<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Mark One
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
Commission File Number 0-14836
METAL MANAGEMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 94-2835068
(State of incorporation) (I.R.S. Employer Identification
No.)
101 West Grand, Suite 200, Chicago, IL 60610
(Address of principal executive office including zip code)
(312)-645-0700
(Telephone including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
At August 7, 1996, there were 8,903,000 shares of Common Stock of the Registrant
outstanding.
1
<PAGE> 2
METAL MANAGEMENT, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1: Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets
June 30, 1996 and March 31, 1996 3
Consolidated Condensed Statements of Operations
For the three months ended June 30, 1996 and July 31, 1995; for the
three months ended June 30, 1995 for EMCO Recycling Corp. and pro forma
for the three months ended July 31, 1995. 4
Consolidated Condensed Statements of Cash Flows
For the three months ended June 30, 1996 and July 31, 1995; for the three months
ended June 30, 1995 for EMCO Recycling Corp. 5
Notes to Consolidated Condensed Financial Statements 6
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to Vote of Security Holders 13
Item 6: Exhibits and Reports on Form 8-K 14
SIGNATURES 16
</TABLE>
2
<PAGE> 3
METAL MANAGEMENT, INC.
Consolidated Condensed Balance Sheet
(Unaudited)
Part I- Financial Information
Item 1
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
------------ -------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 1,708,000 $ 3,093,000
Marketable securities (Note 7) 1,682,000 2,644,000
Accounts receivable, net 7,696,000 1,488,000
Loan to EMCO Recycling Corp. --- 1,000,000
Inventories (Note 6) 1,709,000 1,359,000
Prepaid expenses 893,000 58,000
Refundable income taxes --- 70,000
Net assets held for sale (Note 3) 1,120,000 ---
------------ -------------
Total current assets 14,808,000 9,712,000
Marketable securities (Note 7) 115,000 115,000
Deferred charges (Note 2) --- 478,000
Property and equipment, net 8,930,000 44,000
Goodwill and other intangibles, net (Note 2) 11,088,000 ---
------------ -------------
Total Assets $ 34,941,000 $ 10,349,000
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Operating Line of Credit $ 4,662,000 $ ---
Accounts payable 2,852,000 282,000
Accrued compensation and benefits --- 149,000
Other accrued liabilities 1,025,000 310,000
Current portion of long term debt 1,229,000 ---
------------ -------------
Total current liabilities $ 9,768,000 741,000
Long term debt, less current portion 4,581,000
Other liabilities 1,581,000
------------ -------------
Total Liabilities $ 15,930,000 741,000
============ =============
Stockholders' equity
Common stock $ 98,000 53,000
Additional paid-in capital 12,532,000 3,325,000
Retained earnings 6,381,000 6,230,000
------------ -------------
Total equity 19,011,000 9,608,000
============ =============
Total liabilities and equity $ 34,941,000 $ 10,349,00
============ =============
</TABLE>
3
<PAGE> 4
METAL MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
EMCO
Recycling
Metal Management, Inc. Corp
-------------------------- --------------
For the Pro Forma
For the three months ended Three Combined
-------------------------- Months Three Months
June 30, July 31, Ended Ended
1996 1995 June 30, 1995 July 31, 1995
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Net sales 15,978,000 17,499,000 17,499,000
Cost of sales 13,978,000 13,877,000 13,877,000
------------ ------------ -------------- --------------
Gross profit 2,000,000 0 3,622,000 3,622,000
Operating expenses:
Marketing and sales 142,000 104,000 104,000
General & Administrative 1,658,000 257,000 2,624,000 3,088,000
------------ ------------ -------------- --------------
Total operating expenses 1,800,000 257,000 2,728,000 3,192,000
Income (loss) from continued
operations 200,000 (257,000) 894,000 430,000
Interest expense 233,000 359,000 359,000
Other (income) expense (38,000) (89,000) (13,000) (102,000)
------------ ------------ -------------- --------------
Income (loss) from continuing
operations before income tax
and discontinued operations 5,000 (168,000) 548,000 173,000
Provisions (benefit) from
income tax (85,000) 270,000 133,000
------------ ------------ -------------- --------------
Income (loss) from continuing
operations 5,000 (83,000) 278,000 40,000
Discontinued operations (Note 3)
Income (loss) from operations
of discontinued Spectra*Star
division, net of income taxes
(benefit) of $0 in 1996 and
($83) in 1995 146,000 (172,000) (172,000)
------------ ------------ -------------- --------------
Net income (loss) $ 151,000 ($ 255,000) $278,000 ($132,000)
============ ============ ============== ==============
Net income (loss) per share for:
Continuing operations $ 0.00 ($ 0.02) N/A $0.00
Discontinued operations 0.02 (0.03) N/A (0.02)
$ 0.02 ($ 0.05) N/A ($0.01)
Weighted average number of
shares outstanding 9,370,000 5,123,000 9,370,000
</TABLE>
4
<PAGE> 5
METAL MANAGEMENT, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
----------------------------------------------------
Metal Management, Inc.
---------------------------------
EMCO Recycling
June 30, 1996 July 31, 1995 June 30, 1995
-------------- ------------- --------------
<S> <C> <C> <C>
Cash provided (used) by operating activities:
Net income (loss) $ 151,000 $ (255,000) $ 279,000
Adjustments to reconcile net income to cash
provided by (used in) operating activities -
Depreciation and amortization 522,000 - 160,000
Deferred income taxes 181,000 (191,000)
Other - - -
Changes in assets and liabilities net of effects of
Purchase of EMCO recycling Corp.:
Accounts receivable (499,000) - (431,000)
Inventory, net of amounts reclassified to
assets held for sale 317,000 - 1,111,000
Accounts payable (769,000) - -
Accrued liabilities 91,000 84,000 (294,000)
Other net 289,000 629,000 (184,000)
----------- ---------- ----------
Net cash provided (used) by operations 102,000 639,000 450,000
----------- ---------- ----------
Cash flows provided (used) by investing activities:
Marketable securities 962,000 427,000 -
Purchase of property and equipment (712,000) (8,000) (184,000)
Capitalized software development costs - (147,000) -
Payment for purchase of EMCO, net cash
acquired of $660,000 (792,000) - -
----------- ---------- ----------
Net cash provided (used) by investing activities (542,000) 272,000 (184,000)
----------- ---------- ----------
Cash flows provided (used) by financing activities:
Common Stock issued under Employees Stock
Purchase, Employee Stock Option and Executive
Bonus Plans - 12,000 -
Borrowings on line of credit, net 148,000 - (536,000)
Repayment of borrowings, net (1,093,000) - (75,000)
Payment of cash dividends - (306,000) -
----------- ---------- ----------
Net cash provided (used) by financing activities (945,000) (294,000) (611,000)
----------- ---------- ----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (1,385,000) 617,000 (345,000)
CASH AND CASH EQUIVALENTS, beginning of period 3,093,000 963,000 566,000
----------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 1,708,000 $1,580,000 $ 221,000
=========== ========== ==========
</TABLE>
<PAGE> 6
METAL MANAGEMENT, INC.
Notes to financial statements
Note 1 - Basis of Presentation
In accordance with its previously announced business strategy, the business of
Metal Management, Inc. (hereinafter referred to as "Metal Management" or the
"Company") has changed significantly during the past year. The Company completed
its first of many planned acquisitions in the scrap metal recycling industry
with the purchase of EMCO Recycling Corp. (EMCO) in April 1996 (see below), it
discontinued its Spectra*Star and consumables business during the first
quarter of fiscal 1997 and its VideoShow and related product lines in the fourth
quarter of fiscal 1995, and changed its year end from October 31 to March 31,
effective April 1, 1996. As a result of the above changes, no prior year
quarterly information is truly comparable to the Company's current operating
activities. In an effort to provide meaningful comparable information for the
prior year's quarter, without incurring unreasonable expense, the Company has
included quarterly information for the quarter ended July 31, 1995 because it is
the most comparable quarter in terms of timing. In addition, such quarterly
information is supplemented by unaudited financial information for EMCO for the
quarter ended June 30, 1995 which is presented for informational purposes. The
proforma income statement information for the quarter ended July 31, 1995
assumes the acquisition of EMCO was consummated as of April 1, 1995 and includes
amortization of goodwill and other intangibles ($207,000) arising from the
acquisition.
Note 2 - Acquisition of EMCO Recycling Corp.
On April 11, 1996, the Company completed the acquisition of EMCO Recycling
Corp., a scrap metal recycling company based in Phoenix, AZ, for a purchase
price of approximately $12.8 million ($2.0 million in cash, 3.5 million shares
of common stock valued at $8.8 million, 600,000 warrants at $4.48 per share and
400,000 warrants at $6.48 per share valued at $.3 million and $1.7 million in
other long term liabilities which bear interest at 7%). In connection with the
acquisition the Company also acquired land used in the scrap metal business
which was indirectly owned by one of the principal former owners of EMCO for
$1.1 million ($150,000 in cash and $900,000 in notes payable in three years
which bear interest at 9%). The acquisition of EMCO was accounted for using the
purchase method of accounting, accordingly its results are included in the
consolidated financial statements from the date of purchase. The excess of the
purchase price over the fair value of the net tangible assets acquired has been
allocated to covenants-not-to-compete ($1.7 million which is amortized over 10
years) with the remainder to goodwill ($9.6 million which is amortized over 15
years). A summary of the tangible assets acquired and liabilities assumed is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Current assets $ 8,877,000
Noncurrent assets 7,767,000
Current liabilities (9,348,000)
Non current liabilities (5,785,000)
-----------
1,511,000
Intangible assets, including goodwill of
$9.5 million and covenants not to compete
of $1.7 million 11,261,000
-----------
$12,772,000
===========
</TABLE>
6
<PAGE> 7
Assuming the acquisition of EMCO had occurred as of the first day of the five
month transition period ended March 31, 1996 and the first day of the Company's
last full fiscal year ended October 31, 1995, pro forma results of operations,
after adjusting for discontinued operations, would be as follows:
<TABLE>
<CAPTION>
Five Months Year Ended
Ended March October 31,
31, 1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 29,752,000 $ 69,590,000
============ ============
Income (loss) from continuing operations ($1,404,000) $ 2,934,000
============ ============
Net income (loss) ($ 912,000) $ 1,907,000
============ ============
Net income (loss) per share for continuing
operations ($ 0.10) $ 0.22
============ ============
</TABLE>
Note 3 - Discontinued Operations: Sale of Spectra*Star Division/VideoShow
Product Line
During the first quarter of fiscal 1997, management made the decision to exit
the Spectra*Star printer and consumables business. On July 16, 1996 Mannesmann
Tally (Tally) acquired the inventory and related production equipment for
approximately $1.3 million in cash and other contingent consideration in the
form of royalties on future revenues from the sale of Spectra*Star printers and
related consumables by Tally. Consequently, the printer and consumables business
is reported as a discontinued operation for all periods presented. The operating
results of the division have been netted and reported as a single line item in
the income statement entitled "Income (loss) from discontinued operations, net
of income taxes". The Company anticipates recognizing a modest gain in the
second quarter of fiscal 1997 (after transaction related expenses and placing no
value on the other contingent consideration) from the sale of the division. The
other contingent consideration will be recorded when it becomes known and will
be reported as additional gain on sale of the printer and consumables business.
Also reported as discontinued operations is the VideoShow and related product
lines (VideoShow) which was discontinued in the fourth quarter of fiscal 1995.
VideoShow together with the Spectra*Star printer and consumables business formed
the Company's presentation products business segment. Consequently, with the
sale of the printer and consumable business, and the discontinuance of
VideoShow, both are included in discontinued operations in the accompanying
financial statements.
Note 4 - Financial Statements
The accompanying Consolidated Condensed Balance Sheets of Metal Management, Inc.
at June 30 and March 31, 1996 and the Consolidated Condensed Statements of
Operations for the three months ended June 30, 1996 and July 31, 1995,
respectively, and the Consolidated Condensed Statements of Cash Flows for the
three months ended June 30, 1996 and July 31, 1995, respectively, have not been
audited by independent accountants. However, in the opinion of management, all
adjustments, consisting only of normal, recurring adjustments necessary for a
fair statement of the results of operations for the interim periods, have been
made.
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<PAGE> 8
The Consolidated Condensed Financial Statements included in this Form 10-Q
should be read in conjunction with the audited Consolidated Financial Statements
and Notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995, with the Company's Definitive Joint Proxy
Statement dated March 8, 1996, the Transitional 10-Q for the five months ended
March 31, 1996, and Forms 8-K and 8-K/A dated April 11, 1996, filed with the
Commission.
Note 5 - Supplemental Cash Flow Information
During the first quarter of fiscal 1997, in connection with the acquisition of
EMCO Recycling Corp., the company issued 3,500,000 shares of common stock,
600,000 warrants at $4.48 and 400,000 warrants at $6.48 to acquire MMI common
stock in connection with the acquisition. In conjunction with the aquisition,
liabilities were assumed as follows:
Fair value of assets acquired $27,905,000
Cash paid of $1.9 million, loan of
$1 million and other consideration 13,772,000
-----------
Liabilities assumed $14,133,000
===========
In a related transaction, the company also issued $950,000 of notes payable in
three years which bear interest at 9% to acquire land used in its scrap metal
recycling business
Three Months Ended
-------------------- EMCO
June 30, July 31, June 30,
1996 1995 1995
-------- -------- --------
Interest Paid $251,000 $ --- $408,000
Income taxes paid (refunds received) 8,000 --- 799,000
Note 6 - Inventories
Inventories consisted of:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
---------- ----------
<S> <C> <C>
Ferrous $ 164,000 $ 416,000
Non Ferrous - Processed 852,000 762,000
Unprocessed 682,000 575,000
---------- ----------
$1,698,000 $1,753,000
========== ==========
</TABLE>
Note 7 - Marketable securities
Marketable securities are stated at cost, which approximates market value.
Marketable securities maturing within one year are classified as current assets.
The Company's marketable securities are classified in accordance with Financial
Accounting Standards Board Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Under SFAS No. 115, management is
required to determine the appropriate classification of its securities at the
time of purchase and reevaluate such designation as of each balance sheet.
Held-to-maturity securities are reported at amortized cost. Available-for-sale
securities are carried at fair value, with unrealized gains and losses, net
reported in a separate component of shareholders' equity until disposition.
Realized gains and losses and declines in value judged to be other than
temporary are included in other (income) expense.
All marketable securities are classified as available-for-sale securities as of
June 30, 1996. Gross unrealized losses were not material to the financial
statements taken as a whole as of June 30, 1996.
Note 8 - Pending Merger
On August 7, 1996, the Company announced that it signed a Letter of Intent to
acquire a scrap metal recycling company in southern California for a combination
of cash of $6.5 million, 725,000 shares of common stock and other consideration.
The Company hopes to close the transaction by September 30, 1996, but such
closing is contingent upon completion of due diligence and meeting certain
regulatory filing requirements.
8
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed throughout this Form 10-Q filing are forward-looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
include, but are not limited to, the following: the risk that announced mergers
are not consummated, the risk of challenges from the Company's competition, and
the risk that the Company will face difficulties in consolidating and
controlling operations of diverse geographic locations, as well as other risk
factors discussed in "Factors Affecting Future Results" below.
On April 11, 1996, the Company acquired EMCO Recycling Corp., an Arizona
corporation ("EMCO"), pursuant to a Merger Agreement dated as of December 1,
1995, and as amended through March 7, 1996. The Consolidated Condensed Financial
Statements included in this Form 10-Q should be read in conjunction with the
audited Consolidated Financial Statements and Notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1995,
with the Company's Definitive Joint Proxy Statement dated March 8, 1996, the
Transitional 10-Q for the five months ended March 31, 1996, and Forms 8-K and
8-K/A dated April 11, 1996, filed with the Commission.
RESULTS OF OPERATIONS
With the acquisition of EMCO on April 11, 1996 and the sale on July 16, 1996 of
the Spectra*Star Division, the operating results for the quarter combine a
closing out of the previous high tech business operations in the same quarter
with the commencement of the new direction of the Company into the metals
recycling industry. Management believes that comparisons of financial data
associated with discontinued operations would not be meaningful or relevant and,
accordingly, the following information and comparisons are, to the extent
possible, related primarily to EMCO's operations.
Sales for the quarter ended June 30, 1996 and 1995 are shown in the following
comparative table:
<TABLE>
<CAPTION>
1996 1995
-------------------------------------- --------------------------------------
%Total %Total
Commodity Weight Amount Sales Weight Amount Sales
----------- ----- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Ferrous 42,000 T $ 4,944,000 30.9% 39,200 T $ 4,425,000 25.3%
Nonferrous 9,500 T 10,835,000 67.8% 10,900 T 12,947,000 74.0%
Other -- 199,000 1.3% -- 127,000 .7%
-------- ----------- ----- -------- ----------- -----
Totals 51,500 T $15,978,000 100% 50,100 T $17,499,000 100.0%
======== =========== ===== ======== =========== =====
</TABLE>
The major cause of the decrease in nonferrous sales was attributable to
commodity prices which have generally declined for the past three quarters. Spot
copper prices moved down from $1.14/lb at March 31, 1996 to $0.88/lb at June 30,
1996, a 23% drop. Similarly, aluminum spot prices declined from $0.74/lb at
March 31, 1996 to $0.66/lb at June 30, 1996, down 11%. Compounding the effects
of price declines is a reduced supply of scrap metal as holders of scrap wait to
see if prices will recover. This resulted in a net decrease in nonferrous
tonnage sold by the Company of 1400 tons from 1995 levels. In addition, the
markets have reacted negatively to the much publicized speculative trading
losses sustained by a major copper trader.
9
<PAGE> 10
During the current quarter (and for the two previous quarters) EMCO has kept
inventories at minimum working levels ($1,698,000 at June 30, 1996 compared to
$2,597,000 at June 30, 1995) and matched purchases against firm sales orders in
order to maintain gross sales margins while protecting against unfavorable price
fluctuations.
Gross margins for the quarter were $2,000,000, up from $1,788,000 for the
comparable period in 1995, primarily as a result of increased sales of ferrous
metals which carry a higher gross profit margin than nonferrous. One additional
factor adversely affecting gross margins was the continuing problems of
obtaining sufficient rail cars for ferrous shipments. The Company continued to
shift its reliance for transportation to the trucking industry, resulting in
higher freight costs of approximately $18,000 during the quarter.
Selling expenses rose $38,000 as compared to the same quarter in 1995. This
increase is due to additional purchasing/marketing staff added to build overall
volumes. It is anticipated that further increases will be reflected in future
operations as increased emphasis is being placed on business development.*
General and administrative expenses rose from $1,047,000 in the first
quarter of 1995 to $1,658,000 in 1996. The majority of that increase, $400,000,
was attributable to depreciation on capital additions ($207,000) and
amortization of intangible costs ($193,000) associated with the acquisition of
EMCO by Metal Management. The remaining increase was associated with the
changes in corporate structure, legal expenses, and development costs related
to the change in business activity and direction of the Company during the past
year.
Income (loss) from continuing operations declined from $637,000 in 1995 to
$200,000 for the quarter ended June 30, 1996. Interest expense declined as well,
from $359,000 in 1995 to $233,000 in the current quarter. $94,000 of that
reduction was attributable to elimination of fees on a discontinued $2,000,000
stand-by line of credit to EMCO.
Other income and expense declined from $102,000 in the first quarter of 1995 to
$38,000 for the comparable period in 1996, primarily as a result of utilizing
cash for the acquisition of EMCO.
No provision for income taxes has been required for the current quarter as
compared to $185,000 in the period ended March 31, 1995. The Company has net
operating loss carry-forwards and other deferred tax assets against which a
valuation allowance has been recorded which effectively eliminates the need to
provide taxes in the first quarter of 1997. Net income from continuing
operations amounted to $5,000 ($0.00 per share) for the current quarter compared
to $195,000 ($0.02 per share) for the comparable quarter in 1995.
The income from discontinued operations recorded for the Spectra*Star Division
for the quarter ended June 30, 1996 was $146,000 ($0.02 per share), compared to
a loss for the same quarter in 1995 of $172,000 ($0.03 per share). The Company
anticipates that a modest gain on the sale of the assets will be recorded in the
second quarter of 1996, as well as the commencement of royalty income.*
Net income for the quarter ended March 31, 1996, including discontinued
operations, amounted to $151,000 ($0.02 per share) compared to $23,000 ($0.00
per share) for the same period in 1995.
- ------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations. Stockholders are
strongly encouraged to review the section entitled "Factors Affecting Future
Results" commencing on Page 12 for a discussion of factors that could affect
future performance.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of cash are EMCO's operations, collection of
outstanding accounts receivable remaining from its discontinued Spectra*Star
division and royalties expected to be earned in future periods. At June 30,
1996, the Company had $3,390,000 in cash, cash equivalents and marketable
securities compared to $5,737,000 at March 31, 1996. The decrease is primarily
attributable to the funds used to close the merger and acquisition of EMCO and
to retire certain of EMCO's outstanding debt. Excluding any mergers, cash, cash
equivalents and marketable securities available for operations appear to be
adequate to meet the Company's operating needs for the remainder of the fiscal
year.*
The Company has an operating line of credit of up to $8 million which is based
on qualifying accounts receivable and inventories of EMCO. As of June 30, 1996,
EMCO had substantially utilized the available capacity under the line.
The Company's Board of Directors intends to cause the Company to actively pursue
acquisitions and mergers in various fields, including, but not limited to, scrap
metal recycling and/or telecommunications. Depending on the nature and size of
potential acquisitions, mergers and other transactions, if any, the Company's
cash flows from operating and investing activities, together with its cash, cash
equivalents and marketable securities may not be sufficient in the future. The
Company may have to supplement these sources of liquidity with additional
sources of funds such as borrowings or stock offerings. Refer also to the
section below titled "Factors Affecting Future Results."
The Company has a deferred tax asset valuation allowance which is primarily
attributable to U.S. federal and state deferred tax assets. Realization of the
deferred tax assets is dependent on generating sufficient income to utilize
future deductions and credits. Management believes sufficient uncertainty exists
regarding realization of these deferred tax assets that a valuation allowance is
required.
- ------------------
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations. Stockholders are
strongly encouraged to review the section entitled "Factors Affecting Future
Results" commencing on Page 12 for a discussion of factors that could affect
future performance.
11
<PAGE> 12
FACTORS AFFECTING FUTURE RESULTS
The following factors should be considered carefully in evaluating the
Company and its business. The risk factors described below contain
forward-looking statements that involve risks and uncertainties. The Company's
and EMCO's actual results may differ materially from the results discussed in
the forward-looking statements.
Recent Merger, Sale and Significant Change in Strategic Direction
In the past year, the Company has undergone a significant change in
strategic direction and emphasis. Immediately prior to April 11, 1996, the
Company's business had consisted of designing, manufacturing and marketing color
printers and related consumables, including ribbons, transparencies and paper.
In the fourth quarter of fiscal 1995, the Company discontinued its VideoShow and
related product lines. (The Company remains liable for certain warranties
extended for the discontinued VideoShow product line. Reserves have been
established for such purposes and are believed to be adequate.) Then, on April
11, 1996, the Company acquired EMCO Recycling Corp. ("EMCO"), an Arizona
corporation engaged in scrap metal processing (the "Merger"). In addition, the
Company purchased two parcels of land owned directly or beneficially by Harold
M. Rubenstein, the former principal beneficial shareholder and former Chairman
of the Board of EMCO. On July 16, 1996, the Company sold to Mannesmann Tally the
inventory and related production equipment of its Spectra*Star printer and
consumables business. And on August 7, 1996, the Company announced the signing
of a Letter of Intent to acquire a scrap metal recycling company in Southern
California. The Company anticipates future acquisitions of other companies in
the scrap metal industry and potentially also in other industries. Reflective of
the Company's overall change in emphasis is its corporate name change on April
12, 1996, from General Parametrics Corporation ("GPC") to Metal Management, Inc.
The ramifications of the changes in the Company's business are discussed in
greater detail below.
Given the substantial changes in the Company's business in the past
year, past financial performance should not be considered a reliable indicator
of future performance. Potential purchasers should not use historical trends to
anticipate results or trends in future periods.
Cyclicality of Operating Results
The operating results of the scrap metal processing industry in general
and the Company's EMCO subsidiary in particular are highly cyclical in nature
as they tend to reflect and amplify the general national economic condition. In
periods of national recession or periods of minimal economic growth, the
operations of scrap metal companies have been materially adversely affected.
During recessions or periods of minimal economic growth, the automobile and the
construction industries typically experience major cutbacks in production,
resulting in decreased demand for steel, copper and aluminum supplies. For
example, from approximately 1988 to 1993, the scrap industry was adversely
affected for a period of five years. Due in part to this effect, the
predecessors of EMCO, Empire Metals, Inc. ("Empire") and Copperstate Metals,
Inc. ("Copperstate"), entered bankruptcy proceedings in 1990 and 1991,
12
<PAGE> 13
respectively. Future economic downturns may be expected to materially and
adversely affect the operating results of the Company. The ability of the
Company and EMCO to withstand significant economic downturns in the future will
depend in part on the amount of available cash held by the Company. Recently,
EMCO has required cash infusions from the Company due to what it believes to be
short-term liquidity requirements; there can be no assurance, however, that
liquidity constraints will not continue or worsen.
Price Fluctuations
EMCO's results of operations have been in the past, and the results of
operations of the overall Company are expected to be, subject to price
fluctuations that occur in the metals commodities markets. While EMCO has in the
past generally found it unnecessary to hedge its exposures to fluctuating metals
prices because of the short-term nature of its purchase and sale agreements, an
abnormally sharp decline in prices could expose EMCO and the Company to
potential losses on inventories that have not been committed to specific sales
contracts. Such losses could have a material adverse effect on the Company's
results of operations.
Risk of Expansion Strategy
The Company currently plans to continue to pursue additional
acquisitions in the scrap metal area and, potentially, in other related or
unrelated fields, including but not limited to telecommunications. There can be
no assurance that any future mergers will be consummated or that, if they are,
the Company will be able to effectively manage disparate business enterprises.
The ability of the Company to achieve its expansion objectives and to manage its
growth effectively depends on a variety of factors, including the ability to
identify appropriate acquisition targets and to negotiate acceptable terms for
their acquisition, the integration of new businesses into the Company's
operations and the availability of capital. These difficulties will be
exacerbated in the event that the Company expands in states outside of Arizona
and California. The inability to control or manage growth effectively or to
successfully integrate future new business into the Company's operations would
have a material adverse effect on the Company's financial condition and results
of operations. There can be no assurance that the Company will be able to
successfully expand or that growth and expansion will result in profitability.
There can be no assurance that the Company will be able to realize any of the
other anticipated benefits of the Merger or any future acquisitions that it may
undertake.
Existing and Future Debt of the Company
As a result of the Merger, the Company has approximately $10 million in
consolidated debt. In order to pursue expansion and acquisition opportunities,
the Company may find it necessary to incur additional debt, either through bank
or credit lines or the sale of debt securities in registered or unregistered
transactions, in addition to any additional equity financing it may do. The
servicing of such present and future debt of the Company will utilize cash
either in the form of cash on hand or cash generated by operating activities.
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<PAGE> 14
Risk of Dilution to Existing Stockholders
The Company's strategy of expansion and additional acquisitions may
require it to issue additional shares of Common Stock or securities convertible
into Common Stock as consideration for additional acquisitions. Issuance of a
material amount of Common Stock or such securities would result in significant
dilution to the then-existing stockholders of the Company. The Company may also
be required to seek equity financing to meet future capital requirements, which
would also result in additional dilution. See "Immediate and Future Capital
Requirements."
Competition in the Scrap Metal Industry
The scrap metal processing industry is highly competitive, with the
principal competitive factors being price and availability of scrap metal
supplied. Competition in the industry is intense in part because the barriers to
entry into the scrap metal collection business are relatively low. Additionally,
EMCO faces competition from producers of finished steel products, many of whom
have substantially greater financial resources than EMCO and the Company, who
may vertically integrate by entering the scrap metal processing business. The
inability of EMCO to compete in this environment would have a material adverse
effect on the Company's financial condition and results of operations.
Immediate and Future Capital Requirements
Scrap metal processing companies such as EMCO have substantial ongoing
working capital and capital equipment requirements in order to continue to
operate and grow. During March 1996, the Company loaned EMCO $1,000,000 for
short-term working capital requirements. Upon closing of the Merger, the Company
advanced EMCO $950,000, and EMCO paid its demand note of $950,000 to Donald F.
Moorehead, a director of the Company and EMCO. Also, subsequent to March 31,
1996, the Company loaned EMCO an additional $500,000 for additional working
capital purposes. The Company may find it necessary to infuse additional cash
into EMCO for additional working capital purposes. In order to remain
competitive, EMCO must continue to make significant investments in capital
equipment. As a result, the Company will likely seek equity or debt financing to
fund future improvements and expansion of its scrap metal processing business as
well as to make other acquisitions of scrap metal processing facilities. There
can be no assurance that such financing will be available when needed, or that,
if available, it will be on satisfactory terms. The failure to obtain financing
would hinder the Company's and EMCO's ability to make continued investments in
capital equipment and pursue expansions, which could materially adversely affect
results of operations. Any such equity financing would result in dilution to the
then-existing stockholders of the Company.
Company Management Factors
While management team members who came from EMCO have experience
with scrap metal processing operations, both they and the
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<PAGE> 15
pre-Merger officers of Metal Management may be outside their areas of
experience in the event that the Company pursues acquisition opportunities
outside of scrap metal processing. Additionally, while T. Benjamin Jennings,
the current Chairman of the Board and Chief Development Officer, is currently
devoting substantially all of his time to such position, Gerard M. Jacobs, the
current President and Chief Executive Officer, has numerous other business
interests and will be unable for some time to dedicate his full time to the
Company's operations. However, since the Merger, Mr. Jacobs has been able to
reduce his personal time commitment to certain of such other business interests
and is currently devoting most of his business time to the Company. As a
result, the success of the Company will depend, in large part, upon the
involvement of EMCO management. There can be no assurance that the Company will
be able to retain key management personnel.
Additionally, certain members of EMCO management have been involved in
bankruptcy proceedings in the past as a result of the bankruptcy proceedings of
EMCO's predecessor companies, Copperstate and Empire.
Control of Company by Management and Principal Stockholders
As a result of the Merger, Messrs. Jacobs and Jennings, together with
George O. Moorehead and Donald F. Moorehead, with whom Messrs. Jacobs and
Jennings have had substantial past business relationships, collectively own an
aggregate of approximately 28% of the outstanding Common Stock of the Company.
In addition, Harold Rubenstein, formerly the Chairman of the Board of EMCO,
beneficially owns approximately 26% of the outstanding Common Stock of the
Company, while Gerald Zack, Raymond F. Zack and David M. Zack, who are brothers,
collectively beneficially own -- through their ownership of Copperstate -- an
aggregate of approximately 13% of the outstanding Common Stock of the Company.
Pursuant to demand registration rights of Copperstate, the Company has filed a
registration statement on Form S-3 (the "S-3 Registration Statement") to
register 300,000 shares held by Copperstate. After the sale of shares being
registered by the S-3 Registration Statement, the Zacks will collectively
beneficially hold 10% of the Company's outstanding shares. Accordingly, Messrs.
Jennings and Jacobs, together with the Mooreheads, Harold Rubenstein and the
Zacks, will collectively have sufficient voting power (approximately 58%) after
the sale of shares being registered to control the outcome of all matters
(including the election of a majority of the directors and any future merger,
consolidation or sale of assets of the Company) submitted to Company
stockholders for approval and may be deemed to have effective control over the
affairs and management of the Company. This assumes that the shares being
offered by Copperstate will not be purchased by any of the individuals in the
aforementioned group. The sale of some or all of the shares to such individuals
would increase commensurately the control of such individuals and the group over
the Company. This controlling interest in the Company may also have the effect
of making certain transactions more difficult or impossible, absent the support
of Messrs. Jennings and Jacobs and such other persons. Such transactions could
include proxy contests, mergers involving the Company, tender offers and open
market purchase programs that could give stockholders of the Company the
opportunity to realize a premium over the then-prevailing market price of their
shares of Common Stock.
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<PAGE> 16
Concentration of Customers and Credit Risk
The Company's three largest customers for the three-month period ended
June 30, 1996, represented in the aggregate approximately 17.6% of the
Company's revenues for that period. The Company's results of operations are
substantially dependent upon continuing orders from such customers, and any
cancellation of or reduction in orders from such customers could have a material
adverse effect on the Company's results of operations. This risk is exacerbated
by the fact that most of the Company's customers are not bound by long-term
purchase contracts but instead do business with the Company on the basis of
short-term contracts.
One customer accounted for $477,000, or approximately 6.2%, of the
Company's total accounts receivable as of June 30, 1996.
Dependence on Scrap Suppliers
EMCO's scrap processing operations are dependent upon the supply of
scrap materials from its suppliers. Few of such suppliers are bound by long-term
supply agreements, and therefore they have no obligation to continue to supply
scrap materials to EMCO. In the event that substantial numbers of scrap
suppliers cease supplying scrap materials to EMCO, the Company's financial
condition and results of operations would be materially and adversely affected.
Environmental Matters
Like many other companies in the scrap metal processing business, EMCO
is subject to comprehensive local, state and international regulatory and
statutory requirements relating to the acceptance, storage, handling and
disposal of solid waste and waste water, air emissions, soil contamination and
employee health, among others. Environmental legislation and regulations have
changed rapidly in recent years, and it is likely that EMCO, and any other scrap
metal subsidiaries the Company may acquire in the future, will be subject to
even more stringent environmental standards in the future.
The Company is currently aware of two ongoing environmental matters in
connection with EMCO's business. The first matter concerns certain operating
permits for an auto shredder and a furnace used in removing insulation from
copper wire. The Environmental Protection Agency concluded that Copperstate had
operated those two pieces of equipment while possessing only a temporary permit
from the Arizona Department of Environmental Quality ("ADEQ") when a permanent
permit should have been obtained. The EPA assessed a fine against Copperstate
and EMCO for failure to obtain a permit. EMCO has paid its fine totaling $9,000
and is awaiting formal dismissal by the EPA, which it expects to receive in the
near future. In the second matter, environmental consultants to the Company
reported that an underground storage tank located at one of EMCO's yards had not
been reported to the Arizona environmental authorities as required by law. EMCO
as lessee reported the matter to the owner of the property, and believes that
such report is the
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<PAGE> 17
extent of its obligations with respect to this matter. However, there can be no
assurance that any failure of the owner to report will not result in liability
of or the assessment of penalties against the Company and/or EMCO.
EMCO has a policy of not knowingly accepting, handling or discharging
hazardous waste products, and the Company and EMCO are not aware of any material
concentrations of hazardous waste located on any of EMCO's properties. However,
as part of a pre-Merger review, the Company hired an environmental consulting
firm to conduct Phase I or Phase II site assessments or transaction screen
reviews (the "Pre-Merger Site Assessments") of nearly all of the sites owned or
leased by EMCO in Arizona and the sites that were purchased from Harold
Rubenstein or his affiliates in Tucson. The environmental consultants completed
certain investigations of reviewed sites and delivered all final transaction
screen assessments, Phase I and/or Phase II reports, as appropriate, that they
were requested to deliver. Certain of these reports revealed that some soil or
groundwater contamination is likely at some sites and recommended that certain
additional investigations and remediation be conducted. Based upon its review of
the reports, the Company believes that it is likely that contamination exists at
certain of the sites and that it is likely that remediation will be required at
some of the sites. Also based upon its review of these reports, the Company
believes that such contamination is likely to include, but not be limited to:
polychlorinated biphenyls (PCBs); total petroleum hydrocarbons; volatile organic
compounds (VOCs), including perchloroethylene, trichlorofluoromethane,
trichloroethylene, trichloroethane and dichloroethylene; antimony; arsenic,
cadmium; copper; lead; mercury; silver; zinc; waste oil; toluene; meta- and
para-xylenes; baghouse dust; and aluminum dross. The ultimate extent of
contamination cannot be stated with any certainty at this point, and there can
be no assurance that the cost of remediation will be immaterial. The Company has
supplied the Pre-Merger Site Assessments to EMCO, and EMCO has retained a
qualified environmental and chemical consulting firm in Arizona to review them,
to examine EMCO's ongoing operations, and to recommend to EMCO's management and
Board of Directors any steps EMCO should take to achieve and/or maintain
compliance, including but not limited to any necessary remedial measures or
operational changes.
Due to the nature of the scrap metal business, it is possible that
inquiries or claims based upon environmental laws may be made in the future by
governmental bodies or individuals against the Company, EMCO and any other scrap
metal processing entities that the Company may acquire. The location of EMCO's
facilities in large urban areas may increase the risk of scrutiny and claims.
The Company is unable to predict whether any such future inquiries or claims
will in fact arise or the outcome of such matters. Additionally, it is not
possible to predict the total size of all capital expenditures or the amount of
any increases in operating costs or other expenses that may be incurred to
comply with any environmental requirements, or whether all such cost increases
can be passed on to customers through product price increases. Moreover,
environmental legislation has been enacted, and may in the future be enacted, to
create liability for past actions that were lawful at the time taken but that
have been found to affect the environment and to create public rights of action
for environmental conditions and activities. As is the case with scrap
processors in general, if damage to persons or the environment has been caused,
or is in the future caused, by hazardous materials activities of EMCO or other
Company subsidiaries or by hazardous substances now or hereafter located at any
subsidiaries' facilities, the Company and such subsidiaries may be fined and
held liable
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for such damage. In addition, the Company and such subsidiaries may be required
to remedy such conditions or change procedures. While the Company believes EMCO
is in material compliance with currently applicable environmental regulations
and does not anticipate any substantial capital expenditures for new
environmental control facilities during fiscal 1996, there can be no assurance
that potential liabilities, expenditures, fines and penalties associated with
environmental laws and regulations will not have a material adverse effect on
the Company.
Volatility of Stock Price
The Company's stock price has been, and in the future is expected to
be, volatile and to experience market fluctuation as a result of a number of
factors, including, but not limited to, current and anticipated results of
operations, future product offerings by the Company or its competitors and
factors unrelated to the operating performance of the Company. This volatility
may be increased as a result of the fact that by consummating the recent Merger,
the Company has entered into a new business market. The trading price of the
Company's Common Stock may also vary as a result of changes in the business,
operations, or financial results of the Company, prospects of general market and
economic conditions, additional future proposed acquisitions by the Company and
other factors. In addition, failure of revenues or earnings in any quarter to
meet the investment community's expectations, if any, could have an adverse
impact on the Company's stock price, as could sales of large amounts of stock by
existing stockholders.
Fluctuations in Operating Results
The Company's future operating results could be subject to significant
volatility, particularly on a quarterly basis. The Company's revenues and
operating results have fluctuated in the past and are likely to do so in the
future. The Company's quarterly operating results may continue to fluctuate due
to numerous factors, including but not limited to the demand for scrap metal,
the health of the national economy and competition.
EMCO has recently required cash infusions from the Company due to what
it believes to be short-term liquidity requirements; there can be no assurance,
however, that liquidity constraints will not continue or worsen.
Recent Changes in Management of the Company
The Company has undergone multiple changes in its management in the
past year. Most recently, certain EMCO representatives were appointed Company
directors and/or officers in conjunction with the Merger. On April 9, 1996,
Donald F. Moorehead, then a director of EMCO, was elected to the Company's Board
of Directors. Immediately following the Merger, George O. Moorehead, Harold
Rubenstein and Raymond F. Zack, all officers and/or directors of EMCO, were
appointed to the Board of the Company. Also in conjunction with the Merger,
George O. Moorehead was appointed Executive Vice President of the Company.
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On July 17, 1995, Herbert B. Baskin, then the President, Chief
Executive Officer and Chairman of the Board of Directors of the Company (then
called GPC), sold an aggregate of 1,400,000 shares of Common Stock of the
Company to Gerard M. Jacobs, T. Benjamin Jennings, Donald F. Moorehead and Blue
Bird Partners (the "Purchasers") at a price of $2.00 per share, for a total
purchase price of $2,800,000, pursuant to a Common Stock Purchase Agreement
among Mr. Baskin and the Purchasers dated July 7, 1995. On July 24, 1995, a
group consisting of Messrs. Jacobs and Jennings and Blue Bird Partners delivered
a written request to the Company to hold a Special Meeting of Stockholders on
August 30, 1995, in order to propose the removal of four out of the five
then-elected directors and to elect four replacement directors chosen by the
group. As required by the Company's bylaws, the Company called the Special
Meeting for such date and such purpose. At the completion of a Board meeting
held on July 27, 1995, two members of the Board, J. Thomas Bentley and Luther J.
Nussbaum, resigned from their positions as directors. At the stockholders'
meeting on August 30, 1995, the group's slate of four directors was elected. On
October 11, 1995, Eugene Sanders resigned his position as an employee and
director of the Company. On January 4, 1996, Louis D. Paolino resigned his
position as director of the Company.
In conjunction with the resignation of Mr. Paolino, Blue Bird Partners
has entered into an agreement to sell 250,000 of its shares of the Company to a
group of investors, including Messrs. Jennings and Jacobs, Harold Rubenstein,
Donald F. Moorehead, George O. Moorehead, and Charles R. McCurdy, at a purchase
price of $3.20 per share. In connection therewith, Blue Bird Partners granted
Messrs. Jennings and Jacobs a proxy to vote Blue Bird Partners' shares in favor
of the Merger and other items acted upon at the Company's April 9, 1996, annual
meeting.
Effect of Antitakeover Provisions of Delaware Law, the Company's Charter
Documents and Employment Agreements
The Company is a corporation governed by the laws of Delaware. Certain
provisions of Delaware law and the charter documents of the Company may have the
effect of delaying, deferring or preventing changes in control or management of
the Company. Specifically, the Company's Board of Directors may issue shares of
Preferred Stock without stockholder approval on such terms as the Board may
determine. The rights of the holders of Common Stock of the Company are subject
to, and may be adversely affected by, the rights of any Preferred Stock that may
be issued in the future. The Company is subject to the provisions of Section 203
of the Delaware General Corporation Law, which has the effect of making changes
in control of a company more difficult. In connection with the Merger, the
Company entered into employment agreements with George O. Moorehead, Gerard M.
Jacobs and T. Benjamin Jennings. Such agreements provide for certain payments to
be made to such persons in the event of a change of control of the Company. The
effects of the antitakeover protections of Delaware law, the Company charter
documents and these employment agreements could be to make it more difficult
for a third party to acquire, or could discourage a third party from acquiring,
a majority of the outstanding stock of Company.
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Stockholders should not use historical trends to anticipate results or trends
in future periods. Further, the Company's stock price is subject to volatility.
Any of these factors discussed above could have an adverse impact on the
Company's stock price. In addition, failure of revenues or earnings in any
quarter to meet the investment community's expectations, if any, as well as
broader market trends unrelated to the company's performance could have an
adverse impact on the Company's stock price.
RECENT ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board (FASB) issue Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of". The statement must be adopted for its fiscal year
beginning April 1, 1996. Based upon its preliminary review, management believes
that there will be no material impact on the results of operations or financial
condition upon adoption.
In October 1995, the FASB issued Statement No. 123 "Accounting for Stock-Based
Compensation." The Company must adopt the disclosure requirements for its fiscal
year beginning April 1, 1996. Based upon its preliminary review, management
believes that there will be no material impact on the results of operations or
financial condition upon adoption.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
See disclosure contained in corresponding item of Form 10-Q Transitional
Report for the five months ended March 31, 1996, filed by the Registrant.
Item 4. Submission of Matters to Vote of Security Holders.
(a) The Registrant held its Annual Meeting of Stockholders April 9,
1996. Proxies for the meeting were solicited pursuant to
Regulation 14A.
(b) The following management nominees for director were elected
until the Company's next Annual Meeting of Stockholders or until
their successors are elected and/or appointed, with the votes in
favor and withheld for each nominee in parenthesis: Gerard M.
Jacobs (4,890,685/61,444), T. Benjamin Jennings
(4,893,351/58,778), Donald F. Moorehead (4,890,685/61,444), and
Xavier Hermosillo (4,890,685/61,444).
In addition, George O. Moorehead, Harold R. Rubenstein and
Raymond Zack were appointed by the new Board of Directors to the
Board of Directors on April 9, 1996 following the conclusion of
the Annual Meeting.
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The Stockholders approved the Merger Agreement dated as of December 1,
1995 and as amended through March 7, 1996, between the Company, GPAR
Merger, Inc., EMCO Recycling Corp. and the direct and indirect
beneficial owners of EMCO common stock and the related Agreement of
Merger between the Company and EMCO, which provides for the merger of
GPC with and into EMCO. The number of shares voting in favor were
3,435,279, against were 90,505, broker non- vote were 1,748,633, and
abstain were 60,236.
The Stockholders approved the amendment to the Certificate of
Incorporation of the Company in order to increase the number of
authorized shares of Common Stock of the Company by 20 million to 40
million. The number of shares voting in favor were 4,733,526, against
were 153,321, broker non- vote were 382,524, and abstain were 65,282.
The Stockholders approved the amendment to the Certificate of
Incorporation of the Company in order to change the name of the Company
to "Metal Management, Inc." The number of shares voting in favor were
4,758,934, against were 129,770, broker non-vote were 382,524, and
abstain were 63,425.
The Stockholders approved the Board of Directors' adoption of the 1996
Director Option Plan, and the reservation of 100,000 shares of Common
Stock of the Company for issuance thereunder. The number of shares
voting in favor were 4,575,951, against were 198,391, broker non-vote
were 483,485, and abstain were 76,826.
The Stockholders approved an amendment to the 1995 Stock Option Plan in
order to increase the number of shares of Common Stock reserved for
issuance under the Plan by 800,000 shares. The number of shares voting
in favor were 3,435,279, against were 90,505, broker non-vote were
1,748,633, and abstain were 60,236.
The Stockholders approved an amendment to the Bylaws to provide that the
Board of Directors shall have the power to determine the number of
authorized directors of the Company. The number of shares voting in
favor were 3,206,635, against were 304,884, broker non-vote were
1,731,122, and abstain were 92,012.
The Stockholders approved and ratified the Board of Directors' selection
of Price Waterhouse LLP as independent public accountants for the
Company for the fiscal year ending October 31, 1996. The number of
shares voting in favor were 4,870,261, against were 10,113, broker
non-vote were 382,774 and abstain were 71,505.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
2.1 Merger Agreement dated as of December 1, 1995, and as amended
through March 7, 1996, among the Registrant, GPAR Merger, Inc.,
EMCO Recycling Corp. ("EMCO") and the direct and indirect
beneficial owners of EMCO's Common Stock (incorporated by
reference from Definitive Proxy Statement of the Company and
EMCO, dated March 8, 1996, filed with the Commission).
10.1 1996 Director Option Plan.
10.2 Form of Option Agreement for use under Director Option Plan.
10.3 1995 Stock Plan.
10.4 Form of Option Agreement for use under 1995 Stock Plan.
10.5 Demand Promissory Note of EMCO Recycling Corp. dated March 8,
1996.
10.6 Subordination Agreement dated April 11, 1996 among the
Registrant, Fidelity Funding of California, Inc. and EMCO.
10.7 Demand Promissory Note of EMCO dated April 11, 1996.
10.8 Exclusive Scrap Metal Sales Agreement among Empire Metals, Inc.
("Empire") and EMCO dated April 11, 1996.
10.9 Assignment of Lease between Empire and EMCO, dated April 11,
1996.
10.10 Assignment of Lease between Empire CAN and EMCO, dated April
11, 1996.
10.11 Specific Guaranty dated April 11, 1996 executed by Raymond
Zack, Deborah Zack, David Zack, Elayne Zack, Gerald Zack and
Patricia Zack.
10.12 Collateral Agreement dated April 11, 1996 between Copperstate
Metals, Inc. ("Copperstate") and the Registrant.
10.13 Collateral Agreement dated April 11, 1996 between Donald
Moorehead and the Registrant.
10.14 Collateral Agreement dated April 11, 1996 between George
Moorehead and the Registrant.
10.15 Assumption and Indemnity Agreement dated April 11, 1996 between
Copperstate and EMCO.
10.16 Assumption Agreement dated April 11, 1996 between Empire and
EMCO.
10.17 Indemnity Agreement dated April 11, 1996 among the Registrant,
GPAR Merger, Inc., EMCO, Empire, Copperstate and the beneficial
owners of Empire and Copperstate.
10.18 Stock Pledge and Security Agreement dated April 11, 1996
between Empire and the Registrant.
10.19 Stock Pledge and Security Agreement dated April 11, 1996
between Copperstate and EMCO.
10.20 Employment Agreement dated April 11, 1996 between EMCO and
Raymond Zack.
10.21 Employment Agreement dated April 11, 1996 between the
Registrant and George Moorehead.
10.22 Employment Agreement dated April 11, 1996 between the
Registrant and T. Benjamin Jennings.
10.23 Employment Agreement dated April 11, 1996 between the
Registrant and Gerard M. Jacobs
10.24 Consulting Agreement between EMCO and Harold Rubenstein dated
April 11, 1996.
10.25 Noncompetition Agreement dated April 11, 1996 among the
Registrant, EMCO and Harold Rubenstein.
10.26 Noncompetition Agreement dated April 11, 1996 among the
Registrant, EMCO and George O. Moorehead.
10.27 Purchase & Sale Agreement dated August 1, 1994 between EMCO and
Fidelity Funding of California, Inc.
10.28 Promissory Note dated April 11, 1996 of Ellis.
10.29 Form of Indemnification Agreement entered into among the
Registrant and Harold Rubenstein, George Moorehead, Donald
Moorehead, Raymond Zack, Xavier Hermosillo, Gerard M. Jacobs
and T. Benjamin Jennings
10.30 Promissory Note dated April 11, 1996 of Metal Management Realty
Inc. ("Metal Realty").
10.31 Promissory Note dated April 11, 1996 of Metal Realty.
10.32 Deed of Trust dated April 11, 1996 between Metal Realty and H&S
Broadway.
10.33 Deed of Trust dated April 11, 1996 between Metal Realty and
Harold and Beverly Rubenstein.
10.34 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.35 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.36 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Copperstate.
10.37 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Donald F. Moorehead.
10.38 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to George O. Moorehead.
10.39 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.40 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.41 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Copperstate.
10.42 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Donald F. Moorehead.
10.43 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to George O. Moorehead.
10.44 Contract of Sale dated February 16, 1996 among Harold
Rubenstein, Beverly Rubenstein, the Rubenstein Family Trust,
H&S Broadway, and the Registrant.
10.45 Lease Agreement dated April 11, 1996 between Metal Management
Realty, Inc. and Ellis Metals, Inc.
27.1 Financial Data Schedule
</TABLE>
(b) The following reports on Form 8-K were filed during the quarter ended
June 30, 1996:
1. The Company filed a Form 8-K on April 26, 1996, dated April 11,
1996, reporting that by virtue of the merger with EMCO Recycling
Corp. there may have been a change in control of the registrant
(Item 1) and acquisition or disposition of assets (Item 2). In
addition, the Form 8-K reported a change in fiscal year (Item
8). The Form 8-K
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provided part of the financial statements of business acquired
(Item 7), i.e., the Audited Consolidated Financial Statements of
EMCO Recycling Corp. as of March 31, 1995 and 1994 and for the
year ended March 31, 1995, and the eleven months ended March 31,
1994, and pro forma financial statements giving effect to the
Acquisition for the year ended October 31, 1995.
2. The Company filed a Form 8-K/A on June 20, 1996, dated as of
April 11, 1996, supplying a Management Discussion and Analysis
of Financial Condition and Results of Operations of EMCO
Recycling Corp. (Item 5), the Audited Consolidated Financial
Statements of EMCO Recycling Corp. as of January 31, 1996, and
for the ten months ended January 31, 1996, and pro forma
combined condensed financial statements of the combined Company
as of March 31, 1996, and for the five months ended March 31,
1996 (Item 7).
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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 thereunto duly authorized.
METAL MANAGEMENT, INC.
Dated: August 12, 1996 By / s / T. Benjamin Jennings
--------------------------
Vice President, Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
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<S> <C>
2.1 Merger Agreement dated as of December 1, 1995, and as amended
through March 7, 1996, among the Registrant, GPAR Merger, Inc.,
EMCO Recycling Corp. ("EMCO") and the direct and indirect
beneficial owners of EMCO's Common Stock (incorporated by
reference from Definitive Proxy Statement of the Company and
EMCO, dated March 8, 1996, filed with the Commission).
10.1 1996 Director Option Plan.
10.2 Form of Option Agreement for use under Director Option Plan.
10.3 1995 Stock Plan.
10.4 Form of Option Agreement for use under 1995 Stock Plan.
10.5 Demand Promissory Note of EMCO Recycling Corp. dated March 8,
1996.
10.6 Subordination Agreement dated April 11, 1996 among the
Registrant, Fidelity Funding of California, Inc. and EMCO.
10.7 Demand Promissory Note of EMCO dated April 11, 1996.
10.8 Exclusive Scrap Metal Sales Agreement among Empire Metals, Inc.
("Empire") and EMCO dated April 11, 1996.
10.9 Assignment of Lease between Empire and EMCO, dated April 11,
1996.
10.10 Assignment of Lease between Empire CAN and EMCO, dated April
11, 1996.
10.11 Specific Guaranty dated April 11, 1996 executed by Raymond
Zack, Deborah Zack, David Zack, Elayne Zack, Gerald Zack and
Patricia Zack
10.12 Collateral Agreement dated April 11, 1996 between Copperstate
Metals, Inc. ("Copperstate") and the Registrant.
10.13 Collateral Agreement dated April 11, 1996 between Donald
Moorehead and the Registrant.
10.14 Collateral Agreement dated April 11, 1996 between George
Moorehead and the Registrant.
10.15 Assumption and Indemnity Agreement dated April 11, 1996 between
Copperstate and EMCO.
10.16 Assumption Agreement dated April 11, 1996 between Empire and
EMCO.
10.17 Indemnity Agreement dated April 11, 1996 among the Registrant,
GPAR Merger, Inc., EMCO, Empire, Copperstate and the beneficial
owners of Empire and Copperstate.
10.18 Stock Pledge and Security Agreement dated April 11, 1996
between Empire and the Registrant.
10.19 Stock Pledge and Security Agreement dated April 11, 1996
between Copperstate and EMCO.
10.20 Employment Agreement dated April 11, 1996 between EMCO and
Raymond Zack.
10.21 Employment Agreement dated April 11, 1996 between the
Registrant and George Moorehead.
10.22 Employment Agreement dated April 11, 1996 between the
Registrant and T. Benjamin Jennings.
10.23 Employment Agreement dated April 11, 1996 between the
Registrant and Gerard M. Jacobs
10.24 Consulting Agreement between EMCO and Harold Rubenstein dated
April 11, 1996.
10.25 Noncompetition Agreement dated April 11, 1996 among the
Registrant, EMCO and Harold Rubenstein.
10.26 Noncompetition Agreement dated April 11, 1996 among the
Registrant, EMCO and George O. Moorehead.
10.27 Purchase & Sale Agreement dated August 1, 1994 between EMCO and
Fidelity Funding of California, Inc.
10.28 Promissory Note dated April 11, 1996 of Ellis.
10.29 Form of Indemnification Agreement entered into among the
Registrant and Harold Rubenstein, George Moorehead, Donald
Moorehead, Raymond Zack, Xavier Hermosillo, Gerard M. Jacobs
and T. Benjamin Jennings
10.30 Promissory Note dated April 11, 1996 of Metal Management Realty
Inc. ("Metal Realty").
10.31 Promissory Note dated April 11, 1996 of Metal Realty.
10.32 Deed of Trust dated April 11, 1996 between Metal Realty and H&S
Broadway.
10.33 Deed of Trust dated April 11, 1996 between Metal Realty and
Harold and Beverly Rubenstein.
10.34 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.35 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.36 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Copperstate.
10.37 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Donald F. Moorehead.
10.38 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to George O. Moorehead.
10.39 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.40 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Empire.
10.41 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Copperstate.
10.42 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to Donald F. Moorehead.
10.43 Common Stock Warrant dated April 11, 1996 issued by the
Registrant to George O. Moorehead.
10.44 Contract of Sale dated February 16, 1996 among Harold
Rubenstein, Beverly Rubenstein, the Rubenstein Family Trust,
H&S Broadway, and the Registrant.
10.45 Lease Agreement dated April 11, 1996 between Metal Management
Realty, Inc. and Ellis Metals, Inc.
27.1 Financial Data Schedule
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Exhibit 10.1
METAL MANAGEMENT, INC.
1996 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 1996 Director Option Plan are to
attract and retain the best available personnel for service as Outside Directors
(as defined herein) of the Company, to provide additional incentive to the
Outside Directors of the Company to serve as Directors, and to encourage their
continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Metal Management, Inc., a Delaware corporation.
(e) "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume
<PAGE> 2
of trading in Common Stock) on the date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(j) "Option" means a stock option granted pursuant to the Plan.
(k) "Optioned Stock" means the Common Stock subject to an Option.
(l) "Optionee" means an Outside Director who receives an Option.
(m) "Outside Director" means a Director who is not an Employee.
(n) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1996 Director Option Plan.
(p) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 100,000 Shares of Common Stock (the "Pool"). The Shares
may be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan.
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4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. The provisions set forth in this Section
4(a) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an
Option to purchase 10,000 Shares (the "First Option") on the date on which the
later of the following events occurs: (A) the effective date of this Plan, as
determined in accordance with Section 6 hereof, or (B) the date on which such
person first becomes an Outside Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that no First Option shall be granted to an Outside Director
who, immediately prior to becoming an Outside Director, was a Director.
(iii) After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be automatically granted an
Option to purchase 2,500 Shares (a "Subsequent Option") on January 15 of each
year, if on such date, he or she shall have served on the Board for at least one
(1) month.
(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any exercise of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 16 hereof.
(v) The terms of a First Option granted hereunder shall be as
follows:
(A) the term of the First Option shall be ten (10) years.
(B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Section 8 hereof.
(C) the exercise price per Share shall be the Fair Market
Value per Share on the date of grant of the First Option. In the event that the
date of grant of the First Option is not a trading day, the exercise price per
Share shall be the Fair Market Value on the next trading day immediately
following the date of grant of the First Option.
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(D) the First Option shall be fully vested and exercisable
the date of grant.
(vi) The terms of a Subsequent Option granted hereunder shall be
as follows:
(A) the term of the Subsequent Option shall be ten (10)
years.
(B) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Section 8 hereof.
(C) the exercise price per Share shall be the Fair Market
Value per Share on the date of grant of the Subsequent Option. In the event that
the date of grant of the Subsequent Option is not a trading day, the exercise
price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the Subsequent Option.
(D) the Subsequent Option shall be fully vested and
exercisable the date of grant.
(vii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof. An Outside Director who has been granted an Option may, if he
or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a Director,
nor shall it interfere in any way with any rights which the Director or the
Company may have to terminate his or her directorship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
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7. Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors must comply
with the applicable provisions of Rule 16b-3 promulgated under the Exchange Act
or any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify Plan transactions, and
other transactions by Outside Directors that otherwise could be matched with
Plan transactions, for the maximum exemption from Section 16 of the Exchange
Act.
(c) Termination of Continuous Status as a Director. In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent
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<PAGE> 6
disability (as defined in Section 22(e)(3) of the Code)), the Optionee may
exercise his or her Option, but only within twelve (12) months following the
date of such termination, and only to the extent that the Optionee was entitled
to exercise it on the date of such termination (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of such termination, and to the
extent that the Optionee does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.
(d) Disability of Optionee. In the event Optionee's Continuous
Status as a Director terminates as a result of total and permanent disability
(as defined in Section 22(e)(3) of the Code), the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(e) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger,
Asset Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per Share covered by each such outstanding Option, and the number
of Shares issuable pursuant to the automatic grant provisions of Section 4
hereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of
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<PAGE> 7
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option may be assumed or an equivalent option
may be substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, each
outstanding Option shall become fully vested and exercisable, including as to
Shares as to which it would not otherwise be exercisable. If an Option becomes
fully vested and exercisable in the event of a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the Option confers the right to purchase, for each Share of
Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares).
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in Section 4,
the Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act
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<PAGE> 8
of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
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Exhibit 10.2
METAL MANAGEMENT, INC.
DIRECTOR OPTION AGREEMENT
Metal Management, Inc., a Delaware corporation (the "Company"), has
granted to ________________________________ (the "Optionee"), an option to
purchase a total of __________________ (_________) shares of the Company's
Common Stock (the "Optioned Stock"), at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of the
Company's 1996 Director Option Plan (the "Plan") adopted by the Company which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is
not intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_______ for each share of
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
(a) This Option shall be fully vested and exercisable on the
date of grant; provided, however, that in no event shall any Option be
exercisable prior to the date the stockholders of the Company approve the Plan.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by written
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
<PAGE> 2
(ii) check; or
(iii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference between the sale
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<PAGE> 3
price and the Fair Market Value of the Shares on the date of exercise of the
Option, to the extent not included in income as described above, will be treated
as capital gain or loss.
DATE OF GRANT: ______________
METAL MANAGEMENT, INC.
a Delaware corporation
By:______________________________
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: _________________
_________________________________
Optionee
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EXHIBIT A
DIRECTOR OPTION EXERCISE NOTICE
Metal Management, Inc.
1250 Ninth Street
Berkeley, CA 94710
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Metal Management, Inc. (the "Company") under and pursuant to the
Company's 1996 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by reference.
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof.
<PAGE> 5
This Exercise Notice and the Agreement are governed by California law except for
that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: METAL MANAGEMENT, INC.
______________________________ By:________________________________
Its:_______________________________
Address:
Dated:________________________ Dated:_____________________________
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Exhibit 10.3
METAL MANAGEMENT, INC.
1995 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Metal Management, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services. The term "Consultant" shall not include Directors who are
paid only a director's fee by the Company or who are not compensated by the
Company for their services as Directors.
(i) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company
<PAGE> 2
shall include sick leave, military leave, or any other personal leave approved
by an authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed 90 days, unless reemployment upon expiration
of such leave is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not so guaranteed,
on the 91st day of such leave any Incentive Stock Option held by the Optionee
shall cease to be treated as an Incentive Stock Option and shall be treated for
tax purposes as a Nonstatutory Stock Option.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the Nasdaq National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
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<PAGE> 3
(p) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain
terms and conditions of an individual Option. The Notice of Grant is part of the
Option Agreement.
(r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option.
(w) "Optionee" means an Employee or Consultant who holds an
outstanding Option.
(x) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1995 Stock Option Plan.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(aa) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(bb) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 1,300,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated);
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<PAGE> 4
provided, however, that Shares that have actually been issued under the Plan,
whether upon exercise of an Option, shall not be returned to the Plan and shall
not become available for future distribution under the Plan, except that if
Shares of Restricted Stock are repurchased by the Company at their original
purchase price, and the original purchaser of such Shares did not receive any
benefits of ownership of such Shares, such Shares shall become available for
future grant under the Plan. For purposes of the preceding sentence, voting
rights shall not be considered a benefit of Share ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
(ii) Administration With Respect to Directors and Officers
Subject to Section 16(b). With respect to Option grants made to Employees who
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3; provided, however, that the Board may grant
Options to Employees who are also Officers or Directors subject to Section 16(b)
of the Exchange Act if the Board is unable to administer the Plan in compliance
with the rules governing a plan intended to qualify as a discretionary plan
under Rule 16b-3 (provided, however, that in such a case, the grant of Options
to Employees who are Officers or Directors subject to Section 16(b) of the
Exchange Act will constitute a non-exempt purchase under Section 16(b)), or (B)
a committee designated by the Board to administer the Plan, which committee
shall be constituted to comply with the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise directed by
the Board. From time to time the Board may increase the size of the Committee
and appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules governing a plan intended to qualify as a discretionary
plan under Rule 16b-3.
(iii) Administration With Respect to Other Persons. With respect
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity until otherwise directed by the Board. The Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by Applicable Laws.
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<PAGE> 5
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options may
be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option (subject to Section 14(c) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;
(xi) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
(xii) to institute an Option Exchange Program;
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<PAGE> 6
(xiii) to determine the terms and restrictions applicable to
Options; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Nonstatutory Stock Options may be granted to Employees
and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. Limitations.
(a) Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value:
(i) of Shares subject to an Optionee's Incentive Stock Options
granted by the Company, any Parent or Subsidiary, which
(ii) become exercisable for the first time during any calendar
year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option shall confer upon an Optionee
any right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options to
Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 500,000 Shares.
(ii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 12.
(iii) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 12), the canceled Option will
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<PAGE> 7
be counted against the limit set forth in Section 6(c)(i). For this purpose, if
the exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as described in Section 18 of the
Plan. It shall continue in effect for a term of ten (10) years unless terminated
earlier under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive
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<PAGE> 8
Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive
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<PAGE> 9
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Employment or Consulting Relationship. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). In
the absence of a specified time in the Notice of Grant, the Option shall remain
exercisable for 90 days following the Optionee's termination of Continuous
Status as an Employee or Consultant. In the case of an Incentive Stock Option,
such period of time shall not exceed ninety (90) days from the date of
termination. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
(c) Disability of Optionee. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
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<PAGE> 10
(e) Rule 16b-3. Options granted to individuals subject to Section
16 of the Exchange Act ("Insiders") must comply with the applicable provisions
of Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
11. Non-Transferability of Options. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option may be assumed or an equivalent option
may be substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. The Administrator may, in lieu of such assumption or
substitution, provide for the Optionee to have the right to exercise the Option
as to all or a portion of the Optioned Stock, including Shares as to which it
would not otherwise be exercisable. If the Administrator makes an Option
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option will terminate upon the expiration of
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<PAGE> 11
such period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option confers the right
to purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
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(b) Investment Representations. As a condition to the exercise of
an Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
16. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered
by an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless shareholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14(b) of the Plan.
17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
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Exhibit 10.4
METAL MANAGEMENT, INC.
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Metal
Management, Inc. 1995 Stock Option Plan shall have the same defined meanings in
this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
25% percent of the Shares subject to the Option shall vest on the
first, second, third and fourth anniversary of the Vesting Commencement Date.
Termination Period:
This Option may be exercised for three (3) months after termination of
the Optionee's employment or consulting relationship with the Company. Upon the
death or Disability of the Optionee, this Option may be exercised for such
longer period as provided in the Plan. In the event of the Optionee's change in
status from Employee to Consultant or Consultant to Employee, this Option
Agreement shall remain in effect. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.
<PAGE> 2
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee"), an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
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<PAGE> 3
(b) check; or
(c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or
(e) delivery of Optionee's promissory note (the "Note") in the form
attached hereto as Exhibit C, in the amount of the aggregate Exercise Price of
the Exercised Shares together with the execution and delivery by the Optionee of
the Security Agreement attached hereto as Exhibit B. The Note shall bear
interest at a rate no less than the "applicable federal rate" prescribed under
the Code and its regulations at time of purchase, and shall be secured by a
pledge of the Shares purchased by the Note pursuant to the Security Agreement.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax and state income tax liability upon exercise of a NSO. The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise
Price. If the Optionee is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from Optionee and
pay to the applicable taxing authorities an amount in cash equal to a percentage
of this compensation income at the time of exercise, and may refuse
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<PAGE> 4
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax or state income tax
liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee undergoes a
change of status from Employee to Consultant, any Incentive Stock Option of the
Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on
the ninety-first (91st) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise AND two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the LESSER OF (A) the difference
between the FAIR MARKET VALUE OF THE SHARES ACQUIRED ON THE DATE OF EXERCISE and
the aggregate Exercise Price, or (B) the difference between the SALE PRICE of
such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.
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<PAGE> 5
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: METAL MANAGEMENT, INC.
____________________________________ By:____________________________________
Signature
____________________________________ Title:_________________________________
Print Name
____________________________________
Residence Address
____________________________________
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<PAGE> 6
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
_____________________________________
Spouse of Optionee
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<PAGE> 7
EXHIBIT A
METAL MANAGEMENT, INC.
1995 STOCK OPTION PLAN
EXERCISE NOTICE
General Paramerics Corporation
1250 Ninth Street
Berkeley, CA 94710
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________, 1995,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Metal Management, Inc. (the "Company")
under and pursuant to the 1995 Stock Option Plan (the "Plan") and the Stock
Option Agreement dated __________, 19___ (the "Option Agreement"). The purchase
price for the Shares shall be $_________, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof,
<PAGE> 8
and may not be modified adversely to the Purchaser's interest except by means of
a writing signed by the Company and Purchaser. This agreement is governed by
California law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
PURCHASER: METAL MANAGEMENT, INC.
