SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 18, 1999
PALLET MANAGEMENT SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Florida 2-99212-A 59-2197020
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State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One South Ocean Drive, Suite 305
Boca Raton, Florida 33432
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 338-7763
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
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On August 18, 1999, pursuant to a Stock Purchase Agreement dated as of
June 27,1999 among Pallet Management Systems, Inc. The Nelson Company and Arthur
P. Caltrider, Pallet Management acquired The Nelson Company; a Baltimore,
Maryland based pallet company, in a stock purchase transaction whereby The
Nelson Company became a wholly owned subsidiary of Pallet Management. The
effective date of the transaction was June 27, 1999, the first day of Pallet
Management's 2000 fiscal year. The purchase price was $1,000,000 in cash, a
$1,000,000 note due December 17, 1999 and 145,000 shares of Pallet common stock.
As a result of the transaction and the termination of subchapter S status, the
seller is entitled to receive payment of an amount equal to The Nelson Company's
income through the effective date, which is estimated to be approximately
$375,000.
The Nelson Company is a $12.6 million niche pallet manufacturing and
reverse distribution company. Because The Nelson Company was a customer of
Pallet Management, $3.1 million of their sales will be treated as inter-company
sales in the pro forma financial statements. This acquisition added to the
Company $3,813,000 in total assets, $1,571,000 in net assets, and $730,997 in
debt. The Nelson Company added 100 employees and four facilities in four states
in which Pallet Management is currently doing business. Arthur P. Caltrider, the
owner and president of The Nelson Company joined Pallet Management as a vice
president and a director. Copies of the stock purchase agreement and employment
agreement are attached hereto as exhibits.
Since there is minimal duplication between the companies, there will be
only minimal cost savings. Pallet Manufacturing believes that the real value of
this transaction to Pallet Management is the growth synergies created through a
unified and enlarged sales force and operating network of the two companies.
Pallet Management and The Nelson Company have had many co-venture business
relationships over the past 20 years. The Nelson Company brings a seasoned sales
force that is strong in the analysis and sales of reverse distribution networks
and compliments Pallet Management's sales force in its drive for new business.
The Nelson Company was founded in 1921 by John M. Nelson, Jr. as the
company received its first wood packaging contract from Bethlehem Steel. During
World War II, with the advent of the forklift and other material handling
equipment, The Nelson Company began manufacturing pallets. In the late 1950's it
established one of the first pallet brokerage operations in the industry and
later acquired Associated Box, which was founded in 1890. In the early 1990s,
The Nelson Company saw a changing market place as companies began to focus more
on pallet related services. With this shift, The Nelson Company positioned
itself to be a leader in pallet related services.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired.
Financial statements relating to the acquisition will be filed by
amendment to this form 8-K within 60 days of August 18, 1999.
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(b) Pro Forma Financial Information.
The pro forma financial information will be filed by amendment to this
form 8-K within 60 days of August 18, 1999.
(c) Exhibits.
2.1 Stock Purchase Agreement dated as of June 27, 1999 among
Pallet Management Systems, Inc., The Nelson Company and Arthur
P. Caltrider.
10.7 Employment Agreement with Arthur P. Caltrider.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PALLET MANAGEMENT SYSTEMS, INC.
Date: August 26, 1999 By: /s/ Zachary M. Richardson
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Zachary M. Richardson., President
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.1 Stock Purchase Agreement dated as of June 27, 1999 among
Pallet Management Systems, Inc., The Nelson Company and Arthur
P. Caltrider.
10.7 Employment Agreement with Arthur P. Caltrider.
STOCK PURCHASE AGREEMENT
This Agreement is entered into as of June 27, 1999, by and among Pallet
Management Systems, Inc., a Florida corporation (the "Buyer"), The Nelson
Company, a Maryland corporation ("Nelson") and Arthur Purdum Caltrider, being
the holder of all of the outstanding shares of capital stock of Nelson (the
"Seller"). The Buyer, Nelson and the Seller are collectively referred to herein
as the "Parties."
Nelson is engaged in the pallet manufacturing and reverse distribution
logistics business (the "Business"). The Buyer desires to acquire from Seller,
all the outstanding shares of capital stock of Nelson.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
"Adverse Consequences" means all charges, complaints, notices, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, damages, dues, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including all attorneys' fees and court costs in any
court or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before an arbitrator.
"Affiliate" has the meaning set forth in the regulations promulgated
under the Securities Exchange Act.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Business" means the pallet manufacturing and reverse distribution
logistics business.
"Buyer" has the meaning set forth in the preface above.
"Buyer Shares" has the meaning set forth in Section 2(b) below.
"Cash" means cash and cash equivalents/marketable securities/short term
investments calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
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"Employee Benefit Plan" means any (a) Employee Pension Benefit Plan as
defined in ERISA Section 3(2) or any Employee Welfare Benefit Plan as defined in
ERISA Section 3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Financial Statements" has the meaning set forth in Section 3(f) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Highest Statutory Rate" shall mean the highest federal individual
income tax rate applicable to ordinary income or capital gains, as the case may
be, and the highest state individual income tax rate of the individual's rate of
residency applicable to ordinary income or capital gains, as the case may be.
"Intellectual Property" means all (a) trademarks, service marks, trade
dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, underwriting
processes and techniques, research and development information, plans,
proposals, copyrightable works, financial, marketing, and business data, pricing
and cost information, business and marketing plans, and customer and supplier
lists and information), (e) other proprietary rights, and (f) copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Law(s)" shall mean any statute, regulation, rule, judgment, ordinance,
order, decree, stipulation, injunction, charge, or other restrictions of any
federal, state, or local government, governmental agency, or court.
"Liability" means any liability, obligation, debt or commitment of
Nelson or the Seller (whether known or unknown, whether absolute or contingent,
accrued or unaccrued, asserted or unasserted, liquidated or unliquidated, and
whether due or to become due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet as of June 26,
1999.
"Most Recent Fiscal Year End" means June 26, 1999.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Highest Statutory Rate" shall mean the highest federal individual
income tax rate applicable to ordinary income or capital gains, as the case may
be, and the highest state individual income tax rate of the individual's state
of residency applicable to ordinary income or capital gains, as the case may be.
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"Party" has the meaning set forth in the preface above.
"Pro Rata Share" means the Seller's pro rata share of S corporation
income as determined under Section 1377(c) of the Code and as reported on
Seller's Schedule K-1.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Real Property" means all lots, units or parcels of real estate.
"Nelson" has the meaning set forth in the preface above and shall
include Nelson's Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) construction, mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation, (d) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (e) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Shares" has the meaning set forth in Section 2(a) below.
"Subsidiary" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, Real Property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, alternative minimum, estimated,
or other tax, including any interest, penalty, or addition thereto, whether
disputed or not.
"Year 2000 Problem" means the risk that the computer applications used
by the Seller (or suppliers, vendors and customers) may be unable to recognize
and properly perform date-sensitive functions involving certain dates prior to
and after December 31, 1999.
2. Basic Transaction.
a. Purchase and Sale. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell all of the issued and outstanding shares of capital stock of
Nelson (the "Shares").
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b. Purchase Price. The Buyer agrees to pay at the Closing (the
"Purchase Price") by delivery of (i) cash paid to Seller in the amount of
$1,000,000 payable by wire transfer or delivery of other immediately available
funds (the "Cash Payment"); (ii) a note in the amount of $1,000,000 in the form
set forth in Exhibit A hereto (the "Purchase Note"), which shall be secured by a
first lien on the Shares; and (iii) certificates issued to seller evidencing
145,000 shares of Common Stock, par value $.001 per share, of the Buyer (the
"Buyer Shares").
c. The Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Seller in
Baltimore, Maryland, commencing at 10:00 a.m. local time on August 17, 1999 (the
"Closing Date").
d. Closing Deliveries. At the Closing the Seller and Nelson will
deliver or cause to be delivered to the Buyer: (i) a certificate or certificates
evidencing the Shares duly endorsed for transfer with all necessary transfer
stamps; and (ii) a security agreement in the form of Exhibit B hereto securing
payment of the Note: (iii) an employment agreement for Seller in the form
attached hereto as Exhibit C; and (iii) certified copies of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement.
e. Section 338 Election. If requested by Buyer, Seller shall join with
Buyer in making the election pursuant to Section 338(h)(10) of the Code, and
corresponding state law, as applicable. In such event, Seller shall reasonably
cooperate with Buyer to assure that the transaction meets the definition of a
"qualified stock purchase" pursuant to Section 338(d)(3) of the Code or
otherwise results in a stepped-up basis in Nelson's assets for income tax
purposes. If this election results in additional tax liability for Seller, then
Buyer shall reimburse Seller in an amount equal to such additional tax liability
on or before December 17, 1999. In addition, to the extent that any
reimbursement from Buyer pursuant to the preceding sentence results in an
increased federal or state income tax liability to Seller, the Buyer shall
reimburse Seller on a grossed up basis for such increased tax liability on or
before December 17, 1999. In determining the amount of all reimbursements made
pursuant to this Section 2.3., it shall be conclusively presumed that Seller is
subject to taxation at the Highest Statutory Rate.
f. Allocation of Purchase Price for Section 338 Election. Buyer and
Seller agree that the Purchase Price and the liabilities of Nelson will be
allocated to the assets of Nelson in a manner consistent with the fair market
values of those assets. Buyer and Seller will file all income tax returns
(including all amended returns and claims for refund) and information reports in
a manner consistent with such allocations. Buyer agrees that the Buyer Shares
shall be valued at 65% of the mean average of the mean average of the closing
bid and asked price of Buyer's Common Stock on each of the ten trading days
preceding the Closing Date.
g. Withdrawal of Seller's 1999 Pro Rata Share. Buyer agrees that, in
addition to the Purchase Price, Seller may fully withdraw his Pro Rata Share of
Nelson's S corporation income for 1999. To the extent that Seller has not fully
withdrawn his Pro Rata Share of Nelson's S corporation income by the Closing
Date, Buyer shall make a payment to Seller, on or before December 17, 1999, of
an amount equal to the difference between the (i) Seller's Pro Rata Share of
Nelson's S corporation income for 1999 and (ii) the distributions previously
received by Seller with respect to his Pro Rata Share of such income plus
interest thereon at the rate of 10% per annum from June 27, 1999.
