SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported):
October 10, 1997
________________________________________
THERMO TERRATECH INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9549 04-2925807
(State or other (Commission) (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation or
organization)
81 Wyman Street, P.O. Box 9046
Waltham, Massachusetts 02254-9046
(Address of principal executive offices) (Zip Code)
(617) 622-1000
(Registrant's telephone number including area code)
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FORM 8-K
Item 2. Acquisition or Disposition of Assets
On October 10, 1997, Thermo TerraTech Inc. (the "Company") sold
substantially all of the assets of its Holcroft Division, excluding
certain accounts receivable, to Holcroft L.L.C., an affiliate of Madison
Capital Partners.
The Holcroft Division, based in Livonia, Michigan, designs and builds
large, custom engineered metallurgical-treatment systems used primarily
in the automotive industry.
The sale price for the transferred assets consisted of (i)
$11,417,000, in cash, including $520,000 withheld by Holcroft L.L.C.
pending a post-closing adjustment, (ii) two promissory notes for
principal amounts of $2,218,000 and $663,000, respectively, issued by
Holcroft L.L.C. to the Company, and (iii) the assumption by Holcroft
L.L.C. of certain liabilities of the Holcroft Division. The sale price is
subject to a post-closing adjustment, which would reduce the sale price
by an amount not to exceed $520,000, based on a final determination of
the net book value of the transferred assets as of September 27, 1997.
The $2,218,000 promissory note bears interest at a rate of 9.25%,
requires monthly interest payments and annual principal payments, and has
a five-year term. The note is secured by all of the assets of Holcroft
L.L.C., but is subject to a Subordination Agreement dated as of October
10, 1997, between the Company and Comerica Bank. The $663,000 promissory
note bears no interest for the first 30 days and interest at a rate of
10% thereafter. The note matures on August 10, 1998, requires monthly
interest payments as well as mandatory prepayments of principal based on
Holcroft L.L.C.'s collection of certain receivables of the Holcroft
Division, and is secured by certain receivables of the Holcroft Division.
The disposition was made pursuant to an Asset Purchase Agreement
dated as of October 10, 1997, between the Company and Holcroft L.L.C (the
"Asset Purchase Agreement"). The sale price for the assets of the
Holcroft Division was based on the Company's determination of the fair
market value of such assets, and the terms of the Asset Purchase
Agreement were determined by arms' length negotiation between the
parties.
In addition, the Company and Holcroft L.L.C. entered into a sublease
with a term commencing October 10, 1997, and ending December 31, 2004,
with an option for Holcroft L.L.C. to extend the term for an additional
five years, pursuant to which the Company subleases to Holcroft L.L.C.
office and manufacturing space located at 12068 Market Street, Livonia,
Michigan.
In a separate transaction, on October 6, 1997, Thermo Remediation
Inc., a majority-owned subsidiary of the Company, sold its 50% limited
liability company interest in RETEC/TETRA, L.C., a Texas limited
liability company (the "Joint Venture"), to TETRA Thermal, Inc. This
transaction was reported in a Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 21, 1997. The pro forma
adjustments for the sale of the Joint Venture are reflected in the pro
forma condensed financial information included in Item 7(b) of this
report.
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FORM 8-K
Item 7. Financial Statements, Pro Forma Condensed Financial
Information and Exhibits
(a) Financial Statements
Not applicable.
(b) Pro Forma Condensed Financial Information
The following unaudited pro forma condensed statements of operations
set forth the results of operations for the fiscal year ended March 29,
1997, and the three months ended June 28, 1997, as if the disposition by
the Company of both the Holcroft Division and the interest in the Joint
Venture had occurred at the beginning of fiscal 1997. The unaudited pro
forma condensed balance sheet sets forth the financial position as of
June 28, 1997, as if the dispositions had occurred as of that date.
The pro forma results of operations are not necessarily indicative
of future operations or the actual results that would have occurred had
the sale of the Holcroft Division and the interest in the Joint Venture
been consummated at the beginning of fiscal 1997. These statements should
be read in conjunction with the accompanying notes herein and the
historical consolidated financial statements and related notes of the
Company included in its Annual Report on Form 10-K for the fiscal year
ended March 29, 1997, and Quarterly Report on Form 10-Q for the three
months ended June 28, 1997.
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (Unaudited)
Fiscal Year Ended March 29, 1997
Pro Forma Adjustments
---------------------
Thermo Joint
TerraTech Holcroft Venture Pro Forma
--------- -------- ------- ---------
(In thousands except per share amounts)
Revenues $278,503 $(27,119) $ - $251,384
-------- -------- -------- --------
Costs and Operating
Expenses:
Cost of revenues 230,080 (22,677) - 207,403
Selling, general,
and administrative
expenses 35,466 (2,677) - 32,789
Product and new
business develop-
ment expenses 1,046 - - 1,046
Nonrecurring costs 7,800 - - 7,800
-------- -------- -------- --------
274,392 (25,354) - 249,038
-------- -------- -------- --------
Operating Income 4,111 (1,765) - 2,346
Interest Income 7,253 (33) - 7,220
Interest Expense (12,914) - - (12,914)
(includes $2,492 to
parent company)
Gain on Issuance of
Stock by Subsidiary 1,475 - - 1,475
Loss on Sale of Assets (1,482) - - (1,482)
Equity in Earnings of
Unconsolidated
Subsidiary 865 - (865) -
Other Income, Net 401 - - 401
-------- -------- -------- --------
Income (Loss) Before
Income Tax Provision
and Minority Interest (291) (1,798) (865) (2,954)
Income Tax Provision (1,705) 719 346 (640)
Minority Interest Income 1,834 - 163 1,997
-------- -------- -------- --------
Net Loss $ (162) $ (1,079) $ (356) $ (1,597)
======== ======== ======== ========
Loss per Share $ (.01) $ (.09)
======== ========
Weighted Average Shares 18,090 18,090
======== ========
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended June 28, 1997
Pro Forma Adjustments
---------------------
Thermo Joint
TerraTech Holcroft Venture Pro Forma
--------- -------- ------- ---------
(In thousands except per share amounts)
Revenues $72,519 $(7,409) $ - $65,110
------- ------- ------- -------
Costs and Operating
Expenses:
Cost of revenues 57,951 (6,131) - 51,820
Selling, general,
and administrative
expenses 9,938 (843) - 9,095
Product and new
business develop-
ment expenses 222 - - 222
------- ------- ------- -------
68,111 (6,974) - 61,137
------- ------- ------- -------
Operating Income 4,408 (435) - 3,973
Interest Income 1,403 - - 1,403
Interest Expense
(includes $1,164 to
parent company (3,133) - - (3,133)
Equity in Earnings of
Unconsolidated
Subsidiary 118 - (118) -
Other Income, Net 204 - - 204
------- ------- ------- -------
Income Before Income Tax
Provision and Minority
Interest 3,000 (435) (118) 2,447
Income Tax Provision (1,399) 174 47 (1,178)
Minority Interest
Expense (269) - 21 (248)
------- ------- ------- -------
Net Income $ 1,332 $ (261) $ (50) $ 1,021
======= ======= ======= =======
Earnings per Share $ .08 $ .06
======= =======
Weighted Average Shares 17,646 17,646
======= =======
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET (Unaudited)
As of June 28, 1997
Pro Forma Adjustments
-------------------------------
Thermo Holcroft Joint
TerraTech Holcroft Adjustments Venture Pro Forma
--------- -------- ----------- ------- ---------
(In thousands)
ASSETS
Current Assets:
Cash and short-term
investments $ 45,973 $ - $10,897 $ 8,825 $ 65,695
Accounts receivable,
net 53,238 (4,225) 2,049 - 51,062
Note Receivable - - 663 - 663
Unbilled contract
costs and fees 40,447 (16,191) - - 24,256
Inventories 2,447 (1,606) - - 841
Prepaid income taxes 7,484 - - - 7,484
Prepaid expenses 5,457 (17) - - 5,440
-------- -------- ------- ------ --------
155,046 (22,039) 13,609 8,825 155,441
-------- -------- ------- ------ --------
Property, Plant, and
Equipment, at Cost,
Net 86,519 (738) - - 85,781
-------- -------- ------- ------ --------
Other Assets 20,344 - 2,218 (5,768) 16,794
-------- -------- ------- ------ --------
Cost in Excess of Net
Assets of Acquired
Companies 95,550 - - - 95,550
-------- -------- ------- ------ --------
$357,459 $(22,777) $15,827 $3,057 $353,566
======== ======== ======= ====== ========
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FORM 8-K
THERMO TERRATECH INC.
PRO FORMA CONDENSED BALANCE SHEET (Unaudited) (continued)
As of June 28, 1997
Pro Forma Adjustments
------------------------------
Thermo Holcroft Joint
TerraTech Holcroft Adjustments Venture Pro Forma
--------- -------- ----------- ------- ---------
(In thousands)
LIABILITIES AND
SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable and
current maturities
of long-term
obligations $ 44,351 $ - $ - $ - $ 44,351
Accounts payable 13,735 (1,891) - - 11,844
Accrued payroll and
employee benefits 11,363 (800) - - 10,563
Billings in excess
of cost 5,306 (4,207) - - 1,099
Other accrued
expenses 9,651 (1,236) 936 1,223 10,574
Due to parent
company 2,843 (232) - - 2,611
-------- -------- ------- ------ --------
87,249 (8,366) 936 1,223 81,042
-------- -------- ------- ------ --------
Deferred Income Taxes 5,297 - - - 5,297
-------- -------- ------- ------ --------
Other Deferred Items 1,009 - - - 1,009
-------- -------- ------- ------ --------
Long-term Obligations 152,994 - - - 152,994
-------- -------- ------- ------ --------
Minority Interest 29,635 - - 551 30,186
-------- -------- ------- ------ --------
Shareholders' Investment:
Common stock 1,830 - - - 1,830
Capital in excess of
par value 62,426 - - - 62,426
Retained earnings 25,378 - 480 1,283 27,141
Treasury stock, at
cost (6,937) - - - (6,937)
Cumulative translation
adjustment (1,431) - - - (1,431)
Net unrealized gain
on available-for-
sale investments 9 - - - 9
Parent company
investment - (14,411) 14,411 - -
-------- -------- ------- ------ --------
81,275 (14,411) 14,891 1,283 83,038
-------- -------- ------- ------ --------
$357,459 $(22,777) $15,827 $3,057 $353,566
======== ======== ======= ====== ========
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FORM 8-K
THERMO TERRATECH INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
As described in Item 2 of this Form 8-K, the selling prices were based on
an estimate of the fair market value of the net assets sold and are subject
to adjustment. To date, no information has been gathered that would cause the
Company to believe that the final selling prices will be materially different
than the preliminary estimates.
Note 2 - Pro Forma Adjustments to Pro Forma Condensed Statements of
Operations (In thousands)
Three Months
Year Ended Ended
March 29, 1997 June 28, 1997
-------------- -------------
Debit (Credit)
Equity in Earnings of Unconsolidated Subsidiary
Represents the reversal of the Company's
proportionate share of income from its
investment in the Joint Venture $ 865 $ 118
------- -------
Income Tax Provision
Income tax benefit associated with the
adjustments above, calculated at the Company's
statutory income tax rate of 40% (346) (47)
------- -------
Minority Interest Income (Expense)
Represents Thermo Remediation's minority
shareholders' interest in the pro forma
adjustments above related to the Joint Venture (163) (21)
------- -------
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FORM 8-K
THERMO TERRATECH INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note 3 - Pro Forma Adjustments to Pro Forma Condensed Balance Sheet
(In thousands)
June 28, 1997
-------------
Debit (Credit)
Cash and Short-term Investments
Cash proceeds received from the sale of the
Holcroft Division $10,897
-------
Cash proceeds received from the sale of the
interest in the Joint Venture 8,825
-------
Accounts Receivable
Represents the Holcroft Division's accounts
receivable retained by the Company 2,049
-------
Note Receivable
Note receivable issued to the Company by the
acquirer, Holcroft L.L.C. 663
-------
Other Assets
Long-term note receivable issued to the
Company by the acquirer, Holcroft L.L.C.,
bearing interest at 9.25% 2,218
-------
Represents the Company's sale of its interest
in the Joint Venture (5,768)
-------
Other Accrued Expenses
Represents the tax effect related to the excess
of the expected proceeds received by the
Company from the sale of the Holcroft Division,
calculated at the Company's statutory income
tax rate of 40% (320)
Accruals established by the Company related
to liabilities retained and costs associated
with the sale of the Holcroft Division (616)
-------
(936)
-------
Represents the tax effect related to the
excess of the proceeds received by the
Company from the sale of its interest in the
Joint Venture, calculated at the Company's
statutory income tax rate of 40% (1,223)
-------
Minority Interest
Represents minority interest in the excess of the
proceeds received by the Company from the sale
of its interest in the Joint Venture over the
carrying value of the interest (551)
-------
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FORM 8-K
THERMO TERRATECH INC.
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
Note 3 - Pro Forma Adjustments to Pro Forma Condensed Balance Sheet
(In thousands) (continued)
June 28, 1997
-------------
Debit (Credit)
Shareholders' Investment
Retained Earnings
Represents the excess of the expected proceeds received
by the Company from the sale of the Holcroft Division
over the net book value, net of tax $ (480)
--------
Represents the excess of the proceeds received by the
Company from the sale of its interest in the Joint
Venture over the carrying value of the interest,
net of tax (1,283)
--------
Parent Company Investment
Elimination of the Holcroft Division's equity accounts (14,411)
--------
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FORM 8-K
Item 7. Financial Statements, Pro Forma Condensed Financial
Information and Exhibits
(c) Exhibits
2.1 Asset Purchase Agreement dated as of October 10, 1997,
between the Company and Holcroft L.L.C. Pursuant to
Item 601(b)(2) of Regulation S-K, schedules to this
Agreement have been omitted. The Registrant hereby
undertakes to furnish supplementally a copy of such
schedules to the Securities and Exchange Commission
upon request.
2.2 $2,218,000.00 Principal Promissory Note issued by
Holcroft L.L.C. to the Company.
2.3 $663,117.82 Principal Promissory Note issued by
Holcroft L.L.C. to the Company. Pursuant to Item
601(b)(2) of Regulation S-K, schedules to this
Agreement have been omitted. The Registrant hereby
undertakes to furnish supplementally a copy of such
schedules to the Securities and Exchange Commission
upon request.
2.4 Subordination Agreement dated as of October 10, 1997,
between the Company and Comerica Bank.
2.5 Second Amendment to Sublease dated as of October 10,
1997, between the Company and TMO, Inc.
2.6 Sublease dated as of October 10, 1997, between the
Company and Holcroft L.L.C. Pursuant to Item
601(b)(2) of Regulation S-K, schedules to this
Agreement have been omitted. The Registrant hereby
undertakes to furnish supplementally a copy of such
schedules to the Securities and Exchange Commission
upon request.
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FORM 8-K
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, on this 24th day of October
1997.
THERMO TERRATECH INC.
Paul F. Kelleher
-------------------------------
Paul F. Kelleher
Chief Accounting Officer
EXHIBIT 2.1
_________________________________
ASSET PURCHASE AGREEMENT
by and between
HOLCROFT L.L.C.
and
THERMO TERRATECH INC.
Dated as of October 10, 1997
---------------------------------
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS
1.1 Assets
1.2 Excluded Assets
1.3 Assets of Affiliates
1.4 Limited Assumption of Liabilities
ARTICLE II CONSIDERATION AND MANNER OF PAYMENT
2.1 Purchase Price
2.2 Post-Closing Adjustment
2.3. Noncompetition Payments
2.4. Purchase Price Allocation
ARTICLE III SELLER'S REPRESENTATIONS AND WARRANTIES
3.1 Organization and Good Standing
3.2 Corporate Authorization
3.3 No Violation
3.4 No Consent Required
3.5 Financial Statements
3.6 Absence of Undisclosed Liabilities
3.7 Assets
3.8 Compliance with Laws; Permits
3.9 Property
3.10 Leases
3.11 Contracts
3.12 Intellectual Property
3.13 Employee Benefit Plans
3.14 Salaries
3.15 Personnel Agreements, Plans and Arrangements
3.16 Workers Compensation and Medical Claims
3.17 Suppliers
3.18 Customers
3.19 Interest of Seller in Customers, etc.
3.20 Intercompany Transaction
3.21 Books and Records
3.22 Insurance Policies
3.23 Bank Accounts
3.24 Taxes
3.25 Litigation
3.26 Product Warranties
3.27 Environmental and Safety Requirements
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3.28 Conduct of the Business
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES
4.1 Organization and Good Standing
4.2 Authorization
4.3 No Violation
4.4 No Consent Required
ARTICLE V COVENANTS AND AGREEMENTS
5.1. Further Actions
5.2. Noncompetition and Nondisclosure
5.3. Holcroft Name
5.4. Offer of Employment
5.5. WARN Act
5.6. Letters of Credit
ARTICLE VI CLOSING
6.1. Closing
6.2. Deliveries by the Seller
6.3. Deliveries by Buyer
ARTICLE VIICOVENANTS AFTER CLOSING
7.1 Indemnification by Seller
7.2 Indemnification by Buyer
7.3 Indemnification Procedure for Third Party Claims
7.4 Failure to Give Timely Notice
ARTICLE VIII MISCELLANEOUS
8.1 Notices, Consents, etc.
8.2 Public Announcements
8.3 Severability
8.4 Amendment and Waiver
8.5 Documents
8.6 Counterparts
8.7 Expenses
8.8 Construction
8.9 Headings
8.10 Assignment
8.11 Definitions
8.12 Entire Agreement
8.13 Third Parties
8.14 Interpretative Matters
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8.15 Knowledge
8.16 Brokers and Transaction Payments
8.17 No Strict Construction
8.18 Counterparts
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GLOSSARY OF DEFINED TERMS
"90 Day Receivables"
"90 Day Receivables Note"
"Accountants"
"Agreement"
"Assets"
"Assumed Liabilities"
"Basket Threshold"
"Building and Fixtures"
"Business"
"Buyer Indemnified Party"
"Buyer"
"Cap"
"Chrysler Lease"
"Closing Date"
"Closing"
"Code"
"Contract Requiring Consent"
"Defense Counsel"
"Defense Notice"
"Employee Benefit Plans"
"Employee Pension Benefit Plan"
"Employee Welfare Benefit Plan"
"Employees"
"Environmental and Safety Requirements"
"ERISA"
"Estimated Net Book Value"
"Excluded Assets"
"Excluded Receivables"
"Excluded Liabilities"
"Final Net Book Value"
"Final Purchase Price"
"Final Purchase Price Adjustment Schedule"
"Financial Statements"
"GAAP"
"Hazardous Materials"
"Holcroft Division"
"Holdback Amount"
"Incurred But Not Reported"
"Indemnified Party"
"Indemnifying Party"
"Landlord"
"Lease"
"Letters of Credit"
"Liens"
"Losses"
"Material Contracts"
"Multi-employer Plan"
"Net Book Value"
"Note"
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"Permits"
"Plan Affiliate"
"Preliminary Net Book Value"
"Property"
"Proprietary Rights"
"Protest Notice"
"Purchase Price"
"Restrictive Covenants"
"Retained Receivables"
"Seller Indemnified Party"
"Seller"
"Severance Agreements"
"Sublease"
"Tax Returns"
"Tax"
"Term"
"Thermo"
"Third Party Claim"
"TMO Sublease"
"TMO"
"to the knowledge of Seller,"
"to the best knowledge of Seller"
"Transaction Documents"
"Union Contract"
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of
this 10th day of October, 1997, by and between THERMO TERRATECH
INC., a Delaware corporation ("Seller") and HOLCROFT L.L.C., a
Delaware limited liability company ("Buyer").
WHEREAS, the Holcroft division of Seller (the "Holcroft
Division") is engaged in the business of manufacturing, marketing
and servicing industrial heat treating furnaces (the "Business")
at its principal place of business located at 12068 Market
Street, Livonia, Michigan;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires
to purchase from Seller, the Business and substantially all of
Seller's assets used in the Business, upon the terms and
conditions set forth below;
WHEREAS, Thermo Electron Corporation, a Delaware corporation
("Thermo") owns approximately eighty-one percent (81%) of the
issued and outstanding common stock of Seller.
