<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A1
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: December 31, 1995
---------------------
(Date of earliest event reported)
NYTEST ENVIRONMENTAL INC.
----------------------------------------------------
Exact name of registrant as specified in its charter
Delaware 0-15241 11-2725582
--------------- ------- --------------
State of other jurisdiction of Commission File No. I.R.S. Employer
incorporation or organization ID No.
60 Seaview Boulevard, Port Washington, New York
-----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (516) 625-5500
-----------------------
N/A
-----------------------------------------------------------
(Former name or former address if changed since last report)
<PAGE> 2
Item 1. Acquisition or Disposition of Assets
Effective December 31, 1995, NEI/GTEL Environmental Laboratories, Inc.
("NEI/GTEL"), a newly formed, wholly owned subsidiary of Nytest Environmental
Inc. (the "Registrant"), acquired the business and substantially all of the
assets of GTEL Environmental Laboratories, Inc. ("GTEL"), a subsidiary of
Groundwater Technologies Corporation ("Groundwater"). The assets acquired
include equipment, leasehold improvements, customer contracts and other assets
relating to the business of GTEL, except for real estate owned in Wichita,
Kansas, and certain GTEL assets located in Tempe, Arizona and Concord,
California, cash and accounts receivable. NEI/GTEL, as part of the
transaction, entered into a long-term lease for the use of the GTEL Wichita
facility and assignment and assumption agreements for the leases of GTEL
facilities in Tampa, Florida and Milford, New Hampshire. NEI/GTEL also hired
all of the active employees of GTEL as of the effective date of the
transaction. In exchange for the assets acquired, the NEI/GTEL paid $3.080
million (subject to further adjustment) in a combination of cash, assumption
of liabilities and the issuance of a secured convertible note in the amount of
$.975 million. The Registrant will continue to provide services to the clients
of GTEL from the facilities described above.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial information described below which is required by
Item 7 of Form 8-K is not yet available. The Registrant anticipates that it
will file the required financial information as soon as possible, but not later
than 60 days from the date this report must be filed.
Report of Coopers & Lybrand
Balance Sheet of GTEL at April 29, 1995 and April 30, 1994
Statement of Operations of GTEL, years ended April 29, 1995
and April 30, 1994 and (unaudited) six months ended October
28, 1995 and October 27, 1994
Statements of Cash Flows of GTEL, two years ended April 29,
1995 and April 30, 1994 and (unaudited) six months ended
October 28, 1995 and October 29, 1994.
Notes to Financial Statements
(b) Pro Forma Financial Information
Pro Forma Balance Sheet at December 31, 1995 (to be filed with
Form 10-KSB)
Pro Forma Combined Statements of Operation for the year ended
December 31, 1995
2
<PAGE> 3
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder
of GTEL Environmental Laboratories, Inc.
We have audited the accompanying balance sheets of GTEL Environmental
Laboratories, Inc. as of April 29, 1995 and April 30, 1994 and the related
statements of operations, changes in stockholder's equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GTEL Environmental
Laboratories, Inc. as of April 29, 1995 and April 30, 1994 and the results of
its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 9, 1996
<PAGE> 4
GTEL ENVIRONMENTAL LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
For the Year Ended For the Six Months Ended
---------------------- ---------------------------
April 29, April 30, October 28, October 28,
1995 1994 1995 1994
--------- --------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net revenue $17,018 $20,304 $ 6,943 $9,267
Cost of net revenue 13,513 17,302 6,852 6,999
------- ------- ------- ------
Gross profit 3,505 3,002 91 2,268
Selling, general and administrative expenses 3,629 4,366 1,864 1,798
------- ------- ------- ------
Income (loss) before other expenses (124) (1,364) (1,773) 470
Other expenses, net (113) (354) (320) (56)
------- ------- ------- ------
Income (loss) before provision (benefit)
for income taxes (237) (1,718) (2,093) 414
Provision (benefit) for income taxes (63) (554) (698) 153
------- ------- ------- ------
Net income (loss) $ (174) $(1,164) $(1,395) $ 261
======= ======= ======= ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 5
GTEL ENVIRONMENTAL LABORATORIES, INC.
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
April 29, April 30, October 28, October 29,
ASSETS 1995 1994 1995 1994
--------- --------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current assets:
Cash $ 7 $ 7
Accounts receivable, less allowance of $150 in April and
October 1995 and 1994 1,998 2,624 $1,830 $ 3,216
Unbilled accounts receivable 631 286 425 656
Other current assets 239 224 228 294
------ ------- ------ -------
Total current assets 2,875 3,141 2,483 4,166
Property, plant and equipment, net 5,039 6,903 4,073 5,846
------ ------- ------ -------
Total assets $7,914 $10,044 $6,556 $10,012
====== ======= ====== =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 483 376 468 539
Accrued compensation 574 490 755 497
Other accrued liabilities 252 395 272 320
------ ------- ------ -------
Total current liabilities 1,309 1,261 1,495 1,356
Note payable to Parent 1,706 1,601 1,751 1,654
Stockholder's equity:
Common stock: $.01 par value; 1,000 shares authorized;
1,000 shares issued and outstanding for all
periods presented -- -- -- --
Additional paid-in capital 4,172 4,172 4,172 4,172
Investment by Parent (2,556) (447) (2,750) (888)
Retained earnings 3,283 3,457 1,888 3,718
------ ------- ------ -------
Total stockholder's equity 4,899 7,182 3,310 7,002
------ ------- ------ -------
Total liabilities and stockholder's equity $7,914 $10,044 $6,556 $10,012
====== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 6
GTEL ENVIRONMENTAL LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
for the years ended April 29, 1995 and April 30, 1994
(in thousands)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (174) $(1,164)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,080 2,280
Provision for doubtful accounts 21 --
Loss on disposal of property,
plant and equipment 7 375
Accrued interest for note payable to Parent 105 84
Changes in operating assets and liabilities:
Accounts receivable 260 (82)
Other current assets (14) (34)
Accounts payable 107 23
Accrued salaries and benefits 83 (121)
Other accrued liabilities (144) 40
------- -------
Net cash provided by operating activities 2,331 1,401
Cash flows from investing activities:
Expenditures for property, plant and equipment (396) (904)
Cash received for property, plant and equipment sold 81 170
------- -------
Net cash used by investing activities (315) (734)
Net transactions with Parent (2,016) (671)
Decrease in cash -- (4)
Cash at beginning of year 7 11
------- -------
Cash at end of year $ 7 $ 7
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 7
GTEL ENVIRONMENTAL LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
for the six months ended October 28, 1995 and October 29, 1994
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,395) $ 261
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 988 1,057
Loss on disposal of property, plant and equipment 274 --
Accrued interest for note payable to Parent 45 53
Changes in operating assets and liabilities:
Accounts receivable 374 (962)
Other current assets 11 (70)
Accounts payable (15) 163
Accrued salaries and benefits 234 58
Other accrued liabilities (259) (126)
------- ------
Net cash provided by operating activities 257 434
Cash flows from investing activities:
Expenditures for property, plant and equipment (272) (173)
Cash received for property, plant and equipment sold -- 84
------- ------
Net cash used in investing activities (272) (89)
Net transactions with Parent 8 (352)
Decrease in cash (7) (7)
Cash at beginning of period 7 7
------- ------
Cash at end of period $ -- $ --
======= ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 8
GTEL ENVIRONMENTAL LABORATORIES, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
for the years ended April 29, 1995 and April 30, 1994
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Common Stock
----------------- Additional Investment Retained
Shares Amount Paid-in Capital By Parent Earnings Total
------ ------ --------------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 1, 1993 1,000 $ -- $4,172 $ 240 $ 4,621 $ 9,033
Net loss (1,164) (1,164)
Repayment of investment by Parent (687) (687)
----- ----- ------ ------- ------ -------
Balance at April 30, 1994 1,000 4,172 (447) 3,457 7,182
Net loss (174) (174)
Repayment of investment by Parent (2,109) (2,109)
----- ----- ------ ------- ------ -------
Balance at April 29, 1995 1,000 $ -- $4,172 $(2,556) $3,283 $ 4,899
===== ===== ====== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 9
GTEL ENVIRONMENTAL LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES:
ORGANIZATION AND BASIS OF PRESENTATION
GTEL Environmental Laboratories, Inc. (the Company) is a wholly-owned
subsidiary of Groundwater Technology, Inc. (the Parent). The
accompanying financial statements have been adjusted to reflect the
"carved-out" financial position, results of operations and cash flows
of the Company as if the Company had been operating as a separate
entity. The financial statemnts include an allocation of corporate
general and administrative expenses incured by the Company's Parent.
The balance sheets as of April 29, 1995 and April 30, 1994 and the
statements of operations, cash flows and stockholder's equity for the
two fiscal years ended April 29, 1995 have been audited whereas all
other periods presented are unaudited.
INTERIM FINANCIAL INFORMATION
The interim unaudited financial statements presented include all
adjustments (consisting only of normal recuring adjustments) that
management considers necessary for a fair presentation of its financial
position, results of operations and cash flows for the interim periods
presented. The results of operations for such interim periods are not
necessarily indicative of the results to be expected for the full year.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
Property, plant and equipment are recorded at cost. Depreciation and
amortization are computed on a straight-line method over the estimated
useful lives of the assets, which range from two to twenty-five years.
Leaseholds are amortized over the shorter of the life of the lease or
the asset. Upon retirement or other disposition, the cost and related
accumulated depreciation are removed from the accounts and any gain or
loss is included in income.
REVENUE RECOGNITION
Revenue is recognized when services are performed.
CREDIT RISK
Credit is extended based on an evaluation of the customer's financial
condition, with terms consistent in the industry and normally collateral
is not required. Losses from credit sales are provided in the financial
statements and have been consistently within the allowance provided.
Continued
7
<PAGE> 10
GTEL ENVIRONMENTAL LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
EARNINGS PER SHARE
Earnings per share information has been omitted since the Company has
no publicly traded equity securities.
2. UNBILLED REVENUE:
Unbilled revenue represents amounts earned under the Company's contracts but
not billed or not yet billable to customers according to contract terms,
which usually consider passage of time, achievement of certain project
milestones or completion of the service. The unbilled revenue at April 29,
1995 and April 30, 1994 has been billed in the subsequent period.
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1995 1994
-------------- ---- ----
<S> <C> <C>
Land, buildings and improvements ............................ $ 1,203 $ 1,203
Leasehold improvements ...................................... 2,555 2,558
Laboratory equipment ........................................ 8,790 9,086
Furniture, fixtures and computer equipment .................. 2,753 2,619
------- -------
15,301 15,466
Less accumulated depreciation and amortization .............. 10,262 8,563
------- -------
$ 5,039 $ 6,903
======= =======
</TABLE>
4. INCOME TAXES:
The operations of the Company are included in the consolidated federal
income tax return of the Parent. Under a tax allocation practice, the
Company's is charged by the Parent for federal taxes incurred, generally at
the U.S. statutory rate.
As a result of the tax allocation practice, tax benefits associated with
any losses were recognized in the year the loss occurred. If the Company
had filed a separate return, these tax benefits would have been carried
forward or back, resulting in possible adjustments to the income tax
expense for fiscal years 1994 and 1995.
Continued
8
<PAGE> 11
GTEL ENVIRONMENTAL LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The federal income tax benefit was $63,000 and $554,000 for the fiscal
years 1995 and 1994, respectively. The Company would not pay any state
income taxes on a separate company basis. Deferred tax assets of $177,000
and $234,000 as of April 29, 1995 and April 30, 1994, respectively, have
been included in the Investment by Parent. These assets primarily consist
of differences in methods of depreciation.
The difference between the Company's total tax expense and the U.S.
statutory federal income tax is due to the effect of graduated rates.
5. NOTE PAYABLE TO PARENT:
The Company has a long-term note payable to its Parent with an outstanding
principal balance of $1,436,111 and accrued interest of $270,279 and
$165,279 as of April 29, 1995 and April 30, 1994, respectively. The
interest rate is adjusted annually at the applicable federal rate (7.3% and
5.9% as of April 29, 1995 and April 30, 1994, respectively). The entire
balance was repaid on December 29, 1995.
6. RELATED PARTY TRANSACTIONS:
The Company is dependent upon its Parent for continued financing including
funding required, if any, for settlement of claims and working capital
requirements. The Company provides certain analytical laboratory services
to the Parent while the Parent provides certain corporate and
administrative support services to the Company. All revenues and expense
of these related party transactions are reflected in the income statement
as revenues and expenses and on the balance sheet as Investment by Parent.
Selling, general and administrative costs allocated to the Company were
$385,000 and $381,000 in fiscal 1995 and 1994, respectively.
In fiscal 1994, the Company was responsible for a remediation laboratory
which provided research and development services for the Parent. The
revenues and costs associated with this endeavor during fiscal 1994 were
$390,395 and $468,513, respectively. The remediation laboratory was
transferred to the Parent at the beginning of fiscal 1995. As a result of
this transfer, fixed assets with a net book value of approximately $87,000
were transferred to the Parent.
Intercompany revenues from the Parent were $5,394,651 and $6,725,787 for
the years ended April 29, 1995 and April 30, 1994, respectively, and
$2,604,126 and $2,780,543 for the six months ended October 29, 1995 and
October 28, 1994, respectively.
Certain fixed assets, not related to the remediation laboratory, were
transferred from the Company to the Parent at a net book value of $6,000
and $17,000 in fiscal 1995 and 1994, respectively.
Continued
9
<PAGE> 12
GTEL ENVIRONMENTAL LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS
The Company leases two of its three operating facilities under operating
leases. One of these has a renewal option, and both leases require
increasing rent payments over the term of the lease and payments for
additional expenses such as taxes and maintenance. One of the leases also
contains a purchase option. Additionally, the Company leases some
equipment and most vehicles under operating leases.
Future minimum payment under all noncancelable leases are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996 .................................. $ 498,162
1997 .................................. 404,066
1998 .................................. 150,884
1999 .................................. 111,291
2000 .................................. 110,000
2001 and thereafter ................... 18,333
----------
$1,292,736
==========
</TABLE>
Rent expense charged to operations was $414,188 and $590,923 in fiscal
1995 and 1994, respectively.
CONTINGENCIES
In the ordinary course of conducting its business, the Company becomes
involved in a number of lawsuits and administrative proceedings, including
environmentally related matters. Some of these proceedings may result in
fines, penalties or judgments being assessed against the Company which,
from time to time, may have an impact on earnings for a particular period.
The Company does not believe that these matters, individually or in the
aggregate, will have a material adverse impact on its business or
financial condition.
8. EMPLOYEE BENEFIT PLANS:
PROFIT SHARING PLAN AND BONUS PERFORMANCE PLAN
During fiscal 1995, the Parent instituted a profit sharing plan for the
benefit of all employees meeting certain minimum service requirements.
The Parent distributes 10% of pre-tax operating income of its
consolidated subsidiaries to the employees of all subsidiaries at the
end of the second and fourth quarters of each fiscal year. The plan is
designed to encourage
Continued
10
<PAGE> 13
GTEL ENVIRONMENTAL LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
employees to reduce overall operating costs as a percentage of net revenue. The
profit sharing expense included in the Company's financial statements was
$91,755 and $21,312 for fiscal 1995 and the six months ended October 29, 1995,
respectively.
The Parent has a bonus performance program covering eligible employees under
which awards are made at the discretion of the Compensation Committee of the
Board of Directors of the Parent. Bonus expense was approximately $71,340 and
$19,500 in fiscal 1995 and 1994, respectively.
RETIREMENT SAVINGS PLAN
The Parent has a Retirement Savings Plan under Section 401(k) of the Internal
Revenue Code for the benefit of all employees meeting certain minimum service
requirements. Eligible employees may elect to contribute to the plan up to 12%
of their cash compensation, subject to limitations established by the Internal
Revenue Code. The trustees of the plan select investment opportunities from
which participants may choose to contribute.
The plan requires a matching contribution by the Parent of 100% on the first
1%, and 25% on the next 4% of each participant's contribution up to a maximum
allowable under the Internal Revenue Code. The Parent may also contribute a
discretionary amount to the plan which may be allocated to employees based upon
employees' contributions to the plan. The Parent's matching contributions
currently vest at a rate of 25% per year based upon years of service. The
Parent's contributions to this plan which are included in the Company's
financial statements were $93,646 and $99,293 in fiscal 1995 and 1994,
respectively.
11
<PAGE> 14
NYTEST ENVIRONMENTAL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical Amounts
Year Ended
----------------------------------
December 31, October 28,
1995 1995
-------------- -------------
GTEL Add
Nytest Environmental (Deduct)
Environmental, Laboratories, Pro Forma Adjusted
Inc. Inc. Adjustments Pro Forma
-------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $6,809 $14,694 $(2,855) (1) $18,648
------ ------- ------- -------
Cost and expenses:
Cost of operations 5,191 13,366 (3,626) (1) 14,278
(813) (2)
160 (4)
Selling, general and
administrative
expenses 1,988 3,695 (163) (1)
(464) (2) 5,056
------ ------- ------- -------
Total cost and expenses 7,179 17,061 (4,906) 19,334
------ ------- ------- -------
Operating (loss) (370) (2,367) 2,051 (686)
Interest and
other expenses 120 377 (275) (1) 325
(90) (2)
193 (3)
------ ------- ------- -------
(Loss) before taxes (490) (2,744) 2,223 (1,011)
Income tax (benefit) (158) (914) 891 (5) (181)
------ ------- ------- -------
NET LOSS $ (332) $(1,830) $ 1,332 $ (830)
====== ======= ======= =======
Loss per share $ (.05) $ (.12) (6)
====== =======
Average number of shares
outstanding 6,705 6,705
====== =======
</TABLE>
The attached notes to pro forma financial statements are made a part hereof.
<PAGE> 15
NYTEST ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
On December 31, 1995, the Company acquired, in a purchase transaction,
certain fixed and other assets (deposits, licenses, etc.) and assumed certain
liabilities of GTEL Environmental Laboratories, Inc., a wholly-owned subsidiary
of Groundwater Technology, Inc. (GTI). The transaction was affected through a
new wholly-owned subsidiary, NEI/GTEL Environmental Laboratories, Inc. ("GTEL").
The assets acquired comprise three environmental testing laboratories in
Milford, New Hampshire, Wichita, Kansas and Tampa, Florida. The purchase price
of approximately $3,080,000 is comprised of approximately $940,000 of
liabilities assumed, a subordinated convertible note of $975,000 (each of which
may be subject to further adjustment) and the payment of $1,000,000 in cash,
plus approximately $165,000 in closing costs related to the acquisition. The
purchase price was allocated $2,951,000 to fixed assets, $105,000 to current
assets and $24,000 to other assets based on their relative appraised values.
No goodwill has been recognized because the fair market value of the assets
acquired exceeded the purchase price.
The attached pro forma financial statements combine the historical
amounts of Nytest Environmental, Inc. and GTEL for the twelve month periods
ended December 31, 1995 and October 28, 1995, respectively. The historical
financial statements of GTEL Environmental Laboratories, Inc. also include the
operations and certain assets and liabilities which NEI/GTEL did not acquire.
These amounts have been eliminated in the pro forma adjustments.
After the acquisition, certain expenses (primarily corporate overhead
allocations charged by GTI) will not be incurred by GTEL. Accordingly, these
amounts have been eliminated in the pro forma statements of operations. Because
management anticipates other benefits of the acquisition, which are not in the
pro forma amounts, no representation is made that the pro forma results are
necessarily indicative of the future combined operations.
The pro forma adjustment column is comprised of the following:
1. To eliminate the revenues and the related expenses of operations
which were not acquired.
2. To eliminate depreciation costs ($890,000) and former parent
corporation allocated expenses and charges ($477,000) which would
not have occurred had the acquisition taken place at the beginning
of the period presented.
3. To record additional interest expense on borrowings for the
acquisition.
4. To record additional rent expense on property which is owned by
GTI.
5. To record the tax effect of the transaction, which is limited to
the benefit of existing NYTEST deferred tax balances, and
6. To reflect the per share effect of the transaction.
<PAGE> 16
(c) Exhibits
The following Exhibits are be filed with this amendment:
2.1 Asset and Business Purchase Agreement dated December
28, 1995 and effective as of December 31, 1995
between NEI/GTEL Environmental Laboratores,
Inc. and GTEL Environmental Laboratories, Inc.
99.1 Marketing and Supply Agreement dated December 31,
1995 between NEI/GTEL Environmental Laboratories,
Inc. and Groundwater Technology, Inc.
99.2 Subordinated Convertible Note of NEI/GTEL
Environmental Laboratories, Inc. dated December 31,
1995.
99.3 Security Agreement dated December 31, 1995 among
NEI/GTEL Environmental Laboratories, Inc., GTEL
Environmental Laboraties, Inc. and Nytest
Environmental Inc.
99.4 Registration Rights Agreement dated December 28, 1995
between Nytest Environmental Inc. and Groundwater
Technology, Inc.
99.5 Guaranty of Nytest Environmental Inc. dated December
31, 1995.
99.6 Lease of 4211 West May, Wichita, KS, dated December
31, 1995.
99.7 Assignment of Patent Rights dated December 31, 1995.
[SIGNATURE PAGE FOLLOWS]
3
<PAGE> 17
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 thereunto duly authorized.
March 15, 1996 NYTEST ENVIRONMENTAL INC.
By: /s/ John Gaspari
-------------------------------
John Gaspari, President and
Chief Executive Officer
By: /s/ Elliot J. Laitman
-------------------------------
Elliot J. Laitman, Chief
Financial Officer and Treasurer
4
<PAGE> 18
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
------- -----------
2.1 Asset and Business Purchase Agreement dated December
28, 1995 and effective as of December 31, 1995
between NEI/GTEL Environmental Laboratores,
Inc. and GTEL Environmental Laboratories, Inc.
99.1 Marketing and Supply Agreement dated December 31,
1995 between NEI/GTEL Environmental Laboratories,
Inc. and Groundwater Technology, Inc.
99.2 Subordinated Convertible Note of NEI/GTEL
Environmental Laboratories, Inc. dated December 31,
1995.
99.3 Security Agreement dated December 31, 1995 among
NEI/GTEL Environmental Laboratories, Inc., GTEL
Environmental Laboraties, Inc. and Nytest
Environmental Inc.
99.4 Registration Rights Agreement dated December 28, 1995
between Nytest Environmental Inc. and Groundwater
Technology, Inc.
99.5 Guaranty of Nytest Environmental Inc. dated December
31, 1995.
99.6 Lease of 4211 West May, Wichita, KS, dated December
31, 1995.
99.7 Assignment of Patent Rights dated December 31, 1995.
<PAGE> 1
EXHIBIT 2.1
ASSET AND BUSINESS PURCHASE AGREEMENT
AGREEMENT, dated December 28, 1995, between NEI/GTEL ENVIRONMENTAL
LABORATORIES, INC. , a Delaware corporation ("Buyer"), and GTEL ENVIRONMENTAL
LABORATORIES, INC., a Delaware corporation ("Seller").
WHEREAS, Buyer is a wholly owned subsidiary of Nytest Environmental
Inc., a Delaware corporation ("Buyer's Parent");
WHEREAS, Seller is a wholly owned subsidiary of Groundwater Technology,
Inc., a Delaware corporation ("Seller's Parent");
WHEREAS, Seller conducts certain business operations at laboratories
and offices in Milford, New Hampshire, Tampa, Florida and Wichita, Kansas,
involving the testing of environmental samples (sometimes hereinafter referred
to as the "Business");
WHEREAS, Buyer desires to purchase from Seller substantially all of the
assets and operations of the Business and is willing to assume certain
liabilities and obligations in respect thereof which are specifically identified
in this Agreement; and
WHEREAS, Seller wishes to sell substantially all of the assets and the
operations of the Business to Buyer, and transfer certain liabilities and
obligations of Seller as specifically identified herein, all upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereby agree as follows:
1. PURCHASE AND SALE.
1.1 Purchase and Sale of the Business Assets.
On the terms and subject to the conditions herein set forth, at the
Closing (as defined in Section 2.3 hereof), Seller agrees to sell, transfer,
convey, assign and deliver to Buyer, and Buyer agrees to purchase from Seller
and accept delivery of, all of Seller's right, title and interest in and to the
Business as a going concern including the name "GTEL Environmental
Laboratories," and all variations and derivations thereof, but specifically
excluding any reference to "Groundwater" or "GTI", and the following tangible,
intangible, real, personal and mixed assets, properties and rights of every kind
and description, wherever located, which constitute or are used by Seller in
connection with the Business, other than the Excluded Assets (as defined in
Section 1.2 hereof), all as the same shall exist on the Closing Date
(collectively the "Assets"):
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(a) all security deposits, prepaid items, unbilled costs and fees,
of a type that was or should have been included in a balance
sheet if it had been audited, and works in process other than
those, if any, specifically identified as an Excluded Asset
herein;
(b) all reagents, bottles, glassware, laboratory supplies, spare
parts, shipping materials, labels, packaging, samples and
materials to be analyzed, stationery, purchase orders and
other forms, labels, catalogs, brochures, art work,
photographs and advertising material, wherever located, which
are used or held for use or sale by the Business
(collectively, "Inventory") except as expressly disclosed in
Section 3.11 of the Disclosure Schedule as being owned by a
third party;
(c) all furniture, fixtures, leasehold improvements (except to the
extent such leasehold improvements are, pursuant to the terms
of the relevant Lease (as defined in Section 3.12 or 3.15
below) the property of the lessor thereunder), machinery,
equipment, computer hardware and software and office equipment
owned or leased by Seller located at or provided to the
Business, or otherwise identified in the disclosure schedule
attached hereto and made a part hereof (the "Disclosure
Schedule") (the "Equipment");
(d) Seller's interest in and to all telephone, telecopier,
electronic mail (but only to the extent such address is
independent of addresses associated with Seller's Parent,
defined below), internet address (but only to the extent such
address is independent of addresses associated with Seller's
Parent, defined below) and telex (if any) numbers and
telephone and other directory listings utilized in connection
with the Business to the extent assignable;
(e) any and all formulae, trade secrets, patents, trademarks,
trade names, inventions, computer software, technology,
proprietary know-how, art work, designs, processes and other
intellectual property now used by Seller in connection with
the Business (collectively, "Intellectual Property");
(f) to the extent assignable, all franchises, permits and
licenses, registration, certificate of occupancy, contracts,
agreements and commitments, customer lists, restrictive
covenants, confidentiality obligations and similar obligations
of present and former shareholders, officers and employees of
Seller, and any of their predecessors;
(g) all rights or choses in action arising out of occurrences
before or after the Closing, including without limitation all
rights under express or implied warranties relating to the
Assets;
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(h) all assets and properties reflected on the Closing Balance
Sheet as defined in Section 2.6; and
(i) all books, files, papers, engineering, sales, marketing and
other studies, data and plans, records and other data of
Seller, including but not limited to all personnel files,
computer software and customer and supplier lists and other
data bases, if any, relating to the foregoing;
it being the parties' intention that (x) all tangible, intangible, real,
personal and mixed property, assets and rights considered by Seller to
constitute part of the Business as an ongoing business, wherever located, except
as expressly set forth in Sections 1.2 below, are to be conveyed to Buyer as
part of the Assets, and (y) the Assets comprise all the business, properties,
assets (however, employees, to the extent they could be considered assets, are
not included as assets in this Section) and goodwill employed by the Seller and
its affiliates in connection with the Business other than the Excluded Assets
(as defined below).
1.2 Excluded Assets.
Notwithstanding the forgoing, it is agreed by the parties hereto that
Seller is not selling, and Buyer is not purchasing, any of the following:
(a) Seller's franchise as a corporation and any prepaid taxes or
expenses or deferred charges in connection therewith and tax
refund claims for the periods prior to Closing;
(b) Seller's minute books, corporate seals and stock books;
(c) the consideration to be paid by Buyer to Seller and rights of
Seller pursuant to this Agreement;
(d) all cash and cash equivalents on hand and in bank accounts on
and prior to the Closing Date;
(e) all intercompany accounts between Seller and any of its
Affiliates (as such term is defined herein), including,
without limitation, Groundwater Technology, Inc. ("Seller's
Parent");
(f) the J.D. Edwards software used by Seller with respect to its
financial information, except Buyer will be, to the extent
possible and subject to the implementation of appropriate
security measures, given a license to use such software for up
to 180 days, at no cost to the Buyer;
(g) all insurance policies maintained by Seller in respect of the
Business;
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(h) all claims against third parties, known or unknown, for
refunds or otherwise in respect of events prior to the
Closing;
(i) all assets of Seller held under any "employee benefit plan"
(as defined in Section 3(3) of ERISA (defined in Section 3.25
below) currently or heretofore maintained by Seller;
(j) all assets of Seller located in Tempe, Arizona or Concord,
California and not used as part of the Business (all of which
assets are set forth on Schedule 1.2(j) hereof);
(k) all assets sold to Columbia Analytical Services' Inc. pursuant
to a Purchase Agreement and Bill of Sale dated as of November
8, 1995 and all claims and all payments made or to be made to
Seller in connection therewith;
(l) all accounts, notes and other receivables, and unbilled fees
for services rendered by Seller prior to and on the Closing
Date;
(m) all payments in connection with the Business which are in
transit, including but not limited to cash and cash
equivalents; and
(n) the Wichita Property, defined below.
1.3 Method of Conveyance.
(a) The sale, transfer, conveyance, assignment and delivery by
Seller of the Assets to Buyer in accordance with Section 1.1
hereof shall be effected on the Closing Date by Seller's
execution and delivery of one or more bills of sale and other
instruments of conveyance and transfer, substantially in the
forms attached hereto as Exhibit A (the "Bill of Sale").
(b) At the Closing Seller shall transfer, convey, assign and
deliver to Buyer all of the Assets pursuant to this Agreement
and the Bill of Sale free and clear of any and all liens,
encumbrances, claims, rights of Seller or any third party,
rights of redemption equities, and other restrictions of any
kind or nature whatsoever (collectively, "Liens"), except for
liens for current taxes not yet due and except as set forth in
Section 3.11(c) of the Disclosure Schedule, and subject only
to those liabilities or obligations of Seller in respect of
the Business to be specifically assumed by Buyer pursuant to
Section 1.4 and Section 2.4 hereof.
(c) Buyer will pay all of the costs payable by reason of the
purchase and sale of the Assets hereunder or Buyer's
assumption of the Assumed Obligations and the Assumed
Liabilities hereunder.
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(d) Seller covenants and agrees that in the event that either (i)
any of the Assets cannot be transferred or assigned by it
without the consent of or notice to a third party and in
respect of which any necessary consent or notice has not as of
the Closing Date been given or obtained, or (ii) any Assets
are non-assignable in their nature, Seller will use its
reasonable best efforts to cause the beneficial interest in
and to the same to in any event pass to the Buyer; and Seller
covenants and agrees, on and after the Closing Date, (x) to
use its reasonable best efforts to hold such Assets in trust
for, and for the benefit of, the Buyer; (y) to continue, to
use its reasonable best efforts, on and after the Closing
Date, to obtain and to secure such consent and give such
notice as may be required to effect a valid transfer or
transfers of such Assets to the extent such consent reasonably
can be obtained; provided, however, that, in the case of
Leases to be transferred as part of the Assets, Seller shall
continue, if such consent will not be obtained and/or until
any such consent is received, as a party to each such Lease
for the benefit of the Buyer, and Buyer shall perform Seller's
post-Closing obligations under such Leases as specifically set
forth in subleases between Seller and Buyer and hold Seller
and its affiliates harmless with respect to such performance
by Buyer and with respect to any post-Closing liability Seller
or any of its affiliates may incur in connection with any such
Lease subsequent to the Closing; and (z) to make or complete
such transfer or transfers as soon as possible. Buyer and
Buyer's Parent will execute such documents and take such
actions, including the guaranty by Buyer's Parent of Buyer's
obligations to landlords with respect to any real property
leases.
1.4 Assumed Obligations.
(a) At the Closing, Buyer shall assume and shall, subject to all
rights, against third parties, of offset, defenses, causes of
action, counterclaims and claims of any nature that may be
available to Buyer in respect of the Assumed Obligations,
agree to satisfy and discharge, as the same shall become due,
all of the liabilities and obligations of Seller (the "Assumed
Obligations") under:
(i) the contracts, agreements and commitments of Seller
which are specifically identified in Sections 3.12,
3.15 and 3.17(a), (b), (c) or (p) of the Disclosure
Schedule and obligations to perform testing services
in the ordinary course of business (the "Assumed
Contracts") but only to the extent any such
liabilities and obligations arise after the Closing
and then only in respect of events and time periods
occurring after the Closing, provided, however, Buyer
shall not assume or agree to pay, discharge or
perform:
(A) any liabilities or obligations
arising exclusively in respect of a
breach of the non-assignment
provision of any Assumed Contract
by virtue of the assignment of such
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contract to Buyer hereunder, (but
Buyer shall allow Seller to take
all such steps as may be necessary
to remedy any such breach);
(B) liabilities or obligations of the
aforesaid character existing as of
the Closing Date, and which under
generally accepted accounting
principles should have been accrued
or reserved for on a balance sheet
or the notes thereto as a liability
or obligation, if and to the extent
that the same were not accrued or
reserved for on the Closing Balance
Sheet;
(C) liabilities or obligations arising
out of any breach by Seller of any
provision of any agreement,
contract, commitment or lease
referred to in this Section
1.4(a)(i), including but not
limited to liabilities or
obligations arising out of Seller's
failure to perform any agreement,
contract, commitment or lease in
accordance with its terms prior to
the Closing; or
(D) any liability of Seller to Seller's
Parent or any of its affiliates.
(ii) all permits, registrations, and licenses which are
being transferred to Buyer on the Closing Date, if
and to the extent transferable, but only to the
extent any such liabilities and obligations arise
after the Closing and then only in respect of events
and time periods occurring after the Closing; and
(iii) all of Seller's obligations under purchase orders or
agreements entered into until the Closing to acquire
goods and services solely in connection with the
operation of the Business in the ordinary course and
which are in existence as of the Closing (subject to
the limit on capital expenditures set forth in
Section 3.10(j), below).
(b) Buyer agrees to execute and deliver to Seller: (i) the
Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement"), substantially in the form of Exhibit
B1 hereto, to evidence Buyer's assumption of the Assumed
Obligations and the Assumed Liabilities (as such term is
defined in Section 2.4 below); and (ii) Assignment and
Assumption Agreements substantially in the form annexed hereto
as Exhibit B2, related to the Leased Properties in Tampa, FL,
Milford, NH and Atlanta, GA, defined in Section 3.12 (c),
below.
1.5 Excluded Obligations.
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Buyer shall not assume or be responsible for any liability, obligation,
debt or commitment of Seller, other than the Assumed Obligations and the Assumed
Liabilities, which liabilities, obligations, debts and commitments not so
assumed (the "Excluded Obligations") shall include and not be limited to
liabilities, obligations, debts or commitments, absolute or contingent, whenever
the same may arise:
(a) as set forth in Section 2.4(u) through (z) below;
(b) which arise or are asserted by operation of any law, including
but not limited to any liability (other than an Assumed
Obligation or Assumed Liability) which may be sought to be
imposed on Buyer as successor to any part of Seller's
Business, or otherwise, by reason of any event (including but
not limited to the provision of services by Seller prior to
the Closing), act or omission, injury or transaction which
shall have occurred or failed to have occurred, whether by
reason of the operation of the Business or otherwise, prior to
the Closing;
(c) to issue or purchase or make any payment in respect of any
shares of capital stock or any other security of Seller or any
of its affiliates;
(d) except as otherwise expressly provided herein, including,
without limitation in Section 2.4 hereof, which arises prior
to Closing or is otherwise incurred in respect of any event
which occurs prior to the Closing, whether under any of
Seller's contracts which are assumed by Buyer or otherwise;
(e) relating in any way to any of Seller's affiliates;
(f) which did not arise in the Business;
(g) except as provided in Section 2.4(b) and subject to Section
7.11(c) in respect of any of Seller's employee policies
(whether set forth in any of Seller's employee handbooks,
policies or otherwise) and benefit plans (including but not
limited to the Employee Benefit Plans (as that term is defined
in Section 3.25 of the Disclosure Schedule));
(h) for any deficit in Seller's unemployment compensation
obligations in respect of Seller's employees prior to the
Closing;
(i) to any of Seller's employees in respect of any matter prior to
Closing, whether self-insured by Seller or otherwise, and
including but not limited to worker's compensation and medical
claims;
(j) to any of Seller's retired employees;
(k) for any liability in respect of Seller's operations;
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(l) in respect of any express or implied representation, warranty
or guarantee made in connection with any of Seller's services
or operations (except as provided in Section 7.15 below), or
which are or may be imposed by operation of law in respect of
any operations prior to the Closing; and
(m) any liability, whenever the same may arise, in respect of any
pricing, profit limitation or other regulation applicable to
government contracts, if any, of Seller for all periods prior
to Closing.
Without limiting the generality of the foregoing, Buyer shall,
notwithstanding Seller's disclosure of any matter in this Agreement, or Seller's
failure to disclose any matter in this Agreement whether or not Seller shall
have been required to make any such disclosure, under no circumstances be deemed
to have assumed any debt, liability or obligation of Seller not expressly
assumed in Section 1.4 above or in Section 2.4 below.
2. PURCHASE PRICE AND CLOSING.
2.1 Purchase Price.
The purchase price (the "Purchase Price") for the Assets to be sold,
transferred, conveyed, assigned and delivered by Seller to Buyer pursuant to
this Agreement shall be:
(a) $3,392,000;
(b) decreased by the amount by which normal depreciation between
the date of the July Balance Sheet and the date of the Closing
Balance Sheet has decreased net property, plant and equipment
included in the Assets shown on the Closing Balance Sheet
below $2,802,000 and increased by amount of capital
expenditures (up to a maximum increase of $275,000) made by
Seller during the same period; and
(c) increased or decreased, as the case may be, by the amount that
the "Other Current Assets" as set forth on the Closing Balance
Sheet is greater than or less than $297,000.
2.2 Payment of Purchase Price.
Subject to Section 2.5 below, on the Closing Date, the Buyer shall pay
to Seller on account of the purchase price:
(a) the amount of $1.0 million (the "Cash Closing Payment"),
including a $100,000 deposit transferred to Seller on December
19, 1995 payable by wire transfer of
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immediately payable funds to such account as Seller shall
designate (the "Closing Cash Payment");
(b) the Buyer will issue to Seller a secured convertible note in
the form annexed hereto as Exhibit D (the "Note") in the
principal amount of $1.292 million; and
(c) the Buyer will assume the liabilities described as being
assumed by Buyer in Section 2.4, below.
2.3 Closing.
The closing of the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of Buyer on December 28, 1995, but no
later than 10:00 a.m., New York time on December 29, 1995 to be effective as of
December 31, 1995. The date on which the Closing is to be effective is herein
referred to as the "Closing Date." The Closing shall be deemed to have occurred
at 11:59 P.M. on the Closing Date.
2.4 Assumption of Liabilities.
At the Closing hereunder and except as otherwise specifically provided
in this Section 2.4, Buyer shall assume and agree to pay, discharge or perform,
as appropriate, the following liabilities and obligations of Seller (the
"Assumed Liabilities").
(a) all liabilities and obligations of Seller arising in the
regular and ordinary course of the Business to the extent that
the same remain unpaid and undischarged on the Closing Date
and are accrued or reserved for on the Closing Balance Sheet.
(b) all liabilities for accrued vacation pay for all employees of
the Business as of the Closing Date to the extent such
liabilities are accrued or reserved for on the Closing Balance
Sheet.
In no event, however, shall Buyer assume or incur any liability or
obligation under this Section 2.4 or otherwise in respect of any of the
following:
(u) any undisclosed liability;
(v) except as otherwise expressly provided in Section 1.4 herein,
any product liability or claim for injury to person or
property, regardless of when made or asserted, which arises
out of or is based upon any express or implied representation,
warranty, agreement or guarantee made by Seller, or alleged to
have been made by Seller, or which is imposed or asserted to
be imposed by operation of law, in connection with any service
performed or product sold or leased by or on behalf of Seller
on or prior to the Closing, including without limitation any
claim relating
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to any product delivered in connection with the performance of
such service and any claim seeking recovery for consequential
damage, lost revenue or income;
(w) any federal, state, local or foreign taxes, including, but not
limited to income, franchise, sales and use taxes, and
penalties and interest as a result of Seller to qualify or
become authorized to do business as a foreign corporation in
any jurisdiction (i) payable with respect to the business,
assets, properties or operations of Seller or any member of
any affiliated group of which it is a member for any period
prior to the Closing Date, or (ii) incident to or arising as a
consequence of the negotiation or consummation by Seller or
any member of any affiliated group of which it is a member of
this Agreement and the transactions contemplated hereby;
(x) any liability or obligation under or in connection with
Excluded Assets under Section 1.2;
(y) except as otherwise expressly provided in this Agreement, any
liability or obligation arising prior to or as a result of the
Closing to any employees, agents or independent contractors of
Seller, whether or not employed by Buyer after the Closing, or
under any compensation or benefit arrangement with respect
thereto; or
(z) except as otherwise expressly provided in this Agreement, any
liability or obligation of Seller arising or incurred in
connection with, or incident to, the negotiation, preparation
and execution of this Agreement and the transactions
contemplated hereby and fees and expenses of counsel,
accountants and other experts.
2.5 Closing Adjustment to Closing Cash Payment.
At Closing, on the basis of the best estimates and data then available,
but in no event on information older than the unaudited balance sheet of Seller
as of November 30, 1995, the parties will analyze the financial position of
Seller for the purposes of adjusting the Purchase Price by increasing or
decreasing the principal amount of the Note in the manner set forth below:
(a) by the amount by which the Assumed Liabilities by Buyer are
less than or exceed $1.1 million.