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3. Representations and Warranties of the Seller and Nelson. The Seller
and Nelson, jointly and severally, represent and warrant to the Buyer that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement except as set forth in the disclosure schedule accompanying
this Agreement (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
a. Organization of the Seller. Nelson is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is in good standing and qualified to do business under the
laws of each jurisdiction in which the nature of its business or the ownership
or leasing of its properties requires such qualification. Nelson has full
corporate power and authority to carry on the business in which it is engaged
and, other than Michigan and Georgia where qualification is being pursued, to
own and use the properties owned, leased and used by it. True, complete and
correct copies of Nelson's Articles of Incorporation and bylaws as presently in
effect have been delivered to the Buyer. The corporate minute books of Nelson
has been made available to the Buyer, are complete and correct and contain all
of the proceedings of the shareholders and directors of Nelson.
b. Subsidiaries. Nelson does not control directly or indirectly or have
any direct or indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary.
c. Authorization of Transaction. The Seller and Nelson have full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform their respective obligations hereunder.
Without limiting the generality of the foregoing, the Board of Directors of
Seller has duly authorized the execution, delivery, and performance of this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Nelson and/or the Seller, enforceable in accordance with its terms and
conditions.
d. Capitalization. The authorized capital stock of Nelson consists of
99,860 shares of Common Stock, of which 1,260 shares are currently issued and
outstanding and will be issued and outstanding as of the Closing Date. All of
such issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable, are free of all Security Interests and are
owned of record and beneficially by the Seller. There are no subscriptions,
options, warrants, rights or calls or other commitments or agreements to which
Nelson or the Seller is a party or by which it is bound, calling for the
issuance, transfer, sale or other disposition of any class of securities of
Nelson, and there are no outstanding securities of Nelson convertible or
exchangeable, actually or contingently, into shares of Common Stock or any other
securities of Nelson. All transfer taxes, if any, with respect to transfers of
capital stock of Nelson made prior to the date hereof have been paid. Upon
payment of the Purchase Price to Nelson at the Closing, the Seller will convey
good and marketable title to the Shares free and clear of all Security Interest
or contractual restrictions or limitations whatsoever.
e. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any Law to which Nelson is subject or any provision of Nelson's Articles
of Incorporation or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
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the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument or indebtedness,
Security Interest, or other arrangement to which the Seller or Nelson is a party
or by which they are bound or to which any of their capital stock or assets,
respectively, is subject, or result in the imposition of any Security Interest
upon the capital stock or assets of Nelson.
f. Financial Statements. Attached hereto as Exhibit B is a copy of
unaudited financial statements for Nelson (the "Financial Statements") as of and
for the two fiscal years ended January 3, 1999 (the "Most Recent Fiscal Year
End") and December 28, 1997; and as of and for the six months ended June 26,
1999 (the "Most Recent Fiscal Month End"). The Financial Statements fairly
present the financial condition of Nelson at the Most Recent Fiscal Month End
and the Most Recent Fiscal Year End.
g. Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the assets,
liabilities, business, financial condition, operations, results of operations,
or future prospects of Nelson taken as a whole. Without limiting the generality
of the foregoing since that date:
(i) Nelson has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(ii) Other than as set forth in Section 3(e) of the Disclosure
Schedule, Nelson has not entered into any contract, lease, sublease, license, or
sublicense (or series of related contracts, leases, subleases, licenses, and
sublicenses) either involving more than $25,000 or outside the Ordinary Course
of Business (other than purchases of inventory and sales to customers in the
Ordinary Course of Business);
(iii) Nelson has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(iv) Other than as referenced in Section 3(a)(iv) of the Disclosure
Schedule, Nelson has not made any capital expenditure (or series of related
capital expenditures) of assets with a useful life of more than 12 months either
involving more than $25,000 or outside the Ordinary Course of Business;
(v) Nelson has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any other person (or series of
related capital investments, loans, and acquisitions) either involving more than
$25,000 or outside the Ordinary Course of Business;
(vi) Other than as referenced in Section 3(o) of the Disclosure
Schedule, Nelson has not created, incurred, assumed, or guaranteed any
indebtedness (including capitalized lease obligations) either involving more
than $25,000 in the aggregate or outside the Ordinary Course of Business;
(vii) Nelson has not delayed or postponed (beyond its normal practice)
the payment of accounts payable and other liabilities;
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(viii) Nelson has not cancelled, compromised, waived, or released any
right or claim (of series of related rights and claims) either involving more
than $25,000 or outside the Ordinary Course of Business;
(ix) Nelson has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(x) There has been no change made or authorized in Nelson's Articles of
Incorporation or bylaws;
(xi) Nelson has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion or exercise) any of its capital stock;
(xii) Nelson has not declared, set aside, or paid any dividend or
distribution with respect to its capital stock or redeemed, purchased, or
otherwise acquired any of its capital stock other than the declaration of a
dividend estimated to be $375,000, equal to Nelson's estimated income for the
period from January 1, 1999 through June 27, 1999, paid to Seller in the form of
a promissory note which shall be secured by a first lien on the Shares (the
"Dividend Note"), and to be adjusted post-closing to the amount as confirmed by
PricewaterhouseCoopers in connection with an audit of Nelson;
(xiii) Nelson has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(xiv) Other than as referenced in Section 3(f) of the Disclosure
Schedule, Nelson has not made any loan to, or entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(xv) Other than as referenced in Section 3(f) of the Disclosure
Schedule, Nelson has not granted any increase outside the Ordinary Course of
Business in the base compensation of any of its directors, officers, and
employees;
(xvi) Other than as referenced in Section 3(f) of the Disclosure
Schedule, Nelson has not adopted any bonus, profit-sharing, incentive
compensation, pension, retirement, medical, hospitalization, life, or other
insurance, severance or other plan, contract, or commitment for any of its
directors, officers, and employees, or modified or terminated any existing such
plan, contract, or commitment;
(xvii) Nelson has not made any other change in employment terms for any
of its directors, officers, and employees outside the Ordinary Course of
Business;
(xviii) Nelson has not made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business;
(xix) Nelson has not paid any amount to any third party with respect to
any Liability or obligation (including any costs and expenses Nelson has
incurred or may incur in connection with this Agreement or any of the
transactions contemplated hereby);
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(xx) There has been no other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving
Nelson; and
(xxi) Nelson has not committed to any of the foregoing.
h. Undisclosed Liabilities. Nelson has no Liability (and there is no
Basis for any present or future Adverse Consequence against Nelson giving rise
to any Liability), except for (i) Liabilities set forth on the face of the
Financial Statements for the Most Recent Fiscal Month End (rather than in any
notes thereto) and (ii) Liabilities which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course of Business (none of which relates to
any breach of contract, breach of warranty, tort, infringement, or violation of
law or arose out of any Adverse Consequence).
i. Tax Matters.
(i) Nelson has filed all Tax reports and returns that it is required to
file. All such reports and returns were correct and complete in all respects.
All Taxes owed by Nelson (whether or not shown on any report or return) have
been paid. Nelson is currently the beneficiary of extensions to September 15,
1999 to file federal, Maryland and Pennsylvania income tax returns for the
fiscal year ending January 3, 1999. No claim has ever been made by an authority
in a jurisdiction where Nelson does not file reports and returns that it is or
may be subject to taxation by that jurisdiction. There are no Security Interests
on any of the assets of Nelson that arose in connection with any failure (or
alleged failure) to pay any Tax.
(ii) Nelson has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party.
(iii) Neither the Seller nor any director or officer (or employee
responsible for Tax matters) of Nelson expects any authority to assess any
additional Taxes for any period for which returns have been filed. There is no
dispute or claim concerning any Tax Liability of Nelson either (A) claimed or
raised by any authority in writing or (B) as to which any of the directors and
officers (and employees responsible for Tax matters) of Nelson has Knowledge
based upon personal contact with any agent of such authority. Section 3(i) of
the Disclosure Schedule lists all taxable periods ended on or after December 31,
1995, indicates those returns that have been audited, and indicates those
returns that currently are the subject of audit. Nelson has delivered to the
Buyer correct and complete copies of all income Tax returns, examination
reports, and statements of deficiencies assessed against or agreed to by Nelson
since December 31, 1995.
(iv) Neither the Seller nor Nelson has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(v) The unpaid Taxes of Nelson does not exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
balance sheet as of the Most Recent Fiscal Month End as adjusted for the passage
of time in accordance with the past custom and practice of Nelson in filing its
Tax returns.
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(vi) Seller shall prepare or cause to be prepared and file or cause to
be filed all tax returns for Nelson for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. Seller shall permit Buyer
to review and comment on each such return described in the preceding sentence
prior to filing. To the extent permitted by applicable law, Seller shall include
any income, gain, loss, deduction or other tax items for such periods on his tax
returns in a manner consistent with the Schedule K-1 prepared by Seller for such
periods.
(vii) Cooperation on Tax Matters.
(a) Buyer and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of any
tax return and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding to provide additional
information and explanation of any material provided hereunder. Nelson and
Seller agree (A) to retain all books and records with respect to tax matters
pertinent to Nelson related to any taxable period beginning before the Closing
Date until the expiration of the statute of limitation (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so request, Nelson or Seller, as the case may be, shall allow
the other party to take possession such books and records.