NOW THEREFORE, in consideration of the mutual covenants of
the parties set forth in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Seller is selling,
transferring and delivering to Buyer, free and clear of all
liens, mortgages, charges, security interests, pledges or other
encumbrances or adverse claims or interests of any nature
("Liens"), and Buyer is purchasing from Seller, the Business and
all of Seller's right, title and interest in and to all of the
assets of the Business (other than Excluded Assets) that are used
in or arise out of the conduct of the Business as of the Closing
Date, wherever located and whether or not all or any of said
assets appear on or are reflected upon Seller's books, records or
financial statements (collectively, the "Assets"), including, but
not limited to, the following:
(a) Tangible Personal Property. All molds and
fixtures, equipment and machinery, tools, real estate fixtures
(including, without limitation, cranes), vehicles (whether or not
registered under motor vehicle registration laws), furniture,
computer and EDP equipment, computer software, office furniture
and other similar personal property of Seller and leasehold
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improvements, in each case, used in the Business;
(b) Inventories and Supplies. All inventory of Seller
held in connection with and used in the Business, including
without limitation, raw materials, work-in-process, finished
goods, merchandise for resale, spare parts, and office, operating
and other supplies, whether or not located at the Holcroft
Division's principal place of business;
(c) Receivables. All notes and accounts receivable of
Seller used in the Business and all notes, bonds and other
evidences of indebtedness of any entity or person held by Seller
arising from the Business of Seller, including, without
limitation, all trade, employee, officer and other accounts
(including unbilled work-in-progress) and monies receivable,
except for the Excluded Receivables and the Retained Receivables;
(d) Contracts. All rights Seller may have under any
and all agreements, contracts, purchase orders, licenses (other
than the license agreement dated as of 10/1/93 between Seller and
Thermo Remediation Inc., together with any and all assets related
thereto) and leases (other than the sublease between the Seller
and TMO, Inc. and the Chrysler Lease relating to the Property)
pertaining to the Business including, without limitation, the
labor agreement dated as of 10/1/95 between the Holcroft Division
and Carpenters District Council of Detroit, Wayne, Oakland,
Macomb, St. Claire, Sanilac and Monroe Counties of the United
Brotherhood of Carpenters and Joiners of America and United
Brotherhood of Carpenters and Joiners of America, Millmen's Local
Union No. 1452 (the "Union Contract") and the Material Contracts
set forth in Schedule 3.11, except that Buyer does not assume any
late penalties or loss contracts that are known to the Seller at
the time of the Closing unless such late payments or loss
contracts are specifically reserved for in the Final Net Book
Value;
(e) Intellectual Property. All proprietary
information of Seller used in connection with the Business
including, without limitation, the Holcroft name and assumed
names wherever used, all patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether
or not reduced to practice); all trademarks, service marks, trade
dress, trade names and corporate names; all registered and
unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the
foregoing; all trade secrets, confidential information, ideas,
formulae, compositions, know-how, manufacturing and production
processes and techniques, research and development information,
drawings, specifications, designs, plans, improvements,
proposals, technical and computer data, documentation and
software, financial, business and marketing plans, and customer
and supplier lists and related information and all other
proprietary rights relating to the manufacture, sale or service
of products by, and the conduct of, the Business (collectively,
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"Proprietary Rights");
(f) Records. All records, files, and papers of Seller
pertaining to the Business, including but not limited to, sales
and purchase correspondence, past and current insurance policies,
books of account and employment records of those employees of
Seller hired by Buyer;
(g) Licenses, Permits and Approvals. All rights of
Seller in and to transferable permits, licenses, approvals and
authorizations by or of governmental authorities or third parties
("Permits") relating primarily to, or necessary for the continued
conduct of, the Business or required in connection with ownership
or operation of the Assets, to the extent assignable;
(h) Claims. All causes of actions, claims,
warranties, guarantees, refunds, rights of recovery and set-off
of every kind and character of Seller related directly to the
Assets or the Business, including, without limitation, rights and
claims against suppliers of inventory and other assets
transferred hereunder;
(i) Customer Property. The custody of all assets
owned by a customer of the Business and held by Seller on behalf
of such customer;
(j) Prepaids. All deferred charges, advances,
deposits, credit and other prepaid assets and expenses of Seller
relating to, or arising out of, the Business;
(k) Insurance. All insurance, warranty and
condemnation proceeds received by Seller after the Closing Date
with respect to damage, nonconformance of or loss to the Assets
and all transferable insurance policies relating to the Business
acceptable to Buyer, except to the extent that such proceeds or
policies relate to Excluded Liabilities;
(l) Cash. All cash and cash equivalents of Seller
relating to the Business, including, without limitation, all cash
receipts, lockboxes and bank accounts;
(m) Software and License Agreements. With respect to
the Holcroft Division, all of Seller's rights and obligations (i)
with respect to software used in the Business, including, without
limitation under the Business Cooperation Agreement between the
Holcroft Division and SCR Creroiserat S.A. dated May 12, 1995,
(ii) under the License Agreement between the Holcroft Division
and Camlaw, Ltd. dated June 26, 1992 and (iii) under the Business
Cooperation Agreement between the Holcroft Division and Sanken
Sangyo Co., Ltd. dated January 20, 1995; and
(n) Other Assets. All other properties and assets
owned or held by the Seller that are used primarily in, or are
necessary for the continued conduct of, or are otherwise
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customarily used in, the Business as of the Closing Date, whether
or not of a type falling within any of the categories of assets
or properties described above.
1.2 Excluded Assets. Notwithstanding the foregoing, the
following assets of Seller are retained by Seller and are
expressly excluded from the purchase and sale contemplated by
this Agreement (collectively, the "Excluded Assets"):
(a) Corporate Records and Tax Returns. The Seller's
formal corporate records, including Articles of Incorporation,
corporate seal, minute books, stock books and other records
having exclusively to do with the corporate organization of
Seller and all of Seller's Tax Returns and financial records;
(b) This Agreement. Seller's rights pursuant to or
under this Agreement;
(c) Nonassignable Permits. Any Permits which may not
be transferred without the consent, novation, waiver or approval
of a third person or entity and for which such consent, novation,
waiver or approval has not been obtained;
(d) Employment Agreements. All employment-related
agreements of Seller, and any and all rights and obligations
thereunder (except for the Union Contract);
(e) Certain Receivables. The Champion Credit Corp.
and Avtopromimport receivables totalling $845,940.90 at September
27, 1997 (the "Excluded Receivables") and those receivables set
forth on Schedule 1.2(e) totalling $2,007,003.04 at September 27,
1997 (the "Retained Receivables"). The Buyer agrees to promptly
remit any payments as received by Buyer on the Excluded
Receivables and the Retained Receivables to Seller.
(f) Insurance Policies. The insurance policies
obtained by Seller with respect to the Business or the Assets;
(g) Certain Property. All other properties and assets
owned or held by the Seller that are not used primarily in, or
are necessary for the continued conduct of, or are not otherwise
customarily used in, the Business as of the Closing Date,
including, without limitation, rights to the Seller's corporate
name and all assets related to remediation incinerators or soil
remediation technology;
(h) Employee Benefit Plans. All Employee Benefit
Plans of Seller; and
(i) License Agreement. The license agreement between
Seller and Thermo Remediation Inc., and any and all assets
relating thereto, including soil remediation technology.
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1.3 Assets of Affiliates. The real estate and building
used by Seller as its principal place of business for the
Business (the "Property") is owned by W&C Investment Co. (the
"Landlord"), leased by the Landlord to TMO, Inc., a wholly-owned
subsidiary of Thermo Electron Corporation ("TMO") and subleased
by TMO to Seller. The Seller agrees to enter into a sublease in
the form of Exhibit 1.3 hereto (the "Sublease") with Buyer.
1.4 Limited Assumption of Liabilities.
(a) Subject to the terms and conditions contained in
this Agreement, Buyer shall, at the Closing, assume and agree to
pay or perform, or to cause to be paid or performed, only those
liabilities of Seller that (i) are accurately reflected on the
Estimated Net Book Value; (ii) have been incurred by the Holcroft
Division since September 27, 1997, but only to the extent such
liabilities are trade payables, accruals or tax liabilities and
have been incurred in the ordinary course of business consistent
with past practice; (iii) arise under any contract, lease,
license, permit or other agreement assumed by Buyer pursuant to
Section 1.1(d) hereof or otherwise pursuant to this Agreement;
(iv) arise out of warranty obligations undertaken by the Holcroft
Division with respect to products shipped or sold, or services
rendered, prior to the Closing; (v) with respect to product or
service liability claims, arise due to events occurring after the
Closing regardless of whether such products or services were
shipped or performed before the Closing except that Seller shall
remain liable for any and all claims, suits or actions which
arise due to events occurring prior to Closing and which arise or
result from the manufacture by Seller of remediation incinerators
and/or units, including but not limited to soil remediation
units, the GDC incinerators and the Burns and Roe (CJ 4447) or
any claims which arise from exposure to asbestos from products
manufactured by Seller (except for claims arising out of the
negligence of Buyer) regardless of whether such claim arises due
to events occurring prior to or after the Closing Date; (vi) are
assumed by Buyer pursuant to Section 5.4 hereof, and (vii) with
respect to medical claims of Employees of the Holcroft Division,
arise due to events occurring after the Closing including without
limitation the post-closing treatment of preexisting conditions;
Seller shall remain liable for all claims incurred (i.e., service
provided) prior to the Closing, regardless of when such claims
are filed ("Incurred But Not Reported") (collectively, the
"Assumed Liabilities"). Notwithstanding anything to the contrary
contained in this Agreement or in any agreement, document,
certificate or instrument being delivered pursuant to this
Agreement (collectively, the "Transaction Documents"), Buyer's
assumption of the Assumed Liabilities shall only be to the extent
that the existence of such liabilities or obligations is not
contrary to any covenant, representation or warranty of Seller
under this Agreement.
(b) Without limiting the terms of Section 1.4(a)
above, Buyer is expressly not assuming, and Seller shall remain
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solely liable for, the following: (i) all environmental
liabilities or contamination which arise or result, directly or
indirectly, from conditions existing on or prior to the Closing
Date with respect to the Property, including, without limitation
all liabilities related to the Oakland Disposal/Bestway Recycling
litigation with respect to Waterford township; (ii) except as set
forth in Section 1.4(a), all claims, suits or actions which arise
due, directly or indirectly, to facts or circumstances existing
prior to the Closing; (iii) liability for checks written but not
yet cleared as of the Closing Date (unless such checks are
accurately reflected or included in the determination of the
Estimated Net Book Value); (iv) any liabilities or obligations
relating to medical claims of current or past employees of the
Holcroft Division arising due to events occurring prior to the
Closing, including, without limitation, run-off of claims and/or
deficit balances for reported claims arising due to events
occurring prior to the Closing and all liabilities Incurred But
Not Reported; (v) all product liability claims for any products
manufactured, or services performed, by Seller relating to
claims, suits or actions which arise due to events occurring
prior to the Closing, except that Seller shall remain liable for
any and all claims, suits or actions which arise or result from
the manufacture by Seller of remediation incinerators and/or
units, including but not limited to soil remediation units, the
GDC incinerators, and the Burns and Roe (CJ 4447) or any claims
which arise from exposure to asbestos from products manufactured
by Seller (except for claims arising out of the negligence of
Buyer) regardless of whether such claim arises prior to or after
the Closing Date; (vi) all liabilities which are assumed by
Seller pursuant to Section 5.4 hereof; and (vii) any liability
for Taxes with respect to taxable periods ending on or before the
Closing Date and the portion ending on the closing date of any
taxable period that begins before but has not ended on the
Closing Date (all such liabilities and obligations not being
assumed by Buyer, "Excluded Liabilities").
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Purchase Price.
(a) Subject to the provisions of Section 2.2 below,
the aggregate purchase price to be paid by Buyer to Seller for
the Business, the Assets and Seller's agreement to abide by the
Restrictive Covenants (as defined below) is (i) $13,000,000,
minus Excluded Receivables, minus the 90 Day Receivables (as
defined below), payable by Buyer at the Closing (net of the
Holdback Amount as defined in Section 2.1(b)) by wire transfer of
immediately available funds, plus (ii) $2,218,000, payable by
Buyer at the Closing by delivery of a promissory note in the form
of Exhibit 2.1(a)(ii) hereto (the "Note"), plus
(iii) $663,117.82, payable by Buyer at the Closing by delivery of
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a promissory note in the form of Exhibit 2.1(a)(iii) hereto (the
"90 Day Receivables Note") which amount shall equal 90% of the
aggregate amount of those accounts receivable of Seller, set
forth on Schedule 2.1 (the "90 Day Receivables"), plus (iv)
Buyer's assumption of the Assumed Liabilities (the "Purchase
Price"). The parties agree that all cash receipts related to
assumed receivables or other activities (expressly excluding
Excluded Receivables and Retained Receivables) after September
27, 1997 are for the benefit of Buyer and within six days of the
date hereof, by mutual agreement of the parties, such cash
receipts between September 27, 1997 and the Closing Date, less
liabilities assumed by Buyer pursuant to Section 1.4(a)(ii) but
paid by Seller and any receivables that are Excluded Receivables
or Retained Receivables will be remitted by wire transfer from
Seller to Buyer. Any checks issued by Seller after September 27,
1997 for items that relate to Excluded Assets or Excluded
Liabilities and items that were not accrued for on the Estimated
Net Book Value will remain the responsibility of Seller.
(b) The parties agree that Buyer shall holdback
$520,000 of the Purchase Price (the "Holdback Amount") pursuant
to Section 2.2 hereof.
(c) Prior to the Closing, Seller delivered to Buyer a
statement of the Company's net book value (the "Net Book Value")
of the Assets and the Assumed Liabilities based on the Company's
unaudited balance sheet dated as of September 27, 1997 (the
"Estimated Net Book Value"), calculated in accordance with GAAP
consistently applied by Seller and set forth on Exhibit 2.1(c).
The Purchase Price is based on the assumption that the Estimated
Net Book Value is equal to $13,218,000 (the "Preliminary Net Book
Value", as such amount was calculated on March 29, 1997 and as
set forth on Exhibit 2.1(c)). Because the parties have
determined that the Estimated Net Book Value exceeds the
Preliminary Net Book Value by $2,007,003.04, the Purchase Price
shall be paid in accordance with this Section 2.1, and, in
addition, Seller shall retain all right, title and interest in
and to the Retained Receivables having an aggregate value of
$2,007,003.04, which amount shall be equal to the difference
between the Estimated Net Book Value and the Preliminary Net Book
Value.
2.2 Post-Closing Adjustment. In addition, the Purchase
Price shall be subject to final adjustment as follows:
(a) Purchase Price Adjustment Schedule. As soon as
practicable following the Closing Date, but not later than 30
days after the Closing Date, Buyer shall deliver to Seller a
schedule (the "Final Purchase Price Adjustment Schedule") setting
forth Buyer's final determination of the Purchase Price (the
"Final Purchase Price"), based upon a net book value calculation
as of September 27, 1997 (the "Final Net Book Value"), which
shall be calculated in accordance with GAAP consistently applied
by Seller.
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(b) Protest Notice. Within 15 days of Buyer's
delivery of the Final Purchase Price Adjustment Schedule, Seller
may deliver written notice (the "Protest Notice") to Buyer of any
objections, and the basis therefor, that Seller may have to the
Final Purchase Price or the Final Net Book Value. The failure of
Seller to deliver such written notice within the prescribed time
period will constitute Seller's acceptance of the Final Purchase
Price and the Final Net Book Value, as determined by Buyer.
(c) Resolution of Buyer's Protest. If Buyer and
Seller are unable to resolve any disagreement between them within
10 days following Buyer's receipt of the Protest Notice, then the
items in dispute will be referred to a nationally recognized
independent accounting firm (other than Arthur Anderson, LLP or
Price Waterhouse LLP) (the "Accountants") for final
determination. If the Accountants determine that the Buyer's
calculation of the items in dispute is correct, the Seller shall
be liable for all of the fees and expenses of the Accountants of
the items in dispute. If the Accountants determine that the
Seller's calculation of the items in dispute is correct, the
Buyer shall be liable for all of the fees and expenses of the
Accountants. If the Accountants' final determination is between
the Buyer's calculation and Seller's calculation of the items in
dispute, the Accountants' fees and expenses will be allocated
between the Buyer and Seller by applying a pro rata, straight
line allocation based on the difference between both (i) each of
the Buyer's and Seller's calculation of the items in dispute on
the one hand, and (ii) the Accountants' final determination and
each of Buyer's and Seller's calculation of the items in dispute
on the other hand. For example, if the Buyer's calculation of
the items in dispute is $100,000, the Seller's calculation of the
items in dispute is $50,000 (thereby making the disputed
difference $50,000), and the Accountants' final determination is
$90,000, the Seller shall pay for 80% ($40,000 indicating the
difference between the Seller's and Accountants' determination
divided by $50,000 indicating the difference between the Buyer's
and Seller's calculation) and the Buyer shall pay for 20% of the
fees and expenses of the Accountants.
(d) Payment of Adjustment. Within 10 days following
the final determination of the Final Purchase Price and Final Net
Book Value pursuant to this Section 2.2:
(i) if the Final Net Book Value is less than
the Estimated Net Book Value, Buyer will be
entitled to receive, an amount equal to the
deficiency, up to the Holdback Amount net of any
amount for which Seller is liable pursuant to
Section 2.2(c) which deduction shall not exceed
$10,000.00; provided that any remaining balance of
the Holdback Amount shall be distributed to
Seller;
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(ii) if the Final Net Book Value is equal to
the Estimated Net Book Value, the Buyer will
distribute to Seller the entire Holdback Amount;
and
(iii) if the Final Net Book Value is greater
than the Estimated Net Book Value, the Buyer will
distribute the entire Holdback Amount to Seller
and Buyer will pay Seller the excess in an amount
up to, but in no event to exceed, $520,000 net of
any amount for which Buyer is liable pursuant to
Section 2.2(c), which deduction shall not exceed
$10,000.00.
(e) Agreed Upon Amounts. Buyer and Seller agree that
both the Estimated Net Book Value and the Final Net Book Value
will (i) reflect or include reserves which are equal to, or
greater than, the reserves set forth in the Preliminary Net Book
Value, (ii) take into account any credits which Buyer and Seller
reasonably agree to be due to customers of Seller for products
shipped prior to the Closing, (iii) exclude capitalized research
and development costs in the amount of $287,748.00, (iv) exclude
non-depreciated fixed assets related to relocation costs in the
amount of $46,517.14 and (v) employee advances not expensed in
the amount of $46,567.82. Seller has reserved $200,000 on the
Estimated Net Book Value, representing 50% of $400,000 of slow
moving or obsolete inventory, for which no further purchase price
adjustment will be made. If there is any slow moving or obsolete
inventory in excess of $400,000 but less than $500,000, an
adjustment to the Final Net Book Value will be made to the extent
of 50% of such amount; for any amounts in excess of $500,000 a
100% adjustment will be made subject to Section 2.2(f) below.
(f) Limitation of Liability; Exclusive Remedy.
Notwithstanding anything to the contrary in this Agreement or any
Transaction Document, in no event shall any adjustment to the
Purchase Price in favor of Buyer exceed the aggregate of the
Holdback Amount and in no event shall any adjustment to the
Purchase Price in favor of Seller exceed $520,000. The
provisions of this Section 2.2 shall be the exclusive remedy by
which the parties may cause adjustments to the Purchase Price,
and neither party shall have any recourse to any other provision
of this Agreement or any Transaction Document to adjust the
Purchase Price to any extent not provided for in this Section
2.2; provided, however, that the foregoing shall not prevent (i)
the Buyer from asserting any claims for indemnification under
Article 7 hereof, to the extent that Buyer has not submitted a
claim for adjustment to the Purchase Price pursuant to this
Section 2.2 and did not, in good faith, know or believe, prior to
the time the Buyer delivers its Final Purchase Price Adjustment
Schedule, that such claims for indemnification existed or (ii)
the Seller from asserting any claims for indemnification under
Article 7 hereof.
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2.3. Noncompetition Payments. Buyer and the Seller hereby
agree that $50,000 of the Purchase Price shall be in
consideration for Seller's agreement to abide by the Restrictive
Covenants (as defined herein).
2.4. Purchase Price Allocation. The Buyer and Seller shall
attempt to allocate the cash portion of the Purchase Price among
the Assets by mutual written agreement within one hundred and
eighty (180) days after the Closing. Seller and Buyer agree to
make all appropriate tax filings on a basis consistent with the
agreed allocation, if any.
ARTICLE III
SELLER'S REPRESENTATIONS AND WARRANTIES
As an inducement to Buyer to enter into and perform its
obligations under this Agreement, Seller represents and warrants
to and with Buyer, on the date hereof, as follows:
3.1 Organization and Good Standing. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Seller has full
corporate power and authority to execute and deliver the
Transaction Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Seller is duly
licensed and qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the
location of the Assets or the character of the operations of the
Business requires such license or qualification, except for those
jurisdictions where the failure to be so qualified or in good
standing would not individually or in the aggregate have a
material adverse effect on the Assets or the operations of the
Business.
3.2 Corporate Authorization. The execution and delivery of
this Agreement and the other Transaction Documents, and the
performance by Seller of its obligations hereunder and
thereunder, have been duly authorized by all necessary corporate
action. This Agreement and the other Transaction Documents to
which Seller is a party constitute the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance
with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors
generally, and to general principles of equity, whether applied
by a court of law or equity.
3.3 No Violation. The execution, delivery and performance
by Seller of the Transaction Documents to which it is a party and
the consummation of the transactions contemplated herein and
therein will not:
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(a) except as set forth in Schedule 3.3, result in the
breach of any of the terms or conditions of, or constitute a
default under, or in any manner release any party thereto from
any obligation under, any mortgage, note, bond, indenture,
contract, agreement, license or other instrument or obligation of
any kind or nature by which Seller, the Business or any of the
Assets may be bound.
(b) violate any order, writ, injunction, regulation,
statute or decree of any court, administrative agency, or
governmental body specifically applicable to Seller, the Assets
or the Business; or
(c) violate any provision of the Articles of
Incorporation, Bylaws or Charter Documents of Seller.
3.4 No Consent Required. Except as set forth on Schedule
3.4, no consent, approval, order or authorization of, or
declaration, filing or registration with, any person, entity or
governmental authority is required to be made or obtained by
Seller in connection with the authorization, execution, delivery
or performance of this Agreement, the other Transaction Documents
or the transactions contemplated hereby and thereby.
3.5 Financial Statements. Schedule 3.5 contains the
following financial statements of the Holcroft Division of Seller
(the "Financial Statements"):
(i) The unaudited financial statements for
fiscal years ended March 28, 1992 through March 29,
1997; and
(ii) The unaudited interim financial
statements for the six months ended September 27,
1997.
