SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 29, 1999
United Shields Corporation
(Exact name of Registrant as specified in its Charter)
Colorado 33-11062-D 84-1049047
(State or other (Commission (IRS Employer
jurisdiction File No.) Identification Number)
of incorporation)
2640 Peerless Road, Cleveland, Tennessee 37312
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(423) 479-1655
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On September 29, 1999, United Shields Corporation (the "Company")
completed its acquisition of all of the outstanding stock of
Pittsfield Mold & Tool, Inc. ("Pittsfield"), a Massachusetts-based
manufacturer of custom injection molded plastic products.
Pittsfield's principle assets include a manufacturing facility and
related plant and equipment located in Pittsfield, Massachusetts,
accounts receivable and inventory. The Company intends to
continue to use the assets of Pittsfield in the manufacturer of
custom injection molded plastic products. The total consideration
for the acquisition consisted of:
1. $1,700,000, less the professional fees of Pittsfield
in connection with the acquisition, in cash,
2. a promissory note with an aggregate principle amount
of $1,750,000, payable over a term of six years,
3. a promissory note with an aggregate principle amount
of $2,200,000, payable on or before January 1, 2000.
In addition, simultaneous with the purchase of the outstanding
stock of Pittsfield, the Company caused Pittsfield to purchase the
real property upon which its plant is located from the prior
shareholders of Pittsfield for a total purchase price of
$3,125,000. The consideration for both the outstanding stock of
Pittsfield and the real property was determined through arms-
length negotiations.
The cash portion of the purchase price for the shares of
Pittsfield and the real property was provided as follows:
1. Loans from Berkshire Bank in the aggregate total
amount of $4,137,799; and
2. Working capital.
The loans from Berkshire Bank are secured by a first and second
mortgage on the real property, and a security interest in the
inventory and accounts receivable of Pittsfield.
The promissory notes to the prior shareholders of Pittsfield and
performance of the Company's future obligations to such
shareholders under the promissory notes and certain other
documents, including an employment agreement with Joseph A.
Kirchner, are secured by a security interest in all assets of
Pittsfield and a third mortgage in the real property. Copies of
the principle agreements relating to the foregoing acquisition and
related loans are attached as exhibits to this Current Report on
Form 8-K.
In connection with the acquisition, the Company entered into an
employment agreement with Joseph A. Kirchner, under which Mr.
Kirchner will serve as president of Pittsfield. Mr. Kirchner has
been a director and officer of Pittsfield since February 4, 1985.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired. Financial
statements of Pittsfield Mold & Tool, Inc. will be filed by
amendment to this Current Report on Form 8-K.
(b) Proforma Financial Information. The proforma financial
information relating to the acquisition of Pittsfield Mold &
Tool, Inc. by the registrant will be filed by amendment to
this Current Report on Form 8-K.
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of August 27, 1999,
by and among Henry A. Kirchner, Barbara J. Kirchner, The
Henry A. Kirchner Revocable Trust, The Barbara J. Kirchner
Revocable Trust, and the Kirchner Family Nominee Trust.
2.2 First Amendment to Stock Purchase Agreement, dated as of
September 29, 1999, by and among Henry A. Kirchner,
Barbara J. Kirchner, The Henry A. Kirchner Revocable Trust,
The Barbara J. Kirchner Revocable Trust, and the Kirchner
Family Nominee Trust.
99.1 $1,750,000 Promissory Note, dated as of September 29, 1999,
given by Pittsfield Mold & Tool, Inc. in favor of the
Kirchner Family Nominee Trust.
99.2 $2,200,000 Promissory Note dated as of September 29, 1999,
given by Pittsfield Mold & Tool, Inc. in favor of the
Kirchner Family Nominee Trust.
99.3 Employment Agreement between United Shields Corporation and
Joseph A. Kirchner, dated September 29, 1999.
99.4 Non-Competition Agreement between United Shields Corporation
and Henry A. Kirchner, dated September 29, 1999.
99.5 Non-Competition Agreement between United Shields Corporation
and Barbara J. Kirchner, dated September 29, 1999.
99.6 Real Estate Purchase between Pittsfield Mold & Tool, Inc.
and the Kirchner Family Nominee Trust, dated September 29,
1999.
99.7 Earn-Out Agreement between United Shields Corporation and
Henry A. Kirchner, Barbara J. Kirchner, The Henry A.
Kirchner Revocable Trust, The Barbara J. Kirchner Revocable
Trust, and the Kirchner Family Nominee Trust, dated
September 29, 1999.
99.8 Stock Pledge Agreement between United Shields Corporation
and the Kirchner Family Nominee Trust, dated September 29,
1999.
99.9 Guarantee given by United Shields Corporation in favor of
the Kirchner Family Nominee Trust, dated September 29, 1999.
99.10 Cross-Default and Cross-Collateral Agreement between United
Shields Corporation and Pittsfield Mold & Tool, Inc., Henry
A. Kirchner, Barbara J. Kirchner, The Henry A. Kirchner
Revocable Trust, The Barbara J. Kirchner Revocable Trust,
and the Kirchner Family Nominee Trust, dated September 29,
1999.
99.11 Commercial Real Estate Mortgage and Security Agreement
between Pittsfield Mold & Tool, Inc. and the Kirchner Family
Nominee Trust, dated September 29, 1999.
99.12 Security Agreement between Pittsfield Mold & Tool, Inc. and
the Kirchner Family Nominee Trust, dated September 29, 1999.
99.13 Loan and Security Agreement between Pittsfield Mold & Tool,
Inc. and Berkshire Bank, dated September 29, 1999.
99.14 $1,900,000 demand line of credit Promissory Note, dated as
of September 29, 1999, given by Pittsfield Mold & Tool, Inc.
in favor of Berkshire Bank.
99.15 $2,500,000 Promissory Note, dated September 29, 1999, given
by Pittsfield Mold & Tool, Inc. in favor of Berkshire Bank.
99.16 Mortgage and Security Agreement (first mortgage) between
Pittsfield Mold & Tool, Inc. and Berkshire Bank, dated
September 29, 1999.
99.17 Mortgage and Security Agreement (second mortgage) between
Pittsfield Mold & Tool, Inc. and Berkshire Bank, dated
September 29, 1999.
99.18 Assignment of Rents and Leases, dated September 29, 1999,
given by Pittsfield Mold & Tool, Inc. for the benefit of
Berkshire Bank.
99.19 Agreement of Guaranty, dated September 29, 1999, given by
United Shields Corporation for the benefit of Berkshire
Bank.
99.20 Standby and Subordination Agreement dated September 29,
1999, between Berkshire Bank and Henry A. Kirchner and
Barbara J. Kirchner, Trustees of the Kirchner Family Nominee
Trust, Henry A. Kirchner, Barbara J. Kirchner, Henry A.
Kirchner and Barbara J. Kirchner, Trustees of the Henry A.
Kirchner Revocable Trust, and Henry A. Kirchner and Barbara
J. Kirchner, Trustees of the Barbara J. Kirchner Revocable
Trust.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
UNITED SHIELDS CORPORATION
Date: October 14, 1999 By:/s/John F. Quigley
-----------------------------
John F. Quigley
Senior Vice President and
Chief Financial Officer
Exhibit 2.1
Stock Purchase Agreement
This Stock Purchase Agreement ("Agreement") is made as of August
27, 1999, by United Shields Corporation, a Colorado corporation
("Buyer"), and Henry A. Kirchner ("HAK"), Barbara J. Kirchner
("BJK"), The Henry A. Kirchner Revocable Trust, Henry A. Kirchner
and Barbara J. Kirchner, Trustees, dated February 6, 1996,("HAK
Trust"), The Barbara J. Kirchner Revocable Trust, Barbara J.
Kirchner and Henry A. Kirchner, Trustees, dated February 6, 1996,
("BJK Trust") and the Kirchner Family Nominee Trust, Henry A.
Kirchner and Barbara J. Kirchner, Trustees, under Declaration of
Trust dated February 6, 1996 and recorded with the Berkshire
County (Middle District) Registry of Deeds in Book 910, Page 800
("Family Trust") (HAK, BJK, the HAK Trust, the BJK Trust and the
Family Trust, referred to collectively as "Sellers").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of capital stock of
Pittsfield Mold & Tool, Inc., a Massachusetts corporation (the
"Company"), for the consideration and on the terms set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"Acquired Companies"--the Company and its Subsidiaries,
collectively.
"Applicable Contract"--any Contract (a) under which any Acquired
Company has or may acquire any rights, (b) under which any
Acquired Company has or may become subject to any obligation or
liability, or (c) by which any Acquired Company or any of the
assets owned or used by it is or may become bound.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure
that such result is achieved as expeditiously as possible;
provided, however, that an obligation to use Best Efforts under
this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially
adverse change in the benefits to such Person of this Agreement
and the Contemplated Transactions.
"Breach"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have
occurred if there is or has been (a) any inaccuracy in or breach
of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is
or was inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any
such inaccuracy, breach, failure, claim, occurrence, or
circumstance.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Company"--as defined in the Recitals of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated
by this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Promissory
Note, the Employment Agreement, the Noncompetition Agreements, and
the Sellers' Releases.
(c) the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise
of control over the Acquired Companies.
"Contract"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or
implied) that is legally binding.
"Damages"--as defined in Section 10.2.
"Disclosure Letter"--the disclosure letter delivered by Sellers to
Buyer concurrently with the execution and delivery of this
Agreement.
"Employment Agreement"--as defined in Section 2.4.
"Encumbrance"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind,
including any restriction on use, voting, transfer, receipt of
income, or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air),
plant and animal life, and any other environmental medium or
natural resource.
"Environmental, Health, and Safety Liabilities"--any cost,
damages, expense, liability, obligation, or other responsibility
arising from or under Environmental Law or Occupational Safety and
Health Law and consisting of or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety
and health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and
expenses arising under Environmental Law or Occupational Safety
and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal,
containment, or other remediation or response actions ("Cleanup")
required by applicable Environmental Law or Occupational Safety
and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for
any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety
and Health Law.
The terms "removal," "remedial," and "response action," include
the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA").
"Environmental Law"--any Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances
or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as
resource extraction or construction, that could have significant
impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest
to recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to
that Act or any successor law.
"Facilities"--any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company
and any buildings, plants, structures, or equipment (including
motor vehicles, tank cars, and rolling stock) currently or
formerly owned or operated by any Acquired Company.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section
3.4(b) were prepared.
"Governmental Authorization"--any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment,
or use (including any withdrawal or other use of groundwater) of
Hazardous Materials in, on, under, about, or from the Facilities
or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk
of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of
the Facilities or the Acquired Companies.
"Hazardous Materials"--any waste or other substance that is
listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a pollutant
or a contaminant under or pursuant to any Environmental Law,
including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing
materials.
"Intellectual Property Assets" --as defined in Section 3.22.
"Interim Balance Sheet"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue
Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department
of the Treasury.
"Knowledge"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course
of conducting a reasonably comprehensive investigation concerning
the existence of such fact or other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual
who is serving, or who has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact
or other matter.
"Legal Requirement"--any federal, state, local, municipal,
foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law,
regulation, statute, or treaty.
"Net Sales"--gross sales prices of the Company's products and
services less discounts, allowances, returns, and other sales
price adjustments which may be provided from time-to-time in
conjunction with the Company's normal business practices, all of
which shall be determined in accordance with GAAP.
"Noncompetition Agreements"--as defined in Section 2.4.
"Occupational Safety and Health Law"--any Legal Requirement
designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, and any program,
whether governmental or private (including those promulgated or
sponsored by industry associations and insurance companies),
designed to provide safe and healthful working conditions.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any
arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business"
only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-
day operations of such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be
specifically authorized by the parent company (if any) of such
Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business
as such Person.
"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws or code of regulations of a
corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership
agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a
Person; and (e) any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization,
labor union, or other entity or Governmental Body.
"Plan"--as defined in Section 3.13.
"Proceeding"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Promissory Note"--as defined in Section 2.4.
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a
Material Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director,
officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under
common control with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves
as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and
former spouses, (iii) any other natural person who is related to
the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such
individual, and (b) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 10% of the outstanding
voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity
securities or equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into
the Environment, whether intentional or unintentional.
"Representative"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel,
accountants, and financial advisors.
"Sellers"--as defined in the first paragraph of this Agreement.
"Sellers' Releases"--as defined in Section 2.4.
"Shares"--as defined in the Recitals of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests
having the power to elect a majority of that corporation's or
other Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of
that corporation or other Person (other than securities or other
interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or
more of its Subsidiaries; when used without reference to a
particular Person, "Subsidiary" means a Subsidiary of the Company.
"Tax"--any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate
tax), levy, assessment, tariff, duty (including any customs duty),
deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any
Governmental Body or payable pursuant to any tax-sharing agreement
or any other Contract relating to the sharing or payment of any
such tax, levy, assessment, tariff, duty, deficiency, or fee.
"Tax Return"--any return (including any information return),
report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in
connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has
been given (orally or in writing), or if any other event has
occurred or any other circumstances exist, that would lead a
prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced,
taken, or otherwise pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the
Closing, Sellers will sell and transfer the Shares to Buyer, and
Buyer will purchase the Shares from Sellers.
2.2 PURCHASE PRICE
As the purchase price (the "Purchase Price") for the Shares:
(a) at the Closing, Buyer will deliver the following to Sellers as
provided in Section 2.4: (i) $3,900,000.00, less any amount paid
to Martin & Oliveira pursuant to Section 11.1, in cash; and (ii)
the Promissory Note with an aggregate principal amount of
$1,750,000.00 subject to the provisions of Section 10.8; and
(b) after the Closing, Buyer will make payments to Sellers as
provided in Section 2.6.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Martin & Oliveira,
LLP, 100 North Street, Suite 301, Pittsfield, Massachusetts 01201
_____________, 1999, or at such other time and place as the
parties may agree. Subject to the provisions of Section 9, failure
to consummate the purchase and sale provided for in this Agreement
on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement
and will not relieve any party of any obligation under this
Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;
(ii) releases in a form mutually acceptable to the parties hereto,
executed by Sellers (collectively, "Sellers' Releases");
(iii) employment agreement in a form mutually acceptable to USC
and Joseph A. Kirchner, executed by Joseph A. Kirchner
("Employment Agreement");
(iv) noncompetition agreements in a form mutually acceptable to
the parties hereto, executed by Sellers (collectively, the
"Noncompetition Agreements");and
(v) a certificate executed by Sellers representing and warranting
to Buyer that each of Sellers' representations and warranties in
this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date
as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Letter that were delivered by
Sellers to Buyer prior to the Closing Date in accordance with
Section 5.5).
(b) Buyer will deliver to Sellers:
(i) the following amounts by bank cashier's check payable to the
order of the BJK Trust and the HAK Trust: $___________ and
$______________ to the BJK Trust;
(ii) a promissory note payable to the Family Trust in the
principal amount of $1,750,000 in a form mutually acceptable to
the parties hereto (the "Promissory Note").
(iii) a certificate executed by Buyer to the effect that, except
as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing
Date; and
(iv) the Employment Agreement, executed by the Company.
2.5 PURCHASE OF REAL ESTATE
Simultaneously with the execution of this Agreement, the Company
and Sellers are executing a Real Estate Purchase Agreement in in a
form mutually acceptable to the parties hereto under which Sellers
will sell, transfer and convey to the Company, and the Company
will purchase from Sellers, the real property and improvements
located at 10 BETNR Industrial Drive, Pittsfield, Massachusetts
for a purchase price of $3,125,000. Sellers and Buyer agree that
the Closing of such transaction will occur simultaneously with the
Closing under this Agreement.
2.6 EARN OUT PAYMENTS
In addition to all other amounts payable by Buyer to Sellers
hereunder, Buyer shall also pay Sellers an amount equal to 5% of
the annual Net Sales of the Company in excess of $10,000,000 each
year for a period of six years beginning as of the Closing Date,
payable each year not later than 90 days after the end of the
previous year, pro-rated for any partial years.
2.7 STOCK OPTIONS
Simultaneously with the execution of this agreement, the Buyer and
HAK are executing a Stock Option Agreement in the form of Exhibit
2.7 under which Buyer will grant HAK options to purchase 250,000
shares of Buyer's common stock, at an exercise price of $1.00 per
share, 20% of which shall be vested immediately upon issuance with
20% vesting on the first day of each year thereafter until vested
in full.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list for each Acquired Company of its name, its
jurisdiction of incorporation, other jurisdictions in which it is
authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by
each). Each Acquired Company is a corporation duly organized,
validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to
own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable
Contracts. Each Acquired Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance
with its terms. Upon the execution and delivery by Sellers of the
Employment Agreement, the Sellers' Releases, and the
Noncompetition Agreements (collectively, the "Sellers' Closing
Documents"), the Sellers' Closing Documents will constitute the
legal, valid, and binding obligations of Sellers, enforceable
against Sellers in accordance with their respective terms. Sellers
have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and the Sellers'
Closing Documents and to perform their obligations under this
Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice
or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the Acquired
Companies, or (B) any resolution adopted by the board of directors
or the shareholders of any Acquired Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge
any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to
which any Acquired Company or either Seller, or any of the assets
owned or used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify,
any Governmental Authorization that is held by any Acquired
Company or that otherwise relates to the business of, or any of
the assets owned or used by, any Acquired Company;
(iv) cause Buyer or any Acquired Company to become subject to, or
to become liable for the payment of, any Tax;
(v) cause any of the assets owned by any Acquired Company to be
reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by any Acquired
Company.
Except as set forth in Part 3.2 of the Disclosure Letter, no
Seller or Acquired Company is or will be required to give any
notice to or obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 1,000
shares of no-par common stock, of which 1,000 shares are issued
and outstanding and constitute the Shares. Sellers are and will be
on the Closing Date the record and beneficial owners and holders
of the Shares, free and clear of all Encumbrances. The HAK Trust
owns 600 of the Shares, and the BJK Trust owns 400 of the Shares.
With the exception of the Shares (which are owned by Sellers), all
of the outstanding equity securities and other securities of each
Acquired Company are owned of record and beneficially by one or
more of the Acquired Companies, free and clear of all
Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity
securities of any Acquired Company. All of the outstanding equity
securities of each Acquired Company have been duly authorized and
validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any
equity securities or other securities of any Acquired Company.
None of the outstanding equity securities or other securities of
any Acquired Company was issued in violation of the Securities Act
of 1933, as amended, or any other Legal Requirement. No Acquired
Company owns, or has any Contract to acquire, any equity
securities or other securities of any Person (other than Acquired
Companies) or any direct or indirect equity or ownership interest
in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) unaudited balance sheets of
the Acquired Companies as at December 31, in each of the years
1993 through 1995 and 1998, and the related unaudited consolidated
statements of income and retained earnings, and cash flow for each
of the fiscal years then ended, (b) audited balance sheets of the
Acquired Companies as of December 31, 1997 and 1996 (including the
notes thereto, the "Balance Sheet"), and the related statements of
earnings and retained earnings, and cash flow for the fiscal year
then ended, together with the report thereon of Grant Thornton
LLP, independent certified public accountants, and (c) an
unaudited balance sheet of the Acquired Companies as at May 31,
1999 (the "Interim Balance Sheet") and the related unaudited
statements of income, and cash flow for the five months then
ended. Such financial statements and notes fairly present the
financial condition and the results of operations, and cash flow
of the Acquired Companies as at the respective dates of and for
the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of interim financial
statements, to normal recurring year-end adjustments (the effect
of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Balance Sheet); the
financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout
the periods involved, except as may be disclosed in the notes to
such financial statements. No financial statements of any Person
other than the Acquired Companies are required by GAAP to be
included in the financial statements of the Company.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Acquired Companies, all of which have been made
available to Buyer, are complete and correct and have been
maintained in accordance with sound business practices including
the maintenance of an adequate system of internal controls. The
minute books of the Acquired Companies contain accurate and
complete records of all meetings held of, and corporate action
taken by, the shareholders, the Boards of Directors, and
committees of the Boards of Directors of the Acquired Companies,
and no meeting of any such shareholders, Board of Directors, or
committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all
of those books and records will be in the possession of the
Acquired Companies.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate
list of all real property, leaseholds, or other interests therein
owned by any Acquired Company. Sellers have delivered or made
available to Buyer copies of the deeds and other instruments (as
recorded) by which the Acquired Companies acquired such real
property and interests, and copies of all title insurance
policies, opinions, abstracts, and surveys in the possession of
Sellers or the Acquired Companies and relating to such property or
interests. Part 3.6 of the Disclosure Letter also contains a
complete and accurate list of all vehicles owned or leased by any
Acquired Company and the fixed assets used in the business of any
Acquired Company and carried on its books for tax purposes. The
Acquired Companies own (with good and marketable title in the case
of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they
purport to own located in the facilities owned or operated by the
Acquired Companies or reflected as owned in the books and records
of the Acquired Companies, including all of the properties and
assets reflected in the Balance Sheet and the Interim Balance
Sheet (except for assets held under capitalized leases disclosed
or not required to be disclosed in Part 3.6 of the Disclosure
Letter and personal property sold since the date of the Balance
Sheet and the Interim Balance Sheet, as the case may be, in the
Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by the Acquired Companies since
the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the
Ordinary Course of Business and consistent with past practice),
which subsequently purchased or acquired properties and assets
(other than inventory and short-term investments) are listed in
Part 3.6 of the Disclosure Letter. All material properties and
assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations
of any nature except, with respect to all such properties and
assets, (a) mortgages or security interests shown on the Balance
Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or
event that, with notice or lapse of time or both, would constitute
a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date
of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired),
with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists,
(c) liens for current taxes not yet due, and (d) with respect to
real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value
or impairs the use of the property subject thereto, or impairs the
operations of any Acquired Company, and (ii) zoning laws and other
land use restrictions that do not impair the present or
anticipated use of the property subject thereto. All buildings,
plants, and structures owned by the Acquired Companies lie wholly
within the boundaries of the real property owned by the Acquired
Companies and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the Acquired
Companies are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being
put, and none of such buildings, plants, structures, or equipment
is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost.
The building, plants, structures, and equipment of the Acquired
Companies are sufficient for the continued conduct of the Acquired
Companies' businesses after the Closing in substantially the same
manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Acquired Companies that are
reflected on the Balance Sheet or the Interim Balance Sheet or on
the accounting records of the Acquired Companies as of the Closing
Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or
services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Closing Date current and collectible net of
the respective reserves shown on the Balance Sheet or the Interim
Balance Sheet or on the accounting records of the Acquired
Companies as of the Closing Date (which reserves are adequate and
calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than
the reserve reflected in the Interim Balance Sheet represented of
the Accounts Receivable reflected therein and will not represent a
material adverse change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, each of
the Accounts Receivable either has been or, to the knowledge of
Sellers after due inquiry, will be collected in full, without any
set-off, within ninety days after the day on which it first
becomes due and payable. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business,
under any Contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable.
Part 3.8 of the Disclosure Letter contains a complete and accurate
list of all Accounts Receivable as of the date of the Interim
Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 INVENTORY
All inventory of the Acquired Companies, whether or not reflected
in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of
Business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net
realizable value in the Balance Sheet or the Interim Balance Sheet
or on the accounting records of the Acquired Companies as of the
Closing Date, as the case may be. All inventories not written off
have been priced at the lower of cost or market on a first in,
first out basis. The quantities of each item of inventory
(whether raw materials, work-in-process, or finished goods) are
not excessive, but are reasonable in the present circumstances of
the Acquired Companies.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, the
Acquired Companies have no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.
3.11 TAXES
(a) The Acquired Companies have filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be filed
by or with respect to any of them, either separately or as a
member of a group of corporations, pursuant to applicable Legal
Requirements. Sellers have delivered to Buyer copies of, and
Part 3.11 of the Disclosure Letter contains a complete and
accurate list of, all such Tax Returns relating to income,
franchise or property taxes filed during the current fiscal year
or the last three completed fiscal years of the Acquired
Companies. The Acquired Companies have paid, or made provision
for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by Sellers or any Acquired Company, except
such Taxes, if any, as are listed in Part 3.11 of the Disclosure
Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet and the Interim Balance Sheet.
(b) The state Tax Returns of each Acquired Company subject to such
Taxes have been audited by the relevant state tax authorities or
are closed by the applicable statute of limitations for all
taxable years through the year five years prior to the current
year. Part 3.11 of the Disclosure Letter contains a complete and
accurate list of all audits of all such Tax Returns, including a
reasonably detailed description of the nature and outcome of each
audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in
Part 3.11 of the Disclosure Letter, are being contested in good
faith by appropriate proceedings. Except as described in
Part 3.11 of the Disclosure Letter, no Seller or Acquired Company
has given or been requested to give waivers or extensions (or is
or would be subject to a waiver or extension given by any other
Person) of any statute of limitations relating to the payment of
Taxes of any Acquired Company or for which any Acquired Company
may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on
the respective books of each Acquired Company are adequate
(determined in accordance with GAAP) and are at least equal to
that Acquired Company's liability for Taxes. There exists no
proposed tax assessment against any Acquired Company except as
disclosed in the Balance Sheet or in Part 3.11 of the Disclosure
Letter. No consent to the application of Section 341(f)(2) of the
IRC has been filed with respect to any property or assets held,
acquired, or to be acquired by any Acquired Company. All Taxes
that any Acquired Company is or was required by Legal Requirements
to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental
Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated
basis) any Acquired Company are true, correct, and complete. There
is no tax sharing agreement that will require any payment by any
Acquired Company after the date of this Agreement. During the
consistency period (as defined in Section 338(h)(4) of the IRC
with respect to the sale of the Shares to Buyer), no Acquired
Company or target affiliate (as defined in Section 338(h)(6) of
the IRC with respect to the sale of the Shares to Buyer) has sold
or will sell any property or assets to Buyer or to any member of
the affiliated group (as defined in Section 338(h)(5) of the IRC)
that includes Buyer. Part 3.11 of the Disclosure Letter lists all
such target affiliates.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet and Interim Balance Sheet,
there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of any
Acquired Company, and no event has occurred or circumstance exists
that may result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the following terms have the
meanings set forth below.
"Company Other Benefit Obligation" means an Other Benefit
Obligation owed, adopted, or followed by an Acquired Company or an
ERISA Affiliate of an Acquired Company.
"Company Plan" means all Plans of which an Acquired Company or an
ERISA Affiliate of an Acquired Company is or was a Plan Sponsor,
or to which an Acquired Company or an ERISA Affiliate of an
Acquired Company otherwise contributes or has contributed, or in
which an Acquired Company or an ERISA Affiliate of an Acquired
Company otherwise participates or has participated. All references
to Plans are to Company Plans unless the context requires
otherwise.
"Company VEBA" means a VEBA whose members include employees of any
Acquired Company or any ERISA Affiliate of an Acquired Company.
"ERISA Affiliate" means, with respect to an Acquired Company, any
other person that, together with the Company, would be treated as
a single employer under IRC Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section
3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements,
or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services
rendered, to present or former directors, employees, or agents,
other than obligations, arrangements, and practices that are
Plans. Other Benefit Obligations include consulting agreements
under which the compensation paid does not depend upon the amount
of service rendered, sabbatical policies, severance payment
policies, and fringe benefits within the meaning of IRC Section
132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title
IV of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-
Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under
IRC Section 501(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) (i) Part 3.13(i) of the Disclosure Letter contains a complete
and accurate list of all Company Plans, Company Other Benefit
Obligations, and Company VEBAs, and identifies as such all Company
Plans that are (A) defined benefit Pension Plans, (B) Qualified
Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.
(ii) Part 3.13(ii) of the Disclosure Letter contains a complete
and accurate list of (A) all ERISA Affiliates of each Acquired
Company, and (B) all Plans of which any such ERISA Affiliate is or
was a Plan Sponsor, in which any such ERISA Affiliate participates
or has participated, or to which any such ERISA Affiliate
contributes or has contributed.
(iii) Part 3.13(iii) of the Disclosure Letter sets forth, for each
Multi-Employer Plan, as of its last valuation date, the amount of
potential withdrawal liability of the Acquired Companies and the
Acquired Companies' other ERISA Affiliates, calculated according
to information made available pursuant to ERISA Section 4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets forth a
calculation of the liability of the Acquired Companies for post-
retirement benefits other than pensions, made in accordance with
Financial Accounting Statement 106 of the Financial Accounting
Standards Board, regardless of whether any Acquired Company is
required by this Statement to disclose such information.
(v) Part 3.13(v) of the Disclosure Letter sets forth the financial
cost of all obligations owed under any Company Plan or Company
Other Benefit Obligation that is not subject to the disclosure and
reporting requirements of ERISA.
(c) Sellers have delivered to Buyer, or will deliver to Buyer
within ten days of the date of this Agreement:
(i) all documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any
related trust, including (A) all plan descriptions and summary
plan descriptions of Company Plans for which Sellers or the
Acquired Companies are required to prepare, file, and distribute
plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans, Company Other Benefit
Obligations, and Company VEBAs for which a plan description or
summary plan description is not required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including
both pension and welfare benefits) by the Acquired Companies and
the ERISA Affiliates of the Acquired Companies, and all collective
bargaining agreements pursuant to which contributions are being
made or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any Company
Plan;
(vi) all insurance policies purchased by or to provide benefits
under any Company Plan;
(vii) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent
contractors that relate to any Company Plan, Company Other Benefit
Obligation, or Company VEBA;
(viii) all reports submitted within the four years preceding the
date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors
with respect to any Company Plan, Company Other Benefit
Obligation, or Company VEBA;
(ix) all notifications to employees of their rights under ERISA
Section 601 et seq. and IRC Section 4980B;
(x) the Form 5500 filed in each of the most recent three plan
years with respect to each Company Plan, including all schedules
thereto and the opinions of independent accountants;
(xi) all notices that were given by any Acquired Company or any
ERISA Affiliate of an Acquired Company or any Company Plan to the
IRS, the PBGC, or any participant or beneficiary, pursuant to
statute, within the four years preceding the date of this
Agreement, including notices that are expressly mentioned
elsewhere in this Section 3.13;
(xii) all notices that were given by the IRS, the PBGC, or the
Department of Labor to any Acquired Company, any ERISA Affiliate
of an Acquired Company, or any Company Plan within the four years
preceding the date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most recent
determination letter for each Plan of the Acquired Companies that
is a Qualified Plan; and
(xiv) with respect to Title IV Plans, the Form PBGC-1 filed for
each of the three most recent plan years.
(d) Except as set forth in Part 3.13(vi) of the Disclosure Letter:
(i) The Acquired Companies have performed all of their respective
obligations under all Company Plans, Company Other Benefit
Obligations, and Company VEBAs. The Acquired Companies have made
appropriate entries in their financial records and statements for
all obligations and liabilities under such Plans, VEBAs, and
Obligations that have accrued but are not due.
(ii) No statement, either written or oral, has been made by any
Acquired Company to any Person with regard to any Plan or Other
Benefit Obligation that was not in accordance with the Plan or
Other Benefit Obligation and that could have an adverse economic
consequence to any Acquired Company or to Buyer.
(iii) The Acquired Companies, with respect to all Company Plans,
Company Other Benefits Obligations, and Company VEBAs, are, and
each Company Plan, Company Other Benefit Obligation, and Company
VEBA is, in full compliance with ERISA, the IRC, and other
applicable Laws including the provisions of such Laws expressly
mentioned in this Section 3.13, and with any applicable collective
bargaining agreement.
(A) No transaction prohibited by ERISA Section 406 and no
"prohibited transaction" under IRC Section 4975(c) have occurred
with respect to any Company Plan.
(B) No Seller or Acquired Company has any liability to the IRS
with respect to any Plan, including any liability imposed by
Chapter 43 of the IRC.
(C) No Seller or Acquired Company has any liability to the PBGC
with respect to any Plan or has any liability under ERISA Section
502 or Section 4071.
(D) All filings required by ERISA and the IRC as to each Plan have
been timely filed, and all notices and disclosures to participants
required by either ERISA or the IRC have been timely provided.
(E) All contributions and payments made or accrued with respect to
all Company Plans, Company Other Benefit Obligations, and Company
VEBAs are deductible under IRC Section 162 or Section 404. No
amount, or any asset of any Company Plan or Company VEBA, is
subject to tax as unrelated business taxable income.
(iv) Each Company Plan can be terminated within thirty days,
without payment of any additional contribution or amount and
without the vesting or acceleration of any benefits promised by
such Plan.
(v) Since the first day of the last completed fiscal year of the
Acquired Companies, there has been no establishment or amendment
of any Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(vi) No event has occurred or circumstance exists that could
result in a material increase in premium costs of Company Plans
and Company Other Benefit Obligations that are insured, or a
material increase in benefit costs of such Plans and Obligations
that are self-insured.
(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving,
any Company Plan, Company Other Benefit Obligation, or Company
VEBA is pending or, to Sellers' Knowledge, is Threatened.
(viii) No Company Plan is a stock bonus, pension, or profit-
sharing plan within the meaning of IRC Section 401(a).
(ix) Each Qualified Plan of each Acquired Company is qualified in
form and operation under IRC Section 401(a); each trust for each
such Plan is exempt from federal income tax under IRC Section
501(a). Each Company VEBA is exempt from federal income tax. No
event has occurred or circumstance exists that will or could give
rise to disqualification or loss of tax-exempt status of any such
Plan or trust.
(x) Each Acquired Company and each ERISA Affiliate of an Acquired
Company has met the minimum funding standard, and has made all
contributions required, under ERISA Section 302 and IRC Section
402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Acquired Companies have paid all amounts due to the PBGC
pursuant to ERISA Section 4007.
(xiii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has ceased operations at any facility or has withdrawn
from any Title IV Plan in a manner that would subject to any
entity or Sellers to liability under ERISA Section 4062(e),
Section 4063, or Section 4064.
(xiv) No Acquired Company or any ERISA Affiliate of an Acquired
Company has filed a notice of intent to terminate any Plan or has
adopted any amendment to treat a Plan as terminated. The PBGC has
not instituted proceedings to treat any Company Plan as
terminated. No event has occurred or circumstance exists that may
constitute grounds under ERISA Section 4042 for the termination
of, or the appointment of a trustee to administer, any Company
Plan.
(xv) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the provision
of security under ERISA Section 307 or IRC Section 401(a)(29).
(xvi) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding
deficiency as of the last day of the current plan year of any such
Plan.
(xvii) The actuarial report for each Pension Plan of each Acquired
Company and each ERISA Affiliate of each Acquired Company fairly
presents the financial condition and the results of operations of
each such Plan in accordance with GAAP.
(xviii) Since the last valuation date for each Pension Plan of
each Acquired Company and each ERISA Affiliate of an Acquired
Company, no event has occurred or circumstance exists that would
increase the amount of benefits under any such Plan or that would
cause the excess of Plan assets over benefit liabilities (as
defined in ERISA Section 4001) to decrease, or the amount by which
benefit liabilities exceed assets to increase.
(xiv) No reportable event (as defined in ERISA Section 4043 and in
regulations issued thereunder) has occurred.
(xx) No Seller or Acquired Company has Knowledge of any facts or
circumstances that may give rise to any liability of any Seller,
any Acquired Company, or Buyer to the PBGC under Title IV of
ERISA.
(xxi) No Acquired Company or any ERISA Affiliate of an Acquired
Company has ever established, maintained, or contributed to or
otherwise participated in, or had an obligation to maintain,
contribute to, or otherwise participate in, any Multi-Employer
Plan.
(xxii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has withdrawn from any Multi-Employer Plan with respect to
which there is any outstanding liability as of the date of this
Agreement. No event has occurred or circumstance exists that
presents a risk of the occurrence of any withdrawal from, or the
participation, termination, reorganization, or insolvency of, any
Multi-Employer Plan that could result in any liability of either
any Acquired Company or Buyer to a Multi-Employer Plan.
(xxiii) No Acquired Company or any ERISA Affiliate of an Acquired
Company has received notice from any Multi-Employer Plan that it
is in reorganization or is insolvent, that increased contributions
may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, or that such Plan intends to
terminate or has terminated.
(xxiv) No Multi-Employer Plan to which any Acquired Company or any
ERISA Affiliate of an Acquired Company contributes or has
contributed is a party to any pending merger or asset or liability
transfer or is subject to any proceeding brought by the PBGC.
(xxv) Except to the extent required under ERISA Section 601 et
seq. and IRC Section 4980B, no Acquired Company provides health or
welfare benefits for any retired or former employee or is
obligated to provide health or welfare benefits to any active
employee following such employee's retirement or other termination
of service.
(xxvi) Each Acquired Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both
retired and active employees.
(xxii) Sellers and all Acquired Companies have complied with the
provisions of ERISA Section 601 et seq. and IRC Section 4980B.
(xxviii) No payment that is owed or may become due to any
director, officer, employee, or agent of any Acquired Company will
be non-deductible to the Acquired Companies or subject to tax
under IRC Section 280G or Section 4999; nor will any Acquired
Company be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to
such person.
(xxiv) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times has been, in full
compliance with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in
a violation by any Acquired Company of, or a failure on the part
of any Acquired Company to comply with, any Legal Requirement, or
(B) may give rise to any obligation on the part of any Acquired
Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature; and
(iii) no Acquired Company has received, at any time since the
first day of the next to last completed fiscal year of the
Acquired Companies, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement, or
(B) any actual, alleged, possible, or potential obligation on the
part of any Acquired Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by
any Acquired Company or that otherwise relates to the business of,
or to any of the assets owned or used by, any Acquired Company.
Each Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times has been, in full
compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified
in Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with
or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply
with any term or requirement of any Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure
Letter, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required
to be listed in Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received, at any time since the
first day of the next to last completed fiscal year of the
Acquired Companies, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or requirement of
any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations listed or required to be listed
in Part 3.14 of the Disclosure Letter have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis
with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the
Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Companies to
lawfully conduct and operate their businesses in the manner they
currently conduct and operate such businesses and to permit the
Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure Letter,
there is no pending Proceeding:
(i) that has been commenced by or against any Acquired Company or
that otherwise relates to or may affect the business of, or any of
the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of Sellers and the Acquired Companies, (1) no
such Proceeding has been Threatened, and (2) no event has occurred
or circumstance exists that may give rise to or serve as a basis
for the commencement of any such Proceeding. Sellers have
delivered to Buyer copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Part 3.15 of
the Disclosure Letter. The Proceedings listed in Part 3.15 of the
Disclosure Letter will not have a material adverse effect on the
business, operations, assets, condition, or prospects of any
Acquired Company.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is
subject;
(ii) no Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, any Acquired
Company; and
(iii) to the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, or employee of any Acquired Company is
subject to any Order that prohibits such officer, director, agent,
or employee from engaging in or continuing any conduct, activity,
or practice relating to the business of any Acquired Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) each Acquired Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time)
a violation of or failure to comply with any term or requirement
of any Order to which any Acquired Company, or any of the assets
owned or used by any Acquired Company, is subject; and
(iii) no Acquired Company has received, at any time since the
first day of the next to last completed fiscal year of the
Acquired Companies, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation
of, or failure to comply with, any term or requirement of any
Order to which any Acquired Company, or any of the assets owned or
used by any Acquired Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter, since
the date of the Balance Sheet and the Interim Balance Sheet, the
Acquired Companies have conducted their businesses only in the
Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of
capital stock of any Acquired Company; issuance of any security
convertible into such capital stock; grant of any registration
rights; purchase, redemption, retirement, or other acquisition by
any Acquired Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director,
officer, or (except in the Ordinary Course of Business) employee
or entry into any employment, severance, or similar Contract with
any director, officer, or employee, except the disbursement to
Sellers of cash of the Company in excess of $500,000 as of the
Closing Date, subject in all respects to the conditions set forth
in Sections 7.11 and 8.5;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for
or with any employees of any Acquired Company;
(e) damage to or destruction or loss of any asset or property of
any Acquired Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets,
business, financial condition, or prospects of the Acquired
Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or
(ii) any Contract or transaction involving a total remaining
commitment by or to any Acquired Company of at least $5,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of
any Acquired Company or mortgage, pledge, or imposition of any
lien or other encumbrance on any material asset or property of any
Acquired Company, including the sale, lease, or other disposition
of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
any Acquired Company in excess of $5,000;
(i) material change in the accounting methods used by any Acquired
Company; or
(j) agreement, whether oral or written, by any Acquired Company to
do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Sellers have delivered to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves performance of services
or delivery of goods or materials by one or more Acquired
Companies of an amount or value in excess of $25,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to one or more Acquired
Companies of an amount or value in excess of $25,000;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of one or more Acquired Companies in excess of $5,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of,
or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $5,000 and with terms of less than one
year);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by any Acquired Company with any other
Person;
(viii) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of any Acquired
Company or any Affiliate of an Acquired Company or limit the
freedom of any Acquired Company or any Affiliate of an Acquired
Company to engage in any line of business or to compete with any
Person;
(ix) each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an
express undertaking by any Acquired Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital expenditures in excess
of $10,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by
any Acquired Company other than in the Ordinary Course of
Business; and
(xiv) each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably
complete details concerning such Contracts, including the parties
to the Contracts and the amount of the remaining commitment of the
Acquired Companies under the Contracts.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) neither Seller (and no Related Person of either Seller) has or
may acquire any rights under, and neither Seller has or may become
subject to any obligation or liability under, any Contract that
relates to the business of, or any of the assets owned or used by,
any Acquired Company; and
(ii) to the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, employee, consultant, or contractor of
any Acquired Company is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any
conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any
other Person any rights to any invention, improvement, or
discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter,
each Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and
is valid and enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since the first day
of the last completed fiscal year of the Acquired Companies has
been, in full compliance with all applicable terms and
requirements of each Contract under which such Acquired Company
has or had any obligation or liability or by which such Acquired
Company or any of the assets owned or used by such Acquired
Company is or was bound;
(ii) each other Person that has or had any obligation or liability
under any Contract under which an Acquired Company has or had any
rights is, and at all times since the first day of the last
completed fiscal year of the Acquired Companies has been, in full
compliance with all applicable terms and requirements of such
Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give any Acquired Company
or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; and
(iv) no Acquired Company has given to or received from any other
Person, at any time since the first day of the last completed
fiscal year of the Acquired Companies, any notice or other
communication (whether oral or written) regarding any actual,
alleged, possible, or potential violation or breach of, or default
under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or
payable to any Acquired Company under current or completed
Contracts with any Person and, to the Knowledge of Sellers and the
Acquired Companies, no such Person has made written demand for
such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have
been entered into in the Ordinary Course of Business and have been
entered into without the commission of any act alone or in concert
with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal
Requirement.
3.18 INSURANCE
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance to which
any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, is or has been
covered at any time within the two years preceding the date of
this Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of any Acquired Company's
financial statements, or the accountant compiling such financial
statements, with regard to the adequacy of such entity's coverage
or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired
Company; and
(iii) all obligations of the Acquired Companies to third parties
with respect to insurance (including such obligations under leases
and service agreements) and identifies the policy under which such
coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for
the current policy year and each of the two preceding policy
years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy
for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of insurance, and
period of coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost of
such claims.
(d) Except as set forth in Part 3.18(d) of the Disclosure Letter:
(i) All policies to which any Acquired Company is a party or that
provide coverage to either Seller, any Acquired Company, or any
director or officer of an Acquired Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially sound and
reputable;
(C) taken together, provide adequate insurance coverage for the
assets and the operations of the Acquired Companies for all risks
normally insured against by a Person carrying on the same business
or businesses as the Acquired Companies;
(D) are sufficient for compliance with all Legal Requirements and
Contracts to which any Acquired Company is a party or by which any
of them is bound;
(E) will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any Acquired
Company.
(ii) No Seller or Acquired Company has received (A) any refusal of
coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any
policy is not willing or able to perform its obligations
thereunder.
(iii) The Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations, under
each policy to which any Acquired Company is a party or that
provides coverage to any Acquired Company or director thereof.
(iv) The Acquired Companies have given notice to the insurer of
all claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the Disclosure Letter:
(a) Each Acquired Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or
liable under, any Environmental Law. No Seller or Acquired Company
has any basis to expect, nor has any of them or any other Person
for whose conduct they are or may be held to be responsible
received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen
acting in the public interest, or (ii) the current or prior owner
or operator of any Facilities, of any actual or potential
violation or failure to comply with any Environmental Law, or of
any actual or Threatened obligation to undertake or bear the cost
of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or any
Acquired Company has had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or
processed by Sellers, any Acquired Company, or any other Person
for whose conduct they are or may be held responsible, or from
which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers and the
Acquired Companies, Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental,
Health, and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has
or had an interest.
(c) No Seller or Acquired Company has Knowledge of any basis to
expect, nor has any of them or any other Person for whose conduct
they are or may be held responsible, received, any citation,
directive, inquiry, notice, Order, summons, warning, or other
communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to
any of the Facilities or any other properties or assets (whether
real, personal, or mixed) in which Sellers or any Acquired Company
had an interest, or with respect to any property or facility to
which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by Sellers, any Acquired
Company, or any other Person for whose conduct they are or may be
held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) No Seller or Acquired Company, or any other Person for whose
conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the
Facilities or with respect to any other properties and assets
(whether real, personal, or mixed) in which Sellers or any
Acquired Company (or any predecessor), has or had an interest, or
at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or
hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any
other part of the Facilities or such adjoining property, or
incorporated into any structure therein or thereon. No Seller,
Acquired Company, any other Person for whose conduct they are or
may be held responsible, or to the Knowledge of Sellers and the
Acquired Companies, any other Person, has permitted or conducted,
or is aware of, any Hazardous Activity conducted with respect to
the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has
or had an interest except in full compliance with all applicable
Environmental Laws.
(f) There has been no Release or, to the Knowledge of Sellers and
the Acquired Companies, Threat of Release, of any Hazardous
Materials at or from the Facilities or at any other locations
where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from
or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which Sellers or any
Acquired Company has or had an interest, or to the Knowledge of
Sellers and the Acquired Companies any geologically or
hydrologically adjoining property, whether by Sellers, any
Acquired Company, or any other Person.