__________________________________ By: _________________________________
Signature
__________________________________ Its: ________________________________
Print Name
Address: Address:
___________________________ 1250 Ninth Street
___________________________ Berkeley, CA 94710
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<PAGE> 9
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, 1995 between Metal
Management, Inc., a California corporation ("Pledgee"), and
_________________________ ("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 1995 Stock Option Plan, and Pledgor's election under the terms of the
Option to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased _________ shares of Pledgee's Common Stock (the "Shares") at a price
of $________ per share, for a total purchase price of $__________. The Note and
the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number ______, duly endorsed in blank or with executed stock powers, and
herewith delivers said certificate to the Secretary of Pledgee ("Pledgeholder"),
who shall hold said certificate subject to the terms and conditions of this
Security Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledgeholder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
(b) Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
(c) Margin Regulations. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 207 of
Title 12 of the Code of Federal Regulations
<PAGE> 10
("Regulation G"), Pledgor agrees to cooperate with Pledgee in making any
amendments to the Note or providing any additional collateral as may be
necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
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<PAGE> 11
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, at which time the remaining pledged stock
shall be promptly delivered to Pledgor, subject to the provisions for prior
release of a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the laws of the State of California.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" By:____________________________________
_______________________________________
Print Name
Address:_______________________________
_______________________________________
"PLEDGEE" Metal Management, Inc.,
a California corporation
By:____________________________________
Title:_________________________________
"PLEDGEHOLDER" _______________________________________
Secretary of Metal Management, Inc.
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<PAGE> 13
EXHIBIT C
NOTE
$_______________ [City, State]
______________, 19___
FOR VALUE RECEIVED, _______________ promises to pay to Metal
Management, Inc., a California corporation (the "Company"), or order, the
principal sum of _______________________ ($_____________), together with
interest on the unpaid principal hereof from the date hereof at the rate of
_______________ percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on __________, ______.
Should the undersigned fail to make full payment of principal or interest for a
period of 10 days or more after the due date thereof, the whole unpaid balance
on this Note of principal and interest shall become immediately due at the
option of the holder of this Note. Payments of principal and interest shall be
made in lawful money of the United States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event the undersigned shall cease to be an employee or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
____________________________________
____________________________________
<PAGE> 1
EXHIBIT 10.5
DEMAND PROMISSORY NOTE
======================
$1,000,000.00 March 8, 1996
============= =============
For value received, EMCO Recycling, Corp. (Borrower), an Arizona
corporation, does hereby promise to pay to General Parametrics Corporation,
(Lender), in lawful money of the United States of America, the principal amount
of One Million dollars ($1,000,000.00) together with interest at the rate of
nine percent (9.0%) per annum calculated from March 8, 1996. The principal and
all accrued interest on this note shall be fully and immediately DUE AND
PAYABLE ON DEMAND by lender. Unless and until such demand is made, this Note
shall be payable monthly, interest only, beginning April 8, 1996.
Prepayment: Borrower shall have the right to prepay this Note at
any time, in whole or in part, without limitation or penalty. Borrower
expressly waives demand, presentment for payment, notice of dishonor, protest,
notice of protest, and diligence in collection, and consents that the time any
payment or any part thereof is to be made may be extended by the Lender hereof.
Borrower promises to pay all costs and expenses of collection,
including reasonable attorney's fees, in the event the Note or any portion
hereof, is placed in the hands of an attorney for collection and such
collection is effected without suit. Borrower promises to pay reasonable
attorney's fees as determined by the Court and all other costs, expenses and
fees if suit is instituted to collect this Note or any portion thereof.
Dated this 8th day of March, 1996, at Phoenix,
Maricopa County, Arizona
EMCO Recycling Corp.
By /s/ GEORGE O. MOOREHEAD
--------------------------
George O. Moorehead, President
<PAGE> 1
EXHIBIT 10.6
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement") is made as of April
11, 1996 among General Parametric Corporation ("Subordinated Creditor"),
Fidelity Funding of California, Inc. ("Senior Creditor") and EMCO Recycling
Corp. ("Debtor").
WITNESSETH:
WHEREAS Debtor has executed a promissory note payable to Subordinated
Creditor in the amount of $1,950,000.00 dated March 8, 1996 and April 11, 1996
(such promissory note and all renewals, extensions and modifications thereof
are referred to herein as the "Subordinate Note"); and
WHEREAS, Debtor and Senior Creditor have entered into a Loan and
Security Agreement (as from time to time supplemented, amended or restated, the
"Loan Agreement"), dated August 29, 1995, pursuant to which Senior Creditor has
agreed to advance funds to Debtor from time to time, and
WHEREAS, the execution and delivery of this Agreement by Subordinate
Creditor is a condition precedent to Senior Creditor's obligation to advance
funds to Debtor pursuant to the Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. As used herein, the terms "Agreement", "Senior
Creditor" "Subordinated Creditor", "Debtor", and "Loan Agreement" shall have the
meanings assigned to such terms above, and the following terms shall have the
following meanings:
(a) "Insolvency Proceeding" means, with respect to any Person, any
voluntary or involuntary liquidation, dissolution, sale of all or substantially
all of the assets, marshaling of assets or liabilities, receivership,
conservatorship, assignment for the benefit of creditors, insolvency,
bankruptcy, reorganization, arrangement or composition of such person or entity
(whether or not pursuant to bankruptcy, insolvency or other similar laws) and
any other proceeding under laws for the protection of debtors involving such
Person or any of its assets.
<PAGE> 2
(b) "Obligations" means, with respect to any creditor, all debts,
liabilities and obligations (of any character whatsoever) of Debtor (whether as
principal, surety, endorser, guarantor, accommodation party or otherwise) owed
to such creditor now existing or hereafter incurred or arising, whether
principal, interest, fees or expenses, direct, contingent, primary, secondary,
joint and several, joint or several, or otherwise, and irrespective of the
manner in which, or the Person or Persons in whose favor such debts,
liabilities, or other obligations may at their inception have been, or may
hereafter be, created, or the manner in which such creditor may have acquired
rights with respect thereto.
(c) "Person" means an individual, corporation, partnership,
association, joint stock company, trust or trustee thereof, estate or executor
thereof, unincorporated organization or joint venture, court or governmental
unit or any agency or subdivision thereof, or any other legally recognizable
entity.
(d) "Senior Obligations" means all Obligations of Debtor to Senior
Creditor, including without limitation, all Obligations of Debtor under the Loan
Agreement.
(e) "Subordinated Obligations" means all Obligations of Debtor to
Subordinated Creditor, including without limitation, all Obligations of Debtor
under the Subordinate Note.
(f) "Termination Date" means the ninetieth day following the
earliest date after the date hereof on which all Senior Obligations have been
paid in cash and satisfied in full and Senior Creditor has no outstanding
commitment (whether or not conditioned on the satisfaction of any condition
precedent) to advance or loan monies to Debtor; provided, however, that this
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Senior Obligations is rescinded or must
otherwise be returned by Senior Creditor in connection with an Insolvency
Proceeding involving Debtor, as though such payment had not been made.
Unless the context otherwise requires or unless otherwise provided
herein, references in this Agreement to a particular agreement, instrument or
document (including, but not limited to, references to promissory notes, loan
agreement, guarantees and security documents) also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document.
<PAGE> 3
2. SUBORDINATION OF OBLIGATION. Subordinated Creditor expressly
and in all respects subordinates and makes junior and inferior (i) the
Subordinated Obligations and the payment and enforcement of the Subordinated
Obligations to (ii) the Senior Obligations and the payment and enforcement of
the Senior Obligations (including post petition interest whether or not such
interest is an allowed claim enforceable against Debtor in an Insolvency
Proceeding under applicable law). Except as specifically set forth herein,
prior to the Termination Date, Subordinated Creditor shall not accept, receive
or collect (by set-off or other manner) any payment or distribution on account
of, or ask for, demand or accelerate, directly or indirectly, any Subordinated
Obligation, and Debtor shall not make any such payment or distribution.
3. PERMITTED PAYMENT. Notwithstanding the provisions of Section
2 above. the Subordinated Creditor shall be entitled to collect and receive
scheduled payments of interest with respect to the Subordinated Obligations
(pursuant to the terms of the agreements with respect thereto as the same are
in effect on the date of this Agreement) unless and until an event of default
shall have occurred under the Loan Agreement or any other agreement between
Debtor and Senior Creditor.
4. SUBORDINATION OF LIENS. Any liens, charges, security
interests, pledges, assignments or other encumbrances securing the Subordinated
Obligations are, and will at all times prior to the Termination Date be,
subject, subordinate and inferior to all liens, charges, security interests,
pledges, assignments and other encumbrances securing the Senior Obligations.
Nothing contained herein shall be construed as a consent by Senior Creditor to
any liens, charges, security interests, pledges, assignments or other
encumbrances prohibited by the Loan Agreement.
5. ASSETS WRONGLY RECEIVED. If Subordinated Creditor receives
any payment or distribution of any kind (whether in cash, securities or other
property) in contravention of this Agreement, it shall hold such payment or
distribution in trust for Senior Creditor, shall segregate the same from other
cash or assets it holds and shall immediately deliver the same to Senior
Creditor in the form received by Subordinated Creditor (together with any
necessary endorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of noncash property or securities) for, the payment or
prepayment of the Senior Obligations.
6. SPECIFIC PERFORMANCE. Senior Creditor is hereby authorized to
demand specific performance of this Agreement at any time when Subordinated
Creditor shall have failed to comply with any of the provisions of this
Agreement applicable to it whether or not Debtor has complied with the
provisions of this Agreement applicable to it. Debtor and Subordinated
Creditor hereby irrevocably waive any defense based upon the adequacy of a
remedy at law which might be asserted as a bar to such remedy of specific
performance and waive any requirement of the posting of any bond which might
otherwise be required before such remedy of specific performance is granted.
7. NO ACCELERATION OR INSTITUTION OF COLLECTION PROCEEDINGS.
Prior to the Termination Date, Subordinated Creditor shall not accelerate or
collect or attempt to collect from Debtor all or any part of Subordinated
Obligations, whether through the commencement or joinder of an action or
proceeding (judicial or otherwise) or an Insolvency Proceeding, the enforcement
of any rights against any property of Debtor, including without limitation any
such enforcement by foreclosure, repossession or sequestration proceedings, or
otherwise, except where Senior Creditor shall either request in writing that
Subordinated Creditor join it in bringing proceedings against Debtor or request
in writing that Subordinated Creditor file a claim in connection with any such
proceeding.
<PAGE> 4
8. INSOLVENCY PROCEEDINGS, ETC.: POWER OF ATTORNEY.
(a) Upon any distribution of all or any of the assets of Debtor,
the dissolution, winding up, liquidation or reorganization of Debtor, whether
in any bankruptcy, insolvency, arrangement, reorganization or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of Debtor or otherwise any payment or
distribution of any kind (whether in cash, securities or other property) which
otherwise would be payable or deliverable upon or with respect to the
Subordinated Obligations shall be paid and delivered directly to Senior
Creditor for application (in the case of cash) to or as collateral (in the case
of non-cash property or securities) for the payment or prepayment of the Senior
Obligations until the Senior Obligations (including post petition interest
whether or not such interest is an allowed claim enforceable against Debtor in
an Insolvency Proceeding under applicable law) shall have been paid in full.
(b) In the event of any Insolvency Proceeding involving Debtor
prior to the Termination Date, Senior Creditor is hereby appointed the
attorney-in-fact for Subordinated Creditor with respect to the Subordinated
Obligations to take the following actions if Senior Creditor chooses to do so:
(i) demand, sue for, collect and receive any and all such cash or other assets,
file any claim, proof of claim or similar instrument, and institute such other
proceedings which Senior Creditor may in its sole and absolute discretion deem
necessary, advisable or appropriate to have the Subordinated Obligations claim
allowed in such Insolvency Proceeding, to collect the Subordinated Obligations,
and to enforce the terms of this Agreement, and (ii) to vote for Subordinated
Creditor with respect to the Subordinated Obligations.
9. ASSIGNMENT OF SUBORDINATED OBLIGATIONS. Prior to the
Termination Date, Subordinated Creditor shall not (i) transfer, assign, pledge,
encumber or otherwise dispose of any right, claim or interest in all or any
part of the Subordinated Obligations, (ii) subordinate any of the Subordinated
Obligations to any Obligations other than the Senior Obligations; or (iii)
permit any amendment or modification to the terms of the Subordinated
Obligations or any agreement or document executed in connection therewith,
without the prior written consent of Senior Creditor. Subordinated Creditor
shall cause each instrument to which it is a party that evidences all or any
part of the Subordinated Obligations to bear upon its face a conspicuous
statement or legend to the effect that such instrument and the indebtedness
evidenced thereby are subordinate to the payment of all Senior Obligations
pursuant to this Agreement, and Subordinated Creditor shall, in the case of any
Subordinated Obligations to which it is a party that is not evidenced by any
instrument, upon Senior Creditor's request, cause such Subordinated Obligations
to be evidenced by an appropriate instrument or instruments endorsed with such
statement or legend.
10. OBLIGATIONS HEREUNDER NOT AFFECTED. No action or inaction of
Senior Creditor or any other Person, and no change of law or circumstances,
shall release or diminish the obligations, liabilities, agreements or duties
hereunder of Subordinated Creditor or Debtor, affect this Agreement in any way
or afford any party any recourse against Senior Creditor. Without limiting the
generality of the foregoing, none of the obligations, liabilities,
<PAGE> 5
agreements and duties of Subordinated Creditor or Debtor under this Agreement
shall be released, diminished, impaired, reduced or affected by the occurrence
of any of the following at any time or from time to time, even if occurring
without notice to or without the consent of Subordinated Creditor or Debtor
(any right of any such parties to be so notified or to require such consent
being hereby waived):
(a) the release by operation of law of Debtor from an obligation
to pay any of the Senior Obligations;
(b) any invalidity, deficiency, illegality, or unenforceability
of any of the Senior Obligations or the documents and instruments evidencing,
governing or securing the Senior Obligations, in whole or in part, any bar
by any stature of limitations or other law to recovery on any of the Senior
Obligations, or any defense or excuse for failure to perform on account of
force majeure, act of God, casualty, impracticability or other defense or
excuse with respect to the Senior Obligations whatsoever;
(c) the taking or accepting by Senior Creditor of any additional
security for or subordination to any or all of the Senior Obligations;
(d) any release, discharge, surrender, exchange, subordination,
nonperfection impairment, modification or stay of actions or lien enforcement
proceedings against, or loss of any security at any time existing with respect
to, the Senior Obligations,
(e) the modification or amendment of, or waiver of compliance
with, any terms of the documents and instruments evidencing, governing or
securing the Senior Obligations;
(f) the insolvency, bankruptcy or disability of Subordinated
Creditor or Debtor or the filing or commencement of any Insolvency Proceeding
involving Subordinated Creditor or Debtor or other proceeding with respect
thereto;
(g) any increase or decrease in the amount of the Subordinated
Obligations or in the time, manner or terms in accordance with which Debtor is
to pay the Subordinated Obligations, or any adjustment, indulgence,
forbearance, waiver or compromise that might be granted or given to Debtor
with respect to the Subordinated Obligations;
(h) any neglect, delay, omission, failure or refusal of Senior
Creditor to take or prosecute any action for the collection of the Subordinated
Obligations or to foreclosure or take or prosecute any action in connection
with any instrument or agreement evidencing or securing all or part of the
Subordinated Obligations;
(i) any release of the proceeds of collateral which may come into
the possession of Senior Creditor or its affiliates;
<PAGE> 6
(j) any judgment, order or decree by court or governmental agency
or authority that a payment or distribution by Debtor to Senior Creditor upon
the Senior Obligations is a preference under applicable bankruptcy or similar
laws for the protection of creditors or is for any other reason required to be
refunded by Senior Creditor or paid by Senior Creditor to any other person;
(k) the release or discharge for any reason of any other party
hereto from any of its obligations under this Agreement;
(l) any modification of, or waiver of compliance with, any terms
of this Agreement with respect to any party hereto; or
(m) any neglect, delay, omission, failure or refusal of Senior
Creditor to take or prosecute any action against any party in connection with
this Agreement.
11. WAIVER. Subordinated Creditor and Debtor hereby waive
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Senior Obligations and this Agreement, and any requirement that
Senior Creditor exhaust any other right or take any action against Subordinated
Creditor or Debtor or any other Person, or any collateral.
12. SUBROGATION. No payment or distribution to Senior Creditor
pursuant to the provisions of this Agreement shall entitle Subordinated
Creditor to exercise any rights of subrogation in respect thereof prior to the
Termination Date. After the Termination Date, and provided that no payments
are voidable, Subordinated Creditor shall be subrogated to the rights of Senior
Creditor to receive distributions applicable to Senior Obligations to the
extent that distributions otherwise payable to Subordinated Creditor have been
applied to the payment of Senior Obligations. A distribution made under this
Agreement to Senior Creditor, which otherwise would have been made to
Subordinated Creditor, is not, as between Subordinated Creditor and Debtor a
payment by Debtor to the Subordinated Obligations.
13. REPRESENTATIONS AND WARRANTIES OF SUBORDINATED CREDITOR.
Subordinated Creditor hereby represents and warrants to Senior Creditor that:
(a) the recitals at the beginning of this Agreement are
true and correct in all respects;
(b) Subordinated Creditor is duly organized, validly
existing and in good standing under the laws of the state of its organization
or formation and Subordinated Creditor has all requisite power and authority
to execute, deliver and perform its obligations under the Agreement;
(c) the execution, delivery and performance by
Subordinated Creditor of this Agreement do not and will not contravene any
law or governmental regulation or any contractual restriction binding on or
affecting Subordinated Creditor or any of its properties,
<PAGE> 7
and do not and will not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect
to any of its properties;
(d) no authorization of or approval or other action by,
and no notice to or registration or filing with, any governmental authority
or other regulatory body or other Person is required for the due execution,
delivery and performance by Subordinated Creditor of this Agreement;
(e) this Agreement is a legal, valid and binding
obligation of Subordinated Creditor, enforceable against Subordinated Creditor
in accordance with its terms except as limited by bankruptcy, insolvency or
other laws of general application relating to the enforcement of creditors'
rights and by general equitable principles; and
(f) there is no action, suite or proceeding pending or, to
the knowledge of Subordinated Creditor, threatened against or otherwise
affecting Subordinated Creditor before any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality which may
materially and adversely affect Subordinated Creditor's financial condition or
its ability to perform its obligations hereunder.
14. NO ORAL CHANGE. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Subordinated
Creditor and Senior Creditor, and no waiver of any provision of this Agreement,
and no consent to any departure by Subordinated Creditor therefrom, shall be
effective unless it is in writing and signed by Senior Creditor, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT AND
INSTRUMENT MADE UNDER THE LAWS OF THE STATE OF CALIFORNIA AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF CALIFORNIA AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
16. INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision
of this Agreement shall be determined to be illegal or unenforceable, all other
terms and provisions hereof shall nevertheless remain effective and shall be
enforced to the fullest extent permitted by applicable law.
17. HEADINGS AND REFERENCES. The headings used herein are for
purposes of convenience only and shall not be used in construing the provisions
hereof. The words "this Agreement," "herein", "hereby", "hereof" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The word "or" is not exclusive.
Pronouns in masculine, feminine and neuter genders shall be construed to
include any other gender, and words in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise requires.
<PAGE> 8
18. ADDITIONAL DOCUMENTATION. Subordinated Creditor agrees to
execute any further instruments and to take all other action which, in Senior
Creditor's opinion, may become necessary or appropriate to carry out fully the
purposes of this Agreement.
19. AGREEMENT BY DEBTOR. Debtor hereby agrees to act in
compliance with the terms and restrictions of this Agreement and, in particular
and without limitation, to make no payment on the Subordinated Obligations to
Subordinated Creditor in violation of this Agreement and, upon request of
Senior Creditor in accordance with this Agreement, to pay all Subordinated
Obligations as they come due to Senior Creditor.
20. NOTICES. All notices, requests, consents, demands and other
communications required or permitted under this Agreement shall be in writing
and, unless otherwise specifically provided in such Agreement, shall be deemed
sufficiently given or furnished if delivered by personal delivery, by telegram
or telex, by expedited delivery service with proof of delivery, or by
registered or certified United States mail, postage prepaid, at the addresses
specified below (unless changed by similar notice in writing given by the
particular party whose address is to be changed). Any such notice or
communication shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or, in the
case of telegram or telex, upon receipt.
Debtors Address: EMCO Recycling Corp.
P 0 Box 21366
Phoenix, AZ 85036
Subordinated Creditor's
Address: General Parametrics Corporation
1250 Ninth Street
Berkeley, CA 94710
Senior Creditor's
Address Fidelity Funding of California, Inc.
275 East Baker Street, Suite A
Costa Mesa, CA 92626
21. SUCCESSORS AND ASSIGNS. Subordinated Creditor's rights or
obligations hereunder may not be assigned or delegated, but this Agreement and
such obligations shall pass to and be fully binding upon the successors of
Subordinated Creditor, as well as Subordinated Creditor. This Agreement shall
apply to and inure to the benefit of the parties hereto and their successors or
permitted assigns. Without limiting the generality of the immediately
preceding sentence, Senior Creditor may assign or otherwise transfer its rights
under this Agreement as provided in the Loan Agreement.
<PAGE> 9
22. COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute
one and the same Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
Subordinated Creditor: Senior Creditor:
General Parametrics Corporation Fidelity Funding of California, Inc.
By: GERARD M. JACOBS By: MICHAEL D. HADDAD
---------------- -----------------
Name: Gerard M. Jacobs Name: Michael Haddad
---------------- -----------------
Title: President Title: President
---------------- -----------------
Debtor:
EMCO Recycling Corp.
By: C R McCURDY
-----------
Name: C R McCurdy
-----------
Title: CFO
-----------
<PAGE> 1
Exhibit 10.7
DEMAND PROMISSORY NOTE
$950,000.00 APRIL 11, 1996
For value received, EMCO Recycling Corp. (Borrower), an Arizona
corporation, does hereby promise to pay to General Parametrics Corporation
(Lender), in lawful money of the United States of America, the principal amount
of Nine-Hundred Fifty Thousand dollars ($950,000.00) together with interest at
the rate of nine percent (9.00%) per annum, calculated from April 11, 1996.
The principal and all accrued interest on this note shall be fully and
immediately DUE AND PAYABLE ON DEMAND by lender. Unless and until such demand
is made, this Note shall be payable monthly, interest only, beginning May 11,
1996.
Prepayment: Borrow shall have the right to prepay this Note at any
time, in whole or in part, without limitation or penalty.
Borrower expressly waives demand, presentment for payment, notice of
dishonor, protest, notice of protest and diligence in collection, and consents
that the time any payment or any part thereof is to be made may be extended by
the Lender hereof.
Borrower promises to pay all costs and expenses of collection,
including reasonable attorney's fees, in the event the Note, or any portion
hereof, is placed in the hands of an attorney for collection and such
Collection is effected without suit. Borrower promises to pay reasonable
attorney's fees as determined by the Court and all other costs, expenses and
fees i.c. suit is instituted to collect this Note or any portion thereof.
Dated this 11th day of April, 1996 at Phoenix, Maricopa County,
Arizona.
EMCO Recycling Corp.
By: /s/ GEORGE MOOREHEAD
---------------------------
George Moorehead, President/CEO
<PAGE> 1
Exhibit 10.8
EXCLUSIVE SCRAP METAL SALES AGREEMENT
THIS EXCLUSIVE SCRAP METAL SALES AGREEMENT (the "Agreement") is
entered into by and between Empire Metals, Inc., an Arizona corporation
("Empire"), and EMCO Recycling Corp., an Arizona corporation ("EMCO").
RECITALS
A. Empire presently owns certain scrap metal inventory, raw
materials, products, salvage and other materials relating to the metal
recycling and scrap metal business (all such materials being collectively
hereinafter referred to as the "Inventory");
B. Empire and EMCO have agreed that Empire will not add to or
increase its current level of Inventory and that Empire will sell the Inventory
exclusively to EMCO and Will not dispose of any of the Inventory except via
sale to EMCO; and
C. Empire is willing to enter into this Agreement at the request
of and as an accommodation to General Parametric Corporation ("GPAR") and EMCO,
and in consideration of the benefits flowing to Empire under that certain
Merger Agreement dated December 1, 1995, as amended by that certain First
Amendment to Merger Agreement dated December 1995, and as further amended by
that certain Second Amendment to Merger Agreement dated February 16, 1996, each
of which were entered into by and among GPAR, GPAR Merger, Inc., Empire, EMCO,
Copperstate Metals, Inc., Gerald Zack, Raymond Zack, Harold Rubenstein, Donald
Moorehead and George Moorehead.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, Empire and EMCO agree as
follows:
1. No Increases to Inventory. Empire represents, warrants,
covenants and agrees that it will not purchase or acquire any additional items
of Inventory after the date of this Agreement, or otherwise increase hereafter
in any way the presently existing Inventory.
2. Exclusivity. Empire agrees that it will sell its existing
Inventory solely and exclusively to EMCO or a designee of EMCO. Each such sale
will be in amounts requested by EMCO and shall be at EMCO's then existing
pricing schedule for the purchase of such materials.
3. Inspection. Empire agrees that EMCO, or any of its designated
representatives, may inspect the Inventory on Empire's premises during normal
business hours upon reasonable notice to Empire.
<PAGE> 2
4. Location of Inventory. Empire further represents, warrants,
covenants and agrees that all of the Inventory is presently located at 2010
West Lower Buckeye Drive, Phoenix, Arizona, and that, except for deliveries of
items of Inventory sold to EMCO, none of the Inventory will be removed from
Empire's premises without the prior written consent of EMCO.
5. Term. Unless previously terminated by the express written
agreement of the parties, this agreement shall remain in full force and effect
until the earlier of: (i) the sale of all of Empire's Inventory to EMCO
pursuant to the terms of this agreement; or (ii) April 30, 2007.
6. General Provisions.
a. Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage prepaid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(i) IF TO EMCO TO:
EMCO Recycling Corp.
Attn: George Moorehead
3700 W. Lower Buckeye Drive
Phoenix, Arizona 85009
WITH A COPY TO:
Mr. Gerard Jacobs
General Parametrics, Corp.
7600 Augusta Street
River Forest IL 60305
Telecopy No.: (708) 366-0891
(ii) IF TO EMPIRE:
Empire Metals, Inc.
Attn: Harold Rubenstein
2010 W. Lower Buckeye Drive
Phoenix, Arizona 95009
- 2 -
<PAGE> 3
WITH A COPY TO:
Mr. Rob Kimball
Sacks Tierney, P.A.
2929 N. Central Avenue
Fourteenth Floor
Phoenix, Arizona 85012-2742
Telecopy No.: (602) 279-2027
7. Entire Agreement. This Agreement and the Merger Agreement
contain the entire understanding of the parties in respect of its subject
matter and supersede all prior agreements and understandings (oral or written)
between or among the parties with respect to such subject matter.
8. Amendment: Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written
instrument executed by all parties. No failure to exercise, and no delay in
exercising, any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other
provision, nor shall any waiver be implied from any course of dealing between
the parties. No extension of time for performance of any obligations or other
acts hereunder or under any other agreement shall be deemed to be an extension
of the time for performance of any other obligations or any other acts. The
rights and remedies of the parties under this Agreement are in addition to all
other rights and remedies, at law or equity, that they may have against each
other.
9. Binding Effect: Assignment. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which together shall be an original but all of which
together shall constitute one and the same instrument.
11. Interpretation. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitations" Time shall be of the
essence in this Agreement.
-3-
<PAGE> 4
12. Governing Law: Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Arizona applicable to contracts executed and to be wholly performed
within such state.
13. Arm's Length Negotiations . Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the Opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
14. Attorneys' Fees. If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret provisions
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees and all other costs and expenses of litigation from the other
party, which amounts may be set by the court in the trial of such action or may
be enforced in a separate action brought for that purpose, and which amounts
shall be in addition to any other relief which may be awarded.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year written below.
EMPIRE METALS, INC.,
an Arizona corporation
Date: April 11, 1996 By: HAROLD RUBENSTEIN
-------------- ----------------------------
Harold Rubenstein, President
EMCO RECYCLING CORP.,
an Arizona corporation
Date: April 11, 1996 By: GEORGE MOOREHEAD
-------------- ---------------------------
George Moorehead, President
4
<PAGE> 1
Exhibit 10.9
ASSIGNMENT OF LEASE
(EMPIRE)
This Assignment is made and entered into by and between EMPIRE METALS,
INC., an Arizona corporation, ("Assignor"), and EMCO RECYCLING CORP, an Arizona
corporation ("Assignee").
WITNESSETH:
WHEREAS, there presently exists (i) that certain Lease dated March 1,
1985 by and between the Atchison, Topeka and Santa Fe Railway Company and
Empire Metals, Inc., (ii) that certain Lease Agreement dated January 1, 1990,
between Empire Metals, Inc. and Superior Companies, as amended by that certain
First Amendment to Lease Agreement, effective April 15, 1994; and (iii) that
certain Lease dated March 29, 1988 by and between The Bennett Family Trust and
Empire Metals, Inc. (which two leases an collectively referred to as the
"Assigned Leases"); and
WHEREAS, Assignee desires to assume from Assignor, and Assignor
desires to assign to Assignee, all of Assignor's interest as lessee under
the Assigned Leases;
NOW, THEREFORE, for and in consideration of premises and the mutual
promises and covenants hereinafter set forth, together with the sum of Ten and
No/100 Dollars ($10.00) cash in hand paid by Assignee, together with other good
and valuable consideration, the receipt and sufficiency of which an hereby
acknowledged by Assignor, Assignor does hereby ASSIGN, TRANSFER, SET-OVER and
DELIVER unto Assignee all of Assignor's interest as lessee under the Assigned
Leases and all rights, benefits and privileges of the lessee thereunder and
under any guaranties or other documents or agreements securing the performance
of the lessee under the Assigned Leases.
TO HAVE AND TO HOLD the above rights and interests unto Assignee, its
successors and assigns forever, and Assignor does hereby bind itself, its
successors and assigns to warrant and forever defend, all and singular, the
foregoing rights and interests unto the said Assignee, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the
same, or any part thereof, by, through or under Assignor, but not otherwise.
All the covenants, term and conditions set forth herein shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, devisees, personal representatives, successors and assigns.
EXECUTED this 11th of April 1996.
ASSIGNOR:
EMPIRE METALS, INC., an Arizona corporation
By: HAROLD RUBENSTEIN
----------------------------
Harold Rubenstein, President
ASSIGNEE:
EMCO RECYCLING CORP., an Arizona
corporation
By: GEORGE MOOREHEAD
---------------------------
George Moorehead, President
<PAGE> 1
Exhibit 10.10
ASSIGNMENT OF LEASE
(EMPIRE CAN)
This Assignment is made and entered into by and between EMPIRE CAN
D.B.A. C.A.N.S. RECYCLING, INC., ("Assignor"), and EMCO RECYCLING CORP., an
Arizona corporation ("Assignee").
W I T N E S S E T H:
WHEREAS, there presently exists a certain lease covering those certain
premises (consisting of land and buildings and improvements) located on the
real property (the "Property") more particularly described in that certain
Lease dated January 12, 1989, by and between Pearce Distributing Co. and Empire
Can D.B.A. C.A.N.S. Recycling, Inc. (the "Assigned Lease"); and
WHEREAS, Assignee desires to assume from Assignor, and Assignor desires
to assign to Assignee, all of Assignor's interest as lessee under the Assigned
Lease;
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises and covenants hereinafter set forth, together with the sum of Ten and
No/100 Dollars ($10.00) cash in hand paid by Assignee, together with other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Assignor, Assignor does hereby ASSIGN, TRANSFER, SET-OVER and
DELIVER unto Assignee all of Assignor's interest as lessee under the Assigned
Lease and all rights, benefits and privileges of the lessee thereunder and
under any guaranties or other documents or agreements securing the performance
of the lessee under the Assigned Lease.
TO HAVE AND TO HOLD the above rights and interests unto Assignee, its
successors and assigns forever, and Assignor does hereby bind itself, its
successors and assigns, to warrant and forever defend, all and singular, the
foregoing rights and interests unto the said Assignee, its successors and
assigns, against every person whomsoever lawfully claiming or to claim the
same, or any part thereof, by, through or under Assignor, but not otherwise.
All the covenants, terms and conditions set forth herein shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, devisees, personal representatives, successors and assigns.
EXECUTED this 11th day of April, 1996.
ASSIGNOR:
EMPIRE CAN D.B.A. C.A.N.S. RECYCLING,
INC., an Arizona corporation
By: HAROLD RUBENSTEIN
---------------------------
Harold Rubenstein, President
ASSIGNEE:
EMCO RECYCLING CORP., an Arizona
corporation
By: GEORGE MOOREHEAD
---------------------------
George Moorehead, President
<PAGE> 1
Exhibit 10.11
SPECIFIC GUARANTY
In consideration of the transactions set forth in that certain
Assumption and Indemnity Agreement (the "Agreement") of even date herewith by
and between COPPERSTATE METALS, INC., an Arizona corporation ("Indemnitor"),
and EMCO RECYCLING CORP., an Arizona corporation ("Indemnitee"), the
undersigned agree as follows:
1. Guaranty. The undersigned hereby jointly and severally
guarantee unconditionally and promise to pay to Indemnitee or its order all of
the obligations of Indemnitor to Indemnitee under the terms of the Agreement.
The undersigned agree that immediately upon the failure in payment or
performance when due of any or all of the obligations of Indemnitor as set
forth in the Agreement, the undersigned shall pay to Indemnitee the full amount
of or perform in full such obligations of Indemnitor as are then due or in
default. Payment shall be made in lawful money of the United States of
America.
2. Waivers. The undersigned hereby waive (a) any right to
require Indemnitee to proceed against Indemnitor or any other person, to
proceed against or exhaust any security held by it at any time, or to pursue
any other remedy in its power before proceeding against the undersigned; (b)
the defense of the statute of limitations in any action hereunder or for the
collection of any indebtedness or the performance of any obligation hereby
guarantied; (c) any defense that may arise by reason of the incapacity, lack of
authority, death or disability of, or revocation hereof by, any other or
others, or the failure of Indemnitee to file or enforce a claim against the
estate (probate, bankruptcy, or any other proceeding) of any other or others;
(d) any defense based upon an election of remedies by Indemnitee, including
without limitation an election to proceed by non-judicial foreclosure, which
destroys or otherwise impairs the subrogation rights of the undersigned or the
right of the undersigned to rights of the undersigned or the right of the
undersigned to proceed against Indemnitor for reimbursement, or both; (e) the
provisions of Sections 12-1641, 12-1646, and 44-142 of the Arizona Revised
Statutes; and (f) notice of acceptance of this Guaranty.
3. Rights of Indemnitee. Without the further consent of the
undersigned, Indemnitee may (a) alter, compromise, extend, or change the time
or manner for the payment or performance of any obligation hereby guarantied;
(b) release, substitute, or add any one or more guarantors or endorsers; (c)
accept additional or substituted security therefor; or (d) release or
subordinate any security therefor. No exercise or non-exercise by Indemnitee
or any guarantor, endorser, or any other person and no change, impairment, or
suspension of any right or remedy of Indemnitee shall in any way affect any of
the obligations of the undersigned hereunder or any security furnished by the
undersigned or give the undersigned any recourse against Indemnitee.
4. No Right of Subrogation. The undersigned shall have no right
of subrogation, including any right under Section 12-1643 of the Arizona
Revised Statutes, and waives any right
<PAGE> 2
to enforce any remedy which Indemnitee now has or may hereafter have against
Indemnitor and any benefit of, and any right to participate in, any security
now or hereafter held by Indemnitee.
5. Liability of Undersigned. The amount of liability of the
undersigned and all rights, powers, and remedies of Indemnitee hereunder and
under any other agreement now or at any time hereafter in force between
Indemnitee and the undersigned relating to the obligations hereunder shall be
cumulative and not alternative, and such rights, powers, and remedies shall be
in addition to all rights, powers, and remedies given to Indemnitee by law.
This Guaranty is in addition to and exclusive of the guaranty of any other
guarantor of the obligations hereunder. The liability of each of the
undersigned shall be joint and several.
6. Obligations Independent of Indemnitor. The obligations of the
undersigned hereunder are independent of the obligations of Indemnitor and, in
the event of any default hereunder, a separate action or actions may be brought
and prosecuted against the undersigned whether or not Indemnitor is joined
therein or a separate action or actions are brought against Indemnitor.
Indemnitee may maintain successive actions for other defaults. Its rights
hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions until and
unless all indebtednesses and obligations hereby guarantied have been paid and
fully performed.
7. Attorneys' Fees. The undersigned agree that the prevailing
party in any disputed claim under this Agreement shall be entitled to reasonable
attorneys' fees and all costs and other expenses which the prevailing party
expends or incurs in collecting the obligations hereunder or in enforcing this
Guaranty in any action in which the prevailing party prevails against any other
party to this Agreement whether or not suit is filed.
8. Severability. Should any one or more provisions of this
Guaranty be determined to be illegal or unenforceable, such provision or
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable, and all other provisions nevertheless shall
be effective.
9. Binding Effect: Assignability. This Guaranty shall inure to the
benefit of Indemnitee, its successors and assigns, including the assignees of
any obligations hereby guarantied, and bind the respective heirs, executors,
administrators, successors, and assigns of the undersigned. This Guaranty is
assignable by Indemnitee, and when so assigned the undersigned shall be liable
to the assignees under this Guaranty without in any manner affecting the
liability of the undersigned hereunder. Whether or not this Guaranty is
separately assigned, however, it shall automatically inure to the benefit of and
be enforceable by any holder of any of the obligations guarantied hereby.
10. Waiver or Release from Obligations. No provision of this
Guaranty or right of Indemnitee hereunder can be waived nor can any guarantor be
released from his or her obligations hereunder except by a writing duly executed
by an authorized officer of Indemnitee.
11. Applicable Law: Jurisdiction. This Guaranty shall be governed
and construed in accordance with the laws of the State of Arizona. The
undersigned agree that any litigation
2
<PAGE> 3
concerning this Guaranty shall have Maricopa County, Arizona, as its proper
venue and consent to personal jurisdiction therein.
12. Exercise of Indemnitee's Rights. No failure on the part of
Indemnitee to exercise any of its rights hereunder arising upon any default
shall be construed to prejudice its rights in the event of any other or
subsequent default. No delay on the part of Indemnitee exercising any of such
rights shall be construed to preclude it from the exercise thereof at any time
during the continuance of such default.
13. Counterparts. This Agreement may be executed in counterparts,
each of which, when executed shall be deemed an original.
DATED this 11th day of April, 1996
RAYMOND ZACK
------------------------
RAYMOND ZACK
DEBORAH ZACK
------------------------
DEBORAH ZACK
DAVID M. ZACK
------------------------
DAVID M. ZACK
ELAYNE ZACK
------------------------
ELAYNE ZACK
GERALD ZACK
------------------------
GERALD ZACK
PATRICIA ZACK
------------------------
PATRICIA ZACK
3
<PAGE> 1
Exhibit 10.12
COLLATERAL AGREEMENT
(COPPERSTATE)
This Collateral Agreement (the "Agreement") is made and entered into as
of the 11th day of April, 1996, by and between COPPERSTATE METALS, INC., an
Arizona Corporation ("Debtor"), and GENERAL PARAMETRICS CORPORATION, a Delaware
corporation ("Secured Party"), as follows:
For value received, Debtor hereby grants to the Secured Party a
security interest in the following described property, hereinafter referred to
as the "Collateral", to-wit: 103,496 shares of the common capital stock of
Secured Party, par value $.01 per share, together with all stock dividends,
stock splits, and distribution of shares of subsidiaries or other assets which
may at any time arise from such shares (but excluding any cash dividends) (such
shares, including any shares derived from stock dividends and stock splits are
hereinafter referred to as the "Shares"), to secure during the term of this
Agreement: (1) Debtor's obligations pursuant to that certain Merger Agreement,
dated December 1, 1995, by and among Debtor, Secured Party, EMCO Recycling
Corp., GPAR Merger, Inc., Empire Metals, Inc., Donald Moorehead, George
Moorehead, Raymond Zack, David Zack, Gerald Zack, and Harold Rubinstein, as
amended by the First Amendment to Merger Agreement dated December____, 1995, as
further amended by the Second Amendment to Merger Agreement dated February 16,
1996 (the "Merger Agreement"), and (2) all reasonable costs and expenses
incurred by the Secured Party in the enforcement of Debtor's obligations under
the Merger Agreement (with (1) and (2) together herein referred to as the
"Obligations").
The Collateral will be kept at the office of Secured Party.
DEBTOR WARRANTS, COVENANTS AND AGREES:
1. Title. Except for the security interest hereby granted, the
Collateral is free from any lien, security interest, encumbrance or claim, and
the Debtor will, at the Debtor's sole cost and expense, defend any action which
may affect the Secured Party's interest herein, or the Debtor's title to the
Collateral. The Shares to be held pursuant to this Agreement shall be issued
with certificates titled in the name of the Debtor.
2. Financing Statement. No financing statement covering the
Collateral or any part thereof or any proceeds thereof is on file in any public
office.
3. Protection of Collateral. In order to permit Secured Party,
in the event of default hereunder, to accomplish transfer of the Shares
constituting the Collateral, the Debtor shall execute in blank, such stock
powers as Secured Party shall require, and such execution shall remain
irrevocable during the term of this Agreement. The originals of such stock
powers shall be held by Secured Party throughout the term of this Agreement in
accordance with the terms hereof. The stock certificates for the Shares,
together with the blank stock powers for such
<PAGE> 2
Shares (with Medallion signatures satisfactory to Secured Party's transfer
agent), shall be executed and delivered by Debtor to Secured party upon the
Closing of the Merger Agreement.
4. Taxes. The Debtor will pay promptly when due all taxes and
assessments imposed on or by reason of the Collateral or for its benefit.
5. Increase or Decrease in Value of Collateral. The Collateral
shall remain subject to this Agreement, regardless of increase or decrease in
the value thereof. In the event of decrease in value Of the Collateral, the
Debtor shall not be required to submit additional collateral nor, in the case
of increase in the value of the Collateral, shall the Debtor be entitled to a
release of Collateral from the escrow or the security interest hereby granted.
6. Duration. Within fifteen days following the end of each
three-month period subsequent to the date of this Agreement, GPAR shall deliver
to Debtor 25,874 shares of the Collateral; provided, however, that GPAR need
not deliver such shares if GPAR has asserted a claim against the Collateral in
connection with the provisions set forth in the Merger Agreement.
7. Payment. The Debtor shall repay immediately all sums expended
by the Secured Party to protect its rights in accordance with the terms and
provisions of this Agreement or incurred by Secured Party to protect, perfect
or enforce its rights hereunder, including all reasonable attorneys' fees,
including fees on appeal, whether suit be brought or not.
8. Notification Addresses.
a. The correct address of Debtor for the purposes of
notifications required or appropriate hereunder is as follows:
Copperstate Metals, Inc.
Mr. Raymond Zack,
3700 W. Lower Buckeye
Phoenix, Arizona 85009
b. The correct address for Secured Party for the
purposes of notifications required or allowed hereunder is as follows:
General Parametrics Corporation
Mr. Gerard Jacobs, President
7600 Augusta Street
River Forest, IL 60305
2
<PAGE> 3
With a copy to:
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
Fielder F. Nelms, Esq.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Each party shall give notice of revisions to said addresses which
shall take effect immediately upon receipt of same. To be binding hereunder,
all notices required hereunder shall be by Certified United States Mail, Return
Receipt Requested.
9. Attorney-in-fact. Debtor hereby appoints Secured Party as
Debtor's attorney-in-fact to do any and every act which Debtor is obligated
under this Agreement to do, and exercise all rights of the Debtor in the
Collateral consistent herewith and to make collections and to execute any and
all papers and instruments and to do other things necessary to preserve and
protect the Collateral and the Secured Party's interest in the said Collateral.
10. Time of Performance and Waiver. In performing any act under
this Agreement, time shall be of the essence. The failure of the Secured Party
to exercise any right or remedy shall not be a waiver of any obligation of the
Debtor or right of the Secured Party or constitute a waiver of any other
similar default subsequently occurring.
11. Default. The failure by Debtor to pay any Obligations within
ten (10) days after Secured Party has given written notice to Debtor of Secured
Party's claim, including the amount or estimated amount of the claim and basis
for the claim, shall constitute a default hereunder, entitling Secured Party to
the remedies set forth below; provided, however, that if Debtor gives written
notice to Secured Party within fifteen (15) days after the Secured Party's
written notice to Debtor that Debtor contests Secured Party's determination
that a default has occurred, Secured Party shall not exercise its remedies set
forth in Section 12 until such time as the parties have reached agreement
concerning whether or not a default has occurred or a court of competent
jurisdiction has determined that a default has occurred.
12. Remedies. Upon the occurrence of a default hereunder, the
Secured Party shall have the right to (i) exercise any and all of the rights
and remedies provided by the Uniform Commercial Code as adopted by the State of
Arizona as well as other rights and remedies, either at law or in equity,
possessed by the Secured Party; or (ii) set off against the Shares an amount
sufficient to cure the default, measured as Mows: each Share set off by Secured
Party shall reduce the Obligations by an amount equal to the average of the bid
and ask prices for such Share on the trading day immediately preceding such day
of set off, and if such Share has not been registered wider the Securities Act
of 1933, by multiplying such amount by eighty-five percent (85%). The Shares
which are set off by Secured Party or purchased by Secured Party at a
foreclosure sale shall be retired as treasury shares.
3
<PAGE> 4
13. Rights of Debtor. Prior to any set off or foreclosure, all
Shares shall be owned by Debtor and Debtor shall be entitled to vote the same.
All cash dividends issued or paid upon the Shares shall be distributed to
Debtor. However, notwithstanding the foregoing, there shall be deposited with
Secured Party all Shares issued to Debtor as a result of any stock dividend or
stock split with respect to the Shares.
14. Miscellaneous Provisions.
(a) This Agreement shall be construed under and in
accordance with the Uniform Commercial Code and other applicable laws of the
State of Arizona, and all obligations of the parties created hereunder are
performable in Maricopa County, Arizona. Both parties submit themselves to the
jurisdiction of the courts of the State of Arizona sitting in Maricopa County,
Arizona, and stipulate that such courts hold proper venue.
(b) Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives and assigns where permitted under this Agreement.
(c) Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other provision thereof and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
IN WITNESS WHEREOF, the part have executed this Stock Pledge and
Security Agreement as of the day and year first above stated.
DEBTOR:
COPPERSTATE METALS, INC.
an Arizona corporation
By: DAVID M. ZACK
--------------------------
David M. Zack, President
SECURED PARTY
GENERAL PARAMETRICS CORPORATION,
a Delaware corporation
By: GERALD JACOBS
--------------------------
Gerard Jacobs, President
4
<PAGE> 1
Exhibit 10.13
COLLATERAL AGREEMENT
(D. Moorehead)
This Collateral Agreement (the "Agreement") is made and entered into
as of the 11th day of April, 1996, by and between DONALD MOOREHEAD, an
individual resident of Texas ("Debtor"), and GENERAL PARAMETRICS CORPORATION, a
Delaware corporation ("Secured Party"), as follows:
For value received, Debtor hereby grants to the Secured Party a
security interest in the following described property, hereinafter referred to
as the "Collateral", to-wit: 31,451 shares of the common capital stock of
Secured Party, par value $ .01 per share, together with all stock dividends,
stock splits, and distribution of shares of subsidiaries or other assets which
may at any time arise from such shares (but excluding any cash dividends) (such
shares, including any shares derived from stock dividends and stock splits are
hereinafter referred to as the "Shares"), to secure during the term of this
Agreement: (1) Debtor's obligations pursuant to that certain Merger Agreement,
dated December 1, 1995, by and among Debtor, Secured Party, EMCO, Recycling
Corp., GPAR Merger, Inc., Empire Metals, Inc., Copperstate Metals, Inc., George
Moorehead, Raymond Zack, David Zack, Gerald Zack, and Harold Rubenstein, as
amended by the First Amendment to Merger Agreement dated December, 1995, as
further amended by the Second Amendment to Merger Agreement dated February 16,
1996 (the "Merger Agreement"), and (2) all reasonable costs and expenses
incurred by the Secured Party in the enforcement of Debtor's obligations under
the Merger Agreement (with (1) and (2) together herein referred to as the
"Obligations").
The Collateral will be kept at the office of Secured Party.
DEBTOR WARRANTS, COVENANTS AND AGREES:
1. Title. Except for the security interest hereby granted, the
Collateral is free from any lien, security interest, encumbrance or claim, and
the Debtor will, at the Debtor's sole cost and expense, defend any action which
may affect the Secured Party's interest herein, or the Debtor's title to the
Collateral. The Shares to be held pursuant to this Agreement shall be issued
with certificate titled in the name of the Debtor.
2. Financing Statement. No financing statement covering the
Collateral or any part thereof or any proceeds thereof is on file in any public
office.
3. Protection of Collateral. In order to permit Secured Party,
in the event of default hereunder, to accomplish transfer of the Shares
constituting the Collateral, the Debtor shall execute in blank, such stock
powers as Secured Party shall require, and such execution shall remain
irrevocable during the term of this Agreement. The originals of such stock
powers shall be held by Secured Party throughout the term of this Agreement in
accordance with the terms
<PAGE> 2
hereof. The stock certificates for the Shares, together with the blank stock
powers for such Shares (with Medallion signatures satisfactory to Secured
Party's transfer agent), shall be executed and delivered by Debtor to Secured
Party upon the Closing of the Merger Agreement.
4. Taxes. The Debtor will pay promptly when due all taxes and
assessments imposed on or by reason of the Collateral or for its benefit.
5. Increase or Decrease in Value of Collateral. The Collateral
shall remain subject to this Agreement, regardless of increase or decrease in
the value thereof. In the event of decrease in value of the Collateral, the
Debtor shall not be required to submit additional collateral nor, in the case
of increase in the value of the Collateral, shall the Debtor be entitled to a
release of Collateral from the escrow or the security interest hereby granted.
6. Duration. Within fifteen days following the end of each
three-month period subsequent to the date of this Agreement, GPAR shall deliver
to Debtor 7,862 shares of the Collateral; provided, however, that GPAR need not
deliver such shares if GPAR has asserted a claim against the Collateral in
connection with the indemnification provisions set forth in the Merger
Agreement.
7. Payment. The Debtor shall repay immediately all sums expended
by the Secured Party to protect its rights in accordance with the terms and
provisions of this Agreement or incurred by Secured Party to protect, perfect
or enforce its rights hereunder, including all reasonable attorneys' fees,
including few on appeal, whether suit be brought or not.
8. Notification Addresses.
a. The correct address of Debtor for the purposes of
notifications required or appropriate hereunder is as follows:
Donald Moorehead
1801 Burningtree Lane
Plano, Texas 75092
b. The correct address for Secured Party for the
purposes of notifications required or allowed hereunder is as follows:
General Parametrics Corporation
Mr. Gerard Jacobs, President
7600 Augusta Street
River Forest, IL 60305
2
<PAGE> 3
With a copy to:
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
Fielder F. Nelms, Esq.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Each party shall give notice of revisions to said addresses which shall
take effect immediately upon receipt of same. To be binding hereunder, all
notices required hereunder shall be by Certified United States Mail, Return
Receipt Requested.
9. Attorney-in-Fact. Debtor hereby appoints Secured Party as
Debtor's attorney-in-fact to do any and every act which Debtor is obligated
under this Agreement to do, and exercise all rights of the Debtor in the
Collateral consistent herewith and to make collections and to execute any and
all papers and instruments and to do other things necessary to preserve and
protect the Collateral and the Secured Party's interest in the said Collateral.
10. Time of Performance and Waiver. In performing any act under
this Agreement, time shall be of the essence. The figure of the Secured Party
to exercise any right or remedy shall not be a waiver of any obligation of the
Debtor or right of the Secured Party or constitute a waiver of any other
similar default subsequently occurring.
11. Default. The failure, by Debtor to pay any Obligations within
ten (10) days after Secured Party has given written notice to Debtor of Secured
Party's claim, including the amount or estimated amount of the claim and basis
for the claim, shall constitute, a default hereunder, entitling Secured Party
to the remedies set forth below; provided, however, that if Debtor gives
written notice to Secured Party within fifteen (15) days after the Secured
Party's written notice to Debtor that Debtor contests Secured Party's
termination that a default has occurred, Secured Party shall not exercise its
remedies set forth in Section 12 until such time as the parties have reached
agreement concerning whether or not a default has occurred or a court of
competent jurisdiction has determined that a default has occurred.
12. Remedies. Upon the occurrence of a default hereunder, the
Secured Party shall have the right to (i) exercise any and all of the rights
and remedies provided by the Uniform Commercial Code as adopted by the State of
Arizona as well as other rights and remedies, either at law or in equity,
possessed by the Secured Party; or (ii) set off against the Shares an amount
sufficient to core the default, measured as follows: each Share set off by
Secured Party shall reduce the Obligations by an amount equal to the average of
the bid and ask prices for such Share on the trading day immediately preceding
such day of set off, and if such Share has not been registered under the
Securities Act of 1933, by multiplying such amount by eighty-five percent (85
%). The Shares which are set off by Secured Party or purchased by Secured
Party at a foreclosure sale shall be refired as treasury shares.
3
<PAGE> 4
13. Rights of Debtor. Prior to any set off or foreclosure, all
Shares shall be owned by Debtor and Debtor shall be entitled to vote the same.
All cash dividends issued or paid upon the Shares shall be distributed to
Debtor. However, notwithstanding the foregoing, there shall be deposited with
Secured Party all Shares issued to Debtor as a result of any stock dividend or
stock split with respect to the Shares.
14. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be consumed
under and in accordance with the Uniform Commercial Code and other applicable
laws of the State of Arizona, and all obligations of the parties created
hereunder are performable in Maricopa County, Arizona. Both parties submit
themselves to the jurisdiction of the courts of the State of Arizona sitting in
Maricopa County, Arizona, and stipulate that such courts hold proper venue.
(b) Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives and where permitted under this Agreement.
(c) Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other provision thereof and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Stock Pledge and
Security Agreement as of the day and year first above stated.
DEBTOR:
DONALD F. MOOREHEAD by George O. Moorehead
------------------------------------------
Donald Moorehead Attorney in Fact
SECURED PARTY:
GENERAL PARAMETRICS CORPORATION
a Delaware corporation
By: GERARD JACOBS
-------------------------------------
Gerard Jacobs, President
4
<PAGE> 1
Exhibit 10.14
COLLATERAL AGREEMENT
(G. MOOREHEAD)
This Collateral Agrement (the "Agreement") is made and entered into as
of April 11, 1996, by and between GEORGE O. MOOREHEAD, an individual resident
of Arizona ("Debtor"), and GENERAL PARAMETRICS CORPORATION, a Delaware
corporation ("Secured Party"), as follows:
For value received, Debtor hereby grants to the Secured Party a
security interest in the following described property, hereinafter referred to
as the "Collateral", to-wit: 34,202 shares of the common capital stock of
Secured Party, par value $ .01 per share, together with all stock dividends,
stock splits, and distribution of shares of subsidiaries or other assets which
may at any time arise from such shares (but excluding any cash dividends) (such
shares, including any shares derived from stock dividends and stock splits are
hereinafter referred to as the "Shares"), to secure during the term of this
Agreement: (1) Debtor's obligations pursuant to that certain merger Agreement,
dated December 1, 1995, by and among Debtor, Secured Party, EMCO Recycling
Corp., GPAR Merger, Inc., Empire Metals, Inc., Donald Moorehead; as amended by
the First Amendment to Merger Agreement dated December __, 1995, as further
amended by the Second Amendment to Merger Agreement dated February 16, 1996
(the "Merger Agreement"), and (2) all reasonable costs and expenses incurred by
the Secured Party in the enforcement of Debtor's obligations under the Merger
Agreement (with (1) and (2) together herein referred to as the "Obligations").
The Collateral will be kept at the office of Secured Party.
DEBTOR WARRANTS, COVENANTS AND AGREES:
1. Title. Except for the security interest hereby granted, the
Collateral is free from any lien, security interest, encumbrance or claim, and
the Debtor will, at the Debtor's sole cost and expense, defend any action which
may affect the Secured Party's interest herein, or the Debtor's title to the
Collateral. The Shares to be held pursuant to this Agreement shall be issued
with certificates titled in the name of the Debtor.
2. Financing Statement. No financing statement covering the
Collateral or any part thereof or any proceeds thereof is on file in any public
office.
3. Protection of Collateral. In order to permit Secured Party, in
the event of default hereunder, to accomplish transfer of the Shares
constituting the Collateral, the Debtor shall execute in blank, such stock
powers as Secured Party shall require, and such execution shall remain
irrevocable during the term of this Agrement. The originals of such stock
powers shall be held by Secured Party throughout the term of this Agreement in
accordance with the terms
<PAGE> 2
hereof. The stock certificates for the Shares, together with the blank stock
powers for such Shares (with Medallion signatures satisfactory to Secured
Party's transfer agent), shall be executed and delivered by Debtor to Secured
Party upon the Closing of the Merger Agreement.
4. Taxes. The Debtor will pay promptly when due all taxes and
assessments imposed on or by reason of the Collateral or for its benefit.
5. Increase or Decrease in Value of Collateral. The Collateral
shall remain subject to this Agreement, regardless of increase or decrease in
the value thereof. In the event of decrease in value of the Collateral, the
Debtor shall not be required to submit additional collateral nor, in the case
of increase in the value of the Collateral, shall the Debtor be entitled to a
release of Collateral from the escrow or the security interest hereby granted.
6. Duration. Within fifteen days following the end of each
three-month period subsequent to the date of this Agreement, GPAR shall deliver
to Debtor 8,550 shares of the Collateral; provided, however, that GPAR need not
deliver such shares if GPAR has asserted a claim against the Collateral in
connection with the indemnification provisions set forth in the Merger
Agreement.
7. Payment. The Debtor shall repay immediately all sums expended
by the Secured Party to protect its rights in accordance with the terms and
provisions of this Agreement or incurred by Secured Party to protect, perfect
or enforce its rights hereunder, including all reasonable attorneys' fees,
including fees on appeal, whether suit be brought or not.
8. Notification Addresses.
a. The correct address of Debtor for the purposes of
notifications required or appropriate hereunder is as follows:
George Moorehead
3700 W. Lower Buckeye
Phoenix, Arizona 85009
b. The correct address for Secured Party for the purposes
of notifications required or allowed hereunder is as follows:
General Parametrics Corporation
Mr. Gerard Jacobs, President
7600 Augusta Street
River Forest, IL 60305
<PAGE> 3
With a copy to:
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
Fielder F. Nelms, Esq.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Each party shall give notice of revisions to said addresses which
shall take effect immediately upon receipt of same. To be binding hereunder,
all notices required hereunder shall be by Certified United States Mail, Return
Receipt Requested.
9. Attorney-in-Fact. Debtor hereby appoints Secured Party as
Debtor's attorney-in-fact to do any and every act which Debtor is obligated
under this Agreement to do, and exercise all rights of the Debtor in the
Collateral consistent herewith and to make collections and to execute any and
all papers and instruments and to do other things necessary to preserve and
protect the Collateral and the Secured Party's interest in the said Collateral.
10. Time of Performance and Waiver. In performing any act under
this Agreement, time shall be of the essence. The failure of the Secured Party
to exercise any right or remedy shall not be a waiver of any obligation of the.
Debtor or right of the Secured Party or constitute a waiver of any other
similar default subsequently occurring.
11. Default. The failure by Debtor to pay any Obligations within
ten (10) days after Secured Party has given written notice to Debtor of Secured
Party's claim, including the amount or estimated amount of the clam and basis
for the claim, shall constitute a default hereunder, entitling Secured Party to
the remedies set forth below; provided, however, that if Debtor gives written
notice to Secured Party within fifteen (15) days after the Secured Party's
written notice to Debtor that Debtor contests Secured Party's determination
that a default has occurred, Secured Party shall not exercise its remedies set
forth in Section 12 until such time as the parties have reached agreement
concerning whether or not a default has occurred or a court of competent
jurisdiction has determined that a default has occurred.
12. Remedies. Upon the occurrence of a default hereunder, the
Secured Party shall have the right to (i) exercise any and all of the rights
and remedies provided by the Uniform Commercial Code as adopted by the State of
Arizona as well as other rights and remedies, either at law or in equity,
possessed by the Secured Party; or (ii) set off against the Shares an amount
sufficient to cure the default, measured as follows: each Share set off by
Secured Party shall reduce the Obligations by an mount equal to the average of
the bid and ask prices, for such Share on the trading day immediately preceding
such day of set off, and if such Share has not been registered under the
Securities Act of 1933, by multiplying such amount by eighty-five percent (85
%). The Shares which are set off by Secured Party or purchased by Secured
Party at a foreclosure sale shall be retired as treasury shares.
3
<PAGE> 4
13. Rights of Debtor. Prior to any set off or foreclosure, all
Shares shall be owned by Debtor and Debtor shall be entitled to vote the same.
All cash dividends issued or paid upon the Shares shall be distributed to
Debtor. However, notwithstanding the foregoing, there shall be deposited with
Secured Party all Shares issued to Debtor as a result of any stock dividend or
stock split with respect to the Shares.
14. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be construed
under and in accordance with the Uniform Commercial Code and other applicable
laws of the State of Arizona, and all obligations of the parties created
hereunder are performable in Maricopa County, Arizona. Both parties submit
themselves to the jurisdiction of the courts of the State of Arizona sitting in
Maricopa County, Arizona, and stipulate that such courts hold proper venue.
(b) Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal and assigns where permitted under this Agreement.
(c) Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not effect any other provision thereof and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Stock Pledge and
Security Agreement as of the day and year first above stated.
DEBTOR:
GEORGE A. MOOREHEAD
-------------------
George O. Moorehead
SECURED PARTY:
GENERAL PARAMETRICS CORPORATION,
a Delaware corporation
By: GERARD JACOBS
------------------------
Gerard Jacobs, President
4
<PAGE> 1
Exhibit 10.15
ASSUMPTION AND
INDEMNITY AGREEMENT
(Copperstate)
This Assumption and Indemnity Agreement (this "Agreement") is entered
into by and between Copperstate Metals, Inc., an Arizona corporation
("Copperstate"), and EMCO Recycling Corp., an Arizona corporation ("EMCO").
RECITALS
A. General Parametrics Corporation ("GPAR"), GPAR Merger, Inc.,
Empire Metals, Inc., Copperstate, EMCO, Gerald Zack, David Zack, Raymond Zack,
Donald Moorehead, George Moorehead and Harold Rubenstein have entered into that
certain Merger Agreement, dated December 1, 1995, as amended by that certain
First Amendment to Merger Agreement dated December _, 1995, as amended by that
certain Second Amendment to Merger Agreement dated February 16, 1996.
B. Pursuant to the Merger Agreement, GPAR will acquire all of the
issued and outstanding shares of EMCO in a merger whereby GPAR Merger, Inc.
merges into EMCO, and the shareholders of EMCO transfer all their issued and
outstanding shares to GPAR.
C. Copperstate is indebted to EMCO pursuant to that certain
Promissory Note dated February 14, 1995, in the original principal amount of
$198,205, executed by Copperstate, in favor of EMCO.
D. Copperstate is also indebted to EMCO pursuant to that certain
Promissory Note dated February 14, 1995, in the original principal amount of
$200,000, executed by Copperstate, in favor of EMCO.
E. The indebtedness represented by the $198,205 Promissory Note
and $200,000 Promissory Note, including accrued interest.- amounts to
$429,881.68 (the "Debt").
F. The parties desire to satisfy the Debt as set forth in this
Agreement.
G. In connection with the closing of the transactions
contemplated by the Merger Agreement, Copperstate agrees to assume primary
liability for the payment of certain liabilities for which EMCO may also have
liability, including liability for that certain Equity Claim and Interest filed
against real and personal property now owned by EMCO in Maricopa County,
<PAGE> 2
Arizona in the original amount of $50,742.68, recorded in Maricopa County,
August 10, 1990, in Instrument No. 90-361193 (the "Equity Claim").
H. Copperstate is willing to indemnify EMCO for the assumed
liabilities pursuant to the provisions herein.
AGREEMENT
In consideration of the premises, and the mutual warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
1. Assumption. Copperstate agrees to assume primary liability
for the payment of (i) the obligations set forth on Exhibit "A" attached
hereto, which obligations are currently reflected as liabilities on EMCO's
balance sheet, and (ii) the liabilities arising under the Equity Claim.
2. Payment of Certain Liabilities. Upon the Closing of the
Merger Agreement, Copperstate agrees to immediately satisfy in full the
indebtedness to William Liberson in the amount of $85,250.00, and shall supply
EMCO with a copy of the cancelled check. Upon the Closing of the Merger
Agreement, Copperstate agrees to execute and deliver to EMCO a check in the
amount of $18,224.25 (which reflects interest accrued through December 31,
1995) payable to the Arizona Department of Revenue, which check will be held by
EMCO for six (6) months, during which time Copperstate will use its best
efforts to satisfy all taxes, penalties, and interest owing to the Arizona
Department of Revenue; if such indebtedness has not been satisfied in full at
the end of such six (6) month period, EMCO may draw upon said check. In
exchange for Copperstate's assumption of (i) the liabilities set forth on
Exhibit "A", (ii) the liabilities arising under the Equity Claim and (iii)
payment of the liabilities set forth in this Section 2, EMCO agrees to reduce
and credit the Debt by $215,403.26.
3. Payment to Copperstate. Copperstate hereby pays EMCO the sum
of $156,000.00, which amount shall reduce the Debt.
4. Forgiveness. EMCO agrees to forgive the remaining Debt.
5. Indemnification. Copperstate agrees to indemnify and hold
harmless EMCO from and against all expenses, losses, costs, deficiencies,
liabilities (including, without limitation, related counsel and paralegal fees
and expenses) incurred or suffered by EMCO on a pre-tax consolidated basis to
the extent resulting from any of the liabilities set forth on Exhibit W.
6. Unlimited Duration. The obligations of Copperstate set forth
herein shall continue indefinitely and shall not expire.
7. Conditions of Indemnification. The obligations of Copperstate
hereunder with respect to its indemnity pursuant to this Agreement resulting
from any claim or other assertion
2
<PAGE> 3
of liabilities by third parties (hereinafter called collectively "Claims"),
shall be subject to the following terms and conditions:
a. EMCO must give Copperstate notice of any such Claim
twenty (20) days after EMCO receives notice thereof;
b. Copperstate shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such
Claim;
c. in the event Copperstate shall elect not to undertake
such defense, or within a reasonable time after notice of any such Claim from
EMCO shall fail to defend, EMCO (upon further written notice to Copperstate)
shall have the right to undertake the defense, compromise or settlement of such
Claim, by counsel or other representatives of its own choosing, on behalf of
and for the account and risk of Copperstate (subject to the right of
Copperstate to assume defense of such Claim at any time prior to settlement,
compromise or final determination thereof);
d. Anything in this Section 7 to the contrary
notwithstanding, (A) EMCO shall have the right, at its own cost and expense, to
have its own counsel to protect its own interests and participate in the
defense, compromise or settlement of the Claim, (B) Copperstate shall not,
without EMCO's written consent, settle or compromise any Claim or consent to
entry of any judgement which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to EMCO of a release from all
liability in respect of such Claim, and (C) EMCO, by counsel or other
representatives of its own choosing and at its sole cost and expense, shall
have the right to consult with Copperstate and its counsel or other
representatives concerning such Claim, and Copperstate and EMCO and their
respective counsel shall. cooperate with respect to such Claim.
8. Security for the Indemnification Obligations. As security for
the agreement by Copperstate hereunder, Copperstate shall execute and deliver
to EMCO a certain Stock Pledge and Security Agreement, dated of even date
herewith, wherein Copperstate grants to EMCO a security interest in Seventy-One
Thousand, Three Hundred (71,300) shares of stock of GPAR owned by Copperstate
in accordance with the terms set forth in the security agreement.
9. General Provisions.
a. Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage prepaid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
3
<PAGE> 4
(i) IF TO EMCO TO:
EMCO Recycling Corp.
Attn: George Moorehead
3700 W. Lower Buckeye
Phoenix, Arizona 85009
WITH A COPY TO:
Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P.
901 Main Street, Suite 3700
Dallas, Texas 75202
Attn: Fielder F. Nelms, Esq.
Telecopy No.: (214) 747-3732
(ii) IF TO COPPERSTATE:
Raymond Zack, Secretary
Copperstate Metals, Inc.
3700 W. Lower Buckeye
Phoenix, Arizona 85009
WITH A COPY TO:
David A. Joffe
Brandes, Lane & Joffe P.C.
2020 N. Central, 5th Floor
Phoenix, Arizona 85004-4506
10. Entire Agreement. This Agreement and the Stock Pledge and
Security Agreement contain the entire understanding of the parties in respect
of its subject matter and supersede all prior agreements and understandings
(oral or written) between or among the parties with respect to such subject
matter.