Each of the Financial Statements is complete and correct in
all material respects, is consistent with the books and records
of the Holcroft Division and fairly presents the Holcroft
Division's financial condition, assets and liabilities as of its
respective dates and the results of operations and cash flows for
the periods related thereto. The Financial Statements were
prepared in accordance with GAAP consistently applied by Seller
(except for footnote disclosure).
3.6 Absence of Undisclosed Liabilities. As of the Closin
Date, to Seller's knowledge, Seller will not have any material
debts, liabilities or obligations that can reasonably be expected
to have a material adverse effect on the Business or the Assets
(whether accrued, absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or otherwise and whether due or
to become due) arising out of transactions entered into on or
prior to the Closing Date, or any transaction, series of
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transactions, action or inaction occurring on or prior to the
Closing Date, or any state of facts or condition existing on or
prior to the Closing Date (regardless of when such liability or
obligation is asserted), including, but not limited to,
liabilities or obligations on account of Taxes or governmental
charges or penalties, interest or fines thereon or in respect
thereof, except (a) as and to the extent clearly and accurately
reflected and accrued for or reserved against in the Estimated
Net Book Value, (b) for liabilities specifically delineated on
Schedule 3.6, (c) for liabilities expressly disclosed on any
Schedule hereto and (d) for liabilities incurred in the ordinary
course of business since September 27, 1997.
3.7 Assets.
(a) Title. Except for the Property which is the
subject of the Sublease and except as set forth on Schedule 3.7,
Seller owns all of the Assets and the Assets constitute all of
the property and assets which are considered part of the Business
and all of the assets deemed necessary by Seller to conduct the
Business as presently conducted. Seller has the right to convey,
and upon the consummation of the transactions contemplated by
this Agreement Seller will have conveyed and Buyer will be vested
with, good and marketable title and interest in and to the
Assets, free and clear of all Liens except as set forth on
Schedule 3.7.
(b) Inventories. Except as set forth on Schedule 3.7,
the inventories of Seller related to the Business are in good and
saleable condition, subject to the reserves used in determining
the Estimated Net Book Value, which reserves are sufficient to
cover all inventory which is not good and saleable in the
ordinary course of business, obsolete inventory, or materials
below standard quality. The inventories constituting raw
materials are of a type that are readily useable in connection
with the finished goods offered for sale by the Seller.
(c) Accounts Receivable. All of the Seller's accounts
receivable arising out of, or related to, the Business have
arisen in bona fide arm's-length transactions in the ordinary
course of business. Except to the extent of any reserves for bad
debts set forth in the determination of the Estimated Net Book
Value, which is sufficient to cover all bad debts, all such
receivables are valid and binding obligations of the account
debtors without any counterclaims, set-offs or other defenses
thereto and are collectible in the ordinary course of business.
(d) Condition and Location. Except as set forth in
Schedule 3.7, on the Closing Date, the tangible, personal
property comprising the Assets (other than inventory) is in good
operating condition and is useable in the ordinary course of
business. All of such tangible assets which are part of the
Assets are in good condition and repair, ordinary wear and tear
excepted. None of such Assets requires any repair or
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replacement, except for maintenance in the ordinary course of
business. Except as set forth on Schedule 3.7, none of the
tangible personal property of the Seller used in the Business is
held under any lease, security agreement, conditional sales
contract or other title retention or security arrangement, or is
located other than at the Property.
(e) Unbilled Work-in-Progress. The current status of
the Company's contracts with respect to unbilled work-in-progress
is accurately reflected in the Estimated Net Book Value.
3.8 Compliance with Laws; Permits. Seller, with respect to
its Holcroft Division, is not in material violation of any law,
regulation or requirement applicable to it, the Assets, any
Employee Benefit Plans or the operation of the Business, nor has
the Seller received written notice of any such violation, that
individually or in the aggregate would have a material adverse
affect on the Assets or the operation of the Business. Seller
holds all of the material Permits necessary or desirable for the
current use, occupancy or operation of the Assets, except where
failure to obtain such Permits would not individually, or in the
aggregate, have a material adverse affect on the Assets or the
Business, and all of which are set forth on Schedule 3.8. Seller
is in compliance with each of such Permits, all of which are in
full force and effect. Except as set forth in Schedule 3.8, each
of the Permits is freely transferable and will constitute part of
the Assets. Seller further represents and warrants that all of
its employees at the Holcroft Division have proper citizenship
and/or work authorization documents.
3.9 Property. The Property constitutes all real property
used and occupied by Seller in connection with the Business. The
Property is subject to a lease between TMO and Landlord (the
"Lease"), and to a sublease between TMO and Seller (the "TMO
Sublease"). Each of the Lease and the TMO Sublease is in full
force and effect and no default by TMO or Seller has occurred
under the Lease or the TMO Sublease.
(a) Easements. Seller has all easements and rights
necessary to conduct the Business on the Property as presently
conducted;
(b) Condemnation. No portion of the Property is
subject to any pending condemnation proceeding or proceeding by
any public or quasi-public authority materially adverse to the
Property and, to the knowledge of Seller, there is no threatened
condemnation or proceeding with respect to the Property;
(c) Condition. To the knowledge of Seller, the
buildings and fixtures located on the Property including, without
limitation, heating, ventilation, mechanical, electrical, sewer,
sprinkler and air conditioning systems, roof, foundation and
floors (the "Building and Fixtures"), have been properly
maintained and are in operating condition. To the knowledge of
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Seller, the Building and Fixtures are in good operating
condition, are substantially fit for the purposes for which they
are being utilized, and are not in need of any material repair or
replacement;
(d) Zoning. To the knowledge of Seller, except as
disclosed in Schedule 3.9(d), the Property (or the use, occupancy
and ownership thereof) does not violate any zoning, subdivision,
health, safety, handicapped persons, landmark preservation,
wetlands preservation, building, land use or other ordinances,
laws, codes or regulations or any covenants, restrictions or
other documents of record (including the Americans with
Disabilities Act), nor, has any such violation been claimed by,
nor has any notice of any violation been issued to Seller by any
governmental, public or quasi-public authority;
(e) Subleases. Except as set forth on Schedule
3.9(e), there are no leases, subleases, licenses, concessions or
other agreements, written or oral, granting to any party or
parties, other than Buyer, the right of use or occupancy of any
portion of the Property; and
(f) Utilities. The Property is supplied with
utilities and other services necessary for the operation of the
Business as presently conducted, and all such services are
adequate to conduct that portion of the Business presently
conducted at the Property and are, to the knowledge of Seller, in
accordance with all laws, ordinances, rules and regulations
applicable to Seller or the Property, except where failure to
comply with such laws, ordinances, rules and regulations would
not have individually or in the aggregate a material adverse
effect on the Assets or in the operations of the Business as
presently conducted.
3.10 Leases. All leases of the personal property leased by
Seller in connection with the Business, including all such leases
with related parties or affiliates, are listed on Schedule 3.10,
correct and complete copies of which previously have been
furnished to Buyer. All leases with affiliates and related
parties, if any, carry terms and conditions no less favorable nor
more favorable in all material respects to the Seller than those
which could have obtained in arm's-length transactions with
unrelated third parties. Seller enjoys peaceful and undisturbed
possession under all such leases, and all of such leases are
valid and in full force and effect and neither Seller, nor to the
knowledge of Seller, any other party thereto, is in default under
any of such leases and no event has occurred which with the
giving of notice or the passage of time or both could constitute
a default under any of such leases.
3.11 Contracts. Schedule 3.11 is a correct and complete
list of every material contract, agreement, purchase order,
relationship or commitment, written or oral, arising out of or
related to the Business, to which Seller is a party or by which
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it or any of the Assets are bound (the "Material Contracts"),
correct and complete copies of which previously have been
provided to the Buyer. Except as set forth on Schedule 3.11,
each of the Material Contracts may be assigned to Buyer without
the consent, approval, novation or waiver of any third party.
Seller is not in default, and no event has occurred which with
the giving of notice or the passage of time or both would
constitute a default by Seller, under any Material Contract. To
the knowledge of Seller, no other party to the Material
Contracts, is in default under a Material Contract and no event
has occurred which with the giving of notice or the passage of
time or both could constitute a default under any of such
Material Contracts. Since March 29, 1997, there has been no
cancellation or threatened termination of a Material Contract.
For purposes of this Agreement the term "Material Contracts"
shall include all contracts which (i) require aggregate payments
to or by Seller in excess of $20,000 or (ii) have a term or
effective period longer than 1 (one) year in duration.
3.12 Intellectual Property. Schedule 3.12 contains a
complete and correct list of all Proprietary Rights owned by
Seller which are used in connection with the Business, including,
without limitation, filed and pending patent applications and
applications for the registration of other Proprietary Rights
owned or filed by Seller. Schedule 3.12 also contains a complete
and correct list of all licenses and other rights granted by
Seller to any third party with respect to the Proprietary Rights
and licenses and other rights granted by any third party to
Seller in connection with the Business. With respect to the
Proprietary Rights: (a) Seller owns and possesses all right,
title and interest in and to, or has a valid license to use, all
of the Proprietary Rights necessary for the operation of the
Business as presently conducted and none of such Proprietary
Rights have been abandoned; (b) no claim by any third party
contesting the validity, enforceability, use or ownership of any
such Proprietary Rights has been made, is currently outstanding
or, to the knowledge of Seller, is threatened and, to the
knowledge of Seller, there is no reasonable basis for any such
claim; (c) neither Seller nor any registered agents of Seller
have received any notices of, nor is Seller aware of any
reasonable basis for, an allegation of, any infringement or
misappropriation by, or conflict with, any third party with
respect to such Proprietary Rights, nor has Seller or any
registered agent of Seller received any written claims of
infringement or misappropriation of or other conflict with any
Proprietary Rights of any third party; and (d) Seller, in
operating the Holcroft Division, has not infringed,
misappropriated or otherwise violated any Proprietary Rights of
any third parties, and Seller is not aware of any infringement,
misappropriation or conflict which will occur as a result of the
continued operation of the Business.
3.13 Employee Benefit Plans. With respect to the employees
of the Holcroft Division and except as set forth in
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Schedule 3.13, neither Seller nor any Plan Affiliate has
maintained, sponsored, adopted, made contributions to or
obligated itself to make contributions to or to pay any benefits
or grant rights under or with respect to any "Employee Pension
Benefit Plan" (as defined in Section 3(2) of ERISA), "Employee
Welfare Benefit Plan" (as defined in Section 3(1) of ERISA),
"Multi-employer Plan" (as defined in Section 3(37) of ERISA),
plan of deferred compensation, medical plan, life insurance plan,
long-term disability plan, dental plan or other plan providing
for the welfare of any of Seller's or any Plan Affiliate's
employees or former employees or beneficiaries thereof, personnel
policy (including but not limited to vacation time, holiday pay,
bonus programs, moving expense reimbursement programs and sick
leave), excess benefit plan, bonus or incentive plan (including
but not limited to stock options, restricted stock, stock bonus
and deferred bonus plans), salary reduction agreement,
change-of-control agreement, employment agreement, consulting
agreement, workers compensation law, unemployment compensation
law, social security law or any other benefit, program or
contract (all such plans listed on Schedule 3.13 collectively,
"Employee Benefit Plans"), whether written, voluntary or pursuant
to a collective bargaining agreement or law, which could give
rise to or result in Seller or such Plan Affiliate having any
debt, liability, claim or obligation of any kind or nature,
whether accrued, absolute, contingent, direct, indirect, known or
unknown, perfected or inchoate or otherwise and whether or not
due or to become due. Correct and complete copies of all
Employee Benefit Plans previously have been furnished to Buyer.
For purposes of this Agreement, "Plan Affiliate" means any person
or entity with which Seller constitutes all or part of a
controlled group of corporations, a group of trades or businesses
under common control or an affiliated service group, as each of
those terms are defined in Section 414 of the Code.
3.14 Salaries. Schedule 3.14 is a true, complete and
correct list setting forth, with respect to the Holcroft Division
(i) the names and current compensation rate and compensation of
all individuals presently employed by Seller on a salaried basis,
(ii) the names and current compensation rate of all individuals
presently employed by the Seller on an hourly or piecework basis
and (iii) the names and total annual compensation for all
independent contractors who render services on a regular basis to
the Seller whose current annual compensation is in excess of
$20,000. Except as set forth in Schedule 3.14, no person listed
thereon has received any bonus or increase in compensation since
March 29, 1997 and there has been no "general increase" in the
compensation or rate of compensation payable to any such
employees since March 29, 1997 nor since that date has there been
any promise to the employees listed on Schedule 3.14, orally or
in writing, of any bonus or increase in compensation, whether or
not legally binding, except for increases in the ordinary course
of business consistent with Seller's past compensation practices
and obligations incurred under existing Employee Benefit Plans
and pursuant to the Union Contract.
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3.15 Personnel Agreements, Plans and Arrangements. Except
for the items listed in Schedule 3.15, Seller, with respect to
the Holcroft Division, is not a party to or obligated to any (a)
outstanding contracts with current or former employees, agents,
consultants, advisers, salesmen, sales representatives,
distributors, sales agents, independent contractors, or dealers,
or (b) collective bargaining agreements or contracts with any
labor union or other representative of employees or any employee
benefits provided for by any such agreement, correct and complete
copies of which previously have been furnished to Buyer. With
respect to the Holcroft Division, no strike, union organizational
activity, allegation, charge or complaint of employment
discrimination or other similar occurrence has occurred during
the past three fiscal years of Seller or is pending or, to the
knowledge of Seller, threatened against Seller nor does Seller
know any basis for any such allegation, charge, or complaint.
With respect to the Holcroft Division, Seller has complied in all
material respects with all applicable laws relating to the
employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the
payment of social security and other taxes. There are no
administrative charges or court complaints pending or, to the
knowledge of Seller, threatened against Seller, relating to the
Holcroft Division, before the U.S. Equal Employment Opportunity
Commission or any state or federal court or agency concerning
alleged employment discrimination or any other matters relating
to the employment of labor.
3.16 Workers Compensation and Medical Claims. Schedule 3.16
sets forth all expenses, obligations, duties and liabilities
relating to any claims by employees and former employees
(including dependents and spouses) of the Holcroft Division (or
predecessors) made since April 1, 1995 and the extent of any
specific accrual on or reserve therefor set forth on the
Financial Statements and used in determining the Estimated Net
Book Value, for (a) costs, expenses and other liabilities under
any workers compensation laws, regulations, requirements or
programs and (b) any other medical costs and expenses. Except as
set forth on Schedule 3.16, to the knowledge of Seller, no
claims, injuries, fact, event or condition exists which would
give rise to a material claim (individually or in the aggregate)
by employees and former employees (including dependents and
spouses) of the Holcroft Division of Seller under any Employee
Benefit Plans that comply with workers compensation laws,
regulations, requirements or programs or that provide for any
other medical costs and expenses or under any similar plans or
programs maintained or contributed to by Buyer following the
Closing Date.
3.17 Suppliers. Schedule 3.17 is a complete and correct
list of the ten largest suppliers to the Holcroft Division (in
terms of the Seller's purchases from such suppliers during the
fiscal year ended March 29, 1997) of key materials and services
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and commodities, exclusive of utility services. In the last
twelve months, no such supplier has canceled or otherwise
terminated, or, to the knowledge of Seller, threatened to cancel
or terminate, its relationship with Seller. Seller has not
received any written notice or oral notice and has no knowledge
that any such supplier intends to cancel or otherwise modify its
relationship with Seller on account of the acquisition of the
Assets by Buyer or otherwise.
3.18 Customers. Schedule 3.18 is a complete list by dollar
volume of sales made or services provided within Seller's fiscal
years ended March 30, 1996 and March 29, 1997, to the twenty
largest customers of the Holcroft Division. In the last twelve
months, no such customer has canceled or otherwise terminated,
or, to the knowledge of Seller, threatened to cancel or otherwise
terminate, its relationship with Seller, or reduced, or
threatened to reduce, its business with the Seller. Seller has
not received any written or oral notice and has no knowledge that
any such customer intends to cancel or otherwise modify its
relationship with Seller on account of the acquisition of the
Assets by Buyer or otherwise. Seller represents and warrants
that, with respect to the Holcroft Division, (i) no credits (for
any reason, whether due to returns, discounts or otherwise) are
due to any customers that are not reflected in the Estimated Net
Book Value and (ii) no penalty payments resulting from Seller's
lack of performance under any contract are currently due and
owing, or, to the knowledge of Seller, will be due to any
customers that are not adequately reserved for in the Estimated
Net Book Value.
3.19 Interest of Seller in Customers, etc. Except as set
forth in Schedule 3.19, neither Seller nor any of its respective
affiliates has any direct or indirect interest in any competitor,
supplier or customer of the Holcroft Division or in any person
from whom or to whom the Holcroft Division leases any real or
personal property or in any other person with whom the Holcroft
Division has any business relationship.
3.20 Intercompany Transaction. Schedule 3.20 describes, in
respect of the Business, (i) all material management,
administrative, computer, telephone or other services provided by
any of Seller's affiliates to the Holcroft Division and all such
services provided by the Holcroft Division to any of Seller's
affiliates, and (ii) all other material contracts, agreements,
arrangements or transactions (including the purchase and sale of
inventory, supplies and other goods) between the Holcroft
Division, on the one hand, and any of Seller's affiliates on the
other hand, currently in effect, in each case setting forth the
terms thereof if not effected on an arm's-length basis.
3.21 Books and Records. All the books, records and accounts
included in the Assets are in all material respects accurate and
complete, are in accordance with good business practice and all
laws, regulations and rules applicable to the Business and
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accurately present and reflect in all material respects all of
the transactions described therein.
3.22 Insurance Policies. Schedule 3.22 contains a correct
and complete list and description (including policy numbers), of
all past and present insurance policies owned by Seller
pertaining to the Business, including, without limitation, all
occurrence product liability policies covering the period
beginning January 1, 1992 and ending on the Closing Date. Copies
of all such insurance policies have been previously provided to
Buyer. The present insurance policies are in full force and
effect, and Seller is not in default under any of them. Seller
has not received any written or oral notice of cancellation or
intent to cancel or increase premiums with respect to present
insurance policies nor, to the knowledge of Seller, is there any
basis for any such action. Schedule 3.22 also contains a list of
all pending claims with any insurance Seller and any instances
within the previous three years of a denial of coverage of the
Seller by any insurance Seller which relate to the Business.
3.23 Bank Accounts. Schedule 3.23 is a complete and correct
list of each bank in which Seller has an account, safe deposit
box, or lockbox pertaining to the Business, the number of each
such account or box and the names of all persons authorized to
draw thereon or to have access thereto.
3.24 Taxes. Seller has filed all Tax Returns that it is
required to have filed prior to the Closing in connection with
the Assets or the operation of the Business and such returns are
true and correct. Seller has paid all Taxes, interest and
penalties, if any, reflected on such Tax Returns or otherwise due
and payable by it in connection with the Assets or the operation
of the Business. Except as set forth in the calculation of the
Estimated Net Book Value, Buyer does not have any liability
whatsoever for Taxes with respect to taxable periods ending on or
before September 27, 1997 and the portion ending on the closing
date of any taxable period that begins before but has not ended
on the Closing Date. Any deficiencies proposed as a result of
any governmental audits of such Tax Returns have been paid or
settled, and there are no present disputes as to Taxes payable by
Seller in connection with the Assets or the operation of the
Business.
3.25 Litigation. Except as set forth in Schedule 3.25,
there is no claim, counter-claim, action, suit, order, proceeding
or investigation pending or, to the knowledge of Seller,
threatened against or involving Seller (or pending or threatened
against any of the officers, directors or key employees of Seller
with respect to its business activities on behalf of Seller) or
any Employee Benefit Plan, with respect to or affecting the
Assets or the Business, or relating to the transactions
contemplated hereby, before any court, agency or other
governmental body; nor, to the knowledge of Seller, is there any
reason for any such claim, action, suit, proceeding or
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governmental investigation. Seller is not, with respect to the
Assets or the Business, directly subject to or affected by any
order, judgment, decree or ruling of any court or governmental
agency. Seller does not have any reason to believe it is
exposed, from a legal standpoint, to any liability which may be
material to the Business or the Assets, except as set forth in
Schedule 3.25. Except as set forth in Schedule 3.25, Seller is
not engaged in any legal action to recover monies due it or for
damages sustained by it.
3.26 Product Warranties. To the knowledge of the Seller,
all products sold, serviced or distributed by the Holcroft
Division of Seller at any time on or prior to the Closing Date
have been in conformance with all applicable contractual
commitments and all express or implied warranties of Seller, and
no material liability exists for replacement thereof or other
damages in connection with such sales or deliveries at any time
prior to the Closing Date (except as may be reflected or reserved
for in the determination of the Estimated Net Book Value, which
is adequate to cover all potential product claims). Seller's
standard terms and conditions of sale with respect to the
Holcroft Division, including guarantee and warranty provisions,
are set forth in Schedule 3.26. Except as set forth in Schedule
3.26, no products sold, serviced or distributed by Seller through
the Holcroft Division prior to the Closing Date are subject to
any guarantee or warranty other than Seller's standard terms and
conditions of sale.
3.27 Environmental and Safety Requirements. With respect to
the Holcroft Division:
(a) No Hazardous Materials. Except as set forth in
Schedule 3.27, Seller has never generated, transported, treated,
stored, disposed of or otherwise handled any Hazardous Materials
at any site, location or facility used by Seller in the Business,
and no such Hazardous Materials are present on, in or under any
real property presently owned or used by Seller in the Business
(including the Properties), and such property does not contain
(including without limitation, containment by means of any
underground storage tank) any Hazardous Materials in violation of
any applicable Environmental and Safety Requirement. Except as
set forth on Schedule 3.27, to the Seller's knowledge there are
no underground storage tanks on the Property, and those listed on
Schedule 3.27 are maintained and monitored in compliance with all
applicable Environmental and Safety Requirements.