(b) Buyer and Seller further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
j. Tangible Assets. Nelson owns or leases all tangible assets used by
it in the conduct of the Business as presently conducted and as presently
proposed to be conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
in good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used. Seller has not
directly or indirectly acquired any right, title or interest in any of Nelson's
tangible assets. Nelson has valid and marketable title to each and every one of
the tangible assets, free and clear of any Security Interests, other than the
Security Interest of Allfirst Bank, N.A. securing the debt disclosed in the
Disclosure Schedule. Forklifts owned rather than leased are set forth in Section
3(j) of the Disclosure Schedule.
k. Owned Real Property. Nelson does not own any Real Property.
l. Real Property Leases. Section 3(l) of the Disclosure Schedule lists
and describes briefly all Real Property leased or subleased to Nelson and which
Nelson has a leasehold interest. Nelson has delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section 3(l) of the
Disclosure Schedule. With respect to each lease and sublease listed in Section
3(l) of the Disclosure Schedule:
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(i) the lease or sublease is legal, valid, binding, enforceable, and in
full force and effect;
(ii) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Closing;
(iii) no party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(iv) no party to the lease or sublease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and warranties
set forth in subsections (i) through (v) above are true and correct with respect
to the underlying lease;
(vii) Nelson has not assigned, transferred, conveyed, mortgage, deeded
in trust, or encumbered any interest in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable Laws;
(ix) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities;
(x) the owner of the facility leased or subleased has good and
marketable title to the parcel of Real Property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for (A) installments
of special easements not yet delinquent and (B) recorded easements, covenants,
and other restrictions which do not impair the current use, occupancy, or value,
or the marketability of title, of the property subject thereto;
(xi) all rents and additional rents due to date on each lease have been
paid; and
(xii) any leasehold interest is valid, free and clear of any Security
Interest, covenants and easements or title defects of any nature whatsoever.
m. Inventory. All inventory of Nelson, whether or not reflected in the
Financial Statements, consists of a quality and quantity usable and salable in
the Ordinary Course of Business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Financial Statements or on the accounting records of
Nelson as of the Closing Date, as the case may be.
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n. Intellectual Property.
(i) Section 3(n) of the Disclosure Schedule sets forth a true, correct
and complete list of the Intellectual Property. The Intellectual Property
constitutes all of the Intellectual Property used by Nelson in the Business.
(ii) Nelson owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the Business as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by Nelson
immediately prior to the Closing hereunder will be owned or available for use by
the Buyer on identical terms and conditions immediately subsequent to the
Closing hereunder. Nelson has taken all necessary or desirable action to protect
each item of Intellectual Property that it owns or uses.
(iii) Nelson has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of third
parties, and neither of the Seller nor any director or officer (and employees
with responsibility for Intellectual Property matters) of Nelson has ever
received any Adverse Consequence alleging any such interference, infringement,
misappropriation, or violation. To the Knowledge of the Seller and the directors
and officers (and employees with responsibility for Intellectual Property
matters) of Nelson, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of Nelson.
(iv) Neither the Seller nor the directors and officers (and employees
with responsibility for Intellectual Property matters) of Nelson has directly or
indirectly acquired, any right, title or interest in or to the Intellectual
Property.
o. Contracts. Section 3(o) of the Disclosure Schedule lists the
following contracts, agreements, and other written arrangements to which Nelson
is a party:
(i) any written arrangement (or group of related written arrangements)
for the lease of personal property from or to third parties providing for lease
payments in excess of $25,000 per annum;
(ii) any written arrangement (or group of related written arrangements)
for the purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services which either calls for performance
over a period of more than one year or involves more than the sum of $50,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than $50,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or intangible;
(v) any written arrangement concerning confidentiality or
non-competition;
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(vi) any written arrangement involving the Seller and his Affiliates;
(vii) any written arrangement with any of its directors, officers, and
employees in the nature of a collective bargaining agreement, employment
agreement, or severance agreement;
(viii) any written arrangement under which the consequences of a
default or termination could have an adverse effect on the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of Nelson taken as a whole; or
(ix) any other written arrangement (or group of related arrangements)
either involving more than $50,000 or not entered into in the Ordinary Course of
Business.
Nelson has delivered to the Buyer a correct and complete copy of each written
arrangement listed in Section 3(o) of the Disclosure Schedule (as amended to
date). With respect to each written arrangement so listed: (A) the written
arrangement is legal, valid, binding, enforceable, and in full force and effect
and were entered into in the Ordinary Course of Business; (B) the written
arrangement will continue to be legal, valid, binding, and enforceable and in
full force and effect on identical terms following the Closing; (C) no party is
in breach or default, and no event has occurred which with notice or lapse of
time, or both, would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement; and (D) no party
has repudiated any provision of the written arrangement. Nelson is not a party
to any verbal contract, agreement, or other arrangement which, if reduced to
written form, would be required to be listed in Section 3(o) of the Disclosure
Schedule under the terms of this Section 3(o). No unfilled customer order or
commitment obligating Nelson to deliver products or perform services will result
in a loss to Nelson upon completion of performance. No order or commitment, sold
or produced for Nelson is in excess of normal requirements, nor are prices
provided therein in excess of current market prices for the products or services
to be provided thereunder.
p. Notes and Accounts Receivable. All notes and accounts receivable of
Nelson are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, are presently current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of Nelson and subject further to the uncollectibility of the Joy of
Mining, Franklin P.A. account ($3,614.00) and the CSS Power account ($799.00).
q. Accounts Payable. Section 3(q) of the Disclosure Schedule sets forth
all of the accounts payable of Nelson as of June 27, 1999 arising out if its
operation of the Business identifying each such account by title, nature of
expenditure, total amount due thereunder and payment terms. All such payables
represent accounts for bona fide purchases of goods or services by Nelson in
connection with the Business and Nelson is in full compliance of any claim,
dispute or disagreement regarding the same.
r. Insurance. Each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
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surety arrangements) to which Nelson has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five years has
issued by Travelers Insurance Company and a copy thereof has been furnished to
Buyer.
With respect to each insurance policy, to Seller's knowledge: (A) the policy is
legal, valid, binding, and enforceable and in full force and effect; (B) the
policy will continue to be legal, valid, binding, and enforceable and in full
force and effect on identical terms following the Closing Date; (C) Nelson or
any other party is not in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. Nelson has been
covered during the past five years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period. There are no formal self-insurance arrangements affecting
Nelson.
s. Litigation. Section 3(s) of the Disclosure Schedule sets forth each
instance in which Nelson (i) is, to Seller's knowledge, subject to any Adverse
Consequence or (ii) is a party or, to the Knowledge of the Seller and the
directors and officers (and employees with responsibility for litigation
matters) of Nelson, is threatened to be made a party to any Adverse Consequence.
None of the Adverse Consequences set forth in Section 3(s) of the Disclosure
Schedule could result in any adverse change in the assets, Liabilities,
business, financial condition, operations, results of operations, or future
prospects of Nelson taken as a whole. Neither the Seller nor the directors and
officers (and employees with responsibility for litigation matters) of Nelson
has any reason to believe that any other Adverse Consequence may be brought or
threatened against Nelson.
t. Employees and Employee Benefits. Except as set forth on Section 3(t)
of the Disclosure Schedule, Nelson does not have, or is bound by, any oral or
written employment, bonus, performance, compensation, commission, management,
pension, retirement, stock purchase, savings, profit-sharing, retainer, group
insurance, termination, severance, consulting, sales representative, distributor
or similar incentive or benefit agreements, contracts, understandings or
arrangements with any of its personnel.
(i) Nelson has paid in full all wages, salaries, commissions, bonuses,
vacation pay, sick pay and other direct and indirect compensation and benefits
earned by all employees, representatives, contractors and agents through the
Closing Date, as well as all payroll and withholding taxes and all payroll
overheads. Other than as set forth on the Most Recent Balance Sheet, there are
no bonuses or commissions accrued or payable by Nelson with respect to any
fiscal periods ending on or before June 26, 1999 that remain unpaid in whole or
in part, or which are in dispute or the subject of any claim.
(ii) Section 3(t) of the Disclosure Schedule contains a true and
complete list of all current employees, consultants, representatives, agents,
and contractors of Nelson together with job title and description and current
compensation rates (salary, bonus, commission and otherwise).
(iii) Except as set forth in Section 3(t) of the Disclosure Schedule,
there are no collective bargaining agreements or union or labor agreements to
which Nelson is a party or is bound or affecting the business thereof. Except as
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set forth in Section 3(t) of the Disclosure Schedule, there are no pending, and
during the twelve (12) months preceding the date of this Agreement there have
been no, disputes, strikes, work slow-downs, walkouts, disturbances, slowdowns,
grievances, arbitrations, or filings of any actions, claims, litigation,
proceedings, investigations or complaints of unfair labor practices, harassment,
discrimination, wrongful termination, wage or back pay demands or other
employment-related difficulties with respect to any Nelson employees of, and
Nelson knows of no basis for any of the foregoing. Each collective bargaining
agreement or other union contract set forth in Section 3(t) of the Disclosure
Schedule (each a "Nelson Union Contract") is in full force and effect; provided
that it has not been fully signed by all union representatives; Nelson has made
all payments and contributions due under such Nelson Union Contract and is
otherwise in full compliance with the terms and conditions of such Nelson Union
Contract, and there are no defaults under the Nelson Union Contract or claims
thereof by the union, any employees or any governmental or labor relations
agency. There are no disputes or grievances pending or Threatened with respect
to any Nelson Union Contract or any employees covered thereby, and Nelson knows
of no basis for any of the foregoing.
(iv) Except as set forth on Section 3(t) of the Disclosure Schedule,
Nelson and its Subsidiaries are not covered by and do not maintain, participate
in, contribute to, or operate any pension, retirement, profit-sharing, 401(k) or
other employee benefit plan, do not maintain or contribute to and are not
required to contribute to any employee benefit plan (within the meaning of
Section 3(2) of ERISA), which is intended to qualify under paragraph 401(a) of
the IRC, and Nelson and its Subsidiaries have not been required to contribute to
any employee benefit plan which is a multi-employer plan (within the meaning of
Section 3(37) of ERISA) in the five (5) years immediately preceding the date
hereof. Nelson and its Subsidiaries have no responsibility for and have not
assumed any pension-related or employee benefit plan-related liabilities
(including, without limitation, withdrawal liability) of any other predecessor
business or person. With respect to each and every employee benefit plan of
Nelson and its Subsidiaries identified on Section 3(t) of the Disclosure
Schedule (each, a "Nelson Benefit Plan"), each Nelson Benefit Plan conforms to,
and its administration is in compliance with, applicable federal laws,
including, but not limited to, ERISA and the Code. There are no pending, or
threatened or anticipated, audits, assessments, disputes or claims by, on behalf
of, or against, any Nelson Benefit Plan, or Nelson by any participant or
beneficiary thereunder or any governmental agency.