(b) by the amount by which normal depreciation between July 28,
1995 and the Closing Date has decreased net property, plant
and equipment included in the assets below $2,802,000 and
increased by amount of capital expenditures (up to a maximum
increase of $275,000) made by Seller during the same period;
and
(c) by the amount that Other Current Assets is greater than or
less than $297,000.
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2.6 Closing Financial Statements.
Not later than 30 days after the Closing Date, Seller shall prepare a
balance sheet of the Business at the Closing Date ("Closing Balance Sheet") in
accordance with generally accepted accounting principles. Such balance sheet
shall specifically identify all assets reflected thereon which are not included
in the Assets and all liabilities reflected thereon which are not assumed by
Buyer hereunder.
Seller shall cause Coopers & Lybrand, its independent accountants
("Seller's Auditors"), to perform the procedures set forth on Schedule 2.6 and
to issue, as soon as practicable but in any event not later than 45 days after
the Closing Date, its report to Seller and Buyer to the effect that such balance
sheet presents fairly the financial position of the Business as of the Closing
Date, in conformity with generally accepted accounting principles. Such report
shall also include a detailed schedule setting forth the calculation of the
amounts described in Section 2.1 hereof and the Purchase Price and statement to
the effect that the Purchase Price was calculated in accordance with the
provisions of this Agreement. In performing the foregoing procedures and
rendering the foregoing report, Seller's Auditors shall consult with Cornick,
Garber & Sandler, L.L.P., Buyers independent accountants ("Buyer's Auditors"),
and permit Buyer's Auditors at the earliest practicable date to review the
report of Seller's Auditors, including all work papers, schedules and
calculations related thereto, prior to the issuance thereof. Buyer's Auditors
shall commence its review of said work papers, schedules and calculations as
soon as practicable after Seller's Auditors has completed the field work phase
of its procedures, but such review shall not prevent Seller's auditors from
issuing their report.
Any dispute which may arise between Seller and Buyer as to the Closing
Balance Sheet shall be resolved in the following manner:
(a) Buyer, if it disputes the Closing Balance Sheet or its effect
on the Purchase Price, shall notify Seller in writing within
15 days after the issuance of the Closing Balance Sheet that
Buyer disputes the Closing Balance Sheet or its effect on the
Purchase Price; such notice shall specify in reasonable detail
the nature of the dispute;
(b) during the 15 day period following the date of such notice
Seller and Buyer shall attempt to resolve such dispute and to
determine the appropriateness of the Closing Balance Sheet and
the effect on the Purchase Price; and
(c) if at the end of the 15 day period specified in subsection (b)
above, Seller and Buyer shall have failed to reach a written
agreement with respect to such dispute, the matter shall be
referred to, Arthur Anderson & Co., independent certified
public accounts (the "Arbitrator"), which shall act as an
arbitrator and shall issue its report as to the items in
dispute within thirty (30) days after such dispute is
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referred to the Arbitrator. Each of the parties hereto shall
bear all costs and expenses incurred by it in connection with
such arbitration, except that the fees and expenses of the
Arbitrator hereunder shall be borne in such proportion as the
Arbitrator shall decide based upon the merits of the dispute.
This provision for arbitration shall be specifically
enforceable by the parties and the decision of the Arbitrator
in accordance with the provisions hereof shall be final and
binding and there shall be no right of appeal therefrom.
References in this Agreement to the Closing Balance Sheet shall mean
the balance sheet of the Business at the Closing Date, prepared and reported
upon as described in this Section 2.6.
After the amounts in the Closing Balance Sheet are finally determined
pursuant to this Section 2.6 (the date of such final determination hereinafter
referred to as the "Adjustment Date"), any adjustment required to be made to the
Purchase Price, as adjusted pursuant to Section 2.1 above, as a result of the
amounts set forth in the Closing Balance Sheet, shall be made in the same manner
as set forth in Section 2.5 above.
If the Note is required to be adjusted within fifteen days of the
Adjustment Date, but effective on the Adjustment Date, Seller shall deliver the
Note to Buyer, and Buyer shall deliver to Seller a new convertible promissory
note, identical to the Note except for the making of an appropriate adjustment
to the principal amount thereunder.
2.7 Bulk Sales Laws.
Buyer and Seller each waive compliance with the Bulk Sales Laws of the
States of New Hampshire, Florida and Kansas.
2.8 Allocation of Purchase Price.
The consideration for the Assets will be allocated consistent with the
allocation set forth on Schedule 2.8 hereto. It is agreed that such an
allocation is fair to both parties and that it will be used as the basis for
reporting this transaction for all tax purposes (subject to Purchase Price
adjustments, if any). Each party hereto agrees to prepare its federal and state
income tax returns for all current and future tax reporting periods and file
Form 8594 (and corresponding state forms) with respect to the transfer of the
Assets to Buyer in a manner consistent with such allocation. The allocation of
the Purchase Price shall in no event limit the liability of Seller to Buyer with
respect to damages, liabilities or expenses incurred by Buyer with respect to
any breach of Seller's representations, warranties, covenants or agreements set
forth herein..
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3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer as follows:
3.1 Corporate Organization.
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
Seller has all requisite corporate power and authority to
carry on the Business as the same is now being conducted and
to own, lease and operate it's properties and assets in the
places where such business is now conducted and where such
properties and assets are now owned, leased or operated.
(b) Seller is duly qualified or licensed to do business as a
foreign corporation in good standing only in the jurisdictions
set forth in Section 3.1(b) of the Disclosure Schedule. There
are no jurisdictions where Seller is not qualified to do
business where the failure to so qualify would have a material
adverse effect on the Business.
(c) Except as set forth in Section 3.1(c) of the Disclosure
Schedule, Seller neither owns nor leases any property, and
does not employ any person or maintain any agent, with respect
to the Business, outside of the jurisdictions set forth in
Section 3.1(b) of the Disclosure Schedule.
3.2 Authorization.
(a) Seller has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to carry
out the transactions contemplated hereby; (b) Seller has taken all necessary
corporate action required by law or otherwise to be taken by Seller to authorize
Seller's execution and delivery of this Agreement and the consummation by Seller
of the transactions contemplated hereby; and (c) this Agreement has been duly
and validly executed and delivered by Seller and constitutes a valid and binding
agreement of and upon Seller enforceable against Seller in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity.
3.3 No Violation.
Except for the required consents of third parties identified in
Sections 3.12 and 3.15 of the Disclosure Schedule, and except as set forth in
Section 3.3 of the Disclosure Schedule, neither the execution and delivery of
this Agreement by Seller nor the consummation by Seller of
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the transactions contemplated hereby will violate any provision of the
Certificate of Incorporation or the by-laws of Seller, or be in conflict with,
or constitute a material default (or an event which, with or without notice,
lapse of time or both, would constitute a material default) under, or result in
the termination or invalidity of, or accelerate the performance required by, or
cause the acceleration of the maturity of any of the Assumed Obligations, or
result in the creation or imposition of any security interest, lien or other
encumbrance upon any of the Assets under any agreement or commitment to be
assumed by Buyer pursuant to this Agreement to which Seller is a party or by
which Seller is bound or to which any of the Assets is subject, or violate any
statute or law or any judgment, decree, order, regulation or rule of any
domestic or (to the knowledge of Seller) foreign court or domestic or (to the
knowledge of Seller) foreign government authority applicable to Seller, or any
of the Assets. For purposes of this Agreement, "to Seller's knowledge," "to the
best of Seller's knowledge, " or any similar formulation thereof shall mean to
the actual knowledge of any of the current: (i) laboratory directors of Seller,
(ii) personnel and human resource managers of Seller or Seller's Parent, (iii)
quality assurance and/or quality control directors of Seller, (iv) hazardous
material directors of Seller, or (v) officers and directors of Seller or
Seller's Parent.
3.4 Brokers and Finders.
Except for Tyone Partners (to whom only Seller is liable for fees,
commissions and expenses), no person has been authorized by Seller, or by anyone
acting on behalf of Seller or any of its officers, directors, employees or
trustees, to act as a broker, finder or in any other similar capacity in
connection with the transactions contemplated by this Agreement in such manner
as to give rise to any valid claim against Buyer or Seller for any broker's or
finder's fee or commission or similar type of compensation.
3.5 Financial Statements.
(a) Section 3.5(a) of the Disclosure Schedule sets forth the
following unaudited financial information (the "Financial
Information"):
(i) Internal, unaudited balance sheet of Seller as of
April 29, 1995 and internal unaudited income
statements of Seller for each of the two years ended
April 29, 1995 on a historical basis giving effect to
all operations and costs in existence at the time,
including overhead allocations from the Seller's
Parent, and internal, unaudited balance sheet of
Seller as of April 29, 1995 (the "April Pro Forma
Balance Sheet") and internal, unaudited income
statements for each of the two years ended April 29,
1995 on a pro forma basis giving effect solely to the
operations of Seller at its facilities in Milford,
New Hampshire, Tampa, Florida and Wichita, Kansas,
excluding all overhead allocations from the Seller's
Parent and excluding the assets described in Section
1.2(j) and (k) above.
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(ii) internal, unaudited balance sheets of Seller as of
October 28, 1995 and as of July 28, 1995, adjusted to
reflect the assets and liabilities of the Business
and after giving effect to the disposition or
exclusion, as appropriate, of the Excluded Assets
(the "July and October Pro Forma Balance Sheets");
(iii) internal, unaudited statements of income and cash
flows (prepared in a format previously agreed to by
the parties hereto), of Seller for each of the fiscal
quarters ended July 28, 1995 and October 28, 1995 on
a historical basis giving effect to all operations
and costs in existence at the time including overhead
allocations from the Seller's Parent, and internal,
unaudited statements of income and cash flows
(prepared in a format previously agreed to by the
parties hereto), of Seller for each of the fiscal
quarters ended July 28, 1995 and October 28, 1995 on
a pro forma basis giving effect solely to the
operations of Seller at its facilities in Milford,
New Hampshire, Tampa, Florida and Wichita, Kansas,
and giving effect to all headcount reductions as of
October 28, 1995 as if they had occurred at the
beginning of the periods, excluding all overhead
allocations from the Seller's Parent. The pro forma
adjustments reflecting the headcount reductions and
the overhead allocations are either set forth on the
statements or on a schedule annexed to such
statements.
(b) The Financial Information was compiled from Seller's internal
management reports in the ordinary course of Seller's
business, which is not consistent in all circumstances with
generally accepted accounting principals. The amounts with
respect to property, plant and equipment of the Business set
forth in the April, July and October Pro Forma Balance Sheets,
fairly present, in all material respects, such information as
of the dates referred to therein, and the revenues and gross
margins excluding overhead allocation (after giving effect to
the headcount reductions described above) of the Business set
forth in the April, July and October Pro Forma Income
Statements fairly present, in all material respects, such
information for the periods referred to therein. The estimates
described in subparagraph 3.5(a)(iii) above have been made in
good faith.
(c) Since July 28, 1995, Seller has kept its financial records in
a manner consistent with its practices at the time and during
the periods reflected in clauses (ii) and (iii) of paragraph
(a) above without change, in any material respect, of policy
or procedure, as to nature of item, amount or otherwise.
(d) The aggregate dollar amount of the net property, plant and
equipment included in the July Pro Forma Balance Sheet does
not exceed the cost of such property, plant and equipment to
Seller, less any previous write-downs and less depreciation,
and the value thereof has not been written up.
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3.6 Records and Books of Account; Accounting Practices.
The records and books of account of Seller have been regularly kept and
maintained in reasonable detail and accurately and fairly reflect the
transactions and asset dispositions of the Seller. The Seller also maintains an
adequate system of internal controls.
3.7 No Undisclosed Liabilities.
(a) As of October 28, 1995, except as set forth in Section 3.7 of
the Disclosure Schedule, Seller did not have any material
liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) which were not fully disclosed or
reserved against in the October Pro Forma Balance Sheet, and
the reserves reflected in the October Pro Forma Balance Sheet
were adequate, appropriate, and reasonable as to both nature
of items and amounts.
(b) Except as set forth in Section 3.7 of the Disclosure Schedule,
since October 28, 1995, Seller has not incurred any material
liabilities (contingent or otherwise) except in the ordinary
and usual course of business and consistent with past
practices.
3.8 Reserved.
3.9 Inventory.
Except as set forth in Section 3.9 of the Disclosure Schedule, (a) all
material items of the Inventory have been acquired in the ordinary and usual
course of business; (b) all material items of the Inventory are of a quality and
quantity usable in the ordinary and usual course of business; and (c) the
quantities of each type of Inventory are not materially excessive, but are
reasonable, adequate and appropriate.
3.10 Interim Operations.
Except as set forth in Section 3.10 of the Disclosure Schedule, since
April 29, 1995 Seller has conducted the Business only in the ordinary and usual
course consistent with past practices. Without limiting the generality of the
foregoing, except as set forth in Section 3.10 of the Disclosure Schedule,
Seller has not with respect to the Business, since April 29, 1995:
(a) suffered any material adverse change in the Assets, or
suffered any material damage, destruction or loss, whether or
not covered by insurance, in either case materially affecting
the business, assets or properties of the Seller;
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(b) agreed to, or incurred, assumed or become subject to, any
liabilities or obligations for returns or allowances, other
than in the ordinary and usual course of business and
materially consistent in nature of item and amount with past
practice, or increased, or experienced any change in any
assumption underlying, or methods of calculating, any bad
debt, contingency or other reserve (except for any such
reserve expressly set forth in the July and October Pro Forma
Balance Sheets);
(c) paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other
than the payment, discharge or satisfaction of liabilities and
obligations reflected or reserved against in the April 29
Statements, July Pro Forma Balance Sheet or October Pro Forma
Balance Sheet, or incurred in the ordinary and usual course of
business consistent with past practices;
(d) prepaid any obligation having a fixed maturity of more than 90
(ninety) days from the date such obligation was issued or
incurred, or not paid, within 30 days of when due, any account
payable, or sought the extension of the payment date of any
material account payable, other than any account payable which
was (until paid) or is being contested in good faith;
(e) subjected any of the Assets, or, to the best of Seller's
knowledge, permitted or allowed any of the Assets to be
subjected, to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, except for
liens for current taxes not yet due;
(f) waived any claims or rights of substantial value under any of
the Assumed Contracts or otherwise in connection with any of
the Assets;
(g) except for the disposition referred to in Section 1.2(k)
above, sold, transferred, licensed or otherwise disposed of
any of its material properties or assets (real, personal or
mixed, tangible or intangible) that, but for such sale,
transfer or other disposition, would have been included in the
Assets, except in a bona fide transaction to an unaffiliated
third party for fair value and in the ordinary and usual
course of business and consistent with past practice (the
exceptions hereto listed in Section 3.10 of the Disclosure
Schedule show date of disposition, identity of transferee,
amount received and book value);
(h) disposed of, licensed or permitted to lapse any rights to the
use of any patent, trademark, trade name or copyright used in
the conduct of the Business, or, to Seller's knowledge,
disposed of or disclosed, or permitted to be disclosed (except
as necessary in the conduct of its business), to any person
other than representatives or agents of Buyer, any trade
secret, formula, process, know-how or similar information not
theretofore a matter of public knowledge;
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(i) granted or committed to make any material increase in any
compensation, bonus, pension, profit-sharing or other benefit
plan or commitment of any employee of Seller;
(j) since July 28, 1995, made any capital expenditures or binding
commitments to be assumed by Buyer or to which any of the
Assets may be or become subject, in excess of $5,000 in any
one case or $275,000 in the aggregate, for repairs or
additions to property, plant, equipment or tangible assets;
(k) paid, loaned or advanced any amount to, or sold, transferred
or leased property or asset (real, personal, mixed, tangible
or intangible) to, or entered into any agreement or
arrangement with, any of Seller's, or Seller's Parents,
officers, employees, directors, stockholders or any
"affiliate" or "associate" (as such terms are defined in Rule
405 under the Securities Act of 1933, as amended) or any
immediate or extended family member (up to and including first
cousins) of any of such persons (collectively, the
"Significant Persons" and, individually, a ("Significant
Person"), except for compensation to such persons expressly
disclosed in Section 3.28 of the Disclosure Section, except
for purchase orders and working capital advances from Seller's
Parent;
(l) made any change in any method of accounting;
(m) changed any of the banking or safe deposit arrangements
comprising part of the Assets;
(n) failed to maintain the books, accounts and records of the
Seller in the usual, regular and ordinary manner; or
(o) agreed, whether in writing or otherwise, to take any action
described in this Section 3.10.
3.11 Title to Assets; Encumbrances.
(a) Section 3.11(a) of the Disclosure Schedule contains an
accurate and complete list (the "Equipment List") of all of
the Equipment and interests therein owned by Seller on the
date hereof and such list includes all of the Equipment owned
by Seller reflected in the July Pro Forma Balance Sheet or
acquired after July 28, 1995 (except to the extent disposed of
to an unaffiliated third party in a bona fide transaction, for
fair value, in the ordinary and usual course of business and
consistent with past practice, and except as contemplated by
Section 3.10(g)) having an original cost in excess of $500.00.
All of such properties are and will be included in the Assets.
Section 3.11(a) of the Disclosure Schedule also contains a
list of all property in the possession of Seller on the date
hereof which is owned by any government agency or other third
party.
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(b) Except as set forth in Section 3.11(b) of the Disclosure
Schedule, Seller has good and valid title to all of the
Assets. The Assets comprise all of the business, properties,
assets (however, employees, to the extent that they could be
considered assets, are not included as assets in this Section)
and goodwill employed by Seller and its affiliates in
connection with the Business except the Excluded Assets.
(c) Except as set forth in Section 3.11(c) of the Disclosure
Schedule, all Assets (excluding Assets that are described in
Section 3.12(c) or Section 3.11(a) of the Disclosure Schedule
as leased Assets or Assets owned by third parties) are owned
by Seller free and clear of all title defects or objections,
liens, claims, charges, rights of others, security interests
or other encumbrances of any nature whatsoever, including
without limitation, any leases, escrows, options, security or
other deposits, rights of redemption, chattel mortgages,
conditional sales contracts, Liens, collateral security
arrangements and other title or interest retention
arrangements, except for liens for current taxes not yet due.
(d) Except as set forth in Section 3.11(d) of the Disclosure
Schedule and the Excluded Assets, the Assets include all
rights, properties and other assets (however, employees, to
the extent that they could be considered assets, are not
included as assets in this Section) necessary to conduct and
to continue to conduct the Business after the Closing
(assuming Buyer conducts the Business in the same manner as
Seller) in the same manner as the Business has since April 29,
1995 been and is now being conducted except for licenses and
permits which Buyer may be required to obtain in its own name,
and except that the transfer of certain of the Assets and
Leases requires the consent of those third parties required to
be identified pursuant to Section 3.3 above.
(e) Except as set forth in Section 3.11(e) of the Disclosure
Schedule, Seller does not, own, lease or use in the Business
any machinery and equipment which is not located at Real
Property described in Section 3.12.
3.12 Real Property.
(a) Real Property Defined. All real property (including, without
limitation, all interests in and rights to real property) and
improvements located thereon which are owned or leased by
Seller and used in connection with the Business or included in
the Assets are listed in Section 3.12(a) or Section 3.12(c) of
the Disclosure Schedule (the "Real Property").
(b) Reserved.
(c) Leased Real Property. With respect to the Real Property that
is leased by Seller, all of which property is identified in
Section 3.12(c) of the Disclosure Schedule
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(the "Leased Property") (but which, for the purposes of
subsections through (k) hereof shall relate only to the Tampa
and Milford leases):
(i) Seller has delivered to Buyer a true and complete
copy of every lease and sublease to which Seller is a
tenant or subtenant (the "Leases"), and has described
each Lease in Section 3.12 (c) of the Disclosure
Schedule by listing the name of the landlord or
sublandlord, the address of the leased premises, the
commencement and expiration dates of the current
term, the security deposited by Seller with the
landlord or sublandlord, if any, and the monthly
rental (including base and all additional rents).
(ii) each Lease is, and at Closing shall be, in full force
and effect and has not been assigned, modified,
supplemented or amended except as listed on the
Disclosure Schedule, and neither Seller nor, to
Seller's knowledge, the landlord or sublandlord under
any Lease is in default under any of the Leases, and
to Seller's knowledge, no circumstances or state of
facts presently exists which, with the giving of
notice or passage of time, or both, would permit the
landlord or sublandlord under any Lease to terminate
any Lease; and
(iii) subject to Section 1.3(d) above, at Closing Seller
shall assign to the Buyer all right, title and
interest of Seller in and to all Leases (and shall
deliver to Buyer original copies of all consents
required for such assignments) and all security
deposits made by Seller pursuant to any of the
Leases, including, but not limited to, the security
deposits listed on the Disclosure Schedule, together
with all interest earned on such deposits.
(d) Utility Services. With respect to the Wichita Property and, to
Seller's knowledge with respect to the Leased Property, the
water, electric, gas and sewer utility services and the septic
tank and storm drainage facilities currently available are
adequate for the present use of the Real Property by Seller in
conducting the Business, Seller has not experienced any
material shortage in any such service in the last three years,
are not being appropriated by Seller but rather are being
supplied to Seller by utility companies or municipalities
pursuant to valid and enforceable contracts, and there is no
condition which will result in the termination of the present
access from the Real Property to such utility services and
other facilities. To the knowledge of Seller, without having
made any independent investigation, no curtailment of any such
utility services is proposed by any provider of any of such
services.
(e) Access. With respect to the Wichita Property and, to Seller's
knowledge, with respect to the Leased Property, Seller has
obtained all Authorizations and rights-of-way, including
proof-of-dedication, which are necessary to ensure vehicular
and pedestrian ingress and egress to and from the Real
Property; and there are no
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restrictions on entrance to or exit from the Real Property to
adjacent public streets and to Seller's knowledge no
conditions which will result in the termination of the present
access from the Real Property to existing highways and roads.
(f) Assessments or Hazards. Seller has received no written
notices, nor, to Seller's knowledge, any oral notice, from any
governmental body, that the assessed value of the Wichita
Property has been determined to be greater than that upon
which county, township or school tax was paid for the current
tax year applicable to each such tax, or from any insurance
carrier of Seller of fire hazards with respect to the Real
Property.
(g) Eminent Domain. Seller has received no written notices, nor,
to Seller's knowledge, any oral notice, and has no actual
knowledge, that any governmental body having the power of
eminent domain over the Real Property has commenced or intends
to exercise the power of eminent domain or a similar power
with respect to all or any part of the Real Property.
(h) No Violations. The Real Property and the present uses thereof
comply with all Regulations of all governmental bodies having
jurisdiction over the Wichita Property and, to Seller's
knowledge, the Leased Properties, and Seller has received no
written notices, nor, to Seller's knowledge, any oral notice,
from any governmental body, and has no actual knowledge, that
the Real Property or any improvements erected or situate
thereon, or the uses conducted thereon or therein, violate any
Regulations of any governmental body having jurisdiction over
the Real Property.
(i) Improvements. The improvements located on the Real Property
are in good condition and are, to Seller's knowledge,
structurally sound, and all mechanical and other systems
located therein are in good operating condition, subject to
normal wear, and no condition exists requiring material
repairs, alterations or corrections.
(j) No Encumbrances. Between the date of this Agreement and the
Closing Date Seller shall not sell, mortgage or encumber the
Real Property, or do or permit any act which diminishes title
to or value of the Real Property.
(k) Public Improvements. No work for municipal improvements that
would have a material adverse effect on the Business has been
commenced on or in connection with the Real Property or any
street adjacent thereto. No assessment for public improvements
has been made against the Wichita Property or, to Seller's
knowledge, the Leased Properties which remains unpaid. No
notice from any county, township or other governmental body
has been served upon the Real Property or received by Seller
since January 1, 1993 requiring or calling attention
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to the need for any work, repair, construction, alteration or
installation on or in connection with the Real Property which
has not been complied with.
(l) Executory Contracts. Set forth in Section 3.12(1) of the
Disclosure Schedule is a list of all executory contracts
currently in effect made by or on behalf of Seller, or by
which Seller is bound, with respect to the Real Property
("Executory Contracts") including, without limitation,
operation, management, maintenance, utility, and construction
contracts. At Closing Seller shall deliver to the Buyer a true
and complete copy (the original execution copy, if available)
of each of the Executory Contracts.
3.13 Laboratory and Equipment; Waste Handling.
(a) Except as set forth in Section 3.13 of the Disclosure
Schedule, (i) the laboratory equipment included in the Assets
is, to Seller's knowledge, structurally sound and with no
material defects (for purposes of this Section 3.13(a)
"material" shall mean defects that would cost in excess of
$2,500 to remedy in any one instance) and (ii) all material
items and pieces of Equipment are in good operating condition
on the date hereof, are used in the ordinary course of the
Business, are suitable for the uses to which they are put by
the Seller, and are adequate in the aggregate to conduct the
Business as presently conducted, subject to normal maintenance
requirements and reasonable wear and tear.
(b) Except as set forth in Section 3.13 of the Disclosure
Schedule, there are no outstanding requirements or
recommendations which have been communicated to Seller in
writing during the past two years and Seller has no knowledge
of any insurance company which has issued a policy covering
any part of any of the properties, plants, structures or
equipment included in the Assets, or by any board of fire
underwriters or other body exercising similar functions,
requiring or recommending that any repairs or work be done on
any part of such properties, plants, structures or equipment.
(c) Except as set forth in Section 3.13 of the Disclosure
Schedule, all material obligations to contractors,
subcontractors and suppliers of labor and materials to
Seller's laboratories in connection with any construction or
renovation of any structures or improvements thereon have been
paid in full, and there are no known pending disputes with any
such contractors, subcontractors or suppliers.
3.14 Patents, Copyrights, Trademarks, Trade Names and Licenses.
(a) Except as set forth in Section 3.14(a) of the Disclosure
Schedule, there are no (i) patents held or used by Seller, or
reissues, divisions, continuations, and extensions thereof, or
pending patent applications by Seller which are or were,
within the past three (3) years, for or intended to be for
Seller's benefit; (ii) registered or
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unregistered trademarks or service marks of or used by Seller
or pending applications for registration of trademarks which
are or were, within the past three (3) years, intended to be
used by or for the benefit of Seller; or (iii) registered
copyrights of or used by Seller, or applications for
registration of copyrights that are or were, within the past
three (3) years, intended to be used by or for the benefit of
Seller ("Intellectual Property").
(b) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, there are no licenses (whether as licensor, licensee
or otherwise) or other contracts or commitments to which
Seller is a party or to which it or any of its assets is
otherwise subject relating to any of the Intellectual
Property.
(c) Except as set forth in Section 3.14(c) of the Disclosure
Schedule: (i) during the past three (3) years no claims have
been asserted by any person against or otherwise in respect of
the use by Seller of any of the Intellectual Property, or
challenging or questioning the validity or effectiveness of
any license or agreement referred to in this Section 3.14,
and, to the knowledge of Seller, there is no valid basis for
any such claim; (ii) during the past three (3) years Seller
has not received notice of any allegation that it has
infringed upon any patent, trademark, service mark, trade name
or copyright or misappropriated or misused any invention,
trade secret or other proprietary information of any other
person entitled to legal protection; (iii) during the past
three (3) years Seller has not asserted any claim of such
infringement, misappropriation or misuse against any person;
(iv) Seller has good and valid title to, or otherwise
possesses adequate rights to use all patents, trademarks,
service marks, trade names, copyrights, inventions, trade
secrets and other proprietary information necessary to conduct
its business in the same manner as its business has been
conducted since January 1, 1993; and (v) no shareholder,
officer, director or employee of Seller or affiliates of any
of the foregoing owns or has any interest in any of the
Intellectual Property.
3.15 Personal Property Leases.
(a) Section 3.15 of the Disclosure Schedule sets forth a complete
and accurate list of all personal property leases, subleases,
concessions, licenses, conditional sales agreements or other
title retention agreements (collectively, the "Personal
Property Leases" and individually a "Personal Property Lease")
to which Seller is a party, as lessor, lessee, licensor or
licensee.
(b) Except as set forth in Section 3.15 of the Disclosure
Schedule, (i) each of the Personal Property Leases is valid,
binding and enforceable in accordance with its terms, and is
in full force and effect; (ii) there are no existing defaults
on the part of Seller and, to the best knowledge of the
Seller, any other party, under any Personal Property Lease and
to Seller's knowledge, no event of default under any
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such Personal Property Lease has occurred and is continuing
which (whether with or without the giving of notice, lapse of
time or both, or the happening of any other event) would
constitute a default under such Personal Property Lease; (iii)
each such Personal Property Lease will, subject to obtaining
any consent listed in Section 3.15 of the Disclosure Schedule,
continue to be in full force and effect on the same terms and
conditions immediately after the Closing without the need for
any action on the part of Buyer except for Buyer's performance
of the Assumed Obligations and the execution of documents and
instruments in connections with such assignment; (iv) each
such Personal Property Lease reflects the complete
understanding among the parties thereto in connection with the
subject matter thereof; and (v) accurate and complete copies
of each such Personal Property Lease including all amendments
thereto, have been delivered or will be delivered to Buyer at
or prior to the Closing.
(c) Except as set forth in Section 3.15 of the Disclosure
Schedule, Seller's interest in each of the Personal Property
Leases (i) is free and clear of all Liens (other than any
created by Buyer) and (ii) are not, in the case of real
property, except as set forth in Section 3.15 of the
Disclosure Schedule or in the Personal Property Leases,
subject to any rights of way, building use restrictions,
exceptions, variances, easements (recorded or unrecorded),
rights of redemption, reservations or limitations of any
nature whatsoever of which Seller has knowledge which may
materially and adversely interfere with Buyer's use thereof in
a manner substantially consistent with Seller's use thereof
prior to Closing.
3.16 Taxes.
(a) For any and all periods still open or subject to audit, Seller
or its predecessors have duly filed all tax reports and
returns (including information returns) required to be filed
by it or any of its predecessors relating to or covering the
Business and each of such reports and returns were true,
correct and complete.
(b) For any and all periods still open or subject to audit, Seller
has duly paid all taxes and other charges due or claimed to be
due or shown on any return or declaration to be due from it to
any federal, state, local or foreign taxing authority
(including, without limitation, those due in respect of
properties, income, franchises, licenses, sales and payrolls);
and there are no tax liens upon any of the Assets except liens
for current taxes not yet due.
(c) For any and all periods still open or subject to audit, all
taxes and other assessments and levies required to be withheld
by Seller from customers with respect to the provision of
services, or from or on behalf of employees for income, social
security, unemployment insurance and any other taxes or
similar charges have been collected or withheld and either
paid to the appropriate government agency or properly set
aside and held in accounts for such purpose.
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3.17 Contracts and Commitments.
Except as set forth in Section 3.17 of the Disclosure Schedule:
(a) Seller is not a party to or bound by any written or binding
oral agreements, contracts or commitments, which are material
to the Business, Seller's operations or prospects (for
purposes of this Section 3.17(a), an agreement, contract or
binding commitment shall be deemed to be material if it (i)
shall call for the expenditure of $1,000 or more in any
12-month period, or (ii) shall not be terminable according to
its terms without liability on not more than 30 days' notice);
(b) no purchase contract, contract for the performance of services
or other written or oral binding bid or commitment of Seller
(i) continues for a period of more than three (3) months from
the date hereof and is not terminable by Seller according to
its terms without liability on not more than 30 days' notice;
(ii) is in excess of the normal, ordinary and usual
requirements of the Business; (iii) is with any Affiliate of
Seller; (iv) has been prepaid in whole or part; and/or (v) has
had any delivery thereunder requested to be delayed to a date
past the Closing Date;
(c) Seller is not a party to or bound by any contracts, agreement
or arrangements: (i) with any federal, state, local or foreign
government, or any governmental or quasi-governmental agency,
board, bureau, authority or commission, or any utility company
except for customer contracts entered into in the ordinary
course of business, (ii) with any charitable organization,
(iii) with any officer or director of the Seller or any
Affiliate of the Seller or members of the immediate family of
the foregoing (a "Related Person") or (iv) providing for the
payment of any bonus or commission, whether based on sales or
earnings or otherwise;
(d) Seller is not a party to or otherwise bound by any written or
binding oral (i) employment agreements, (ii) non-competition
agreements or (iii) any other agreements, practices or
understandings that contain or will impose on Buyer any
severance or termination pay liabilities or obligations;
(e) Seller is not a party to or bound by any (i) collective
bargaining or union contracts or agreements or (ii) material
practices or understandings with any of employees which will
be binding on Buyer and are not embodied in a written
collective bargaining or union contract or other written
agreement listed in Section 3.17 of the Disclosure Schedule;
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(f) Seller is not in default, nor to Seller's knowledge is there
any basis for any valid claim of default against Seller, and
to the best of Seller's knowledge no other party is in
default, under any contract, agreement, commitment or
restriction which is an Assumed Obligation, and no event of
default has occurred which (whether with or without the giving
of notice, lapse of time, or both, or the happening or
occurrence of any other event) would constitute a default
thereunder;
(g) Seller is not a party to or bound by any consulting agreement;
(h) Seller is not restricted by any agreement from carrying on the
Business anywhere in the world;
(i) Seller is not a party to or bound by any outstanding powers of
attorney (except for powers of attorney issued to customs
brokers in the ordinary and usual course of business) or any
other outstanding obligations or liabilities (whether
absolute, accrued, contingent or otherwise), as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise
in respect of the obligation of any other person, corporation,
partnership, joint venture, association, organization or other
entity;
(j) Seller is not a party to or bound by any partnership or joint
venture agreement, or any written or binding oral royalty,
distribution, agency, territorial or license agreement;
(k) There are no credit cards issued to any of Sellers employees
or for which Seller is directly liable and for which any
liability will be sought to be imposed on Buyer;
(l) Seller is not a party to or bound by any barter or counter
trade agreement;
(m) Seller is not a party to or bound by any cooperative
advertising agreement or arrangement;
(n) Seller has no debt obligation for borrowed money;
(o) Seller has no outstanding loans to any person; and
(p) There are no outstanding sales contracts, commitments or bids
of Seller which (i) continue for a period of more than six (6)
months from the date hereof, (ii) were entered into more than
six (6) months prior to the date hereof, or (iii) have been
prepaid in whole or part;
(q) all contracts, agreements, and leases, referred to in Section
3.17 of the Disclosure Schedule (i) are valid and in full
force and effect, (ii) will, except for the obtaining of any
consents listed in Section 3.24 of the Disclosure Schedule
that
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shall not have been obtained by the Closing, continue to be so
on the same terms and conditions immediately after the Closing
without the need for any action on the part of Buyer, other
than Buyer's performance of the Assumed Obligations and, where
specifically and expressly set forth in Section 3.7 of the
Disclosure Schedule, execution of documents and instruments in
connection with such assignment, and, (iii) reflect the
complete understanding among the parties thereto in connection
with the subject matter thereof; true and complete copies of
each thereof, including all amendments thereto, have been
delivered to Buyer at or prior to the date hereof (regarding
material contracts) and will be delivered by Closing (for all
others).
3.18 Customers and Suppliers; Trade Programs.
(a) Section 3.18 of the Disclosure Schedule sets forth:
(i) to Seller's knowledge, an accurate and complete list
of the ten (10) largest customers of Seller in terms
of revenues in each case during (x) the twelve month
period ended April 29, 1995, and (y) the six months
ended October 28, 1995, showing the approximate total
revenues in dollars received by Seller from each such
customer during each such period; and
(ii) an accurate and complete list of the ten (10) largest
suppliers of Seller in terms of purchases during (x)
the twelve month period ended April 29, 1995, and (y)
the six months ended October 28, 1995 showing the
approximate total purchases in dollars by Seller from
each such supplier during each such period.
(b) Except to the extent set forth in Section 3.18 of the
Disclosure Schedule, since January 1, 1994, there has not been
any material adverse change, and Seller has no knowledge that
any material adverse change is reasonably likely, in the
business relationship, or volume of business, of the Business
with any customer or supplier named in Section 3.18 of the
Disclosure Schedule.
(c) Except for the customers and suppliers named in Section 3.18
of the Disclosure Schedule, Seller has not had any customer
which accounted for more than 5% of Seller's revenues during
the six months ended October 28, 1995, or any supplier from
which Seller purchased more than 5% of the goods and services
which it purchased during (i) Seller's fiscal year ended April
29, 1995, or (ii) the six months ended October 28, 1995.
(d) All trade programs of Seller, if any, instituted since January
1, 1994, whether or not in the ordinary and usual course of
business or consistent with past practice, which may result in
claims against Buyer for money, credit or goods, including but
not limited to bonuses, billbacks, in-house programs,
accruals, other sales or
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commission incentives or allowances, discounts, returns,
credits, allowances and contests, are disclosed in Section
3.18 of the Disclosure Schedule.
3.19 Sales Practices; Warranties.
(a) Since April 29, 1995, except as set forth in Section 3.19 to
the Disclosure Schedule, Seller has not received any written
notice, nor, to its knowledge, any oral notice, of any claim
(actual or threatened) of any consumer or customer based on
any warranty other than claims in the ordinary course of
business and not in excess of $5,000.
(b) Since April 29, 1995, Seller has not accelerated its sales of
services except, and has made sales of services only, in the
ordinary course of the business consistent with Seller's past
practices.
(c) Section 3.19 of the Disclosure Schedule also sets forth, as at
October 31, 1995, each material pending claim against Seller
in connection with provision or services.
3.20 Insurance.
(a) Section 3.20 of the Disclosure Schedule contains an accurate
and complete list of all policies of fire, liability, keyman
life insurance, workers' compensation, products liability, and
other forms of insurance owned or held by or beneficially for
Seller. All such policies are in full force and effect and
will not be canceled or modified by Seller prior to Closing
without the express written consent of Buyer (except to extend
the maturity dates thereof), all premiums with respect thereto
covering all periods up to and including the Closing Date have
been or will be paid by Seller, and no written, or to Seller's
knowledge oral, notice of cancellation or termination has been
received by Seller with respect to any such policy.
(b) The aforesaid policies are sufficient for Seller's compliance
with, to Seller's knowledge, all requirements of law and of
all material agreements to which Seller is a party; are valid,
outstanding and enforceable policies; are, in the opinion of
management of Seller, in amounts customarily deemed to be
adequate and cover all risks customarily insured against in
the type of business conducted by Seller in the locality where
Seller operates its business; have been issued by reputable
insurance companies which are in good standing, adequately
capitalized and actively engaged in the insurance business;
and in the judgment of Seller provide adequate insurance
coverage for its assets and operations.
(c) Section 3.20 of the Disclosure Schedule also identifies (i)
all risks for which Seller is self-insured and (ii) the
workers' compensation and if possible unem-
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ployment insurance (for New Hampshire, Kansas and Florida)
ratings of Seller (or, if applicable, Seller's Parent).
(d) Except as set forth in Section 3.20 of the Disclosure
Schedule, in connection with its operations, (i) Seller has
not, since January 1, 1994, been unable to obtain any
insurance coverage in the amounts desired by Seller; (ii)
since January 1, 1994, neither the amount nor scope of any
insurance referred to in Section 3.20 of the Disclosure
Schedule or premiums therefor has been materially changed; and
(iii) Seller has not been notified of any material adverse
change or proposed material adverse change in the workers'
compensation or unemployment insurance ratings or insurance
rates for Seller.
3.21 Labor Difficulties.
Except to the extent set forth in Section 3.21 of the Disclosure
Schedule:
(a) there is no labor strike, formal dispute, formal grievance,
arbitration proceeding, general slowdown or stoppage, or
charge of unfair labor practice actually pending before a
court, regulatory body or arbitration tribunal, or to the best
of Seller's knowledge threatened against or affecting Seller;
(b) no union representation campaign is pending or, to Seller's
knowledge, threatened respecting any employees of Seller;
(c) Seller has not experienced any material work stoppage by its
work force or other material labor difficulty since January 1,
1993;
(d) to Seller's knowledge, there are no charges or complaints of
discrimination pending before the United States Equal
Employment Opportunity Commission or any state, local or
foreign agency against Seller;
(e) to the best of Seller's knowledge, Seller, does not presently
employ, and at no time during the past year did it employ, any
illegal alien;
(f)(i) to Seller's knowledge, Seller is not engaged in any unfair
labor practice, and (ii) at no time during the past three (3)
years has any unfair labor practice, complaint, charge or
similar claim against Seller been filed with, or to Seller's
knowledge, threatened to be filed by any employee with, the
National Labor Relations Board, Equal Employment Opportunity
Commission, Department of Labor or any similar state, local or
foreign agency; and
(g) no collective bargaining agreement which is binding on Seller
will be binding on Buyer or restricts the owner of the
Business from relocating or closing any of the Business's
facilities or operations.
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3.22 Litigation, Judgments and Decrees.
(a) Except as set forth in Section 3.22 of the Disclosure
Schedule, and except for workers compensation claims, there
has not been in the three (3) years prior to the date hereof,
nor is there currently, any action, suit or proceeding of any
nature whatsoever, at law or in equity or both, by or before
any domestic or foreign court, or to the best of Seller's
knowledge any proceeding or claim pending or threatened before
any government or other regulatory or administrative agency,
arbitration tribunal, board, bureau, authority or commission
or involving Seller, any of the Assets or any of the Assumed
Obligations, in any such case which would have a material
adverse effect on the Business or which questions or
challenges the validity of this Agreement or any action taken
or to be taken by Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby.
(b) Except as set forth in Section 3.22 of the Disclosure
Schedule, Seller is not subject to any judgment, order, award
or decree of any domestic or, foreign court or government or
other regulatory or administrative agency, arbitration
tribunal, board, bureau, authority or commission (i) which has
or, to Seller's knowledge, may have a material adverse effect
on Seller's practices in the Business or on its ability to
acquire any property or conduct its Business in any area, (ii)
which is or will be binding on Buyer, or (iii) with respect to
which Seller is in default.