(b) No Actions or Proceedings. Except as set forth in
Schedule 3.27, Seller has not been subject to, nor has any Seller
received any notice (written or oral) of, any private,
administrative or judicial action, order, or investigation or any
notice (written or oral) of any intended private, administrative,
or judicial action, order or investigation relating to the
presence or alleged presence of Hazardous Materials in, under or
upon any real property owned or used by Seller in the Business,
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and other than as set forth on Schedule 3.27, to the Seller's
knowledge there is no reasonable basis for any such notice or
action; and there are no pending or threatened actions,
investigations or orders or proceedings (or notices of potential
actions or proceedings) from any governmental agency or any other
entity regarding any matter relating to Environmental and Safety
Requirement.
(c) Other Condition. Except as set forth in Schedule
3.27, to the Seller's knowledge no facts, events or conditions
with respect to the past or present operations or facilities of
Seller, the Assets or the Business exist which could reasonably
be expected to interfere with or prevent continued compliance
with, or could give rise to any common law or statutory liability
or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation against or involving the
Assets or the Business under any Environmental and Safety
Requirement based on any such fact, event or circumstance,
including, without limitation, liability for cleanup costs,
personal injury or property damage.
(d) Definitions. For purposes of this Agreement,
"Environmental and Safety Requirements" means all federal, state
and local laws, rules, regulations, ordinances, orders, statutes,
actions, policies and requirements relating to public health and
safety, worker health and safety, pollution or protection of the
environment, all through the Closing Date. For purposes of this
Agreement, "Hazardous Materials" means (i) hazardous substances,
extremely hazardous substances or hazardous wastes, as those
terms are defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. S9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. S6901 et seq.,
and any other Environmental and Safety Requirements; (ii)
petroleum, including without limitation, crude oil or any
fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds
per square inch absolute); (iii) any radioactive material,
including, without limitation, any source, special nuclear, or
by-product material as defined in 42 U.S.C. S2011 et seq.; (iv)
asbestos in any form or condition; and (v) any other material,
substance or waste to which liability or standards of conduct may
be imposed under any Environmental and Safety Requirements.
3.28 Conduct of the Business. Except as set forth on
Schedule 3.28, since March 29, 1997, Seller has conducted the
Business only in the ordinary course of business consistent with
past custom and practice, and has incurred no liabilities other
than in the ordinary course of business consistent with past
custom and practice and there has been no material adverse change
in the Assets, condition (financial or otherwise), operating
results, or the knowledge of Seller, employee or customer
relations, business activities or, business prospects of Seller
or the Business. Without limitation of the foregoing and except
as set forth on Schedule 3.28, since March 29, 1997, Seller has
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not, in connection with the Business:
(a) Dispositions. Voluntarily or involuntarily sold,
transferred, abandoned, surrendered, subjected to a Lien or
otherwise disposed of any material assets or property rights
relating to or used in the operation of the Business other than
in the ordinary course of business, consistent with past action
and practice;
(b) Accounting. Changed any accounting principles,
methods or practices utilized by it or changed any of its
depreciation rates or amortization policies or rates;
(c) Loans. Other than as set forth on the Estimated
Net Book Value, made any loan or advance to any party;
(d) Indebtedness. Other than as set forth on the
Estimated Net Book Value, incurred debt, liabilities, or
obligations of any nature whether accrued, absolute, contingent,
direct, indirect, perfected or otherwise and whether due or to
become due other than in the ordinary course of business,
consistent with past action and practice;
(e) Material Transactions. Entered into any material
transaction involving a capital expenditure or commitment of more
than $25,000, other than in the ordinary course of business, and
if still in existence, properly disclosed in the Schedules
hereto.
(f) Other. Committed to any of the foregoing, except
in the ordinary course.
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
As an inducement to Seller to enter into and perform its
obligations under this Agreement, Buyer hereby represents and
warrants to and with Seller (on the date hereof and as of the
Closing) as follows:
4.1 Organization and Good Standing. Buyer is duly
organized, validly existing and in good standing under the laws
of the State of Delaware and has full power and authority to
execute and deliver this Agreement and the other Transaction
Documents to be executed by it, to perform its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Buyer is duly licensed and
qualified to do business as a foreign limited liability company
and is in good standing in the state of Michigan.
4.2 Authorization. The execution and delivery of this
Agreement and the Transaction Documents, and the performance by
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Buyer of its obligations hereunder and thereunder, have been duly
authorized by all necessary organizational action. This
Agreement and the other Transaction Documents to which Buyer is a
party constitute the legal, valid and binding obligations of
Buyer enforceable against Buyer in accordance with their
respective terms, subject to the applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors
generally, and to general principles of equity, whether applied
by a court of law or equity.
4.3 No Violation. The execution, delivery and performance
by Buyer of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated herein and
therein will not:
(a) result in the breach of any of the terms or
conditions of, or constitute a default under, or in any manner
release any party thereto from any obligation under, any
mortgage, note, bond, contract, indenture, agreement, license or
other instrument or obligation of any kind or nature to which
Buyer is now a party or by which any of its properties or assets
may be bound;
(b) violate any order, writ, injunction regulation,
statute or decree of any court, administrative agency or
governmental body specifically applicable to Buyer; or
(c) violate any provision of the Buyer's Operating
Agreement.
4.4 No Consent Required. No consent, approval, order or
authorization of, or declaration, filing or registration with,
any person or governmental authority, including, but not limited
to, any Hart-Scott-Rodino filing, is required to be made or
obtained by Buyer in connection with the authorization,
execution, delivery or performance of this Agreement, the other
Transaction Documents or the transactions contemplated hereby and
thereby.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1. Further Actions.
(a) Each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all reasonable things necessary,
proper or advisable to consummate the transactions contemplated
by this Agreement and the Transaction Documents, including using
all reasonable efforts to: (i) give all notices and effect all
necessary registrations and filings; and (ii) defend any lawsuits
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or other legal proceedings, whether judicial or administrative
and whether brought derivatively or on behalf of third parties
(including governmental agencies or officials), challenging this
Agreement, the Transaction Documents, or the consummation of the
transactions contemplated hereby and thereby. If at any time
after the Closing any further action is deemed necessary or
desirable by either party to carry out the purposes of this
Agreement or the Transaction Documents, the proper officers
and/or directors of Buyer and the Seller shall use all reasonable
efforts to take such action.
(b) To the extent that a third party consent or waiver
is necessary to assign to Buyer any claim, contract, agreement,
license, lease, commitment, purchase order or sales order that is
being transferred to Buyer pursuant to Section 1.1 hereof (a
"Contract Requiring Consent") and such consent or waiver is not
obtained prior to the Closing Date, Seller shall, commencing on
the Closing Date and continuing for the term of such Contract
Requiring Consent, use its (i) best efforts to provide to Buyer
the benefits of such Contract Requiring Consent and (ii)
reasonable efforts consistent with past practices, to enforce for
the benefit of Buyer, or allow Buyer to enforce (and, solely for
such purpose, Seller hereby constitutes and appoints Buyer as its
true and lawful attorney-in-fact until revoked in a writing
delivered by Seller to Buyer), with Buyer assuming Seller's
obligations thereunder, any and all rights of Seller under such
Contract Requiring Consent against the issuer thereof or the
other party or parties thereto. In addition, Seller will pay
promptly to Buyer when received all monies received by Seller
after September 27, 1997 under any Contract Requiring Consent to
the extent that Buyer would be entitled thereto pursuant to this
Agreement. Seller shall have no other duties or obligations with
respect to any such Contract Requiring Consent, and the failure
or inability to obtain any necessary consent or waiver with
respect thereto shall in no event (i) be a breach of this
Agreement so long as Seller has carried out its obligations under
this Section 5.1(b) or (ii) limit, or in any way affect, Buyer's
assumption of the liabilities that arise under such Contract
Requiring Consent pursuant to Section 1.4(a) hereof.
5.2. Noncompetition and Nondisclosure.
(a) Noncompetition. In furtherance of the sale of the
Assets and the Business to Buyer hereunder by virtue of the
transactions contemplated hereby and to more effectively protect
the value of the Assets and the Business so sold, Seller
covenants and agrees that, for a period ending on the fifth
anniversary of the Closing Date (the "Term"), neither Seller nor
any of its respective officers, directors or affiliates, will
(a) engage, directly or indirectly, in the Business anywhere
where Seller sold prior to the Closing or the Buyer sells, during
the Term, products and/or services relating to the Business;
provided, however, that Seller's Metallurgical Services Group may
(i) continue to engage in the heat treating of parts and
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(ii) sell for its account that certain furnace having contract
job number 4664 to Wilson Tools; (b) solicit any party who is or
was a customer or supplier of the Holcroft Division, or who
becomes a customer or supplier of Buyer at any time during the
Term, for the purpose of engaging in, or assisting any person or
entity in engaging in, any business which competes directly or
indirectly with the Business, other than in connection with
Seller's Metallurgical Services Group's heat treating of parts;
or (c) solicit for employment any employee of Buyer (including
those of Seller's employees hired by Buyer). Notwithstanding the
foregoing, nothing contained in this Section 5.2 shall prohibit
Seller, or its respective officers, directors, affiliates from
owning not more than five percent (5%) of any class of stock
listed on a national securities exchange or traded in the
over-the-counter market or continuing to own any interest in any
noncompetitive business owned by Seller or such officer, director
or affiliate as of the Closing Date.
(b) Confidentiality. After the Closing, Seller and
its directors shall, and Seller shall cause its respective
officers, employees, agents and affiliates to, maintain the
confidentiality of all information, documents and materials
relating to the Business, the Assets or the transactions
contemplated by this Agreement which remain in their possession,
except to the extent disclosure of any such information is
required by law or authorized by Buyer or reasonably occurs in
connection with disputes over the terms of this Agreement. In
the event that Seller reasonably believes after consultation with
counsel that it is required by law to disclose any confidential
information described in this Section 5.2(b), it will (a) provide
Buyer with prompt notice before such disclosure in order that
Buyer may attempt to obtain a protective order or other assurance
that confidential treatment will be accorded to confidential
information, and (b) cooperate with Buyer in attempting to obtain
such order or assurance. The provisions of this Section 5.2(b)
shall not apply to any information, documents or materials which
are in the public domain or shall come into the public domain,
other than by reason of default by Seller or its affiliates of
this Agreement.
(c) Rights and Remedies Upon Breach. Upon a breach,
or threatened breach, of any of the provisions of Sections 5.2(a)
or 5.2(b) (the "Restrictive Covenants"), Buyer shall have the
right and remedy to have the Restrictive Covenants specifically
enforced by any court of competent jurisdiction, without the
necessity of posting a bond, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause
irreparable injury to Buyer and that money damages would not
provide an adequate remedy to Buyer. Buyer shall also have any
other rights and remedies available to Buyer under law or in
equity.
(d) Severability of Covenants. Seller acknowledges
and agrees that the Restrictive Covenants are reasonable and
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valid in geographical and temporal scope and in all other
respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect, without regard to the
invalid portions.
(e) Duration and Scope of Covenant. If any court
determines that any of the Restrictive Covenants, or any part
thereof, is unenforceable because of the duration or geographic
scope of such provision, such court shall have the power to
reduce the duration or scope of such provision to the maximum
extent allowed, as the case may be, and, in its reduced form,
such provision shall then be enforceable.
5.3. Holcroft Name. Seller acknowledges and agrees that all
of its rights in and to, and ownership of, the name "Holcroft,"
or any variations thereof shall be transferred hereunder to
Buyer. From and after the Closing, the Seller shall be prohibited
from using the Holcroft name or a name similar thereto.
5.4. Offer of Employment. Buyer shall offer employment with
Buyer to each employee of the Holcroft Division (collectively,
the "Employees") after the Closing (i) at the same base salary;
(ii) with a total benefits package which shall be comparable with
those benefits set forth on Schedule 5.4, except for the Seller's
employee stock purchase plan and the Seller's employee stock
option plan; and (iii) with comparable job responsibilities and
title as such employee had immediately prior to the Closing.
Buyer will give such employees credit for service with the
Holcroft Division with respect to (a) any of Buyer's benefit
plans which have vesting or length of service requirements,
except Buyer's equity appreciation rights program and (b) all
severance payments, if any, made in connection with a termination
following the Closing Date. Buyer shall comply with all terms of
the Union Contract, including, without limitation, seniority and
lay-off requirements. Buyer shall be responsible for, and hold
Seller harmless against, any payments that arise after Closing or
are properly accrued for on the Estimated Net Book Value
(including, without limitation, salaries, commissions, bonuses,
vacation pay, sick pay, severance pay, employee benefits and
unemployment taxes) that may be due by reason of termination of
employment of Employees at any time on or after the Closing Date.
Seller shall be responsible for any employment-related claims
filed by any Employees which were (i) filed prior to the Closing
Date or (ii) filed after the Closing Date but which arose from
facts and circumstances which existed prior to the Closing Date.
5.5. WARN Act. During the period commencing on the Closing
Date and ending ninety days after the Closing Date, Buyer shall
not take any action that independently, or in connection with any
action taken by Seller prior to the Closing Date, could be
construed as a "plant closing" or "mass layoff" within the
meaning of the WARN Act or the regulations enacted thereunder.
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If Buyer takes any such action during such 90-day period, Buyer
shall be solely responsible for providing any notice required by
the WARN Act and for making payments, if any, which may be
required under the WARN Act and for any other liabilities related
to its failure to provide appropriate notice.
5.6. Letters of Credit. Buyer agrees that it will not take
any action to extend the terms of the letters of credit set forth
on Schedule 5.6 (the "Letters of Credit").
ARTICLE VI
CLOSING
Section 6.1. Closing
Closing. The transactions that are the
subject of this Agreement shall be consummated at a closing (the
"Closing") which shall be held at the offices of Katten Muchin &
Zavis, 525 West Monroe Street, Chicago, Illinois 60661, on
October 10, 1997, or at some other time and place as the parties
may mutually agree, which Closing will be effective as of 12:01
a.m., October 10, 1997 (the "Closing Date").
Section 6.2. Deliveries by the Seller. At the Closing,
the Seller shall deliver to Buyer, against payment of the
consideration set forth in Article II hereof:
(i) Such bills of sale with respect to the Seller's
ownership of Assets, assignments, endorsements and
other documents of title and other good and sufficient
instruments of conveyance and transfer, as shall be
effective to vest Buyer with full, complete and
marketable right, title and interest in and to the
Assets, subject to the Assumed Liabilities, in form and
substance reasonably satisfactory to Buyer;
(ii) To the extent obtained, copies of all written
consents necessary for the transfer of the Material
Contracts, in form and substance satisfactory to Buyer;
(iii) Certificates of good standing, dated not more
than ten days prior to the Closing Date, with respect
to Seller, issued by the office of the Secretary of
State of Delaware and by the Secretary of State of each
jurisdiction in which Seller, due to the operations of
the Holcroft Division, is qualified to do business as a
foreign corporation;
(iv) The opinion of Seth H. Hoogasian, Esq, counsel
for the Seller in substantially the form attached
hereto as Exhibit 6.2(iv). In giving its opinion,
counsel shall be entitled to rely on certificates of
the Seller, public officials or such other persons or
opinions of such other counsel (which other counsel
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shall be identified by name) which such counsel shall
reasonably consider to be an appropriate and reliable
source of information which counsel's opinion is based,
which sources shall be specified in such opinion;
(v) The Sublease;
(vi) The written consent of TMO to the sublease of
the Property by Seller to Buyer pursuant to the terms
of the Sublease;
(vii) The Estoppel certificate in the form of Exhibit
6.2(vii) hereto, duly executed by the Landlord; and
(viii)Such other documents and instruments as Buyer
may reasonably require in order to effectuate the
transactions which are the subject of this Agreement.
All documents and instruments delivered to Buyer shall be in
form and substance reasonably satisfactory to Katten Muchin &
Zavis, counsel for Buyer.
Section 6.3.Deliveries by Buyer. At the Closing, Buyer
shall deliver to the Sellers:
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(i) The cash consideration set forth in Section 2.1
hereof less the Holdback Amount provided in Section
2.1(b);
(ii) The Note in the form of Exhibit 2.1(a)(ii)
hereto;
(iii) Instruments of assumption of all Material
Contracts and Permits to be assumed hereunder and of
the Assumed Liabilities;
(iv) The opinion of Katten Muchin & Zavis, counsel
for Buyer, in substantially the form attached hereto as
Exhibit 6.3(iv). In giving its opinion, counsel shall
be entitled to rely on certificates of the Seller,
public officials or such other persons or opinions of
such other counsel (which other counsel shall be
identified by name) which such counsel shall reasonably
consider to be an appropriate and reliable source of
information which counsel's opinion is based, which
sources shall be specified in such opinion.;
(v) Copies of resolutions of the Buyer, certified by
the sole member as having been duly adopted and being
in current force and effect, authorizing the
transactions contemplated by this Agreement and the
Transaction Documents;
(vi) The Sublease;
(vii) An executed Severance Agreement between Buyer
and each of Douglas Bradford, Mary Anne Cesarone, Klaus
Doll, Robert Fox, John Lutz, Tim McMann, Frank Ragone
and Vera Roggen ("Severance Agreements");
(viii)The 90 Day Receivables Note; and
(ix) Such other documents and instruments as the
Seller may reasonably require in order to effectuate
the transactions which are the subject of this
Agreement.
All documents and instruments delivered to the Seller shall
be in form and substance reasonably satisfactory to Seth H.
Hoogasian, Esq., counsel for the Seller.
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ARTICLE VII
COVENANTS AFTER CLOSING
7.1 Indemnification by Seller. Subject to the limitations
set forth in Section 7.5, from and after the Closing, Seller
agrees to indemnify, defend and save Buyer and its affiliates,
and each of their respective officers, directors, employees,
agents, and fiduciaries (each, a "Buyer Indemnified Party"),
forever harmless from and against any and all liabilities
(whether contingent, fixed or unfixed, liquidated or
unliquidated, or otherwise), obligations, deficiencies, demands,
claims, suits, actions, or causes of action, assessments, losses,
costs, expenses, interest, fines, penalties, actual or punitive
damages or costs or expenses of any and all investigations,
proceedings, judgments, remediations, settlements and compromises
(including reasonable fees and expenses of attorneys, accountants
and other experts) (individually and collectively, the "Losses")
sustained or incurred by any Buyer Indemnified Party relating to,
resulting from, arising out of or otherwise by virtue of any of
the following (provided that Buyer shall use reasonable efforts
to collect such Losses from its insurance policies and will
assign any insurance claims and any proceeds therefrom to Seller
to the extent that Seller has indemnified Buyer for any Losses to
which such insurance claims or proceeds relate):
(a) any misrepresentation or breach of a
representation or warranty made herein by Seller, or
non-compliance with or breach by Seller of any of the covenants
or agreements contained in this Agreement or the Transaction
Documents to be performed by Seller or any of its affiliates;
(b) any violations of or obligations under
Environmental and Safety Requirements relating to acts,
omissions, circumstances or conditions existing on or prior to
the Closing Date, including, but not limited to, all liabilities
arising out of or in connection with any treatment, storage, or
disposal of any Hazardous Materials, or the arranging therefor by
Seller and any discharge or release of any Hazardous Material
onto, at or under the Property or any other real property
previously owned or operated by Seller and used in connection
with the Business, whether or not such acts, omissions,
circumstances or conditions constituted a violation of or
obligation under Environmental and Safety Requirements as then in
effect;
(c) any liability or obligation of Seller or any
assertion against a Buyer Indemnified Party, arising out of or
relating, directly or indirectly, to any Excluded Liability;
(d) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation,
execution or consummation of this Agreement based upon an alleged
agreement between claimant and Seller or any of its affiliates;
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(e) up to an aggregate of $85,000 of any Losses
relating to, resulting from or arising out of any obligations of
Buyer under the Severance Agreements; or
(f) any action taken by Thermo, directly or
indirectly, which, if taken by Seller, would result in a
violation or breach of the representations and warranties set
forth in Section 5.2 hereof, except for sales by Thermo
Remediation of its soil remediation units and/or related
technology.
Seller agrees to promptly pay to or reimburse a Buyer
Indemnified Party for all Losses incurred by such Buyer
Indemnified Party.
7.2 Indemnification by Buyer. From and after the Closing,
Buyer agrees to indemnify, defend and save Seller and its
affiliates and their respective officers, directors, employees,
agents and fiduciaries (each, a "Seller Indemnified Party")
forever harmless from and against, and to promptly pay to a
Seller Indemnified Party or reimburse a Seller Indemnified Party
for, any and all Losses sustained or incurred by any Seller
Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of any of the following:
(a) any misrepresentation or breach of a
representation or warranty made herein by Buyer, or
non-compliance with or breach by Buyer of any of the covenants or
agreements contained in this Agreement or the Transaction
Documents to be performed by Buyer;
(b) any action, demand, proceeding, investigation or
claim (whenever made) by any third party (including governmental
agencies) against or affecting Seller which, if successful, would
give rise to or evidence the existence of or relate to a
misrepresentation or breach of any of the representations,
warranties or covenants of Buyer in this Agreement or any
Transaction Document;
(c) any claim arising out of Buyer's failure to pay,
satisfy or discharge the Assumed Liabilities, including, without
limitation, liabilities under the Union Contract;
(d) any claim for payment and/or expenses as a broker
or finder in connection with the origin, negotiation, execution
or consummation of this Agreement based upon an alleged agreement
between claimant and Buyer or any of its affiliates;
(e) any claim arising out of Buyer's failure to pay
any amounts owed to Seller pursuant to Sections 1.2(e), 2.1 or
2.2 hereof; or
(f) any claim for a Loss incurred by Seller relating
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to the Letters of Credit.