(v) Nelson has fully paid and performed all liabilities and obligations
whatsoever relating to their participation in the multi-employer pension plans
set forth in Section 3(t) of the Disclosure Schedule, including, without
limitation, payment of all contributions and assessments, whether imposed by
such plan or the trustees thereof or ERISA, as amended by the Multi-Employers
Pension Plan Amendment Act of 1980, or otherwise. There are no pending, or
Threatened or anticipated, audits, assessments, disputes or claims by, on behalf
of, or against, Nelson by any such plan, the trustees thereof, any related
union, any participant or beneficiary thereunder or any governmental agency.
u. Guaranties. Nelson is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other person.
v. Environment, Health, and Safety.
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(i) Nelson has complied with all Laws concerning the environment,
public health and safety, and employee health and safety, and no Adverse
Consequence has been filed or commenced against any of the alleging any failure
to comply with any such Law.
(ii) Nelson has no Liability (and there is no Basis related to the past
or present operations, properties, or facilities of Nelson for any Adverse
Consequence against Nelson giving rise to any Liability) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Federal Water Pollution Control Act
of 1972, the Clear Air Act of 1970, the Safe Drinking Water Act of 1974, the
Toxic Substances Control Act of 1976, the Refuse Act of 1899, or the Emergency
Planning and Community Right-to-Know Act of 1986 (each as amended), or any other
Law concerning release or threatened release of hazardous substances, public
health and safety, or pollution or protection of the environment.
(iii) Other than as set forth in the Disclosure Schedule, Nelson has no
Liability and has not handled or disposed of any substance, arranged for the
disposal of any substance, or owned or operated any property or facility in any
manner that could form the Basis for any Adverse Consequence for damage to any
site, location, or body of water (surface or subsurface) or for illness or
personal injury.
(iv) Nelson has no Liability (and there is no Basis for any Adverse
Consequence) under the Occupational Safety and Health Act, as amended, or any
other Law concerning employee health and safety.
(v) Nelson has no Liability (and Nelson has not exposed any employee to
any substance or condition that could form the Basis for any Adverse
Consequence) for any illness of or personal injury to any employee.
(vi) Nelson has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, local, and foreign laws
(including rules, regulations, codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health and
safety, worker health and safety, and pollution or protection of the
environment, including Laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes.
(vii) All properties and equipment used in the Business have been free
of asbestos, PCB's, methylene chloride, trichloroethylene, 1,
2-tran-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances.
(viii) No pollutant, contaminant, or chemical, industrial, hazardous,
or toxic material or waste ever has been buried, stored, spilled, leaked,
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discharged, emitted, or released on any Real Property that Nelson owns or ever
has owned or that Nelson leases or ever has leased.
w. Compliance with Applicable Laws. The Business is being conducted in
compliance with all applicable laws, including, without limitation, all
insurance laws, ordinances, rules and regulations, decrees and orders of any
governmental entity, and all notices, reports, documents and other information
required to be filed thereunder within the last three years were properly filed
and were in compliance in all respects with such laws. Nelson has complied with
all Laws in all material respects, and no Adverse Consequence has been filed or
commenced against Nelson alleging any failure to comply with any such Law.
x. Licenses. Section 3(x) of the Disclosure Schedule sets forth a
complete list of all licenses, franchises, permits, approvals, authorizations,
exemptions, classifications, registrations, rights and similar documents. Nelson
own or validly holds all licenses, franchises, permits, approvals,
authorizations, exemptions, classifications, registrations, rights and similar
documents which are necessary for it to own, lease or operate its properties and
assets and to conduct its business as now conducted. The Business has been and
is being conducted in compliance in all material respects with all such
licenses. All such licenses are in full force and effect, and there is no
proceeding or investigation pending or, threatened which would reasonable be
expected to lead the revocation, amendment, failure to renew, limitation,
suspension or restriction of any such license.
y. Certain Business Relationships with the Seller . The Seller has not
been involved in any business arrangement or relationship with Nelson within the
past 12 months, and the Seller and his Affiliates do not own any property or
right, tangible or intangible, which is used in the Business.
z. Brokers' Fees. Neither the Seller nor Nelson has Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
aa. Consents. Section 3(aa) of the Disclosure Schedule sets forth a
complete list of consents of governmental and other regulatory agencies, and of
other parties required to be received by or on the part of the Seller and Nelson
to enable the Seller or Nelson to enter into and carry out this Agreement in all
material respects. All such requisite consents have been obtained.
bb. Year 2000 Compliance. Nelson has (a) initiated a review and
assessment of all areas within its business and operations that could be
adversely affected by the Year 2000 Problem, (b) developed a plan and timeline
for addressing the Year 2000 Problem on a timely basis, and (c) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
Nelson believes that all computer applications are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000.
cc. Investments. Nelson has no outstanding agreements and commitments
for investments in securities.
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dd. Dealings with Affiliates. Section 3(dd) of the Disclosure Schedule
hereto sets forth a complete list, including the Parties, of all oral or written
agreements and arrangements to which Nelson is, will be or has been a party, at
any time from January 1, 1998 to the Closing Date, and to which any one or more
Affiliates is also a party.
ee. Banking Arrangements. Section 3(ee) of the Disclosure Schedule sets
forth the name of each bank in or with which Nelson has an account, credit line
or safety deposit box, and a brief description of each such account, credit line
or safety deposit box, including the names of all persons currently authorized
to draw thereon or having access thereto.
ff. Investment Representations.
(i) The Seller has been given access to all publicly available
information relating to the business and assets of Buyer which the Seller has
requested. On the basis of the foregoing, Seller is familiar with the
operations, business plans and financial condition of Buyer.
(ii) Seller understands that Buyer proposes to issue and deliver the
Shares for the Buyer without compliance with the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), that for such
purpose Buyer will rely upon the representations, warranties, covenants and
agreements contained herein; and that such noncompliance with registration is
not permissible unless such representations and warranties are correct and such
covenants and agreements performed.
(iii) Seller understands that, under existing rules of the Securities
and Exchange Commission (the "SEC"), there are substantial restrictions in the
transferability of the Buyer Stock; the Buyer Shares may be transferred only if
registered under the Securities Act or if an exemption from such registration is
available; Seller may not be able to avail himself of the provisions of Rule 144
promulgated by the SEC under the Securities Act with respect to the transfer of
such shares; and the Seller may have to hold the Buyer Shares indefinitely.
Notwithstanding the foregoing, the Company will use its reasonable efforts to
cause Rule 144 to be available to the Seller for resale of the Buyer Shares.
(iv) Seller is a sophisticated investor familiar with the type of risks
inherent in the acquisition of securities such as the Buyer Shares and such
Seller's financial position is such that such Seller can afford to retain the
Buyer Shares for an indefinite period of time without realizing any direct or
indirect cash return on such Seller's investment.
(v) The Seller is acquiring the Buyer Shares for his own account and
not with a view to, or for sale in connection with, the distribution thereof
within the meaning of the Securities Act.
(vi) Seller understands that the certificates evidencing the Buyer
Shares will bear appropriate restrictive legends.
gg. Receipt of Corporate Information. All requested publicly available
documents, records and books pertaining to the Buyer, including, without
limitation, Buyer's Annual Report on Form 10-KSB for the Year Ended June 27,
1998 (the "Form 10-KSB") and Quarterly Report on Form 10-QSB for the Quarter
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Ended March 26, 1999 (the "Form 10-QSB" and together with the Form 10-KSB, the
"SEC Documents"), have been delivered to the Seller, and all of the Seller's
questions and requests for information have been answered to the Seller's
satisfaction.
hh. Disclosure. Neither this Agreement nor any of the schedules,
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Buyer by or on behalf of the Seller or
Nelson with respect to the transactions contemplated hereby contains any untrue
statement of a material fact or omits a material fact necessary to make each
statement contained herein or therein not misleading. There is no fact which the
Seller or Nelson has not disclosed to the Buyer in writing and of which any of
Nelson's respective officers, directors or executive employees or the Seller is
aware and which could reasonably be anticipated to have Adverse Consequences on
Nelson or the ability of the Buyer to continue the Business in the same manner
as Nelson has conducted its business prior to the Closing Date.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to Seller and Nelson that the statements contained in this Section
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
a. Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.
b. Authorization of Transaction. The Buyer has corporate power and
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. This Agreement and the Notes each
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer Shares have been duly
authorized, and when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable.
c. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any Law to which the Buyer is subject or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject. The Buyer does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency for the Parties to consummate
the transactions contemplated by this Agreement.
d. Compliance with Applicable Laws. The Buyer's business is being
conducted in compliance with all applicable laws, including, without limitation,
all insurance laws, ordinances, rules and regulations, decrees and orders of any
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governmental entity, and all notices, reports, documents and other information
required to be filed thereunder within the last three years were properly filed
and were in compliance in all respects with such laws. Buyer has complied with
all Laws, and no Adverse Consequence has been filed or commenced against Buyer
alleging any failure to comply with any such Law.
e. Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
f. Undisclosed Liabilities. Buyer has no Liability (and there is no
Basis for any present or future Adverse Consequence against Buyer giving rise to
any Liability), except for (i) Liabilities set forth in the financial statements
contained in the SEC Documents and (ii) Liabilities which have arisen since the
SEC Documents were filed in the Ordinary Course of Business (none of which
relates to any breach of contract, breach of warranty, tort, infringement, or
violation of law or arose out of any Adverse Consequence).
g. SEC Documents. The SEC Documents at the time they were filed with
the Securities and Exchange Commission, complied in all material respects with
the requirements of the Securities Exchange Act of 1934, and do 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, in light of the
circumstances under which they were made, not misleading.
h. Disclosure. Neither this Agreement nor any written statements,
documents, certificates or other items prepared for or supplied to Seller by or
on behalf of Buyer with respect to the transactions contemplated hereby or the
SEC Documents contains any untrue statement of material fact or omits a material
fact necessary to make each statement contained herein or therein not
misleading. There is no fact which Buyer has not disclosed to Seller in writing
and of which any of Buyer's respective officers, directors or executive
employees is aware and which could reasonably be anticipated to have Adverse
Consequences on Buyer.