(g) Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by Sellers or any Acquired Company
pertaining to Hazardous Materials or Hazardous Activities in, on,
or under the Facilities, or concerning compliance by Sellers, any
Acquired Company, or any other Person for whose conduct they are
or may be held responsible, with Environmental Laws.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee or
director of the Acquired Companies, including each employee on
leave of absence or layoff status: employer; name; job title;
current compensation paid or payable and any change in
compensation since the first day of the last completed fiscal year
of the Acquired Companies; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under any
Acquired Company's pension, retirement, profit-sharing, thrift-
savings, deferred compensation, stock bonus, stock option, cash
bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical,
welfare, or vacation plan, other Employee Pension Benefit Plan or
Employee Welfare Benefit Plan, or any other employee benefit plan
or any Director Plan.
(b) No employee or director of any Acquired Company is a party to,
or is otherwise bound by, any agreement or arrangement, including
any confidentiality, noncompetition, or proprietary rights
agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects
or will affect (i) the performance of his duties as an employee or
director of the Acquired Companies, or (ii) the ability of any
Acquired Company to conduct its business, including any
Proprietary Rights Agreement with Sellers or the Acquired
Companies by any such employee or director. To Sellers'
Knowledge, except as disclosed in part 3.20 of the Disclosure
Letter, no director, officer, or other key employee of any
Acquired Company intends to terminate his employment with such
Acquired Company.
(c) Part 3.20 of the Disclosure Letter also contains a complete
and accurate list of the following information for each retired
employee or director of the Acquired Companies, or their
dependents, receiving benefits or scheduled to receive benefits in
the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE
Since the first day of the last completed fiscal year of the
Acquired Companies, no Acquired Company has been or is a party to
any collective bargaining or other labor Contract. Since the first
day of the last completed fiscal year of the Acquired Companies,
there has not been, there is not presently pending or existing,
and to Sellers' Knowledge there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process,
(b) any Proceeding against or affecting any Acquired Company
relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (c)
any application for certification of a collective bargaining
agent. To Sellers' Knowledge no event has occurred or circumstance
exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by any
Acquired Company, and no such action is contemplated by any
Acquired Company. Each Acquired Company has complied in all
respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health, and
plant closing. No Acquired Company is liable for the payment of
any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(i) the name Pittsfield Mold & Tool, Inc., all fictional business
names, trade names, registered and unregistered trademarks,
service marks, and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works
(collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask
Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by any Acquired Company as
licensee or licensor.
(b) Agreements--Part 3.22(b) of the Disclosure Letter contains a
complete and accurate list and summary description, including any
royalties paid or received by the Acquired Companies, of all
Contracts relating to the Intellectual Property Assets to which
any Acquired Company is a party or by which any Acquired Company
is bound, except for any license implied by the sale of a product
and perpetual, paid-up licenses for commonly available software
programs with a value of less than $5,000 under which an Acquired
Company is the licensee. There are no outstanding and, to Sellers'
Knowledge, no Threatened disputes or disagreements with respect to
any such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary for
the operation of the Acquired Companies' businesses as they are
currently conducted. One or more of the Acquired Companies is the
owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use without payment to a
third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c) of the Disclosure Letter,
all former and current employees of each Acquired Company have
executed written Contracts with one or more of the Acquired
Companies that assign to one or more of the Acquired Companies all
rights to any inventions, improvements, discoveries, or
information relating to the business of any Acquired Company. No
employee of any Acquired Company has entered into any Contract
that restricts or limits in any way the scope or type of work in
which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to
anyone other than one or more of the Acquired Companies.
(d) Patents
(i) Part 3.22(d) of the Disclosure Letter contains a complete and
accurate list and summary description of all Patents. One or more
of the Acquired Companies is the owner of all right, title, and
interest in and to each of the Patents, free and clear of all
liens, security interests, charges, encumbrances, equities, and
other adverse claims.
(ii) All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use),
are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the
Closing Date.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To Sellers'
Knowledge, there is no potentially interfering patent or patent
application of any third party.
(iv) No Patent is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by any
Acquired Company infringes or is alleged to infringe any patent or
other proprietary right of any other Person.
(v) All products made, used, or sold under the Patents have been
marked with the proper patent notice.
(e) Trademarks
(i) Part 3.22(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks. One or more of
the Acquired Companies is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims.
(ii) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all
formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to
any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to Sellers' Knowledge, no such
action is Threatened with the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially interfering
trademark or trademark application of any third party.
(v) No Mark is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the Marks used by any
Acquired Company infringes or is alleged to infringe any trade
name, trademark, or service mark of any third party.
(vi) All products and materials containing a Mark bear the proper
federal registration notice where permitted by law.
(f) Copyrights
(i) Part 3.22(f) of the Disclosure Letter contains a complete and
accurate list and summary description of all Copyrights. One or
more of the Acquired Companies is the owner of all right, title,
and interest in and to each of the Copyrights, free and clear of
all liens, security interests, charges, encumbrances, equities,
and other adverse claims.
(ii) All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety days after the date of
Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has
been challenged or threatened in any way. None of the subject
matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work
based on the work of a third party.
(iv) All works encompassed by the Copyrights have been marked with
the proper copyright notice.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation relating
to such Trade Secret is current, accurate, and sufficient in
detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of
any individual.
(ii) Sellers and the Acquired Companies have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(iii) One or more of the Acquired Companies has good title and an
absolute (but not necessarily exclusive) right to use the Trade
Secrets. The Trade Secrets are not part of the public knowledge or
literature, and, to Sellers' Knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person
(other than one or more of the Acquired Companies) or to the
detriment of the Acquired Companies. No Trade Secret is subject to
any adverse claim or has been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS
Since during the current fiscal year and the last three completed
fiscal years of the Acquired Companies, no Acquired Company or
director, officer, agent, or employee of any Acquired Company, or
to Sellers' Knowledge any other Person associated with or acting
for or on behalf of any Acquired Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Acquired
Company or any Affiliate of an Acquired Company, or (iv) in
violation of any Legal Requirement, (b) established or maintained
any fund or asset that has not been recorded in the books and
records of the Acquired Companies.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and
no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light
of the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to
make the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
(c) There is no fact known to either Seller that has specific
application to either Seller or any Acquired Company (other than
general economic or industry conditions) and that materially
adversely affects or, as far as either Seller can reasonably
foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Acquired
Companies (on a consolidated basis) that has not been set forth in
this Agreement or the Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of Sellers or of any Acquired
Company has, or since the first day of the next to last completed
fiscal year of the Acquired Companies has had, any interest in any
property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to the Acquired Companies'
businesses. No Seller or any Related Person of Sellers or of any
Acquired Company is, or since the first day of the next to last
completed fiscal year of the Acquired Companies has owned (of
record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any
transaction with any Acquired Company other than business dealings
or transactions conducted in the Ordinary Course of Business with
the Acquired Companies at substantially prevailing market prices
and on substantially prevailing market terms, or (ii) engaged in
competition with any Acquired Company with respect to any line of
the products or services of such Acquired Company (a "Competing
Business") in any market presently served by such Acquired Company
except for less than one percent of the outstanding capital stock
of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as
set forth in Part 3.25 of the Disclosure Letter, no Seller or any
Related Person of Sellers or of any Acquired Company is a party to
any Contract with, or has any claim or right against, any Acquired
Company.
3.26 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this
Agreement except for payments to Vernon A. Martin, Inc.
3.27 DEPOSIT ACCOUNTS
Part 3.27 of the Disclosure Letter contains a complete and
accurate list of (a) the name of each financial institution in
which any Acquired Company has an account or safe deposit box, (b)
the names in which each account or box is held, (c) the type
account, and (d) the name of each person authorized to draw on or
have access to each account or box.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Colorado.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms. Upon the execution and delivery by Buyer of the
Promissory Note and the Noncompetition Agreements (collectively,
the "Buyer's Closing Documents"), the Buyer's Closing Documents
will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the
Buyer's Closing Documents and to perform its obligations under
this Agreement and the Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated
Transactions by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
shareholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may
be bound.
Except as set forth in this Section 4.2(b), Buyer is not and will
not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated
Transactions.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against
Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions. To Buyer's Knowledge, no such
Proceeding has been Threatened.
4.4 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with
this Agreement, except for amounts, if any, due Stopel Business
Services, James A. DeRoche, Esq. Buyer will indemnify and hold
Sellers harmless from any such payment alleged to be due by or
through Buyer as a result of the action of Buyer or its officers
or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause each Acquired Company and its Representatives
to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's
Advisors") full and free access to each Acquired Company's
personnel, properties (including subsurface testing), contracts,
books and records, and other documents and data, (b) furnish Buyer
and Buyer's Advisors with copies of all such contracts, books and
records, and other existing documents and data as Buyer may
reasonably request, and (c) furnish Buyer and Buyer's Advisors
with such additional financial, operating, and other data and
information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause each Acquired Company to:
(a) conduct the business of such Acquired Company only in the
Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the current business
organization of such Acquired Company, keep available the services
of the current officers, employees, and agents of such Acquired
Company, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others
having business relationships with such Acquired Company;
(c) confer with Buyer concerning operational matters of a material
nature; and
(d) otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of such Acquired
Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Sellers will not,
and will cause each Acquired Company not to, without the prior
consent of Buyer, take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of
which any of the changes or events listed in Section 3.16 is
likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement,
Sellers will, and will cause each Acquired Company to, make all
filings required by Legal Requirements to be made by them in order
to consummate the Contemplated Transactions. Between the date of
this Agreement and the Closing Date, Sellers will, and will cause
each Acquired Company to, (a) cooperate with Buyer with respect to
all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with Buyer in obtaining all
consents identified in Schedule 4.2.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each
Seller will promptly notify Buyer in writing if such Seller or any
Acquired Company becomes aware of any fact or condition that
causes or constitutes a Breach of any of Sellers' representations
and warranties as of the date of this Agreement, or if such Seller
or any Acquired Company becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except
as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence
or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the
Disclosure Letter were dated the date of the occurrence or
discovery of any such fact or condition, Sellers will promptly
deliver to Buyer a supplement to the Disclosure Letter specifying
such change. During the same period, each Seller will promptly
notify Buyer of the occurrence of any Breach of any covenant of
Sellers in this Section 5 or of the occurrence of any event that
may make the satisfaction of the conditions in Section 7
impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Sellers will cause
all indebtedness owed to an Acquired Company by any Seller or any
Related Person of any Seller (other than an Acquired Company) to
be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant
to Section 9, Sellers will not, and will cause each Acquired
Company and each of their Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public
information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or
assets (other than in the Ordinary Course of Business) of any
Acquired Company, or any of the capital stock of any Acquired
Company, or any merger, consolidation, business combination, or
similar transaction involving any Acquired Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers
will use their Best Efforts to cause the conditions in Sections 7
and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer
will, and will cause each of its Related Persons to, make all
filings required by Legal Requirements to be made by them, if any,
to consummate the Contemplated Transactions. Between the date of
this Agreement and the Closing Date, Buyer will, and will cause
each Related Person to, cooperate with Sellers with respect to all
filings that Sellers are required by Legal Requirements to make in
connection with the Contemplated Transactions, if any, and (ii)
cooperate with Sellers in obtaining all consents identified in
Part 3.2 of the Disclosure Letter; provided that this Agreement
will not require Buyer to dispose of or make any change in any
portion of its business or to incur any other burden to obtain a
Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the
date of this Agreement and the Closing Date, Buyer will use its
Best Efforts to cause the conditions in Sections 7 and 8 to be
satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in
whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these
representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this
Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, without giving effect
to any supplement to the Disclosure Letter.
(b) Each of Sellers' representations and warranties in Sections
3.3, 3.4, 3.12, and 3.24 must have been accurate in all respects
as of the date of this Agreement, and must be accurate in all
respects as of the Closing Date as if made on the Closing Date,
without giving effect to any supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have
been duly performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to
Sections 2.4 through 2.7 must have been delivered, and each of the
other covenants and obligations in Sections 5.4 and 5.8 must have
been performed and complied with in all respects.
7.3 CONSENTS
Each of the Consents, if any, identified in Part 3.2 of the
Disclosure Letter, and the consent referred to in Section 4.2(b),
must have been obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Martin & Oliviera, LLP, counsel to Sellers and
the Company, dated the Closing Date, in a form mutually acceptable
to the parties hereto;
(b) such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion
referred to in Section 8.4(a), (ii) evidencing the accuracy of any
of Sellers' representations and warranties, (iii) evidencing the
performance by either Seller of, or the compliance by either
Seller with, any covenant or obligation required to be performed
or complied with by such Seller, (iv) evidencing the satisfaction
of any condition referred to in this Section 7, or (v) otherwise
facilitating the consummation or performance of any of the
Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been
commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge
to, or seeking damages or other relief in connection with, any of
the Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any
claim asserting that such Person (a) is the holder or the
beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any stock of, or any other voting,
equity, or ownership interest in, any of the Acquired Companies,
or (b) is entitled to all or any portion of the Purchase Price
payable for the Shares.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause
Buyer or any Person affiliated with Buyer to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before
any Governmental Body.
7.8 DUE DILIGENCE.
Buyer must have completed its review of the business, operations,
assets, prospects and condition (financial and otherwise) of each
Acquired Company, and the results of that review must be
satisfactory to Buyer.
7.9 FINANCING.
Buyer must have obtained additional bank financing in an amount
that Buyer, in its sole discretion, deems necessary to enable
Buyer to finance the Contemplated Transactions and the working
capital requirements of the Acquired Companies after the Closing.
7.10 PURCHASE OF REAL ESTATE
The closing of the purchase by the Company from Sellers of certain
real estate and improvements as specified in the Real Estate
Purchase Agreement referred to in Section 2.5 must occur
simultaneously with the Closing under this Agreement.
7.11 FINANCIAL BENCHMARKS
As of the Closing, the Company must have at least $500,000 in cash
balances and accounts receivable minus accounts payable shall be
not less than $1,220,000, subject in all respects to the
provisions of Section 5.2.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other
actions required to be taken by Sellers at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Sellers, in
whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in
all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if
made on the Closing Date.
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have
been performed and complied with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Sections 2.4 through 2.7 and must
have made the cash payments required to be made by Buyer pursuant
to Section 2.2.
8.3 Each of the Consents, if any, identified in Part 3.2 of the
Disclosure Letter, must have been obtained and must be in full
force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered to
Sellers:
(a) an opinion of Dinsmore & Shohl LLP, counsel to Buyer, dated
the Closing Date,in a form mutually acceptable to the parties
hereto; and
(b) such other documents as Sellers may reasonably request for the
purpose of (i) enabling their counsel to provide the opinion
referred to in Section 7.4(a), (ii) evidencing the accuracy of any
representation or warranty of Buyer, (iii) evidencing the
performance by Buyer of, or the compliance by Buyer with, any
covenant or obligation required to be performed or complied with
by Buyer, (ii) evidencing the satisfaction of any condition
referred to in this Section 8, or (v) otherwise facilitating the
consummation of any of the Contemplated Transactions.
8.5 FINANCIAL BENCHMARKS
As of the Closing, the Company must have at least $500,000 in cash
balances and accounts receivable minus accounts payable shall be
not less than $1,220,000, subject in all respects to the
provisions of Section 5.2.
8.6 NO INJUNCTION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the
Shares by Sellers to Buyer, and (b) has been adopted or issued, or
has otherwise become effective, since the date of this Agreement.
8.7 BUYER'S FINANCIAL CONDITION
The Sellers shall have completed their review of Buyer's financial
statements, books, records, accounts receivable, inventory and
actual and potential liabilities, and determined, in their
reasonable discretion, that Buyer has the financial to repay the
Promissory Note and otherwise perform its obligations hereunder in
all material respects.
8.8 SECURITY FOR FUTURE PAYMENTS
Buyer shall deliver at the Closing, as security for payment by
Buyer of all amounts owing Sellers under the Promissory Note in
accordance with the terms and conditions thereof, each of the
following in form and substance reasonably satisfactory to
Sellers: (i) a letter of credit in the amount of $250,000, (ii)a
lien on all assets of the Company, subordinate only to the
Company's primary lender, holders of purchase money security
interests, holders of statutory liens or liens to which the assets
of the Company were subject prior to the Closing which are not to
be released as a condition to Buyer's obligation to close
hereunder, and (iii) a pledge to Henry A. Kirchner of 400 shares
of common stock of the Company, subject to anti-dilution
protection to ensure a pledge at all times of 40% of the
outstanding common stock of the Company, which shares shall be
placed in escrow under an escrow agreement in a form mutually
acceptable to the parties hereto with a third party mutually
acceptable to Henry A. Kirchner and Buyer, which shares shall be
released to Buyer as the Promissory Note is paid down by Buyer.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party
and such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure
of Buyer to comply with its obligations under this Agreement) and
Buyer has not waived such condition on or before the Closing Date;
or (ii) by Sellers, if any of the conditions in Section 8 has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure
of Sellers to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or before the
Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this
Agreement) on or before September 1, 1999, or such later date as
the parties may agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition
to any other rights it may have under this Agreement or otherwise,
and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to
Section 9.1, all further obligations of the parties under this
Agreement will terminate, except that the obligations in Sections
11.1 and 11.3 will survive; provided, however, that if this
Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's
failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations of
Sellers in this Agreement, the Disclosure Letter, the supplements
to the Disclosure Letter, the certificate delivered pursuant to
Section 2.4(a)(iv), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The
right to indemnification, payment of Damages or other remedy based
on such representations, warranties, covenants, and obligations
will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of being acquired) at
any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will
not affect the right to indemnification, payment of Damages, or
other remedy based on such representations, warranties, covenants,
and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold harmless
Buyer, the Acquired Companies, and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim,
damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving
a third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Sellers
in this Agreement (without giving effect to any supplement to the
Disclosure Letter), the Disclosure Letter, the supplements to the
Disclosure Letter, or any other certificate or document delivered
by Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by Sellers
in this Agreement as if such representation or warranty were made
on and as of the Closing Date without giving effect to any
supplement to the Disclosure Letter, other than any such Breach
that is disclosed in a supplement to the Disclosure Letter and is
expressly identified in the certificate delivered pursuant to
Section 2.4(a)(v) as having caused the condition specified in
Section 7.1 not to be satisfied;
(c) any Breach by either Seller of any covenant or obligation of
such Seller in this Agreement;
(d) any product shipped or manufactured by, or any services
provided by, any Acquired Company prior to the Closing Date;
(e) any matter disclosed in Part ____ of the Disclosure Letter [to
be completed upon receipt of Disclosure Letter];
(f) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with
either Seller or any Acquired Company (or any Person acting on
their behalf) in connection with any of the Contemplated
Transactions; or
The remedies provided in this Section 10.2 will not be exclusive
of or limit any other remedies that may be available to Buyer or
the other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--
ENVIRONMENTAL MATTERS
In addition to the provisions of Section 10.2, Sellers, jointly
and severally, will indemnify and hold harmless Buyer, the
Acquired Companies, and the other Indemnified Persons for, and
will pay to Buyer, the Acquired Companies, and the other
Indemnified Persons the amount of, any Damages (including costs of
cleanup, containment, or other remediation) arising, directly or
indirectly, from or in connection with:
(a) any Environmental, Health, and Safety Liabilities arising out
of or relating to: (i) (A) the ownership, operation, or condition
at any time on or prior to the Closing Date of the Facilities or
any other properties and assets (whether real, personal, or mixed
and whether tangible or intangible) in which Sellers or any
Acquired Company has or had an interest, or (B) any Hazardous
Materials or other contaminants that were present on the
Facilities or such other properties and assets at any time on or
prior to the Closing Date; or (ii) (A) any Hazardous Materials or
other contaminants, wherever located, that were, or were
allegedly, generated, transported, stored, treated, Released, or
otherwise handled by Sellers or any Acquired Company or by any
other Person for whose conduct they are or may be held responsible
at any time on or prior to the Closing Date, or (B) any Hazardous
Activities that were, or were allegedly, conducted by Sellers or
any Acquired Company or by any other Person for whose conduct they
are or may be held responsible; or
(b) any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury occurred, was
incurred, or manifested itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction, and deprivation
of the use of real property), or other damage of or to any Person,
including any employee or former employee of Sellers or any
Acquired Company or any other Person for whose conduct they are or
may be held responsible, in any way arising from or allegedly
arising from any Hazardous Activity conducted or allegedly
conducted with respect to the Facilities or the operation of the
Acquired Companies prior to the Closing Date, or from Hazardous
Material that was (i) present or suspected to be present on or
before the Closing Date on or at the Facilities (or present or
suspected to be present on any other property, if such Hazardous
Material emanated or allegedly emanated from any of the Facilities
and was present or suspected to be present on any of the
Facilities on or prior to the Closing Date) or (ii) Released or
allegedly Released by Sellers or any Acquired Company or any other
Person for whose conduct they are or may be held responsible, at
any time on or prior to the Closing Date.
Buyer will be entitled to control any Cleanup, any related
Proceeding, and, except as provided in the following sentence, any
other Proceeding with respect to which indemnity may be sought
under this Section 10.3. The procedure described in Section 10.9
will apply to any claim solely for monetary damages relating to a
matter covered by this Section 10.3.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to
Sellers the amount of any Damages arising, directly or indirectly,
from or in connection with (a) any Breach of any representation or
warranty made by Buyer in this Agreement or in any certificate
delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer
(or any Person acting on its behalf) in connection with any of the
Contemplated Transactions.
10.5 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability (for
indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in
Sections 3.3, 3.11, 3.13, 3.14, and 3.19, unless on or before the
date two years after the Closing Date Buyer notifies Sellers of a
claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Buyer; a claim with respect to
Section 3.3, 3.11, 3.13, 3.14, or 3.19, or a claim for
indemnification or reimbursement not based upon any representation
or warranty or any covenant or obligation to be performed and
complied with prior to the Closing Date, may be made at any time.
If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before the
date two years after the Closing Date Sellers notify Buyer of a
claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Sellers.
10.6 LIMITATIONS ON AMOUNT--SELLERS
Sellers will have no liability (for indemnification or otherwise)
with respect to the matters described in clause (a), clause (b),
clause (d) or, to the extent relating to any failure to perform or
comply prior to the Closing Date, clause (c) of Section 10.2 until
the total of all Damages with respect to such matters exceeds
$10,000, and then for the full amount of such Damages. However,
this Section 10.6 will not apply to any Breach of any of Sellers'
representations and warranties of which either Seller had
Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by
either Seller of any covenant or obligation, and Sellers will be
jointly and severally liable for all Damages with respect to such
Breaches.
10.7 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise)
with respect to the matters described in clause (a) or (b) of
Section 10.4 until the total of all Damages with respect to such
matters exceeds $10,000, and then for the full amount of such
Damages. However, this Section 10.7 will not apply to any Breach
of any of Buyer's representations and warranties of which Buyer
had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by
Buyer of any covenant or obligation, and Buyer will be liable for
all Damages with respect to such Breaches.
10.8 RIGHT OF SET-OFF
Upon notice to Sellers specifying in reasonable detail the basis
for such set-off, Buyer may set off any amount to which it may be
entitled under this Section 10 against principal payments
otherwise payable under the Promissory Note and against amounts
otherwise payable under Section 2.6 of this Agreement. The
exercise of such right of set-off by Buyer in good faith, whether
or not ultimately determined to be justified, will not constitute
an event of default under the Promissory Note or any instrument
securing the Promissory Note or a breach of this Agreement.
Neither the exercise of nor the failure to exercise such right of
set-off will constitute an election of remedies or limit Buyer in
any manner in the enforcement of any other remedies that may be
available to it.
10.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section
10.2, 10.4, or (to the extent provided in the last sentence of
Section 10.3) Section 10.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is
to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such
claim, but the failure to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have
to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.9(a) is brought
against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to the extent that
it wishes (unless (i) the indemnifying party is also a party to
such Proceeding and the indemnified party determines in good faith
that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to
the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding, other
than reasonable costs of investigation. If the indemnifying party
assumes the defense of a Proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified
party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of
any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party;
(iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its
consent and (iv) the indemnified party will cooperate with the
indemnifying party in connection with such defense and provide it
with such information as it reasonably requests. If notice is
given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten days
after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability
that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise, or settle such Proceeding,
but the indemnifying party will not be bound by any determination
of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably
withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified
Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the
matters alleged therein, and agree that process may be served on
Sellers with respect to such a claim anywhere in the world.
10.10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-
party claim may be asserted by notice to the party from whom
indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each
party to this Agreement will bear its respective expenses incurred
in connection with the preparation, execution, and performance of
this Agreement and the Contemplated Transactions, including all
fees and expenses of agents, representatives, counsel, and
accountants, except that Buyer shall pay the legal fees of the
Company owing to Martin & Oliveira as follows: $10,000 upon
execution of this Agreement and up to an additional $10,000 at
such time as Sellers become irrevocably obligated to consummate
the transactions contemplated hereby. Sellers will cause the
Acquired Companies not to incur any out-of-pocket expenses in
connection with this Agreement. In the event of termination of
this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from
a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer determines. Unless
consented to by Buyer in advance or required by Legal
Requirements, prior to the Closing Sellers shall, and shall cause
the Acquired Companies to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to
any Person. Sellers and Buyer will consult with each other
concerning the means by which the Acquired Companies' employees,
customers, and suppliers and others having dealings with the
Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any
such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and
Sellers will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of Buyer and the
Acquired Companies to maintain in confidence, and not use to the
detriment of another party or an Acquired Company any written,
oral, or other information obtained in confidence from another
party or an Acquired Company in connection with this Agreement or
the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such
information is required by or necessary or appropriate in
connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party
will return or destroy as much of such written information as the
other party may reasonably request. Whether or not the Closing
takes place, Sellers waive, and will upon Buyer's request cause
the Acquired Companies to waive, any cause of action, right, or
claim arising out of the access of Buyer or its representatives to
any trade secrets or other confidential information of the
Acquired Companies except for the intentional competitive misuse
by Buyer of such trade secrets or confidential information.
11.4 CERTAIN POST-CLOSING OBLIGATIONS
(a) Sellers will not sell convey, assign, transfer or otherwise
dispose of the Promissory Note without the prior consent of Buyer.
(b) Buyer shall provide, or shall cause the Company to provide,
medical insurance for Henry A. Kirchner and Barbara J. Kirchner,
on substantially the same terms as currently provide such
individuals, for such time as the Promissory Note remains
outstanding or such individual reaches 65 years of age, whichever
is earlier.
11.5 NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation
of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other
parties):
Sellers:
Henry A. and Barbara Kirchner
53 Victoria Lane
P.O. Box 2140
Lanesboro, Massachusetts 61237
with a copy to:
Martin & Oliviera, LLP
100 North Street, #301
Pittsfield, Massachusetts 01201
Attention: John J. Martin, Jr., Esq.
Facsimile No.: (413) 445-5883
Buyer:
United Shields Corporation
311 Northland Boulevard
Cincinnati, Ohio 45246
Attention: President
Facsimile No.: (513) 782-8902
with a copy to:
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Attn: Charles F. Hertlein, Jr., Esq.
Facsimile No.: (513) 977-8141
11.6 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought
against any of the parties in the courts of the State of Ohio,
County of Hamilton, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of
Ohio, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the
world.
11.7 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying
out the intent of this Agreement and the documents referred to in
this Agreement.
11.8 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under
this Agreement or the documents referred to in this Agreement will
operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege
will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no
waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to
or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand
as provided in this Agreement or the documents referred to in this
Agreement.
11.9 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter (including the Letter of Intent
between Buyer and Sellers dated June 16, 1999) and constitutes
(along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
11.10 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and those in any
Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly
relate and not to any other representation or warranty in this
Agreement.
(b) In the event of any inconsistency between the statements in
the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the
Disclosure Letter with respect to a specifically identified
representation or warranty), the statements in the body of this
Agreement will control.
11.11 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement
without the prior written consent of the other parties except that
Buyer may assign any of its rights under this Agreement to any
Subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of
the parties. Nothing expressed or referred to in this Agreement
will be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions
are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
11.12 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.13 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to
the corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words
or terms.
11.14 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to
in this Agreement, time is of the essence.
11.15 GOVERNING LAW
This Agreement will be governed by the laws of the State of Ohio
without regard to conflicts of laws principles.
11.16 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement
and all of which, when taken together, will be deemed to
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer: Sellers:
UNITED SHIELDS CORPORATION /s/ Henry A. Kirchner
Henry A. Kirchner
By: /s/Donald T. Zimmerman, Jr./s/ Barbara J. Kirchner
Donald T. Zimmerman, Jr. Barbara J. Kirchner
The Henry A. Kirchner
Revocable Trust
By: /s/ Henry A. Kirchner
Henry A. Kirchner
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner
<PAGE>
The Barbara J. Kirchner
Revocable Trust
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner
By: /s/ Henry A. Kirchner
Henry A. Kirchner
Kirchner Family Nominee Trust
By: /s/ Henry A. Kirchner
Henry A. Kirchner
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner
<PAGE>
EXHIBITS
[To be delivered prior to the Closing]
2.4(a)(ii) Releases
2.4(a)(iii) Form of Employment Agreement
2.4(a)(iv) Form of Noncompetition Agreement
2.4(b)(ii) Form of Promissory Note
2.5 Real Estate Purchase Agreement
2.7 Stock Option Agreement
7.4(a) Opinion of Seller's counsel
8.4(a) Opinion of Buyer's counsel
Exhibit 2.2
FIRST AMENDMENT
TO
STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT to Stock Purchase Agreement ("Amendment") is
made as of September 17, 1999, by UNITED SHIELDS CORPORATION, a
Colorado corporation (the "Buyer"), and HENRY A. KIRCHNER ("HAK"),
BARBARA J. KIRCHNER ("BJK"), THE HENRY A. KIRCHNER REVOCABLE
TRUST, Henry A. Kirchner and Barbara J. Kirchner, Trustees, dated
February 6, 1996 ("HAK Trust") and THE BARBARA J. KIRCHNER
REVOCABLE TRUST, Barbara J. Kirchner and Henry A. Kirchner,
Trustees, dated February 6, 1996 ("BJK Trust"), the KIRCHNER
FAMILY NOMINEE TRUST, Henry A. Kirchner and Barbara J. Kirchner,
Trustees, under Declaration of Trust dated February 6, 1996 and
recorded with the Berkshire County (Middle District) Registry of
Deeds in Book 910, Page 800 ("Family Trust") (HAK, BJK, the HAK
Trust, the BJK Trust and the Family Trust, collectively referred
to as the "Sellers") hereby make this First Amendment to the Stock
Purchase Agreement dated August 27, 1999.
The Stock Purchase Agreement shall be amended as follows:
A. Section 2.2 (a) shall be revised as follows:
"(a) at the Closing, Buyer will deliver the following to Sellers
as provided in Section 2.4: (i) $1,700,000.00, less any amount
paid to Martin & Oliveira, pursuant to Section 11.1, in cash; and
(ii) the Promissory Note with an aggregate principal amount of
$1,750,000.00 subject to the provisions of Section 10.8; and (iii)
a promissory note with an aggregate principal amount of
$2,200,000.00; and"
B. Section 2.3 - insert September 29, 1999.
C. Section 2.4 (b) (i) shall be revised as follows:
"(i) all cash proceeds shall be made by bank cashier's check made
payable to the order of the KIRCHNER FAMILY NOMINEE TRUST, Henry
A. Kirchner and Barbara J. Kirchner, Trustees, under Declaration
of Trust dated February 6, 1996;"
D. Add new Section 2.4 (b) (v) as follows:
"(v) a promissory note payable to the Family Trust in the
principal amount of $2,200,000.00 in a form mutually acceptable to
the parties hereto (the "Short Term Promissory Note")."
E. Section 7.8 shall be deleted in its entirety.
F. Section 7.9 shall be deleted in its entirety.
G. Section 7.11 shall be revised as follows:
"As of the Closing, the Company must have at least $500,000.00 in
cash balances; and accounts receivable plus inventory minus
accounts payable shall be not less than $1,680,000.00, subject in
all respects to the provisions of Section 5.2."
H. Section 8.5 shall be revised as follows:
"As of the Closing, the Company must have at least $500,000.00 in
cash balances; and accounts receivable plus inventory minus
accounts payable shall be not less than $1,680,000.00, subject in
all respects to the provisions of Section 5.2."
I. Section 8.7 shall be deleted in its entirety.
J. Section 9.1 (b) delete September 1, 1999 and replace with
September 30, 1999.
K. Section 10.2 (e) shall be revised as follows:
"(e) any matter disclosed in the Disclosure Letter;"
In all other respects the Stock Purchase Agreement dated August
27, 1999 is hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties have executed this Amendment as a
sealed instrument as of the day and year first above written.
BUYER: SELLERS:
UNITED SHIELDS CORPORATION /s/ Henry A. Kirchner
Henry A. Kirchner
/s/ Barbara J. Kirchner
By /s/Donald T. Zimmerman, Jr. Barbara J. Kirchner
Donald T. Zimmerman, Jr.
Its President THE HENRY A. KIRCHNER
REVOCABLE TRUST
By: /s/ Henry A. Kirchner
Henry A. Kirchner, Trustee
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner, Trustee
THE BARBARA J. KIRCHNER
REVOCABLE TRUST
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner, Trustee
By: /s/ Henry A. Kirchner
Henry A. Kirchner, Trustee
KIRCHNER FAMILY NOMINEE TRUST
By: /s/ Henry A. Kirchner
Henry A. Kirchner, Trustee
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner, Trustee
PITTSFIELD MOLD & TOOL, INC.
By: /s/ Henry A. Kirchner
Henry A. Kirchner, President
Exhibit 99.1
PROMISSORY NOTE
$1,750,000.00 September 29, 1999
FOR VALUE RECEIVED, PITTSFIELD MOLD & TOOL, INC., a Massachusetts
corporation (the "Maker"), promises to pay to HENRY A. KIRCHNER
and BARBARA J. KIRCHNER, Trustees of THE KIRCHNER FAMILY NOMINEE
TRUST, under Declaration of Trust dated February 6, 1996 and
recorded with the Berkshire County (Middle District) Registry of
Deeds in Book 910, Page 800, whose place of residence is 53
Victoria Lane, P.O. Box 2140, Lanesboro, Massachusetts 01237 (the
"Payee"), in lawful money of the United States of America, the
principal sum of $1,750,000.00, together with interest in arrears
on the unpaid principal balance at an annual rate equal to nine
and one-half (9 2%) percent (the "Stated Rate"), in the manner
provided below. Interest shall be calculated on the basis of a
year of 365 or 366 days, as applicable, and charged for the actual
number of days elapsed.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of the Stock Purchase
Agreement, dated August 27, 1999, by and between Maker and Payee
(the "Agreement"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein
and made a part hereof. Capitalized terms used in this Note
without definition shall have the respective meanings set forth in
the Agreement.
1. PAYMENTS:
1.1 PRINCIPAL AND INTEREST: The principal and interest payments of
this Note shall be due and payable in equal consecutive monthly
installments of $31,250.00 commencing on November 1, 1999, and on
the first of each month thereafter until paid in full.
If any payment due under this Note, whether principal or interest,
is not received by the Payee within ten (10) days after the same
is due, the Maker shall be charged a late payment penalty (whether
or not such late payment constitutes an Event of Default hereunder
as defined below) equal to five (5%) percent of the amount of such
late payment. To the extent permitted by law, interest on any
principal or interest unpaid after the occurrence of an Event of
Default shall be payable on demand at an interest rate equal to
five (5%) percent above the Stated Rate (the "Default Rate").
If at any time the interest rate or the amount of any fee or
penalty required to be paid in connection with this Note would
exceed the maximum rate for interest or amount for fees or
penalties permitted by the laws of any applicable jurisdiction or
the rules or regulations of any appropriate regulatory authority
or agency thereof, then, during such time as such interest, fees,
or penalties would be deemed excessive, that portion of each
payment of interest, fees or penalties which exceeds the maximum
rate for interest or amount for fees or penalties so permitted
shall be deemed a voluntary prepayment of principal (which shall
not require the payment of any premium if any such premium is
otherwise required hereunder).
1.2 MANNER OF PAYMENT: All payments of principal and interest on
this Note shall be made to Payee at 53 Victoria Lane, P.O. Box
2140, Lanesboro, Massachusetts 01237, or at such other place in
the United States of America as Payee shall designate to Maker in
writing. If any payment of principal or interest of this Note is
due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of
time shall be taken into account in calculating the amount of
interest payable under this Note. "Business Day" means any day
other than a Saturday, Sunday or legal holiday in the State of
Ohio.
1.3 PREPAYMENT: Maker may, without premium or penalty, at any time
and from time to time, prepay all or any portion of the
outstanding principal balance due under this Note, provided that
each such prepayment is accompanied by accrued interest on the
amount of principal prepaid calculated to the date of such
prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order of their maturity.
1.4 RIGHT OF SET-OFF: Maker shall have the right to withhold and
set-off against any amount due hereunder the amount of any claim
for indemnification or payment of damages to which Maker may be
entitled under the Agreement, as provided in Section 10.8 thereof,
or under those certain Non-Competition Agreements between Maker
and each Payee of even date, as provided in Section 5 (b) thereof.
1.5 SUBORDINATION: This Note and all payments, whether for
principal, interest or otherwise, shall be subject to the terms of
a the Standby and Subordination Agreement of even date, executed
by Berkshire Bank, Maker and Payee, the terms of which are
incorporate herein.
Payee agrees that it shall enter into any similar agreement
requested by a lender under any credit facility obtained by Maker
which is secured by Maker=s machinery and equipment, provided that
the terms thereof are reasonable and customary for agreements of
such type and the proceeds of such facility are used by Maker to
make payments under that certain Promissory Note in the original
principal amount of $2,200,000 of even date herewith executed by
Maker in favor of Payee.
1.6 NON-NEGOTIABLE: This Note shall not be negotiable by Payee.
2. DEFAULTS:
2.1 EVENTS OF DEFAULT: The occurrence of any one or more of the
following events with respect to Maker shall constitute an event
of default hereunder (the "Event of Default"):
(1) If Maker shall fail to pay when due any payment of principal
or interest on this Note and such failure continues for ten (10)
days after Payee notified Maker thereof in writing; provided,
however, that the exercise by Maker in good faith of its right of
set-off pursuant to Section 1.4 above, whether or not ultimately
determined to be justified, shall not constitute an Event of
Default.
(2) If, pursuant to or within the meaning of United States
Bankruptcy Code or any other federal or state law relating to
insolvency or relief of debtors (a "Bankruptcy Law"), Maker shall
(i) commence a voluntary case or proceeding; (ii) consent to the
entry of an order for relief against it in an involuntary case;
(iii) consent to the appointment of a trustee, receiver, assignee,
liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or, (v) admit in writing its inability
to pay its debts as they become due.
(3) If a court of competent jurisdiction entered an order or
decree under any Bankruptcy Law that (i) is for relief against
Maker in an involuntary case, (ii) appoints a trustee, receiver,
assignee, liquidator or similar official for Maker or
substantially all of Maker=s properties, or (iii) orders the
liquidation of Maker, and in each case the order or decree is not
dismissed within one hundred twenty (120) days.
(4) A "USC Default" as that term is defined per a certain Cross-
Default and Cross-Collateral Agreement of even date executed by
Maker and Payee.
(5) A "Change of Control". A Change of Control of Maker shall be
deemed to have occurred if: (i) any "person" (as such term is used
in Section 13 (d) and 14 (d) (2) of the Securities Exchange Act of
1934, as amended) other than United Shields Corporation ("USC")
becomes the beneficial owner, directly or indirectly, of
securities of Maker representing more than fifty (50%) percent of
the aggregate voting power of all cases of Maker then outstanding
voting securities; or (ii) the shareholder(s) of Maker approve(s)
(A) a plan of merger, consolidation or share exchange between
Maker and any person or entity other than a merger, consolidation
or other business combination with USC or with another wholly-
owned subsidiary of USC, or (B) a proposal with respect to the
sale, lease, exchange or other disposal of all, or substantially
all, of Maker=s property.
(6) Maker fails to meet a debt service ratio requirement of 1.2
times; or a current ratio requirement of 1:1; or a quick ratio
requirement of .6.
2.2 NOTICE BY MAKER: Maker shall notify Payee in writing within
fifteen (15) days after the occurrence of any Event of Default of
which Maker acquires knowledge.
2.3 REMEDIES: Upon the occurrence of an Event of Default hereunder
(unless all Events of Default have been cured or waived by Payee),
Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with
all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all
rights and remedies available to it under applicable law,
including, without limitation, the right to collect from Maker all
sums due under this Note, and (iii) obtain a release of the
obligations of Henry A. Kirchner and Barbara J. Kirchner under the
Non-Competition Agreement, and (iv) prosecute the $250,000.00
letter of credit referred to at Section 8.8 (i) of the Agreement,
and (v) Joseph A. Kirchner shall be entitled to a release of his
obligations under the Employment Agreement, and (vi) all
reasonable costs of collection and reasonable attorney's fees paid
or incurred by Payees in enforcing their rights hereunder.
No delay or omission on the part of the Payee in exercising any
right hereunder shall operate aw a waiver of such right or of any
other right under this Note. No waiver of any right shall be as a
bar to or waiver of any such right on any future occasion.
2.4 SECURITY: This Note is secured by the letter of credit
referred to at Section 8.8 (i) of the Agreement and by a certain
subordinate Mortgage and Security Agreement executed of even date.
3. MISCELLANEOUS:
3.1 WAIVER: The rights and remedies of Payee under this Note shall
be cumulative and not alternative. No waiver by Payee of any
right or remedy under this Note shall be effective unless in a
writing signed by Payee. Neither the failure nor any delay in
exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege and no
single or partial exercise of any such right, power or privilege
by Payee will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right of Payee arising out of this Note can
be discharged by Payee, in whole or in part, by a waiver or
renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable
except in the specific instance for which it is given; and, (c) no
notice to or demand on Maker will be deemed to be a waiver of any
obligation of Maker or of the right of Payee to take further
action without notice or demand as provided in this Note. Maker
hereby waives presentment, demand, protest and notice of dishonor
and protest.
3.2 ANNUAL REPORTING: Annually, within ninety (90) days of fiscal
year end, Maker shall provide copies of its audit level financial
statements and true copies of its federal tax return, as filed,
with all supporting schedules, to Payee.
3.3 NOTICES: Any notice required or permitted to be given
hereunder shall be given in accordance with Section 11.4 of the
Agreement.
3.4 SEVERABILITY: If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any
provision of this Note held invalid or unenforceable only in party
or degree will remain in full force and effect to the extent not
held invalid or unenforceable.
3.5 GOVERNING LAW: This Note will be governed by the laws of the
State of Ohio without regard to conflicts of laws principles.
3.6 PARTIES IN INTEREST: This Note shall bind Maker and its
successors and assigns. The Note shall not be assigned or
transferred by Payee without the express prior written consent of
Maker, except by will or, in default thereof, by operation of law.
3.7 SECTION HEADINGS, CONSTRUCTION: The headings of Sections in
this Note are provided for convenience only and will not affect
its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of
this Note unless otherwise specified.
All words used in this Note will be construed to be of such gender
or number as the circumstances require. Unless otherwise
expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any
specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as
of the date first stated above.
PITTSFIELD MOLD & TOOL, INC.
By /s/William A. Frey III
William A. Frey III
Its President
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, SS September 29, 1999
Then personally appeared the above named ________________________,
and acknowledged the foregoing instrument to be _________ free act
and deed, before me,
/s/
Notary Public
My Commission Expires:
Exhibit 99.2
PROMISSORY NOTE
$2,200,000.00 September 29, 1999
FOR VALUE RECEIVED, Pittsfield Mold & Tool, Inc., a Massachusetts
corporation (the "Maker"), promises to pay to HENRY A. KIRCHNER
and BARBARA J. KIRCHNER, Trustees of THE KIRCHNER FAMILY NOMINEE
TRUST, under Declaration of Trust dated February 6, 1996 and
recorded with the Berkshire County (Middle District) Registry of
Deeds in Book 910, Page 800, whose place of residence is 53
Victoria Lane, P.O. Box 2140, Lanesboro, Massachusetts 01237 (the
"Payee"), in lawful money of the United States of America, the
principal sum of $2,200,000.00, together with interest in arrears
on the unpaid principal balance at an annual rate equal to nine
and one-half (9 1/2%) percent (the "Stated Rate"), in the manner
provided below. Interest shall be calculated on the basis of a
year of 365 or 366 days, as applicable, and charged for the actual
number of days elapsed.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of the Stock Purchase
Agreement, dated August 27, 1999, by and between Maker and Payee
(the "Agreement"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein
and made a part hereof. Capitalized terms used in this Note
without definition shall have the respective meanings set forth in
the Agreement.
1. PAYMENTS:
1.1 PRINCIPAL AND INTEREST: The principal and interest payments of
this Note shall be due and payable in one lump sum on or before
November 15, 1999 (the "Maturity Date") unless Payee allows Maker
to extend the Maturity Date until January 1, 2000 (the "Extended
Maturity Date"). Payee shall permit such an extension to the
Extended Maturity Date provided Maker shall have paid all accrued
interest at the Stated Rate on or before the Maturity Date.
Interest on any principal or interest unpaid after the Maturity
Date shall be payable at an interest rate equal to two (2%)
percent above the Stated Rate; provided further, however, that to
the extent permitted by law, interest on any principal or interest
unpaid after the earlier of (i) the Extended Maturity Date; or
(ii) the occurrence of an Event of Default shall be payable on
demand at an interest rate equal to five (5%) percent above the
Stated Rate (the "Default Rate").
If at any time the interest rate or the amount of any fee or
penalty required to be paid in connection with this Note would
exceed the maximum rate for interest or amount for fees or
penalties permitted by the laws of any applicable jurisdiction or
the rules or regulations of any appropriate regulatory authority
or agency thereof, then, during such time as such interest, fees,
or penalties would be deemed excessive, that portion of each
payment of interest, fees or penalties which exceeds the maximum
rate for interest or amount for fees or penalties so permitted
shall be deemed a voluntary prepayment of principal (which shall
not require the payment of any premium if any such premium is
otherwise required hereunder).
1.2 MANNER OF PAYMENT: All payments of principal and interest on
this Note shall be made to Payee at 53 Victoria Lane, P.O. Box
2140, Lanesboro, Massachusetts 01237, or at such other place in
the United States of America as Payee shall designate to Maker in
writing. If any payment of principal or interest of this Note is
due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of
time shall be taken into account in calculating the amount of
interest payable under this Note. "Business Day" means any day
other than a Saturday, Sunday or legal holiday in the State of
Ohio.