Buyer agrees to promptly pay to or reimburse a Seller
Indemnified Party for all Losses incurred by such Seller
Indemnified Party.
7.3 Indemnification Procedure for Third Party Claims. In
the event that subsequent to the Closing any person or entity
entitled to indemnification under this Agreement (an "Indemnified
Party") asserts a claim for indemnification or receives notice of
the assertion of any claim or of the commencement of any action
or proceeding by any person or entity who is not a party to this
Agreement or an affiliate of a party to this Agreement
(including, but not limited to any domestic or foreign court or
governmental authority, federal, state or local) (a "Third Party
Claim") against such Indemnified Party, against which a party to
this Agreement is required to provide indemnification under this
Agreement (an "Indemnifying Party"), the Indemnified Party shall
give written notice together with a statement of any available
information regarding such claim to the Indemnifying Party within
thirty (30) days after learning of such claim (or within such
shorter time as may be necessary to give the Indemnifying Party a
reasonable opportunity to respond to such claim). The
Indemnifying Party shall have the right, upon written notice to
the Indemnified Party (the "Defense Notice") within thirty days
(30) after receipt from the Indemnified Party of notice of such
claim, which notice by the Indemnifying Party shall specify the
counsel it will appoint to defend such claim ("Defense Counsel"),
to conduct at its expense the defense against such claim in its
own name, or if necessary in the name of the Indemnified Party;
provided, however, that the Indemnified Party shall have the
right to approve the Defense Counsel, which approval shall not be
unreasonably withheld or delayed, and in the event the
Indemnifying Party and the Indemnified Party cannot agree upon
such counsel within ten (10) days after the Defense Notice is
provided, then the Indemnifying Party shall propose an alternate
Defense Counsel, which shall be subject again to the Indemnified
Party's approval pursuant to this Section 7.3.
(a) In the event that the Indemnifying Party shall
fail to give the Defense Notice within the time period described
above, it shall be deemed to have elected not to conduct the
defense of the subject claim, and in such event the Indemnified
Party shall have the right to conduct such defense in good faith
and to compromise and settle the claim without prior consent of
the Indemnifying Party and such Indemnifying Party will be liable
for all reasonable costs, expenses, settlement amounts or other
Losses paid or incurred in connection therewith.
(b) In the event that the Indemnifying Party does
deliver a Defense Notice within the time period described above
and thereby elects to conduct the defense of the subject claim,
the Indemnified Party will cooperate with and make available to
the Indemnifying Party such assistance and materials as it may
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reasonably request, all at the expense of the Indemnifying Party,
and the Indemnified Party shall have the right at its expense to
participate in the defense assisted by counsel of its own
choosing, provided that the Indemnified Party shall have the
right to compromise and settle the claim only with the prior
written consent of the Indemnifying Party.
(c) Without the prior written consent of the
Indemnified Party, the Indemnifying Party will not enter into any
settlement of any Third Party Claim or cease to defend against
such claim, if pursuant to or as a result of such settlement or
cessation, (i) injunctive or other equitable relief would be
imposed against the Indemnified Party, or (ii) such settlement or
cessation would lead to liability or create any financial or
other obligation on the part of the Indemnified Party for which
the Indemnified Party is not entitled to indemnification
hereunder.
(d) Notwithstanding paragraph (b) above, the
Indemnifying Party shall not be entitled to control, and the
Indemnified Party shall be entitled to have sole control over,
the defense or settlement of any claim to the extent that claim
seeks an order, injunction or other equitable relief against the
Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition
(financial or otherwise) or prospects of the Indemnified Party
(and the reasonable cost of such defense shall constitute an
amount for which the Indemnified Party is entitled to
indemnification hereunder). If the Indemnifying Party decides to
accept and agree to an offer to settle a Third Party claim, which
Third Party Claim the Indemnifying Party is permitted to settle
under this Section 7.3, the Indemnifying Party will give written
notice to the Indemnified Party to that effect within thirty (30)
calendar days after its receipt of such notice. If the
Indemnified Party fails to consent to such offer within 30
calendar days after its receipt of such notice, the Indemnified
Party may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of
such settlement offer, plus reasonable costs and expenses paid or
incurred by the Indemnified Party through the end of such 30-day
period.
(e) Any final judgment entered or settlement agreed
upon in the manner provided herein shall be binding upon the
Indemnifying Party, and shall conclusively be deemed to be an
obligation with respect to which the Indemnified Party is
entitled to prompt indemnification hereunder.
7.4 Failure to Give Timely Notice. A failure by an
Indemnified Party to give timely, complete or accurate notice as
provided in Section 7.3 will not affect the rights or obligations
of any party hereunder except and only to the extent that, as a
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result of such failure, any party entitled to receive such notice
was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise directly and
materially damaged as a result of such failure to give timely
notice.
7.5 Certain Limitations.
(a) Notwithstanding anything to the contrary set forth
in this Agreement (but subject to the terms of this Section 7.5),
Seller shall not be liable hereunder to Buyer as a result of any
misrepresentation of any representation or warranty contained in
this Agreement, unless and until the Losses incurred by all Buyer
Indemnified Parties, in the aggregate, as a result of such
misrepresentations under this Agreement shall exceed, in the
aggregate, $100,000 (the "Basket Threshold"); provided, however,
that once the Basket Threshold is reached, Seller shall fully
indemnify Buyer (or a Buyer Indemnified Party) for all Losses,
liabilities and damages incurred by Buyer (or a Buyer Indemnified
Party), including the $100,000 applied to the Basket Threshold.
The aggregate amount required to be paid by Sellers under Section
7.1(a) and 7.1(f) shall not exceed the Purchase Price (the
"Cap"). The parties agree that the (i) Basket Threshold and the
Cap shall not apply to any breach of the representations and
warranties contained in Sections 3.7(a), 3.13, 3.24 and 3.27; and
(ii) Basket Threshold shall not apply to Section 7.1(e).
(b) All of the representations and warranties set
forth in this Agreement or in any of the other Transaction
Documents shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby, regardless of any investigation, inquiry or examination
made for or on behalf of or any knowledge of Buyer or Sellers, or
any of their respective affiliates, officers, directors,
employees, agents, or representatives or the acceptance by any of
them of any certificate or opinion, for a period of two years
after the Closing and shall expire and terminate upon the
expiration of such two year period, except the warranties and
representations contained in (i) Section 3.7(a) concerning title
of the Assets shall survive indefinitely, (ii) Section 3.24
regarding Taxes shall survive until the expiration of all
applicable statutes of limitations (including extensions of said
statutes) and (iii) Section 3.27 regarding environmental
liabilities shall survive indefinitely. Seller shall only be
liable for claims of which it receives notice of from Buyer
within the applicable survival period. In the event Buyer incurs
a Loss and a claim is filed, prior to the end of such two year
period, the termination date shall be extended until such claim
is fully resolved and Buyer is appropriately indemnified for such
Loss. Unless a specified period is set forth in this Agreement
or in a Transaction Document (in which event such specified
period will control), all covenants contained in this Agreement
and in any Transaction Document will survive the Closing and
remain in effect indefinitely.
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(c) Seller's liability for any claims made with
respect to a breach or misrepresentation of the representations
and warranties contained in Section 3.7(b) will be subject to the
limitations set forth in Section 2.2(e), as well as the other
limitations of this Section 7.5.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices, Consents, etc. Any notices, consents or other
communication required to be sent or given hereunder by any of
the parties shall in every case be in writing and shall be deemed
properly served if (a) delivered personally, (b) sent by
registered or certified mail, in all such cases with first class
postage prepaid, return receipt requested, (c) delivered by a
recognized overnight courier service, or (d) sent by facsimile
transmission to the parties at the addresses as set forth below
or at such other addresses as may be furnished in writing.
(a) If to Seller:
Thermo TerraTech Inc.
81 Wyman Street
Waltham, Massachusetts 02254-9046
Fax: (781) 622-1242
Attention: John P. Appleton, Ph.D.
with a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254-9046
Fax: (781) 622-1283
Attention: General Counsel
(b) If to Buyer:
Holcroft L.L.C.
c/o Madison Capital Partners
150 North Wacker Drive, Suite 2360
Chicago, Illinois 60606
Fax: (312) 236-4367
Attention: Larry Gies
Scott Murray
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Fax: (312) 902-1061
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Attention: David R. Shevitz, Esq.
Karen A. Ruzic, Esq.
Date of service of such notice shall be (w) the date such notice
is personally delivered, (x) three (3) days after the date of
mailing if sent by certified or registered mail, (y) one (1) day
after date of delivery to the overnight courier if sent by
overnight courier or (z) the next succeeding business day after
transmission by facsimile.
8.2 Public Announcements. Except as required by law, no
party shall make any public announcement or filing with respect
to the transactions provided for herein without the prior consent
of the other parties hereto, such consent not to be unreasonably
withheld or delayed. To the extent reasonably feasible, any
press release or other announcement or notice regarding the
transactions contemplated by this Agreement shall be made jointly
by the parties.
8.3 Severability. The unenforceability or invalidity of
any provision of this Agreement shall not affect the
enforceability or validity of any other provision.
8.4 Amendment and Waiver. This Agreement may be amended,
or any provision of this Agreement may be waived, provided that
any such amendment or waiver will be binding on Buyer only if
such amendment or waiver is set forth in a writing executed by
Buyer, and provided that any such amendment or waiver will be
binding upon Seller only if such amendment or waiver is set forth
in a writing executed by Seller. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any other breach.
8.5 Documents. Each party will execute all documents and
take such other actions as any other party may reasonably request
in order to consummate the transactions provided for herein and
to accomplish the purposes of this Agreement.
8.6 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute
one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties hereto
and delivered to the other.
8.7 Expenses. Except as otherwise specifically provided
herein, each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing
this Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
8.8 Construction. This Agreement shall be construed and
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enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Agreement shall be governed by, the laws of the State of Delaware
without giving effect to provisions thereof regarding conflict of
laws.
8.9 Headings. The subject headings of Articles and
Sections of this Agreement are included for purposes of
convenience only and shall not affect the construction or
interpretation of any of its provisions.
8.10 Assignment. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but will not be assignable or
delegable by any party without the prior written consent of the
other party; provided, however, that nothing in this Agreement is
intended to limit Buyer's ability to assign its rights or
delegate its responsibilities, liabilities and obligations under
this Agreement to any of its affiliates or to lenders as security
for borrowings, at any time whether prior to or following the
Closing Date without consent. Notwithstanding anything to the
contrary contained herein, Seller may not assign or delegate any
of its responsibilities, liabilities or obligations under this
Agreement, without the prior written consent of Buyer.
8.11 Definitions. For purposes of this Agreement, the
following terms have the meaning set forth below:
"Code" means the Internal Revenue Code of 1986, as
amended.
"Chrysler Lease" means the sublease dated October 1,
1995 between the Holcroft Division and Chrysler Corporation.
"ERISA" means the Employment Retirement Income Security
Act of 1974, as amended.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or any successor authority) that are
applicable as the date of determination.
"Tax" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative
minimum, add-on minimum, sales, use, transfer, registration,
value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee or
other withholding, or other tax, of any kind whatsoever,
including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing; the foregoing
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shall include any transferee or secondary liability for a Tax and
any liability assumed by agreement or arising as a result of
being (or ceasing to be) a member of any Affiliated Group, as
defined in Section 1504 of the Code, (or being included
(or required to be included) in any Tax Return relating thereto).
"Tax Returns" means returns, declarations, reports,
claims for refund, information returns or other documents
(including any related or supporting Schedules, statements or
information) filed or required to be filed in connection with the
determination, assessment or collection of any Taxes of any party
or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
8.12 Entire Agreement. This Agreement, the Preamble and all
the Schedules and Exhibits attached to this Agreement (all of
which shall be deemed incorporated in the Agreement and made a
part hereof) and the other Transaction Documents set forth the
entire understanding of the parties, and supersedes and preempts
all prior oral or written understandings and agreements, with
respect to the subject matter hereof, except for the
confidentiality provisions contained in that certain letter
agreement between Buyer and Seller dated July 3, 1997, and shall
not be modified or affected by any offer, proposal, statement or
representation, oral or written, made by or for any party in
connection with the negotiation of the terms hereof, and may be
modified only by instruments signed by all of the parties hereto.
8.13 Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person or entity, other than the parties to this Agreement and
their respective permitted successors and assigns, any rights or
remedies under or by reason of this Agreement.
8.14 Interpretative Matters. Unless the context otherwise
requires, (a) all references to Articles, Sections or Schedules
are to Articles, Sections or Schedules in this Agreement,
(b) each accounting term not otherwise defined in this Agreement
has the meaning assigned to it in accordance with GAAP, and (c)
words in the singular or plural include the singular and plural,
pronouns stated in either the masculine, the feminine or neuter
gender shall include the masculine, feminine and neuter and (d)
the term "including" shall mean by way of example and not by way
of limitation.
8.15 Knowledge. Where any representation or warranty of
Sellers contained in this Agreement is expressly qualified by
reference "to the knowledge of Seller," or "to the best knowledge
of Seller" or similar phrases it refers to the knowledge of
Seller as to the existence or absence of facts that are the
subject of such representations and warranties after consultation
with and due inquiry of all officers, directors and senior
management of Seller and management of the Holcroft Division who
have executed Severance Agreements, it being understood that
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Seller has not made any other independent investigation or
consulted with any outside third parties, other than Seller's
accountants, legal counsel and environmental consultants.
8.16 Brokers and Transaction Payments. Except for Michigan
Eagle Corp. who will receive a fee upon consummation of the
transactions contemplated hereby, which Buyer shall be
responsible for paying, each party warrants to the other that it
has not employed or used the services of or incurred any
liability to any broker, finder or other third party in
connection with the transaction contemplated by this Agreement.
8.17 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto by virtue
of such party being deemed to have drafted this Agreement.
8.18 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same agreement
and shall become effective when one or more counterparts have
been signed by each of the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
SELLER:
THERMO TERRATECH INC.
By: /s/ John P. Appleton
Its: Chief Executive Officer
BUYER:
HOLCROFT L.L.C.
By: Holcroft Technologies L.P.
Its: Manager
By: Holcroft Management, Inc.
Its: General Partner
By: /s/ Larry W. Gies, Jr.
Its: Vice President
EXHIBIT 2.2
This Note and the indebtedness evidenced hereby
are subordinate in the manner and extent set forth in
that certain Subordination Agreement dated as of
October 10, 1997 among Thermo TerraTech Inc., Comerica
Bank and Holcroft L.L.C. to the indebtedness owed by
Holcroft L.L.C. to Comerica Bank, and each holder of
this Note, by its acceptance hereof, shall be bound by
the provisions of the Subordination Agreement.
SECURED PROMISSORY NOTE
$2,218,000.00 October 10, 1997
This Secured Promissory Note (hereinafter "this Note") is
made as of the date stated hereinabove by HOLCROFT L.L.C., a
Delaware limited liability company ("Borrower"), with a mailing
address at 12068 Market Street, Livonia, Michigan 48150, to the
order of THERMO TERRATECH INC., a Delaware corporation
("Lender"), with an office at 81 Wyman Street, Waltham,
Massachusetts 02254-9046.
I
PAYMENT
For Value Received, Borrower hereby irrevocably and
unconditionally promises to pay to the order of Lender, at
Lender's office at the address stated hereinabove or such other
place as Lender may from time to time designate in writing to
Borrower, the principal amount of TWO MILLION TWO HUNDRED
EIGHTEEN THOUSAND DOLLARS AND NO/100THS ($2,218,000.00) (the
"Loan") or so much thereof as may now or hereafter be disbursed
by Lender to or for the benefit of Borrower, together with
interest as provided hereinbelow, all in lawful money of the
United States of America, as follows:
1.1 Interest in Installments. Interest only on the unpaid
principal balance of the Loan from time to time, shall accrue at
an annual interest rate (the "Interest Rate") equal to nine and
one-quarter percent (9.25%), from and including the date hereof
until October 10, 2002 (the "Maturity Date"). Interest shall be
due and payable quarterly in arrears commencing on January 1,
1998. Interest hereunder shall be calculated on the basis of the
actual number of days elapsed during the period for which
interest is being charged hereunder, predicated on a year
consisting of three hundred and sixty-five (365) days.
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1.2 Payments. The principal balance of the Loan shall be
payable in 4 consecutive annual installments of $443,600 on each
annual anniversary of the date hereof commencing with the year
beginning October 10, 1998. The remaining principal balance, as
well as all accrued and unpaid interest, shall be due and payable
on the Maturity Date.
1.3 Method of Payment. On the date a payment is due under
Paragraphs 1.1 or 1.2 above, Borrower shall pay the amount of
such payment to Lender in immediately available funds at the
address of Lender specified above.
1.4 Application of Payments Prior to Default. All monies
paid by Borrower to Lender shall be applied in the following
order of priority: (a) first, toward payment of interest which
has accrued on the outstanding principal balance of the Loan and
which is due and payable; and (b) last, toward payment of the
outstanding principal balance of the Loan.
1.5 Prepayments. This Note may be prepaid, in whole or in
part, at any time, without premium or penalty. Any payment made
under this paragraph shall be applied as set forth in Paragraph
1.4.
1.6 Certain Waivers. The Borrower hereby waives
presentment, demand, notice of prepayment, protest and all other
demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The Borrower
hereby assents to any extension of time for payment of any
indebtedness evidenced hereby granted or permitted by the Lender.
The Borrower hereby waives the right to a jury trial and waives
the right to exercise any counterclaim or setoff of any kind
whatsoever.
II
SECURITY, DEFAULTS, AND REMEDIES
2.1 Security for Payment. Payment of this Note is secured
by a Security Agreement dated of even date herewith between
Borrower and Lender (the "Security Agreement") (this Note, the
Security Agreement and all other documents and instruments
executed in connection with the Note or the Security Agreement
hereinafter are referred to as the "Loan Documents").
2.2 Events of Default. Any event of default shall exist
upon the occurrence of any of the following events (an "Event of
Default"):
(a) The failure of the Borrower to pay any sum due and
payable hereunder, including without limitation, interest or
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principal or both and either as an installment or on the
Maturity Date;
(b) The failure of the Borrower to observe or perform
any of its agreements, obligations, warranties or
representations in that certain Asset Purchase Agreement of
even date herewith between the Borrower and the Lender (the
"Purchase Agreement") or in any agreement with the Lender or
with any other person or organization for borrowed money,
including all obligations to Comerica Bank;
(c) Any warranty, representation, or statement made or
furnished to the Lender by or on behalf of the Borrower in
the Purchase Agreement proves to have been false in any
material respect when made;
(d) The liquidation, termination of existence,
dissolution, insolvency or business failure of the Borrower,
or the appointment of a receiver or custodian for the
Borrower or any part of its property if such appointment is
not terminated or dismissed within 30 days;
(e) The sale by the Borrower of all or substantially
all of its assets;
(f) The merger or consolidation of the Borrower with
or into any other corporation in a transaction in which the
Borrower is not the surviving entity;
(g) The institution against the Borrower of any
proceedings under the United States Bankruptcy Code or any
other federal or state bankruptcy, reorganization,
receivership, insolvency or other similar law affecting the
rights of creditors, generally, which proceeding is not
dismissed within 30 days after filing of such proceeding;
(h) The institution by the Borrower of any proceedings
under the United States Bankruptcy Code or any other federal
or state bankruptcy, reorganization, receivership,
insolvency or other similar law affecting the rights of
creditors generally or the making by the Borrower of a
composition or an assignment or trust mortgage for the
benefit of creditors; or
(i) The suspension of the transaction of the usual
business of the Borrower.
2.3 Acceleration of Maturity. At any time during the
existence of any Event of Default (other than Events of Default
under Paragraphs 2.2(b) or (c) above), and at the option of
Lender, the entire unpaid principal balance under this Note,
together with interest accrued thereon and all other sums due
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from Borrower hereunder or under any of the other Loan Documents,
shall become immediately due and payable without notice or
demand. If an Event of Default occurs under Paragraphs 2.2(b) or
(c) above, Lender shall provide Borrower notice of such Event of
Default and Borrower shall have ten (10) days after receipt of
such notice to cure such Event of Default. If such Event of
Default is not cured, the entire unpaid principal balance under
this Note, together with interest accrued thereon and all other
sums due from Borrower hereunder or under any of the other Loan
Documents shall become immediately due and payable. After the
occurrence and during the continuance of an Event of Default
which has not been cured, the principal balance together with
accrued and unpaid interest of this Note shall bear interest at
the Interest Rate plus two and one half percent (2.50%). After
the occurrence and during the continuance of an Event of Default,
Borrower shall be liable for all costs of collection, including
reasonable attorneys' fees.