5. Covenants Of The Parties. Nelson and Seller hereby covenant and
agree with Buyer:
a. Consents. Nelson will obtain, prior to the Closing, all consents
necessary, in the opinion of Buyer's counsel, to the consummation of the
transactions contemplated hereby. All such consents will be in writing and
executed counterparts thereof will be delivered to Buyer prior to the Closing.
b. Supplements to Schedules. From time to time prior to the Closing,
Seller and Nelson will promptly supplement or amend any Schedule hereto with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
any such Schedule. No supplement or amendment of any such Schedule made pursuant
to this Section shall be deemed to cure any breach of any representation of or
warranty made in this Agreement; provided, that if Buyer elects to close the
transaction, the Schedules shall be deemed to include any amendments and
supplements. If Buyer expressly agrees in writing to any supplement or amendment
to any such Schedule, then, the sole existence of any such express amendment or
supplement will not be a basis for the Buyer's refusing to close the transaction
contemplated by this Agreement.
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c. Other Transactions. Neither Nelson nor Seller shall enter into any
discussions concerning, or approve or recommend any merger, consolidation,
disposition of all or substantially all of its business, properties or assets
(other than pursuant to this Agreement), acquisition or other business
combination, or proposal therefor, or furnish or cause to be furnished any
information concerning the business, properties or assets of Nelson to any party
in connection with any Nelson transaction involving the acquisition of Nelson or
all or any substantial part of its assets by any person other than Buyer unless
the Closing does not occur prior to September 1, 1999.
d. Remedies. That in the event of the breach or threatened breach by
Nelson or Seller of any of the terms and conditions of this Agreement, then
Buyer shall be entitled, if it so elects, to institute and prosecute any
proceedings in any court of competent jurisdiction either in law or equity, for
such relief as it deems appropriate including, without limiting the generality
of the foregoing proceedings, to obtain damages for any breach of this Agreement
or to enforce the specific performance thereof by Nelson or Seller or to enjoin
them from performing services for any other person, firm or corporation; in any
such action, Buyer is successful in whole or in part, Buyer shall further, as an
element of Buyer's damages, be liable for the attorney's fees of Buyer in the
prosecution of such action or proceeding.
e. Employee Benefits. Buyer agrees that for the duration of the life of
Seller and Seller's spouse, Seller and Seller's spouse will continue to be
eligible to participate in Nelson's health plans and that Buyer will not modify
or discontinue the existing plans for the Baltimore location without the consent
of Seller and his spouse. To the extent required by existing law and to
integrate Nelson's employees into Buyer's benefit plans, Buyer and Seller agree
to mutually negotiate or develop any modifications to Nelson's existing pension
plans so that Nelson's employees will have substantially similar benefits and as
to not violate any provisions of ERISA.
f. Buyer agrees that it will continue Nelson's policy of providing the
post retirement supplemental Medicare insurance referred to on Schedule
(o)(vii)(bb) of the Disclosure Schedule for the duration of the lives of John
Williams and Arthur Caltrider and their respective spouses.
g. Buyer agrees that if it has knowledge of any breach of any
representation or warranty by Seller or Nelson prior to Closing, it will inform
Seller promptly, and in any event, prior to Closing.
6. Conditions To Nelson's And Seller' Obligations. Each and every
obligation of Nelson and Seller under this Agreement to be performed on or
before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by Nelson
and Seller:
a. Representations and Warranties True. The representations and
warranties of Buyer contained herein shall be in all material respects true and
accurate as of the date when made and at and as of the Closing as though such
representations and warranties were made at and as of such date, except for
changes expressly permitted or contemplated by the terms of this Agreement.
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b. Performance. Buyer shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
c. No Governmental Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
d. Items to be Delivered at Closing by Buyer. At the Closing, Buyer
shall deliver to Seller the Cash Payment and a certificate representing the
Buyer Shares.
e. Agreements. On or before the Closing Date, Buyer shall enter into an
employment agreements with Seller, Marc Ottinger, Paul Pascarella, David
Caltrider and John G. Williams on the terms previously agreed between Nelson and
Buyer.
7. Conditions To Purchaser's Obligations. Each and every obligation of
Buyer under this Agreement to be performed on or before the Closing shall be
subject to the satisfaction, on or before the Closing, of each of the following
conditions, unless waived in writing by Buyer:
a. Representations and Warranties True. The representations and
warranties contained in Article II hereof, the Schedules and in all certificates
and other documents delivered and to be delivered by Nelson and Seller or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby shall be true, complete and accurate as of the date when
made and at and as of the Closing Date as though such representations and
warranties were made at and as of such date, except for changes expressly
permitted or contemplated by the terms of this Agreement or changes which are
not material in the aggregate.
b. Performance. Nelson and Seller shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
c. Investigations; Etc. No investigation of Nelson and Seller by Buyer,
nor the Schedules or any supplement thereto nor any other document delivered to
Buyer as contemplated by this Agreement, shall have revealed any facts or
circumstances which, in the sole and exclusive judgment of Buyer, reflect in a
material adverse way on the financial condition, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, business, operations or prospects
of Nelson.
d. Consents. The consents from third parties and government agencies
required to consummate the transactions contemplated hereby shall have been
obtained.
e. No Government Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
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f. No Injunction. On the Closing Date there shall be no injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby which the Buyer deems
unacceptable in its sole discretion.
g. Material Change. From the date of the Financial Statements to the
Closing Date, Nelson shall not have suffered any unanticipated material adverse
change (whether or not such change is referred to or described in any supplement
to the Schedules) in its business, prospects, financial condition, working
capital, assets, liabilities (absolute, accrued, contingent or otherwise),
reserves or operations.
h. Miscellaneous Closing Documents. At the Closing, Nelson and Seller
shall deliver to the Buyer:
(i) Certificates representing the Shares with a duly endorsed stock
power;
(ii) Certificate of Nelson and Seller that the representations and
warranties contained in Article 2 of this Agreement are true and correct in all
material respects at and as of the Closing Date, except for representations and
warranties specifically relating to a time or times other than the Closing Date,
which shall be true and correct in all material respects at such time or times,
8. Conduct Of Nelson's Business Pending The Closing. Pending the
Closing and except as otherwise expressly consented to or approved by Buyer in
writing:
a. Conduct of Business. Nelson will carry on its business diligently
and substantially in the same manner as heretofore conducted, so that at the
Closing no representation or warranty of Nelson will be inaccurate, and no
covenant or agreement of Nelson will be breached. Except as otherwise required
by the Buyer in writing, until the Closing, Nelson will use its best efforts to
preserve its business, to keep available the services of its present personnel,
to preserve in full force and effect the contracts, agreements, instruments,
leases, licenses, arrangements, and understandings of Nelson, and to preserve
the good will of their suppliers, customers, and others having business
relations with any of them.
b. Amendments. No change or amendment shall be made in the charter
documents of Nelson.
c. Capital Changes; Dividends Redemptions. Nelson will not issue or
sell any additional shares of its capital stock or other securities, acquire
directly or indirectly, by redemption or otherwise, any such shares or split-up
any such capital stock, declare or pay any dividends thereon in cash, securities
or other property or make any other distribution with respect thereto, or grant
or enter into any options, warrants, calls or commitments of any kind with
respect thereto.
d. Subsidiaries. Nelson will not organize any new subsidiary, acquire
any capital stock or other equity securities of any corporation, partnership, or
other entity or acquire any equity or ownership interest in any business.
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e. Access to Information. Nelson shall give to Buyer's officers,
employees, counsel, accountants and other representatives free and full access
to and the right to inspect, during normal business hours, all of the premises,
properties, assets, records, contracts and other documents relating to its
business and shall permit them to consult with the officers, employees,
accountants, counsel and agents of Nelson for the purpose of making such
investigation of Nelson as Buyer shall desire to make, provided that such
investigation shall not unreasonably interfere with Nelson's business
operations. Furthermore, Nelson 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 physical inventories and inspections of Nelson as Buyer may request
from time to time.
f. Certain Changes. Nelson will not:
(i) Borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guarantee or otherwise, any obligation
or liability (absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business and consistent with past practice;
(ii) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities or obligations reflected or reserved against in the
Financial Statements or incurred in the ordinary course of business and
consistent with past practice since the date of the Financial Statements;
(iii) Prepay any obligation having a fixed maturity of more than 90
days from the date such obligation was issued or incurred;
(iv) Permit or allow any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien or
encumbrance;
(v) Write off as uncollectible any accounts receivable except in the
ordinary course of business;
(vi) Cancel any debts or waive any claims or rights of substantial
value or sell, transfer, or otherwise dispose of any of its properties or
assets, except in the ordinary course of business and consistent with past
practice;
(vii) Grant any general increase in the compensation of its officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employees;
(viii) Pay, loan or advance any amount to, or sell transfer or lease
any properties or assets to, or enter into any agreement or arrangement with,
Seller, officers or any affiliates;
(ix) Agree, whether in writing or otherwise, to do any of the
foregoing.
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g. Contracts. No contract or commitment will be entered into, and no
purchase of raw material or supplies and no sale of assets will be made, by or
on behalf of Nelson, except (i) normal contracts or commitments for the purchase
of, and normal purchases of, inventory or supplies, made in the ordinary course
of business an consistent with past practice, and (ii) other contracts,
commitments, purchases or sales in the ordinary course of business and
consistent with past practice not in excess of $50,000 in the aggregate.
h. Insurance; Property. Nelson shall adequately insure all property,
real, personal and mixed, owned or leased by Nelson, against all ordinary and
insurable risks; and all such property shall be used, operated, maintained and
repaired in a careful and reasonably efficient manner.
i. No Default. Nelson shall not do any act or omit to do any act, or
permit any action or omission to act, which will cause a breach of any material
contract or commitment of Nelson or which would cause the breach of any warranty
made hereunder.
j. Compliance With Laws. Nelson shall duly comply with all laws
applicable to it and its properties, operations, business and employees.
k. Material Developments. Nelson shall promptly notify Buyer of the
occurrence of any and all events which have, or may have, a material effect upon
the business, or financial condition of Nelson.