1.3 PREPAYMENT: Maker may, without premium or penalty, at any time
and from time to time, prepay all or any portion of the
outstanding principal balance due under this Note, provided that
each such prepayment is accompanied by accrued interest on the
amount of principal prepaid calculated to the date of such
prepayment. Any partial prepayments shall be applied to
installments of principal in inverse order of their maturity.
1.4 SUBORDINATION: This Note and all payments, whether for
principal, interest or otherwise, shall not be subject to the
terms of the Standby and Subordination Agreement of even date,
executed by Berkshire Bank, Maker and Payee, the terms of which
are incorporated herein.
Notwithstanding the above, Payee agrees that it shall enter into a
subordination agreement if requested by a lender under any credit
facility obtained by Maker which is secured by Maker's machinery
and equipment, provided that the terms thereof are reasonable and
customary for agreements of such type and the proceeds of such
facility are used by Maker to make payment under this Note.
1.5 NON-NEGOTIABLE: This Note shall not be negotiable by Payee.
2. DEFAULTS:
2.1 EVENTS OF DEFAULT: The occurrence of any one or more of the
following events with respect to Maker shall constitute an event
of default hereunder (the "Event of Default"):
(1) If Maker shall fail to pay when due the full amount of
principal and interest due on this Note by the Extended Maturity
Date.
(2) If, pursuant to or within the meaning of United States
Bankruptcy Code or any other federal or state law relating to
insolvency or relief of debtors (a "Bankruptcy Law"), Maker shall
(i) commence a voluntary case or proceeding; (ii) consent to the
entry of an order for relief against it in an involuntary case;
(iii) consent to the appointment of a trustee, receiver, assignee,
liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or, (v) admit in writing its inability
to pay its debts as they become due.
(3) If a court of competent jurisdiction entered an order or
decree under any Bankruptcy Law that (i) is for relief against
Maker in an involuntary case, (ii) appoints a trustee, receiver,
assignee, liquidator or similar official for Maker or
substantially all of Maker's properties, or (iii) orders the
liquidation of Maker, and in each case the order or decree is not
dismissed within one hundred twenty (120) days.
(4) A "USC Default" as that term is defined per a certain Cross-
Default and Cross-Collateral Agreement of even date executed by
Maker and Payee.
(5) A "Change of Control". A Change of Control of Maker shall be
deemed to have occurred if: (i) any "person" (as such term is used
in Section 13 (d) and 14 (d) (2) of the Securities Exchange Act of
1934, as amended) other than United Shields Corporation ("USC")
becomes the beneficial owner, directly or indirectly, of
securities of Maker representing more than fifty (50%) percent of
the aggregate voting power of all cases of Maker then outstanding
voting securities; or (ii) the shareholder(s) of Maker approve(s)
(A) a plan of merger, consolidation or share exchange between
Maker and any person or entity other than a merger, consolidation
or other business combination with USC or with another wholly-
owned subsidiary of USC, or (B) a proposal with respect to the
sale, lease, exchange or other disposal of all, or substantially
all, of Maker's property.
(6) Maker fails to meet a debt service ratio requirement of 1.2
times; or a current ratio requirement of 1:1; or a quick ratio
requirement of .6.
(1)
2.2 NOTICE BY MAKER: Maker shall notify Payee in writing within
fifteen (15) days after the occurrence of any Event of Default of
which Maker acquires knowledge.
2.3 REMEDIES: Upon the occurrence of an Event of Default hereunder
(unless all Events of Default have been cured or waived by Payee),
Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with
all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all
rights and remedies available to it under applicable law,
including, without limitation, the right to collect from Maker all
sums due under this Note, and (iii) obtain a release of the
obligations of Henry A. Kirchner and Barbara J. Kirchner under the
Non-Competition Agreement, and (iv) prosecute the $250,000.00
letter of credit referred to at Section 8.8 (i) of the Agreement,
and (v) Joseph A. Kirchner shall be entitled to a release of his
obligations under the Employment Agreement, and (vi) all
reasonable costs of collection and reasonable attorney's fees paid
or incurred by Payees in enforcing their rights hereunder.
No delay or omission on the part of the Payee in exercising any
right hereunder shall operate aw a waiver of such right or of any
other right under this Note. No waiver of any right shall be as a
bar to or waiver of any such right on any future occasion.
2.4 SECURITY: This Note is secured by the letter of credit
referred to at Section 8.8 (i) of the Agreement and by a certain
subordinate Mortgage and Security Agreement executed of even date.
3. MISCELLANEOUS:
3.1 WAIVER: The rights and remedies of Payee under this Note shall
be cumulative and not alternative. No waiver by Payee of any
right or remedy under this Note shall be effective unless in a
writing signed by Payee. Neither the failure nor any delay in
exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege and no
single or partial exercise of any such right, power or privilege
by Payee will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right of Payee arising out of this Note can
be discharged by Payee, in whole or in part, by a waiver or
renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable
except in the specific instance for which it is given; and, (c) no
notice to or demand on Maker will be deemed to be a waiver of any
obligation of Maker or of the right of Payee to take further
action without notice or demand as provided in this Note. Maker
hereby waives presentment, demand, protest and notice of dishonor
and protest.
3.2 ANNUAL REPORTING: Annually, within ninety (90) days of fiscal
year end, Maker shall provide copies of its audit level financial
statements and true copies of its federal tax return, as filed,
with all supporting schedules, to Payee.
3.3 NOTICES: Any notice required or permitted to be given
hereunder shall be given in accordance with Section 11.4 of the
Agreement.
3.4 SEVERABILITY: If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any
provision of this Note held invalid or unenforceable only in party
or degree will remain in full force and effect to the extent not
held invalid or unenforceable.
3.5 GOVERNING LAW: This Note will be governed by the laws of the
State of Ohio without regard to conflicts of laws principles.
3.6 PARTIES IN INTEREST: This Note shall bind Maker and its
successors and assigns. The Note shall not be assigned or
transferred by Payee without the express prior written consent of
Maker, except by will or, in default thereof, by operation of law.
3.7 SECTION HEADINGS, CONSTRUCTION: The headings of Sections in
this Note are provided for convenience only and will not affect
its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of
this Note unless otherwise specified.
All words used in this Note will be construed to be of such gender
or number as the circumstances require. Unless otherwise
expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any
specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as
of the date first stated above.
PITTSFIELD MOLD & TOOL, INC.
By /s/William A. Frey III
William A. Frey III
Its President
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, SS September 29, 1999
Then personally appeared the above named ________________________,
and acknowledged the foregoing instrument to be _________ free act
and deed, before me,
/s/
Notary Public
My Commission Expires:
Exhibit 99.3
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of the 29th day of
September, 1999 by and between UNITED SHIELDS CORPORATION, a
Colorado corporation (the "Employer"), and JOSEPH A. KIRCHNER (the
"Executive").
WHEREAS, the Employer desires to employ the Executive on the terms
and conditions set forth in this Agreement and the Executive is
willing to accept such employment.
NOW, THEREFORE, in consideration of the mutual covenants and
promises set forth in this Agreement, the Employer and Executive,
intending to be legally bound, agree as follows:
1. Employment: The Employer hereby employs the Executive, and the
Executive hereby accepts employment, upon the terms and conditions
set forth in this Agreement. The relationship between the Executive
and Employer is that of employee and employer.
2. Term: Subject to the provisions for termination set forth in
this Agreement, the term of this Agreement shall be for a period of
five (5) years, beginning on the date of the acquisition of
Pittsfield Mold & Tool, Inc. ("PMT") by United Shields Corporation.
3. Compensation: For all services rendered by the Executive under
this Agreement, the Employer shall pay Executive during the term of
this Agreement an annual base salary of $125,000.00, payable in
equal installments in accordance with the normal payroll practices
of PMT. All payments made pursuant to this Section 3 shall be
subject to withholding and other applicable taxes. Executive's base
salary shall be reviewed at least annually, commencing with a review
in the eleventh month subsequent to the effective date of this
Agreement, and may be adjusted from time to time in the sole
discretion of the Board of Directors of Employer, but in no event
will it be adjusted to an amount lower than $125,000.00 per year.
4. Fringe Benefits: The Executive shall be entitled to the same
fringe benefits as are offered, from time to time, to other
employees of Employer who are employed in positions similar to that
of Executive.
5. Duties: The Executive is engaged as the President of PMT and
shall perform such services and assume and discharge such
responsibilities, which are commensurate with his position, as the
Employer, in its reasonable discretion, may, from time to time,
require of, or assign to Executive. The Executive shall not
delegate the duties and responsibilities which are vested in him.
He, nevertheless, may utilize and delegate to such individuals who
may also be employed by the Employer those tasks which he deems
necessary or appropriate to help him carry out the duties and
responsibilities assigned to him as an employee of the Employer,
except that he shall remain accountable for such tasks to the
Employer. Executive further agrees that he shall devote
substantially his full time, energy and best efforts to the business
of the Employer during the hours that the business remains open and
such additional time as is reasonably necessary to complete
Executive's tasks. Executive agrees to exercise his best efforts,
judgment, skills and talents in performing his duties and, in
general, to comply with the policies and be subject to the direction
of the Board of Directors of PMT.
6. Direction of Services: The Employer shall direct, control and
supervise the duties and work of Executive; provided, however, that
the Employer shall not impose employment duties or constraints of
any kind which would require Executive to violate any ordinance or
law.
7. Exclusive Services: The Executive shall devote his entire
business time, attention and energies to the business of the
Employer, and shall not during the term of this Agreement, either
directly or indirectly, engage in any other professional or business
whether or not such business activity is pursued for gain, profit,
or other pecuniary advantage to which the Executive would be giving
of his time and effort to the detriment of Employer; but this shall
not be construed as preventing the Executive from investing his
assets in such form or manner as will not require any substantial
services on the part of the Executive in the operation of the
affairs of the companies in which such investments are made;
provided, however, that no such investment shall be made in any
company which competes with Employer in any aspect of the injection
molding industry, except that Executive shall be able to invest in
any such public company provided such investment does not exceed
five (5%) percent of such company's issued and outstanding shares.
8. Working Facilities: The Executive shall be furnished, at the
expense of the Employer, with all necessary facilities and equipment
for performing his services hereunder.
9. Disclosure of Information:
(a) (i) Executive acknowledges that as a result of his employment
by Employer, he will be making use of, acquiring and/or adding to
confidential information of a special and unique nature and value
relating to Employer's intellectual property, proprietary
information, trade secrets, systems, procedures, manuals,
confidential reports and customer list and all information related
to customer lists and customer sales and service (the "Confidential
Information"). As a material inducement to Employer to enter into
this Agreement and to pay Executive the compensation set forth in
this Agreement, Executive covenants and agrees that, except as
authorized by Employer, so long as he receives his Residual Salary
(hereinafter defined), he shall not, for a period of one year
following the term of this Agreement, directly or indirectly,
divulge or disclose for any purpose whatsoever any Confidential
Information unless Executive's employment is terminated by Executive
pursuant to Section 14 (a) (ii) or by Employer pursuant to Section
14 (b) or pursuant to Section 14 (c) (ii), in which case, Executive
shall be under no such duty not to disclose the Confidential
Information. Executive acknowledges that unauthorized disclosure or
misuse of the Confidential Information will cause irreparable damage
to the Employer. Employer and Executive also agree that covenants
by Executive not to make unauthorized disclosures of the
Confidential Information are essential to the growth and stability
of the Employer. Accordingly, Executive agrees to the
confidentiality covenants in this Section of the Agreement.
Confidential Information shall not include information which (i) is
or becomes generally available to the public other than as a result
of a disclosure by the Executive; or, (ii) is or becomes available
to the Executive on a non-confidential basis from a source other
than the Employer provided such source is not, to the knowledge of
the Executive, bound by a confidentiality agreement with the
Employer.
(ii) Because a remedy at law for any breach of the provisions of
this Section may be inadequate, in addition to any and all other
remedies available to Employer, Employer shall have the remedies of
a restraining order, injunction or other equitable relief to enforce
the provisions hereof.
(iii) Executive acknowledges, warrants, represents and agrees that
the confidentiality covenants contained in this Section are
necessary for the protection of the Employer's legitimate business
interests and are reasonable in scope and content, and Executive
represents and warrants that his attorney has thoroughly and
completely reviewed this Agreement with him, and he understands the
contents hereof.
(b) Executive agrees to indemnify and hold Employer harmless from
any loss, cost or expense incurred by the Employer arising out of
any material breach of the agreements set forth in this Section or
the fact that any material representation made by Executive in this
Agreement was false when made. It is further understood and agreed
that in the event there is a material breach of any of the
provisions set forth above, all obligations of Employer shall end,
and Executive's employment with the Employer may be terminated
immediately.
<PAGE>
10. Expenses: Executive may, from time to time, incur reasonable
expenses for promoting the business of Employer, including expenses
for entertainment, travel and similar items. In such instances, the
Employer will reimburse the Executive upon submission of an itemized
account of such expenditures.
11. Vacations: Executive shall be entitled to a vacation of four
(4) weeks per year during the term of this Agreement during which
time his compensation shall be paid in full.
12. Stock Option Grant: The Employer shall grant to Executive an
option to purchase 40,000 shares of common stock of United Shields
Corporation with an exercise price of $1.00 per share, which stock
option grant shall vest in equal annual installments over the term
of this Agreement. The Executive shall participate in future stock
option grants as determined by the Board of Directors of United
Shields Corporation.
13. Incentive Bonus: The Employer shall pay to Executive an
incentive bonus based on earnings before interest, taxes,
depreciation and amortization ("EBITDA"). The Year 1 incentive
bonus will be equal to thirty (30%) percent of Executives annual
base salary if EBITDA exceeds $1.7 million; and for every
$100,000.00 increase in EBITDA above $1.7 million, an additional
five (5%) percent of annual base salary will be paid, up to a
maximum incentive bonus of fifty (50%) of annual base salary.
14. Termination of Employment:
(a) (i) The Employer may terminate this Agreement and Executive's
employment at any time for cause which shall include, but not be
limited to, (a) Executive's fraud, felony conviction (whether or not
employment related), misappropriation, embezzlement or the like, or
(b) for willful or gross neglect of his duties hereunder in any
material respect, or if Executive violates any of the provisions
hereunder in any material respect which neglect is not cured by the
Executive to the Employer's reasonable satisfaction within a period
of thirty (30) days following the Executive's receipt of written
notice from the Employer making specific reference to this Section
14 (a) (i) and, (b) and stating with particularity all alleged
actions or omissions in the Executive's service being relied upon by
the Employer hereunder.
(ii) Executive may terminate this Agreement and his employment, if
(a) the Employer requires Executive to relocate more than fifty (50)
miles from the current location of Executive's branch of Employer;
or (b) there is a material and adverse change in Executive's
position, duties, responsibilities or status with the Employer, a
material reduction in Executive's salary or benefits, other than a
reduction in salary or benefits comparable to reductions generally
applicable to similarly situated employees of the Employer; or the
Employer violates any of the provisions of this Agreement in any
material respect and such change, reduction or violation is not
cured to the Executive's reasonable satisfaction within a period of
thirty (30) days following the Employer's receipt of written notice
from the Executive making specific reference to this Section 14 (a)
(ii) (b) and stating with particularity all alleged actions or
omissions of the Employer being relied upon by the Executive
hereunder; or if (c) there is a "USC Default" as that term is
defined per a certain Cross-Default and Cross-Collateral Agreement
of even date executed by Employer, Henry A. Kirchner and Barbara J.
Kirchner, et. al.; or if (d) there is a "Change of Control". A
Change of Control of PMT shall be deemed to have occurred if: (i)
any "person" (as such term is used in Section 13 (d) and 14 (d) (2)
of the Securities Exchange Act of 1934, as amended) other than
United Shields Corporation becomes the beneficial owner, directly or
indirectly, of securities of PMT representing more than fifty (50%)
percent of the aggregate voting power of all classes of PMT's then
outstanding voting securities; or (ii) the shareholder(s) of PMT
approve(s) (A) a plan of merger, consolidation or share exchange
between PMT and any person or entity other than a merger,
consolidation or other business combination with USC or with another
wholly-owned subsidiary of USC, or (B) a proposal with respect to
the sale, lease, exchange or other disposal of all, or substantially
all, of PMT's property.
(b) The Employer or Executive may terminate this Agreement without
cause upon ninety (90) days written notice to the other party.
(c) This Agreement shall also be terminated (i) by the mutual
agreement of Employer and Executive; (ii) by the dissolution and
liquidation of Employer (other than as part of a reorganization,
merger, consolidation, or sale of all or substantially all of the
assets of Employer through which the business of the Employer is
continued); and, (iii) by the total or complete disability of the
Executive for more than ninety (90) consecutive days.
(d) If this Agreement is terminated by Employer pursuant to Section
14 (a) (i), by Executive pursuant to Section 14 (b) or pursuant to
Section 14 (c) (i), Executive shall be paid only such amounts as are
accrued under Sections 3, 4 and 11, but are unpaid as of the date of
termination. Payment pursuant to this Section 14 (d) shall be made
to Executive as soon as practicable, and shall be subject to
withholding and other applicable taxes.
(e) If this Agreement is terminated by Executive pursuant to Section
14 (a) (ii), by Employer pursuant to Section 14 (b), or pursuant to
Section 14 (c) (ii), or Section 14 (c) (iii), Executive shall
receive severance pay in the amount equal to six (6) month's then
current salary. Payments pursuant to this Section 14 (e) shall
continue to be made by Employer in equal monthly installments, and
shall be subject to withholding and other applicable taxes.
(f) In the event of termination of this Agreement for any reason,
Executive agrees to resign from all positions held in Employer or
any of its affiliate or subsidiary companies, including, without
limitation, any position as a director, officer, trustee or
consultant.
15. Restrictive Covenants:
(a) For a period of one (1) year after termination by Employer
pursuant to Section 14 (a) (i), or by Executive pursuant to Section
14 (b), or pursuant to Section 14 (c) (i), or pursuant to Section 14
(c) (iii) of this Agreement, the Executive shall not, directly or
indirectly, (i) own, manage, operate, control, direct, be employed
by, participate in, or be connected in any manner with the
ownership, management, operation, direction or control of any
business which competes with the business conducted by the Employer
at the time of the termination of this Agreement; (ii) solicit any
of Employer's customers; or (iii) solicit for employment any of
Employer's employees.
(b) For a period of one (1) year after the expiration of this
Agreement, the Executive shall not, directly or indirectly, (i) own,
manage, operate, control, direct, be employed by, participate in, or
be connected in any manner with the ownership, management,
operation, direction or control of any business which competes with
the business conducted by the Employer at the time of the
termination of this Agreement; (ii) solicit any of Employer's
customers; or (iii) solicit for employment any of Employer's
employees, provided Employer pays Executive an amount equal to one
(1) year's then current salary, payable in equal monthly
installments, subject to withholding and other applicable taxes
("Residual Salary") and, provided further, that a USC Default does
not occur during such period.
(c) Executive acknowledges that the foregoing time and other
limitations are reasonable and properly required for the adequate
protection of the business affairs of the Employer, and in the event
any such limitation is found to be unreasonable by a Court of
competent jurisdiction, Executive agrees and submits to the
reduction of said limitation to such an area, time or other
limitation or otherwise as the Court may determine to be reasonable.
In the event that any limitation under this Section is found to be
unreasonable or otherwise invalid in any jurisdiction, in whole or
in part, Executive acknowledges, warrants, represents, and agrees
that such limitation shall nevertheless be valid in all other
jurisdictions.
(d) Executive acknowledges, warrants, represents, and agrees that
the restrictive covenants contained in this Section are reasonable
and necessary for the protection of the Employer's legitimate
business interests and are reasonable in scope and content and
represents and warrants that Executive's attorney has reviewed this
Agreement with Executive and Executive understands the contents of
these restrictive covenants.
(e) Because a remedy at law for any breach of the provisions of this
Section will be inadequate, in addition to any and all other
remedies available to the Employer, the Employer shall have the
remedies of a restraining order, injunction or other equitable
relief to enforce the provisions hereof.
16. Death During Employment: If the Executive dies during the term
of his employment hereunder, the Employer shall pay to the estate of
the Executive the compensation, if any, accrued but unpaid to the
date of death.
17. Notices: Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing, and if sent by
certified or registered mail or personally delivered to his
residence in the case of the Executive or to its principal place of
business in the case of the Employer. Either party, by notice to
the other, may change the address to which further notice is to be
sent to such party.
18. Waiver of Breach: The waiver by either party of a breach of any
provisions of this Agreement by the other party shall not operate or
be construed as a waiver of any subsequent breach.
19. Assignment: The rights and obligations of the Employer and
Executive under this Agreement are of a personal nature and,
therefore, this Agreement and the rights and obligations of the
parties are not assignable by either party, without the prior
written consent of the other party.
20. Entire Agreement; Amendments: This Agreement contains the
entire agreement of the parties. This Agreement may be amended at
any time by mutual consent of the parties provided, however, that no
such amendment shall be valid or enforceable unless set forth in
writing and signed by Employer and Executive.
21. Applicable Laws: This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Massachusetts.
22. Severability: The invalidity or unenforceability of any
provision in the Agreement shall not in any way affect the validity
of enforceability of any other provision and this Agreement shall be
construed in all respects as if such invalid or unenforceable
provision had never been in the Agreement.
23. Headings: The various headings in this Agreement are inserted
for convenience only and are not part of the Agreement.
24. Expenses: All expenses, including reasonable attorney's fees
and expenses, arising out of claims under this Agreement, shall be
borne by the losing party to the fullest extent permitted by law.
IN WITNESS WHEREOF, Employer and Executive have executed this
Agreement as of the 29th day of September, 1999.
UNITED SHIELDS CORPORATION EXECUTIVE
By /s/ Donald T. Zimmerman, Jr. /s/ Joseph A. Kirchner
Donald T. Zimmerman, Jr. Joseph A. Kirchner
President and Chief Operating Officer
Exhibit 99.4
Exhibit 2.4(a)(iv)
Part 1
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of
September 29, 1999, by and between United Shields Corporation, a
Colorado corporation ("Buyer"), and Henry A. Kirchner, residing at
_________________ ("Seller").
RECITALS
Concurrently with the execution and delivery of this Agreement,
Buyer is purchasing all of the outstanding shares (the "Shares") of
common stock, no par value, of Pittsfield Mold & Tool, Inc. (the
"Company") pursuant to the terms and conditions of a Stock Purchase
Agreement made as of September 29, 1999, (the "Stock Purchase
Agreement", and certain real property and assets (the "Property")
pursuant to a Real Property Purchase Agreement made as of September
29, 1999 (the "Real Property Purchase Agreement").
Section 2.4(a)(iv) of the Stock Purchase Agreement requires that
noncompetition agreements be executed and delivered by each of
Seller and Barbara J. Kirchner ("BJK") as a condition to the
purchase of the Shares by Buyer.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have
the meanings ascribed to them in the Stock Purchase Agreement.
2. ACKNOWLEDGMENTS BY SELLER
Seller acknowledges that (a) Seller has occupied a position of trust
and confidence with the Acquired Companies prior to the date hereof
and has become familiar with the following, any and all of which
constitute confidential information of the Acquired Companies,
(collectively the "Confidential Information"): (i) any and all trade
secrets concerning the business and affairs of the Acquired
Companies, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current and planned
research and development, current and planned manufacturing and
distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object
code and source code), computer software and database technologies,
systems, structures and architectures (and related processes,
formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, of
the Acquired Companies and any other information, however
documented, of the Acquired Companies that is a trade secret within
the meaning of applicable law; (ii) any and all information
concerning the business and affairs of the Acquired Companies (which
includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets
and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials, however documented; and
(iii) any and all notes, analysis, compilations, studies, summaries,
and other material prepared by or for the Acquired Companies
containing or based, in whole or in part, on any information
included in the foregoing, (b) the business of the Acquired
Companies is national in scope, (c) its products and services are
marketed throughout the United States; (d) the Acquired Companies
compete with other businesses that are or could be located in any
part of the United States; (e) Buyer has required that Seller make
the covenants set forth in Sections 3 and 4 of this Agreement as a
condition to the Buyer's purchase of the Shares owned by Seller and
BJK; (f) the provisions of Sections 3 and 4 of this Agreement are
reasonable and necessary to protect and preserve the Acquired
Companies' business, and (g) the Acquired Companies would be
irreparably damaged if Seller were to breach the covenants set forth
in Sections 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION
Seller acknowledges and agrees that all Confidential Information
known or obtained by Seller, whether before or after the date
hereof, is the property of the Acquired Companies. Therefore, Seller
agrees that Seller will not, at any time, disclose to any
unauthorized Persons or use for his own account or for the benefit
of any third party any Confidential Information, whether Seller has
such information in Seller's memory or embodied in writing or other
physical form, without Buyer's written consent, unless and to the
extent that the Confidential Information is or becomes generally
known to and available for use by the public other than as a result
of Seller's fault or the fault of any other Person bound by a duty
of confidentiality to Buyer or the Acquired Companies. Seller agrees
to deliver to Buyer at the time of execution of this Agreement, and
at any other time Buyer may request, all documents, memoranda,
notes, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a
disk or in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of the Acquired
Companies and any other Confidential Information that Seller may
then possess or have under Seller's control.
4. NONCOMPETITION
As an inducement for Buyer to enter into the Stock Purchase
Agreement and Real Property Purchase Agreement and as additional
consideration for the consideration to be paid to Seller under the
Stock Purchase Agreement and Real Property Purchase Agreement Seller
agrees that:
(a) For a period of six years after the Closing:
(i) Seller will not, directly or indirectly, engage or invest in,
own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be
employed by, associated with, or in any manner connected with, lend
Seller's name or any similar name to, lend Seller's credit to, or
render services or advice to, any business whose products or
activities compete in whole or in part with the products or
activities of the Company, anywhere within the United States;
provided, however, that Seller may purchase or otherwise acquire up
to (but not more than) one percent of any class of securities of any
enterprise (but without otherwise participating in the activities of
such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934. Seller agrees that
this covenant is reasonable with respect to its duration,
geographical area, and scope.
(ii) Seller will not, directly or indirectly, either for himself or
any other Person, (A) induce or attempt to induce any employee of an
Acquired Company to leave the employ of such Acquired Company,
(B) in any way interfere with the relationship between an Acquired
Company and any employee of such Acquired Company, (C) employ, or
otherwise engage as an employee, independent contractor, or
otherwise, any employee of an Acquired Company, or (D) induce or
attempt to induce any customer, supplier, licensee, or business
relation of an Acquired Company to cease doing business with such
Acquired Company, or in any way interfere with the relationship
between any customer, supplier, licensee, or business relation of an
Acquired Company.
(iii) Seller will not, directly or indirectly, either for himself or
any other Person, solicit the business of any Person known to Seller
to be a customer of an Acquired Company, whether or not Seller had
personal contact with such Person, with respect to products or
activities which compete in whole or in part with the products or
activities of the Company;
(b) In the event of a breach by Seller of any covenant set forth in
Subsection 4(a) of this Agreement, the term of such covenant will be
extended by the period of the duration of such breach;
(c) Seller will not, at any time during or after the six year
period, disparage Buyer or the Acquired Companies, or any of their
shareholders, directors, officers, employees, or agents; and
(d) Seller will, for a period of six years after the Closing, within
ten days after accepting any employment, advise Buyer of the
identity of any employer of Seller. Buyer or an Acquired Company
may serve notice upon each such employer that Seller is bound by
this Agreement and furnish each such employer with a copy of this
Agreement or relevant portions thereof.
5. REMEDIES
If Seller breaches the covenants set forth in Sections 3 or 4 of
this Agreement, Buyer and the Acquired Companies will be entitled to
the following remedies:
(a) Damages from Seller;
(b) To offset against any and all amounts owing any Seller under the
Stock Purchase Agreement, Real Property Purchase Agreement, or
Promissory Note any and all amounts which Buyer or the Acquired
Companies claim under Subsection 5(a) of this Agreement; and
(c) In addition to its right to damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain any
breach or threatened breach or otherwise to specifically enforce the
provisions of Sections 3 and 4 of this Agreement, it being agreed
that money damages alone would be inadequate to compensate the Buyer
and the Acquired Companies and would be an inadequate remedy for
such breach.
6. BUYER'S DEFAULT
Notwithstanding any other provisions of this Agreement, in the event
there is a "USC Default" as that term is defined in a certain Cross-
Default and Cross-Collateral Agreement of even date executed by
Buyer, Henry A. Kirchner and Barbara J. Kirchner, then, and in such
a case, said USC Default shall constitute a default of Buyer's
obligations under this Agreement which shall release Seller of all
restrictive covenants described herein.
7. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Buyer, the Acquired Companies
and Seller and will inure to the benefit of Buyer and the Acquired
Companies and their affiliates, successors and assigns and Seller
and Seller's assigns, heirs and legal representatives.
8. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this
Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party
giving such notice or demand to take further action without notice
or demand as provided in this Agreement.
9. GOVERNING LAW
This Agreement will be governed by the laws of the State of Ohio
without regard to conflicts of laws principles.
10. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought
against any of the parties in the courts of the State of Ohio,
County of Hamilton, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of Ohio,
and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process
in any action or proceeding referred to in the preceding sentence
may be served on any party anywhere in the world.
11. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any
provision or term of this Agreement is held to be prohibited by or
invalid, then such provision or term will be ineffective only to the
extent of such prohibition or invalidity, without invalidating or
affecting in any manner whatsoever the remainder of such provision
or term or the remaining provisions or terms of this Agreement. If
any of the covenants set forth in Section 4 of this Agreement are
held to be unreasonable, arbitrary, or against public policy, such
covenants will be considered divisible with respect to scope, time,
and geographic area, and in such lesser scope, time and geographic
area, will be effective, binding and enforceable against Seller.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one
and the same agreement.
13. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to
the corresponding Section or Sections of this Agreement unless
otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
14. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return
receipt requested, or (c) when received by the addressee, if sent by
a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
Seller:
Henry A. Kirchner
_________________
_________________
with a copy to:
Martin & Oliviera, LLP
100 North Street, # 301
Pittsfield, Massachusetts 01201
Attention: John J. Martin, Jr.
Facsimile No.: _______________
Buyer:
United Shields Corporation
311 Northland Boulevard
Cincinnati, Ohio 45246
Attention: President
Facsimile No.: 513-782-8902
with a copy to:
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Charles F. Hertlein, Jr., Esq.
Facsimile No.: (513) 977-8141
14. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement and supersedes
all prior written and oral agreements and understandings between
Buyer and Seller with respect to the subject matter of this
Agreement. This Agreement may not be amended except by a written
agreement executed by the party to be charged with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
Buyer:
UNITED SHIELDS CORPORATION
By: /s/Donald T. Zimmerman, Jr.
Donald T. Zimmerman, Jr.
Its: President
Seller:
/s/ Henry A. Kirchner
Henry A. Kirchner
Exhibit 99.5
Exhibit 2.4(a)(iv)
Part 2
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of
September 29, 1999, by and between United Shields Corporation, a
Colorado corporation ("Buyer"), and Barbara A. Kirchner, residing
at _________________ ("Seller").
RECITALS
Concurrently with the execution and delivery of this Agreement,
Buyer is purchasing all of the outstanding shares (the "Shares")
of common stock, no par value, of Pittsfield Mold & Tool, Inc.
(the "Company") pursuant to the terms and conditions of a Stock
Purchase Agreement made as of September 29, 1999, (the "Stock
Purchase Agreement"), and certain real property and assets (the
"Property") pursuant to a Real Property Purchase Agreement made as
of September 29, 1999 (the "Real Property Purchase Agreement").
Section 2.4(a)(iv) of the Stock Purchase Agreement requires that
noncompetition agreements be executed and delivered by each of
Seller and Henry A. Kirchner ("HJK") as a condition to the
purchase of the Shares by Buyer.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall
have the meanings ascribed to them in the Stock Purchase
Agreement.
2. ACKNOWLEDGMENTS BY SELLER
Seller acknowledges that (a) Seller has occupied a position of
trust and confidence with the Acquired Companies prior to the date
hereof and has become familiar with the following, any and all of
which constitute confidential information of the Acquired
Companies, (collectively the "Confidential Information"): (i) any
and all trade secrets concerning the business and affairs of the
Acquired Companies, product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current and
planned research and development, current and planned
manufacturing and distribution methods and processes, customer
lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs
(including object code and source code), computer software and
database technologies, systems, structures and architectures (and
related processes, formulae, compositions, improvements, devices,
know-how, inventions, discoveries, concepts, ideas, designs,
methods and information, of the Acquired Companies and any other
information, however documented, of the Acquired Companies that is
a trade secret within the meaning of applicable law; (ii) any and
all information concerning the business and affairs of the
Acquired Companies (which includes historical financial
statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques
and materials, however documented; and (iii) any and all notes,
analysis, compilations, studies, summaries, and other material
prepared by or for the Acquired Companies containing or based, in
whole or in part, on any information included in the foregoing,
(b) the business of the Acquired Companies is national in scope,
(c) its products and services are marketed throughout the United
States; (d) the Acquired Companies compete with other businesses
that are or could be located in any part of the United States;
(e) Buyer has required that Seller make the covenants set forth in
Sections 3 and 4 of this Agreement as a condition to the Buyer's
purchase of the Shares owned by Seller and HAK; (f) the provisions
of Sections 3 and 4 of this Agreement are reasonable and necessary
to protect and preserve the Acquired Companies' business, and
(g) the Acquired Companies would be irreparably damaged if Seller
were to breach the covenants set forth in Sections 3 and 4 of this
Agreement.
3. CONFIDENTIAL INFORMATION
Seller acknowledges and agrees that all Confidential Information
known or obtained by Seller, whether before or after the date
hereof, is the property of the Acquired Companies. Therefore,
Seller agrees that Seller will not, at any time, disclose to any
unauthorized Persons or use for his own account or for the benefit
of any third party any Confidential Information, whether Seller
has such information in Seller's memory or embodied in writing or
other physical form, without Buyer's written consent, unless and
to the extent that the Confidential Information is or becomes
generally known to and available for use by the public other than
as a result of Seller's fault or the fault of any other Person
bound by a duty of confidentiality to Buyer or the Acquired
Companies. Seller agrees to deliver to Buyer at the time of
execution of this Agreement, and at any other time Buyer may
request, all documents, memoranda, notes, plans, records, reports,
and other documentation, models, components, devices, or computer
software, whether embodied in a disk or in other form (and all
copies of all of the foregoing), relating to the businesses,
operations, or affairs of the Acquired Companies and any other
Confidential Information that Seller may then possess or have
under Seller's control.
4. NONCOMPETITION
As an inducement for Buyer to enter into the Stock Purchase
Agreement and Real Property Purchase Agreement and as additional
consideration for the consideration to be paid to Seller under the
Stock Purchase Agreement and Real Property Purchase Agreement,
Seller agrees that:
(a) For a period of six years after the Closing:
(i) Seller will not, directly or indirectly, engage or invest in,
own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be
employed by, associated with, or in any manner connected with,
lend Seller's name or any similar name to, lend Seller's credit
to, or render services or advice to, any business whose products
or activities compete in whole or in part with the products or
activities of the Company, anywhere within the United States;
provided, however, that Seller may purchase or otherwise acquire
up to (but not more than) one percent of any class of securities
of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on
any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of
1934. Seller agrees that this covenant is reasonable with respect
to its duration, geographical area, and scope.
(ii) Seller will not, directly or indirectly, either for himself
or any other Person, (A) induce or attempt to induce any employee
of an Acquired Company to leave the employ of such Acquired
Company, (B) in any way interfere with the relationship between an
Acquired Company and any employee of such Acquired Company,
(C) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any employee of an Acquired Company, or
(D) induce or attempt to induce any customer, supplier, licensee,
or business relation of an Acquired Company to cease doing
business with such Acquired Company, or in any way interfere with
the relationship between any customer, supplier, licensee, or
business relation of an Acquired Company.
(iii) Seller will not, directly or indirectly, either for himself
or any other Person, solicit the business of any Person known to
Seller to be a customer of an Acquired Company, whether or not
Seller had personal contact with such Person, with respect to
products or activities which compete in whole or in part with the
products or activities of the Company;
(b) In the event of a breach by Seller of any covenant set forth
in Subsection 4(a) of this Agreement, the term of such covenant
will be extended by the period of the duration of such breach;
(c) Seller will not, at any time during or after the six year
period, disparage Buyer or the Acquired Companies, or any of their
shareholders, directors, officers, employees, or agents; and
(d) Seller will, for a period of six years after the Closing,
within ten days after accepting any employment, advise Buyer of
the identity of any employer of Seller. Buyer or an Acquired
Company may serve notice upon each such employer that Seller is
bound by this Agreement and furnish each such employer with a copy
of this Agreement or relevant portions thereof.
5. REMEDIES
If Seller breaches the covenants set forth in Sections 3 or 4 of
this Agreement, Buyer and the Acquired Companies will be entitled
to the following remedies:
(a) Damages from Seller;
(b) To offset against any and all amounts owing any Seller under
the Stock Purchase Agreement, Real Property Purchase Agreement, or
Promissory Note any and all amounts which Buyer or the Acquired
Companies claim under Subsection 5(a) of this Agreement; and
(c) In addition to its right to damages and any other rights it
may have, to obtain injunctive or other equitable relief to
restrain any breach or threatened breach or otherwise to
specifically enforce the provisions of Sections 3 and 4 of this
Agreement, it being agreed that money damages alone would be
inadequate to compensate the Buyer and the Acquired Companies and
would be an inadequate remedy for such breach.
6. BUYER'S DEFAULT
Notwithstanding any other provisions of this Agreement, in the
event there is a "USC Default" as that term is defined in a
certain Cross-Default and Cross-Collateral Agreement of even date
executed by Buyer, Henry A. Kirchner and Barbara J. Kirchner,
then, and in such a case, said USC Default shall constitute a
default of Buyer's obligations under this Agreement which shall
release Seller of all restrictive covenants described herein.
7. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Buyer, the Acquired Companies
and Seller and will inure to the benefit of Buyer and the Acquired
Companies and their affiliates, successors and assigns and Seller
and Seller's assigns, heirs and legal representatives.
8. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under
this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by
a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a
party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further
action without notice or demand as provided in this Agreement.
9. GOVERNING LAW
This Agreement will be governed by the laws of the State of Ohio
without regard to conflicts of laws principles.
10. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought
against any of the parties in the courts of the State of Ohio,
County of Hamilton, or, if it has or can acquire jurisdiction, in
the United States District Court for the Southern District of
Ohio, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the
world.
11. SEVERABILITY
Whenever possible each provision and term of this Agreement will
be interpreted in a manner to be effective and valid but if any
provision or term of this Agreement is held to be prohibited by or
invalid, then such provision or term will be ineffective only to
the extent of such prohibition or invalidity, without invalidating
or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this
Agreement. If any of the covenants set forth in Section 4 of this
Agreement are held to be unreasonable, arbitrary, or against
public policy, such covenants will be considered divisible with
respect to scope, time, and geographic area, and in such lesser
scope, time and geographic area, will be effective, binding and
enforceable against Seller.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement
and all of which, when taken together, will be deemed to
constitute one and the same agreement.
13. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to
the corresponding Section or Sections of this Agreement unless
otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
14. NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation
of receipt), (b) sent by facsimile (with written confirmation of
receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and
facsimile numbers as a party may designate by notice to the other
parties):
Seller:
Henry A. Kirchner
_________________
_________________
with a copy to:
Martin & Oliviera, LLP
100 North Street, # 301
Pittsfield, Massachusetts 01201
Attention: John J. Martin, Jr.
Facsimile No.: _______________
Buyer:
United Shields Corporation
311 Northland Boulevard
Cincinnati, Ohio 45264
Attention: President
Facsimile No.: 513-782-8902
with a copy to:
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Charles F. Hertlein, Jr., Esq.
Facsimile No.: (513) 977-8141
14. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral agreements and
understandings between Buyer and Seller with respect to the
subject matter of this Agreement. This Agreement may not be
amended except by a written agreement executed by the party to be
charged with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
Buyer:
UNITED SHIELDS CORPORATION
By: /s/Donald T. Zimmerman, Jr.
Donald T. Zimmerman, Jr.
Its: President
Seller:
/s/ Barbara A. Kirchner
Barbara A. Kirchner
Exhibit 99.6
REAL ESTATE PURCHASE AGREEMENT
This Real Estate Purchase Agreement ("Agreement") is made and
entered into as of September 29, 1999, by and between Pittsfield
Mold & Tool, Inc. (referred to as "Purchaser"), and the Kirchner
Family Nominee Trust, Henry A. Kirchner and Barbara J. Kirchner,
Trustees, under Declaration of Trust dated February 6, 1996 and
recorded with the Beckshire County (Middle District) Registry of
Deeds in Book 910, Page 800 (referred to as "Seller"), relating to
the real property known as 10 BETNR Industrial Drive, Pittsfield,
Massachusetts 01201, and more particularly described on Schedule
A, attached hereto and incorporated herein ("Real Property"), and
each of the assets and other items of personal property listed on
Schedule B, attached hereto and incorporated herein ("Personal
Property") (together, the "Property").
1. The purchase price shall be $3,125,000 payable at Closing.
2. The Real Property includes the land, all buildings and
fixtures, and all appurtenant rights, privileges and easements.
3. Seller represents, warrants and covenants to Purchaser and
United Shields Corporation ("USC") that: (i) as currently used or
contemplated to be used by Purchaser, the Real Property conforms
in all respects with applicable zoning requirements, (ii) the
improvements constructed on the Real Property have been fully and
satisfactorily completed, and, in addition, the improvements
located thereon are in compliance with all applicable laws,
ordinances, rules, regulations, zoning and building codes and
building permits, the roofs are free from leaks, the basements, if
any, are free from leaks and flooding, that the electrical,
plumbing, heating, air-conditioning equipment and systems and
security equipment are in good condition and working order and in
compliance with the applicable codes of all governmental
authorities and the guidelines of appropriate boards of fire
insurance underwriters and the improvements on the Real Property
are structurally sound, (iii) the Property is free from any and
all actual or threatened city, county and state orders or
proceedings, and that there is no pending or threatened
litigation, arbitration or other dispute relating to the Property,
(iv) Seller has obtained all Certificates of Occupancy, if
required, and other permits required to evidence the lawful use
and enjoyment of the property, (v) there are no leases or
contracts affecting the Property, (vi) the Property is serviced by
water, gas, electric, sewer and all other necessary utilities, the
utility lines which service the Property enter the Property from
public streets or through valid easements, no utility lines
servicing the Property encroach on abutting properties, no utility
lines servicing abutting properties encroach on the Property, and
separate meters for all utilities serving the Property are located
on and meter only the utilities used within the Property, (vii)
Seller shall deliver to Purchaser and to Purchaser's title
insurance company, if any, at the Closing, master and supporting
statutory affidavits of all contractors, suppliers and materialmen
performing labor or providing supplies, material or equipment in
connection with work done on or for the benefit of the Property
within 75 days of the date of Closing, said affidavits to show
that all such contractors, suppliers and materialmen have been
paid in full in lieu thereof or in addition thereto, at
Purchaser's option, Seller shall deliver to Purchaser and to
Purchaser's title insurance company, if any, an ALTA title
affidavit or certificate stating in substance that, among other
things, no work has been done on the Property and no supplies,
material or equipment have been furbished for use at or
incorporated into the Property for which mechanic's or other liens
could be asserted against the Property, and (viii) (a) to the best
of the Seller's knowledge, there has not been a release or a
disposal, or any event at, on or in connection with the Property
which would be deemed a release or a disposal, of Hazardous
Material (as defined below), and the Property is not in violation
of any Environmental Law (as defined below), (b) neither Seller
nor, to the best of the knowledge of Seller, any third party has
used, generated, stored, or disposed of on, under or about the
Property, or transported to or from it, any Hazardous Materials
other than materials commonly used or stored, in accordance with
all Environmental Laws at similar properties, (c) Seller has
received no notice from any governmental agency of any
investigation or proceeding by such agency concerning the presence
or alleged presence of Hazardous Materials on the Property, (d)
there are no underground storage tanks or associated product
piping systems at the Property, and the Property does not include
any "fill" or any area which is or has been used as a garbage or
rubbish disposal site, and (e) that no portion of the Property
constitutes governmentally protected "wetlands" and no portion of
the Property is located in a flood hazard area.
The term "Environmental Law" includes any federal, state or local
law, ordinance, or regulation pertaining to the health, industrial
hygiene, waste disposal, or the environment, including, without
limitation, the Comprehensive Environmental Response, Liability
and Compensation Act, 42 U.S.C. Section 9601 et seg., the federal
Superfund Amendments and Reauthorization Act and other so-called
"Superfund" or "Superlien" laws, the federal Resource Conservation
and Recovery Act, the federal Clean Air Act, the federal Water
Pollution Control Act, the federal Insecticide, Fungicide and
Rodenticide Act, the federal Pesticide Act, the federal Toxic
Substances Control Act, the federal Safe Drinking Water Act, the
federal Hazardous Materials Transportation Act, and any amendments
thereto and regulations adopted and publications promulgated
pursuant thereto, and any other federal, state, or local statute,
law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability for Hazardous
Materials. The term "Hazardous Materials" includes without
limitation oil and petroleum products and derivatives thereof,
asbestos (friable or otherwise), polychlorinated biphenyls
("PCB"s), radon gas, urea formaldehyde, lead, flammable
explosives, hydrocarbons, radioactive materials, and any
hazardous, toxic or dangerous substance, waste or material or any
solid waste, pollutant or contaminant, including, without
limitation, any hazardous, toxic or dangerous substance, waste or
material or any solid waste, pollutant or contaminant classified
as such under any Environmental Law.
Seller further represents, warrants and covenants to Purchaser and
USC that the Personal Property includes any and all items owned by
Seller which are or may be required and/or used in connection with
the business of Purchaser as currently conducted or as
contemplated by Purchaser.