2.4 Nature of Remedies. Lender's remedies under this Note
and all of the other Loan Documents shall be cumulative and
concurrent and may be pursued singly, successively, or together
against Borrower and any other "Obligors" (as that term is
hereinafter defined), the Collateral (as defined in the Security
Agreement), and any other security described in the Loan
Documents or any portion or combination of such security, and
Lender may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies
contained herein, all in Lender's sole discretion. Failure of
Lender, for any period of time or on more than one occasion, to
exercise its option to accelerate the Maturity Date shall not
constitute a waiver of the right to exercise the same at any time
during the continued existence of the Event of Default or in the
event of any subsequent Event of Default. Lender shall not by
any other omission or act be deemed to waive any of its rights or
remedies hereunder unless such waiver is in writing and signed by
Lender, and then only to the extent specifically set forth
therein. A waiver in connection with one event shall not be
construed as continuing or as a bar to or as a waiver of any
right or remedy in connection with a subsequent event.
III
OTHER MATTERS
3.1 Notices. Any notices, consents or other communications
required to be sent or given hereunder shall in every case be in
writing and shall be deemed properly served if (a) delivered
personally, (b) sent by registered or certified mail, in all such
cases with first class postage prepaid, return receipt requested,
(c) delivered by a recognized overnight courier service or (d)
sent by facsimile transmission to Borrower at (313) 591-6443, or
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to Lender at (781) 622-1283. The date of service of such notice
shall be (a) the date such notice is personally delivered, (b)
three days after the day of mailing if sent by certified or
registered mail, (c) one day after date of delivery to the
overnight courier if sent by overnight courier or (d) when
receipt of such transmission is acknowledged, if sent by
facsimile transmission. All such notices and other
communications to a party shall be addressed to such party at the
address set forth on the initial page hereof or to such other
address as such party may designate for itself in a notice to the
other party given in accordance with this section.
3.2 Governing Law. THIS NOTE AND THE TRANSACTIONS
EVIDENCED HEREBY SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
INTERNAL LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS, AS THE SAME MAY FROM TIME TO
TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN SUCH STATE.
3.3 Interpretation. The headings of sections and
paragraphs in this Note are for convenience only and shall not be
construed to limit or define the content, scope, or intent of the
provisions hereof. As used in this Note, the singular shall
include the plural, and masculine, feminine, and neuter pronouns
shall be fully interchangeable, where the context so requires.
If any provision of this Note, or any paragraph, sentence,
clause, phrase, or word, or the application thereof, in any
circumstances, is adjudicated to be invalid, the validity of the
remainder of this Note shall be construed as if such invalid part
were never included herein. Time is of the essence of this Note.
3.4 Subsequent Holders. Upon any endorsement, assignment,
or other transfer of this Note by Lender or by operation of law,
the term "Lender," as used herein, shall mean the endorsee,
assignee, or other transferee or successor to Lender then
becoming the holder of this Note.
3.5 Subsequent Obligors. This Note and all provisions
hereof shall be binding on all persons claiming under or through
Borrower. The terms "Borrower" and "Obligors," as used herein,
shall include the respective successors, assigns, legal and
personal representatives, executors, administrators, devisees,
legatees, and heirs of Borrower and any other Obligors.
[signature page follows]
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In Witness Whereof, Borrower has caused this Note to be
executed as of the date first written hereinabove.
HOLCROFT L.L.C.
By: Holcroft Technologies L.P.,
Sole Member of Holcroft L.L.C.
By: Holcroft Management, Inc.,
General Partner of Holcroft
Technologies L.P.
By: /s/ Scott M. Murray
Name: Scott M. Murray
Title:President
Exhibit 2.3
SECURED RECEIVABLE NOTE
$663,117.82 October 10, 1997
This Secured Receivable Note (hereinafter "this Note") is
made as of the date stated hereinabove by HOLCROFT L.L.C., a
Delaware limited liability company ("Borrower"), with a mailing
address at 12068 Market Street, Livonia, Michigan 48150, to the
order of THERMO TERRATECH INC., a Delaware corporation
("Lender"), with an office at 81 Wyman Street, Waltham,
Massachusetts 02254-9046.
I
PAYMENT
For Value Received, Borrower hereby irrevocably and
unconditionally promises to pay to the order of Lender, at
Lender's office at the address stated hereinabove or such other
place as Lender may from time to time designate in writing to
Borrower, the principal amount of SIX HUNDRED SIXTY THREE
THOUSAND ONE HUNDRED SEVENTEEN AND 82/100THS ($663,117.82) (the
"Loan") or so much thereof as may now or hereafter be disbursed
by Lender to or for the benefit of Borrower, together with
interest as provided hereinbelow, all in lawful money of the
United States of America, as follows:
1.1 Interest in Installments. Interest only on the unpaid
principal balance of the Loan from time to time, shall accrue at
an annual interest rate (the "Interest Rate") equal to (a) zero
percent (0.00%), for the period from and including the date
hereof until November 10, 1997 and (b) ten percent (10.00%),
commencing on November 11, 1997 until August 10, 1998 (the
"Maturity Date"). Interest shall be due and payable monthly in
arrears commencing on December 10, 1997. Interest hereunder
shall be calculated on the basis of the actual number of days
elapsed during the period for which interest is being charged
hereunder, predicated on a year consisting of three hundred and
sixty-five (365) days.
1.2 Payments. The remaining principal balance, as well as
all accrued and unpaid interest, shall be due and payable on the
Maturity Date.
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1.3 Method of Payment. On the date a payment is due under
Paragraphs 1.1 or 1.2 above, Borrower shall pay the amount of
such payment to Lender in immediately available funds at the
address of Lender specified above.
1.4 Application of Payments Prior to Default. All monies
paid by Borrower to Lender shall be applied in the following
order of priority: (a) first, toward payment of interest which
has accrued on the outstanding principal balance of the Loan and
which is due and payable; and (b) last, toward payment of the
outstanding principal balance of the Loan.
1.5 Prepayments. This Note may be prepaid, in whole or in
part, at any time, without premium or penalty. Any payment made
under this paragraph shall be applied as set forth in Paragraph
1.4. Concurrently with the payment of interest required under
Paragraph 1.1 above, Borrower shall make mandatory prepayments to
Lender in the amount of ninety percent (90%) times the amount
actually collected by Borrower during the calendar month
immediately preceding the month during which such payment is made
(excluding the amount collected pursuant to the following
sentence) on account of those receivables listed on Exhibit A
attached hereto. In addition, Borrower shall make a mandatory
prepayment on November 10, 1997 in the amount of one hundred
percent (100%) times the amount actually collected by Borrower
during the period from October 10, 1997 to November 10, 1997 on
account of those receivables listed on Exhibit A attached hereto.
1.6 Certain Waivers. The Borrower hereby waives
presentment, demand, notice of prepayment, protest and all other
demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The Borrower
hereby assents to any extension of time for payment of any
indebtedness evidenced hereby granted or permitted by the Lender.
The Borrower hereby waives the right to a jury trial and waives
the right to exercise any counterclaim or setoff of any kind
whatsoever.
II
SECURITY, DEFAULTS, AND REMEDIES
2.1 Security for Payment. Payment of this Note is secured
by a Receivables Security Agreement dated of even date herewith
between Borrower and Lender (the "Security Agreement") (this
Note, the Security Agreement and all other documents and
instruments executed in connection with the Note or the Security
Agreement hereinafter are referred to as the "Loan Documents").
2.2 Events of Default. Any event of default shall exist
upon the occurrence of any of the following events (an "Event of
Default"):
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(a) The failure of the Borrower to pay any sum due and
payable hereunder, including without limitation, interest or
principal or both and either as an installment or on the
Maturity Date;
(b) The failure of the Borrower to observe or perform
any of its agreements, obligations, warranties or
representations in that certain Asset Purchase Agreement of
even date herewith between the Borrower and the Lender (the
"Purchase Agreement") or in any agreement with the Lender or
with any other person or organization for borrowed money,
including all obligations to Comerica Bank;
(c) Any warranty, representation, or statement made or
furnished to the Lender by or on behalf of the Borrower in
the Purchase Agreement proves to have been false in any
material respect when made;
(d) The liquidation, termination of existence,
dissolution, insolvency or business failure of the Borrower,
or the appointment of a receiver or custodian for the
Borrower or any part of its property if such appointment is
not terminated or dismissed within 30 days;
(e) The sale by the Borrower of all or substantially
all of its assets;
(f) The merger or consolidation of the Borrower with
or into any other corporation in a transaction in which the
Borrower is not the surviving entity;
(g) The institution against the Borrower of any
proceedings under the United States Bankruptcy Code or any
other federal or state bankruptcy, reorganization,
receivership, insolvency or other similar law affecting the
rights of creditors, generally, which proceeding is not
dismissed within 30 days after filing of such proceeding;
(h) The institution by the Borrower of any proceedings
under the United States Bankruptcy Code or any other federal
or state bankruptcy, reorganization, receivership,
insolvency or other similar law affecting the rights of
creditors generally or the making by the Borrower of a
composition or an assignment or trust mortgage for the
benefit of creditors; or
(i) The suspension of the transaction of the usual
business of the Borrower.
2.3 Acceleration of Maturity. At any time during the
existence of any Event of Default (other than Events of Default
under Paragraphs 2.2(b) or (c) above), and at the option of
Lender, the entire unpaid principal balance under this Note,
together with interest accrued thereon and all other sums due
3PAGE
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from Borrower hereunder or under any of the other Loan Documents,
shall become immediately due and payable without notice or
demand. If an Event of Default occurs under Paragraphs 2.2(b) or
(c) above, Lender shall provide Borrower notice of such Event of
Default and Borrower shall have ten (10) days after receipt of
such notice to cure such Event of Default. If such Event of
Default is not cured the entire unpaid principal balance under
this Note, together with interest accrued thereon and all other
sums due from Borrower hereunder or under any of the other Loan
Documents shall become immediately due and payable. After the
occurrence and during the continuance of an Event of Default
which has not been cured, the principal balance together with
accrued and unpaid interest of this Note shall bear interest at
the Interest Rate plus two and one half percent (2.50%). After
the occurrence and during the continuance of an Event of Default,
Borrower shall be liable for all costs of collection, including
reasonable attorneys' fees.
2.4 Nature of Remedies. Lender's remedies under this Note
and all of the other Loan Documents shall be cumulative and
concurrent and may be pursued singly, successively, or together
against Borrower and any other "Obligors" (as that term is
hereinafter defined), the Collateral (as defined in the Security
Agreement), and any other security described in the Loan
Documents or any portion or combination of such security, and
Lender may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies
contained herein, all in Lender's sole discretion. Failure of
Lender, for any period of time or on more than one occasion, to
exercise its option to accelerate the Maturity Date shall not
constitute a waiver of the right to exercise the same at any time
during the continued existence of the Event of Default or in the
event of any subsequent Event of Default. Lender shall not by
any other omission or act be deemed to waive any of its rights or
remedies hereunder unless such waiver is in writing and signed by
Lender, and then only to the extent specifically set forth
therein. A waiver in connection with one event shall not be
construed as continuing or as a bar to or as a waiver of any
right or remedy in connection with a subsequent event.
III
OTHER MATTERS
3.1 Notices. Any notices, consents or other
communications required to be sent or given hereunder shall in
every case be in writing and shall be deemed properly served if
(a) delivered personally, (b) sent by registered or certified
mail, in all such cases with first class postage prepaid, return
receipt requested, (c) delivered by a recognized overnight
courier service or (d) sent by facsimile transmission to Borrower
at (313) 591-6443, or to Lender at (781) 622-1283. The date of
service of such notice shall be (a) the date such notice is
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personally delivered, (b) three days after the day of mailing if
sent by certified or registered mail, (c) one day after date of
delivery to the overnight courier if sent by overnight courier or
(d) when receipt of such transmission is acknowledged, if sent by
facsimile transmission. All such notices and other
communications to a party shall be addressed to such party at the
address set forth on the initial page hereof or to such other
address as such party may designate for itself in a notice to the
other party given in accordance with this section.
3.2 Governing Law. THIS NOTE AND THE TRANSACTIONS
EVIDENCED HEREBY SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
INTERNAL LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS, AS THE SAME MAY FROM TIME TO
TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN SUCH STATE.
3.3 Interpretation. The headings of sections and
paragraphs in this Note are for convenience only and shall not be
construed to limit or define the content, scope, or intent of the
provisions hereof. As used in this Note, the singular shall
include the plural, and masculine, feminine, and neuter pronouns
shall be fully interchangeable, where the context so requires.
If any provision of this Note, or any paragraph, sentence,
clause, phrase, or word, or the application thereof, in any
circumstances, is adjudicated to be invalid, the validity of the
remainder of this Note shall be construed as if such invalid part
were never included herein. Time is of the essence of this Note.
3.4 Subsequent Holders. Upon any endorsement, assignment,
or other transfer of this Note by Lender or by operation of law,
the term "Lender," as used herein, shall mean the endorsee,
assignee, or other transferee or successor to Lender then
becoming the holder of this Note.
3.5 Subsequent Obligors. This Note and all provisions
hereof shall be binding on all persons claiming under or through
Borrower. The terms "Borrower" and "Obligors," as used herein,
shall include the respective successors, assigns, legal and
personal representatives, executors, administrators, devisees,
legatees, and heirs of Borrower and any other Obligors.
[signature page follows]
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In Witness Whereof, Borrower has caused this Note to be
executed as of the date first written hereinabove.
HOLCROFT L.L.C.
By: Holcroft Technologies
L.P., Sole Member of
Holcroft L.L.C.
By: Holcroft Management,
Inc., General Partner of
Holcroft Technologies
L.P.
By: /s/ Scott M. Murray
Name: Scott M. Murray
Title: President
Exhibit 2.4
SUBORDINATION AGREEMENT
(All Indebtedness and Liens)
Holcroft L.L.C., a Delaware limited liability company of
Livonia, Michigan ("Borrower") is indebted to the undersigned
("Creditor") in the principal sum of Two Million Two Hundred
Eighteen Thousand Dollars ($2,218,000) evidenced by a promissory
note dated October 10, 1997 which indebtedness is secured by a
security interest in the property described in attached Exhibit
"A", and Creditor is or may become financially interested in
Borrower and desires to aid Borrower in obtaining or having
continued financial accommodations, whether by way of loan,
commitment to loan, discounting of instruments, extensions of
credit or the obtaining of any other financial aid from Comerica
Bank (the "Bank"), a Michigan banking corporation of 500 Woodward
Avenue, Detroit, Michigan 48226.
In order to induce the Bank to extend or to continue to
extend financial accommodations to Borrower from time to time,
whether by way of a loan, commitment to loan, discounting of
instruments, extension of credit or otherwise and in
consideration of any of these financial accommodations, Creditor
agrees as follows:
1. Any and all obligations and liabilities of Borrower to
Creditor, including, without limit, principal and interest,
whether direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or to become due, now
existing or later arising and whatever the amount and
however evidenced including, without limit, the debt
described above but excluding the Receivable Note executed
by Borrower in favor of Creditor dated as of the date hereof
in the original principal amount of $657,532.51 (the
"Subordinated Indebtedness"), are subordinated in right of
payment to any and all obligations and liabilities of
Borrower to the Bank, including, without limit, principal
and interest, whether accrued before or after the filing of
a petition in bankruptcy or similar insolvency proceeding,
and whether direct or indirect, absolute or contingent,
joint or several, secured or unsecured, due or to become
due, now existing or later arising and however evidenced,
together with all other sums due thereon and all costs of
collecting the same (including, without limit, reasonable
attorney fees) for which Borrower is liable (the "Senior
Indebtedness").
2.(a)Borrower may not make and Creditor may not receive (by way
of voluntary payment, set-off, counterclaim or otherwise)
any payment of principal, interest or any other any other
amount due with respect to the Subordinated Indebtedness, if
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at the time of such payment Creditor shall have received a
notice from Bank of the occurrence of a default with respect
to the Senior Indebtedness ("Default Notice"). Borrower may
resume payments (and may make any payments missed due to
application of the foregoing) and Creditor may receive such
payments in respect of the Subordinated Indebtedness upon
the earlier of (a) the cure or written waiver by Bank of
such default or (b) 180 days shall have elapsed since the
date the Default Notice was received by Creditor. In no
event may Borrower make or Creditor receive any prepayment
of the Subordinated Indebtedness without the consent of
Bank, which consent may be withheld in the Bank's sole
discretion.
(b) Until the Senior Indebtedness is paid in full, Creditor
shall not, without the prior written consent of Bank, take
any Collection Action (as defined below) with respect to the
Subordinated Indebtedness, except as permitted in the
following sentence. After the passage of one hundred eighty
(180) days from the occurrence of any payment default with
respect to the Subordinated Indebtedness if such default
shall not have been cured or waived within such period, then
the Creditor may, upon five (5) business days' prior written
notice to Bank accelerate the Subordinated Indebtedness or
take other Collection Action. Such five-day notice may be
given during the 180-day period described in the preceding
sentence. Notwithstanding the foregoing, Creditor may file
proofs of claim against the Borrower in any Proceeding
involving the Borrower.
"Collection Action" shall mean (a) to demand, sue for,
take or receive from or on behalf of the Borrower, by
set-off or in any other manner, the whole or any part
of any moneys which may now or hereafter be owing by
the Borrower with respect to the Subordinated
Indebtedness, (b) to initiate or participate with
others in any suit, action or proceeding against the
Borrower to (i) enforce payment of or to collect the
whole or any part of the Subordinated Indebtedness or
(ii) commence judicial enforcement of any of the rights
and remedies under the documents executed with respect
to the Subordinated Indebtedness or applicable law
with respect to the Subordinated Indebtedness or the
documents executed in connection with the Subordinated
Indebtedness, or (c) to accelerate any Subordinated
Indebtedness.
(c) Creditor shall not amend or modify any of the documents
evidencing or relating to the Subordinated Indebtedness
without the consent of Bank.
3. All rights of Creditor in any collateral now or later
securing the Subordinated Indebtedness are subordinated to
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all rights of the Bank now or later existing in any of the
same collateral securing the Senior Indebtedness. Creditor
waives all rights to require the Bank to marshall the
collateral for the Senior Indebtedness or any other property
the Bank may at any time have as security for the Senior
Indebtedness and waives all right to require the Bank to
first proceed against any guarantor or other person before
proceeding against such collateral. Creditor shall not
contest the validity, priority or perfection of the Bank's
security interest in any collateral in which the Creditor
may also have an interest. The priorities of the Bank and
the Creditor in such collateral shall be in accordance with
this Agreement, regardless of whether the Bank's security
interest or lien in such collateral is valid or perfected.
Bank may take action to foreclose or otherwise realize upon,
or protect its interest in, the collateral, in accordance
with its agreements with the Borrower, at any time, without
the consent of Creditor, and Creditor agrees not to
interfere in a manner which would defeat the purpose of this
Agreement in connection therewith. Bank agrees to provide
Creditor with notice of such foreclosure or other
realization upon its collateral. So long as any part of the
Senior Indebtedness is outstanding, if Bank has agreed to
release its security interest in any of the collateral in
connection with the realization of any of its rights with
respect to such collateral, Bank is hereby authorized as
Creditor's attorney in fact to execute releases and
discharges of Creditor's liens and security interests in
such collateral provided that Bank is releasing or
discharging Bank's security interest in such collateral as
part of the same transaction and provided that Bank gives
Creditor five days prior written notice of such release
during which such five day period Creditor does not sign and
deliver to Bank any such releases or discharges.
4. In the event of any Proceeding (as defined below) involving
the Borrower, (a) all Senior Indebtedness first shall be
paid in full before any payment of or with respect to the
Subordinated Indebtedness shall be paid; (b) any payment or
distribution, whether in cash, property or securities which,
but for the terms hereof, otherwise would be payable or
deliverable in respect of the Subordinated Indebtedness,
shall be paid or delivered directly to Bank (to be held
and/or applied by Bank in accordance with the terms of the
Senior Indebtedness) until all Senior Indebtedness is paid
in full; (c) Creditor agrees to execute and deliver to Bank
or its representative all such further instruments
reasonable requested by Bank confirming the authorization
referred to in the foregoing clause (b); and (d) Creditor
agrees to execute, verify, deliver and file any proofs of
claim in respect of the Subordinated Indebtedness in
connection with any such Proceeding and hereby irrevocably
authorizes, empowers and appoints Bank its agent and
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attorney-in-fact to (i) execute, verify, deliver and file
such proofs of claim upon the failure of Creditor promptly
to do so (and, in any event, prior to 10 days before the
expiration of the time to file any such proof) and (ii) vote
such claim in any such Proceeding upon the failure of
Creditor to do so prior to 10 days before the expiration of
the time to vote and such claim; provided, however, that
Bank shall have no obligation to execute, verify, deliver,
file and/or vote any such proof of claim. In the event that
Bank votes any claim in accordance with the authority
granted hereby, Creditor shall not be entitled to change or
withdraw such vote.
"Proceeding" shall mean any voluntary or involuntary
insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution, reorganization, assignment
for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with
similar powers or any other proceeding for the
liquidation, dissolution or other winding up of
Borrower.
5. Should any payment, distribution or security or proceeds
from these be received by Creditor upon or with respect to
the Subordinated Indebtedness prior to the satisfaction in
full of the Senior Indebtedness which is not permitted by
the terms of this Agreement, Creditor shall immediately
deliver same to the Bank in the form received (except for
endorsement or assignment by Creditor where required by the
Bank), for application on the Senior Indebtedness (whether
or not then due and in such order of maturity as Bank
elects) and, until so delivered, the same shall be held in
trust by Creditor as the property of the Bank. In the event
of the failure of Creditor to make this endorsement or
assignment and if such failure remains uncured for fifteen
(15) days following written notice thereof from Bank to
Creditor, the Bank or any Bank employee is irrevocably
authorized and appointed as attorney-in-fact for Creditor to
make the same.