11. Amendment: Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties
4
<PAGE> 5
under this Agreement are in addition to all other rights and remedies, at law
or equity, that they may have against each other.
12. Binding Effect: Assignment. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
14. Interpretation. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Time shall be of the
essence, in this Agreement.
15. Governing Law: Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Arizona applicable to contracts executed and to be wholly performed
within such state.
16. Arm's Length Negotiations. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
17. Attorney Fees. If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorney's fees and all other costs and expenses of litigation from
the other party, which amounts may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose, and
which amounts shall be in addition to any other relief which may be awarded.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year written below.
COPPERSTATE METALS, INC.,
AN ARIZONA CORPORATION
Date: April 11,1996 By: David M. Zack
----------------- --------------------
David M. Zack, President
EMCO RECYCLING CORP.,
AN ARIZONA CORPORATION
Date: April 11,1996 By: George Moorehead
----------------- ---------------------
George Moorehead, President
-6-
<PAGE> 7
04/04/96 EXHIBIT "A"
COPPERSTATE METALS
UNSECURED CREDITORS
MARCH 31, 1996 REMAINING
BALANCE
CREDITOR NAME @ 3/31/95
- ------------------------------- ---------
AT&T TECHNOLOGIES, INC. 13,900.00
ARIZONA PUBLIC SERVICE 5,258.17
ALLIED SIGNAL AEROSPACE 5,502.98
AMERICAN FENCE 48.45
U-HAUL 5,053.25
US WEST 3,846.31
CENTURY ENTERPRISES 3,751.50
LA MINERA DE CANERA SA 2,416.51
SCHUFF STEEL 2,208.81
SOUTHERN PACIFIC TRANSPT 3,652.30
KRUEGER 1,900.14
TRI-CONTINENTAL TRUCK BKG 1,971.15
CATERPILLAR 3,238.80
BULL HN 1,666.09
SMITH PIPE & STEEL CO. 1,590.18
RELIANCE ELECTRIC 1,544.21
IMSALCO 490.00
PHOENIX FUEL 1,321.55
BOWIE TRANSPORTATION 1,311.26
SG SECURITY 1,238.78
TIERNEY TURBINES 1,179.30
SIERRA INTERNATIONAL 1,142.03
AZ PRECISION SHEET METAL 1,098.57
TRIUMPH CORPORATION 1,700.00
LITTON ELECTRON DEVICES 1,041.11
T & M ELECTRIC INC 940.77
EXCEL 936.01
ROMNEY BUCK TRUCKING COM 929.20
VERCO MANUFACTURING 872.11
DESIGNERS CHOICE 870.02
PHOENIX MANUFACTURING 872.11
INTEL CORP 840.61
AT&T NETWORK SYSTEMS 833.94
DUNCAN & SONS LINES INC 812.00
SAFEWAY STORES 810.28
HERAEUS INC 786.15
FREIGHT T3ECHNOLOGY INC. 757.50
CITIZENS UTILITIES 754.80
WESTERN STATES TIRE COMPA 829.57
1
<PAGE> 8
4/96
ROAD MACHINERY 748.69
KSM CARRIERS 732.34
- - BEN 725.70
WASTE MANAGEMENT 777.50
KARSTEN ENGINEERING 657.16
PIONEER DISTRIBUTING 646.76
LEAVITT LUMBER COMPANY 570.02
HAWKINS TRUCKING & EXCAVAT 600.00
DIGITAL EQUIPMENT CO. 565.93
MARYATT INDUSTRIES 642.14
JOE BROWN COMPANY 542.86
NESS OF ARIZONA 522.74
METRA STEEL 478.73
ACI 452.30
VAW OF AMERICA INC 452.04
AMERICAN METALS 451.90
BIG A AUTO PARTS 398.17
STATE OF ARIZONA 398.01
LIQUID AIR CORPORATION 273.83
KIRK PATRICK & O'DONNELL 423.20
ARIZONA WIRE ROPE & RIG 371.73
AIRDRAULICS 351.55
CATERPILLAR PROVING 339.26
WELSH'S TRUCKING 337.50
- -RO CONDUIT 337.17
INDEPENDENT TRUCK 323.83
OBERG-ARIZONA 307.37
RIVERSIDE PRODUCTS DIVISION 540.00
FIRESTONE STORES 302.44
UNITED CALIFORNIA DISC CORP 296.30
PORT A STALL 294.63
BINGHAM EQUIPMENT COMPANY 292.40
KWIK-KOPY 283.76
O.S. WALKER CO. 299.63
NELCO TECHNOLOGY 277.70
CORESLAB 267.56
CLARK TRUCKING 264.25
YALE MATERIALS HANDLING 260.98
ANOZIRA DOOR SYSTEMS 260.63
AMERICAN ANALYTICAL LABS 240.15
TOP PERSONELL 229.94
SOUTHWEST PETERBILT 191.76
H.S.M./RECYCLING 225.59
TRIAD TRANSPOR 217.78
CAPITAL CASTINGS 215.46
WATSON ENTERPRISES 215.00
2
<PAGE> 9
04/04/96
ACTION TRUCK PARTS 213.47
SOUTHWESTERN SCALE COMPA 212.76
SPECIALIZED OFFICE SYSTEMS 205.95
ALL MODELS LTD 201.96
CVC LEASING 201.56
ST VINCENT DEPAUL 196.94
DEFENSE REUTILIZATION 192.08
GRAY TRUCKING 187.50
CITY OF PHOENIX 186.79
ALL ECONOMY 183.98
BJ CECIL TRUCKING 180.00
NEEL'S WRECKING 172.62
DEER VALLEY PACKAGING 166.32
BROWNING FERRIS INDUSTRIES 166.03
CABRILLO CRANE 159.10
GENEX TERMINAL COMPANY 136.30
DAVID A ANDRUS TRUCKING 150.10
GETZ INT'L TRAVEL AGENCY 147.80
PHOENIX RECYCLES 146.44
G & M SERVICES 146.00
CYPRUS BAGDAD COPPER CO. 144.60
AUTOMATIC DATA PROCESSING 142.96
INVENTORY NETWORKING 141.34
PETE KING CORP. 140.55
- -RRIS METALS 137.35
CANNON SALVAGE 136.31
ARIZONA SCRAP IRON & METAL 135.20
ECHO TRUCKING 131.85
CLIMATE CONTROL 127.03
BOB'S PLUMBING 126.63
FEDERAL EXPRESS CORPORATI 126.50
PARKER METALS 125.61
AA NATIONAL TOWING 124.60
LDM TRUCKING 122.95
PDQ METALS 121.41
ROYDEN CONSTRUCTION 120.54
GERRAD PACKAGING 120.34
PHOENIX SOLID WASTE 117.82
BOB HELLENDER TRUCK 116.65
BASHA'S 116.49
SWIFT TRANSPORTATION 115.50
STANDARD TRANSPORTATION I 114.91
MOTOROLA INC 112.36
DIMENSION CABLE 112.16
SOUTHWEST REBAR 110.35 110.35
PRECISION PETROLEUM 107.35
3
<PAGE> 10
04/04/96
AJAX CONTRACTING 102.65
E&H ELECTRIC 102.44
BROADWAY 100.63
AZTEC BUTANE 99.97
LAIDLAW 98.63
CAMPBELL'S RUBBISH REMOVAL 96.00
ELECTRIC SUPPLY INC. 94.35
I-17-AUTO SALVAGE 94.25
INDUSTRIAL MTR & CONTROL 92.58
CAVCO 89.37
AZ REPUBLIC /& GAZETTE 88.72
S&L CONTRACTING 88.70
ARIZONA FILTER HOUSE 87.99
MELTON RADIATOR 82.43
COASTAL CONNECTION 80.60
NKP TRUCKING INCORPORATED 80.00
OPTIFAB 77.86
KODIAK TRANSPORTATION LEAS 77.50
ADOBE AUTO 76.73
CONSOLIDATED FREIGHTWAYS 72.06
CRAFTSMAN ASSOCIATES 70.00
CARLSON SYSTEMS 67.74
INDUSTRIAL RADIATOR SERVICE 67.48
FAMILY AUTO WRECKING 67.36
CRYSTAL BOTTLED WATER 67.28
SAFCO 67.27
DONNELL DOUGLAS TRK SRV 67.02
TEAM AIR EXPRESS 66.31
ADMIRAL SCRAP METALS (0.00)
LOOMIS ARMORED INC 64.00
PHOENIX METAL TRADING 62.18
BEL-AIRE MECH 61.95
GEORGE ELLIS TRUCKING 60.18
BLEDSOE TRANSPORT 59.80
RICHARD MILLER TRUCKING 59.74
ALLIED AMERICAN 59.30
EQUIPMENT EXCHANGE 58.65
AMERICAN SCRAP METALS 58.31
GARY B. CONRAD 57.31
PHOENIX CULVERT 57.14
UNIT SERVICE COMPANY 57.14
AMERICAN PRESIDENT DIST. 57.00
TAMARACK SERVICES 56.88
OCCUPATIONAL HEALTH NETW 56.80
L.W. MILLER TRANSPORT 56.76
COPPERSTATE BATTERY 56.38
4
<PAGE> 11
04/04/96
NSR OF ARIZONA 55.40
ARIZONA CULVERT COMPANY 54.95
- -GENT AUTO 54.19
APACHE AUTO 53.25
CSM 51.29
LOU GRUBB 50.78
ARIZONA INVESTIGATIONS 50.00
LANDA INC 49.68
DIEHL LUMBER TRANSPORT 49.39
PAPAGO PLATING 48.48
SOUTHWEST CONTRACTOR 48.24
ANDICO INC 48.14
CROWN TRUCK 46.88
METALS ENGINEERING AND TES 46.50
BEST WESTERN YUMA INN 46.46
ADVANCE CONNECTORS 46.14
PAY DIRT MAGAZINE 45.60
WEYERHAUSER WOOD PRODUC 44.93
MESA AIRE 43.72
GLENN WEINBERGER 43.32
REEVES AUTO 42.76
LIQUID AIR 424.87
FERRO UNION 41.01
ERIC SWENSON 40.94
? N. CORPORATION 40.00
CHRISTOPHER CHRISTIANSON 39.82
TOYOTALIFT OF ARIZONA INC 39.35
GIBSON TOWING 38.68
PAUL JOHNSON 38.58
SYSTEMS ALTERNATIVES 38.54
MARCO CRANE 38.48
PACTEL PAGING 38.15
WASTE MANAGEMENT 37.21
METAGRAM AMERICA 37.04
CANAL SALVAGE 36.60
ACME FENCE 35.52
SHURWAY 34.80
ROYAL SIGN 34.72
METALFORM 34.60
EMBASSY EXPRESS SERVICE 34.05
ARIZONA REBAR 33.82
ADT SECURITY 33.58
GENERAL METALS 33.12
WASTE MGT CO PORTOLET 32.64
ALPHA 1 CONTROLS INC 32.00
BANGO DISTRIBUTING 31.95
5
<PAGE> 12
04/04/96
SUNDEVIL FIRE EQUIPMENT 31.77
UNISOURCE 30.95
- -L'S RADIATORS 30.90
ALLIED PIPING SUPPLY 30.89
WASTE MANAGEMENT 30.61
DHL AIRWAYS INC 30.53
KING BEARING 30.30
INFINCOM 30.06
BIG K AUTO WRECKING 27.80
DOMIATOR ENGINEERING 26.65
YELLOW FREIGHT SYSTEMS 25.53
LARSON METALS 25.42
GRANITE CONSTRUCTION 25.18
GERMAN AUTO 24.72
ALLIED PIPE & SUPPLY 24.61
AMFORM 24.03
THOMAS VALENTE CONSTRUCTI 23.57
EMPIRE MACHINERY CO. 22.90
UNITED FIBERS 22.78
J B ROGERS 22.51
NORTHWEST TRANSPORT SERV 22.50
SMITH METALCRAFT 22.22
ALL JAPANESE AUTO 21.84
PHOENIX REDI MIX 21.78
- -ARING BELT & CHAIN INC 21.48
SHEA-NA FOODS 21.34
SAFET-KLEEN CORPORATION 21.21
MY FLORIST 21.18
ALMA IMPORTS 20.84
TIME CLOCK SALES & SERVICES 20.81
TOWN & COUNTRY SCALE CO. 19.10
AUTO SALVAGE 18.53
RICHARD'S P/U 78.80
CONSOLIDATED C/O MICRO-MET 17.90
PINAL FEEDING CO. 17.89
ALLISON EQUIPMENT 17.56
ROYDON CONST 17.49
CULIVER MOTORS 17.49
VALLEY FORGE & BOLT 16.77
WASTE MANAGEMENT 16.69
CASH-N-CARRY 16.56
KOVACH PROPERTIES 16.55
POWER STEEL 16.55
SPIRO FAB 16.46
MALLCO LUMBER 16.04
U & R AUTO 15.88
6
<PAGE> 13
04/04/96
ELIASON & KNUTH OF AZ 15.06
MAGNEY ELECTRIC 15.04
WESTERN ELECTRIC 15.00
EMERY WORLDWIDE 14.92
AIRCRAFT GEAR 14.91
PROFESSIONAL BUSINESS EQT. 14.80
RON'S PICKUP PARTS 14.72
SAAN'S M RENTALS 14.47
MAR-WOOD 13.71
GOMER FENCE 12.90
RICHARD'S AUTO & TRUCK 100.00
SOUTHEND WRECKING 12.84
L&M ORNAMENTAL 12.56
MESA MATERIAL 12.51
T R C CONSTRUCTION 12.48
HOME SYSTEMS 12.48
MAMCO MANUFACTURING 12.12
EXECUTONE 11.67
OCOTILLO LUMBER 10.75
S L HENRE SERVICE 10.50
A & K RAILROAD MAT'L INC. 9.56
ELIASON & KNUTH 9.46
MASTER HALCO 9.36
ANGEL AUTO 8.90
- -TON AIR CONDITIONING 8.85
J.M.B. COMPANY 8.79
SUNLAND AUTO WRECKING 8.75
RICHARD'S AUTO 8.40
RAPIDFORMS INCORPORATED 7.96
ANIXTER DISTRIBUTION 7.14
GOODWILL INDUSTRIES 6.80
ALL TRUCK 6.16
POWER TRANSMISSION SPEC IN 6.14
CHEMET PRODUCTS INT'L 6.00
DOLORES MEDICAL ASSOC. 5.00
DONNA'S BID REPORTING SERVI 4.80
LORAL DEFENSE SYSTEMS 0.00
BUG WORLD 4.60
CREATIVE CARRIAGES 4.56
ZEP MANUFACTURING 4.42
RUDY'S AUTO WRECKERS 4.26
BARLOW 4.24
MK TRUCKING 4.00
ALL IMPORTS 3.96
YELLOW FRONT 3.81
LODI DOOR 3.78
7
<PAGE> 14
04/04/96
CAP OF AZ 3.70
GOLDEN PASSPHORT PHOTOS 2.90
PHASE III COMMERCIAL PTRS 2.82
SW SUPERMARKETS 2.60
WOODSTUFF 2.48
NAUMANN MATERIAL HANDLING 2.21
BLAIR & SON AUTO PARTS 2.12
HELDREF PUBLICATIONS 2.00
WILCOX 1.99
ALLCHEVY 1.67
EECO INC 1.58
GMC TRUCK 1.55
NANCE 1.38
AALAERT PAGING 0.24
------------
Subtotal - 112,640.01
------------
Dept of Rev 17,513.25
Liberson 85,250.00
------------
Total - 215,403.26
============
8
<PAGE> 1
Exhibit 10.16
ASSUMPTION AGREEMENT
(Empire)
This Assumption Agreement (this "Agreement") is entered into by and
between Empire Metals, Inc., an Arizona corporation ("Empire"), and EMCO
Recycling Corp., an Arizona corporation ("EMCO").
RECITALS
A. General Parametrics Corporation ("GPAR"), GPAR Merger, Inc.,
Copperstate Metals, Inc., Empire, EMCO, Gerald Zack, David Zack, Raymond Zack,
Donald Moorehead, George Moorehead and Harold Rubenstein have entered into that
certain Merger Agreement, dated December 1, 1995, as amended by that certain
First Amendment to Merger Agreement dated December ___, 1995, as amended by that
certain Second Amendment to Merger Agreement dated February 16, 1996.
B. Pursuant to the Mager Agreement, GPAR will acquire all of the
issued and outstanding shares of EMCO in a merger whereby GPAR Merger, Inc.
merges into EMCO, and the shareholders of EMCO transfer all their issued and
outstanding shares to GPAR.
C. In connection with the closing of the transactions
contemplated by the Merger Agreement, Empire agrees to assume primary liability
for the payment of certain liabilities for which EMCO may also have liability.
AGREEMENT
In consideration of the premises, and the mutual warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
1. Assumption. Empire agrees to assume primary liability for the
payment of the Obligations set forth on Exhibit "A" attached hereto, which
obligations are currently reflected as liabilities on EMCO's balance sheet.
2. Payment to Empire. EMCO hereby pays Empire the sum of
$42,273.92 in exchange. for Empire's assumption of the indebtedness set forth
on Exhibit "A" attached hereto.
3. Indemnification. Empire agrees to indemnify and hold harmless
EMCO from and against the liabilities set forth on Exhibit "A" pursuant to that
certain Indemnity Agreement of even date herewith.
<PAGE> 2
4. General Provisions.
a. Notices. AU notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage prepaid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(i) IF TO EMCO TO:
EMCO Recycling Corp.
Attn: George Moorehead
3700 W. Lower Buckeye
Phoenix, Arizona 85009
WITH A COPY TO:
Mr. Gerard Jacobs
General Parametrics Corp.
7600 Augusta Street
River Forest IL 60305
(ii) IF TO EMPIRE:
Empire Metals, Inc.
2010 W. Lower Buckeye Drive
Phoenix, Arizona 85009
WITH A COPY TO:
Rob Kimball, Esq.
Sachs Tierney P.A.
2929 N. Central Avenue Fourteenth Floor
Phoenix, Arizona 85004
5. Entire Agreement. This Agreement, the Merger Agreement and
the Indemnity Agreement executed by the parties on this date contain the entire
understanding of the parties in respect of its subject matter and supersede all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter.
6. Amendment: Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No
2
<PAGE> 3
failure to exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude the exercise of
any other right, power or privilege. No waiver of any breach of any provision
shall be deemed to be a waiver of any preceding or succeeding breach of the
same or any other provision, nor shall any waiver be implied from any course of
dealing between the parties. No extension of time for performance of any
obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
7. Binding Effect: Assignment. The rights and obligations of
this Agreement shall bid and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall
be construed to give any other person any legal or equitable rights hereunder.
8. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
9. Interpretation. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reflect shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Time shall be of the
essence in this Agreement.
10. Governing Law: Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Arizona applicable to contracts executed and to be wholly performed
within such state.
11. Arm's Length Negotiations. Each party herein expressly to all
other parties hereto that (a) before executing this Agreement, said party has
hilly informed itself of the terms, contents, conditions and effects of this
Agreement; (b) said party has relied solely and completely upon its own
judgment in executing this Agreement; (c) said party has had the opportunity to
seek and has obtained the advice of counsel before executing this Agreement (d)
said party has acted voluntarily and of its own free will in executing this
Agreement; (e) said party is not acting under duress, whether economic or
physical, in executing this Agreement; and (f) this Agreement is the result of
arm's length negotiations conducted by and among the parties and their
respective counsel.
12. Attorneys' Fees. If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorney's fees and all other costs and expenses of litigation from
the other party, which amounts may be set by the court in the trial
3
<PAGE> 4
of such action or may be enforced in a separate action brought for that
purpose, and which amounts shall be in addition to any other relief which may
be awarded.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year written below.
EMPIRE METALS, INC.,
an Arizona corporation
Date: 4-11-96 By: HAROLD RUBENSTEIN
---------------------------
Harold Rubenstein, President
EMCO RECYCLING CORP.,
an Arizona corporation
Date: 4-11-96 By: GEORGE MOOREHEAD
---------------------------
George Moorehead, President
4
<PAGE> 5
EXHIBIT A
EMPIRE METALS, INC. - Pre-Petition Payables
(Payments Due)
NAME BALANCE
DUE
- ----------- -----------
ACCOUNTS WITH REMAINING BALANCES:
3T Tanakaya 10,865.00
SECORE & NIEDZIALER 6,894.65
Superior Retreading 12,154.35
INLAND KENWORTH (Mike Kennedy) 7,121.51
PTO SALES & SERVICE 493.41
Sanifill of Arizona (AAZ CRUSHERS) 4,745.00
-----------
TOTAL OF OPEN ACCOUNTS 42,273.92
===========
1
<PAGE> 1
Exhibit 10.17
INDEMNITY AGREEMENT
(Empire)
This Indemnity Agreement (this "Agreement") is entered into by and
among General Parametrics Corporation, a Delaware corporation ("GPAR"); GPAR
Merger, Inc., an Arizona corporation, and wholly-owned subsidiary of GPAR (the
"GPAR Merger Sub", and together with GPAR, the "GPAR Companies"); Empire
Metals, Inc., an Arizona corporation ("Empire"); Copperstate Metals, Inc., an
Arizona corporation ("Copperstate"); Donald Moorehead; George Moorehead; Harold
Rubenstein, an individual resident of Arizona ("Shareholder"); and EMCO
Recycling Corp., an Arizona corporation ("EMCO"). Empire and Shareholder are
hereinafter referred to as the "Indemnifying Parties." GPAR, GPAR Merger Sub,
EMCO, Copperstate, the officers, directors, employees, agents, and shareholders
of the foregoing corporations, Donald Moorehead, Shelley Moorehead, Nancy D.
Moorehead and George Moorehead are hereinafter collectively referred to as the
"Indemnified Parties."
RECITALS
A. The GPAR Companies, Empire, Shareholder, Copperstate, EMCO,
Gerald Zack, David Zack, Raymond Zack, Donald Moorehead and George Moorehead
have entered into that certain Merger Agreement, dated December 1, 1995, as
amended by that certain First Amendment to Merger Agreement dated December _,
1995, as further amended by that certain Second Amendment to Merger Agreement
dated February 16, 1996.
B. Pursuant to the Merger Agreement, GPAR will acquire all of the
issued and outstanding shares of EMCO in a merger whereby GPAR Merger Sub
merges into EMCO, and the shareholders of EMCO transfer all their issued and
outstanding shares to GPAR.
C. There is pending that certain litigation styled EMCO Recycling
Corp. vs. Ellis Rubenstein and Kristi Rubenstein, et al., Cause No. CV 95-10011
pending in the Superior Court of the State of Arizona, Maricopa County (the
"Lawsuit"), wherein Kristi Rubenstein ("Wife"), the wife of Ellis Rubenstein
("Husband"), asserts various claims against EMCO, including the claim that (i)
Husband was wrongfully terminated from employment by EMCO, (ii) Wife and/or
Husband own an interest in a sky box arena in Phoenix, Arizona, for which
Husband and/or Wife are entitled to compensation in an amount equal to the
value of such interest, and (iii) Husband owned or owns forty-five percent
(45%) of the issued and outstanding shares of EMCO and any predecessors or
successors in interest. The Lawsuit is the result of a divorce proceeding
between Wife and Husband, Cause No. DR-94-17565, pending in the Superior Court
of the State of Arizona, Maricopa County (the "Divorce Action").
<PAGE> 2
D. The claims of Wife and/or Husband set forth in the Lawsuit and
Divorce Action, and any other claims or counterclaims of any nature whatsoever
which may be raised in the Lawsuit, Divorce Action or in any other proceeding
or forum, which relate directly, indirectly, or derivatively in any manner to
Wife's or Husband's assertions of an interest in EMCO, Ellis Metals, Inc.,
GPAR, or any predecessors, successors-in-interest, or subsidiaries of EMCO,
Ellis Metals, Inc., or GPAR, are hereinafter referred to as the "Claims."
E. The GPAR Companies, Copperstate, Donald Moorehead and George
Moorehead are unwilling to consummate the merger contemplated by the Merger
Agreement absent indemnification from the Claims by the Indemnifying Parties.
Also, the GPAR Companies, EMCO, Copperstate, Donald Moorehead and George
Moorehead desire indemnification from certain bankruptcy liabilities of Empire.
F. The Indemnifying Parties are willing to indemnify the
Indemnified Parties from the Claims pursuant to the provisions herein.
AGREEMENT
In consideration of the premises, and the mutual warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
1. Indemnification. The Indemnifying Parties, jointly and
severally, agree to indemnify and hold harmless the Indemnified Parties from
and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities (including, without limitation, related legal counsel and paralegal
fees and expenses) incurred or suffered by the Indemnified Parties on a pre-tax
consolidated basis to the extent resulting from the Claims; provided, however,
EMCO shall bear the legal fees, costs and expenses of its own attorneys to
prosecute the claims currently set forth in the Lawsuit, but not for any new
claims raised by Husband or Wife in the Lawsuit. Additionally, Empire agrees
to indemnify and hold harmless the Indemnified Parties from and against all
expenses, losses, costs, deficiencies, liabilities (including, without
limitation, related counsel and paralegal fees and expenses) incurred or
suffered by the Indemnified Parties on a pre-tax consolidated basis to the
extent resulting from any claim (the "Bankruptcy Claims") which may be made
against the Indemnified Parties relating to any chapter 11 bankruptcy debts of
Empire.
2. Duration. This Agreement shall continue indefinitely until
(i) Wife and Husband have unconditionally released GPAR and EMCO and all other
Indemnified Parties from any and all Claims; or (ii) a final, non-appealable
judgment has been entered which absolves GPAR and EMCO and all other
Indemnified Parties from liability for any and all Claims-set forth in the
Lawsuit, and there is no other claim by Wife or Husband pending against GPAR or
EMCO and all other Indemnified Parties, and Husband has unconditionally
released GPAR and EMCO and all other Indemnified Parties from any and all
claims.
<PAGE> 3
3. Conditions of Indemnification Regarding Claims.
a. With respect to any Claims against the Indemnified
Parties, each Indemnified Party shall have the right to undertake and control
the defense of the Claims against such Indemnified Party by counsel or other
representatives of its own choosing, at the expense and for the account and
risk of the Indemnifying Parties.
b. Anything in this Agreement to the contrary
notwithstanding, the obligations of the Indemnifying Parties hereunder shall
terminate as to any Indemnified Party who, without the Indemnifying Parties'
written consent, settles or compromises any of the Claims against such
Indemnified Party.
4. Control of Claims by Indemnified Parties. The Indemnifying
Parties acknowledge and agree that the Indemnified Parties shall control the
defense of the Claims and the Lawsuit, including the selection of legal counsel
who will represent the Indemnified Parties with respect to such Claims and the
Lawsuit, the legal theories which will be argued and/or asserted, the evidence
to be presented or not presented, the witnesses to be called or not called, the
motions to be filed or not filed, the arguments to be presented, not presented,
or abandoned, and the examination or cross-examination of witnesses, and the
Indemnifying Parties hereby release and waive any right to contest or complain
of such actions, inactions, or omissions by the Indemnified Parties and their
legal counsel which relate to the Lawsuit, and the Indemnifying Parties agree
that none of such actions, inactions or omissions shall in any manner
whatsoever mitigate or reduce the obligations undertaken in this Agreement by
the Indemnifying Parties. The Indemnifying Parties also acknowledge and agree
that the interests of the Indemnifying Parties and the Indemnified Parties may
differ in the course of any litigation with respect to the Lawsuit, and the
Indemnifying Parties release and waive any claims that they may have against
the Indemnified Parties for such difference in interests and agree that no such
difference in interests shall in any manner mitigate or reduce the Indemnifying
Parties' obligations hereunder. Notwithstanding the foregoing, the Indemnified
Parties acknowledge and agree that the release and waiver by the Indemnifying
Parties being given herein relate only to the Lawsuit, and not to any other of
the Claims.
5. Conditions of Indemnification Regarding Bankruptcy Claims.
The obligations of Empire hereunder with respect to its indemnity related to
the Bankruptcy Claims shall be subject to the following terms and conditions:
a. The Indemnified Party must give Empire notice of any
such Bankruptcy Claim twenty (20) days after the Indemnified Party receives
notice thereof;
b. Empire shall have the right to undertake, by counsel
or other representatives of its own choosing, the defense of such Bankruptcy
Claim;
3
<PAGE> 4
c. in the event Empire shall elect not to undertake such
defense, or within a reasonable time after notice of any such Bankruptcy Claim
from the Indemnified Party shall fail to defend, the Indemnified Party (upon
further written notice to Empire) shall have the right to undertake the
defense, compromise or settlement of such Bankruptcy Claim, by counsel or other
representatives of its own choosing, on behalf of and for the account and risk
of Empire (subject to the right of Empire to assume defense of such Bankruptcy
Claim at any time prior to settlement, compromise or final determination
thereof);
d. Anything in this Section 5 to the contrary
notwithstanding, (A) EMCO shall have the right, at its own cost and expense, to
have its own counsel to protect its own interests and participate in the
defense, compromise or settlement of any Bankruptcy Claim, (B) Empire shall
not, without EMCO's written consent, settle or compromise any Bankruptcy Claim
or consent to entry of any judgement which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to EMCO of a release
from all liability in respect of such Bankruptcy Claim, and (C) EMCO, by
counsel or other representatives of its own choosing and at its sole cost and
expense, shall have the right to consult with Empire and its counsel or other
representatives concerning such Bankruptcy Claim, and Empire and EMCO and their
respective counsel shall cooperate with respect to such Bankruptcy Claim.
6. Security for the Indemnification Obligations. As security for
the obligations of the Indemnifying Parties to GPAR and EMCO, Empire shall
execute and deliver to GPAR a certain Stock Pledge and Security Agreement,
dated of even date herewith, wherein Empire grants to GPAR a security interest
in (i) Two Hundred and Fifty Thousand (250,000) shares of stock of GPAR owned
by Empire, (ii) warrants to purchase one hundred thousand (100,000) shares of
GPAR at $6.00 per share, and (iii) warrants to purchase one hundred fifty
thousand (150,000) shares of GPAR at $4.00 per share, in accordance with the
terms set forth in the security agreement.
7. Shareholder shall cause his spouse to execute the Joinder of
Spouse attached hereto as Exhibit "A."
8. General Provisions.
a. Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage prepaid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
4
<PAGE> 5
(i) IF TO ANY OF THE GPAR COMPANIES TO:
General Parametrics Corp.
12 Country Lane
Northfield, IL 60093
Attn: T. Benjamin Jennings, Chairman
Telecopy No.: (708) 446-9108
General Parametrics Corp.
7600 Augusta Street
River Forest, EL 60305
Attn: Mr. Gerard Jacobs, President
Telecopy No.: (708) 366-0891
WITH A COPY TO:
Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P.
901 Main Street, Suite 3700
Dallas, Texas 75202
Attn: Fielder F. Nelms, Esq.
Telecopy No.: (214) 747-3732
(ii) IF TO THE INDEMNIFYING PARTIES:
Empire Metals, Inc.
2010 W. Lower Buckeye
Phoenix, Arizona 85009
Attn: Harold Rubenstein
Telecopy No.: (602)_________
WITH A COPY TO:
Sacks Tierney P.A.
2929 N. Central Avenue
Fourteenth Floor
Phoenix, Arizona 85012-2742
Attn: Rob Kimball
Telecopy No.: (602) 279-2027
5
<PAGE> 6
(iii) IF TO COPPERSTATE:
Raymond Zack
3700 W. Lower Buckeye
Phoenix, Arizona 85009
Telecopy No.: 602-447-3020
(iv) IF TO GEORGE MOOREHEAD:
George Moorehead
EMCO Recycling Corp.
3700 W. Lower Buckeye
Phoenix, Arizona 85009
(v) IF TO DONALD MOOREHEAD:
Donald Moorehead
1801 Burningtree Lane
Plano, Texas 75092
9. Entire Agreement. This Agreement, the Stock Pledge and
Security Agreement, the Merger Agreement, the Joinder of Spouse, and that
certain Assumption Agreement between Empire and EMCO contain the entire
understanding of the parties in respect of its subject matter and supersede all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter.
10. Amendment: Waiver. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and, no delay in exercising,
any right, power or privilege under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No
waiver of any breach of any provision shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision, nor shall
any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts. The rights and
remedies of the parties under this Agreement are in addition to all other
rights and remedies, at law or equity, that they may have against each other.
11. Binding Effect: Assignment. The obligations hereunder shall
survive the death of Shareholder and/or the liquidation or dissolution of
Empire, in which event the obligations hereunder shall be binding upon
Shareholder's estate, heirs, administrators, executors, and assigns, or
Empire's successors and assigns, as appropriate. The rights of this Agreement
shall
6
<PAGE> 7
inure to the benefit of the parties and their respective successors and
assigns. Nothing expressed or implied herein shall be construed to give any
other person any legal or equitable rights hereunder.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
13. lnterpretation. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The
headings contained herein are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Time shall be of the
essence in this Agreement.
14. Governing Law: Interpretation. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Arizona applicable to contracts executed and to be wholly performed
within such state.
15. Arm's Length Negotiations. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
16. Attorney Fees. If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorney's fees and all other costs and expenses of litigation from
the other party, which amounts may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose, and
which amounts shall be in addition to any other relief which may be awarded.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year written below.
GENERAL PARAMETRICS CORPORATION,
a Delaware corporation
Date: 4-11-96 By: T. Benjamin Jennings
--------------------------
Name: T. Benjamin Jennings
--------------------------
Title: Chairman of the Board
--------------------------
GPAR MERGER, INC., an Arizona corporation
Date: 4-11-96 By: T. Benjamin Jennings
--------------------------
Name: T. Benjamin Jennings
--------------------------
Title: President
--------------------------
EMPIRE METALS, INC.,
an Arizona corporation
Date: 4-11-96 By: /s/ HAROLD RUBENSTEIN
--------------------------
Harold Rubenstein, President
Date: 4-11-96 /s/ HAROLD RUBENSTEIN
-----------------------------
HAROLD RUBENSTEIN, Individually
EMCO RECYCLING CORP.,
an Arizona corporation
Date: 4-11-96 By: /s/ George O. Moorehead
--------------------------
Name: George O. Moorehead
--------------------------
Title: President
--------------------------
- 8 -
<PAGE> 9
COPPERSTATE METALS, INC.,
an Arizona corporation
Date: April 11, 1996 By: David M. Zack
---------------------- -------------------------
Name: David M. Zack
-------------------------
Title: President
------------------------
Date: 4-11-96 Donald F. Moorehead, by George Moorehead
---------------------- Attorney-in-fact
-------------------------------
DONALD MOOREHEAD, Individually
Date: 4-1-96 G.O. Moorehead
---------------------- --------------------------------
GEORGE MOOREHEAD, Individually
-9-
<PAGE> 1
Exhibit 10.18
STOCK PLEDGE AND SECURITY AGREEMENT
(Empire)
This Stock Pledge and Security Agreement (the "Agreement") is made and
entered into as of the 11th day of April, 1996, by and between
EMPIRE METALS, INC., an Arizona corporation ("Debtor") and GENERAL PARAMETRICS
CORPORATION, a Delaware corporation ("Secured Party"), as follows:
For value received, Debtor hereby grants to the Secured Party a
security interest in the following described property, hereinafter referred to
as the "Collateral", to-wit: (i) warrants to purchase one-hundred fifty
thousand (150,000) shares of the common capital stock of Secured Party at $4.00
per share; (ii) warrants to purchase one-hundred thousand (100,000) shares of
the common capital stock of Secured Party at $6.00 per share; and (iii) two
hundred and fifty thousand (250,000) shares of the common capital stock of
Secured Party, par value $.01 per share, together with all stock dividends,
stock splits, and distribution of shares of subsidiaries or other assets which
may at any time arise from such shares (but excluding any cash dividends) (such
shares, including any shares derived from stock dividends and stock splits are
hereinafter referred to as the "Shares"). The Collateral shall secure during
the term of this Agreement: (1) Debtor's and Harold Rubenstein's obligations to
Secured Party and EMCO Recycling Corp. ("EMCO") pursuant to that certain
Indemnity Agreement, of even date herewith, by and between Debtor, Secured
Party, EMCO, GPAR Merger, Inc., Copperstate Metals, Inc., Donald Moorehead,
George Moorehead and Harold Rubenstein (the "Indemnity Agreement"), (2)
Debtor's Obligations pursuant to that certain Merger Agreement, dated December
1, 1995, by and among Debtor, Secured Party, EMCO, GPAR Merger, Inc.,
Copperstate Metals, Inc., Donald Moorehead, George Moorehead, Raymond Zack,
David Zack, Gerald Zack, and Harold Rubenstein, as amended by the First
Amendment to Merger Agreement dated December__, 1995, as further amended by the
Second Amendment to Merger Agreement dated February 16, 1996 (the "Merger
Agreement"), (3) the obligations of Harold Rubenstein and Ellis Metals, Inc.
set forth in Section 5.9 of that certain Purchase Agreement dated January__,
1996, by and among Secured Party, Harold Rubenstein, and Ellis Metals, Inc.
(in the event such Purchase Agreement entered into) and (4) all reasonable
costs and expenses incurred by the Secured Party and EMCO in the enforcement of
Debtor's and Harold Rubenstein's obligations under the aforementioned
agreements (with (1)through (4) together herein referred to as the
"Obligations").
The Collateral will be kept at the office of Secured Party.
DEBTOR WARRANTS, COVENANTS AND AGREES:
1. Title. Except for the security interest hereby granted, the
collateral is free from any lien, security interest, encumbrance or claim, and
the Debtor will, at the Debtor's sole cost and expense, defend any action which
may affect the Secured Party's interest herein, or the
<PAGE> 2
Debtor's title to the Collateral. The Shares to be held pursuant to this
Agreement shall be issued with certificates titled in the name of the Debtor.
The parties acknowledge that the shares are "restricted" shares within the
meaning of Rule 144 under the Securities Act of 1933.
2. Financing Statement. No financing statement covering the
Collateral or any part thereof or any proceeds thereof is on file in any public
office.
3. Protection of Collateral. In order to permit Secured Party,
in the event of default hereunder, to accomplish transfer of the Shares
constituting the Collateral, the Debtor shall execute in blank, such stock
powers as Secured Party shall require, and such execution shall remain
irrevocable during the term of this Agreement. The originals of such stock
powers shall be held by Secured Party throughout the term of this Agreement in
accordance with the terms hereof. The stock warrants described herein, the
certificates for the Shares, and executed blank stock powers for the Shares
(with Medallion signatures satisfactory to Secured Party's transfer agent),
shall be delivered by Debtor to Secured Party upon the Closing of the Merger
Agreement.
4. Taxes. The Debtor will pay promptly when due all taxes and
assessments imposed on or by reason of the Collateral or for its benefit.
5. Increase or Decrease in Value of Collateral. The Collateral
shall remain subject to this Agreement, regardless of increase or decrease in
the value thereof. In the event of decrease in value of the Collateral, the
Debtor shall not be required to submit additional collateral nor, in the case
of increase in the value of the Collateral, shall the Debtor be entitled to a
release of Collateral from the escrow or the security interest hereby granted.
6. Duration. This Agreement shall continue indefinitely until
(i) Wife and Husband have unconditionally released Secured Party and EMCO from
any and all Claims; or (ii) a final, non-appealable judgment has been entered
which absolves Secured Party and EMCO from liability for any and all, Claims
set forth in the Lawsuit, and there, is no other claim by Wife or Husband
pending against Secured Party or EMCO, and Husband has unconditionally released
Secured Party and EMCO from any and all claims. (Certain capitalized terms set
forth herein are defined in the Indemnity Agreement.)
7. Payment. The Debtor shall repay immediately all sums expended
by the Secured Party to protect its rights in accordance with the and provisions
of this Agreement or incurred by Secured Party to protect, perfect or enforce
its rights hereunder, including all reasonable attorneys' fees, including fees
on appeal, whether suit be brought or not.
8. Warrants. During the term of this Agreement, Debtor my
exercise the warrants pledged hereunder (the "Warrants") by complying with the
terms of such Warrants; provided, however, that any shares of Secured Party
issued upon the exercise of the Warrants shall be pledged to Secured Party as
additional collateral subject to the terms of this Agreement, certificates for
such shares shall be issued in the name of Debtor, but such certificates shall
be
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<PAGE> 3
transferred directly from the transfer agent to Secured Party, Secured Party
shall take possession of such certificates, and blank stock powers for such
shares (with Medallion signatures satisfactory to Secured Party's transfer
agent) shall be executed and delivered by Debtor to Secured Party. In the
event neither of the events described in (i) or (ii) of paragraph 6 have
occurred on or before the day immediately preceding the expiration date of the
Warrants and the Warrants have not been exercised, (i) the Warrants may be
exercised by Secured Party on behalf of Debtor with any consideration paid by
Secured Party to be added to Debtor's Obligations hereunder, and the shares
issued shall be subject to all the terms of this Agreement, including the first
sentence of this paragraph 8, or (ii) Secured Party may, but is not obligated
to, extend the exercise date for the Warrants for an additional year, and may
likewise extend the exercise date for an additional year on each subsequent
anniversary.
9. Notification Addresses.
a. The correct address of Debtor for the purposes of
notifications required or appropriate hereunder is as follows:
Empire Metals, Inc.
Mr. Harold Rubenstein, President
2010 W. Lower Buckeye
Phoenix, Arizona 85009
b. The correct address for Secured Party for the
purposes of notifications required or allowed hereunder is as follows:
General Parametrics Corporation
Mr. Gerard Jacobs, President
7600 Augusta Street
River Forest IL 60305
With a copy to:
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
Fielder F. Nelms, Esq.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Each party shall give notice of revisions, to said addresses
which shall take effect upon receipt of same. To be binding hereunder, all
notices, required hereunder shall be by Certified United States, Mail, Return
Receipt Requested.
10. Attorney-in-Fact. Debtor hereby appoints Secured Party as
Debtor's attorney-in-fact to do any and every act which Debtor is obligated
under this Agreement to do, and exercise
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<PAGE> 4
all rights of the Debtor in the Collateral consistent herewith and to make
collections and to execute any and all papers and instruments and to do other
things necessary to preserve and protect the Collateral and the Secured Party's
interest in the said Collateral.
11. Time of Performance and Waiver. In performing any act under
this Agreement, time shall be of the essence. The failure of the Secured Party
to exercise any right or remedy shall not be a waiver of any obligation of the
Debtor or right of the Secured Party or constitute a waiver of any other
similar default subsequently occurring.
12. Default. The failure by Debtor to pay any Obligations within
the ten (10) day notice period set forth below, shall constitute a default
hereunder, entitling Secured Party to the remedies set forth below.
13. Notice of Default. Debtor shall not be in default under this
Agreement until ten (10) days after Secured Party has given written notice to
Debtor of the specific instances of default during which time Debtor shall have
failed to cure the default.
14. Remedies. Upon the occurrence of a default hereunder, the
Secured Party shall have the right to (i) exercise any and all of the rights
and remedies provided by the Uniform Commercial Code as adopted by the State of
Arizona as well as other rights and remedies, either at law or in equity,
possessed by the Secured Party; or (ii) set off against the Shares an amount
measured as follows: each Share set off by Secured Party shall reduce the
Obligations by an amount equal to the average of the bid and ask prices for
such Share on the trading day immediately preceding such day of set off, and if
such Share has not been registered under the Securities Act of 1933, by
multiplying such amount by eighty-five percent (85%); or (iii) set off against
the Warrants an amount measured as follows: (a) the average of the bid and
asking prices for a share of the Secured Party's stock on the trading day
immediately preceding such day of set off, and if the shares purchasable
pursuant to the Warrants have not been registered under the Securities Act of
1933, by multiplying such amount by eighty-five percent (85%), and further
multiplying such amount times the number of shares which the holder of the
Warrant is entitled to purchase, and (b) by reducing the amount in (a) by the
consideration payable by the holder of the Warrant to purchase the number of
shares entitled to be purchased pursuant to such Warrant. The Shares which are
set off by Secured Party or purchased by Secured Party at a foreclosure sale
shall be retired as treasury shares. Secured Party may purchase the Shares
and/or Warrants at a foreclosure sale by crediting Debtor with the amount
determined pursuant to the formulas set forth in this Section 14.
15. Rights of Debtor. Prior to any set off or foreclosure, (i)
all Warrants and Shares shall be owned by Debtor, and (ii) Debtor shall be
entitled to vote the Shares. All cash dividends issued or paid upon the Shares
shall be distributed to Debtor. However, notwithstanding the foregoing, there
shall be deposited with Secured Party all Shares issued to Debtor as a result
of any stock dividend or stock split with respect to the Shares.
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<PAGE> 5
16. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be construed
under and in accordance with the Uniform Commercial Code and other applicable
laws of the State of Arizona, and all obligations of the parties created
hereunder are performable in Maricopa County, Arizona. Both parties submit
themselves to the jurisdiction of the courts of the State of Arizona sitting in
Maricopa County, Arizona, and stipulate that such courts hold proper venue.
(b) Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives and assigns where permitted under this Agreement.
(c) Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other provision thereof and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Stock Pledge and
Security Agreement as of the day and year first above stated.
DEBTOR:
EMPIRE METALS, INC.
an Arizona corporation
Date: 4-11-96 By: Harold Rubenstein
------------------------- ------------------------------
Harold Rubenstein, President
SECURED PARTY:
GENERAL PARAMETRICS CORPORATION,
a Delaware corporation
Date: 4-11-96 By: Gerard M. Jacobs
-------------------------- -----------------------------
Gerard Jacobs, President
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<PAGE> 1
EXHIBIT 10.19
STOCK PLEDGE AND SECURITY AGREEMENT
(Copperstate)
This Stock Pledge and Security Agreement (the "Agreement") is made and
entered into as of the 11th day of April, 1996, by and between COPPERSTATE
METALS, INC., an Arizona Corporation ("Debtor"), and EMCO RECYCLING CORPORATION,
an Arizona corporation ("Secured Party"), as follows:
For value received, Debtor hereby grants to the Secured Party a
security interest in the following described property, hereinafter referred to
as the "Collateral", to-wit: Seventy-one Thousand, Three Hundred (71,300)
shares of the common capital stock of General Parametrics Corporation, par
value $.01 per share, together with all stock dividends, stock splits, and
distribution of shares of subsidiaries or other assets which may at any time
arise from such shares (but excluding any cash dividends) (such shares,
including any shares derived from stock dividends and stock splits are
hereinafter referred to as the "Shares"), to secure during the term of this
Agreement: (1) Debtor's obligations pursuant to that certain Assumption and
indemnity Agreement, of even date herewith, by and between Debtor and Secured
Party, and (2) all reasonable costs and expenses incurred by the Secured Party
in the enforcement of Debtor's obligations under the Assumption and Indemnity
Agreement (with (1) and (2) together herein referred to as the "Obligations").
The Collateral will be kept at the office of Secured Party.
DEBTOR WARRANTS, COVENANTS AND AGREES:
1. Title. Except for the security interest hereby granted, the
Collateral is free from any lien, security interest, encumbrance or claim, and
the Debtor will, at the Debtor's sole cost and expense, defend any action which
may affect the Secured Party's interest herein, or the Debtor's title to the
Collateral. The Shares to be held pursuant to this Agreement shall be issued
with certificates titled in the name of the Debtor.
2. Financing Statement. No financing statement covering the
Collateral or any part thereof or any proceeds thereof is on file in any public
office.
3. Protection Of Collateral. In order to permit Secured Party,
in the event of default hereunder, to accomplish transfer of the Shares
constituting the Collateral, the Debtor shall execute in blank, such stock
powers as Secured Party shall require, and such execution shall remain
irrevocable during the term of this Agreement. The originals of such stock
powers shall be held by Secured Party throughout the term of this Agreement in
accordance with the terms hereof. The stock certificates for the Shares,
together with the blank stock powers for such
<PAGE> 2
Shares (with Medallion signatures satisfactory to Secured Party's transfer
agent), shall be executed and delivered by Debtor to Secured Party upon the
Closing of the Merger Agreement.
4. Taxes. The Debtor will pay promptly when due all taxes and
assessments imposed on or by reason of the Collateral or for its benefit.
5. Increase or Decrease in Value of Collateral. The Collateral
shall remain subject to this Agreement, regardless of increase or decrease in
the value thereof. In the event of decrease in value of the Collateral, the
Debtor shall not be required to submit additional collateral nor, in the case
of increase in the value of the Collateral, shall the Debtor be entitled to a
release of Collateral from the escrow or the security interest hereby granted.
6. Duration. This Agreement shall continue until the second
anniversary of this Agreement, unless on or prior to such time, any of the
claims referred to on Exhibit "A" to the Assumption and Indemnity Agreement
have been asserted against Secured Party, in which case this Agreement shall
continue indefinitely until (i) a final, non-appealable judgment has been
entered which absolves the Secured Party from liability for any and all such
claims; or (ii) the claimant asserting the claim referred to on Exhibit "A" of
the Assumption and Indemnity Agreement has unconditionally released Secured
Party from any and all claims.
7. Payment. The Debtor shall repay immediately all sums expended
by the Secured Party to protect its rights in accordance with the terms and
provisions of this Agreement or incurred by Secured Party to protect, perfect or
enforce its rights hereunder, including all reasonable attorneys' fees,
including fees on appeal, whether suit be brought or not.
8. Notification Addresses.
a. The correct address of Debtor for the purposes of
notifications required or appropriate hereunder is as follows:
Copperstate Metals, Inc.
Mr. David Zack, President
---------------------------
Phoenix, Arizona
----------
b. The correct address for Secured Party for the
purposes of notifications required or allowed hereunder is as follows:
EMCO Recycling Corporation
Mr. George Moorehead, President
3700 W. Lower Buckeye
Phoenix, Arizona 85009
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<PAGE> 3
With a copy to:
Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
Fielder F. Nelms, Esq.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Each Party shall give notice of revisions to said addresses which
shall take effect immediately upon receipt of same. To be binding hereunder,
all notices required hereunder shall be by Certified United States Mail, Return
Receipt Requested.
9. Attorney-in-Fact. Debtor hereby appoints Secured Party as
Debtor's attorney-in-fact to do any and every act which Debtor is obligated
under this Agreement to do, and exercise all rights of the Debtor in the
Collateral consistent herewith and to make Collections and to execute any and
all papers and instruments and to do other things necessary to preserve and
protect the Collateral and the Secured Party's interest in the said Collateral.
10. Time of Performance and Waiver. In performing any act under
this Agreement, time shall be of the essence. The failure of the Secured Party
to exercise any right or remedy shall not be a waiver of any obligation of the
Debtor or right of the Secured Party or constitute a waiver of any other
similar default subsequently occurring.
11. Default. The failure by Debtor to pay any Obligations within
the ten (10) day notice period set forth below, shall constitute a default
hereunder, entitling Secured Party to the remedies set forth below.
12. Notice of Default. Debtor shall not be in default under this
Agreement until ten (10) days after Secured Party has given written notice to
Debtor of the specific instances of default during which time Debtor shall
have failed to cure the default.
13. Remedies. Upon the occurrence of a default hereunder, the
Secured Party shall have the right to (i) exercise any and all of the rights
and remedies provided by the Uniform Commercial Code as adopted by the State of
Arizona as well as other rights and remedies, either at law or in equity,
possessed by the Secured Party; or (ii) set off against the Shares an amount
sufficient to cure the default, measured as follows: each Share set off by
Secured Party shall reduce the Obligations by an amount equal to the bid price
for such Share on the trading day immediately preceding such day of set off,
and if such Share has not been registered under the Securities Act of 1933, by
multiplying such amount by eighty-five percent (85%). The Shares which are set
off by Secured Party or purchased by Secured Party at a foreclosure sale shall
be retired as treasury shares.
14. Rights of Debtor. Prior to any set off or foreclosure, all
Shares shall be owned by Debtor, and Debtor shall be entitled to vote the same.
All cash dividends issued or paid upon the Shares shall be distributed to
Debtor. However, notwithstanding the foregoing, there shall
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<PAGE> 4
be deposited with Secured Party all Shares issued to Debtor as a result of any
stock dividend or stock split with respect to the Shares.
15. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be construed
under and in accordance with the Uniform Commercial Code and other applicable
laws of the State of Arizona, and all obligations of the parties created
hereunder are performable in Maricopa County, Arizona. Both parties submit
themselves to the jurisdiction of the courts of the State of Arizona sitting in
Maricopa County, Arizona, and stipulate that such courts hold proper venue.
(b) Parties Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives and assigns where permitted under this Agreement.
(c) Legal Construction. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other provision thereof and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Stock Pledge and
Security Agreement as of the day and year first above stated.
DEBTOR:
COPPERSTATE METALS, INC.,
an Arizona corporation
Date: April 11, 1996 By: /s/ David M. Zack
------------------------------- ---------------------------
David M. Zack, President
SECURED PARTY:
EMCO RECYCLING CORPORATION,
an Arizona corporation
Date: April 11, 1996 By: /s/ G. O. Moorehead
------------------------------- ---------------------------
George Moorehead, President
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<PAGE> 1
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), effective as of Apr 11
1996, is entered into by and between RAYMOND ZACK (the "Employee") and EMCO
RECYCLING CORP., an Arizona corporation (the "Company"), in consideration of,
and upon, the terms and conditions set forth herein.
I. RECITALS
1.1 The Company in the business of processing scrap metals and
materials with its offices located in the State of Arizona (the "Business").
Employee was a founder and key employee of the Company.
1.2 The Company recognizes that the Employee's contribution as a
founder and employee has been substantial, and the Company desires to assure
the Employee's continued integral involvement in the development and growth of
the Business through employment with the Company on the terms set forth herein,
and Employee is desirous of committing himself to serve the Company on the
terms set forth herein.
1.3 It is a material condition to the Company's obligation to
consummate a merger with a subsidiary of General Parametrics Corporation
("GPAR") that the Employee enter into this Agreement.
1.4 The Company desires to obtain the services of the Employee, in
the capacity described below, on the terms and conditions hereinafter set
forth, and the Employee is willing to accept such employment on such terms and
conditions.
<PAGE> 2
II. EMPLOYMENT BY THE COMPANY
The Company does hereby employ, engage, and hire the Employee on a
full-time basis, and the Employee does hereby accept and agree to such
full-time employment, engagement and hiring. The Employee's duties during the
employment period shall be in a managerial capacity as the Board of Directors
of the Company (the "Board of Directors" or "Board") shall from time to time
prescribe. The Employee will devote his full working time, energy and skill
to the performance of his duties for the Company and for the benefit of the
Company.
Employee's services hereunder shall be performed in Maricopa County,
Arizona (except for temporary out of town work from time to time in the ordinary
course of business). Employee shall not be relocated except upon express
written consent of Employee and upon such terms and conditions as Employee and
Company may agree.
III. EMPLOYMENT PERIOD
A. Initial Term - The Employee shall be employed by the Company
for the duties set forth in Article II above for a five (5) year period,
commencing as of the effective date of the merger (the "Effective Time") and
ending on the fifth anniversary thereof (the "Initial Term"), unless sooner
terminated in accordance with the provisions of this Agreement. Thereafter,
this Agreement shall automatically renew for an additional period of one (1)
year on each subsequent anniversary of the Effective Time (each such one-year
period is referred to
2
<PAGE> 3
as the "Renewal Term") unless either party gives written notice to the other to
terminate this Agreement not less than ninety (90) days prior to such Initial
Term (or Renewal Term). The term "Initial Term" and the term "Renewal Term"
are collectively referred to as the "Employment Period."
IV. CENTRAL COMPENSATION
A. Base Salary - The Company shall pay the Employee, and the
Employee agrees to accept from the Company, a base salary of $120,000 per year
("Base Salary") payable in equal weekly installments or at such other time or
times as the Employee and the company shall agree.
B. Annual Base Salary Increases - The Base Salary for Employee
shall be increased on an annual basis in an amount not less than 7% per year,
including each Renewal Term.
C. Bonus - Employee shall be further entitled to any annual
bonuses and stock options (collectively "Bonus") in an amount, if any, to be
determined by the Board of Directors of the Company in its discretion.
V. BENEFITS
The Employee shall be entitled to the following fringe benefits:
A. Insurance Coverage - The Company shall provide Employee with
medical and dental insurance coverage for Employee and Employee's immediate
family in accordance with the terms and conditions established from time to
time in the Company's insurance plan. Medical and dental insurance benefits
provided
3
<PAGE> 4
to Employee and his immediate family hereunder shall be no less than those
previously provided to Employee by the Company.
B. Benefit Plans - Employee may participate in the Company's 401K
Plan, provided the Employee is eligible to participate therein, to the same
extent Employee participated prior to the Effective Time. In the event such
401K Plan is terminated, Company shall compensate Employee in a
substantially-equivalent manner, provided, that this is lawful pursuant to the
ERISA laws.
C. Vacation - Employee shall be entitled to four (4) weeks paid
vacation during each year with such vacation days to be taken at times mutually
agreed upon by Employee and the Company consistent with his duties hereunder
and in accordance with the Company's policies and reasonable needs of
the Employee and Company.
D. Automobile Expenses - Employee shall receive a car allowance
of $600.00 per month to cover expenses incurred by Employee pursuant to
Employee's use of an automobile, plus a reasonable amount for gas, oil, and
maintenance as a result of extraordinary trip expenses, if any, on company
business approved by the Company.
E. Additional Benefits - In addition to the other benefits
described in this Article V, the Company shall pay standard monthly fees and
Company business air-time expenses for a cellular telephone.
4
<PAGE> 5
VI. BUSINESS EXPENSES
The Company will reimburse the Employee for any and all necessary,
customary and usual expenses, properly receipted in accordance with the
Company's policies applicable to all executive employees, incurred by the
employee on behalf of the Company, including, but not limited to, reasonable
expenses relating to meals and entertainment, and other professional expenses.
The Company will issue to Employee a corporate credit card to be used by
Employee for such business expenses in the discretion of the Company.
VII. TERMINATION
The compensation and other benefits provided to the Employee pursuant
to this Agreement, and the employment of the Employee by the Company, shall be
terminated prior to the expiration of the Initial Term or Renewal Tom only as
provided in this Article VII.
A. Termination Due to Death or Disability - The Employee's
obligations under this Employment Agreement shall automatically terminate (i)
upon the Employee's death, or (ii) if the Employee becomes "disabled" (as
defined below), on the date such disability is determined. The Employee shall
be considered to be "disabled" for purposes of this Article VII if, in the
judgment of a licensed physician selected by the Board of Directors of the
Company and reasonably acceptable to the Employee, the Employee is unable to
perform his customary duties under this Agreement because of a physical or
mental impairment.
5
<PAGE> 6
The determination by said physician shall be binding and conclusive for all
purposes.
B. Termination for Cause - The Company may terminate this Agreement
at any time during the Employment Period for "cause." The term "cause" as used
herein shall mean:
(i) the continued failure by the Employee to substantially perform
his duties under this Agreement (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness) after demand for
substantial performance delivered by the Company to the Employee in a writing
that specifically identifies the manner in which the Company believes the
Employee has not substantially performed his duties and the Employee is given a
reasonable opportunity to cure such failure;
(ii) the conviction of the Employee of a felony charge involving
moral turpitude, or the engagement by the Employee in misconduct relating to
the Company which is materially injurious to the Company, monetarily or
otherwise, including, but not limited to, sexual misconduct, fraud, theft, or
embezzlement; or
(iii) the intentional violation by the Employee of any material
provision of this Agreement, which violation, is not cured within twenty (20)
days after written notice thereof by the Company to the Employee, or within
forty-eight (48) hours for a violation which is not capable of being cured.
6
<PAGE> 7
C. Termination Without Cause - Either the Company or the Employee
may terminate this Agreement without cause at any time during the employment
period by providing the other with thirty (30) days' advance written notice of
termination.
D. Obligations of the Company Upon Termination
(i) Death, Disability or Termination by Employee: If the
Employee's employment is terminated by reason of death or because he is
disabled, or if the Agreement is terminated by Employee at any time for any
reason after the date hereof, the Company shall pay to the Employee (or his
estate) 70% of the Employee's Base Salary in equal weekly installments until
the sooner of (a) the end of the Initial Term (or Renewal Term, as the case may
be), or (b) two (2) years from such event, but in no event shall Employee or
his estate be entitled to receive any Bonus or other fringe benefits following
death or disability or termination by Employee.
(ii) Cause: If the Employee's employment is terminated for
cause, Employee shall receive none of the Base Salary remaining during the
Initial Term and/or Renewal Term, nor shall Employee receive any Bonus or
fringe benefits.
(iii) Termination Without Cause by Company: In the event
that this Agreement is terminated without cause by the Company, the Employee
shall receive from the Company and the Company shall pay to the Employee the
Employee's entire Base Salary in equal weekly installments until the and of the
Initial Term or Renewal Term, and shall continue to provide all
7
<PAGE> 8
insurance coverage, fringe benefits and benefit plan participation provided to
Employee and his immediate family as set forth above.
VIII. RESTRICTIVE COVENANTS.
In order to assure that GPAR will realize the benefits of the Merger
Agreement of even date herewith and in consideration of the transactions set
forth in this Agreement, Employee agrees that he will not for a period of five
(5) years from the later of the Effective Time or the date he ceases to be an
employee, officer or director of GPAR or EMCO:
(a) directly or indirectly, alone or as a
partner, joint venturer, officer, director, employee, consultant, agent,
independent contractor or stockholder of any company or business, engage in any
business activity in the State of Arizona which is directly in competition with
the business conducted by the Company at the Effective Time; provided, however,
that, the beneficial ownership of less than five percent (5%) of the shares of
stock of any corporation having a class of equity securities actively traded on
a national securities exchange, over-the-counter market or foreign exchange
shall not be deemed, in and of itself, to violate the prohibitions of this
Section;
(b) directly or indirectly (i) induce any Person
(as defined in the Merger Agreement) which is a customer of the Company at the
Effective Time to patronize any business directly or indirectly in competition
with the business conducted by the
8
<PAGE> 9
Company; (ii) canvass, solicit or accept from any Person (as defined in the
Merger Agreement) which is a customer of the Company, any such competitive
business, or (iii) request or advise any Person which is a customer of the
Company at the Effective Time to withdraw, curtail or cancel any such
customer's business with the Company;
(c) directly or indirectly employ, or knowingly
permit any company or business directly or indirectly controlled by him, to
employ, any Person who was employed by the Company at or within six (6) months
prior to the Effective Time, or in any manner seek to induce any such Person to
leave his or her employment;
(d) directly or indirectly, at any time following
the Effective Time, in any way utilize, disclose, copy, reproduce or retain in
his possession any of the Company's proprietary rights or records, including,
but not limited to, any of their customer lists.
Employee acknowledges that the restrictions contained in this Section are
reasonable in scope and duration and are necessary to protect the Company after
the Effective Time. If any provision of this Section as applied to any party
or to any circumstance is adjudged by a court to be invalid or unenforceable,
the same will in no way affect any other circumstance or the validity or
enforceability of this Agreement. If any such provision, or any part thereof,
is hold to be unenforceable because of the duration of such provision or
9
<PAGE> 10
the area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced. The parties
agree and acknowledge that the breach of this section will cause irreparable
damage to the Company and upon breach of any provision of this Section, the
Company shall be entitled to injunctive relief, specific performance or other
equitable relief; provided, however, that this shall in no way limit any other
remedies which the Company may have (including, without limitation, the right
to seek monetary damages).
IX. GENERAL PROVISIONS
A. Assignment - This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder.
B. Governing Law - This Agreement and the legal relations hereby
created between the parties hereto shall be governed by and construed under and
in accordance with the laws of the State of Arizona.
C. Entire Agreement - This Agreement embodies the entire
agreement of the parties respecting the matters within its scope, supersedes
any prior agreements concerning these matters and may be modified only in
writing.
10
<PAGE> 11
D. Waiver - Failure to insist upon strict compliance with any of
the terms, covenants or conditions hereof shall not be deemed a waiver of such
term, covenant or condition, nor shall any waiver or relinquishment of, or
failure to insist upon strict compliance with, any right or power hereunder
at any one or more times be deemed a waiver or relinquishment of such right or
power at any other time or times.
E. Attorneys' Fees - The Employee and the Company agree that in
any arbitration or legal proceedings arising out of this Agreement the
prevailing party shall be entitled to its or his reasonable attorneys' fees and
costs of litigation in addition to any other relief granted.
F. Severability - In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation of
any statute or public policy, then only the portions of this Agreement which
violate such statute or public policy shall be stricken. All portions of this
Agreement which do not violate any statute or public policy shall continue in
full force and effect. Further, any court order striking any portion of this
Agreement shall modify the stricken terms to give as such effect an possible to
the intentions of the parties under this Agreement.
G. Indemnification - The Company shall indemnify and hold the
Employee harmless to the maximum extent permitted by law against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
foes, incurred by the
11
<PAGE> 12
Employee in connection with the defense of, or as a result of any action or
proceeding (or any appeal from any action or proceeding) to which the Employee
is made or is threatened to be made a party by reason of the fact that the
Employee is or was an officer, director, or any employee in any capacity of the
Company or any of its affiliates or any employee benefit plan of the Company or
its affiliates, regardless of whether such action or proceeding is brought by
or in the right of the Company, to procure a judgment in its favor, or other
than by or in the right of the Company. The Employee shall not be entitled to
indemnification for any judgments, fines, amounts paid in settlement or expenses
arising out of any action or omission by the Employee which is determined,
pursuant to a final, nonappealable order of any court of competent jurisdiction,
to be grossly negligent, to constitute willful misconduct, or to be in
violation of any law or regulation of the State of Arizona or the United States
of America, unless such action or omission was taken or omitted in good faith
pursuant to a directive or policy of the Board of Directors of the Company.
Notwithstanding anything to the contrary contained herein, the Company's
indemnification obligations hereunder shall terminate upon Company's lawful
termination of this Agreement pursuant to Article VIIB.
H. Arbitration - All disputes or claims between Employee and the
Company relating to this Agreement shall be submitted for resolution exclusively
to arbitration under the Commercial
12
<PAGE> 13
Rules of Arbitration of the American Arbitration Association in Phoenix,
Arizona, no later than one (1) year from the date such claim arises. As a
condition precedent to any such arbitration, the parties shall first
participate in non-binding mediation in Phoenix with costs shared between them.
I. Remedies Not Exclusive - No remedy expressly provided in this
Agreement shall limit the right of any party to avail itself or himself of any
other remedy available to such party, at law or in equity.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Employee has hereunto signed
this Agreement as of the day first above written.
"EMPLOYEE"
/s/ Raymond Zack
---------------------------
Raymond Zack
"THE COMPANY"
EMCO RECYCLING CORP.
By: /s/ G.O. Moorehead
-----------------------
Its: President
----------------------
13
<PAGE> 1
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
(Moorehead)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on the
11th day of April, 1996, by and between GENERAL PARAMETRICS CORPORATION, a
Delaware corporation ("Corporation") and George 0. Moorehead ("Employee").
WITNESSETH:
WHEREAS, the Employee desires to serve the Corporation in a position
of substantial responsibility; and
WHEREAS, the Board of Directors of the Corporation recognizes that the
efforts of certain employees identified by the Board as key management
employees will contribute to the growth and success of the Corporation; and
WHEREAS, the Board of Directors of the Corporation believes that, in
the best interests of the Corporation, it is essential that key management
employees, including Employee, be retained and that the Corporation be in a
position to rely on their dedication and commitment to render services to the
Corporation, irrespective of whether the Corporation is or may be acquired or
merged with or into another corporation.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Corporation and Employee agree as follows:
1. Employment. The Corporation shall employ Employee and
Employee shall serve as an employee of the Corporation for a term of sixty (60)
months from the date hereof ("Employment Period"). The Employment Period and
this Agreement shall automatically be extended for an additional one (1) year
term following the expiration of each Employment Period unless either the
Corporation or the Employee notifies the other in writing at least thirty (30)
days prior to such expiration that the Employment Period and this Agreement
shall not be so extended. Further, if a Change in Control (as defined below)
of the Corporation shall have occurred during the original or extended term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control of the
Corporation occurred. Employee shall serve as Executive Vice President of the
Corporation and President of EMCO Recycling Corp., the Corporation's wholly
owned subsidiary ("EMCO") and shall perform the functions typically associated
with such offices. Employee shall also perform such other managerial,
administrative, technical, and other services as may be designated from time to
time by the Board of Directors of the Corporation appropriate for such officer
positions. Corporation shall not require Employee to be based at an office
location other than Maricopa County, Arizona or to travel without his consent.
Employee shall devote time and attention to matters of the Corporation such
that Employee's services to the Corporation constitute his primary business
activity. The Corporation acknowledges and agrees that Employee will devote a
portion of his time and energies to other entities; however, Employee agrees
that he will consult with the Chairman of the Board and Chief Executive
<PAGE> 2
Officer of the Corporation regarding such entities and that Employee will use
reasonable efforts to minimize the disruption his services to such entities may
cause to the Corporation.