4. This Agreement is contingent upon each of the following (unless
Purchaser waives in writing all unsatisfied contingencies), and
Purchaser may terminate this Agreement by written notice to Seller
if any contingency is unsatisfied:
(a) A survey, if Purchaser chooses to obtain one, at Purchaser's
expense, showing that there are no encroachments, that the
improvements on the Property are within the lot lines and conform
to applicable setback requirements, and that the size and shape of
the Property and such other relevant matters as Purchaser may
reasonably require are acceptable.
(b) Purchaser's approval, in its sole judgement, of the condition
of title to the Property (including without limitation, approval
of all easements, restrictions, and other matters of record
relating to or which affect the Property), the assessments against
and the zoning of the Property, and all other restrictions and
conditions on the development and use of the Property.
(c) All of the Seller's representations and warranties set forth
in this Agreement being true and correct when made and at all
times thereafter at and through the date of Closing.
(d) Inspections, to be made at Purchaser's option and expense,
showing to Purchaser's satisfaction that the building
improvements, the heating and air conditioning units, the
plumbing, electrical and security systems and all other systems on
the Property are in good condition and in good working order, that
the improvements on the Property are not infested or previously
damaged by termites or other wood-destroying pests, that the roofs
are in good condition and repair, that there are no structural or
other defects adversely affecting said improvements and that the
Property is otherwise in good condition and repair.
(e) The simultaneous purchase by USC of all of the outstanding
shares of Purchaser pursuant to that certain Stock Purchase
Agreement, dated August 27, 1999, by and between USC, Seller, The
Henry A. Kirchner Revocable Trust, Henry A. Kirchner and Barbara
J. Kirchner, Trustees, dated February 6, 1996, The Barbara J.
Kirchner Revocable Trust, Barbara J. Kirchner and Henry A.
Kirchner, Trustees dated February 6, 1996, Henry A. Kirchner and
Barbara J. Kirchner.
5. Marketable and insurable title to the Property shall be
conveyed to Purchaser by recordable deed of a type customarily
used in commercial real estate transactions in Pittsfield,
Massachusetts, in fee simple absolute, with release of dower (with
respect to the Real Property), and a warranty bill of sale (with
respect to the Personal Property) at the Closing, free and clear
of all liens and encumbrances as of the date of the Closing,
subject only to those items approved by Purchaser in accordance
with Sections 4(a) and 4(b). Transfer taxes shall be paid by
Seller.
6. All real property taxes and installments of assessments, if
any, shall be prorated as of the date of Closing based upon the
most recent tax bill. After such proration is made, Purchaser
shall be responsible for paying taxes and assessments as they come
due.
7. Risk of loss to the Property shall be borne by Seller until
Closing, and seller shall, until such time, keep the Property
insured to its full replacement value against loss by fire or
other casualty. If said Property is damaged or destroyed by fire,
or other casualty prior to Closing, the Purchaser may (a) elect to
proceed with the transaction, in which event the Purchaser shall
be entitled to all insurance money payable to the Seller as
compensation for such damage or destruction under any and all
policies of insurance covering the Property so damaged or
destroyed, or (b) elect to terminate this Agreement. If the
Purchaser elects to rescind the Agreement, Purchaser shall so
notify the Seller in writing within thirty days after the
Purchaser receives written notice of such damage or destruction
and relevant information as to the insurance coverage.
8. Seller shall deliver possession and occupancy of the Property
to Purchaser upon or before the Closing. Seller shall be solely
responsible for the payment of all utility bills and other
expenses attributable to the period of Seller's occupancy of the
premises.
9. Seller agrees that, upon Closing, the Property shall be in the
same condition as on the date of this offer, reasonable wear and
tear not impairing functionality excepted.
10. This Agreement shall constitute the entire agreement of the
parties, and no oral or implied agreements or understanding shall
vary the terms of this Agreement.
11. All capitalized terms not defined herein shall have the
meaning ascribed to them in the Stock Purchase Agreement.
12. Time is the essence of each provision of this agreement. This
Agreement is governed by the law of the Commonwealth of
Massachusetts.
This Agreement has been executed as of the date first above
written.
KIRCHNER FAMILY NOMINEE TRUST
By: /s/ Henry A. Kirchner
Henry A. Kirchner, Trustee
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner, Trustee
PITTSFIELD MOLD & TOOL, INC.
By:/s/Donald T. Zimmerman, Jr.
Donald T. Zimmerman, Jr.
Its: President
Exhibit 99.7
EARN OUT AGREEMENT
This Earn Out Agreement (the "Agreement") is made as of September
29, 1999 by and between UNITED SHIELDS CORPORATION, a Colorado
corporation (the "Buyer") and HENRY A. KIRCHNER ("HAK"), BARBARA
J. KIRCHNER ("BJK"), THE HENRY A. KIRCHNER REVOCABLE TRUST, HENRY
A. KIRCHNER AND BARBARA J. KIRCHNER, TRUSTEES, dated February 6,
1996, (the "HAK Trust"), THE BARBARA J. KIRCHNER REVOCABLE TRUST,
BARBARA J. KIRCHNER AND HENRY A. KIRCHNER, TRUSTEES, dated
February 6, 1996 (the "BJK Trust") and THE KIRCHNER FAMILY NOMINEE
TRUST, HENRY A. KIRCHNER AND BARBARA J. KIRCHNER, TRUSTEES, under
Declaration of Trust dated February 6, 1996 and recorded with the
Berkshire County (Middle District) Registry of Deeds in Book 910,
Page 800 (the "Family Trust") (HAK, BJK and HAK Trust, the BJK
Trust and the Family Trust, referred to collectively as
"Sellers").
RECITALS: Concurrently with the execution and delivery of this
Agreement, Buyer is purchasing, all of the issued and outstanding
shares (the "Shares") of capital stock of Pittsfield Mold & Tool,
Inc., a Massachusetts corporation (the "Company"), and the real
property located at Stearnsville Industrial Park, 10 Betnr
Industrial Drive, Pittsfield, Massachusetts, pursuant to the terms
and conditions of a Stock Purchase Agreement made as of August 27,
1999 (the "Stock Purchase Agreement"). Section 2.6 of the Stock
Purchase Agreement requires that an Earn Out Agreement be executed
by Buyer and delivered to Sellers as a condition to the sale of
the Shares by Sellers.
AGREEMENT: The parties, intending to be legally bound, agree as
follows:
1. DEFINITIONS: Capitalized terms not expressly defined in this
Agreement shall have the meanings ascribed to them in the Stock
Purchase Agreement.
2. EARN OUT: As an inducement for Sellers to enter into the Stock
Purchase Agreement, Buyer has agreed to the following additional
consideration to be paid to Sellers under the Stock Purchase
Agreement:
For a period of six (6) years beginning as of the Closing Date,
Buyer shall pay Sellers an amount equal to five (5%) percent of
the annual Net Sales of the Company in excess of $10,000,000.00
each year, payable each year, not later than ninety (90) days
after the end of the previous year, pro-rated for any partial
years. Any installment or payment due hereunder which shall be
received by Sellers after its due date shall be subject to an
additional charge of five (5%) percent of the amount so overdue.
3. REMEDIES: If Buyer breaches its payment obligation as set
forth at paragraph 2 above, Sellers will be entitled to the
following remedies:
a. Damages from Buyer;
b. A release of their obligations under the Non Competition
Agreements;
c. Prosecution of the $250,000.00 Letter of Credit referred to at
Section 8.8(i) of the Stock Purchase Agreement;
d. Joseph A. Kirchner shall be entitled to a release of his
obligations under the Employment Agreement; and,
e. All reasonable costs of collection and reasonable attorney's
fees paid or incurred by Sellers in enforcing their rights
hereunder.
In addition, Buyer's breach of this Agreement shall constitute an
Event of Default under the Promissory Note.
4. SUCCESSORS AND ASSIGNS: This Agreement will be binding upon
Buyer, its successors and assigns and will enure to the benefit of
Sellers, their successors, assigns, heirs and legal
representatives.
5. NOTICES: All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be
deemed to have been duly given when (a) delivered by hand (with
written confirmation of receipt); (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received
by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or
to such other addresses and telecopier numbers as a party may
designate by notice to the other parties):
Sellers: Henry A. Kirchner and Barbara J. Kirchner
53 Victoria Lane
P.O. Box 2140
Lanesboro, Massachusetts 01237
With a copy to: John J. Martin, Jr., Esquire
MARTIN & OLIVEIRA, LLP
100 North Street, Suite 301
Pittsfield, Massachusetts 01201
Telecopier number: (413) 445-5883
Buyer: United Shields Corporation
311 Northland Boulevard
Cincinnati, Ohio 45246
Attention: President
Facsimile number: (513) 782-8902
With a copy to: Charles F. Hertlein, Jr., Esquire
DINSMORE & SHOHL LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
Facsimile number: (513) 977-8141
6. JURISDICTION; SERVICE OF PROCESS: Any action or proceeding
seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties
in the courts of the Commonwealth of Massachusetts, County of
Berkshire, or, if it has or can acquire jurisdiction, in the
United State District Court for the Western District of
Massachusetts, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party
anywhere in the world.
7. WAIVER: The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure
nor any delay by any party in exercising any right, power, or
privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or
privilege, or no single or partial exercise of any such right,
power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any
obligation of such party or the right of the party giving such
notice or demand to take further action without notice or demand
as provided in this Agreement or the documents referred to in this
Agreement
8. ENTIRE AGREEMENT AND MODIFICATION: This Agreement supersedes
all prior agreements between the parties with respect to its
subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the
amendment.
9. SEVERABILITY: If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
10. SECTION HEADINGS, CONSTRUCTION: The headings of Sections in
this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to
"Section" or "Sections" referred to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will
be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
11. TIME OF ESSENCE: With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the
essence.
12. GOVERNING LAW: This Agreement will be governed by the laws of
the State of Ohio without regard to conflicts of laws principles.
13. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer: Sellers:
UNITED SHIELDS CORPORATION
By /s/Donald T. Zimmerman, /s/ Henry A. Kirchner
Donald T. Zimmerman, Jr. HENRY A. KIRCHNER
/s/ Barbara J. Kirchner
BARBARA J. KIRCHNER
THE HENRY A. KIRCHNER
REVOCABLE TRUST
By /s/ Henry A. Kirchner
HENRY A. KIRCHNER
By /s/ Barbara J. Kirchner
BARBARA J. KIRCHNER
THE BARBARA J. KIRCHNER
REVOCABLE TRUST
By /s/ Barbara J. Kirchner
BARBARA J. KIRCHNER
By /s/ Henry A. Kirchner
HENRY A. KIRCHNER
KIRCHNER FAMILY NOMINEE TRUST
By /s/ Henry A. Kirchner
HENRY A. KIRCHNER
By /s/ Barbara J. Kirchner
BARBARA J. KIRCHNER
Exhibit 99.8
STOCK PLEDGE AGREEMENT
THIS AGREEMENT, dated this 29th day of September, 1999 by and
between UNITED SHIELDS CORPORATION, a Colorado corporation (the
"Pledgor"), the only shareholder of PITTSFIELD MOLD & TOOL, INC.,
a Massachusetts corporation (the "Company") and the KIRCHNER
FAMILY NOMINEE TRUST, Henry A. Kirchner and Barbara J. Kirchner,
Trustees, under Declaration of Trust dated February 6, 1996 and
recorded with the Berkshire County (Middle District) Registry of
Deeds in Book 910, Page 800 (collectively referred to as the
"Secured Party");
W I T N E S S E T H :
WHEREAS, the Pledgor and the Secured Party are parties to a
certain Stock Purchase Agreement dated August 27, 1999 (the "Stock
Purchase Agreement") relating to the sale of all of the issued and
outstanding shares (the "Stock") of capital stock of the Company,
pursuant to which Pledgor and the Company are obligated to the
Secured Party;
WHEREAS, the Stock Purchase Agreement provides for the Company
(the "Borrower") to execute a Promissory Note in the principal
amount of $1,750,000.00 and a promissory note in the principal sum
of $2,200,000.00 (collectively referred to as the "Note") and for
the Pledgor to guarantee the Note; and
WHEREAS, Section 8.8 (iii) of the Stock Purchase Agreement
requires Pledgor to execute and deliver this stock pledge
agreement (the "Agreement") and to grant the security interest
hereinafter described.
NOW THEREFORE, in consideration of the willingness of the Secured
Party to enter into the Stock Purchase Agreement and for good and
other valuable consideration the receipt of which is hereby
acknowledged, it is hereby agreed as follows:
1. Security Interest. The Pledgor hereby pledges to the Secured
Party four hundred (400) shares of capital stock of the Company
(the "Pledged Stock"), representing forty (40%) of the Stock,
listed at Schedule "A" attached hereto and does hereby deposit the
Pledged Stock and the certificates representing them with John J.
Martin, Jr., as pledge trustee, and the Pledgor hereby grants to
the Secured Party a security interest in the Pledged Stock as
security for due and punctual payment and performance of the
secured obligations described in Section 2 hereof.
2. Secured Obligations. The security interest hereby created shall
secure the due and punctual performance of the following
liabilities and obligations of Borrower, the Company and Pledgor
("Secured Obligations"):
(a) Principal of, and interest on the Note;
(b) Any and all other obligations of the Company or the Pledgor to
the Secured Party under the Stock Purchase Agreement or interest
relating thereto; and
(c) Any and all other indebtedness or obligations of the
Company or the Pledgor to the Secured Party, whether direct or
indirect, absolute or contingent, due or to become due or now
existing or hereafter arising.
3. Special Warranties and Covenants of the Pledgor. The Pledgor
hereby warrants and covenants to the Secured Party that:
(a) The Pledged Stock is duly and validly pledged with the Secured
Party in accordance with law and the Pledgor warrants and will
defend the Secured Party's right, title and security interest in
and to the Pledged Stock against the claims and demands of all
persons whomsoever;
(b) The Pledgor has good title to the Pledged Stock, free and
clear of all claims, mortgages, pledges, liens, security
interests and other encumbrances of every nature whatsoever;
(c) All of the Pledged Stock has been duly and validly issued and
is fully paid and nonassessable;
(d) The Pledged Stock constitutes forty (40%) percent of the
presently issued and outstanding capital stock of the Company;
(e) If any additional shares of capital stock of any class of the
Company (other than the initial acquisition of the six hundred
(600) shares simultaneously acquired) are acquired by the Pledgor
after the date hereof, forty (40%) percent of the same shall
constitute Pledged Stock and shall be deposited and pledged with
the Secured Party as provided in Section 1 simultaneously with
such acquisition;
(f) The Pledgor will not sell, convey or otherwise dispose of any
of the Pledged Stock, nor will the Pledgor create, incur or permit
to exist any pledge, mortgage, lien, charge, encumbrance or any
security interest whatsoever with respect to any of the Pledged
Stock, of the proceeds thereof, other than liens on and security
interests in the Pledged Stock created hereby; and
(g) The Pledgor will not consent to or approve the issuance of
any additional shares of capital stock of any class of the
Company, except to the extent that any such additional shares of
capital stock shall be deposited and pledged with the Secured
Party simultaneously with such issuance as provided in Section 1
hereof.
4. Distributions. In case, upon the dissolution, winding up,
liquidation or reorganization of the Company whether in
bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other marshalling
of the assets and liabilities of the Company or otherwise, if any
sum shall be paid or any property shall be distributed upon or
with respect to any of the Pledged Stock, such sum shall be paid
over to the Secured Party to be held as collateral security of the
Secured Obligations. In case any stock dividend shall be
declared on any of the Pledged Stock, or any share of stock or
fraction thereof shall be issued pursuant to any stock split
involving any of the Pledged Stock, or any distribution of capital
(excluding ordinary cash dividends) shall be made on any of the
Pledged Stock, or any property shall be distributed upon or with
respect to the Pledged Stock pursuant to recapitalization or
reclassification of the capital of the Company, the shares or
other property so distributed shall be delivered to the Secured
Party to be held as collateral security for the Secured
Obligations.
5. Events of Default. There shall exist a default under this
Agreement upon the happening of any of the following events or
conditions (herein called "Events or Defaults"):
(a) Default shall be made in the due and punctual payment of any
principal or interest on any of the Secured Obligations as and
when the same shall become due and payable (whether at maturity or
at a date fixed for any prepayment or installment or by
declaration or acceleration or otherwise) and such default shall
continue beyond the expiration of the applicable period of grace,
if any; or
(b) Any other Event of Default (as defined or provided in the
Stock Purchase Agreement or the Note) shall occur; or
(c) A "USC Default" (as defined per a certain Cross-Default Cross-
Collateral Agreement of even date executed by Pledgor and Secured
Party) shall occur; or
(d) A "Change of Control". A Change of Control of Company shall
be deemed to have occurred if: (i) any "person" (as such term is
used in Section 13 (d) and 14 (d) (2) of the Securities Exchange
Act of 1934, as amended) other than Pledgor becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing more than fifty (50%) percent of the aggregate voting
power of all classes of the Company's then outstanding voting
securities; or (ii) the shareholder(s) of the Company approve(s)
(A) a plan of merger, consolidation or share exchange between the
Company and any person or entity other than a merger,
consolidation or other business combination with Pledgor or with
another wholly-owned subsidiary of Pledgor, or (B) a proposal with
respect to the sale, lease, exchange or other disposal of all, or
substantially all, of the Company's property.
6. Rights and Remedies of Secured Party. Upon the occurrence of
any Event of Default, such default not having previously been
remedied or cured, the Secured Party shall have the following
rights and remedies:
(a) All rights and remedies provided by law, including, without
limitation, those provided by the Uniform Commercial Code;
(b) All rights and remedies provided in this Agreement;
(c) All rights and remedies provided in the Stock Purchase
Agreement, or in any other agreement, document or instrument
pertaining to the Secured Obligations, including without
limitation the Cross-Default Cross-Collateral Agreement;
(d) A release of the obligations of Henry A. Kirchner and Barbara
J. Kirchner under the Non Competition Agreements;
(e) Prosecution of the $250,000.00 Letter of Credit referred to
at Section 8.8 (i) of the Stock Purchase Agreement;
(f) Joseph A. Kirchner shall be entitled to a release of his
obligations under the Employment Agreement; and
(g) All reasonable costs of collection and reasonable attorneys'
fees paid or incurred by Secured Party in enforcing their rights
hereunder.
In addition, Pledgor's breach of this Agreement shall constitute
an Event of Default and a breach by the Company under the
Promissory Note.
7. Right to Transfer into Name of Secured Party, etc.. In case
there shall exist an Event of Default, but subject to the
provisions of the Uniform Commercial Code or other applicable law
the Secured Party may cause all or any of the Pledged Stock to be
transferred into its name or into the name of its nominee or
nominees. So long as no Event of Default shall exist, the
Pledgor shall be entitled to exercise as the Pledgor shall deem
fit, but in a manner not inconsistent with the terms hereof or of
the Secured Obligations, the voting power with respect to the
Pledged Stock.
8. Right of Secured Party to Exercise Voting Power, etc.. In
case there shall exist an Event of Default, the Secured Party
shall be entitled to exercise the voting power with respect to the
Pledged Stock, to receive and retain, as collateral security of
the Secured Obligations, any and all dividends or other
distributions at any time and from time to time declared or made
upon any of the Pledged Stock, and to exercise any and all rights
of payment, conversions, exchange, subscription or any other
rights, privileges or options pertaining to the Pledged Stock as
if it were the absolute owner thereof, including without
limitation, the right to exchange, at its discretion, any and all
of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the
Company or, upon the exercise of any such right, privilege or
option pertaining to the Pledged Stock, and in connection
therewith, to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Secured
Party may determine, all without liability except to account for
property actually received, but the Secured Party shall have no
duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or
delay in so doing.
9. Right of Secured Party to Dispose of Collateral, etc.. Upon
the occurrence of an Event of Default, such default not having
previously been remedied or cured, the Secured Party shall have
the right at any time or times thereafter to sell, resell, assign
and deliver all or any of the Pledged Stock in one or more parcels
at any exchange or broker's board or at public or private sale.
Unless the Pledged Stock is perishable or threatens to decline
speedily in value or is of a type customarily sold at a recognized
market, the Secured Party will give the Pledgor at lest ten (10)
days prior written notice at the address of the Pledgor specified
in Section 16 hereof, of the time and place of any public sale
thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. Any such notice shall
be deemed to meet any requirement hereunder or under any
applicable law (including the Uniform Commercial Code) that
reasonable notification be given of the time and place of such
sale or other disposition. Such notice may be given without any
demand of performance or other demand, all such demands being
hereby expressly waived by the Pledgor. All such sales shall be
at such commercially reasonable price or prices as the Secured
Party shall deem best and either for cash or on credit or for
future delivery (without assuming any responsibility for credit
risk). At any such sale or sales the Secured Party may purchase
any or all of the Pledge Stock to be sold thereat upon such terms
as the Secured Party may deem best. Upon any such sale or sales
the Pledged Stock so purchased shall be held by the purchaser
absolutely free from any claims or rights of whatsoever kind or
nature, including any equity of redemption and any similar rights,
all such equality of redemption and any similar rights being
hereby expressly waived and released by the Pledgor. In the event
any consent, approval or authorization of any governmental agency
will be necessary to effectuate any such sale or sales, the
Pledgor shall execute, and hereby agrees to cause the Company to
execute, all such applications or other instruments as may be
required. The proceeds of any such sale or sales, together with
any other additional collateral security at the time received and
held hereunder shall be received and applied: first, to the
payment of all costs and expenses of such sale, including
reasonable attorneys' fees; second, to the payment of the Secured
Obligations in such order or priority as the Secured Party shall
determine, and any surplus thereafter remaining shall be paid to
the Pledgor or to whomever may be legally entitled thereto
(including, if applicable, any subordinated creditor of the
Company or the Pledgor).
The Pledgor recognizes that the Secured Party may be unable to
effect a public sale of all or a part of the Pledged Stock by
reason or certain prohibitions contained in the Securities Act of
1933, but may be compelled to resort to one or more private sales
to a restricted group of purchasers, each of whom will be
obligated to agree, among other things, to acquire such Pledged
Stock for its own account, for investment and not with a view to
the distribution or resale thereof. The Pledgor acknowledges that
private sales so made may be at prices Pledged Stock were sold at
public sales, and that the Secured Party has no obligation to
delay sale of any such Pledged Stock for the period of time
necessary to permit such Pledged Stock to be registered for public
sale under the Securities Act of 1933. The Pledgor agrees that
any such private sales shall not be deemed to have been made in an
commercially unreasonable manner solely because they shall have
been made under the foregoing circumstances.
10. Collection of Amounts Payable on Account of Pledged
Collateral, etc.. Upon the occurrence of any Event of Default the
Secured Party may, but without obligation to do so, demand, sue
for and/or collect any money or property at any time due, payable
or receivable, to which it may be entitled hereunder, on account
of or in exchange for any of the Pledged Stock and shall have the
right for an in the name, place and stead of the Pledgor, to
execute endorsements, assignments or other instruments of
conveyance or transfer with respect to all or any of the Pledged
Stock.
11. Care of Pledged Collateral in Secured Party's Possession.
Beyond the exercise of reasonable care to assure the safe custody
of the Pledged Stock while held hereunder, the Secured Party shall
have no duty or liability to collect any sums due in respect
thereof or to protect or preserve the rights pertaining thereto,
and shall be relieved of all responsibility for the Pledged Stock
upon surrendering the same to the Pledgor.
12. Waivers, etc. The Pledgor hereby waives presentment, demand,
notice, protest and, except as is otherwise provided herein, all
other demands and notices in connection with this Agreement or the
enforcement of the Secured Party's rights hereunder or in
connection with any Secured Obligations or any Pledged Stock;
consents to and waive notice of the granting of renewals,
extensions of time for payment or other indulgences to the Company
or the Pledgor or to any third party, or substitution, release or
surrender of any collateral security for any Secured Obligation,
the addition or release of persons primarily or secondarily liable
on any Secured Obligation or on any collateral security for any
Secured Obligation, the acceptance of partial payments on any
Secured Obligation or on any collateral Security of any Secured
Obligation and/or the settlement or compromise thereof. No delay
or omission on the part of the Secured Party in exercising any
right hereunder shall operate as a waiver of such right or of any
other right hereunder. Any waiver of any such right on any one
occasion shall not be construed as a bar to or waiver of any such
right on any future occasion. The Pledgor further waives any
right the Pledgor may have under the constitution of the State of
Ohio (or under the constitution of any other state in which any of
the Pledged Stock may be located), or under the constitution of
the United States of America, to notice (other than any
requirement of notice provided herein) or to a judicial hearing
prior to the exercise of any right or remedy provided by this
Agreement to the Secured Party and waive their rights, if any, to
set aside or invalidate any sale duly consummated in accordance
with the foregoing provisions hereof on the grounds (if such be
the case) that the sale was consummated without prior judicial
hearing. The Pledgor's waivers under this section have been made
voluntarily, intelligently and knowingly and after the Pledgor
has been apprised and counseled by the Pledgor's attorneys as to
the nature thereof and its possible alternative rights.
13. Termination' Assignment, etc. This Agreement and the
security interest in the Pledged Stock created hereby shall
terminate when all of the Secured Obligations have been paid and
finally discharged in full. No waiver of the Secured Party or by
any other holder of Secured Obligations of any default shall be
effective unless in writing nor operate as a waiver of any other
default or of the same default on a future occasion. The Secured
Party may not assign or transfer its rights and interest under
this Agreement in whole or in part to a purchaser or purchasers.
14. Reinstatement. Notwithstanding the provisions of Section 13,
this Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any amount received by the Secured
Party in respect of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Secured Party upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization
of the Borrower, the Company or the Pledgor or upon the
appointment of any intervener or conservator of, or trustee or
similar official for, the Borrower, the Company or the Pledgor or
any substantial part of their respective properties, or otherwise,
all as though such payments had not been made.
15. Restrictions on Transfer, etc. To the extent that any
restrictions imposed by the charter or by-laws of the Company or
any other document or instrument would in any way affect or impair
the pledge of the Pledged Stock hereunder or the exercise by the
Secured Party of any right granted hereunder, including, without
limitation, the right of the Secured Party to dispose of the
Pledged Stock upon the occurrence of any Event of Default, the
Pledgor hereby waives such restrictions, and represents and
warrants that they have caused the Company to take all necessary
action to waive such restrictions, and the Pledgor hereby agrees
that the Pledgor will take any further action which the Secured
Party may reasonably request in order that the secured Party may
obtain and enjoy the full rights and benefits granted to the
Secured Party may reasonably request in order that the Secured
Party may obtain and enjoy the full rights and benefits granted to
the Secured Party by this Agreement free of any such restrictions.
16. Notices. Except as otherwise provided herein, all notices to
the Pledgor or to the Secured Party shall be in writing and shall
be deemed to have been sufficiently given or served for all
purposes hereof if personally delivered or mailed by first class
mail, postage prepaid, as follows:
(a) if to the Pledgor;
United Shields Corporation
311 Northland Boulevard
Cincinnati, Ohio 45246
Attention: President
Facsimile No. (513) 782-8902
with a copy to:
Scott E. Wiegand, Esquire
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
(b) if to the Secured Party:
c/o Henry A. and Barbara J. Kirchner
53 Victoria Lane
Post Office Box 2140
Lanesboro, Massachusetts 01237
with a copy to:
John J. Martin, Jr., Esquire
Martin & Oliveira, LLP
100 North Street, Suite 301
Pittsfield, Massachusetts 01201
or at such other address as the party to whom such notice I
directed may have designated in writing to the other party hereto.
A notice shall be deemed to have been given upon the earlier to
occur of (i) three (3) days after the date on which it is
deposited in the U. S. mail or (ii) receipt by the party to whom
such notice is directed.
17. Miscellaneous. This Agreement shall inure to the benefit of
and be binding upon the Secured Party and the Pledgor and their
respective successors and assigns, and the term "Secured Party"
shall be deemed to include any other holder or holders of any of
the Secured Obligations. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby . This Agreement may be
executed in any number of counterparts and by the difference
parties hereto on separate counterparts, each of which shall be an
original, but all of which together shall constitute an
instrument.
18. Governing Law; Jurisdiction. This Agreement, including the
validity hereof and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by
the laws of the State of Ohio. Pledgor and Company, to the
extent that they may lawfully do so, hereby consents to service of
process, and to be sued, in the State of Ohio and consent to the
jurisdiction of the courts of the State of Ohio as well as to the
jurisdiction of all courts from which an appeal may be taken from
such courts, for the purpose of any suit, action or other
proceeding arising out of any of its obligations hereunder or with
respect to the transactions contemplated hereby, and expressly
waive any and all objections it may have as to venue in any such
courts. Pledgor and Company further agrees that a summons and
complaint commencing an action or proceeding in any of such courts
shall be properly served and shall confer personal jurisdiction if
served personally or by certified mail to it at its address
provided herein or as otherwise provided under the laws of the
State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date first above written.
PLEDGOR:
UNITED SHIELDS CORPORATION:
/s/ By: /s/Donald T. Zimmerman, Jr.
Witness Donald T. Zimmerman, Jr.
SECURED PARTY:
KIRCHNER FAMILY NOMINEE TRUST
/s/ By: /s/ Henry A. Kirchner
Witness Henry A. Kirchner, Trustee
/s/ By: /s/ Barbara J. Kirchner
Witness Barbara J. Kirchner, Trustee
SCHEDULE "A"
TO STOCK PLEDGE AGREEMENT
PLEDGED STOCK
Owner and Address No. of Shares Cert. No.
United Shields Corporation 400 3
311 Northland Boulevard
Cincinnati, Ohio 45246
Exhibit 99.9
G U A R A N T Y
IN CONSIDERATION, the KIRCHNER FAMILY NOMINEE TRUST, HENRY A.
KIRCHNER AND BARBARA J. KIRCHNER, Trustees, under Declaration of
Trust dated February 6, 1996 and recorded with the Berkshire
County (Middle District) Registry of Deeds in Book 910, Page 800,
with a mailing address of Post Office Box 2140, Lanesboro,
Massachusetts 01237 (the "Lender"), making extensions of credit or
extending other financial accommodations to PITTSFIELD MOLD AND
TOOL, INC., a Massachusetts corporation with a business address of
Stearnsville Industrial Park, 10 Betnr Industrial Drive,
Pittsfield, Massachusetts 01201(the "Borrower"), the undersigned
UNITED SHIELDS CORPORATION, a Colorado corporation with a business
address of 311 Northland Boulevard, Cincinnati, Ohio 45246, (the
"Guarantor") hereby, jointly and severally, unconditionally
guarantee the due payment, performance and fulfillment to the
Lender of all liabilities, obligations and undertakings of the
Borrower to the Lender, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising or acquired, sole, joint or several, and whether
consisting of obligations to pay money or to perform the
Borrower's obligations to the Lender (collectively, the "Secured
Obligations"), including, without limitation, under or in respect
of: (a) that certain promissory note of even date herewith of the
Borrower payable to the order of the Lender in the original
principal amount of One Million Seven Hundred Fifty Thousand and
00/100 Dollars ($1,750,000.00) and that certain promissory note of
even date herewith of the Borrower payable to the order of the
Lender in the original principal amount of Two Million Two Hundred
Thousand and 00/100 Dollars ($2,200,000.00) (collectively referred
to as the "Note"), (b) that certain Earn-Out Agreement (c) that
certain Stock Pledge Agreement (the "Security Agreement") (d) all
other Exhibits and related agreements defined in that certain
stock purchase agreement executed as of August 27, 1999 (the
"Stock Purchase Agreement") (the "Loan Documents"), and (e) all
substitutions, extensions, increases, amendments, renewals,
modifications of any of the foregoing, this Guaranty being a
guaranty of payment and not of collectability and being in no way
conditional or contingent.
This Guaranty shall operate as a continuing and absolute guaranty
and shall remain in full force and effect for so long as any of
the Secured Obligations remains outstanding.
The Guarantor hereby warrants and represents to, and covenants and
agrees with, the Lender that:
(a) this Guaranty has been duly executed and delivered by the
Guarantor and is a legal, valid and binding obligation of the
Guarantor, enforceable in accordance with its terms;
(b) the execution, delivery and performance of this Guaranty will
not result in any breach of, or constitute a default under, or
result in the acceleration of any obligation of the Guarantor
under, any contract, mortgage, lien, lease, agreement, instrument,
arbitration award, judgment, decree, bank loan or credit
agreement, trust indenture or other instrument to which the
Guarantor is a party or by which the Guarantor may be bound or
affected, and will not violate or contravene any law, order,
decree, rule or regulation to which the Guarantor is subject; nor
will this Guaranty impose or contemplate any obligations which are
or may be inconsistent with any other obligations imposed on the
Guarantor under any other instruments heretofore or hereafter
delivered by the Guarantor, or to which the Guarantor is now or
hereafter subject;
(c) the Guarantor is financially solvent and there are no
actions, suits or proceedings against the Guarantor or the assets
of the Guarantor, including without limitation, outstanding
federal or state tax liens, garnishments, or insolvency and
bankruptcy proceedings, pending or threatened, against or
affecting the Guarantor or its assets, or which may involve or
affect the validity or enforceability this Guaranty;
(d) no consent or approval or other authorization of, or
exemption by, or declaration or filing with, any person or entity
and no waiver of any right by any person or entity is required to
authorize or permit, or is otherwise required in connection with,
the execution, delivery and performance of this Guaranty;
(e) the financial statements of the Guarantor given to the Lender
in connection with the making of the loan were true and accurate
as of the date thereof and disclosed all liabilities, including
without limitation, all contingent liabilities, of the Guarantor,
and there has been no material adverse change since such date with
respect to the tangible net worth of the Guarantor or any other
matters contained or referred to therein and no additional
material liabilities, including, without limitation, contingent
liabilities of the Guarantor, have arisen or been incurred since
such date; and
(f) all of the representations and warranties made with respect
to the Guarantor are true and correct as of the date hereof.
Notice of the acceptance of this Guaranty and notice of
transactions entered into in reliance hereof are hereby waived.
The Guarantor consents to any renewal, extension or postponement
of the time of payment of any of the Secured Obligations or to any
other forbearance or indulgence with respect thereto and consents
to any substitution, exchange, modification or release of any
security therefor or the release of any other person primarily or
secondarily liable on any of the Secured Obligations, whether or
not notice thereof shall be given to the Guarantor, and agrees to
the provisions of any instrument, security or other writing
evidencing or securing any of the Secured Obligations, and the
enforcement hereof shall not be affected by the delay, neglect or
failure of the Lender to take any action with respect to any
security, right, obligation, endorsement, guaranty or other means
of collecting the Secured Obligations which it may at any time
hold, including perfection or enforcement thereof, or by any
change with respect to the Borrower in the form or manner of doing
business, whether by incorporation, consolidation, merger,
partnership formation, change in membership or otherwise, it being
hereby agreed that the Guarantor shall be and remain bound upon
this Guaranty irrespective of any action, delay or omission by the
Lender in dealing with the Borrower, any of the Secured
Obligations, any collateral therefor or any person at any time
liable with respect thereto.
The Guarantor further covenants and agrees with the Lender that
during such time as this Guaranty is in effect:
(a) The Guarantor shall furnish to the Lender its audit level
financial statements within one hundred twenty (120) days after
the close of each calendar year, prepared in accordance with
generally accepted accounting principles, consistently applied
(the "Financial Statements") and the Guarantor's federal tax
return for such year. The Financial Statements so furnished shall
show a financial condition not materially worse than that shown on
the Financial Statements of the Guarantor furnished to the Lender
as part of the documentation submitted in connection with the
Borrower's request for the loan evidenced by the Note; and
The Guarantor guarantees to the Lender the payment of any and all
reasonable expenses paid or incurred by the Lender (including
reasonable attorneys' fees) in connection with the collection of
all sums and the Secured Obligations guaranteed hereunder, whether
such collection be from the Borrower or from either of the
Guarantor, together with interest on all amounts recoverable under
this Guaranty at the Default Rate provided in the Note.
Upon any default by the Borrower, the liability of the Guarantor
hereunder shall be effective immediately and the Guarantor waives
all requirements of notice, demand, presentment or protest, and
any right which the Guarantor might otherwise have to require the
Lender first to proceed against the Borrower or against any other
guarantor or any other person or first to realize on any security
held by it before proceeding against the Guarantor for the
enforcement of this Guaranty. The Guarantor also irrevocably
waives, to the fullest extent permitted by law, all suretyship
defenses and other defenses in the nature thereof, and all
defenses which at any time may be available in respect of the
Guarantor's obligations hereunder by virtue of any homestead
exemption, statute of limitations, valuation, stay, moratorium law
or other similar law now or hereafter in effect.
The Guarantor, to the extent that the Guarantor may lawfully do
so, hereby submits to the jurisdiction of the courts of The State
of Ohio as well as to the jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of
any suit, action or other proceeding arising out of any of the
Guarantor's obligations under or with respect to this Guaranty.
The Guarantor also waives trial by jury in any action brought on
or with respect to this Guaranty. Further, the Guarantor hereby
waives the right to assert any statute of limitations as a bar to
the enforcement of this Guaranty, or to any action brought to
enforce the Note or any other Secured Obligation guaranteed by
this Guaranty.
If for any reason the Borrower has no legal existence or is under
no legal obligation to discharge any of the Secured Obligations,
or if any amounts included in the Secured Obligations shall have
become irrecoverable from the Borrower by operation of law or for
any other reason, or if any security or other guaranty shall be
found invalid, the Guarantor shall nonetheless be and remain bound
on this Guaranty.
Without limitation of any other right or remedy of the Lender
whether under any of the Loan Documents or applicable law, in the
case of any receivership, insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial case or
proceedings affecting the Borrower or the Guarantor or any co-
maker or endorser of any of the Secured Obligations, its creditors
or its properties, the Lender, to the extent permitted by law,
shall be entitled to file such proofs of claim and other documents
as may be necessary or desirable in order to have the Lender's
claims allowed in such case or proceedings for the entire
indebtedness secured or guaranteed hereby at the date of the
institution of such case or proceedings, and for any additional
amounts which may become due and payable by the Borrower after
such date.
If and to the extent the Guarantor makes any payment pursuant to
or in respect of this Guaranty, any claim which the Guarantor may
have against the Borrower, any other guarantor, or any other
person by reason thereof or any claim by reason of the giving of
this Guaranty shall be subject and subordinate, as to lien and
claim, to the prior payment in full of, and in all other respects
to, the amounts owing to the Lender under all of the Secured
Obligations, and the Guarantor shall not be entitled to enforce or
receive any payment on account thereof until all monies owing to
the Lender under, or in respect of the Secured Obligations have
been paid in full, and the Guarantor agrees that any sums the
Guarantor may receive on account of the claims so subordinated
shall be received by the Guarantor as trustee for the Lender, and
shall, immediately upon receipt, be remitted by the Guarantor to
the Lender for application against the Secured Obligations.
Nothing herein contained is intended or shall be construed to give
to the Guarantor any right of subrogation in or under any of the
Secured Obligations or any right to participate in any way
therein, or in the right, title or interest of the Lender or in
the property securing the obligations, notwithstanding any
payments made under this Guaranty; and all rights of subrogation
and participation under or with respect to the Secured Obligations
are hereby expressly waived and released by the Guarantor.
This Guaranty shall inure to the benefit of the Lender and its
successors and assigns and shall be binding upon the Guarantor and
the legal representatives, successors and assigns of the
Guarantor.
Any notice, request, demand, statement or consent to be made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, or sent by certified or registered mail,
return receipt requested, or sent by a nationally recognized
commercial overnight delivery service to the address for the
Guarantor and the Lender, respectively, as set forth in this
Guaranty, or at such other place as either the Lender or the
Guarantor may from time to time hereinafter designate to the other
in writing in accordance with the terms set forth above.
EXECUTED AS AN INSTRUMENT UNDER SEAL as of the 29th day of
September, 1999.
WITNESS: GUARANTOR:
UNITED SHIELDS CORPORATION:
/s/ By: /s/Donald T. Zimmerman, Jr.
Donald T. Zimmerman, Jr.
Exhibit 99.10
CROSS-DEFAULT AND CROSS-COLLATERAL AGREEMENT
THIS CROSS-DEFAULT AND CROSS-COLLATERAL AGREEMENT (this
"Agreement") is made and entered into effective as of this 29th
day of September, 1999, by and between UNITED SHIELDS CORPORATION,
a Colorado corporation ("Buyer") and PITTSFIELD MOLD & TOOL, INC.,
a Massachusetts corporation (the "Company"), JOSEPH A. KIRCHNER
("JAK"), HENRY A. KIRCHNER ("HAK"), BARBARA J. KIRCHNER ("BJK"),
THE HENRY A. KIRCHNER REVOCABLE TRUST, Henry A. Kirchner and
Barbara J. Kirchner, Trustees, dated February 6, 1996 ("HAK
Trust") and THE BARBARA J. KIRCHNER REVOCABLE TRUST, Barbara J.
Kirchner and Henry A. Kirchner, Trustees, dated February 6, 1996,
("BJK Trust") and the KIRCHNER FAMILY NOMINEE TRUST, Henry A.
Kirchner and Barbara J. Kirchner, Trustees, under Declaration of
Trust dated February 6, 1996 and recorded with the Berkshire
County (Middle District) Registry of Deeds in Book 910, Page 800
("Family Trust") (HAK, BJK, the HAK Trust, the BJK Trust, the
Family Trust, referred to collectively as "Sellers").
PRELIMINARY STATEMENT
Buyer, Company, JAK and Sellers, as applicable, have entered into
each of the following agreements in connection with the purchase
by Buyer of all outstanding stock of Company: (i) Stock Purchase
Agreement, dated August 27, 1999 ("Stock Purchase Agreement");
(ii) $1,175,000.00 Promissory Note, of even date herewith; (iii)
Earn-Out Agreement, of even date herewith; (iv) Stock Option
Agreement, of even date herewith; (v) Employment Agreement, of
even date herewith; (vi) Stock Pledge Agreement, of even date
herewith (vii) Commercial Real Estate Mortgage and Security
Agreement, of even date herewith; (viii) Security Agreement, of
even date herewith; and (ix) $2,200,000.00 Promissory Note, of
even date herewith (items (ii) through (ix) referred to herein as
the "Ancillary Agreements").
Buyer has also agreed to deliver to Sellers a $250,000 Letter of
Credit (the "LOC") to secure its obligations under the Stock
Purchase Agreement and the Ancillary Agreements, and has agreed to
adopt certain restrictions in the Articles of Incorporation and
Bylaws of the Company (the "Corporate Restrictions").
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the undersigned
hereby agree as follows:
1. Cross-Defaults. A default by Buyer under the Stock Purchase
Agreement or any Ancillary Agreement, or an "LOC Cancellation" or
a violation of the Corporate Restrictions ("USC Default") shall
constitute a default under the Stock Purchase Agreement and all
the Ancillary Agreements. For purposes of this Agreement a LOC
Cancellation shall mean the cancellation of that certain Sun Trust
Bank Chattanooga, N.A. Irrevocable Letter of Credit No.
CHA/F080449, a copy of which is attached hereto, or the
cancellation of a "Suitable Replacement" thereto. A Suitable
Replacement shall mean a $250,000.00 letter of credit in a form
substantially the same as the Sun Trust Bank LOC, the expiration
date of which shall not occur until such date as Buyer and/or
Company have fully satisfied their financial obligations to
Sellers.
2. Cross-Collateral. The security granted by Buyer pursuant to
the Stock Pledge Agreement, the Commercial Real Estate Mortgage
and Security Agreement, the Security Agreement and the LOC shall
secure all of Buyer's obligations under the Stock Purchase
Agreement and each of the Ancillary Agreements and under the
Corporate Restrictions.
3. Remedies. In the event of any USC Default, Sellers shall be
entitled to the following remedies:
a. Such money damages from Buyer which may be available under
applicable law under either the Stock Purchase Agreement or any
Ancillary Agreement.
b. A release of Sellers' obligations under the Non-Competition
Agreements delivered by them pursuant to the Stock Purchase
Agreement.
c. enforcement and collection under the LOC in accordance with
its terms.
d. JAK shall be entitled to a release of his obligations under
his employment agreement with the Company.
e. All reasonable costs of collection and reasonable attorneys'
fees paid or incurred by Sellers in enforcing their rights
hereunder.
Neither the exercise nor the failure to exercise any of the
remedies described above will constitute an election of remedies
or limit Sellers or JAK in any manner in the enforcement of any
other remedies that may be available to them.
4. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective
successors and assigns.
5. Notices. All notices provided for herein shall be deemed to
have been duly given if and when deposited in the United States
mail with proper first class postage affixed, properly addressed
to the party for whom intended and at the party's address as
listed in the Stock Purchase Agreement referenced above or when
personally delivered to such party.
6. Entire Agreement. It is expressly agreed by and between the
parties hereto as a material consideration for the execution of
this Agreement that there are and were no verbal or written
representations, understanding, stipulations, agreements or
promises pertaining to the subject matter of this Agreement not
incorporated in writing herein. This Agreement nor any of the
provisions herein contained can be modified, terminated,
superseded, waived or extended except by an appropriate written
instrument executed by the parties hereto.
7. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Ohio.
8. Severability. Each Section of this Agreement shall be deemed
severable and if for any reason any Section or Subsection hereof
is invalid or contrary to an existing or future law, such
invalidity shall not affect the applicability or validity of any
such other provision of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
BUYER: SELLERS:
PITTSFIELD MOLD & TOOL, INC.
By:/s/William A. Frey III /s/ Henry A. Kirchner
William A. Frey III Henry A. Kirchner
Its President
UNITED SHIELDS CORPORATION /s/ Barbara J. Kirchner
Barbara J. Kirchner
By:/s/Donald T. Zimmerman, Jr. KIRCHNER FAMILY NOMINEE TRUST
Donald T. Zimmerman, Jr.