6. Creditor represents and warrants that it has not made or
permitted to be made any assignment or transfer, for
collateral purposes or otherwise, of the Subordinated
Indebtedness or any collateral or other security for the
Subordinated Indebtedness. Creditor shall not make or permit
any assignment, transfer, pledge or disposition of all or
any part of the Subordinated Indebtedness or any collateral
or other security for the Subordinated Indebtedness while
any Senior Indebtedness remains unpaid except upon five (5)
days prior written notice to Bank and unless the assignee or
transferee has agreed in a writing acceptable to the Bank to
be bound by the terms of this Agreement. Until the Senior
Indebtedness is paid in full, each instrument evidencing any
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Subordinated Indebtedness shall at all times contain in a
conspicuous manner the following legend:
"This Note and the indebtedness evidenced hereby are
subordinate in the manner and extent set forth in that
certain Subordination Agreement dated as of October 10,
1997 among Thermo Terratech, Inc., Comerica Bank and
Holcroft L.L.C. to the indebtedness owed by Holcroft
L.L.C. to Comerica Bank and each holder of this Note,
by its acceptance hereof, shall be bound by the
provisions of the Subordination Agreement."
7. Possession by the Bank of any note or other evidence of
indebtedness made, endorsed or guaranteed by Borrower shall
be conclusive evidence (but not the only means of
establishing) that Borrower is indebted to the Bank and that
this indebtedness is covered by this Agreement.
8. This Agreement constitutes a continuing agreement of
subordination and shall remain in full force and effect
until such time as all of the Senior Indebtedness has been
paid in full, each commitment on the part of Bank to extend
credit to Borrower has been terminated and all letters of
credit issued by Bank for the account of Borrower have
expired.
9. Creditor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor,
notice of dishonor, notice of default and diligence in
collecting any Senior Indebtedness, and agrees that the Bank
may modify the terms of borrowing, compromise, extend,
increase, accelerate, renew or forbear to enforce payment of
any part or all of any Senior Indebtedness, or permit
Borrower to incur additional Senior Indebtedness, all
without notice to Creditor and without affecting in any
manner the Bank's rights or Creditor's obligations under
this Agreement. Creditor further waives any and all other
notices to which Creditor might otherwise be entitled.
Creditor acknowledges and agrees that the Bank's rights
under this Agreement are not conditioned upon pursuit by the
Bank of any remedy the Bank may have against the Borrower or
any other person or any other security. The absence of
Borrower's signature at the end of this Agreement shall in
no way impair or affect the validity of this Agreement.
10. Creditor delivers this Agreement based solely on Creditor's
independent investigation of (or decision not to
investigate) the financial condition of the Borrower and is
not relying on any information furnished by the Bank.
Creditor assumes full responsibility for obtaining any
further information concerning the Borrower's financial
condition, the status of the Senior Indebtedness or any
other matter which Creditor may deem necessary or
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appropriate now or later. Creditor waives any duty on the
part of the Bank, and agrees that Creditor is not relying
upon nor expecting the Bank to disclose to Creditor any fact
now or later known by the Bank, whether relating to the
operations or condition of the Borrower, the existence,
liabilities or financial condition of any guarantor of the
Senior Indebtedness, the occurrence of any default with
respect to the Senior Indebtedness, or otherwise,
notwithstanding any effect such fact may have upon
Creditor's risk or Creditor's rights against the Borrower.
Creditor knowingly accepts the full range of risk
encompassed in this Agreement, which risk includes, without
limit, the possibility that the Borrower may incur Senior
Indebtedness to the Bank after the financial condition of
the Borrower, or its ability to pay Borrower's debts as they
mature, has deteriorated.
11. Creditor represents that: (a) the Bank has made no
representation to Creditor as to the creditworthiness of the
Borrower; and (b) Creditor has established adequate means of
obtaining from the Borrower on a continuing basis financial
and other information pertaining to the Borrower's financial
condition. Creditor agrees to keep adequately informed of
any facts, events, or circumstances which might in any way
affect the risks of Creditor under this Agreement.
12. The Bank, in its sole discretion, without notice to
Creditor, may release, exchange, enforce and otherwise deal
with any security now or later held by the Bank for payment
of the Senior Indebtedness or release any party now or later
liable for payment of the Senior Indebtedness without
affecting in any manner the Bank's rights under this
Agreement. Creditor acknowledges and agrees that the Bank
has no obligation to acquire or perfect any lien on or
security interest in any asset(s), whether realty or
personalty, to secure payment of the Senior Indebtedness.
13. If after receipt of any payment of all or any part of the
Senior Indebtedness, the Bank is for any reason compelled to
surrender the payment to any person or entity, because the
payment is determined to be void or voidable as a
preference, impermissible setoff, diversion of trust funds
or for any other reason, then to the extent of that payment,
the Senior Indebtedness shall be automatically revived and
the Bank's rights under this Agreement shall be
automatically continued in effect without reduction or
discharge for that payment, and this Agreement shall
automatically continue in full force notwithstanding any
contrary action which may have been taken by the Bank in
reliance upon that payment (including, without limit,
surrender or termination of this Agreement) and any contrary
action so taken shall be without prejudice to the Bank's
rights under this Agreement and shall be deemed to have been
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conditioned upon that payment having become final and
irrevocable.
14. Creditor waives any right to require the Bank to: (a)
proceed against any person, including without limit the
Borrower; (b) proceed against or exhaust any security held
from the Borrower or any other person; (c) pursue any other
remedy in the Bank's power; or (d) make any presentments or
demands for performance, or give any notices of
nonperformance, protests, notices of protest or notices of
dishonor in connection with any obligations or evidences of
Senior Indebtedness held by the Bank as security, in
connection with any other obligations or evidences of Senior
Indebtedness which continues in whole or in part as the
Senior Indebtedness, or in connection with the creation of
new or additional Senior Indebtedness.
15. Creditor acknowledges that the Bank has the right to sell,
assign, transfer, negotiate or grant participations or any
interest in, any or all of the Senior Indebtedness and any
related obligations, including without limit this Agreement.
16. No waiver or modification of any of its rights under this
Agreement shall be effective unless the waiver or
modification shall be in writing and signed by an authorized
officer on behalf of the Bank, and each waiver or
modification shall be a waiver or modification only with
respect to the specific matter to which the waiver or
modification relates and shall in no way impair the rights
of the Bank or the obligations of Creditor to the Bank in
any other respect.
17. Creditor waives notice of acceptance by the Bank of this
Agreement and this Agreement is immediately binding upon
Creditor.
18. This Agreement shall bind and be for the benefit of Creditor
and the Bank and their respective successors and assigns,
and shall be construed according to the laws of the State of
Michigan.
19. The term "Borrower", as used in this Agreement, includes any
person, corporation, partnership or business entity which
succeeds to the interests or business of the Borrower named
above, and the terms "Senior Indebtedness" and "Subordinated
Indebtedness" include indebtedness of any successor Borrower
to the Bank and Creditor.
20. If this Agreement is executed by two or more persons, it
shall bind each of them individually as well as jointly.
21. Creditor agrees to reimburse the Bank for any and all costs
and expenses (including, without limit, court costs, legal
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fees, and reasonable attorney fees whether inside or outside
counsel is used, whether or not suit is instituted and, if
instituted, whether at the trial or appellate level, in a
bankruptcy, probate or administrative proceeding, or
otherwise) incurred in enforcing any of the duties and
obligations of Creditor under this Agreement but only to the
extent such costs or expenses are incurred as a result of a
breach by Creditor of the terms and provisions of this
Agreement which breach remains uncured for fifteen (15) days
after written notice thereof by Bank to Creditor.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT.
IN WITNESS WHEREOF, Creditor has caused this Agreement to be
executed as of the 10th day of October, 1997.
CREDITOR:
WITNESS(ES): THERMO TERRATECH INC.
/s/ Cheryl Norden /s/ John P. Appleton
/s/ Christine Leonard Chief Executive Officer
CREDITOR'S ADDRESS:
81 Wyman Street
Waltham, MA 02254
COMERICA BANK:
/s/ Michael Stapleton
Vice President
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Borrower's Acknowledgment
Holcroft L.L.C. ("Borrower"), accepts notice of
subordination created by this Agreement and agrees that it will
take no action inconsistent with this Agreement and that, except
with the prior written approval of Bank, no payment or
distribution shall be made by Borrower on or with respect to the
Subordinated Indebtedness, so long as this Agreement remains in
effect. Borrower agrees that the Bank may, at its option, without
notice and without limiting Bank's other rights, upon any breach
by Creditor of, or purported termination by the Creditor of, this
Agreement, declare all Senior Indebtedness to be immediately due
and payable and/or terminate any commitments of Bank to Borrower.
BORROWER:
HOLCROFT L.L.C.
By: Holcroft Technologies
L.P., Sole Member of
Holcroft L.L.C.
By: Holcroft Management,
Inc., General Partner of
Holcroft Technologies
L.P.
By: /s/ Scott M. Murray
Its: President
Dated: October 10, 1997
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EXHIBIT A
All of the Debtor's now owned or hereafter acquired: (i)
inventory; (ii) accounts, contract rights, chattel paper,
documents and instruments; (iii) technology or know-how; (iv)
other general intangibles, including but not limited to
trademarks, patent rights, copyrights, goodwill, records,
computer programs and rights in premises used in the conduct of
Debtor's business; (v) equipment, including but not limited to
all vehicles, machinery, tools, furniture and fixtures; and (vi)
other personal property of every kind, including tax refunds or
interests in the claims under policies of insurance; and all
products and proceeds of the foregoing, including insurance
proceeds.
Exhibit 2.5
SECOND AMENDMENT TO SUBLEASE
THIS SECOND AMENDMENT TO SUBLEASE (this "Amendment") is
entered into as of October 10, 1997, by and between TMO, INC.,
having an address at 81 Wyman Street, Waltham, Massachusetts
02254 ("Landlord"), and THERMO TERRATECH INC., having an address
at 81 Wyman Street, Waltham, Massachusetts 02254 ("Tenant").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Agreement of
Lease dated as of December 31, 1985 (as amended, the
"Overlease"), by and between W & C Investment Co.
("Overlandlord"), successor-in-interest to Claridge Properties
Ltd., and Landlord, successor-in-interest to Thermo Electron
Corporation, Overlandlord currently leases to Landlord certain
premises known and numbered as 12068 Market Street, Livonia,
Michigan, and more particularly described in the Overlease (the
"Demised Premises"); and
WHEREAS, pursuant to the terms of that certain Sublease
dated as of March 30, 1986 (as amended, the "Sublease"), by and
between Landlord and Tenant, successor-in-interest to
Holcroft/Loftus, Inc., Landlord currently subleases to Tenant the
Demised Premises; and
WHEREAS, Landlord and Tenant desire to amend the Sublease as
more particularly set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Section 6.6 of the Sublease is hereby amended to
incorporate by reference into the Sublease the provisions of
Article 30 of the Overlease.
2. The following new Article is hereby added to the
Sublease:
"Article 9. Option to Extend.
Section 9.1. Provided that Tenant shall not be in
default of its obligations under this Sublease, Tenant shall have
an option to extend the Term of this Sublease for one (1)
additional period of five (5) years (the "Renewal Period"), which
option shall be exercisable by written notice to Landlord given
no less than thirteen (13) months prior to the expiration of the
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then current Term. Upon receipt of such notice, Landlord shall
exercise its corresponding option to renew the Overlease. All of
the terms, covenants and provisions of this Sublease shall apply
to such Renewal Period, except that the annual fixed rental
payable with respect to such Renewal Period shall be equal to the
annual Fixed Rent payable to Overlandlord under Article 30 of the
Overlease. In the event that Tenant elects to exercise its
option to extend under this Section 9.1, Tenant shall be
responsible for the payment of all costs payable by the lessee
under Section 30.04 of the Overlease. During the Renewal Period,
all references in this Sublease to the Term shall be deemed to
mean the original Term as extended by the Renewal Period. Tenant
shall have no further right to extend the Term of this Sublease
following the expiration of the Renewal Period."
3. Except as specifically herein provided, all of the
terms, provisions, covenants and conditions of the Sublease are
hereby ratified and confirmed and shall continue in full force
and effect. Any capitalized term not defined herein shall have
the meaning ascribed to it under the Sublease.
4. The individuals executing this Amendment hereby
represent and warrant that they are empowered and duly authorized
to so execute this Amendment on behalf of the parties they
represent.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as a sealed instrument as of the date
first above written.
LANDLORD:
TMO, INC.,
a Delaware corporation
By: /s/Sandra L. Lambert
Name: Sandra L. Lambert
Title: Secretary
TENANT:
THERMO TERRATECH INC.,
a Delaware corporation
By: /s/ John P. Appleton
Name: John P. Appleton
Title: Chief Executive Officer
Exhibit 2.6
SUBLEASE
THIS SUBLEASE (this "Sublease") is made as of October 10,
1997, by and between THERMO TERRATECH INC., a Delaware
corporation ("Sublandlord"), and HOLCROFT L.L.C., a Delaware
limited liability company ("Subtenant").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Agreement of
Lease dated as of December 31, 1985 (as amended, the
"Overlease"), by and between W & C Investment Co.
("Overlandlord"), successor-in-interest to Claridge Properties
Ltd., and TMO, Inc. ("Overtenant"), successor-in-interest to
Thermo Electron Corporation, Overlandlord currently leases to
Overtenant certain premises known and numbered as 12068 Market
Street, Livonia, Michigan, and more particularly described in the
Overlease (the "Entire Premises"); and
WHEREAS, pursuant to the terms of that certain Sublease
dated as of March 30, 1986 (as amended, the "Oversublease"), by
and between Overtenant and Sublandlord, successor-in-interest to
Holcroft/Loftus, Inc., Overtenant currently subleases to
Sublandlord the Entire Premises; and
WHEREAS, Sublandlord desires to further sublease to
Subtenant varying portions of the Entire Premises upon the terms
and subject to the conditions more particularly set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Demise of Sublease Premises.
1.1 Upon the terms and subject to the conditions
hereinafter set forth, Sublandlord agrees to demise to Subtenant
the following premises:
(a) During Subterm A (as defined in Section 2
below), a portion of the Entire Premises consisting of
approximately 96,000 square feet and delineated in red on the
Site Plan attached hereto as Exhibit A and incorporated herein by
this reference (the "Sublease Premises A");
(b) During Subterm B (as defined in Section 2
below), the Sublease Premises A, together with an additional
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portion of the Entire Premises consisting of approximately 37,000
square feet and delineated in blue on the Site Plan attached
hereto as Exhibit A (collectively, the "Sublease Premises B");
and
(c) During Subterm C (as defined in Section 2
below), the Sublease Premises B, together with an additional area
consisting of approximately 37,000 square feet and comprising the
balance of the Entire Premises.
The term "the Sublease Premises" as used in this Sublease shall
mean and refer to (i) the Sublease Premises A during Subterm A,
(ii) the Sublease Premises B during Subterm B and (iii) the
Entire Premises during Subterm C. Subtenant shall have the right
(in common with others during Subterm A and Subterm B, and
exclusively during Subterm C) to use the parking and other common
areas serving the Entire Premises.
1.2 Notwithstanding the foregoing, Subtenant shall
have the right at any time during Subterm B to elect, upon
written notice to Sublandlord (the "Expansion Notice"), to add to
the Sublease Premises B the then unleased balance of the Entire
Premises, effective as of the date of Sublandlord's receipt of
the Expansion Notice; provided, however, that Subtenant's
aforesaid right of expansion shall not be exercisable if
Sublandlord has, prior to its receipt of the Expansion Notice
from Subtenant, signed a sublease or letter of intent with a
third party for the subleasing of such space.
2. Term. The term of this Sublease shall commence on
October 10, 1997 (the "Commencement Date") and shall continue for
the following consecutive periods:
(a) The period from the Commencement Date through and
including October 31, 1997 ("Subterm A");
(b) The period from November 1, 1997 through and
including October 31, 1998 ("Subterm B"); and
(c) The period from November 1, 1998 through and
including December 31, 2004 ("Subterm C");
provided, however, that if Subtenant elects to
exercise its expansion option under Section 1.2
above, Subterm C shall commence as of the date of
Sublandlord's receipt of the Expansion Notice.
Subterm A, Subterm B and Subterm C are hereinafter collectively
referred to as the "Term".
3. Annual Fixed Rent. Subtenant shall pay to
Sublandlord, in lawful money of the United States, without any
set-off or deduction whatsoever, annual fixed rent (the "Annual
Fixed Rent") at the following rates:
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Annual Fixed
Period Rent Rate
(a) Subterm A and Subterm B: $228,500
(b) Subterm C: The annual fixed
rental payable by
Overtenant to
Overlandlord under
Article 3 of the
Overlease.
The Annual Fixed Rent shall be payable in twelve (12) equal
monthly installments in advance on the first day of each calendar
month during the Term hereof; provided, however, that the parties
agree that the installment of Annual Fixed Rent payable with
respect to Subterm A shall be paid upon execution of this
Sublease and that such installment shall be calculated as if
Subterm A commenced on October 1, 1997. In the event that the
Term expires, or this Sublease is otherwise terminated in
accordance with its terms, on a date other than the last day of a
calendar month, the final monthly installment of Annual Fixed
Rent shall be pro-rated accordingly on a per diem basis. All
payments of Annual Fixed Rent, additional rent and other charges
under this Sublease shall be made to Sublandlord at its address
set forth in Section 17 below, or at such other address or
addresses as Sublandlord may from time to time designate.
4. Insurance.
4.1 Subtenant shall obtain on or before the
Commencement Date, and shall keep in effect at all times during
the Term hereof, the following insurance coverage with respect to
the Sublease Premises:
(a) Comprehensive general liability insurance insuring
against claims for bodily injury, death or property damage
occurring on, in or about the Sublease Premises, written on an
occurrence basis and having a combined single limit not less than
$5,000,000.00;
(b) Workers' Compensation Insurance, in amounts
required by applicable law, covering all persons working at or in
the Sublease Premises;
(c) Fire and Extended Coverage Insurance in an amount
adequate to cover the actual cash value of all of Subtenant's
personal property, trade fixtures, tenant improvements, equipment
and the like located on the Sublease Premises; and
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(d) Such other insurance as Overlandlord may
reasonably require.
All such insurance shall be in responsible companies
qualified to do business in the State of Michigan, and Subtenant
shall deliver to Sublandlord, prior to the time such insurance is
required to be maintained, certificates of such insurance
evidencing the coverage required hereunder. The insurance
referenced in clause (a) above shall name Sublandlord,
Overtenant, Overlandlord and any Mortgagee (as defined in Section
3A.02 of the Overlease) as additional insureds, and shall provide
that the same may only be canceled or amended upon no less than
ten (10) days' prior written notice to said additional insureds.
Notwithstanding anything to the contrary contained herein,
Sublandlord and Subtenant each hereby waives all rights of
recovery against the other party, and such other party's
insurance company (by way of subrogation or otherwise), for all
losses, damages or injuries to the Sublease Premises or Entire
Premises, any improvements thereon or any personal property of
either party therein, to the extent such waiver does not
invalidate any insurance coverage of either party; provided,
however, that the foregoing waiver by either party shall not
apply with respect to any loss, damage or injury to the extent
caused by the negligence or willful misconduct of the other
party, its agents, employees, representatives or contractors.
4.2 During Subterm A and Subterm B, Subtenant shall
pay to Sublandlord, as additional rent, Subtenant's Pro Rata
Share (as hereinafter defined) of the cost incurred by
Sublandlord in maintaining the insurance coverage required under
Article 7 of the Overlease. During Subterm C, Subtenant shall
pay to Sublandlord, as additional rent, the full amount of the
cost incurred by Sublandlord in maintaining the aforesaid
insurance coverage. For purposes of this Sublease, Subtenant's
Pro Rata Share at any given time during the Term hereof shall be
a percentage equal to the ratio of the then total square footage
of the Sublease Premises to the total square footage of the
Entire Premises.
4.3 Payment of all additional rent under this Section
4 shall be made by Subtenant to Sublandlord within ten (10) days
after demand therefor.
5. Additional Charges.
5.1 During Subterm A and Subterm B, Subtenant shall
pay to Sublandlord, as additional rent, Subtenant's Pro Rata
Share of all Impositions (as defined in Section 4.01 of the
Overlease) payable to Overlandlord under Article 4 of the
Overlease. During Subterm C, Subtenant shall pay to Sublandlord,
as additional rent, the full amount of all Impositions payable to
Overlandlord under Article 4 of the Overlease.
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5.2 During Subterm A and Subterm B, Subtenant shall
pay to Sublandlord, as additional rent, Subtenant's Pro Rata
Share of all charges payable to Overlandlord under Article 5 of
the Overlease, except for utility charges which shall be payable
in accordance with the following provisions of this Section 5.2.
During Subterm A, Subtenant shall pay to Sublandlord, as
additional rent, all charges for electricity, gas, water, sewage,
garbage, telephone and other utilities (collectively,
"Utilities") used or consumed in the Sublease Premises, which
charges shall be based upon Subtenant's estimated usage as
determined by Sublandlord in its reasonable discretion. From and
after the commencement date of Subterm C, Subtenant shall pay,
directly to the applicable provider thereof, all charges for
Utilities used or consumed in the Entire Premises.
5.3 Payment of all additional rent under this Section
5 shall be made by Subtenant to Sublandlord within ten (10) days
after demand therefor.