3.23 No Condemnation or Expropriation.
Neither the whole nor any portion of the Assets is subject to any
government decree or order to be sold or is being condemned, expropriated or
otherwise taken by any domestic or foreign public authority with or without
payment of compensation thereof, nor, to Seller's knowledge, has any such
condemnation, expropriation or taking been proposed in writing within the past
two years.
3.24 Consents and Approvals of Government Authorities and Others.
Except as set forth in Section 3.24 of the Disclosure Schedule, no
consent, approval or authorization of, or declaration, filing or registration
with, or the giving of notice to, any domestic or, to Seller's knowledge,
foreign government or regulatory authority or any other person or entity is
required of Seller in connection with the execution, delivery and performance by
Seller of this Agreement or the consummation by Seller of the transactions
contemplated hereby. Accurate and complete copies of each of the forgoing which
have been obtained or made have been delivered to Buyer at or prior to the date
hereto.
3.25 ERISA; Employee Benefit Plans.
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(a) As used in this Section 3.25, the term "Plan" means any bonus,
deferred compensation, pension, profit-sharing, retirement,
stock purchase, stock option, phantom stock, medical or any
other benefit plan, arrangement or practice, whether written
or unwritten including but not limited to any such plan,
arrangement or practice which constitutes an "employee welfare
benefit plan" within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974 and the
regulations thereunder ("ERISA") or an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA,
covering any employee of the Business. Section 3.25 of the
Disclosure Schedule sets forth a complete list of all Plans
maintained by Seller. Seller has no legally binding
commitment, whether formal or informal, to create any
additional such plan or arrangement.
(b) To Seller's knowledge, except as set forth on Section 3.25(b)
of the Disclosure Statement, all of Seller's Plans are in all
material respects in compliance in operation and in form with
the currently prescribed requirements prescribed by any and
all statutes, orders or governmental rules or regulations
currently in effect with respect to such Plans, including, but
not limited to ERISA and the Code, and there are no pending
or, to the Seller's knowledge, threatened claims, lawsuits or
arbitrations (other than routine claims for benefits) which
have been asserted or instituted against the Seller, any Plan
or the assets of any trust for any Plan.
(c) Seller has complied in all material respects with the
requirements of Section 4980B of the Code and applicable
regulations. Seller has not contributed to, nor has it been
obligated to contribute to, any multi-employer plan (as
defined in Section 3(37) of ERISA), or any other plan subject
to Title IV of ERISA within the preceding three calendar
years.
3.26 Absence of Questionable Payments.
Since January 1, 1994, neither Seller nor any of its officers, agents,
employees or any other person, entity or corporation acting on behalf of any of
them, has, to Seller's knowledge, accepted, received or made any unlawful
contributions, payments, gifts, or expenditures in respect of the Business.
3.27 Distinct Entity.
Except as set forth in Section 3.27 of the Disclosure Schedule, Seller
does not, share any Assets with any related or unrelated third party.
3.28 Personnel.
(a) Section 3.28 of the Disclosure Schedule sets forth an accurate
and complete list as of December 1, 1995 of:
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(i) the names and current salaries of Seller's salaried
employees;
(ii) the wage rates for Seller's non-salaried employees;
(iii) the customary increases on a periodic basis in the
compensation of each of the foregoing or any
increases required by any agreement or understanding
with each of the foregoing;
(iv) a description of any informal understanding generally
concerning employees' rights to continue to receive
compensation during any periods during which such
employees are not performing any services for Seller
other than with respect to vacation, disability and
sick time; and
(v) any increase granted or committed to for any period
subsequent to December 1, 1995 in the compensation of
any employee including, without limitation, any
change in any bonus, pension, profit-sharing or other
benefit plan or commitment except for obligations
imposed on Seller by the Code, ERISA or ADEA.
For a period of 18 months following the Closing, Seller will,
upon the reasonable request of Buyer, provide Buyer with
information relating to Seller's employees.
(b) (i) The vacation period for employees of Seller occurs
normally during the periods described in Section 3.28 of the
Disclosure Schedule. (ii) Except as set forth in Section 3.28
of the Disclosure Schedule, as at the Closing Date there will
be no bonuses, profit sharing, incentives, commissions or
other compensation of any kind due to or expected by present
or former employees of Seller which have not been fully paid
prior to such date.
(c) All employees of Seller are at-will employees.
(d) Except to the extent set forth in Section 3.28 of the
Disclosure Schedule, Seller has no knowledge that any material
adverse change in the relationship of the Business with its
employees is reasonably likely.
3.29 Compliance with Law; Necessary Authorizations.
(a) In conducting the Business, Seller has, except as set forth in
Section 3.29 of the Disclosure Schedule, since January 1,
1993, in all material respects duly complied and is presently
in all material respects duly complying with all applicable
laws (whether statutory or otherwise), rules, regulations,
orders, building and other codes, zoning and other ordinances,
permits, licenses, authorizations, judgments and decrees of
all federal, state, local or, to Seller's knowledge, foreign
governmental authorities, including, but not limited to, the
Federal Occupational
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Safety and Health Act, ERISA, National Labor Relations Act,
Worker Adjustment and Retraining Notification Act, Civil
Rights Act, Immigration Reform and Control Act of 1986, Age
Discrimination in Employment Act, the Water Pollution Control
Act and all applicable domestic and foreign laws, rules and
regulations relating to the safe conduct of business,
employment discrimination, wages and hours, employment of
illegal aliens, collective bargaining, the payment of
withholding and social security taxes, product labeling,
antitrust, consumer protection, occupational safety and
health, consumer product safety, the importation of goods,
product liability, currency exchange, securities and
trading-with-the-enemy matters, except where the failure to so
comply would not have a material adverse effect on the
Business.
(b) Except as set forth in Section 3.29 of the Disclosure
Schedule, since January 1, 1993, (i) Seller has obtained and
adhered to all necessary permits and other approvals,
including interim status under the Federal Solid Waste
Disposal Act, necessary to store, dispose of and otherwise
handle hazardous wastes, if any, and has reported, to the
extent required by all federal, state, local and, to Seller's
knowledge, foreign statutes, laws, ordinances, regulations,
rules, permits, judgments, orders and decrees (accurate and
complete copies of all such permits, judgments, orders and
decrees received by Seller or in Seller's possession being
included in Section 3.29 of the Disclosure Schedule), all past
and present sites, if any, owned and/or operated by Seller
where hazardous wastes have been treated, stored or disposed
of; (ii) there has been no spill, discharge, leak, emission,
injection, escape, dumping or any other release of any kind
onto any property of or used by Seller or into the environment
surrounding any such property of any toxic or hazardous waste
or substance, as such terms are defined under any applicable
law, ordinance, regulation or rule; and (iii) there is no
on-site or to Seller's knowledge off-site location to which
Seller has transported hazardous wastes or arranged for the
transportation of hazardous wastes, which site is the subject
of any federal, state, local or foreign enforcement action or
any other investigation which could lead to any claim against
Seller or Buyer for any clean-up cost, remedial work, damage
to natural resources or personal injury, including, but not
limited to, claims under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980.
(c) Except as set forth in Section 3.29 of the Disclosure
Schedule, Seller (i) has no knowledge and (ii) has not
received any written notification from any third party
(including but not limited to employees and government
agencies) of any present or, within the past three years, past
failure so to comply or has knowledge of any present
condition, activity, incident, action or plan which may
interfere with or prevent continued compliance with any laws,
rules or regulations or which may give rise to any common law
or statutory liability, or otherwise form the basis of any
material claim, action, suit, proceeding, hearing or
investigation which would have a material adverse effect on
the Business.
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(d) Seller has duly obtained all permits, concessions, grants,
franchises, licenses and other government authorizations and
approvals necessary for the conduct of the Business except
where such failure would not have a material adverse effect on
the Business; each of the foregoing is set forth in Section
3.29 of the Disclosure Schedule and is in full force and
effect; to the best of Seller`s knowledge, there are no
proceedings pending or threatened which may result in the
revocation, cancellation, suspension or modification of any
thereof.
3.30 Disclosure.
No representation or warranty by Seller in this Agreement and no
statement contained in the Disclosure Schedule contains any untrue statement of
any material fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements made
herein or therein not misleading.
3.31 Insider Interests.
Except as set forth in Section 3.32 of the Disclosure Schedule, to
Seller's knowledge, no person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
(an "Affiliate"), the Seller, and no Significant Person (as defined in Section
3.10(k)) has an interest in any contract or agreement pertaining to the business
of Seller wherein more than $5,000 in any twelve month period is involved.
3A. REPRESENTATIONS AND WARRANTIES OF SELLER'S PARENT.
The Seller's Parent represents and warrants to Buyer as follows:
3A.1 Corporate Organization.
Seller's Parent is a corporation duly organized, validly existing and
in good standing under the laws of its State of Delaware. Seller's Parent has
full corporate power and authority to carry on its businesses as they are now
being conducted and to own, lease and operate its properties and assets as and
in the places where such businesses are now conducted and where such properties
and assets are now owned, leased or operated.
3A.2 Authorization.
Seller's Parent has full corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to carry out the
transactions contemplated hereby. Seller's Parent has taken all action required
by law or otherwise to be taken by Seller's Parent to authorize Seller's
Parent's execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement and the other agreements and
instruments contemplated hereunder to which Seller's Parent is a party have been
duly and validly executed and
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delivered by Seller's Parent and constitutes a valid and binding agreement of
and upon Seller's Parent enforceable against Seller's Parent in accordance with
its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and (ii) general principles of equity.
3A.3 No Violation.
Neither the execution and delivery of this Agreement by Seller's Parent
nor the consummation by Seller's Parent of the transactions contemplated hereby
will violate any provision of the Certificate of Incorporation or by-laws of
Seller's Parent, or be in conflict with, or constitute a material default (or an
event which, with or without notice, lapse of time or both, would constitute a
material default) under, or result in the termination or invalidity of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any obligations or liabilities of the Seller's Parent or violate any
statute or law or any judgment, decree, order, regulation or rule of any
domestic or foreign court or governmental authority applicable to Seller's
Parent.
3A.4 Litigation.
There is no action, suit or proceeding or any claim or investigation of
any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to Seller's Parent's
knowledge, which questions or challenges the validity of this Agreement or any
action taken or to be taken by Seller's Parent pursuant to this Agreement or in
connection with the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to Seller as follows:
4.1 Corporate Organization.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its State of incorporation. Buyer has full corporate
power and authority to carry on its businesses as they are now being conducted
and to carry on the Business being acquired hereunder and to own, lease and
operate its properties and assets as and in the places where such businesses are
now conducted and where such properties and assets are now owned, leased or
operated. Buyer is, or will be at the time of the Closing, duly qualified or
licensed to do business as a foreign corporation in all jurisdictions where the
failure to so qualify would have a material adverse effect on the business,
financial condition, properties or operations of Buyer, after taking into
consideration the purchase of the Assets and the Business hereunder.
4.2 Authorization.
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<PAGE> 36
Buyer has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to carry out the transactions
contemplated hereby. Buyer has taken all action required by law or otherwise to
be taken by Buyer, to authorize Buyer's, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes a valid and binding agreement of and upon the Buyer enforceable
against the Buyer in accordance with its terms, except that such enforcement may
be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (ii)
general principles of equity.
4.3 No Violation.
Neither the execution and delivery of this Agreement by the Buyer nor
the consummation by the Buyer of the transactions contemplated hereby will
violate any provision of the Certificate of Incorporation or by-laws of the
Buyer, or be in conflict with, or constitute a material default (or an event
which, with or without notice, lapse of time or both, would constitute a
material default) under, or result in the termination or invalidity of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any obligations or liabilities of Buyer or result in the creation or
imposition of any security interest, lien or other encumbrance upon any of its
assets or properties under any agreement or commitment to which Buyer is a party
or by which it is bound or to which any of its assets are subject, or violate
any statute or law or any judgment, decree, order, regulation or rule of any
domestic or foreign court or governmental authority applicable to the Buyer. For
the purposes of this Agreement, "to Buyer's knowledge" "to the best of Buyer's
knowledge" or any similar formulation thereof shall mean to the actual knowledge
of the officers and directors of Buyer and Parent.
4.4 Brokers and Finders.
No person has been authorized by the Buyer, or by anyone acting on any
of its behalf or by any of its officers, directors, employees or trustees, to
act as a broker, finder or in any other similar capacity in connection with the
transactions contemplated by this Agreement in such manner as to give rise to
any valid claim against Buyer or Seller for any broker's or finder's fee or
commission or similar type of compensation.
4.5 Litigation.
There is no action, suit or proceeding or any claim or investigation of
any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to the Buyer's knowledge,
which questions or challenges the validity of this Agreement or any action taken
or to be taken by the Buyer pursuant to this Agreement or in connection with the
transactions contemplated hereby; and to the best of their knowledge, there is
no valid basis for any such action, suit, inquiry proceeding or investigation.
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4.6 Capitalization.
All of the issued and outstanding capital stock of Buyer is, and will
be on the Closing Date, owned, beneficially and of record by Nytest
Environmental, Inc. (the "Parent"). All such issued and outstanding capital
stock has been duly authorized, validly issued, and is fully paid and
nonassessable. As of the date hereof and on the Closing Date, there are and will
be no outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interest in the Buyer, or any
contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of Buyer, any such convertible or
exchangeable securities or any such rights, warrants or options.
4.7 Consents.
No consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or any
other person or entity is required of Buyer in connection with the execution,
delivery and performance of this Agreement or the consummation by Buyer of the
transactions contemplated hereby which consent, approval, etc. has not been
obtained or will not be obtained on or prior to the Closing Date. Accurate and
complete copies of each of the foregoing which have been obtained or made have
been delivered to Seller at or prior to the date hereof.
4A. REPRESENTATIONS AND WARRANTIES OF THE PARENT.
The Parent represents and warrants to Seller as follows:
4A.1 Corporate Organization.
Parent is a corporation duly organized, validly existing and in good
standing under the laws of its State of Delaware. Parent has full corporate
power and authority to carry on its businesses as they are now being conducted
and to own, lease and operate its properties and assets as and in the places
where such businesses are now conducted and where such properties and assets are
now owned, leased or operated.
4A.2 Authorization.
Parent has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to carry out the transactions
contemplated hereby. Parent has taken all action required by law or otherwise to
be taken by Parent, to authorize Parent's, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement and the other agreements and instruments contemplated hereunder to
which Parent is a
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party have been duly and validly executed and delivered by Parent and
constitutes a valid and binding agreement of and upon Parent enforceable against
Parent in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights and (ii) general
principles of equity.
4A.3 No Violation.
Neither the execution and delivery of this Agreement by Parent nor the
consummation by Parent of the transactions contemplated hereby will violate any
provision of the Certificate of Incorporation or by-laws of Parent, or be in
conflict with, or constitute a material default (or an event which, with or
without notice, lapse of time or both, would constitute a material default)
under, or result in the termination or invalidity of, or accelerate the
performance required by, or cause the acceleration of the maturity of any
obligations or liabilities of the Parent result in the creation or imposition of
any security interest, lien or other encumbrance upon any of its assets or
properties under any agreement or commitment to which Parent is a party or by
which it is bound or to which any of its assets are subject, or violate any
statute or law or any judgment, decree, order, regulation or rule of any
domestic or foreign court or governmental authority applicable to Parent.
4A.4 Litigation.
There is no action, suit or proceeding or any claim or investigation of
any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to Parent's knowledge, which
questions or challenges the validity of this Agreement or any action taken or to
be taken by Parent pursuant to this Agreement or in connection with the
transactions contemplated hereby.
4A.5 Financial Statements.
The financial statements of Parent and the related notes contained in
Parent's Form 10-QSB for the quarterly period ending September 30, 1995 present
fairly the financial position of Parent as of the dates indicated, and the
results of its operations and cash flows for the periods therein specified. Such
financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified.
4A.6 No Material Adverse Change.
Subsequent to September 30, 1995, Parent and its subsidiaries, taken as
a whole, have not incurred any material liabilities or obligations, direct or
contingent, other than in the ordinary course of business, and there has not
been any material adverse change in their consolidated condition (in each case,
financial or other), results of operations, business, prospects, key personnel
or capitalization.
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4A.7 Additional Information.
Parent has filed in a timely manner all documents that Parent was
required to file under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the 12 months preceding the date of this Agreement. The
following documents complied in all material respects with the requirements of
the Exchange Act as of their respective filing dates, and the information
contained therein as of the date thereof did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading:
(a) Parent's Annual Report on Form 10-KSB, as amended, for the
fiscal year ended December 31, 1994; and
(b) all other documents, if any, filed by Parent with the
Securities and Exchange Commission since December 31, 1994
pursuant to the reporting requirements of the Exchange Act.
4A.8 Listing.
Parent shall comply with all requirements of the National Association
of Securities Dealers, Inc. with respect to the issuance of any shares of common
stock to Seller or its affiliates under the Note and the listing thereof on the
NASDAQ Small-Cap Market or any other exchange on which Parent's shares are then
trading.
5. AGREEMENTS PENDING CLOSING.
5.1 Agreements of Seller Pending the Closing. Seller covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Buyer:
(a) Business in the Ordinary Course. The Business shall be
conducted solely in the ordinary course consistent with past
practice.
(b) Existing Condition. Seller shall not cause nor permit to occur
any of the events or occurrences described in Section 3.10
hereof.
(c) Maintenance of Physical Assets. Seller shall continue to
maintain and service the physical assets used in the conduct
of the Business in the same manner as has been its consistent
past practice.
(d) Employees and Business Relations. Seller shall use its
reasonable best efforts to keep available the services of the
present employees and agents of the Business and to maintain
the relations and goodwill with the suppliers, customers,
distributors and any others having business relations with the
Business.
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(e) Maintenance of Insurance. Seller shall notify Buyer of any
changes in the terms of the insurance policies and binders
referred to on Schedule 3.20 of the Disclosure Schedule.
(f) Compliance with Laws. etc. Seller shall comply with all laws,
ordinances, rules, regulations and orders applicable to the
Business, or Seller's operations, assets or properties in
respect thereof the noncompliance with which might materially
affect the Business or Assets.
(g) Update Schedules. Seller shall promptly disclose to Buyer any
information contained in its representations and warranties or
the Schedules which, because of an event occurring after the
date hereof, is incomplete or is no longer correct in any
material respect as of all times after the date hereof until
the Closing Date; provided, however, that none of such
disclosures shall be deemed to modify, amend or supplement the
representations and warranties of Seller or the schedules
hereto for the purposes of Article 6 hereof, unless Buyer
shall have consented thereto in writing.
(h) Conduct of Business. Seller shall conduct its business in such
a manner that on the Closing Date the representations and
warranties of Seller contained in this Agreement shall be
true, in all material respects, except as specifically
contemplated by this Section 5, as though such representations
and warranties were made on and as of such date. Furthermore,
Seller shall cooperate with Buyer and use its reasonable best
efforts to cause all of the conditions to the obligations of
Buyer under this Agreement to be satisfied on or prior to the
Closing Date.
(i) Sale of Assets; Negotiations. Seller shall not, directly or
indirectly, sell or encumber all or any part of the Assets,
other than in the ordinary course of the Business consistent
with past practice, or initiate or participate in any
discussions or negotiations or enter into any agreement to do
any of the foregoing. Seller shall not provide any
confidential information concerning the Business or its
properties or assets to any third party other than in the
ordinary course of business.
(j) Access. Seller shall give to Buyer's officers, employees,
counsel, accountants and other representatives all reasonable
opportunity and access to and the right to inspect, during
normal business hours, all of the premises, properties,
assets, records, contracts and other documents relating to the
Business and shall permit them to consult with the officers,
employees, accountants, counsel and agents of Seller for the
purpose of making such investigation of the Business and in
furtherance of the transaction proposed herein, including
without limitation the financial information set forth in
paragraph 3.5(a) above as Buyer shall desire to make, provided
that such investigation shall not unreasonably interfere with
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Seller's business operations, Furthermore, Seller shall
furnish to Buyer all such documents and copies of documents
and records and information with respect to the affairs of the
Business and copies of any working papers relating thereto as
Buyer shall from time to time reasonably request and shall
permit Buyer and its agents to make such inspections of the
Assets as Buyer may request from time to time.
(k) Press Releases. Except as required by applicable law, neither
Seller nor Seller's parent shall give notice to third parties
or otherwise make any public statement or releases concerning
this Agreement or the transactions contemplated hereby except
for such written information as shall have been approved in
writing as to form and content by Buyer, which approval shall
not be unreasonably withheld; provided that Seller may
continue such communications with employees, customers,
suppliers, shareholders, lenders, franchisers, lessors and
other particular groups as may be legally required or
necessary or appropriate and not inconsistent with the best
interests of Buyer or the Closing under this Agreement.
(l) No Default. Seller shall not do any act or omit to do any act,
or permit any act or omission to act, which will cause a
breach of any material contract or commitment of Seller.
(m) Confidentiality. Section 4.6 (B) of the Letter of Intent among
Seller, Seller's Parent and Parent, dated November 6, 1995
(the "Letter of Intent") is incorporated herein and made a
part hereof as if fully set forth herein.
5.2 Agreements of Buyer Pending the Closing. Buyer covenants and
agrees that, pending the Closing and except as otherwise agreed to in writing by
Seller:
(a) Actions of Buyer. Buyer will not knowingly take any action
which would result in a breach of any of its representations
and warranties hereunder. Furthermore, Buyer shall cooperate
with Seller and use its reasonable best efforts to cause all
of the conditions to the obligations of Buyer and Seller under
this Agreement to be satisfied on or prior to the Closing
Date.
(b) Confidentiality. Section 4.6(A) of the Letter of Intent is
incorporated herein and made a part hereof as if fully set
forth herein.
(c) Access. Section 4.1 (b) of the Letter of Intent is
incorporated herein and made a part hereof as if fully set
forth herein.
(d) Press Releases. Except as required by applicable law, neither
Buyer nor Buyer's Parent will not give notice to third parties
or otherwise make any public statement or releases concerning
this Agreement or the transactions contemplated hereby except
for such written information as shall have been approved in
writing as to
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form and content by Seller, which approval shall not be
unreasonably withheld; provided that Buyer may continue such
communications with employees, customers, suppliers,
shareholders, lenders, franchisers, lessors and other
particular groups as may be legally required or necessary or
appropriate and not inconsistent with the best interests of
Seller or the Closing under this Agreement. In addition, Buyer
and Buyer's Parent will provide Seller with information
concerning press releases and filings relating to these
transactions not less than two days prior to proposed release.
6. CONDITIONS PRECEDENT TO THE CLOSING.
6.1 Conditions Precedent to Buyer's Obligations. All obligations
of Buyer under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
(a) Representations and Warranties True as of the Closing Date.
The representations and warranties of Seller and Seller's
Parent contained in this Agreement or in any schedule,
certificate or document delivered by Seller or Seller's Parent
to Buyer pursuant to the provisions hereof shall have been
true in all material respects on the date hereof without
regard to any schedule updates furnished by Seller after the
date hereof and shall be true in all material respects on the
Closing Date with the same effect as though such
representations and warranties were made as of such date.
(b) Compliance with this Agreement. Each of Seller and Seller's
Parent shall have performed and complied in all material
respects with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or
at the Closing.
(c) Closing Certificate. Buyer shall have received a certificate
from each of Seller and Seller's Parent dated the Closing
Date, certifying that the conditions specified in Sections
6.1(a) and 6.1(b) hereof have been fulfilled and certifying
that Seller has obtained all consents and approvals required
with respect to it or the Business by Section 6.1(f) hereof.
(d) Opinions of Counsel for Seller. Counsel for Seller, shall have
delivered to Buyer a written opinion, dated the Closing Date,
in the form of Exhibit F hereto with only such changes as
shall be in form and substance reasonably satisfactory to the
Buyer and its counsel.
(e) No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending
before any court or governmental or regulatory official, body
or authority in which it is sought to restrain or prohibit or
to obtain damages
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or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or
proceeding shall be pending or threatened.
(f) Consents and Approvals. Except for consents required by the
terms of the contracts, commitments, agreements listed in
Section 6.1(f) of the Disclosure Statement, and subject to the
provisions of Section 1.3(d) above, the holders of any
indebtedness of Seller, the lessors or lessees of any real or
personal property or assets leased by Seller, the parties
(other than Seller) to any contract, commitment or agreement
to which Seller is a party or subject, any governmental or
regulatory official, body or authority or any other person,
and any governmental, judicial or regulatory official, body or
authority having jurisdiction over Seller or Buyer or their
respective affiliates to the extent that their consent or
approval is required or necessary under the pertinent debt,
lease, contract, commitment or agreement or other document or
instrument or under applicable orders, laws, rules or
regulations, for the consummation of the transactions
contemplated hereby in the manner herein provided, shall have
granted such consent or approval, provided such debt, lease,
contract, etc. is material to the Business.
(g) Material Adverse Changes. The assets or the operations of the
Business taken as a whole, shall not have been and shall not
be threatened to be materially adversely affected in any way
as a result of any event or occurrence (except as a result of
general economic conditions).
(h) Lease and Option. Seller shall have executed and delivered the
Lease and Option Agreement with respect to building owned by
Seller in Wichita, KS (the "Wichita Property") substantially
in the form annexed hereto as Exhibit E (the "Lease and Option
Agreement").
(i) Employee Arrangements. Each of Susan Uhler, Terry Loucks and
Harold Vernon shall have executed a "stay-put" agreement
substantially in the form annexed hereto as Exhibit G (for
which Buyer shall have no liability for bonuses).
(j) Supply and Marketing Agreement. Seller's Parent shall have
executed and delivered the Supply and Marketing Agreement in
the form annexed hereto as Exhibit H.
(k) Change in Business. Buyer having no reasonable basis to
believe that either: (i) the net sales of the Business was
less than $12,900,000 for the year ended April 30, 1995 or
less than $4,575,000 for the five fiscal months ended
September 22, 1995; or (ii) the sum of PP&E being less than
$3,400,000 as of July 28, 1995.
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(l) Patent Assignment. Seller shall have executed and delivered
the Patent Assignment in the form Annexed hereto as Exhibit I.
(m) Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required
to carry out this Agreement or incidental hereto and all other
related legal matters shall have been approved on the Closing
Date by The Law Offices of Herbert H. Sommer, counsel for
Buyer, in the exercise of their reasonable judgment. GTI and
Seller shall also have delivered to Buyer such other
documents, instruments, certifications and further assurances
as such counsel may reasonably require.
6.2 Conditions Precedent to the Obligations of Seller. All
obligations of Seller under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
(a) Representations and Warranties True as of the Closing Date.
The representations and warranties of Buyer and Parent
contained in this Agreement or in any list, certificate or
document delivered by Buyer or Parent to Seller pursuant to
the provisions hereof shall have been true in all material
respects on the date hereof and shall be true in all material
respects on the Closing Date with the same effect as though
such representations and warranties were made as of such date.
(b) Compliance with this Agreement. Each of Buyer and Parent shall
have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
(c) Closing Certificates. Seller shall have received a certificate
from each of Buyer and Parent dated the Closing Date
certifying that the conditions specified in Sections 6.2(a)
and 6.2(b) hereof have been fulfilled.
(d) Opinion of Counsel for Buyer. Herbert H. Sommer, counsel to
Buyer, shall have delivered to Seller a written opinion, dated
the Closing Date, in the form of Exhibit J hereto with only
such changes as shall be in form and substance reasonably
satisfactory to Seller and its counsel.
(e) No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final
judgment relating thereto, shall be threatened or be pending
before any court or governmental or regulatory official, body
or authority in which it is sought to restrain or prohibit or
to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby, and no investigation that might result in any such
suit, action or proceeding shall be pending or threatened.
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(f) Lease and Option. Buyer shall have executed and delivered the
Lease and Option Agreement.
(g) Note, Security Agreement and Guaranty. The Buyer shall have
executed and delivered the Note and the Security Agreement and
the Parent shall have executed and delivered the Note, the
Security Agreement, the Registration Rights Agreement and
Guaranty of the Note, substantially in the forms annexed as
hereto as Exhibit K, Exhibit L and Exhibit M, respectively.
(h) Supply and Marketing Agreement. Buyer and Parent shall have
executed and delivered the Supply and Marketing Agreement in
the form annexed hereto as Exhibit H.
(i) Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents required
to carry out this Agreement or incidental hereto and all other
related legal matters shall have been approved on the Closing
Date by Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.,
counsel for Seller, in the exercise of their reasonable
judgment. Buyer shall also have delivered to Seller such other
documents, instruments, certifications and further assurances
as such counsel for Seller may reasonably require.
6.3 Termination.
(a) Methods of Termination. Anything in this Agreement to the
contrary notwithstanding, the transactions contemplated hereby
may be terminated and abandoned at any time prior to the
Closing:
(i) by mutual consent of the Buyer and Seller; or
(ii) by Seller if, as of the Closing Date, any of the
conditions set forth in Section 6.2 shall not have
been met;
(iii) by Buyer if, as of the Closing Date, any of the
conditions set forth in Section 6.1 shall not have
been met;
(iv) by Buyer if the net sales of the Business was less
than $12,900,000 for the year ended April 30, 1995 or
$4,575,000 for the five fiscal months ended September
22, 1995;
(v) by Buyer if the sum of net property, plant and
equipment included in the Assets was less than
$2,440,000 as of July 28, 1995; or
(vi) by either party if, without fault of the terminating
party, the Closing shall not have occurred on or
prior to December 31, 1995.
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(b) Procedure Upon Termination. In the event of termination and
abandonment pursuant to Section 6.3(a) hereof, written notice
thereof shall forthwith be given to the other party hereto and
this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned without further action
by the Buyer or the Seller.
(c) Effect of Termination. In the event of termination of this
Agreement as expressly provided in Section 6.3(a) above, this
Agreement shall forthwith become void and neither Buyer, on
the one hand, nor Seller on the other, shall have any
liability to the other, except for either party's breach of
any of its obligations which breach shall be existing at the
time of such termination. Notwithstanding the preceding
sentence:
(i) Buyer shall not be entitled to a return of its
deposit.
(ii) in the event of any termination of this Agreement, if
GTI or Seller, or any of their affiliates, directly
or indirectly, through any officer, director, agent,
or otherwise, from November 6, 1995 through the date
of such termination, solicited or initiated, directly
or indirectly, or encouraged the submission of
inquiries, proposals or offers from any potential
buyer (other than Buyer) relative to the disposition
of the Assets or securities of Seller (which for
these purposes includes GTI and any entity affiliated
with GTI which conducts the Business or has title to
the Assets), or participated in any material
discussions or negotiations regarding, or furnished
to any person any proprietary or confidential
information of Seller which could be used to solicit
an offer from a potential buyer or could be used by
such a potential buyer to make or finance such an
inquiry, proposal or offer, then Seller, within 5
(five) days of demand, which demand must be made
within nine months from the date of termination will
pay Nytest $200,000.
7. CERTAIN COVENANTS, AGREEMENTS AND CLOSING DOCUMENTS.
7.1 Non-Competition and Confidentiality of Seller.
(a) Neither Seller nor Seller's Parent or any subsidiary or
Affiliate of Seller's Parent in which Seller's Parent owns or
has the right, directly or indirectly, to vote 50.1% or more
of the voting stock of such entity (collectively the "GTI
Group") shall, without the written consent of Buyer, for a
period of five years from the Closing Date, operate, directly
or indirectly, an environmental testing laboratory in the
continental United States. The Parties acknowledge and agree
that this Section 7.1 shall not apply to Fluor Daniel, Inc.
("Fluor") and its affiliates, except to the extent such
affiliates become controlled by Seller's Parent as a result of
the
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transactions contemplated by the agreement between Seller's
Parent and Fluor dated December 11, 1995.
(b) Notwithstanding the provisions of this Section 7.1: (i)
nothing herein shall prevent members of the GTI Group from
investing in the securities of any company listed on a
national securities exchange or quoted on the NASDAQ quotation
system, which investment, but for this Section 7.1(b), would
be a violation of Section 7.1(a), provided Seller's and GTI
Group's ownership is not more than 5% of any class of
securities of any such company and Seller's and GTI Group's
involvement with any such company is solely that of a passive
stockholder, (ii) nothing herein shall prevent Seller or any
of its Affiliates from providing specialized laboratory
services not then provided by Buyer or Buyer's Affiliates,
(iii) nothing herein shall prevent Seller's Parent and member
of the GTI Group from providing environmental testing
exclusively in the field for customers (provided, however,
that neither Seller's Parent nor members of the GTI Group will
maintain mobile laboratories); (iv) Seller's Parent or members
of GTI Group may continue to use Seller's remediation
laboratory consistent with past practices; (v) nothing herein
shall prevent an acquisition by or of Seller's Parent or
members of GTI Group involving, peripherally an environmental
test laboratory provided such laboratory is disposed of or
divested within 180 days following such transaction; and (vi)
if any provision of this Section 7.1 is determined to be
unenforceable because of the duration of such provision or the
area covered thereby, the court making such determination
shall have the power to and shall reduce the scope of such
provision with respect to such duration and/or area, and/or to
delete ("blue-pencil") specific words or phrases, and in its
reduced or blue-penciled form such provision shall be
enforceable and shall be enforced.
(c) Seller acknowledges that, after the Closing, Buyer could be
irreparably damaged if Seller, or any affiliate of Seller,
were to disclose or utilize confidential information of the
business, operations and affairs (other than information in
the public domain through no fault of Seller or any such
successor) of the Business on behalf of itself or any person,
firm, corporation or other business entity to which any such
disclosure may be made which competes in any respect with any
present or presently proposed business of the Business, and
Seller covenants and agrees that it will not at any time
(except for any such nonpublic confidential information
lawfully acquired), without the prior written consent of
Buyer, disclose or use (or permit to be disclosed or used) any
such confidential information, unless compelled to disclose by
judicial or administrative process or, in the opinion of its
counsel, by other requirements of law.
(d) Seller agrees that it will not, for a period of 24 months
after the Closing, for its own account or for the account of
any other person, interfere with Buyer's relationships with
any of its suppliers or customers (except to the extent
necessary
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to collect receivables purchased form Buyer pursuant to
Section 7.9) or directly solicit Buyer's employees.
(e) At or prior to Closing, Seller and Seller's Parent will: (i)
use reasonable efforts to enforce or if it chooses not to so
enforce, assign to Buyer all confidentiality agreements signed
by parties from whom Seller or Seller's Parent had
communications in connection with a possible purchase of the
Assets, Business or any interest or part thereof (collectively
the "Offerees") on behalf of Buyer; (ii) provide Buyer with a
list of such Offerees; and (iii) request from such Offerees a
return of all such confidential information.
(f) Seller expressly agrees and understands that Buyer's remedy at
law for any breach of Section 7.1(a), (b), (c), (d) or (e)
will likely be inadequate if it were Buyer's exclusive remedy
and that the damages flowing from any such breach are not
readily susceptible to being measured solely in monetary
terms. Accordingly, it is acknowledged that upon adequate
proof of Seller's violation or threatened violation of any
legally enforceable provisions of any of the above enumerated
Subsections of Section 7.1, and Buyer's satisfaction of any
applicable legal or judicial requirements to support its claim
for equitable relief, Buyer will be entitled to specific
performance of the above enumerated Subsections of Section
7.1, including but not limited to, immediate injunctive
relief, a temporary order restraining any threatened or
further breach and such other equitable relief as may be
appropriate. Nothing in this Section 7.1 shall be deemed to
limit Buyer's remedies at law or in equity for any breach by
Seller of any of the provisions of this Agreement, including
but not limited to the above enumerated Subsections of Section
7.1, which may be pursued or availed of by Buyer. Seller has
carefully considered the nature and extent of the restrictions
upon it and the rights and remedies conferred upon Buyer under
this Section 7.1 and hereby acknowledges and agrees that the
same are reasonable, are fully required to protect the
legitimate interests of Buyer and do not confer a benefit upon
Buyer disproportionate to the detriment of Seller.
(g) The provisions of this Section 7.1 shall be terminated upon
the occurrence of an Event of Default subject to applicable
grace periods under the Note.
7.2 Licenses.
At the Closing, Seller shall assign any and all federal, state, county,
local and foreign licenses necessary for the operation of the Business to the
extent the same may be assigned, and shall cooperate with Buyer and assist
Buyer, at Buyer's expense, in obtaining any other licenses that are not
assignable or that are necessary for Buyer to continue to operate the Business.
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7.3 Consummation of Transactions; Further Assurances.
(a) Each of the parties agrees to use its reasonable best efforts
to bring about the satisfaction of the conditions required to
be performed, fulfilled or complied with by it hereunder and
to take or cause to be taken, all action, and to do, or cause
to be done, all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated by this
Agreement as expeditiously as practicable.
(b) In case at any time after the Closing any further action is
reasonably necessary or desirable to carry out the purposes of
this Agreement, the appropriate party will take all such
necessary action, including without limitation, the execution
and delivery of such further instruments and documents as may
be reasonably requested by the other party or parties for such
purposes or otherwise to complete or perfect the transactions
contemplated hereby. After the Closing, Buyer and Seller shall
cooperate fully with the other and shall make available to the
other and to any taxing authority all information, records or
documents in its possession which are reasonably requested in
connection with the preparation of any tax returns or in
connection with any tax liability of Seller for any period
prior to the Closing, and otherwise shall cooperate in
connection with all matters, such as but not limited to
litigations and personnel matters, involved in the transfer of
the Assets and the Business operations from Seller to Buyer.
7.4 Risk of Loss.
Prior to the Closing Date, the risk of loss or damage to, or
destruction of, any or all of the Business and any or all of the Assets shall
remain with Seller.
7.5 Payment of Taxes.
Seller shall file when due, giving effect to all applicable extension
provisions, all federal, state, local and foreign tax returns required to be
filed by it (including but not limited to income, sales, use and payroll taxes)
for all periods to the Closing Date and shall pay all taxes, interest or
penalties (i) shown on, or which are otherwise due and payable pursuant to, such
returns, (ii) which shall become due with respect to any such period pursuant to
any deficiency notice or similar notice or (iii) which otherwise shall become
due with respect to any such period.
7.6 Best Efforts to Obtain Consents.
Each of Seller and Buyer shall use its reasonable best efforts to
obtain promptly all the consents and authorizations of third parties for which
it is responsible to obtain, and to cooperate with the other as the other may
reasonably request, to make all filings, if any, and to give all notices to
third parties which may be required in order to effect the transactions
contemplated by this Agreement.
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7.7 Other Government Filings.
Buyer and Seller agree to cooperate with each other in filing any
necessary applications, reports or other documents with any federal or state
authorities (including federal, state or local taxing authorities as to the
allocation, if agreed, of the Purchase Price to the Assets) having jurisdiction
with respect to the transactions contemplated by this Agreement and in seeking
necessary consultation with and favorable action by any such agencies,
authorities or bodies.
7.8 Closing Apportionments.
(a) The following items shall be apportioned as of the close of
business on the day immediately prior to the Closing Date
(with such meter readings as shall be appropriate) and paid by
Seller or Buyer to the other, as the case may be, in respect
of all periods prior to the Closing Date:
(i) All water, utility and other similar charges, and
sewer rent and assessments, affecting Real Property
which constitutes part of the Assets;
(ii) All payments required to be paid under the Assumed
Contracts;
(iii) All real estate taxes and assessments with respect to
the Real Property, which become due and payable in
respect of any and all periods prior to the date of
Closing shall be paid by Seller, and all real estate
taxes and assessments becoming due and payable in
respect of any and all periods on or after the
Closing Date shall be paid by Buyer, whenever the
same become due or payable. Buyer shall pay all taxes
and assessments after the Closing Date and Seller
shall immediately upon receipt of a bill therefore
(which may be an unreceipted bill) pay Buyer to
Seller's pro rata portion thereof in respect of all
periods to the Closing Date.
(b) The adjustments above-described (i) shall be determined in
accordance with generally accepted accounting principles,
consistently applied and (ii) shall, to the extent
practicable, be paid by Seller to Buyer or by Buyer to Seller,
as the case may be, at the Closing, by check, subject to
collection.
(c) The provisions of this Section 7.8 shall survive the Closing.
Any errors or omissions in computing apportionments at the
Closing, or any recomputations required as a result of facts
that become known after the Closing, shall be corrected as
soon as practicable thereafter.
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7.9 Accounts Receivable.
(a) Promptly after the Closing Date, the Seller shall deliver to
the Buyer a list of its accounts receivables relating to sales
of services and products by Seller on and before the Closing
Date (the "Accounts Receivables"). The Buyer shall use its
reasonable best efforts to cooperate and assist the Seller and
the Seller's Parent with the collection of the Accounts
Receivable. Such reasonable best efforts may require the Buyer
to take such actions to collect the Accounts Receivables as
though they were accounts receivables of the Buyer, including,
without limitation, ceasing to continue to provide additional
goods and services to account debtors that are delinquent in
payment of the Accounts Receivables, provided, however, that
the Buyer shall not be required to institute legal action
against the account debtors.
(b) The Buyer shall promptly remit to Seller's Parent all payments
received by the Buyer with respect to the Accounts
Receivables. The Buyer shall treat the first payments received
from account debtors as being payments of the Accounts
Receivables, except in the case of disputed invoices. The
existence of any such disputed invoices shall be promptly
communicated in writing by the Buyer to Seller's Parent with
reasonable detail therefor.
(c) Not in limitation of the foregoing, the Buyer will permit the
Seller and Seller's Parent to have reasonable access to
personnel and books and records of the Buyer relating to the
collection of the Accounts Receivables and will provide
periodic reports and such other information concerning the
Accounts Receivables as the Seller or Seller's Parent may
reasonably request from time to time.