2. Compensation.
(a) Employee shall initially receive as compensation for
all services performed by him hereunder an annual base salary of not less than
One Hundred Sixty Eight Thousand and No/100 Dollars ($168,000). Employee's
salary hereunder shall be reviewed and may be increased by the Board of
Directors of the Corporation or EMCO from time to time. In addition to such
annual base salary, Employee shall receive such annual bonus, if any, in an
amount to be determined by the Board of Directors of the Corporation or EMCO.
(b) Employee shall be entitled to participate in all
present and future bonus, incentive, stock option, stock purchase and other
compensation plans during the Employment Period on a basis commensurate with
his position as an executive officer of the Corporation and consistent with
(but not necessarily exactly equal to) the top executive officers of the
Corporation.
3. Fringe, Benefits. Employee shall be entitled to not less than
six (6) weeks paid vacation per year. The Corporation shall adopt a reasonable
policy for sick leave and short-term disability during which the Employee will
be compensated as provided in Section 2, above. The Corporation shall
reimburse Employee for other ordinary and necessary business expenses incurred
by Employee in the course of his employment. Employee shall also receive such
other fringe benefits as the Corporation's Board of Directors may deem
appropriate, including not less than those fringe benefits set forth on Exhibit
A attached hereto.
4. Change in Control of the Corporation.
(a) No benefits shall be payable under this Section 4
unless there shall have been a Change in Control of the Corporation, as set
forth below. For purposes of this Agreement, a "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 214A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act'), whether or not the Corporation is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if:
(i) Any "person" (as defined in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing thirty percent (30%) or more of the
combined voting power of the Corporation's then outstanding securities computed
on a fully diluted basis;
(ii) During any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
there shall cease to be a majority of the Board
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<PAGE> 3
comprised as follows: individuals who at the beginning of the Employment Period
constitute the Board and any new director(s) whose election by the Board or
nomination for election by the Corporation's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the Employment Period or whose
election or nomination for election was previously so approved; or
(iii) The shareholders of the Corporation: (a)
approve a merger or consolidation of the Corporation with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation; or (b) approve a plan of complete liquidation of the Corporation
or an agreement for the sale or disposition by the Corporation of all or
substantially all the Corporation's assets.
(b) For purposes of this Agreement, a "Potential Change
in Control of the Corporation" shall be deemed to have occurred if,
(i) The Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control of
the Corporation;
(ii) Any person (including the Corporation)
publicly announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control of the Corporation;
(iii) Any person, or a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or a
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock
of the Corporation, who is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing nine and one-half
percent (9 1/2%) or more of the combined voting power of the Corporation's then
outstanding securities, increases his beneficial ownership of such securities
by five percent (5%) or more over the percentage owned by such person on the
date hereof with such percentages computed on a fully diluted basis; or
(iv) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control of the
Corporation has occurred.
(c) Employee agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control of
the Corporation, Employee shall not terminate his employment with the
Corporation until the earliest of:
(i) A date which is six (6) months from the
occurrence of such Potential Change in Control of the Corporation;
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<PAGE> 4
(ii) The termination by Employee of his employment
by reason of Disability or Retirement (at Employee's normal retirement age, as
defined in Subsection 5(a) hereof); or
(iii) The occurrence of a Change in Control of the
Corporation.
5. Termination. Following a Change in-Control of the Corporation.
if any of the events described in Section 4 constituting a Change in Control of
the Corporation shall have occurred, Employee shall be entitled to the benefits
provided in Section 8 hereof immediately upon a termination of his employment
which occurs during the term of this Agreement either by Employee or
Corporation, if such termination is for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without Employee's express written consent,
the occurrence after a Change in Control of the Corporation of any one (1) or
more of the following:
(a) The assignment to Employee of titles, duties,
responsibilities or status inconsistent with his present duties,
responsibilities and status as the Executive Vice-President of the Corporation
and the President of EMCO or a reduction or alteration in the nature or status
of Employee's duties and responsibilities from those in effect as of the date
hereof,
(b) A reduction by the Corporation in Employee's base
salary as in effect on the execution date hereof or as the same shall be
increased from time to time ("Base Salary");
(c) The Corporation's requiring Employee to be based at
an office location other than Phoenix, Arizona;
(d) The failure by the Corporation to continue in effect
the Corporation's insurance, disability, stock option plans and 401(k) plans,
or any other of the Corporation's employee benefit plans, policies, practices
or arrangements in which Employee participates, or the failure by the
Corporation to continue Employee's participation therein on substantially the
same basis, both in terms of the amount of benefits provided and the level of
Employee's participation relative to other participants, as existed as of the
date hereof;
(e) The failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement; and
(f) Any purported termination by the Corporation of
Employee's employment that is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 6(c) below and, for purposes of this
Agreement, no such purported termination shall be effective.
(g) Any breach of this Agreement by the Corporation which
is not cured within 15 days of written notice from Employee to the Corporation
describing such breach.
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<PAGE> 5
6. Termination Generally. This Agreement and Employee's
employment may be terminated by the Corporation prior to its expiration in
accordance with this Section 6 as follows:
(a) Disability Retirement. If, as a result of Employee's
incapacity due to physical or mental illness, Employee shall have been absent
from the performance of his duties with the Corporation for six (6) consecutive
months and, within thirty (30) days after written notice of termination is
given, Employee shall not have returned to the full-time performance of his
duties, the Corporation may terminate Employee's employment for "Disability."
Termination by the Corporation or by Employee of Employee's employment by
reason of "Retirement" shall mean termination on or after Employee's "Normal
Retirement Date" which shall be when the Employee attains the age of 65, or in
accordance with any retirement arrangement established with Employee's consent
with respect to Employee.
(b) The Corporation may terminate this Agreement and
Employee's employment for "Cause." "Cause" shall mean any one of the following:
(i) The willful and continued failure by Employee
to substantially perform his duties with the Corporation (other than any such
failure resulting from termination for Good Reason, Disability or Retirement)
after a demand for substantial performance is delivered to Employee that
specifically identifies the manner in which the Corporation believes that
Employee has not substantially performed his duties, and Employee failing to
resume substantial performance of his duties on a continuous basis within
fourteen (14) days of receiving such demand; provided, that if it is not
reasonably possible for Employee to resume such substantial performance within
such fourteen (14) days, then such fourteen (14) day time period shall be
extended to that minimum period of time during which it is reasonably possible
for Employee to resume such substantial performance;
(ii) The willful engaging by Employee in conduct
which is demonstrably and materially injurious to the Corporation, monetarily
or otherwise and Employee's failure to cease engaging in such conduct within
fourteen (14) days after a demand for such cessation is delivered to Employee
by the Corporation that specifically identifies such conduct; provided,
however, that if it is not reasonably possible for Employee to cease such
conduct within such fourteen (14) days, then such fourteen (14) day time period
shall be extended to that minimum period of time during which it is reasonably
possible for Employee to cease such conduct; or
(iii) Employee's conviction of a felony or
conviction of a misdemeanor which materially impairs Employee's ability
substantially to perform his duties with the Corporation. For purposes of this
subsection, no act, or failure to act, on Employee's part shall be deemed
"willful" unless done, or omitted to be done, by Employee not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Corporation.
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<PAGE> 6
(c) Notice of Termination. Any termination by the
Corporation for Cause or by Employee for Good Reason shall be communicated by
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the provision so
indicated.
(d) Date of Termination "Date of Termination" shall mean
the date specified in the Notice of Termination where required or, in any other
case, the date upon which Employee ceases to perform services to the
Corporation; provided that if within thirty (30) days after any Notice of
Termination one party notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date finally determined
to be the Date of Termination, either by mutual written agreement of the
parties or by the final, nonappealable determination of a court of competent
jurisdiction.
7. Compensation Upon Termination Generally. Employee shall be
entitled to the following benefits upon termination for reason other than the
Change of Control as set forth in Section 4 hereof, as additional benefits
under this Agreement and as compensation for the Covenant Not to Compete set
forth in Section 9 hereof:
(a) During any portion of the Employment Period that
Employee fails to perform his full-term, duties with the Corporation as a
result of incapacity due to physical or mental illness or other disability,
Employee shall continue to receive his Base Salary at the rate in effect at the
commencement of any such portion of the Employment Period, until Employee's
employment is terminated pursuant to subsection 6(a) hereof. Thereafter,
Employee's benefits shall be determined in accordance with the Corporation's
retirement, insurance and other applicable programs and plans then in effect.
(b) If Employee's employment shall be terminated by the
Corporation for Cause, the Corporation shall pay Employee his full Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given or on the Date of Termination if no Notice of Termination
is required hereunder, plus all other amounts to which Employee is entitled
under any compensation plan of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to Employee under
this Agreement.
(c) If Employee voluntarily terminates his employment, for
any reason other than for Good Reason, Employee must provide the Corporation
with at least ninety (90) days prior notice and shall be entitled to receive
seventy percent (70%) of the Employee's Base Salary at the rate in effect at the
date of notice of termination by Employee for a period of 36 months after such
notice. Employee's salary payable under this section shall be reduced dollar
for dollar by any compensation Employee receives from another employer for any
other employment during the 36 month period.
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<PAGE> 7
8. Compensation Upon Termination for Change of Control. Following
a Change in Control of the Corporation, as defined in Section 4, hereof, upon
termination of Employee's employment either by Employee or Corporation, Employee
shall be entitled to the following benefits ("Severance Benefits") as severance
benefits and as compensation for the Covenant Not to Compete set forth in
Section 9 hereof.
(a) The Corporation shall pay Employee his full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, or the Date of Termination where no Notice of
Termination is required hereunder;
(b) The Corporation shall pay as Severance Benefits, and
as compensation for the Covenant Not to Compete to Employee, not later than the
tenth day following the Date of Termination, a lump sum severance payment equal
to the product of:
(i) The sum of:
(A) Employee's annual Base Salary in
effect immediately prior to the
occurrence of the circumstances
giving rise to such termination; and
(B) The highest annual bonus awarded to
Employee during the previous three
(3) years of employment; times
(ii) The lesser of:
(A) Five (5); or
(B) The number of whole and fractional
years occurring between Employee's
Date of Termination and his Normal
Retirement Date;
(c) AU options and warrants to purchase common stock or
other securities of the Corporation ("Options"), if any, granted to Employee
under the Corporation's Stock Option Plans or otherwise, together with any
additional, substitute or successor option program or plan as may be in effect
from time to time then held by Employee shall fully vest as of the Date of
Termination and shall remain outstanding and exercisable until the expiration
date of such options and warrants (without regard to any early termination of
such option or warrant resulting from Employee's termination of employment).
(d) For a sixty (60) month period after such termination,
the Corporation will arrange to provide Employee, at the Corporation's expenses,
with benefits under the Corporation's applicable employee hinge benefit plans,
which benefits shall be the same or substantially as those enjoyed by Employee
immediately prior to the Notice of Termination but in no event shall Employee be
provided the benefits described herein after his Normal
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<PAGE> 8
Retirement Date and provided further that benefits otherwise receivable by
Employee pursuant to this subsection (d) shall be reduced to the extent
comparable benefits are actually received by Employee during the sixty (60)
month period following Employee's termination, and any such benefits actually
received by Employee shall be reported to the Corporation.
(e) In the event the amount of Severance Payments that
Employee would be entitled to receive hereunder, following a Change in Control
of the Corporation, upon termination of Employee's employment, would, under any
applicable provision of law, render the validity, legality or enforceability of
this Agreement and the Severance Payments made hereunder contingent upon this
Agreement having first been approved by the affirmative vote of a majority of
the aggregate outstanding voting securities of the Corporation:
(i) The Severance Payments due Employee hereunder
shall be reduced to the extent necessary to avoid rendering this Agreement
subject, under any applicable provision of law, to prior shareholder approval
as specified above; or
(ii) If Severance Payments have previously been
made to Employee hereunder, the amount of which Severance Payments would render
this Agreement subject to prior shareholder approval, as specified above, as a
condition precedent to its validity, legality or enforceability, Employee shall
immediately repay to the Corporation that portion of the Severance Payments
which served to render this Agreement subject to said prior shareholder
approval.
(f) The payments provided for in subsection (b) above
shall be made not later than the tenth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Corporation shall pay to Employee on such
day an estimate as determined in good faith by the Corporation of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Internal
Revenue Code of 1986, as amended (the "Code") (or any similar tax that may
hereafter be imposed) as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Corporation to Employee payable on the tenth day after demand by the
Corporation (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to Employee all legal
fees and expenses incurred by Employee as a result of such termination of
employment (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement) or in connection with any tax
audit or proceeding to the extent attributable to any payment or benefit
provided hereunder.
(h) Employee shall not be required to mitigate the amount
of any payment provided for in this Section 8 by seeking other employment or
otherwise, nor shall the amount
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<PAGE> 9
of any payment provided for in this Section 8 be reduced by any compensation
earned by Employee as the result of employment by another employer after the
Date of Termination or otherwise.
(i) The Severance Payments to be paid pursuant to
subsection (b) above are not intended as stipulated or liquidated damages for
breach of any promise of a term of employment, no such promise being made
herein, but are payments which shall be fully earned as of the Date of
Termination and shall be compensation for Employee's continued services
rendered to the Corporation after the date hereof and prior to such Date of
Termination; for the covenant not to compete provision of Section 9 hereof; the
foregoing of other, possibly more secure employment; consequential losses which
may result from such termination, including, but not limited to, permanent
injury to reputation, loss of career development opportunities, and emotional
stress; and actual losses which may result from such termination, including,
but not limited to, lost wages and expenses of securing other employment.
(j) The Corporation shall have no obligation to provide
or cause to be provided to Employee the benefits described in this Agreement,
other than those provided in Section 7 hereof, if the Corporation or Employee
shall terminate Employee's employment prior to a Change of Control.
(k) In the event that Employee becomes entitled to the
Severance Payments, if it is determined that any of the Severance Payments will
be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code
(or any similar tax that may hereafter be imposed), the Employee shall have the
option, but not the obligation, to reduce the amount of the Severance Payments
to an amount which will result in the Severance Payments no being subject to the
Excise Tax. The Corporation will cooperate with Employee in every way possible
to restructure the Severance Payments to achieve such result.
9. Restrictive Covenants. Employee agrees with the Corporation
that he will not for a period of five years from the date he ceases to be an
officer, director, employee or consultant of the Corporation:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any business
activity in Arizona, California, New Mexico, Nevada, Texas and Utah that is
directly in Competition with the Business conducted by EMCO or the Corporation
as of the date hereof; provided, however, that the beneficial ownership of
less than five percent (5%) of the shares of stock of any corporation having a
class of equity securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly (i) induce any Person that is
a customer of EMCO or the Corporation as of date hereof to patronize any
business directly in Competition with the Business conducted by EMCO or the
Corporation; (ii) canvass, solicit or accept from any Person
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<PAGE> 10
that is a customer of EMCO or the Corporation, any such Competitive business,
or (iii) request or advise any Person that is a customer of EMCO or the
Corporation as of the date hereof to withdraw, curtail or cancel any such
customer's business with EMCO or the Corporation;
(c) directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to employ,
any Person who was employed by EMCO or the Corporation at or within six months
prior to the date hereof, or in any manner seek to induce any such Person to
leave his or her employment;
For purposes of this Agreement, the term "Business" shall mean metal
recycling and the terms "Competitive" and "Competition" shall mean a business
whose primary activity is metal recycling.
Employee agrees and acknowledges that the restrictions contained
herein are reasonable in scope and duration and are necessary to protect EMCO
and the Corporation. If any provision of this Section, as applied to any party
or to any circumstance is adjudged by a court to be invalid or unenforceable,
the same will in no way affect any other circumstance or the validity or
enforceability of this Agreement. If any such provision, or any part thereof,
is held to be unenforceable because of the duration of such provision or the
area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced. The parties
agree and acknowledge that the breach of this Section will cause irreparable
damage to EMCO and the Corporation and upon breach of any provision of this
Section, EMCO and the Corporation shall be entitled to injunctive relief,
specific performance or other equitable relief, provided, however, that, this
shall in no way limit any other remedies which EMCO and the Corporation may
have (including, without limitation, the right to seek monetary damages). For
purposes of this Section, "Person" means an individual, partnership,
corporation, business trust, joint stock company, estate, trust, unincorporated
association, joint venture, governmental authority or other entity, of whatever
nature.
10. Confidential Information. Employee shall not, during the
Employment Period or thereafter, disclose to any person any confidential
information obtained from or regarding the Corporation or its affiliates,
including, without limitation, contracts, business plans, forms, lists,
manuals, or any budgetary, sales, marketing, financial, procedural or
operations materials or information, or any other nonpublic information
intended to be confidential prepared by or for the benefit of the Corporation
or its affiliates. If Employee shall leave the employment of the Corporation
for any reason, the Employee agrees not to take with him any such documents,
materials or information or other data of any description or any copy or
reproduction of any of the foregoing.
11. Enforceability. The failure of either party at any time to
require performance by the other party of any provision hereunder shall in no
way affect the right of that party thereafter to enforce the same, nor shall it
affect any other party's right to enforce the same, or to enforce
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<PAGE> 11
any of the other provisions in this Agreement; nor shall the waiver by either
party of the breach of any provision hereof be taken or held to be a waiver of
any subsequent breach of such provision or as a waiver of the provision itself.
12. Successors; Binding Agreement.
(a) The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing Employee to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Corporation in
the same amount and on the same terms as Employee would be entitled hereunder
if Employee terminated his employment for Good Reason, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrator, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amount would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designees or, if there is no such designee, to
Employee's estate.
13. Modification. This Agreement may not be canceled, changed,
modified or amended, and no cancellation, change, modification or amendment
will be effective or binding unless in writing and signed by both parties to
this Agreement.
14. Severability: Survival. In the event any provision of this
Agreement is found to be void and unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of laws principles thereof.
16. Counterparts. This Agreement may be executed simultaneously
in several counterparts, each of which will be an original, but all of which
together will constitute one and the same original.
17. Entire Agreement. This Agreement represents the entire
agreement between the Corporation and the Employee with respect to the subject
matter hereof, and all prior agreements
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<PAGE> 12
relating to the relationship between the Employee and the Corporation, written
or oral, are nullified and superseded hereby.
18. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
GENERAL PARAMETRICS
CORPORATION
By: /s/ Gerard M. Jacobs
---------------------------
Name: Gerard M. Jacobs
Title: Chief Executive Officer
EMPLOYEE:
/s/ George O. Moorehead
-------------------------------
George O. Moorehead
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<PAGE> 14
EXHIBIT A
1. $1,000 per month car allowance (any excess not used to pay for car to
be paid to Employee as compensation) plus reimbursement for gas, oil,
repairs and maintenance.
2. Company phones at home offices, car phone, cellular phone.
3. $750,000 whole life insurance policy and $750,000 term life insurance
policy, each with Employee or Employee's designee as the beneficiary.
4. Health and dental insurance, 401(k) plan, disability insurance.
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<PAGE> 1
EXHIBIT 10.22
EMPLOYMENT AGREEMENT
(Jennings)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on the 9th
day of April, 1996, by and between GENERAL PARAMETRICS CORPORATION, a Delaware
corporation ("Corporation") and T. Benjamin Jennings ("Employee").
WITNESSETH:
WHEREAS, the Employee desires to serve the Corporation in a position
of substantial responsibility; and
WHEREAS, the Board of Directors of the Corporation recognizes that the
efforts of certain employees identified by the Board as key management
employees will contribute to the growth and success of the Corporation; and
WHEREAS, the Board of Directors of the Corporation believes that, in
the best interests of the Corporation, it is essential that key management
employees, including Employee, be retained and that the Corporation be in a
position to rely on their dedication and commitment to render services to the
Corporation, irrespective of whether the Corporation is or may be acquired or
merged with or into another corporation.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Corporation and Employee agree as follows:
1. Employment. The Corporation shall employ Employee and Employee
shall serve as an employee of the Corporation for a term of sixty (60) months
from the date hereof ("Employment Period"). The Employment Period and this
Agreement shall automatically be extended for an additional one (1) year term
following the expiration of each Employment Period unless either the
Corporation or the Employee notifies the other in writing at least thirty (30)
days prior to such expiration that the Employment Period and this Agreement
shall not be so extended. Further, if a Change in Control (as defined below)
of the Corporation shall have occurred during the original or extended term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control of the
Corporation occurred. Employee shall serve as Chairman of the Board and Chief
Development Officer of the Corporation and shall perform the functions
typically associated with such offices. Employee shall also perform such other
managerial, administrative, technical, and other services as may be designated
from time to time by the Board of Directors of the Corporation appropriate for
such officer positions. Corporation shall not require Employee to be based at
an office location other than downtown Chicago, Illinois. Employee shall
devote time and attention to matters of the Corporation such that Employee's
services to the Corporation constitute his primary business activity. The
Corporation acknowledges and agrees that Employee will devote a portion of his
time and energies to the entities set forth on Exhibit "A" attached hereto;
however, Employee agrees that he will use reasonable efforts to minimize the
disruption his services to such entities may cause to the Corporation. In the
event that
<PAGE> 2
Gerard M. Jacobs ("Jacobs") ceases for any reason to be employed by the Company
during the Employment Period, Employee shall also be appointed President and
Chief Executive Officer of the Company for the balance of the Employment
Period.
2. Compensation.
(a) Employee shall initially receive as compensation for
all services performed by him hereunder an annual base salary of not less than
One Hundred Sixty Eight Thousand and No/100 Dollars ($168,000). Employee's
salary hereunder shall be reviewed and may be increased by the Board of
Directors of the Corporation from time to time. In addition to such annual
base salary, Employee shall receive such annual bonus, if any, in an amount to
be determined by the Board of Directors.
(b) For so long as Employee and Jacobs are both employed
by the Corporation, Employee's compensation shall be no less than the
compensation paid to Jacobs (including, but not limited to, annual base salary,
bonus and fringe benefits under Section 3).
(c) Employee shall be entitled to participate in all
present and future bonus, incentive, stock option, stock purchase and other
compensation plans during the Employment Period on a basis commensurate with
his position as one of the two most senior executive officers of the
Corporation.
3. Fringe Benefits. Employee shall be entitled to not less than
six (6) weeks paid vacation per year. The Corporation shall adopt a reasonable
policy for sick leave and short-term disability during which the Employee will
be compensated as provided in Section 2, above. The Corporation shall
reimburse Employee for other ordinary and necessary business expenses incurred
by Employee in the course of his employment. Employee shall also receive such
other fringe benefits as the Corporation's Board of Directors may deem
appropriate, including not less than those fringe benefits set forth on Exhibit
B attached hereto.
4. Change in Control of the Corporation.
(a) No benefits shall be payable under this Section 4
unless there shall have been a Change in Control of the Corporation, as set
forth below. For purposes of this Agreement, a 'Change in Control of the
Corporation' shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") whether or not the Corporation is then subject to such reporting
requirement; provided that, without limitation, such a Change in Control shall
be deemed to have occurred if:
(i) Any "person" (as defined in Sections 13(d) and
14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Corporation representing thirty percent
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<PAGE> 3
(30%) or more of the combined voting power of the Corporation's then
outstanding securities computed on a fully diluted basis;
(ii) During any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
there shall cease to be a majority of the Board comprised as follows:
individuals who at the beginning of the Employment Period constitute the Board
and any new director(s) whose election by the Board or nomination for election
by the Corporation's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the Employment Period or whose election or nomination for election
was previously so approved; or
(iii) The shareholders of the Corporation: (a)
approve a merger or consolidation of the Corporation with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least eighty percent (80%)
of the combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation; or (b) approve a plan of complete liquidation of the Corporation
or an agreement for the sale or disposition by the Corporation of all or
substantially all the Corporation's assets.
(b) For purposes of this Agreement, a "Potential Change
in Control of the Corporation" shall be deemed to have occurred if:
(i) The Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control of
the Corporation;
(ii) Any person (including the Corporation)
publicly announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control of the Corporation;
(iii) Any person, or a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or a
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock
of the Corporation, who is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing nine and one-half
percent (9 1/2 %) or more of the combined voting power of the Corporation's
then outstanding securities, increases his beneficial ownership of such
securities by five percent (5%) or more over the percentage owned by such
person on the date hereof with such percentages computed on a fully diluted
basis; or
(iv) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control of the
Corporation has occurred.
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<PAGE> 4
(c) Employee agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control of
the Corporation, Employee shall not terminate his employment with the
Corporation until the earliest of:
(i) A date which is six (6) months from the
occurrence of such Potential Change in Control of the Corporation;
(ii) The termination by Employee of his employment
by reason of Disability or Retirement (at Employee's normal retirement age, as
defined in Subsection 5(a) hereof); or
(iii) The occurrence of a Change in Control of the
Corporation.
5. Termination Following a Change in Control of the Corporation.
If any of the events described in Section 4 constituting a Change in Control of
the Corporation shall have occurred, Employee shall be entitled to the benefits
provided in Section 8 hereof immediately upon a termination of his employment
which occurs during the term of this Agreement either by Employee or
Corporation, if such termination is for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without Employee's express written
consent, the occurrence after a Change in Control of the Corporation of any one
(1) or more of the following:
(a) The assignment to Employee of titles, duties,
responsibilities or status inconsistent with his present duties,
responsibilities and status as the Chairman of the Board and Chief Development
Officer of the Corporation or a reduction or alteration in the nature or status
of Employee's duties and responsibilities from those in effect as of the date
hereof,
(b) A reduction by the Corporation in Employee's base
salary as in effect on the execution date hereof or as the same shall be
increased from time to time ("Base Salary");
(c) The Corporation's requiring Employee to be based at
an office location other than downtown Chicago, Illinois;
(d) The failure by the Corporation to continue in effect
the Corporation's insurance, disability, stock option plans and 401(k) plans,
or any other of the Corporation's employee benefit plans, policies, practices
or arrangements in which Employee participates, or the failure by the
Corporation to continue Employee's participation therein on substantially the
same basis, both in terms of the amount of benefits provided and the level of
Employee's participation relative to other participants, as existed as of the
date hereof;
(e) The failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement; and
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<PAGE> 5
(f) Any purported termination by the Corporation of
Employee's employment that is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 6(c) below and, for purposes of this
Agreement, no such purported termination shall be effective.
(g) Any breach of this Agreement by the Corporation which
is not cured within 15 days of written notice from Employee to the Corporation
describing such breach.
6. Termination Generally. This Agreement and Employee's
employment may be terminated by the Corporation prior to its expiration in
accordance with this Section 6 as follows:
(a) Disability; Retirement. If, as a result of
Employee's incapacity due to physical or mental illness, Employee shall have
been absent from the performance of his duties with the Corporation for six (6)
consecutive months and, within thirty (30) days after written notice of
termination is given, Employee shall not have returned to the full-time
performance of his duties, the Corporation may terminate Employee's employment
for "Disability." Termination by the Corporation or by Employee of Employee's
employment by reason of "Retirement" shall mean termination on or after
Employee's "Normal Retirement Date" which shall be when the Employee attains
the age of 65, or in accordance with any retirement arrangement established
with Employee's consent with respect to Employee.
(b) The Corporation may terminate this Agreement and
Employee's employment for "Cause." "Cause" shall mean any one of the following:
(i) The willful and continued failure by Employee
to substantially perform his duties with the Corporation (other than any such
failure resulting from termination for Good Reason, Disability or Retirement)
after a demand for substantial performance is delivered to Employee that
specifically identifies the manner in which the Corporation believes that
Employee has not substantially performed his duties, and Employee failing to
resume substantial performance of his duties on a continuous basis within
fourteen (14) days of receiving such demand; provided, that if it is not
reasonably possible for Employee to resume such substantial performance within
such fourteen (14) days, then such fourteen (14) day time period shall be
extended to that minimum period of time during which it is reasonably possible
for Employee to resume such substantial performance;
(ii) The willful engaging by Employee in conduct
which is demonstrably and materially injurious to the Corporation, monetarily
or otherwise and Employee's failure to cease engaging in such conduct within
fourteen (14) days' after a demand for such cessation is delivered to Employee
by the Corporation that specifically identifies such conduct; provided,
however, that if it is not reasonably possible for Employee to cease such
conduct within such fourteen (14) days, then such fourteen (14) day time period
shall be extended to that minimum period of time during which it is reasonably
possible for Employee to cease such conduct; or
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<PAGE> 6
(iii) Employee's conviction of a felony or
conviction of a misdemeanor which materially impairs Employee's ability
substantially to perform his duties with the Corporation. For purposes of this
subsection, no act, or failure to act, on Employee's part shall be deemed
"willful" unless done, or omitted to be done, by Employee not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Corporation.
(c) Notice of Termination. Any termination by the
Corporation for Cause or by Employee for Good Reason shall be communicated by
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under the provision so
indicated.
(d) Date of Termination. "Date of Termination" shall
mean the date specified in the Notice of Termination where required or, in any
other case, the date upon which Employee ceases to perform services to the
Corporation; provided that if within thirty (30) days after any Notice of
Termination one party notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date finally determined
to be the Date of Termination, either by mutual written agreement of the
parties or by the final, nonappealable determination of a court of competent
jurisdiction.
7. Compensation Upon Termination Generally. Employee shall be
entitled to the following benefits upon termination for reason other than the
Change of Control as set forth in Section 4 hereof, as additional benefits
under this Agreement and as compensation for the Covenant Not to Compete set
forth in Section 9 hereof.
(a) During any portion of the Employment Period that
Employee fails to perform his full-term duties with the Corporation as a
result of incapacity due to physical or mental illness or other disability,
Employee shall continue to receive his Base Salary at the rate in effect at the
commencement of any such portion of the Employment Period, until Employee's
employment is terminated pursuant to subsection 6(a) hereof. Thereafter,
Employee's benefits shall be determined in accordance with the Corporation's
retirement, insurance and other applicable programs and plans then in effect.
(b) If Employee's employment shall be terminated by the
Corporation for Cause, the Corporation shall pay Employee his full Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given or on the Date of Termination if no Notice of Termination
is required hereunder, plus all other amounts to which Employee is entitled
under any compensation plan of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to Employee under
this Agreement.
(c) If Employee voluntarily terminates his employment for
any reason other than for Good Reason, Employee must provide the Corporation
with at least ninety (90) days prior notice and shall be entitled to receive
seventy percent (70%) of the Employee's Base Salary
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<PAGE> 7
at the rate in effect at the date of notice of termination by Employee for a
period of 36 months after such notice. Employee's salary payable under this
section shall be reduced dollar for dollar by any compensation Employee
receives from another employer for any other employment during the 36 month
period.
8. Compensation Upon Termination for Change of Control. Following
a Change in Control of the Corporation, as defined in Section 4, hereof, upon
termination of Employee's employment either by Employee or Corporation,
Employee shall be entitled to the following benefits ("Severance Benefits") as
severance benefits and as compensation for the Covenant Not to Compete set
forth in Section 9 hereof:
(a) The Corporation shall pay Employee his full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, or the Date of Termination where no Notice of
Termination is required hereunder;
(b) The Corporation shall pay as Severance Benefits, and
as compensation for the Covenant Not to Compete to Employee, not later than the
tenth day following the Date of Termination, a lump sum severance payment equal
to the product of:
(i) The sum of:
(A) Employee's annual Base Salary in
effect immediately prior to the
occurrence of the circumstances
giving rise to such termination; and
(B) The highest annual bonus awarded to
Employee during the previous three
(3) years of employment; times
(ii) The lesser of:
(A) Five (5); or
(B) The number of whole and fractional
years occurring between Employee's
Date of Termination and his Normal
Retirement Date;
(c) All options and warrants to purchase common stock or
other securities of the Corporation ("Options"), if any, granted to Employee
under the Corporation's Stock Option Plans or otherwise, together with any
additional, substitute or successor option program or plan as may be in effect
from time to time then held by Employee shall fully vest as of the Date of
Termination and shall remain outstanding and exercisable until the expiration
date of such options and warrants (without regard to any early termination of
such option or warrant resulting from Employee's termination of employment).
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<PAGE> 8
(d) For a sixty (60) month period after such termination,
the Corporation will arrange to provide Employee, at the Corporation's
expenses, with benefits under the Corporation's applicable employee fringe
benefit plans, which benefits shall be the same or substantially as those
enjoyed by Employee immediately prior to the Notice of Termination but in no
event shall Employee be provided the benefits described herein after his Normal
Retirement Date and provided further that benefits otherwise receivable by
Employee pursuant to this subsection (d) shall be reduced to the extent
comparable benefits are actually received by Employee during the sixty (60)
month period following Employee's termination, and any such benefits actually
received by Employee shall be reported to the Corporation.
(e) In the event the amount of Severance Payments that
Employee would be entitled to receive hereunder, following a Change in Control
of the Corporation, upon termination of Employee's employment, would, under any
applicable provision of law, render the validity, legality or enforceability of
this Agreement and the Severance Payments made hereunder contingent upon this
Agreement having first been approved by the affirmative vote of a majority of
the aggregate outstanding voting securities of the Corporation:
(i) The Severance Payments due Employee hereunder
shall be reduced to the extent necessary to avoid rendering this Agreement
subject, under any applicable provision of law, to prior shareholder approval
as specified above; or
(ii) If Severance Payments have previously been
made to Employee hereunder, the amount of which Severance Payments would render
this Agreement subject to prior shareholder approval, as specified above, as a
condition precedent to its validity, legality or enforceability, Employee shall
immediately repay to the Corporation that portion of the Severance Payments
which served to render this Agreement subject to said prior shareholder
approval.
(f) The payments provided for in subsection (b) above
shall be made not later than the tenth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Corporation shall pay to Employee on such
day an estimate as determined in good faith by the Corporation of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Internal
Revenue Code of 1986, as amended (the "Code") (or any similar tax that may
hereafter be imposed) as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Corporation to Employee payable on the tenth day after demand by the
Corporation (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to Employee all legal
fees and expenses incurred by Employee as a result of such termination of
employment (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain
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<PAGE> 9
or enforce any right or benefit provided by this Agreement) or in connection
with any tax audit or proceeding to the extent attributable to any payment or
benefit provided hereunder.
(h) Employee shall not be required to mitigate the amount
of any payment provided for in this Section 8 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 8
be reduced by any compensation earned by Employee as the result of employment
by another employer after the Date of Termination or otherwise.
(i) The Severance Payments to be paid pursuant to
subsection (b) above are not intended as stipulated or liquidated damages for
breach of any promise of a term of employment, no such promise being made
herein, but are payments which shall be fully earned as of the Date of
Termination and shall be compensation for Employee's continued services
rendered to the Corporation after the date hereof and prior to such Date of
Termination; for the covenant not to compete provision of Section 9 hereof;
the foregoing of other, possibly more secure employment; consequential losses
which may result from such termination, including, but not limited to,
permanent injury to reputation, loss of career development opportunities, and
emotional stress; and actual losses which may result from such termination,
including, but not limited to, lost wages and expenses of securing other
employment.
(j) The Corporation shall have no obligation to provide
or cause to be provided to Employee the benefits described in this Agreement,
other than those provided in Section 7 hereof, if the Corporation or Employee
shall terminate Employee's employment prior to a Change of Control.
(k) In the event that Employee becomes entitled to the
Severance Payments, if it is determined that any of the Severance Payments will
be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code
(or any similar tax that may hereafter be imposed), the Employee shall have the
option, but not the obligation, to reduce the amount of the Severance Payments
to an amount which will result in the Severance Payments no being subject to
the Excise Tax. The Corporation will cooperate with Employee in every way
possible to restructure the Severance Payments to achieve such result.
9. Restrictive Covenants. Employee agrees with the Corporation
that he will not for a period of five years from the date he ceases to be an
officer, director, employee or consultant of the Corporation:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any business
activity in Arizona, California, New Mexico, Nevada, Texas and Utah that is
directly in Competition with the Business conducted by EMCO Recycling Corp.
("EMCO") or the Corporation as of the date hereof; provided, however, that the
beneficial ownership of less than five percent (5%) of the shares of stock of
any corporation having a class
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<PAGE> 10
of equity securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly (i) induce any Person that is
a customer of EMCO or the Corporation as of date hereof to patronize any
business directly in Competition with the Business conducted by EMCO or the
Corporation; (ii) canvass, solicit or accept from any Person that is a customer
of EMCO or the Corporation, any such Competitive business, or (iii) request or
advise any Person that is a customer of EMCO or the Corporation as of the date
hereof to withdraw, curtail or cancel any such customer's business with EMCO or
the Corporation;
(c) directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to employ,
any Person who was employed by EMCO or the Corporation at or within six months
prior to the date hereof, or in any manner seek to induce any such Person to
leave his or her employment;
For purposes of this Agreement, the term "Business" shall mean metal
recycling and the terms "Competitive" and "Competition" shall mean a business
whose primary activity is metal recycling.
Employee agrees and acknowledges that the restrictions contained
herein are reasonable in scope and duration and are necessary to protect EMCO
and the Corporation. If any provision of this Section, as applied to any party
or to any circumstance is adjudged by a court to be invalid or unenforceable,
the same will in no way affect any other circumstance or the validity or
enforceability of this Agreement. If any such provision, or any part thereof,
is held to be unenforceable because of the duration of such provision or the
area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced. The parties
agree and acknowledge that the breach of this Section will cause irreparable
damage to EMCO and the Corporation and upon breach of any provision of this
Section, EMCO and the Corporation shall be entitled to injunctive relief,
specific performance or other equitable relief, provided, however, that, this
shall in no way limit any other remedies which EMCO and the Corporation may
have (including, without limitation, the right to seek monetary damages). For
purposes of this Section, "Person" means an individual, partnership,
corporation, business trust, joint stock company, estate, trust, unincorporated
association, joint venture, governmental authority or other entity, of whatever
nature.
10. Confidential Information. Employee shall not, during the
Employment Period or thereafter, disclose to any person any confidential
information obtained from or regarding the Corporation or its affiliates,
including, without limitation, contracts, business plans, forms, lists,
manuals, or any budgetary, sales, marketing, financial, procedural or
operations materials or information, or any other nonpublic information
intended to be confidential prepared by or for the benefit of the Corporation
or its affiliates. If Employee shall leave the employment of the Corporation
for any reason, the Employee agrees not to take with him any such documents,
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<PAGE> 11
materials or information or other data of any description or any copy or
reproduction of any of the foregoing:
11. Enforceability. The failure of either party at any time to
require performance by the other party of any provision hereunder shall in no
way affect the right of that party thereafter to enforce the same, nor shall it
affect any other party's right to enforce the same, or to enforce any of the
other provisions in this Agreement; nor shall the waiver by either party of the
breach of any provision hereof be taken or held to be a waiver of any
subsequent breach of such provision or as a waiver, of the provision itself.
12. Successors; Binding Agreement.
(a) The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing Employee to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Corporation in
the same amount and on the same terms as Employee would be entitled hereunder
if Employee terminated his employment for Good Reason, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrator, successors, heirs, distributees, devisees and legatees. If
Employee should die while any amount would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designees or, if there is no such designee, to
Employee's estate.
13. Modification. This Agreement may not be canceled, changed,
modified or amended, and no cancellation, change, modification or amendment will
be effective or binding unless in writing and signed by both parties to this
Agreement.
14. Severability; Survival. In the event any provision of this
Agreement is found to be void and unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of laws principles thereof.
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<PAGE> 12
16. Counterparts. This Agreement may be executed simultaneously
in several counterparts, each of which will be an original, but all of which
together will constitute one and the same original.
17. Entire Agreement. This Agreement represents the entire
agreement between the Corporation and the Employee with respect to the subject
matter hereof, and all prior agreements relating to the relationship between
the Employee and the Corporation, written or oral, are nullified and superseded
hereby.
18. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
GENERAL PARAMETRICS
CORPORATION
By: Gerard M. Jacobs
-------------------------
Name: Gerard M. Jacobs
----------------------
Title: President
----------------------
EMPLOYEE:
T. Benjamin Jennings
--------------------
T. Benjamin Jennings.
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<PAGE> 14
EXHIBIT "A"
1 Armstrong Fiber Optic Networks, Inc.
2. Crown Casino Corporation
3. Miss Mimi Corporation
4. GMJ Holdings, Inc.
5. Environmental Waste Funding Corporation and affiliated entities
6. Trailside Capital Corporation
7. Casper & Associates, Inc. and affiliated entities
8. North-South Partners
9. Entrepreneurial Capital Management
10. Lonesome Dove Ventures
<PAGE> 15
EXHIBIT B
1. $1,000 per month car allowance (any excess not used to pay for car to
be paid to Employee as compensation) plus reimbursement for gas, oil,
repairs and maintenance.
2. Company phones at home offices, car phone, cellular phone.
3. $1,000,000 whole life insurance policy and $1,000,000 term life
insurance policy, each with Employee or Employee's designee as the
beneficiary.
4. Health and dental insurance, 401(k) plan, disability insurance.
<PAGE> 1
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
(Jacobs)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on the 9th
day of April, 1996, by and between GENERAL PARAMETRICS CORPORATION, a Delaware
corporation ("Corporation") and Gerard M. Jacobs ("Employee").
WITNESSETH:
WHEREAS, the Employee desires to serve the Corporation in a position
of substantial responsibility; and
WHEREAS, the Board of Directors of the Corporation recognizes that the
efforts of certain employees identified by the Board as key management
employees will contribute to the growth and success of the Corporation; and
WHEREAS, the Board of Directors of the Corporation believes that, in
the best interests of the Corporation, it is essential that key management
employees, including Employee, be retained and that the Corporation be in a
position to rely on their dedication and commitment to render services to the
Corporation, irrespective of whether the Corporation is or may be acquired or
merged with or into another corporation.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Corporation and Employee agree as follows:
1. Employment. The Corporation shall employ Employee and
Employee shall serve as an employee of the Corporation for a term of sixty (60)
months from the date hereof ("Employment Period"). The Employment Period and
this Agreement shall automatically be extended for an additional one (1) year
term following the expiration of each Employment Period unless either the
Corporation or the Employee notifies the other in writing at least thirty (30)
days prior to such expiration that the Employment Period and this Agreement
shall not be so extended. Further, if a Change in Control (as defined below)
of the Corporation shall have occurred during the original or extended term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the month in which such Change in Control of the
Corporation occurred. Employee shall serve as President and Chief Executive
Officer of the Corporation and shall perform the functions typically associated
with such offices. Employee shall also perform such other managerial,
administrative, technical, and other services as may be designated from time to
time by the Board of Directors of the Corporation appropriate for such officer
positions. Corporation shall not require Employee to be based at an office
location other than downtown Chicago, Illinois. Employee shall devote time and
attention to matters of the Corporation such that Employee's services to the
Corporation constitute his primary business activity. The Corporation
acknowledges and agrees that Employee will devote a portion of his time and
energies to the entities set forth on Exhibit "A" attached hereto; however,
Employee agrees that he will use reasonable efforts to minimize the disruption
his services to such entities may cause to the Corporation. In the event that
T. Benjamin Jennings
<PAGE> 2
("Jennings") ceases for any reason to be employed by the Company during the
Employment Period, Employee shall also be appointed Chairman of the Board and
Chief Development Officer of the Company for the balance of the Employment
Period.
2. Compensation.
(a) Employee shall initially receive as compensation for
all services performed by him hereunder an annual base salary of not less than
One Hundred Sixty Eight Thousand and No/100 Dollars ($168,000). Employee's
salary hereunder shall be reviewed and may be increased by the Board of
Directors of the Corporation from time to time. In addition to such annual
base salary, Employee shall receive such annual bonus, if any, in an amount to
be determined by the Board of Directors.
(b) For so long as Employee and Jennings are both
employed by the Corporation, Employee's compensation shall be no less than the
compensation paid to Jacobs (including, but not limited to, annual base salary,
bonus and fringe benefits under Section 3).
(c) Employee shall be entitled to participate in all
present and future bonus, incentive, stock option, stock purchase and other
compensation plans during the Employment Period on a basis commensurate with
his position as one of the two most senior executive officers of the
Corporation.
3. Fringe Benefits. Employee shall be entitled to not less than
six (6) weeks paid vacation per year. The Corporation shall adopt a reasonable
policy for sick leave and short-term disability during which the Employee will
be compensated as provided in Section 2, above. The Corporation shall
reimburse Employee for other ordinary and necessary business expenses incurred
by Employee in the course of his employment. Employee shall also receive such
other fringe benefits as the Corporation's Board of Directors may deem
appropriate, including not less than those fringe benefits set forth on Exhibit
B attached hereto.
4. Change in Control of the Corporation.
(a) No benefits shall be payable under this Section 4
unless there shall have been a Change in Control of the Corporation, as set
forth below. For purposes of this Agreement, a "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Corporation is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if:
(i) Any "person" (as defined in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing thirty percent
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<PAGE> 3
(30%) or more of the combined voting power of the Corporation's then
outstanding securities computed on a fully diluted basis;
(ii) During any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement), there shall
cease to be a majority of the Board comprised as follows: individuals who at the
beginning of the Employment Period constitute the Board and any new director(s)
whose election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
Employment Period or whose election or nomination for election was previously so
approved; or
(iii) The shareholders of the Corporation: (a) approve a
merger or consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least eighty percent (80%) of the combined voting power
of the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation; or
(b) For purposes of this Agreement, a "Potential Change in Control
of the Corporation" shall be deemed to have occurred if:
(i) The Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control of
the Corporation;
(ii) Any person (including the Corporation) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control of the Corporation;
(iii) Any person, or a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation or a corporation
owned, directly or indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation, who is or becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing nine and one-half percent (9 1/2%) or
more of the combined voting power of the Corporation's then outstanding
securities, increases his beneficial ownership of such securities by five
percent (5%) or more over the percentage owned by such person on the date hereof
with such percentages computed on a fully diluted basis; or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the Corporation has
occurred.
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<PAGE> 4
(c) Employee agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control of
the Corporation, Employee shall not terminate his employment with the
Corporation until the earliest of:
(i) A date which is six (6) months from the
occurrence of such Potential Change in Control of the Corporation;
(ii) The termination by Employee of his employment
by reason of Disability or Retirement (at Employee's normal retirement age, as
defined in Subsection 5(a) hereof); or
(iii) The occurrence of a Change in Control of the
Corporation.
5. Termination Following a Change in Control of the corporation.
If any of the events described in Section 4 constituting a Change in Control of
the Corporation shall have occurred, Employee shall be entitled to the benefits
provided in Section 8 hereof immediately upon a termination of his employment
which occurs during the term of this Agreement either by Employee or
Corporation, if such termination is for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without Employee's express written
consent, the occurrence after a Change in Control of the Corporation of any one
(1) or more of the following:
(a) The assignment to Employee of titles, duties,
responsibilities or status inconsistent with his present duties,
responsibilities and sum as the President and Chief Executive Officer of the
Corporation or a reduction or alteration in the nature or status of Employee's
duties and responsibilities from those in effect as of the date hereof,
(b) A reduction by the Corporation in Employee's base
salary as in effect on the execution date hereof or as the same shall be
increased from time to time ("Base Salary");
(c) The Corporation's requiring Employee to be based at
an office location other than downtown Chicago, Illinois;
(d) The failure by the Corporation to continue in effect
the Corporation's insurance, disability, stock option plans and 401(k) plans,
or any other of the Corporation's employee benefit plan, policies, practices or
arrangements in which Employee participates, or the failure by the Corporation
to continue Employee's participation therein on substantially the same basis,
both in terms of the amount of benefits provided and the level of Employee's
participation relative to other participants, as existed as of the date hereof;
(e) The failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation to assume and
agree to perform this Agreement; and
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<PAGE> 5
(f) Any purported termination by the Corporation of
Employee's employment that is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 6(c) below and, for purposes of this
Agreement, no such purported termination shall be effective.
(g) Any breach of this Agreement by the Corporation which
is not cured within 15 days of written notice from Employee to the Corporation
describing such breach.
6. Termination Generally. This Agreement and Employee's
employment may be terminated by the Corporation prior to its expiration in
accordance with this Section 6 as follows:
(a) Disability: Retirement. If, as a result of
Employee's incapacity due to physical or mental illness, Employee shall have
been absent from the performance of his duties with the Corporation for six (6)
consecutive months and, within thirty (30) days after written notice of
termination is given, Employee shall not have returned to the full-time
performance of his duties, the Corporation may terminate Employee's employment
for "Disability." Termination by the Corporation or by Employee of Employee's
employment by reason of "Retirement" shall mean termination on or after
Employee's "Normal Retirement Date" which shall be when the Employee attains
the age of 65, or in accordance with any retirement arrangement established
with Employee's consent with respect to Employee.
(b) The Corporation may terminate this Agreement and
Employee's employment for "Cause." "Cause" shall mean any one of the following:
(i) The willful and continued failure by Employee to
substantially perform his duties with the Corporation (other than any such
failure resulting from termination for Good Reason, Disability or Retirement)
after a demand for substantial performance is delivered to Employee that
specifically identifies the manner in which the Corporation believes that
Employee has not substantially performed his duties, and Employee failing to
resume substantial performance of his duties on a continuous basis within
fourteen (14) days of receiving such demand; provided, that if it is not
reasonably possible for Employee to resume such substantial performance within
such fourteen (14) days, then such fourteen (14) day time period shall be
extended to that minimum period of time during which it is reasonably possible
for Employee to resume such substantial performance;
(ii) The willful engaging by Employee in conduct
which is demonstrably and materially injurious to the Corporation, monetarily
or otherwise and Employee's failure to cease engaging in such conduct within
fourteen (14) days after a demand for such cessation is delivered to Employee
by the Corporation that specifically identifies such conduct; provided,
however, that if it is not reasonably possible for Employee to cease such
conduct within such fourteen (14) days, then such fourteen (14) day time period
shall be extended to that minimum period of time during which it is reasonably
possible for Employee to cease such conduct; or
-5-
<PAGE> 6
(iii) Employee's conviction of a felony or conviction of a
misdemeanor which materially impairs Employee's ability substantially to perform
his duties with the Corporation. For purposes of this subsection, no act, or
failure to act, on Employee's part shall be deemed "willful" unless done, or
omitted to be done, by Employee not in good faith and without reasonable belief
that his action or omission was in the best interest of the Corporation.
(c) Notice of Termination. Any termination by the Corporation
for Cause or by Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean the
date specified in the Notice of Termination where required or, in any other
case, the date upon which Employee ceases to perform services to the
Corporation; provided that if within thirty (30) days after any Notice of
Termination one party notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date finally determined to
be the Date of Termination, either by mutual written agreement of the parties or
by the final, nonappealable determination of a court of competent jurisdiction.
7. Compensation Upon Termination Generally. Employee shall be entitled
to the following benefits upon termination for reason other than the Change of
Control as set forth in Section 4 hereof, as additional benefits under this
Agreement and as compensation for the Covenant Not to Compete set forth in
Section 9 hereof:
(a) During any portion of the Employment Period that Employee
fails to perform his full-term duties with the Corporation as a result of
incapacity due to physical or mental illness or other disability, Employee shall
continue to receive his Base Salary at the rate in effect at the commencement of
any such portion of the Employment Period, until Employee's employment is
terminated pursuant to subsection 6(a) hereof. Thereafter, Employee's benefits
shall be determined in accordance with the Corporation's retirement, insurance
and other applicable programs and plans then in effect.
(b) If Employee's employment shall be terminated by the
Corporation for Cause, the Corporation shall pay Employee his full Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given or on the Date of Termination if no Notice of Termination
is required hereunder, plus all other amounts to which Employee is entitled
under any compensation plan of the Corporation at the time such payments are
due, and the Corporation shall have no further obligations to Employee under
this Agreement.
(c) If Employee voluntarily terminates his employment for any
reason other than for Good Reason, Employee must provide the Corporation with at
least ninety (90) days prior notice and shall be entitled to receive seventy
percent (70%) of the Employee's Base Salary
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<PAGE> 7
at the rate in effect at the date of notice of termination by Employee for a
period of 36 months after such notice. Employee's salary payable under this
section shall be reduced dollar for dollar by any compensation Employee
receives from another employer for any other employment during the 36 month
period.
8. Compensation Upon Termination for Change of Control.
Following a Change in Control of the Corporation, as defined in Section 4,
hereof, upon termination of Employee's employment either by Employee or
Corporation, Employee shall be entitled to the following benefits ("Severance
Benefits') as severance benefits and as compensation for the Covenant Not to
Compete set forth in Section 9 hereof:
(a) The Corporation shall pay Employee his full Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, or the Date of Termination where no Notice of
Termination is required hereunder;
(b) The Corporation shall pay as Severance Benefits, and
as compensation for the Covenant Not to Compete to Employee, not later than the
tenth day following the Date of Termination, a lump sum severance payment equal
to the product of.
(i) The sum of:
(A) Employee's annual Base Salary in effect
immediately prior to the occurrence of
the circumstances giving rise to such
termination; and
(B) The highest annual bonus awarded to
Employee during the previous three (3)
years of employment; times
(ii) The lesser of:
(A) Five (5); or
(B) The number of whole and fractional
years occurring between Employee's Date
of Termination and his Normal Retirement
Date;
(c) All options and warrants to purchase common stock or
other securities of the Corporation ("Options"), if any, granted to Employee
under the Corporation's Stock Option Plans or otherwise, together with any
additional, substitute or successor option program or plan as may be in effect
from time to time then held by Employee shall fully vest as of the Date of
Termination and shall remain outstanding and exercisable until the expiration
date of such options and warrants (without regard to any early termination of
such option or wan-ant resulting from Employee's termination of employment).
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<PAGE> 8
(d) For a sixty (60) month period after such termination,
the Corporation will arrange to provide Employee, at the Corporation's
expenses, with benefits under the Corporation's applicable employee fringe
benefit plans, which benefits shall be the same or substantially as those
enjoyed by Employee immediately prior to the Notice of Termination but in no
event shall Employee be provided the benefits described herein after his Normal
Retirement Date and provided further that benefits otherwise receivable by
Employee pursuant to this subsection (d) shall be reduced to the extent
comparable benefits are actually received by Employee during the sixty (60)
month period following Employee's termination, and any such benefits actually
received by Employee shall be reported to the Corporation.
(e) In the event the amount of Severance Payments that
Employee would be entitled to receive hereunder, following a Change in Control
of the Corporation, upon termination of Employee's employment, would, under any
applicable provision of law, render the validity, legality or enforceability of
this Agreement and the Severance Payments made hereunder contingent upon this
Agreement having first been approved by the affirmative vote of a majority of
the aggregate outstanding voting securities of the Corporation:
(i) The Severance Payments due Employee
hereunder shall be reduced to the extent necessary to avoid rendering this
Agreement subject, under any applicable provision of law, to prior
shareholder approval as specified above; or
(ii) If Severance Payments have previously been
made to Employee hereunder, the amount of which Severance Payments would
render this Agreement subject to prior shareholder approval, as specified
above, as a condition precedent to its validity, legality or enforceability,
Employee shall immediately repay to the Corporation that portion of the
Severance Payments which served to render this Agreement subject to said
prior shareholder approval.
(f) The payments provided for in subsection (b) above
shall be made not later than the tenth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Corporation shall pay to Employee on such
day an estimate as determined in good faith by the Corporation of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Internal
Revenue Code of 1986, as amended (the "Code") (or any similar tax that may
hereafter be imposed) as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Corporation to Employee payable on the tenth day after demand by the
Corporation (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to Employee all legal
fees and expenses incurred by Employee as a result of such termination of
employment (including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to obtain
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<PAGE> 9
or enforce any right or benefit provided by this Agreement) or in connection
with any tax audit or proceeding to the extent attributable to any payment or
benefit provided hereunder.
(h) Employee shall not be required to mitigate the amount
of any payment provided for in this Section 8 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 8
be reduced by any compensation earned by Employee as the result of employment
by another employer after the Date of Termination or otherwise.
(i) The Severance Payments to be paid pursuant to
subsection (b) above are not intended as stipulated or liquidated damages for
breach of any promise of a term of employment, no such promise being made
herein, but are payments which shall be fully earned as of the Date of
Termination and shall be compensation for Employee's continued services
rendered to the Corporation after the date hereof and prior to such Date of
Termination; for the covenant not to compete provision of Section 9 hereof; the
foregoing of other, possibly more secure employment; consequential losses which
may result from such termination, including, but not limited to, permanent
injury to reputation, loss of career development opportunities, and emotional
stress; and actual losses which may result from such termination, including,
but not limited to, lost wages and expenses of securing other employment.
(j) The Corporation shall have no obligation to provide
or cause to be provided to Employee the benefits described in this Agreement,
other than those provided in Section 7 hereof, if the Corporation or Employee
shall terminate Employee's employment prior to a Change of Control.
(k) In the event that Employee becomes entitled to the
Severance Payments, if it is determined that any of the Severance Payments Will
be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code
(or any similar tax that may hereafter be imposed), the Employee shall have the
option, but not the obligation, to reduce the amount of the Severance Payments
to an amount which will result in the Severance Payments no being subject to
the Excise Tax. The Corporation will cooperate with Employee in every way
possible to restructure the Severance Payments to achieve such result.
9. Restrictive Covenants. Employee agrees with the
Corporation that he will not for a period of five years from the date he ceases
to be an officer, director, employee or consultant of the Corporation:
(a) directly or indirectly, alone or as a partner, joint
venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder of any company or business, engage in any business
activity in Arizona, California, New Mexico, Nevada, Texas and Utah that is
directly in Competition with the Business conducted by EMCO Recycling Corp.
("EMCO") or the Corporation as of the date hereof; provided, however, that the
beneficial ownership of less than five percent (5 %) of the shares of stock of
any corporation having a class
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<PAGE> 10
of equity securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
(b) directly or indirectly (i) induce any Person that is
a customer of EMCO or the Corporation as of date hereof to patronize any
business directly in Competition with the Business conducted by EMCO or the
Corporation; (ii) canvass, solicit or accept from any Person that is a customer
of EMCO or the Corporation, any such Competitive business, or (iii) request or
advise any Person that is a customer of EMCO or the Corporation as of the date
hereof to withdraw, curtail or cancel any such customer's business with EMCO or
the Corporation;
(c) directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to employ,
any Person who was employed by EMCO or the Corporation at or within six months
prior to the date hereof, or in any manner seek to induce any such Person to
leave his or her employment;
For purposes of this Agreement, the term "Business" shall mean metal
recycling and the terms "Competitive" and "Competition" shall mean a business
whose primary activity is metal recycling.
Employee agrees and acknowledges that the restrictions contained
herein are reasonable in scope and duration and are necessary to protect EMCO
and the Corporation. If any provision of this Section, as applied to any party
or to any circumstance is adjudged by a court to be invalid or unenforceable,
the same will in no way affect any other circumstance or the validity or
enforceability of this Agreement. If any such provision, or any part thereof,
is held to be unenforceable because of the duration of such provision or the
area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area of such
provision, and/or to delete specific words or phrases, and in its reduced form,
such provision shall then be enforceable and shall be enforced. The parties
agree and acknowledge that the breach of this Section will cause irreparable
damage to EMCO and the Corporation and upon breach of any provision of this
Section, EMCO and the Corporation shall be entitled to injunctive relief,
specific performance or other equitable relief, provided, however, that, this
shall in no way limit any other remedies which EMCO and the Corporation may
have (including, without limitation, the right to seek monetary damages). For
purposes of this Section, "Person" means an individual, partnership,
corporation, business trust, joint stock company, estate, MM, unincorporated
association, joint venture, governmental authority or other entity, of whatever
nature.
10. Confidential Information. Employee shall not, during the
Employment Period or thereafter, disclose to any person any confidential
information obtained from or regarding the Corporation or its affiliates,
including, without limitation, contracts, business plans, forms, lists,
manuals, or any budgetary, sales, marketing, financial, procedural or
operations materials or, information, or any other nonpublic information
intended to be confidential prepared by or for the benefit of the Corporation
or its affiliates. If Employee shall leave the employment of the Corporation
for any reason, the Employee agrees not to take with him any such documents,
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<PAGE> 11
materials or information or other data of any description or any copy or
reproduction of any of the foregoing.
11. Enforceability. The failure of either party at any time to
require performance by the other party of any provision hereunder shall in no
way affect the right of that party thereafter to enforce the same, nor shall it
affect any other party's right to enforce the same, or to enforce any of the
other provisions in this Agreement; nor shall the waiver by either party of the
breach of any provision hereof be taken or held to be a waiver of any
subsequent breach of such provision or as a waiver of the provision itself.
12. Successors: Binding Agreement.
(a) The Corporation shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing Employee to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Corporation in
the same amount and on the same terms as Employee would be entitled hereunder
if Employee terminated his employment for Good Reason, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrator, successors, heirs, distributes, devisees and legatees. If
Employee should die while any amount would still be payable to him hereunder if
he had continued to five, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designees or, if there is no such designee, to
Employee's estate.
13. Modification. This Agreement may not be canceled, changed,
modified or amended, and no cancellation, change, modification or amendment
will be effective or binding unless in writing and signed by both parties to
this Agreement.
14. Severability; Survival. In the event any provision of this
Agreement is found to be void and unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted.
15. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the conflicts of laws principles thereof.
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16. Counterparts. This Agreement may be executed simultaneously
in several counterparts, each of which will be an original, but all of which
together will constitute one and the same original.
17. Entire Agreement. This Agreement represents the entire
agreement between the Corporation and the Employee with respect to the subject
matter hereof, and all prior agreements relating to the relationship between t
he Employee and the Corporation, written or oral, are nullified and superseded
hereby.
18. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
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<PAGE> 13
IN WITNESS WHEREFOF, the parties have executed this Agreement as of the
day and year first above written.
GENERAL PARAMETRICS
CORPORATION
By: /s/ T. BENJAMIN JENNINGS
-------------------------
Name T. Benjamin Jennings
------------------------
Title Co. President and
Chief Executive Officer
-----------------------
EMPLOYEE:
/s/ Gerard M. Jacobs
--------------------------
Gerard M. Jacobs
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<PAGE> 14
EXHIBIT "A"
<TABLE>
<S> <C>
1. Armstrong Fiber Optic Networks, Inc.
2. Crown Casino Corporation
3. Miss Mimi Corporation
4. GMJ Holdings, Inc.
5. Environmental Waste Funding Corporation and affiliated entities
6. Trailside Capital Corporation
7. Casper & Associates, Inc. and affiliated entities
8. North-South Partners
9. Entrepreneurial Capital Management
10. Lonesome Dove Ventures
</TABLE>
<PAGE> 15
EXHIBIT B
<TABLE>
<S> <C>
1. $1, 000 per month car allowance (any excess not used to pay for car
to be paid to Employee as compensation) plus reimbursement for
gas, oil, repairs and maintenance.
2. Company phones at home offices, car phone, cellular phone.
3. $1,000,000 whole life insurance policy and $1,000,000 term life
insurance policy, each with Employee or Employee's designee as the
beneficiary.
4. Health and dental insurance, 401(k) plan, disability insurance.
</TABLE>
<PAGE> 1
EXHIBIT 10.24
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is entered into and shall be
effective as of April 11, 1996, by and between EMCO RECYCLING CORP., an
Arizona corporation ("Company") and HAROLD RUBENSTEIN ("Consultant"). The
Company and Consultant are hereinafter sometimes collectively referred to as
the "Parties" and individually as "Party".
RECITALS
A. On the date hereof, GPAR Merger, Inc., a wholly-owned
subsidiary of General Parametrics Corporation ("GPAR"), will merge into and
with the Company, such that the Company will survive and become a wholly-owned
subsidiary of GPAR, all pursuant to that certain Merger Agreement dated
December 1, 1995, as amended by that certain First Amendment to Merger
Agreement dated December, 1995, as further amended by that certain Second
Amendment to Merger Agreement dated February 16, 1996, by and among GPAR, GPAR
Merger, Inc., the Company, Empire Metals, Inc., Copperstate Metals, Inc.,
Donald Moorehead, George Moorehead, Raymond Zack, Gerald Zack, David Zack, and
Consultant.
B. Upon consummation of the Merger, the Company desires assurance
of the association and services of Consultant and desires to obtain
Consultant's experience, skills, abilities, background and knowledge, and
desires to engage Consultant's services on the terms and conditions set forth
in this Agreement.
C. Consultant desires to provide consulting services to the
Company and is willing to provide such services on the terms and conditions set
forth in this Agreement.
AGREEMENT
In consideration of the foregoing premises and the mutual covenants
herein contained, and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows:
1. Retention of Services
1.1 The Company hereby retains Consultant, and Consultant
hereby accepts such retention upon the terms and conditions set forth in this
Agreement.
1.2 The Consultant shall make himself available to
consult with the Board of Directors and Officers of Company at reasonable times
concerning the business affairs of
<PAGE> 2
Company, GPAR, and any subsidiaries of GPAR. Consultant shall not be required
to keep regular Office hours so long as Consultant Is available for telephone
consultation within twenty-four (24) hours of any request for assistance.
2. INDEPENDENT CONTRACTOR STATUS. Company and Consultant agree
that Consultant shall perform his duties under this Agreement as an independent
contractor. Consultant shall not have or claim any right against Company
arising from employee status.
3. TERM OF AGREEMENT. Consultant shall be retained for a
five-year term which commences On the effective date Of the merger of GPAR
Merger, Inc., into the Company (the "Effective Date") and shall expire on the
fifth anniversary of such date unless earlier terminated pursuant to this
Agreement.
4. COMPENSATION OF CONSULTANT
4.1 MONTHLY PAYMENTS. Monthly payments (the "Consulting
Fees") in the amount of $6,000 shall be made on the first day of each month,
throughout the term of this Agreement commencing on the Effective Date and
terminating on the fifth anniversary thereof.
4.2 PARTICIPATION IN COMPANY PLANS. Consultant shall have
the right to participate in the Company's health plan and in GPAR's outside
director's stock option plan.
4.3 ALLOWANCE FOR SATELLITE DISH. Company shall
reimburse Consultant in an amount not to exceed $1,000 per month throughout
the tam of this Agreement, as an allowance for a satellite dish and/or such
other equipment necessary to enable Consultant to monitor metal commodity
prices.
5. CONFIDENTIAL INFORMATION. Consultant shall not divulge,
communicate, use to the detriment of Company or GPAR or for the benefit of any
other person or in any other way, any confidential information or trade secrets
of Company or GPAR heretofore or in the future acquired or obtained with
respect to the businesses of Company or GPAR. Without limiting the foregoing,
said covenant shall apply to all legal and financial information, business
plans, transactions with customers and suppliers, personnel relations,
discussions with other shareholders, directors, officers, and management of
Company or GPAR, and all other matters not of public record.
6. TERMINATION.
a. Death, Disability, Cause and Change of Control.
At any time during the Term, the Company shall have the right to terminate this
Agreement for "cause." Upon termination of the Agreement for "cause," the
Consultant or his legal representatives shall be entitled to receive the unpaid
portion of such month's consulting Fee, prorated through the end of the month
in which such termination occurs, but shall not be entitled to any further
-2-
<PAGE> 3
Consulting Fees or other compensation set forth in Article 4. Termination for
"cause" shall mean Termination because of (i) the Consultant's breach of his
covenants contained in this Agreement, (ii) the Consultant's repeated failure
or refusal to perform the services required to be performed by the Consultant
hereunder, (iii) gross misconduct by the Consultant in the performance of his
duties, hereunder, (iv) the commission by the Consultant of an act of
dishonesty affecting the Company or an act constituting common law fraud or a
felony, (v) the commission by the Consultant of an act (other than good faith
exercise of business judgment in the exercise of his consultation
responsibilities) resulting in material damage to the Company, (vi) the
Consultant's inability to perform his duties and responsibilities as provided
herein due to his death or physical or mental disability or sickness extending
for, or reasonably expected to extend for, greater than three months, or (vii)
Consultant's breach of that certain Noncompetition Agreement (the
"Noncompetition Agreement") executed and delivered by Consultant in favor of
the Company and GPAR. The termination of this Agreement by the Consultant
shall be deemed a termination for "cause".
b. Without Cause. At any time during the Term, the
Company shall have the right to terminate this Agreement, without cause,
effective upon 30 days prior written notice to the Consultant. Upon the
termination of this Agreement without cause, the Consultant shall be entitled
to receive the unpaid portion of his compensation pursuant to Article 4, when
and as the same would have been payable hereunder but for such termination;
provided that the Consultant shall only be entitled to such payments as long as
he is in compliance with the provisions of the Noncompetition Agreement.
c. Survival of Non-Compete Provisions. Notwithstanding
anything to the contrary contained herein, the termination of this Agreement
shall not terminate Consultant's covenants in the Noncompetition Agreement,
which covenants shall survive any termination of this Agreement.
7. ASSIGNMENT AND BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the Company
and its successors and assigns. Consultant may not assign his rights hereunder
without Company's prior written consent. Any attempt by Consultant to assign
his rights hereunder shall terminate this Agreement.
8. FORM OF AGREEMENT. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for convenience only and shall not
affect the construction or interpretation of any of its provisions.
9. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement and
the Noncompetition Agreement constitute the entire agreement between the
Parties pertaining to the subject matter contained herein and supersede all
prior and contemporaneous agreements, representations, and understandings of
the Parties. No supplement, modification, or amendment of this Agreement
shall be binding unless executed in writing by all the Parties. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute,
a waiver of any
-3-
<PAGE> 4
other provision in this Agreement, whether or not similar, nor shall any waiver
constitute continuing waiver. No waiver shall be binding unless executed in
writing by the Party making the waiver.
10. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each Of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
11. PARTIES. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the Parties to it and the Company's
successors and assigns.
12. LITIGATION COSTS. If any legal action or any arbitration or
other, proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing Party or
Part= shall be entitled to recover reasonable attorneys, fees and other costs
incurred in that action or proceedings in addition to any other relief to which
it or he may be entitled.
13. NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage prepaid), guaranteed
overnight delivery, or facsimile transmission if such transmission is confirmed
by delivery by certified or registered mail (first class postage prepaid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(i) IF TO COMPANY:
EMCO Recycling Corp.
3700 W. Lower Buckeye
Phoenix, Arizona 85009
Attn: George Moorehead, President
Telecopy No.: (602) 447-3020
(ii) IF TO CONSULTANT:
Mr. Harold Rubenstein
7330 Lakeside Lane
Scottsdale, Arizona 85253
14. GOVERNING LAW. This Agreement shall be construed in accordance
with, and be governed by, the laws of the State of Arizona as applied to
contracts that are executed and performed entirely in Arizona.
-4-
<PAGE> 5
15. Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of final jurisdiction, it is the intent of the
parities that all other provisions of this Agreement be construed to remain
fully valid, enforceable, and binding on the parties.
IN WITNESS WHEREOF, the Parties to this Agreement have duly executed
it effective as of the day and year first above written.
CONSULTANT:
/s/ HAROLD RUBENSTEIN
------------------------------
HAROLD RUBENSTEIN
COMPANY:
EMCO RECYCLING CORP.,
a Arizona corporation
By: /s/ GEORGE MOOREHEAD
---------------------------
George Moorehead, President
-5-
<PAGE> 1
EXHIBIT 10.25
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement") is entered into as
of April 11, 1996 by and among GENERAL PARAMETRICS CORPORATION, a Delaware
corporation ("GPAR"); EMC0 RECYCLING CORP., an Arizona corporation ("EMCO");
and HAROLD RUBENSTEIN, an individual resident of the State of Arizona.
RECITALS
A. The parties have entered into that certain Merger Agreement dated
December 1, 1995, as amended by that certain First Amendment to Merger Agreement
dated December, 1995, as further amended by that certain Second Amendment to
Merger Agreement dated February 16, 1996, by and among GPAR, EMCO, Harold
Rubenstein, GPAR Merger, Inc., Empire Metals, Inc., Copperstate Metals, Inc.,
Raymond Zack, David Zack, Gerald Zack, Donald Moorehead, and George Moorehead.
B. Pursuant to the Merger Agreement, GPAR MOW, Inc. has merged into EMCO
and EMCO, the surviving corporation, has become a wholly-owned subsidiary of
GPAR (the merger is hereinafter referred to as the "Merger"). Empire Metals,
Inc., formerly a shareholder of EMCO, has received shares of GPAR as a result
of the Merger.
C. Harold Rubenstein is the majority shareholder of Empire Metals, Inc.
TERMS OF AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the parties agree as follows:
1. RESTRICTIVE COVENANTS. In order to assure that GPAR will
realize the benefits of the Merger Agreement and in consideration of the
transactions set forth in the Merger Agreement, HAROLD RUBENSTEIN agrees with
EMCO and GPAR that he will not for a period of five yon from the later of the
effective date of the Merger or the date he ceases to be an officer, director,
employee of or consultant to EMCO or GPAR:
a. directly or indirectly, alone or as a paartner, joint
venturer, member, owner, officer, director, employee, consultant, agent,
independent contractor or stockholder of any company or business, engage in,
assist, finance or cooperate with any business activity in Arizona, California,
New Mexico, Nevada, Texas or Utah that is directly in Competition with the
Business conducted by EMCO or GPAR; provided, however, that the beneficial
ownership of less than five percent (5%) of the shares of stock of any
corporation having a class of equity
<PAGE> 2
securities actively traded on a national securities exchange or
over-the-counter market shall not be deemed, in and of itself, to violate the
prohibitions of this Section;
b. directly or indirectly (i) induce any Person that is
a customer of EMCO or GPAR to patronize any business directly in Competition
with the Business conducted by EMCO or GPAR; (ii) canvass, solicit or accept
from any Person that is a customer of EMCO or GPAR, any such Competitive
business, or (iii) request or advise any Person that is a customer of EMCO or
GPAR to withdraw, curtail or cancel any such customer's business with EMCO or
GPAR;
c. directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to employ,
any Person employed by EMCO or GPAR, or in any manner seek to induce any such
Person to leave his or her employment.
For purposes of this Agreement, the term "Business" shall mean metal
recycling and the terms "Competition" or "Competitive" shall mean a business
whose primary activity is metal recycling.
Harold Rubenstein agrees with EMCO and GPAR that he will not, directly
or indirectly, at any time following the effective time of the Merger, in any
way utilize, disclose, copy, reproduce or retain in his possession any of
EMCO's or GPAR's proprietary rights or records, including, but not limited to,
any of their customer lists.
Harold Rubenstein agrees and acknowledges that the restrictions
contained herein are reasonable. in scope and duration and are necessary to
protect EMCO and GPAR after the effective time of the Merger. If any provision
of this Section, as applied to any party or to any circumstance is adjudged by
a court to be invalid or unenforceable, the same will in no way affect any
other circumstance or the validity or enforceability of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this Section
will cause irreparable damage to EMCO and GPAR and upon breach of any provision
of this Section, EMCO and GPAR shall be entitled to injunctive relief, specific
performance or other equitable relief; provided, however, that, this shall in
no way limit any other remedies which EMCO and GPAR may have (including,
without limitation, the right to seek monetary damages). For purposes of this
Section, "Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association, joint
venture, governmental authority or other entity, of whatever nature.
2. Enforceability. The failure of any party to this Agreement at
any time to require performance by any other party of any provision hereunder
shall in no way affect the right of that party thereafter to enforce the same,
nor shall it affect any other party's right to enforce the same, or to enforce
any of the other provisions in this Agreement; nor shall the waiver by any
party of the breach of any provision hereof be taken or held to be a waiver of
any subsequent breach of such provision or as a waiver of the provision itself.
2
<PAGE> 3
3. ASSIGNMENT. This Agreement, and Harold Rubenstein's rights
and obligations hereunder, may not be assigned by him. EMCO or GPAR may assign
its rights, together with its obligations hereunder, to any affiliated company
or entity or any successor entity.
4. MODIFICATION. This Agreement may not be canceled, changed,
modified or amended, and no cancellation, change, modification or amendment win
be effective or binding, unless in writing and signed by the parties to this
Agreement.
5. SEVERABILITY; SURVIVAL. In the event any provision of this
Agreement is found to be void and unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted. The provisions of this
Agreement will survive the termination for any reason of Harold Rubenstein's
relationship with EMCO or GPAR.
6. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of laws principles thereof.
7. COUNTERPARTS. This Agreement may be executed simultaneously
in several counterparts, each of which will be an original, but all of which
together will constitute one and the same original.
8. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof, and
all prior agreements relating to the relationship between the parties, written
or oral, are nullified and superseded hereby.
9. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
GENERAL PARAMETRICS CORPORATION,
a Delaware Corporation
By: T. BENJAMIN JENNINGS
---------------------------
Name: T. BENJAMIN JENNINGS
---------------------------
Title: CHAIRMAN OF THE BOARD
---------------------------
3
<PAGE> 4
EMCO RECYCLING CORP., AN ARIZONA
CORPORATION
By: /s/ GEORGE MOOREHEAD
---------------------------
George Moorehead, President
/s/ HAROLD RUBENSTEIN
---------------------------
Harold Rubenstein
4
<PAGE> 1
Exhibit 10.26
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
April 11, 1996 by and among GENERAL PARAMETRICS CORPORATION, a Delaware
corporation ("GPAR"); EMCO RECYCLING CORP., an Arizona corporation ("EMCO"); and
GEORGE 0. MOOREHEAD, an individual resident of the State of Arizona.
RECITALS
A. The parties have entered into that certain Merger Agreement dated
December 1, 1995, as amended by that certain First Amendment to Merger Agreement
date December _, 1995, as further amended by that certain Second Amendment to
Merger Agreement dated February 16, 1996, by and among GPAR, EMCO, Harold
Rubenstein, GPAR Merger, Inc., Empire Metals, Inc., Copperstate Metals, Inc.,
Raymond Zack, David Zack, Gerald Zack, Donald Moorehead, and George Moorehead.
B. Pursuant to the Merger Agreement, GPAR Merger, Inc. has merged into
EMCO and EMCO, the surviving corporation, has become a wholly-owned subsidiary
of GPAR (the merger is hereinafter referred to as the "Merger"). George
Moorehead, formerly a shareholder of EMCO, has received shares of GPAR as a
result of the Merger.
TERMS OF AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein and intending to be legally bound hereby, the
parties agree as follows:
1. RESTRICTIVE COVENANTS. In order to assure that GPAR will
realize the benefits of the Merger Agreement and in consideration of the
transactions set forth in the Merger Agreement, GEORGE 0. MOOREHEAD agrees with
EMCO and GPAR that he will not for a period of five years from the later of
the effective date of the Merger or the date he ceases to be an officer,
director, employee of or consultant to EMCO or GPAR:
a. directly or indirectly, alone or as a partner, joint
venturer, member, owner, officer, director, employee, consultant, agent,
independent contractor or stockholder of any company or business, engage in,
assist, finance or cooperate with any business activity in Arizona, California,
New Mexico, Nevada, Texas or Utah that is directly in Competition with the
Business conducted by EMCO or GPAR; provided, however, that the beneficial
ownership
<PAGE> 2
of less than five percent (5%) of the shares of stock of any corporation having
a class of equity securities actively traded on a national securities exchange
or over-the-counter market shall not be deemed, in and of itself, to violate
the prohibitions of this Section;
b. directly or indirectly (i) induce any Person that is
a customer of EMCO or GPAR to patronize any business directly in Competition
with the Business conducted by EMCO or GPAR; (ii) canvass, solicit or accept
from any Person that is a customer of EMCO or GPAR, any such Competitive
business, or (iii) request or advise any Person that is a customer of EMCO or
GPAR to withdraw, curtail or cancel any such customer's business with EMCO or
GPAR;
c. directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by him, to employ,
any Person employed by EMCO or GPAR, or in any manner seek to induce any such
Person to leave his or her employment.
For purposes of this Agreement, the term "Business" shall mean metal
recycling and the terms "Competition" or "Competitive" shall mean a business
whose primary activity is metal recycling.
George Moorehead agrees with EMCO and GPAR that he will not, directly
or indirectly, at any time following the effective time of the Merger, in any
way utilize, disclose, copy, reproduce or retain in his possession any of
EMCO's or GPAR's proprietary rights or records, including, but not limited to,
any of their customer lists.
George Moorehead agrees and acknowledges that the restrictions
contained herein are reasonable in scope and duration and are necessary to
protect EMCO and GPAR after the effective time of the Merger. If any provision
of this Section, as applied to any party or to any circumstance is adjudged by
a court to be invalid or unenforceable, the same will in no way affect any
other circumstance or the validity or enforceability of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this Section
will cause irreparable damage to EMCO and GPAR and upon breach of any provision
of this Section, EMCO and GPAR shall be entitled to injunctive relief, specific
performance or other equitable relief; provided, however, that, this shall in
no way limit any other remedies which EMCO and GPAR may have (including,
without limitation, the right to seek monetary damages). For purposes of this
Section, "Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association, joint
venture, governmental authority or other entity, of whatever nature.
2
<PAGE> 3
2. ENFORCEABILITY. The failure of any party to this Agreement at
any time to require performance by any other party of any provision hereunder
shall in no way affect the right of that party thereafter to enforce the same,
nor shall it affect any other party's right to enforce the same, or to enforce
any of the other provisions in this Agreement; nor shall the waiver by any
party of the breach of any provision hereof be taken or held to be a waiver of
any subsequent breach of such provision or as a waiver of the provision itself.
3. ASSIGNMENT. This Agreement, and George Moorehead's rights and
obligations hereunder, may not be assigned by him. EMCO or GPAR may assign its
rights, together with its obligations hereunder, to any affiliated company or
entity or any successor entity.
4. MODIFICATION. This Agreement may not be canceled, changed,
modified or amended, and no cancellation, change, modification or amendment
will be effective or binding, unless in writing and signed by the parties to
this Agreement.
5. SEVERABILITY; SURVIVAL. In the event any provision of this
Agreement is found to be void and unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall nevertheless be
binding upon the parties with the same effect as though the void or
unenforceable part had been severed and deleted. The provisions of this
Agreement will survive the termination for any reason of George Moorehead's
relationship with EMCO or GPAR.
6. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of laws principles thereof.
7. COUNTERPARTS. This Agreement may be executed simultaneously
in several counterparts, each of which will be an original, but all of which
together will constitute one and the same original.
8. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof, and
all prior agreements relating to the relationship between the parties, written
or oral, are nullified and superseded hereby.
9. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
GENERAL PARAMETRICS CORPORATION,
A DELAWARE CORPORATION
By: /s/ Gerard M. Jacobs
-------------------------------
Name: GERARD M. JACOBS
------------------------------
Title: PRESIDENT
----------------------------
EMCO RECYCLING CORP., AN ARIZONA
CORPORATION
By: /s/ C.R. McCurdy
-------------------------------
Chuck R. McCurdy, Vice-President
/s/ George O. Moorehead
--------------------------------
GEORGE O. MOOREHEAD
4
<PAGE> 1
EXHIBIT 10.27
PURCHASE & SALES AGREEMENT
Name of Seller ("Seller") EMCO Recycling Corp. Date: August 1, 1994
Seller and Fidelity Funding of California, Inc., a California
corporation ("Purchaser"), hereby agree to the terms and conditions set forth in
this Purchase & Sale Agreement ("Agreement"):
1. Purchase & Sale of Accounts Receivable.
(a) Seller hereby offers to sell, assign, transfer, convey and deliver
to Purchaser, as absolute owner, all of the right, title and interest of Seller
in and to the following accounts ("Account" or "Accounts") which arise from the
sale of Seller's services or merchandise (herein collectively referred to as the
"Merchandise") as indicated by the box checked below, together with all
guarantees and security therefor, and all of Seller's right, title and interest
in the Merchandise purchased and represented by such Accounts, including all of
Seller's rights to returned goods and rights of stoppage in transit, replevin,
and reclamation as an unpaid vendor (with respect to each Account, such
guarantees, security and rights are herein called the "Related Rights"):
| | All of Seller's Acceptable Accounts not to exceed $_______ (the
"Commitment") per month, which Acceptable Accounts Purchaser agrees to
purchase on the terms and conditions set forth herein, or
X Acceptable Accounts totaling not less that $750,000 per month, in which
case Purchaser shall be obligated (subject to the terms and conditions
stated below) to purchase Acceptable Accounts totaling not more than
$3,000,000 (the "Commitment") per month, or
| | Only those Acceptable Accounts which Seller from time to time may wish
to sell but not to exceed $_______ (the "Commitment") per month, which
Acceptable Accounts Purchaser agrees to purchase on the terms and
conditions set forth herein;
provided, however, that in no case shall the amount of Seller's Acceptable
Accounts, less the Purchaser's discount and the amount retained by Purchaser to
create the Reserve Account described in paragraph 4 below, which Purchaser (i)
purchases as the first purchase of Acceptable Accounts under this Agreement or
each renewal thereof or (ii) is obligated to purchase after the first month
during the term of this Agreement or each renewal thereof, be less than $5,000.
(b) Subject to the terms of this Agreement, Purchaser hereby agrees to
purchase all accounts that it deems acceptable in its sole discretion
("Acceptable Accounts") together with the Related Rights. Seller may, from time
to time, submit names of Account Debtors to Purchaser for approval prior to
acceptance by Purchaser. Purchaser shall not be obligated to purchase any
Account if (i) the Account is deemed unacceptable to Purchaser for any reason,
(ii) an Event of Default has occurred hereunder or (iii) if after such purchase
is made, the aggregate face amount of all outstanding Acceptable Accounts which
have been purchased by Purchaser would exceed the Commitment. A credit
investigation by
<PAGE> 2
Purchaser shall not be deemed as acceptance of an Account and Purchaser shall be
free to reject any Account submitted by Seller if Purchaser deems the Account
unacceptable, even though Purchaser may have previously approved such Account
Debtor. The term "Account Debtor" or "Account Debtors" as used herein shall mean
the customer or customers of Seller. Except as Purchaser may otherwise agree in
writing, the payment terms of all Accounts submitted to Purchaser shall not
exceed "net 30 days".
(c) Accounts shall be submitted to Purchaser on a Schedule of Accounts
listing such Account separately. The Schedule of Accounts shall be in the form
attached hereto as Exhibit "A", and shall be signed by a person acting or
purporting to act on behalf of Seller. There shall be no more than one (1)
Schedule of Accounts submitted each week unless Purchaser otherwise agrees in
writing. At the time the Schedule of Accounts is presented, Seller shall also
deliver to Purchaser one copy of an invoice for each Account together with
evidence of shipment of the Merchandise and the original of the Account Debtor's
purchase order. All invoices shall plainly state on their face that amounts
payable thereunder are payable only to the remittance address set forth below.
Payment by Purchaser of the sum specified in paragraph 2(a) below shall
constitute acceptance of an Account by Purchaser at which time such Account
shall become an Acceptable Account.
(d) Any and all Acceptable Accounts shall be purchased with full
recourse against Seller, including but not limited to recourse as to the
insolvency or other financial inability of the Account Debtor to pay. Any
Acceptable Accounts not paid after sixty (60) days from invoice date shall be
repurchased by Seller, by means of Seller paying directly to Purchaser the face
amount of each such Acceptable Account, Purchaser deducting such face amount
from the purchase price for the next Acceptable Accounts purchased hereunder or
Purchaser charging such face amount against the Reserve Account, as Purchaser
may elect.
(e) No single Account Debtor's total purchased and outstanding
Acceptable Accounts shall ever constitute more than twenty percent (20%) of
Seller's total Accounts purchased and outstanding for all of Seller's Account
Debtors. In the event any single Account Debtor's total purchased and
outstanding accounts exceed twenty percent (20%), Purchaser may at its sole
discretion increase to Seller's Reserve Account to cover such excess on a
dollar-for-dollar basis.
2. Purchase Price and Fees.
(a) Purchaser shall purchase an Acceptable Account at a purchase price
equal to the face amount of such Acceptable Account, less the Reserve Percentage
of such face amount (as defined in paragraph 4 below) which shall establish the
Reserve Account.
(b) As described above, Purchaser commits to purchase Acceptable
Accounts with a gross face value not to exceed to Commitment during each month
of the Term (as defined in Paragraph 14 hereof) on the terms and conditions set
forth herein, for which Seller shall pay to Purchaser a commitment fee in the
amount of one percent (1.0%) of the Commitment ($30,000), payable on the date of
the first purchase hereunder. Seller hereby authorizes Purchaser to deduct the
commitment fee from the purchase price for Acceptable Accounts or to charge the
commitment fee against the Reserve Account, as Purchaser elects in is sole
discretion.
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(c) Seller shall pay to Purchaser interest on the daily balance of all
sums (the "Advances") remitted, paid, or otherwise advanced by Purchaser to
Seller or for Seller's benefit (including but not limited to the purchase price
of Acceptable Accounts purchased by Purchaser hereunder), net of all payments
received from Seller's Account Debtors or otherwise received by Purchaser on the
Seller's behalf, which are credited to the Seller's account.
(d) Interest shall be charged on the Advances on each day at a rate
equal to the Prime Rate in effect on such day, plus three percent (3%) per annum
(the "Interest Rate"), but in no event to exceed the maximum rate permitted by
applicable law. If the Prime Rate changes after the date hereof, the Interest
Rate shall be automatically increased or decreased, as the case may be, without
notice to Seller from time to time as of the effective time of each change in
the Prime Rate. Interest shall be due and payable on the last day of each
calendar month and may, in Purchaser's sole discretion, be charged against the
Reserve Account (as defined in paragraph 4 below) or other sums that may be due
to Seller hereunder. As used herein, the term "Prime Rate" means the rate as
published from time to time by The Wall Street Journal as the base rate for
corporate loans at large commercial banks (if more than one such rate is
published, the Prime Rate will be the higher or highest of the rates published).
If such rate is no longer published by The Wall Street Journal, then Purchaser
shall, in its sole discretion select the base or prime rate for corporate loans
at a large commercial bank as the "Prime Rate". All interest accruing hereunder
shall be calculated on the basis of actual days elapsed (including the first day
but excluding the last) plus three (3) business days to allow for collection of
checks received from Account Debtors and a year of 360 days.
(e) All past due amounts owed hereunder, including but not limited to
interest that is not paid when due because there is a negative balance in the
Reserve Account or otherwise, shall bear interest at the rate four percent (4%)
per annum above the Interest Rate, but in to event to exceed the maximum rate
permitted by applicable law, and shall be payable on demand.
(f) Seller shall pay to Purchaser a line maintenance in the amount of
one half of one percent (0.5%) of the face amount of each Acceptable Account
purchased hereunder, payable at the time of purchase. Seller hereby authorizes
Purchaser to deduct such fee from the purchase price for Acceptable Accounts or
to charge such fee against the Reserve Account, as Purchaser elects in its sole
discretion.
(g) It is the intention of the parties hereto that the transactions
contemplated hereby shall constitute a purchase of accounts under the Uniform
Commercial Code as in effect in the State of Arizona. Nevertheless, the parties
intend to contract in strict compliance with applicable usury law from time to
time in effect. In furtherance thereof such parties stipulate and agree that
none of the terms and provisions contained in this Agreement or any other
document executed in connection herewith (collectively, the "Transaction
Documents") shall ever be construed to create a contract to pay, for the use,
forbearance or detention of money, interest in excess of the maximum amount of
interest permitted to be charged by applicable law from time to time in effect.
Neither Seller, any present or future guarantor or any other person hereafter
becoming liable for the payment of the Advances, shall ever be liable for
unearned interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully charged under applicable law
from time to time in effect, and the
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provisions of this paragraph shall control over all other provisions of the
Transaction Documents which may be in conflict therewith. If any indebtedness or
obligation owned by Seller hereunder is prepaid or accelerated and as a result
any amounts held to constitute interest are determined to be in excess of the
legal maximum, or Purchaser shall otherwise collect moneys which are determined
to constitute interest which would otherwise increase the interest on all or any
part of such obligations to an amounts in excess of that permitted to be charged
by applicable law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related indebtedness or
obligations or, at Purchaser's option returned to Seller or the other payor
thereof upon such determination.
3. Transfer. Upon Purchaser's acceptance of each Acceptable Account, Purchaser
shall be the sole owner and holder of such Acceptable Account and the Related
Rights. Seller hereby sells, transfers, conveys and assigns to Purchaser all its
right, title and interest in and to each Acceptable Accounts together with all
Related Rights, effective at the time of acceptance thereof by Purchaser. Seller
agrees to execute and deliver to Account Debtors obligated under Acceptable
Accounts such written notices of sale of the Acceptable Accounts as Purchaser
may request.
4. Reserve Account. Purchaser shall create and maintain a reserve account (the
"Reserve Account") in the amount of twenty percent (20%) (the "Reserve
Percentage") of the face amount of the Acceptable Accounts out of any payments
or credits otherwise to be made to Purchaser with respect to such Acceptable
Accounts. In no event shall the Reserve Account at any time equal less than the
Reserve Percentage of all Acceptable Accounts remaining unpaid. Purchaser may
charge against the Reserve Account any amount for which Seller may be obligated
to Purchaser at any time, whether under the terms of this Agreement, or
otherwise, including but not limited to amounts owed under paragraph 2 above,
any damages suffered by Purchaser as a result of Seller's breach of any
provision of paragraph 5 hereof (whether intentional or unintentional), any
losses (under any one or more Schedules of Accounts) due to any Account Debtor's
insolvency or other financial inability to pay, any Disputes (as defined under
paragraph 5(e) hereof), any Adjustments due under paragraph 16 hereof and any
attorney's fees and disbursements due under paragraph 17 hereof. Seller
recognizes that any balance in the Reserve Account represents bookkeeping
entries and not cash funds. It is further agreed that with respect to the
balances in the Reserve Account, Purchaser is authorized to withhold such
payments and credits otherwise due to Seller under the terms of this Agreement
for reasonably anticipated claims such as, for example, charge-backs or credits
against Seller for Account Debtor claims. If the amount of the Reserve Account
exceeds the Reserve Percentage of the Acceptable Accounts remaining unpaid,
Purchaser shall distribute such excess amount to Seller weekly; provided that no
Event of Default has occurred and is continuing and Seller has not ceased
selling Accounts to Purchaser. If an Event of Default has occurred and is
continuing, or, in the event Seller shall cease selling Accounts to Purchaser,
Purchaser shall not pay the amount in the Reserve Account until all Accounts
have been collected or Purchaser has determined, in its sole discretion, that it
will make no further efforts to collect any Accounts and all sums due Purchaser
hereunder have been paid. Purchaser shall make available to Seller, through
Purchaser's computer link capabilities or otherwise, within fifteen (15) days of
the close of the preceding calendar month, a summary or statement of Seller's
account, prepared from Purchaser's records, which will conclusively be deemed
correct and accepted by Seller unless Seller gives Purchaser a written statement
of exceptions within thirty (30) days after receipt of such extract or
statement.
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5. Seller's Representations and Covenants. Seller represents, warrants and
covenants to Purchaser that:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and is qualified
and authorized to do business and is in good standing in all states in which
such qualification and good standing are necessary or desirable. The execution,
delivery and performance by Seller of this Agreement does not and will not
constitute a violation of any applicable law or of Seller's articles or
certificates of incorporation or Bylaws or any material breach of any other
document, agreement or instrument to which Seller is a party or by which Seller
is bound. The Agreement is a legal, valid and binding obligation of Seller
enforceable against it in accordance with it terms.
(b) Immediately prior to the execution and delivery of each Schedule of
Accounts, Seller will be the sole owner and holder of each of the Accounts
described thereon and the Related Rights. Upon Purchaser's acceptance of each
Acceptable Account, it shall become the sole owner and holder of such Acceptable
Account.
(c) No Acceptable Account shall be subject to any lien, encumbrance,
security interest or other claim of any kind or nature. Seller will not
transfer, pledge or give a security interest in any of its Accounts to anyone
other than Purchaser. Seller will not factor or sell any of its Accounts except
to Purchaser. There are no financing statements now on file in any public office
governing any property of Seller of any kind, real or personal, in which Seller
is named in or has signed as the debtor, except the financing statement or
statements filed or to be filed in respect of this Agreement or those statements
now on file that have been disclosed in writing by Seller to Purchaser. Seller
will not execute any financing statement in favor of any person or entity,
exception Purchaser, during the Term.
(d) The amount of each Acceptable Account is due and owing to Seller
and represents an accurate statement of a bona fide sale, delivery and
acceptance of Merchandise or performance of service by Seller to or for an
account Debtor. The terms for payment of Acceptable Accounts are thirty (30)
days from date of invoice and the payment of such Acceptable Accounts is not
contingent upon the fulfillment by Seller of any further performance of any
nature whatsoever. Each Account Debtor's business is solvent to the best of
Seller's knowledge.
(e) To the best of Seller's knowledge, there are and shall be no
set-offs, allowances, discounts, deductions, counterclaims, or Disputes with
respect to any Acceptable Account, either at the time it is accepted by
Purchaser for purchase or prior to the date it is to be paid. "Dispute," as used
in the last preceding sentence, shall mean any claim by an Account Debtor
against Seller, of any kind whatsoever, valid or invalid, that is asserted by
the Account Debtor as a basis for refusing to pay an Acceptable Account either
in whole or in part. Seller agrees to inform Purchaser in writing immediately
upon learning that there exists or may exist any Account which is subject to any
contra account, charge back, credit, consignment, right to return merchandise,
or other matter which diminishes or may diminish the dollar amount of timely
collection of such Account. Seller shall accept no returns and shall grant no
allowance or credit to any Account Debtor without notice to and the prior
written approval of Purchaser except in Seller's ordinary course of business.
Seller shall provide to Purchaser for each Account Debtor on Acceptable Accounts
that have been purchased, a weekly report in form and substance satisfactory
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to Purchaser itemizing all such returns and allowances made during the previous
week with respect such Acceptable Accounts and a check (a wire transfer) payable
to Purchaser for the amount thereof.
(f) The address set forth below Seller's signature hereon is Seller's
mailing address, its chief executive office, principal place of business and the
office where all of the books and records concerning the Acceptable Accounts are
maintained. Seller shall not change its mailing address, chief executive office,
principal place of business or place where such records are maintained without
thirty (30) days prior written notice to Purchaser.
(g) Seller shall maintain its books and records in accordance with
generally accepted accounting principles and shall reflect on its books the
absolute sale of the Acceptable Accounts to Purchaser. Seller shall furnish
Purchaser, upon request, such information and statements as Purchaser shall
request from time to time regarding Seller's business affairs, financial
condition and results of its operations. Without limiting the generality of the
foregoing, Seller shall provide Purchaser, on or prior to the 30th day or each
month, unaudited consolidated and consolidating financing statements with
respect to the prior month and, within ninety (90) days after the end of each of
Seller's fiscal years, reviewed annual consolidated and consolidating financial
statements and such certificates relating to the foregoing as Purchaser may
request including, without limitation, a monthly certificate from the president
and chief financial officer of Seller stating whether any Events of Default have
occurred and stating in detail the nature of the Events of Default. Seller will
furnish to Purchaser upon request a current listing of all open and unpaid
accounts payable and accounts receivable, and such other items of information
that Purchaser may deem necessary or appropriate from time to time. Unless
otherwise expressly provided herein or unless Purchaser otherwise consents, all
financial statements and reports furnished to Purchaser hereunder shall be
prepared and all financial computations and determinations pursuant hereto shall
be made in accordance with generally accepted accounting principles,
consistently applied.
(h) Purchaser shall have the right, from time to time, to audit
Seller's books and records annually upon reasonable notice to Seller; provided
that if an Event of Default exists Purchaser shall have the right to conduct
such audits at any time and from time to time without limitation. Seller shall
pay all costs associated with such audits.
(i) Seller has paid and will pay all taxes and governmental charges
imposed with respect to sales of the Merchandise and furnish to Purchaser upon
request satisfactory proof of payment and compliance with all federal, state and
local tax requirements.
(j) Seller will promptly notify Purchaser of (i) the filing of any
lawsuit against Seller involving amounts greater than $10,000 and (ii) any
attachment or any other legal process levied against Seller.
(k) Seller has served or caused to be served any and all preliminary
notices required by law to perfect or enforce any mechanic's lien or stop notice
or bonded stop notice for the Acceptable Accounts and the information contained
in those notices is true and correct to the best of Seller's knowledge. Waivers
and releases for all labor, services, equipment or material of Seller and others
will be submitted on Purchaser's form concurrently with each Schedule of
Accounts.
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(l) The application ("Application") made by Seller in connection with
this Agreement, and the statements made therein are true and correct at the time
that this Agreement is executed. There is no fact which Seller has not disclosed
to Purchaser in writing which could materially adversely affect the properties,
business or financial condition of Seller, or any of the Acceptable Accounts or
Collateral, or which it is necessary to disclose in order to keep the foregoing
representations and warranties from being misleading.
(m) In no event shall the funds paid to Seller hereunder be used
directly or indirectly for personal, family, household or agricultural purposes.
(n) Seller does business under no trade or assumed names except as
indicated below:
6. Notice of Purchase. Seller shall execute and deliver to Purchaser and/or file
at such times and places as Purchaser may designate Financing Statements to give
notice of Purchaser's purchase of the Acceptable Accounts as required by the
Uniform Commercial Code.
7. Collateral. In order to secure the payment of all indebtedness and
obligations of Seller to Purchaser, whether presently existing or hereafter
arising, Seller hereby grants to Purchaser a security interest in and lien upon
all of Seller's right, title and interest in and to (a) the Reserve Account and
all payments (if any) due or to become to Seller from the Reserve Account; (b)
all accounts, contract rights, general intangibles, receivables and claims not
purchased hereunder whether now or hereafter arising, all guaranties and
security therefor and all of Sellers right title and interest in the goods
purchased and represented thereby including all of Seller's rights in and to
returned goods and rights of stoppage in transit, replevin and reclamation as
unpaid vendor; (c) all inventory, wherever located and whether now or hereafter
existing, (including, but not limited to raw materials and work in process,
finished goods and materials used or consumed in the manufacture or production
thereof, goods in which Seller has an interest in mass of a joint or other
interest or rights of any kind, and goods which are returned to or repossessed
by Seller) and all accessions thereto and products thereof and documents
therefor; (d) all equipment wherever located and whether now or hereafter
existing, and all parts thereto, accessions thereto, and replacements therefor
and all documents and general intangibles covering or relating thereto; (e) all
books and records pertaining to the foregoing, including but not limited to
computer programs, data and lists; and (f) all proceeds of the foregoing
(collectively, the "Collateral"). Seller agrees to comply with all appropriate
laws in order to perfect Purchaser's security interest in and to the Collateral,
to execute any financing statement(s) or additional documents as Purchaser may
require and to deliver to Purchaser a list of all locations of its inventory and
equipment. The occurrence of any Event of Default (as hereinafter defined) shall
entitle Purchaser to all of the default rights and remedies (without limiting
the other rights and remedies exercisable by Purchaser either prior or
subsequent to an Event of Default) as available to a secured party under the
Uniform Commercial Code. So long as no Event of Default has occurred and is
continuing and the Company continues to perform satisfactorily in the sole
discretion of Purchaser, at one year from the date hereof, Purchaser shall
release its security interest in the equipment of Seller.
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8. Collection.
(a) Seller shall notify all Account Debtors and take other necessary or
appropriate means to insure that all of Seller's Accounts, whether or not
purchased by Purchaser, shall be paid directly to Purchaser at the remittance
address set forth below. Purchaser shall have the right at any time to so notify
all Account Debtors if Seller fails to do so. After collection by Purchaser, all
payments on Collateral shall be promptly remitted to Seller, subject to and
following the exercise of Purchaser's rights therein as a secured party and its
rights to offset any sums then owing by Seller hereunder.
(b) Purchaser, as the sole and absolute owner of the Acceptable
Accounts purchased hereunder, shall have the sole and exclusive power and
authority to collect each such Acceptable Account, through legal action or
otherwise, and Purchaser may, it its sole discretion, settle, compromise, or
assign (in whole or in part) any of such Acceptable Accounts, or otherwise
exercise any other right now existing or hereafter arising with respect to any
of such Acceptable Accounts. If Seller receives payment of all or any portion of
any of such Acceptable Accounts or any other account, Seller shall notify
Purchaser immediately and shall hold all checks and other instruments so
received in trust for Purchaser and shall deliver to Purchaser such checks and
other instruments without delay.
(c) Purchaser shall have the right at any time, either before or after
the occurrence of an Event of Default and without notice to Seller, to notify
any or all Account Debtors on the Collateral of the assignment of the Collateral
to Purchaser and to direct such Account Debtors to make payment of all amounts
due or to become due to Seller directly to Purchaser, and to the extent
permitted by law, to enforce collection of any Collateral and to adjust, settle
or compromise the amount or payment thereof. Upon the occurrence and during the
continuance of an Event of Default or any breach of any provisions of this
Agreement, such payments shall be applied by Purchaser to the payment or the
prepayment of the indebtedness and obligations of Seller to Purchaser or held as
cash collateral for such indebtedness and obligations. All amounts and proceeds
(including instruments and writings) received by Seller in respect of the
Collateral shall be received in trust for the benefit of Purchaser hereunder,
shall be segregated from other funds of seller and shall be promptly paid over
to Purchaser in the same form as so received with any necessary endorsement) to
be applied in the same manner as payments received directly by Purchaser.
9. Power of Attorney. Seller grants to Purchaser an irrevocable power of
attorney authorizing and permitting Purchaser, at its option, with or without
notice to Seller to do any or all of the following:
(a) Endorse the name of Seller on any checks or other evidence of
payment whatsoever that may come into the possession of Purchaser regarding
Acceptable Accounts or Collateral, including checks received by Purchaser
pursuant to paragraph 8 hereof;
(b) Receive, open and dispose of any mail addressed to Seller and put
Purchaser's address on any statements mailed to Account Debtors;
(c) Pay, settle, compromise, prosecute or defend any action, claim,
conditional waiver and release, or proceeding relating to Acceptable Accounts or
Collateral;
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(d) Upon the occurrence of an Event of Default, notify in the name of
Seller, the U.S. Post Office to change the address for delivery of mail
addressed to Seller to such address as Purchaser may designate. Purchaser shall
turn over to Seller all such mail not relating to Acceptable Accounts or
Collateral;
(e) Verify, sign, acknowledge, record, file for recording, serve as
required by law, any claim of mechanic's lien, stop notice or bonded stop notice
in the sole and absolute discretion of Purchaser relating to any Acceptable
Account or Collateral;
(f) Insert all recording or service information in any Mechanic's Lien
or Assignment of Rights Under Stop Notice/Bonded Stop Notice which Seller has
signed in connection with this Agreement, recorded or served to enforce payment
of the Acceptable Accounts or Collateral;
(g) Execute and file on behalf of Seller any financing statement deemed
necessary or appropriate by Purchaser to protect Purchaser's interest in and to
the Acceptable Accounts or Collateral, or under any provisions of this
Agreement; and
(h) To do all other things necessary and proper in order to carry out
this Agreement.
The authority granted to Purchaser herein is irrevocable until this Agreement is
terminated and all Advances are fully satisfied.
10. Default and Remedies. An event of default ("Event of Default") shall be
deemed to have occurred hereunder and Purchaser shall have no further obligation
to purchase Accounts and may immediately exercise its rights and remedies with
respect to the Acceptable Accounts and the Collateral under this Agreement, the
Uniform Commercial Code, and applicable law, upon the happening of one or more
of the following:
(a) Seller shall fail to pay as and when due any amount owed to
Purchaser within ten (10) days after notice thereof from Purchaser;
(b) There shall be commenced by or against Seller any voluntary case
under the federal Bankruptcy Code, or any assignment for the benefit of
creditors, or appointment of a receiver or custodian for a substantial portion
of its assets;
(c) Seller shall become insolvent in that its debts are greater than
the fair value of its assets, or Seller in generally not paying its debts as
they become due;
(d) Any involuntary lien, garnishment, attachment or the like shall be
issued against or shall attach to the Acceptable Accounts or the Collateral and
the same is not released within ten (10) days;
(e) Seller suffers the entry against it for a final judgment for the
payment of money in excess of $10,000, unless the same is discharged within
thirty (30) days after the date of entry thereof or an
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appeal or appropriate proceeding for review thereof is taken within such period
and a stay of execution pending such appeal is obtained;
(f) Seller shall breach any covenant or agreement or if any warranty or
representation set forth herein shall be untrue when made and the same is not
cured to Purchaser's satisfaction within ten (10) days after such breach or
occurrence;
(g) Any report, certificate, schedule, financial statement, profit and
loss statement or other statement furnished by Seller, or by any other person on
behalf of Seller, to Purchaser is not true and correct in any material respect;
(h) Seller shall have a federal or state tax lien filed against any of
its properties, or shall fail to pay any federal or state tax when due, or shall
fail to file any federal or state tax form as and when due; or
(i) A material adverse change shall have occurred in Seller's financial
conditions, business or operations.
11. Equitable Relief. In the event that Seller commits any act or omission which
prevents or unreasonably interferes with: (a) Purchaser's exercise of the rights
and privileges arising under the power of attorney granted in paragraph 9 of
this Agreement; or (b) Purchaser's perfection of or levy upon the security
interest granted in the Collateral, including any seizure of any Collateral,
such conduct will cause immediate, severe, incalculable and irreparable harm and
injury, and shall constitute sufficient grounds to entitle Purchaser to an
injunction, writ of possession, or other applicable relief in equity, and to
make such application for such relief in any court of competent jurisdiction,
without any prior notice to Seller.
12. Cumulative Rights; Waivers. All rights, remedies and powers granted to
Purchaser in this Agreement, or in any other instrument or agreement given by
Seller to Purchaser or otherwise available to Purchaser in equity or at law, are
cumulative and may be exercised singularly or concurrently with such other
rights as Purchaser may have. These rights may be exercised from time to time as
to all or any part of the Acceptable Accounts purchased hereunder or the
Collateral as Purchaser in its discretion may determine. In the event that the
transaction between Seller and Purchaser is construed to be a loan from
Purchaser to Seller, such loan shall be secured by the Acceptable Accounts and
the Collateral and Purchaser shall have all rights and remedies available to a
lender in addition to its rights and remedies hereunder. Purchaser may not waive
its rights and remedies unless the waiver is in writing and signed by Purchaser.
A waiver by Purchaser of a right or remedy under this Agreement on one occasion
is not a waiver of the right or remedy on any subsequent occasion.
13. Notices. Any notice or communication with respect to this Agreement shall be
given in writing, sent by (i) personal delivery, or (ii) expedited delivery
service with proof of delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, or (iv) prepaid telegram, telex or telecopy,
addressed to each party hereto at its address set forth below or to such other
address or to the attention of such other person as hereafter shall be
designated in writing by the applicable party sent in accordance herewith. Any
such notice or communication shall be deemed to have been given either at the
time of
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personal delivery or, in the case of delivery service or mail, as of the date of
first attempted delivery at the address and in the manner provided herein, or in
the case of telegram, telex or telecopy, upon receipt.
14. Term. The term of this Agreement shall be for thirty-six (36) months from
the date hereof (the "Term"). Seller shall have the right to terminate this
Agreement without penalty upon its issuance of additional common stock in a
public offering or in the event that Seller obtains financing from a bank (the
"new offer") and Purchaser elects not to modify this Agreement to contain the
same terms as the new offer. Any termination of this Agreement shall not affect
Purchaser's security interest in the Collateral and Purchaser's ownership of the
Acceptable Accounts, and this Agreement shall not affect Purchaser's security
interest in the Collateral and Purchaser's ownership of the Acceptable Accounts,
and this Agreement shall continue to be effective, until all transactions
entered into and obligations incurred hereunder have been completed and
satisfied in full. Seller shall have no right to terminate this Agreement except
as set forth above; provided that in the event this Agreement is terminated for
any reason (other than as set forth above) during the first twelve months of the
Term, Seller shall pay to Purchaser an early termination fee in the amount of
one and one-half percent (1.5%) of the Commitment, if this Agreement is
terminated for any reason (other than as set forth above) during the second
twelve months of the Term, Seller shall pay to Purchaser an early termination
fee in the amount of one percent (1.0%) of the Commitment and if the Agreement
is terminated for any reason (other than as set forth above) during the last
twelve months of the Term, Seller shall pay to Purchaser an early termination
fee in the amount of one-half percent (0.5%) of the Commitment.
15. Reimbursable Expenses. Purchaser incurs certain routine expenses in the
course of performing its functions with respect to the Acceptable Accounts, a
portion of which Purchaser shall be entitled to deduct from the Reserve Account.
However, Purchaser shall not be entitled to any deductions for routine expenses
not specifically listed in this paragraph. The following is an itemization of
the routine deductions to which Purchaser shall be entitled: long-distance
telephone charges, legal fees incurred in collecting the Accounts, postage,
credit reports, wire transfers, overnight mail delivery, UCC and tax lien
searches and filing fees ("Adjustments").
16. Attorney's Fees. Seller agrees to reimburse Purchaser upon demand for all
reasonable attorney's fees, court costs and other expenses incurred by Purchaser
in preparation, negotiation, and enforcement of this Agreement and protecting or
enforcing its interest to the Acceptable Accounts or the Collateral, in
collecting the Acceptable Accounts or the Collateral, or in the representation
of Purchaser in connection with any bankruptcy case or insolvency proceeding
involving Seller, the Collateral, any Account Debtor, or any Acceptable Account.
Seller hereby authorizes Purchaser, at its sole discretion, to deduct such fees,
costs and expenses from the purchase price for Acceptable Accounts. The fees and
expenses of Purchaser's attorneys for work in connection with the negotiation,
preparation and execution of this Agreement will be $2,500.
17. Severability. Each and every provision, condition, covenant and
representation contained in this Agreement is, and shall be construed to be a
separate and independent covenant and agreement. If any term or provision of
this Agreement shall to any extent be invalid or unenforceable, the remainder of
the Agreement shall not be affected thereby.
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18. Parties in Interest. All grants, covenants and agreements contained in this
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Seller may not
delegate or assign any of its duties or obligations under this Agreement without
the prior written consent of Purchaser. PURCHASER RESERVES THE RIGHT TO ASSIGN
ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT IN WHOLE OR IN PART TO ANY
PERSON OR ENTITY.
19. GOVERNING LAW; SUBMISSION TO PROCESS. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA
AND THE LAWS OF THE UNITED STATES OF AMERICA. SELLER HEREBY IRREVOCABLY SUBMITS
ITSELF TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
THE STATE OF ARIZONA AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE
UPON IT IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, THE PURCHASE OF
ACCEPTABLE ACCOUNTS OR ANY OTHER RELATIONSHIP BETWEEN PURCHASER AND SELLER BY
ANY MEANS ALLOWED UNDER STATE OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT
OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE PURCHASE OF ACCEPTABLE ACCOUNTS
OR ANY OTHER RELATIONSHIP BETWEEN PURCHASER AND SELLER SHALL BE BROUGHT AND
LITIGATED EXCLUSIVELY IN ANY ONE OF THE STATE OR FEDERAL COURTS LOCATED IN THE
STATE OF ARIZONA HAVING JURISDICTION. THE PARTIES HERETO HEREBY WAIVE AND AGREE
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER.
20. WAIVER OF JURY TRIAL, PUNITIVE AND CONSEQUENTIAL DAMAGES, ETC. EACH OF
SELLER AND PURCHASER HEREBY (A) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
ASSOCIATED HEREWITH; (B) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (C) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS PARAGRAPH.
21. COMPLETE AGREEMENT. THIS AGREEMENT, THE SECURITY DOCUMENTS DESCRIBED HEREIN
OR IN THE ADDENDUM HERETO, AND THE ACKNOWLEDGMENT DELIVERED IN CONNECTION
HEREWITH SET FORTH THE ENTIRE UNDERSTANDING AND
-12-
<PAGE> 13
AGREEMENT OF THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. NO MODIFICATION OR AMENDMENT OF OR
SUPPLEMENT TO THIS AGREEMENT OR TO SUCH ACKNOWLEDGMENT SHALL BE VALID OR
EFFECTIVE UNLESS THE SAME IS IN WRITING AND SIGNED BY THE PARTY AGAINST WHOM IT
IS SOUGHT TO BE ENFORCED.
The undersigned have entered into this Agreement on the date first
above written.
<TABLE>
<S> <C>
FIDELITY FUNDING OF EMCO RECYCLING CORP.,
CALIFORNIA, INC., an Arizona corporation
a California corporation
By: /s/ Jeffrey Sweet By: /s/ Ellis H. Rubenstein
-------------------------------------------- -------------------------------------------
Name: Jeffrey Sweet Name: Ellis H. Rubenstein
Title: Vice President Title: President
Remittance Address: P.O. Drawer 840425
Dallas, TX 75284-0425
Mailing Address: P.O. Box 670484 Mailing Address: P.O. Box 21366
Dallas, TX 75367-0484 Phoenix, Arizona 85036
Street Address: 14850 Montfort Drive Street Address: 3700 W. Lower Buckeye Rd.
Suite 200 Phoenix, Arizona 85009
Dallas, Texas 75240
</TABLE>
-13-
<PAGE> 1
EXHIBIT 10.28
PROMISSORY NOTE
$300,000.00 Tucson, Arizona
April 11, 1996
FOR VALUE RECEIVED, Ellis Metals, Inc., an Arizona corporation
("Maker") having an address of 1800 North Stone, Tucson, Arizona 85703, hereby
promises to pay to the order of EMCO Recycling Corp., an Arizona corporation,
its successors and assigns ("Holder"), at 3700 West Lower Buckeye Road,
Phoenix, AZ 85009, or such other place as the Holder hereof may, from time to
time, specify in writing, the principal sum of Three Hundred Thousand and
No/100 Dollars ($300,000.00), together with interest as provided in this
Promissory Note ("Note").
1. Interest. The unpaid principal amount of this Note will bear
interest at the rate of nine percent (9%) per annum from the date hereof, until
fully paid. All interest under this Note will accrue on the basis of a 365-day
year and actual days elapsed.
2. Payments. Interest only shall be paid in monthly installments
on the unpaid principal amount commencing an the first day of May, 1996, and
continuing on the first day of each month thereafter until April 12, 2001,
when the entire unpaid principal amount and all accrued and unpaid interest
shall be due and payable. Holder may extend the date when the entire unpaid
principal amount and all accrued and unpaid interest is due and payable by one
(1) five (5) year period, in which case interest only shall continue to be paid
in monthly installments on the unpaid principal amount on the first day of each
month until April 12, 2006, when the entire unpaid principal amount and all
accrued and unpaid interest shall be due and payable.
3. Default. Upon failure to make any payment as herein provided
within ten (10) days of the date due the remaining payments of principal, at
the option of the holder hereof, shall at once become due and payable. After
any default, and so long as such default remains uncured, at the option of the
holder hereof, the unpaid principal sum hereof shall bear interest at the rate
of eighteen percent (18%) per annum.
4. Prepayment. The entire unpaid principal balance of this Note
may be prepaid, in whole or in part, at any time without premium penalty.
<PAGE> 2
5. Severability. Should any one or more provisions of this Note
be determined to be illegal or unenforceable, such provision or provisions
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable, and all other provisions nevertheless shall be
effective.
6. Governing Law. This Note shall be construed
according to the laws of the State of Arizona.
7. Waiver of Maker's Rights. Maker hereby expressly waives
demand, presentment for payment, protest, notice of protest and diligence in
collection, and consents to the time said payment or any part thereof is to be
made.
8. Attorneys' Fees. Maker promises to pay all costs and expenses
of collection, including reasonable attorneys' fees in the event this Note is
placed in the hands of an attorney for collection, and such collection is
effected without suit. The prevailing party in any litigation, arbitration or
other proceedings arising out of this Note shall be reimbursed by the other
party for all costs and expenses incurred in such proceedings, including
reasonable attorneys' fees.
9. Security. This Note shall be secured by a Security Agreement
on all of the inventory of the Maker.
10. Cancellation of Prior Note. This Note replaces in its
entirety that certain Promissory Note, dated August 2, 1995, by Maker to
Holder, which is hereby cancelled by execution of this Note.
ELLIS METALS, INC., an Arizona
corporation
By: /s/ Harold Rubenstein
------------------------------
Its: Vice President
------------------------------
2
<PAGE> 1
EXHIBIT 10.29
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this 11th
day of April, 1996, by and between GENERAL PARAMETRICS CORPORATION, a Delaware
corporation (the "Company"), and _________________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the increasing
difficulty in obtaining directors' and officers' liability insurance, the
significant increases in the cost of such insurance and the general reductions
in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available
as adequate under the present circumstances, and Indemnitee and other officers
and directors of the Company may not be willing to continue to serve as
officers and directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve as officers and
directors of the Company and to indemnify its officers and directors so as to
provide them with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred
by Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in
1
<PAGE> 2
good faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that Indemnitee's conduct
was unlawful.
(b) Proceedings By or in the Right of the Company. The
Company shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company or any subsidiary of the Company to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with the defense
or settlement of such action or suit if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery of the State of Delaware or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.
(c) Mandatory Payment of Expenses. To the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Subsections (a) and (b) of this
Section 1 or the defense of any claim, issue or matter therein, Indemnitee
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by Indemnitee in connection therewith.
2. Agreement to Serve. In consideration of the protection
afforded by this Agreement, if Indemnitee is a director of the Company he
agrees to serve at least for the balance of the current term as a director and
not to resign voluntarily during such period without the written consent of a
majority of the Board of Directors. If Indemnitee is an officer of the Company
not serving under an employment contract, he agrees to serve in such capacity
at least for the balance of the current fiscal year of the Company and not to
resign voluntarily during such period without the written consent of a majority
of the Board of Directors. Following the applicable period set forth above,
Indemnitee agrees to continue to serve in such capacity at the will of the
Company (or under separate agreement, if such agreement exists) so long as he
is duly appointed or elected and qualified in accordance with the applicable
provisions of the by-laws of the Company or any subsidiary of the Company or
until such time as he tenders his resignation in writing. Nothing contained in
this Agreement is intended to create in Indemnitee any right to continued
employment.
3. Expenses; Indemnification Procedure.
2
<PAGE> 3
(a) Advancement of Expenses. The company shall advance all
expenses incurred by indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action, suit or proceeding
referenced in section 1(a) or (b) hereof. Indemnitee hereby undertakes to repay
such amounts advanced only if, and to the extent that, it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified by the Company
as authorized hereby. The advances to be made hereunder shall be paid by the
Company to the Indemnitee within twenty (20) days following delivery of a
written request therefore by Indemnitee to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be Indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to General Parametrics
Corporation, 250 Ninth Street, Berkeley, California 94710 (Attn: President)
(or such other address as the Company shall designate in writing to Indemnitee).
Notice shall be deemed received on the third business day after the date
postmarked if sent by domestic certified or registered mail, properly
addressed; otherwise notice shall be deemed received when such notice shall
actually be received by the Company. In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.
(c) Procedure. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than forty-five (45) days
after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Company's
Certificate of Incorporation or By-laws providing for indemnification, is not
paid in full by the Company within forty-five (45) days after a written request
for payment thereof has first been received by the Company, Indemnitee may, but
need not, at any time thereafter bring an action against the Company to recover
the unpaid amount of the claim and, subject to Section 13 of this Agreement,
Indemnitee shall also be entitled to be paid for the expenses (including
attorneys' fees) of bringing such action. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify Indemnitee for the
amount claimed, and the burden of proving such defense shall be on the Company
and Indemnitee shall be entitled to receive interim payments of expenses
pursuant to Subsection 3(a) unless and until such defense may be finally
adjudicated by court order or judgment from which no further right of appeal
exits. It is the parties' intention that if the Company contests Indemnitee's
right to indemnification, the question of Indemnitee's right to indemnification
shall be for the court to decide, and neither the failure of the Company
(including its Board of Directors or any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including its Board
of Directors or any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard conduct, shall create a presumption that Indemnitee has or has not met
the applicable standard conduct.
3
<PAGE> 4
(d) Notice to Insurers. If, at the time of the receipt
of a notice of a claim pursuant to Subsection 3(b) hereof, the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of such proceeding in accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall
be obligated under Section 3(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume
the defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred
by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee
shall have the right to employ his counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
4. Additional Indemnification Rights: Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's By-laws or by statute.
In the event of any change, after the date of this Agreement, in any applicable
law, statute, or rule which expands the right of a Delaware corporation to
indemnify a member of its board of directors or an officer, such changes shall
be, ipso facto , within the purview of Indemnitee's rights and Company's
obligations, under this Agreement. In the event of any change in any
applicable law, statute or rule which narrows the right of a Delaware
corporation to indemnify a member of its board of directors or an officer, such
changes, to the extent not otherwise required by such law, statute or rule to
be applied to this Agreement shall have no effect on this Agreement or the
parties' rights and obligations hereunder.
(b) Nonexclusivity. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may
be entitled under the Company's Certificate of Incorporation, its By-laws, any
agreement, any vote of stockholders or disinterested Directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken
4
<PAGE> 5
or not taken while serving in an indemnified capacity even though he may have
ceased to serve in an indemnified capacity at the time of any action, suit or
other covered proceeding.
5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any
civil or criminal action, suit or proceeding, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines or penalties to which Indemnitee is
entitled.
6. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee
acknowledge that in certain instances, Federal law or public policy may
override applicable state law and prohibit the Company from indemnifying its
directors and officers under this Agreement or otherwise. For example, the
Company and Indemnitee acknowledge that the Securities and Exchange Commission
(the "SEC") has taken the position that indemnification is not permissible for
liabilities arising under certain federal securities laws, and federal
legislation prohibits indemnification for certain ERISA violations. Indemnitee
understands and acknowledges that the Company has undertaken, and may be
required in the future to undertake, with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
7. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall,
from time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and
directors of the Company with coverage for losses from wrongful acts, or to
ensure the Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all policies of director and officer liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if Indemnitee is not an officer or
director but is a key employee. Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if
the premium costs for such insurance are disproportionate to the amount of
coverage provided, if the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit, or if Indemnitee is
covered by similar insurance maintained by a parent or subsidiary of the
Company.
8. SEVERABILITY. Nothing in this Agreement is intended to require
or shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach
of this Agreement. The provisions of this Agreement shall be severable as
provided in this Section 8. If this Agreement or any portion hereof shall be
invalidated on any ground by any court
5
<PAGE> 6
of competent jurisdiction, then the Company shall nevertheless indemnify
Indemnitee to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its terms.
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or
advance expenses to Indemnitee with respect to proceedings or claims initiated
or brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as
required under Section 145 of the Delaware General Corporation Law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors finds it to be appropriate;
(b) Lack of Good Faith. To indemnify Indemnitee for any
expenses incurred by Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous;
(c) Insured Claims. To indemnify Indemnitee for expenses
or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to Indemnitee by an insurance carrier
under a policy of officers' and directors' liability insurance maintained by
the Company; or
(d) Claims under Section 16(b). To indemnify Indemnitee
for expenses or the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, and
employees or agents, so that if Indemnitee is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.
6
<PAGE> 7
(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants,
or beneficiaries; and if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have
acted in a manner "not opposed to the best interests of the Company" as
referred to in this Agreement.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. ATTORNEY'S FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms
hereof, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee with respect to
such action, unless as a part of such action, a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee as a basis
for such action were not made in good faith or were frivolous. In the event of
an action instituted by or in the name of the Company under this Agreement or
to enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all court costs and expenses, including attorneys' fees,
incurred by Indemnitee in defense of such action (including with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action the court determines that each of Indemnitee's material
defenses to such action were made in bad faith or were frivolous.
14. NOTICE. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipt is acknowledged by the party addressee, on the
date of such receipt, or (ii) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
15. CONSENT TO JURISDICTION. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be brought only in the state courts of the State of
Delaware.
7
<PAGE> 8
f16. Choice of Law. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residence entered into and to be performed entirely
within Delaware.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GENERAL PARAMETRICS CORPORATION
By:
--------------------------
Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, California 94710
AGREED TO AND ACCEPTED:
INDEMNITEE:
- ---------------------
(Signature)
- ---------------------
(address)
- ---------------------
9
<PAGE> 1
Exhibit 10.30
PROMISSORY NOTE
Date: April 11, 1996
Maker: METAL MANAGEMENT REALTY, INC., an Arizona corporation
Payee: H & S BROADWAY, an Arizona general partnership ("Payee")
Place for Payment: 7330 Lakeside Lane, Scottsdale, Arizona 85253
Principal Amount: Five Hundred Forty-Seven Thousand Fifty-Nine and
No/100 Dollars ($547,059.00)
Annual Interest Rate on Unpaid
Principal From Date of Funding: Nine Percent (9.0%) Per Annum.
Terms of Payment: The principal balance of the Note shall be due and
payable in full on the third (3rd) anniversary of the
date set forth above. Interest, computed on the
unpaid principal balance of the Note, shall be due
and payable in monthly installments as it accrues,
with each installment to be due and payable on the
eleventh (11th) day of each succeeding month
following the date set forth above until maturity of
the Note, when all then accrued but unpaid interest
on the outstanding principal balance of the note
shall be finally due and payable.
Annual Interest Rate on
Matured, Unpaid Amounts
in the Event of Default: In the event of default, the applicable interest rate
shall be EIGHTEEN PERCENT (18%), computed from the
date of default.
Maker promises to pay to the order of Payee at the place for payment
and according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
Upon the occurrence of a default hereunder, Payee must provide Maker
with written notice thereof and permit Maker to have twenty (20) days from the
date of the notice within which to cure the default before exercising any of its
remedies hereunder or in that certain Deed of Trust, Assignment of Rents and
Security Agreement (the "Deed of Trust") executed by Maker in favor of Payee.
Maker shall have the right to prepay this Note at any time, in whole or
in part, without premium or penalty, and that interest shall immediately cease
to accrue on any part of the note so prepaid.
This Note is secured by the Deed of Trust of even date herewith
executed and delivered to Payee by Maker.
<PAGE> 2
Interest on the debt evidenced by this Note shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that maximum
amount shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Maker is responsible for all obligations represented by this Note.
When the context requires, singular nouns and pronouns include the
plural.
This Note shall be constructed and interpreted in accordance with the
laws of the State of Arizona.
MAKER:
METAL MANAGEMENT REALTY, INC., an Arizona
corporation
By: /s/ T. BENJAMIN JENNINGS
-------------------------------------
T. Benjamin Jennings, Co-President
2
<PAGE> 1
Exhibit 10.31
PROMISSORY NOTE
Date: April 11, 1996
Maker: METAL MANAGEMENT REALTY, INC., an Arizona corporation
Payees: HAROLD RUBENSTEIN and BEVERLY RUBENSTEIN (collectively
referred to as "Payees")
Place for Payment: 7330 Lakeside Lane, Scottsdale, Arizona 85253
Principal Amount: Four Hundred Two Thousand Nine Hundred Forty-One and
No/100 Dollars ($402,941.00)
Annual Interest Rate on Unpaid
Principal From Date of Funding: Nine Percent (9.0%) Per Annum.
Terms of Payment: The principal balance of the Note shall be due and
payable in full on the third (3rd) anniversary of the
date set forth above. Interest, computed on the
unpaid principal balance of the Note, shall be due
and payable in monthly installments as it accrues,
with each installment to be due and payable on the
eleventh (11th) day of each succeeding month
following the date set forth above until maturity of
the Note, when all then accrued but unpaid interest
on the outstanding principal balance of the note
shall be finally due and payable.
Annual Interest Rate on
Matured, Unpaid Amounts
in the Event of Default: In the event of default, the applicable interest rate
shall be EIGHTEEN PERCENT (18%), computed from the
date of default.
Maker promises to pay to the order of Payees at the place for payment
and according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
Upon the occurrence of a default hereunder, Payees must provide Maker
with written notice thereof and permit Maker to have twenty (20) days from the
date of the notice within which to cure the default before exercising any of its
remedies hereunder or in that certain Deed of Trust, Assignment of Rents and
Security Agreement (the "Deed of Trust"), executed by Maker in favor of Payees.
Maker shall have the right to prepay this Note at any time, in whole or
in part, without premium or penalty, and that interest shall immediately cease
to accrue on any part of the note so prepaid.
<PAGE> 2
The Payees appoint Harold Rubenstein to receive all notices on behalf
of Payees, to execute any and all documents, consents and instruments required
to be executed by the Payees under the terms of this Note and to take any and
all action required or permitted to the Payees.
This Note is secured by the Deed of Trust of even date herewith
executed and delivered to Payees by Maker.
Interest on the debt evidenced by this Note shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that maximum
amount shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Maker is responsible for all obligations represented by this Note.
When the context requires, singular nouns and pronouns include the
plural.
This Note shall be constructed and interpreted in accordance with the
laws of the State of Arizona.
MAKER:
METAL MANAGEMENT REALTY, INC., an Arizona
corporation
By: /s/ T. BENJAMIN JENNINGS
---------------------------------------
T. Benjamin Jennings, Co-President
2
<PAGE> 1
Exhibit 10.32
WHEN RECORDED, MAIL TO:
SACKS TIERNEY P.A.
Attn: Robert G. Kimball, Esq.
2929 North Central Avenue, Suite 1400
Phoenix, Arizona 85012-2742
[Stone Parcel]
DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
TRUSTOR: METAL MANAGEMENT REALTY, INC.
Mailing Address:
7600 Augusta Street
River Forest, IL 60305
Attn: Gerard M. Jacobs
BENEFICIARY: H & S BROADWAY, an Arizona general partnership
Mailing Address:
7330 E. Lakeside Ln.
Scottsdale, AZ 85254
TRUSTEE: ______________________________
Mailing Address:
______________________________
______________________________
______________________________
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
is made this 11th day of April, 1996 between the Trustor, Trustee and
Beneficiary named above. For purposes of convenience,
<PAGE> 2
this instrument is sometimes referred to within the text as "Deed of Trust".
W I T N E S S E T H:
In consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and legal sufficiency of which are
acknowledged, Trustor irrevocably grants, transfers and assigns to Trustee, IN
TRUST, with power of sale, the real property described in Exhibit A, which is
attached to and made a part of this Deed of Trust ("Trust Property"), TOGETHER
WITH all interest which Trustor now has or may hereafter acquire in and to the
Trust Property and the following:
(i) All buildings, structures, and improvements of every
nature whatsoever now or hereafter situated on the Trust Property, and all
fixtures and building materials now or hereafter owned by Trustor and which are
located in, on, or used or intended to be used in connection with the operation
of the Trust Property, the buildings, structures or other improvements thereon
(including all extensions, additions, improvements, betterments, renewals, and
replacements to any of the foregoing).
(ii) All of the right, title and interest of Trustor of, in or
to the land lying in the bed of any street, road, avenue or right-of-way in
front of or adjoining the Trust Property, and in and to any and all easements or
appurtenances to the Trust Property and all the estate and rights of Trustor in
and to, or benefiting, the Trust Property.
(iii) Any awards which are or may become due by reason of the
taking by eminent domain of the whole or any part of the Trust Property, or any
rights appurtenant thereto, including any award for change of grade of street,
or damages awarded for injuries caused by private trespass (Beneficiary, at its
option, may apply all or any portion of the awards as additional payment in
reduction of the indebtedness secured by this Deed of Trust).
(iv) All rents, issues, income, profits, reversions and
remainders arising out of or arising from the Trust Property ("Property
Income"), subject, however, to the right, power and authority given to
Beneficiary to collect and apply the Property Income.
(v) All right, title, and interest of Trustor in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Trust Property, hereafter
acquired by or released to Trustor, or constructed, assembled or placed on the
Trust Property. All conversions or modifications of the security,
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<PAGE> 3
immediately upon each acquisition, release, construction, assembling, placement
or conversion, as the case may be, shall, without any further grant, conveyance,
assignment or other act by Trustor, become part of the Trust Property as fully
and completely and with the same effect, as though now owned by Trustor, and
specifically described in the granting clause (although at any and all times
Trustor shall execute and deliver to Trustee any and all further assurances,
supplemental deeds of trust, conveyances or assignments as Trustee may
reasonably require for the purpose of expressly and specifically conveying and
confirming such property to Trustee, in trust, and confirming and perfecting the
security interest granted to Beneficiary).
(vi) All rights of the Trustor under any construc tion,
service, engineering, consulting, architectural and other similar contracts as
such may be modified, amended or supplemented from time to time, concerning the
decision, construction, management, operation, occupancy, use, and/or
disposition of any or all of the Trust Property.
(vii) All rights of the Trustor to any payment and performance
bond or guarantees and any and all modifications and extensions thereof relating
to the Property.
(viii) All rights of the Trustor to any governmental
permissions, environmental clearances, authority to subdivide the property,
rights, licenses and permits as are necessary for the commencement,
continuation, completion, occupancy, use and disposition of any and all of the
Trust Property.
(ix) All rights of the Trustor under any sales contracts and
proceeds, escrow agreements and broker's agreements concerning the sale of any
or all of the Trust Property.
(x) All right, title and interest of Trustor in and to all
insurance policies of any type whatsoever, which currently insure, or in the
future will insure, the Trust Property and/or any or all of the items described
in subparagraphs (i) through (xiv) above, including all proceeds, loss payments
and premium refunds which may become payable with respect to such insurance
policies.
The Trust Property and all those items described in subparagraphs (i) through
(x) above are referred to herein as the "Collateral."
In addition to the security interest created by this Deed of
Trust in the Trust Property, Trustor hereby grants to Beneficiary a security
interest in all of the Collateral which is comprised of fixtures, personal
property and intangibles. This Deed of Trust may be indexed as a fixture filing
in counties or jurisdictions where there is no centralized filing.
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<PAGE> 4
TO HAVE AND TO HOLD the same to Trustee and the successors,
heirs, executors, administrators or assigns of Trustee, forever.
TRUSTOR covenants and warrants that Trustor is seized of a
good and marketable title in fee simple to the Trust Property, and has good,
right and lawful authority to convey the same; and that the title so conveyed is
clear, free and unencumbered, excepting only current taxes which are not yet due
and payable, patent reservations, easements, and restrictions, conditions and
covenants of record.