6. Use. Subtenant shall have the right to use the
Sublease Premises only for those uses permitted under Article 2
of the Overlease. Subtenant shall conduct its business
operations in the Sublease Premises in a first class manner and
so as not to disturb the quiet enjoyment or interfere with the
business operations of any other tenant or occupant of the
building in which the Sublease Premises are located. Subtenant
shall not commit or suffer to be committed any waste upon the
Sublease Premises and agrees not to injure, overload, deface or
otherwise damage the Sublease Premises. Subtenant shall not
permit the emission of any objectionable noise, vibration, odor
or fumes from the Sublease Premises, nor make any use of the
Sublease Premises which is offensive, noxious, or liable to
create a nuisance or to invalidate or increase the premiums for
any insurance thereon maintained by Overtenant and/or
Overlandlord. In its use and occupancy of the Sublease Premises,
Subtenant shall comply, at Subtenant's sole cost and expense,
with the requirements of all applicable zoning, building, fire,
health and other codes, statutes, regulations, rules, orders,
ordinances and laws of any federal, state or local governmental
or other public authority (including without limitation any
requirements related to the issuance of a certificate of
occupancy for the Sublease Premises). Subtenant, promptly after
obtaining knowledge thereof, will notify Sublandlord, and any
other persons designated by Sublandlord, of any action or
proceeding affecting the Sublease Premises.
7. Alterations. Subtenant shall not make any
alterations, additions or improvements to the Sublease Premises
without the prior written consent of Sublandlord, which consent
will not be unreasonably withheld; provided, however, that it is
understood and agreed that the granting of Sublandlord's consent
under this Section 7 with respect to any proposed alteration,
addition or improvement shall be conditioned upon Sublandlord's
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receipt of Overlandlord's consent to the same, to the extent
required by the terms of the Overlease, and further provided that
the making by Subtenant of any such alteration, addition or
improvement shall be in compliance with all applicable provisions
of Article 11 of the Overlease. Notwithstanding the foregoing,
in the event that any proposed alteration, addition or
improvement is approved by Overlandlord and Overlandlord further
agrees in writing that the same need not be removed upon the
expiration or earlier termination of the Overlease, Sublandlord's
consent to the making of such alteration, addition or improvement
shall not be required.
8. Maintenance and Repair.
8.1 During Subterm A and Subterm B, Sublandlord shall,
at its sole cost and expense, maintain the Sublease Premises in
good condition and repair; provided, however, that to the extent
any repairs are required due to the negligence or willful
misconduct of Subtenant, its agents, employees, representatives
or contractors, the same shall be made by Subtenant at
Subtenant's sole cost and expense. Notwithstanding anything to
the contrary contained herein, Subtenant shall be solely
responsible for janitorial cleaning of the Sublease Premises and
garbage and trash disposal therefrom. Subtenant shall provide,
at Subtenant's sole cost and expense, reasonable security
protection for the Sublease Premises.
8.2 During Subterm C, Subtenant shall, at its sole
cost and expense, maintain the Sublease Premises, and all
sidewalks, grounds, parking and other areas, vaults, chutes,
sidewalk hoists, railings, gutters, water and sewer connections,
alleys and curbs in front of or adjacent to the Sublease
Premises, in good and safe order and condition, all in accordance
with Article 10 of the Overlease, and shall further perform all
other obligations of the lessee under said Article 10.
9. Fire and other Casualty. If the whole or any part of
the Sublease Premises shall be damaged by fire or other casualty
and neither the Overlease nor the Oversublease is terminated on
account thereof, this Sublease shall remain in full force and
effect and Annual Fixed Rent and all other charges payable
hereunder shall not abate unless there is an abatement of Fixed
Rent and Additional Rent under the terms of the Overlease, and
then only to the extent such abatement is allocable to the
Sublease Premises.
10. Subordination. This Sublease shall be fully
subordinate to (i) the Overlease and all extensions or
modifications thereof, (ii) any Mortgage (as defined in Section
3A.02 of the Overlease) on the Sublease Premises or any part
thereof, and (iii) the Oversublease. The foregoing provisions
shall be self-operative and no further instrument of
subordination shall be necessary; provided, however, that
Subtenant agrees to execute any and all documents or instruments
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required by Overlandlord under the Overlease, the holder of any
such Mortgage or Overtenant, or their respective counsel, to
evidence such subordination. A true and complete copy of each of
the Overlease and Oversublease are attached hereto as Exhibit B-1
and Exhibit B-2, respectively. The following provisions of the
Overlease are incorporated herein by reference, as they relate to
the Term hereof and to the Sublease Premises, with the same force
and effect as if they were fully set forth herein, except as to
those matters otherwise provided for herein: Articles 2, 3
(except for Section 3.01), 3A (except for the words "is a net
lease" in line one of Section 3A.01), 4 (except for Section
4.04), 5, 6, 9 (but only to the extent applicable to Sections
10.01 and 12.01 of the Overlease), 10 and 11 (but only to the
extent applicable to Sections 10.01 and 12.01 of the Overlease
and Section 7 of this Sublease), Section 12.01 (except for the
phrase commencing in line 20 of Section 12.01 with words
"provided, however, that the provisions of this" and continuing
through the end of Section 12.01), Section 12.02 (but only the
last sentence thereof), Section 12.03 (except for the insert
denoted by an asterisk in line 9), Articles 13, 16 (except for
the balance of the first sentence of Section 16.01 from and after
the comma in line 2 thereof), 17, 19, 21, 23, 24, 25, 27, 30 (but
only to the extent applicable to Section 23 of this Sublease),
31, 32 and 33 (except for Section 33.09). Subtenant hereby
assumes, and covenants and agrees to perform, all of the
obligations of the lessee under the Overlease to the extent such
obligations are incorporated herein by reference and relate to
the Sublease Premises during the Term hereof. To the extent that
any provision in the Overlease incorporated herein by reference
conflicts with any provisions of this Sublease, the provisions of
this Sublease shall be controlling. Sublandlord agrees to
perform its obligations as tenant under the Oversublease, except
to the extent such obligations are assumed by Subtenant
hereunder. Subject to Section 16 below, if for any reason the
term of the Overlease or of the Oversublease is terminated prior
to the expiration date of this Sublease, this Sublease shall
thereupon terminate, and Sublandlord shall not be liable to
Subtenant by reason thereof.
11. Covenants Regarding Overlease.
(a) Subtenant covenants and agrees not to do or permit
to be done any act of commission or omission which would
constitute a violation or default under the Oversublease and/or
the Overlease.
(b) Each party hereto promptly shall deliver to the
other party copies of all notices, requests, demands or other
communications which relate to the Sublease Premises or the use
or occupancy thereof after receipt of the same from Overlandlord
or others.
(c) Sublandlord shall not incur any liability
whatsoever to Subtenant for any injury, loss, damage (whether
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direct, consequential or incidental) or inconvenience incurred or
suffered by Subtenant as a result of the exercise by Overlandlord
of any of the rights reserved to Overlandlord under the
Overlease, or as a result of the exercise by Overtenant of any of
the rights reserved to Overtenant under the Oversublease, nor
shall such exercise constitute a constructive eviction or default
by Sublandlord hereunder, except to the extent, if any, such
injury, loss, damage or inconvenience is the result of the
negligence or willful misconduct of Sublandlord.
12. Representations. Subtenant represents that it has
made a thorough examination and inspection of the Entire Premises
and is familiar with the condition thereof. Subtenant hereby
agrees that it is entering into this Sublease without any
representations or warranties by Sublandlord, its agents,
representatives, employees, servants, brokers or any other person
as to the present or future condition of the Entire Premises or
the appurtenances thereto or any improvements therein or thereon.
It is agreed that Subtenant does and will accept the Sublease
Premises "as is" and Sublandlord shall have no obligation to
perform any work therein except as expressly set forth in this
Sublease.
13. Assignment and Subletting.
(a) Subtenant, for itself, its successors and assigns,
expressly covenants that it shall not assign, whether by
operation of law or otherwise, or pledge or otherwise encumber
this Sublease, or sublet all or any part of the Sublease Premises
without obtaining the prior written consent of Sublandlord.
Sublandlord agrees that its consent to any proposed subletting of
the 37,000 square foot area referenced in Section 1.1.(c) above
shall not be unreasonably withheld, conditioned or delayed.
Sublandlord reserves the right to transfer and assign its
interest in and to this Sublease to any entity or person who
shall succeed to Sublandlord's interest in and to the
Oversublease.
(b) Consent by Sublandlord to any assignment, transfer
or subletting to any party shall not be construed as a waiver or
release of Subtenant from the terms of any covenant or its
primary responsibility under this Sublease, nor shall consent to
one assignment, transfer or sublease to any person, partnership,
firm or corporation be deemed to be a consent to any subsequent
assignment, transfer or subletting to another person,
partnership, firm or corporation.
14. Quiet Enjoyment. Subject to the provisions of this
Sublease, Subtenant, upon paying the Annual Fixed Rent and all
other sums and charges herein provided, and observing and keeping
all covenants, agreements and conditions of this Sublease on its
part to be observed and kept, shall quietly have and enjoy the
Sublease Premises during the Term of this Sublease.
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15. End of Term. If Subtenant shall remain in possession
of the Sublease Premises or any part thereof after the expiration
or prior termination of the Term hereof, the parties agree that
no such holding over by Subtenant shall operate to extend or
renew this Sublease, and that any such holding over shall be
construed as a tenancy-at-will at two hundred percent (200%) of
the Annual Fixed Rent (on a per diem basis) in effect when such
holding over shall have commenced, and such tenancy shall
otherwise be subject to all the terms, conditions, covenants and
agreements of this Sublease. Subtenant further agrees to pay to
Sublandlord any additional amounts payable by Sublandlord to
Overtenant under the Oversublease by reason of any such holding
over by Subtenant.
16. Default.
16.1 In the event that Subtenant shall default in the
payment of Annual Fixed Rent, additional rent or any other charge
payable hereunder, or shall default in the performance or
observance of any of the terms, conditions and covenants of this
Sublease, Sublandlord, in addition to and not in limitation of
any rights otherwise available to it, shall have the same rights
and remedies with respect to such default as are provided to
Overlandlord under the Overlease with respect to defaults by the
lessee thereunder, with the same force and effect as though all
such provisions relating to any such default or defaults were set
forth herein in their entirety, and Subtenant shall have all of
the obligations of the lessee under the Overlease with respect to
such default or defaults.
16.2 In the event of a default by Subtenant in the
performance of any of its non-monetary obligations hereunder,
Sublandlord may, at its option, at any time thereafter and
without waiving any other remedies for such default contained
herein or in the Overlease as incorporated herein or at law or in
equity, give written notice to Subtenant that if such default is
not cured, or the cure not commenced, within twenty (20) days
after receipt of such notice by Subtenant, and if so commenced is
not thereafter pursued diligently to completion, Sublandlord may
cure such default for the account of Subtenant, and any amount
paid or incurred by Sublandlord in so doing shall be deemed paid
or incurred for the account of Subtenant and Subtenant agrees
promptly to reimburse Sublandlord therefor and save Sublandlord
harmless therefrom; provided, however, that Sublandlord may cure
any such default as aforesaid prior to the expiration of any
waiting period if reasonably necessary to protect Sublandlord's
interest under the Oversublease or to prevent injury or damage to
persons or property.
17. Attornment. Notwithstanding anything to the contrary
contained herein, to the full extent required by Overlandlord,
Subtenant shall attorn to Overlandlord for the duration of the
Term of this Sublease, as the same may be extended, if the
Overlease and Oversublease are terminated for any reason.
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18. Notices. Whenever, by the terms of this Sublease,
notice, demand or other communication shall or may be given to
either party, the same shall be in writing and addressed:
If to Sublandlord:
Thermo TerraTech Inc.
81 Wyman Street
Waltham, Massachusetts 02254
Attention: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street
Waltham, Massachusetts 02254
Attention: General Counsel
If to Subtenant:
Holcroft L.L.C.
12068 Market Street
Livonia, Michigan 48150
Attention: President
or to such other address or addresses as shall from time to time
be designated by written notice by either party to the other as
herein provided. All notices shall be sent by registered or
certified mail, postage pre-paid and return receipt requested, or
by Federal Express or other comparable service providing proof of
delivery, and shall be deemed duly given and received (i) if
mailed, on the third business day following the mailing thereof
or (ii) if sent by courier, the date of its receipt (or if such
day is not a business day, the next succeeding business day).
19. Indemnification. Subtenant hereby agrees to
indemnify, defend and hold harmless Sublandlord, its parent,
subsidiaries and affiliates, and their respective officers,
directors, shareholders and employees, from and against any and
all claims, demands, judgments, actions, causes of action, suits,
liabilities, damages, losses, costs and expenses (including
without limitation reasonable attorneys' fees and disbursements
and court costs) arising out of or in connection with (i)
Subtenant's use and occupancy of the Sublease Premises (except to
the extent, if any, such claims, demands, judgments, actions,
causes of action, suits, liabilities, damages, losses, costs or
expenses are caused by the negligence or willful misconduct of
Sublandlord), (ii) the negligence or willful misconduct of
Subtenant, its agents, employees, representatives or contractors,
or (iii) the failure by Subtenant to perform, observe or fulfill
any of Subtenant's covenants, agreements, representations or
warranties under this Sublease. In case any action or proceeding
is brought against Sublandlord by reason of any of the above,
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Sublandlord shall give written notice thereof to Subtenant, and
Subtenant may resist or defend such action or proceeding at its
sole cost and expense with counsel reasonably acceptable to
Sublandlord. If Subtenant fails to resist or defend such action
or proceeding, Sublandlord may do so or, upon not less than ten
(10) days' notice to Subtenant, may settle or compromise the
same, and, in such event, Subtenant shall pay to Sublandlord as
additional rent hereunder all payments made by, and all expenses
(including without limitation reasonable attorneys' fees and
disbursements and court costs) incurred by, Sublandlord.
20. Surrender. At the expiration or earlier termination
of this Sublease, Subtenant shall surrender the Sublease Premises
to Sublandlord broom clean, with all alterations, additions and
improvements thereto, in as good condition as on the date of
delivery of possession thereof to Subtenant or as the Sublease
Premises may be put in during the Term hereof, reasonable wear
and tear and damage by casualty excepted; provided, however, that
at Sublandlord's request, Subtenant shall remove, at Subtenant's
sole cost and expense, any and all alterations, additions and
improvements specified by Sublandlord. If Subtenant fails to
remove any such alterations, additions or improvements on or
before the later to occur of the termination of this Sublease or
the twentieth (20th) day following such request, Sublandlord may
remove the same and deliver the same to any place of business of
Subtenant or any warehouse, and Subtenant shall pay the cost of
such removal, delivery and warehousing, together with interest
thereon at the maximum rate permitted by law, to Sublandlord upon
demand.
21. Environmental Indemnification. Subtenant agrees to
indemnify, defend and hold harmless Sublandlord from and against
any and all liabilities, losses, damages, suits, actions, causes
of action, costs, expenses (including without limitation
reasonable attorneys' fees and disbursements and court costs),
penalties, fines, demands, judgments, claims or liens (including
without limitation liens or claims imposed under any so-called
"Superfund" or other environmental legislation) arising from or
in connection with the use, storage, release or discharge by
Subtenant of Hazardous Materials (as hereinafter defined) on the
Sublease Premises and/or the Entire Premises.
For purposes of this Section 20, the term "Hazardous
Materials" shall include without limitation any petroleum
product, any flammable, explosive or radioactive material, or any
hazardous or toxic waste, substance or material, including
without limitation substances defined as "hazardous substances",
"hazardous materials," "solid waste" or "toxic substances" under
any applicable laws relating to hazardous or toxic materials and
substances, air pollution (including noise and odors), water
pollution, liquid and solid waste, pesticides, drinking water,
community and employee health, environmental land use management,
stormwater, sediment control, nuisances, radiation, wetlands,
endangered species, environmental permitting and petroleum
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products, which laws may include, but not be limited to, the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended;
the Toxic Substances Control Act; the Clean Water Act; the
National Environmental Policy Act, as amended; the Solid Waste
Disposal Act, as amended; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986; the
Hazardous Materials Transportation Act, as amended; the Resource
Conservation and Recovery Act, as amended; the Clean Air Act, as
amended; the Emergency Planning and Community Right-to-Know Act,
as amended; the Occupational Safety and Health Act, as amended;
comparable state laws; and all rules and regulations promulgated
pursuant to such laws and ordinances.
22. Consents. Sublandlord's refusal to consent to or
approve any matter or thing, whenever Sublandlord's consent or
approval is required under this Sublease or under the Overlease
as incorporated herein, shall be deemed reasonable if
Overlandlord has refused or failed to give its consent to such
matter or thing.
23. Option to Extend. Provided that Subtenant shall not
be in default of its obligations under this Sublease, Subtenant
shall have an option to extend the Term of this Sublease for one
(1) additional period of five (5) years (the "Renewal Period"),
which option shall be exercisable by written notice to
Sublandlord given no later than November 1, 2003. Upon receipt
of such notice, Sublandlord shall exercise its corresponding
option to renew the Oversublease. All of the terms, covenants
and provisions of this Sublease shall apply to such Renewal
Period, except that the Annual Fixed Rent payable with respect to
such Renewal Period shall be equal to the annual Fixed Rent
payable to Overlandlord under Article 30 of the Overlease. In
the event that Subtenant elects to exercise its option to extend
under this Section 23, Subtenant shall be responsible for the
payment of all costs payable by the lessee under Section 30.04 of
the Overlease. During the Renewal Period, all references in this
Sublease to the Term shall be deemed to mean the original Term as
extended by the Renewal Period. Subtenant shall have no further
right to extend the Term of this Sublease following the
expiration of the Renewal Period.
24. Direct Lease. Subtenant agrees to use its best
efforts to negotiate the execution, on or before the second
anniversary of the Commencement Date hereunder, of a direct lease
by Overlandlord to Subtenant of the Entire Premises upon such
terms as may then be commercially reasonable for leases of
comparable properties in the Livonia, Michigan area (the "Direct
Lease"), together with the termination of the Overlease and the
full release of Overtenant from its obligations thereunder. This
Sublease shall automatically terminate upon the effective date of
the termination of the Overlease.
25. Miscellaneous.
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25.1 Governing Laws. This Sublease shall be governed
by and construed in accordance with the laws of the State of
Michigan.
25.2 Entire Agreement. This Sublease constitutes the
entire agreement between Sublandlord and Subtenant with respect
to the subject matter hereof and shall not be supplemented,
amended, varied or modified in any manner except by an instrument
in writing signed by both parties.
25.3 Waiver. No delay or omission on the part of
either party to this Sublease in requiring performance by the
other party or in exercising any right hereunder shall operate as
a waiver of any provision hereof or of any right hereunder, and
the waiver, omission or delay in requiring performance or
exercising any right hereunder on any one occasion shall not be
construed as a bar to or waiver of such performance or right on
any future occasion.
25.4 Remedies Cumulative. Any and all rights and
remedies which either party may have under this Sublease, at law
or in equity, shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such
rights and remedies may be exercised at the same time insofar as
permitted by law.
25.5 Broker. Each of the parties hereto represents
and warrants to the other that there are no claims for brokerage
commissions or finder's fees in connection with this Sublease.
Each party shall indemnify and hold harmless the other party from
and against any and all claims for brokerage fees, commissions or
other charges arising from the dealings of the indemnifying party
in connection with this Sublease.
25.6 Consent to Sublease. The effectiveness of this
Sublease is conditioned upon the prior written consent of
Overtenant to the subletting of the Sublease Premises to
Subtenant in accordance with the terms hereof.
25.7 Survival. It is understood and agreed that the
provisions of Sections 18 and 20 above shall survive the
expiration or earlier termination of this Sublease.
25.8 Personal Property. All furnishings, fixtures,
equipment, effects and personal property of every kind, nature
and description of Subtenant, and of all persons claiming by,
through or under Subtenant, which, during the Term of this
Sublease or any occupancy of the Sublease Premises by Subtenant,
or anyone claiming by, through or under Subtenant, may be on the
Sublease Premises or elsewhere in the Entire Premises, shall at
the sole risk and hazard of Subtenant and, if the whole or any
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part thereof shall be destroyed or damaged by fire, water or
otherwise, or by the leakage or bursting of water pipes, steam
pipes or other pipes, by theft, or from any other cause, no part
of said loss or damage is to be charged to or borne by
Sublandlord except to the extent caused by the negligence or
willful misconduct of Sublandlord, its agents, employees,
representatives or contractors.
25.9 Headings. Section headings and the organization
of this Sublease are for descriptive purposes only and shall not
control or alter the meaning of this Sublease.
25.10 Successors and Assigns. This Sublease shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
25.11 Authority. The individuals executing this
Sublease hereby represent and warrant that they are empowered and
duly authorized to so execute this Sublease on behalf of the
parties they represent.
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IN WITNESS WHEREOF, the parties hereto have executed this
Sublease under seal as of the date first set forth above.
SUBLANDLORD:
THERMO TERRATECH INC.
By: /s/ John P. Appleton
Name: John P. Appleton
Title: Chief Executive Officer
SUBTENANT:
HOLCROFT L.L.C.
By: /s/ Scott M. Murray
Name: Scott M. Murray
Title: President
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CONSENT TO SUBLEASE
Pursuant to Section 5.1 of the Oversublease attached as
Exhibit B-2 hereto, the undersigned hereby consents to the
subletting of the Sublease Premises described herein on the terms
and conditions contained in the within Sublease. The undersigned
further agrees to perform its obligations as lessee under the
Overlease, except to the extent the same are assumed by
Sublandlord pursuant to the terms of the Oversublease.
TMO, INC.,
a Delaware corporation
By: /s/ Sandra L. Lambert
Name: Sandra L. Lambert
Title: Secretary