Its President
By: /s/ Henry A. Kirchner
JAK: Henry A. Kirchner
Its: Trustee
/s/ Joseph A. Kirchner By: /s/ Barbara J. Kirchner
Joseph A. Kirchner Barbara J. Kirchner
Its: Trustee
THE HENRY A. KIRCHNER
REVOCABLE TRUST
By: Henry A. Kirchner
Henry A. Kirchner
Its: Trustee
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner
Its: Trustee
THE HENRY A. KIRCHNER
REVOCABLE TRUST
By: /s/ Barbara J. Kirchner
Barbara J. Kirchner
Its: Trustee
By: /s/ Henry A. Kirchner
Henry A. Kirchner
Its: Trustee
Exhibit 99.11
COMMERCIAL REAL ESTATE MORTGAGE
AND SECURITY AGREEMENT
THIS COMMERCIAL REAL ESTATE MORTGAGE AND SECURITY AGREEMENT (as
amended from time to time, this "Mortgage"), is made this 29th day
of September, 1999, by and from PITTSFIELD MOLD & TOOL, INC., a
Massachusetts corporation, which has its principal place of
business at Stearnsville Industrial Park 10 BETNR Industrial
Drive, Pittsfield, Massachusetts 01201 ("Mortgagor"), to the
KIRCHNER FAMILY NOMINEE TRUST, under Declaration of Trust, dated
February 6, 1996 and recorded with the Berkshire County (District)
Registry of Deeds in Book 910, Page 800, having its principal
office at Victoria Lane, Lanesboro, Massachusetts 01237 (the
"Bank");
1. Mortgage, Obligations and Future Advances
1.1 Mortgage. For valuable consideration paid, the receipt and
sufficiency of which is hereby acknowledged, Mortgagor hereby
grants to the Bank, with MORTGAGE COVENANTS, the "Property"
described in Section 1.4 below, to secure the prompt payment and
performance of any and all obligations of Mortgagor to the Bank,
whether direct or indirect, absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising
or acquired, and whether arising out of this present transaction,
or a transaction separate and unrelated hereto (the "Obligations"),
including without limitation:
(a) all obligations under a Promissory Note of even date herewith
from Mortgagor payable to the order of the Bank in the original
principal amount of $1,750,000.00, as the same may be amended or
extended and under a Promissory Note of even date herewith from
Mortgagor payable to the order of the Bank in the original
principal amount of $2,200,000.00, as the same may be amended or
extended (collectively the "Note");
1.2 Security Interest in Personal Property. As continuing
security for the Obligations, Mortgagor hereby pledges assigns and
grants to the Bank a security interest in any of the Property (as
defined in Section 1.4 below) constituting personal property or
fixtures. This Mortgage shall be deemed to be a security agreement
and financing statement pursuant to the terms of the Uniform
Commercial Code of Massachusetts.
1.3 Collateral Assignment of Leases and Rents. Mortgagor hereby
assigns to the Bank as collateral security for the Obligations all
of Mortgagor's rights and benefits under any and all Leases (as
defined in Section 1.4 below) and any and all rents and other
amounts now or hereafter owing with respect to the Leases or the
use or occupancy of the Properties. This collateral assignment
shall be absolute and effective immediately, but Mortgage shall
continue to collect rents owing under the Leases until an Event of
Default (as defined in Section 6.1 below) occurs and the Bank
exercises its rights and remedies to collect such rents as set
forth in Section 6.2(c) hereof.
1.4 Property. The term "Property", as used in this Mortgage,
shall mean that certain parcel of land and the structures and
improvements now or hereafter thereon known as Stearnsville
Industrial Park, 10 BETNR Industrial Drive, Pittsfield,
Massachusetts 01201 as more particularly described in Exhibit A
attached hereto, together with (i) all rights now or hereafter
existing, belonging or pertaining thereto (ii) all goods,
furniture, machinery, equipment, fixtures, accounts, contract
rights, documents, instruments, proceeds of insurance, general
intangibles and other items of personal property of Mortgagor or in
which it has an interest, now owned or hereafter acquired, that are
located on or used in connection with the Property and any
substitutions, replacements, accessions and proceeds of any of the
foregoing; (iii) all judgments, awards of damages and settlements
hereafter made as a result or in lieu of any Taking (as defined in
Section 3 hereof); (iv) all of the rights and benefits of Mortgagor
under any present or future leases or agreements relating to the
Property, or the use or occupancy thereof together with any
extensions and renewals thereof (the "Leases"); (v) all contracts,
permits and licenses respecting the use, operation or maintenance
of the Property.
1.5 Cross-Collateral. It is the express intention of Mortgagor
that this Mortgage secure payment and performance of all of the
Obligations. Notice of the continuing grant of this Mortgage shall
not be required to be stated on the face of any document evidencing
any of the Obligations, nor shall such documents be required to
otherwise specify that they are secured hereby.
2. Representations, Warranties, Covenants
2.1 Representations and Warranties. Mortgagor represents and
warrants that to its actual knowledge without any independent
investigation,
(a) (i) Mortgagor is a Massachusetts corporation, duly organized
and validly existing; (ii) Mortgagor has all requisite power to own
the Property and conduct its business as now conducted and as
presently contemplated, to execute and deliver this Mortgage and
convey the Property as contemplated hereby and to grant the
security interests and assignment of Leases contained herein; (iii)
the execution, delivery and performance of this Mortgage have been
authorized by all necessary proceedings of the Mortgagor and do not
contravene any provision of Mortgagor's charter or other
organizational documents or any law, rule or regulation applicable
to Mortgagor or any agreement, instrument, order or undertaking
binding on Mortgagor or by which the Property is bound or affected;
(iv) this Mortgage has been duly executed and delivered by
Mortgagor and is the legal, valid and binding obligation of
Mortgagor enforceable in accordance with its terms except as
limited by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights
generally;
(b) Mortgagor is the sole legal and equitable owner of the
Property, holding good and marketable fee simple title to the
Property, subject to no liens, encumbrances, leases, security
interests or rights of others other than as set forth in detail in
Exhibit B hereto (the "Permitted Encumbrances");
(c) As of the date hereof, there are no Hazardous Substances (as
defined in Section 2.3(b) hereof) in, on or under the Property;
and
(d) In making such representations and warranties, Mortgagor may
rely on sellers' representations and warranties in that certain
Stock Purchase Agreement between Bank and others (as Sellers) and
Mortgagor.
2.2 Recording; Further Assurances. Mortgagor covenants that it
shall at all times comply with all statutes and regulations, as may
be required by law in order to establish, preserve and protect the
interest of the Bank in the Property and the rights of the Bank
under this Mortgage. Upon the written request of the Bank,
Mortgagor will promptly execute and deliver such further instru-
ments and documents and take such further actions as the Bank may
reasonably deem desirable to obtain the full benefits of this
Mortgage and of the rights and powers herein granted, including,
without limitation, filing financing statements under the Uniform
Commercial Code and obtaining any consents or estoppel certificates
of lessees under the Leases that the Bank deems appropriate. Mort-
gagor authorizes the Bank to file a copy of this Agreement in lieu
of a financing statement.
3. Takings
In case of any condemnation for public use of, or any damage by
reason of the action of any public or governmental entity or
authority to, all or any part of the Property (a "Taking"), or the
commencement of any proceedings or negotiations that might result
in a Taking, the Bank may, at its option, appear in any proceeding
for a Taking or any negotiations relating to a Taking, and
Mortgagor shall give to the Bank copies of all notices, pleadings,
determinations and other papers relating thereto.
6. Defaults and Remedies
6.1 Event of Defaults. Each of the following events shall consti-
tute an "Event of Default" under this Mortgage:
(a) Failure by Mortgagor to make any payment of principal, interest
or other sums within five (5) days of when due under the Note or
this Mortgage or any other Obligation giving effect to any cure
period therein;
(b) Failure by Mortgagor to perform, observe or comply with any of
the covenants, agreements, terms or conditions set forth, or the
occurrence of a default under, this Mortgage, the Note, or any
other agreement, instrument or other document evidencing, securing
or otherwise delivered in connection with any Obligation, not cured
within twenty (20) days from written notice of the occurrence
thereof or any cure period contained therein, if any;
(c) "USC Default" as that term is defined per a certain Cross-
Default and Cross-Collateral Agreement of even date executed by
Mortgagor and Bank;
(d) "Change of Control". A Change of Control of Mortgagor shall be
deemed to have occurred if: (i) any "person" (as such term is used
in Section 13 (d) and 14 (d) (2) of the Securities Exchange Act of
1937, as amended) other than United Shields Corporation ("USC")
becomes the beneficial owner, directly or indirectly, of securities
of Mortgagor representing more than fifty (50%) percent of the
aggregate voting power of all cases of Mortgagor then outstanding
voting securities; or (ii) the shareholder(s) of Mortgagor
approve(s) (A) a plan of merger, consolidation or share exchange
between Mortgagor and any person or entity other than a merger,
consolidation or other business combination with USC or with
another wholly-owned subsidiary of USC, or (B) a proposal with
respect to the sale, lease, exchange or other disposal of all, or
substantially all, of Mortgagor's property.
6.2 Remedies. On the occurrence of any Event of Default the Bank
may, at any time thereafter, at its option and, to the extent
permitted by applicable law, without notice, exercise any or all of
the following remedies:
(a) Declare the Obligations due and payable, and the Obligations
shall thereupon become immediately due and payable, without
presentment, protest, demand or notice of any kind, all of which
are hereby expressly waived by Mortgagor;
(b) Take possession of the Property (including all records and
documents pertaining thereto) and exclude Mortgagor therefrom, and
operate the Property as a mortgagee in possession with all the
powers as could be exercised by a receiver or as otherwise provided
herein or by applicable law;
(c) Receive and collect all rents, income and profits from the
Property, including as may arise under the Leases, and Mortgagor
appoints the Bank as its true and lawful attorney with the power
for the Bank in its own name and capacity to demand and collect
such rents, income and profits and take any action that Mortgagor
is authorized to take under the Leases. Lessees under the Leases
are hereby authorized and directed, following notice from the Bank,
to pay all amounts due Mortgagor under the Leases to the Bank,
whereupon such lessees shall be relieved of any and all duty and
obligation to Mortgagor with respect to such payments so made;
(d) Sell the Property or any part thereof or interest therein
pursuant to exercise of its STATUTORY POWER OF SALE or otherwise at
public auction on terms and conditions as the Bank may determine or
otherwise foreclose this Mortgage in any manner permitted by law,
and upon such sale, Mortgagor shall execute and deliver such
instruments as the Bank may request in order to convey and transfer
all of Mortgagor's interest in the Property, and the same shall
operate to divest all rights, title and interest of Mortgagor in
and to the Property. In the event this Mortgage shall include more
than one parcel of property or subdivision (each hereinafter called
a "portion"), the Bank shall, in its sole and exclusive discretion,
be empowered to foreclose upon any such portion without impairing
its right to foreclose subsequently upon any other portion or the
entirety of the Property from time to time thereafter;
(e) Cause one or more environmental assessments to be taken,
arrange for the clean-up of any Hazardous Substances, or otherwise
cure Mortgagor's failure to comply with any statute, regulation or
ordinance relating to the presence or clean-up of Hazardous
Substances; provided that the exercise of any of such remedies
shall not be deemed to have relieved Mortgagor from any
responsibility therefor or given the Bank "control" over the
Property or cause the Bank to be considered to be a mortgagee in
possession, "owner" or "operator" of the Property for purposes of
any applicable law, rule or regulation pertaining to Hazardous
Substances;
(f) Take such other actions or proceedings as the Bank deems
necessary or advisable to protect its interest in the Property and
ensure payment and performance of the Obligations including,
without limitation, appointment of a receiver (and Mortgagor hereby
waives any right to object to such appointment) and exercise of any
of the Bank's remedies provided in the Note or in any document
evidencing, securing or relating to any of the Obligations or
available to a secured party under the Uniform Commercial Code of
Massachusetts or under other applicable law;
(g) Obtain a release of the obligations of Henry A. Kirchner and
Barbara J. Kirchner under the Non-Competition Agreements;
(h) Prosecute the $250,000.00 letter of credit referred to at
Section 8.8 (i) of the Stock Purchase Agreement; and
(i) Joseph A. Kirchner shall be entitled to a release of his
obligations under the Employment Agreement.
This Mortgage is upon the STATUTORY CONDITION, for any breach of
which the Bank shall have the STATUTORY POWER OF SALE and any other
remedies provided by applicable law including, without limitation,
the right to pursue a judicial sale of the Property or any portion
thereof by deed, assignment or otherwise. Mortgagor agrees and
acknowledges that the acceptance by the Bank of any payments from
Mortgagor after the occurrence of any Event of Default, the
exercise by the Bank of any remedy set forth herein or the
commencement of foreclosure proceedings against the Property shall
not waive the Bank's right to foreclose or operate as a bar or
estoppel to the exercise of any other rights or remedies of the
Bank. Mortgagor agrees and acknowledges that the Bank, by making
payments or incurring costs described herein, shall be subrogated
to any right of Mortgagor to seek reimbursement from any third
parties, including without limitation, any predecessor in interest
to Mortgagor's title or other party who may be responsible under
any law, regulation or ordinance relating to the presence or clean-
up of Hazardous Substances.
6.3 Cumulative Rights and Remedies. All of the foregoing rights,
remedies and options are cumulative and in addition to any rights
the Bank might otherwise have, whether at law or by agreement and
may be exercised separately or concurrently. Mortgagor further
agrees that the Bank may exercise any or all of its rights or
remedies set forth herein without having to pay Mortgagor any sums
for use or occupancy of the Property.
7. Miscellaneous
7.1 Payments by the Bank. To the extent permitted by applicable
law, Mortgagor shall pay to the Bank, on demand, all reasonable
expenses (including attorneys' fees and expenses and reasonable
consulting, accounting, appraisal, brokerage and similar
professional fees and charges) incurred by the Bank in connection
with the Bank's exercise, preservation or enforcement of any of its
rights, remedies and options set forth in this Mortgage (including
without limitation any amounts expended pursuant to Section 5.1 and
6.2(e) hereof) and in connection with any litigation, proceeding or
dispute whether arising hereunder or otherwise relating to the
Obligations, together with interest thereon to the extent permitted
by applicable law until paid in full by Mortgagor at a rate per
annum equal to the greater of 18% or four percent (4%) above the
prime rate of interest per annum as published from time to time by
The Wall Street Journal, provided such interest rate not exceed the
maximum amount permitted by law. Any amounts owed by Mortgagor
hereunder shall be, until paid, part of the Obligations, and the
Bank shall be entitled, to the extent permitted by law, to receive
and retain such amounts in any action for a deficiency against or
redemption by Mortgagor, or any accounting for the proceeds of a
foreclosure sale or of insurance proceeds. All references to
"attorneys" in this Section 7 and elsewhere in this Mortgage shall
include without limitation any attorney or law firm engaged by the
Bank and the Bank's in-house counsel, and all references to any
"fees and expenses" in this Mortgage shall include without
limitation any fees of such attorney or law firm and any allocated
charges and allocation costs of the Bank's in-house counsel. The
obligations of Mortgagor hereunder shall survive any payment or
satisfaction of any of the other Obligations.
7.2 No Waiver or Release. No failure of the Bank to exercise or
delay by the Bank in exercising, any right or remedy or option
provided for herein or otherwise shall be deemed to be a waiver of
that right, remedy or option or of any other right or option. No
sale of all or any part of the Property, no forbearance on the part
of the Bank, no release or partial release of any of the Property,
and no extension of the time for the payment of the whole or any
part of any of the Obligations or any other indulgence given by the
Bank to Mortgagor or any other person or entity, shall operate to
release or in any manner affect the lien of this Mortgage or the
original liability of the Mortgagor except to the extent
specifically provided in any written instrument signed by the Bank
accomplishing any of the foregoing. Notice of any such extensions
or indulgences is waived by Mortgagor. This Mortgage may not be
waived, changed or discharged orally, but only by an agreement in
writing signed by the Bank, and any oral waiver, change or
discharge of any provision of this Mortgage shall be without
authority and of no force and effect. A waiver on any one occasion
shall be limited to its express terms and conditions and the
circumstances giving rise to such waiver and shall not be construed
to be a bar to or waiver of any right on any future occasion.
7.3 Notices. Any demand upon or notice to Mortgagor hereunder
shall be effective when delivered by hand, properly deposited in
the mails postage prepaid, or sent by telex, answerback received,
or electronic facsimile transmission, receipt acknowledged, or
delivered to a telegraph company or overnight courier, in each case
addressed to Mortgagor to United Shields Corporation, 311 Northland
Boulevard, Cincinnati, Ohio 45246, or as it appears on the books
and records of the Bank. Demands or notices addressed to any other
address at which the Bank customarily communicates with Mortgagor
also shall be effective. Any notice by Mortgagor to the Bank shall
be given as aforesaid, addressed to the Bank c/o Mr. and Mrs. Henry
A. Kirchner, Victoria Lane, Lanesboro, MA 02137 or such other
address the Bank may advise Mortgagor in writing.
7.4 Mortgagor's Waivers. Mortgagor waives presentment, demand,
notice, protest, and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement
of this Mortgage (except for such demands and notices as are
specifically required to be provided to Mortgagor under this
Mortgage) and assents to any extension or postponement of the time
of payment or performance or any other indulgence with respect to
any of the Obligations, to any substitution, exchange or release of
any collateral for any of the Obligations and/or to the addition or
release of any other party or person primarily or secondarily
liable hereunder or in connection with any of the Obligations.
7.5 Entire Agreement; Severability; Captions. The terms and
conditions of this Mortgage constitute the entire agreement, and
supersede all prior agreements and understandings, both written and
oral, with respect to the subject matter hereof. The invalidity of
any provisions of this Mortgage shall in no way affect the validity
of any other provision. Each party signing this Mortgage submits to
personal jurisdiction in The Commonwealth of Massachusetts and
waives any and all rights to object to such jurisdiction. Each such
party agrees that service of process may be made and personal
jurisdiction obtained by serving Mortgagor at any location provided
in Section 7.6 hereof.
7.6 JURY WAIVER. THE MORTGAGEE (BY ITS ACCEPTANCE HEREOF) AND THE
MORTGAGOR AGREE THAT NEITHER OF THEM, NOR ANY ASSIGNEE OR SUCCESSOR
SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF,
THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B)
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF
THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE MORTGAGEE AND THE
MORTGAGOR, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
EXECUTED under the seal as of the date first above written.
WITNESSES: BORROWER:
PITTSFIELD MOLD & TOOL, INC.
/s/ By: /s/ William A. Frey, III
William A. Frey, III
ITS: President
COMMONWEALTH OF MASSACHUSETTS
Berkshire, ss. September 29, 1999
Then personally appeared the above-named William A. Frey, III,
President as aforesaid, and acknowledged the foregoing to be his
free act and deed and the free act and deed of the corporation,
before me,
__________________
Notary Public:
My Commission Expires:
EXHIBIT A
to
Commercial Real Estate Mortgage and Security Agreement
The land in Pittsfield, Berkshire County, Massachusetts, bounded
and described as follows:
Being Lot E6-1-606 on a plan of land entitled "Building Lot Plan of
Stearnsville Business Park surveyed for BETNR Industrial
Development Corporation, Pittsfield, Massachusetts" prepared by SK
Design Group, Inc. dated March 1, 1996 and recorded with Berkshire
Middle District Registry of Deeds in Plat D, Plan No. 362 and
containing, according to said Plan, 6.97 acres of land.
SUBJECT TO the terms and conditions of a Declaration of Covenants
and Restrictions made by BETNR Industrial Development Corporation
by instrument dated March 27, 1996 and recorded with Berkshire
Middle District Registry of Deeds in Book 1509, Page 850 (the
"Declaration").
TOGETHER WITH, in common with the Grantor, its successors and
assigns, the easements reserved by Grantor in the First 100-Foot
Buffer-Zone (as defined in the Declaration) and the right to
enforce such Easements.
TOGETHER WITH the benefit of three water line easements granted to
BETNR by:
1. Daryoosh Pakpour, David L. Pallon and Scott R. Lenihan, as they
are Trustees of Cobblestone Cove Nominee Trust, dated May 29, 1996
and recorded with said Registry in Book 1517, Page 210.
2. Scott R. Lenihan, as he is Trustee of Cole Development Nominee
Trust, dated May 29, 1996 and recorded with said Registry in Book
1517, Page 214.
3. Thomas J. Hamel, as he is Trustee of Barker Road Nominee Trust,
dated October 15, 1996 and recorded with said Registry in Book
1534, Page 128.
SUBJECT TO the terms of and TOGETHER WITH the benefit of a 100 foot
building construction buffer as shown on the plan hereinbefore
mentioned.
SUBJECT TO a fifteen foot utility easement for the benefit of Lot
D6-7-117 as shown on the plan herein above mentioned to be conveyed
as appurtenant to Lot D6-7-117.
Being the same premises conveyed to the Mortgagors herein by deed
of the Kirchner Family Nominee Trust of even date and recorded with
the Berkshire County (Middle District) Registry of Deeds
simultaneously herewith.
EXHIBIT B
to
Commercial Real Estate Mortgage and Security Agreement
Permitted Encumbrances
1. Subject to a mortgage in the principal amount of $2,500,000.00
given to Berkshire Bank dated September 29, 1999 and recorded with
the Berkshire County (Middle District) Registry of Deeds
simultaneously herewith.
2. Subject to a second mortgage in the principal amount of
$1,900,000.00 given to Berkshire Bank dated September 29, 1999 and
recorded with the Berkshire County (Middle District) Registry of
Deeds simultaneously herewith.
3. Subject to the terms and conditions of a Declaration of
Covenants and Restrictions made by BETNR Industrial Development
Corporation by instrument, dated March 27, 1996, and recorded with
the Berkshire County (Middle District) Registry of Deeds in Book
1509, Page 850 (the "Declaration").
4. Subject to the terms of a 100 foot Building Construction Buffer
as shown on the plan of land entitled "Building Lot Plan of
Stearnsville Business Park surveyed for BETNR Industrial
Development Corporation, Pittsfield, Massachusetts", prepared by SK
Design Group, Inc., dated March 1, 1996, and recorded with the
Berkshire County (Middle District) Registry of Deeds in Plat D,
Plan Number 362.
5. Subject to a fifteen foot utility easement for the benefit of
Lot D6-7-117 as shown on the plan of land entitled "Building Lot
Plan of Stearnsville Business Park surveyed for BETNR Industrial
Development Corporation, Pittsfield, Massachusetts", prepared by SK
Design Group, Inc., dated March 1, 1996, and recorded with
Berkshire County (Middle District) in Plat D, Plan Number 362.
Exhibit 99.12
SECURITY AGREEMENT
THIS AGREEMENT, entered into as of the 29th day of September,
1999, by and between PITTSFIELD MOLD & TOOL, INC., a Massachusetts
corporation, with its principal place of business at Stearnsville
Industrial Park, 10 BETNR Industrial Drive, Pittsfield,
Massachusetts 01201 ( the "Debtor"), and the HENRY A. KIRCHNER
AND BARBARA J. KIRCHNER, Trustees of the KIRCHNER FAMILY NOMINEE
TRUST, under Declaration of Trust dated February 6, 1996 and
recorded with the Berkshire County (Middle District) Registry of
Deeds in Book 910, Page 800, with its principal place of business
at Victoria Lane, Lanesboro, Massachusetts 01237 (the "Secured
Party");
W I T N E S S E T H:
WHEREAS, the Secured Party has agreed to lend $3,950,000.00 to the
Debtor (the "Loan") to be evidenced by a $1,750,000.00 Promissory
Note and a $2,200,000.00 Promissory Note (collectively the "Note")
to the Debtor and secured by a Mortgage and Security Agreement, a
Stock Pledge Agreement, a $250,000.00 Letter of Credit and a
Security Agreement (the Note, the Mortgage, the Stock Pledge, the
Letter of Credit, the Security Agreement, and other documents
executed in connection therewith are hereinafter referred to as
the "Loan Documents"); and
WHEREAS, as a material inducement to the Secured Party to
consummate the transactions evidenced by the Loan Documents, the
Debtor has agreed to enter into this Security Agreement, and
acknowledges that the Secured Party intends to rely upon the
representation, warranties, covenants and indemnifications
contained herein;
NOW THEREFORE, in consideration of the willingness of the Secured
Party to enter into the Loan Documents and to agree, subject to
the terms and conditions set forth herein, to make the Loan to the
Debtor pursuant thereto, and in consideration of the mutual
covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Secured Party and the Debtor hereby agree as
follows:
ARTICLE 1. GRANT OF SECURITY INTEREST
1.1 To secure the prompt, punctual and faithful performance of
all and each of the present and future Obligations, the Debtor
hereby grants to the Secured Party a continuing security interest
in and to, and assigns to the Secured Party, all of the Debtor=s
right, title and interest in the following properties, assets and
rights, all wherever located and whether now existing or hereafter
acquired or arising (all of which, together with any other
property in which the Secured Party may in the future be granted a
security interest pursuant hereto, is referred to hereinafter as
the "Collateral"): (a) all Accounts and all Receivables; (b) all
Inventory; (c) all General Intangibles; (d) all Equipment; (e) all
Fixtures; (f) all Goods; (g) all Tangible Personal Property; (h)
all Chattel Paper; (i) all books, records, ledgers, printouts,
papers, data, file materials and information relating to the
Property, the Collateral, any account debtors in respect thereof
and/or to the operation of the Debtor=s business, and all rights
of access to such books, records, ledgers, pinouts, papers, file
materials and information, and all property in which such books,
records, ledgers, pinouts, data, file materials and information
are stored, recorded, and maintained; (j) all Instruments,
Documents of Title, Documents, policies and certificates of
insurance, Securities, deposits, deposit accounts, money, cash or
other property; (k) all federal, state, and local tax refunds
and/or abatements to which the Debtor is, or becomes entitled, no
matter how or when arising, including, but not limited to any loss
carryback tax refunds; (l)all trade secrets, computer programs,
customer lists, manuals, developmental ideas and concepts, and all
papers, drawings, blueprints, sketches and documents relating to
all of the foregoing and/or relating to the operation of the
Debtor's business and/or the Collateral; and (m) all insurance
proceeds, refunds and premium rebates, whether any of such
proceeds, refunds and premium rebates arise out of any of the
foregoing or otherwise; together with (i) all security pledged,
assigned, hypothecated or granted to or held by the Debtor to
secure any of the foregoing, (ii) General Intangibles arising out
of the Debtor's rights in any Goods, the sale of which gave rise
thereto, (iii) any property received in payment, settlement or
compromise of any Account or Receivable, (iv) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing,
(v) all rights, remedies and privileges pertaining to any of the
foregoing, (vi) all powers of attorney for the execution of any
evidence of indebtedness or security or other writing in
connection therewith, (vii) all evidence of the filing of
financing statements and other statements and the registration of
other instruments in connection therewith and amendments thereto
and (viii) all of the Debtor's rights to use, in perpetuity, in
connection with the operation of the Property, the name
"PITTSFIELD MOLD & TOOL, INC." and any other names similar thereto
and the good will of the Debtor with respect thereto.
1.2 The Debtor shall execute, upon request of the Secured Party,
all such instruments as may be required by the Secured Party with
respect to the perfection of the security interests granted
herein. A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument
executed pursuant to this Section 1.2 shall be sufficient for
filing to perfect the security interests granted herein, to the
extent permitted under applicable law.
ARTICLE 2. CERTAIN DEFINITIONS
All capitalized terms not defined herein shall have the same
meanings ascribed to such terms under the Loan Documents.
As herein used, the following terms have the following meanings:
2.1 The term "Accounts" shall have the same meaning ascribed to
such term under the UCC.
2.2 The term "Chattel Paper" shall have the same meaning ascribed
to such term under the UCC.
2.3 The term "Collateral" shall have the same meaning ascribed to
such term in Section 1.1.
2.4 The term "Debtor" shall have the same meaning ascribed to such
term in the preamble of this Agreement.
2.5 The term "Documents" shall have the same meaning ascribed to
such term under the UCC.
2.6 The term "Documents of Title" shall have the same meaning
ascribed to such term under the UCC.
2.7 The term "Equipment" shall have the same meaning ascribed to
such term under the UCC.
2.8 The term Event of Default shall have the same meaning ascribed
to such term in Article 5 of this Agreement.
2.9 The term "Fixtures" shall have the same meaning ascribed to
such term under the UCC.
2.10 The term "General Intangibles" shall have the same meaning
ascribed to such term under the UCC.
2.11 The term "Goods" shall have the same meaning ascribed to such
term under the UCC.
2.12 The term "Instruments" shall have the same meaning ascribed
to such term under the UCC.
2.13 The term "Inventory" shall have the same meaning ascribed to
such term under the UCC.
2.14 The term "Liable Person" shall have the same meaning ascribed
to such term in Section 7.3.
2.15 The term "Proceeds" shall have the meaning ascribed to such
term under the UCC.
2.16 The term "Receivables" shall mean collectively, all
(i)Instruments, Documents, Accounts, Proceeds, General Intangibles
and Chattel Paper and (ii) rights to payment for goods sold or
leased or services rendered by the Debtor or any other party,
whether now in existence or arising from time to time hereafter
and whether or not yet earned by performance, including, without
limitation, obligations evidenced by an account, note, contract,
security agreement, chattel paper, or other evidence of
indebtedness.
2.17 The term "Receivables Collateral" refers to the Debtor's
Accounts, Receivables, Chattel Paper, Instruments, Documents of
Title, Documents, Securities, Letters of Credit, the Secured
Party's Acceptance, and any other rights to payment now held or in
which the Debtor has an interest, or hereafter acquired, or in
which the Debtor obtains an interest.
2.18 The term "Secured Party" shall have the meaning ascribed to
such term in the preamble of this Agreement.
2.19 The term "Secured Party's Rights and Remedies" shall have the
meaning ascribed to such term in Section 6.4.
2.20 The term "Securities" shall have the same meaning ascribed to
such term under the UCC.
2.21 The term "UCC" shall mean the Uniform Commercial Code as
adopted in the Commonwealth of Massachusetts.
ARTICLE 3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 The Collateral is and shall be primarily kept and maintained
at the PITTSFIELD MOLD & TOOL, INC., Stearnsville Industrial Park,
10 BETNR Industrial Drive, Pittsfield, Massachusetts 01201 (the
"Premises").
3.2 The Debtor shall do, make, execute and deliver all such
additional and further acts, things, deeds, assurances and
instruments as the Secured Party may reasonably request, to vest
more completely in and assure to the Secured Party its rights
hereunder and in or to the Collateral including, without
limitation, compliance with the Federal Assignment of Claims Act.
3.3 The agreements, representations, covenants and warranties
contained herein are in addition to any others previously,
presently or hereafter made by the Debtor to or with the Secured
Party in any other instrument.
ARTICLE 4. COLLECTION OF ACCOUNTS RECEIVABLE, CONTRACT
RIGHTS AND OTHER RECEIVABLES COLLATERAL
4.1 The Debtor hereby irrevocably constitutes and appoints the
Secured Party as the Debtor's true and lawful attorney, with full
power of substitution, such powers to be effective following the
occurrence of an Event of Default, to convert the Receivables
Collateral into cash at the sole risk, cost, and expense of the
Debtor, but for the sole benefit of the Secured Party. Subject to
applicable law, the rights and powers granted the Secured Party by
the within appointment include but are not limited to the right
and power to: prosecute, defend, compromise, settle, or release
any action relating to the Collateral; receive, open, and dispose
of all mail addressed to the Debtor and to take therefrom any
remittances on or proceeds of any Collateral; sign change of
address forms to change the address to which the Debtor's mail is
to be sent as the Secured Party shall designate; endorse the name
of the Debtor in favor of the Secured Party upon any and all
checks or other items constituting remittances or proceeds of
Collateral; sign and endorse the name of the Debtor on, and to
receive as secured party, any of the Collateral, any invoices,
schedules of Collateral, freight or express receipts, or bills of
lading, storage receipts, warehouse receipts, or other documents
of title of a same or different nature relating to the Collateral;
sign the name of the Debtor on any notice to the obligors on the
Receivables Collateral; take all such action as may be necessary
to obtain the payment on any Letter of Credit of which the Debtor
is a beneficiary; and sign and file or record on behalf of the
Debtor any financing or other statement in order to perfect or
protect the Secured Party's security interest. The Secured Party
shall not be obligated to perform any of such acts or to exercise
any of such powers, but if the Secured Party elects so to perform
or exercise, the Secured Party shall not be accountable for more
than it actually receives as a result of such exercise of power,
and shall not be responsible to Debtor except for the Secured
Party's actual willful misconduct. All powers conferred upon the
Secured Party by this Agreement, being coupled with an interest,
shall be irrevocable until terminated by a written instrument
executed by a duly authorized officer of the Secured Party and
shall not be affected by any disability or incapacity which the
Debtor may suffer and shall survive the same. The power of
attorney conferred on the Secured Party pursuant to the provisions
of this Article 4 is provided solely to protect the interests of
the Secured Party and shall not impose any duty on the Secured
Party to exercise any such power, and neither the Secured Party
nor such attorney-in-fact shall be liable for any act, omission,
error in judgment or mistake of law, except as the same may result
from its gross negligence or willful misconduct.
ARTICLE 5. EVENTS OF DEFAULT
Upon the occurrence of a default beyond the applicable notice
and/or grace periods, if any, under this Agreement or any of the
other Loan Documents including without limitation, a "USC Default"
as that term is defined per a certain Cross-Default and Cross-
Collateral Agreement of even date executed by Debtor and Secured
Party (each, hereinafter referred to as an "Event of Default"
hereunder), at the option of the Secured Party, the Obligations
shall become immediately due and payable by the Debtor; in
addition to which, the Secured Party may exercise its rights and
remedies upon default, as set forth under this Agreement.
ARTICLE 6. RIGHTS AND REMEDIES UPON DEFAULT
6.1 Upon the occurrence of any Event of Default and at any time
thereafter, the Secured Party shall have all of the rights and
remedies of a secured party upon default under the UCC; in
addition to which, the Secured Party shall have all of the
following rights and remedies: (a) to collect the Receivables
Collateral; (b) to take possession of the Collateral and to
maintain and to use the same at the Property (or elsewhere)
pending any disposition thereof; (c) to sell, lease, or otherwise
dispose of any or all of the Collateral in its then condition or
following such preparation or processing as the Secured Party
deems advisable having due regard to compliance with any statute
or regulation which might affect, limit, or apply to the Secured
Party's disposition of the Collateral; (d) to apply the
Receivables Collateral, or the proceeds of the Collateral, towards
(but not necessarily in complete satisfaction of) the Loan
Obligations in such order as the Secured Party may determine (in
its sole and absolute discretion); (e) to prosecute the
$250,000.00 Letter of Credit referred to at Section 8.8 (i) of the
Stock Purchase Agreement; (f) to release Joseph A. Kirchner of his
obligations under the Employment Agreement; and/or (g) to release
Henry A. Kirchner and Barbara J. Kirchner of their obligations
under the Non-Competition Agreement. The Secured Party may
conduct any such sale or other disposition of the Collateral at
the Premises (or elsewhere). Unless the Collateral is perishable,
threatens to decline speedily in value, or is of a type
customarily sold on a recognized market (in which event the
Secured Party shall give the Debtor such notice as may be
practicable under the circumstances), the Secured Party shall give
the Debtor at least the greater of the minimum notice required by
law or seven (7) days' prior written notice of the date, time and
place of any proposed public sale, and/or of the date after which
any private sale or other disposition of the Collateral may be
made. The Secured Party may purchase the Collateral, or any
portion of it, at any public sale conducted pursuant to this
Agreement.
6.2 In connection with the Secured Party's exercise of the
Secured Party's Rights and Remedies, in accordance with and to the
maximum extent permitted by applicable law, the Secured Party may
enter upon, occupy, and use any premises owned or occupied by the
Debtor, and may exclude the Debtor from such premises or portion
thereof as may have been so entered upon, occupied, or used by the
Secured Party. The Secured Party shall not be required to remove
any of the Collateral from any such premises upon the Secured
Party's taking possession thereof, and may render any Collateral
unusable to the Debtor. In no event shall the Secured Party be
liable to the Debtor for use or occupancy by the Secured Party of
any premises pursuant to this Agreement, nor for any charge (such
as wages for the Debtor's employees and utilities) incurred in
connection with the Secured Party's exercise of the Secured
Party's Rights and Remedies.
6.3 Upon the occurrence of any Event of Default, the Secured
Party may require the Debtor to assemble the Collateral and make
it available to the Secured Party at the Debtor's sole risk and
expense at a place or places designated by the Secured Party which
are reasonably convenient to both the Secured Party and the
Debtor.
6.4 The rights, remedies, powers, privileges, and discretions of
the Secured Party hereunder and under the other Loan Documents
(herein, the "Secured Party's Rights and Remedies") shall be
cumulative and not exclusive of any rights or remedies which it
otherwise may have. No delay or omission by the Secured Party in
exercising or enforcing any of the Secured Party's Rights and
Remedies shall operate as, or constitute, a waiver thereof. No
waiver by the Secured Party of any Event of Default shall operate
as a waiver of any other default hereunder or under any of the
other Loan Documents. No exercise of any of the Secured Party's
Rights and Remedies and no other agreement or transaction of
whatever nature entered into between the Secured Party and the
Debtor at any time, shall preclude any other exercise of the
Secured Party's Rights and Remedies. No waiver by the Secured
Party of any of the Secured Party's Rights and Remedies on any one
occasion shall be deemed a waiver on any subsequent occasion, nor
shall it be deemed a continuing waiver. All of the Secured Party's
Rights and Remedies and all of the Secured Party's rights,
remedies, powers, privileges, and discretions under any Related
Party Agreement are cumulative and not alternative or exclusive
and may be exercised by the Secured Party at such time or times
and in such order of preference as the Secured Party in its sole
discretion may determine.
ARTICLE 7. MISCELLANEOUS
7.1 The Secured Party shall have no duty as to the collection or
protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of the Secured
Party and shall have no duty as to the preservation of rights
against prior parties or of any other rights pertaining thereto.
The Secured Party's Rights and Remedies may be exercised without
resort or regard to any other source of satisfaction of the Loan
Obligations.
7.2 The obligations of the Debtor under this Agreement shall
continue in full force and effect until all of the Loan
Obligations have been fully paid and performed.
7.3 The Secured Party shall be at liberty, without giving notice
to or obtaining the assent of the Debtor and without relieving the
Debtor of any of the Loan Obligations, to deal with each other
Person who now is or after the date hereof becomes liable in any
manner for any of the Obligations (a "Liable Person"), in such
manner as the Secured Party in its sole discretion deems fit, and
to this end the Debtor gives to the Secured Party full authority
in its sole discretion to do any or all of the following things:
(a) extend credit, make loans, and afford other financial
accommodations to any Liable Person, enter into leases of real and
personal property and agreements and contracts of any nature
whatsoever, at such times, in such amounts, and on such terms as
the Secured Party may approve, (b) vary the terms and grant
extensions or renewals of any present or future indebtedness or
obligation to the Secured Party of any Liable Person, (c) grant
time, waivers, and other indulgences in respect thereto, (d) vary,
exchange, release or discharge, wholly or partially, or delay in
or abstain from perfecting and enforcing any security or guaranty
or other means of obtaining payment of any of the Loan Obligations
which the Secured Party now has or acquires after the date hereof,
(e) accept partial payments from any Liable Person, (f) release or
discharge, wholly or partially, any endorser or guarantor and (g)
compromise or make any settlement or other arrangement with any
Liable Person. The Debtor waives all surety ship defenses of every
kind and nature.
7.4 This Agreement shall be in addition to any guaranty or other
security for the Loan Obligations, and it shall not be prejudiced
or rendered unenforceable by the invalidity of any such guaranty
or other security.
7.5 As long as the Obligations remain unpaid or undischarged, the
Debtor will not, by paying any sum recoverable hereunder (whether
or not demanded by the Secured Party) or by any means or on any
other ground, claim any set-off or counterclaim against any Liable
Person in respect of any liability of the Debtor to such Liable
Person or, in proceedings under the bankruptcy or other similar
laws of the United States, any state or any other jurisdiction or
any insolvency proceedings of any nature, prove in competition
with the Secured Party in respect of any payment hereunder or be
entitled to have the benefit of any counterclaim or proof of claim
or dividend or payment by or on behalf of any Liable Person or the
benefit of any other security for any Liability which, now or
hereafter, the Secured Party may hold or in which it may have any
share.
7.6 The Debtor shall pay, on demand, all costs and expenses
(including, without limitation, attorneys' fees and expenses) now
or hereafter reasonably incurred by the Secured Party in
connection with the protection or enforcement of any of the
Secured Party's rights and remedies against the Debtor, any of the
Collateral, and any other Liable Person (including, without
limitation, the exercise of any of the Secured Party's Rights and
Remedies).
7.7 This Agreement shall be construed, and the rights and
obligations of the Debtor and the Secured Party shall be
determined, in accordance with the laws of the Commonwealth of
Massachusetts, except (a) that the laws of the state where the
Collateral is located shall govern this Agreement to the extent
necessary to perfect and/or enforce the Liens created by this
Agreement and to the extent necessary to obtain the benefit of the
rights and remedies set forth herein with respect to the
Collateral and (b) for procedural requirements which must be
governed by the laws of the state in which the Collateral is
located. To the maximum extent permitted by applicable law, the
Debtor hereby submits to the jurisdiction of the courts of the
Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts, as well as to the jurisdiction
of all courts from which an appeal may be taken from the aforesaid
courts, for the purpose of any suit, action or other proceeding
arising out of, or with respect to any of the Loan Documents, the
negotiation and/or consummation of the transactions evidenced by
the Loan Documents, and/or the performance of any obligation or
the exercise of any remedy under any of the Loan Documents and
expressly waives any and all objections the Debtor may have as to
venue in any of such courts.
7.8 This Agreement shall remain in full force and effect until
specifically terminated in writing by a duly authorized officer of
the Secured Party. In the event that any of the Loan Obligations
remain outstanding, such termination by the Secured Party may be
conditioned upon such further indemnifications provided to the
Secured Party by or on behalf of the Debtor as the Secured Party
may request. Until specifically terminated in writing as set
forth above, this Agreement shall itself constitute conclusive
evidence of validity, effectiveness and continuing force hereof
and any Person may rely hereon. Upon the satisfaction in full of
all of the Loan Obligations, the Secured Party, upon the written
request of the Debtor, shall execute and deliver to the Debtor, at
the Debtor's expense, all instruments of assignment or other
instruments as may be necessary to establish full title of the
Debtor to the Collateral, subject to any prior sale or other
disposition pursuant to the terms and provisions of this
Agreement.
7.9 It is intended that the security interests created by this
Agreement attached to all of the Debtor's assets now owned or
hereafter acquired which are capable of being subject to a
security interest.
7.10 Any notice, request, demand, statement or consent made
hereunder shall be in writing and shall be deemed duly given if
personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight
delivery service with provisions for a receipt, postage or
delivery charges prepaid, and shall be deemed given when
postmarked or placed in the possession of such mail or delivery
service and addressed as follows:
If to the Debtor: United Shields Corporation
311 Northland Boulevard
Cincinnati, Ohio 45246,
With a copy to: Scott E. Wiegand, Esquire
Dinsmore & Shohl LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202
If to the Secured Party: KIRCHNER FAMILY NOMINEE TRUST
c/o Henry A. Kirchner
Victoria Lane
Lanesboro, Massachusetts 01237
With copies to: John J. Martin, Jr., Esquire
Martin & Oliveira, LLP
100 North Street, Suite 301
Pittsfield, Massachusetts 01201
or at such other place as any of the parties hereto may from time
to time hereafter designate to the others in writing. The Bank
may also provide notice to the address at which the Secured Party
customarily communicates with the Debtor. Any notice given to the
Debtor by the Secured Party at any time shall not imply that such
notice or any further or similar notice was or is required.
IN WITNESS WHEREOF, the Debtor and the Secured Party duly executed
this Agreement as a sealed instrument as of the day and year first
above written.
WITNESSES: DEBTOR:
PITTSFIELD MOLD & TOOL, INC.
/s/ By: /s/William A. Frey III
William A. Frey III
Its President
SECURED PARTY:
KIRCHNER FAMILY NOMINEE TRUST
/s/ By: /s/ Henry A. Kirchner
Henry A. Kirchner
Its: Trustee
/s/ By: /s/ Barbara J. Kirchner
Barbara J. Kirchner
Its: Trustee
Exhibit 99.13
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of
the 29th day of September, by and between PITTSFIELD MOLD & TOOL,
INC., a Massachusetts corporation, with a mailing address for the
purposes hereof at 10 Betnr Industrial Drive, Pittsfield,
Massachusetts 01201 (the "Borrower") and BERKSHIRE BANK, a
Massachusetts banking corporation with its principal office and
place of business at 24 North Street, P. O. Box 1308, Pittsfield,
Massachusetts 01202 ("Lender").
W I T N E S S E T H:
FOR CONSIDERATION PAID and to secure payment of that certain loan
in the form of a line of credit facility (the "Loan") from the
Lender to the Borrower evidenced by that certain promissory note
of even date herewith between Borrower, as Maker, and Lender, as
Payee (the "Note") in the original principal amount of ONE MILLION
NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($1,900,000.00) and
SUBJECT TO THE REVOLVING CREDIT AGREEMENT TERMS ON EXHIBIT A
ATTACHED HERETO AND MADE A PART HEREOF and to secure the full
performance by the Borrower of the terms and conditions herein and
in the Note together with any and all other obligations and
liabilities of the Borrower to the Lender including, but not
limited to, any future advances which may be made by the Lender to
the Borrower, with interest thereon and with the provisions for
payment of principal and interest as provided in the Note, and to
secure payment of any other value extended to Borrower from time
to time by the Lender including, but not limited to, reasonable
expenses incurred by the Lender in the protection, enforcement,
collection, realization or disposition of the Collateral, as
hereinafter defined, the Borrower hereby grants to the Lender a
first priority security interest in and to all of the Collateral
(defined below), except Equipment (defined below), and a second
priority security interest in and to the Equipment;
PROVIDED THAT if the Borrower shall well and truly pay the
Indebtedness, as hereinafter defined, in accordance with the terms
of the Note or any renewal, modification or extension thereof, and
shall also pay, when due, all other indebtedness of the Borrower
to the Lender existing at any time prior to the full payment,
satisfaction and discharge hereof, and shall well and truly
perform and observe all covenants, agreements, obligations and
conditions on the Borrower's part to be performed or observed
herein and in the Note, then this Agreement shall cease, determine
and be void; otherwise this Agreement shall remain in full force
and effect for all purposes.