7.10 Retention of Records.
(a) Seller shall preserve all files and records directly
pertaining to its operation of the Business (and not delivered
to Buyer at Closing) for a period of seven years after the
date of the respective documents constituting such files and
records. Seller shall, upon prior reasonable notice, allow
Buyer access thereto and the right to make copies and extracts
therefrom at any time during normal business hours, and shall
not dispose of any thereof during said seven year period
without giving at least 30 days' prior written notice to Buyer
of its intention to dispose of same, specifying the items to
be disposed of in reasonable detail. Buyer may, within a
period of 30 days after receipt of any such notice, notify
Seller of Buyer's desire to retain one or more of the items to
be disposed of. Seller shall, upon receipt of such notice from
Buyer, deliver to Buyer, at Buyer's expense, the items
specified in Buyer's notice. If Buyer shall not so notify
Seller within such 30 day period, Seller may dispose of such
items. Seller shall preserve all financial records related to
the Business and shall provide Buyer with access to such
records in accordance with the foregoing provisions of this
Section 7.10.
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(b) Buyer shall preserve all files and records included in the
Assets and delivered by Seller, pertaining directly to its
operation of the Business, for a period of seven years after
the date of the respective documents constituting such files
and records. Buyer shall, upon prior reasonable notice, allow
Seller access thereto and the right to make copies and
extracts therefrom at any time during normal business hours,
and shall not dispose of any thereof during said seven year
period without giving at least 30 days' prior written notice
to Seller of its intention to dispose of same, specifying the
items to be disposed of in reasonable detail. Seller may,
within a period of 30 days after receipt of any such notice,
notify Buyer of Seller's desire to retain one or more of the
items to be disposed of. Buyer shall, upon receipt of such
notice from Seller, deliver to Seller, at Seller's expense,
the items specified in Seller's notice.
7.11 Offer of Employment.
(a) Buyer agrees that as of the Closing Date effective January 1,
1996, it will offer to hire all of the employees of Seller who
were Seller's employees as reflected in Seller's payroll
records on the preceding business day and were terminated by
Seller, on an at-will basis, and for positions or comparable
positions, at the location at which such employees are
currently engaged and on terms (including compensation and
benefit plans and arrangements) that are reasonably comparable
to those offered by Sellers as if such employees had been
employed by Seller on January 1, 1996 on an at-will basis.
Buyer will credit each such employee's period of service with
Seller when determining the eligibility, coverage or benefits
of any such employee under any employee benefit plan, program
or arrangement of Buyer.
(b) Buyer has no present intention to immediately terminate any
employee to whom it offered employment or to make any
immediate material change to any of Buyer's employment
contracts, relationships, practices, plans or programs;
however, Buyer may in its sole discretion amend or terminate
any of Buyer's employment contracts, relationships or
practices, or employee benefit plans or programs, if any, at
any time after the Closing Date.
(c) Seller agrees to allow any and all such employees hired by
Buyer to continue, from the Closing Date through March 31,
1996, to receive and be included in the medical, dental,
supplemental life, basic life and short and long term
disability benefit programs and plans which would have been
offered to such employees as of January 1, 1996, but for the
transactions contemplated by this Agreement by Seller or GTI,
provided Buyer reimburses Seller or GTI, as the case may be,
for any out of pocket employer contributions or payments of
premiums for such plans or programs. Continued inclusion of
employees in such plans will be in Buyer's sole discretion.
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7.12 Financial Statements.
Promptly after the Closing Date, but in no case later than February 15,
1996, Seller shall prepare and deliver to Buyer a balance sheet as of April 28,
1995 and a statement of operations and cash flow for each of the two years then
ended, with a report from Coopers & Lybrand on such statements which report will
have no modifications or emphasis as to any matter.
7.13 Accountants Consents.
During the period beginning on the Closing Date and ending the last
date for which such statements would be required to be included in a filing made
by Nytest with the Securities and Exchange Commission ("SEC"), GTI will, at its
expense, procure and deliver to Nytest, the consent of Coopers & Lybrand to
include and incorporate their reports or the Closing Balance Sheet and April
Statement in Nytest's filings with the SEC.
7.14 Computer Purchase Program.
Buyer will, subject to the consent of the effected employees, withhold
the agreed portion of salary under the GTI Computer Purchase Program and remit
such sums to Seller's Parent within 5 days of such withholding.
7.15 Performance of Services.
Buyer agrees to perform services on Seller's behalf, in connection with
warranty claims arising from services performed by Seller prior to the date of
Closing. Seller agrees to pay the invoices generated by such warranty work
within 30 days. Nothing contained herein shall obligate Buyer to bear the cost
of such warranty work except to extent of any reserve on the Closing Balance
Sheet, including but not limited to the cost of resampling.
7.16 Certain Financial Services.
Seller's Parent agrees, for a period not exceeding 90 days from the
Closing to continue processing payments relating to the accounts receivable
assigned to Buyer and accounts payable assumed by Buyer. Seller's Parent will
remit the cash amount due to such vendors on Buyer's behalf, if it receives
prior payment from Buyer.
7.17 Payments Received.
Seller and Buyer each agree that after the Closing they will hold and
will promptly transfer and deliver to the other, from time to time as and when
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing which properly belongs to
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the other party, including without limitation any insurance proceeds, and will
account to the other for all such receipts.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
8.1 Survival of Representations.
All representations and warranties contained in this Agreement shall
survive the Closing for a period (the "Survival Period") of eighteen (18) months
after the Closing Date, except for those related to the representations set
forth in Sections 3.16 and 3.25 hereof which shall continue through the
applicable statute of limitations and those related to third party claims in
connection with Excluded Obligations which shall survive the Closing for a
period of twenty-four (24) months.
8.2 Indemnification by Buyer.
Each of Buyer and Parent agree, jointly and severally, to indemnify,
defend and hold harmless Seller and any Affiliate thereof and any parent,
subsidiary or affiliate thereof and all directors, officers, employees and each
of the foregoing (the "Seller Group"), at any time after the Closing and during
the appropriate Survival Period (except that such indemnification obligations
shall continue beyond the Survival Period if a Notice of Claim for
indemnification shall be delivered to Parent and Buyer prior thereto, in which
case such indemnification obligations shall continue until the claim as to which
such notice has been given is resolved and any applicable indemnification
obligations have been satisfied), from and against all demands, claims, actions
or causes of action, assessments, deficiencies, taxes, losses, damages,
liabilities, costs and expenses, including without limitation, interest,
penalties and reasonable attorneys' fees and expenses (collectively "Losses"),
asserted against, resulting from, imposed upon or incurred by the Seller Group,
directly or indirectly, arising out of or in connection with (a) the breach or
inaccuracy of any of the representations or warranties of Buyer or Parent made
in or pursuant to this Agreement; (b) any breach of any covenant or agreement of
Buyer or Parent contained in this Agreement; or (c) any failure to pay any
obligation, liability, debt or commitment of the Seller which is an Assumed
Obligation or Assumed Liability, whether or not paid by Seller; or (d) any and
all obligations, liabilities, debts or commitments in connection with the Assets
or the operation of the Business arising after the Closing to the extent that
they arise after the Closing and only in respect of such time period.
8.3 Indemnification by Seller.
Each of Seller and Seller's Parent agree, jointly and severally, to
indemnify, defend and hold harmless Buyer and any parent, subsidiary or
affiliate thereof and all directors, officers, employees and representatives of
each of the foregoing (the "Buyer Group"), at any time after the Closing and
during the appropriate Survival Period (except that such indemnification
obligations shall continue beyond the Survival Period if a Notice of Claim for
indemnification shall be delivered to Seller and Seller's Parent prior thereto,
in which case such indemnification
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obligations shall continue until the claim as to which such notice has been
given is resolved and any applicable indemnification obligations have been
satisfied), from and against all Losses asserted against, resulting from,
imposed upon or incurred by the Buyer Group or any member thereof, directly or
indirectly, arising out of or in connection with (a) the breach or inaccuracy or
alleged breach or inaccuracy of any of the representations or warranties of
Seller made in or pursuant to this Agreement; (b) any breach of any covenant or
agreement of Seller contained in this Agreement; or (c) any obligation,
liability, debt or commitment of the Seller which is not an Assumed Obligation
or an Assumed Liability (or is an Excluded Obligation), whether or not paid by
Buyer.
8.4 Indemnification Procedure.
(a) A party agreeing to indemnify against any matter pursuant to
this Agreement is referred to herein as the "Indemnifying
Party" and the other party claiming indemnity is referred to
as the "Indemnified Party."
(b) Whenever any claim or threatened claim shall arise for
indemnification hereunder, the Indemnified Party shall notify
the Indemnifying Party in writing promptly after the
Indemnified Party has actual knowledge of the acts
constituting the basis for such claim or threatened claim (the
"Notice of Claim"), provided, however, that the omission so to
notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which the Indemnifying
Party may have to the Indemnified Party otherwise than under
this Section 8 or to the extent the Indemnifying Party is not
prejudiced as a proximate result of the failure to give such
notice promptly. The Notice of Claim shall specify all
material facts known to the Indemnified Party giving rise to
such indemnification claim and the amount or an estimate of
the amount of the liability arising therefrom.
(c) If the facts giving rise to any such indemnification shall
involve any actual, threatened or possible claim or demand by
any third party against the Indemnified Party, the
Indemnifying Party shall be entitled (without prejudice to the
right of the Indemnified Party to participate at its expense
through counsel of its own choosing) to contest, defend,
compromise or settle (without imposing any liability or
obligation on the Indemnified Party) such claim at its expense
and through counsel of its own choosing, so long as it gives
written notice to the Indemnified Party within forty-five (45)
days after receipt of the Notice of Claim (i) of its intention
to do so and (ii) of its agreeing to indemnify to the full
extent required hereunder the Indemnified Party for such claim
hereunder. The Indemnified Party shall provide such
cooperation and such access to its books, records and
properties as the Indemnifying Party shall reasonably request
with respect to such matter and the parties hereto agree to
cooperate with each other in order to ensure the proper and
adequate defense thereof. In the event that the Indemnifying
Party does not so elect to defend any such claim, it shall be
entitled at its expense to
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participate in the defense of such claim by the Indemnified
Party with counsel of its choosing.
(d) The Indemnified Party shall not make any settlement of any
claim which would give rise to liability on the part of the
Indemnifying Party under the indemnity contained in this
Section 8 without the prior written consent of the
Indemnifying Party. If a firm offer is made to settle a claim
or litigation defended by the Indemnified Party and the
Indemnifying Party refuses to accept such offer within twenty
(20) days after receipt of written notice from the Indemnified
Party of the terms of such offer, then, in such event, the
Indemnified Party shall continue to contest or defend such
claim and shall be indemnified pursuant to the terms hereof.
If a firm offer is made to settle a claim or litigation and
the Indemnifying Party notifies the Indemnified Party in
writing that the Indemnifying Party desires to accept and
agree to such settlement, but the Indemnified Party elects not
to accept or agree to it, the Indemnified Party may continue
to contest or defend such claim or litigation and, in such
event, the total maximum liability of the Indemnifying Party
to indemnify or otherwise reimburse the Indemnified Party
hereunder with respect to such claim or litigation shall be
limited to and shall not exceed the amount of such settlement
offer, plus out-of-pocket costs and expenses (including
reasonable attorneys' fees and disbursements) to the date of
notice that the Indemnifying Party desires to accept such
settlement.
(e) The amount of any Losses for which indemnification is
available shall be computed without regard to the tax effect
of any such loss or indemnification.
(f) In the event of payment by an Indemnifying Party to the
Indemnified Party as contemplated in this Section 8, the
Indemnifying Party shall be subrogated to and shall stand in
the place of the Indemnified Party as to any events or
circumstances in respect of which the Indemnified Party may
have any right or claim against any third party relating to
such event giving rise to the claim for which the Indemnifying
Party shall have made payment to the Indemnified Party. The
Indemnified Party shall cooperate with the Indemnifying Party
in any reasonable manner in prosecuting any such subrogated
right or claim.
8.5 Limitations on Indemnification.
(a) No claim may be made against an Indemnifying Party pursuant to
its indemnification obligations set forth in Section 8.2 or
8.3 hereof unless the aggregate amount of all matters for
which such party would (but for this provision) be liable (and
of which matters the Indemnified Party followed the provisions
of Section 8.4 above) exceeds $100,000 (the "Threshold
Amount") and the Indemnified Party's right to indemnification
hereunder shall only be with respect to such amounts in excess
of the Threshold Amount. For purposes of determining the
Threshold Amount and Maximum Amount hereunder, the
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Indemnifying Party's obligations shall be with respect to the
Seller Group as a whole and the Buyer Group as a whole.
(b) The Indemnifying Party shall not be obligated for any
indirect, special or consequential damages or lost profits
incurred by the Indemnified Party.
(c) Neither Buyer and Parent, on the one hand, nor Seller and
Seller's Parent, on the other hand, will be liable in the
aggregate to the other for indemnification pursuant hereto in
excess of the amount of the Purchase Price, as adjusted, (the
"Maximum Amount"). To the extent that the payments to the
Buyer Group from Seller and Seller's Parent pursuant to this
Section 8, in the aggregate, has exceeded the Maximum Amount
less the principal amount of the Note, as adjusted, the Seller
may offset any such further claims against the principal
amount of the Note.
8.6 Successors.
The merger, consolidation, liquidation, dissolution or winding up of,
or any similar transaction with respect to, the Indemnifying Party shall not
affect in any manner the obligations of the Indemnifying Party pursuant to this
Section or any other term or provision of this Agreement, and the Indemnifying
Party covenants and agrees to make adequate provision for its liabilities and
obligations hereunder in the event of any such transaction.
8.7 Time Action Must be Brought.
No action may be brought under this Section 8 unless brought eighteen
(18) months from the date of Closing except: (i) actions related to the
representation set forth in Section 3.16 and 3.25 which shall be brought by the
expiration of the applicable statute of limitation plus one week; and (ii)
actions relating to third party claims arising from Excluded Obligations shall
be brought within 24 months from the Closing Date.
9. MISCELLANEOUS PROVISIONS.
9.1 Amendment.
This Agreement may be amended, modified or supplemented by the parties
hereto only by a written instrument duly signed by or on behalf of the party to
be charged therewith.
9.2 Waiver of Compliance.
Any failure of Seller, on the one hand, or Buyer, on the other hand, to
comply with any obligation, covenant, agreement or condition herein may be
expressly waived in writing by an authorized officer of Buyer or Seller,
respectively, but such waiver or failure to insist upon strict
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compliance with any such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
9.3 Expenses.
(a) Except as set forth in paragraph 9.3(b), whether or not the
transactions contemplated by this Agreement are consummated,
each of the parties hereto shall pay the fees and expenses of
their respective counsel, accountants and other experts, and
shall pay all other expenses incurred by it incident to the
negotiation, preparation, execution and consummation of this
Agreement.
(b) Seller shall bear the cost of fees and expenses charged by
Seller's Auditors in connection with the preparation of and
report described in Section 7.12. In addition, Buyer and
Seller shall bear equally the fees and expenses: (i) Seller's
Auditors up to a maximum of $20,000 in connection with
performing the procedures set forth in Schedule 2.6; and (ii)
Buyer's Auditors up to a maximum of $5,000 in connection with
their supervision of the foregoing.
(c) The provisions of Section 9.3 shall survive any termination of
this Agreement.
9.4 Notices.
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (i) upon delivery if delivered by hand; (ii) four business days subsequent
to mailing if mailed by express, certified or registered mail, with postage
prepaid, in the continental United States; (iii) two business days subsequent to
pick up by such courier if sent by a nationally or internationally recognized
overnight courier service that regularly maintains records of items picked up
and delivered; or (iv) when transmitted if sent by telecopier, provided that a
written acknowledgment of receipt signed by or on behalf of the recipient of the
telecopy is transmitted back to the sender by the recipient, as follows:
If to Seller/or
Seller's Parent: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attention: Chief Financial Officer
Telecopier No.: (617) 769-7992
with a copy to: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attention: General Counsel
Telecopier No.: (617) 769-7992
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and to: Mintz, Levin, Cohn, Ferris, Glovsky & Popeo,
P.C.
One Financial Center
Boston, MA 02111
Attention: Richard Goldman, Esq.
Telecopier No.: (617) 542-2241
or to such other person or address as Seller shall furnish to Buyer in writing.
If to Buyer: NEI/GTEL Environmental Laboratories, Inc.
c/o Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attention: John Gaspari, President
Telecopier No.: (516) 625-1274
with a copy to
Parent: Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attention: Chief Financial Officer
Telecopier No.: (516) 625-1274
and to: Herbert H. Sommer, Esq.
600 Old Country Road, Suite 535
Garden City, New York 11530
Telecopier No.: (516) 228-8211
and to: Horowitz, Klosowski & Scope, P.C.
595 Stewart Avenue, Suite 710
Garden City, NY 11530
Attention: Eric M. Mencher, Esq.
Telecopier No.: (516) 222-2665
or to such other person or address as Buyer shall furnish to Seller in writing.
9.5 Binding Effect; Assignment.
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective
administrators, legal representatives, successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations
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hereunder shall be assigned or assignable by any of the parties hereto without
the prior written consent of the other party, except (i) by operation of law,
(ii) that Buyer may freely assign this Agreement or all or any rights or
obligations it may have hereunder to a direct or indirect wholly-owned
subsidiary of Buyer or Parent, (iii) that Buyer may assign all of its rights but
not its obligations under this Agreement to any institution providing financing
or re-financing for the transactions contemplated by this Agreement, and (iv)
that Seller may assign all of its rights and its obligations under this
Agreement to Seller's Parent.
9.6 Remedies.
Except that the indemnification provision of Section 8 above is the
exclusive remedy for breaches of representations, warranties and covenants as
provided therein, the parties acknowledge and agree that each party hereto may
seek any remedies in equity or law that may be available to it. Nothing herein
shall prevent the Parties from impleading or interpleading the other party at
any time in an action brought by a third party relating to what would otherwise
have been an indemnifiable claim.
9.7 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to its principles of conflict
or choice of law.
9.8 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
the same instrument.
9.9 Headings.
The headings of the sections of this Agreement are inserted for
convenience only and shall not constitute a part or affect in any way the
meaning or interpretation of this Agreement.
9.10 Entire Agreement.
(a) This Agreement sets forth the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein, and supersedes all prior agreements,
promises, letters of intent, covenants, arrangements,
communications, representations or warranties, whether oral or
written, by any party hereto or by any Related Person of any
party hereto.
(b) All Exhibits attached hereto, the Disclosure Schedule, any
exhibits thereto and all certificates, documents and other
instruments delivered or to be delivered pursuant to the terms
hereof are hereby expressly made a part of this Agreement
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as fully as though set forth herein, and all references herein
to the terms "this Agreement," "hereunder," "herein," "hereby"
or "hereto" shall be deemed to refer to this Agreement and to
all such writings.
9.11 Third Parties.
Except as specifically set forth or referred to herein, nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon
or give to any person (including but not limited to Seller's employees), firm,
partnership or corporation other than the parties hereto and their successors or
permitted assigns, any rights or remedies under or by reason of this Agreement.
9.12 Severability.
The invalidity of any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall not affect
the enforceability of the remaining portions of this Agreement or any part
hereof, all of which are inserted conditionally on their being valid in law,
and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GTEL ENVIRONMENTAL
LABORATORIES, INC.
By: /s/ Joel Adler
---------------------------
Name: Joel Adler
Title: Assistant Treasurer
NEI/GTEL ENVIRONMENTAL
LABORATORIES INC.
By: /s/ John Gaspari
---------------------------
Name: John Gaspari
Title: CEO
Agreed as to Section 3A, 7.1 & 8 only.
GROUNDWATER TECHNOLOGY, INC.
By: /s/ Joel Adler
---------------------------
Name: Joel Adler
Title: Assistant Treasurer
Agreed as to Section 4A, 7.16 & 8 only.
NYTEST ENVIRONMENTAL INC.
By: /s/ John Gaspari
---------------------------
Name: John Gaspari
Title: President
62
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EXHIBIT 99.1
MARKETING AND SUPPLY AGREEMENT
Agreement made as of this 31st day of December, 1995, between
Groundwater Technology, Inc., a Delaware corporation ("GTI"), and NEI/GTEL
Environmental Laboratories, Inc., a Delaware corporation ("Nytest").
WHEREAS, GTI, Nytest, GTEL Environmental Laboratories, Inc. ("GTEL")
and Nytest Environmental Inc. ("Parent") have entered into an Asset Purchase
Agreement, dated December 28, 1995 (the "Asset Purchase Agreement"), which
provides, among other things, for GTI and Nytest to enter into this Agreement
as a condition to consummating the transactions contemplated under the Asset
Purchase Agreement; and
WHEREAS, GTI desires, in certain circumstances, to order services from
Nytest and Nytest desires to provide such services to GTI, all on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration thereof and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. General.
(a) This Agreement governs all Services (as such term is defined
below) ordered by GTI and provided by Nytest and certain other obligations and
restrictions set forth herein. The parties hereto contemplate that purchase or
task orders will be issued pursuant to this Agreement by authorized
representatives of GTI ("Purchase Orders"), setting forth the scope of work to
be performed, including schedules, compensation and any special terms pertinent
to the work. The terms and conditions of this Agreement shall supersede the
pre-printed terms on such purchase orders and any pre-printed forms (including
acknowledgements) or additional terms of Nytest.
(b) Each party hereto shall have a relationship manager (a
"Manager") for purposes of this Agreement who shall have authority to make
day-to-day operational decisions on behalf of such party, provided, however,
that this Agreement may not be amended except as provided in Section 19(b)
herein. The Manager for Nytest shall initially be Guy Sylvester and the
Manager for GTI shall initially be David Daniels, provided, however, that
either party may change its Manager by providing written notice thereof to the
other party.
<PAGE> 2
2. Services to be Performed by Nytest.
(a) Nytest shall perform its services hereunder, including sample
storing, analysis, documentation and reporting (collectively, the "Services")
in a timely, competent and professional manner and in a manner consistent with
the terms and conditions set forth herein and in the Purchase Orders and
related specifications and standards.
(b) Nytest acknowledges that its participation in certain Services
requested by GTI may be contingent upon its acceptance of additional
provisions, including obligations to secure bonds, increase insurance limits or
sign non-disclosure agreements as may be required by the type of Service or the
terms of a contract or other arrangement between GTI and its customer. Prior
to or contemporaneous with its request for such Services, GTI shall present
such requirements to Nytest for its review, and appropriate provisions shall be
included in the Purchase Order for the Services.
(c) Unless otherwise specified by GTI, Nytest shall furnish all
labor, materials, facilities, equipment and supervision necessary to perform
the Services requested. Nytest warrants that all such materials, facilities
and equipment shall meet all applicable requirements of federal, state and
local government agencies for their intended use. Upon five days prior notice,
Nytest shall provide to GTI at GTI's offices or at other facilities designated
by GTI all requested sample containers, packing materials, preservatives and
shipping coolers at no charge, provided, however, that GTI shall pay Nytest for
the cost of such items to the extent they are not returned by GTI to Nytest.
Nytest shall prepare all sample containers as required for the sampling and
testing methods specified.
(d) In connection with any Purchase Orders, GTI may order changes,
deletions or additional Services within the scope of this Agreement orally
(with written confirmation thereof to be provided by GTI within three (3)
business days thereafter) or by issuance of written change orders
(collectively, "Change Orders"). If such changes cause an increase or decrease
in costs or in time for performance, as mutually determined by GTI and Nytest,
these changes will be included in the Change Order. Nytest shall make no
change to the Services requested and shall not be entitled to compensation for
additional Services performed without prior receipt of a Change Order from GTI.
If Nytest determines in its performance of Services that additional or
different Services may be necessary, Nytest will notify GTI before performing
such additional or different Services to request GTI's authorization and obtain
a Change Order.
(e) GTI may from time to time require rush analysis performed. A
representative of GTI (the "Representative") will contact Nytest's laboratory
as far in advance as possible and notify it that samples will be submitted for
rush analysis. Nytest shall use all commercially reasonable efforts to perform
such work in the time requested, provided, however, that Nytest shall promptly
notify the Representative if Nytest determines in good faith that it cannot
perform such work in the time requested so that samples can be taken to an
alternate laboratory. The required turnaround time will be indicated in the
request for
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Services or in the chain of custody form. To the extent reasonably required by
GTI, GTI may from time to time require that a copy of the laboratory data
package be sent to the Representative by facsimile within the required
turnaround time. This requirement will be made on the chain of custody form by
the Representative.
(f) Nytest shall perform all Services hereunder at the
laboratories it acquired from GTEL under the Asset Purchase Agreement in
Milford, New Hampshire, Tampa, Florida and Wichita, Kansas and at Parent's
laboratory located in Port Washington, New York. If it is determined in the
reasonable opinion of GTI, in consultation with Nytest, that any of such
laboratories has failed to maintain and satisfy the quality and other standards
provided herein and as otherwise agreed to by the parties hereto, then Nytest,
in consultation with GTI, shall use its reasonable best efforts to promptly
correct such problems, shall not perform Services hereunder at such laboratory
until such problems have been remedied and shall provide GTI with reasonable
evidence thereof. No transferring or subcontracting to other facilities, even
other facilities operated by Nytest, is allowed unless prior approval has been
obtained from GTI, which approval shall not be unreasonably withheld or
delayed. In the event approval under this paragraph is properly given, (i)
regardless of the price charged to Nytest by the subcontracted facility, Nytest
will directly bill GTI according to its contract price using the original GTI
release number (if such number is provided to Nytest); and (ii) Nytest agrees
that it is fully responsible for the acts or omissions of any other facility or
subcontractor. Nytest shall use its commercially reasonable efforts to perform
the services hereunder at the four laboratories identified in the first
sentence of this Paragraph (f).
3. Standard of Performance.
(a) GTI and Nytest understand and acknowledge that the Services
performed hereunder may involve hazardous or toxic substances or wastes, and
laws, regulations and government agency policy and guidance documents related
thereto. Nytest represents and warrants that it is technically, financially,
and legally ready, willing, and able to perform the Services in response to
each Purchase Order issued hereunder, and that it is familiar with and
knowledgeable about the applicable laws, regulations and government agency
policy and guidance documents necessary to perform the Services in a
professional, complete and compliant manner. GTI agrees to comply with
Department of Transportation requirements concerning the shipping, labeling and
notification requirements with respect to high-hazardous substances and to
provide notice to Nytest before such substances are delivered to Nytest.
(b) Nytest further warrants that Services performed by Nytest
shall be in accordance with all applicable federal, state and local laws and
regulations and shall conform to the provisions of the Purchase Orders or
Change Orders (including without limitation any associated schedule or method)
and to the provisions of this Agreement. Nytest shall treat all samples
submitted as if they are evidentiary in nature, and ensure that the technical
quality of all Services performed is scientifically sound, legally defensible
and of known and readily documentable quality.
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(c) Upon completion of Services, Nytest shall, at its expense,
preserve and maintain all samples and extracts for a minimum period of 30 days
or longer as may be required by applicable laws and regulations or as may be
specified by GTI prior to Nytest's receipt of samples with respect to a
Purchase Order or as otherwise agreed to by the parties. Thereafter, Nytest
shall be responsible for disposing of samples and residue at no cost to GTI and
with appropriate care and in accordance with all applicable laws and
regulations or, if so specified in writing by GTI, return such samples and
materials to GTI for final disposition.
(d) Nytest shall comply with current EPA quality assurance
requirements and guidelines and such other quality assurance requirements and
guidelines as GTI may request from time to time.
(e) The quality control data provided with the reports on the
analytical results will include such information reasonably requested by GTI.
Results less than the detection limits shall be reported as such.
(f) Any deviations from standard sample preparation or analytical
procedures shall be promptly reported to GTI via facsimile with a copy thereof
to be sent via regular mail. Such report shall state, among other things, the
reasons for such deviations. Nytest will dilute samples only as necessary and
in accordance with EPA methodology, which is required to be followed pursuant
to this Agreement.
4. Compliance with Laws.
(a) Nytest represents and warrants that it has and will maintain
during the term of this Agreement all necessary federal, state and local
certifications, permits and licenses to perform the Services and it will
conduct all work in compliance with all applicable federal, state and local
statutes, ordinances and implementing regulations, including, without limiting
the generality of the foregoing, the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation, and Liability Act and
the Superfund Amendments and Reauthorization Act governing the handling,
treatment, transportation, storage, or disposal of hazardous waste, substances,
samples or residue. In the event that any Service to be performed requires
Nytest to undertake any such activities, Nytest will be exclusively liable for
any losses or penalties arising from Nytest's violation of applicable statutes,
ordinances and regulations. Upon request, Nytest agrees to provide GTI with
information and certifications required to demonstrate compliance with the
provisions of this Section 4.
(b) Nytest understands and acknowledges the samples to be
delivered to it may contain materials and waste that are toxic, corrosive or
otherwise hazardous to human health. Nytest hereby certifies that its
employees engaged in the Services have completed health and safety training
courses as specified by the Occupational Safety and Health Administration, EPA
and chapters 29 and 40 of the Code of Federal Regulations.
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<PAGE> 5
(c) Nytest shall furnish to GTI upon request any additional
certifications reasonably required under applicable law, including those
applicable to work contracted between GTI and any agency, agent or prime
contractor of the U.S. Government.
5. Reports.
(a) Nytest's reports shall be signed by the laboratory director,
an assistant laboratory director or the appropriate quality control officer,
and provide, in addition to the requirements set forth herein, copies of all
pertinent shipping documents, chain of custody forms, units of concentration,
name of analysts, notation of discrepant events during analysis, and EPA method
used.
(b) Nytest shall promptly provide to GTI's Representative for the
particular Services being performed the final data resulting from such Services
via facsimile or electronic media. A hard copy of the final report in
connection therewith shall be delivered via overnight or regular mail,
including chain of custody, to GTI within five (5) business days after
completion of the related Services or as directed in the Purchase Order or
Change Order.
6. Chain of Custody; Document Control.
Nytest shall follow EPA and other applicable agencies' recommended
chain of custody and document control procedures. Furthermore, Nytest shall
perform such other chain of custody and document control procedures for
specific samples to the extent such procedures are identified to Nytest prior
to accepting a sample.
7. Marketing and Opportunity to Bid.
(a) GTI acknowledges that during the term of this Agreement, it
will use commercially reasonable efforts to promote Nytest to the employees of
GTI and its Affiliates located in the continental United States in existence as
of the date hereof (giving no effect to the Agreement between GTI and Fluor
Daniel, Inc. dated December 11, 1995) ("Current U.S. Affiliates") as the
preferred vendor on all projects of GTI and Current U.S. Affiliates for which
Nytest is qualified to provide the services for such projects. In furtherance
thereof, it will be necessary for Nytest to actively market and promote its
Services to employees of GTI and its Current U.S. Affiliates. GTI also agrees
to do the following:
i. Use its commercially reasonable efforts to support a marketing
plan to be developed by Nytest and GTI to encourage the use of
Nytest's Services by GTI;
ii. The Manager of each of GTI and Nytest will communicate on a
regular basis and will meet at least four times per year to
develop and implement plans for maintaining and improving the
ongoing business relationship between Nytest
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<PAGE> 6
and GTI under this Agreement and to review and improve, if
necessary, Nytest's and GTI's performance under this
Agreement;
iii. GTI will use commercially reasonable efforts to facilitate and
provide Nytest with access to GTI's project managers and other
designated employees for Nytest to promote the Services
hereunder, including, without limitation, arranging periodic
meetings and providing certain access via the internet and
other communications channels, provided, however, such access
shall be during normal business hours and shall not disrupt
the conduct of GTI's business;
iv. By January 8, 1996 and at least one (1) additional time during
1996, the Chief Executive Officer of GTI or other suitable
members of the management of GTI will circulate notices to its
employees, substantially in the form attached hereto as
Exhibit A, stating that Nytest is the preferred vendor and
encouraging such employees to utilize Nytest's Services.
Thereafter, such notice will be circulated at least two (2)
times per year, if Nytest is performing in accordance with
good laboratory practices and is otherwise in material
compliance with this Agreement.
v. With respect to GTI's customers and any entities located in
the continental United States that become Affiliates of GTI
after the date hereof, GTI will use its commercially
reasonable efforts to promote Nytest's services to them,
provided, however, that the parties hereto acknowledge and
agree that given, among other things, GTI's relationship and
accessibility to such customers and any new Affiliates, such
commercially reasonable efforts shall not necessarily be
consistent with the commercially reasonable efforts GTI has
agreed to use to promote Nytest to its employees and its
Current U.S. Affiliates and shall not require GTI to take the
actions set forth in clauses i. to iv. above.
(b) In recognition of the discounted pricing arrangement
previously in existence between GTI and GTEL, except for Qualified Projects put
out to bid (provided in paragraph (c) below), the prices to be paid by GTI and
its Affiliates for Nytest's Services hereunder shall be equal to the prices set
forth on the price list, as set forth in Exhibit B attached hereto, less thirty
five percent (35%) (the "Percentage Discount") unless otherwise agreed to by
the parties hereto. At least thirty (30) days prior to the expiration of each
calendar year during the term of this Agreement, GTI and Nytest shall negotiate
in good faith the amount of the Percentage Discount for the following year,
which Percentage Discount will (i) consider the aggregate amount of Services
ordered by GTI during the year and (ii) be applied to Nytest's standard
published price list in effect during the next year. GTI represents and
warrants to Nytest that during the past 12 months, the weighted average
discount provided by GTEL to GTI and its Current U.S. Affiliates, other than
for work put out to bid, has been in the range of 30% to 40%.
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(c) GTI agrees to provide Nytest with the opportunity to bid on
each Qualified Project (as such term is defined below) that is put out to bid
to more than one environmental testing laboratory during the term of this
Agreement by GTI and by GTI's Current U.S. Affiliates (collectively, the "GTI
Group"). The GTI Group shall only be obligated to accept a bid for a Qualified
Project from Nytest if (i) Nytest's bid is submitted on a timely basis and
complies with all of the other criteria set forth in the request for proposal
("RFP") prepared by the GTI Group in connection with such Qualified Project,
and (ii) the dollar amount of Nytest's bid (or, if applicable, its revised bid
pursuant to paragraph (e) below) is equal to or less than the dollar amount of
the lowest competing bid from any other qualified bidder for the Qualified
Project, provided, however, if the lowest bid is not required in connection
with the Qualified Project, the member of the GTI Group that requested the bid
shall use its reasonable discretion in determining whether or not to accept a
higher bid from Nytest, considering factors such as the quality and timeliness
of the services provided by Nytest and that of the lowest bidder.
(d) For purposes of this Agreement only, "Qualified Project" shall
mean a project for environmental testing services (i) that has an expected
value in excess of $1,500, (ii) for which Nytest is qualified to provide the
services required for such project on a timely basis and in a manner consistent
with the standards for performance required in connection with such project and
as otherwise set forth in this Agreement and (iii) for which the GTI Group
member's customer does not require that the environmental testing services be
provided by a laboratory other than Nytest.
(e) If the GTI Group member that put out for bid the Qualified
Project is not prohibited, whether by law or by GTI's customer with respect to
the Qualified Project, and if Nytest timely submitted its initial bid for the
Qualified Project but it was not the lowest bid, such GTI Group member shall
offer Nytest the opportunity to revise its bid to lower the amount of the bid,
provided, however, that if Nytest desires to so revise its bid it must do so
within the period of time designated by the GTI Group member.
(f) For purposes of this Agreement, "Affiliate" shall mean any
person controlling, controlled by or under common control with such person.
For purposes of this definition, "control" shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through ownership of voting securities or by
contract or otherwise.
(g) In furtherance of Nytest's obligations hereunder, Nytest shall
use its commercially reasonable efforts to timely submit competitive bids that
comply with the criteria set forth in the RFP's for Qualified Projects and to
accept from GTI Purchase Orders for services not put out to bid.
8. Commitment for 1996.
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(a) During calendar year 1996, GTI agrees that the amount of
Actual Revenue (as such term is defined below) for such year shall at least be
equal to sixty five percent (65%) (the "Base Percentage") of the aggregate
dollar amount of all environmental testing services ordered by GTI and its
Current U.S. Affiliates from environmental laboratories, including, from
Nytest, for which Nytest is qualified to provide such environmental testing
services and for which such environmental testing services are completed during
1996 ("Total Revenue").
(b) If the percentage (the "Actual Percentage") determined by
dividing the Actual Revenue (as such term is defined below) for 1996 by the
Total Revenue is less than the Base Percentage, for each full percentage point
that the Actual Percentage is below the Base Percentage, the principal amount
outstanding under the Subordinated Convertible Note of even date herewith
issued by Nytest to GTI (the "Note") shall be reduced (the "Note Reduction") by
an amount equal to the product of the Total Revenue multiplied by .7%,
provided, however, that no Note Reduction shall be made if Actual Revenue
exceeds in 1996 $5,000,000 (the "Base Revenue"). The parties hereto
acknowledge and agree that (i) the Note Reduction, if any, shall be Nytest's
sole remedy if the Actual Percentage is less than the Base Percentage and (ii)
if the amount of the Note Reduction is greater than the principal amount of the
Note, the Note shall be terminated and returned to Nytest by GTI and Nytest
shall not be entitled to any additional compensation or remedy in excess
thereof. Except as provided in this Section 8, this Agreement does not
obligate GTI or its Affiliates to order or purchase any specific dollar amount
of services or products from Nytest at any time during the term of this
Agreement.
(c) For purposes of this Agreement only, "Actual Revenue" shall
mean the aggregate dollar amount of Nytest's services and products ordered by
the GTI Group during 1996 from Nytest or any of its Affiliates that are
scheduled for delivery in 1996 and, if delivered in 1996, paid for, (except for
Disputed Invoices (as such term is defined in Section 9 herein)) by February
14, 1997 (assuming Nytest promptly sends invoices for such services and
products). Notwithstanding the foregoing, Actual Revenue and Total Revenue
shall not include (i) the aggregate amount of environmental testing services
ordered by GTI directly resulting from services requested to be ordered by GTI
from Affiliates of GTI not in existence as of the date hereof and (ii) the
portion of Services or products ordered by the GTI Group during 1996 and
scheduled for delivery during 1996, but not completed by Nytest during 1996 due
to suspension of such products or Services without cause, or an extension by
the GTI Group.
(d) It is understood and agreed by the parties hereto that GTI's
ability to achieve the Base Percentage and/or Base Revenue is significantly
dependent on Nytest's actively marketing and promoting its services as provided
in Section 7(a) herein. In furtherance thereof, in the event that Nytest fails
to satisfactorily perform the obligations expressly set forth in Section 7(a)
herein, the amount of the Base Percentage and the Base Revenue shall be
appropriately adjusted to reflect such unsatisfactory performance as determined
by mutual agreement of the parties hereto or, if no such agreement can be
reached within a reasonable
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period of time, pursuant to the dispute resolution procedures set forth in
Section 19(k) herein.
(e) GTI shall provide to Nytest within forty-five (45) days after
the end of each calendar quarter during 1996 a report setting forth in
reasonable detail the amount of Actual Revenue and Total Revenue for such
quarter.
9. Payment.
(a) GTI shall pay to Nytest the fees and/or charges specified in
Purchase or Change Order(s) for the Services and shall make payment within
thirty (30) days (or, during the first ninety days of this Agreement, within
three (3) business days) after the later to occur of receipt of a valid invoice
and satisfactory completion of the Services invoiced, provided, however, that
GTI may notify Nytest of its classification of an invoice as a Disputed Invoice
(as such term is defined below). Nytest's invoice shall reference the Purchase
Order and any Change Order numbers, and shall include an itemized statement of
charges and copies of receipts for reimbursable expenses included in the
Services and shall state any prompt payment discounts.
(b) For purposes of this Agreement, "Disputed Invoice" means any
invoice which, in the good faith business judgment of GTI, is inaccurate or
does not comply with this Agreement. To qualify an invoice as a Disputed
Invoice, GTI must notify Nytest, orally or in writing, within twenty (20) days
of GTI's receipt of the invoice and provide reasonable detail about the reasons
then evident to GTI for the dispute of the invoice, provided, however, GTI
shall have its other rights and remedies available to it, other than treating
an invoice as a "Disputed Invoice" hereunder, if it fails to notify Nytest
within such twenty (20) day period. At no time will payment be withheld
greater than the amount in dispute. If an invoice remains a Disputed Invoice
after twenty (20) days after GTI notifies Nytest about a Disputed Invoice,
Seller may in good faith invoke the problem resolution procedure set forth in
Section 19(k) herein and GTI and Nytest shall use commercially reasonable
efforts to resolve the Disputed Invoice. An invoice will remain a Disputed
Invoice until, in the good faith business judgment of both parties, the reasons
for the Disputed Invoice no longer exist.
(c) If required by the Purchase Order, after the payment of the
relevant invoices, Nytest shall promptly submit the appropriate waiver and
release of lien form to GTI. In all cases, Nytest shall submit the appropriate
unconditional waiver and release of lien form supplied by GTI from any supplier
of labor and/or material whose charges exceed $500.
(d) Nytest shall pay all taxes imposed by reason of the Services
to be performed by Nytest hereunder, including, without limitation, all
applicable sales or use taxes and shall state on each invoice that all such
taxes have been or will be paid to the appropriate taxing jurisdiction.
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(e) Nytest warrants that GTI's title and appurtenant rights to all
deliverables or other documentation, and data referred to in Section 3 shall be
free and unencumbered by claims from Nytest or any third party.
10. Ownership of Work Product: Confidentiality.
(a) The Services and all records relating to the Services,
including, without limitation, all specifications, documentation and other
information specifically requested in Purchase Orders or Change Orders, shall
be deemed the property of GTI or its client. During the period that Nytest is
required hereunder or by law to retain any such materials, upon request of GTI,
Nytest shall deliver all such materials to GTI. Nytest shall retain for its
records originals or copies of such records relating to the Services to the
extent required under its certification, regulatory or legal obligations.