NEVERTHELESS, upon written request of Beneficiary stating that
all sums secured have been paid, and upon surrender of this Deed of Trust and
the notes or other instruments secured hereby to Trustee for cancellation and
retention and upon payment of its fees, Trustee shall release and reconvey,
without covenant or warranty, express or implied, the Collateral then held
hereunder. The recitals in the reconveyance of any matters or facts shall be
conclusive proof of their truthfulness. The grantee in the reconveyance may be
described as "the person or persons legally entitled thereto". Seven (7) years
after issuance of a full reconveyance, Trustee may destroy this Deed of Trust,
all evidence of assignments and all other related documents.
ARTICLE 1. THIS DEED OF TRUST IS GIVEN FOR THE PURPOSE OF
SECURING THE FOLLOWING OBLIGATIONS:
1.1 The payment of all indebtedness and timely performance of
all obligations of Trustor to Beneficiary under that certain indebtedness
evidenced by a Promissory Note dated April 11, 1996, made by Trustor and payable
to Beneficiary, in the principal amount of FIVE HUNDRED FORTY-SEVEN THOUSAND
FIFTY-NINE AND NO/100 DOLLARS ($547,059.00), and any and all extensions,
modifications or renewals of the Note (sometimes referred to as "Note").
1.2 Payment, with interest, in accordance with the terms of
the obligations evidencing the same, of any and all additional loans or advances
made by Beneficiary to Trustor and/or the then record owner or owners of all or
part of the Collateral, so long as such indebtedness is evidenced by a
promissory note(s) reciting that they are secured by this Deed of Trust, and any
and all extensions, modifications or renewals thereof.
1.3 (a) Performance, payment and observance of each obligation
of Trustor contained in this Deed of Trust, including reimbursement to
Beneficiary and Trustee for all money that may be advanced as provided herein,
and all of Beneficiary's and Trustee's reasonable costs and expenses, including
attorneys' fees, incurred or paid on account of any matter arising out of this
Deed of Trust or the Collateral, together with interest from the date of
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<PAGE> 5
expenditure at the default rate specified in the Note (the "Default Rate"). Any
amounts so paid by Beneficiary or Trustee shall become a part of the debt
secured by this Deed of Trust and a lien on the Collateral and immediately due
and payable.
(b) Without limiting the generality of Section 1.3(a),
Trustor's obligation to pay all of Beneficiary's reasonable costs and expenses
resulting from action taken pursuant to this Deed of Trust includes the
obligation to pay costs and expenses, including attorneys' fees incurred by
Beneficiary to take possession of the Collateral, to dispose of the Collateral
at a Trustee's sale or other sale in the case of personal property, to prevent
waste or any other impairment of the Collateral or to take any action which
Beneficiary and/or Trustee deem advisable relating to the Collateral or the
property encumbered by this Deed of Trust in any proceeding under the applicable
bankruptcy laws of the United States. Such costs, expenses and attorneys' fees
constitute an obligation of the Trustor secured by this Deed of Trust, and are
payable out of any proceeds from the sale of any of the Collateral.
1.4 Payment of all obligations incurred, and all moneys
expended or advanced by Beneficiary or Trustee on behalf of Trustor pursuant to
any of the terms of this Deed of Trust, including, but not limited to, amounts
paid by Beneficiary to enforce the rights of, or to pay the obligations of,
Trustor.
ARTICLE 2. TO PROTECT THE SECURITY OF THIS DEED OF TRUST,
TRUSTOR AGREES AND WARRANTS AS FOLLOWS:
2.1 Obligations. Trustor shall promptly perform all
obligations set forth in this Deed of Trust and shall timely pay all secured
indebtedness.
2.2 Condition of Collateral. Trustor shall keep the Collateral
in the same condition and repair as the Collateral was in at the time of
conveyance of the Collateral by Beneficiary to Trustor, ordinary wear and tear
excepted, and Trustor shall not partially or completely remove, demolish, or
substantially alter any improvements thereon. Trustor shall complete or restore
promptly in a good and workmanlike manner any structure on the Trust Property
which may be damaged or destroyed, and shall pay when due all claims for labor
performed and materials furnished. Trustor shall materially comply with all laws
affecting the Collateral or requiring any alterations or improvements to be
made. Trustor agrees not to commit or permit waste with respect to any of the
Collateral. Except for violations of law relating to Hazardous Materials which
occur in the ordinary course of Trustor's business of the operation of a scrap
yard, Trustor agrees not to commit, suffer or permit any act upon the Trust
Property materially in violation of law, and to do all other acts which, from
the character or use of the Collateral, may be reasonably necessary to
5
<PAGE> 6
preserve and protect the Collateral and the security hereof, including, but not
limited to, making all filings and payments and taking all other necessary
actions to preserve the water and mineral rights of the Collateral. The specific
enumerations listed in this paragraph do not limit the general obligations of
the Trustor to preserve and protect the Trust Property and the Collateral.
2.3 Title to Trust Property And Obligation to Defend. Trustor
warrants that Trustor is the lawful owner of the Trust Property, in fee simple,
and of the other Collateral and that title to the Trust Property and other
Collateral is free and clear of all liens and encumbrances except as expressly
stated herein. Trustor agrees to protect, preserve and defend Trustor's interest
in and title to the Collateral, to appear and defend this Deed of Trust in any
action or proceeding affecting or purporting to affect the Collateral, the lien
of this Deed of Trust, or any of the security, rights or powers of Trustee or
Beneficiary, and Trustor agrees to pay all reasonable costs and expenses of
Beneficiary or Trustee, including costs of evidence of title and attorneys'
fees, in any action or proceeding in which Beneficiary or Trustee may appear or
be named and in any suit brought by Beneficiary to foreclose this Deed of Trust.
2.4 Future Encumbrances on the Collateral. Except for taxes
and assessments which are to be paid by Trustor as specified herein, Trustor
will not in the future create or suffer or permit to be created, subsequent to
the date of the execution and delivery of this Deed of Trust, any lien or
encumbrance upon the Collateral that is or may become superior to the lien of
this Deed of Trust.
2.5 Liens or Default on Other Property of Trustor. Trustor
warrants that the execution and delivery of this Deed of Trust and the Note, and
any other instruments executed and delivered to Beneficiary, and the full and
complete performance of their provisions, will not result in any breach of, or
constitute a default under any indenture, mortgage, deed of trust, bank loan,
credit agreement or other instrument to which Trustor is a party or by which
Trustor is bound, or result in the creation of any lien, charge or encumbrance
(other than those contained in this Deed of Trust or in any instrument delivered
by Trustor to Beneficiary) upon any property or assets of Trustor.
2.6 Litigation Pending. Trustor warrants that there are no
lawsuits pending or threatened against Trustor, or lawsuits instituted by
Trustor in which the party defendant has counterclaimed, or threatened to
counterclaim, against Trustor, or in the event there is a lawsuit or
counterclaim pending or threatened, no lawsuit or counterclaim has or shall have
a material adverse effect upon the business or financial condition of Trustor,
upon the Collateral, or upon Trustor's interest in the Collateral.
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<PAGE> 7
2.7 Taxes, Assessments and Charges.
(a) Trustor shall pay and discharge when due all
taxes of every kind and nature, all general and special assessments, adverse
claims, charges, liens, permits, inspection fees, license fees, all water and
sewer rents and charges, and all other public charges whether of a like or
different nature, any of which charges (i) are imposed upon or assessed against
it or all or any part of the Collateral; (ii) impair or may impair the security
of the Collateral or this Deed of Trust; (iii) impair or may impair the Property
Income; or (iv) arise in respect of the occupancy, use or possession of the
Collateral. Upon the request of Beneficiary, Trustor shall promptly deliver to
Beneficiary receipts evidencing the payment of all taxes, assessments, levies,
fees, rents, other public charges, and all other charges described in this
paragraph imposed upon or assessed against it or any part of the Collateral.
(b) If Trustor fails to pay any of the taxes,
assessments, adverse claims, encumbrances, liens, premiums of insurance or other
charges as provided in this Deed of Trust, Beneficiary may pay, purchase,
contest or compromise the same, without obligation to do so and without notice
to or demand upon Trustor, and without releasing Trustor from any obligations
hereunder, and the amounts so paid, together with interest at the Default Rate
shall become a part of the indebtedness secured by this Deed of Trust and a lien
on the Collateral immediately due and payable by Trustor.
(c) Trustor, in good faith and at its own expense,
may contest any tax or assessment or the validity thereof by appropriate legal
proceedings; provided, however, that during any contest Trustor shall first
provide security wholly satisfactory to Beneficiary; and provided further, that
if, at any time, payment of any obligation imposed on Trustor becomes necessary
to prevent the delivery of a tax deed or tax certificate of purchase (or a
similar instrument) conveying all or part of the Collateral because of a
nonpayment, then Trustor must pay the same in sufficient time to prevent the
delivery of a tax deed or tax certificate of purchase (or a similar instrument).
2.8 Insurance.
(a) Trustor shall keep all buildings, improvements,
fixtures, machinery and equipment now existing or hereafter erected or placed on
the Trust Property and all of the other Collateral insured against loss or
damage by fire and the risks embraced within the terms "all risk" or "all
perils," providing that any loss is payable to Beneficiary in such amount or
amounts and with such insurance companies as Beneficiary may reasonably require
(but in no event less than the secured indebtedness). Trustor shall also provide
public liability and property damage insurance
7
<PAGE> 8
protecting Trustor and Beneficiary as named insureds in such amounts as
Beneficiary may reasonably request and, when requested by Beneficiary, business
interruption insurance, rent loss insurance, federal flood insurance and
insurance against such other hazards or risks in such amount or amounts as may
be reasonably required by Beneficiary. All such policies shall be with companies
approved by Beneficiary from time to time and shall otherwise be in form and
substance satisfactory to Beneficiary. Trustor shall deliver to Beneficiary as
additional security the insurance policies just described and any additional
insurance policies that may be taken out, together with an endorsement providing
for written notice by the insurer to Beneficiary at least ten (10) days before
the cancellation of any such policies. Renewals of the policies shall be
delivered at least ten (10) days before any insurance expires. If Trustor fails
to replace its insurance policies within ten (10) days after being notified that
any insurance company is no longer approved by Beneficiary, Beneficiary may
(without obligation to do so) procure and substitute for any and all of the
insurance procured by Trustor, at Trustor's expense, any other policy or
policies of insurance in such amount(s) as Beneficiary may determine is
necessary.
(b) If all or any part of the Collateral is destroyed
or damaged at any time by fire or any other cause whatsoever, the insurance
proceeds collected shall be paid to Beneficiary and may, at the option of
Beneficiary, be applied either (i) on account of any indebtedness, whether the
same shall then be due or not, in such order as Beneficiary may determine, or
(ii) to the cost of repairing, rebuilding, renewing or restoring the Collateral
or of replacing any personal property covered by this Deed of Trust, or, at the
sole option of Beneficiary, all or part of the amount collected may be released
to Trustor. The application or release of the insurance proceeds shall not cure
or waive any default or notice of Trustee's sale or invalidate any act done
pursuant to the notice.
2.9 Alteration or Construction.
(a) Trustor shall not materially improve, demolish,
add to, rehabilitate, remodel, reconfigure or otherwise alter the Collateral
without the advance written permission of the Beneficiary (such consent not to
be unreasonably withheld). Trustor further covenants and agrees that no material
excavation, construction, earth work, site work or any other lienable work shall
be done to or for the benefit of the Collateral without Beneficiary's prior
written approval, except for normal repair and maintenance in the ordinary
course of business. Beneficiary shall have the right to review and approve all
plans, specifications and materials to be used in any material alteration of the
Collateral. In the event Beneficiary gives such written consent, Trustor agrees
to apply for and obtain any material permit which is required by
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<PAGE> 9
any governmental law or ordinance as to any construction, improvement,
alteration or addition to be made to the Collateral. Once commenced, all work
shall proceed with due diligence, and all construction will be fully in
accordance with the plans and specifications approved by Beneficiary and
materially in accordance with all laws, ordinances or regulations made or
promulgated by any governmental agency or lawful authority and with the rules of
the applicable board of fire underwriters. Trustor shall pay when due all claims
for work performed or materials furnished, or both, on or in connection with all
or any part of the Collateral, and shall pay, discharge or cause to be removed,
all mechanic's, artisan's, laborer's and materialman's charges, liens, claims or
encumbrances upon the Collateral.
(b) Trustor will not in any manner impair or take any
action which threatens to impair the value of the Collateral or the security of
Beneficiary for the payment of the secured indebtedness except in the ordinary
course of Trustor's business of the operation of a scrap yard. Trustor also
agrees not to permit a change of the character or use of the Collateral without
the prior written consent of Beneficiary.
2.10 Right of Inspection. Upon ten (10) days written notice,
Trustor shall permit Beneficiary, or its agents, during normal business hours to
enter, pass through or over the Trust Property for the purpose of inspecting the
Collateral. If Trustor fails to maintain the Collateral in the manner specified
herein, Beneficiary may, at its option, undertake repairs and maintenance, as
Beneficiary deems necessary. The cost of any repairs or maintenance undertaken
by Beneficiary shall be paid by Trustor, and, if it is necessary for Beneficiary
to advance funds for this purpose, such advances, together with interest at the
Default Rate shall become part of the debt secured by this Deed of Trust and a
lien on the Collateral immediately due and payable by Trustor. The right of
Beneficiary to undertake repairs or maintenance shall be optional, and shall in
no way limit Beneficiary's right to declare a default under this Deed of Trust
because of Trustor's failure to maintain the Collateral in accordance with this
Deed of Trust.
2.11 Statutes, Rules and Regulations. Trustor shall materially
comply with all regulations, rules, ordinances, statutes, orders and decrees of
any governmental authority or court applicable to Trustor or to all or part of
the Collateral, except for violations of law relating to Hazardous Materials
which occur in the ordinary course of Trustor's business of the operation of a
scrap yard.
2.12 Accordance with Law. Trustor warrants that this Deed of
Trust, the Note and all other instruments executed and delivered to Beneficiary
by or on behalf of Trustor are or were executed in accordance with the
requirements of law and are valid
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<PAGE> 10
and binding obligations of Trustor enforceable in accordance with their terms.
2.13 Beneficiary's Right to Perform Acts Required of Trustor.
If Trustor fails to make any payments or do any acts as provided in this Deed of
Trust, then Beneficiary or Trustee, but without obligation to do so and without
notice or demand upon Trustor, and without releasing Trustor from its
obligations, may make or do the same in the manner and to the extent that either
may deem necessary to protect their security. Beneficiary or Trustee is
authorized to enter upon the Trust Property for such purposes; to appear and
defend in any action or proceeding purporting to affect the security or the
rights and powers of Beneficiary and Trustee; to pay, purchase, contest, or
compromise any encumbrance, charge, or lien which in the judgment of either
appears to be prior or superior to the lien created by this Deed of Trust; and,
in exercising those powers, to pay necessary reasonable expenses, employ counsel
and pay reasonable attorneys' fees and costs. If Trustee or Beneficiary makes
any payments or takes any of the actions provided above, then all amounts paid
or incurred, together with interest thereon at the Default Rate, shall become a
part of the indebtedness secured by this Deed of Trust and a lien on the
Collateral immediately due and payable by Trustor.
2.14 Hazardous Waste and Materials.
(a) Trustor covenants that it will not place
Hazardous Materials on, under or about the Trust Property after the date
Beneficiary transfers the Trust Property to Trustor, except for Hazardous
Materials placed on the Trust Property in the ordinary course of Trustor's
business of the operation of a scrap yard.
(b) "Hazardous Materials" shall include, but not be
limited to, substances defined as "hazardous substances," "hazardous materials,"
or "toxic substances" or "hazardous wastes" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 ET SEQ. and Title 49 of the Arizona Revised Statutes, A.R.S. Section 49-101
ET SEQ., in the rules and regulations adopted pursuant to said laws, and in all
other federal, state or local statutes, rules or regulations.
(c) Trustor further covenants that it will promptly
notify Beneficiary if Trustor receives knowledge or notice from any governmental
agency or lawful authority that Hazardous Materials are located on or beneath or
about the Trust Property or on, beneath or about the surface of adjacent parcels
of real estate.
(d) Subject to that certain Agreement ("Remediation
Agreement") of even date herewith by and between Beneficiary and
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Trustor with regard to certain remediation costs, except for Hazardous Materials
present on the Trust Property as of the date of this Deed of Trust, if any, and
except for those Hazardous Materials used, generated, stored or disposed of by
Trustor on the Trust Property in the ordinary course of Trustor's business in
the operation of a scrap yard, Trustor agrees to indemnify and hold Beneficiary
and Trustee harmless from and against any and all reasonable costs (including
attorneys' fees and court costs) and liability directly or indirectly arising
out of the use, generation, storage or disposal of Hazardous Materials by
Trustor, its agents, contractors, subcontractors and materialmen, or any other
person or entity.
(e) Subject to the Remediation Agreement, except for
Hazardous Materials present on the Trust Property as of the date of this Deed of
Trust, if any, and except for those Hazardous Materials used, generated, stored,
placed or disposed of by Trustor on the Trust Property in the ordinary course of
Trustor's business in the operation of a scrap yard, in the event that Trustor
becomes aware of the existence of Hazardous Materials located on or beneath the
Trust Property and fails to promptly commence and thereafter diligently pursue
an expeditious program (approved by Beneficiary and the appropriate regulatory
authorities) of removal of such materials at Trustor's cost and expense, such
existence shall constitute a default hereunder.
(f) Subject to the Remediation Agreement, except for
Hazardous Materials present on the Trust Property as of the date of this Deed of
Trust, if any, and except for those Hazardous Materials used, generated, stored,
placed or disposed of by Trustor on the Trust Property in the ordinary course of
Trustor's business in the operation of a scrap yard, in the event that Trustor
becomes aware of the existence of Hazardous Materials, located on or beneath any
property adjacent to the Trust Property, Trustor shall, at its own cost and
expense, take such actions as are reasonable under the circumstances to prevent
the contamination of the Trust Property from such materials. The failure to take
such action shall constitute a default hereunder.
2.15 No Transfer or Encumbrance of Trust Property. Trustor
shall not, voluntarily or involuntarily, sell, convey, transfer, assign,
encumber, lease for more than three (3) years, lease with option to purchase,
contract to sell, or in any other way transfer or dispose of the Trust Property,
the other Collateral, or any interest therein, or grant a security interest in,
assign or attempt to assign all or any of the Property Income from the Trust
Property, without first obtaining the prior written consent of Beneficiary (such
consent not to be unreasonably withheld). Beneficiary shall not be held to have
notice of any impairment or threat of impairment until it receives actual
notice;
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recording of any instruments shall not be deemed to give notice to Beneficiary
for the purposes of this paragraph.
2.16 Due on Sale or Encumbrance.
(a) Written Consent of Beneficiary Required. Trustor
agrees not to sell, convey, transfer, whether voluntarily or involuntarily,
assign, contract to sell, lease for more than three (3) years or lease with an
option to purchase, or in any other way transfer or dispose of all or any part
of the Collateral, or any interest therein, and agrees not to encumber or
subject the Collateral to any lien, security interest, charge or encumbrance,
without the prior written consent of Beneficiary (such consent not to be
unreasonably withheld). (The transactions enumerated in this section are meant
to be illustrative of the type of transfers requiring Beneficiary's consent; the
list is not exclusive or comprehensive.) Trustor also agrees not to permit a
change of the character or use of the Collateral without the prior written
consent of Beneficiary. Trustor agrees that not more than twenty-five percent
(25%) of the voting stock of Trustor may be sold, transferred or assigned
without the prior written consent of Beneficiary. Beneficiary shall not be held
to have notice of any transfer or encumbrance until it receives actual notice;
recording of any instruments shall not be deemed to give notice to Beneficiary
for the purpose of this paragraph. If Beneficiary consents to a transfer, it
does so without prejudicing its right to raise the rate of interest payable on
the secured indebtedness as provided in Section 2.16(c). Consent to one
transaction shall not be deemed to be a waiver of Beneficiary's right to require
consent to future or successive transactions.
(b) Acceleration. If Trustor sells, transfers,
encumbers or enters any other transaction described in Section 2.16(a) without
first obtaining Beneficiary's written consent (such consent not to be
unreasonably withheld), Beneficiary may, at its option, declare by written
notice all indebtedness secured by this Deed of Trust, irrespective of the
maturity date of the indebtedness otherwise specified, immediately due and
payable. Beneficiary may avail itself of any and all remedies provided in this
Deed of Trust, in the Note, in any other instrument delivered by or on behalf of
Trustor to Beneficiary, or at law or in equity, in the event of failure to pay
the amount due.
(c) Increased Interest Rate. Whether or not
Beneficiary consents to a transfer, and notwithstanding its alternative right to
declare the entire indebtedness due and payable as described in Section 2.16(b),
Beneficiary is granted the right, at its option, to raise the rate of interest
payable on the secured indebtedness at the time of, or at any time after, a
transfer, as described in Section 2.16(a), occurs, to the extent permitted by
law. Trustor acknowledges and agrees that
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Beneficiary's right to raise the rate of interest is given for the express
purpose of enabling Beneficiary to realize a market rate of interest on the
Note.
(d) Transfer Fee. Beneficiary and Trustee are granted
the right to charge a reasonable transfer fee at the time of, or at any time
after, a transfer, as described in Section 2.16(a), occurs. The transfer fee
will cover costs incurred to reflect the transfer or encumbrance on the records
of Beneficiary and/or Trustee. Because it is impossible to accurately calculate
the clerical costs incurred as a result of a transfer or encumbrance, the
parties agree that the transfer fee will be One Hundred Dollars ($100.00) or one
percent (1%) of the balance due on the obligation secured by this Deed of Trust,
whichever is greater.
2.17 Limitation of Covenants. Notwithstanding the foregoing
covenants in Articles 2 and 3, Trustor shall not be obligated to perform the
covenants contained in Sections 2.2, 2.7, 2.8, 2.9, 2.10, 2.11, 2.14, 3.2, 3.3
and 3.4 so long as Ellis Metals, Inc., an Arizona corporation ("Ellis Metals")
or an affiliate of Beneficiary or Ellis Metals is a tenant of all of the Trust
Property.
ARTICLE 3. TO FURTHER PROTECT THE SECURITY OF THIS DEED OF
TRUST, TRUSTOR AGREES AND WARRANTS AS FOLLOWS:
3.1 Property Income. Trustor gives to and confers upon
Beneficiary the right, power and authority, during the continuance of this Deed
of Trust, to collect the Property Income, reserving to Trustor, however, the
right to collect and retain the Property Income as it becomes due and payable
prior to any default by Trustor in payment of the secured indebtedness or in
performance of each and every agreement contained in this Deed of Trust or in
any other instrument delivered by or on behalf of Trustor to Beneficiary.
3.2 Leases. Trustor agrees to faithfully perform each and
every obligation, covenant and agreement (to be performed by lessor) in all
leases now existing or hereafter created pertaining to the Trust Property (the
"leases"). Trustor agrees, at its sole cost and expense, to enforce performance
of all lease requirements to be performed by lessees, and to defend any action
or proceeding that seeks adversely to affect the leases or the Trust Property
and to pay all reasonable costs and expenses of Beneficiary, including
attorneys' fees, in any action or proceeding in which Beneficiary may appear.
Unless the prior written permission of Beneficiary is first received (such
consent not to be unreasonably withheld), Trustor agrees (a) not to modify,
extend, or in any way alter the terms of any of the leases; (b) not to terminate
the leases, or accept the surrender thereof; and (c) not to collect the rents in
advance, or to waive, excuse or in any manner release or discharge
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lessees from their obligation to pay the rental called for in the leases.
Trustor relinquishes to Beneficiary all of its right, power, and authority to
amend, modify, or in any way alter the terms of the leases.
3.3 Performance of Trustor's Obligations. Upon the default of
Trustor, Beneficiary may perform or discharge any obligation of Trustor under
the leases and defend or prosecute any action or proceeding that might affect
Trustor's or Beneficiary's rights under any leases. Trustor must reimburse
Beneficiary, on demand, for any sums expended as just described plus interest at
the Default Rate from the date expended until paid and such sums shall be
secured by this Deed of Trust. Upon a default by Trustor, Beneficiary may, at
any time, without notice, either in person, by agent, or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the
secured indebtedness or the solvency of Trustor, enter upon and take possession
of and manage all or part of the Trust Property and other Collateral, take
possession of books and records, and make, cancel, enforce or modify the leases,
obtain and evict tenants and fix or modify rents, and in its own name, sue for,
or otherwise collect, the Property Income, including that past due and unpaid,
and apply it, less reasonable costs and expenses of operation and collection,
including attorneys' fees, to any secured indebtedness in such order and manner
as Beneficiary may determine. The entering upon and taking possession of the
Trust Property and other Collateral, the collection of the Property Income and
the application of it to the secured indebtedness shall not cure or waive any
default or notice of default or invalidate any act done by Beneficiary.
3.4 Subordination of Leases. Trustor agrees that any and all
leases of all or any portion of the Trust Property, whether entered into before
or after the execution or recordation of this Deed of Trust, are subordinate to
the Trustee's and Beneficiary's respective right, title and interest in the
Trust Property. At any time, upon the request of Trustee or Beneficiary, Trustor
shall attempt, in good faith, to obtain a written agreement from any lessee
under any such lease consenting to and acknowledging such subordination. From
and after the date of the execution of this Deed of Trust, Trustor shall enter
into no lease of all or any portion of the Trust Property unless the lessee
acknowledges the subordination of such lease and such lease requires the lessee
to acknowledge the subordinate nature of such lease upon the request of Trustor
or of Trustee or Beneficiary.
3.5 Community Facilities District. Without obtaining the prior
written consent of Beneficiary (such consent not to be unreasonably withheld),
Trustor shall not consent to, or vote in favor of, the inclusion of all or any
part of the Trust Property in any Community Facilities District formed pursuant
to the Community Facilities District Act, A.R.S. Section 48-701, ET SEQ., as
amended
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from time to time. Trustor shall immediately give notice to Beneficiary of any
notification that Trustor may receive from any municipality of any intent or
proposal to include all or any part of the Trust Property in a Community
Facilities District. Beneficiary shall have the right to file a written
objection to the inclusion of all or any part of the Trust Property in a
Community Facilities District, either in its own name or in the name of Trustor,
and to appear at, and participate in, any hearing with respect to the formation
of any such district, all at the sole cost of Beneficiary.
ARTICLE 4. DEFAULT; REMEDIES:
4.1 Events of Default. The happening of any one or more of the
following events shall constitute an event of default:
(a) The failure to pay any indebtedness or obligation
of Trustor secured by this Deed of Trust, including, but not limited to, payment
of all sums due under the Note secured hereby, payment of taxes, insurance
premiums, assessments and like payments as and when such payments shall become
due and payable, by lapse of time, by declaration, by acceleration or otherwise,
or within the period of grace, if any, which is expressly allowed in writing
with respect to any particular payment.
(b) The failure to timely perform any term, covenant
or condition contained in this Deed of Trust, or the failure to perform any
term, covenant or condition within the period of grace, if any, which is
expressly allowed in writing with respect to that term.
(c) The abandonment of all or any part of the
Collateral.
(d) The suffering or permitting of another person,
entity, government or governmental agency to acquire possession of any interest
in, or any lien upon, any of the Collateral that is inconsistent with
Beneficiary's rights.
(e) The occurrence of any default under any other
instrument given by Trustor to secure the secured indebtedness.
(f) The seeking of any bankruptcy, arrangement,
reorganization, insolvency proceeding, liquidation or dissolution by or against
Trustor; or if Trustor is at any time during the term of this Deed of Trust a
partnership, the seeking of any such proceedings by or against a partner (other
than a limited partner) of Trustor.
(g) The seeking of the appointment of a receiver,
trustee, custodian or other similar official for Trustor or for all
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or a substantial part of Trustor's property, or if Trustor shall not pay its
debts as they become due, shall admit in writing its inability to pay its debts
or shall make an assignment for the benefit of creditors.
(h) The misrepresentation or failure to disclose a
material fact in any financial or other written representations and disclosures
made by Trustor in order to induce Beneficiary to extend credit as evidenced by
the Note referred to in this Deed of Trust and other obligations which this Deed
of Trust secures.
(i) The falsity of any representation or warranty
made by Trustor in the Note, this Deed of Trust, or any other instrument
delivered by or on behalf of Trustor to Beneficiary.
(j) The default by Trustor under any other lien or
security device placed upon the Collateral or personal property which is the
subject of this Deed of Trust or the attachment, levy or other seizure by legal
process of all or any portion of the Collateral.
(k) The death of Trustor if Trustor is an individual,
the death of any individual who is part of a marital community which is the
Trustor, the dissolution of the Trustor if the Trustor is a general or limited
partnership or a corporation; provided, however, that in such event Trustor
shall have sixty (60) days to obtain new financing for the Collateral.
4.2 Remedies. Upon the occurrence of any monetary event of
default, Beneficiary must provide Trustor with written notice thereof and permit
Trustor twenty (20) days from the date of the notice to cure the default before
exercising any of its remedies hereunder. Upon the occurrence of any
non-monetary event of default, Beneficiary must provide Trustor with written
notice thereof and permit Trustor thirty (30) days from the date of the notice
to cure the default before exercising any of its remedies hereunder; or, if such
default is not capable of being cured within said thirty (30) day period,
Trustor must pursue cure with diligence within said period. Except as expressly
set forth herein or as may be required by law, without the necessity of any
notice to or demand upon Trustor or any other party having an interest in the
Collateral or the giving of an opportunity to cure the event of default
Beneficiary may, at its option, do any or all of the following:
(a) Acceleration. Beneficiary may declare all secured
indebtedness immediately due and payable.
(b) Possession. Beneficiary may enter upon and take
possession of the Collateral or any part thereof, with or without notice, either
by its agents, attorneys, employees, or by
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a receiver to be appointed by a court, and without regard to the adequacy of any
security for the secured indebtedness or the existence of waste, and Trustor
shall upon demand peaceably surrender possession thereof to Beneficiary or the
receiver. Beneficiary, in its name and/or in the name of Trustor, may operate
and maintain all or any portion of the Collateral to such extent as Beneficiary
deems advisable, and Trustor agrees that Beneficiary shall be entitled to do and
perform any acts that Beneficiary may deem necessary or proper to conserve the
value of the Collateral and to sue for and otherwise collect and receive all
Property Income, including past due and unpaid Property Income, as well as
Property Income accruing thereafter, and may rent or lease the Collateral or any
portion thereof to such person or persons and for such periods of time and on
such terms and conditions as Beneficiary in its sole discretion may determine.
Beneficiary may apply all the Property Income collected or received by it to the
payment of reasonable costs and expenses incurred in the operation of the Trust
Property or to protect and preserve the security thereof, and then in the manner
hereafter specified in respect of proceeds of sale of the Collateral, or any
part or all of such Property Income may be released by Beneficiary to Trustor or
any other party entitled thereto at Beneficiary's sole option. The reasonable
expenses (including receiver's fees, if any, compensation to any agent appointed
by Beneficiary, and counsel fees and costs and disbursements) incurred in taking
possession and effecting collection or attempting to take possession and effect
collection shall be deemed an expense to be paid by Trustor and secured hereby.
Neither the entering upon and taking possession of the Collateral nor the
collection of the Property Income or the application or release thereof shall
cure or waive any default or notice of sale hereunder or invalidate any act done
pursuant to such notice. In dealing with the Collateral or any related personal
property as a beneficiary in possession, Beneficiary shall be without any
liability, charge, or obligation therefor to Trustor other than for negligence
or misconduct, and all net losses, costs, and reasonable expenses incurred shall
be deemed advancements to Trustor under this Deed of Trust.
(c) Collection of Property Income. Beneficiary may
collect and enforce the payment of all Property Income of all or part of the
Collateral, with or without taking possession and without assuming any liability
under any tenancy, lease, option or other agreement.
(d) No Legal Proceedings Necessary. Beneficiary may
perform any of the foregoing acts with or without bringing any action or
proceeding, or through a receiver appointed by a court (which may be appointed
without proving waste), and in any case without the necessity of giving or
recording any notice of sale and without regard to the solvency of Trustor or
the adequacy of security.
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(e) Foreclosure. Beneficiary may bring an action in
any court of competent jurisdiction to foreclose this Deed of Trust in the same
manner as provided by law for the foreclosure of realty mortgages.
(f) Sale. Beneficiary may elect to have all or any
portion of the Collateral sold in the manner and at the time(s) and place(s)
selected by Beneficiary, as long as the sale(s) is(are) in accordance with law.
4.3 Sale of Collateral by Trustee.
(a) In the event Beneficiary elects to have the Trust
Property sold under the Trustee's power of sale, Beneficiary shall deliver to
Trustee written notice of the breach and the nature thereof, and of its election
to cause the Trust Property to be sold by Trustee at one or more sales.
Thereafter, Trustee shall sell, after giving proper notice in the manner
required by law, the Trust Property at public auction at the time and place
fixed by it in the notice of Trustee's sale, to the highest bidder for cash in
lawful money of the United States, payable in accordance with law. Trustee may
postpone or continue the sale from time to time by giving notice of postponement
or continuance in the manner and to such parties as required by law. Trustee
shall deliver to the purchaser its deed conveying the property sold, but without
any covenant or warranty, express or implied. Any persons, including Trustor,
Trustee or Beneficiary, may purchase at the sale. The proceeds of the sale will
first be applied to payment of the reasonable expenses of exercising the power
of sale, including attorneys' fees and Trustee's fees, and then to satisfaction
of the obligations secured by this Deed of Trust.
(b) Beneficiary has the right to sell the Collateral
other than the Trust Property subject to this Deed of Trust at, and as a part
of, the Trustee's sale of the Trust Property, in which case Part 5 of Article 9
of the Uniform Commercial Code (Arizona Revised Statutes Sections 47-9501 to
47-9507) does not apply. Any sale of the Collateral pursuant to the Trustee's
power of sale will be as described in Section 4.3(a).
(c) As an alternative to selling the Collateral other
than the Trust Property pursuant to the Trustee's power of sale, Beneficiary may
elect to pursue its remedies under the Uniform Commercial Code in effect in
Arizona. In this regard, Beneficiary has the right, upon Trustor's default, to
take possession of the Collateral other than the Trust Property and to dispose
of it in any order, in any manner, and at any time and place, as long as the
disposition is commercially reasonable. The proceeds of the disposition will
first be applied to payment of the reasonable cost of taking possession and
disposing of the other
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Collateral, including attorneys' fees, and then to satisfaction of the secured
indebtedness.
(d) The sale of any part of the Collateral will not
diminish Beneficiary's security interest in the remainder of the Collateral or
affect Beneficiary's right, if any, to a deficiency, if a deficiency remains
after disposing of all of the Collateral.
(e) Trustor's obligation to pay reasonable attorneys'
fees incurred by Beneficiary on account of any matter arising out of this Deed
of Trust or the Collateral, is secured by this Deed of Trust. Consequently,
Beneficiary's reasonable attorneys' fees are part of the secured indebtedness
and will be paid from the proceeds of any sale(s). If Trustor desires to
reinstate this Deed of Trust after a sale has been noticed, it must tender
sufficient cash to pay in full all sums then due under this Deed of Trust,
including reasonable costs and expenses incurred in enforcing the Deed of Trust,
reasonable attorneys' fees and reasonable Trustee's fees incurred by Beneficiary
to take possession of the Collateral and to process the sale, and payment of the
recording fees for cancellation of the notice of sale. Notwithstanding any other
provision hereof, the obligation to pay attorneys' fees or Trustee's fees, or to
reimburse Beneficiary therefor, shall be subject to any statutory limitation on
the amount of such fees.
4.4 Rights of Beneficiary. To the extent permitted by law, the
rights and remedies provided for in this Deed of Trust, or that Beneficiary may
have otherwise, at law or in equity (including, but not limited to, the right to
damages by reason of Trustor's failure to keep, observe and perform any of the
covenants, conditions or agreements contained in this Deed of Trust), shall be
distinct, separate and cumulative, and shall not be deemed to be inconsistent
with each other. None of Beneficiary's rights and remedies, whether or not
exercised by Trustee or Beneficiary, shall be deemed to be in exclusion of any
other, and any two or more or all of its rights and remedies may be exercised at
the same time. All rights and remedies shall be cumulative.
4.5 Beneficiary as Purchaser. If Beneficiary is a purchaser at
any sale of the Collateral, whether made under Trustee's or Beneficiary's power
of sale, pursuant to judicial proceedings, or otherwise, Beneficiary shall be
entitled to use and apply all or any portion of the secured indebtedness for or
in settlement or payment of all or any portion of the purchase price for the
property purchased.
4.6 Proceeds of Sale. After deducting all reasonable costs,
fees and expenses of both Beneficiary and Trustee pertaining to the sale(s),
including costs of evidence of title in connection
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with the sale and attorneys' fees incurred by Beneficiary as well as by Trustee,
Trustee shall apply the proceeds of the sale to payment of all indebtedness then
secured by this Deed of Trust, including accrued interest, and then to junior
lienholders, in the manner provided by law. Trustee waives the right to elect to
deposit the balance (if any) of the proceeds of the sale with the county
treasurer, as provided in Arizona Revised Statutes Section 33-812, except as to
that portion remaining after payment of the reasonable costs and expenses of the
sale, including attorneys' fees incurred by Beneficiary and Trustee, payment of
the secured indebtedness, and all other obligations provided in this Deed of
Trust.
4.7 Trustor's Refusal to Surrender After Trustee's Sale. In
the event Trustor fails or refuses to surrender possession of the Trust Property
after any Trustee's sale, Trustor shall be deemed a tenant at sufferance,
subject to eviction by means of forcible entry and detainer proceedings,
provided that this remedy is not exclusive, or in derogation of any other right
or remedy available to Beneficiary. Trustor expressly agrees to pay to
Beneficiary all reasonable costs or expenses, including attorneys' fees,
incurred by Beneficiary as a result of eviction proceedings. The effectiveness
of this paragraph shall survive the sale of the Trust Property.
4.8 Deficiency Allowed. To the extent permitted by law, an
action may be maintained by Beneficiary to recover a deficiency judgment for any
balance due from Trustor pursuant to this Deed of Trust. In this regard, if the
proceeds from any sale(s) of the Collateral are insufficient to pay in full the
secured indebtedness, reasonable costs and expenses incurred in enforcing this
Deed of Trust, including attorneys' fees, Trustee's fees and costs of evidence
of title incurred by Beneficiary to exercise its rights and remedies under this
Deed of Trust, then Beneficiary is entitled to seek a deficiency judgment in an
amount sufficient to pay in full the secured indebtedness and all reasonable
attorneys' fees, Trustee's fees, costs, expenses and other obligations incurred
in enforcing this Deed of Trust. In addition, Beneficiary is entitled to recover
its reasonable costs and attorneys' fees incurred in order to recover a
deficiency judgment.
4.9 Other Remedies. Every power or remedy given by this
instrument to Trustee or Beneficiary, or to which either of them may be
otherwise entitled, may be exercised from time to time and as often as may be
deemed expedient by Trustee or Beneficiary, and either of them may pursue
inconsistent remedies. Enforceability of any provision of this Deed of Trust
shall not affect the enforceability of any other provision. If there exists
additional security for the performance of the obligations secured, the holder
of the Note(s), at its sole option, and without limiting or affecting any rights
or remedies granted in this Deed of Trust, may
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exercise any of the rights and remedies to which it may be entitled either
concurrently with whatever other rights it may have in connection with (or
separate from) the other security or in such order as it may determine. At
Beneficiary's option, Trustee shall be authorized to take the steps and exercise
the rights and remedies explicitly reserved to Beneficiary.
4.10 No Offset. No offset or claim that Trustor now has or may
in the future have against Beneficiary shall relieve Trustor from paying
installments or performing any other obligation secured by this Deed of Trust.
4.11 Junior Liens Extinguished. Judicial foreclosure of this
Deed of Trust extinguishes all junior liens that do not redeem, as provided by
law, following the Sheriff's sale. A Trustee's sale pursuant to this Deed of
Trust extinguishes all junior liens and the purchaser takes free of any junior
liens.
4.12 Notice. Except as provided herein, no notices are due to
Trustor other than as expressly set forth in the Note or this Deed of Trust;
except nothing herein shall be construed so as to diminish or eliminate any
required statutory notices or rights to cure with respect to a trustee's sale or
a judicial foreclosure.
4.13 Election to Continue or Terminate Leases. Upon a sale of
the Trust Property under Sections 4.2 or 4.3 hereof, the purchaser at said sale
(whether or not such purchaser is the Beneficiary) may elect to either continue
any lease of all or a portion of the Trust Property, in which case such lease
shall remain in full force and effect, or to terminate any such lease, in which
case such lease shall be of no further force and effect. To continue any such
lease, the purchaser shall, after the sale, either (i) direct the lessee to
continue to observe the terms and conditions of the lease or (ii) accept any
lease payment from lessee for any rental period subsequent to the sale without
giving any inconsistent notice or direction to the lessee. By electing to
continue any such lease, the purchaser shall be fully subrogated to the
Trustor's rights and obligations under and interest in such lease. To terminate
any such lease, the purchaser must give notice to the lessee of its election to
terminate before accepting any lease payment from lessee for any rental period
subsequent to the sale. Upon such notice of the purchaser's election to
terminate, the lessee shall become a tenant by sufferance. If the purchaser
gives proper notice of its election to terminate, it may nevertheless agree to
allow a lessee to remain in possession of and pay rent for the leased premises
on terms and conditions other than those of the lease without invalidating the
termination. The purchaser's election to terminate (or continue) one or more
leases shall not be construed as an election to terminate (or continue, as
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the case may be) any other leases; the purchaser may elect to treat various
leases differently.
ARTICLE 5. OTHER DUTIES AND RIGHTS OF TRUSTEE:
5.1 Compensation and Indemnification of Trustee. Trustee shall
be entitled to reasonable compensation for all services rendered or expenses
incurred in the administration or execution of the Trusts created by this Deed
of Trust and Trustor agrees to pay the same, subject to all statutory
limitations. Trustee and Beneficiary shall be indemnified, held harmless and
reimbursed by Trustor for any liability, damage or expense, including reasonable
attorneys' fees and amounts paid in settlement, that either or both of them may
incur or sustain in the execution of this Deed of Trust, or in the doing of any
act that either or both of them are required or permitted to do by the terms of
this Deed of Trust or by law.
5.2 Statement Service Charge. For any statement requested by
Trustor regarding the obligations secured, the ownership of the Collateral, the
liens on the Collateral, the amount required to reinstate the Deed of Trust or
similar matters, Beneficiary or Trustee may charge a reasonable fee, not to
exceed the maximum amount permitted by law at the time of the request.
5.3 Rights of Trustee Upon Request. At any time or from time
to time, upon written request of Beneficiary, without affecting the personal
liability of any person for payment of the secured indebtedness, and without
affecting the security for the full amounts secured by this Deed of Trust,
Trustee may:
(a) Release and reconvey all or any part of the Trust
Property or other Collateral;
(b) Consent to the making and recording, or either,
of any map or plat of all or part of the Trust Property;
(c) Join in granting any easement on the Trust
Property; or
(d) Join in or consent to any extension agreement or
any agreement subordinating the lien, encumbrance or charge created by this Deed
of Trust.
5.4 Successor Trustee. Beneficiary may, in its discretion,
appoint a successor trustee in the manner prescribed by law. Trustee may resign
by recording a notice of resignation and by mailing or delivering notice of
resignation to Beneficiary and to Trustor in the manner prescribed by law. Upon
Trustee's resignation, Beneficiary may appoint a successor trustee, which
appointment shall constitute a substitution of trustee upon the
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mailing and recording of written notice by Beneficiary in the manner prescribed
by law for the substitution of a trustee of a deed of trust. A successor trustee
shall, without conveyance from the predecessor trustee, succeed to all the
predecessor's title, estate, rights, powers and duties.
5.5 Acceptance by Trustee. Trustee accepts this Trust when
this Deed of Trust, duly executed and acknowledged, is made a public record as
provided by law. Trustee is not obligated to notify any party of a pending sale
under any other deed of trust or of any action or proceeding in which Trustor,
Beneficiary or Trustee shall be a party, unless brought by Trustee.
5.6 Costs. Trustor shall pay all reasonable costs, fees and
expenses of this Deed of Trust, including, without limiting the generality of
the foregoing, the fees of Trustee for issuance of any deed of partial release
and partial reconveyance or deed of release and full reconveyance. Trustor shall
pay all lawful and reasonable charges, costs and expenses, including charges for
the preparation of title reports and attorneys' fees incurred by Beneficiary and
Trustee, in the event of reinstatement of this Deed of Trust following default
in the performance of Trustor's obligations. Notwithstanding any other
provision hereof, the foregoing obligations shall be subject to any statutory
limitation on the amount of such fees and costs.
ARTICLE 6. IT IS FURTHER AGREED:
6.1 Waiver by Trustor. Trustor expressly waives any right that
it may have to direct the order in which any of the Collateral shall be sold in
the event of any sale(s) pursuant to the power of sale granted in this Deed of
Trust and by law. Trustor waives any requirements of presentment, demands for
payment, notices of nonpayment or late payment, protest, notices of protest,
notices of dishonor and all other formalities, except as explicitly required by
statute. Trustor waives all rights and/or privileges it might otherwise have to
require Trustee and/or Beneficiary to proceed against or exhaust the assets
encumbered by this Deed of Trust or by any other security document or instrument
securing the Note or to proceed against any guarantors of such indebtedness, or
to pursue any other remedy available to Beneficiary in any particular manner or
order under the legal or equitable doctrines or principles of guaranty and/or
suretyship and/or marshalling. Trustor further agrees that, in the event of
default, Trustee and/or Beneficiary may proceed against any or all of the assets
encumbered by this Deed of Trust or by any other security document or instrument
executed with respect to the secured indebtedness in any order and manner that
Beneficiary may determine, without releasing its security on the Collateral or
any such other assets. Any Trustor that has signed this Deed of Trust as a
surety or accommodation party, or that has subjected its
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<PAGE> 24
property to this Deed of Trust to secure the indebtedness of another party,
expressly waives the benefits of the provisions of Arizona Revised Statutes
Sections 12-1641, 12-1642, and 33-814 and waives any defense arising by reason
of any disability or other
defense of Trustor.
6.2 Condemnation Proceeds and Damages. Any award of damages in
connection with any condemnation of, public use of, or injury to all or part of
the Trust Property, or for damages for private trespass or injury to the Trust
Property, is assigned and shall be payable to Beneficiary (reserving unto
Trustor, however, the right to sue for damages) up to the amount of the
indebtedness secured by this Deed of Trust. Beneficiary shall have the right,
but not the obligation, to participate in all settlement negotiations, legal
actions or similar proceedings in connection with any of the events described
above, including the drafting and approval of documents. Upon receipt of the
award, less only attorneys' fees and expenses awarded by a court, Beneficiary,
at its sole option, may apply the funds received toward the payment of the
secured indebtedness of Trustor to Beneficiary, whether or not then due, or
release such funds to Trustor.
6.3 Successors; Construction. This Deed of Trust applies to,
and inures to the benefit of, and binds all parties hereto, their heirs,
legatees, devisees, administrators, personal representatives, executors,
successors and assigns. The term "Beneficiary" shall mean the owner and holder
of the Note (or other secured obligation) whether or not named as Beneficiary
herein. In this Deed of Trust, whenever the context so requires, the neuter
gender includes the feminine and masculine, and the singular number includes the
plural.
6.4 Attorneys' Fees. In the event this Deed of Trust, and the
obligations that it secures, are placed in the hands of an attorney for the
collection of any sum payable hereunder, and the collection is effected without
suit, Trustor agrees to pay all reasonable costs of collection, including
attorneys' fees incurred by Beneficiary. In the event suit is instituted,
Trustor promises to pay reasonable attorneys' fees as determined by the court
(or, if payment is made during pendency of the suit, as incurred by
Beneficiary), and any additional costs, disbursements and allowances allowed by
law. All fees and costs so incurred shall be secured by this Deed of Trust and
collectable out of the Collateral in any manner permitted by law or by this Deed
of Trust. If Trustor shall become subject to any case or proceeding under the
Bankruptcy Reform Act of 1978, as amended by the Bankruptcy Amendments and
Federal Judgeship Act of 1984, as further amended or recodified from time to
time (collectively, the "Act"), Trustor shall pay to Beneficiary, upon demand,
all reasonable attorneys' fees, costs and expenses which Beneficiary may incur
to obtain relief from any provision of the Act which delays or otherwise
24
<PAGE> 25
impairs Beneficiary's exercise of any right or remedy under the Note, this Deed
of Trust, or any other document given to Beneficiary by Trustor, or to obtain
adequate protection for any of Beneficiary's rights or collateral.
6.5 Waiver of Conditions. No delay by Beneficiary in enforcing
any covenant or other right shall be deemed a waiver of that or any other
covenant or right. No waiver by Beneficiary of any particular provision of this
Deed of Trust will be effective unless in writing signed by Beneficiary, and no
waiver shall be deemed a waiver of any other provision or continuing waiver of
the particular provision. A waiver in one or more instances of any of the terms,
covenants, conditions or provisions of this Deed of Trust, or of the obligations
secured by this Deed of Trust, shall apply to the particular instance or
instances and to the particular time or times only. No waiver shall be deemed a
continuing waiver, but all of the terms, covenants, conditions and other
provisions of this Deed of Trust and of the obligations secured by this Deed of
Trust shall survive and continue to remain in full force and effect.
ARTICLE 7. MISCELLANEOUS PROVISIONS:
7.1 Severability. In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other provision of this Deed of Trust. This Deed of Trust shall
be construed as if it had never contained the invalid, illegal or unenforceable
provision.
7.2 Notices. All notices, demands and requests given or
required to be given by either party to the other party shall be in writing and
shall be personally delivered or sent by registered or certified mail, except
when another form or method of notice is required by statute in which case
notice shall be given as required by statute. All notices, demands and requests
by the parties shall be deemed to have been properly given and effective for all
purposes hereunder when delivered, if personally delivered or at the time the
notice, demand or request is deposited in the United States mail, registered or
certified, postage prepaid, addressed to the party at the address stated above,
or at such other address as the party may, from time to time, designate by
written notice.
7.3 Governing Law. This Deed of Trust shall be deemed to have
been made and executed in the State of Arizona. The validity, construction and
enforcement of the obligations secured shall be governed by the laws of the
State of Arizona.
7.4 Irrevocability. The trusts created by this Deed of Trust
are irrevocable by Trustor.
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7.5 Amendment to Deed of Trust. This Deed of Trust cannot be
changed except by agreement, in writing, signed by Trustor and Beneficiary.
7.6 Notice of Sale to Trustor. The undersigned Trustor
requests that a copy of any notice of sale be mailed to it at its mailing
address, as set forth above.
7.7 Survival. Trustor agrees that all agreements made
hereunder shall survive until the termination and release of this Deed of Trust,
unless otherwise set forth herein.
7.8 Usury Prohibited. If, from any circumstances whatever,
payment or performance of any provision of this Deed of Trust or of any secured
obligations, at the time performance of the provision shall be due, shall
require a payment in excess of that permitted by any applicable law, the
obligations to be paid or performed shall be reduced to the limit allowed by
law, so that in no event shall any exaction be possible under this Deed of
Trust, or any obligations or other agreement given in connection with it, that
is in excess of any limitation of law. By acceptance of this Deed of Trust,
Beneficiary expressly waives the right to demand any excess. The provisions of
this paragraph shall control every other provision of the Note, this Deed of
Trust and any other instrument given by or on behalf of Trustor to Beneficiary
as security for the obligations of Trustor.
7.9 Time is of the Essence. Time is of the essence of this
Deed of Trust. By accepting payment of any sums secured by this Deed of Trust
(or the performance of any of Trustor's other obligations) after its due date,
Beneficiary shall not be deemed to have waived its right either to require
prompt payment when due of all other sums secured, and prompt performance of
Trustor's obligations; or to declare default for failure to timely pay or
perform.
7.10 Modification of Terms of Payment. Without affecting the
obligation of Trustor to pay and perform as required under this Deed of Trust,
without affecting the personal liability of any person for payment of the
secured indebtedness, and without affecting the lien or priority of the lien of
this Deed of Trust on the Collateral, Beneficiary may, at its option, extend the
time for payment of all or part of the indebtedness, reduce the payments
thereon, give partial releases of any parts of the Collateral from the lien,
terms and provisions of this Deed of Trust, release any person liable on any of
the indebtedness, accept a renewal note, modify the terms of the indebtedness,
take or release other or additional security, or join in any extension or
subordination agreement, or direct Trustee to release from this Deed of Trust
any part of the Collateral. Any such action by Beneficiary or by Trustee at
Beneficiary's direction may be taken without the consent
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<PAGE> 27
of any junior lienholder, and shall not affect the priority (which shall be
unimpaired) of this Deed of Trust over any junior lien.
7.11 Multiple Party Beneficiary. If Beneficiary hereto is at
any time more than one person or entity, all such persons shall jointly arrange
among themselves for the appointment of one person or entity to receive all
notices on behalf of such persons and entities, to execute any and all
documents, consents and instruments required to be executed by Beneficiary under
the terms of the Note or this Deed of Trust and to take any and all action
required or permitted to the holder of the Note.
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<PAGE> 28
ARTICLE 8. TRUSTOR ACTIONS: Notwithstanding any other provision of this Deed of
Trust, without Beneficiary's consent, Trustor shall have the right to: (1) take
any action necessary for Hazardous Materials remediation of the Trust Property;
(2) modify the Trust Property for any tenant subsequent to Ellis Metals; and (3)
re-lease the Trust Property to any tenant subsequent to Ellis Metals; and any
action by Ellis Metals regarding the Trust Property will not be deemed a default
by Trustor of any provision of this Deed of Trust.
IN WITNESS WHEREOF, the undersigned has executed this Deed of
Trust, Assignment of Rents and Security Agreement effective the date first above
written.
TRUSTOR:
METAL MANAGEMENT REALTY, INC., an Arizona
corporation
By: /s/ METAL MANAGEMENT REALTY, INC.
------------------------------------
Its:
-----------------------------------
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<PAGE> 29
STATE OF ARIZONA )
)
County of Maricopa )
The foregoing instrument was signed and acknowledged before me
this 11th day of April, 1996, by ___________________, the ______________________
of METAL MANAGEMENT REALTY, INC., an Arizona corporation, on behalf of the
corporation.
___________________________________
Notary Public
My Commission Expires:
______________________
EXHIBIT A - LEGAL DESCRIPTION
29
<PAGE> 1
Exhibit 10.33
WHEN RECORDED, MAIL TO:
SACKS TIERNEY P.A.
Attn: Robert G. Kimball, Esq.
2929 North Central Avenue, Suite 1400
Phoenix, Arizona 85012-2742
[Euclid Parcel]
DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
TRUSTOR: METAL MANAGEMENT REALTY, INC.
Mailing Address:
7600 Augusta Street
River Forest, IL 60305
Attn: Gerard M. Jacobs
BENEFICIARY: HAROLD RUBENSTEIN and BEVERLY RUBENSTEIN
as joint tenants with right of survivorship
Mailing Address:
7330 E. Lakeside Ln.
Scottsdale, AZ 85254
TRUSTEE: ______________________________
Mailing Address:
______________________________
______________________________
______________________________
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
is made this 11th day of April, 1996 between the Trustor, Trustee and
Beneficiary named above. For purposes of convenience,
<PAGE> 2
this instrument is sometimes referred to within the text as "Deed of Trust".
W I T N E S S E T H:
In consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and legal sufficiency of which are
acknowledged, Trustor irrevocably grants, transfers and assigns to Trustee, IN
TRUST, with power of sale, the real property described in Exhibit A, which is
attached to and made a part of this Deed of Trust ("Trust Property"), TOGETHER
WITH all interest which Trustor now has or may hereafter acquire in and to the
Trust Property and the following:
(i) All buildings, structures, and improvements of every
nature whatsoever now or hereafter situated on the Trust Property, and all
fixtures and building materials now or hereafter owned by Trustor and which are
located in, on, or used or intended to be used in connection with the operation
of the Trust Property, the buildings, structures or other improvements thereon
(including all extensions, additions, improvements, betterments, renewals, and
replacements to any of the foregoing).
(ii) All of the right, title and interest of Trustor of, in or
to the land lying in the bed of any street, road, avenue or right-of-way in
front of or adjoining the Trust Property, and in and to any and all easements or
appurtenances to the Trust Property and all the estate and rights of Trustor in
and to, or benefiting, the Trust Property.
(iii) Any awards which are or may become due by reason of the
taking by eminent domain of the whole or any part of the Trust Property, or any
rights appurtenant thereto, including any award for change of grade of street,
or damages awarded for injuries caused by private trespass (Beneficiary, at its
option, may apply all or any portion of the awards as additional payment in
reduction of the indebtedness secured by this Deed of Trust).
(iv) All rents, issues, income, profits, reversions and
remainders arising out of or arising from the Trust Property ("Property
Income"), subject, however, to the right, power and authority given to
Beneficiary to collect and apply the Property Income.
(v) All right, title, and interest of Trustor in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Trust Property, hereafter
acquired by or released to Trustor, or constructed, assembled or placed on the
Trust Property. All conversions or modifications of the security,
2
<PAGE> 3
immediately upon each acquisition, release, construction, assembling, placement
or conversion, as the case may be, shall, without any further grant, conveyance,
assignment or other act by Trustor, become part of the Trust Property as fully
and completely and with the same effect, as though now owned by Trustor, and
specifically described in the granting clause (although at any and all times
Trustor shall execute and deliver to Trustee any and all further assurances,
supplemental deeds of trust, conveyances or assignments as Trustee may
reasonably require for the purpose of expressly and specifically conveying and
confirming such property to Trustee, in trust, and confirming and perfecting the
security interest granted to Beneficiary).
(vi) All rights of the Trustor under any construction,
service, engineering, consulting, architectural and other similar contracts as
such may be modified, amended or supplemented from time to time, concerning the
decision, construction, management, operation, occupancy, use, and/or
disposition of any or all of the Trust Property.
(vii) All rights of the Trustor to any payment and performance
bond or guarantees and any and all modifications and extensions thereof relating
to the Property.
(viii) All rights of the Trustor to any governmental
permissions, environmental clearances, authority to subdivide the property,
rights, licenses and permits as are necessary for the commencement,
continuation, completion, occupancy, use and disposition of any and all of the
Trust Property.
(ix) All rights of the Trustor under any sales contracts and
proceeds, escrow agreements and broker's agreements concerning the sale of any
or all of the Trust Property.
(x) All right, title and interest of Trustor in and to all
insurance policies of any type whatsoever, which currently insure, or in the
future will insure, the Trust Property and/or any or all of the items described
in subparagraphs (i) through (xiv) above, including all proceeds, loss payments
and premium refunds which may become payable with respect to such insurance
policies.
The Trust Property and all those items described in subparagraphs (i) through
(x) above are referred to herein as the "Collateral."
In addition to the security interest created by this Deed of
Trust in the Trust Property, Trustor hereby grants to Beneficiary a security
interest in all of the Collateral which is comprised of fixtures, personal
property and intangibles. This Deed of Trust may be indexed as a fixture filing
in counties or jurisdictions where there is no centralized filing.
3
<PAGE> 4
TO HAVE AND TO HOLD the same to Trustee and the successors,
heirs, executors, administrators or assigns of Trustee, forever.
TRUSTOR covenants and warrants that Trustor is seized of a
good and marketable title in fee simple to the Trust Property, and has good,
right and lawful authority to convey the same; and that the title so conveyed is
clear, free and unencumbered, excepting only current taxes which are not yet due
and payable, patent reservations, easements, and restrictions, conditions and
covenants of record.
NEVERTHELESS, upon written request of Beneficiary stating that
all sums secured have been paid, and upon surrender of this Deed of Trust and
the notes or other instruments secured hereby to Trustee for cancellation and
retention and upon payment of its fees, Trustee shall release and reconvey,
without covenant or warranty, express or implied, the Collateral then held
hereunder. The recitals in the reconveyance of any matters or facts shall be
conclusive proof of their truthfulness. The grantee in the reconveyance may be
described as "the person or persons legally entitled thereto". Seven (7) years
after issuance of a full reconveyance, Trustee may destroy this Deed of Trust,
all evidence of assignments and all other related documents.
ARTICLE 1. THIS DEED OF TRUST IS GIVEN FOR THE PURPOSE OF
SECURING THE FOLLOWING OBLIGATIONS:
1.1 The payment of all indebtedness and timely performance of
all obligations of Trustor to Beneficiary under that certain indebtedness
evidenced by a Promissory Note dated April 11, 1996, made by Trustor and payable
to Beneficiary, in the principal amount of FOUR HUNDRED TWO THOUSAND NINE
HUNDRED FORTY-ONE AND NO/100 DOLLARS ($402,941.00), and any and all extensions,
modifications or renewals of the Note (sometimes referred to as "Note").
1.2 Payment, with interest, in accordance with the terms of
the obligations evidencing the same, of any and all additional loans or advances
made by Beneficiary to Trustor and/or the then record owner or owners of all or
part of the Collateral, so long as such indebtedness is evidenced by a
promissory note(s) reciting that they are secured by this Deed of Trust, and any
and all extensions, modifications or renewals thereof.
1.3 (a) Performance, payment and observance of each obligation
of Trustor contained in this Deed of Trust, including reimbursement to
Beneficiary and Trustee for all money that may be advanced as provided herein,
and all of Beneficiary's and Trustee's reasonable costs and expenses, including
attorneys' fees, incurred or paid on account of any matter arising out of this
Deed of Trust
4
<PAGE> 5
or the Collateral, together with interest from the date of expenditure at the
default rate specified in the Note (the "Default Rate"). Any amounts so paid by
Beneficiary or Trustee shall become a part of the debt secured by this Deed of
Trust and a lien on the Collateral and immediately due and payable.
(b) Without limiting the generality of Section
1.3(a), Trustor's obligation to pay all of Beneficiary's reasonable costs and
expenses resulting from action taken pursuant to this Deed of Trust includes the
obligation to pay costs and expenses, including attorneys' fees incurred by
Beneficiary to take possession of the Collateral, to dispose of the Collateral
at a Trustee's sale or other sale in the case of personal property, to prevent
waste or any other impairment of the Collateral or to take any action which
Beneficiary and/or Trustee deem advisable relating to the Collateral or the
property encumbered by this Deed of Trust in any proceeding under the applicable
bankruptcy laws of the United States. Such costs, expenses and attorneys' fees
constitute an obligation of the Trustor secured by this Deed of Trust, and are
payable out of any proceeds from the sale of any of the Collateral.
1.4 Payment of all obligations incurred, and all moneys
expended or advanced by Beneficiary or Trustee on behalf of Trustor pursuant to
any of the terms of this Deed of Trust, including, but not limited to, amounts
paid by Beneficiary to enforce the rights of, or to pay the obligations of,
Trustor.
ARTICLE 2. TO PROTECT THE SECURITY OF THIS DEED OF TRUST,
TRUSTOR AGREES AND WARRANTS AS FOLLOWS:
2.1 Obligations. Trustor shall promptly perform all
obligations set forth in this Deed of Trust and shall timely pay all secured
indebtedness.
2.2 Condition of Collateral. Trustor shall keep the Collateral
in the same condition and repair as the Collateral was in at the time of
conveyance of the Collateral by Beneficiary to Trustor, ordinary wear and tear
excepted, and Trustor shall not partially or completely remove, demolish, or
substantially alter any improvements thereon. Trustor shall complete or restore
promptly in a good and workmanlike manner any structure on the Trust Property
which may be damaged or destroyed, and shall pay when due all claims for labor
performed and materials furnished. Trustor shall materially comply with all laws
affecting the Collateral or requiring any alterations or improvements to be
made. Trustor agrees not to commit or permit waste with respect to any of the
Collateral. Except for violations of law relating to Hazardous Materials which
occur in the ordinary course of Trustor's business of the operation of a scrap
yard, Trustor agrees not to commit, suffer or permit any act upon the Trust
Property materially in violation of law, and to do all other acts which, from
the
5
<PAGE> 6
character or use of the Collateral, may be reasonably necessary to preserve and
protect the Collateral and the security hereof, including, but not limited to,
making all filings and payments and taking all other necessary actions to
preserve the water and mineral rights of the Collateral. The specific
enumerations listed in this paragraph do not limit the general obligations of
the Trustor to preserve and protect the Trust Property and the Collateral.
2.3 Title to Trust Property And Obligation to Defend. Trustor
warrants that Trustor is the lawful owner of the Trust Property, in fee simple,
and of the other Collateral and that title to the Trust Property and other
Collateral is free and clear of all liens and encumbrances except as expressly
stated herein. Trustor agrees to protect, preserve and defend Trustor's interest
in and title to the Collateral, to appear and defend this Deed of Trust in any
action or proceeding affecting or purporting to affect the Collateral, the lien
of this Deed of Trust, or any of the security, rights or powers of Trustee or
Beneficiary, and Trustor agrees to pay all reasonable costs and expenses of
Beneficiary or Trustee, including costs of evidence of title and attorneys'
fees, in any action or proceeding in which Beneficiary or Trustee may appear or
be named and in any suit brought by Beneficiary to foreclose this Deed of Trust.
2.4 Future Encumbrances on the Collateral. Except for taxes
and assessments which are to be paid by Trustor as specified herein, Trustor
will not in the future create or suffer or permit to be created, subsequent to
the date of the execution and delivery of this Deed of Trust, any lien or
encumbrance upon the Collateral that is or may become superior to the lien of
this Deed of Trust.
2.5 Liens or Default on Other Property of Trustor. Trustor
warrants that the execution and delivery of this Deed of Trust and the Note, and
any other instruments executed and delivered to Beneficiary, and the full and
complete performance of their provisions, will not result in any breach of, or
constitute a default under any indenture, mortgage, deed of trust, bank loan,
credit agreement or other instrument to which Trustor is a party or by which
Trustor is bound, or result in the creation of any lien, charge or encumbrance
(other than those contained in this Deed of Trust or in any instrument delivered
by Trustor to Beneficiary) upon any property or assets of Trustor.
2.6 Litigation Pending. Trustor warrants that there are no
lawsuits pending or threatened against Trustor, or lawsuits instituted by
Trustor in which the party defendant has counterclaimed, or threatened to
counterclaim, against Trustor, or in the event there is a lawsuit or
counterclaim pending or threatened, no lawsuit or counterclaim has or shall have
a material
6
<PAGE> 7
adverse effect upon the business or financial condition of Trustor, upon the
Collateral, or upon Trustor's interest in the Collateral.
2.7 Taxes, Assessments and Charges.
(a) Trustor shall pay and discharge when due all
taxes of every kind and nature, all general and special assess ments, adverse
claims, charges, liens, permits, inspection fees, license fees, all water and
sewer rents and charges, and all other public charges whether of a like or
different nature, any of which charges (i) are imposed upon or assessed against
it or all or any part of the Collateral; (ii) impair or may impair the security
of the Collateral or this Deed of Trust; (iii) impair or may impair the Property
Income; or (iv) arise in respect of the occupancy, use or possession of the
Collateral. Upon the request of Beneficiary, Trustor shall promptly deliver to
Beneficiary receipts evidencing the payment of all taxes, assessments, levies,
fees, rents, other public charges, and all other charges described in this
paragraph imposed upon or assessed against it or any part of the Collateral.
(b) If Trustor fails to pay any of the taxes,
assessments, adverse claims, encumbrances, liens, premiums of insurance or other
charges as provided in this Deed of Trust, Beneficiary may pay, purchase,
contest or compromise the same, without obligation to do so and without notice
to or demand upon Trustor, and without releasing Trustor from any obligations
hereunder, and the amounts so paid, together with interest at the Default Rate
shall become a part of the indebtedness secured by this Deed of Trust and a lien
on the Collateral immediately due and payable by Trustor.
(c) Trustor, in good faith and at its own expense,
may contest any tax or assessment or the validity thereof by appropriate legal
proceedings; provided, however, that during any contest Trustor shall first
provide security wholly satisfactory to Beneficiary; and provided further, that
if, at any time, payment of any obligation imposed on Trustor becomes necessary
to prevent the delivery of a tax deed or tax certificate of purchase (or a
similar instrument) conveying all or part of the Collateral because of a
nonpayment, then Trustor must pay the same in sufficient time to prevent the
delivery of a tax deed or tax certificate of purchase (or a similar instrument).