1. Definitions. Borrower and Lender agree that, unless the
context otherwise specifies or requires, the following terms shall
have the meanings herein specified, such definitions to be
applicable equally to the singular and the plural forms of such
terms:
(a) "Accounts Receivable" shall mean and include all rights to
payment created by accounts, accounts receivable, documents,
instruments, chattel paper, general intangibles, patents,
royalties, deposit accounts, notes, drafts, acceptances, and other
forms of obligations and rights to payment of money now due or to
become due under contracts now existing or hereafter made by the
Borrower.
(b) "Collateral" shall mean and include the following property of
the Borrower, whether now owned or hereafter acquired: all
Inventory and Accounts Receivable (each as defined herein), now in
existence or hereafter created, and all replacements thereof,
additions and accessions thereto, substitutions therefor, and all
proceeds and products from the sale, exchange or other disposition
of the foregoing.
(c) "Indebtedness" shall mean (i) the outstanding principal
balance of the Note together with the interest thereon as provided
in the Note and (ii) all other amounts, payments and other
consideration due on account of the Note and/or this Agreement or
the other Loan Documents, as hereinafter defined.
(d) "Interest Rate" shall mean the Interest Rate as defined in the
Note.
(e) "Inventory" shall mean all goods, merchandise, materials, raw
materials, work-in-progress, supplies, finished goods now owned or
hereafter acquired by the Borrower or used or consumed in the
Borrower's business.
(f) "Loan Documents" shall mean this Agreement, the Note, Uniform
Commercial Code Financing Statements issued by Borrower of even
date herewith, a second mortgage and security agreement from the
Borrower to the Lender of even date herewith, the assignment of
rents and leases from the Borrower to the Lender of even date
herewith, the absolute, unconditional, irrevocable guaranty of
repayment of the Loan from United Shields Corporation (the
"Guarantor") to the Lender of even date herewith, together with
all other documentation collateral thereto or which may now or
hereafter be given to the Lender by Borrower evidencing, securing
or further securing the Loan, it being understood that to the
extent that any of the terms of the Commitment Letter are in
conflict with the terms of this Agreement, the terms of this
Agreement shall prevail.
(g) "Obligations" shall mean any of the covenants, promises and
other obligations made or owing by the Borrower to or due to the
Lender pursuant to or as otherwise set forth herein or in the Note
or in any other documents, instruments or agreements to which
Borrower is a party or to which Borrower is bound.
(h) "UCC" shall mean the Uniform Commercial Code as adopted and
amended from time to time by the Commonwealth of Massachusetts.
2. Representations and Warranties. Borrower warrants and
represents to the Lender that (i) Borrower will pay the
Indebtedness in the manner described in the Note or in any
modification, renewal or extension, supplementation or replacement
thereof, (ii) the Loan Documents have been duly authorized,
executed and delivered by and on behalf of the Borrower and the
Guarantor, (iii) each of the Borrower and the Guarantor is duly
existing and in good standing with all power, authority, and legal
right to engage in the transactions contemplated by the Loan
Documents, (iv) the execution and delivery of the Loan Documents
and the consummation of the transactions contemplated thereby will
not conflict with or result in a breach of the terms of any
agreement to which the Borrower or the Guarantor is a party and
will not conflict with any law or order of any court, agency or
other governmental body, (v) there are no actions, suits or
proceedings pending, or, to the knowledge of the Borrower,
threatened before any court, any agency or any other governmental
body which could adversely affect the Collateral, Borrower,
Guarantor, or the Borrower's or Guarantor's ability to pay the
Indebtedness and/or perform the Obligations in accordance with the
terms of the Loan Documents, (vi) the Collateral is free from
defects, (vii) the Borrower's title to the Collateral is good and
marketable, free from defects, liens or encumbrances, except the
lien created by this Agreement, and such defects, liens or
encumbrances approved by Lender, if any, and listed on Exhibit B
attached hereto and made a part hereof for all purposes (the
"Permitted Encumbrances"), (viii) the Borrower's name set forth
above is the Borrower's correct legal name and the Borrower has no
other trade name, and the Borrower will not change its legal,
trade, or style name without Lender's prior written consent, (ix)
neither the financial statements or any other document furnished
by the Borrower or the Guarantor to the Lender in connection with
the transaction contemplated by the Loan Documents contain any
untrue statement of a material fact or omit to state a material
fact necessary to prevent the statements contained therein from
being misleading, and (x) there is no fact known to the Borrower
which materially adversely affects, nor, so far as the Borrower
can reasonably foresee, will materially adversely affect the
Borrower's or Guarantor's business, business prospects, financial
condition, operations or properties or the Borrower's or
Guarantor's ability to pay the Indebtedness and/or perform the
Obligations in accordance with the terms of the Loan Documents.
3. UCC Representations. The Borrower warrants that its principal
place of business in Massachusetts is at 10 Betnr Industrial
Drive, Pittsfield, Massachusetts. The Borrower agrees to maintain
complete and accurate records listing and describing the
Collateral and the location of the Collateral and to deliver such
records to the Lender upon request of the Lender.
4. Affirmative Covenants. Until the Loan is paid in full, the
Borrower shall: (a) keep the Collateral in good order and
condition, damage from casualty expressly not excepted; (b) pay
promptly when due all taxes and assessments of whatever nature
imposed upon the Collateral; (c) maintain insurance at all times
with respect to the Collateral against such risks, in such
amounts, in such form and written by such companies as the Lender
may require, naming the Lender and its successors and assigns, as
their interests may appear, as additional insureds and providing
for twenty (20) days prior notice of cancellation or amendment to
the Lender; (d) deliver all insurance policies covering the
Collateral or certificates evidencing appropriate insurance
coverages to the Lender on the closing date of the transaction
contemplated by the Loan Documents; (e) maintain all of Borrower's
depository accounts with the Lender; (f) reimburse Lender for all
fees and expenses for filing all financing statements and
continuation statements (and any other necessary filings) relating
thereto; and (g) at all times maintain a debt service coverage
ratio of 1.25 times, a current ratio of 1.1 and a quick ratio of
.6. As used herein: (a) "debt service coverage ratio" shall mean
the sum of net income, depreciation, amortization and interest
expenses divided by the total maximum debt service and capital
lease requirements, (b) "current ratio" shall mean the sum of
cash, cash equivalents, accounts receivable and inventory divided
by total current liabilities, and (c) "quick ratio" shall mean the
sum of cash and accounts receivable divided by total current
liabilities. All such ratios shall be determined in accordance
with Generally Accepted Accounting Principals, or so-called "GAAP"
(except that in determining "current ratio" only cash, cash
equivalents, accounts receivable and inventory shall be counted as
current assets.
5. Negative Covenants. Until the Loan is paid in full, the
Borrower shall not: (a) directly or indirectly, create, incur,
assume, or suffer to exist any lien, charge, or encumbrance
(except for Permitted Encumbrances) on or with respect to the
whole or any part of the Collateral; (b) lease or lend any
Collateral except in the ordinary course of Borrower's business
without the express written consent of the Lender; (c) sell or
otherwise transfer the Collateral outside the ordinary course of
Borrower's business and/or for sums less than the cost thereof
without the written consent of the Lender; (d) merge or
consolidate with or into any other company or corporation; (e)
permit or suffer anything to be done which shall have the effect
of materially impairing the value of the security given by the
Borrower to the Lender for the Loan; (f) become a guarantor,
surety or otherwise liable for the debts or other obligations of
any other person or entity, except as an endorser of instruments
for the payment of money deposited to a bank account for
collection in the ordinary course of business; (g) incur any
additional debt without the prior written consent of the Lender,
it being understood that trade debt incurred in the ordinary
course of business shall be permitted, or (h) make any payment,
loan or transfer to the Guarantor or any other Affiliate (as
defined in paragraph 1.02N of Exhibit A attached hereto), except
for the payment of a monthly management fee to United Shields
Corporation not to exceed six percent (6%) of gross monthly
revenues; however, notwithstanding the foregoing, if an Event of
Default shall occur, the management payment shall be deferred
until and if the Event of Default is cured.
6. Inspection of Collateral and Books and Records. The Borrower
agrees that the Lender or its agents or representatives, may, at
reasonable times, enter upon the Borrower's premises and inspect
the condition of the Collateral. Borrower agrees that the Lender
or its agents or representatives may, at reasonable times, inspect
the logs and books and records of the Borrower with respect to all
Inventory, and the books and records of the Borrower's business,
and Borrower shall allow the Lender, its agents or representatives
to make copies thereof and extracts therefrom, but the Lender
shall have no duty to make any such inspection and shall not incur
any liability or obligation by reason of not making such
inspection. Borrower shall keep complete and accurate books and
records with respect to the Collateral and the operation of the
Borrower's business and such books and records shall be in form
and substance satisfactory to the Lender.
7. Casualty and Condemnation Award.
(a) Notice to Lender. In the case of any act or occurrence of any
kind or nature which results in damage, loss or destruction to the
Collateral ("Casualty"), or commencement of any proceedings or
actions which might result in a condemnation or other taking for
public or private use of the Collateral or which relates to
injury, damage, benefit or betterment thereto ("Taking"), Borrower
shall promptly notify Lender describing the nature and the extent
of the Taking or the Casualty, as the case may be. Borrower shall
promptly furnish to Lender copies of all notices, pleadings,
determinations and other papers in any such proceedings or
negotiations.
(b) Repair and Replacement. In case of a Casualty or Taking,
Borrower shall promptly (at Borrower's sole cost and expense and
regardless of whether the Insurance Proceeds or the Taking
Proceeds, if any, shall be sufficient or made available to Lender
for the purpose) restore, repair, replace and rebuild the
Collateral as nearly as possible to its quality, utility value,
condition, and character immediately prior to the Casualty or the
Taking, as the case may be.
(c) Insurance Proceeds and Taking Proceeds.
(i) Collection. Borrower shall use its best efforts to collect
the maximum amount of insurance proceeds payable on account of any
Casualty ("Insurance Proceeds"), and the maximum award, payment or
compensation payable on account of any Taking ("Taking Proceeds").
In case of a Casualty, Lender may, in its sole unfettered
discretion, make proof of loss to the insurer, if not made
promptly by Borrower. Borrower shall not settle or otherwise
compromise any claim for Insurance Proceeds or Taking Proceeds
without giving Lender notice thereof at least 10 days in advance.
(ii) Assignment to Lender. Borrower hereby assigns, sets over
and transfers to Lender all Insurance Proceeds and Taking Proceeds
and authorizes payment of such Insurance Proceeds and Taking
Proceeds to be made directly to Lender. Lender shall apply the
Insurance Proceeds and Taking Proceeds first to pay all reasonable
expenses incurred by Lender in connection with the Casualty or
Taking, including, without limitation, attorney's fees and title
fees. Unless Paragraph (d) regarding Insurance Proceeds applies,
Lender may, in its sole unfettered discretion, apply the balance
of such Insurance Proceeds or Taking Proceeds ("Net Proceeds") to
either of the following, or any combination thereof:
(aa) payment of the Indebtedness, either in whole or in party, in
any order determined by Lender in its sole unfettered discretion;
(bb) repair or replacement, either partly or entirely, of any part
of the Collateral so destroyed, damaged or taken, in which case
Lender may impose such terms, conditions and requirements for the
disbursement of the Insurance Proceeds or the Taking Proceeds as
it, in its sole unfettered discretion, deems advisable. Lender
shall not be a trustee with respect to any Insurance Proceeds or
Taking Proceeds, and may commingle Insurance Proceeds or Taking
Proceeds with its funds without obligation to pay interest
thereon.
If any portion of the Indebtedness shall thereafter be unpaid,
Borrower shall not be excused from the payment thereof in
accordance with the terms of the Loan Documents. Lender shall
not, in any event or circumstance, be liable or responsible for
failure to collect or exercise diligence in the collection of any
Insurance Proceeds or Taking Proceeds.
(d) Disbursement of Insurance Proceeds to Borrower. Lender will
disburse the Insurance Proceeds to Borrower provided: (i) there
exists no Event of Default or occurrence or facts which with the
passage of time, the giving of notice, or both, will be an Event
of Default which remains uncured at any time before or during the
Restoration; (ii) the Casualty does not occur within nine months
of the Maturity Date; and (iii) the conditions in this Paragraph 7
are satisfied.
As to any loss or damage which Lender estimates can be repaired
for less that 1/2 of 1% of the then Indebtedness, Lender shall
disburse to Borrower from the Net Proceeds the amount which it
determines is necessary to repair the damage, which amounts shall
be used by Borrower to restore the damage to the property caused
by the Casualty.
As to all other Casualties, Lender shall disburse the Net Proceeds
related thereto to Borrower on the following terms and conditions:
(i) Prior to the first and each subsequent disbursement, Borrower
shall give proof satisfactory to the Lender that:
(aa) Lender is holding a fund comprised of the Net Proceeds and,
if necessary, additional deposits made by Borrower sufficient to
restore the Collateral to its prior condition and use
("Restoration"), together with a fund comprised of Net Proceeds or
funds deposited by Borrower, sufficient to pay operating expenses,
Property Taxes and Charges, the monthly payments (as defined in
the Note) and other so-called "carrying costs" of the property
during the period of Restoration;
(bb) there are no laws preventing Restoration of the Collateral.
Lender shall not be a trustee with respect to any Insurance
Proceeds and may mingle Insurance Proceeds with its funds without
obligation to pay interest thereon. Lender shall in no event be
liable for the performance or observance of any covenant or
condition arising under any lease in connection with the property
nor obligated to take any action to restore the property.
8. Lender Right To Cure And Expenses. The Lender shall be
entitled to, but not obligated to, cure any failure of the
Borrower under the Loan Documents in the performance of the
Obligations and to commence, intervene in or otherwise participate
in any legal or equitable proceeding which, in the Lender's sole
judgement, affects the Collateral or any rights or obligations
created or secured by the Loan Documents. If the Lender shall
become involved in any action or course of conduct with respect to
the Loan Documents or the Collateral in order to cure any default
of the Borrower under the Loan Documents or to protect its
interest in the Collateral, the Borrower shall reimburse the
Lender for all charges, costs and expenses incurred by the Lender
in connection therewith, including, without limitation, reasonable
attorneys' fees. Such charges, costs and expenses described above
shall be payable by the Borrower upon demand of the Lender.
9. Events of Default. The Indebtedness shall become immediately
due and payable by the Borrower, at the option of Lender, if any
of the following events (each an "Event of Default") shall occur
under any of the Loan Documents (including this agreement) and
shall continue beyond applicable grace and cure periods contained
therein, if any:
(a) Borrower fails to pay any interest or principal when due in
accordance with the terms and conditions of the Note;
(b) breach of any other covenant, condition or agreement contained
herein or in the Note or in any of the other Loan Documents
remaining uncured for a period in excess of ten (10) days after
Lender has provided Borrower with written notice of such breach,
provided that in case of any breach which is susceptible to cure
but cannot be cured within ten (10) days through the exercise of
reasonable diligence, so long as the Borrower commences such cure
within ten (10) days, such breach remains susceptible to cure, and
the Borrower diligently pursues such cure, such breach shall not
be deemed to create an Event of Default hereunder;
(c) failure of the Borrower to cause to be dismissed any
proceeding against the Borrower, and, if applicable, any holder of
a general partnership interest in the Borrower, any guarantor of
any of the Borrower's obligations under the Loan Documents or any
endorser of the Note (the Borrower, and, if applicable, any such
general partner, guarantor or endorser hereinafter referred to as
an "Obligor") under any law relating to bankruptcy,
reorganization, insolvency or relief of debtors within ninety (90)
days from the date upon which such proceeding is filed or
instituted, or the filing or other institution of a proceeding by
any Obligor under any such law;
(d) failure of an Obligor to cause to be dismissed a proceeding
for the enforcement of a money judgement instituted against said
Obligor within thirty (30) days from the date upon which such
proceeding is filed and which materially affects the financial
condition of Borrower or instituted unless such proceeding is
contested in good faith by the Obligor and bonded or otherwise
secured to Lender's satisfaction;
(e) the liquidation, termination, dissolution, merger, transfer of
a controlling interest in, or a consolidation of, any Obligor
which is not an individual, the insolvency of any Obligor or the
inability of any Obligor to pay such Obligor's debts when due
(notwithstanding the foregoing, a transfer in the ownership
interest of an Obligor by William A. Frey for estate planning
purposes shall not be an Event of Default hereunder or under any
Loan Document so long as William A. Frey retains direct or
indirect control over the ownership interest); and
(f) material inaccuracy of any statement, representation or
warranty made by the Borrower to the Lender in the Loan Documents
or in any instrument, document or statement hereafter submitted to
the Lender by an Obligor and which results in any loss or damage
to the Lender.
If an Event of Default shall occur and Borrower fails to cure such
Event of Default within the applicable cure periods, then, at the
option of the Lender, without any further notice to the Borrower,
the Indebtedness, together with all other charges due under the
Loan Documents shall be due and payable, and the Lender shall be
entitled to exercise any and all of the rights and remedies
provided for in the Loan Documents or available at law or in
equity, including, but not limited to, all rights and remedies
available to a secured party under the UCC. The Borrower shall,
upon request of the Lender, assemble the Collateral not already in
the Lender's possession and make it available to the Lender at a
place to be designated by the Lender and reasonably convenient to
both the Borrower and the Lender.
10. Application Of Deposits After Default. If the Borrower shall
default in the performance or observance of any covenant or
agreement under the Loan Documents and the Borrower fails to cure
such Event of Default within the applicable cure period, the
Lender may apply any deposit, payment or any sum due from the
Lender to any Obligor toward the Indebtedness in such manner or
order as the Lender, in the exercise of its sole discretion, shall
determine, without first enforcing any other rights of the Lender
against any Obligor or against the Collateral.
11. Separate Foreclosure Sales and Waiver of Marshalling. The
Lender may sell the Collateral and any other security given by the
Borrower for the payment of the Indebtedness and the performance
of the Obligations in one lot or in parts or parcels. Such sales
may be held from time to time by public or private sale and the
power of sale herein given to the Lender shall not be fully
executed until all of the Collateral and other security not
previously sold shall have been sold. The Lender may apply the
net proceeds of any sale, lease or other disposition of the
Collateral to the payment of the Indebtedness and the performance
of the Obligations in such manner and order as the Lender, in the
exercise of its sole discretion, shall determine, after deducting
all costs and expenses of every kind incurred therein or
incidental to the retaking, holding, preparing for sale, selling,
leasing or other disposition of the Collateral or in any way
relating to the protection and/or enforcement of the rights of the
Lender hereunder, including, but not limited to, reasonable
attorney's fees. If the amount realized from such sale, lease or
other disposition of the Collateral is insufficient to satisfy and
discharge the Indebtedness and other charges due and owing by
Borrower to Lender, the Borrower shall remain liable to Lender for
the payment of any such deficiency and interest shall accrue
thereon, until paid, at the Default Rate, as defined in the Note.
If surplus proceeds are realized from such a sale, lease, or other
disposition of the Collateral, the Lender shall not be liable for
any interest thereon pending distribution of such proceeds to the
Borrower. Any separate items of property sold together for a
single price may be accounted for in one account without
distinction between the items of security or without assigning to
them any proportion of such proceeds. The Borrower hereby waives
the application of any doctrine of marshalling of assets.
The Borrower agrees that the requirement of the UCC with respect
to personal property that a secured party give a debtor reasonable
notice of any proposed sale or disposition of collateral shall be
met if such notice is given to Borrower at least five (5) days
before such time of sale or disposition. No such notice need be
given by Lender with respect to collateral which is perishable or
threatens to decline speedily in value or is of a type customarily
sold on a recognized market.
12. Collection of Accounts. The Lender may communicate with
account debtors in order to verify the existence, amount and terms
of any Accounts Receivable and to notify account debtors of the
Lender's security interest in their Accounts Receivable. When
requested by the Lender, the Borrower shall notify account debtors
and indicate on all billings that payments are to be made directly
to the Lender. The Lender may require that payments on Accounts
Receivable be made directly to the Lender and the Lender shall
have full power to collect, compromise, endorse, sell or otherwise
deal with the Accounts Receivable or proceeds thereof and to
perform the terms of any contract in order to create accounts in
the Lender's name or in the name of the Borrower for the business
conducted with respect to the Collateral.
13. Effect of Releases and Waivers. Any failure by Lender to
insist upon the strict performance by Borrower of any of the
Obligations shall not be deemed to be a waiver of the strict
performance of any of the Obligations and Lender, notwithstanding
any such failure, shall have the right thereafter to insist upon
the strict performance by Borrower of any and all of the
Obligations. Neither Borrower nor any other person or entity now
or hereafter obligated for the payment of the whole or any part of
the Indebtedness shall be relieved of such obligation by reason of
(i) the failure of Lender to comply with any request of Borrower,
or of any other person or entity so obligated; (ii) the failure of
Lender to take action in collection or protection of the
Collateral or to otherwise enforce the performance of any of the
Obligations; (iii) the release, regardless of consideration, of
the whole or any part of the security held for the payment of the
Indebtedness and the performance of the Obligations, or (iv) any
agreement or stipulation between the Lender and any subsequent
owner or owners of the equity of redemption in the Collateral
modifying the covenants, terms and provisions of this Loan
Agreement and of the Loan Documents without first having obtained
the consent of Borrower or such other person or entity. In the
last mentioned event, Borrower and all such other persons or
entities shall continue to be liable to make such payments
according to the terms and provisions of the Loan Documents, as
amended, unless expressly released and discharged of record by
Lender. Lender may release, regardless of consideration, any part
of the security held for payment of the Indebtedness and the
performance of the Obligations without, as to the remainder of the
security, in any way impairing or affecting the lien created by
this Agreement or the priority of such lien over any subordinate
lien. Lender may resort for the payment of the Indebtedness and
the performance of the Obligations to any other security therefor
held by Lender, in such manner and order as Lender may elect.
14. WAIVER OF JURY TRIAL. THE BORROWER AND LENDER WAIVE TRIAL BY
JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
WITH, OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT,
OR THE INDEBTEDNESS, OR THE VALIDITY, PROTECTION, INTERPRETATION,
COLLECTION OR ENFORCEMENT THEREOF, OR THE RELATIONSHIP BETWEEN
BORROWER AND LENDER AS BORROWER AND LENDER, OR ANY OTHER CLAIM OR
DISPUTE HOWEVER ARISING BETWEEN THE BORROWER AND LENDER.
15. Interest To Accrue. If the Indebtedness shall become due and
payable because of an acceleration by the Lender of the Borrower's
obligation to repay the Indebtedness caused by an Event of Default
hereunder or if the Indebtedness shall mature and become due, then
interest on the Indebtedness shall continue to accrue at the
Default Rate, as defined in the Note, until paid in full.
16. No Set-Off, Counterclaim, etc. The Borrower's obligation to
pay the Indebtedness shall be absolute and unconditional and shall
not be affected by any circumstance, including, without
limitation:
(a) Any set-off, counterclaim, recoupment, defense, or other
right which the Borrower may have against the Lender or anyone
else;
(b) Any defect in title, condition, design, fitness for use, or
operation of, damage to, or loss or destruction of the Collateral,
or any interruption or cessation in the use or possession thereof
by the Borrower for any reason whatsoever;
(c) Any insolvency, bankruptcy, reorganization, or similar
proceedings by or against the Borrower or any guarantor; or
(d) Any other circumstance, happening, or event whatsoever,
whether or not similar to any of the foregoing.
17. Remedies Cumulative. The rights and remedies afforded to
Lender under the Loan Documents shall be cumulative and
supplementary to and not exclusive of any other rights and
remedies which the Lender may have at law or in equity.
18. Further Assurances. The Borrower agrees to execute and cause
to be filed or recorded, and hereby appoints the Lender its duly
authorized attorney-in-fact, which appointment is acknowledged by
the parties hereto to be coupled with an interest, with full power
of substitution and with authority to execute, file and record on
behalf of the Borrower all instruments from time to time deemed by
the Lender to be necessary or appropriate to evidence further the
Indebtedness and/or the Obligations or to secure further to the
Lender the security intended to be provided by this Agreement.
Borrower shall pay, upon demand of the Lender, all costs, expenses
and fees, including, without limitation, reasonable attorneys'
fees, incurred as a result of the operation of this paragraph.
19. Statement of Amount Due. Borrower, within fifteen (15) days
after receipt of a written request from the Lender, shall furnish
a written statement duly acknowledged of the amount due on the
Note to the Lender.
20. Notices. Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by
registered or certified mail, postage prepaid, return receipt
requested, or (iii) forwarded by overnight courier service, in
each instance addressed to the addressee at the address for such
party set forth herein, or such other address as each may
designate in writing to the other. All notices given hereunder
shall be in writing and shall be deemed given, in the case of
notice by personal delivery, upon actual delivery, and in the case
of mail or courier service, upon deposit with the U.S. Postal
Service or delivery to the courier service.
21. Assignment by Lender. The Lender shall have the right at any
time to assign any or all of its right, title, and interest in and
to the Loan Documents and all or any part of the Collateral. Upon
any such assignment, the Lender shall not be deemed the assignee's
agent for any purpose and the Lender may deliver all or any part
of the Collateral held by it to the assignee which shall thereupon
become vested with all rights, powers, and privileges of the
Lender in respect thereto, and the Lender shall thereupon be
forever released and fully discharged from all liability and
responsibility for the whole or any part of the Collateral
transferred. With respect to any Collateral not transferred,
Lender shall retain all powers and rights hereby given to Lender.
This Agreement shall not be assignable by the Borrower without the
prior written consent of the Lender.
22. Interpretation And Binding Effect. This Agreement and the
other Loan Documents constitute the entire agreement between
Borrower and Lender and, to the extent that any writings not
signed by the Lender or oral statements at any time made or had by
either party hereto are inconsistent with the provisions of this
Agreement, the unsigned writings and oral statements shall be null
and void and of no force or effect. The Loan Documents shall be
governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts. If any provision of this Agreement
shall be found unenforceable or invalid for any reason, such
provision shall be deemed modified to the extent necessary to be
enforceable or, if such modification is not practicable, such
provision shall be deemed deleted from this Agreement without
otherwise affecting any other provision of this Agreement. The
headings of sections and paragraphs shall be ignored in
interpreting this Agreement. The word "Borrower", as used herein,
means the Borrower named herein and also means any subsequent
owner or owners of all or any part of the equity of redemption in
the Collateral. All of the covenants and agreements of the
Borrower herein contained shall be binding upon the Borrower, and
(if applicable) its heirs, executors, administrators, successors
and assigns and shall be joint and several if more than one person
constitute the Borrower. The word "Lender", as used herein, means
the Lender named herein and any subsequent holder or holders of
one or both of the Note and this Agreement.
23. Year 2000 Compliance. Borrower represents and warrants that
(a) Borrower has performed a formal assessment of the effect of
year 2000 on Borrower's computer systems and business operations,
(b) Borrower has converted the assessment to a plan ("Year 2000
Compliance Plan") with budget and implementation dates, including
a statement of awareness of the problem, an inventory checklist of
equipment affected, and an assessment of complexity, remediation,
validation, testing and implementation, (c) Borrower has
sufficient resources to implement the Year 2000 Compliance Plan
and (d) the Year 2000 Compliance Plan will be completed by
December 31, 1999.
24. FINANCIAL INFORMATION. Borrower will at all times keep
proper books of records and accounts in which full, true and
correct entries shall be made in accordance with generally
accepted accounting principles and will deliver to Lender within
115 days after the end of each fiscal year a copy of the annual
financial statements of Borrower relating to the prior fiscal year
such statements to include (i) the balance sheet of Borrower as at
the end of such fiscal year and (ii) the related income statement,
statement of retained earnings and statement of changes in the
financial position of Borrower for such fiscal year prepared on an
audit level basis by such certified public accountants as may be
reasonably satisfactory to Lender. Borrower also agrees to
deliver to Lender by within 115 days after the end of each fiscal
year a copy of the Guarantor's year-end form 10-KSB report (or
such other similar report if such report shall no longer be
prepared) and, from time to time, at the request of the Lender,
such other financial information with respect to Borrower and the
Guarantor as the Lender may reasonably request. In addition, the
Borrower shall by the 30th day of each month deliver to the
Lender, management prepared financial statements as of the last
day of the previous month and by the 60th day after the end of a
fiscal quarter each of the Guarantor's quarterly form 10-QSB (or
such other similar report if such report shall no longer be
prepared). All of the foregoing reports and financial statements
will be signed by the chief financial officer of the Borrower and
Guarantor, as the case may be, and certified to the Lender as
being true and accurate.
If the Borrower shall fail to provide the financial statements,
tax returns and other information as required by this paragraph
(i) (a "Financial Information Default"), then, in addition to all
of Lender's other rights and remedies, at Lender's option
commencing three days after written notice (the "Adjustment Date")
of such Financial Information Default is sent by Lender to the
Borrower, the Interest Rate shall be increased by one quarter of
one percent (0.25%) per annum for the first thirty (30) days after
the Adjustment Date, and the Interest Rate shall be increased by
one quarter of one percent (0.25%) 30 days after the Adjustment
Date and each 30 days thereafter, but in no event beyond the
maximum interest rate permitted by applicable law. Such higher
interest rates shall apply to the entire outstanding principal
balance then due under this Note. Effective upon the curing of
such Financial Information Default, as determined by the Lender in
its sole and exclusive discretion, the Interest Rate shall revert
to that set forth in Article I of this Note. Borrower acknowledges
that such increase in the Interest Rate is intended to compensate
Lender for the potentially higher credit risk and increased
administrative costs associated with such failure to furnish
timely financial statements, tax returns and other information.
25. Participation. Lender reserves the right to sell all or any
portion of the Loan to any other party/ies and may deliver to such
party/ies copies of all financial statements, agreements and other
materials supplied to Lender by Borrower and Guarantor, subject
however to such party/ies agreeing to be bound by the
confidentiality agreement in then in force between the Lender, the
Borrower and Guarantor.
IN WITNESS WHEREOF, Borrower has caused this instrument
to be executed by William A. Frey, III, its duly authorized President
and Treasurer, and Lender has caused this instrument to be
executed by John R. Carmichael, III, its duly authorized Vice
President, and their corporate seals to be hereunto affixed as of
the date first above written.
PITTSFIELD MOLD & TOOL, INC.
By: /s/ William A. Frey, III
William A. Frey, III, President and Treasurer
BERKSHIRE BANK
By: /s/ John R. Carmichael, III
John R. Carmichael, III, Vice President
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss. September 29, 1999
Then personally appeared the above-named, who acknowledged the
foregoing instrument to be the free act and deed of Pittsfield
Mold & Tool, Inc., before me,
/s/ Gerald A. Denmark
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
EXHIBIT B TO
LOAN AND SECURITY AGREEMENT
PERMITTED ENCUMBRANCES
Exhibit 99.14
Approved By:
____________
DEMAND
LINE OF CREDIT PROMISSORY NOTE
$1,900,000.00 Pittsfield, Massachusetts
Date: September 29, 1999
FOR VALUE RECEIVED, PITTSFIELD MOLD & TOOL, INC., a Massachusetts
corporation, with a mailing address for the purposes hereof at 10
Betnr Industrial Drive, Pittsfield, Massachusetts 01201 (the
"Borrower") promises to pay to the order of BERKSHIRE BANK, a
Massachusetts banking corporation with its principal office and
place of business at 24 North Street, P. O. Box 1308, Pittsfield,
Massachusetts 01202 ("Lender") ON DEMAND the principal sum of ONE
MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($1,900,000.00)
or so much thereof as may be advanced from time to time (the
"Loan") in accordance with the terms of a loan and security
agreement dated even date herewith (the "Loan Agreement"), with
interest on the unpaid principal balance of such amount from the
date of this Note or such advance, as the case may be, at the
Interest Rate (hereinafter defined). This Note is secured by a
Loan Agreement and financing statements evidencing a security
interest in certain personal property (the "Personal Property")
more particularly described therein; a mortgage and security
agreement (the "Mortgage") dated even date herewith which creates
a second priority mortgage and security interest on certain real
property located in Pittsfield, Massachusetts (the "Real
Property") and certain personal property; an assignment of rents
and leases (the "Assignment") which will conditionally assign all
rents and absolutely assign all leases applicable to the Real
Property to the Lender; the irrevocable and unconditional guaranty
of payment by United Shields Corporation (the "Guarantor") of the
Loan set forth in a guaranty of payment from the Guarantor to
Lender (the "Guaranty"); and such other security as may now or
hereafter be given to Lender as collateral for the Loan. This
Note, the Loan Agreement, the Mortgage, the Assignment, the
Guaranty, and all other documents evidencing, securing and/or
relating to the Loan, are hereinafter collectively referred to as
the "Loan Documents".
I
DEFINITIONS
(a) "BASE RATE" shall mean the rate of interest set, determined or
announced on a periodic basis by Lender as its "Base Rate" which
rate of interest is not necessarily the lowest rate charged by
Lender on loans and other credits; and loans and other credits may
be extended by Lender at rates both above and below the Base Rate.
(b) "INTEREST RATE" shall mean the rate of interest to be paid by
Borrower on any outstanding principal due under this Note and
shall be equal to the Base Rate plus 2.00 percent (2.00%) per
annum.
II
ADVANCES AND READVANCES OF LOAN PROCEEDS
(a) ADVANCES AND READVANCES. Provided that payment of this Note
shall not have been demanded by the Lender, and subject to the
provisions of the Loan Agreement, advances or readvances of the
proceeds of the Loan (each, an "Advance") shall be made available
to the Borrower from time to time in the manner set forth in this
Article II and information with regard to any Advances of proceeds
of the Loan shall be entered by the Lender on its schedule of
advances and payments and such entry shall be conclusive as to the
information set forth therein except for manifest error.
(b) PROCEDURE FOR ADVANCES AND READVANCES Borrower may obtain an
advance of proceeds of the Loan by issuing checks on Account
#22603325, titled Pittsfield Mold & Tool, Inc. (the "Account").
As funds are needed to clear checks issued hereunder, Advances
will be deposited into this Account, but in any event subject to
the terms of the Loan Agreement. The deposit of any Advance in
the Account by the Lender shall be conclusive with respect to the
receipt of said Advance by the Borrower, and Borrower shall be
responsible for the repayment of any Advance so made pursuant to
the terms of this Note.
III
INTEREST
(a) COMPUTATION OF INTEREST. Interest on the outstanding
principal balance of this Note shall be computed on the basis of
"a 360-day year for the actual number of days elapsed" (such
phrase, as used throughout this Note, shall mean that in computing
interest for the subject period, the interest rate shall be
multiplied by a fraction, the denominator of which is 360 and the
numerator of which is the actual number of days an Advance is
outstanding from the date of the preceding interest and/or
principal due date, as the case may be, to the date of the next
interest and/or principal due date). Interest shall accrue until
the date of receipt of payment.
(b) INTEREST CHANGE PROCEDURES. Any change in the Base Rate shall
automatically and simultaneously effect a corresponding change in
the Interest Rate without notice to the Borrower.
IV
PAYMENT OF PRINCIPAL AND INTEREST
(a) PERIODIC PAYMENTS OF INTEREST. Borrower shall pay accrued
interest at the Interest Rate on the unpaid principal balance of
this Note beginning on the 29th day of October, 1999 and
continuing on the 29th day of each month thereafter until the Loan
becomes due and payable as set forth in this Note, when Borrower
shall pay the full balance of principal plus any accrued and
unpaid interest and any other sums due under this Note.
(b) PERIODIC PAYMENTS OF PRINCIPAL. The Lender shall credit
principal payments against the Loan in amounts equal to the sums
paid by Borrower. Principal shall be payable upon demand.
V
GENERAL CONDITIONS
(a) METHOD OF PAYMENT. All payments under this Note are payable
at 24 North Street, P.O. Box 1308, Pittsfield, Massachusetts 01202
or at such other place as Lender shall notify Borrower in writing.
Lender reserves the right to require any payment on this Note,
whether such payment is of a regular installment or represents a
prepayment, to be by wired federal funds or other immediately
available funds or to be paid at a place other than the above
address.
(b) APPLICATION OF PAYMENTS RECEIVED. Except as otherwise
provided in this Note, all payments received by Lender on this
Note shall be applied by Lender as follows:
FIRST, to accrued and unpaid interest then due and owing; and
SECOND, to the reduction of principal of this Note; and
THIRD, to any unpaid Late Payment Charges (hereinbelow defined).
(c) LATE PAYMENT CHARGES. If Borrower fails to pay any amount of
principal and/or interest on this Note for ten (10) days after
such payment becomes due, whether by acceleration or otherwise,
Lender may, at its option, whether immediately or at the time of
final payment of the amounts evidenced by this Note, impose a late
payment charge (the "Late Payment Charge") computed by multiplying
the amount of each past due payment by five (5.0%) percent. Until
any and all Late Payment Charges are paid in full, the amount
thereof shall be added to the indebtedness secured by any of the
Loan Documents. The Late Payment Charge is not a penalty and is
deemed to be liquidated damages for the purpose of compensating
Lender for the difficulty in computing the actual amount of
damages incurred by Lender as a result of the late payment by
Borrower.
(d) DEFAULT RATE. Principal and any accrued interest not paid
when due, and any advances which are made by the holder pursuant
to any provision of any other instruments or agreements securing
this Note from the date of any such advance shall bear interest at
a rate of four percent (4.00%) above the Base Rate, but in no
event at an annual interest rate greater than the maximum amount
permitted by applicable law.
(e) PREPAYMENT. The principal balance may be prepaid in whole or
in part at any time without the payment of any prepayment
consideration.
(f) COSTS AND EXPENSES ON DEFAULT. In addition to principal,
interest and any Late Payment Charge, Lender shall be entitled to
collect all costs of collection, including, but not limited to,
reasonable attorneys' fees incurred in connection with the
protection or realization of collateral or in connection with any
of Lender's collection efforts, whether or not suit on this Note
or any foreclosure proceeding is filed, and all such costs and
expenses shall be added to the principal due hereunder and be
payable on demand, and until paid shall also be secured by the
Loan Documents and by all other collateral held by Lender as
security for Borrower's obligations to Lender.
(g) WAIVER BY BORROWER. Borrower and each endorser or Guarantor
of this Note hereby waives presentment, protest, demand,
diligence, notice of dishonor and of nonpayment, and waives and
renounces all rights to the benefits of any statute of limitations
and any moratorium, appraisement, exemption and homestead now
provided or which may hereafter be provided by any federal or
state statute, including but not limited to exemptions provided by
or allowed under the United States Bankruptcy Code, both as to
itself personally and as to all of its or their property, whether
real or personal, against the enforcement and collection of the
obligations evidenced by this Note and any and all extensions,
renewals and modifications hereof.
(h) COMPLIANCE WITH USURY LAWS. It is the intention of the
parties to conform strictly to the usury laws, whether state or
federal, that are applicable to this Note. All agreements between
Borrower and Lender, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in
no contingency or event whatsoever, whether by acceleration of
maturity hereof or otherwise, shall the amount paid or agreed to
be paid to Lender or the holder hereof, or collected by Lender or
such holder, for the use, forbearance or detention of the money to
be loaned hereunder or otherwise, or for the payment or
performance of any covenant or obligation contained herein, or in
any of the Loan Documents, exceed the maximum amount permissible
under applicable federal or state usury laws. If under any
circumstances whatsoever fulfillment of any provision hereof or of
the Loan Documents, at the time performance of such provision
shall be due, shall involve exceeding the limit of validity
prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if under any
circumstances Lender or other holder hereof shall ever receive an
amount deemed interest by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest
under applicable usury laws shall be applied to the reduction of
the principal amount owing hereunder or to other indebtedness
secured by the Loan Documents and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of
principal and such other indebtedness, the excess shall be deemed
to have been a payment made by mistake and shall be refunded to
Borrower or to any other person making such payment on Borrower's
behalf. All sums paid or agreed to be paid to the holder hereof
for the use, forbearance or detention of the indebtedness of
Borrower evidenced hereby, outstanding from time to time shall, to
the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed
by law, be amortized, pro-rated, allocated and spread from the
date of disbursement of the proceeds of this Note until payment in
full of the Loan evidenced hereby and thereby so that the actual
rate of interest on account of such indebtedness is uniform
throughout the term hereof and thereof. The terms and provisions
of this paragraph shall control and supersede every other
provision of all agreements between Borrower, any endorser or
Guarantor and Lender.
(i) GOVERNING LAW; SUBMISSION TO JURISDICTION. This Note shall be
governed by and construed under the laws of the Commonwealth of
Massachusetts and shall have the effect of a sealed instrument.
Borrower and each endorser or Guarantor hereby submits to personal
jurisdiction in said Commonwealth for the enforcement of
Borrower's obligations hereunder or under any other Loan Document
and waives any and all personal rights under the law of any other
state to object to jurisdiction within such Commonwealth for the
purposes of litigation to enforce such obligations of Borrower.
(j) WAIVER OF JURY TRIAL. LENDER AND THE BORROWER HEREBY WAIVE
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS NOTE, ANY OTHER LOAN
DOCUMENT OR THE LOAN, OR ANY INSTRUMENT OR DOCUMENT DELIVERED IN
CONNECTION WITH THE LOAN, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN THE BORROWER AND
LENDER.
(k) AUTHORITY OF LENDER. Borrower authorizes Lender to date this
Note as of the day when the Loan is made and to complete or
correct this Note as to any terms of the Loan not set forth herein
at the time of delivery hereof.
(l) NOTICES. Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by
registered or certified mail, postage prepaid, return receipt
requested, or (iii) forwarded by overnight courier service, in
each instance addressed to the addresses set forth at the head of
this Note, or such other addresses as the parties may for
themselves designate in writing as provided herein for the purpose
of receiving notices hereunder. All notices shall be in writing
and shall be deemed given, in the case of notice by personal
delivery, upon actual delivery, and in the case of mail or
courier service, upon deposit with the U.S. Postal Service or
delivery to the courier service.
(m) LIABILITY IF MORE THAN ONE BORROWER. If more than one person
or entity executes this Note as a Borrower, all of said persons or
entities are jointly and severally liable hereunder.
(n) ENTIRE AGREEMENT. This Note and the other Loan Documents
constitute the entire understanding between Borrower, the
Guarantors, if any, and Lender and to the extent that any writings
not signed by Lender or oral statements or conversations at any
time made or had shall be inconsistent with the provisions of this
Note and the other Loan Documents, the same shall be null and
void.
(o) "BUSINESS PURPOSE" WARRANTY. The undersigned covenants and
warrants that the proceeds of this Loan shall be used solely for
business purposes and that the transaction evidenced hereby is not
a consumer transaction subject to MGL c.140D, Federal Reserve
Board Regulation Z or other "consumer protection" statutes,
regulations or restrictions, without exception.
(p) RIGHT OF SET OFF. Borrower grants to the Lender a continuing
lien for the amount of this Note upon any and all monies,
securities and other property of Borrower and the proceeds
thereof, now or hereafter held or received by or in transit to the
Lender from or for Borrower whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any
and all deposits (general or special) and credits of Borrower
with, and any and all claims of Borrower against the Lender at
any time existing. In the Event of Default which is not cured
within the applicable cure period, the Lender is authorized at any
time and from time to time, without notice to Borrower, regardless
of the adequacy of any other collateral, and without requiring the
Lender to first proceed against any other security interest, to
set off, appropriate and apply any and all items hereinabove
referred to against the outstanding indebtedness evidenced by
this Note. Lender shall be deemed to have exercised such right of
set off immediately at the time Lender elects to make such set
off, even though any charge therefor is made or entered on
Lender's records subsequent thereto.
IN WITNESS WHEREOF, Borrower has caused this instrument to be
executed by William A. Frey, III, its duly authorized President
and Treasurer, and its corporate seal to be hereunto affixed as of
the date first above written.
PITTSFIELD MOLD & TOOL, INC.
By: /s/ William A. Frey, III
William A. Frey, III,
President and Treasurer
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss. September 29, 1999
Then personally appeared the above-named William A. Frey, III,
President and Treasurer, who acknowledged the foregoing instrument
to be the free act and deed of Pittsfield Mold & Tool, Inc.,
before me,
/s/ Gerald A. Denmark
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
Exhibit 99.15
Approved by:
____________
PROMISSORY NOTE
$2,500,000.00 Pittsfield, Massachusetts
Date: September 29, 1999
FOR VALUE RECEIVED, PITTSFIELD MOLD & TOOL, INC., a Massachusetts
corporation, with a mailing address for the purposes hereof at 10
Betnr Industrial Drive, Pittsfield, Massachusetts 01201 (the
"Borrower") promises to pay to the order of BERKSHIRE BANK, a
Massachusetts banking corporation with its principal office and
place of business at 24 North Street, P. O. Box 1308, Pittsfield,
Massachusetts 01202 ("Lender") the principal sum of TWO MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00) (the
"Loan")as hereinafter set forth with interest on the unpaid
principal balance of such amount from the date of this Note at the
Interest Rate (hereinafter defined). This Note is secured by a
mortgage and security agreement (the "Mortgage") dated even date
herewith which creates a first priority mortgage and security
interest on certain real property located in Pittsfield,
Massachusetts (the "Real Property"), and certain personal
property; an assignment of rents and leases (the "Assignment")
which will conditionally assign all rents and absolutely assign
all leases applicable to the Real Property to Lender; the
irrevocable and unconditional guaranty of payment by United
Shields Corporation (the "Guarantor") of the Loan set forth in a
guaranty of payment from the Guarantor to Lender (the "Guaranty");
and such other security as may now or hereafter be given to Lender
as collateral for the Loan. This Note, the Mortgage, the
Assignment, the Guaranty, and all other documents evidencing,
securing and/or relating to the Loan, are hereinafter collectively
referred to as the "Loan Documents".
I
DEFINITIONS
(a) "BASE RATE" shall mean the rate of interest set, determined or
announced on a periodic basis by Lender as its "Base Rate" which
rate of interest is not necessarily the lowest rate charged by
Lender on loans and other credits; and loans and other credits may
be extended by Lender at rates both above and below the Base Rate.
(b) "INTEREST RATE" shall mean the rate of interest to be paid by
Borrower on any outstanding principal due under this Note and
shall be equal to 8.25 percent (8.25%) per annum up to and through
the payment due hereunder on September 29, 2000. The interest
rate charged hereunder shall be reviewed by Lender on each
September 29th hereafter (each an "Anniversary Date") and shall be
equal to the Base Rate in effect on each Anniversary Date, which
rate shall be set on each Anniversary Date occurring during the
term of the Loan commencing with said Anniversary Date and shall
remain in effect until midnight on the calendar day immediately
preceding the next Anniversary Date.