(b) All information furnished to Nytest by GTI, or developed by
Nytest, in the course of performing the work under this Agreement, whether or
not it is marked "Proprietary" or "Confidential," shall be deemed to be
business proprietary information of GTI. Nytest agrees not to disclose such
information, directly or indirectly, to any third party (except as required by
law and except for such financial information as Nytest is required to provide
to its financial institutions, lending money thereto) nor to use such
information other than in performance of the Services, and Nytest agrees not to
use the name of GTI or GTI's clients for promotional or other purposes without
prior written consent. Title to all such confidential information shall be and
remain with GTI. The parties hereto agree that this Agreement and the terms
and conditions hereof shall be kept confidential except as required by law and
except to the extent Nytest is obligated to disclose such information to
financial institutions lending funds to it.
11. Right to Audit; Record Retention.
(a) GTI reserves the right to perform qualification audits and
inspections of Nytest's laboratories during the term of this Agreement,
including the submission of replicate, duplicate, blind and blank samples
without prior knowledge of Nytest; provided that the audit or inspection is
conducted during normal business hours and does not unreasonably interfere with
normal business operations. In addition, GTI shall have the right, upon
reasonable notice, to inspect Nytest facilities, records and procedures to
evaluate Nytest's compliance with the terms of this Agreement.
(b) Nytest shall maintain a complete and correct set of records
pertaining to its performance under this Agreement for such period as required
under applicable federal, state or local law. GTI may two times per year and
more frequently if it has a commercially reasonable basis therefore, audit any
and all such records of Nytest that are so retained at any reasonable time
during the term of this Agreement or thereafter.
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(c) Nytest shall have the right, upon prior written notice and
during normal business hours, to audit and inspect the books and records and GTI
directly related to the determination of Total Revenue and Actual Revenue. Such
right may be exercised up to two (2) times and any and all audit(s) and
inspections must be completed by June 30, 1997. All information, audited and
inspected shall be subject to the confidentiality restrictions set forth herein.
12. Warranty and Professional Care.
(a) Nytest represents and warrants that (i) its Services will
conform with the requirements of this Agreement and applicable federal, state
and local law and with any special terms pertinent to the work specified by
GTI, and (ii) it shall be responsible for the professional and technical
accuracy, adequacy and standards of all work performed under this Agreement,
including that (a) samples are analyzed by methods specified by GTI; (b)
procedures and holding times meet EPA or other applicable regulatory limits or
requirements; (c) only requested analyses are performed; and (d) proper chain
of custody is maintained.
(b) Nytest shall, without cost to GTI, promptly correct or revise
any errors or deficiencies in the Services as determined by GTI, or, in the
reasonable discretion of GTI, promptly refund in full or in part fees paid by
GTI for such Services. Nytest shall promptly reimburse GTI for the cost of
collecting and analyzing replacement samples if (A) (i) data received from
Nytest is considered invalid by GTI due to failure of Nytest to adhere to the
warranties described in this Agreement; (ii) Nytest loses or damages samples so
that they may not be properly analyzed; or (iii) Nytest stores samples in
excess of acceptable holding times prior to performing analyses, provided that
samples arrived with adequate shelf life and (B) GTI did not request a refund
from Nytest in respect of such services and paid to the extent due, pursuant to
the payment terms in Section 9 herein (or offset against the reimbursement) the
Nytest invoice in respect thereof.
(c) Nytest shall commence and complete the work in accordance with
the schedule specified by GTI in the Purchase or Change Order. Time is of the
essence to GTI. Nytest shall reimburse GTI for GTI's payment of any penalty,
liquidated damages and/or expenses (collectively, "Penalties") pursuant to any
contract, agreement, order, decree, or other legal instrument or process of any
court, agency, or other governmental entity that arises out of any failure by
Nytest, or any person or firm engaged by or through Nytest, to perform in
accordance with the provisions of this Agreement or any Purchase Order issued
hereunder, but only to the extent such Penalties were disclosed to Nytest prior
to its accepting the samples to which the Penalties relate.
13. Insurance.
(a) Nytest shall, at all times during the period this Agreement is
in effect, maintain the following insurance with the minimum policy limits
specified:
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<TABLE>
<CAPTION>
Type Limits
---- ------
<S> <C>
1. Worker's Compensation Statutory
Employer's Liability $1,000,000/Per occurrence
2. Commercial General Liability, $1,000,000
including Contractual Liability Combined single limit
3. Automobile Liability, including $1,000,000
Bodily Injury/ Property Damage Combined single limit
4. Professional Liability or $1,000,000/Per occurrence
Errors and Omissions
5. Umbrella $2,000,000
</TABLE>
(b) The insurance policies provided for in 2 and 3 above shall be
endorsed to name GTI as an additional insured party. All policies shall be
endorsed to provide that all rights of subrogation against GTI are waived and
shall contain cross liability and severability of interest provisions.
Nytest's compliance with the above insurance provisions shall not constitute a
limitation of liability or in any way limit or affect Nytest's indemnification
obligations under this Agreement.
(c) Based on GTI's specific customer requirements and the nature of
Services to be performed by Nytest, GTI and Nytest agree to negotiate in good
faith additional insurance or coverage amounts for the policies listed above
that may be required. Certificates evidencing the required insurance coverage
shall be delivered to GTI prior to commencement of work and shall provide that
any material change in or cancellation of any policy under which certificates
are issued shall not be valid until GTI has received thirty (30) days prior
written notice of such change or cancellation.
14. Indemnification. To the fullest extent permitted by law, Nytest
agrees to indemnify, defend and hold harmless GTI and its Affiliates and their
respective officers, directors, agents and employees from and against any and
all liabilities, losses, damages, demands, claims, suits, taxes, costs and
expenses including reasonable legal fees and other expenses of litigation
arising out of or related to Services performed by Nytest, its agents,
employees, or subcontractors, including, without limiting the generality of the
foregoing, all injuries, disease, or death to any persons, including Nytest's
employees, and for loss of or damage to property of any type, except to the
extent such liabilities or losses are attributable to the sole negligence or
willful misconduct of GTI. Without limiting the generality of the foregoing,
this indemnity shall apply to:
(i) Any violation by Nytest or its subcontractors of any applicable
federal, state, or local law, rule, or regulation;
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(ii) Any penalty or fine incurred by or assessed against GTI or its
client to the extent caused by Nytest, its subcontractors or
suppliers;
(iii) Any patent or copyright infringement by Nytest, its
subcontractors or suppliers; and
(iv) Any obligation of GTI to its client resulting from Nytest's
breach of this Agreement.
15. Conflicts of Interest. It is recognized that the performance of
the Services by Nytest in the context of Nytest's other involvements could
present both GTI and Nytest with questions involving possible conflicts of
interests. Accordingly, Nytest agrees to disclose to GTI any situation
involving an actual or potential conflict of interest which may arise, directly
or indirectly, in the course of performance by Nytest of any obligation
pursuant to this Agreement or any purchase order issued hereunder. With
respect to any such disclosure, GTI and Nytest shall jointly determine the most
appropriate course of action, provided that GTI reserves its rights in any such
event and in this context to withdraw, cancel, or terminate any purchase order
if GTI should determine that such course of action is in its best interests
under the circumstances then prevailing, and provided further that Nytest
reserves a right to decline an individual purchase order in the event that its
acceptance would represent a potential or actual conflict of interest.
16. Independent Contractor Status. Nytest, its subcontractors and
associates shall act as and be deemed to be independent contractors for all
purposes of this Agreement and shall not be deemed to be agents, assigns,
employees, joint venturers, partners or principals of GTI or any of its
Affiliates or their respective employees, officers, directors or
representatives. The employees, methods, materials, equipment and facilities
used by Nytest, its subcontractors and suppliers to perform the Services
hereunder at all times shall be under Nytest's exclusive supervision, direction
and control. This Agreement is not intended to be one of hiring under the
provisions of any workers compensation or other laws and shall not be so
construed.
17. Force Majeure. Neither party shall be liable for or deemed in
breach hereof because of any delay in the performance of its obligations to the
extent caused by circumstances beyond its control and that could not have been
prevented by the exercise of due diligence, including but not limited to fires,
natural disasters, riots, wars, labor strikes, adverse weather conditions, or
acts of God. Nytest will promptly notify GTI in writing, but in any event
within ten (10) business days, after the beginning of any such cause which
would affect its performance.
18. Term, Suspension and Termination.
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(a) This Agreement shall remain in effect for a period of four (4)
years from the date hereof unless earlier terminated in the manner provided
herein.
(b) GTI may suspend all or part of particular Services with respect
to a particular Purchase or Change Order requested to be performed by Nytest.
Nytest shall comply with such request and all work-related directions
concerning the suspension, and shall resume the suspended work promptly alter
being notified by GTI to do so. GTI shall compensate Nytest for work performed
prior to a suspension, without cause, which compensation shall include a
reasonable allocation of the profit that would have been earned for such
services, plus reasonable costs actually incurred by Nytest as a result of the
suspension. If such suspension causes holding times of environmental samples
to be exceeded, Nytest will not be responsible for replacement of samples or
any penalty, liability or default caused by such suspension.
(c) GTI may terminate all or any part of particular Services with
respect to a particular Purchase or Change Order with or without cause. If
termination is without cause, Nytest shall be compensated for work performed to
the date of termination plus reasonable costs actually incurred by Nytest as a
result of the termination. If termination is with cause, GTI shall notify
Nytest of the reason or reasons for such cause and, to the extent practicable,
Nytest shall have three (3) days to cure the problem. Nytest shall be
compensated only for those portions of the work acceptable to GTI. Termination
for cause shall include, without limitation: (a) failure by Nytest to provide
the necessary labor, materials, facilities or supervision for proper
performance of the Services; (b) failure to comply with any of Nytest's
material obligations under this Agreement; (c) failure to correct any material
defect which it is obligated to correct after being so notified by GTI; (d)
failure to meet the quality control procedures required by the Services,
including licensing, certification, sample handling and analysis methods; and
(e) insolvency on the part of the Nytest. In addition to its other rights
hereunder, GTI shall be entitled to recover any and all damages resulting from
or arising out of a termination of Services with cause.
(d) Upon termination of all or any part of particular Services with
respect to a particular Purchase or Change Order, with or without cause, and
except as otherwise provided for in this Agreement or as directed by GTI,
Nytest shall promptly deliver to GTI all tangible work product in connection
with such Services, whether completed or in process, including all samples,
data, reports and such other information and materials prepared by Nytest or
received from GTI, except those materials Nytest is required to retain under
certification, license, regulatory or legal obligations, in which case copies
of such materials shall be delivered to GTI.
(e) GTI shall have the right, in its sole discretion, to immediately
terminate or suspend this Agreement in whole or in part upon the occurrence of
any of the following events:
i. A material breach of this Agreement by Nytest or Parent, which
is not cured within ten (10) days after notice thereof is
provided by GTI to Nytest;
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<PAGE> 15
ii. Nytest enters into a management agreement with a third party,
other than an entity in which Parent owns and maintains greater
than fifty percent (50 %) of such entity's outstanding voting
stock, with respect to all or a portion of the Services, without
the prior written consent of GTI, which shall not be
unreasonably withheld;
iii. The occurrence and continuation of an Event of Default (as such
term is defined under the Note) by Nytest or Parent under the
Note;
iv. If Nytest or Parent shall make an assignment for the benefit of
creditors or shall admit in writing its inability to pay its
debts as they become due;
v. If Nytest or Parent shall file a voluntary petition in
bankruptcy, or shall be adjudicated a bankrupt or insolvent, or
shall file any petition or answer seeking any reorganization
arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under the United States
bankruptcy code or other applicable federal, state or similar
statute, law or regulation, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver or
liquidator of Nytest or Parent, as the case may be, or of all or
any substantial part of its properties;
vi. If within thirty (30) days after the commencement of any
proceedings against Nytest or Parent seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the United States bankruptcy code or
other applicable federal, state or similar statute, law or
regulation, such proceeding shall not have been dismissed or if,
within thirty (30) days after the appointment, without the
consent or acquiescence of Nytest or Parent, as the case may be,
or of all or any substantial part of its properties, such
appointment shall not have been vacated; or
vii. If during any rolling three (3) month period (a "Measurement
Period"), the aggregate amount (measured in dollar volume) of
the Services provided that are delivered after the scheduled due
date and/or the results of which contain errors or deficiencies
exceed twenty-five percent (25%) of the total Services (measured
in dollar volume) scheduled to be provided by Nytest during such
Measurement Period. For purposes of measuring errors and
deficiencies hereunder, such errors and deficiencies shall be
deemed to have occurred with respect to such Services for which
Nytest is required to reissue the report with respect to such
Services or for such Services for which GTI is permitted to, and
does, take elsewhere. Notwithstanding the foregoing, no late
deliveries or errors or deficiencies will be included in the
amount measured herein which late deliveries or errors or
deficiencies resulted from the actions or omissions of a GTI
Group member.
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<PAGE> 16
(f) Nytest shall have the right to terminate this Agreement upon
ninety (90) days prior written notice to GTI, provided, however, that upon
providing such notice, Seller's obligations under Sections 7 and 8 herein shall
immediately terminate.
(g) Upon termination of this Agreement and except as otherwise
provided for in this Agreement or as directed by GTI, Nytest shall promptly
deliver to GTI all tangible work product in connection with all Services being
performed by Nytest, whether completed or in process, including all samples,
data, reports and such other information and materials prepared by Nytest or
received from GTI, except those materials Nytest is required to retain under
certification, license, regulatory or legal obligations, in which case copies
of such materials shall be delivered to GTI. In addition to its rights of
termination, GTI shall be entitled to recover any and all actual damages
resulting from or arising out of said default subject to the terms hereof.
(h) Neither completion of the work hereunder nor termination of this
Agreement shall relieve Nytest or GTI of any obligations hereunder that by
their nature survive such completion or termination, including but not limited
to payment, warranties, indemnity, confidentiality, audit and record keeping.
(i) Except for Penalties pursuant to Section 12(c) herein, neither
party shall be obligated for any indirect, special or consequential damages or
lost profits incurred by the other party.
19. Miscellaneous
(a) Notices. Unless otherwise provided herein, all notices,
requests and other communications to any party hereunder shall be in writing
and shall be (i) personally delivered, (ii) sent by registered or certified
mail, postage prepaid, return receipt requested, (iii) or by a reputable
courier delivery service by next day, priority and shall be given:
If to Nytest or Parent: Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attention: President
with a copy to: Herbert H. Sommer, Esq.
600 Old Country Road
Garden City, NY 11530
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<PAGE> 17
If to GTI: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: Chief Financial Officer
with a copy to: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: General Counsel
or such other address as such party may hereafter specify by notice to the
other parties hereto. All notices, requests, consents and other communications
hereunder shall be deemed to have been given either (i) if by hand, at the time
of the delivery thereof to the receiving party at the address of such party set
forth above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, or (iii) if
sent by registered or certified mail, on the 5th business day following the day
such mailing is made.
(b) Amendments and Waivers. No provision hereof shall be
modified, altered or limited except by a written instrument expressly referring
to this Agreement and to such provision, and executed by Nytest and GTI.
(c) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited shall remain in
full force and effect. In the event that such court shall deem any such
provision, or portion thereof, wholly unenforceable, the remaining provisions
of this Agreement shall nevertheless remain in full force and effect.
(d) Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties
hereto.
(e) Entire Agreement. This Agreement and the Exhibits attached
hereto embody the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersedes all prior oral or
written agreements and understandings relating to the subject matter hereof.
No statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the Commonwealth of Massachusetts
(without giving effect to the conflict of laws principles thereof).
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<PAGE> 18
(g) Captions. The captions of the sections of this Agreement have
been inserted for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
(h) Assignment. Nytest shall not assign this Agreement in whole
or in part, or any monies due hereunder, without the prior written consent of
GTI, provided, however, that Nytest may assign to a financial institution
providing financing to it its right to receive payments hereunder.
(i) Expenses. If any party makes a claim against the other
parties for any alleged error, omission or act arising out of the performance
of work hereunder that cannot be mutually resolved without resort to litigation
and such party fails to prove the claim, such party shall pay all costs
incurred by the other parties in defending itself against the claim, including
personnel costs, attorney's fees, court costs and other claim related expenses.
(j) Guaranty. Parent hereby unconditionally and irrevocably
guarantees to GTI the performance and satisfaction of all of Nytest's
obligations under this Agreement, as amended from time to time.
(k) Disputes. With respect to disputes, problems or claims
arising out of or in connection with this Agreement ("Disputes"), the Managers
for the parties hereto shall, in good faith, use their reasonable best efforts
to resolve the Dispute. If after such efforts the Managers are unable to
resolve the Dispute, they shall promptly elevate the Dispute in the following
manner: (x) for Nytest the problem elevation chain is: the President, and (y)
for GTI the problem elevation chain is: Business Unit Manager and Chief
Financial Officer. If after elevating any Dispute to the highest level the
Dispute still remains, either party may initiate arbitration proceedings in the
manner provided herein to settle the Dispute. Such arbitration shall be
conducted by an arbitration tribunal pursuant to the rules of the American
Arbitration Association and shall be final and binding. The location of the
tribunal shall be located in either Boston, Massachusetts or New York, New York
and shall be designated by the party that did not initiate the arbitration
procedure. The parties shall cooperate to select an arbitrator acceptable to
both parties. If such an arbitrator is not selected within ten (10) days the
arbitration tribunal shall consist of three arbitrators. The party initiating
arbitration shall nominate one arbitrator in the request for arbitration and
the other party shall nominate a second in the answer thereto within twenty
(20) days of receipt of the request. The two arbitrators so named will then
jointly appoint the third arbitrator. If the answering party fails to nominate
its arbitrator within the twenty (20) day period, or if the arbitrators named
by the parties fail to agree on the third arbitrator within thirty (30) days,
the office of the American Arbitration Association in the designated city shall
make the necessary appointments of such arbitrator(s). The decision or award
of the arbitration tribunal (by a majority determination, or if there is no
majority, then by the determination of the third arbitrator, if any) shall be
final and binding, and judgment upon such decision or award may be entered in
any competent court or application may be made to any competent court for
judicial acceptance of such decision or award and an order
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<PAGE> 19
of enforcement. In the event of any procedural matter not covered by the
aforesaid rules, the procedural law of the Commonwealth of Massachusetts shall
govern. Nothing herein shall prevent a party from terminating this Agreement
in the manner provided herein.
(l) Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original and all of which
shall together constitute one and the same agreement.
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date written above.
GROUNDWATER TECHNOLOGY, INC.
By:/s/ Joel Adler
-------------------------------------
Joel Adler, Assistant Treasurer
NEI/GTEL ENVIRONMENTAL LABORATORIES, INC.
By:/s/ John Gaspari
-------------------------------------
John Gaspari, President
FOR PURPOSES OF SECTION 19 ONLY:
NYTEST ENVIRONMENTAL INC.
By:/s/ John Gaspari
-------------------------------------
John Gaspari, President
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<PAGE> 1
EXHIBIT 99.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH IT MAY BE CONVERTED HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO APPLICABLE STATE
SECURITIES LAWS.
--------------------------------------------------------------
NEI/GTEL ENVIRONMENTAL LABORATORIES, INC.
Subordinated Convertible Note
Garden City, New York
$1,254,000 December 31, 1995
NEI/GTEL Environmental Laboratories, Inc. Sub I, Inc., a Delaware
corporation (the "Company"), for value received, hereby promises to pay to GTEL
Environmental Laboratories, Inc., a Delaware corporation ("GTEL"), or its
permitted assigns (the "Holder"), the principal sum of One Million Two Hundred
Fifty-Four Thousand Dollars ($1,254,000) in lawful money of the United States of
America and to pay interest in like money accruing from the date hereof until
the date of payment of all of the unpaid amounts hereunder at the annual rate of
_______%, compounded annually. Interest shall be payable quarterly in arrears on
the last day of March, June, September and December of each year, commencing on
March 31, 1996 and the outstanding principal amount hereunder shall be paid in
full on December 31, 1998.
1. Priority of Payment; Reduction in Principal Amount.
(a) Any payments hereunder will be applied in the following order
of priority: first to the payment of any fees, expenses or other costs the
Company is obligated to pay hereunder; next to any accrued and unpaid interest
due and owing by the Company to the Holder and then to the unpaid principal
balance of this Note.
(b) Reference is hereby made to a Marketing and Supply Agreement
dated the date hereof (the "Marketing Agreement") between the Company and
Groundwater Technology, Inc., a Delaware corporation ("GTI"), which provides,
among other things, for an adjustment in the principal amount of this Note in
the manner set forth therein.
(c) Reference is hereby made to Section 2.6 of the Asset and
Business Purchase Agreement dated the date hereof (the "Purchase Agreement")
between the Company and GTEL which provides, among other things, for an
adjustment in the principal amount of this Note in the manner set forth therein.
(d) Any adjustments to the Note required to be made under the
Marketing Agreement and/or the Purchase Agreement shall be effective as of
December 31, 1995 and interest shall be recalculated accordingly. Any
underpayment or overpayment of interest made prior to the date that the
adjustment to principal is determined shall be reconciled on the next date
interest is due hereunder.
<PAGE> 2
2. Payment by Conversion.
(a) Conversion; Conversion Price. The Holder has the right, at its
option, at any time and from time to time to convert, in lieu of payment of
cash, all or a portion of the outstanding principal amount under this Note in
amounts not less than $100,000 into that number of fully paid and nonassessable
shares of the common stock, $.01 par value per share ("Common Stock") of Nytest
Environmental Inc., a Delaware corporation (the "Parent"), equal to (i) the
amount of principal being converted divided by (ii) the Conversion Price (as
such term is defined below). If the Company provides written notice to the
Holder that it will prepay all or a portion of the principal amount outstanding
hereunder pursuant to Section 3 herein, the Holder shall not be permitted to
convert the amount of such principal to be prepaid from the date it receives
such notice and for a period of four (4) days thereafter, provided however, that
if after giving such notice the Company fails to prepay in full within such four
day period the amount of the prepayment set forth in the notice (a "Prepayment
Failure"), any further notice of prepayment sent during the six month period
beginning with the date the prepayment notice with respect to such Prepayment
Failure was given, shall not suspend the Holder's right to convert all or a
portion of the principal amount under the Note. The Conversion Price shall
initially be equal to $1.00, subject to adjustment as set forth below. Common
Stock into which this Note may be converted is referred to herein as "Conversion
Stock." The Company and the Parent will not, by amendment of the Company's
charter or through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Note, but will at all times in good
faith assist in the carrying out of all such terms.
(b) Changes in Common Stock. If the Parent shall (i) combine the
outstanding shares of Common Stock into a lesser number of shares, (ii)
subdivide the outstanding shares of Common Stock into a greater number of
shares, or (iii) issue additional shares of Common Stock as a dividend or other
distribution with respect to the Common Stock, (x) the Conversion Price in
effect immediately prior to any such combination of Common Stock shall, upon the
effectiveness of such combination, be proportionately increased and (y) the
Conversion Price in effect immediately prior to any such subdivision of Common
Stock or at the record date of such dividend shall upon the effectiveness of
such subdivision or immediately after the record date of such dividend be
proportionately reduced.
(c) Reorganizations and Reclassification. If there shall occur any
capital reorganization or reclassification of the Common Stock (other than a
change in par value or a subdivision or combination as provided for in Paragraph
(b)), then, as part of any such reorganization or reclassification, lawful
provision shall be made so that the Holder shall have the right thereafter to
receive upon the conversion hereof the kind and amount of shares of stock or
other securities or property which such Holder would have been entitled to
receive if, immediately prior to any such reorganization or reclassification,
such Holder had held the number of shares of Common Stock which were then
purchasable upon the conversion of this Note. In any such case, appropriate
adjustment shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Holder such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Conversion Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in
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<PAGE> 3
relation to any shares of stock or other securities or property thereafter
deliverable upon the exercise of this Note.
(d) Merger, Consolidation or Sale of Assets. If there shall be a
merger or consolidation of the Parent with or into another corporation (other
than a merger or reorganization involving only a change in the state of
incorporation of the Parent or the acquisition by the Parent of other businesses
where the Parent survives as a going concern), or the sale of all or
substantially all of the Parent's capital stock or assets to any other person,
then as a part of such transaction, provision shall be made so that the Holder
shall thereafter be entitled to receive the number of shares of stock or other
securities or property of the Parent, or of the successor corporation resulting
from the merger, consolidation or sale, to which the Holder would have been
entitled if the Holder had converted this Note immediately prior thereto. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 2 to the end that the provisions of this Section 2
shall be applicable after that event in as nearly equivalent a manner as may be
practicable.
(e) Certificate of Adjustment. When any adjustment is required to
be made in the Conversion Price, the Parent shall promptly mail to the Holder a
certificate setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Delivery of such
certificate shall be deemed to be a final and binding determination with respect
to such adjustment unless challenged by the Holder within thirty (30) days of
receipt thereof. Such certificate shall also set forth the kind and amount of
stock or other securities or property into which this Note shall be convertible
following the occurrence of any of the events specified in this Section 2.
(f) Mechanics of Conversion. Before any Holder of this Note shall
be entitled to convert all or a portion of this Note into shares of Common Stock
or other shares of the Parent pursuant to this Section 2, it shall surrender
this Note duly endorsed, at the office of the Parent, and shall give written
notice by mail, postage prepaid, to the Parent at its principal corporate
office, of the election to convert the same and the election, if any, of the
type of securities into which it is electing to convert and shall state therein
the name or names in which the certificate or certificates for shares are to be
issued. The Parent shall, promptly thereafter, issue and deliver to such Holder,
or the nominee or nominees of such Holder, at the address specified by such
Holder, a certificate or certificates for the number of shares as aforesaid;
provided, however, that if the person in whose name certificates are requested
to be registered is other than the Holder of this Note, the Parent may require,
prior to issuance of a certificate in the name of such other person, that it
receive reasonable transfer documentation including opinions or other evidence
that the issuance of certificates in such other name as requested does not and
will not cause a violation of the Securities Act of 1933, as amended, any
similar Federal statute at the time in effect or any applicable state securities
laws. Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such surrender of this Note with such notice,
and the person or persons entitled to receive the shares of stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares as of such date. If the Holder elects to convert less
than the full amount outstanding under this Note, the Company shall deliver to
the Holder a new note containing the same terms and conditions as set forth
herein for the remaining balance hereunder.
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<PAGE> 4
(g) Reservation of Stock Issuable Upon Conversion. The Parent
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
this Note, such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of this Note.
(h) No Fractional Shares and Certificates. No fractional shares
shall be issued upon conversion of this Note and the number of shares of Common
Stock to be issued shall be rounded down to the nearest whole share and the
Parent shall pay to the Holder in cash an amount equal to the Conversion Price
then in effect multiplied by the fractional share.
(i) Registration Rights. The shares of Common Stock issued upon
conversion of this Note, if any, shall be entitled to the benefits set forth in
the Registration Rights Agreement of even date herewith between the Parent and
GTEL.
3. Prepayment.
Upon written notice received by the Holder five (5) days prior to
prepayment, the Company may prepay this Note in whole or in part without
premium, penalty of interest or fee at any time. If a partial prepayment is
made, it will not change the due date of the principal amount outstanding or the
obligation of the Company to pay interest in arrears on a quarterly basis, but
will first be applied to the payment of any fees, expenses or other costs the
Company is obligated to pay hereunder; next to any accrued and unpaid interest
due and owing by the Company to the Holder; and then to reduce the amount of the
latest principal installments payable hereunder.
4. Payment of Costs and Expenses.
The Company shall pay all costs and expenses, including, without
limitation, reasonable attorneys' fees and all expenses and disbursements of
counsel, in connection with the enforcement, after the occurrence of an Event of
Default (as such term is defined below) hereunder, of any of the Holder's rights
against the Company and/or the Parent under this Note (whether or not suit is
instituted by or against the Holder).
5. Guaranty and Security.
As security for the payment, performance and observance of the
obligations hereunder, this Note is secured by a Security Agreement of even date
herewith by and among GTEL, the Company and the Parent (the "Security
Agreement"). The payment, performance and observance of the obligations
hereunder are guaranteed by the Parent pursuant to a Guaranty of even date
herewith (the "Guaranty").
6. Events of Default.
(a) The occurrence of any of the following events shall constitute
an "Event of Default":
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<PAGE> 5
(i) Failure of the Company to make any payments when due
hereunder and the continuation of such failure for a period of five (5)
business days thereafter;
(ii) Default in the performance (other than payment) of
any liability, covenant, obligation or agreement of the Company or the
Parent contained herein which default is not cured within five (5)
business days after written notice thereof is given by the Holder to
the Company;
(iii) The occurrence of an Event of Default (after giving
effect to any applicable grace period) under the Security Agreement or
the Guaranty;
(iv) if a default shall occur, which is not cured within
any applicable grace period or a waiver therefor is not expressly
provided in writing, (x) in the payment of any principal, interest or
premium with respect to any Senior Indebtedness (as such term is
defined below) or (y) under any agreement or instrument under or
pursuant to which any such indebtedness may have been issued, created,
assumed, guaranteed or secured by the Company or the Parent, which
shall permit (assuming the giving of appropriate notice if required)
the acceleration of such indebtedness (without giving effect to any
standstill or acceleration blockage period) or if any such indebtedness
shall be declared due and payable prior to the stated maturity thereof
or shall not be paid in full at the stated maturity thereof;
(v) If the Company or the Parent shall make an assignment
for the benefit of creditors or shall admit in writing its inability to
pay its debts as they become due;
(vi) If the Company or the Parent shall file a voluntary
petition in bankruptcy, or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking any
reorganization arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under the United States bankruptcy code
or other applicable federal, state or similar statute, law or
regulation, or shall seek or consent to or acquiesce in the appointment
of any trustee, receiver or liquidator of the Company or the Parent, as
the case may be, or of all or any substantial part of its properties;
or
(vii) If within thirty (30) days after the commencement of any
proceedings against the Company or the Parent seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the United States bankruptcy code
or other applicable federal, state or similar statute, law or
regulation, such proceeding shall not have been dismissed or if, within
thirty (30) days after the appointment, without the consent or
acquiescence of the Company or the Parent, as the case may be, or of
all or any substantial part of its properties, such appointment shall
not have been vacated.
The Company and the Parent agree that they shall give prompt written
notice to the Holder upon the occurrence of an Event of Default.
(b) Upon the occurrence at any time of an Event of Default, the
aggregate amount outstanding hereunder shall, at the option of the Holder,
become immediately due and payable
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<PAGE> 6
in full without notice or demand, provided, however, that upon the occurrence of
an event under Clauses (v), (vi) or (vii) above, the aggregate amount
outstanding shall automatically become due and payable in full and, provided
further, that during the period prior to December 31, 1997, if a default occurs
under clause (i) above at such time as GTI is in default under the Marketing
Agreement pursuant to a material breach by GTI thereof, the Holder shall have no
right to accelerate the payment of this Note until such breach under the
Marketing Agreement is cured and for a period of sixty (60) days thereafter.
Upon the this Note becoming due and payable in full, whether automatically or at
the Holder's election, the rights of the Company, the Parent and the Holder
arising prior to the effective date thereof shall not be affected and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights created or amounts outstanding prior to such date have been
fully disposed of, concluded or liquidated. The security interests, liens and
rights granted to the Holder hereunder and under the Security Agreement shall
continue in full force and effect, until all of the Obligations, as such term is
defined in the Security Agreement, have been paid in full. All representations,
warranties, covenants, waivers and agreements contained herein and therein shall
survive termination hereof unless otherwise provided. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, the Company is for any reason compelled to surrender such payment
to any person or entity because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, the Company shall be liable to, and shall indemnify and
hold the Holder harmless for, the amount of such payment surrendered until the
Holder shall have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Holder in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Holder's rights under this Note and shall be deemed to have been conditioned
upon such payment having become final and irrevocable. From and after maturity
or acceleration of the Note, whichever shall first occur, interest shall be
payable on the entire unpaid balance, until paid in full, at an annual rate
equal to the lesser of fifteen percent (15%) or the highest rate permitted by
law.
7. Subordination.
(a) Holder for itself, its successors and assigns covenants and agrees
that to the extent and in the manner hereinafter set forth, this Note shall be
subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness (defined below) solely in the manner set forth in this
Section 7. The provisions of this Section 7 are made for the benefit of all
holders of Senior Indebtedness and are intended to be and are an inducement and
a consideration for each holder of Senior Indebtedness, whether created on,
before or after the date hereof, to acquire and hold or continue to hold such
Senior Indebtedness. Any such holder may proceed to enforce such provisions and
Holder for itself, its successors and assigns hereby waives notice or proof of
reliance hereon by any holder of Senior Indebtedness and protest, demand for
payment and notice of default.
(b) "Senior Indebtedness" shall mean the principal, interest and any
other sum due or to be due to unaffiliated third parties, but subject to the
restrictions set forth in Section 7(i) below, on:
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<PAGE> 7
(i) all indebtedness of the Company or Parent, other than
indebtedness represented by this Note, whether outstanding on the date
hereof or hereafter created, incurred or assumed which (a) is for the
existing financing of the Company which is secured by a lien against
all or any portion of the properties and/or assets of the Company and
which is listed on Exhibit A hereto, (b) is for all existing secured or
unsecured institutional financing listed on Exhibit A attached hereto
and all future financing, including without limitation, financing,
whether secured or unsecured, from banks, savings and loan
institutions, mortgage companies, insurance companies, governmental
agencies and/or any other institution which is engaged in whole or in
part in making loans in the ordinary course of its business, and (c) is
for all future purchase money financing which is secured by a lien
against all or any portion of the property purchased with the proceeds
of such purchase money financing;
(ii) all obligations, liabilities and indebtedness of the
Company or Parent, under leases, whether in existence on the date of
execution of this Note or thereafter created or arising which are or
may be capitalized under generally accepted accounting principles; and
(iii) amendments, renewals, extensions and refundings of
any obligations of the kind described in the preceding clauses (i) and
(ii).
Anything contained in the preceding sentence to the contrary notwithstanding,
(x) any indebtedness of the kind described in clause (i) of the preceding
sentence and (y) any lease of the kind described in clause (ii) of the preceding
sentence which is not described in clause (iii) of the preceding sentence, will
not be classified as Senior Indebtedness unless at the time it is incurred or
comes into existence the party (or representative of the party) to which sums
will be due requests that this Note be subordinated to such indebtedness or
lease, but subject to the terms and conditions set forth in Paragraph (i)
herein. The Company shall provide notice to the Holder of the institution
providing Senior Indebtedness and a reasonably detailed summary of the term
thereof.
(c) By its acceptance of this Note, Holder covenants and agrees and
each subsequent holder of this Note by its acceptance of this Note covenants and
agrees that payment of the sums due or to be due under this Note are expressly
subordinated to all Senior Indebtedness in the manner provided herein, and
Holder and each subsequent holder of this Note covenant and agree to enter into
any further subordination agreement by any holder of Senior Indebtedness,
provided, however, that (i) such agreement is reasonable and consistent with the
terms and conditions set forth in this Section 7, (ii) before executing such
agreement, the Company and the Parent provide the Holder with a certificate of
the President and Chief Financial Officer of the Company that the Senior
Indebtedness has been approved by the Company's Board of Directors and satisfies
the conditions set forth in Section 7(i) herein and (iii) the Company and the
Parent agree to promptly reimburse the Holder for all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and all
expenses and disbursements of counsel) incurred by the Holder in connection with
entering into such an agreement.
(d) Unless otherwise specifically provided in this Section 7, the
Company shall be permitted to make all scheduled payments of principal and
interest under this Note. No payment
- 7 -
<PAGE> 8
on account of any sum due under this Note shall be made, nor shall any assets be
applied to purchase, acquire or retire any part of this Note, if at the time of
such payment or application or immediately after giving effect thereto any
default shall have occurred permitting the holder of any Senior Indebtedness to
accelerate the maturity thereof and such default shall not have been cured or
waived, provided, that this sentence shall not prohibit payments or applications
on this Note if such default or event of default (i) is not a default in the
making of any required payment due on any Senior Indebtedness, and (ii) shall
continue for a period of 60 days and the holder of the Senior Indebtedness has
not accelerated the maturity thereof, except that any future payments on this
Note shall again become prohibited if at any later time the holder of the Senior
Indebtedness accelerates the maturity thereof.
(e) If the Holder or any subsequent holder of this Note shall receive
any payment in respect of any sum due or to be due under this Note which Holder
or any subsequent holder of this Note knows it is not entitled to receive under
the provisions of Section 7(d) hereof, it will hold any amount so received in
trust for the benefit of the holders of the Senior Indebtedness and will
forthwith turn over such payment to such holders of the Senior Indebtedness in
the form received to be applied on the Senior Indebtedness upon receipt of
written notice from all such holders.
(f) Neither Holder nor any subsequent holder of this Note will commence
any action or proceeding against the Company or any guarantor hereof to recover
all or any part of this Note or join with any creditor under any bankruptcy,
reorganization, readjustment or arrangement of debt, receivership, liquidation
or insolvency law or statute of the federal or any state government, unless
Holder or any subsequent holder shall have given the holders of the Senior
Indebtedness 60 days notice of its intention to do so and unless the holders of
the Senior Indebtedness shall also have the opportunity to join in bringing any
such proceedings against the Company.
(g) In the event of any liquidation, dissolution or other winding up of
the Company, or in the event of any receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization or arrangement with
creditors, whether or not pursuant to bankruptcy laws, sale of all or
substantially all of the assets or any other marshaling of the assets and
liabilities of the Company, (i) the holders of the Senior Indebtedness, in the
order of their priority, shall first be paid in full before Holder or any
subsequent holder of this Note shall be entitled to receive any monies,
dividends or other assets in any such proceeding, and (ii) Holder and each
subsequent holder of this Note will, at the reasonable request of any holder of
Senior Indebtedness, file any claim, proof of claim or other instrument of
similar character necessary to enforce the obligations of the Company in respect
of this Note and will hold in trust for the benefit of the holders of the Senior
Indebtedness, in the order of their priority, and pay over to said holders in
the form received, upon receipt of written notice from all such holders, to be
applied on Senior Indebtedness in the order of their priority, any and all
monies, dividends or other property or assets received in any such proceeding on
account of this Note, until all Senior Indebtedness shall have been paid in
full.
(h) At any time and from time to time, the holders of the Senior
Indebtedness may, without the consent of or notice to Holder or any subsequent
holder of this Note, without incurring responsibility to Holder or any
subsequent holder of this Note, and without impairing
- 8 -
<PAGE> 9
or releasing any of their rights or any of the obligations of Holder or any
subsequent holder of this Note hereunder:
(i) subject to Paragraph (i) herein, change the amount,
manner, place or terms of payment or change or extend the time of
payment of or renew or alter the Senior Indebtedness in any manner;
(ii) sell, exchange, release or otherwise deal with any
property pledged or mortgaged to secure, or howsoever securing, the
Senior Indebtedness;
(iii) release anyone liable in any manner for the payment
or collection of the Senior Indebtedness;
(iv) exercise or refrain from exercising any rights
against the Company and others, including Holder or any subsequent
holder of this Note; and
(v) apply any sums by whomsoever paid or however realized
to the Senior Indebtedness.
(i) This Section 7 shall not apply to any indebtedness of the Company
or the Parent, and such indebtedness shall not be treated as "Senior
Indebtedness" hereunder, if such indebtedness causes the Parent's consolidated
debt to equity ratio to exceed : (the "Cap") at any time. Furthermore, with
respect to all future indebtedness of the Company and/or the Parent and any
amendments, renewals, extensions and refundings of any Senior Indebtedness in
existence as of the date hereof ("Future Indebtedness), such Future Indebtedness
shall only be treated as Senior Indebtedness hereunder if the Parent and the
Company provide the Holder with a projected consolidated statement of cash flows
of the Parent, certified by the President and Chief Financial Officer of the
Parent as being prepared in good faith and with a reasonable basis therefore and
consistent with past practices, that establishes that the incurrence of such
Future Indebtedness will not result in the Company's inability to pay all
amounts due under this Note on or before the due dates thereof.
8. General.
(a) Except as otherwise provided herein, the Company and the Parent
hereby waive presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement hereof. No delay or omission on the part of the Holder in exercising
or enforcing any of its right, powers, privileges or remedies hereunder
(collectively, "Rights") shall operate as a waiver thereof, and a waiver of any
Rights on any one occasion shall not be construed as a bar to or waiver of any
Rights on any future occasion.
(b) In the event that any court having jurisdiction shall determine
that any covenant or other provision contained in this Note shall be
unreasonable or unenforceable in any respect, then such covenant or other
provision shall be deemed limited to the extent that such court deems it
reasonable and enforceable, and as so limited shall remain in full force and
effect. In the event that such court shall deem any such covenant or other
provision wholly unenforceable,
- 9 -
<PAGE> 10
the remaining covenants and other provisions of this Note shall nevertheless
remain in full force and effect.
(c) This Note is given to evidence debt for business or commercial
purposes and shall take effect as a sealed instrument and shall be governed by
the law of The Commonwealth of Massachusetts (without giving effect to the
conflict of law principles thereof). Any legal action or proceeding with respect
to this Note shall be brought in the courts of The Commonwealth of Massachusetts
or of the United States of America for the District of Massachusetts, and, by
execution and delivery of this Note, each of the Company and the Parent hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the Company,
the Parent and the Holder hereby knowingly, voluntarily, intentionally and
irrevocably waives, in connection with any such action or proceeding: (i) any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such action or proceeding in such respective
jurisdictions and (ii) to the maximum extent not prohibited by law, any right it
may have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Note. Each of the Company, the
Parent and the Holder irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof in the manner provided in paragraph (e) of this Section 8.