2.8 Insurance.
(a) Trustor shall keep all buildings, improvements,
fixtures, machinery and equipment now existing or hereafter erected or placed on
the Trust Property and all of the other Collateral insured against loss or
damage by fire and the risks embraced within the terms "all risk" or "all
perils," providing that any loss is payable to Beneficiary in such amount or
amounts and with
7
<PAGE> 8
such insurance companies as Beneficiary may reasonably require (but in no event
less than the secured indebtedness). Trustor shall also provide public liability
and property damage insurance protecting Trustor and Beneficiary as named
insureds in such amounts as Beneficiary may reasonably request and, when
requested by Beneficiary, business interruption insurance, rent loss insurance,
federal flood insurance and insurance against such other hazards or risks in
such amount or amounts as may be reasonably required by Beneficiary. All such
policies shall be with companies approved by Beneficiary from time to time and
shall otherwise be in form and substance satisfactory to Beneficiary. Trustor
shall deliver to Beneficiary as additional security the insurance policies just
described and any additional insurance policies that may be taken out, together
with an endorsement providing for written notice by the insurer to Beneficiary
at least ten (10) days before the cancellation of any such policies. Renewals of
the policies shall be delivered at least ten (10) days before any insurance
expires. If Trustor fails to replace its insurance policies within ten (10) days
after being notified that any insurance company is no longer approved by
Beneficiary, Beneficiary may (without obligation to do so) procure and
substitute for any and all of the insurance procured by Trustor, at Trustor's
expense, any other policy or policies of insurance in such amount(s) as
Beneficiary may determine is necessary.
(b) If all or any part of the Collateral is destroyed
or damaged at any time by fire or any other cause whatsoever, the insurance
proceeds collected shall be paid to Beneficiary and may, at the option of
Beneficiary, be applied either (i) on account of any indebtedness, whether the
same shall then be due or not, in such order as Beneficiary may determine, or
(ii) to the cost of repairing, rebuilding, renewing or restoring the Collateral
or of replacing any personal property covered by this Deed of Trust, or, at the
sole option of Beneficiary, all or part of the amount collected may be released
to Trustor. The application or release of the insurance proceeds shall not cure
or waive any default or notice of Trustee's sale or invalidate any act done
pursuant to the notice.
2.9 Alteration or Construction.
(a) Trustor shall not materially improve, demolish,
add to, rehabilitate, remodel, reconfigure or otherwise alter the Collateral
without the advance written permission of the Beneficiary (such consent not to
be unreasonably withheld). Trustor further covenants and agrees that no material
excavation, construction, earth work, site work or any other lienable work shall
be done to or for the benefit of the Collateral without Beneficiary's prior
written approval, except for normal repair and maintenance in the ordinary
course of business. Beneficiary shall have the right to review and approve all
plans, specifications and
8
<PAGE> 9
materials to be used in any material alteration of the Collateral. In the event
Beneficiary gives such written consent, Trustor agrees to apply for and obtain
any material permit which is required by any governmental law or ordinance as to
any construction, improvement, alteration or addition to be made to the
Collateral. Once commenced, all work shall proceed with due diligence, and all
construction will be fully in accordance with the plans and specifications
approved by Beneficiary and materially in accordance with all laws, ordinances
or regulations made or promulgated by any governmental agency or lawful
authority and with the rules of the applicable board of fire underwriters.
Trustor shall pay when due all claims for work performed or materials furnished,
or both, on or in connection with all or any part of the Collateral, and shall
pay, discharge or cause to be removed, all mechanic's, artisan's, laborer's and
materialman's charges, liens, claims or encumbrances upon the Collateral.
(b) Trustor will not in any manner impair or take any
action which threatens to impair the value of the Collateral or the security of
Beneficiary for the payment of the secured indebtedness except in the ordinary
course of Trustor's business of the operation of a scrap yard. Trustor also
agrees not to permit a change of the character or use of the Collateral without
the prior written consent of Beneficiary.
2.10 Right of Inspection. Upon ten (10) days written notice,
Trustor shall permit Beneficiary, or its agents, during normal business hours to
enter, pass through or over the Trust Property for the purpose of inspecting the
Collateral. If Trustor fails to maintain the Collateral in the manner specified
herein, Beneficiary may, at its option, undertake repairs and maintenance, as
Beneficiary deems necessary. The cost of any repairs or maintenance undertaken
by Beneficiary shall be paid by Trustor, and, if it is necessary for Beneficiary
to advance funds for this purpose, such advances, together with interest at the
Default Rate shall become part of the debt secured by this Deed of Trust and a
lien on the Collateral immediately due and payable by Trustor. The right of
Beneficiary to undertake repairs or maintenance shall be optional, and shall in
no way limit Beneficiary's right to declare a default under this Deed of Trust
because of Trustor's failure to maintain the Collateral in accordance with this
Deed of Trust.
2.11 Statutes, Rules and Regulations. Trustor shall materially
comply with all regulations, rules, ordinances, statutes, orders and decrees of
any governmental authority or court applicable to Trustor or to all or part of
the Collateral, except for violations of law relating to Hazardous Materials
which occur in the ordinary course of Trustor's business of the operation of a
scrap yard.
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2.12 Accordance with Law. Trustor warrants that this Deed of
Trust, the Note and all other instruments executed and delivered to Beneficiary
by or on behalf of Trustor are or were executed in accordance with the
requirements of law and are valid and binding obligations of Trustor enforceable
in accordance with their terms.
2.13 Beneficiary's Right to Perform Acts Required of Trustor.
If Trustor fails to make any payments or do any acts as provided in this Deed of
Trust, then Beneficiary or Trustee, but without obligation to do so and without
notice or demand upon Trustor, and without releasing Trustor from its
obligations, may make or do the same in the manner and to the extent that either
may deem necessary to protect their security. Beneficiary or Trustee is
authorized to enter upon the Trust Property for such purposes; to appear and
defend in any action or proceeding purporting to affect the security or the
rights and powers of Beneficiary and Trustee; to pay, purchase, contest, or
compromise any encumbrance, charge, or lien which in the judgment of either
appears to be prior or superior to the lien created by this Deed of Trust; and,
in exercising those powers, to pay necessary reasonable expenses, employ counsel
and pay reasonable attorneys' fees and costs. If Trustee or Beneficiary makes
any payments or takes any of the actions provided above, then all amounts paid
or incurred, together with interest thereon at the Default Rate, shall become a
part of the indebtedness secured by this Deed of Trust and a lien on the
Collateral immediately due and payable by Trustor.
2.14 Hazardous Waste and Materials.
(a) Trustor covenants that it will not place
Hazardous Materials on, under or about the Trust Property after the date
Beneficiary transfers the Trust Property to Trustor, except for Hazardous
Materials placed on the Trust Property in the ordinary course of Trustor's
business of the operation of a scrap yard.
(b) "Hazardous Materials" shall include, but not be
limited to, substances defined as "hazardous substances," "hazardous materials,"
or "toxic substances" or "hazardous wastes" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 ET SEQ. and Title 49 of the Arizona Revised Statutes, A.R.S. Section 49-101
ET SEQ., in the rules and regulations adopted pursuant to said laws, and in all
other federal, state or local statutes, rules or regulations.
(c) Trustor further covenants that it will promptly
notify Beneficiary if Trustor receives knowledge or notice from any governmental
agency or lawful authority that Hazardous Materials
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are located on or beneath or about the Trust Property or on, beneath or about
the surface of adjacent parcels of real estate.
(d) Except for Hazardous Materials present on the
Trust Property as of the date of this Deed of Trust, if any, and except for
those Hazardous Materials used, generated, stored or disposed of by Trustor on
the Trust Property in the ordinary course of Trustor's business in the operation
of a scrap yard, Trustor agrees to indemnify and hold Beneficiary and Trustee
harmless from and against any and all reasonable costs (including attorneys'
fees and court costs) and liability directly or indirectly arising out of the
use, generation, storage or disposal of Hazardous Materials by Trustor, its
agents, contractors, subcontractors and materialmen, or any other person or
entity.
(e) Except for Hazardous Materials present on the
Trust Property as of the date of this Deed of Trust, if any, and except for
those Hazardous Materials used, generated, stored, placed or disposed of by
Trustor on the Trust Property in the ordinary course of Trustor's business in
the operation of a scrap yard, in the event that Trustor becomes aware of the
existence of Hazardous Materials located on or beneath the Trust Property and
fails to promptly commence and thereafter diligently pursue an expeditious
program (approved by Beneficiary and the appropriate regulatory authorities) of
removal of such materials at Trustor's cost and expense, such existence shall
constitute a default hereunder.
(f) Except for Hazardous Materials present on the
Trust Property as of the date of this Deed of Trust, if any, and except for
those Hazardous Materials used, generated, stored, placed or disposed of by
Trustor on the Trust Property in the ordinary course of Trustor's business in
the operation of a scrap yard, in the event that Trustor becomes aware of the
existence of Hazardous Materials, located on or beneath any property adjacent to
the Trust Property, Trustor shall, at its own cost and expense, take such
actions as are reasonable under the circumstances to prevent the contamination
of the Trust Property from such materials. The failure to take such action shall
constitute a default hereunder.
2.15 No Transfer or Encumbrance of Trust Property. Trustor
shall not, voluntarily or involuntarily, sell, convey, transfer, assign,
encumber, lease for more than three (3) years, lease with option to purchase,
contract to sell, or in any other way transfer or dispose of the Trust Property,
the other Collateral, or any interest therein, or grant a security interest in,
assign or attempt to assign all or any of the Property Income from the Trust
Property, without first obtaining the prior written consent of Beneficiary (such
consent not to be unreasonably withheld). Beneficiary shall not be held to have
notice of any
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impairment or threat of impairment until it receives actual notice; recording of
any instruments shall not be deemed to give notice to Beneficiary for the
purposes of this paragraph.
2.16 Due on Sale or Encumbrance.
(a) Written Consent of Beneficiary Required. Trustor
agrees not to sell, convey, transfer, whether voluntarily or involuntarily,
assign, contract to sell, lease for more than three (3) years or lease with an
option to purchase, or in any other way transfer or dispose of all or any part
of the Collateral, or any interest therein, and agrees not to encumber or
subject the Collateral to any lien, security interest, charge or encumbrance,
without the prior written consent of Beneficiary (such consent not to be
unreasonably withheld). (The transactions enumerated in this section are meant
to be illustrative of the type of transfers requiring Beneficiary's consent; the
list is not exclusive or comprehensive.) Trustor also agrees not to permit a
change of the character or use of the Collateral without the prior written
consent of Beneficiary. Trustor agrees that not more than twenty-five percent
(25%) of the voting stock of Trustor may be sold, transferred or assigned
without the prior written consent of Beneficiary. Beneficiary shall not be held
to have notice of any transfer or encumbrance until it receives actual notice;
recording of any instruments shall not be deemed to give notice to Beneficiary
for the purpose of this paragraph. If Beneficiary consents to a transfer, it
does so without prejudicing its right to raise the rate of interest payable on
the secured indebtedness as provided in Section 2.16(c). Consent to one
transaction shall not be deemed to be a waiver of Beneficiary's right to require
consent to future or successive transactions.
(b) Acceleration. If Trustor sells, transfers,
encumbers or enters any other transaction described in Section 2.16(a) without
first obtaining Beneficiary's written consent (such consent not to be
unreasonably withheld), Beneficiary may, at its option, declare by written
notice all indebtedness secured by this Deed of Trust, irrespective of the
maturity date of the indebtedness otherwise specified, immediately due and
payable. Beneficiary may avail itself of any and all remedies provided in this
Deed of Trust, in the Note, in any other instrument delivered by or on behalf of
Trustor to Beneficiary, or at law or in equity, in the event of failure to pay
the amount due.
(c) Increased Interest Rate. Whether or not
Beneficiary consents to a transfer, and notwithstanding its alternative right to
declare the entire indebtedness due and payable as described in Section 2.16(b),
Beneficiary is granted the right, at its option, to raise the rate of interest
payable on the secured indebtedness at the time of, or at any time after, a
transfer, as described in Section 2.16(a), occurs, to the extent
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permitted by law. Trustor acknowledges and agrees that Beneficiary's right to
raise the rate of interest is given for the express purpose of enabling
Beneficiary to realize a market rate of interest on the Note.
(d) Transfer Fee. Beneficiary and Trustee are granted
the right to charge a reasonable transfer fee at the time of, or at any time
after, a transfer, as described in Section 2.16(a), occurs. The transfer fee
will cover costs incurred to reflect the transfer or encumbrance on the records
of Beneficiary and/or Trustee. Because it is impossible to accurately calculate
the clerical costs incurred as a result of a transfer or encumbrance, the
parties agree that the transfer fee will be One Hundred Dollars ($100.00) or one
percent (1%) of the balance due on the obligation secured by this Deed of Trust,
whichever is greater.
2.17 Limitation of Covenants. Notwithstanding the foregoing
covenants in Articles 2 and 3, Trustor shall not be obligated to perform the
covenants contained in Sections 2.2, 2.7, 2.8, 2.9, 2.10, 2.11, 2.14, 3.2, 3.3
and 3.4 so long as Ellis Metals, Inc., an Arizona corporation ("Ellis Metals"),
or an affiliate of Beneficiary or Ellis Metals is a tenant of all of the Trust
Property.
ARTICLE 3. TO FURTHER PROTECT THE SECURITY OF THIS DEED OF
TRUST, TRUSTOR AGREES AND WARRANTS AS FOLLOWS:
3.1 Property Income. Trustor gives to and confers upon
Beneficiary the right, power and authority, during the continuance of this Deed
of Trust, to collect the Property Income, reserving to Trustor, however, the
right to collect and retain the Property Income as it becomes due and payable
prior to any default by Trustor in payment of the secured indebtedness or in
performance of each and every agreement contained in this Deed of Trust or in
any other instrument delivered by or on behalf of Trustor to Beneficiary.
3.2 Leases. Trustor agrees to faithfully perform each and
every obligation, covenant and agreement (to be performed by lessor) in all
leases now existing or hereafter created pertaining to the Trust Property (the
"leases"). Trustor agrees, at its sole cost and expense, to enforce performance
of all lease requirements to be performed by lessees, and to defend any action
or proceeding that seeks adversely to affect the leases or the Trust Property
and to pay all reasonable costs and expenses of Beneficiary, including
attorneys' fees, in any action or proceeding in which Beneficiary may appear.
Unless the prior written permission of Beneficiary is first received (such
consent not to be unreasonably withheld), Trustor agrees (a) not to modify,
extend, or in any way alter the terms of any of the leases; (b) not to terminate
the leases, or accept the surrender thereof; and (c) not to collect the rents in
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advance, or to waive, excuse or in any manner release or discharge lessees from
their obligation to pay the rental called for in the leases. Trustor
relinquishes to Beneficiary all of its right, power, and authority to amend,
modify, or in any way alter the terms of the leases.
3.3 Performance of Trustor's Obligations. Upon the default of
Trustor, Beneficiary may perform or discharge any obligation of Trustor under
the leases and defend or prosecute any action or proceeding that might affect
Trustor's or Beneficiary's rights under any leases. Trustor must reimburse
Beneficiary, on demand, for any sums expended as just described plus interest at
the Default Rate from the date expended until paid and such sums shall be
secured by this Deed of Trust. Upon a default by Trustor, Beneficiary may, at
any time, without notice, either in person, by agent, or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the
secured indebtedness or the solvency of Trustor, enter upon and take possession
of and manage all or part of the Trust Property and other Collateral, take
possession of books and records, and make, cancel, enforce or modify the leases,
obtain and evict tenants and fix or modify rents, and in its own name, sue for,
or otherwise collect, the Property Income, including that past due and unpaid,
and apply it, less reasonable costs and expenses of operation and collection,
including attorneys' fees, to any secured indebtedness in such order and manner
as Beneficiary may determine. The entering upon and taking possession of the
Trust Property and other Collateral, the collection of the Property Income and
the application of it to the secured indebtedness shall not cure or waive any
default or notice of default or invalidate any act done by Beneficiary.
3.4 Subordination of Leases. Trustor agrees that any and all
leases of all or any portion of the Trust Property, whether entered into before
or after the execution or recordation of this Deed of Trust, are subordinate to
the Trustee's and Beneficiary's respective right, title and interest in the
Trust Property. At any time, upon the request of Trustee or Beneficiary, Trustor
shall attempt, in good faith, to obtain a written agreement from any lessee
under any such lease consenting to and acknowledging such subordination. From
and after the date of the execution of this Deed of Trust, Trustor shall enter
into no lease of all or any portion of the Trust Property unless the lessee
acknowledges the subordination of such lease and such lease requires the lessee
to acknowledge the subordinate nature of such lease upon the request of Trustor
or of Trustee or Beneficiary.
3.5 Community Facilities District. Without obtaining the prior
written consent of Beneficiary (such consent not to be unreasonably withheld),
Trustor shall not consent to, or vote in favor of, the inclusion of all or any
part of the Trust Property in any Community Facilities District formed pursuant
to the Community
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Facilities District Act, A.R.S. Section 48-701, ET SEQ., as amended from time to
time. Trustor shall immediately give notice to Beneficiary of any notification
that Trustor may receive from any municipality of any intent or proposal to
include all or any part of the Trust Property in a Community Facilities
District. Beneficiary shall have the right to file a written objection to the
inclusion of all or any part of the Trust Property in a Community Facilities
District, either in its own name or in the name of Trustor, and to appear at,
and participate in, any hearing with respect to the formation of any such
district, all at the sole cost of Beneficiary.
ARTICLE 4. DEFAULT; REMEDIES:
4.1 Events of Default. The happening of any one or more of the
following events shall constitute an event of default:
(a) The failure to pay any indebtedness or obligation
of Trustor secured by this Deed of Trust, including, but not limited to, payment
of all sums due under the Note secured hereby, payment of taxes, insurance
premiums, assessments and like payments as and when such payments shall become
due and payable, by lapse of time, by declaration, by acceleration or otherwise,
or within the period of grace, if any, which is expressly allowed in writing
with respect to any particular payment.
(b) The failure to timely perform any term, covenant
or condition contained in this Deed of Trust, or the failure to perform any
term, covenant or condition within the period of grace, if any, which is
expressly allowed in writing with respect to that term.
(c) The abandonment of all or any part of the
Collateral.
(d) The suffering or permitting of another person,
entity, government or governmental agency to acquire possession of any interest
in, or any lien upon, any of the Collateral that is inconsistent with
Beneficiary's rights.
(e) The occurrence of any default under any other
instrument given by Trustor to secure the secured indebtedness.
(f) The seeking of any bankruptcy, arrangement,
reorganization, insolvency proceeding, liquidation or dissolution by or against
Trustor; or if Trustor is at any time during the term of this Deed of Trust a
partnership, the seeking of any such proceedings by or against a partner (other
than a limited partner) of Trustor.
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(g) The seeking of the appointment of a receiver,
trustee, custodian or other similar official for Trustor or for all or a
substantial part of Trustor's property, or if Trustor shall not pay its debts as
they become due, shall admit in writing its inability to pay its debts or shall
make an assignment for the benefit of creditors.
(h) The misrepresentation or failure to disclose a
material fact in any financial or other written representations and disclosures
made by Trustor in order to induce Beneficiary to extend credit as evidenced by
the Note referred to in this Deed of Trust and other obligations which this Deed
of Trust secures.
(i) The falsity of any representation or warranty
made by Trustor in the Note, this Deed of Trust, or any other instrument
delivered by or on behalf of Trustor to Beneficiary.
(j) The default by Trustor under any other lien or
security device placed upon the Collateral or personal property which is the
subject of this Deed of Trust or the attachment, levy or other seizure by legal
process of all or any portion of the Collateral.
(k) The death of Trustor if Trustor is an individual,
the death of any individual who is part of a marital community which is the
Trustor, the dissolution of the Trustor if the Trustor is a general or limited
partnership or a corporation; provided, however, that in such event Trustor
shall have sixty (60) days to obtain new financing for the Collateral.
4.2 Remedies. Upon the occurrence of any monetary event of
default, Beneficiary must provide Trustor with written notice thereof and permit
Trustor twenty (20) days from the date of the notice to cure the default before
exercising any of its remedies hereunder. Upon the occurrence of any
non-monetary event of default, Beneficiary must provide Trustor with written
notice thereof and permit Trustor thirty (30) days from the date of the notice
to cure the default before exercising any of its remedies hereunder; or, if such
default is not capable of being cured within said thirty (30) day period,
Trustor must pursue cure with diligence within said period. Except as expressly
set forth herein or as may be required by law, without the necessity of any
notice to or demand upon Trustor or any other party having an interest in the
Collateral or the giving of an opportunity to cure the event of default
Beneficiary may, at its option, do any or all of the following:
(a) Acceleration. Beneficiary may declare all secured
indebtedness immediately due and payable.
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(b) Possession. Beneficiary may enter upon and take
possession of the Collateral or any part thereof, with or without notice, either
by its agents, attorneys, employees, or by a receiver to be appointed by a
court, and without regard to the adequacy of any security for the secured
indebtedness or the existence of waste, and Trustor shall upon demand peaceably
surrender possession thereof to Beneficiary or the receiver. Beneficiary, in its
name and/or in the name of Trustor, may operate and maintain all or any portion
of the Collateral to such extent as Beneficiary deems advisable, and Trustor
agrees that Beneficiary shall be entitled to do and perform any acts that
Beneficiary may deem necessary or proper to conserve the value of the Collateral
and to sue for and otherwise collect and receive all Property Income, including
past due and unpaid Property Income, as well as Property Income accruing
thereafter, and may rent or lease the Collateral or any portion thereof to such
person or persons and for such periods of time and on such terms and conditions
as Beneficiary in its sole discretion may determine. Beneficiary may apply all
the Property Income collected or received by it to the payment of reasonable
costs and expenses incurred in the operation of the Trust Property or to protect
and preserve the security thereof, and then in the manner hereafter specified in
respect of proceeds of sale of the Collateral, or any part or all of such
Property Income may be released by Beneficiary to Trustor or any other party
entitled thereto at Beneficiary's sole option. The reasonable expenses
(including receiver's fees, if any, compensation to any agent appointed by
Beneficiary, and counsel fees and costs and disbursements) incurred in taking
possession and effecting collection or attempting to take possession and effect
collection shall be deemed an expense to be paid by Trustor and secured hereby.
Neither the entering upon and taking possession of the Collateral nor the
collection of the Property Income or the application or release thereof shall
cure or waive any default or notice of sale hereunder or invalidate any act done
pursuant to such notice. In dealing with the Collateral or any related personal
property as a beneficiary in possession, Beneficiary shall be without any
liability, charge, or obligation therefor to Trustor other than for negligence
or misconduct, and all net losses, costs, and reasonable expenses incurred shall
be deemed advancements to Trustor under this Deed of Trust.
(c) Collection of Property Income. Beneficiary may
collect and enforce the payment of all Property Income of all or part of the
Collateral, with or without taking possession and without assuming any liability
under any tenancy, lease, option or other agreement.
(d) No Legal Proceedings Necessary. Beneficiary may
perform any of the foregoing acts with or without bringing any action or
proceeding, or through a receiver appointed by a court (which may be appointed
without proving waste), and in any case
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without the necessity of giving or recording any notice of sale and without
regard to the solvency of Trustor or the adequacy of security.
(e) Foreclosure. Beneficiary may bring an action in
any court of competent jurisdiction to foreclose this Deed of Trust in the same
manner as provided by law for the foreclosure of realty mortgages.
(f) Sale. Beneficiary may elect to have all or any
portion of the Collateral sold in the manner and at the time(s) and place(s)
selected by Beneficiary, as long as the sale(s) is(are) in accordance with law.
4.3 Sale of Collateral by Trustee.
(a) In the event Beneficiary elects to have the Trust
Property sold under the Trustee's power of sale, Beneficiary shall deliver to
Trustee written notice of the breach and the nature thereof, and of its election
to cause the Trust Property to be sold by Trustee at one or more sales.
Thereafter, Trustee shall sell, after giving proper notice in the manner
required by law, the Trust Property at public auction at the time and place
fixed by it in the notice of Trustee's sale, to the highest bidder for cash in
lawful money of the United States, payable in accordance with law. Trustee may
postpone or continue the sale from time to time by giving notice of postponement
or continuance in the manner and to such parties as required by law. Trustee
shall deliver to the purchaser its deed conveying the property sold, but without
any covenant or warranty, express or implied. Any persons, including Trustor,
Trustee or Beneficiary, may purchase at the sale. The proceeds of the sale will
first be applied to payment of the reasonable expenses of exercising the power
of sale, including attorneys' fees and Trustee's fees, and then to satisfaction
of the obligations secured by this Deed of Trust.
(b) Beneficiary has the right to sell the Collateral
other than the Trust Property subject to this Deed of Trust at, and as a part
of, the Trustee's sale of the Trust Property, in which case Part 5 of Article 9
of the Uniform Commercial Code (Arizona Revised Statutes Sections 47-9501 to
47-9507) does not apply. Any sale of the Collateral pursuant to the Trustee's
power of sale will be as described in Section 4.3(a).
(c) As an alternative to selling the Collateral other
than the Trust Property pursuant to the Trustee's power of sale, Beneficiary may
elect to pursue its remedies under the Uniform Commercial Code in effect in
Arizona. In this regard, Beneficiary has the right, upon Trustor's default, to
take possession of the Collateral other than the Trust Property and to dispose
of it in any order, in any manner, and at any time and
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place, as long as the disposition is commercially reasonable. The proceeds of
the disposition will first be applied to payment of the reasonable cost of
taking possession and disposing of the other Collateral, including attorneys'
fees, and then to satisfaction of the secured indebtedness.
(d) The sale of any part of the Collateral will not
diminish Beneficiary's security interest in the remainder of the Collateral or
affect Beneficiary's right, if any, to a deficiency, if a deficiency remains
after disposing of all of the Collateral.
(e) Trustor's obligation to pay reasonable attorneys'
fees incurred by Beneficiary on account of any matter arising out of this Deed
of Trust or the Collateral, is secured by this Deed of Trust. Consequently,
Beneficiary's reasonable attorneys' fees are part of the secured indebtedness
and will be paid from the proceeds of any sale(s). If Trustor desires to
reinstate this Deed of Trust after a sale has been noticed, it must tender
sufficient cash to pay in full all sums then due under this Deed of Trust,
including reasonable costs and expenses incurred in enforcing the Deed of Trust,
reasonable attorneys' fees and reasonable Trustee's fees incurred by Beneficiary
to take possession of the Collateral and to process the sale, and payment of the
recording fees for cancellation of the notice of sale. Notwithstanding any other
provision hereof, the obligation to pay attorneys' fees or Trustee's fees, or to
reimburse Beneficiary therefor, shall be subject to any statutory limitation on
the amount of such fees.
4.4 Rights of Beneficiary. To the extent permitted by law, the
rights and remedies provided for in this Deed of Trust, or that Beneficiary may
have otherwise, at law or in equity (including, but not limited to, the right to
damages by reason of Trustor's failure to keep, observe and perform any of the
covenants, conditions or agreements contained in this Deed of Trust), shall be
distinct, separate and cumulative, and shall not be deemed to be inconsistent
with each other. None of Beneficiary's rights and remedies, whether or not
exercised by Trustee or Beneficiary, shall be deemed to be in exclusion of any
other, and any two or more or all of its rights and remedies may be exercised at
the same time. All rights and remedies shall be cumulative.
4.5 Beneficiary as Purchaser. If Beneficiary is a purchaser at
any sale of the Collateral, whether made under Trustee's or Beneficiary's power
of sale, pursuant to judicial proceedings, or otherwise, Beneficiary shall be
entitled to use and apply all or any portion of the secured indebtedness for or
in settlement or payment of all or any portion of the purchase price for the
property purchased.
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4.6 Proceeds of Sale. After deducting all reasonable costs,
fees and expenses of both Beneficiary and Trustee pertaining to the sale(s),
including costs of evidence of title in connection with the sale and attorneys'
fees incurred by Beneficiary as well as by Trustee, Trustee shall apply the
proceeds of the sale to payment of all indebtedness then secured by this Deed of
Trust, including accrued interest, and then to junior lienholders, in the manner
provided by law. Trustee waives the right to elect to deposit the balance (if
any) of the proceeds of the sale with the county treasurer, as provided in
Arizona Revised Statutes Section 33-812, except as to that portion remaining
after payment of the reasonable costs and expenses of the sale, including
attorneys' fees incurred by Beneficiary and Trustee, payment of the secured
indebtedness, and all other obligations provided in this Deed of Trust.
4.7 Trustor's Refusal to Surrender After Trustee's Sale. In
the event Trustor fails or refuses to surrender possession of the Trust Property
after any Trustee's sale, Trustor shall be deemed a tenant at sufferance,
subject to eviction by means of forcible entry and detainer proceedings,
provided that this remedy is not exclusive, or in derogation of any other right
or remedy available to Beneficiary. Trustor expressly agrees to pay to
Beneficiary all reasonable costs or expenses, including attorneys' fees,
incurred by Beneficiary as a result of eviction proceedings. The effectiveness
of this paragraph shall survive the sale of the Trust Property.
4.8 Deficiency Allowed. To the extent permitted by law, an
action may be maintained by Beneficiary to recover a deficiency judgment for any
balance due from Trustor pursuant to this Deed of Trust. In this regard, if the
proceeds from any sale(s) of the Collateral are insufficient to pay in full the
secured indebtedness, reasonable costs and expenses incurred in enforcing this
Deed of Trust, including attorneys' fees, Trustee's fees and costs of evidence
of title incurred by Beneficiary to exercise its rights and remedies under this
Deed of Trust, then Beneficiary is entitled to seek a deficiency judgment in an
amount sufficient to pay in full the secured indebtedness and all reasonable
attorneys' fees, Trustee's fees, costs, expenses and other obligations incurred
in enforcing this Deed of Trust. In addition, Beneficiary is entitled to recover
its reasonable costs and attorneys' fees incurred in order to recover a
deficiency judgment.
4.9 Other Remedies. Every power or remedy given by this
instrument to Trustee or Beneficiary, or to which either of them may be
otherwise entitled, may be exercised from time to time and as often as may be
deemed expedient by Trustee or Beneficiary, and either of them may pursue
inconsistent remedies. Enforceability of any provision of this Deed of Trust
shall not affect the enforceability of any other provision. If there exists
additional
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security for the performance of the obligations secured, the holder of the
Note(s), at its sole option, and without limiting or affecting any rights or
remedies granted in this Deed of Trust, may exercise any of the rights and
remedies to which it may be entitled either concurrently with whatever other
rights it may have in connection with (or separate from) the other security or
in such order as it may determine. At Beneficiary's option, Trustee shall be
authorized to take the steps and exercise the rights and remedies explicitly
reserved to Beneficiary.
4.10 No Offset. No offset or claim that Trustor now has or may
in the future have against Beneficiary shall relieve Trustor from paying
installments or performing any other obligation secured by this Deed of Trust.
4.11 Junior Liens Extinguished. Judicial foreclosure of this
Deed of Trust extinguishes all junior liens that do not redeem, as provided by
law, following the Sheriff's sale. A Trustee's sale pursuant to this Deed of
Trust extinguishes all junior liens and the purchaser takes free of any junior
liens.
4.12 Notice. Except as provided herein, no notices are due to
Trustor other than as expressly set forth in the Note or this Deed of Trust;
except nothing herein shall be construed so as to diminish or eliminate any
required statutory notices or rights to cure with respect to a trustee's sale or
a judicial foreclosure.
4.13 Election to Continue or Terminate Leases. Upon a sale of
the Trust Property under Sections 4.2 or 4.3 hereof, the purchaser at said sale
(whether or not such purchaser is the Beneficiary) may elect to either continue
any lease of all or a portion of the Trust Property, in which case such lease
shall remain in full force and effect, or to terminate any such lease, in which
case such lease shall be of no further force and effect. To continue any such
lease, the purchaser shall, after the sale, either (i) direct the lessee to
continue to observe the terms and conditions of the lease or (ii) accept any
lease payment from lessee for any rental period subsequent to the sale without
giving any inconsistent notice or direction to the lessee. By electing to
continue any such lease, the purchaser shall be fully subrogated to the
Trustor's rights and obligations under and interest in such lease. To terminate
any such lease, the purchaser must give notice to the lessee of its election to
terminate before accepting any lease payment from lessee for any rental period
subsequent to the sale. Upon such notice of the purchaser's election to
terminate, the lessee shall become a tenant by sufferance. If the purchaser
gives proper notice of its election to terminate, it may nevertheless agree to
allow a lessee to remain in possession of and pay rent for the leased premises
on terms and conditions other than those of the lease without invalidating the
termination. The pur-
21
<PAGE> 22
chaser's election to terminate (or continue) one or more leases shall not be
construed as an election to terminate (or continue, as the case may be) any
other leases; the purchaser may elect to treat various leases differently.
ARTICLE 5. OTHER DUTIES AND RIGHTS OF TRUSTEE:
5.1 Compensation and Indemnification of Trustee. Trustee shall
be entitled to reasonable compensation for all services rendered or expenses
incurred in the administration or execution of the Trusts created by this Deed
of Trust and Trustor agrees to pay the same, subject to all statutory
limitations. Trustee and Beneficiary shall be indemnified, held harmless and
reimbursed by Trustor for any liability, damage or expense, including reasonable
attorneys' fees and amounts paid in settlement, that either or both of them may
incur or sustain in the execution of this Deed of Trust, or in the doing of any
act that either or both of them are required or permitted to do by the terms of
this Deed of Trust or by law.
5.2 Statement Service Charge. For any statement requested by
Trustor regarding the obligations secured, the ownership of the Collateral, the
liens on the Collateral, the amount required to reinstate the Deed of Trust or
similar matters, Beneficiary or Trustee may charge a reasonable fee, not to
exceed the maximum amount permitted by law at the time of the request.
5.3 Rights of Trustee Upon Request. At any time or from time
to time, upon written request of Beneficiary, without affecting the personal
liability of any person for payment of the secured indebtedness, and without
affecting the security for the full amounts secured by this Deed of Trust,
Trustee may:
(a) Release and reconvey all or any part of the Trust
Property or other Collateral;
(b) Consent to the making and recording, or either,
of any map or plat of all or part of the Trust Property;
(c) Join in granting any easement on the Trust
Property; or
(d) Join in or consent to any extension agreement or
any agreement subordinating the lien, encumbrance or charge created by this Deed
of Trust.
5.4 Successor Trustee. Beneficiary may, in its discretion,
appoint a successor trustee in the manner prescribed by law. Trustee may resign
by recording a notice of resignation and by mailing or delivering notice of
resignation to Beneficiary and to Trustor in the manner prescribed by law. Upon
Trustee's
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<PAGE> 23
resignation, Beneficiary may appoint a successor trustee, which appointment
shall constitute a substitution of trustee upon the mailing and recording of
written notice by Beneficiary in the manner prescribed by law for the
substitution of a trustee of a deed of trust. A successor trustee shall, without
conveyance from the predecessor trustee, succeed to all the predecessor's title,
estate, rights, powers and duties.
5.5 Acceptance by Trustee. Trustee accepts this Trust when
this Deed of Trust, duly executed and acknowledged, is made a public record as
provided by law. Trustee is not obligated to notify any party of a pending sale
under any other deed of trust or of any action or proceeding in which Trustor,
Beneficiary or Trustee shall be a party, unless brought by Trustee.
5.6 Costs. Trustor shall pay all reasonable costs, fees and
expenses of this Deed of Trust, including, without limiting the generality of
the foregoing, the fees of Trustee for issuance of any deed of partial release
and partial reconveyance or deed of release and full reconveyance. Trustor shall
pay all lawful and reasonable charges, costs and expenses, including charges for
the preparation of title reports and attorneys' fees incurred by Beneficiary and
Trustee, in the event of reinstatement of this Deed of Trust following default
in the performance of Trustor's obligations. Notwithstanding any other
provision hereof, the foregoing obligations shall be subject to any statutory
limitation on the amount of such fees and costs.
ARTICLE 6. IT IS FURTHER AGREED:
6.1 Waiver by Trustor. Trustor expressly waives any right that
it may have to direct the order in which any of the Collateral shall be sold in
the event of any sale(s) pursuant to the power of sale granted in this Deed of
Trust and by law. Trustor waives any requirements of presentment, demands for
payment, notices of nonpayment or late payment, protest, notices of protest,
notices of dishonor and all other formalities, except as explicitly required by
statute. Trustor waives all rights and/or privileges it might otherwise have to
require Trustee and/or Beneficiary to proceed against or exhaust the assets
encumbered by this Deed of Trust or by any other security document or instrument
securing the Note or to proceed against any guarantors of such indebtedness, or
to pursue any other remedy available to Beneficiary in any particular manner or
order under the legal or equitable doctrines or principles of guaranty and/or
suretyship and/or marshalling. Trustor further agrees that, in the event of
default, Trustee and/or Beneficiary may proceed against any or all of the assets
encumbered by this Deed of Trust or by any other security document or instrument
executed with respect to the secured indebtedness in any order and manner that
Beneficiary may determine, without releasing its security on the Collateral or
any
23
<PAGE> 24
such other assets. Any Trustor that has signed this Deed of Trust as a surety or
accommodation party, or that has subjected its property to this Deed of Trust to
secure the indebtedness of another party, expressly waives the benefits of the
provisions of Arizona Revised Statutes Sections 12-1641, 12-1642, and 33-814 and
waives any defense arising by reason of any disability or other defense of
Trustor.
6.2 Condemnation Proceeds and Damages. Any award of damages in
connection with any condemnation of, public use of, or injury to all or part of
the Trust Property, or for damages for private trespass or injury to the Trust
Property, is assigned and shall be payable to Beneficiary (reserving unto
Trustor, however, the right to sue for damages) up to the amount of the
indebtedness secured by this Deed of Trust. Beneficiary shall have the right,
but not the obligation, to participate in all settlement negotiations, legal
actions or similar proceedings in connection with any of the events described
above, including the drafting and approval of documents. Upon receipt of the
award, less only attorneys' fees and expenses awarded by a court, Beneficiary,
at its sole option, may apply the funds received toward the payment of the
secured indebtedness of Trustor to Beneficiary, whether or not then due, or
release such funds to Trustor.
6.3 Successors; Construction. This Deed of Trust applies to,
and inures to the benefit of, and binds all parties hereto, their heirs,
legatees, devisees, administrators, personal representatives, executors,
successors and assigns. The term "Beneficiary" shall mean the owner and holder
of the Note (or other secured obligation) whether or not named as Beneficiary
herein. In this Deed of Trust, whenever the context so requires, the neuter
gender includes the feminine and masculine, and the singular number includes the
plural.
6.4 Attorneys' Fees. In the event this Deed of Trust, and the
obligations that it secures, are placed in the hands of an attorney for the
collection of any sum payable hereunder, and the collection is effected without
suit, Trustor agrees to pay all reasonable costs of collection, including
attorneys' fees incurred by Beneficiary. In the event suit is instituted,
Trustor promises to pay reasonable attorneys' fees as determined by the court
(or, if payment is made during pendency of the suit, as incurred by
Beneficiary), and any additional costs, disbursements and allowances allowed by
law. All fees and costs so incurred shall be secured by this Deed of Trust and
collectable out of the Collateral in any manner permitted by law or by this Deed
of Trust. If Trustor shall become subject to any case or proceeding under the
Bankruptcy Reform Act of 1978, as amended by the Bankruptcy Amendments and
Federal Judgeship Act of 1984, as further amended or recodified from time to
time (collectively, the "Act"), Trustor shall pay to Beneficiary, upon demand,
all reasonable attorneys'
24
<PAGE> 25
fees, costs and expenses which Beneficiary may incur to obtain relief from any
provision of the Act which delays or otherwise impairs Beneficiary's exercise of
any right or remedy under the Note, this Deed of Trust, or any other document
given to Beneficiary by Trustor, or to obtain adequate protection for any of
Beneficiary's rights or collateral.
6.5 Waiver of Conditions. No delay by Beneficiary in enforcing
any covenant or other right shall be deemed a waiver of that or any other
covenant or right. No waiver by Beneficiary of any particular provision of this
Deed of Trust will be effective unless in writing signed by Beneficiary, and no
waiver shall be deemed a waiver of any other provision or continuing waiver of
the particular provision. A waiver in one or more instances of any of the terms,
covenants, conditions or provisions of this Deed of Trust, or of the obligations
secured by this Deed of Trust, shall apply to the particular instance or
instances and to the particular time or times only. No waiver shall be deemed a
continuing waiver, but all of the terms, covenants, conditions and other
provisions of this Deed of Trust and of the obligations secured by this Deed of
Trust shall survive and continue to remain in full force and effect.
ARTICLE 7. MISCELLANEOUS PROVISIONS:
7.1 Severability. In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other provision of this Deed of Trust. This Deed of Trust shall
be construed as if it had never contained the invalid, illegal or unenforceable
provision.
7.2 Notices. All notices, demands and requests given or
required to be given by either party to the other party shall be in writing and
shall be personally delivered or sent by registered or certified mail, except
when another form or method of notice is required by statute in which case
notice shall be given as required by statute. All notices, demands and requests
by the parties shall be deemed to have been properly given and effective for all
purposes hereunder when delivered, if personally delivered or at the time the
notice, demand or request is deposited in the United States mail, registered or
certified, postage prepaid, addressed to the party at the address stated above,
or at such other address as the party may, from time to time, designate by
written notice.
7.3 Governing Law. This Deed of Trust shall be deemed to have
been made and executed in the State of Arizona. The validity, construction and
enforcement of the obligations secured shall be governed by the laws of the
State of Arizona.
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<PAGE> 26
7.4 Irrevocability. The trusts created by this Deed of Trust
are irrevocable by Trustor.
7.5 Amendment to Deed of Trust. This Deed of Trust cannot be
changed except by agreement, in writing, signed by Trustor and Beneficiary.
7.6 Notice of Sale to Trustor. The undersigned Trustor
requests that a copy of any notice of sale be mailed to it at its mailing
address, as set forth above.
7.7 Survival. Trustor agrees that all agreements made
hereunder shall survive until the termination and release of this Deed of Trust,
unless otherwise set forth herein.
7.8 Usury Prohibited. If, from any circumstances whatever,
payment or performance of any provision of this Deed of Trust or of any secured
obligations, at the time performance of the provision shall be due, shall
require a payment in excess of that permitted by any applicable law, the
obligations to be paid or performed shall be reduced to the limit allowed by
law, so that in no event shall any exaction be possible under this Deed of
Trust, or any obligations or other agreement given in connection with it, that
is in excess of any limitation of law. By acceptance of this Deed of Trust,
Beneficiary expressly waives the right to demand any excess. The provisions of
this paragraph shall control every other provision of the Note, this Deed of
Trust and any other instrument given by or on behalf of Trustor to Beneficiary
as security for the obligations of Trustor.
7.9 Time is of the Essence. Time is of the essence of this
Deed of Trust. By accepting payment of any sums secured by this Deed of Trust
(or the performance of any of Trustor's other obligations) after its due date,
Beneficiary shall not be deemed to have waived its right either to require
prompt payment when due of all other sums secured, and prompt performance of
Trustor's obligations; or to declare default for failure to timely pay or
perform.
7.10 Modification of Terms of Payment. Without affecting the
obligation of Trustor to pay and perform as required under this Deed of Trust,
without affecting the personal liability of any person for payment of the
secured indebtedness, and without affecting the lien or priority of the lien of
this Deed of Trust on the Collateral, Beneficiary may, at its option, extend the
time for payment of all or part of the indebtedness, reduce the payments
thereon, give partial releases of any parts of the Collateral from the lien,
terms and provisions of this Deed of Trust, release any person liable on any of
the indebtedness, accept a renewal note, modify the terms of the indebtedness,
take or release other or additional security, or join in any extension or
subordination
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<PAGE> 27
agreement, or direct Trustee to release from this Deed of Trust any part of the
Collateral. Any such action by Beneficiary or by Trustee at Beneficiary's
direction may be taken without the consent of any junior lienholder, and shall
not affect the priority (which shall be unimpaired) of this Deed of Trust over
any junior lien.
7.11 Multiple Party Beneficiary. If Beneficiary hereto is at
any time more than one person or entity, all such persons shall jointly arrange
among themselves for the appointment of one person or entity to receive all
notices on behalf of such persons and entities, to execute any and all
documents, consents and instruments required to be executed by Beneficiary under
the terms of the Note or this Deed of Trust and to take any and all action
required or permitted to the holder of the Note.
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<PAGE> 28
ARTICLE 8. TRUSTOR ACTIONS: Notwithstanding any other provision of this Deed of
Trust, without Beneficiary's consent, Trustor shall have the right to: (1) take
any action necessary for Hazardous Materials remediation of the Trust Property;
(2) modify the Trust Property for any tenant subsequent to Ellis Metals; and (3)
re-lease the Trust Property to any tenant subsequent to Ellis Metals; and any
action by Ellis Metals regarding the Trust Property will not be deemed a default
by Trustor of any provision of this Deed of Trust.
IN WITNESS WHEREOF, the undersigned has executed this Deed of
Trust, Assignment of Rents and Security Agreement effective the date first above
written.
TRUSTOR:
METAL MANAGEMENT REALTY, INC., an Arizona
corporation
By: /s/ Metal Management Realty, Inc.
----------------------------------
Its:
---------------------------------
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<PAGE> 29
STATE OF ARIZONA )
)
County of Maricopa )
The foregoing instrument was signed and acknowledged before me
this 11th day of April, 1996, by ___________________, the ______________________
of METAL MANAGEMENT REALTY, INC., an Arizona corporation, on behalf of the
corporation.
________________________________________
Notary Public
My Commission Expires:
______________________
EXHIBIT A - LEGAL DESCRIPTION
29
<PAGE> 1
Exhibit 10.34
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 1 WARRANT 150,000 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Empire Metals, Inc. is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 150,000 shares (the "Shares") of the Company's Common Stock at a
purchase price of $4.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
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<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
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<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
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<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
-----------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
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<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_____________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_____________________________________
[Name]
___________________________ _____________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
(Please Print)
________________________________________________________________________________
Dated: _______________, 19____.
Holder's Signature: _______________________________________
Holder's Address: _______________________________________
_______________________________________
Signature Guaranteed: ________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.35
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 2 WARRANT 187,740 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Empire Metals, Inc. is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 187,740 shares (the "Shares") of the Company's Common Stock at a
purchase price of $4.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
-------------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
____________________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
____________________________________________
[Name]
__________________________ ____________________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.36
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 3 WARRANT 180,000 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Copperstate Metals, Inc. is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 180,000 shares (the "Shares") of the Company's Common Stock at a
purchase price of $4.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
-2-
<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
-----------------------------------
Name: Gerard M. Jacobs
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.37
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 4 WARRANT 41,160 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Donald F. Moorehead is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 41,160 shares (the "Shares") of the Company's Common Stock at a
purchase price of $4.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
-2-
<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
---------------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.38
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 5 WARRANT 41,100 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received George O. Moorehead is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 41,100 shares (the "Shares") of the Company's Common Stock at a
purchase price of $4.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
-2-
<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
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<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
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<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
---------------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
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<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.39
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 6 WARRANT 100,000 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Empire Metals, Inc. is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 100,000 shares (the "Shares") of the Company's Common Stock at a
purchase price of $6.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
----------------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.40
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 7 WARRANT 125,160 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Empire Metals, Inc. is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 125,160 shares (the "Shares") of the Company's Common Stock at a
purchase price of $6.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
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<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
----------------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the
Stock may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
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<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.41
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 8 WARRANT 120,000 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Copperstate Metals, Inc. is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 120,000 shares (the "Shares") of the Company's Common Stock at a
purchase price of $6.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
-----------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.42
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 9 WARRANT 27,440 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received Donald F. Moorehead is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 27,440 shares (the "Shares") of the Company's Common Stock at a
purchase price of $6.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
-----------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.43
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
No. 10 WARRANT 27,400 Shares
To Purchase Shares of Common Stock of
General Parametrics Corporation
THIS CERTIFIES that, for value received George O. Moorehead is
entitled, upon the terms and subject to the conditions hereinafter set forth, to
purchase from General Parametrics Corporation, a Delaware corporation (the
"Company"), that number of fully paid and nonassessable shares of the Company's
Common Stock at the purchase price per share as set forth in Section 1 below
("Exercise Price"). The number of shares and Exercise Price are subject to
adjustment as provided in Section 10 hereof.
1. Number of Shares; Exercise Price; Term.
(a) Subject to adjustments as provided herein, this Warrant is
exercisable for 27,400 shares (the "Shares") of the Company's Common Stock at a
purchase price of $6.48 per share.
(b) Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable during the term commencing on the date hereof and
ending on the fifth anniversary of the date hereof and shall be void thereafter.
2. Title to Warrant. This Warrant and all rights hereunder are
transferable, in whole or in part, but only with the prior written consent of
the Company. Transfers shall occur at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
3. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the registered holder hereof, in whole or in part, at any
time, or from time to time, during the term hereof as described in Section l
above, by the surrender of this Warrant and the Notice of Exercise annexed
hereto duly completed and executed on behalf of the holder hereof, at the office
of the Company in Berkeley, California (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), upon
payment in cash or check acceptable to the Company of the purchase price of the
shares thereby purchased whereupon the holder of this Warrant shall be entitled
to receive a certificate for the number of shares so purchased and, if this
Warrant is exercised in part, a new Warrant for the unexercised portion of this
Warrant. The Company agrees that, upon exercise of this Warrant in accordance
with the terms hereof, the shares so purchased shall be deemed to be issued to
such holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been exercised.
<PAGE> 2
Certificates for shares purchased hereunder and, on partial exercise of
this Warrant, a new Warrant for the unexercised portion of this Warrant shall be
delivered to the holder hereof as promptly as practicable after the date on
which this Warrant shall have been exercised.
The Company covenants that all shares which may be issued upon the
exercise of rights represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, be fully paid and
nonassessable and free from all taxes, liens and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which such holder would otherwise be
entitled, such holder shall be entitled, at its option, to receive either (i) a
cash payment equal to the excess of fair market value for such fractional share
above the Exercise Price for such fractional share (as mutually determined by
the Company and the holder) or (ii) a whole share if the holder tenders the
Exercise Price for one whole share.
5. Charges, Taxes and Expenses. Issuance of certificates for shares
upon the exercise of this Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificates, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the holder
of this Warrant or in such name or names as may be directed by the holder of
this Warrant (with the prior written consent of the Company); provided, however,
that in the event certificates for shares are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof and the Notice of Exercise duly completed and
executed and stating in whose name and certificates are to be issued; and
provided further, that such assignment shall be subject to applicable laws and
regulations. Upon any transfer involved in the issuance or delivery of any
certificates for shares of the Company's securities, the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. No Rights as Shareholders. This Warrant does not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
7. Exchange and Registry of Warrant. The Company shall maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and
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<PAGE> 3
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor and dated as of such cancellation, in lieu of this
Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments and Termination of Rights. The purchase price per share
and the number of shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the Company
is not the surviving corporation, then, as part of such merger or consolidation,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the aggregate Exercise Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such merger or consolidation, to which a
holder of the stock deliverable upon exercise of this Warrant would have been
entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder after the merger or
consolidation.
(b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to Common
Stock of, shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the Common
Stock outstanding immediately after such dividend or distribution. This
paragraph shall apply only if and to the extent that, at the time of such event,
this Warrant is then exercisable for Common Stock.
-3-
<PAGE> 4
(e) Other Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend (other than dividends
out of retained earnings), or make any other distribution with respect to Common
Stock payable in stock (other than Common Stock) or other securities or
property, then the Company may, at its option, either (i) decrease the per share
Exercise Price of this Warrant by an appropriate amount based upon the value
distributed on each share of Common Stock as determined in good faith by the
Company's Board of Directors or (ii) provide by resolution of the Company's
Board of Directors that on exercise of this Warrant, the holder hereof shall
receive, in addition to the shares of Common Stock otherwise receivable on
exercise hereof, the same number and kind of stock, other securities and
property which such holder would have received had the holder held the shares of
Common Stock receivable on exercise hereof on and before the record date for
such dividend or distribution. This paragraph shall apply only if and to the
extent that, at the time of such event, this Warrant is then exercisable for
Common Stock.
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to 10(c) or 10(d) above, the number of shares
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Executive
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was calculated
and the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this Warrant.
12. Miscellaneous.
(a) Governing Law. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of Delaware and for all purposes shall be construed in accordance
with and governed by the laws of said state, without giving effect to the
conflict of laws principles.
(b) Restrictions. THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
(c) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the prevailing
party shall be entitled to reasonable attorneys' fees and expenses incurred in
enforcing this Warrant.
-4-
<PAGE> 5
(d) Amendments. This Warrant may be amended and the observance
of any term of this Warrant may be waived only with the written consent of the
Company and the holders hereof.
(e) Notice. Any notice required or permitted hereunder shall
be deemed effectively given upon personal delivery to the party to be notified
or upon deposit with the United States Post Office, by certified mail, postage
prepaid and addressed to the party to be notified at the address indicated below
for the Company, or at the address for a holder set forth in the registry
maintained by the Company pursuant to Section 7, such party, or at such other
address as such other party may designate by ten-day advance written notice.
-5-
<PAGE> 6
IN WITNESS WHEREOF, General Parametrics Corporation has caused this
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 11, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ Gerard M. Jacobs
----------------------------
Name: Gerard M. Jacobs,
President
Address: 1250 Ninth Street
Berkeley, CA 94710
-6-
<PAGE> 7
NOTICE OF EXERCISE
To: General Parametrics Corporation
1. The undersigned hereby elects to purchase _______ shares of Common
Stock ("Stock") of General Parametrics Corporation (the "Company") pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price and any transfer taxes payable pursuant to the terms of the Warrant,
together with an investment Representation Statement in form and substance
satisfactory to legal counsel to the Company.
2. The shares of Stock to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Stock. The undersigned believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Stock.
3. The undersigned understands that the shares of Stock are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the instruments evidencing the Stock may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE> 8
5. Please issue a certificate or certificates representing said shares
of Stock in the name of the undersigned:
_______________________________________
[Name]
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
_______________________________________
[Name]
___________________________ _______________________________________
[Date] [Signature]
-2-
<PAGE> 9
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
________________________________________________________________________________
(Please Print)
Dated: ___________________, 19___.
Holder's Signature: ________________________________________
Holder's Address: ________________________________________
________________________________________
Signature Guaranteed: ___________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE> 1
Exhibit 10.44
February 16, 1996
CONTRACT OF SALE
This Agreement is entered into by and among HAROLD RUBENSTEIN, BEVERLY
RUBENSTEIN, THE RUBENSTEIN FAMILY TRUST, and H & S BROADWAY, an Arizona general
partnership (collectively referred to as "Seller") and GENERAL PARAMETRICS
CORPORATION, a Delaware corporation ("Purchaser").
W I T N E S S E T H :
FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:
ARTICLE I
PROPERTY
The conveyance by Seller to Purchaser shall include the following:
a. that certain tract or parcel of land situated at 1800 North
Stone Avenue in Tucson, Pima County, Arizona, said tract being more
particularly described on Exhibit "A" attached hereto and made a part
hereof, together with all and singular the rights and appurtenances
pertaining to such property, including any right, title and interest of
Seller in and to adjacent strips or gores, streets, alleys or
rights-of-way and all rights of ingress and egress thereto (the
property described in this clause is herein referred to collectively as
the "Stone Parcel");
b. that certain tract or parcel of land situated at 1804 South
Euclid Avenue in Tucson, Pima County, Arizona, said tract being more
particularly described on Exhibit "B" attached hereto and made a part
hereof, together with all and singular the rights and appurtenances
pertaining to such property, including any right, title and interest of
Seller in and to adjacent strips or gores, streets, alleys or
rights-of-way and all rights of ingress and egress thereto (the
property described in this clause is herein referred to collectively as
the "Euclid Parcel");
c. the buildings and other improvements on the Stone Parcel or
Euclid Parcel, as appropriate (the property described in this clause is
herein referred to collectively as the "Improvements");
d. the personal property owned by Seller upon the Stone Parcel
or Euclid Parcel, as appropriate, within the Improvements, as
appropriate, including specifically, without limitation, heating,
ventilation and air conditioning systems and equipment, appliances,
furniture, carpeting, draperies and curtains, tools and supplies, and
other items of personal property (excluding cash) used in connection
with the operation of the parcel and Improvements (the property
described in this clause is herein referred to collectively as the
"Personal Property");
<PAGE> 2
e. all of Seller's right, title and interest in the written
agreement by which the Stone Parcel is leased to Ellis Metals, Inc.
(the property described in this clause is herein referred to
collectively as the "Lease");
f. all of Seller's right, title and interest in and to all
assignable warranties and guaranties (express or implied) issued to
Seller in connection with the Stone Parcel or Euclid Parcel, as
appropriate (the property described in this clause is sometimes herein
referred to collectively as the "Intangibles").
The Stone Parcel and Euclid Parcel together with the Improvements,
Personal Property, Lease, and Intangibles pertaining to such parcel(s), as
appropriate, are hereinafter sometimes referred to collectively as the "Subject
Property."
ARTICLE II
PURCHASE PRICE
1. Stone Parcel. The purchase price to be paid by Purchaser to Seller
for the Stone Parcel and the Improvements, Personal Property, Lease and
Intangibles pertaining to such parcel, shall be $647,059, payable as follows:
a. $100,000 of the total purchase price shall be payable in
cash at closing.
b. The balance of the purchase price shall be paid by
Purchaser's execution and delivery at the closing of a promissory note
(the "Note") payable to Seller in the amount of $547,059.
2. Euclid Parcel. The purchase price to be paid by Purchaser to Seller
for the Euclid Parcel and the Improvements, Personal property, and Intangibles
pertaining to such parcel, shall be $452,941, payable as follows:
a. $50,000 of the total purchase price shall be payable in
cash at closing.
b. The balance of the purchase price shall be paid by
Purchaser's execution and delivery at the closing of a promissory note
(the "Note") payable to Seller in the amount of $402,941.
3. Promissory Notes. Each of the promissory notes referenced in
paragraph A and B shall provide for and be secured as follows:
a. The Note shall bear interest at the rate of nine percent
(9%) per annum.
b. The principal balance of the Note shall be due and payable
in full on the third (3rd) anniversary of the date of execution of the
Note in an amount equal to the original face amount of the Note.
Interest, computed on the unpaid principal balance of the Note, shall
be due and payable in monthly installments as it accrues, the first of
such installments to be due and payable on the first (1st) day of the
second month following the closing, and an installment of interest to
be due and payable monthly on the first day of each succeeding month
until maturity of the Note when all then accrued but unpaid interest on
the outstanding principal balance of the note shall be finally due and
payable;
c. The Note shall provide that it may be prepaid at any time,
in whole or in part, without premium or penalty, and that interest
shall immediately cease to accrue on any part of the note so prepaid;
any partial prepayment shall be applied to the next maturing
installment of principal due on the Note;
<PAGE> 3
d. The Note shall be secured by a deed of trust (the "Deed of
Trust") which encumbers the Subject Property, which Deed of Trust will
be executed and delivered at the Closing;
e. Both the Note and the Deed of Trust shall provide that upon
the occurrence of a monetary default thereunder Seller must provide
Purchaser with written notice thereof and permit Purchaser to have
twenty (20) days from the date of the notice within which to cure the
same before exercising any of its remedies thereunder and that upon the
occurrence of a nonmonetary default thereunder Seller must provide
Purchaser with written notice thereof and permit Purchaser to have
thirty (30) days from the date of the notice within which to cure the
same before exercising any of its remedies thereunder;
f. The Note and Deed of Trust shall each contain a provision
requiring that if the holder of the Note is at any time more than one
person or entity all such persons shall jointly arrange among
themselves for the appointment of one person or entity to receive all
notices on behalf of such persons and entities, to execute any and all
documents, consents and instruments required to be executed by the
holder of the Note under the terms of the Note or Deed of Trust and to
take any and all action required or permitted to the holder of the
Note; and
g. Both the Note and the Deed of Trust shall otherwise be in
form and substance satisfactory to counsel for Purchaser and Seller.
ARTICLE III
PRE-CLOSING OBLIGATIONS OF SELLER
Within ten (10) days from the date of execution of this Agreement,
Seller shall furnish to Purchaser, at Seller's sole cost and expense (except for
item i, the cost of which shall be split equally between Purchaser and Seller),
each of the following (collectively, the "Due Diligence Items"):
a. Current commitments (the "Title Commitments") for the
issuance of an owner's policy of title insurance to the Purchaser from
____________________________________________ (the "Title Company"),
together with good and legible copies of all documents constituting
exceptions to Seller's title as reflected in the Title Commitments;
b. A list of all service contracts, warranties, management,
maintenance, or other agreements affecting the Subject Property, if
any, together with copies of same. Seller agrees not to enter into any
additional contracts, warranties, or agreements prior to closing which
would be binding on Purchaser and which cannot be cancelled by
Purchaser upon thirty (30) days written notice without cost, penalty,
or obligation unless such service contracts or other agreements are
approved in writing by Purchaser;
c. Copies of all licenses, permits, applications,
authorizations, certificates of occupancy, governmental approvals and
other entitlements relating to the Subject Property and the operation
thereof, if any;
d. True and correct copies of the tax statements covering the
Subject Property or any part thereof for each of the two (2) years
prior to the current year and, if available, for the current year;
e. True and correct copies of any existing option contracts,
construction contracts, and architectural contracts relating to all or
any portion of the Subject Property;
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<PAGE> 4
f. A schedule of all Personal Property (specifying if any such
Personal Property is leased);
g. A list of any unwritten agreements affecting the Subject
Property to which Seller is a party or of which Seller has knowledge;
h. All other information of any kind whatsoever in the
possession of Seller and pertaining to the ownership and operation of
the Subject Property; and
i. No later than January 24, 1996, Seller shall provide
Purchaser with updated as-built surveys prepared by a licensed
professional engineer or surveyor acceptable to Purchaser, which
surveys shall: (a) include a metes and bounds legal description of the
Subject Property; (b) accurately show all improvements, encroachments
and uses and accurately show all easements and encumbrances visible or
listed on the title commitment (identifying each by recording reference
if applicable); (c) recite the exact number of square feet included
within the Subject Property and the dimensions of the surface perimeter
of all Improvements; (d) state whether the Subject Property (or any
portion thereof) lies within a flood zone or flood prone area; (e)
contain a certificate verifying that the survey was made on the ground,
that the survey is correct, that there are no improvements,
encroachments, easements, uses or encumbrances except as shown on the
survey plat, that the area represented for the Subject Property and the
Improvements has been certified by the surveyor as being correct and
that the Subject Property does not lie within any flood zone or flood
prone area, except as indicated thereon, the Subject Property has
access to public streets as indicated thereon; and (f) otherwise be in
form satisfactory to Purchaser.
Notwithstanding anything to the contrary contained herein, Purchaser
hereby agrees that, in the event Purchaser terminates this Agreement for any
reason, then, at the request of Seller, Purchaser shall return to Seller all Due
Diligence Items which have been delivered by Seller to Purchaser in connection
with Purchaser's inspection of the Subject Property or shall destroy the Due
Diligence Items.
ARTICLE IV
TITLE INSPECTION PERIOD
Purchaser shall have a period of thirty (30) days following the date on
which Purchaser receives the last of the items to be provided to Purchaser
pursuant to subparagraph (a) of Article III hereinabove in which to review and
approve each such item (the "Title Review Period"). If the information to be
provided pursuant to subparagraph (a) of Article III reflect or discloses any
defect, exception or other matter affecting the Subject Property ("Title
Defects") that is unacceptable to Purchaser, then prior to the expiration of the
Title Review Period, Purchaser shall provide Seller with written notice of
Purchaser's objections. Seller may, at its sole option, elect to cure or remove
the objections raised by Purchaser; provided, however, that Seller shall have no
obligation to do so. Should Seller elect to attempt to cure or remove the
objections, Seller shall have ten (10) days from the date of Purchaser's written
notice of objections (the
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<PAGE> 5
"Cure Period") in which to accomplish the cure. In the event Seller either
elects not to cure or remove the objections or is unable to accomplish the cure
prior to the expiration of the Cure Period, then Seller shall so notify
Purchaser in writing specifying which objections Seller does not intend to cure,
and then Purchaser shall be entitled, as Purchaser's sole and exclusive
remedies, either to terminate this Agreement by providing written notice of
termination to Seller within ten (10) days from the date on which Purchaser
receives Seller's no-cure notice or waive the objections and close this
transaction as otherwise contemplated herein. If Purchaser shall fail to notify
Seller in writing of any objections to the state of Seller's title to the
Subject Property as shown by the Title Commitments, then Purchaser shall be
deemed to have no objections to the state of Seller's title to the Subject
Property as shown by the Title Commitments, and any exceptions to Seller's title
which have not been objected to by Purchaser and which are described in the
Title Commitment shall be considered to be "Permitted Exceptions." It is
understood and agreed that the Subject Property will be conveyed to Purchaser
subject to the Lease, and that such Lease shall be a Permitted Exception. It is
further understood and agreed that any Title Defects which have been objected to
by Purchaser and which are subsequently waived by Purchaser shall be Permitted
Exceptions.
ARTICLE V
INSPECTION PERIOD
Purchaser, at Purchaser's sole expense, shall have the right to conduct
any and all studies, audits, analyses, inspections, investigations, surveys,
appraisals and/or tests of the Subject Property that Purchaser deems appropriate
or necessary for a period of time expiring upon the Closing (the "Inspection
Period"). Purchaser and Purchaser's duly authorized agents or representatives
shall be permitted to enter upon the Subject Property at all reasonable times
during the Inspection Period in order to conduct environmental assessments,
engineering studies, soil tests and any other inspections and/or tests that
Purchaser may deem necessary or advisable. Purchaser further agrees to indemnify
and hold Seller harmless from any claims or damages, including reasonable
attorneys' fees, resulting from Purchaser's inspection of the Subject Property.
If Purchaser is not satisfied by its environmental assessment of the Stone
Parcel and/or Euclid Parcel, Purchaser may terminate this Agreement with respect
to the Stone Parcel and/or Euclid Parcel in its sole and absolute discretion at
any time prior to the expiration of the
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<PAGE> 6
Inspection Period. If this Agreement is terminated as to one parcel, but not as
to the other parcel, the remaining parcel will be subject to the terms of the
Agreement. If Purchaser shall provide written notice of cancellation regarding
both parcels prior to the expiration of the Inspection Period, then this
Agreement shall be cancelled, Purchaser shall return to Seller all of the Due
Diligence Items provided by Seller, and thereafter neither Seller nor Purchaser
shall have any continuing obligations one unto the other.
With regard to the Stone Parcel, if based upon Purchaser's
environmental assessments, remediation is necessary in the opinion of
Purchaser's environmental engineers and legal counsel, and Purchaser has elected
to proceed with the purchase of the Stone Parcel, then Purchaser shall pay the
first $75,000 of remediation costs and expenses; and Seller shall indemnify and
hold harmless Purchaser from and against all remediation costs and expenses in
excess of $75,000; provided, however, that Seller's liability under this
provision shall not exceed the amount of $75,000.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Seller represents and warrants to Purchaser that Seller will have at
closing good and indefeasible fee simple title to the Subject Property free and
clear of all mortgages, liens, encumbrances, covenants, restrictions,
rights-of-way, easements, and any other matters affecting title to the Subject
Property except for the Permitted Exceptions.
Seller further covenants and agrees with Purchaser that, from the date
hereof until the closing, Seller shall not sell, assign, or convey any right,
title, or interest whatsoever in or to the Subject Property, or create or permit
to exist any lien, security interest, easement, encumbrance, charge, or
condition affecting the Subject Property (other than the Permitted Exceptions)
without promptly discharging the same prior to closing.