9. Survival of Terms; Indemnification.
a. Survival. The indemnities contained herein shall survive the Closing
and any investigation made with respect thereto for a period commencing on the
date hereof and ending on the first anniversary of the Closing Date; provided,
however, that such indemnities shall survive as to any claim or demand made
prior to first anniversary until such claim or demand is fully paid or otherwise
resolved by the parties hereto in writing or by a court of competent
jurisdiction; and provided, further, however, that such indemnities shall
survive to the expiration of the applicable statute of limitations for any Tax
or environmental liability of Nelson for the operation of its business prior to
the Closing Date.
b. Indemnification by the Seller and Nelson. The Seller and Nelson,
jointly and severally, hereby indemnifies and holds harmless Buyer in respect of
any and all Adverse Consequences incurred by Buyer in connection with each and
all of the following:
(i) Any misrepresentation or breach of any warranty made by the Seller
or Nelson in this Agreement or in any Schedule, Exhibit, or other document
attached hereto or delivered to Buyer by the Seller or Nelson in connection with
the transactions contemplated hereby.
(ii) The breach of any covenant, agreement, or obligation of the Seller
or Nelson contained in this Agreement or any Schedule or Exhibit hereto or any
other instrument specifically contemplated by this Agreement.
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(iii) Any misrepresentation contained in any statement in writing or
certificate furnished by Seller or Nelson pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement.
(iv) Any liability or obligation of any kind or nature that arises out
of, or relates to, any pension, retirement, profit sharing, deferred
compensation, bonus or other incentive plan, or any collective bargaining
agreement or other labor agreement, including single or multi-employer plans or
agreements, to which Nelson or any of its affiliates is a party or by which any
of them is bound, except as specifically set forth in the Disclosure Statement
hereof.
(v) Any liability, obligation or claim for Taxes owed by the Seller or
Nelson which could affect or constitute a lien or claim with respect to Nelson's
assets of Seller and with respect to any period ending on or before the Closing
Date.
(vi) Any misrepresentation in or omission from any list, Schedule,
Exhibit, certificate or other instrument required to be furnished or
specifically contemplated to have been furnished pursuant to this Agreement to
Buyer or its authorized representatives.
(vii) Except as may otherwise be provided in the Disclosure Schedule,
any and all payments due and owing by Nelson to its employees who leave its
employ and become employees of Buyer with respect to periods of employment up to
the Closing insofar as such payments relate to salary, bonuses, compensation,
vacation pay, sick leave, retirement benefits and/or fringe benefits as shown on
the various employee benefit plans which Nelson currently maintains and any
other forms of remuneration owed by Nelson to its employees.
(viii) Any material variance between the Financial Statements taken as
a whole attached hereto as Exhibits and the financial statements for such
periods arising from adjusting entries required in the written opinion of
PricewaterhouseCoopers LLC to cause the Financial Statements to satisfy
generally acceptable accounting principles.
c. Indemnification by the Seller and Nelson Regarding Environmental
Condition. The Seller and Nelson hereby and herewith acknowledges the effect and
operation of all Laws concerning the environmental condition of Nelson's assets
existing and applicable as of the Closing Date. Subject to the provisions of the
Disclosure Schedule, the Seller and Nelson hereby indemnifies and holds Buyer
harmless in respect of any and all Adverse Consequences incurred by Buyer in
connection with the matters set forth herein to the extent that the Seller would
have had liability or responsibility had the Seller not sold Nelson; provided,
however, it is understood and agreed that Buyer shall be liable and responsible
for new environmental conditions independently occurring or caused by Buyer
after the Closing Date and that, in fact, Buyer will and hereby does agree to
indemnify and hold harmless the Seller from any such previously disclosed and
new and independently caused condition or occurrence.
d. Indemnification by Buyer. Buyer hereby indemnifies and holds
harmless the Seller and Nelson in respect of any and all Adverse Consequences
incurred by Seller in connection with each and all of the following:
(i) Any misrepresentation or breach of any warranty made by Buyer in
this Agreement or in any Schedule, Exhibit, or other document attached hereto or
delivered to the Seller or Nelson by Buyer or any officer of Buyer in connection
with the transactions contemplated hereby.
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(ii) The breach of any covenant, agreement, or obligation of Buyer
contained in this Agreement or any Schedule or Exhibit hereto or any other
instrument specifically contemplated by this Agreement.
(iii) Any misrepresentation contained in any statement in writing or
certificate furnished by an officer of Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement.
e. Indemnification Procedures. Whenever any claims shall arise for
indemnification hereunder, the party seeking indemnification ("Indemnitee")
shall promptly notify the other party ("Indemnitor") of the claim and, when
known, the facts constituting the basis for such claim. If any claim for
indemnification hereunder results from or is in connection with any claim or
Adverse Consequence by a person who is not a party to this Agreement ("Third
Party Claim"), such notice shall also specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnitee shall
give the other party prompt notice of any such claim and the Indemnitor shall
undertake the defense thereof by representatives of its own choosing, reasonably
satisfactory to the Indemnitee, at the expense of the Indemnitor. The Indemnitee
shall have the right to participate in any such defense of a Third Party Claim
with advisory counsel of its own choosing, at its own expense. If Indemnitor,
within a reasonable time after notice of any such Third Party Claim, fails to
defend, the Indemnitee or any subsidiary or affiliate of the Indemnitee shall
have the right to undertake the defense, compromise or settlement of such Third
Party Claim on behalf of, and for the account of, Indemnitor, at the expense and
risk of Indemnitor. Indemnitor shall not, without the Indemnitee's written
consent, settle or compromise any such Third Party Claim or consent to entry of
any judgment that does not include, as an unconditional term thereof, the giving
by the claimant or the plaintiff to Indemnitee and/or Indemnitee's subsidiary or
subsidiaries, or Affiliate or Affiliates, as the case may be, an unconditional
release from all liability in respect of such Third Party Claim. Notwithstanding
any provision herein to the contrary, failure of Indemnitee to give any notice
required by this Section shall not constitute a waiver of Indemnitee's right to
indemnification or a defense to any claim by Indemnitee hereunder. All
indemnification hereunder shall be effected upon demand by delivery by Seller at
Seller's option of (i) cash or (ii) Buyer's shares valued at the average of the
bid and asked price during the 10 business days preceding delivery or (iii) a
certified or cashier's check in the amount of the indemnification liability, or
any combination thereof.
f. Indemnification Limitations. Neither party will have liability for
indemnification or otherwise with respect to any Adverse Consequence, unless the
amount of such Adverse Consequence exceeds $25,000. Neither party will have any
liability or indemnification or otherwise with respect to Adverse Consequences
until the total amount of all such Adverse Consequences exceeds $200,000 and
then only for the amount by which such Adverse Consequences exceed $200,000.
The calculation of the amount any Adverse Consequence shall in
all instances be net of any amounts recovered by the indemnitee under insurance
policies with respect to such matter and net of the tax benefit realized by the
indemnitee with respect to such matter.
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In the event that indemnification is sought with respect to any account
receivable which proves to be uncollectible, Buyer shall assign to Seller the
unpaid balance of such account receivable.
10. Post Closing Covenants.
a. Post Closing Covenants of Buyer. Buyer shall cause Seller to be
released from all guarantees of Nelson's indebtedness to Allfirst Bank, N.A. on
or before August 31, 1999. Buyer shall cause Nelson to pay as soon as
practicable but in any event on or before December 17, 1999 the Promissory Note
referred to in Section 3.g(xii) above.
11. Miscellaneous.
a. Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
b. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
c. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefits of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
d. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
e. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
f. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Nelson: Attn. : Arthur P. Caltrider
2116 Sparrows Point Road
Baltimore, Maryland 21219
Telephone Number: (410) 477-3000
Telecopier Number: (410) 388-0246
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Copy to: Thomas P. Perkins, III, Esq.
Venable Baetjer Howard LLP
1800 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore,Maryland 21201
Telephone Number: (410) 244-7400
Telecopier Number: (410) 244-7742
If to the Buyer: Pallet Management Systems Inc.
Attn.: Zachary Richardson, President
One South Ocean Boulevard
Suite 305
Boca Raton, Florida 33432
Telephone Number: (561) 338-7763
Telecopier Number: (954) 338-9845
Copy to: Michael D. Karsch, Esq.
Broad and Cassel
7777 Glades Road
Boca Raton, Florida 33434
Telephone Number: (561) 483-7000
Telecopier Number: (561) 483-7321
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, confirmed telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall
be deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any Party may change the address to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Party notice in the manner herein set forth.
g. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
h. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. The Seller may consent to any such amendment at any time prior to the
Closing with the prior authorization of their respective board of directors. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach or warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
i. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phases,
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or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
j. Expenses. Except as otherwise specified, each of the Buyer, the
Seller will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
k. Construction. The language used in this Agreement will be deemed to
be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
l. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
m. Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably if any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 7(n) below, in addition
to any other remedy to which it may be entitled, at law or in equity).
n. Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Maryland in any action or
proceeding arising out of or relating to this Agreement, agrees that all claims
in respect of the action or proceeding may be heard and determined in any such
court, and agrees not to bring action or proceeding arising out of or relating
to this Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Any Party may make service on the other Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 7(f).
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Nothing in this Section 7(n), however, shall affect the rights of any Party to
serve legal process in any manner permitted by law. Each Party agrees that a
final judgment in any action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment or in any other manner provided by law.
o. Entire Agreement. This Agreement (including the documents, referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
SIGNATURES ON NEXT PAGE
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PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
BUYER:
PALLET MANAGEMENT SYSTEMS, INC.,
a Florida corporation
By: /s/ John C. Lucy, III
------------------------------
John C. Lucy III, Chairman and
Chief Executive Officer
SELLER:
/s/ Arthur P.Caltrider
-------------------------------
ARTHUR P. CALTRIDER
THE NELSON COMPANY,
a Maryland corporation
By: /s/ Arthur P.Caltrider
-------------------------------
Arthur P. Caltrider, President
31
PALLET MANAGEMENT SYSTEMS
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 21st day of June, 1999 by and between PALLET MANAGEMENT SYSTEMS, INC., a
Florida corporation with its principal office at One South Ocean Boulevard,
Suite 305, Boca Raton, Florida 33432 (the "Company"), and ARTHUR P. CALTRIDER,
whose residence address is 35 S. Lake Way, Reisterstown, Maryland 21136 (the
"Executive").