(d) This Note shall be binding upon each of the Company and the Parent
and its successor and permitted assigns and shall inure to the benefit of the
Holder and its successors and permitted assigns. The rights and obligations
under this Note shall not be assigned by either the Parent or the Company
without the prior written consent of the Holder, which may be given or withheld
in its sole discretion. The rights and obligations under this Note shall not be
assigned by the Holder without the prior written consent of the Parent and the
Company, which may be given or withheld in their sole discretion, provided,
however, that the Holder may, without having to obtain such consent, assign this
Note and the rights and obligations hereunder (i) to GTI or any of its
Affiliates (as such term is defined in the Purchase Agreement); or (ii) as
collateral to secure bank or institutional financing of GTI or any of its
Affiliates.
(e) All notices, requests, consents and other communications hereunder
shall be in writing, shall be addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii) sent by reputable
overnight courier by next day, priority, or (iii) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Holder: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: Chief Financial Officer
with a copy to: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: General Counsel
- 10 -
<PAGE> 11
If to the Company or Nytest Environmental Inc.
the Parent: 60 Seaview Boulevard
Port Washington, NY 11050
Attn: President
with a copy to: Herbert H. Sommer, Esq.
600 Old Country Road
Garden City, NY 11530
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if sent by overnight courier,on the next business day following the day
such notice is delivered to the courier service, or (iii) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
(f) No provision hereof shall be modified, altered or limited except by
a written instrument expressly referring to this Note and to such provision, and
executed by the parties hereto.
(g) Except as expressly provided in Section [8.5] of the Purchase
Agreement, the obligations of the Company hereunder shall not be reduced to
satisfy any other obligations between the Holder (including any of its
affiliates) and the Company and/or the Parent pursuant to any other agreement or
arrangement between such parties or otherwise.
(h) If any date that may at any time be specified in this Note as a
date for the making of any payment of interest under this Note shall fall on
Saturday, Sunday or on a day which in Massachusetts shall be a legal holiday,
then the date for the making of that payment shall be the next subsequent day
which is not a Saturday, Sunday or legal holiday.
IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument on the date first above written by the duly authorized
representatives of the Company and the Parent.
NEI/GTEL ENVIRONMENTAL
LABORATORIES, INC.
/s/ By: /s/ John Gaspari
- ----------------------- ---------------------------
Witness John Gaspari, President
FOR PURPOSES OF SECTION 2, 6, 7 AND 8
ONLY:
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<PAGE> 12
NYTEST ENVIRONMENTAL INC.
By: /s/ John Gaspari
- ----------------------- -------------------------------
Witness John Gaspari, President
- 12 -
<PAGE> 1
EXHIBIT 99.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of this 31st day of December 1995,
is made by and among, NEI/GTEL Environmental Laboratories, Inc., a Delaware
corporation ("Debtor"), Nytest Environmental Inc., a Delaware Corporation
("Parent") and GTEL Environmental Laboratories, Inc., a Delaware corporation
("Secured Party").
WHEREAS, Debtor, Parent and Secured Party have entered into an Asset
and Business Purchase Agreement dated December 28, 1995 (the "Asset Purchase
Agreement"), whereby Debtor purchased substantially all of the assets, subject
to certain liabilities, of Secured Party;
WHEREAS, Debtor issued to Secured Party, in partial consideration for
the assets, a Subordinated Convertible Note of even date herewith in the
original principal amount of $1,254,000 (the "Note"); and
WHEREAS, Debtor and Parent desire to secure all of the obligations of
Debtor under the Note by granting to Secured Party a security interest in all
of Debtor's assets on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. As collateral security for the payment,
performance and observance of the Note and all other obligations of
Debtor and/or Parent to Secured Party or any of its Affiliates (as
such term is defined below) (collectively, the "Obligations"), Debtor
hereby grants to Secured Party a security interest in and a right of
setoff against all of the property, plant and equipment of Debtor
purchased by Debtor under the Asset Purchase Agreement, wherever
located set forth together with any and all additions thereto and
replacements and proceeds thereof (the "Collateral"), including, the
following:
(a) All of Debtor's (i) equipment, machinery, vehicles, furniture
and fixtures, all attachments, accessions and property now or
hereafter affixed thereto, and all substitutions and
replacements thereof; and (ii) books, records and other
property relating to the foregoing; and
(b) All of Debtor's right, interest or title to any and all
products and proceeds of any of the foregoing, in any form
(including, without limitation, any insurance proceeds and
claims by Debtor against third parties for loss or damage to
or destruction of any or all of the foregoing property and
proceeds of proceeds).
<PAGE> 2
2. Representations, Warranties and Covenants. Debtor and Parent, jointly
and severally, represent, warrant and covenant as follows:
(a) Debtor has full corporate power, authority and legal right to
pledge and grant a security interest in all of the Collateral
pursuant to this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of Debtor and Parent,
enforceable against them in accordance with its terms.
(b) No consent of any other party (including, without limitation,
stockholders or creditors of Debtor or Parent) and no consent,
authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body
is required and has not been obtained either (x) for the
pledge by Debtor of the Collateral pursuant to this Agreement,
or (y) for the execution, delivery or performance of this
Agreement.
(c) All filings, registrations and recordings necessary,
appropriate or reasonably requested by Secured Party to
create, preserve, protect and perfect the security interest
granted by Debtor to Secured Party hereby in respect of the
Collateral and required to be made on or before the date
hereof have been accomplished. The security interest granted
to Secured Party pursuant to this Agreement in and to the
Collateral constitutes and hereafter will constitute a
perfected security interest therein (assuming fully executed
UCC-1 Financing Statements are properly filed with the
Secretary of State of the state in which the Collateral is
located as listed on Schedule A and in the towns or counties
in which the Collateral is located as listed on Schedule A),
superior and prior to the rights of all other persons therein,
except for those holders of Senior Indebtedness, as defined in
the Note, and subject to no other Liens (as such term is
defined below).
(d) Debtor is, as of the date hereof, and, as to Collateral
acquired by it from time to time after the date hereof, Debtor
will be, the owner of all Collateral free from any Lien,
except Permitted Liens (as such term is defined below) or
other right, title or interest of any person other than
Secured Party or holders of Senior Indebtedness, and Debtor
shall defend the Collateral against all claims and demands of
all persons at any time claiming any interest therein adverse
to Secured Party.
(e) Except for financing statements evidencing obligations of
Debtor to holders of Senior Indebtedness, there is no
financing statement on file in any jurisdiction (or similar
statement, notice of assignment or instrument of registration
under the law of any jurisdiction) covering or purporting to
cover any interest of any kind in the Collateral, and Debtor
shall not execute or authorize to be filed in any public
office any financing statement (or similar statement, notice
of assignment or instrument of registration under the law of
any jurisdiction) relating to the Collateral, except financing
statements filed or to be filed in respect of, and
2
<PAGE> 3
covering the security interests granted hereby by Debtor or
granted by Debtor to such holders.
(f) The chief executive office of Debtor is located at Meadowbrook
Industrial Park, Milford, New Hampshire 03035 and the chief
executive office of the Parent is located at 60 Seaview
Boulevard, Port Washington, New York. Debtor and Parent shall
not move their respective chief executive offices until, (i)
they shall have given to Secured Party not less than 15 days'
prior written notice of their intention so to do, setting
forth the new location (which shall be in the continental
United States of America) and such other information in
connection therewith as Secured Party may reasonably request,
and (ii) with respect to such new location, Debtor shall have
taken all action reasonably satisfactory to Secured Party to
maintain the perfection and proof of the security interest of
Secured Party in the Collateral intended to be granted hereby,
including, without limitation, obtaining waivers of landlord's
or warehouseman's liens with respect to such new location.
(g) Debtor shall not change its corporate name until (i) it shall
have given to Secured Party not less than 15 days' prior
written notice of its intention so to do, clearly describing
such new name and providing such other information in
connection therewith as Secured Party may request, and (ii)
with respect to such new name, Debtor shall have taken all
action reasonably satisfactory to Secured Party to maintain
the perfection and proof of the security interest of Secured
Party in the Collateral intended to be granted hereby.
(h) All of the Collateral held on the date hereof by Debtor is
located at the locations shown on Schedule B hereto. All
Collateral now held or subsequently acquired shall be kept at
any of the locations shown on Schedule B hereto or such new
location as Debtor may establish, provided, however, that
before establishing such new location, (i) Debtor shall have
given Secured Party fifteen (15) days prior notice thereof,
clearly describing such new location (which shall be in the
continental United States of America) and shall have provided
such other information in connection therewith as Secured
Party may reasonably request, and (ii) with respect to such
new location, Debtor shall have taken all action reasonably
satisfactory to Secured Party to maintain the perfection and
proof of the security interest in the Collateral intended to
be granted hereby, including, without limitation, obtaining
waivers of landlord's or warehouseman's liens with respect to
such new location.
(i) Debtor will not assign, transfer, sell, lease or otherwise
dispose of any Collateral except (x) in the ordinary course of
business or (ii) to Parent or to any entity in which Parent
owns and maintains greater than two-thirds of the voting stock
( "Direct Subsidiary" and any entity in which a Direct
Subsidiary owns and maintains greater then two-thirds of the
voting stock (such a subsidiary and any direct subsidiary are
hereinafter referred to as a "Controlled Subsidiary"),
provided, however, that Parent shall, and shall cause each
such Controlled
3
<PAGE> 4
Subsidiary to which any Collateral has been assigned,
transferred, sold, leased or otherwise disposed, to comply
with the covenants and obligations set forth herein.
(j) Debtor will use the Collateral for lawful purposes only, and
in conformity with all applicable laws, ordinances and
regulations.
(k) The Collateral is now and shall remain personal property, and
Debtor will not permit any material part of the Collateral to
become a fixture without prior written notice to and consent
of Secured Party and without first making all arrangements,
and delivering, or causing to be delivered, to Secured Party
all instruments and documents, including, without limitation,
waivers and subordination agreements by any landlords or
mortgagees, reasonably requested by and reasonably
satisfactory in form and substance to Secured Party to
preserve and protect the security interest granted herein, and
to effectuate or maintain the priority thereof, against all
persons.
(l) Parent will maintain at its chief executive office proper
books of account and records in accordance with generally
accepted accounting principles applied on a consistent basis,
and will deliver to Secured Party the following:
(i) as soon as available and in any event within fifty
(50) days after the end of each quarter of each
fiscal year of Parent, a consolidated balance sheet
of Parent as of the end of such quarter, statements
of income, stockholders' equity and the related
statements of cash flows of Parent for the period
commencing at the end of the previous fiscal year and
ending with the end of such quarter, setting forth in
each case in comparative form the corresponding
figures for the corresponding period of the preceding
fiscal year in reasonable detail and prepared in
accordance with generally accepted accounting
principles consistently applied (subject to year-end
audit adjustments) in the form filed with the United
States Securities and Exchange Commission ("SEC") or,
if no such filings are made, such financial
information shall be duly certified by the President
or Chief Financial Officer; and
(ii) as soon as available and in any event within one
hundred five (105) days after the end of each fiscal
year of Parent, a copy of the annual audit report for
such year for Parent, including therein a
consolidated balance sheet of Parent as of the end of
such fiscal year and statements of income and
stockholders' equity and of cash flows of Parent for
such fiscal year, all duly certified by independent
public accountants, which, if filed with the SEC, may
be in such form as so filed.
(m) Secured Party and its agents, advisors and counsel may, at
Secured Party's expense, visit and inspect any of the
facilities of Debtor for the purpose inspecting the
Collateral, at reasonable times and with reasonable prior
notice during normal business hours in a manner not disruptive
to Debtor's business.
4
<PAGE> 5
Debtor and Parent will furnish to Secured Party such other
information as it from time to time may reasonably request.
(n) Debtor will maintain insurance with financially sound and
reputable insurance companies or associations in such amounts
and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in
the same general areas in which Debtor operates, provided,
however, that the insurance coverage for the Collateral shall
at least equal its replacement cost. Such insurance policies
shall be endorsed to name Secured Party as an additional
insured party. Upon Secured Party's reasonable request from
time to time, certificates evidencing the required insurance
coverage shall be delivered by Debtor to Secured Party and the
policies shall provide that any material change in or
cancellation of any policy under which certificates are issued
shall not be valid until Secured Party has received fifteen
(15) days prior written notice of such change or cancellation.
(o) Debtor will preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification
is necessary in view of its business and operations or the
ownership of its properties, including, without limitation,
all jurisdictions in which any of the Collateral is located.
Debtor shall preserve and maintain all licenses and other
rights to use patents, processes, licenses, trademarks, trade
names, inventions, intellectual property rights or copyrights
owned or possessed by it and necessary to the conduct of its
business.
(p) Debtor will pay and discharge when due and payable, all lawful
taxes, subject to any available extensions, assessments and
governmental charges or levies imposed upon the income,
profits, property or business of Debtor; provided, however,
that any such tax, assessment, charge or levy need not be paid
if the validity thereof shall currently be contested in good
faith by appropriate proceedings and if Debtor shall have set
aside on its books adequate reserves with respect thereto, and
provided, further, that Debtor will pay all such taxes,
assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any Lien which may have attached
to the Collateral as security therefor.
(q) Debtor will keep the Collateral in good operating condition in
all material respects, reasonable wear and tear excepted, and
from time to time make all needful and proper repairs,
renewals, replacements, additions and improvements thereto.
(r) Debtor will not create, incur, assume or suffer to exist any
Lien of any nature, upon or with respect to any of the
Collateral or assign or otherwise convey any right to receive
income, except Permitted Liens.
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<PAGE> 6
(s) Debtor will not incur or suffer to exist any Indebtedness (as
such term is defined below) except:
(i) Senior Indebtedness;
(ii) Indebtedness secured by purchase money security
interests securing the purchase price of goods and
services and capitalized equipment leases, but
specifically excluding any sale leaseback of all or
any portion of the Collateral; and
(iii) Current liabilities, other than for money borrowed,
of Debtor incurred in the ordinary course of business.
(t) Debtor will not permit any change in the nature of the
business of Debtor or merge or consolidate with any other
person, except with Parent or with a Controlled Subsidiary,
provided, however, that Parent shall, and shall cause the
Controlled Subsidiary with which the merger or consolidation
has occurred, to comply with the covenants and obligations set
forth herein.
(u) Debtor will not purchase, redeem, retire, or otherwise acquire
for value any shares of its capital stock (or rights, options
or warrants to purchase such shares) now or hereafter
outstanding or return any capital to its stockholders, and
Debtor shall not declare or pay any dividends or make any
distribution of assets to its stockholders as such.
(v) Debtor will not sell, transfer, lease or otherwise dispose of,
in one transaction or a series of transactions, all or
substantially all of its assets, except to the Parent or a
Controlled Subsidiary, provided, however, that Parent shall,
and shall cause the Controlled Subsidiary to which the assets
have been sold, transferred, leased or otherwise disposed, to
comply with the covenants and obligations set forth herein.
(w) Debtor and Parent shall cause Debtor to conduct its business
in the ordinary course and Parent shall not permit or cause
work typically performed by Debtor to be performed by another
Affiliate of Debtor or to take any other actions to purposely
diminish the value of the Collateral;
(x) Parent will continue to own at all times all of the issued and
outstanding capital stock of Debtor;
(y) Debtor will not enter into any transaction or agreement with
Parent or any Affiliate of Debtor or Parent, except agreements
and transactions on terms no less favorable to Debtor than it
would obtain in a transaction between unrelated parties.
6
<PAGE> 7
(z) Debtor will not guarantee any Indebtedness except Senior
Indebtedness and will not make any loan or advance to any
person, except customary travel and entertainment advances to
employees.
(aa) Debtor and Parent will, at their sole cost and expense,
perform all acts and execute all documents reasonably
requested by Secured Party from time to time to evidence,
perfect, maintain or enforce Secured Party's security interest
granted herein, and to effectuate or maintain the priority
thereof or otherwise to carry out the provisions and purposes
of this Agreement.
(bb) Debtor and Parent shall promptly advise Secured Party of any
event or occurrence which results in or is likely to result in
a breach of the covenants contained herein, describing such
event or occurrence in reasonable detail. Debtor and Parent
will also promptly advise Secured Party of any facts which
cast any doubt upon the accuracy or completeness in any
material respects of any of the representations and warranties
contained herein.
For purposes of this Agreement, the following terms shall have the
meanings:
"Affiliate" has the meaning ascribed to that term in Rule
12b-2 under the Securities Exchange Act of 1934, or any
successor rule.
"Indebtedness" shall mean, with respect to any person, (i) all
obligations of such person for borrowed money, or with respect
to deposits or advances of any kind (other than deposits,
advances or excess payments accepted in connection with the
sale by such Person of products or services in the ordinary
course of business), (ii) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments,
(iii) all obligations of such person upon which interest
charges are customarily paid (other than obligations accepted
in connection with the purchase by such person of products or
services in the ordinary course of business), (iv) all
obligations of such person under conditional sale or other
title retention agreements relating to property purchased by
such person, (v) all obligations of such person issued or
assumed as the deferred purchase price of property or services
(other than accounts payable to suppliers incurred in the
ordinary course of business and paid when due), (vi) all
Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien or security interest on
property owned or acquired by such person whether or not the
obligations secured thereby have been assumed, (vii) all
obligations of such person under leases required to be
accounted for as capital leases under generally accepted
accounting principles, and (viii) all guarantees of such
person.
"Lien" shall mean any mortgage, pledge, assignment, security
interest, encumbrance, lien or charge of any kind, any
conditional sale or other title retention agreement or any
lease in the nature thereof (including any agreement to give
any of the foregoing).
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"Permitted Liens" shall mean:
(a) for taxes, assessments or governmental charges or
levies on property of Debtor if the same shall not at the time
be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate
proceedings;
(b) imposed by law, such as carriers, warehousemen's and
mechanics' Liens and other similar Liens arising in the
ordinary course of business;
(c) arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation;
(d) arising from any litigation or proceeding which is
being contested in good faith by appropriate proceedings,
provided, however, that no execution or levy has been made;
(e) securing the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations and surety bonds; and
(f) Securing the Senior Indebtedness.
3. Events of Default. Debtor and Parent shall be in default under this
Agreement upon the happening of any of the following events or
conditions (herein called "Events of Default"):
(i) The occurrence of an Event of Default under the Note;
(ii) Debtor or Parent shall fail to perform any of its obligations
under this Agreement, including, without limiting the
generality of the foregoing, any covenants under Section 2
herein, and such failure shall continue beyond ten (10) days
after notice of such failure to perform is provided by Secured
Party to Debtor or Parent, as the case may be; or
(iii) Any representation, warranty or statement made by Debtor or
Parent herein is found to have been false or misleading in any
material respect as of the time when made.
4. Remedies Upon Default. Upon the occurrence of an Event of Default and
at any time thereafter while such Event of Default remains unremedied
and unwaived, Secured Party may, without notice to or demand upon
Debtor or Parent, declare any Obligations immediately due and payable
and Secured Party shall have the following rights and remedies (to the
extent permitted by applicable law), in addition to all rights and
remedies of a secured party under the UCC, at law or in equity, all
such rights and
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remedies being cumulative, not exclusive and enforceable
alternatively, successively or concurrently:
(a) Secured Party may, at any time and from time to time, with or
without judicial process or the aid and assistance of others,
enter upon any premises in which any Collateral may be located
and, without resistance or interference by Debtor or Parent,
take possession of the Collateral, and/or dispose of any
Collateral on any such premises, and/or require Debtor or
Parent to assemble and make available to Secured Party, at the
expense of Debtor and Parent, any Collateral at any place and
time designated by Secured Party which is reasonably
convenient to both parties, and/or remove any Collateral from
any such premises for the purpose of effecting sale or other
disposition thereof and/or sell, resell, lease, assign and
deliver, grant options for or otherwise dispose of any
Collateral in its then condition or following any commercially
reasonable preparation or processing, at public or private
sale or proceedings or otherwise, by one or more contracts, in
one or more parcels, at the same or different times, with or
without having the Collateral at the place of sale or other
disposition, for cash and/or credit, and upon any terms, at
such place(s) and time(s) and to such person(s) as Secured
Party deems best, all without demand, notice or advertisement
whatsoever except that where an applicable statute requires
reasonable notice of sale or other disposition Debtor and
Parent hereby agree that the sending of ten (10) days' notice
by certified mail, return receipt requested, to Debtor's and
Parent's address set forth in Section 11 hereof, or such other
address as Debtor and Parent may provide to Secured Party from
time to time, shall be deemed reasonable notice thereof. If
any Collateral is sold by Secured Party upon credit or for
future delivery, Secured Party shall not be liable for the
failure of the purchaser to pay for same and in such event
Secured Party may resell such Collateral in accordance with
the terms set forth above. Secured Party may buy any
Collateral at any public sale and, if any Collateral is of a
type customarily sold in a recognized market or is of the type
which is the subject of widely distributed standard price
quotations, Secured Party may buy such Collateral at private
sale and in each case may make payment therefor by any means.
(b) Secured Party may apply the cash proceeds actually received
from any sale or other disposition of Collateral to the
reasonable expenses of retaking, holding, preparing for sale,
selling, leasing and the like, to reasonable attorneys' fees
and all reasonable legal, travel and other expenses which may
be incurred by Secured Party in attempting to collect the
Obligations or enforce this Agreement or in the prosecution or
defense of any action or proceeding related to the subject
matter of this Agreement; and then to the Obligations in such
order and as to principal or interest as Secured Party may
determine in its sole discretion; and Debtor shall remain
liable and will pay Secured Party on demand any deficiency
remaining after the application of such cash proceeds,
together with interest thereon at the highest rate then
payable on the Obligations and the balance of any expenses
unpaid, with any surplus to be paid to Debtor, subject to any
duty of Secured
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Party imposed by law to the holder of any subordinate security
interest in the Collateral known to Secured Party.
(c) Secured Party may appropriate, set off and apply to the
payment of the Obligations, any Collateral in or coming into
the possession of Secured Party or its agents, without notice
to Debtor or Parent and in such manner as Secured Party may,
in its reasonable discretion, determine without regard to the
existence or sufficiency of other collateral therefor.
5. Power of Attorney. To effectuate the terms and provisions hereof,
Debtor, so long as an Event of Default has occurred and is continuing,
hereby designates and appoints Secured Party and each of its designees
or agents as attorney-in-fact of Debtor, irrevocably and with power of
substitution, with authority to: (i) endorse the name of Debtor on
any notes, acceptances, checks, drafts, money orders, instruments or
other evidences of Collateral that may come into Secured Party's
possession; (ii) sign the name of Debtor on any invoices, documents,
drafts against and notices to account debtors or obligors of Debtor,
assignments and requests for verification of accounts; (iii) execute
proofs of claim and loss; (iv) execute endorsements, assignments or
other instruments of conveyance or transfer with respect to
instruments which constitute the Collateral; (v) adjust and compromise
any claims under insurance policies or otherwise; (vi) execute
releases; (vii) receive, open and dispose of all mail addressed to
Debtor and notify the Post Office authorities to change the address
for delivery of mail addressed to Debtor to such address as Secured
Party may designate; and (viii) do all other acts and things necessary
or advisable in the sole discretion of Secured Party to carry out and
enforce this Agreement or the Obligations. All acts done under the
foregoing authorization are hereby ratified and approved and neither
Secured Party nor any designee or agent thereof shall be liable for
any acts of commission or omission, for any error of judgment or for
any mistake of fact or law provided, that Secured Party shall not be
relieved of liability to the extent its or its agent's or designee's
act, error or mistake constituted gross negligence or willful
misconduct. This power of attorney being coupled with an interest is
irrevocable while any Obligations shall remain unpaid.
6. Care of Collateral. Secured Party shall have the duty to exercise
reasonable care in the custody and preservation of any Collateral in
its possession, which duty shall be fully satisfied if Secured Party
accords such Collateral treatment substantially the same as that which
it accords similar property owned by it, and, with respect to Secured
Party's custody and preservation of any of the Collateral in Secured
Party's possession, Debtor and Parent release Secured Party from, and
agree to indemnify, defend, and hold harmless Secured Party with
respect to, any third party claims, causes of actions, and demands at
any time arising out of or with respect to Secured Party's custody
and/or preservation of the Collateral at any time in Secured Party's
possession, except that such release and indemnity shall not be
applicable to the extent that any such claims, causes of actions, or
demands have resulted from Secured Party's gross negligence or willful
misconduct. Secured Party's prior recourse to any Collateral shall
not constitute a condition of any demand, suit or proceeding for
payment or collection of the Obligations.
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7. Expenses. So long as an Event of Default has occurred and is
continuing, upon demand, Debtor and Parent, jointly and severally,
will pay to Secured Party the amount of any and all reasonable
expenses, including the fees and expenses of its counsel and the fees
and expenses of any experts and agents, which Secured Party may incur
in connection with (i) the collection of the Obligations, (ii) the
administration of this Agreement, (iii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of
the Collateral, (iv) the exercise or enforcement of any of the rights
of Secured Party hereunder, or (v) the failure by Debtor and/or Parent
to perform or observe any of the provisions hereof. All amounts
payable by Debtor and/or Parent under this Section shall be due upon
demand and shall be part of the Obligations. Debtor's and Parent's
obligations under this Section shall survive the termination of this
Agreement and the discharge of Debtor's and Parent's other obligations
hereunder.
8. Indemnification.
(a) Debtor and Parent jointly and severally agree to indemnify,
reimburse and hold Secured Party and its respective
successors, assigns, employees, officers, directors, agents,
attorneys and servants (collectively, "Indemnities") harmless
from and against any and all liabilities, obligations,
damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and
expenses) of whatsoever kind and nature imposed on, asserted
against, or incurred by any of the Indemnitees, in any way
relating to or arising out of this Agreement or in any other
way connected with the administration of the transactions
contemplated hereby or the enforcement of any of the terms
hereof, or the preservation of any rights hereunder, or in any
way relating to or arising out of the manufacture, processing,
ownership, ordering, purchase, delivery, testing, control,
lease, possession, operation or other disposition or use of
the Collateral by the Indemnitees (including, without
limitation, latent or other defects, whether or not
discoverable); provided, that Debtor and Parent shall have no
obligation to an Indemnitee hereunder to the extent that such
indemnified liabilities arise from the gross negligence or
willful misconduct of such Indemnitee. Upon written notice by
any Indemnitee of the assertion of such a liability,
obligation, damage, injury, penalty, claim, demand, action,
judgment or suit, Debtor and/or Parent shall assume full
responsibility for the defense thereof. If any action, suit
or proceeding arising from any of the foregoing is brought
against any Indemnitee, Debtor and/or Parent shall, if
requested by such Indemnitee, defend such action, suit or
proceeding. Each Indemnitee shall, unless any other
Indemnitee has made the request described in the preceding
sentence and such request has been complied with, have the
right to employ its own counsel (or internal counsel) to
investigate and control the defense of any matter covered by
the indemnity set forth in this Section, and the fees and
expenses of such counsel shall be paid by Debtor and Parent;
provided that, only to the extent no conflict exists between
and among the Indemnitees as reasonably determined by the
Indemnitees, Debtor and/or Parent shall not be obligated to
pay the fees and expenses or more than
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one counsel for all Indemnitees as a group with respect to any
such matter, action, suit or proceeding.
(b) Contribution. If and to the extent that the obligations of
Debtor and Parent under this Section are unenforceable for any
reason, Debtor and Parent hereby agree to, jointly and
severally, make the maximum contribution to the payment and
satisfaction of such obligations that is permissible under
applicable law.
(c) Survival. The obligations of Debtor and Parent contained in
this Section shall survive the termination of this Agreement
and the discharge of Debtor's and Parent's other obligations
hereunder.
9. Waivers. No act, omission or delay by Secured Party or course of
dealing between Secured Party and Debtor or Parent shall constitute a
waiver of the rights and remedies of Secured Party hereunder. No
single or partial waiver by Secured Party of any Event of Default or
right or remedy which it may have shall operate as a waiver of any
other Event of Default, right or remedy or of the same Event of
Default, right or remedy on a future occasion. Debtor and Parent
hereby waive presentment, notice of dishonor and protest of all
instruments included in or evidencing any Obligations or Collateral,
and all other notices and demands whatsoever (except as expressly
provided herein).
10. Governing Law; Jurisdiction; etc. This Agreement shall be governed by
and construed in accordance with the law of the Commonwealth of
Massachusetts (without giving effect to the conflict of laws
principles thereof). Any legal action or proceeding with respect to
this Agreement may be brought in the courts of the Commonwealth of
Massachusetts or of the United States of America for the District of
Massachusetts, and, by execution and delivery of this Agreement, each
of Debtor and Parent hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of Holder, Debtor and Parent hereby knowingly,
voluntarily, intentionally and irrevocably waives, in connection with
any such action or proceeding: (i) any objection, including, without
limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to
the bringing of any such action or proceeding in such respective
jurisdictions and (ii) to the maximum extent not prohibited by law,
any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with
this Agreement. Each of Holder, Debtor and Parent irrevocably
consents to the service of process of any of the aforementioned courts
in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address
set forth in Section 11 below, or at such other address as it may
provide to the other parties hereto from time to time. Nothing herein
shall affect the right of a party hereto to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise
proceed against a party in any other jurisdiction.
11. Notices. Unless otherwise provided herein, all notices, requests,
consents and other communications hereunder shall be in writing, shall
be addressed to the receiving party's address set forth below or to
such other address as a party may designate by notice
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hereunder, and shall be either (i) delivered by hand, (ii) sent by
reputable overnight courier by next day, priority, or (iii) sent by
registered or certified mail, return receipt requested, postage
prepaid.
If to Debtor or Parent: Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attention: President
with a copy to: Herbert H. Sommer, Esq.
600 Old Country Road
Garden City, NY 11530
Fax.: (516) 228-8211
If to Secured Party: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: Chief Financial Officer
with a copy to: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: General Counsel
All notices, requests, consents and other communications hereunder
shall be deemed to have been given either (i) if by hand, at the time
of the delivery thereof to the receiving party at the address of such
party set forth above, (ii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier
service, or (iii) if sent by registered or certified mail, on the 5th
business day following the day such mailing is made.
12. Amendments and Waivers. No provision hereof shall be modified,
altered or limited except by a written instrument expressly referring
to this Agreement and to such provision, and executed by Debtor,
Parent and Secured Party.
13. Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained
in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent
that such court deems it reasonable and enforceable, and as so limited
shall remain in full force and effect. In the event that such court
shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
14. Benefit of Agreement; Continuing Security Interest. This Agreement
and all Obligations shall be binding upon the administrators,
successors and assigns of Debtor and Parent and shall, together with
the rights and remedies of Secured Party hereunder, inure to the
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benefit of Secured Party, its successors, endorsees and assigns. This
Agreement shall create a continuing security interest in the
Collateral which shall remain in full force and effect until payment
in full of the Obligations.
15. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not
expressly set forth in this Agreement shall affect, or be used to
interpret, change or restrict, the express terms and provisions of
this Agreement.
16. Restoration of Rights. In the event Secured Party shall have
instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to Secured Party, then and in
every such case, the parties hereto shall be restored to their
respective former positions and rights hereunder with respect to the
Collateral, and all rights, remedies and powers of Secured Party shall
continued as if no such proceeding had been instituted.
17. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original and all of which shall together constitute one and the same
agreement.
18. Captions. The captions of the sections of this Agreement have been
inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed or caused this
Agreement to be executed as a sealed instrument as of the date first above set
forth.
NEI/GTEL ENVIRONMENTAL LABORATORIES, INC.
By:/s/ John Gaspari
-------------------------------------
John Gaspari, President
NYTEST ENVIRONMENTAL INC.
By:/s/ John Gaspari
-------------------------------------
John Gaspari, President
GTEL ENVIRONMENTAL LABORATORIES, INC.
By:/s/ John Gaspari
-------------------------------------
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SCHEDULE A
LOCATIONS OF COLLATERAL
1. Tampa, Florida
2. Wichita, Kansas
3. Milford, New Hampshire
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EXHIBIT 99.4
NYTEST ENVIRONMENTAL INC.
REGISTRATION RIGHTS AGREEMENT
AGREEMENT made this 28th day of December, 1995 by and between Nytest
Environmental Inc. having an address at 60 Seaview Boulevard, Port Washington,
New York 11050 (the "Company") and Groundwater Technology, Inc., having an
address at 100 River Ridge Drive, Norwood, MA 02062 (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company has, in connection with the issuance of a Note by
NEI/GTEL Environmental Laboratories, Inc., a wholly owned subsidiary of the
Company provided the Holder with the right to acquire up to 1,500,000 shares of
the Company's Common Stock, $.01 par value, subject to adjustment as provided
herein (the "Rights"); pursuant to such note dated the date of this Agreement
(the "Note").
NOW THEREFORE, in consideration of the agreements set forth herein the
parties agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Holder" shall include the initial Holder and any permitted transferee
of the shares provided such transferee holds more than 50% of the shares or
securities convertible into the shares.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in paragraph 4.
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"Registrable Shares" means the Shares of Common Stock which maybe
issued to Holder upon the exercise of the Rights, and, any other shares of
Common Stock of the Company issued in respect of such shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events) or upon exercise of such Rights; provided, however, that shares of
Common Stock which are Registrable Shares shall cease to be Registrable Shares
upon any sale pursuant to a Registration Statement, Rule 144 under the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may from time to time, be in effect.
2. REGISTRATION.
(a) At any time from the date of this Agreement until December 31,
1998, if the Company proposes to file a Registration Statement for a public
offering for its own account or for the account of others, it will, promptly
give written notice to the Holder of its intention to do so and, upon the
written request of the Holder given within twenty (20) days after the Company
provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company, on only one occasion,
shall cause all Registrable Shares which the Company has been requested by the
Holder to register to be registered under the Securities Act to the extent
necessary to permit their sale or other disposition in accordance with the
intended method of distribution specified in the request of such Holder;
provided that the Company shall have the right to postpone or withdraw any
registration effected pursuant to this paragraph 2 without obligation to the
Holder.
(b) The Holder's rights under this paragraph shall be subject to the
limitation that, in the event that the Company files a Registration Statement
for an underwritten public offering intending to distribute its Shares in an
underwritten offering, the inclusion of the Registrable Shares shall be upon the
condition that: (i) if requested by the managing underwriter as a condition of
the offering, they be sold through the underwriters on the same terms and
conditions as are applicable to the Company or all other selling stockholders of
the Company; or (ii) if such condition is imposed by the managing underwriter,
and the Holder does not wish to sell the Registrable Shares upon such terms and
conditions, the Holder will agree not to transfer or otherwise dispose of any
Registrable Shares for a period of time from the effective date of the
Registration Statement (not to exceed 120 days) specified by the managing
underwriter, provided such shares have been registered.
(c) All registration rights under this paragraph 2, shall terminate on
December 31, 1998 provided, however, such registration rights shall not so
terminate if prior to such date, the Company has provided notice to the Holder
as provided in Paragraph (a) herein.
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3. REGISTRATION PROCEDURES.
If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any of the
Registrable Shares under the Securities Act, the Company shall as expeditiously
as possible:
(a) prepare and file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective for the period of time
contemplated therein;
(b) prepare and file with the Commission any amendments and supplements
to the Registration Statement and the prospectus included in the Registration
Statement as may be necessary to keep the Registration Statement effective for a
period of not less than nine months from the effective date and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares covered by such registration statement in accordance with the
Holders' intended method of disposition set forth in such registration statement
for such period;
(c) furnish to Holder such reasonable numbers of copies of the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the selling
Stockholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Shares owned by the selling Stockholder and
promptly notify the selling stockholder at any time when a prospectus is
required to be delivered under the Securities Act, of the happening of any event
of which the Company has knowledge as a result of which the prospectus would
include an untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; and
(d) use its best efforts to register or qualify the Registrable Shares
covered by the Registration Statement under the securities or Blue Sky laws of
such states as the selling Stockholders shall reasonably request, and do any and
all other acts and things that may be necessary or desirable to enable the
selling Stockholders to consummate the public sale or other disposition in such
states of the Registrable Shares owned by the selling Stockholder; provided,
however, that the Company shall not be required in connection with this
paragraph (d) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction.
(e) use its best efforts to list the Registrable Shares covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) cooperate with the selling holders of Registrable Shares and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Shares to be sold, such certificates to
be in such denominations and registered in such
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names as such holders or the managing underwriters may request at least two
business days prior to any sale of Registrable Shares;
(g) comply with all applicable rules and regulations under the
Securities Act and the Exchange Act;
For the purposes of this Agreement, the period of distribution of
Registrable Shares in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Shares
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Shares covered thereby or nine months after the
effective date thereof.
If the Company has delivered preliminary or final prospectuses to the
Holder and, after having done so, the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the Holder
and, if requested, the Holder shall immediately cease making offers of
Registrable Shares and return all prospectuses to the Company. The Company shall
promptly provide the Holder with revised prospectuses and, following receipt of
the revised prospectuses, the Holder shall be free to resume making offers of
the Registrable Shares.
4. ALLOCATION OF EXPENSES.
The Company will pay all Registration Expenses of all registrations
under this Agreement; provided, however, that if a registration is withdrawn at
the request of the Holder (other than as a result of information concerning the
business or financial condition of the Company which is made known to the Holder
after the date on which such registration was requested) and if the Holder
elects not to have such registration counted as the Company having fully
discharged its obligations to Holder under paragraph 2, the Holder shall pay the
portion of Registration Expenses in the proportion that the market value of
their Registrable Shares included in such registration bear to all of securities
included therein. For purposes of this Section, the term "Registration Expenses"
shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel and
accountants for the Company state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but
excluding underwriting discounts, the fees and expenses of Holder's own counsel
and selling commissions
5. INDEMNIFICATION.
In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, the Company will indemnify and
hold harmless the seller of such Registrable Shares, and its directors and
officers, each underwriter of such Registrable Shares, and each other person, if
any, who controls such seller or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims, damages or
liabilities, joint or
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<PAGE> 5
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, in so far as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained in
the Registration Statement, any offering circular or document related to such
registration or any amendment or supplement to such Registration Statement, and
any document incorporated therein by reference or arise out of or are based upon
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
blue sky application or other document executed by the Company specifically for
that purpose or based upon written information furnished by the Company filed in
any state or other jurisdiction in order to qualify any or all of the
Registrable Shares under the securities laws thereof (any such application,
document or information herein called a "Blue Sky Application"), (iii) the
omission or alleged omission to state in any such registration statement,
prospectus, amendment or supplement or in any Blue Sky Applications executed or
filed by the Company, a material fact required to be stated therein or necessary
to make the statements therein not misleading, (iv) any violation by the Company
or its agents of the Securities Act or, any rule or regulation promulgated under
the Securities Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration,
or (v) any failure to register or qualify the Registrable Shares in any state
where the Company or its agents has affirmatively undertaken or agreed in
writing that the Company (the undertaking of any underwriter chosen by the
Company being attributed to the Company) will undertake such registration or
qualification (provided that in such instance the Company shall not be so liable
if it has used its best efforts to so register or qualify the Registrable
Shares) and will reimburse each such seller, and such officer, director and
partner, each such underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action promptly after being
so incurred and the Company will reimburse such seller, underwriter and each
such controlling person for any legal or any other expenses reasonably incurred
by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action
promptly after being so incurred; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such
seller, underwriter or controlling person specifically for use in the
preparation thereof.
In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors, and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers,
5
<PAGE> 6
underwriters or controlling person may become subject under the Securities Act,
Exchange Act, state securities or Blue Sky laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such seller,
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
obligations of such Stockholders hereunder shall be limited to an amount equal
to the proceeds to each Stockholder of Registrable Shares sold as contemplated
herein. Not in limitation of the foregoing, it is understood and agreed that the
indemnification obligations of any seller hereunder pursuant to any underwriting
agreement entered into in connection herewith shall be limited to the
obligations contained in this paragraph.
Each party entitled to Indemnification under this paragraph 5 (the
"Indemnified Party") shall give written notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; providing, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement. The Indemnified party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall pay such expense if representation of such Indemnified party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
The indemnities and obligations provided in this Section 8 shall
survive the sale or transfer of any Registrable Shares by such Holder.
6
<PAGE> 7
6. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING.
In the event that Registrable Shares are sold pursuant to a
Registration Statement in an underwritten offering pursuant to sub-paragraph
2(a), the Company agrees to enter into an underwriting agreement containing
customary representations and warranties with respect to the business and
operations of an issuer of the securities being registered and customary
covenants and agreements to be performed by such issuer, including without
limitation customary provisions with respect to indemnification by the Company
of the underwriters of such offering.
7. RULE 144 REPORTING.
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Registrable Shares to the public without registration, except as provided in
paragraph (c) below, at all times the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Registrable Shares forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 (or any successor rule) and, at any time
after it has become subject to such reporting requirements, of the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the Company as
such holder may reasonably request in availing itself of any rule or regulation
of the Commission allowing such holder to sell any Registrable Securities with
out registration
8. INFORMATION BY HOLDER.
The Holder shall furnish to the Company such information regarding such
holder and the distribution proposed by such holder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
9. SELECTION OF UNDERWRITER.
In the case of any registration effected pursuant to this Agreement,
the Company shall have the right to designate the managing underwriter in any
underwritten offering.
7
<PAGE> 8
10. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon, and inure to
the benefit of, the respective successors, assigns, heirs, executors and
administrators of the parties hereto, provided that the rights of the Holder may
only be assigned in whole to a party who purchases not less than 50% of the
Shares or securities convertible into the Shares.
11. FURTHER ASSURANCES.
From and after the date hereof, all persons subject to or bound by this
Agreement shall from time to time, at the request of any such other person and
without further consideration, do, execute and deliver, or cause to be done,
executed and delivered, all such further acts, things and instruments as may
reasonably be requested or required more effectively to evidence and give effect
to the provisions, intent and purposes of this Agreement (including, without
limitation, certificates to the effect that this Agreement continues operative
and as to any defaults hereunder or modifications hereof).