Seller hereby further represents and warrants to Purchaser as follows:
a. There are no actions, suits, or proceedings pending or, to
the best of Seller's knowledge, threatened against Seller or otherwise
affecting any portion of the Subject Property, at law or in equity, or
before or by any federal, state, municipal, or other governmental
court, department, commission, board, bureau, agency, or
instrumentality, domestic or foreign;
b. The execution by Seller of this Agreement and the
consummation by Seller of the sale contemplated hereby have been duly
authorized, and do not, and, at the closing date, will not, result in a
breach of any of the terms or provisions of, or
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<PAGE> 7
constitute a default under any indenture, agreement, instrument, or
obligation to which Seller is a party or by which the Subject Property
or any portion thereof is bound, and do not, and at the closing date
will not, constitute a violation of any regulation affecting the
Subject Property;
c. From the date of execution of this Agreement through the
date of closing, Seller shall continue to maintain the Subject Property
in its present condition, subject to ordinary wear and tear and Article
XII hereof; Seller shall not remove any fixtures, equipment,
furnishings or other personal property from the Subject Property, nor
shall Seller in any manner neglect the Subject Property;
d. At all times from the date hereof through the date of
closing, Seller shall cause to be maintained in force fire and extended
coverage insurance upon the Subject Property, and public liability
insurance with respect to damage or injury to person or property
occurring on the Subject Property in at least such amounts as are
maintained by Seller on the date hereof;
e. Seller has not received any notice of any violation of any
ordinance, regulation, law, or statute of any governmental agency
pertaining to the Subject Property or any portion thereof;
f. Seller has not received any notices from any party of any
defects or inadequacies in the Subject Property or any part thereof
which would adversely affect the condition of the Subject Property or
the insurability of the Subject Property or the premiums for the
insurance therefor;
g. That, at closing, there will be no unpaid bills, claims, or
liens in connection with any construction or repair of the Subject
Property except for ones which will be paid in the ordinary course of
business or which have been bonded around or the payment of which has
otherwise been adequately provided for to the complete satisfaction of
Purchaser;
h. From the date of execution of this Agreement through the
date of closing, Seller will not enter into any new lease of any
portion of the Subject Property or modify any existing lease covering
space in the Subject Property without first obtaining the written
consent of Purchaser;
i. To Seller's best knowledge, there are no material defects
of any kind or nature in any of the improvements located on the parcels
or comprising the Subject Property;
j. To the best of its knowledge, Seller is and has at all
times been in compliance with all Environmental, Health and Safety Laws
(as defined herein) governing the Subject Property, including, without
limitation, Environmental, Health and Safety Laws with respect to
discharges into the ground water, surface water and soil, emissions
into the ambient air, and generation, accumulation, storage, treatment,
transportation, transfer, labeling, handling, manufacturing, use,
spilling, leaking, dumping, discharging, release or disposal of
Hazardous Substances (as defined herein), or other Waste (as described
herein). Seller is not currently liable for any penalties, fines or
forfeitures for failure to comply with any Environmental, Health and
Safety Laws. To the best of its knowledge, Seller is in full compliance
with all notice, record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied with all
informational requests or demands arising under the Environmental,
Health and Safety Laws;
k. To the best of its knowledge, Seller has obtained, or
caused to be obtained, and is in full compliance with, all licenses,
certificates, permits, approvals and registrations (collectively
"Licenses") required by the Environmental, Health and Safety Laws for
the ownership of the Subject Property, including, without limitation,
all air emission, water discharge, water use and solid waste, hazardous
waste and other Waste generation, transportation, transfer, storage,
treatment or disposal Licenses, and Seller
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<PAGE> 8
is in full compliance with all the terms, conditions and requirements
of such Licenses, and copies of such Licenses have been provided to
Purchaser. There are no administrative or judicial investigations,
notices, claims or other proceedings pending or, to the best of
Seller's knowledge, threatened by any Governmental Authority or third
parties against the Subject Property which question the validity or
entitlement of Seller to any License required by the Environmental,
Health and Safety Laws for the ownership of the Subject Property or
wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect on Seller, or which would impose any liability
upon Purchaser in the event that the sale contemplated by this
Agreement closes;
l. Seller has not received and is not aware of any
non-compliance order, warning letter, notice of violation, claim, suit,
action, judgment, or administrative or judicial proceeding pending
against or involving the Subject Property issued by any Governmental
Authority or third party with respect to any Environmental, Health and
Safety Laws in connection with the ownership by Seller of the Subject
Property which has not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not impose
any obligation, burden or continuing liability on Purchaser in the
event that the sale contemplated by this Agreement closes, or which
could have a Material Adverse Effect on Seller;
m. To the best of its knowledge, Seller is in full compliance
with, and is not in breach of or default under any applicable writ,
order, judgment, injunction, governmental communication or decree
issued pursuant to the Environmental, Health and Safety Laws and no
event has occurred or is continuing which, with the passage of time or
the giving of notice or both, would constitute such non-compliance,
breach or default thereunder, or affect the Subject Property;
n. To the best of its knowledge, Seller has not generated,
manufactured, used, transported, transferred, stored, handled, treated,
spilled, leaked, dumped, discharged, released or disposed, nor has
Seller allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat, spill,
leak, dump, discharge, release or dispose of, Hazardous Substances or
other waste to or at the Subject Property other than a location on the
Subject Property lawfully permitted to receive such Hazardous
Substances or other waste for such purposes, nor has Seller performed,
arranged for or allowed by any method or procedure such generation,
manufacture, use, transportation, transfer, storage, treatment,
spillage, leakage, dumping, discharge, release or disposal in
contravention of any Environmental, Health and Safety Laws. To the best
of its knowledge, Seller has not generated, manufactured, used, stored,
handled, treated, spilled, leaked, dumped, discharged, released or
disposed of, or allowed or arranged for any third parties to generate,
manufacture, use, store, handle, treat, spill, leak, dump, discharge,
release or dispose of, Hazardous Substances or other waste upon the
Subject Property, except as permitted by law. For purposes of this
paragraph, the term "Hazardous Substances" shall be construed broadly
to include any toxic or hazardous substance, material, or waste, and
any other contaminant, pollutant or constituent thereof, whether
liquid, solid, semi-solid, sludge and/or gaseous, including without
limitation, chemicals, compounds, by-products, pesticides, asbestos
containing materials, petroleum or petroleum products, and
polychlorinated biphenyls, the presence of which requires investigation
or remediation under any Environmental, Health and Safety Laws or which
are or become regulated, listed or controlled by, under or pursuant to
any Environmental Health and Safety Laws, including, without
limitation, the United States Department of Transportation Table (49
CFR 172, 101) or by the Environmental Protection Agency as hazardous
substances (40 CFR Part 302) and any amendments thereto; the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendment and Reauthorization Act of
1986, 42 U.S.C. Section 9601, et seq. (hereinafter collectively
"CERCLA"); the Solid Waste Disposal Act, as amended by the Resource
Conversation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq.
(hereinafter, collectively "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the
Clean Water Act, as amended, 33 U.S.C. Section 1311, et seq.; the Clean
Air Act, as amended (42 U.S.C. Section 7401-7642); Toxic Substances
Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide
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<PAGE> 9
Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the Emergency
Planning and Community Right-to-Know Act of 1986 as amended, 42 U.S.C.
Section 11001, et seq. (Title III of SARA) ("EPCRA"); the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et
seq. ("OSHA"); any similar state statute, or any future amendments to,
or regulations implementing such statutes, laws, ordinances, codes,
rules, regulations, orders, rulings, or decrees, or which has been or
shall be determined or interpreted at any time by any Governmental
Authority to be a hazardous or toxic substance regulated under any
other statute, law, regulation, order, code, rule, order, or decree.
For purposes of this paragraph, the term "Waste" shall be construed
broadly to include agricultural wastes, biomedical wastes, biological
wastes, bulky wastes, construction and demolition debris, garbage,
household wastes, industrial solid wastes, liquid wastes, recyclable
materials, sludge, solid wastes, special wastes, used oils, white
goods, and yard trash;
o. To the best of its knowledge, Seller has not caused, or
allowed to be caused or permitted, either by action or inaction, a
Release or Discharge, or threatened Release or Discharge, of any
Hazardous Substance on, into or beneath the surface of any parcel of
the Subject Property. To the best of Seller's knowledge, there has not
occurred, nor is there presently occurring, a Release or Discharge, or
threatened Release or Discharge, of any Hazardous Substance on, into or
beneath the surface of any parcel of the Subject Property. For purposes
of this Section, the terms "Release" and "Discharge" shall have the
meanings given them in the Environmental, Health and Safety Laws;
p. To the best of its knowledge, Seller has not generated,
handled, manufactured, treated, stored, used, shipped, transported,
transferred, or disposed of, nor has it allowed or arranged, by
contract, agreement or otherwise, for any third parties to generate,
handle, manufacture, treat, store, use, ship, transport, transfer or
dispose of, any Hazardous Substance or other Waste to or at the Subject
Property which, pursuant to CERCLA or any similar state law (i) has
been placed on the National Priorities List or its state equivalent; or
(ii) the Environmental Protection Agency or the relevant state agency
has notified Seller that it has proposed or is proposing to place on
the National Priorities List or its state equivalent. Seller has not
received notice, and Seller has no knowledge of any facts which could
give rise to any notice, that Seller is a potentially responsible party
for a federal or state environmental cleanup site or for corrective
action under CERCLA, RCRA or any other applicable Environmental Health
and Safety Laws with respect to the Subject Property. To the best of
its knowledge, Seller has not submitted nor was required to submit any
notice pursuant to Section 103(c) of CERCLA with respect to the Subject
Property. Seller has not received any written or oral request for
information in connection with any federal or state environmental
cleanup site, or in connection with any of the real property or
premises where Seller has transported, transferred or disposed of other
Wastes. Seller has not been required to and has not undertaken any
response or remedial actions or clean-up actions of any kind at the
request of any Governmental Authorities or at the request of any other
third party. To the best of its knowledge, Seller has no liability
under any Environmental, Health and Safety Laws for personal injury,
property damage, natural resource damage, or clean up obligations;
q. Except as disclosed to Purchaser, Seller does not use, nor
has it used, any Aboveground Storage Tanks or Underground Storage
Tanks, and, to the best of its knowledge, there are not now nor have
there ever been any Underground Storage Tanks on the Subject Property.
For purposes of this paragraph, the terms "Aboveground Storage Tanks"
and "Underground Storage Tanks" shall have the meanings given them in
Section 6901 et seq., as amended, of RCRA, or any applicable state or
local statute, law, ordinance, code, rule, regulation, order ruling, or
decree governing Aboveground Storage Tanks or Underground Storage
Tanks;
r. Schedule "C" identifies (i) all environmental audits,
assessments or occupational health studies undertaken by Seller or its
agents or, to the knowledge of Seller or the Seller Shareholders,
undertaken by any Governmental Authority, or any third party, relating
to or affecting the Subject Property; (ii) the results of any ground,
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<PAGE> 10
water, soil, air or asbestos monitoring undertaken by Seller or its
agents or, to the knowledge of Seller, undertaken by any Governmental
Authority or any third party, relating to or affecting the Subject
Property; (iii) all written communications between Seller and any
Governmental Authority arising under or related to Environmental,
Health and Safety Laws; and (iv) all citations issued under OSHA, or
similar state or local statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, relating to or affecting the
Subject Property;
s. Except as disclosed to Purchaser, to the best of Seller's
knowledge, it has operated and continues to operate the Subject
Property in compliance with all Environmental, Health & Safety Laws
governing the handling, use and exposure to and disposal of asbestos or
asbestos-containing materials. Except as disclosed to Purchaser, there
are no claims, actions, suits, governmental investigations or
proceedings before any Governmental Authority or third party pending,
or, to the best of Seller's knowledge, threatened against or directly
affecting the Subject Property or relating to the use, handling or
exposure to and disposal of asbestos or asbestos-containing materials
in connection with the Subject Property; and
t. As used in this Agreement, "Environmental, Health and
Safety Laws" means all federal, state, regional or local statutes,
laws, rules, regulations, codes, orders, plans, injunctions, decrees,
rulings, and changes or ordinances or judicial or administrative
interpretations thereof, whether currently in existence or hereafter
enacted or promulgated, any of which govern (or purport to govern) or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste or occupational health and safety, as any of
these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation, RCRA, CERCLA, the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, the
Clean Air Act, the Clean Water Act, FIFRA, EPCRA and OSHA.
All of the foregoing representations and warranties of Seller are made by Seller
both as of the date hereof and as of the date of the closing hereunder and shall
survive the closing hereunder.
Purchaser represents to Seller that, as of the date hereof:
a. Purchaser is duly organized, validly existing and in good
standing under the laws of the state of its organization; and
b. Except for approval by its Board of Directors and
Shareholders, Purchaser has all the requisite power and authority, has
taken all actions required by its organizational documents and
applicable law, and has obtained all necessary consents, to execute and
deliver this Agreement and to consummate the transactions contemplated
in this Agreement.
The representations and warranties made by Seller and Purchaser shall survive
for a period of one year after the Closing, and upon expiration of such one
year, such representations and warranties shall expire.
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<PAGE> 11
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
The obligation of Purchaser to close this Agreement shall, at the
option of Purchaser, be subject to the following conditions precedent:
a. All of the representations, warranties and agreements of
Seller set forth in this Agreement shall be true and correct in all
material respects as of the date hereof and at closing, and Seller
shall not have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Agreement.
b. There shall be no change in the matters reflected in the
Title Commitments, and there shall not exist any encumbrance or title
defect affecting the Subject Property not described in the Title
Commitment except for the Permitted Exceptions.
c. No material and substantial change shall have occurred with
respect to the Subject Property which would in any way affect the
findings made in the inspection of the Subject Property described in
Article V hereinabove.
d. Purchaser and all parties pursuant to that certain Merger
Agreement dated December 1, 1995, shall have consummated the Closing as
set forth in said Merger Agreement. Said Merger Agreement was entered
into by and among Purchaser, EMCO Recycling Corp., Empire Metals, Inc.,
Copperstate Metals, Inc., Raymond Zack, David Zack, Gerald Zack, George
Moorehead, Donald Moorehead, and Harold Rubenstein.
If any such condition is not fully satisfied by closing, Purchaser may
terminate this Agreement by written notice to Seller whereupon this Agreement
shall be cancelled, and thereafter neither Seller nor Purchaser shall have any
continuing obligations one unto the other.
ARTICLE VIII
CLOSING
The closing hereunder shall take place at the offices of Seller's
counsel in Phoenix, Arizona. The closing shall occur on or before June 30, 1996.
ARTICLE IX
SELLER'S OBLIGATIONS AT CLOSING
At the closing, Seller shall do the following:
a. Deliver to Purchaser special warranty deeds covering the
Subject Property, duly signed and acknowledged by Seller, which deeds
shall be in form reasonably acceptable to Purchaser for recording and
shall convey to Purchaser good and indefeasible fee simple title to the
Subject Property, free and clear of all mortgages, liens,
rights-of-way, easements, and other matters affecting title to the
Subject Property, except for the Permitted Exceptions.
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<PAGE> 12
b. Deliver or cause to be delivered to Purchaser an Owner
Policy of Title Insurance (the "Title Policy") covering the Subject
Property, in the amount of the Purchase Price pertaining to each
parcel, in the form prescribed by the Arizona State Board of Insurance.
Such Title Policy may contain as exceptions only the Permitted
Exceptions and the standard printed exceptions except that: (i) the
exception relating to restrictions against the Subject Property shall
be deleted, except for such restrictions as may be included in the
Permitted Exceptions; (ii) the exception relating to discrepancies,
conflicts, or shortages in area or boundary lines, or any encroachment
or overlapping of improvements which a survey might show shall be
deleted except for shortages in area; and (iii) the exception relating
to standby fees and ad valorem taxes shall except only to taxes owing
for the current year and subsequent assessments for prior years due to
change in land usage or ownership. The additional premium charged by
the Title Company for modifying the survey exception shall be paid by
Purchaser.
c. Deliver a bill of sale and a blanket assignment in form
reasonably acceptable to Purchaser, duly executed and acknowledged by
Seller, conveying and/or assigning to Purchaser the Personal Property
and Intangibles of the Subject Property.
d. Deliver an assignment, in form reasonably acceptable to
Purchaser, duly executed and acknowledged by Seller, assigning all of
Seller's interest in and to the Lease, together with the executed
original of the Lease.
e. Deliver such evidence or other documents that may be
reasonably required by the Title Company evidencing the status and
capacity of Seller and the authority of the person or persons who are
executing the various documents on behalf of Seller in connection with
the sale of the Subject Property.
f. Deliver a non-withholding statement that will satisfy the
requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase price
for payment to the Internal Revenue Service.
g. Deliver to Purchaser all keys to all buildings and other
improvements located on the Subject Property, combinations to any safes
thereon, and security devices therein in Seller's possession.
h. Deliver to Purchaser a certificate executed by Seller
remaking and reaffirming as of the closing all representations and
warranties made by Seller to Purchaser in accordance with the
provisions of Article VI hereinabove.
i. Deliver to Purchaser any other documents or items necessary
or convenient in the reasonable judgment of Purchaser to carry out the
intent of the parties under this Agreement.
ARTICLE X
PURCHASER'S OBLIGATIONS AT CLOSING
At the closing, Purchaser shall deliver to Seller the consideration set
forth in Article II.
ARTICLE XI
COSTS AND ADJUSTMENTS
At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:
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<PAGE> 13
a. Ad valorem taxes for the Subject Property for the current
calendar year shall be prorated as of the date of closing, and Seller
shall pay to Purchaser in cash at closing Seller's pro rata portion of
such taxes. Seller's pro rata portion of such taxes shall be based upon
taxes actually assessed for the current calendar year or, if for any
reason such taxes for the Subject Property have not been actually
assessed, such proration shall be based upon the amount of such taxes
for the immediately preceding calendar year.
b. All other income and ordinary operating expenses for or
pertaining to the Subject Property including, but not limited to,
public utility charges, maintenance, service charges, and all other
normal operating charges of the Subject Property shall be prorated as
of the closing date.
c. All other closing costs (except for the cost of delivering
the Title Policy, the cost of which shall be borne as set forth in
Article IX b), including but not limited to, recording and escrow fees
shall be split equally between Purchaser and Seller; provided, however,
that Seller and Purchaser shall each be responsible for the fees and
expenses of their respective attorneys.
Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Agreement specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.
Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.
ARTICLE XII
DAMAGE OR DESTRUCTION PRIOR TO CLOSING
In the event that the Subject Property should be damaged by any
casualty prior to closing, then if the cost of repairing such damage, as
estimated by an architect or contractor retained pursuant to the mutual
agreement of Seller and Purchaser, is:
a. Less than One Hundred Thousand Dollars ($100,000.00), then
at Purchaser's option, either (i) Seller shall repair such damage as
promptly as is reasonably possible, restoring the damaged property at
least to its condition immediately prior to such damage; and, in the
event such repairs have not been completed prior to closing, then the
closing shall nevertheless proceed as scheduled, and Purchaser may have
the
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<PAGE> 14
Title Company withhold from Seller the funds necessary to make such
repairs until Seller has repaired such damage pursuant to the
provisions hereof, at which time such funds shall be distributed to
Seller or (ii) Purchaser may take an assignment of Seller's proceeds
and a credit for Seller's deductible (as described in paragraph [b]
below) and repair such damage;
or if said cost is:
b. greater than One Hundred Thousand Dollars ($100,000.00),
then, at Purchaser's election, Seller shall pay to Purchaser, at
closing, all insurance proceeds payable for such damage, and the sale
shall be closed without Seller's repairing such damage but with
Purchaser receiving a credit for the amount of any deductible provided
for in the applicable insurance policy, or, if Purchaser does not elect
to accept such insurance proceeds, then either Seller or Purchaser may
elect to terminate this Agreement.
ARTICLE XIII
POSSESSION OF PROPERTY
Possession of the Subject Property free and clear of all uses and
encroachments, except the Permitted Exceptions, shall be delivered to Purchaser
at closing.
ARTICLE XIV
NOTICES
All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Agreement or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in accordance with the provisions of
this paragraph. All notices shall be in writing and delivered to the person to
whom the notice is directed, either in person, by facsimile transmission, or by
United States Mail, as a registered or certified item, return receipt requested.
Notices delivered by mail shall be deemed given when deposited in a post office
or other depository under the care or custody of the United States Postal
Service, enclosed in a wrapper with proper postage affixed, addressed as
follows:
Seller: Harold Rubenstein
Telephone No.:
Facsimile No.:
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<PAGE> 15
With a copy to: Sacks Tierney P.A.
1919 N. Central Avenue
Fourteenth Floor
Phoenix, Arizona 85012-2742
Attn: Rob Kimball
Telephone No.: (602) 240-2603
Facsimile No.: (602) 279-2027
Purchaser: General Parametrics Corporation
7600 Augusta Street
River Forest, Illinois 60305
Attn: Gerard M. Jacobs
Telephone No.: (708) 366-1939
Facsimile No.: (708) 366-0891
With Required Copy to: Meadows, Owens, Collier, Reed, Cousins & Blau,
L.L.P.
3700 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Attn: Fielder F. Nelms, Esq.
Telephone No.: (214) 749-2412
Facsimile No.: (214) 747-3732
ARTICLE XV
REMEDIES
In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, it shall be an event of default
and Purchaser shall have the option (i) to terminate this Agreement by providing
written notice thereof to Seller, in which event the parties hereto shall have
no further liabilities or obligations one unto the other; (ii) to waive any
defect or requirement and close this Agreement; or (iii) sue Seller for specific
performance or for damages; provided, however, that Purchaser's right to obtain
damages hereunder shall be limited to recovery of Purchaser's out-of-pocket
expenses in the event that Seller violates its obligations pursuant to this
Agreement and in no event shall Purchaser have the right to sue for
consequential damages including lost profits or punitive damages.
In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and Seller shall have the option (i) to terminate this
Agreement by providing written notice thereof to Purchaser, in which event the
parties hereto shall have no further liabilities or obligations one unto the
other; (ii) to waive any defect or requirement and close this Agreement; or
(iii) sue Purchaser for specific performance or for damages; provided, however,
that Seller's right to obtain damages hereunder shall be limited to recovery of
Seller's out-of-pocket expenses in the event
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<PAGE> 16
that Purchaser violates its obligations pursuant to this Agreement and in no
event shall Seller have the right to sue for consequential damages including
lost profits or punitive damages.
ARTICLE XVI
ASSIGNMENT
Purchaser may not assign its rights under this Agreement to anyone
other than a Permitted Assignee without first obtaining Seller's prior written
approval. Purchaser may assign its rights under this Agreement to a Permitted
Assignee without prior written consent of Seller. For purposes of this Agreement
a "Permitted Assignee" shall mean any entity controlled by Purchaser. For
purposes of the preceding sentence an entity shall be deemed to be controlled by
a person if such person owns 50% or more of the ownership interest in such
entity or has the right to control 50% or more of such ownership interest
through a contract or otherwise.
In the event that the Stone Parcel or Euclid Parcel is not titled in
the name of Seller, but is titled in the name of a person or entity controlled
by Seller or under common control by Seller, Seller shall use its best efforts
to assign Seller's rights under this Agreement to such person or entity and to
cause such person or entity to assume Seller's obligations under this Agreement.
XVII
INTERPRETATION AND APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with
the laws of the State of Arizona. Where required for proper interpretation,
words in the singular shall include the plural; the masculine gender shall
include the neuter and the feminine, and vice versa. The terms "successors and
assigns" shall include the heirs, administrators, executors, successors, and
assigns, as applicable, of any party hereto.
XVIII
AMENDMENT
This Agreement may not be modified or amended, except by an agreement
in writing signed by the Seller and the Purchaser. The parties may waive any of
the conditions contained
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<PAGE> 17
herein or any of the obligations of the other party hereunder, but any such
waiver shall be effective only if in writing and signed by the party waiving
such conditions and obligations.
ARTICLE XIX
AUTHORITY
Each party executing this Agreement warrants and represents that it is
fully authorized to do so.
ARTICLE XX
ATTORNEYS' FEES
In the event it becomes necessary for either party to file a suit to
enforce this Agreement or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.
ARTICLE XXI
DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs contained in this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
ARTICLE XXII
ENTIRE AGREEMENT
This Agreement (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Agreement
shall be binding upon the parties hereto or shall affect or be effective to
interpret, change, or restrict the provisions of this Agreement.
- 17 -
<PAGE> 18
ARTICLE XXIII
MULTIPLE ORIGINALS ONLY
Numerous copies of this Agreement may be executed by the parties
hereto. Each such executed copy shall have the full force and effect of an
original executed instrument.
ARTICLE XXIV
REAL ESTATE COMMISSION
Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction, and that Seller
has not taken any action which would result in any real estate broker's,
finder's, or other fees or commissions being due and payable to any other party
with respect to the transaction contemplated hereby. Purchaser hereby represents
and warrants to Seller that Purchaser has not contracted or entered into any
agreement with any real estate broker, agent, finder, or any other party in
connection with this transaction, and that Purchaser has not taken any action
which would result in any real estate broker's, finder's, or other fees or
commissions being due or payable to any other party with respect to the
transaction contemplated hereby. Each party hereby indemnifies and agrees to
hold the other party harmless from any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees) resulting to the other party by reason of
a breach of the representation and warranty made by such party herein.
Notwithstanding anything to the contrary contained herein, the indemnities set
forth in this Article XXIV shall survive the closing.
ARTICLE XXV
CONFIDENTIALITY
Except as provided otherwise in this Article XXV, Purchaser and Seller,
for the benefit of each other, hereby agree that prior to the closing neither of
them will release or cause or permit to be released to the public any press
notices, publicity (oral or written) or advertising promotion relating to, or
otherwise publicly announce or disclose or cause or permit to be publicly
announced or disclosed, in any manner whatsoever, the terms, conditions or
substance of this Agreement or the transactions contemplated herein, without
first obtaining the consent of the other party hereto (which shall not be
unreasonably withheld). Seller, being aware that
- 18 -
<PAGE> 19
Purchaser is publicly-held corporation, the securities of which are traded on a
national securities exchange, acknowledges that Purchaser may be compelled by
considerations of legal obligation, fiduciary and public responsibility,
commercial pragmatism and established corporate policy, to issue a public press
release announcing that it has entered into this Agreement and stating the
material terms hereof; Purchaser agrees to send a copy of such press release
directly to Seller not later than the time when Purchaser issues such press
release to the public; and Seller consents to the dissemination of any such
press release and to all such additional statements and disclosures Purchaser
may reasonably make in responding to inquiries arising as a result of any such
press release.
Purchaser shall indemnify and hold Seller harmless, and Seller shall
indemnify and hold Purchaser and the affiliates of Purchaser harmless, from and
against any and all actual direct claims, demands, causes of action, losses,
damages, liabilities, costs and expenses (including, without limitation,
attorneys' fees and disbursements) suffered or incurred by the other party and
proximately caused by a breach by Purchaser or Purchaser's Representatives or
Seller, as the case may be, of the provisions of this Article XXV; but this
Article XXV will not entitle either Purchaser, Seller, Purchaser's affiliates or
Seller's affiliates to recover consequential damages.
It is understood that the foregoing shall not preclude either party
from discussing the substance or any relevant details of the transactions
contemplated in this Agreement on a confidential basis with any of its
attorneys, accountants, professional consultants, financial advisors, rating
agencies, or potential lenders, as the case may be, or prevent either party
hereto from complying with applicable laws, including, without limitation,
governmental regulatory, disclosure, tax and reporting requirements.
EXECUTED on this the 16th day of February, 1996.
SELLER:
/s/ Harold Rubenstein
----------------------------------------
HAROLD RUBENSTEIN
/s/ Beverly Rubenstein
----------------------------------------
BEVERLY RUBENSTEIN
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<PAGE> 20
THE RUBENSTEIN FAMILY TRUST
By: /s/ Harold Rubenstein
-------------------------------------
Name: Harold Rubenstein
-----------------------------------
Title: President
----------------------------------
H & S BROADWAY, an Arizona partnership
By: /s/ Harold Rubenstein
-------------------------------------
Name: Harold Rubenstein
-----------------------------------
Title: Partner
----------------------------------
EXECUTED on this the 16th day of February, 1996.
PURCHASER:
GENERAL PARAMETRICS CORPORATION, a
Delaware corporation
By: /s/ Gerard M. Jacobs
-------------------------------------
Name: Gerard M. Jacobs
-----------------------------------
Title:
----------------------------------
- 20 -
<PAGE> 21
EXHIBIT "A"
The following described property situated in Pima County, Arizona:
PARCEL A:
Lots 1 through 16 in Block 35 of Bronx Park Addition to the City of Tucson, Pima
County, Arizona, according to the map or plat thereof of record in the Office of
the County Recorder of Pima County, Arizona, in Book 3 of Maps and Plats at page
117 thereof.
TOGETHER WITH all abandoned alleys lying within said Block 35.
PARCEL B:
A 70-foot parcel lying between the North boundary line of Block 35 and the South
boundary line of Block 26 representing the abandoned Plata Street of Bronx Park
Addition to the City of Tucson, Pima County, Arizona, according to the map or
plat thereof of record in the office of the County Recorder of Pima County,
Arizona, in Book 3 of Maps and Plats at page 117 thereof.
<PAGE> 22
EXHIBIT "B"
All that part of Lot 2 of Section 19, Township 14 South, Range 14 East, G & S.
R. B. & M., Pima County, Arizona, lying west of the west right-of-way of Euclid
Avenue and south of the south line of Bruckner's Addition to the City of Tucson,
according to the map thereof on record in the office of the County Recorder of
Pima County, Arizona, in Book 1 of Land Claims at Page 581, described as
follows:
Beginning at the point of intersection of a line parallel with
and 45.00 feet northerly from the south line of the northwest
quarter of said Section 19, with the west line of said
section;
Thence north 00(degree) 00' 50" west, along said west line
256.55 feet to a point in a line parallel with and 1,000.00
feet southerly from said south line of Bruckner's Addition;
Thence north 89(degree) 55' 22" east, along said line, 396.16
feet to a point on the west line of Euclid Avenue;
Thence south, along said west line of Euclid Avenue, 257.06
feet to the north line of 29th Street; being parallel with and
45.00 feet northerly from the south line of the northwest
quarter of Section 19;
Thence south 89(degree) 59' 49" west, along said north line of
29th Street, 396.10 feet to the point of beginning;
Except that certain triangular parcel conveyed to the City of
Tucson by Deed recorded in Docket 2258 at Page 234.
<PAGE> 23
ASSIGNMENT
In consideration for Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
General Parametrics Corporation, a Delaware corporation ("GPAR"), hereby sells,
assigns, and transfers to Metal Management Realty, Inc., that certain Contract
of Sale (the "Contract") dated February 16, 1996, executed by and among GPAR,
H&S Broadway, Harold Rubenstein, Beverly Rubenstein, and the Rubenstein Family
Trust.
Dated this 11 day of April, 1996
GENERAL PARAMETRICS CORPORATION
By: /s/ GERARD M. JACOBS
-----------------------------------
Name: Gerard M. Jacobs
---------------------------------
Title: President
--------------------------------
ACCEPTANCE:
METAL MANAGEMENT REALTY, INC., an Arizona corporation, hereby agrees to
assume all of the obligations of GPAR set forth in the Contract.
Dated this 11 day of April, 1996.
METAL MANAGEMENT REALTY, INC.
By: /s/ T. BENJAMIN JENNINGS
-----------------------------------
Name: T. Benjamin Jennings
---------------------------------
Title: President
--------------------------------
<PAGE> 1
Exhibit 10.45
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is made and entered into by and
between METAL MANAGEMENT REALTY, INC., an Arizona corporation ("Lessor"), and
ELLIS METALS, INC., an Arizona corporation ("Lessee").
W I T N E S S E T H:
WHEREAS, Lessor is the owner of the fee simple estate in and to three
parcels of land, located in Tucson, Pima County, Arizona, which parcels are more
particularly described on Exhibit "A" attached hereto and made a part hereof for
all purposes (the "Leased Premises").
WHEREAS, Lessee desires to lease the Leased Premises for the term set
forth in Article II below.
I
DEMISE
In consideration of the obligation of Lessee to pay rent as herein
provided and in consideration of the other terms, covenants, and conditions of
this Lease, Lessor does hereby LEASE, DEMISE, and LET unto Lessee, and Lessee
does hereby take and lease from Lessor, the Leased Premises, TO HAVE AND TO HOLD
the Leased Premises, together with all rights, privileges, easements and
appurtenances belonging to or in any way appertaining to the Leased Premises,
including, but not limited to, any and all easements, rights, titles and
privileges of Lessor now or hereafter existing in, to, or under adjacent
streets, sidewalks, alleys, and party walls and any reversions which may
hereafter accrue to Lessor as owner of the Leased Premises by reason of the
closing of any street, sidewalk or alley, for the term hereinafter provided,
upon and subject to the terms, conditions and agreements hereinafter contained.
II
TERM
2.1 Initial Term: The initial term (the "Initial Term") of this Lease
shall be for sixty (60) months, beginning on April 11, 1996, and ending at
midnight on April 10, 2001.
2.2 Renewal: Within ninety (90) days, but not more than one hundred
twenty (120) days, prior to the expiration of the Initial Term of the Lease, the
Lessee may, by written notice delivered to Lessor, renew this Lease for an
additional five (5) year term, upon the same terms that apply to the Initial
Term.
III
RENTAL
So long as this Lease remains in force and effect, Lessee promises to
pay to Lessor rents, without deduction or set off, in the manner, at the time,
and in the amounts specified below. Any term or provision of this Lease to the
contrary notwithstanding, the covenant and obligation of Lessee to pay the rent
provided for herein shall be independent from any obligations, warranties,
representations, expressed or implied, if any, of Lessor herein contained:
3.1 Rent: During the term of this Lease, Lessee agrees to pay to Lessor
rental in the amount of Eighty-Five Thousand Five Hundred and No/100 Dollars
($85,500.00) per annum, payable in equal monthly installments of Seven Thousand
One Hundred Twenty-Five and No/100 Dollars ($7,125.00) in advance, the first
such monthly installment to be due on May 11, 1996, and a like monthly
installment to be due on the eleventh (11th) day of each calendar month
thereafter until the term expires. Rent for any partial month shall be prorated
on a per diem basis.
<PAGE> 2
3.2 Place and Manner of Payment: Subject to the further provisions
hereof, the rent hereunder shall be payable to Lessor at the address of Lessor
set forth on the signature page of this Lease or to such other person at such
address as Lessor may designate from time to time in writing.
3.3 Service Charge: If any rental payment which is required to be paid
or which becomes due under this Lease is not paid by the tenth (10th) day
following Lessee's receipt of written notice from Lessor stating that such
payment is past due, a service charge of five percent (5%) of the amount due
shall become due and payable in addition to the amount due. The service charge
is for the purpose of reimbursing Lessor for the extra costs and expenses in
connection with the handling and processing of late payments. In addition to
such service charge, if any rental payment is not paid by the tenth (10th) day
following the day Lessor notifies Lessee that the rent was not paid on the date
due, Lessee shall pay to Lessor, in addition to such rental payment and the
service charge, interest on the rental payment calculated at the lesser of (i)
fifteen percent (15%) per annum, or (ii) the highest rate allowed by applicable
law (the "Default Rate") from the date such rental payment was due until paid by
Lessee.
IV
QUIET ENJOYMENT
Lessor warrants that Lessor has full right to make this Lease and
perform its obligations hereunder, and subject to the terms and provisions of
this Lease, Lessee shall have quiet and peaceable enjoyment of the Leased
Premises during the term hereof.
V
TAXES
Payment of Taxes: Lessee agrees to pay and fully discharge all taxes,
special assessments, and governmental charges of every character imposed during
the term of this Lease upon the Leased Premises, or any part thereof, and all
improvements now or hereafter erected thereon and all personal property located
thereon, except that Lessee shall not be chargeable with any income taxes
imposed under any existing or future laws of the United States or any state or
any political or taxing authority on the rentals provided for in this Lease, nor
shall Lessee be chargeable with any gross receipts, sales, excise, or use taxes,
if any, imposed on rentals paid to Lessor, nor with any corporate franchise tax
or corporate license fee levied upon or against any Lessor, nor with any taxes
similar to any of the above excepted taxes. Lessee shall pay all taxes, charges
and assessments which Lessee is responsible for hereunder (collectively "Taxes")
either to the Lessor or to the public officer charged with the collection
thereof before the same shall become delinquent, and Lessee agrees to indemnify
and save harmless Lessor from all such Taxes. Notwithstanding the foregoing,
however, if at any time during the term of this Lease, the present method of
taxation or assessment shall be so changed that the whole or any part of the
taxes, assessments, levies, impositions, or charges now levied, assessed, or
imposed on real estate and the improvements thereon shall be discontinued and,
as a substitute, taxes, assessments, revenues, impositions, or charges shall be
levied, assessed and imposed wholly or partially as a capital levy or otherwise
on the rents received from said real estate or the rents reserved herein or any
part thereof, then such substitute taxes, assessments, levies, impositions, or
charges, to the extent so levied, assessed, or imposed in substitution, shall be
paid by Lessee.
VI
CONDEMNATION
6.1 Total Taking: If the Leased Premises in its entirety is taken
(which term when used in this Article VI shall include any conveyance in
avoidance or settlement of condemnation or eminent domain proceedings) for any
public or quasi-public use or improvement by virtue of
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eminent domain, this Lease shall terminate as of the date of the physical taking
of the Leased Premises, and the rentals shall be abated during the unexpired
portion of this Lease, effective on the date of such actual physical taking of
the Leased Premises; provided that such termination of this Lease shall not
prejudice the rights of the parties with respect to the computation of the
amounts of the awards for such taking as hereinafter provided.
6.2 Partial Taking: If only a part of the Leased Premises is taken for
any public or quasi-public use or improvement by virtue of eminent domain, this
Lease shall remain in effect as to that part of the Leased Premises not taken
(unless so much of the Leased Premises shall be taken so as to render the
balance unsuitable for use by Lessee for the uses and purposes contemplated as
determined by Lessee, in which event this Lease shall terminate as provided in
Section 6.1), but the rentals shall be reduced during the unexpired portion of
this Lease on a just and proportionate basis having due regard to the relative
value of the portion of the Leased Premises so taken as compared to the
remainder thereof and taking into consideration the extent, if any, to which
Lessee's use of the remainder of the Leased Premises shall have been impaired or
interfered with by reason of such partial taking. Lessee, at its option, may
restore or repair the portion of the improvements, if any, then on the Leased
Premises not taken by such condemnation. In the event that Lessee elects to
restore or repair, Lessor shall reimburse Lessee for the cost of such
restoration or repair out of (but not exceeding) the amount of the condemnation
award to Lessor; provided, however, in the event the condemnation award made
available to Lessee to perform such restoration or repair work is insufficient
to pay all of Lessee's costs of such work, Lessee, at Lessee's option, may
terminate this Lease by delivering written notice thereof to Lessor.
6.3 Condemnation Awards. All compensation awarded for any taking (or
the proceeds of private sale in lieu thereof) of the Leased Premises shall be
the property of Lessor and Lessee hereby assigns its interest in any such award
to Lessor; provided, however, Lessor shall have no interest in any award made to
Lessee for loss of business or for the taking of Lessee's fixtures and other
property, or for relocation expenses or for damage to its leasehold estate, if a
separate award for such items is made to Lessee. Nothing herein shall prevent
Lessee from pursuing such a separate award.
6.4 Temporary Taking: In the event of a taking of all or part of the
Leased Premises by a governmental authority for temporary public or quasi-public
use, this Lease shall not terminate and Lessee shall be entitled to the award
made or damages granted in connection with such temporary taking attributable to
any period prior to the expiration of the term hereof (including any renewals or
extensions); provided, however, in the event such temporary taking is for more
than a period of ninety (90) days and such temporary taking prevents Lessee from
using the Leased Premises for its intended purposes (as determined by Lessee),
Lessee, at Lessee's option, may terminate this Lease by delivering written
notice thereof to Lessor.
VII
USE OF LEASED PREMISES
7.1 Use: Lessee shall use and occupy the premises for the operation of
the metal recycling and scrap metal business. The Leased Premises shall be used
for no other purpose without the prior written consent of Lessor.
7.2 Laws: Lessee shall comply with all federal, state, county and city
laws and ordinances applicable to the Leased Premises.
7.3 Repairs. Lessee, at its own cost and expense, shall maintain the
Leased Premises (including roofs, walls, and foundation of any improvements on
the Leased Premises) in good condition and repair, and Lessee shall repair or
replace any damage or injury to all or any part of the Leased Premises. Lessee
shall also be responsible for the repair and maintenance of all sidewalks,
driveways, service areas, curbs, parking areas and landscaping in and on the
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Leased Premises. Lessee will accomplish such repairs promptly with first-class
materials, in a good and workmanlike manner, in compliance with all applicable
laws and in a style, character and quality substantially conforming to existing
construction. Notwithstanding anything herein to the contrary, Lessee shall not
be required to make any of the foregoing repairs if the need for such repairs
results from the gross negligence or willful misconduct of Lessor, and in such
event, any such repairs shall be made by Lessor promptly with first-class
materials, in a good and workmanlike manner, in compliance with all applicable
laws and in a style, character and quality substantially conforming to existing
construction. In addition, in the event any repairs required to be made by
Lessee hereunder are of the type that are covered by the insurance described in
Paragraph 8.1 below, and such insurance proceeds are not made available to
Lessee to make such repairs, then Lessee, in lieu of making such repairs, may
terminate this Lease by providing written notice thereof to Lessor.
7.4 Operations on the Leased Premises:
7.4.1 Lessee shall not, without Lessor's prior written consent, keep
anything within the Leased Premises for any purpose which invalidates any
insurance policy carried on the Leased Premises. All property kept, stored or
maintained within the Leased Premises by Lessee shall be at Lessee's sole risk.
7.4.2 Lessee shall take good care of the Leased Premises and keep the
same free from waste at all times. Lessee shall keep the Leased Premises neat,
clean and reasonably free from dirt, rubbish, insects and pests at all times,
and shall store all trash and garbage within the Leased Premises, arranging for
the regular pickup of such trash and garbage at Lessee's expense.
7.4.3 Lessee shall procure, at its sole expense, any permits and
licenses required for the transaction of business in the Leased Premises.
7.5 Alterations: Lessee shall not, without first obtaining the
written consent of Lessor, make any alterations, additions, or improvements, in,
to or about the Leased Premises that would materially affect the structure, load
bearing walls or roof of the Leased Premises, and Lessor will not construct any
additional square footage to the Leased Premises without Lessee's prior written
consent. Lessee may make any other alterations or improvements to the Leased
Premises without the prior written consent of Lessor. In the event alterations
are made to the Leased Premises in accordance with this paragraph, Lessee agrees
to indemnify Lessor and hold Lessor harmless against any loss, liability, or
damage resulting from such alterations.
7.6 Liens: Lessee covenants and agrees to protect, indemnify, defend
and hold harmless Lessor from and against all bills, claims, liens and rights to
liens for labor and materials and architect's, contractors', and subcontractors'
claims and all other fees, claims and expenses incident to the performance of
any work at the Leased Premises or any alterations thereof. Lessee shall have
the right to contest any and all bills, fees and claims, being obligated to pay
the contested item only if and when liability is established against Lessee or
against the Leased Premises; provided Lessor is provided with a bond, security
or other reasonable assurance that Lessee will have readily available funds on
hand to pay such contested item if necessary and that such contested item shall
not ripen into a lien or claim against the Leased Premises or Lessor.
7.7 Title to Improvements: Title to and ownership of any buildings
and permanent improvements located on the Leased Premises shall be and remain in
Lessor throughout the term of this Lease.
7.8 Surrender: Lessee covenants and agrees, at the termination of
this Lease, whether by limitation, forfeiture, or otherwise, to quit, surrender
and deliver to Lessor possession of the Leased Premises with all the buildings
and improvements thereon in the same condition as they were at the commencement
of this Lease, ordinary wear and tear excepted, all
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of which buildings and improvements shall become and remain the property of
Lessor. Notwithstanding the foregoing, on the last day of the term of this Lease
or upon any earlier termination of this Lease, or upon termination of Lessee's
right of possession under this Lease, or at any other time during the term of
this Lease, Lessee shall have the right, at its option, to remove all
furnishings, machinery, equipment, signage, trade fixtures and other removable
personal property installed by Lessee from time to time during the term of this
Lease. Lessee shall also surrender all keys for the Leased Premises and shall
inform Lessor of all combinations on locks, safes and vaults remaining in the
Leased Premises.
7.9 Holding Over. In the event Lessee remains in possession of the
Leased Premises after the expiration or termination of this Lease and without
the execution of a new Lease, the renewal of this Lease or the consent of
Lessor, Lessee shall be a tenant at sufferance for the hold over period and all
of the terms and provisions of this Lease shall be applicable during that
period, except that Lessee shall pay to Lessor the rent in effect as of the
expiration or termination of the Lease, plus fifty percent (50%) of such amount
(without waiver of Lessor's right to recover damages as permitted by law). The
rental payable during the hold over period shall be payable to Lessor on demand.
No holding over by Lessee shall operate to extend the term of this Lease. In the
event of a holding over by Lessee, Lessee shall indemnify Lessor against all
claims made against Lessor or losses incurred by Lessor resulting from delay by
Lessor in delivering possession of the Leased Premises to a tenant or
prospective tenant with whom a bona fide lease has been entered into with
respect to all or a portion of the Leased Premises.
VIII
INSURANCE
8.1 Fire and Extended Coverage: During the term of this Lease, Lessee
shall, at its sole cost and expense, keep and maintain full replacement value
policies of insurance on any buildings and improvements on the Leased Premises
against loss or damage by fire or damage by other risks now insured against by
standard form "extended coverage" provisions of policies generally in force on
buildings or improvements of like type in the location in which the Leased
Premises are situated. Such insurance shall be on standard form policies.
8.2 General Liability: During the term of this Lease, Lessee shall, at
its sole cost and expense, keep and maintain policies of commercial general
liability insurance with a minimum single limit, which may be effected by
primary and excess coverage, equal to $1,000,000.00. Such limits shall be
increased during the term of this Lease (including any renewals and extensions)
by such amounts as may be reasonable, proper and prudent in Pima County,
Arizona, for similar properties with the same type of improvements as may from
time to time be situated upon the Leased Premises.
8.3 Forms of Policies: All fire/extended coverage insurance required
herein shall (a) be carried in the name of Lessee; Lessor and any leasehold
mortgagees Lessor has previously disclosed to Lessee shall be named on the
policies as their respective interests may appear; (b) provide that any loss
thereunder may be adjusted with and payable solely to Lessor or Lessor and a
named mortgagee Lessor has previously disclosed to Lessee; (c) require at least
fifteen (15) days advance written notice to Lessor and any such mortgagees
disclosed to Lessee by Lessor prior to the cancellation thereof; and (d) where
appropriate, contain provisions whereby the insurer releases and waives all
rights of subrogation against both Lessor and any leasehold mortgagee disclosed
to Lessee by Lessor requesting same. All insurance policies are to be written by
insurance companies reasonably satisfactory to Lessor. The commercial general
liability insurance policy shall name Lessor as an additional insured thereon.
Certificates of insurance evidencing such insurance policies shall be provided
to Lessor and any mortgagees disclosed to Lessee by Lessor. Lessee's failure to
comply with the requirements in this Article 8 relating to insurance shall
constitute an event of default hereunder. In addition to the remedies provided
elsewhere in this Lease, in the event Lessee fails to obtain and maintain the
insurance
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policies required by this Article 8, Lessor may, but is not obligated to, obtain
such insurance policies and Lessee shall pay to Lessor upon demand as additional
rental the premium cost thereof plus interest at the Default Rate from the date
of payment by Lessor until repaid by Lessee.
8.4 Blanket Policies: Any insurance required to be maintained by Lessee
may be effected under blanket insurance policies relating to the Leased Premises
and other properties so long as such blanket policies conform to the
requirements of this Lease.
8.5 Damage by Casualty. Lessee shall give immediate written notice to
Lessor of any damage to the Leased Premises by fire or other casualty. In the
event that the Leased Premises shall be damaged or destroyed by fire or other
casualty insurable under standard fire and extended coverage insurance, Lessee
shall proceed with reasonable diligence to rebuild and repair the Leased
Premises and Lessor shall reimburse Lessee for the cost of such repairs up to
(but not exceeding) the amount of insurance proceeds actually received by Lessor
and applicable to such damages. In the event the proceeds of such insurance are
not sufficient to pay for the entire cost of such repairs, Lessee, at Lessee's
option, may terminate this Lease by delivering written notice thereof to Lessor.
Notwithstanding the foregoing, in the event damage to the Leased Premises caused
by fire or other casualty is of a nature that cannot be completely repaired
within six (6) months after the date of the fire or casualty, or if the fire or
casualty occurs during the last six (6) months of the initial term (or any
renewal term) of the Lease, Lessee, at Lessee's option, may terminate this Lease
by delivering written notice thereof to Lessor. In the event this Lease is not
terminated after a fire or other casualty, all rent payable by Lessee under this
Lease shall be equitably adjusted from the date of the damage until the date the
repairs are completed.
IX
SUBLETTING AND ASSIGNMENT
9.1 Assignment and Sublease. Lessee may not assign this Lease, or allow
it to be assigned, in whole or in part, by operation of law or otherwise or
mortgage or pledge the same, or sublet the Leased Premises, or any part thereof
without the prior written consent of Lessor, and in no event shall any such
assignment or sublease ever release Lessee from any obligation or liability
hereunder.
X
DEFAULT
10.1 Monetary Default: In the event of a default on the part of Lessee
in payment of rentals, taxes or insurance premiums, or any other monies required
to be paid by Lessee under this Lease, if Lessor shall deliver to Lessee a
written notice specifying such default and if the default as specified by such
notice shall continue for a period of fifteen (15) days after the date of
delivery of such notice, then in such event Lessor shall have the right at
Lessor's election to take any of the remedies set forth hereinafter.
10.2 Non-Monetary Default: In the event of any breach of this Lease by
Lessee, other than as specified in Section 10.1, if Lessor shall deliver to
Lessee a written notice specifying such breach and if the breach so specified by
such notice shall not be removed or cured within a period of thirty (30) days
after Lessee's receipt of such notice (or, if such breach is of a nature that it
cannot be cured within thirty (30) days, without Lessee having commenced to
remove or cure such breach within such thirty (30) day period and thereafter
proceeding with reasonable diligence to completely remove or cure such breach),
then in such event Lessor shall have the right at its election to exercise any
of the remedies set forth hereinafter.
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10.3 Remedies. (a) Upon the occurrence of any event of default
hereunder, and after the expiration of any applicable notice and cure period,
Lessor shall have the option to pursue any one or more of the following remedies
without any notice or demand whatsoever:
(i) Terminate this Lease, in which event Lessee shall immediately
surrender the Leased Premises to Lessor, and if Lessee fails to do so, Lessor
may, without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession and expel or remove Lessee
and any other person who may be occupying said Leased Premises or any part
thereof, without being liable for prosecution or any claim for damages therefor;
and Lessee agrees to pay to Lessor on demand the amount of all loss and damage
which Lessor may suffer by reason of such termination, whether through inability
to relet the premises on satisfactory terms or otherwise, including the loss of
rent for the remainder of the Lease Term.
(ii) Enter upon and take possession of the Leased Premises and expel or
remove Lessee and any other person who may be occupying the Leased Premises or
any part thereof, without being liable for prosecution or any claim for damages
therefor, and if Lessor so elects, relet the Leased Premises on such terms as
Lessor shall deem advisable and receive the rental thereof; and Lessee agrees to
pay to Lessor on demand any deficiency that may arise by reason of such
reletting for the remainder of the Lease Term. Lessor need not give Lessee any
further written notice whatsoever of Lessor's intent to take possession of the
Leased Premises and expel or remove Lessee, and Lessor shall have the right to
change the locks on any door of the Leased Premises without notifying Lessee of
the name, address or telephone number of an individual or company from whom a
new key may be obtained, nor shall Lessor have any obligation to provide a new
key to Lessee until such time as all events of default have been cured and
Lessee has provided to Lessor additional security for, or further assurances of,
Lessee's future performance of all Lessee's obligations arising under this
Lease, such security and assurances to be satisfactory to Lessor in the exercise
of Lessor's sole and absolute discretion.
(iii) Enter upon the Leased Premises, without being liable for prosecution
or any claim for damages therefor, and do whatever Lessee is obligated to do
under the terms of this Lease; and Lessee agrees to reimburse Lessor on demand
for any reasonable expenses which Lessor may incur in thus effecting compliance
with Lessee's obligations under this Lease, and Lessee further agrees that
Lessor shall not be liable for any damages resulting to the Lessee from such
action.
(b) No re-entry or taking possession of the Leased Premises by Lessor shall
be construed as an election on its part to terminate this Lease, unless a
written notice of such intention be given to Lessee. Notwithstanding any such
reletting or re-entry or taking possession, Lessor may at any time thereafter
elect to terminate this Lease for a previous default. Pursuit of any of the
foregoing remedies shall not preclude pursuit of any of the other remedies
herein provided or any other remedies provided by law, nor shall pursuit of any
remedy herein provided constitute a forfeiture or waiver of any rent due to
Lessor hereunder or of any damages accruing to Lessor by reason of the violation
of any of the terms, provisions and covenants herein contained. Lessor's
acceptance of rent following an event of default hereunder shall not be
construed as Lessor's waiver of such event of default. No waiver by Lessor of
any violation or breach of any of the terms, provisions, and covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation or breach of any of the terms, provisions, and covenants herein
contained. Forbearance by Lessor to enforce one or more of the remedies herein
provided upon an event of default shall not be deemed or construed to constitute
a waiver of any other violation or default. The loss or damage that Lessor may
suffer by reason of termination of this Lease or the deficiency from any
reletting as provided for above shall include the reasonable expense of
repossession and any repairs or remodeling undertaken by Lessor following
possession. Should Lessor at any time terminate this Lease for any default, in
addition to any other remedy Lessor may have, Lessor may recover from Lessee all
damages Lessor may incur by reason of such default, including the reasonable
cost of recovering the Leased Premises and the loss of rent for the remainder of
the Lease Term. It is expressly agreed that Lessor shall have no obligation or
duty to mitigate damages, and Lessee hereby waives and relinquishes any right or
claim for mitigation of damages.
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10.4 No Waiver: No waiver by either party of any default or breach of
any covenant, condition, or stipulation herein contained shall be treated as a
waiver of any subsequent default or breach of the same or any other covenant,
condition or stipulation hereof.
10.5 Bankruptcy: The bankruptcy or insolvency of Lessee, an assignment
by Lessee for the benefit of Lessee's creditors, the appointment of a trustee,
liquidator or receiver for Lessee, reorganization by Lessee, an admission by
Lessee of its inability to pay its debts as the same become due and/or the
seeking or granting of any order of relief in any proceeding commenced by or
against Lessee under any present or future federal or state bankruptcy,
insolvency or creditors' relief statute shall not affect this Lease so long as
rent is paid when due and all other covenants of Lessee are continued in
performance by Lessee or its successors or legal representatives.
10.6 Default by Lessor. In the event of any default by Lessor, Lessee
will give Lessor written notice specifying such default with particularity, and
Lessor shall thereupon have thirty (30) days in which to cure any default (or,
in the event such default is of a nature that it cannot be cured in thirty (30)
days, such longer period as may be required to effect such cure provided Lessor
commences such cure within such thirty (30) day period and diligently pursues
same to completion). If Lessor fails to timely cure any default after such
notice, Lessee may enforce the performance of this Lease in any manner provided
by law or in equity, including, without limitation, enforcing specific
performance of Lessor's obligations hereunder, or performing such act or making
such payment as Lessor is required hereunder to do, and Lessor shall reimburse
Lessee for all expenses incurred by Lessee in performing such act or making such
payment, including, without limitation, reasonable attorneys' fees, or this
Lease may be terminated at Lessee's discretion.
XI
NON-LIABILITY
11.1 Lessor Non-Liability: Lessor shall not be liable to Lessee or to
Lessee's employees, subtenants, patrons or visitors for any damages to persons
or property caused by any act of negligence or any other act of Lessee, its
agents or employees, or due to fire, tornado or other casualty, or due to any
building on the Leased Premises and appurtenances thereon being improperly
constructed, or being or becoming out of repair, or due to any cause whatsoever,
except where caused by a deliberate or grossly negligent act of the Lessor or
Lessor's duly authorized agent.
11.2 Indemnification of Lessor: Lessor shall not be liable for any
damage or injury to Lessee, or any other person, or to any property, occurring
on the Leased Premises or any part thereof, and Lessee agrees to hold Lessor
harmless from any claims for damages, except to the extent such claims or
damages are attributable to Lessor's gross negligence or willful misconduct.
XII
ESTOPPEL CERTIFICATES
Lessor and Lessee shall, from time to time, without additional
consideration promptly upon request, execute and deliver to each other or to any
person whom the requesting party may designate, an estoppel certificate
consisting of statements, if true, that (i) this Lease is in full force and
effect, with rent current through the date of the certificate (or stating the
date through which rent has been paid); (ii) this Lease has not been modified or
amended (or setting forth all modifications and amendments); (iii) to the best
of such party's knowledge and belief, neither party is then in default, and
Lessee and Lessor have fully performed all of Lessee's and Lessor's obligations,
hereunder; (iv) if true, the transactions, if any, described in the request do
not constitute an event of default under this Lease; (v) that Lessee's interest
in the Lease is
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subordinate and inferior to the deeds of trust referenced in Section 13.19
below; and such further instruments of a similar nature evidencing the agreement
of Lessor or Lessee hereunder.
XIII
MISCELLANEOUS
13.1 Relationship: Nothing herein contained shall be deemed or
construed by the parties hereto, nor by any third party, as creating the
relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that neither the
computation of rent, nor any other provision contained herein, nor any acts of
the parties hereto, shall be deemed to create any relationship between the
parties hereto other than the relationship of landlord and tenant.
13.2 Numbers and Gender: Whenever herein the singular number is used,
the same shall include the plural, and words of any gender shall include each
other gender.
13.3 Recording: Upon execution and delivery of this Lease, if so
requested in writing by Lessee, Lessor and Lessee shall execute and acknowledge
a "short form" memorandum of this Lease for recording purposes.
13.4 Heading: The headings, captions, and arrangements used in this
Lease are, unless specified otherwise, for convenience only and shall not be
deemed to limit, amplify, or modify the terms of this Lease, nor affect the
meaning thereof.
13.5 References: All references to "Article", "Articles", "Exhibit",
"Exhibits", "Section", "Sections", "Subsection" or "Subsections" contained in
this Lease are, unless specifically indicated otherwise, references to articles,
exhibits, sections and subsections of this Lease.
13.6 Notices: Whenever this Lease requires or permits any consent,
approval, notice, request, or demand from one party to another, unless otherwise
provided, the consent, approval, notice, request or demand must be in writing to
be effective and will be effective upon delivery, and shall be deemed to have
been given on the third (3rd) day after it is enclosed in an envelope, addressed
to the party to be notified at the address stated on the signature page hereof
(or at such other address as may have been designated by written notice in
accordance herewith) properly stamped, sealed and deposited in the United States
Postal Service, certified or registered mail, return receipt requested.
13.7 Laws: This Lease is being executed and delivered, and is intended
to be performed, in the State of Arizona, and the laws of such State and of the
United States shall govern the rights and duties of the parties hereto and the
validity, construction, enforcement and interpretation hereof. The parties
hereto agree that venue on any action under this Lease shall be exclusively in
Pima County, Arizona.
13.8 Partial Invalidity: If any provision of any of this Lease is held
to be illegal, invalid, or unenforceable under present or future laws effective
during the term thereof, such provision shall be fully severable; this Lease
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance therefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision, there shall be
added automatically as a part of this Lease a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
13.9 Prior Agreements: This Lease embodies the entire agreement between
the parties relating to the subject matter hereof, supersedes all prior
agreements and understandings,
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if any, relating to the subject matter hereof, and may be amended only by an
instrument in writing executed jointly by Lessor and Lessee and supplemented
only by documents delivered or to be delivered in accordance with the express
terms hereof.
13.10 Multiple Counterparts: This Lease may be executed in a number of
identical counterparts, each of which constitutes an original and all of which
constitute, collectively, one agreement; but in making proof of this Lease, it
shall not be necessary to produce or account for more than one such counterpart.
13.11 Successors and Assigns: Subject to Section 9.1 hereof, this Lease
shall be binding upon and inure to the benefit of Lessor and Lessee, and their
respective successors and assigns.
13.12 Merger of Title: No merger of Lessee's interest in this Lease or
of the leasehold estate created by this Lease with the fee simple estate in the
Leased Premises, or any part thereof, shall occur by reason of the fact that the
same person may acquire or own or hold, directly or indirectly, (i) Lessee's
interest in this Lease or the leasehold created by this Lease and (ii) the fee
estate in the Leased Premises or any part thereof or any interest therein, and
no such merger shall occur unless and until all persons having an interest in
the ownership interests described in (i) and (ii) above shall join in a written
instrument effecting such merger and shall record same.
13.13 Time is of the Essence: It is expressly agreed by the parties
hereto that time is of the essence with respect to this Lease.
13.14 Brokerage: Lessee and Lessor respectively represent and warrant
to the other that no brokers were retained, used or referred to with respect to
this Lease, and that no claims for brokerage commissions or finders' fees are
valid or warranted with respect to or in connection with this Lease, and that
each shall defend, indemnify and hold the other harmless from any and all costs,
claims, or causes of action for such commissions or fees resulting from its own
acts. Lessor shall reasonably cooperate with Lessee in order to insure that all
utility services are available to the Leased Premises.
13.15 Attorneys' Fees: In the event either party hereto fails to comply
with any of the terms of this Lease to be complied with on its part and the
other party commences legal proceedings to enforce the terms of the Lease, the
prevailing party in any such proceeding shall receive from the other its
reasonable attorneys' fees.
13.16 Utilities: Lessee shall be responsible at its sole cost and
expense for the payment of all charges for utility services to the Leased
Premises. In no event shall Lessor be liable or responsible for any costs
incurred by Lessee as a result of the interruption of utility service to the
Leased Premises unless such interruption is caused by Lessor.
13.17 Absolute Net; Maintenance and Repair: Lessee acknowledges and
agrees that, except as expressly set forth herein to the contrary, it is
intended that this Lease shall be a triple net lease for the Lessor and that the
Lessor shall not be responsible during the Lease Term for any cost, charges,
expenses and outlays of any nature whatsoever arising from or related to the
Leased Premises, the contents, use or occupancy thereof, or the business carried
on therein, and the Lessee shall pay all charges, impositions, costs and
expenses of any nature and kind relating to the Leased Premises. Lessee
acknowledges that, accordingly, except as expressly set forth herein to the
contrary, Lessee shall be responsible for all expenses related to the Leased
Premises including all maintenance and repair of the improvements thereon, and
Lessor shall have no liability or responsibility for the maintenance or repair
of any improvements.
13.18 Force Majeure. Neither Lessee nor Lessor shall be required to
perform any term, condition or covenant in this Lease for so long as such
performance is delayed or prevented by force majeure, which shall mean acts of
God, strikes, lockouts, material or labor
-10-
<PAGE> 11
restrictions, acts of any governmental authority, civil riots, floods, and any
other cause not reasonably within the control of such party and which by the
exercise of reasonable diligence such party is unable, wholly or in part, to
prevent or overcome.
13.19 Subordination. Lessee hereby acknowledges that as of the date
hereof, the Lessee's interest in the Leased Premises, is subordinate and
inferior to (i) that certain Deed of Trust, Assignment of Rents, and Security
Agreement, executed by Lessor in favor of Harold Rubenstein and Beverly
Rubenstein; and (ii) that certain Deed of Trust, Assignment of Rents, and
Security Agreement, executed by Lessor in favor of H & S Broadway. Upon the
written request of Lessor or the trustees or beneficiaries of the foregoing
deeds of trust, Lessee agrees to acknowledge the subordinate nature of this
Lease. Lessor shall have the right to subordinate this Lease to any future deed
of trust or mortgage hereafter encumbering the Leased Premises and any renewals,
modifications, consolidations, replacements, or extensions thereof; provided,
however, any such subsequent subordination shall be governed by a Subordination
Agreement in form and substance reasonably satisfactory to Lessee which shall
provide that any mortgagee or beneficiary under a deed of trust shall not
disturb Lesee's use and occupancy of the Leased Premises for so long as Lessee
is not in default under the Lease and shall also provide that in the event of
any foreclosure or other suit, public or private sale, or in the event of a sale
in lieu of foreclosure, such mortgagee or beneficiary will hold or offer and
sell the Leased Premises subject to all of the terms and conditions of the
Lease.
13.20 Consequential Damages. Under no circumstances whatsoever shall
Lessor or Lessee ever be liable hereunder to the other party for consequential
damages or special damages.
13.21 Consents. Except as may be expressly herein provided to the
contrary, in all circumstances under this Lease where the consent, permission,
or approval of one party is required before the other party may take any
particular type of action, such consent, permission or approval shall not be
unreasonably withheld, conditioned or delayed.
13.22 Signs. Lessee shall have the right to place any sign or signs on
the Leased Premises as Lessee deems reasonably necessary for the operation of
Lessee's business therein.
EXECUTED as of the 11 day of April, 1996.
LESSOR:
Address:
METAL MANAGEMENT REALTY,
INC., AN ARIZONA CORPORATION
7600 Augusta Street By: /s/ T. Benjamin Jennings
River Forest, Illinois 60305 -------------------------------------
Name: T. Benjamin Jennings
-----------------------------------
Title; President
----------------------------------
-11-
<PAGE> 12
LESSEE:
ELLIS METALS, INC., an Arizona
corporation
Address:
By: /s/ Harold Rubenstein
-------------------------------------
Name: Harold Rubenstein
- ------------------------- -----------------------------------
Its: Vice President
- ------------------------- ------------------------------------
-12-
<PAGE> 13
EXHIBIT "A"
-13-
<PAGE> 14
EXHIBIT "A"
The following described property situated in Pima County, Arizona:
PARCEL A:
Lots 1 through 16 in Block 35 of Bronx Park Addition to the City of Tucson, Pima
County, Arizona, according to the map or plat thereof of record in the Office of
the County Recorder of Pima County, Arizona, in Book 3 of Maps and Plats at page
117 thereof.
TOGETHER WITH all abandoned alleys lying within said Block 35.
PARCEL B:
A 70-foot parcel lying between the North boundary line of Block 35 and the South
boundary line of Block 26 representing the abandoned Plata Street of Bronx Park
Addition to the City of Tucson, Pima County, Arizona, according to the map or
plat thereof of record in the office of the County Recorder of Pima County,
Arizona, in Book 3 of Maps and Plats at page 117 thereof.
PARCEL C:
All that part of Lot 2 of Section 19, Township 14 South, Range 14 East, Gila and
Salt River Meridian, Pima County, Arizona, lying west of the west right-of-way
of Euclid Avenue and south of the south line of Bruckner's Addition to the City
of Tucson, according to the map thereof on record in the office of the County
Recorder of Pima County, Arizona, in Book 1 of Land Claims at Page 581,
described as follows:
Beginning at the point of intersection of a line parallel with
and 45.00 feet northerly from the south line of the northwest
quarter of said Section 19, with the west line of said
section;
Thence north 00(degree) 00' 50" west (record), north
00(degree) 1' 28" east (measured), along said west line 256.55
feet (record), 256.78 feet (measured) to a point in a line
parallel with and 1,000.00 feet southerly from said south line
of Bruckner's Addition;
Thence north 89(degree) 55' 22" east (record), north
89(degree) 58' 16" east (measured), along said line, 396.16
feet (record), 396.45 feet (measured) to a point on the west
line of Euclid Avenue;
Thence south, along said west line of Euclid Avenue, 257.06
feet (record), 256.98 feet (measured) to the north line of
29th Street; being parallel with and 45.00 feet northerly from
the south line of the northwest quarter of Section 19;
Thence south 89(degree) 59' 49" west (record), south
89(degree) 59' 58" west (measured), along said north line of
29th Street, 396.10 feet (record), 396.56 feet (measured) to
the point of beginning;
Except that certain triangular parcel conveyed to the City of
Tucson by Deed recorded in Docket 2258 at Page 234.
These parcels are subject to the exceptions set forth on Exhibit "B"
attached hereto.
<PAGE> 15
EXHIBIT "B"
1. Taxes for the year 1996, not yet payable.
2. Reservations and exceptions in the Patent from the United States of
America, recorded in Book 59 of Deeds at Page 386.
3. Easement in favor of City of Tucson recorded in Docket 2662 at page
210.
4. Easement in favor of Comstock Steel Company recorded in Docket 2297 at
page 373.
5. Agreement with the City of Tucson recorded in Book 101 of the
Miscellaneous Records at page 370.
6. Utility easements or rights of way, if any, as reserved in instruments
of record in the office of the County Recorder of Pima County, Arizona,
in Docket 910 at Page 440 and in Docket 1019 at Page 377.
7. Easement in favor of Tucson Gas and Electric Company recorded in Docket
2562 at Page 319.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997<F1>
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,708,000
<SECURITIES> 1,797,000
<RECEIVABLES> 7,696,000
<ALLOWANCES> 0
<INVENTORY> 1,709,000
<CURRENT-ASSETS> 14,808,000
<PP&E> 8,930,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,941,000
<CURRENT-LIABILITIES> 9,768,000
<BONDS> 0
0
0
<COMMON> 98,000
<OTHER-SE> 18,913,000
<TOTAL-LIABILITY-AND-EQUITY> 34,941,000
<SALES> 15,978,000
<TOTAL-REVENUES> 15,978,000
<CGS> 13,978,000
<TOTAL-COSTS> 13,978,000
<OTHER-EXPENSES> 1,800,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 233,000
<INCOME-PRETAX> 5,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 146,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 151,000
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
<FN>
<F1><Period Start> and <Period End> reflect only the quarter ended 6/30/96 since
comparable balance sheets are included for 6/30/96 and 3/31/96, while the
Statement of Operations compares disparate quarters for the current and prior
year.
</FN>
</TABLE>