(c)"LOAN YEAR" shall mean the period between the date hereof and
September 29, 2000 for the first Loan Year and each succeeding
twelve (12) month period until the Maturity Date.
(d) "MATURITY DATE" shall mean September 29, 2019.
II
INTEREST
(a) COMPUTATION OF INTEREST. Interest on the outstanding
principal balance of this Note shall be computed on the basis of
"a 360-day year for the actual number of days elapsed" (such
phrase, as used throughout this Note, shall mean that in computing
interest for the subject period, the interest rate shall be
multiplied by a fraction, the denominator of which is 360 and the
numerator of which is the actual number of days elapsed from the
date of the first disbursement of the Loan or the date of the
preceding interest and/or principal due date, as the case may be,
to the date of the next interest and/or principal due date).
Interest shall accrue until the date of receipt of payment.
(b) INTEREST CHANGE PROCEDURES. Any change in the Base Rate shall
effect a corresponding change in the Interest Rate without notice
to the Borrower, such change to take effect on each Anniversary
Date, shall be based on the Base Rate then in effect and shall
thereafter be fixed for that Loan Year.
III
PAYMENT OF PRINCIPAL AND INTEREST
Commencing on October 29, 1999 and continuing on the 29th day of
each month thereafter until September 29, 2000, Borrower shall pay
twelve (12) equal consecutive monthly installments of principal
and interest at the Interest Rate in the amount sufficient to
amortize the then outstanding principal balance due hereunder over
the period ending on the Maturity Date (the "Amortization
Period"). On each Anniversary Date, the required monthly payments
for the next succeeding twelve (12) months shall be recalculated
by Lender to an amount sufficient, at the Interest Rate in effect
on such Anniversary Date, to amortize the then outstanding
principal balance hereunder over the Amortization Period, and said
payments shall continue until the Maturity Date (or such earlier
date in the event Lender accelerates Borrower's obligations
hereunder pursuant to its rights under the Loan Documents), when
the full outstanding balance of principal remaining plus accrued
interest shall be fully due and payable. Based on the initial
Interest Rate to be charged on principal due hereunder for the
first twelve (12) months of the term of the Loan, the monthly
principal and interest payments due for the first twelve (12)
months of the term of the Loan shall be TWENTY ONE THOUSAND FOUR
HUNDRED NINETY THREE AND 19/100 DOLLARS ($21,493.19).
IV
GENERAL CONDITIONS
(a) METHOD OF PAYMENT. All payments under this Note are payable
at 24 North Street, P.O. Box 1308, Pittsfield, Massachusetts 01202
or at such other place as Lender shall notify Borrower in writing.
Lender reserves the right to require any payment on this Note,
whether such payment is of a regular installment or represents a
prepayment, to be by wired federal funds or other immediately
available funds or to be paid at a place other than the above
address.
(b) APPLICATION OF PAYMENTS RECEIVED. Except as otherwise
provided in this Note, all payments received by Lender on this
Note shall be applied by Lender as follows:
FIRST, to accrued and unpaid interest then due and owing; and
SECOND, to the reduction of principal of this Note; and
THIRD, to any unpaid Late Payment Charges (herein below defined).
If an Event of Default (hereinbelow defined) occurs, or an event
which, but for the passage of time, the giving of notice, or both
would constitute an Event of Default, Lender may apply any
payments received to any sums due hereunder or under any other
Loan Document in such manner as it deems appropriate.
(c) LATE PAYMENT CHARGES. If Borrower fails to pay any amount of
principal and/or interest on this Note for ten (10) days after
such payment becomes due, whether by acceleration or otherwise,
Lender may, at its option, whether immediately or at the time of
final payment of the amounts evidenced by this Note, impose a late
payment charge (the "Late Payment Charge") computed by multiplying
the amount of each past due payment by five percent (5.00%).
Until any and all Late Payment Charges are paid in full, the
amount thereof shall be added to the indebtedness secured by any
of the Loan Documents. The Late Payment Charge is not a penalty
and is deemed to be liquidated damages for the purpose of
compensating Lender for the difficulty in computing the actual
amount of damages incurred by Lender as a result of the late
payment by Borrower.
(d) DEFAULT RATE. Principal and any accrued interest not paid
when due, whether at the Maturity Date or resulting from the
acceleration of the Maturity Date upon the occurrence of an Event
of Default (as such term is defined herein), and any advances
which are made by the holder pursuant to any provision of any
other instruments or agreements securing this Note from the date
of any such advance shall bear interest at a rate of four percent
(4.00%) above the Base Rate, but in no event at an annual interest
rate greater than the maximum amount permitted by applicable law.
(e) PREPAYMENT. If the principal balance is prepaid in whole or
in part, at any time and from time to time prior to September 29,
2004, the Borrower will pay to the Lender a sum equal to the
following amounts of principal so prepaid: five percent (5.00%) of
any prepayment on or before September 29, 2000; four percent
(4.00%) of any prepayment on or before September 29, 2001; three
percent (3.00%) of any prepayment on or before September 29, 2002;
two percent (2.00%) of any prepayment on or before September 29,
2003; and one percent (1.00%) of any prepayment on or before
September 29, 2004. The receipt and application of any principal
prepayment shall result in a re-calculation of the amortization of
the then outstanding principal balance of the Loan.
In the event Lender receives partial prepayments, or in the event
that Lender shall receive proceeds of condemnation or insurance
proceeds for application against the Loan, such prepayments and
proceeds shall be applied to installments of principal in the
inverse order of maturity and no prepayment consideration shall be
deducted from such prepayments or such condemnation or insurance
proceeds.
(f) ACCELERATION. If:
(i) Borrower shall fail to pay any sum due on this Note within
thirty (30) days of the date the same is due; or
(ii) Borrower shall fail to perform any other obligation required
to be performed by Borrower under this Note, or any other Loan
Document, for ten (10) days after Lender has given written notice
of such failure to Borrower provided that in the case of any such
failure which is susceptible to cure but cannot be cured within
ten (10) days through the exercise of due diligence, so long as
the Borrower commences such cure within such ten (10) day period,
such failure remains susceptible to cure, and the Borrower
diligently pursues such cure, such failure shall not be deemed to
create an Event of Default hereunder; or
(iii) Any warranty, representation or other statement by or on
behalf of Borrower, or Guarantor in any instrument furnished in
compliance with or in reference to this Note be false or
misleading in any material respect; or
(iv) Borrower or Guarantor shall generally not be paying debts as
they become due or file a petition or seek relief under or take
advantage of any insolvency law; make an assignment for the
benefit of creditors; commence a proceeding for the appointment of
a receiver, trustee, liquidator, custodian or conservator of
Borrower or any Guarantor or of the whole or substantially all of
Borrower's or any Guarantor's property or of any collateral
pledged as security for this Note; or if Borrower or Guarantor
shall file a petition under any chapter of the United States
Bankruptcy Code, as amended (or any successor statute thereto), or
file a petition or seek relief under or take advantage of any
other similar law or statute of the United States of America, any
State thereof, or any foreign country or subdivision thereof; or
(v) A court of competent jurisdiction shall enter an order,
judgment or decree appointing or authorizing a receiver, trustee,
liquidator, custodian or conservator of Borrower or any Guarantor
or of the whole or substantially all of Borrower's or Guarantors'
property, or any portion of the collateral pledged as security for
this Note, or enter an order for relief against Borrower or
Guarantor in any case commenced under any chapter of the United
States Bankruptcy Code, as amended (or any successor statute
thereto), or grant relief under any other similar law or statute
of the United States of America, any State thereof, or any foreign
country or subdivision thereof and the same is not stayed or
discharged within ninety (90) days of entry; or
(vi) Under the provisions of any law for the relief or aid of
debtors, a court of competent jurisdiction or a receiver, trustee,
liquidator, custodian or conservator shall assume custody or
control or take possession from Borrower or Guarantor of all or
substantially all of Borrower's or Guarantor's property or any
portion of any collateral pledged as security for this Note; or
(vii) There shall be commenced against Borrower or Guarantor any
proceeding for any of the foregoing relief or if a petition is
filed against Borrower or Guarantor under any chapter of the
United States Bankruptcy Code, as amended (or any successor
statute thereto), or under any other similar law or statute of the
United States of America, any State thereof, or any foreign
country or subdivision thereof, and such proceeding or petition
remains undismissed for a period of ninety (90) days or if
Borrower or Guarantor by any act indicates consent to, approval of
or acquiescence in any such proceeding or petition; or
(viii) Lender shall receive a notice to creditors with regard to a
bulk transfer by Borrower or Guarantor pursuant to Article VI of
any applicable Uniform Commercial Code; or
(ix) A judgement shall enter or a tax lien be filed against the
Borrower or the property of the Borrower and shall not be
satisfied or bonded to the satisfaction of the Lender within sixty
(60) days of entry or recording, as the case may be; or
(x) the liquidation or dissolution of either of the Borrower or a
Guarantor shall occur; or
(xi) Borrower or Guarantor shall fail to comply with the terms of
or an "event of default" occurs under any other loan transaction
or credit arrangement of any kind with Lender, and Borrower or
Guarantor shall fail to cure such event of default within any
applicable cure period provided for in the respective Loan
Document; or
(xii) an "Event of Default", as said term is defined in any other
Loan Document, shall occur;
then, and in any such event (an "Event of Default"), the Lender
may, at its option and subject to Borrower's right to cure such
Event of Default within any such applicable cure period, declare
the entire unpaid balance of this Note together with interest
accrued thereon and any other sums due hereunder or under the Loan
Documents, to be immediately due and payable and Lender may
proceed to exercise any rights or remedies that it may have under
this Note or any other Loan Documents, or such other rights and
remedies which Lender may have at law, equity or otherwise. In
the event of such acceleration, Borrower may discharge its
obligations to Lender by paying:
(i) accrued interest computed in the manner set forth above, plus
(ii) the unpaid principal balance hereof as at the date of such
payment, plus
(iii) any Late Payment Charge computed in the manner set forth
above, plus
(iv) any other sum due and owing Lender under this Note or any
other Loan Document.
(g) COSTS AND EXPENSES ON DEFAULT. After default, in addition to
principal, interest and any Late Payment Charge, Lender shall be
entitled to collect all costs of collection, including, but not
limited to, reasonable attorneys' fee, incurred in connection with
the protection or realization of collateral or in connection with
any of Lender's collection efforts, whether or not suit on this
Note or any foreclosure proceeding is filed, and all such costs
and expenses shall be added to the principal due hereunder and
shall be payable on demand and until paid shall be secured by the
Loan Documents and by all other collateral held by Lender as
security for Borrower's obligations to Lender.
(h) NO WAIVER BY LENDER. No failure on the part of Lender or
other holder hereof to exercise any right or remedy hereunder,
whether before or after the happening of an Event of Default,
shall constitute a waiver thereof, and no waiver of any past
right, remedy, or Event of Default shall constitute a waiver of
any future default or of any other default. No failure to
accelerate the Loan evidenced hereby by reason of default
hereunder, or acceptance of a past due installment, or indulgence
granted from time to time shall be construed to be a waiver of the
right to insist upon prompt payment thereafter, or shall be deemed
to be a novation of this Note or as a reinstatement of the Loan
evidenced hereby or as a waiver of such right of acceleration or
any other right, or be construed so as to preclude the exercise of
any right which Lender may have, whether by the laws of the state
governing this Note, by agreement or otherwise; and Borrower and
each endorser or Guarantor hereby expressly waive the benefit of
any statute or rule of law or equity which would produce a result
contrary to or in conflict with the foregoing. This Note may not
be changed orally, but only by an agreement in writing signed by
the party against whom such agreement is sought to be enforced.
(i) FINANCIAL INFORMATION. Borrower will at all times keep
proper books of records and accounts in which full, true and
correct entries shall be made in accordance with generally
accepted accounting principles and will deliver to Lender within
115 days after the end of each fiscal year a copy of the annual
financial statements of Borrower relating to the prior fiscal year
such statements to include (i) the balance sheet of Borrower as at
the end of such fiscal year and (ii) the related income statement,
statement of retained earnings and statement of changes in the
financial position of Borrower for such fiscal year prepared on an
audit level basis by such certified public accountants as may be
reasonably satisfactory to Lender. Borrower also agrees to
deliver to Lender by within 115 days after the end of each fiscal
year a copy of the Guarantor's year-end form 10-KSB report (or
such other similar report if such report shall no longer be
prepared) and, from time to time, at the request of the Lender,
such other financial information with respect to Borrower and the
Guarantor as the Lender may reasonably request. In addition, the
Borrower shall by the 30th day of each month deliver to the
Lender, management prepared financial statements as of the last
day of the previous month and by the 60th day after the end of a
fiscal quarter each of the Guarantor's quarterly form 10-QSB (or
such other similar report if such report shall no longer be
prepared). All of the foregoing reports and financial statements
will be signed by the chief financial officer of the Borrower and
Guarantor, as the case may be, and certified to the Lender as
being true and accurate.
If the Borrower shall fail to provide the financial statements,
tax returns and other information as required by this paragraph
(i) (a "Financial Information Default"), then, in addition to all
of Lender's other rights and remedies, at Lender's option
commencing three days after written notice (the "Adjustment Date")
of such Financial Information Default is sent by Lender to the
Borrower, the Interest Rate shall be increased by one quarter of
one percent (0.25%) per annum for the first thirty (30) days after
the Adjustment Date, and the Interest Rate shall be increased by
one quarter of one percent (0.25%) 30 days after the Adjustment
Date and each 30 days thereafter, but in no event beyond the
maximum interest rate permitted by applicable law. Such higher
interest rates shall apply to the entire outstanding principal
balance then due under this Note. Effective upon the curing of
such Financial Information Default, as determined by the Lender in
its sole and exclusive discretion, the Interest Rate shall revert
to that set forth in Article I of this Note. Borrower acknowledges
that such increase in the Interest Rate is intended to compensate
Lender for the potentially higher credit risk and increased
administrative costs associated with such failure to furnish
timely financial statements, tax returns and other information.
(j) WAIVER BY BORROWER. Borrower and each endorser or Guarantor
of this Note hereby waives presentment, protest, demand,
diligence, notice of dishonor and of nonpayment, and waives and
renounces all rights to the benefits of any statute of limitations
and any moratorium, appraisement, exemption and homestead now
provided or which may hereafter be provided by any federal or
state statute, including but not limited to exemptions provided by
or allowed under the United States Bankruptcy Code, both as to
itself personally and as to all of its or their property, whether
real or personal, against the enforcement and collection of the
obligations evidenced by this Note and any and all extensions,
renewals and modifications hereof.
(k) COMPLIANCE WITH USURY LAWS. It is the intention of the
parties to conform strictly to the usury laws, whether state or
federal, that are applicable to this Note. All agreements between
Borrower and Lender, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in
no contingency or event whatsoever, whether by acceleration of
maturity hereof or otherwise, shall the amount paid or agreed to
be paid to Lender or the holder hereof, or collected by Lender or
such holder, for the use, forbearance or detention of the money to
be loaned hereunder or otherwise, or for the payment or
performance of any covenant or obligation contained herein, or in
any of the Loan Documents, exceed the maximum amount permissible
under applicable federal or state usury laws. If under any
circumstances whatsoever fulfillment of any provision hereof or of
the Loan Documents, at the time performance of such provision
shall be due, shall involve exceeding the limit of validity
prescribed by law, then the obligation to be fulfilled shall be
reduced to the limit of such validity; and if under any
circumstances Lender or other holder hereof shall ever receive an
amount deemed interest by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest
under applicable usury laws shall be applied to the reduction of
the principal amount owing hereunder or to other indebtedness
secured by the Loan Documents and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of
principal and such other indebtedness, the excess shall be deemed
to have been a payment made by mistake and shall be refunded to
Borrower or to any other person making such payment on Borrower's
behalf. All sums paid or agreed to be paid to the holder hereof
for the use, forbearance or detention of the indebtedness of
Borrower evidenced hereby, outstanding from time to time shall, to
the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed
by law, be amortized, pro-rated, allocated and spread from the
date of disbursement of the proceeds of this Note until payment in
full of the Loan evidenced hereby and thereby so that the actual
rate of interest on account of such indebtedness is uniform
throughout the term hereof and thereof. The terms and provisions
of this paragraph shall control and supersede every other
provision of all agreements between Borrower, any endorser or
Guarantor and Lender.
(l) GOVERNING LAW; SUBMISSION TO JURISDICTION. This Note shall be
governed by and construed under the laws of the Commonwealth of
Massachusetts and shall have the effect of a sealed instrument.
Borrower and each endorser or Guarantor hereby submits to personal
jurisdiction in Berkshire County in said Commonwealth for the
enforcement of Borrower's obligations hereunder or under any other
Loan Document and waives any and all personal rights under the law
of any other state to object to jurisdiction within such
Commonwealth for the purposes of litigation to enforce such
obligations of Borrower.
(m) WAIVER OF JURY TRIAL. LENDER AND THE BORROWER HEREBY WAIVE
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS NOTE, ANY OTHER LOAN
DOCUMENT OR THE LOAN, OR ANY INSTRUMENT OR DOCUMENT DELIVERED IN
CONNECTION WITH THE LOAN, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN THE BORROWER AND
LENDER.
(n) AUTHORITY OF LENDER. Borrower authorizes Lender to date this
Note as of the day when the Loan is made and to complete or
correct this Note as to any terms of the Loan set forth in the
Lender's Commitment Letter dated July 8, 1999 and not set forth
herein at the time of delivery hereof.
(o) NOTICES. Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by
registered or certified mail, postage prepaid, return receipt
requested, or (iii) forwarded by overnight courier service, in
each instance addressed to the addresses set forth at the head of
this Note, or such other addresses as the parties may for
themselves designate in writing as provided herein for the purpose
of receiving notices hereunder. All notices shall be in writing
and shall be deemed given, in the case of notice by personal
delivery, upon actual delivery, and in the case of mail or courier
service, upon deposit with the U.S. Postal Service or delivery to
the courier service.
(p) LIABILITY IF MORE THAN ONE BORROWER. If more than one person
or entity executes this Note as a Borrower, all of said persons or
entities are jointly and severally liable hereunder.
(q) ENTIRE AGREEMENT. This Note and the other Loan Documents
constitute the entire understanding between Borrower, the
Guarantors, if any, and Lender and to the extent that any writings
not signed by Lender or oral statements or conversations at any
time made or had shall be inconsistent with the provisions of this
Note and the other Loan Documents, the same shall be null and
void.
(r) "BUSINESS PURPOSE" WARRANTY. The undersigned covenants and
warrants that the proceeds of this Loan shall be used solely for
business purposes and that the transaction evidenced hereby is not
a consumer transaction subject to MGL c.140D, Federal Reserve
Board Regulation Z or other "consumer protection" statutes,
regulations or restrictions, without exception.
(s) RIGHTS OF SET OFF. Borrower grants to the Lender a continuing
lien for the amount of this Note upon any and all monies,
securities and other property of Borrower and the proceeds
thereof, now or hereafter held or received by or in transit to the
Lender from or for Borrower whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any
and all deposits (general or special) and credits of Borrower
with, any and all claims of Borrower against the Lender at any
time existing. Upon the occurrence of an Event of Default and
failure of Borrower to cure such Event of Default within any
applicable cure period, the Lender is authorized at any time and
from time to time, without notice to Borrower, regardless of the
adequacy of any other collateral, and without requiring the Lender
to first proceed against any other security interest, to set off,
appropriate and apply any and all items hereinabove referred to
against the outstanding indebtedness evidenced by this Note.
Lender shall be deemed to have exercised such right of set off
immediately at the time Lender elects to make such set off, even
though any charge therefor is made or entered on Lender's records
subsequent thereto.
IN WITNESS WHEREOF, Borrower has caused this instrument to be
executed by William A. Frey, III, its duly authorized President
and Treasurer, and its corporate seal to be hereunto affixed as of
the date first above written.
PITTSFIELD MOLD & TOOL, INC.
By: /s/ William A. Frey, III
William A. Frey, III,
President and Treasurer
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss. September 29, 1999
Then personally appeared the above-named William A. Frey, III,
President and Treasurer, who acknowledged the foregoing instrument
to be the free act and deed of Pittsfield Mold & Tool, Inc.,
before me,
/s/ Gerald A. Denmark
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
Exhibit 99.16
MORTGAGE AND SECURITY AGREEMENT
(First Mortgage)
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is
made this 29th day of September, 1999, between PITTSFIELD MOLD &
TOOL, INC., a Massachusetts corporation, with a mailing address
for the purposes hereof at 10 Betnr Industrial Drive, Pittsfield,
Massachusetts (the "Mortgagor") and BERKSHIRE BANK, a
Massachusetts banking corporation with its principal office and
place of business at 24 North Street, P. O. Box 1308, Pittsfield,
Massachusetts 01202 ("Mortgagee").
W I T N E S E T H:
WHEREAS, Mortgagor is indebted unto Mortgagee in the amount
of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($2,500,000.00) (the "Loan"), evidenced by that certain
promissory note of like amount made by the Mortgagor and payable
to the order of the Mortgagee (the "Note"); and
WHEREAS, Mortgagor has given this Mortgage to partially
secure the Note; and
WHEREAS, Mortgagor desires to secure the Mortgagee and any
subsequent holder(s) of the Note and all those claiming under or
through the Mortgagee the full and punctual payment of the total
debt evidenced by the Note, when and as the same shall become due
and payable, as well as any renewal, extension, modification,
supplement and amendment of the Note, or any part of the Note,
together with interest thereon, if any, and the performance of and
compliance with the covenants and agreements herein and therein
contained and also to secure the reimbursement to the holder(s) of
the Note of all value which may be advanced as herein provided,
and for any reasonable costs and expenses incurred or paid on
account of any litigation at law or in equity which may arise with
respect to this Mortgage, the Indebtedness, as hereinafter
defined, or the Mortgaged Property, as hereinafter defined, or in
obtaining possession of said Mortgaged Property.
It is the true, clear and express intention of Mortgagor that
the continuing grant of this Mortgage remain as security for
payment and performance of the Indebtedness, whether or not
presently contemplated or otherwise related to this Mortgage
transaction by class or kind; and that the notice of the
continuing grant of this Mortgage therefor shall not be required
to be stated on the face of any document representing any such
Indebtedness, nor otherwise be identified as being secured by this
Mortgage; and if such Indebtedness shall remain or become that of
less than all of the Mortgagors herein, any Mortgagor not liable
therefor hereby expressly hypothecates his, her, its, or their
ownership interest in the Mortgaged Property herein to the extent
required to satisfy the Secured Indebtedness, without restriction
or limitation.
NOW THEREFORE, FOR CONSIDERATION PAID, Mortgagor, to secure
payment of the Indebtedness, in lawful money of the United States
of America, and also to secure the performance, satisfaction and
discharge of the Obligations, as hereinafter defined, does hereby
give, grant, bargain, sell and convey with MORTGAGE COVENANTS unto
the Mortgagee and its successors and assigns the Mortgaged
Property, as hereinafter defined;
TO HAVE AND TO HOLD the Mortgaged Property unto and to the
proper use and benefit of the Mortgagee, and its successors and
assigns forever;
PROVIDED, NEVERTHELESS, and these presents are upon this
express condition, that if the Mortgagor shall pay to Mortgagee
the Indebtedness at the time and in the manner provided in the
Note and this Mortgage and shall well and truly abide by and
comply with each and every covenant and condition set forth in the
Note, this Mortgage, and other Loan Documents, as hereinafter
defined, then this Mortgage shall cease, determine and be void;
otherwise, this Mortgage shall remain in full force and effect for
all purposes.
1. DEFINITIONS. Mortgagor and Mortgagee agree that, unless
the context otherwise specifies or requires, the following terms
shall have the meanings herein specified, such definitions to be
applicable equally to the singular and the plural forms of such
terms:
Fixtures shall mean all fixtures located upon or within the
Improvements, as hereinafter defined, or now or hereafter attached
to or installed in, or used in connection with any of the
Improvements, including, but not limited to, any and all
partitions, dynamos, screens, awnings, motors, engines, boilers,
furnaces, pipes, plumbing, elevators, sprinkler systems, fire
prevention and extinguishing apparatus and equipment, water tanks,
heating, ventilating, air-conditioning and air-cooling equipment,
furnaces, heaters, condensers, compressors, motors, ducts,
machinery, walks, fences, shrubbery, driveways, fittings and
articles of personal property of every kind and character
whatsoever, excluding, however, all items of personal property
owned by occupancy tenants of the Improvements and installed for
the purpose of their tenancies with the right of removal by the
tenant upon the expiration of its tenancy.
Impositions shall mean (i) all real estate taxes, personal
property taxes and other taxes of every kind and character,
general and special, ordinary and extraordinary, foreseen and
unforeseen, which at any time prior to or after the execution of
this Mortgage may be assessed, levied or imposed upon the
Mortgaged Property, as hereinafter defined, or the rents
therefrom, or any use or occupancy thereof; (ii) all general and
special assessments, levies, and all other rentals and charges
payable to municipal or other governmental authorities for use of
or in respect to public space at, below or above ground level
(including public air space); (iii) all permit fees, inspection
fees and license fees; (iv) all water and sewer rents and charges;
(v) all other public charges, taxes, assessments, fees,
governmental and non-governmental charges, whether of a like or a
different nature, to the extent any of the foregoing are imposed
upon or assessed against Mortgagor or the Mortgaged Property or
any part thereof or upon the revenues, rents, avails, issues,
income and profits of the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof; (vi) any charges for
any easement or agreement maintained for the benefit of the
Mortgaged Property; and (vii) any interest, costs or penalties
with respect to any of the foregoing.
Improvements shall mean any and all buildings, structures,
improvements, alterations or appurtenances now erected or at
anytime hereafter constructed or placed upon the Land, as
hereinafter defined, or any portion thereof and any replacements
thereof including, without limitation, all equipment, apparatus,
machinery and fixtures of any kind or character forming a part of
said buildings, structures, improvements, alterations or
appurtenances, excluding, however, all items of personal property
owned by occupancy tenants of the Improvements and installed for
the purpose of their tenancies with the right of removal by the
tenant upon the expiration of its tenancy.
Indebtedness shall mean the principal sum due and the
interest thereon described in the Note and all other amounts,
charges, expenses, payments and premiums due on account of the
Note, this Mortgage, and the other Loan Documents, as hereinafter
defined.
Interest Rate shall mean the Interest Rate as defined in the
Note.
Land shall mean the fee simple estate in the parcel of real
estate located in Pittsfield, Berkshire County, Massachusetts
described in Exhibit A attached hereto and by this reference made
a part hereof for all purposes.
Leases shall mean any and all leases, sub-leases, occupancy
agreements, licenses, concessions or grants or other possessory
interests, and any guaranties thereof, if any, now or hereafter in
force, whether oral or written, covering or affecting the
Mortgaged Property, as hereinafter defined, or any portion
thereof, if any, in which Mortgagor is landlord, licensor,
concessionaire or owns any other beneficial interest of any type
or kind.
Loan Documents shall mean this Mortgage, the Note, the
guaranty from United Shields Corporation (the "Guarantor"), an
assignment of rents and leases from the Mortgagor the Mortgagor to
the Mortgagee of even date herewith, and any and all other
documents now or subsequently relating to, evidencing, securing or
further securing the payment of the Indebtedness or the
performance of the Obligations, as hereinafter defined, by the
Mortgagor and any amendment, modification, supplementation to or
replacement thereof.
Maturity Date shall mean the date stated in the Note for the
payment of the entire unpaid Indebtedness.
Mortgaged Property shall mean, collectively, all of
Mortgagor's right, title, interest, estate, claim or demand either
at law or in equity in and to the Land, the Improvements, the
Fixtures and the Personalty, as hereinafter defined, TOGETHER
WITH:
(i) all and singular the rights, privileges, tenements,
hereditaments, rights-of-way, easements, appendages and
appurtenances of the Land and Improvements belonging or in any way
appertaining thereto, or which hereafter shall in any way belong,
relate or be appurtenant thereto, whether now owned or hereafter
acquired by Mortgagor, and all right, title and interest of
Mortgagor in and to any streets, ways, alleys, strips or gores of
land adjoining the Land or any portion thereof; and any and all
rights and estates in reversion or remainder; and
(ii) all of Mortgagor's right, title and interest in and
to any award or awards heretofore made or hereafter to be made by
municipal, state or federal authorities to the present or any
subsequent owners of the Land, the Improvements, the Fixtures or
the Personalty, including any award or awards or settlements
hereafter made resulting from (x) condemnation proceedings or the
taking of the Land, the Improvements, the Fixtures or the
Personalty, or any part thereof, under the power of eminent domain
or payments in lieu thereof, or (y) the alteration of the grade or
the location or discontinuance of any street adjoining the Land or
any portion thereof, or (z) any other injury to or decrease in the
value of the Mortgaged Property at the date of receipt of any such
award or payment by the Mortgagee, and the Mortgagor hereby agrees
to execute and deliver, from time to time, such further
instruments as may be requested by the Mortgagee to confirm such
assignment to the Mortgagee of any such award, damage, payment or
other compensation; and
(iii) all proceeds from the conversion, voluntary or
involuntary, of any of the foregoing into cash or liquidated
claims including, without limitation, the proceeds of insurance;
and
(iv) all Leases of the Land or the Improvements now or
hereafter entered into and all right, title and interest of
Mortgagor thereunder, including, without limitation, Mortgagor's
right to cash or securities deposited thereunder to secure
performance by tenants of their obligations thereunder, whether
such cash or securities are to be held until the expiration of the
terms of such leases or applied to one or more of the installments
of rent coming due immediately prior to the expiration of such
terms; and
(v) all earnings, revenues, rents, royalties, issues,
profits, avails and other income of and from the Land or the
Improvements, and all undisbursed proceeds of the Loan; and
(vi) all right, title, interest, estate, claim or demand
of Mortgagor, either at law or in equity, in and to all
architectural, engineering and similar plans, specifications,
drawings, renderings, models, profiles, studies, shop drawings,
reports, plats, permits, surveys and the like; and all sewer taps,
permits and allocations, agreements for utilities, bonds, sureties
and the like, relating to the Land or the Improvements or
appurtenant facilities erected or to be erected upon or about the
Land; and
(vii) all right, title and interest of Mortgagor in, to
and under any and all contracts, now or hereafter entered into by
Mortgagor covering any part of the Land or Improvements or
relating to the Fixtures or the Personalty; and
(viii) all right, title and interest of Mortgagor in and
to any and all governmental permits, licenses and the like
respecting the use, construction, occupancy, operation or
maintenance of the Mortgaged Property; and
(ix) all right, title and interest of Mortgagor in and
to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and
appurtenances to the Land, the Improvements, the Fixtures and the
Personalty, hereafter acquired by, or released to, Mortgagor or
constructed, assembled or placed by Mortgagor on the Land, and all
conversions of the security constituted thereby, immediately upon
such acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case, without any
further mortgage, conveyance, assignment or other act by
Mortgagor, the same shall become subject to this Mortgage as fully
and completely, and with the same effect, as though now owned by
Mortgagor and specifically described in the granting clause
hereof. At any and all times, Mortgagor will execute and deliver
to Mortgagee such further assurances, mortgages, conveyances or
assignments thereof as Mortgagee may reasonably require for the
purpose of expressly and specifically subjecting the same to the
lien of this Mortgage; and
(x) all right, title and interest of Mortgagor in and to
all trade or style name(s) under or by which any or all of the
Improvements may at any time be operated or known, the good will
of the Mortgagor in connection therewith and the right of
Mortgagor to carry on business under any or all such trade or
style name(s) and any variant or variance thereof, insofar as the
same may be transferable by Mortgagor without the breach of any
agreement pursuant to which Mortgagor may have obtained its right
to use such trade or style name(s);
(xi) any and all other, further or additional title,
estate, interest or right which may at any time be acquired by
Mortgagor in or to the Mortgaged Property or any portion thereof.
Mortgagee shall mean the party hereinabove designated as
such, its successors and assigns, and any subsequent holder or
holders of this Mortgage.
Mortgagor shall mean the party hereinabove designated as
such, its successors and assigns, and any subsequent owner or
owners of the equity of redemption in the Mortgaged Property, but
nothing in this sentence or any reference in this instrument to
successors in title to the Mortgagor shall be construed as
derogating from the restrictions on transfer of the Mortgagor's
interest in the Mortgaged Property contained herein.
Obligations shall mean any and all of the covenants, promises
and other obligations (other than the Indebtedness) made or owing
by the Mortgagor to or due to the Mortgagee pursuant to or as
otherwise set forth in the Note, this Mortgage and other Loan
Documents or in any other instrument(s) to which Mortgagor is a
party or by which Mortgagor is bound.
Permitted Encumbrances shall mean zoning laws and ordinances,
easements, and similar restrictions to title that are described in
the policy of title insurance issued to the Mortgagee in
connection herewith or that do not individually or in the
aggregate materially detract from the value of the Mortgaged
Property or impair the use thereof for the purposes intended or
subject such use to the risk of being impaired.
Personalty shall mean all of the right, title, interest,
estate, claim or demand of Mortgagor in and to any furniture,
furnishings, equipment, machinery and other personal property
(other than the Fixtures) including, without limitation, all
venetian blinds, shades, draperies, drapery and curtain rods,
brackets, bulbs, vacuum cleaning systems and cleaning apparatus,
mirrors, lamps, ornaments, rugs, linoleum and other floor
covering, refrigerating and cooling apparatus and equipment,
refrigerators, ranges and ovens, garbage disposals, dishwashers,
mantels, and any and all such property which is at any time
hereafter installed in, affixed to, placed upon or used in
connection with the Land or the Improvements and all replacements
thereof, additions thereto and substitutions therefor, excluding,
however, (i) all items of personal property owned by occupancy
tenants of the Improvements and installed for the purpose of their
tenancies with the right of removal by the tenant upon the
expiration of its tenancy and (ii) all personal property leased by
Mortgagor as lessee.
Rents shall mean all of the rents, revenues, income, profits
and other benefits arising from the use and enjoyment of ownership
of all or any portion of the Mortgaged Property.
2. REPRESENTATIONS. Mortgagor warrants and represents to
the Mortgagee that (i) Mortgagor will pay the Indebtedness in the
manner provided in the Note or in any modification, renewal or
extension thereof, (ii) this Mortgage has been duly authorized,
executed and delivered by and on behalf of the Mortgagor, (iii) if
applicable, the Mortgagor is duly existing and in good standing
with all power, authority, and legal right to engage in the
transaction contemplated by this Mortgage and the Loan Documents,
(iv) the execution and delivery of this Mortgage and the Loan
Documents and the carrying out of the transaction contemplated
thereby will not conflict with or result in a breach of the terms
of any agreement to which the Borrower or any endorser of the Note
or any guarantor is a party or will not conflict with any law or
order of any court or governmental body, (v) there are no actions,
suits or proceedings, including, without limitation, eminent
domain proceedings, pending, or, to the knowledge of the
Mortgagor, threatened before any court or any other governmental
body or agency which could adversely affect the Mortgaged Property
or the Mortgagor or the Mortgagor's ability to perform its
obligations under this Mortgage or under the other Loan Documents,
(vi) the Mortgagor has not generated, stored or disposed of any
oil, hazardous waste or hazardous material as such material is
defined in Massachusetts General Laws C. 21E, the Resource
Conservation and Recovery Act, as amended, and other applicable
State or Federal laws or regulations as they may be amended from
time to time, excluding customary amounts of such materials
commonly and lawfully used in residential and office buildings,
and to Mortgagor's knowledge and except as reported in the 21E
Site Assessment heretofore supplied to the Mortgagee by the
Mortgagor, no third party has generated, stored, or disposed of
any such materials on the Mortgaged Property or on any other
property owned or operated by the Mortgagor, and no such materials
are presently located on the Mortgaged Property or on any other
property owned or operated by the Mortgagor except in compliance
with all applicable laws and regulations, (vii) the Mortgaged
Property is in compliance with applicable zoning, building,
environmental and all other laws, ordinances and regulations
relating to the use and occupancy thereof and the Mortgagor has no
knowledge of any claim of violation of any such legal
requirements, (viii) all necessary licenses and permits for the
use and occupancy of the Mortgaged Property have been issued and
are in full force and effect, (ix) the Improvements and the
Personalty are in good working order and free from structural
defects, (x) the Mortgagor has no knowledge of any existing
default, or claim thereof, under any leases or other arrangements
for the use or occupancy of the Mortgaged Property either on the
part of the Mortgagor or any other party thereto, and the
Mortgagor's title to the Mortgaged Property is free from defects,
liens or encumbrances except for the Permitted Encumbrances, and
(xi) any and all financial statements heretofore delivered to the
Mortgagee by or on behalf of the Mortgagor and any other financial
statements of individuals and/or entities for which financial
statements have been furnished to Mortgagee in connection with the
Loan, are true and correct in all material respects, have been
prepared in accordance with generally accepted accounting
principles, consistently applied, and fairly present the
respective financial conditions of the subjects thereof as of the
respective dates thereof. No materially adverse change has
occurred in the financial conditions reflected therein since the
respective dates thereof and no additional borrowings have been
made or guaranteed by the subjects thereof since the respective
dates thereof which would cause a material adverse change in the
financial condition of Mortgagor, or other person or entity
endorsing the Note or delivering a guaranty of the Loan, other
than the borrowing secured hereby or previously approved by the
Mortgagee, including borrowings to facilitate Guarantor's
acquisition of Mortgagor.
3. UCC REPRESENTATIONS. The Mortgagor warrants that the
Mortgagor's principal place of business in Massachusetts is at 10
Betnr Industrial Drive, Pittsfield, Massachusetts. The Mortgagor
agrees to maintain complete and accurate records listing and
describing the Fixtures and the Personalty and to deliver such
records to the Mortgagee from time to time upon request of the
Mortgagee.
4. SECURITY INTEREST UNDER THE UNIFORM COMMERCIAL CODE.
Upon demand, Mortgagor shall make, execute and deliver such
security agreements (as such term is defined in the Uniform
Commercial Code of the Commonwealth of Massachusetts) as Mortgagee
at any time may deem necessary or proper or require to grant to
Mortgagee a perfected security interest in the Personalty, and
upon Mortgagor's failure to do so, Mortgagee is authorized to sign
any such agreement as the agent of Mortgagor. Mortgagor hereby
authorizes Mortgagee to file financing statements (as such term is
defined in said Uniform Commercial Code) with respect to the
Personalty, at any time, without the signature of Mortgagor.
Mortgagor will, however, at any time upon request of Mortgagee,
sign such financing statements. Mortgagor will pay all filing
fees for the filing of such financing statements and for the
refiling thereof at the times required, in the opinion of
Mortgagee, by said Uniform Commercial Code. If the lien of this
Mortgage be subject to any security agreement covering the
Personalty, then in the event of any default under this Mortgage,
all the right, title and interest of Mortgagor in and to any and
all of the Personalty is hereby assigned to Mortgagee, together
with the benefit of any deposits or payments now or hereafter made
thereof by Mortgagor or the predecessors or successors in title of
Mortgagor in the Mortgaged Property. This Mortgage is considered
to be a financing statement pursuant to the provisions of the
Uniform Commercial Code of the Commonwealth of Massachusetts
covering Fixtures and Personalty located on or used in connection
with the Land.
5. LEASES. The Mortgagor shall observe and perform all
the obligations imposed upon the Mortgagor under any lease of the
Mortgaged Property, or any portion thereof, and shall not do or
permit anything to be done, without the prior written consent of
the Mortgagee, which would impair the security of any such lease
to the Mortgagee, or, except where the lessee is in default
thereunder, terminate or consent to the cancellation or surrender
of any lease of the Mortgaged Property, or any part thereof, or
modify any such lease so as to shorten the unexpired term thereof
or so as to decrease the amount of the Rents payable thereunder.
The Mortgagor shall not accept prepayments of any installments of
Rent to become due under such leases more than thirty (30) days in
advance, except prepayments in the nature of security for the
performance of the obligations of the lessee thereunder. The
Mortgagor warrants that no Rent reserved under any lease of the
Mortgaged Property has been previously assigned or anticipated,
and no rent for any period subsequent to the date hereof has been
collected more than thirty (30) days in advance of the due date
thereof. If any of such leases provide for the giving by the
lessee of estoppel certificates with respect to the status of such
leases, Mortgagor shall exercise its right to request such
estoppel certificates within five (5) days of any demand therefor
by Mortgagee.
6. ASSIGNMENT OF LEASES AND RENTS. As additional
security for the obligations secured hereby, the Mortgagor hereby
assigns to the Mortgagee all of the Mortgagor's rights under any
and all leases or other arrangements for the use or occupancy of
all of any part of the Mortgaged Property, including, without
limitation, the right to receive the Rents from the Mortgaged
Property provided, however, that the Mortgagor shall retain the
right to receive and enjoy the Rents and exercise its other rights
under such leases and other contractual arrangements for the use
and/or occupancy of the Mortgaged Property until the occurrence of
an Event of Default under this Mortgage. After an Event of
Default, the Mortgagee shall be entitled to modify, alter, amend
and otherwise deal with all such leases and other arrangements
with the same power and discretion which the Mortgagee would have
if it were the Lessor or obligee thereof, and the Mortgagee shall
be entitled to collect all of the Rents to collect and endorse
any checks issued in the name of the Mortgagor and to apply the
same to the Indebtedness and other charges outstanding under any
of the Loan Documents. Mortgagor hereby agrees to enter into any
other agreement requested by the Mortgagee to evidence further
this assignment of leases and rents described in this Section.
7. OTHER SECURITY INTERESTS AND EQUIPMENT LEASING. The
Mortgagor shall not permit, without the prior written consent of
Mortgagee, (i) the creation or continued existence, whether by
voluntary action or operation of law, of any security interest in
or other encumbrance on the Mortgaged Property other than the
Permitted Encumbrances or a lien for unpaid real estate taxes and
betterment assessments prior to the commencement of interest and
penalties thereon, or (ii) the leasing of any equipment to be used
by the Mortgagor at or in connection with the operation of the
Mortgaged Property, other than in the ordinary course of
Mortgagor's business. The Mortgagor shall notify the Mortgagee
promptly of the existence of and the terms of any security
interest affecting any portion of the Mortgaged Property and any
lease of personal property, except for those equipment leases made
in the ordinary course of Mortgagor's business, to be used by the
Mortgagor at or in connection with the operation of the Premises,
whether now existing or hereafter arising, shall make all payments
that become due to any secured party having any such security
interest or to any lessor of such equipment, and, at the request
of the Mortgagee, shall assign to the Mortgagee all of Mortgagor's
right, title and interest in and to any and all agreements
evidencing such security interest or lease. The Mortgagor hereby
grants to the Mortgagee full power and authority as attorney-in-
fact of the Mortgagor, which appointment is acknowledged by the
parties hereto to be coupled with an interest, to make, execute,
acknowledge and deliver such assignments. The Mortgagor
represents that, except for the Permitted Encumbrances, no such
security interest or lease presently exists.
8. INSURANCE. The Mortgagor agrees, at the Mortgagor's
sole cost and expense, to keep the Mortgaged Property insured at
all times throughout the term of this Mortgage with policies of
insurance of the type set forth below:
(a) Casualty Insurance. Physical hazard insurance
on an "all risks" basis including, without limitation, the hazards
of earthquake and collapse, with a full replacement cost
endorsement (including builder's risk during any period or periods
of time that construction or remodeling is being performed on the
Mortgaged Property), in an amount equal to 100% of the full
replacement cost of all Improvements (excluding only the
reasonable value of footings and foundations) and the Mortgagor's
contents therein, determined to the reasonable satisfaction of the
Mortgagee, and, in any event, in an amount sufficient to prevent
the Mortgagor from incurring any co-insurance liability. This
insurance policy shall be first payable in case of loss to the
Mortgagee by means of the Commonwealth of Massachusetts standard
non-contributory mortgagee clause and shall name Mortgagee as an
additional insured thereunder.
(b) Boiler Insurance. Policies of insurance against
loss or damage to the major components of the air-conditioning
and/or heating system, fly wheel, steam pipes, steam turbines,
steam engines, steam boilers, other pressure vessels, high-
pressure piping and machinery if any, such as are installed in the
buildings and improvements in an amount reasonably satisfactory to
the Mortgagee.
(c) Liability Insurance. Policies of comprehensive
general liability insurance on an occurrence basis against claims
for bodily injury and property damage with limits of liability
satisfactory to the Mortgagee. The Mortgagor and the Mortgagee
shall be named as insureds under such policies as their interests
may appear.
(d) Workers' Compensation Insurance, Disability
Benefits Insurance, and such other form of insurance which the
Mortgagor is required by law to provide, covering loss resulting
from injury, sickness, disability or death of employees of
Mortgagor who are located at or assigned to the Land or who are
responsible for the construction of the Improvements.
(e) Business Interruption and/or Loss of Rental
Value Insurance. Business interruption and/or loss of rental
insurance for a period of twelve (12) months in such amounts as
are reasonably satisfactory to the Mortgagee.
(f) Flood Insurance. If the Mortgaged Property is
located in an area designated by any governmental authority as an
area of special flood hazard, such insurance against damage caused
by flooding as the Mortgagee shall reasonably require.
(g) Additional Insurance. Insurance with respect to
such other insurable risks relating to the Mortgaged Property or
the Mortgagor in such amounts and containing such terms and
conditions as the Mortgagee may reasonably require from time to
time.
No insurance shall be blanketed with insurance on other
properties without the prior written consent of the Mortgagee,
such consent not to be unreasonably withheld. The Mortgagor shall
deposit all insurance policies (or certificates thereof acceptable
to the Mortgagee) providing coverage applicable to the Mortgaged
Property, whether or not required by this Mortgage, with the
Mortgagee forthwith after the binding of such insurance, and shall
deliver to the Mortgagee new policies (or certificates thereof
acceptable to the Mortgagee) for any insurance about to expire at
least thirty (30) days before such expiration. All such insurance
policies shall be written by such companies on such terms and in
such form and for such periods and amounts as the Mortgagee shall
from time to time designate or approve, shall be primary and
without right of contribution from any other insurance which may
be available, shall waive any right of set-off, counterclaim,
subrogation, or any deduction in respect of any liability of the
Mortgagor and the Mortgagee, shall provide that, with respect to
the Mortgagee, the insurance shall not be invalidated by any
action or inaction by the Mortgagor including, without limitation,
any defect in any representations made by the Mortgagor in the
procurement of such insurance, and shall provide that the
insurance policies may not be cancelled or amended without at
least thirty (30) days prior written notice to the Mortgagee. The
Mortgagor hereby grants the Mortgagee full power and authority as
attorney-in-fact of the Mortgagor, which appointment is
acknowledged by the parties hereto to be coupled with an interest,
to cancel or transfer such insurance, to collect and endorse any
checks issued in the name of the Mortgagor and to retain any
premium and to apply the same against the Indebtedness and other
charges outstanding under the Loan Documents.