Recitals
1. The Executive is hired as a Senior Vice President of the Company.
2. The Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel.
3. The Company recognizes that the Executive's contribution, as a
Senior Vice President of the Company, to the growth and success of the Company
has been and will be substantial and desires to assure the Company of the
Executive's present and continued employment in an executive capacity and to
compensate him therefor.
4. The Company has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to the Company.
5. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereby agree as follows:
1. Employment.
1.1 (a) Employment and Term. The Company shall employ the Executive and
the Executive shall serve the Company, on the terms and conditions set forth
herein, for the period (the "Initial Term") effective as of June 27, 1999 (the
"Commencement Date") and expiring on the third anniversary of the Commencement
Date, unless sooner terminated as hereinafter set forth.
(b) Renewal. This Agreement shall automatically renew for successive
annual terms of one year each (a "Renewal Term") at the conclusion of the
Initial Term, unless the Company provides the Employee written notice of its
intent not to renew at least three (3) months prior to the conclusion of each
anniversary date, commencing as of the third anniversary of the Commencement
Date. Unless used independently, the use of the word "Term" throughout the
remainder of this Agreement shall refer to both the Initial Term and the
Renewal/Remainder Terms.
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1.2 Duties of Executive. The Executive shall serve as a Senior Vice
President of the Company and shall perform the duties of an executive
commensurate with such position, shall diligently perform all services as may be
reasonably designated by the Company and shall exercise such power and authority
as is necessary and customary to the performance of such duties and services.
The Executive shall devote his full time business hours to the business and
affairs of the Company.
1.3 Place of Performance. In connection with his employment by the
Company, the Executive shall be based at the Company's offices in Baltimore,
Maryland except for required travel on behalf of the Company.
1.4 Relocation. If at any time the Board determines that it is in the
best interests of the Company to relocate the Company's offices to a location
other than Baltimore, Maryland, and Executive needs and agrees to relocate to
such location in order to perform his duties hereunder, then the Company shall
reimburse Executive for all out-of-pocket relocation expenses for him and his
family, including but not limited to, moving and storage expenses, temporary
living and travel expenses for a reasonable time while arranging to move his
residence to the changed location.
2. Compensation.
2.1 Base Salary. During the Term, the Executive shall receive a base
salary at the annual rate of $142,500, subject to adjustment in accordance with
this Paragraph 2.1 (the "Base Salary"). The Base Salary shall be payable in
substantially equal installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes. Commencing on the
first anniversary of the Commencement Date, and each anniversary of the
Commencement Date thereafter during the Term, the Base Salary shall be
increased, but shall not be decreased, by that percentage by which the Consumer
Price Index (All Items Less Shelter), Urban Wage Earners and Clerical Workers,
for Metropolitan Areas published by the United States Government (the "Index")
for the immediately preceding calendar year exceeds such index for the next
preceding calendar year. If publication of the Index is discontinued, the
parties hereto shall accept comparable statistics on the cost of living as
computed and published by an agency of the United States government or, if no
such agency computes and publishes such statistics, by any regularly published
national periodical that does compute and publish such statistics.
2.2 Additional Cash Compensation. Executive shall be entitled to
receive a bonus calculated as follows:
(a) For the fiscal year ending June, 2000 and future years, the bonus
will be equal to a percentage of Base Salary, equal to one quarter of the
percentage increase in fully diluted pre-tax earnings per share over the prior
fiscal year up to 50% of Base Salary, provided that the base for the bonus
computation for any year cannot increase more than 100% from the prior year even
if fully diluted pre-tax earnings per share increases by more than 100% (i.e.,
if the fully diluted pre-tax earnings per share for 2000 was $.40 and for 2001
was $1.00, the base for bonus computation purposes will be $.80 or 100% of the
prior year), provided further, that if fully diluted pre-tax earnings per share
decreases from the prior year base or is less than $.20 per share, then no bonus
is payable.
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(b) Executive's bonus shall be paid no later than ten business days
after the Company files its Annual Report on Form 10-K with the Securities and
Exchange Commission if the Company is a public company, and if not a public
company, within ten business days of the completion of its annual audit.
(c) Executive shall also be entitled to receive such additional
increments in base salary and performance or merit bonuses as shall be
determined from time to time during the Term by the Board (collectively,
"Bonus").
2.3 Stock Options.
(a) At the beginning of Fiscal year 2000 Executive shall be granted
10,000 ten year stock options under the Company's stock option plans to purchase
shares of Common Stock at fair market value on the date of grant. At the
beginning of each fiscal year commencing with fiscal 2001, Executive shall be
granted ten year stock options under the Company's stock option plans to
purchase shares of Common Stock equal to not less than one quarter percent
(1/4%) of the shares then outstanding, with an exercise price equal to the fair
market value of the Company's Common Stock on the grant date. The terms shall be
set forth in a separate stock option agreement, but shall provide (i) that all
options shall immediately vest upon a "Change of Control" or a termination by
the Company without "Cause" (as defined herein), and (ii) for "cashless
exercise" upon exercise of the options.
(b) Effective on the Commencement Date, Executive shall be granted
15,000 Stock Appreciation Rights under the Company's stock option plan that
shall vest only upon a "Change of Control" as defined in Section 6(a) below. The
exercise price shall be the fair market value of the Company's Common Stock on
the Commencement Date.
3. Expense Reimbursement and Other Benefits.
3.1 Expense Reimbursement. During the Term, the Company, upon the
submission of supporting documentation by the Executive, and in accordance with
Company policies for its executives, shall reimburse the Executive for all
reasonable expenses actually paid or incurred by the Executive in the course of
and pursuant to the business of the Company, including expenses for travel and
entertainment.
3.2 Other Benefits. The Company shall obtain or shall continue in force
comprehensive health insurance coverage, including dental coverage, either group
or individual, for the Executive and his dependents, and shall obtain or shall
continue in force disability. The disability insurance shall have the maximum
amount obtainable and an elimination period of not more than one year, when
available.
3.3 Automobile Allowance. Throughout the Term of this Agreement, the
Company will pay for and provide Executive with, a monthly automobile allowance
of $750, of a company vehicle, together with reimbursement for all operating
fluids used in the automobile.
3.4 Vacation. Executive shall be entitled to reasonable vacations
during each year of the Term, the time and duration thereof to be determined by
mutual agreement between Executive and the Company.
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4. Termination.
4.1 Termination for Cause. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated by the Company for
Cause. As used in this Agreement "Cause" shall only mean (i) subject to the
following sentences, any action or omission of the Executive which constitutes a
willful and material breach of this Agreement which is not cured or as to which
diligent attempts to cure have not commenced within 20 business days after
receipt by Executive of notice of same, (ii) fraud, embezzlement or
misappropriation as against the Company, or (iii) the conviction (from which no
appeal can be taken) of Executive for any criminal act which is a felony. Upon
any termination pursuant to this Paragraph 4.1, the Company shall pay to the
Executive any unpaid Base Salary accrued through the effective date of
termination specified in such notice. In addition, the Company shall pay any
benefits, if any, owed to Executive under any plan provided for Executive under
Paragraph 3 hereof in accordance with the terms of such plan as in effect on the
date of termination of employment under this Paragraph 4.1. Except as provided
above, the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however to the provisions of Paragraph 3.1 hereof).
4.2 Disability. Notwithstanding anything to the contrary contained in
this Agreement if, during the term hereof the Executive suffers a disability (as
defined below) the Company shall continue to pay Executive the compensation
provided in Paragraph 2.1 hereof during the period of his disability; provided,
however, that, in the event Executive is disabled for a period of more than 180
days in any 12 month period (the "Disability Period"), the Company may, at its
election, by a vote of a majority of the members of the Board within 90 days
from the end of the Disability Period, and provided that disability insurance is
in effect pursuant to Section 3.2, terminate this agreement. In the event of
such termination, payment of the Executive's Base Salary at the rate prevailing
on the date of termination of the Executive and fringe benefits (to the extent
permissible by applicable law) shall be continued for a period of six months
after such termination. As used in this Agreement, the term "disability" shall
mean the complete inability of Executive to perform his duties under this
Agreement as determined by an independent physician selected with the approval
of the Company and the Executive. Except as provided above, the Company shall
have no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred, stock options and bonuses accrued prior to the date
of termination subject, however, to the provisions of Paragraph 3.1 hereof).
4.3 Termination for Good Reason. The Executive may resign (and thereby
terminate his employment under this Agreement) at any time for "Good Reason" (as
defined below), upon not less than thirty (30) days' prior written notice to the
Company specifying in reasonable detail the reason therefor, provided, however,
that if the reason for resignation for "good reason" is susceptible of cure, the
Company shall have a period of thirty (30) days after such written notice to
effect a cure. For purposes of this Agreement, "Good Reason" shall mean (a) any
material failure by the Company to comply with any material obligation imposed
by this Agreement; (b) a material reduction in the Executive's title, position,
duties or responsibilities other than as a result of a material breach of this
Agreement by the Executive; (c) the Executive's assignment to an office of the
Company located other than in the Baltimore, Maryland area so that he can no
longer reasonably perform his duties for the Company while residing in the
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Baltimore, Maryland area; (d) the Company's creation of working conditions that
a reasonable person in the Executive's position would consider unreasonable or
intolerable; [or (e) any substantial disparity between the adjustments to the
salary or any of the benefits payable to the Executive and the adjustments to
the salary or any of the benefits generally payable to the other senior
executives of the Company, other than a disparity based upon the Executive"
performance of the duties assigned to him hereunder and the compensation
policies and review standards then applied by the Company with respect to
compensation and benefits payable to the Company's senior executives.]