12. NOTICE.
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (i) upon delivery if delivered by hand; (ii) four business days subsequent
to mailing if mailed by express, certified or registered mail, with postage
prepaid, in the continental United States; (iii) two business days subsequent to
pick up by such courier if sent by a nationally or internationally recognized
overnight courier service that regularly maintains records of items picked up
and delivered; or (iv) when transmitted if sent by telecopier, provided that a
written acknowledgment of receipt signed by or on behalf of the recipient of the
telecopy is transmitted back to the sender by the recipient, as follows:
If to Holder: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attention: Chief Financial Officer
Telecopier No.: (617) 769-7992
with a copy to
Holder's Parent: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attention: General Counsel
Telecopier No.: (617) 769-7992
8
<PAGE> 9
and to: Mintz, Levin, Cohn, Ferris, Glovsky & Popeo,
P.C.
One Financial Center
Boston, MA 02111
Attention: Richard Goldman, Esq.
Telecopier No.: (617) 542-2241
or to such other person or address as Holder shall furnish to Company in
writing.
If to the Company: NEI/GTEL Environmental Laboratories, Inc.
c/o Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attention: John Gaspari, President
Telecopier No.: (516) 625-1274
with a copy to
Company's Parent: Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attention: Chief Financial Officer
Telecopier No.: (516) 625-1274
and to: Herbert H. Sommer, Esq.
600 Old Country Road, Suite 535
Garden City, New York 11530
Telecopier No.: (516) 228-8211
and to: Horowitz, Klosowski & Scope, P.C.
595 Stewart Avenue, Suite 710
Garden City, NY 11530
Attention: Eric M. Mencher, Esq.
Telecopier No.: (516) 222-2665
or to such other person or address as the Company shall furnish to Holder in
writing.
13. GOVERNING LAW; INTERPRETATION.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed exclusively therein as to all matters, without reference to
the conflicts of law provision thereof.
(b) All pronouns and words shall be read in appropriate number and
gender, the masculine, feminine and neuter shall be interpreted interchangeably
and singular shall include the plural and vice versa, as the circumstances may
require.
9
<PAGE> 10
14. SUBMISSION TO JURISDICTION.
Each of the parties hereto irrevocably submits to the non-exclusive
jurisdiction of the federal and state courts located in the State of New York.
15. MISCELLANEOUS.
(a) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the Holder.
Any waiver or consent hereunder shall be effective only in the specific instance
and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
(b) This Agreement may be executed in one or more counterparts and by
different parties hereto on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
(c) The Company recognizes that the rights of the Holder under this
Agreement are unique and, accordingly, the Holders shall, in addition to such
other remedies as may be available to them at law or in equity, have the right
to enforce their rights hereunder by actions for injunctive relief and specific
performance to the extent permitted by law. This Agreement is not intended to
limit or abridge any rights of the Holders which may exist apart from this
Agreement.
[SIGNATURE PAGE FOLLOWS]
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals to this instrument, as of the date first above written.
NYTEST ENVIRONMENTAL INC.
By: /s/ John Gaspari
----------------------------------
John Gaspari, President
HOLDER:
GROUNDWATER TECHNOLOGY, INC.
By: /s/ Joel Adler
----------------------------------
Print Name: Joel Adler
-------------------------
11
<PAGE> 1
EXHIBIT 99.5
GUARANTY
THIS GUARANTY ("Guaranty"), dated as of this 31st day of December
1995, is made by Nytest Environmental Inc. (the "Guarantor"), a Delaware
corporation, having a principal place of business located at 60 Seaview
Boulevard, Port Washington, New York, in favor of GTEL Environmental
Laboratories, Inc. ("GTEL"), a Delaware corporation having a principal place of
business located at Meadowbrook Industrial Park, Milford, New Hampshire 03055.
WHEREAS, the Guarantor is the parent corporation and sole shareholder
of NEI/GTEL Environmental Laboratories, Inc., a Delaware corporation ("Buyer");
WHEREAS, pursuant to an Asset and Business Purchase Agreement (the
"Purchase Agreement") dated December 28, 1995, by and among, the Buyer,
Groundwater Technology, Inc. and GTEL, Buyer issued to GTEL a convertible
promissory note of even date herewith in the original principal amount of
$1,254,000 (the "Note"); and
WHEREAS, it is a condition to the consummation of the transactions
contemplated under the Purchase Agreement that the Guarantor guarantee all of
the obligations of Buyer under the Note.
NOW, THEREFORE, in consideration of the foregoing and for other and
further consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor agrees as follows:
1. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees to GTEL the full and prompt payment of all amounts which
may be presently due and owing and all sums which shall in the future become
due and owing to GTEL (or its permitted endorsees, successors or assigns) under
the Note including, without limitation, the payment of principal, interest and
expenses thereunder (collectively, the "Guaranteed Obligations").
2. Authority. The Guarantor has determined that the execution
and delivery of this Guaranty is in its best interests, will create a direct
benefit to the Guarantor, is within its powers, and is in furtherance of its
business purposes and objectives. The execution of this Guaranty by the
undersigned person has been authorized by all necessary corporate action and
will not violate the Guarantor's charter or by-laws or any material agreement,
instrument, order, judgment or decree to which it is a party or by which it is
bound.
3. Guarantee of Payment. This Guaranty constitutes a guarantee
of payment, and not of collection. The liability of the Guarantor hereunder is
direct and unconditional, and may be enforced without requiring GTEL first to
resort to any other right, remedy or security. The Guarantor shall not have
any right of subrogation, contribution, reimbursement or indemnity whatsoever,
until all of the Guaranteed Obligations shall have been indefeasibly paid in
full.
4. No Impairment. This Guaranty shall not be released, impaired
or affected by any modification, extension, amendment, release or other
alteration of any of the Guaranteed
<PAGE> 2
Obligations or of any security therefor, nor by any agreements or arrangements
whatever with Buyer or any one else, and the liability of the Guarantor
hereunder shall apply to the Guaranteed Obligations as so altered, modified.
5. Primary Obligation. No invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations or of any
security therefor (including, without limitation, as a result of Buyer's
bankruptcy, reorganization or insolvency, or pursuant to any assignment for the
benefit of creditors, receivership, or similar proceeding under any law or with
respect to any party, or by any actions of a trustee in any said proceeding)
shall affect, impair or be a defense to this Guaranty, and this Guaranty shall
be a primary obligation of the Guarantor and nothing shall discharge or satisfy
the liability of the Guarantor hereunder except the full payment and
performance of the Guaranteed Obligations.
6. Termination of Guaranty. This Guaranty is a continuing
Guaranty which shall remain effective until the Guaranteed Obligations have
been satisfied in full.
7. Default. If the Guarantor should at any time become insolvent
or make a general assignment for the benefit of creditors, or if a petition in
bankruptcy or any insolvency or reorganization proceedings shall be filed or
commenced by, against (and not removed within 30 days) or in respect of the
Guarantor, or if the Guarantor should at any time liquidate, dissolve, wind up
its affairs or cease doing business, or contest, cancel or otherwise terminate
the obligations under this Guaranty, then and in any such event, any and all
obligations of the Guarantor (including the Guaranteed Obligations, whether or
not then due) shall, at the option of GTEL forthwith become due and payable
without notice or other action of any kind by GTEL or any other party.
8. Disgorgement of Payments. If any claim is ever made on GTEL
for repayment or recovery of any amount or amounts received by GTEL in payment,
or on account of any of the Guaranteed Obligations, and GTEL repays all or part
of such amount(s), the Guarantor shall be and remain liable hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by GTEL, notwithstanding any termination hereof or any
cancellation of any instrument evidencing the Guaranteed Obligations.
9. Waivers By Guarantor. The Guarantor hereby waives all rights
of notice or demand including, without limitation: notice of acceptance hereof
and notice of any liability to which it may apply; presentment, demand for
payment and protest of any instrument, and notice of dishonor or nonpayment;
notice of default or nonpayment by Buyer; and all other notices to which the
Guarantor may otherwise be entitled. In addition, the Guarantor waives all
suretyship defenses it may have, whether now or in the future. The Guarantor
also waives any right to seek contribution, indemnification, subrogation or
reimbursement from Buyer, until all of the Guaranteed Obligations have been
indefeasibly paid in full.
10. No Implied Waiver By GTEL. No act, omission or delay by GTEL
or course of dealing between GTEL and the Guarantor and/or Buyer shall
constitute a waiver of the rights
2
<PAGE> 3
and remedies of GTEL hereunder. No single or partial waiver by GTEL of any
right or remedy which it may have hereunder shall operate as a waiver of any
other right or remedy or of the same right or remedy on a future occasion. All
rights and remedies of GTEL hereunder shall be cumulative, and no such right or
remedy shall be exclusive of any other right or remedy.
11. Amendment. No waiver of any rights hereunder and no
modification or amendment of this Guaranty shall be effective unless the same
shall be in writing, duly signed on behalf of GTEL and each such waiver,
modification or amendment, if any, shall apply only with respect to the
specific instance involved, and shall in no way impair the rights of GTEL or
the obligations of the Guarantor to GTEL in any other respect or at any other
time.
12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) sent by reputable overnight courier by next day, priority, or (iii) sent
by registered or certified mail, return receipt requested, postage prepaid.
If to GTEL Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: Chief Financial Officer
with copy to: Groundwater Technology, Inc.
100 River Ridge Road
Norwood, MA 02062
Attn: General Counsel
If to the Guarantor: Nytest Environmental Inc.
60 Seaview Boulevard
Port Washington, NY 11050
Attn: President
with a copy to: Herbert H. Sommer, Esq.
600 Old Country Road
Garden City, NY 11530
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iii) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
13. Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Guaranty shall be unreasonable or
3
<PAGE> 4
unenforceable in any respect, then such provision shall be deemed limited to
the extent that such court deems it reasonable and enforceable, and as so
limited shall remain in full force and effect. In the event that such court
shall deem any such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Guaranty shall nevertheless remain in full force
and effect.
14. Successors and Assigns. This Guaranty and all obligations
hereunder shall be binding upon the successors and permitted assigns of the
Guarantor and shall, together with the rights and remedies of GTEL hereunder,
inure to the benefit of GTEL and its permitted successors, endorsees and
assigns. The rights and obligations of the Guarantor under this Guaranty shall
not be assigned by the Guarantor and the rights and obligations of GTEL under
this Guaranty may only be assigned to a permitted Holder (as such term is
defined in the Note) of the Note.
15. Entire Agreement. This Guaranty embodies the entire agreement
and understanding between GTEL and the Guarantor with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant, agreement, course of dealing, course of
conduct, or course of performance of any kind not expressly set forth in this
Guaranty shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Guaranty.
16. Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(without giving effect to its conflict of laws). Any legal action or
proceeding with respect to this Guaranty may be brought in the courts of the
Commonwealth of Massachusetts or of the United States of America for the
District of Massachusetts, and, by execution and delivery of this Agreement,
the Guarantor hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Guarantor hereby knowingly, voluntarily, intentionally and irrevocably waives,
in connection with any such action or proceeding: (i) any objection, including,
without limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions, and
(ii) to the maximum extent not prohibited by law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Guaranty. The Guarantor irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Guarantor at the address set forth
above, or at such other address as the Guarantor may provide to GTEL from time
to time. Nothing herein shall affect the right of GTEL to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Guarantor in any other jurisdiction.
4
<PAGE> 5
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as a
sealed instrument as of the date first set forth above.
WITNESS: NYTEST ENVIRONMENTAL INC.
/s/ Herbert H. Sommer By: /s/ John Gaspari
- ------------------------- -------------------------
Name: Herbert H. Sommer John Gaspari, President
5
<PAGE> 1
EXHIBIT 99.6
TENANT: NEI/GTEL ENVIRONMENTAL LABORATORIES, INC.
LEASE OF
4211 WEST MAY
WICHITA, KANSAS
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1
BASIC LEASE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
LEASE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3
BASIC RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 4
CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 5
USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 6
ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 7
RESPONSIBILITY FOR REPAIRS AND CONDITION OF PROPERTY . . . . . . . . . 5
ARTICLE 8
REAL ESTATE TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 9
OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 10
INDEMNITY AND PUBLIC LIABILITY INSURANCE . . . . . . . . . . . . . . . 8
ARTICLE 11
LANDLORD'S ACCESS TO PROPERTY . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 12
FIRE, EMINENT DOMAIN, ETC. . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE 13
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 14
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 14
14.1 EXTRA HAZARDOUS USE
14.2 WAIVER
14.3 COVENANT OF QUIET ENJOYMENT
14.4 LANDLORD'S LIABILITY
14.5 MORTGAGEE'S RIGHTS
14.6 ASSIGNMENT OF RENTS AND TRANSFER OF TITLE
14.7 INVALIDITY OF PARTICULAR PROVISIONS
14.8 PROVISIONS BINDING, ETC
14.9 RECORDING
14.10 NOTICES
14.11 WHEN LEASE BECOMES BINDING
14.12 PARAGRAPH HEADINGS AND INTERPRETATION OF SECTIONS
14.13 REMEDYING DEFAULTS
14.14 HOLDING OVER
14.15 WAIVER OF SUBROGATION
14.16 SURRENDER OF PROPERTY
14.17 BROKERAGE
14.18 GOVERNING LAW
ARTICLE 15
OPTION TO EXTEND . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 16
OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 3
L E A S E
THIS INSTRUMENT IS A LEASE, dated as of December 31, 1995, in which
the Landlord and the Tenant are the parties hereinafter named, and which
relates to the building (the "Building") located at 4211 West May, Wichita,
Kansas. The parties to this instrument hereby agree with each other as
follows:
ARTICLE 1
BASIC LEASE PROVISIONS
1.1 INTRODUCTION. The following set forth basic data and, where
appropriate, constitute definitions of the terms hereinafter listed.
1.2 BASIC DATA.
Landlord: GTEL ENVIRONMENTAL LABORATORIES, INC., a Delaware
corporation.
Landlord's Original Address: 100 River Ridge Drive, Norwood,
Massachusetts 02062
Tenant: NEI/GTEL ENVIRONMENTAL LABORATORIES, INC.
Tenant's Original Address: Meadowbrook Industrial Park, Milford, NH
03055
Basic Rent: The sum of $160,311.36 per annum (equal to $10.34
multiplied by 15,504 square feet), subject to adjustment pursuant to Section
3.1.
Permitted Uses: General commercial and industrial uses including
without limitation environmental laboratory uses, subject always to applicable
laws, regulations and rules, including without limitation those concerning
zoning, building and health and safety matters.
Guarantor: Nytest Environmental Inc., a Delaware corporation
("Guarantor").
Initial Term: The term commencing on the date hereof (the
"Commencement Date") and expiring on the day immediately preceding the fifth
anniversary of the Commencement Date.
Extended Term: as defined in Section 15.1.
Property: The Building and the land parcels on which it is located
(including adjacent sidewalks), as described on Exhibit A.
1
<PAGE> 4
ARTICLE 2
LEASE OF PROPERTY
2.1 LEASE OF PROPERTY. Landlord hereby demises and leases to Tenant for
the Term of this Lease and upon the terms and conditions hereinafter
set forth, and Tenant hereby accepts from Landlord, the Property.
ARTICLE 3
BASIC RENT
3.1 PAYMENT. (a) Tenant agrees to pay to Landlord, or as directed by
Landlord, commencing on the Commencement Date without offset,
abatement, deduction or demand, the Basic Rent. Such Basic Rent
shall be payable in equal monthly installments, in advance, on the
first day of each and every calendar month during the Term of this
Lease, to Landlord at Landlord's Original Address, or at such other
place as Landlord shall from time to time designate by notice, in
lawful money of the United States. Basic Rent for any partial month
shall be pro-rated on a daily basis, and if the first day on which
Tenant must pay Basic Rent shall be other than the first day of a
calendar month, the first payment which Tenant shall make to Landlord
shall be equal to a proportionate part of the monthly installment of
Basic Rent for the partial month from the first day on which Tenant
must pay Basic Rent to the last day of the month in which such day
occurs. Tenant acknowledges that this is a "net" lease, and that
Basic Rent does not include any portion of the taxes, operating
costs, insurance premiums or other costs or expenses relative to the
Property, all of which are to be paid for separately by Tenant.
(b) Commencing on the first anniversary of the Commencement Date, and
on each subsequent anniversary of the Commencement Date throughout
the Term of this Lease (including without limitation the Extended
Term), the Basic Rent shall be increased by an amount equal to the
Basic Rent per annum payable with respect to the Property for the
year ending on such anniversary, multiplied by a fraction, the
numerator of which shall be the United States Department of Labor
Consumer Price Index, all Urban Consumers, Kansas City, MO
(1982-84=100) (the "Index"), as most recently released prior to such
anniversary, and the denominator of which shall be the Index as of
the immediately prior anniversary (or, in the case of the first such
adjustment, as of the Commencement Date). In no event shall any such
adjustment result in any decrease in Basic Rent.
ARTICLE 4
CONDITION
4.1 CONDITION. Subject only to the representations and warranties of
Landlord set forth in Sections 3.1, 3.2, 3.3, 3.12 and 3.29 of the
Asset and Business Purchase Agreement (the "APA") dated December 28,
1995 between Landlord and Tenant and, as to certain Sections,
Guarantor and Groundwater Technology, Inc. (which representations and
warranties are incorporated herein by reference, subject to the
limitations on survival set forth in Section 8 of the APA), the
Property is being leased, and Tenant hereby accepts the Property, in
its current condition AS IS, WITHOUT REPRESENTATION OR WARRANTY by
Landlord as to condition or suitability for purpose.
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Tenant acknowledges that it has inspected the Property prior to the
date hereof, and that Tenant has a complete understanding of the
Property, the Building, its systems, and the condition of each
thereof.
ARTICLE 5
USE OF PROPERTY
5.1 PERMITTED USE. (a) Tenant agrees that the Property shall be used
and occupied by Tenant only for Permitted Uses. Tenant agrees to
conform to the following provisions during the Term of this Lease:
(i) Tenant will not place on the exterior of the Building any
signs, symbol, advertisement or the like visible to public
view outside of the Building, other than those, if any, placed
with Landlord's prior written consent, which consent shall not
be unreasonably withheld or delayed (Landlord hereby
consenting to existing signage and new signage reasonably
consistent therewith);
(ii) Tenant shall not perform any act or carry on any
practice which may injure the Property, or any other part of
the Building, or constitute a nuisance; and
(iii) Tenant shall, in its use of the Property, comply with
the requirements of all applicable governmental laws, rules
and regulations, including without limitation the Occupational
Safety and Health Act and the Americans With Disabilities Act
of 1990; provided, however, that to the extent any obligation
on the part of Tenant under this clause (iii) arises from a
breach of Landlord's representation with respect thereto as
set forth in the APA, Tenant shall not be liable therefor.
5.2 INSTALLATIONS AND ALTERATIONS BY TENANT. (a) Tenant shall make no
structural alterations, additions, or improvements in or to the
Property, or alterations or additions to the electrical, plumbing or
mechanical systems, without Landlord's prior written consent, which
consent shall not be unreasonably withheld with respect to
alterations, additions or improvements not materially affecting the
electrical, plumbing or mechanical systems or the structure of the
Building and Landlord's response to any request shall not be
unreasonably delayed in any event. Any such alterations, additions
or improvements shall be in accordance with complete plans and
specifications approved in advance by Landlord. Such work shall (i)
be performed in a good and workmanlike manner and in compliance with
all applicable laws, (ii) be made at Tenant's sole cost and expense,
and (iii) at Landlord's election, become part of the Property and the
property of Landlord. If any alterations or improvements shall
involve the removal of fixtures, equipment or other property in the
Property which are not Tenant's Removable Property, such fixtures,
equipment or property shall be promptly replaced by Tenant at its
expense with new fixtures, equipment or property of like utility and
of at least equal quality.
(b) All articles of personal property, and all business fixtures,
machinery, inventory, equipment and furniture owned or installed by
Tenant solely at its expense in the Property ("Tenant's Removable
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Property") shall remain the property of Tenant and may be removed by
Tenant at any time prior to the expiration of this Lease, provided
that Tenant, at its expense, shall repair any damage to the Building
caused by such removal.
(c) Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the reversion or other estate or
interest of Landlord in and to the Property. To the maximum extent
permitted by law, before such time as any contractor commences to
perform work on behalf of Tenant, such contractor (and any
subcontractors) shall furnish a written statement acknowledging the
provisions set forth in the prior clause. Whenever and as often as
any mechanic's lien shall have been filed against the Property based
upon any act or interest of Tenant or of anyone claiming through
Tenant, Tenant shall forthwith take such action by bonding, deposit
or payment as will remove or satisfy the lien.
ARTICLE 6
ASSIGNMENT AND SUBLETTING
6.1 PROHIBITION. (a) Tenant covenants and agrees that whether
voluntarily, involuntarily, by operation of law or otherwise, neither
this Lease nor the term and estate hereby granted, nor any interest
herein or therein, will be assigned, mortgaged, pledged, encumbered
or otherwise transferred and that neither the Property nor any part
thereof will be encumbered in any manner by reason of any act or
omission on the part of Tenant, or used or occupied or permitted to
be used or occupied, by anyone other than Tenant, or for any use or
purpose other than a Permitted Use, or be sublet (which term, without
limitation, shall include granting of concessions, licenses and the
like) in whole or in part, or be offered or advertised for assignment
or subletting, without in each and every case having first obtained
the written consent of Landlord. Such consent shall not be
unreasonably withheld or delayed provided that the proposed assignee
or sublessee has a financial standing and credit rating reasonably
acceptable to Landlord (as evidenced by complete and current audited
financial statements), and further provided that the proposed
assignee or sublessee shall use the Property for Permitted Uses only.
The provisions of this paragraph shall apply to a transfer (by one or
more transfers) of a majority of the stock or partnership interests
or other evidences of ownership of Tenant as if such transfer were an
assignment of this Lease. Notwithstanding the foregoing, however,
Landlord's consent shall not be required in connection with an
assignment of Tenant's interest hereunder (including the option to
purchase set forth in Article 16 hereof) to Guarantor or a wholly-
owned subsidiary of Guarantor.
(b) If, in violation of this Article VI, this Lease be assigned,
or if the Property or any part thereof be sublet or occupied by
anyone other than Tenant, Landlord may, at any time and from time to
time, collect rent and other charges from the assignee, subtenant or
occupant, and apply the net amount collected to the rent and other
charges herein reserved, but no such assignment, subletting,
occupancy, collection or modification of any provisions of this Lease
shall be deemed a waiver of this covenant, or the acceptance of the
assignee, subtenant or occupant as a tenant or a release of Tenant
from the further performance of covenants on the part of Tenant to be
performed hereunder. Any consent by Landlord to a particular
subletting or occupancy shall not in any way diminish the prohibition
stated in paragraph (a) of this Section 6.1 or the continuing
liability of the original named Tenant. No assignment or subletting
hereunder shall relieve Tenant from its obligations hereunder and
Tenant shall remain fully and primarily liable therefor. No such
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assignment, subletting, or occupancy shall affect or be contrary to
Permitted Uses. Any consent by Landlord to a particular assignment,
subletting or occupancy shall be revocable, and any assignment,
subletting or occupancy shall be void ab initio, if the same shall
fail to require that such assignee, subtenant or occupant agree
therein to be independently bound by and upon all of the covenants,
agreements, terms, provisions and conditions set forth in this Lease
on the part of Tenant to be kept and performed.
ARTICLE 7
RESPONSIBILITY FOR REPAIRS AND CONDITION OF PROPERTY
7.1 LANDLORD LIABILITY. Except as otherwise provided in this Lease,
Landlord shall have no responsibility or liability for repairs or
maintenance of the Building or the Property. Without limitation,
Landlord shall in no event be responsible to Tenant for the repair of
the roof, walls, foundation or structural members of the Building, or
doors or glass in the Building, the doors (or related glass and
finish work) leading to the Property, or any condition in the
Property or the Building not caused by any intentional and wrongful
act or gross neglect of Landlord, its invitees or contractors, except
for the reimbursement obligations set forth in Section 7.2(c) hereof.
Landlord shall never be liable for any failure to make repairs which
Landlord has undertaken to make under the provisions of this Section
7.1 or elsewhere in this Lease, unless Tenant has given notice to
Landlord of the need to make such repairs, and Landlord has failed to
commence to make such repairs within a reasonable time after receipt
of such notice, or fails to proceed with reasonable diligence to
complete such repairs.
7.2 TENANT'S AGREEMENT. (a) Tenant agrees to maintain and replace as
necessary the roof, exterior walls (including without limitation
exterior glass) and structure of the Building, and keep neat and
clean and maintain in good order, condition and repair the Property
and every part thereof, damage by fire or other casualty and as a
consequence of the exercise of the power of eminent domain excepted,
and shall surrender the Property at the end of the Term of this Lease
in such condition. Without limitation, Tenant shall (i) maintain the
exterior of the Property, including without removal of snow and ice
from the driveways, walkways, sidewalks, parking areas and other
public areas, (ii) maintain the landscaping of the Property in a neat
and attractive manner, (iii) maintain the utility delivery systems to
the Building, including water and sewer lines, HVAC equipment and
electrical and plumbing equipment, and (iv) continually during the
Term of this Lease maintain the Property in accordance with all laws,
codes and ordinances from time to time in effect and all directions,
rules and regulations of the proper officers of governmental agencies
having jurisdiction, and of the applicable board of fire
underwriters, and shall, at Tenant's own expense, obtain all permits,
licenses and the like required by applicable law. Tenant shall be
responsible, subject to the requirements of Section 5.2, for
complying with the Americans With Disabilities Act of 1990, and all
state and local laws and requirements relating to accessibility to
disabled persons; provided, however, that to the extent any
obligation of Tenant pursuant to this sentence arises from a breach
of Landlord's representation with respect thereto as set forth in the
APA, Tenant shall not be responsible therefor. Notwithstanding the
foregoing or the provisions of Article 7, but subject to the
provisions of Section 14.15, Tenant shall be responsible for the cost
of repairs which may be made necessary by reason of damage to the
Building caused by any act or neglect of Tenant, or its contractors
or invitees (including any damage by fire or any other casualty
arising therefrom).
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(b) If repairs are required to be made by Tenant pursuant to the
terms hereof, Landlord may demand in writing that Tenant make the
same forthwith, and if Tenant refuses or neglects to commence such
repairs and complete the same with reasonable dispatch, after such
demand (except in the case of an emergency, in which event Landlord
may make such repairs immediately), Landlord may (but shall not be
required to do so) make or cause such repairs to be made (the
provisions of Section 14.13 being applicable to the costs thereof),
and shall not be responsible to Tenant for any loss or damage
whatsoever that may accrue to Tenant's stock or business by reason
thereof (except to the extent that any such damage results from a
grossly negligent or wrongful act or omission on the part of
Landlord).
(c) To the extent Tenant's obligations under this Section 7.2
require it to make a capital improvement during the Term of this
Lease, the useful life (as reasonably determined by the parties
hereto) of which extends beyond the expiration of the Term of this
Lease, then, upon the expiration of the Term of this Lease, and
provided no Default of Tenant shall then exist and Landlord shall
have consented to the capital improvement so made, Landlord shall
reimburse Tenant for Landlord's pro rata share of the cost of any
such improvement. Landlord's pro rata share shall be equal to a
fraction, the numerator of which shall be that portion of the useful
life of the improvement that extends beyond the expiration of the
Term of this Lease (as the same may be extended), and the denominator
of which shall be the useful life of the improvement.
7.3 UTILITIES; SECURITY. (a) Tenant shall arrange and pay for all of its
requirements for utilities, including, but not limited to, gas,
steam, water, electricity, sewer charges, and the like, including all
utilities necessary for heating and air-conditioning the Building.
Landlord shall have no liability for interruption or unavailability
of any utility or service.
(b) Landlord shall have no obligation whatsoever to provide any
security for the Property. If and to the extent that Tenant desires
to provide security for the Property or for Tenant's employees and
invitees or their property, Tenant shall be responsible for so doing.
Tenant agrees that, as between Landlord and Tenant, it is Tenant's
responsibility to advise its employees, agents, contractors and
invitees as to the foregoing and as to necessary and appropriate
safety precautions. Tenant, for itself and its agents, contractors,
invitees and employees, hereby expressly waives any claim, action,
cause of action or other right against Landlord which may accrue or
arise as a result of any damage or injury to the person or property
of Tenant or any such agent, invitee, contractor or employee relating
in any way to a lack of security for the Property (except to the
extent any such damage or injury results from a grossly negligent or
wrongful act or omission of Landlord).
ARTICLE 8
REAL ESTATE TAXES
8.1 PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES. (a) For the purposes of
this Article, the term "Tax Year" shall mean the twelve-month period
from time to time used in Wichita, Kansas for the assessment and
collection of real estate or other ad valorem taxes on property; and
the term "Taxes" shall mean real estate taxes assessed with respect
to the Property for any Tax Year.
(b) For each Tax Year, Tenant shall pay, directly to the appropriate
taxing authority(ies) any and all Taxes for such Tax Year, such
amount to be apportioned for any portion of a Tax Year in which the
Commencement Date falls or the Term of this Lease ends. To the
extent received by Landlord,
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Landlord shall promptly furnish to Tenant copies of all bills for
Taxes. To the extent received by Tenant, Tenant shall furnish to
Landlord, without notice or demand, copies of all bills for Taxes,
and in any event shall furnish to Landlord evidence of payment not
later than fifteen (15) days prior to the last day on which payments
may be made without penalty.
8.2 ALTERNATE TAXES. (a) If some method or type of taxation shall
replace the current method of assessment of real estate taxes in
whole or part, or the type thereof, or if additional types of taxes
are imposed upon the Property or Landlord in its capacity as owner of
the Property (other than a Federal or State income tax), Tenant
agrees that such taxes or other charges shall be deemed to be, and
shall be, Taxes hereunder and Tenant shall pay an equitable share of
the same as an additional charge computed in a fashion consistent
with the method of computation herein provided, to the end that
Tenant's share thereof shall be, to the maximum extent practicable,
comparable to that which Tenant would bear under the foregoing
provisions.
(b) If a tax (other than a Federal or State income tax) is assessed
on account of the rents or other charges payable by Tenant to
Landlord under this Lease, Tenant agrees to pay the same as an
additional charge within ten (10) days after billing therefor, unless
applicable law prohibits the payment of such tax by Tenant.
8.3 RIGHT TO CONTEST. Tenant shall have the right, upon notice to
Landlord, to contest in good faith and by appropriate legal
proceedings, any Taxes payable hereunder, provided Tenant first gives
Landlord appropriate assurance reasonably satisfactory to Landlord
against any loss, cost or expense on account thereof, and provided
such contest shall not subject Landlord to criminal penalties or
civil sanctions, loss of property or civil liability.
ARTICLE 9
OPERATING EXPENSES
9.1 DEFINITIONS. For the purposes of this Article, the following terms
shall have the following respective meanings:
Operating Year: Each calendar year in which any part of the Term of
this Lease shall fall.
Operating Expenses: aggregate costs or expenses reasonably related
to the operation, repair and maintenance and administration of the
Building and/or the Property.
Tenant shall pay and be solely responsible for any and all Operating
Expenses during and relating to the Term of this Lease of whatever
type, description or nature, including without limitation insurance
premiums for property damage insurance (even though the same may be
purchased by Landlord, in which event Tenant shall reimburse Landlord
within fifteen (15) days of receipt of an invoice therefor,
accompanied by evidence of payment).
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ARTICLE 10
INDEMNITY AND PUBLIC LIABILITY INSURANCE
10.1 TENANT'S INDEMNITY. To the maximum extent this agreement may be made
effective according to law, Tenant agrees to indemnify and save
harmless Landlord from and against all claims, loss, cost, damage or
expense of whatever nature arising: (i) from any accident, injury or
damage whatsoever to any person, or to the property of any person,
occurring in, on or about the Property (except to the extent such
accident, damage or injury results from a grossly negligent or
wrongful act or omission on the part of Landlord); or (ii) in
connection with the conduct or management of the Property or of any
business therein, or any thing or work whatsoever done, or any
condition created; and, in any case, occurring after the date of this
Lease until the end of the Term of this Lease and thereafter so long
as Tenant is in occupancy of any part of the Property. This
indemnity and hold harmless agreement shall include indemnity against
all losses, costs, damages,expenses and liabilities incurred in or in
connection with any such claim or proceeding brought thereon, and the
defense thereof, including, without limitation, reasonable attorneys'
fees and costs at both the trial and appellate levels.
10.2 PUBLIC LIABILITY INSURANCE. Tenant agrees to maintain in full force
from the date upon which Tenant first enters the Property for any
reason, throughout the Term of this Lease, and thereafter so long as
Tenant is in occupancy of any part of the Property, a policy of
general liability and property damage insurance (including broad form
contractual liability, independent contractor's hazard and completed
operations coverage) under which Tenant is named as an insured and
Landlord (and such other persons as are in privity of estate with
Landlord as may be set out in a notice from time to time) are named
as additional insureds, and under which the insurer agrees to
indemnify and hold Landlord and those in privity of estate with
Landlord, harmless from and against all cost, expense and/or
liability arising out of or based upon any and all claims, accidents,
injuries and damages set forth in Section 10.1. Each such policy
shall be non-cancelable and non-amendable with respect to Landlord
and Landlord's said designees without thirty (30) days' prior notice
and shall be in at least the amount of $2,000,000 per occurrence
(combined single limit) for property damage, bodily injury or death,
or such greater amounts as Landlord shall from time to time
reasonably request, and a duplicate original thereof shall be
delivered to Landlord.
10.3 TENANT'S RISK. Tenant agrees to use and occupy the Property at
Tenant's own risk. To the maximum extent this agreement may be made
effective according to law, Landlord shall have no responsibility or
liability for any loss of or damage to Tenant's Removable Property
(except to the extent such loss or damage results from a grossly
negligent or wrongful act or omission on the part of Landlord and
subject in any event to the following sentence). Tenant shall carry
"all-risk" property insurance on a "replacement cost" basis
(including so-called improvements and betterments), and provide a
waiver of subrogation as required in Section 14.5. The provisions of
this Section 10.3 shall be applicable from and after the execution of
this Lease and until the end of the Term of this Lease, and during
such further period as Tenant may use or be in occupancy of any part
of the Property or of the Building.
10.4 INJURY CAUSED BY THIRD PARTIES. To the maximum extent this agreement
may be made effective according to law, Tenant agrees that Landlord
shall not be responsible or liable to Tenant, or to those claiming
by, through or under Tenant, for any loss or damage that may be
occasioned by or through the acts or omissions of visitors to or
trespassers on the Property, or by persons occupying adjoining
property.
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10.5 ENVIRONMENTAL MATTERS. (a) Landlord represents to the best of its
actual knowledge and belief, without having made any independent
investigation, that the Property is not in violation of any
applicable Environmental Laws (as hereafter defined), subject to the
provisions regarding survival set forth in Section 8 of the APA.
Tenant represents, warrants and covenants that: (x) Tenant will under
no circumstances maintain, allow, place, deposit, leave, release or
store in, on or about the Property or the Building, any Hazardous
Material, as hereinafter defined except in connection with providing
environmental testing services in the ordinary course of business,
provided, however, that the use or storage of any Hazardous Materials
shall be in strict accordance with licensing and regulatory
requirements of all applicable local, state and federal regulatory
authorities and agencies; and (y) Tenant is not in violation of any
applicable Environmental Laws, as hereinafter defined, relating to or
affecting its operations in the Property. Tenant hereby indemnifies
and agrees to defend and hold the Landlord harmless from and against
any and all liens, damages, losses, liabilities, obligations,
penalties, claims, litigation, demands, judgments, suits,
proceedings, costs, disbursements or expenses of any kind or nature
whatsoever (including, without limitation, attorneys' and experts'
fees and expenses) which may at any time (whether or not prior to or
after expiration of the term of this Lease) be imposed upon, incurred
by or asserted or awarded against the Landlord, the Building or the
Property arising from or out of (i) the release by Tenant of any
Hazardous Materials at any time during the Term of this Lease on, in,
under or affecting all or any portion of the Property, (ii) the
violation or alleged violation by Tenant during the Term of this
Lease of any Environmental Law with respect to the Property or any
portion thereof, and (iii) any attempts by the Landlord to enforce
the foregoing rights. The foregoing indemnification shall include,
without limitation (x) the cost of removal of any and all Hazardous
Materials released by Tenant from all or any portion of the Property
or any surrounding areas, (y) additional costs required as a result
of such release or violation by Tenant to take necessary precautions
to protect against the discharge, spillage, emission, leakage,
seepage or release of Hazardous Materials on, in, under or affecting
the Building or the Property or into the air, water or soil, and (z)
costs incurred as a result of such release or violation by Tenant to
comply with Environmental Laws in connection with all or any portion
of the Property or any surrounding areas. In determining whether the
Tenant is liable under this paragraph (a), the term "Tenant" shall
include Tenant and its agents, employees and independent contractors.
(b) Notwithstanding any of the foregoing to the contrary, Tenant
shall not be required to indemnify or hold the Landlord harmless from
or against any such liens, damages, liabilities or the like to the
extent that the same arise from acts or omissions of Landlord or any
third parties for whose conduct Tenant is not responsible, occurring
during any period in which Landlord or such third party was in
possession of the Property. With respect to liens, damages,
liabilities and the like relating to acts or omissions of Landlord or
any other third parties for whose conduct Tenant is not responsible
occurring during any period in which Landlord or such third party was
in possession of the Property, Landlord shall indemnify Tenant as
provided in the APA.
(c) For purposes of this Lease, "Hazardous Material" or "Hazardous
Materials" means and includes petroleum products, flammable
explosives, radioactive materials, asbestos or any material
containing asbestos, polychlorinated biphenyls, and/or any hazardous,
toxic or dangerous waste, substance or material now or hereafter
defined as such, or as a hazardous substance, or any similar term, by
or in the Environmental Laws. For purposes of this Lease,
"Environmental Law" or "Environmental Laws" shall mean: (x) any
"Super Fund" or "Super Lien" law, or any other federal, state or
local statute, law ordinance, code, rule, regulation, order or
decree, regulating, relating to or imposing liability or standards of
conduct concerning, any Hazardous Materials as may now or at any time
hereafter be in effect, including without limitation, the following
as the same may be amended or
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replaced from time to time, and all regulations promulgated
thereunder or in connection therewith: the Super Fund Amendments and
Reauthorization Act of 1986, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Air Act,
the Clean Water Act, the Toxic Substances Control Act, the Solid
Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act, the Hazardous Waste Management System, and the
Occupational Safety and Health Act of 1970; and (y) any law,
ordinance or regulation the primary purpose of which is to protect
the quality of the environment.
ARTICLE 11
LANDLORD'S ACCESS TO PROPERTY
11.1 LANDLORD'S RIGHTS. Landlord shall have the right to enter the
Property at all reasonable hours, upon reasonable advance notice, for
the purpose of inspecting or making repairs to the same, and Landlord
shall also have the right to make access available at all reasonable
hours to prospective or existing mortgagees, purchasers or, in the
last six months of the Term of this Lease, tenants of any part of the
Property.
ARTICLE 12
FIRE, EMINENT DOMAIN, ETC.
12.1 CASUALTY AND CONDEMNATION. (a) In the event that all or any part of
the Building shall be damaged or destroyed in any way by fire or
other casualty, then Tenant shall, at its sole cost and expense,
repair and restore the Building, or the portion thereof so affected,
to substantially the same or better condition as the same were in
immediately prior to such damage or destruction. Landlord shall make
any proceeds of its property damage insurance (to the extent actually
received by Landlord) available to reimburse Tenant for the cost of
such repair and restoration, on such reasonable terms and conditions
as may be reasonable and customary for construction loans under like
circumstances (it being understood, however, that no creditor/debtor
relationship shall be deemed to exist between Landlord and Tenant as
a result thereof). Except as expressly provided in this Lease, no
such damage or destruction by fire or other casualty shall entitle
Tenant to terminate this Lease, nor shall Tenant be entitled to any
claim of offset against, or abatement or reduction in, the amount of
Basic Rent payable hereunder. All of such repairs and restoration
shall be in accordance with plans and specifications first approved
by Landlord, and shall be performed with a level of quality at least
equal to that of the Building prior to such damage or destruction.
Tenant shall promptly give Landlord notice of any such damage or
destruction. Notwithstanding the foregoing, in the event that within
the last two (2) years of the Term of this Lease (including any
Extended Term with respect to which Tenant shall have exercised its
option to extend), the Building is substantially damaged such that,
in the professional written opinion of Tenant's architect or engineer
(to be delivered to Landlord within twenty (20) days after such
damage), the time necessary to reconstruct the Building and reopen
for business will exceed one hundred eighty (180) days from the date
on which construction would begin, then Tenant shall have the right
to terminate this Lease by giving Landlord notice of its desire to do
so, which notice shall be given not later than thirty (30) days after
the date of such damage. Any such termination shall be effective on
the date which is thirty (30) days after the giving of such notice as
if such date was the date originally set forth herein as the
expiration date hereof.
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(b) If the use, occupancy or title to the Property or any portion
thereof, shall be taken by exercise of the right of eminent domain,
the party hereto with knowledge thereof shall promptly give notice
thereof to the other party hereto. If any portion (but not all or
substantially all) of the Property that does not include any portion
of the Building, or any facilities on the Property that are necessary
for the proper operation of the Building, shall be affected by any
exercise of the power of eminent domain, and such taking does not
render it impracticable or impossible for Tenant to continue to
operate its business therein, and:
(i) such exercise is temporary in nature (and will not extend
beyond the expiration of the Term of this Lease, including the
Extended Term, if Tenant shall have then duly exercised its
option to extend), then the entire award paid on account of
such portion of the Property shall be assigned over and
payable to Tenant, and Tenant shall continue to pay Basic Rent
and any additional rent and other charges as herein provided,
and this Lease shall remain unaffected thereby; or
(ii) such exercise is permanent in nature (which means, for
purposes hereof, that such taking will extend beyond the
expiration of the Term of this Lease, including any Extended
Term, if Tenant shall have then duly exercised its option to
extend), then Basic Rent payable by Tenant shall be justly and
equitably abated and reduced according to the nature and
extent of the loss of use thereof suffered by Tenant.