4.4 Termination by the Company Without Cause or by the Executive for
Good Reason. The Company may terminate the employment of Executive Without Cause
and the Executive may terminate the Agreement with Good Reason, in each case, at
any time upon 30 days' prior written notice, provided that the Company shall be
obligated to pay Executive, in a lump sum on the date of termination, all of the
Base Salary compensation until the expiration of the term of this Agreement and
the Company shall maintain the Executive's health insurance on the same terms
and conditions as existed during his employment for the duration of his life and
the life of his spouse.
4.5 Termination by Executive Without Good Reason. Executive shall have
the right to terminate this Agreement without Good Reason at any time upon 90
days' prior written notice, in which case this Agreement shall continue in full
force and effect until the date of termination. The Company may terminate the
Executive immediately if Executive gives written notice of a termination under
this Section. Upon a termination pursuant to this Paragraph, Executive shall
only be entitled to receive his Base Salary to the date of termination, plus
reimbursement for reasonable business expenses incurred, stock options and
bonuses accrued prior to the date of termination.
5. Change of Control.
(a) For the purposes of this Agreement, a "Change of Control" shall be
deemed to have taken place if: (i) any person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, other than
a group whose primary persons are members of the Lucy family, becomes the owner
or beneficial owner of Company securities, after the date of this Agreement,
having 40% or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of directors of the
Company (other than as a result of an issuance of securities initiated by the
Company, or open market purchases approved by the Board, as long as the majority
of the Board approving the purchases is the majority at the time the purchases
are made), or (ii) the persons who were directors of the Company before such
transactions shall cease to constitute a majority of the Board, or any successor
to the Company, as the direct or indirect result of or in connection with, any
cash tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions.
(b) The Company and Executive hereby agree that, if Executive is
affiliated with the Company on the date on which a Change of Control occurs (the
"Change of Control Date"), the Company (or, if Executive is affiliated with a
subsidiary, the subsidiary) will continue to retain Executive and Executive will
remain affiliated with the Company (or subsidiary), for the period commencing on
the Change of Control Date and ending on the second anniversary of such date, to
exercise such authority and perform such executive duties as are commensurate
with the authority being exercised and duties being performed by the Executive
immediately prior to the Change of Control Date. If after a Change of Control
Executive is requested and, in his sole and absolute discretion, consents to
change his principal business location, the Company will reimburse the Executive
as provided in Section 1.4 hereof. If the Executive shall not consent to change
his business location, the Executive may continue to provide the services
required of him hereunder from his then residence and/or business address, and
the Company shall continue to maintain an office for Executive at that location
commensurate with the Company's office prior to the Change of Control Date.
(c) During the remaining term hereof after the Change of Control Date,
the Company (or subsidiary) will (i) continue to pay Executive at not less than
the Base Salary on the Change of Control Date, (ii) pay Executive bonuses in
amounts not less in amount than those paid during the 12 month period preceding
the Change of Control Date, and (iii) continue employee benefit programs as to
Executive at levels in effect on the Change of Control Date (but subject to such
reductions as may be required to maintain such plans in compliance with
applicable federal law regulating employee benefit programs).
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(d) If during the remaining term hereof after the Change of Control
Date (i) Executive's employment is terminated by the Company (or subsidiary), or
(ii) the Executive shall have terminated this Agreement for "good reason" as
defined above, or (iii) there shall have occurred a material reduction in
Executive's compensation or employment related benefits, or a material change in
Executive's status, working conditions, management responsibilities or titles,
and Executive voluntarily terminates his relationship with the Company within 60
days of any such occurrence, or the last in a series of occurrences, then
Executive shall be entitled to receive, a lump sum payment equal to [100]% of
Executive's Base Salary and the Company shall maintain the Executive's health
insurance on the same terms and conditions as existed during his employment for
the duration of his life and life of this spouse. Such amount will be paid to
Executive within 15 business days after his termination of affiliation with the
Company.
6. Restrictive Covenants.
6.1 Non-Competition. During the Term and for a period of two years
following the termination (other than a termination without Cause pursuant to
Paragraph 4.4) of the Executive's employment from the Company, Executive shall
not, directly or indirectly engage in or have any interest in, directly or
indirectly, any sole proprietorship, partnership, corporation, business or any
other person or entity (whether as an employee, officer, director, partner,
agent, security holder, creditor, consultant or otherwise) that, directly or
indirectly, engages primarily in the development, marketing, distribution or
sale of products and services competitive with the Company's products and
services in any and all states in which the Company conducts its business during
the Term or at the time Executive's employment with the Company is terminated
(the "Territory"); provided, however, that Executive may hold Company securities
and/or acquire, solely as an investment, shares of capital stock or other equity
securities of any such company, so long as Executive does not control acquire a
controlling interest in or become a member of a group which exercises direct or
indirect control of, more than five percent of any class of capital stock of
such corporation.
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6.2 Nondisclosure. During the Term and following termination of the
Executive's employment with the Company, Executive shall not divulge,
communicate, use to the detriment of the Company or for the benefit of any other
person or persons, or misuse in any way, any Confidential Information (as
hereinafter defined) pertaining to the business of the Company. Any Confidential
Information or data now or hereafter acquired by the Executive with respect to
the business of the Company (which shall include, but not be limited to,
information concerning the Company's financial condition, prospects, technology,
customers, methods of doing business and marketing, distribution or sale of the
Company's products and services) shall be deemed a valuable, special and unique
asset of the Company that is received by the Executive in confidence and as a
fiduciary. For purposes of this Agreement "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof and not generally known or in the public domain, about the
Company or its business. Notwithstanding the foregoing, nothing herein shall be
deemed to restrict the Executive from disclosing Confidential Information to the
extent required by law, provided that prior to such disclosure, Executive shall
give the Company 15 business days' (or such shorter period as Executive has to
respond to such request) written notice.
6.3 Nonsolicitation of Employees. During the Term and for a period of
two years following termination of the Executive's employment with the Company,
Executive shall not directly or indirectly, for himself or for any other person,
firm, corporation, partnership, association or other entity, attempt to employ
or enter into any contractual arrangement with any employee or former employee
of the Company, unless such employee or former employee has not been employed by
the Company for a period in excess of six months.
6.4 Books and Records. All books, records, accounts and similar
repositories of Confidential Information of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of this Agreement or on the Board's request at any time.
7. Injunction. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Paragraph 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Paragraph 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. Consolidation, Merger or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement, and all obligations of the Company hereunder, in
writing. Upon such consolidation, merger, or transfer of assets and assumption,
the term "the Company" as used herein, shall mean such other corporation and
this Agreement shall continue in full force and effect, subject to the
provisions of Paragraph 5 hereof.
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9. Binding Effect. Except as herein otherwise provided, this Agreement
shall inure to the benefit of and shall be binding upon the parties hereto,
their personal representatives, successors, heirs and assigns.
10. Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural and vice versa. Titles of
Paragraphs are for convenience only, and neither limit nor amplify the
provisions of the Agreement itself.
11. Further Assurances. At any time, and from time to time, each party
will take such action as may be reasonably requested by the other party to carry
out the intent and purposes of this Agreement.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. It
supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
13. Amendment. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
14. Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party and except as provided in
Paragraph 8 hereof.
15. Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Florida, without giving
effect to the application of the principles pertaining to conflicts of laws.
16. Effect of Waiver. The failure of any party at any time or times to
require performance of any provision of this Agreement will in no manner affect
the right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
17. Construction. The parties hereto and their respective legal counsel
participated in the preparation of this Agreement; therefore, this Agreement
shall be construed neither against nor in favor of any of the parties hereto,
but rather in accordance with the fair meaning thereof.
18. Severability. The Company and Pete Caltrider recognize that the
laws and public policies of the various states of the United States may differ
as to the validity and enforceability of certain of the provisions contained
herein. It is the intention of the Company and Pete Caltrider that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of each state and jurisdiction in which such
enforcement is sought, but that the unenforceability (or the modification to
conform with such laws or public policies) of any provision hereof shall not
render unenforceable or impair the remainder of this Agreement. Accordingly, if
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any provision of this Agreement shall be deemed to be invalid or unenforceable,
either in whole or in part, this Agreement shall be deemed to delete or modify,
as necessary, the offending provision and to alter the balance of this Agreement
in order to render the same valid and enforceable to the fullest extent
permissible as aforesaid.
19. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Any suit, action or proceeding with
respect to this Agreement shall be brought in the courts of the city/county
where Employee resided during employment hereunder or any other state where
jurisdiction or venue over the Employee exists. The parties hereto hereby accept
the exclusive jurisdiction of those courts for the purpose of any such suit,
action or proceeding.
The parties hereto acknowledge and agree that any party's remedy at law
for a breach or threatened breach of any of the provisions of this Agreement
would be inadequate and such breach or threatened breach shall be per se deemed
as causing irreparable harm to such party. Therefore, in the event of such
breach or threatened breach, the parties hereto agree that, in addition to any
available remedy at law, including but not limited to monetary damages, an
aggrieved party shall be entitled to seek equitable relief in the form of
specific enforcement, temporary restraining order, temporary or permanent
injunction, or any other equitable remedy that may then be available to the
aggrieved party.
20. Binding Nature. This Agreement will be binding upon and will inure
to the benefit of any successor or successors of the parties hereto.
21. No Third-Party Beneficiaries. No person shall be deemed to possess
any third-party beneficiary right pursuant to this Agreement. It is the intent
of the parties hereto that no direct benefit to any third party is intended or
implied by the execution of this Agreement.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
23. Notice. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered when delivered by the United States mail,
postage prepaid, registered or certified mail, return receipt requested, or by
overnight courier, addressed to the parties at the addresses first stated
herein, or to such other address as either party hereto shall from time to time
designate to the other party by notice in writing as provided herein.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, this Agreement has been duly signed by the parties
hereto on the day and year first above written.
PALLET MANAGEMENT SYSTEMS, INC.
By: /s/ John C. Lucy, III
------------------------------------
John C. Lucy III, Chairman and
Chief Executive Officer
/s/ Arthur P. Caltrider
-------------------------------
ARTHUR P. CALTRIDER, Executive
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