(c) If all or substantially all of the Property shall be affected by
any exercise of the power of eminent domain such that it is
impracticable or impossible for Tenant thereafter to operate its
business in the Building, then this Lease shall terminate (even if
Landlord's entire interest therein may have been divested) as of the
effective date of such taking, with the same force and effect as if
such date were the date originally established as the expiration date
hereof.
(d) Except to the extent herein expressly provided for in this
Section, Landlord shall have and hereby reserves and excepts, and
Tenant hereby grants and assigns to Landlord, all rights to recover
for damages to the Property and the leasehold interest hereby
created, and to compensation accrued or hereafter to accrue by reason
of such taking, damage or destruction, and by way of confirming the
foregoing, Tenant hereby grants and assigns, and covenants with
Landlord to grant and assign to Landlord, all rights to such damages
or compensation, and covenants to deliver such further assignments
and assurances thereof as Landlord may from time to time reasonably
request. In no event shall Landlord have any liability for damages to
Tenant for inconvenience, annoyance, or interruption of business
arising from such eminent domain proceeding. Nothing contained herein
shall be construed to prevent Tenant from prosecuting in any
condemnation proceedings a claim for the value of any of Tenant's
removable personal property or for relocation expenses, if a separate
award is provided under applicable law.
12.2 PROPERTY INSURANCE. Landlord agrees to maintain in full force and
effect, during the Term of this Lease, at commercially reasonable
rates, so-called all-risk property damage insurance with such
reasonable deductibles and in such amounts as Landlord may from time
to time determine are carried by reasonably prudent owners of similar
buildings in the area in which the Property is located, provided (i)
that in no event shall Landlord be required to carry other than fire
and extended coverage insurance or insurance in amounts greater than
the full replacement value of the Building (excluding footings and
foundations and alterations, additions and improvements made by
Tenant), and (ii) Tenant shall reimburse Landlord for all costs and
premiums of such insurance, including without limitation all costs of
inspections and the cost of any repairs or maintenance
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required as a condition of such insurance. Such insurance shall
provide that it will not be cancelled without furnishing Tenant with
at least thirty days' prior notice thereof. In the event of any
casualty described above, Tenant shall reimburse Landlord for the
deductible (if any) due under such policy. Landlord may satisfy such
insurance requirements by including the Property in a so-called
"blanket" insurance policy, provided that the amount of coverage
allocated to the Property shall fulfill the foregoing requirements.
It shall be Tenant's responsibility to insure all contents and
improvements in the Building, as well as any furniture, fixtures and
equipment.
ARTICLE 13
DEFAULT
13.1 TENANT'S DEFAULT. (a) If at any time subsequent to the date of this
Lease any one or more of the following events (herein referred to as
a "Default of Tenant") shall happen:
(i) Tenant shall fail to pay the Basic Rent or any additional
charges hereunder when due and such failure shall continue for
ten (10) full Business Days after notice to Tenant from
Landlord; or
(ii) Tenant shall neglect or fail to perform or observe any
other covenant herein contained on Tenant's part to be
performed or observed and Tenant shall fail to remedy the same
within thirty (30) days after notice to Tenant specifying such
neglect or failure, or if such failure is of such a nature
that Tenant cannot reasonably remedy the same within such
thirty (30) day period, Tenant shall fail to commence promptly
to remedy the same and to prosecute such remedy to completion
with diligence and continuity; or
(iii) Tenant's leasehold interest in the Property shall be
taken on execution or by other process of law directed against
Tenant; or
(iv) Tenant shall make an assignment for the benefit of
creditors or shall be adjudicated insolvent, or shall file any
petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future Federal, State
or other statute, law or regulation for the relief of debtors,
or shall seek or consent to or acquiesce in the appointment of
any trustee, receiver or liquidator of Tenant or of all or any
substantial part of its properties, or shall admit in writing
its inability to pay its debts generally as they become due;
or
(v) A petition shall be filed against Tenant under any law
seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief
under any present or future Federal, State or other statute,
law or regulation and shall remain undismissed or unstayed for
an aggregate of sixty (60) days (whether or not consecutive),
or if any debtor in possession (whether or not Tenant)
trustee, receiver or liquidator of Tenant or of all or any
substantial part of its properties or of the Property
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shall be appointed without the consent or acquiescence of
Tenant and such appointment shall remain unvacated or unstayed
for an aggregate of sixty (60) days (whether or not
consecutive); or
(vi) For so long as the Property is owned by the Landlord
named herein, Groundwater Technology, Inc., or any
wholly-owned subsidiary thereof, an occurrence of an Event of
Default, after giving effect to any applicable grace period,
under the Subordinated Convertible Promissory Note of even
date herewith issued by Tenant to Landlord;
then in any such case Landlord may terminate this Lease by notice to
Tenant, specifying a date not less than five (5) days after the
giving of such notice on which this Lease shall terminate and this
Lease shall come to an end on the date specified therein as fully and
completely as if such date were the date herein originally fixed for
the expiration of the Term of this Lease, and Tenant will then quit
and surrender the Property to Landlord, but Tenant shall remain
liable as hereinafter provided.
(b) If this Lease shall have been terminated as provided in this
Article, or if any execution or attachment shall be issued against
Tenant or any of Tenant's property whereupon the Property shall be
taken or occupied by someone other than Tenant, then Landlord may
re-enter the Property, either by summary proceedings, ejectment or
otherwise, and remove and dispossess Tenant and all other persons and
any and all property from the same, as if this Lease had not been
made.
(c) In the event of any termination, Tenant shall pay the Basic
Rent and other sums payable hereunder up to the time of such
termination, and thereafter Tenant, until the end of what would have
been the Term of this Lease in the absence of such termination, and
whether or not the Property shall have been relet, shall be liable to
Landlord for, and shall pay to Landlord, as liquidated current
damages, the Basic Rent and other sums that would be payable
hereunder if such termination had not occurred, less the net
proceeds, if any, of any reletting of the Property, after deducting
all expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, advertising, expenses of employees,
alteration costs and expenses of preparation for such reletting.
Tenant shall pay the current damages referred to above to Landlord
monthly on the days which the Basic Rent would have been payable
hereunder if this Lease had not been terminated.
(d) At any time after such termination, whether or not Landlord
shall have collected any such current damages, as liquidated final
damages and in lieu of all such current damages beyond the date of
such demand, at Landlord's election Tenant shall pay to Landlord an
amount equal to the excess, if any, of the Basic Rent and other sums
as hereinbefore provided which would be payable hereunder from the
date of such demand assuming that, for the purposes of this
paragraph, annual payments by Tenant on account of Taxes and
Operating Expenses would be the same as the payments required for the
immediately preceding Operating or Tax Year for what would be the
then unexpired Term of this Lease if the same remained in effect,
over the then fair net rental value of the Property for the same
period.
(e) In case of any Default by Tenant, re-entry, expiration and
dispossession by summary proceedings or otherwise, Landlord may (i)
re-let the Property or any part or parts thereof, either in the name
of Landlord or otherwise, for a term or terms which may at Landlord's
option be equal to or less than or exceed the period which would
otherwise have constituted the balance of the Term of this Lease and
may grant concessions or free rent to the extent that Landlord
considers advisable
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and necessary to re-let the same and (ii) may make such reasonable
alterations and repairs to the Property as Landlord in its sole
judgment considers advisable and necessary for the purpose of
reletting the Property; and the making of such alterations and
repairs shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be
liable in any way whatsoever for failure to re-let the Property, or,
in the event that the Property are re-let, for failure to collect the
rent under such re-letting. Tenant hereby expressly waives any and
all rights of redemption granted by or under any present or future
laws in the event of Tenant being evicted or dispossessed, or in the
event of Landlord obtaining possession of the Property, by reason of
the violation by Tenant of any of the covenants and conditions of
this Lease.
(f) The specified remedies to which Landlord may resort hereunder
are not intended to be exclusive of any remedies or means of redress
to which Landlord may at any time be entitled lawfully, and Landlord
may invoke any remedy (including the remedy of specific performance)
allowed at law or in equity as if specific remedies were not herein
provided for.
(g) All costs and expenses incurred by or on behalf of Landlord
(including, without limitation, attorneys' fees and expenses at both
the trial and appellate levels) in enforcing its rights hereunder or
occasioned by any Default of Tenant shall be paid by Tenant.
13.2 LANDLORD'S DEFAULT. Landlord shall in no event be in default in the
performance of any of Landlord's obligations hereunder unless and
until Landlord shall have failed to perform such obligations within
thirty (30) days of receipt of notice thereof (except that no notice
need be given, and Landlord shall be deemed to immediately be in
default hereunder, if Landlord denies access to the Property to
Tenant), or if such failure is of such a nature that Landlord cannot
reasonably remedy the same within such thirty (30) day period,
Landlord shall fail to commence promptly (and in any event within
such thirty (30) day period) to remedy the same and to prosecute such
remedy to completion with diligence and continuity.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 EXTRA HAZARDOUS USE. Tenant covenants and agrees that Tenant will
not do or permit anything to be done in or upon the Property, or
bring in anything or keep anything therein, which shall increase the
rate of casualty insurance on the Property or the Property above the
standard rate applicable to Property being occupied for Permitted
Uses; and Tenant further agrees that, in the event that Tenant shall
do any of the foregoing, Tenant will promptly pay to Landlord, on
demand, any such increase resulting therefrom, which shall be due and
payable as an additional charge hereunder.
14.2 WAIVER. (a) Failure on the part of Landlord or Tenant to complain of
any action or non-action on the part of the other, no matter how long
the same may continue, shall never be a waiver by Tenant or Landlord,
respectively, of any of the other's rights hereunder. Further, no
waiver at any time of any of the provisions hereof by Landlord or
Tenant shall be construed as a waiver of any of the other provisions
hereof, and a waiver at any time of any of the provisions hereof
shall not be construed as a waiver at any subsequent time of the same
provisions. The consent or approval of Landlord or Tenant to or of
any action by the other requiring such consent or approval shall not
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be construed to waive or render unnecessary Landlord's or Tenant's
consent or approval to or of any subsequent similar act by the other.
(b) No payment by Tenant, or acceptance by Landlord, of a lesser
amount than shall be due from Tenant to Landlord shall be treated
otherwise than as a payment on account of the earliest installment of
any payment due from Tenant under the provisions hereof. The
acceptance by Landlord of a check for a lesser amount with an
endorsement or statement thereon, or upon any letter accompanying
such check, that such lesser amount is payment in full, shall be
given no effect, and Landlord may accept such check without prejudice
to any other rights or remedies which Landlord may have against
Tenant.
14.3 COVENANT OF QUIET ENJOYMENT. Tenant, subject to the terms and
provisions of this Lease, on payment of the Basic Rent and Escalation
Charges and observing, keeping and performing all of the other terms
and provisions of this Lease on Tenant's part to be observed, kept
and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the Property during the term hereof, without
hindrance or ejection by any persons lawfully claiming under Landlord
to have title to the Property superior to Tenant; the foregoing
covenant of quiet enjoyment is in lieu of any other covenant with
respect to quiet enjoyment, express or implied.
14.4 LANDLORD'S LIABILITY. (a) Tenant specifically agrees to look solely
to the greater of (i) Landlord's then equity interest in the Property
at the time owned or (ii) $250,000, for recovery of any judgment from
Landlord; it being specifically agreed that, except as provided
herein, Landlord (original or successor) shall never be personally
liable for any such judgment, or for the payment of any monetary
obligation to Tenant. The provision contained in the foregoing
sentence is not intended to, and shall not, limit any right that
Tenant might otherwise have to obtain injunctive relief against
Landlord or Landlord's successors in interest, or to take any action
not involving the personal liability of Landlord (original or
successor) to respond in monetary damages from Landlord's assets
other than Landlord's equity interest in the Property.
(b) With respect to any repairs or services to be furnished by
Landlord to Tenant, Landlord shall in no event be liable for failure
to furnish the same when prevented from doing so by strike, lockout,
breakdown, accident, order or regulation of or by any governmental
authority, or failure of supply, or failure whenever and for so long
as may be necessary by reason of the making of repairs or changes
which Landlord is required or is permitted by this Lease or by law to
make or in good faith deems necessary, or inability by the exercise
of reasonable diligence to obtain supplies, parts or employees
necessary to furnish such services, or because of war or other
emergency, or for any other cause beyond Landlord's reasonable
control, or for any cause due to any act or neglect of Tenant or
Tenant's servants, agents, employees, licensees or any person
claiming by, through or under Tenant, nor shall any such failure give
rise to any claim in Tenant's favor that Tenant has been evicted,
either constructively or actually, partially or wholly.
(c) In no event shall either party hereto ever be liable to the other
for any loss of business or any other indirect or consequential
damages suffered by such other party from whatever cause.
(d) Whenever Tenant requests Landlord's consent or approval (whether
or not provided for herein), Tenant shall pay to Landlord, on demand,
as an additional charge, any out-of-pocket expenses reasonably
incurred by Landlord (including without limitation legal fees and
costs, if any) in connection therewith.
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(e) With respect to any repairs or restoration which are required or
permitted to be made by Landlord, the same may be made during normal
business hours and Landlord shall have no liability for damages to
Tenant for inconvenience, annoyance or interruption of business
arising therefrom.
14.5 MORTGAGEE'S RIGHTS. This Lease shall be subordinate to any mortgage
or ground lease from time to time encumbering the Property, whether
executed and delivered prior to or subsequent to the date of this
Lease, if the holder of such mortgage or ground lease shall so elect;
provided, however, that if any such holder so elects, such holder
shall execute an agreement, in form and substance reasonably
acceptable to such holder and Tenant, to the effect that in the event
such holder succeeds to Landlord's interests hereunder, and so long
as no Default of Tenant exists, such holder shall not disturb
Tenant's rights hereunder. If this Lease is subordinate to any
mortgage or ground lease and the holder thereof (or successor) shall
succeed to the interest of Landlord, at the election of such holder
(or successor) Tenant shall attorn to such holder and this Lease
shall continue in full force and effect between such holder (or
successor) and Tenant. Tenant agrees to execute such instruments of
subordination or attornment in confirmation of the foregoing
agreement as such holder may reasonably request. After receiving
notice from any person, firm or other entity that it holds a mortgage
or a ground lease which includes the Property, no notice from Tenant
to Landlord alleging any default by Landlord shall be effective
against the mortgagee or ground lessor unless and until a copy of the
same is given to such holder or ground lessor (provided Tenant shall
have been furnished with the name and address of such holder or
ground lessor), and the curing of any of Landlord's defaults by such
holder or ground lessor shall be treated as performance by Landlord.
14.6 ASSIGNMENT OF RENTS AND TRANSFER OF TITLE. With reference to any
assignment by Landlord of Landlord's interest in this Lease, or the
rents payable hereunder, conditional in nature or otherwise, which
assignment is made to the holder of a mortgage on property which
includes the Property, Tenant agrees that the execution thereof by
Landlord, and the acceptance thereof by the holder of such mortgage
shall never be treated as an assumption by such holder of any of the
obligations of Landlord hereunder unless such holder shall, by notice
sent to Tenant, specifically otherwise elect and that, except as
aforesaid, such holder shall be treated as having assumed Landlord's
obligations hereunder only upon foreclosure of such holder's mortgage
and the taking of possession of the Property. In the event of any
transfer of title to the Property by Landlord, Landlord shall
thereafter be entirely freed and relieved from the performance and
observance of all covenants and obligations hereunder; provided the
same are assumed by the transferee.
14.7 INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of
this Lease, or the application thereof to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.
14.8 PROVISIONS BINDING, ETC. Except as herein otherwise provided, the
terms hereof shall be binding upon and shall inure to the benefit of
the successors and assigns, respectively, of Landlord and Tenant
(except in the case of Tenant, only such assigns as may be permitted
hereunder) and, if Tenant shall be an individual, upon and to his
heirs, executors, administrators, successors and permitted assigns.
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14.9 RECORDING. Tenant agrees not to record this Lease, but may record a
memorandum or notice hereof in a form complying with applicable law
and reasonably satisfactory to Landlord.
14.10 NOTICES. Whenever, by the terms of this Lease, notices shall or may
be given either to Landlord or to Tenant, such notice shall be in
writing and shall be sent by registered or certified mail, postage
prepaid, return receipt requested:
If intended for Landlord, addressed to Landlord at Landlord's
Original Address and marked: "Attention: Chief Financial Officer"
(or to such other address or addresses as may from time to time
hereafter be designated by Landlord by like notice).
If intended for Tenant, addressed to Tenant at Tenant's Original
Address (or to such other address or addresses as may from time to
time hereafter be designated by Tenant by like notice).
All such notices shall be effective when deposited in the United
States Mail within the Continental United States, provided that the
same are received in ordinary course at the address to which the same
were sent.
14.11 WHEN LEASE BECOMES BINDING. The submission of this document for
examination and negotiation does not constitute an offer to lease, or
a reservation of, or option for, the Property, and this document
shall become effective and binding only upon the execution and
delivery hereof by both Landlord and Tenant. All negotiations,
considerations, representations and understandings between Landlord
and Tenant are incorporated herein and this Lease expressly
supersedes any proposals or other written documents relating hereto.
This Lease may be modified or altered only by written agreement
between Landlord and Tenant, and no act or omission of any employee
or agent of Landlord shall alter, change or modify any of the
provisions hereof.
14.12 PARAGRAPH HEADINGS AND INTERPRETATION OF SECTIONS. The paragraph
headings throughout this instrument are for convenience and reference
only, and the words contained therein shall in no way be held to
explain, modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Lease. The provisions of this
Lease shall be construed as a whole, according to their common
meaning (except where a precise legal interpretation is clearly
evidenced), and not for or against either party. Use in this Lease of
the words "including," "such as" or words of similar import, when
followed by any general term, statement or matter, shall not be
construed to limit such term, statement or matter to the specified
item(s), whether or not language of non-limitation, such as "without
limitation" or "including, but not limited to," or words of similar
import, are used with reference thereto, but rather shall be deemed
to refer to all other terms or matters that could fall within a
reasonably broad scope of such term, statement or matter.
14.13 REMEDYING DEFAULTS. Landlord shall have the right, but shall not be
required, to pay such sums or do any act which requires the
expenditure of monies which may be necessary or appropriate by reason
of the failure or neglect of Tenant to perform any of the provisions
of this Lease, and in the event of the exercise of such right by
Landlord, Tenant agrees to pay to Landlord forthwith upon demand all
such sums, together with interest thereon at a rate equal to 3% over
the base rate in effect from time to time at The First National Bank
of Boston, as an additional charge. Any payment of Basic Rent,
Escalation Charges or other sums payable hereunder not paid when due
shall, at the option of Landlord, bear interest at a rate equal to 3%
over the base rate in effect from time to time at The First National
Bank of Boston from the due date thereof and shall be payable
forthwith on demand by Landlord, as an additional charge.
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14.14 HOLDING OVER. Any holding over by Tenant after the expiration of the
term of this Lease shall be treated as a daily tenancy at sufferance
at a rate equal to two times the Basic Rent then in effect plus
Escalation Charges and other charges herein provided (prorated on a
daily basis). Tenant shall also pay to Landlord all direct damages
sustained by reason of any such holding over. Otherwise, such holding
over shall be on the terms and conditions set forth in this Lease as
far as applicable.
14.15 WAIVER OF SUBROGATION. Insofar as, and to the extent that, the
following provision shall not make it impossible to secure insurance
coverage obtainable from responsible insurance companies doing
business in the locality in which the Property is located (even
though extra premium may result therefrom) Landlord and Tenant
mutually agree that any property damage insurance carried by either
shall provide for the waiver by the insurance carrier of any right of
subrogation against the other, and they further mutually agree that,
with respect to any damage to property, the loss from which is
covered by insurance then being carried by them, respectively, the
one carrying such insurance and suffering such loss releases the
other of and from any and all claims with respect to such loss to the
extent of the insurance proceeds paid with respect thereto.
14.16 SURRENDER OF PROPERTY. Upon the expiration or earlier termination of
the Term of this Lease, Tenant shall peaceably quit and surrender to
Landlord the Property in neat and clean condition and in good order,
condition and repair, together with all alterations, additions and
improvements which may have been made or installed in, on or to the
Property prior to or during the Term of this Lease, excepting only
ordinary wear and use and damage by fire or other casualty for which,
under other provisions of this Lease, Tenant has no responsibility of
repair or restoration. Tenant shall remove all of Tenant's Removable
Property and, to the extent specified by Landlord at the time consent
was given thereto, all alterations and additions made by Tenant and
all partitions wholly within the Property unless installed initially
by Landlord in preparing the Property for Tenant's occupancy; and
shall repair any damages to the Property or the Building caused by
such removal. Any Tenant's Removable Property which shall remain in
the Building or on the Property after the expiration or termination
of the Term of this Lease (or Tenant's surrender of the Property, if
Tenant is holding over pursuant to the terms of Section 14.14 hereof
and no Default of Tenant otherwise exists) shall be deemed
conclusively to have been abandoned, and either may be retained by
Landlord as its property or may be disposed of in such manner as
Landlord may see fit, at Tenant's sole cost and expense.
14.17 BROKERAGE. Each of the parties hereto warrants and represents to the
other that it has dealt with no broker in connection with the
consummation of the Lease and, in the event of any brokerage claims
asserted against either party predicated upon prior dealings with the
other party hereto, such other party shall defend the same and
indemnify the party against whom the claim is asserted against any
such claim.
14.18 GOVERNING LAW. This Lease shall be governed exclusively by the
provisions hereof and by the laws of the State of Kansas as the same
may from time to time exist.
ARTICLE 15
OPTION TO EXTEND
15.1 TENANT'S RIGHT. Provided that, at the time of such exercise, (i)
there exists no Default of Tenant; (ii) this Lease is still in full
force and effect; and (iii) Tenant shall not have assigned this
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Lease or sublet any or all of the Property, Tenant shall have the
right to extend the Term of this Lease for one extended term (the
"Extended Term") of five (5) years. The Extended Term shall commence
on the day immediately following the expiration date of the Initial
Term, and shall end on the day immediately preceding the fifth
anniversary of the first day of the Extended Term. Tenant shall
exercise such option by giving Landlord notice of its desire to do
so, not later than six months prior to the expiration of the Initial
Term, it being agreed that time shall be of the essence with respect
to the giving of such notice. The giving of such notice shall
automatically extend the Term of this Lease for the Extended Term,
and no instrument of renewal need be executed. In the event that
Tenant fails to give such notice to Landlord, the Term of this Lease
shall automatically terminate at the end of the Initial Term, and
Tenant shall have no further right or option to extend the Term of
this Lease. The Extended Term shall be on all the terms and
conditions of this Lease, except that the Basic Rent for the Extended
Term shall be determined in accordance with Section 3.1(b).
ARTICLE 16
OPTION TO PURCHASE
16.1 TENANT'S RIGHT. Provided that, at the time of such exercise, (i)
there exists no Default of Tenant; (ii) this Lease is still in full
force and effect; and (iii) Tenant shall not have assigned this Lease
or sublet any or all of the Property, Tenant shall have the right, on
or before the one hundred fiftieth (150th) day after the date hereof,
to purchase the Property on the terms set forth herein. The purchase
price (the "Purchase Price") for the Property shall be One Million
Dollars ($1,000,000) to the Landlord. Tenant shall exercise such
option by giving Landlord notice of its irrevocable election to do
so, not later than ninety (90) days after the date hereof, and the
closing shall take place at the Landlord's Original Address on that
date specified in Tenant's notice, which date shall in no event be
later than the one hundred fiftieth (150th) day after the date
hereof, it being agreed that time shall be of the essence with
respect to the giving of such notice and such closing. In the event
that Tenant fails to give such notice to Landlord, then Tenant shall
have no further right or option to purchase the Property. At the
designated time for closing, Tenant shall pay the difference between
the Purchase Price and the aggregate Basic Rent theretofore actually
paid by Tenant hereunder, and Landlord shall convey title to the
Property by general warranty deed (accompanied by a corporate
resolution authorizing the signatory to the deed to execute and
deliver the same) and consistent (subject to any title conditions or
encumbrances arising from Tenant's use or occupancy of the Property)
with the state of record title reflected in that certain Commitment
for Title Insurance dated as of November 29, 1995 and issued by
Chicago Title Insurance Company (No. C496339), a copy of which is
annexed to this Lease as Exhibit "Title" (except that Landlord shall
be responsible for payment of taxes applicable to calendar year
1995), but subject only to those additional matters shown on any
survey Tenant may obtain (and not referenced in such Commitment) that
do not materially interfere with the use of the Property as currently
used. If Tenant gives such notice and prior to the closing either
party receives notice that the Property or a portion thereof is to be
taken by the exercise of the right of eminent domain, Tenant, at its
election, shall be relieved of its obligation to purchase the
Property as herein provided by giving notice of such election to
Landlord, whereupon this option to purchase shall be of no further
force or effect, and the rights of the parties shall be as set forth
in Article 12 hereof. If Tenant elects to purchase the Property as
herein provided, and subsequently fails to pay such remaining portion
of the Purchase Price, then Landlord may, at its election, declare
Tenant's election to purchase null
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and void but leave this Lease otherwise unaffected. Tenant shall be
responsible for payment of all transfer taxes, recording costs and
fees, and the like.
The representations and warranties of the Landlord set forth in
Section 3.1, 3.2, 3.3, 3.12 and 3.29 of the APA shall be deemed to
apply to the closing, if any, hereunder, and shall survive the
closing subject to the limitations on survival set forth in Section 8
of the APA. The parties hereto agree that to the extent there are
any Losses (as such term is defined in the APA) asserted against,
resulting from, imposed upon or incurred by the Buyer Group (as
defined in the APA) directly or indirectly arising out of or in
connection with a breach or inaccuracy in any such representation or
warranty in connection with the Property, the Maximum Amount (as
defined in the APA) shall be increased by the amount of cash paid by
Tenant to purchase the Property hereunder and any claims for such
Losses shall be subject to the terms and conditions set forth in
Section 8 of the APA. Furthermore, Landlord and Groundwater
Technology, Inc. shall not be responsible for the payment of any
Losses to the extent Tenant or Nytest Environmental Inc. receives
proceeds from any title insurance policy therefor.
16.2 ENVIRONMENTAL ANALYSIS. Each of the parties hereto acknowledges that
an environmental analysis, including sampling of groundwater, will be
performed on the Property promptly after the date hereof. The
parties agree to determine within two weeks of the date hereof the
specific analysis to be performed and will share the cost of such
analysis 50/50 between them, up to an aggregate of $15,000. If
either party desires that additional analysis be performed in excess
of $15,000, such party shall pay for all costs thereof. If the
results of the analysis indicate that there is contamination by
hazardous substances of the soil or groundwater, then Tenant may
elect not to purchase the Property at any time prior to the closing
of any such elected purchase. If the results of the analysis
indicate that there is such contamination to the extent that there
may be a material adverse impact on the Property or Tenant's use
thereof then should Tenant elect not to purchase the Property, Tenant
and Landlord will negotiate, in good faith, a reduction in the Base
Rent under this Lease so that the Base Rent is an amount that is
equivalent to the average rental for comparable premises in the area
(Landlord acknowledges that the Base Rent in the Lease was derived
from an "expected return on investment" model, which model will not
be used in determining the reduction). In the event Landlord and
Tenant are unable to agree on the appropriate reduction within three
(3) months of the commencement of such negotiations, such reduction
shall be determined by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association, except
that there shall be only one arbitrator, who shall have at least ten
(10) years' experience as a real estate broker or appraiser in the
City of Wichita dealing with properties of a similar type as the
Property. Tenant will not be responsible or liable for any
remediation of contamination indicated in such analysis, except to
the extent such contamination is determined to have been caused by
Tenant.
20
<PAGE> 23
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed, under seal, by persons hereunto duly authorized, in multiple
copies, each to be considered an original hereof, as of the date first set
forth above.
LANDLORD: GTEL ENVIRONMENTAL
LABORATORIES, INC.
By: _____________________________________
Joel Adler, Assistant Treasurer
TENANT: NEI/GTEL ENVIRONMENTAL
LABORATORIES, INC.
By: _____________________________________
John Gaspari, Chief Executive Officer
By: _____________________________________
(Assistant) Treasurer
21
<PAGE> 24
EXHIBIT A
DESCRIPTION OF PROPERTY
Lots 3 and 4, Block 3, Westpark Addition to Wichita, Sedgwick County,
Kansas.
22
<PAGE> 25
GUARANTY
GUARANTY (this "Guaranty") dated as of December 31, 1995 from the
party executing this Guaranty (the "Guarantor"), having an address as set forth
on the last page hereof, in favor of GTEL ENVIRONMENTAL LABORATORIES, INC.,
having an address at 100 River Ridge Drive, Norwood, Massachusetts 02026
("Landlord").
WHEREAS, by that certain Lease of even date (the "Lease"), Landlord
leased certain space (the "Premises") located at 4211 West May, Wichita, Kansas
to NEI/GTEL Environmental Laboratories, Inc., a Delaware corporation (the
"Tenant"); and
WHEREAS, the Tenant is a wholly owned subsidiary of the Guarantor;
WHEREAS, the execution and delivery of this Guaranty by Guarantor is a
material inducement to Landlord to enter into the Lease, which is a material
benefit to Guarantor and Tenant.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor agrees with Landlord as follows:
1. Guarantor, jointly, severally, unconditionally and irrevocably
guarantees that Tenant shall pay all amounts (of whatever nature, and including
without limitation rent, additional rent, late charges, fees, costs of
compliance and the like) due, and perform all of its obligations, under the
Lease promptly and in accordance with the provisions of the Lease. This
Guaranty is irrevocable, unconditional and absolute, and if for any reason any
such payments or obligations shall not be paid or performed, as the case may
be, by Tenant when due, then, prior to the expiration of any notice and grace
periods expressly provided for in the Lease, Guarantor will pay or perform same
or cause the same promptly to be paid or performed, regardless of whether
Landlord shall have taken any steps to enforce any rights against Tenant or any
other remedy thereunder. Without limiting the foregoing obligations, Guarantor
agrees to pay all of Landlord's legal and other fees, expenses and costs
reasonably incurred in enforcing the Lease and this Guaranty.
2. The obligations, covenants, agreements and duties of Guarantor
under this Guaranty shall in no way be affected or impaired by reason of the
happening from time to time of any of the following, although without notice to
or the further consent of Guarantor:
(a) the waiver by Landlord of the performance or
observance by Tenant of any of the agreements,
covenants, terms or conditions contained in the
Lease; or
(b) the extension, in whole or in part, of the time for
payment by Tenant or Guarantor of any sums owing or
payable under the Lease or this Guaranty; or
(c) any assignment of Tenant's interest under the Lease
or the subletting of the Premises or any part
thereof; or
(d) the modification or amendment (whether material or
otherwise) of any of the obligations of Tenant under
the Lease; or
(e) any failure, omission or delay on the part of
Landlord to enforce, assert or exercise any right,
power or remedy conferred on or available to Landlord
in or by the Lease
<PAGE> 26
or this Guaranty, or any action on the part of
Landlord granting indulgence or extension in any form;
or
(f) the voluntary or involuntary liquidation,
dissolution, sale of all or substantially all of the
assets, marshalling of assets and liabilities,
receivership, conservatorship, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or
readjustment of, or other similar proceeding
affecting Tenant or Guarantor or any of their assets;
or
(g) the transfer of title to all or part of the Premises
by Landlord; or
(h) the release of Tenant or Guarantor from the
performance or observance of any of the agreements,
covenants, terms or conditions contained in the Lease
or this Guaranty by operation of law.
3. In the event of the rejection or disaffirmance of the Lease by
Tenant or Tenant's trustee in bankruptcy pursuant to bankruptcy law or any
other law affecting creditors' rights, Guarantor will, and does hereby (without
the necessity of any further agreement or act) assume the obligations and
liabilities of Tenant under the Lease to the same extent as if (a) Guarantor
were the originally named Tenant under the Lease, and (b) there had been no
such rejection or disaffirmance, and Guarantor will confirm such assumption in
writing at the request of Landlord upon or after such rejection or
disaffirmance. Guarantor shall, upon such assumption (to the extent permitted
by law), have all rights of Tenant under the Lease. If, for any reason, any
payment to Landlord of any of the obligations to which this Guaranty is
applicable is required to be refunded to Tenant or required to be paid over to
any other party including, without limitation, by reason of the operation of
any bankruptcy law or other law affecting creditors' rights now or hereafter
enacted, Guarantor will pay the amount so required to be paid by Landlord upon
demand, and such obligations of Guarantor hereunder shall not be treated as
having been discharged by reason of the payment by Tenant to Landlord giving
rise to the obligation of Landlord to repay the same; and this Guaranty shall
be treated as having remained in full force and effect for any such repayment
so made by Landlord as well as any amount not theretofore paid to Landlord on
account of such obligations. Guarantor hereby agrees, for itself and its
successors and assigns, that it will consent to and not contest or otherwise
oppose any action or motion by or on behalf of Landlord for relief from the
automatic stay provided in 11 U.S.C. Section 362 (including without limitation
any stay against actions against non-debtor parties).
4. Notice of acceptance of this Guaranty and notice of any
obligations or liabilities contracted or incurred by Tenant are hereby waived
by Guarantor.
5. The liabilities and obligations of Guarantor hereunder are
primary and enforceable either before, simultaneously with, or after proceeding
against Tenant or against any property or security available to Landlord.
6. Any indebtedness or obligation of Tenant to Guarantor, whether
liquidated or speculative, now or hereafter existing is hereby subordinated to
the obligations of Guarantor hereunder. Guarantor agrees that, until Tenant's
obligations have been paid or satisfied in full, Guarantor will not accept any
payment from Tenant on account of such subordinated debt, which payment would
impair Tenant's ability to perform its obligations under the Lease, and
Landlord shall have the right to recover from Guarantor any amounts so paid by
Tenant. Guarantor hereby unconditionally and irrevocably agrees that: (a)
Guarantor will not assert against Tenant (or Tenant's estate in the event
Tenant becomes bankrupt or becomes the subject of any case or proceeding under
the bankruptcy laws of the United States of America) any right or claim to
subrogation,
- 2 -
<PAGE> 27
indemnification, reimbursement, contribution or payment which Guarantor may
have now or at any time against Tenant for or with respect to any and all
amounts Guarantor may pay or be obligated to pay to Landlord, including,
without limitation, such obligations, and any and all obligations which
Guarantor may perform, satisfy or discharge under or with respect to this
Guaranty; (b) Guarantor waives and releases all such rights and claims to
subrogation, indemnification, reimbursement, contribution or payment which
Guarantor may have nor or at any time against Tenant (or Tenant's estate in the
event Tenant becomes bankrupt or becomes the subject of any case or proceeding
under the bankruptcy laws of the United States of America); and (c) Guarantor
will indemnify and hold Landlord harmless from any and all loss, cost, damage
or expense (including, without limitation, attorneys' fees and costs) incurred
by Landlord incident to or in connection with any allegation or finding that
delivery of this Guaranty is a "preference" under 11 U.S.C. Section 547.
7. Guarantor is fully aware of the financial condition of Tenant,
and is executing and delivering this Guaranty based solely upon its own
independent investigation of all matters pertinent thereto, and is not relying
in any manner upon any representation or statement to Landlord. Guarantor
shall have no right to require Landlord to obtain or disclose any information
with respect to such obligations, the financial condition or character of
Tenant or the Lease or any other matter, fact or occurrence whatsoever.
8. Guarantor hereby agrees that, notwithstanding that the
Premises are located in the State of Kansas, all actions to enforce the terms
and provisions of this Guaranty may be brought and maintained within the
Commonwealth of Massachusetts, and Guarantor hereby consents to the
jurisdiction of any court within the Commonwealth of Massachusetts, waives
personal service of all process and hereby agrees that such service may be made
by express mail, directed to Guarantor at the address set forth below.
Guarantor hereby expressly waives any and all rights which it may have to make
any objections based on jurisdiction or venue to any suit brought to enforce
this Guaranty in accordance with the above provisions. Guarantor shall notify
Landlord in writing at the time of any change in the Guarantor's address shown
below.
9. This Guaranty shall be construed in accordance with the laws
of the Commonwealth of Massachusetts. Guarantor agrees that any action or
proceeding brought hereunder shall be tried before a judge sitting without a
jury, and GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY SUCH ACTION
OR PROCEEDING. GUARANTOR MAKES THE FOREGOING WAIVER KNOWINGLY AND VOLUNTARILY,
AND ACKNOWLEDGES THAT GUARANTOR HAS HAD THE BENEFIT OF LEGAL COUNSEL OF
GUARANTOR'S CHOOSING.
10. This Guaranty may not be modified or amended except by a
written agreement duly executed by Guarantor with the consent in writing of
Landlord.
11. This Guaranty shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns.
- 3 -
<PAGE> 28
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
under seal as of the date first set forth above.
WITNESS: GUARANTOR: NYTEST ENVIRONMENTAL
INC.
/s/ Eric M. Mencher By:/s/ John Gaspari
- -------------------------- -----------------------------
Name:_____________________ Name: John Gaspari, President
Address: _________________ Address: 60 Seaview Blvd.
__________________________ Port Washington, NY 11050
__________________________
- 4 -
<PAGE> 1
EXHIBIT 99.7
ASSIGNMENT OF PATENT RIGHTS
This Assignment of Patent Rights, dated as of December 31, 1995, is
executed by GTEL Environmental Laboratories, Inc. ("GTEL"), a Delaware
corporation (the "Assignor"), in favor of NEI/GTEL Environmental Laboratories,
Inc., a Delaware corporation (the "Assignee").
WHEREAS the Assignor and the Assignee, and, as to certain sections,
Groundwater Technology, Inc., a Delaware corporation, and Nytest Environmental
Inc., a Delaware corporation, have entered into a certain Asset and Business
Purchase Agreement, dated December 28, 1995 (the "Purchase Agreement"),
pursuant to which Assignee is acquiring substantially all of the assets of the
Assignor;
WHEREAS pursuant to the Purchase Agreement, on the terms and subject
to the conditions contained in the Purchase Agreement, the Assignor has agreed
to assign to Assignee all of the Assignor's right, title and interest in a
certain patent; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Assignor agrees as follows:
1. The Assignor hereby assigns to the Assignee all of the
Assignor's rights, title and interest in U.S. Patent No. 5,450,948, (the
"Patent") a copy of which is attached hereto, together with the goodwill of the
business associated therewith and all claims, if any, which may have arisen
thereunder prior to the effective date of this instrument.
2. From and after the date hereof, upon request of Assignee,
Assignor shall do, execute, acknowledge and deliver all such further acts,
assurances, deeds, assignments, transfers, conveyances and other instruments
and papers as may be reasonably required to sell, assign, transfer, convey and
deliver to and vest in Assignee all the rights and interests hereby assigned
and transferred to Assignee or intended so to be assigned and transferred.
3. Assignor hereby irrevocably authorizes and requests the United
States Commissioner of Patents and, as appropriate, the corresponding officials
in other countries and any other agency or authority having jurisdiction in the
matter to record Assignee as the owner of and/or to issue in accordance with
this Assignment the Patent which is assigned to Assignee by this Assignment and
hereby irrevocably consents to the filing and recordation of this Assignment
with the United States Commissioner of Patents and with such other officials,
agencies and authorities.
4. This Assignment shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
5. The Assignor further assigns unto the Assignee all right to
sue at Assignee's expense for and to receive all damages accruing from past
infringement of the Patent.
<PAGE> 2
6. This Agreement is being executed in several originals for
recordation in the various jurisdictions in which the Patent is recorded.
IN WITNESS WHEREOF, the Assignor has caused this Assignment of Patent
Rights to be duly executed under seal as of and on the date first written
above.
GTEL ENVIRONMENTAL LABORATORIES, INC., Assignor
By: /s/Joel Adler
------------------------------------
Joel Adler, Assistant Treasurer
State of New York )
County of Nassau ) ss.
On this 28th day of December, 1995, before me personally appeared Joel
Adler, to me personally known, who, being by me duly sworn, did say that he is
the Assistant Treasurer of GTEL Environmental Laboratories, Inc., and that the
foregoing instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and he acknowledged said instrument to be
the free act and deed of said corporation.
/s/
---------------------------------
Notary Public
My Commission Expires:
-----------
<PAGE> 3
5. The Assignor further assigns unto the Assignee all right to
sue at Assignee's expense for and to receive all damages accruing from past
infringement of the Patent.
6. This Agreement is being executed in several originals for
recordation in the various jurisdictions in which the Patent is recorded.
IN WITNESS WHEREOF, the Assignor has caused this Assignment of Patent
Rights to be duly executed under seal as of and on the date first written
above.
GTEL ENVIRONMENTAL LABORATORIES, INC., Assignor
By: /s/ Joel Adler
----------------------------------
Joel Adler, Assistant Treasurer
State of New York )
County of Nassau ) ss.
On this 28th day of December, 1995, before me personally appeared Joel
Adler, to me personally known, who, being by me duly sworn, did say that he is
the Assistant Treasurer of GTEL Environmental Laboratories, Inc., and that the
foregoing instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and he acknowledged said instrument to be
the free act and deed of said corporation.
/s/
---------------------------------
Notary Public
My Commission Expires:
------------