9. MAINTENANCE AND ALTERATIONS. The Mortgagor shall
maintain the Mortgaged Property at all times in as good repair and
condition as the same now is or may hereafter be put, damage from
casualty expressly not excepted. The Mortgagor shall not take any
action, or permit any condition or activity, which could diminish
the value of the Mortgaged Property or invalidate any insurance
required to be provided under this Mortgage. The Mortgagor shall
not remove or alter or demolish any of the Improvements,
equipment, appliances, furnishing and Fixtures constituting part
of the Mortgaged Property without the prior written consent of the
Mortgagee and without promptly replacing any such item with an
item of equivalent utility and value. Upon notice at least 24
hours in advance of Mortgagee's inspection, the Mortgagor shall
permit the Mortgagee and its agents and employees to enter upon
the Mortgaged Property during normal business hours for the
purpose of inspecting the condition of the Mortgaged Property and
determining the Mortgagor's compliance with the covenants
contained herein.
10. USE AND COMPLIANCE WITH LAW. The Mortgagor shall not
permit any violation of any law, by-law, ordinance, public or
private restriction, regulation, order or code (including without
limitation, any rule or order of any Board of Fire Underwriters)
affecting the Mortgaged Property or the use thereof or take any
action or permit any condition or activity which could invalidate
any license or permit needed for the use and occupancy of the
Mortgaged Property. Additionally, Mortgagor warrants and
represents that:
(a) Mortgagor has not committed any act or omission
and is not, to the best of its knowledge, aware of any action or
omission by any prior owner that would cause the Mortgaged
Property to be subject to forfeiture pursuant to any Federal or
State law, rule or regulation; and
(b) the Mortgaged Property has not been acquired
with any proceeds from a transaction or an activity that would
cause the Mortgaged Property to be subject to such forfeiture.
Mortgagor covenants that Mortgagor will not use, operate or
occupy, and will not permit any third party to use operate or
occupy the Mortgaged Property, or any portion thereof, for any
purpose or activity that may give rise to such a forfeiture of the
Mortgaged Property.
11. TAXES AND ASSESSMENTS. The Mortgagor shall pay or
cause to be paid, not later than the last day upon which payment
may be made without penalty or interest, all Impositions, whether
or not assessed against the Mortgagor or the Mortgagee whether or
not assessed pursuant to the authority adopted before or after the
date of this Mortgage, if applicable or related in any way to the
Mortgaged Property, any interest in the Mortgaged Property of the
Mortgagor or the Mortgagee or the debt, obligations or performance
secured hereby, or the disbursement or application of the proceeds
therefrom excluding, however, any income or corporation excise tax
of the Mortgagee. If, at any time, the Mortgagee does not require
the escrow of payments for the Impositions, the Mortgagor shall
furnish to the Mortgagee receipted real estate tax bills for the
Mortgaged Property not later than ten (10) days after the date
from which any interest or penalty would accrue for non-payment
thereof unless such Imposition is being challenged, in good faith
by Mortgagor. The Mortgagor shall also furnish to the Mortgagee
evidence and payment of all other Impositions within fifteen (15)
days after written request therefor by the Mortgagee. If the
Mortgagor is not permitted by applicable law to pay any Imposition
or the payment of such Imposition would violate any usury law
applicable to the transaction contemplated hereby and by the other
Loan Documents, then, at the option of the Mortgagee, the
Indebtedness and other charges outstanding under the Loan
Documents shall become due and payable on the date specified by
written notice given by the Mortgagee to the Mortgagor, which date
shall be at least thirty (30) days after the date of such notice.
If requested by the Mortgagee, the Mortgagor shall pay to the
Mortgagee monthly, on the first day of each month, a sum
reasonably determined by the Mortgagee to be sufficient to provide
in the aggregate a fund adequate to pay each Imposition at least
thirty (30) days before it becomes delinquent, and, in addition,
shall pay to the Mortgagee, on demand, any balance necessary to
pay in full each Imposition at least ten (10) days before the date
on which it becomes due and payable. If such request is made by
Mortgagee, such sums must be applied by the Mortgagee to the
payment of the Impositions. The Mortgagor shall furnish to the
Mortgagee all original bills relating to any Impositions promptly
uponrequest by Mortgagee.
The Mortgagor shall have the right, after giving written
notice to the Mortgagee and subject to the conditions stated
below, to contest by appropriate legal proceedings the amount or
validity of any Imposition. In no event shall the Mortgagor be
entitled to delay payment of any Imposition if the delay in
payment would subject any portion of the Mortgaged Property to
possible foreclosure or, in any event, unless the Mortgagor
deposits with the Mortgagee a sum of money or such other security
as the Mortgagee deems reasonable to cover the amount of any such
Imposition plus any interest or penalty that may become due as a
result of such contest.
12. FILING FEES/TAXES.
(a) Mortgagor will pay all taxes, filing fees and
other charges, in connection with any transfer of the Mortgaged
Property by the Mortgagor or the Mortgagee, including the making
or satisfaction of this Mortgage, the taking of any action
permitted to be taken hereunder by the Mortgagee, the granting of
a deed or assignment in lieu of foreclosure, the appointment of a
receiver or any transfer pursuant to any sale of the Mortgaged
Property on a foreclosure, or by deed in lieu of foreclosure, or
the removal of any prior or subordinate mortgage.
(b) The provisions of this Section shall survive any
sale of the Premises on a foreclosure of this Mortgage or by deed
in lieu of foreclosure.
13. REPORTING REQUIREMENTS. The Mortgagor shall furnish
financial statements of the owner of the Mortgaged Property and
any guarantors and endorsers and, if requested, shall furnish such
information on a periodic basis without additional requests. Any
financial statements required herein shall be prepared in
accordance with generally accepted principles of accounting,
consistently applied, shall be in form and substance satisfactory
to the Mortgagee, and, if requested by the Mortgagee, shall be
certified by an independent public accountant satisfactory to the
Mortgagee. Notwithstanding the foregoing, the Mortgagor shall
provide the Mortgagee with Mortgagor's complete Federal and State
tax returns (together with all relevant schedules) and a financial
statement at such times and in a form required by the Note.
14. TRANSFERS. The Mortgagor shall not suffer or permit
a change, whether affected by voluntary act or by operation of
law, in the legal or direct or indirect beneficial ownership of
(i) the Mortgaged Property, or any portion thereof, or (ii) any
interest in the Mortgagor. The Mortgagor shall not enter into any
lease or combination of leases or other arrangements which have
the effect of transferring to any other person or affiliated group
the right to own, use or occupy all or substantially all of the
Mortgaged Property without the prior written consent of the
Mortgagee. The Mortgagee may, without notice to the Mortgagor,
deal with the Mortgagor's successor or successors in interest with
reference to this Mortgage and the Indebtedness in the same manner
as with the Mortgagor without in any way releasing, discharging or
modifying the Mortgagor's liability or obligations with respect to
this Mortgage or the Indebtedness. No transfer of any interest in
any part of the Mortgaged Property shall operate to release,
discharge, modify, change or affect the original liability of the
Mortgagor, or the priority of this Mortgage, either in whole or in
part.
15. CASUALTY AND CONDEMNATION-AWARD.
(a) Notice to Mortgagee. In the case of any act or
occurrence of any kind or nature which results in damage, loss or
destruction to the Mortgaged Property ("Casualty"), or
commencement of any proceedings or actions which might result in a
condemnation or other taking for public or private use of the
Mortgaged Property or which relates to injury, damage, benefit or
betterment thereto ("Taking"), Mortgagor shall promptly notify
Mortgagee describing the nature and the extent of the Taking or
the Casualty, as the case may be. Mortgagor shall promptly
furnish to Mortgagee copies of all notices, pleadings,
determinations and other papers in any such proceedings or
negotiations.
(b) Repair and Replacement. In case of a Casualty
or Taking, Mortgagor shall promptly (at Mortgagor's sole cost and
expense and regardless of whether the Insurance Proceeds or the
Taking Proceeds, if any, shall be sufficient or made available to
Mortgagee for the purpose) restore, repair, replace and rebuild
the Mortgaged Property as nearly as possible to its quality,
utility value, condition, and character immediately prior to the
Casualty or the Taking, as the case may be. However, upon a
Casualty or Taking resulting in a restoration cost that exceeds
25% of the then replacement value of the Improvements or a Taking
of more than 25% of the area of the Land, and application by
Mortgagee of the Insurance Proceeds or the Taking Proceeds to
reduction of the Indebtedness in accordance with this Mortgage,
Mortgagor shall be obligated only to remove any debris from the
Mortgaged Property and take such actions as are necessary to make
the undamaged or non-taken portion of the Mortgaged Property into
a functional economic unit insofar as it is possible under the
circumstances.
(c) Insurance Proceeds and Taking Proceeds.
(i) Collection. Mortgagor shall use its best
efforts to collect the maximum amount of insurance proceeds
payable on account of any Casualty ("Insurance Proceeds"), and the
maximum award, payment or compensation payable on account of any
Taking ("Taking Proceeds"). In case of a Casualty, Mortgagee may,
in its sole unfettered discretion, make proof of loss to the
insurer, if not made promptly by Mortgagor. Mortgagor shall not
settle or otherwise compromise any claim for Insurance Proceeds or
Taking Proceeds without giving Mortgagee notice thereof at least
10 days in advance.
(ii) Assignment to Mortgagee. Mortgagor hereby
assigns, sets over and transfers to Mortgagee all Insurance
Proceeds and Taking Proceeds and authorizes payment of such
Insurance Proceeds and Taking Proceeds to be made directly to
Mortgagee. Mortgagee shall apply the Insurance Proceeds and
Taking Proceeds first to pay all reasonable expenses incurred by
Mortgagee in connection with the Casualty or Taking, including,
without limitation, attorney's fees and title fees. Unless
Paragraph (d) regarding Insurance Proceeds applies, Mortgagee may,
in its sole unfettered discretion, apply the balance of such
Insurance Proceeds or Taking Proceeds ("Net Proceeds") to either
of the following, or any combination thereof:
(aa) payment of the Indebtedness,
either in whole or in party, in any order determined by Mortgagee
in its sole unfettered discretion;
(bb) repair or replacement, either
partly or entirely, of any part of the Mortgaged Property so
destroyed, damaged or taken, in which case Mortgagee may impose
such terms, conditions and requirements for the disbursement of
the Insurance Proceeds or the Taking Proceeds as it, in its sole
unfettered discretion, deems advisable. Mortgagee shall not be a
trustee with respect to any Insurance Proceeds or Taking Proceeds,
and may commingle Insurance Proceeds or Taking Proceeds with its
funds without obligation to pay interest thereon.
If any portion of the Indebtedness shall thereafter be
unpaid, Mortgagor shall not be excused from the payment thereof in
accordance with the terms of the Loan Documents. Mortgagee shall
not, in any event or circumstance, be liable or responsible for
failure to collect or exercise diligence in the collection of any
Insurance Proceeds or Taking Proceeds.
(d) Disbursement of Insurance Proceeds to Mortgagor.
Mortgagee will disburse the Insurance Proceeds to Mortgagor
provided: (i) there exists no Event of Default or occurrence or
facts which with the passage of time, the giving of notice, or
both, will be an Event of Default which remains uncured at any
time before or during the Restoration; (ii) the Casualty does not
occur within nine months of the Maturity Date; and (iii) the
conditions in this Paragraph 15 are satisfied.
As to any loss or damage which Mortgagee estimates can be
repaired for less that 1/2 of 1% of the then Indebtedness,
Mortgagee shall disburse to Mortgagor from the Net Proceeds the
amount which it determines is necessary to repair the damage,
which amounts shall be used by Mortgagor to restore the damage to
the Mortgaged Property caused by the Casualty.
As to all other Casualties, Mortgagee shall disburse the
Net Proceeds related thereto to Mortgagor on the following terms
and conditions:
(i) Prior to the first and each subsequent
disbursement, Mortgagor shall give proof satisfactory to the
Mortgagee that:
(aa) Mortgagee is holding a fund comprised of
the Net Proceeds and, if necessary, additional deposits made by
Mortgagor sufficient to restore the Property to its condition and
use required of Mortgagor under the terms of the Leases
("Restoration"), together with a fund comprised of Net Proceeds or
funds deposited by Mortgagor, sufficient to pay operating
expenses, Property Taxes and Charges, the Monthly Payments (as
defined in the Note) and other so-called "carrying costs" of the
Mortgaged Property during the period of Restoration;
(bb) there are no laws preventing Restoration
of the Mortgaged Property;
(cc) the Restoration will be conducted under
the supervision of an architect, engineer and/or a general
contractor selected by and paid by Mortgagor and approved by
Mortgagee;
(dd) the Restoration will be performed pursuant
to plans and specifications approved by Mortgagee and by a
contractor or contractors approved by Mortgagee; and
(ee) the Mortgaged Property, after such
Restoration, shall be in compliance with applicable laws.
(ii) With respect to each disbursement and
accompanying each request therefor, there shall be delivered to
Mortgagee:
(aa) a certificate addressed to Mortgagee and
executed by Mortgagor and by the architect, engineer or general
contractor supervising the Restoration that such disbursement is
to pay for costs of the Restoration not paid previously by any
other prior disbursement, that the amount of such disbursement
does not exceed the aggregate of such costs incurred or paid on
account of work, labor or services performed and materials
installed in or stored upon the Mortgaged Property at the date of
such certificate and that the disbursement requested, together
with the disbursements made prior thereto, collectively, as a
percentage of the total Net Proceeds, do not exceed the percentage
of completion of the Restoration; and
(bb) an endorsement to Mortgagee's title
insurance policy, in which the making of the disbursement is
recognized and the effective date of coverage is changed to the
date of disbursement.
(iii) Each disbursement shall be in the amount not
greater than 90% of the costs described in the certificate
referred to in Paragraph (d)(ii)(aa) hereof. Disbursement of the
final balance of the Net Proceeds, constituting not less than ten
percent (10%) thereof, shall be disbursed only upon delivery to
Mortgagee of the following, in addition to the foregoing:
(aa) evidence satisfactory to Mortgagee that
all claims then existing for labor, services and materials
enforceable by lien upon the Mortgaged Property have been paid in
full or provision acceptable to Mortgagee has been made therefor;
(bb) a certificate of such architect, engineer
or general contractor that the Restoration of the Mortgaged
Property has been completed in a good workmanlike manner and in
accordance with all laws;
(cc) an estoppel affidavit in form satisfactory
to Mortgagee from each tenant occupying or leasing space in the
Mortgaged Property affected by the Casualty; and
(dd) an as-built survey of the Improvements
certified to Mortgagee and in form satisfactory to Mortgagee.
(iv) Mortgagor shall complete the Restoration within
180 days of the Casualty subject to delay beyond Mortgagor's
control other than lack of funds. If Mortgagor does not complete
the Restoration within such time, Mortgagee, at its option, may
restore the Mortgaged Property for and on Mortgagor's behalf and
may do any act or thing as Mortgagee deems necessary or
appropriate to that end and the expenses of Restoration in excess
of Net Proceeds shall be borne by Mortgagor.
(v) If the quality of the Restoration is at
least equal to the quality of the Improvements before the
Casualty, any Net Proceeds in excess of the amount used in payment
of the Restoration shall be distributed to Mortgagor.
Mortgagee shall not be a trustee with respect to any
Insurance Proceeds and may mingle Insurance Proceeds with its
funds without obligation to pay interest thereon. Mortgagee shall
in no event be liable for the performance or observance of any
covenant or condition arising under any lease in connection with
the Mortgaged Property nor obligated to take any action to restore
the Mortgaged Property.
16. HAZARDOUS WASTE AND SUBSTANCES; OCCUPATIONAL HEALTH
AND SAFETY AND ENVIRONMENTAL LAWS, STANDARDS AND REGULATION.
Mortgagor shall comply with all laws, governmental standards and
regulations applicable to Mortgagor or to the Mortgaged Property
in respect of occupational health and safety, hazardous wastes and
substances and the environment. Mortgagor shall promptly notify
Mortgagee of its receipt of any notice of violation of or non-
compliance with any such law, standard or regulation.
Mortgagor covenants that it shall not unlawfully "release" or
cause an unlawful "threat of release" of any "hazardous materials"
or "oil" (as such terms are defined in the Massachusetts Oil and
Hazardous Material Release Prevention and Response Act, Chapter
21E of the Massachusetts General Laws) on the Mortgaged Property
or on any other property in the Commonwealth of Massachusetts,
whether or not owned by the Mortgagor. Furthermore, Mortgagor
covenants, and it shall be a further condition of this Mortgage:
(a) that Mortgagor will not incur due to its acts or
omissions during the term of this Mortgage any liability to the
Commonwealth of Massachusetts under such Act on the Mortgaged
Property or elsewhere;
(b) that no lien on the Mortgaged Property will
arise due to the acts or omissions of Mortgagor during the term of
this Mortgage under such Act;
(c) that no portion of the Mortgaged Property during
the term of this Mortgage shall be used for the generation,
storage, treatment, use, transport or disposal of any substance
for which a license is required by Chapter 21C of the
Massachusetts General Laws, viz, so-called hazardous wastes except
for customary quantities in compliance with all applicable laws
and regulations;
In furtherance of the foregoing, Mortgagor covenants and
agrees to take all steps necessary in order to prevent any such
lien from attaching to the Mortgaged Property or any part thereof.
Mortgagor hereby agrees to indemnify and hold Mortgagee harmless
from all loss, costs, damage, claim and expense incurred by
Mortgagee on account of Mortgagor's failure to perform the
obligations of this Section or arising out of or in any way
connected with the application to the Mortgaged Property or any
part thereof of any current or future legislation related to the
presence of any hazardous waste or materials upon the Mortgaged
Property. The preceding sentence shall not constitute a
limitation on any similar or additional rights to indemnity in
favor of Mortgagee, whether or not same exist hereunder or under
any of the other Loan Documents, and whether existing at law or
equity.
17. EVENT OF DEFAULT. The Indebtedness and all other
charges due under the Note, this Mortgage and the other Loan
Documents shall become due, at the option of Mortgagee, if one or
more of the following events (an "Event of Default") shall occur:
(a) Mortgagor fails to pay any interest or principal
when due or within applicable grace and cure periods, if any,
provided in the Note;
(b) breach of any covenant contained in the sections
herein entitled "Insurance", "Transfers", and "Taxes and
Assessments";
(c) breach of any other covenant, condition or
agreement contained herein and in the Loan Documents remaining
uncured for a period in excess of ten (10) days after Mortgagee
has provided Mortgagor with written notice of such breach;
provided that in a case of any breach which is susceptible to cure
but cannot be cured within ten (10) days through the exercise of
reasonable diligence, so long as the Mortgagor commences such cure
within such ten (10) day period, such breach remains susceptible
to cure, and the Mortgagor diligently pursues such cure, such
breach shall not be deemed to create an Event of Default
hereunder;
(d) The actual or threatened removal, demolition or
structural alteration, in whole or in part, of any Improvement,
without the prior written consent of Mortgagee; or the removal,
demolition or destruction in whole or in part, of any Fixtures
without replacing the same with Fixtures at least equal in quality
and condition to those replaced, free from any security interest
or other encumbrance thereon and free from any reservation of
title thereto; or the commission of any waste in respect to the
Mortgaged Property; or
(e) breach of any other covenant, condition or
agreement in any loan document or in any other mortgage, debt or
obligation of or from the Mortgagor to the Mortgagee or in any
other mortgage or instrument which constitutes a lien on all or
any part of the Mortgaged Property;
(f) failure of the Mortgagor to cause to be
dismissed any proceeding against the Mortgagor, and, if
applicable, any holder of a general partnership interest in the
Mortgagor, any guarantor of any of the Obligations or any endorser
of the Note (the Mortgagor and, if applicable, any such general
partner, guarantor or endorser hereinafter referred to as an
"Obligor") under any law relating to bankruptcy, reorganization,
insolvency or relief of debtors, within ninety (90) days from the
date upon which such proceeding is filed or instituted, or the
filing or other institution of a proceeding by any Obligor under
any such law;
(g) failure of an Obligor to cause to be dismissed a
proceeding for the enforcement of a money judgement under the laws
of the Commonwealth of Massachusetts, and which materially affects
the financial condition ofMortgagor, instituted against said
Obligor within thirty (30) days from the date upon which such
proceeding is filed or instituted unless such proceeding is
contested in good faith by the Obligor and bonded or otherwise
secured to Mortgagee's satisfaction;
(h) the liquidation, termination, dissolution,
merger or a consolidation of any Obligor which is not an
individual, the insolvency of any Obligor or the inability of any
Obligor to pay such Obligor's debts when due;
(i) failure of Mortgagor to pay within fifteen (15)
days after notice and demand any filing or refiling fees required
hereunder; or
(j) material inaccuracy of any statement,
representation or warranty made by the Mortgagor to the Mortgagee
in this Mortgage or in any Loan Document, or any instrument or
statement submitted to the Mortgagee by an Obligor, and which
results in any loss or damage to the Mortgagee.
18. STATUTORY POWER OF SALE. This Mortgage is upon the
STATUTORY CONDITION and upon the further condition that all
covenants and agreements on the part of Mortgagor herein
undertaken shall be kept and fully and seasonably performed and
that no breach of any other of the conditions specified herein
shall be permitted, for any breach of which covenants or
conditions, Mortgagee shall have the STATUTORY POWER OF SALE.
19. APPLICATION OF DEPOSITS AFTER DEFAULT. If the
Mortgagor shall default in the performance or observance of any
covenant or agreement contained herein or in the Note or other
Loan Documents, the Mortgagee may apply any deposit, payment or
any sum due from the Mortgagee to any Obligor toward the
Indebtedness and other charges outstanding under the Loan
Documents without first enforcing any other rights of the
Mortgagee against any Obligor or against the Mortgaged Property.
20. SEPARATE FORECLOSURE SALES AND WAIVER OF MARSHALLING.
The Mortgagee may sell the Mortgaged Property and other security
in one lot or in parts or parcels. Such sales may be held from
time to time by public sale and the power of sale herein given to
the Mortgagee shall not be fully executed until all of the
Mortgaged Property and other security not previously sold shall
have been sold. If surplus proceeds are realized from such a
foreclosure sale, the Mortgagee shall not be liable for any
interest thereon pending distribution of such proceeds to the
Mortgagor by the Mortgagee. Any separate items of property sold
together for a single price may be accounted for in one account
without distinction between the items of security or without
assigning to them any proportion of such proceeds. The Mortgagor
hereby waives the application of any doctrine of marshalling of
assets.
The Mortgagor agrees that the requirement of the Uniform
Commercial Code with respect to personal property that a secured
party give a debtor reasonable notice of any proposed sale or
disposition of the collateral shall be met if such notice is given
to Mortgagor at least five (5) days before such time of sale or
disposition.
21. COLLECTION OF ACCOUNTS. After an Event of Default,
the Mortgagee may communicate with account debtors in order to
verify the existence, amount and terms of any accounts or contract
rights and to notify account debtors of the Mortgagee's security
interest in their accounts. When requested by the Mortgagee, the
Mortgagor shall notify account debtors and indicate on all
billings that payments are to be made directly to the Mortgagee.
After an Event of Default, the Mortgagee may require that payments
on accounts be made directly to the Mortgagee and the Mortgagee
shall have full power to collect, compromise, endorse, sell or
otherwise deal with the accounts or proceeds thereof and to
perform the terms of any contract in order to create accounts in
the Mortgagee's name or in the name of the Mortgagor with respect
to the business conducted with respect to and at the location of
the Mortgaged Property.
22. APPOINTMENT OF RECEIVER. Mortgagee, in any action to
foreclose this Mortgage, shall be entitled, without notice and as
a matter of right and without regard to the adequacy of any
security for the Indebtedness or the solvency of Mortgagor, upon
application to any court of competent jurisdiction, to the
appointment of a receiver of the rents, issues and profits of the
Mortgaged Property.
23. WAIVER OF JURY TRIAL. THE MORTGAGOR AND THE
MORTGAGEE EACH HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN
ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS MORTGAGE, ANY OTHER LOAN DOCUMENT OR THE LOAN, OR THE
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF, OR THE RELATIONSHIP BETWEEN MORTGAGOR AND MORTGAGEE AS
BORROWER AND LENDER, OR ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING
BETWEEN THE MORTGAGOR AND MORTGAGEE.
24. INTEREST TO ACCRUE. If the outstanding Indebtedness
shall either mature or become due because of an acceleration by
the Mortgagee of the Mortgagor's obligation to repay the
Indebtedness caused by an Event of Default, then interest on the
Indebtedness shall continue to accrue at the Default Rate, as
defined in the Note, until paid in full.
25. EFFECT OF RELEASES AND WAIVERS. Any failure by
Mortgagee to insist upon the strict performance by Mortgagor of
any of the covenants, terms and provisions of this Mortgage or any
of the other Loan Documents shall not be deemed to be a waiver of
any of the covenants, terms and provisions of this Mortgage or any
of the Loan Documents, and Mortgagee, notwithstanding any such
failure, shall have the right thereafter to insist upon the strict
performance by Mortgagor of any and all of the covenants, terms
and provisions of this Mortgage and any of the Loan Documents.
Neither Mortgagor nor any other person or entity now or hereafter
obligated for the payment of the whole or any part of the
Indebtedness shall be relieved of such obligation by reason of (i)
the failure of Mortgagee to comply with any request of Mortgagor,
or of any other person or entity so obligated, (ii) the failure of
Mortgagee to take action to foreclose this Mortgage or otherwise
enforce any of the covenants, terms and provisions of this
Mortgage or any of the Loan Documents, (iii) the release,
regardless of consideration, of the whole or any part of the
security held for payment of the Indebtedness and the performance
of all other obligations hereunder and under the other Loan
Documents, or (iv) any agreement or stipulation between the
Mortgagee and any subsequent owner or owners of the equity of
redemption in the Mortgaged Property modifying the covenants,
terms and provisions of this Mortgage or the Note without first
having obtained the consent of Mortgagor or such other person or
entity. In the last mentioned event, Mortgagor and all such other
persons or entities shall continue to be liable to make such
payments according to the terms and provisions of the Mortgage as
amended, unless expressly released and discharged of record by
Mortgagee. Mortgagee may release, regardless of consideration,
any part of the security held for payment of the Indebtedness and
performance of the Obligations without, as to the remainder of the
security, in any way impairing or affecting the lien of this
Mortgage or the priority of such lien over any subordinate lien.
Mortgagee may resort for the payment of the Indebtedness and
performance of the Obligations to any other security therefor held
by Mortgagee, in such order and manner as Mortgagee may elect.
26. MORTGAGEE RIGHT TO CURE AND EXPENSES. The Mortgagee
shall be entitled, but not obligated, to cure any failure of the
Mortgagor hereunder and under the other Loan Documents and to
commence, intervene in or otherwise participate in any legal or
equitable proceeding which, in the Mortgagee's sole judgement,
affects the Mortgaged Property or any rights or obligations
created or secured by this Mortgage or the other Loan Documents.
If the Mortgagee shall become involved in any action or course of
conduct with respect to the Note, this Mortgage, any of the other
Loan Documents, the Mortgaged Property or other security for the
Indebtedness and the Obligations in order to protect its interest
therein or to cure any default of the Mortgagor hereunder or under
the other Loan Documents, the Mortgagor shall, on demand,
reimburse the Mortgagee for all charges, cost and expenses
incurred by the Mortgagee in connection therewith, including,
without limitation, reasonable attorneys' fees. All such charges
incurred through the operation of this paragraph, together with
interest thereon as described in this paragraph, shall be added to
the outstanding Indebtedness and shall be secured by the Loan
Documents.
27. INTERVENING LIENS. Should any agreement be hereafter
entered into modifying or changing the terms of any Loan Document,
the rights of the parties to such agreement shall be superior to
the rights of the holder of any intervening lien.
28. REMEDIES CUMULATIVE. The rights and remedies herein
afforded to Mortgagee and its successors and assigns shall be
cumulative and supplementary to and not exclusive of any other
rights and remedies which the Mortgagee and its successors and
assigns may have under the other Loan Documents, at law or in
equity.
29. FURTHER ASSURANCES. The Mortgagor agrees to execute
and cause to be filed or recorded, and hereby appoints the
Mortgagee its duly authorized attorney-in-fact, which appointment
is acknowledged by the parties hereto to be coupled with an
interest and is irrevocable, with full power of substitution and
with authority to execute, file and record on behalf of the
Mortgagor, all instruments from time to time deemed by the
Mortgagee to be necessary or appropriate to evidence further the
obligations of the Mortgagor pursuant to or secured by this
Mortgage or the other Loan Documents, or to secure further to the
Mortgagee the security intended to be provided by this Mortgage.
Mortgagor will pay all costs, expenses and fees incurred as a
result of the operation of this paragraph.
30. STATEMENT OF AMOUNT DUE. Mortgagor, within five (5)
days upon request in person or within fifteen (15) days upon
request by mail, will furnish a written statement duly
acknowledged of the amount due on this Mortgage and whether any
offsets or defenses exist against the Indebtedness.
31. NOTICES. Any notices required or permitted to be
given hereunder shall be: (i) personally delivered or (ii) given
by registered or certified mail, postage prepaid, return receipt
requested, or (iii) forwarded by overnight courier service, in
each instance addressed to the addressee at the address for such
party set forth at the head of this Mortgage, or such other
address as each may designate in writing to the other. All
notices given hereunder shall be in writing and shall be deemed
given, in the case of notice by personal delivery, upon actual
delivery, and in the case of mail or courier service, upon
deposit with the U.S. Postal Service or delivery to the courier
service.
32. TIME OF THE ESSENCE. Time is of the essence with
respect to each and every covenant, agreement and obligation of
Mortgagor under this Mortgage, the Note and any and all other Loan
Documents.
33. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(a) Mortgagor shall indemnify, defend and hold
Mortgagee harmless against: (i) any and all claims for brokerage,
leasing, finders or similar fees which may be made relating to the
Mortgaged Property or the Loan, and (ii) against any and all
liability, obligations, losses, damages, penalties, claims,
actions, suits, costs, and expenses (including its reasonable
attorneys' fees, together with reasonable appellate counsel fees,
if any) of whatever kind or nature which may be imposed on or
incurred by Mortgagee at any time pursuant either to a judgement
or decree or other order entered into by a court or administrative
agency or to a settlement reasonably approved by Mortgagor, which
judgment, decree, order or settlement relates in any way to or
arises out of the offer, sale or lease of the Mortgaged Property
and/or the ownership, use, occupation or operation of any portion
of the Mortgaged Property, unless such judgment or decree arises
from Mortgagee's negligence after Mortgage takes control of the
Mortgaged Property.
(b) If Mortgagee is made a party defendant to any
litigation concerning the Loan instituted by an individual or
entity not party to the Loan Documents, this Mortgage, the
Mortgaged Property, or any part thereof, or any interest therein,
or the occupancy thereof, then Mortgagor shall indemnify, defend
and hold Mortgagee harmless from all liability by reason of said
litigation, including reasonable attorneys' fees (together with
reasonable appellate counsel fees, if any) and expenses incurred
by Mortgagee in any such litigation, whether or not any such
litigation is prosecuted to judgment. If Mortgagee commences an
action against Mortgagor to enforce any of the terms hereof or to
prosecute any breach by Mortgagor of any of the terms hereof or to
recover any sum secured hereby, Mortgagor shall pay to Mortgagee
such reasonable attorneys' fees (together with reasonable
appellate counsel fees, if any) and expenses so incurred. The
right to such attorneys fees (together with reasonable appellate
counsel fees, if any) and expenses shall be deemed to have accrued
on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If
Mortgagor breaches any term of this Mortgage, Mortgagee may
employ an attorney or attorneys to protect its rights hereunder,
and in the event of such employment following any breach by
Mortgagor, Mortgagor shall pay Mortgagee reasonable attorneys'
fees (together with reasonable appellate counsel fees, if any) and
expenses incurred by Mortgagee, whether or not an action is
actually commenced against Mortgagor by reason of such breach.
(c) A waiver of subrogation shall be obtained by
Mortgagor from its insurance carrier and, consequently, Mortgagor
waives any and all right to claim or recover against Mortgagee,
its officers, employees, agents and representatives, for loss of
or damage to Mortgagor, the Mortgaged Property, Mortgagor's
property or the property of others under Mortgagor's control from
any cause insured against or required to be insured against by the
provisions of this Mortgage.
(d) All sums payable by Mortgagor hereunder shall be
paid without notice (except as may otherwise be provided herein),
demand, counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction, and the
obligations and liabilities of Mortgagor hereunder shall in no way
be released, discharged or otherwise affected by reason of: (i)
any damage to or destruction of or any condemnation or similar
taking of the Mortgaged Property or any part thereof; (ii) any
restriction or prevention of or interference with any use of the
Mortgaged Property or any part thereof; (iii) any title defect or
encumbrance or any eviction from the Mortgaged Property or the
Improvements or any part thereof by title superior or otherwise;
(iv) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation, or other like proceeding
relating to Mortgagee, or any action taken with respect to this
Mortgage by any trustee or receiver of Mortgagee, or by any court,
in such proceeding; (v) any claim which Mortgagor has, or might
have, against Mortgagee; (vi) any default or failure on the part
of Mortgagee to perform or comply with any of the terms hereof or
of any other agreement with Mortgagor; or (vii) any other
occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not Mortgagor shall have notice or knowledge
of any of the foregoing. Mortgagor waives all rights now or
hereafter conferred by statute or otherwise to any abatement,
suspension, deferment, diminution, or reduction of any sum secured
hereby and payable by Mortgagor.
34. SEVERABILITY/HEADINGS/BINDING EFFECT. This Mortgage
and the other Loan Documents constitute the entire agreement
between Mortgagor, any guarantors or endorsers, and Mortgagee and,
to the extent that any writings not signed by Mortgagee or oral
statements at any time made or had are inconsistent with the
provisions of this Mortgage and the other Loan Documents, the
unsigned writings and oral statements shall be null and void.
This Mortgage and all of the other Loan Documents shall be
governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
In case any provision of the Note, this Mortgage, or any Loan
Documents shall be found unenforceable or invalid for any reason,
such provision shall be deemed modified to the extent necessary to
be enforceable or if such modification is not practicable, such
provision shall be deemed deleted from this Mortgage or such other
Loan Documents. The headings of Sections and Paragraphs shall be
ignored in interpreting this Mortgage. All of the covenants and
agreements of the Mortgagor herein contained shall be binding upon
the Mortgagor, its heirs, executors, administrators, successors
and assigns and shall be joint and several if more than one person
constitute the Mortgagor.
35. YEAR 2000 COMPLIANCE. Borrower represents and
warrants that (a) Borrower has performed a formal assessment of
the effect of year 2000 on Mortgagor's computer systems and
business operations, (b) Mortgagor has converted the assessment to
a plan ("Year 2000 Compliance Plan") with budget and
implementation dates, including a statement of awareness of the
problem, an inventory checklist of equipment affected, and an
assessment of complexity, remediation, validation, testing and
implementation, (c) Mortgagor has sufficient resources to
implement the Year 2000 Compliance Plan and (d) the Year 2000
Compliance Plan has been completed.
IN WITNESS WHEREOF, Mortgagor has caused this instrument to
be executed by William A. Frey, III, its duly authorized President
and Treasurer, and its corporate seal to be hereunto affixed as of
the date first above written.
PITTSFIELD MOLD & TOOL, INC.
By:/s/William A. Frey, III
------------------------------
William A. Frey, III,
President and Treasurer
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss.
September 29, 1999
Then personally appeared the above-named William A. Frey,
III, President and Treasurer, who acknowledged the foregoing
instrument to be the free act and deed of Pittsfield Mold & Tool,
Inc., before me,
/s/Gerald A. Denmark
---------------------------------
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
EXHIBIT A TO
MORTGAGE AND SECURITY AGREEMENT
[description of real property]
Exhibit 99.17
MORTGAGE AND SECURITY AGREEMENT
(Second Mortgage)
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made
this 29th day of September, 1999, between PITTSFIELD MOLD & TOOL,
INC., a Massachusetts corporation, with a mailing address for the
purposes hereof at 10 Betnr Industrial Drive, Pittsfield,
Massachusetts (the "Mortgagor") and BERKSHIRE BANK, a
Massachusetts banking corporation with its principal office and
place of business at 24 North Street, P. O. Box 1308, Pittsfield,
Massachusetts 01202 ("Mortgagee").
W I T N E S S E T H:
WHEREAS, Mortgagor is indebted unto Mortgagee in the amount of ONE
MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($1,900,000.00)
(the "Loan"), evidenced by that certain promissory note of like
amount made by the Mortgagor and payable to the order of the
Mortgagee (the "Note"); and
WHEREAS, Mortgagor has given this Mortgage to partially secure the
Note; and
WHEREAS, Mortgagor desires to secure the Mortgagee and any
subsequent holder(s) of the Note and all those claiming under or
through the Mortgagee the full and punctual payment of the total
debt evidenced by the Note, when and as the same shall become due
and payable, as well as any renewal, extension, modification,
supplement and amendment of the Note, or any part of the Note,
together with interest thereon, if any, and the performance of and
compliance with the covenants and agreements herein and therein
contained and also to secure the reimbursement to the holder(s) of
the Note of all value which may be advanced as herein provided,
and for any reasonable costs and expenses incurred or paid on
account of any litigation at law or in equity which may arise with
respect to this Mortgage, the Indebtedness, as hereinafter
defined, or the Mortgaged Property, as hereinafter defined, or in
obtaining possession of said Mortgaged Property.
It is the true, clear and express intention of Mortgagor that the
continuing grant of this Mortgage remain as security for payment
and performance of the Indebtedness, whether or not presently
contemplated or otherwise related to this Mortgage transaction by
class or kind; and that the notice of the continuing grant of this
Mortgage therefor shall not be required to be stated on the face
of any document representing any such Indebtedness, nor otherwise
be identified as being secured by this Mortgage; and if such
Indebtedness shall remain or become that of less than all of the
Mortgagors herein, any Mortgagor not liable therefor hereby
expressly hypothecates his, her, its, or their ownership interest
in the Mortgaged Property herein to the extent required to satisfy
the Secured Indebtedness, without restriction or limitation.
NOW THEREFORE, FOR CONSIDERATION PAID, Mortgagor, to secure
payment of the Indebtedness, in lawful money of the United States
of America, and also to secure the performance, satisfaction and
discharge of the Obligations, as hereinafter defined, does hereby
give, grant, bargain, sell and convey with MORTGAGE COVENANTS unto
the Mortgagee and its successors and assigns the Mortgaged
Property, as hereinafter defined;
TO HAVE AND TO HOLD the Mortgaged Property unto and to the proper
use and benefit of the Mortgagee, and its successors and assigns
forever;
PROVIDED, NEVERTHELESS, and these presents are upon this express
condition, that if the Mortgagor shall pay to Mortgagee the
Indebtedness at the time and in the manner provided in the Note
and this Mortgage and shall well and truly abide by and comply
with each and every covenant and condition set forth in the Note,
this Mortgage, and other Loan Documents, as hereinafter defined,
then this Mortgage shall cease, determine and be void; otherwise,
this Mortgage shall remain in full force and effect for all
purposes.
1. DEFINITIONS. Mortgagor and Mortgagee agree that, unless the
context otherwise specifies or requires, the following terms shall
have the meanings herein specified, such definitions to be
applicable equally to the singular and the plural forms of such
terms:
Fixtures shall mean all fixtures located upon or within the
Improvements, as hereinafter defined, or now or hereafter attached
to or installed in, or used in connection with any of the
Improvements, including, but not limited to, any and all
partitions, dynamos, screens, awnings, motors, engines, boilers,
furnaces, pipes, plumbing, elevators, sprinkler systems, fire
prevention and extinguishing apparatus and equipment, water tanks,
heating, ventilating, air-conditioning and air-cooling equipment,
furnaces, heaters, condensers, compressors, motors, ducts,
machinery, walks, fences, shrubbery, driveways, fittings and
articles of personal property of every kind and character
whatsoever, excluding, however, all items of personal property
owned by occupancy tenants of the Improvements and installed for
the purpose of their tenancies with the right of removal by the
tenant upon the expiration of its tenancy.
Impositions shall mean (i) all real estate taxes, personal
property taxes and other taxes of every kind and character,
general and special, ordinary and extraordinary, foreseen and
unforeseen, which at any time prior to or after the execution of
this Mortgage may be assessed, levied or imposed upon the
Mortgaged Property, as hereinafter defined, or the rents
therefrom, or any use or occupancy thereof; (ii) all general and
special assessments, levies, and all other rentals and charges
payable to municipal or other governmental authorities for use of
or in respect to public space at, below or above ground level
(including public air space); (iii) all permit fees, inspection
fees and license fees; (iv) all water and sewer rents and charges;
(v) all other public charges, taxes, assessments, fees,
governmental and non-governmental charges, whether of a like or a
different nature, to the extent any of the foregoing are imposed
upon or assessed against Mortgagor or the Mortgaged Property or
any part thereof or upon the revenues, rents, avails, issues,
income and profits of the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof; (vi) any charges for
any easement or agreement maintained for the benefit of the
Mortgaged Property; and (vii) any interest, costs or penalties
with respect to any of the foregoing.
Improvements shall mean any and all buildings, structures,
improvements, alterations or appurtenances now erected or at
anytime hereafter constructed or placed upon the Land, as
hereinafter defined, or any portion thereof and any replacements
thereof including, without limitation, all equipment, apparatus,
machinery and fixtures of any kind or character forming a part of
said buildings, structures, improvements, alterations or
appurtenances, excluding, however, all items of personal property
owned by occupancy tenants of the Improvements and installed for
the purpose of their tenancies with the right of removal by the
tenant upon the expiration of its tenancy.
Indebtedness shall mean the principal sum due and the interest
thereon described in the Note and all other amounts, charges,
expenses, payments and premiums due on account of the Note, this
Mortgage, and the other Loan Documents, as hereinafter defined.
Interest Rate shall mean the Interest Rate as defined in the Note.
Land shall mean the fee simple estate in the parcel of real estate
located in Pittsfield, Berkshire County, Massachusetts described
in Exhibit A attached hereto and by this reference made a part
hereof for all purposes.
Leases shall mean any and all leases, sub-leases, occupancy
agreements, licenses, concessions or grants or other possessory
interests, and any guaranties thereof, if any, now or hereafter in
force, whether oral or written, covering or affecting the
Mortgaged Property, as hereinafter defined, or any portion
thereof, if any, in which Mortgagor is landlord, licensor,
concessionaire or owns any other beneficial interest of any type
or kind.
Loan Documents shall mean this Mortgage, the Note, the guaranty
from United Shields Corporation (the "Guarantor"), an assignment
of rents and leases from the Mortgagor the Mortgagor to the
Mortgagee of even date herewith, and any and all other documents
now or subsequently relating to, evidencing, securing or further
securing the payment of the Indebtedness or the performance of the
Obligations, as hereinafter defined, by the Mortgagor and any
amendment, modification, supplementation to or replacement
thereof.
Maturity Date shall mean the date stated in the Note for the
payment of the entire unpaid Indebtedness.
Mortgaged Property shall mean, collectively, all of Mortgagor's
right, title, interest, estate, claim or demand either at law or
in equity in and to the Land, the Improvements, the Fixtures and
the Personalty, as hereinafter defined, TOGETHER WITH:
(i) all and singular the rights, privileges, tenements,
hereditaments, rights-of-way, easements, appendages and
appurtenances of the Land and Improvements belonging or in any way
appertaining thereto, or which hereafter shall in any way belong,
relate or be appurtenant thereto, whether now owned or hereafter
acquired by Mortgagor, and all right, title and interest of
Mortgagor in and to any streets, ways, alleys, strips or gores of
land adjoining the Land or any portion thereof; and any and all
rights and estates in reversion or remainder; and
(ii) all of Mortgagor's right, title and interest in and to any
award or awards heretofore made or hereafter to be made by
municipal, state or federal authorities to the present or any
subsequent owners of the Land, the Improvements, the Fixtures or
the Personalty, including any award or awards or settlements
hereafter made resulting from (x) condemnation proceedings or the
taking of the Land, the Improvements, the Fixtures or the
Personalty, or any part thereof, under the power of eminent domain
or payments in lieu thereof, or (y) the alteration of the grade or
the location or discontinuance of any street adjoining the Land or
any portion thereof, or (z) any other injury to or decrease in the
value of the Mortgaged Property at the date of receipt of any such
award or payment by the Mortgagee, and the Mortgagor hereby agrees
to execute and deliver, from time to time, such further
instruments as may be requested by the Mortgagee to confirm such
assignment to the Mortgagee of any such award, damage, payment or
other compensation; and
(iii) all proceeds from the conversion, voluntary or involuntary,
of any of the foregoing into cash or liquidated claims including,
without limitation, the proceeds of insurance; and
(iv) all Leases of the Land or the Improvements now or hereafter
entered into and all right, title and interest of Mortgagor
thereunder, including, without limitation, Mortgagor's right to
cash or securities deposited thereunder to secure performance by
tenants of their obligations thereunder, whether such cash or
securities are to be held until the expiration of the terms of
such leases or applied to one or more of the installments of rent
coming due immediately prior to the expiration of such terms; and
(v) all earnings, revenues, rents, royalties, issues, profits,
avails and other income of and from the Land or the Improvements,
and all undisbursed proceeds of the Loan; and
(vi) all right, title, interest, estate, claim or demand of
Mortgagor, either at law or in equity, in and to all
architectural, engineering and similar plans, specifications,
drawings, renderings, models, profiles, studies, shop drawings,
reports, plats, permits, surveys and the like; and all sewer taps,
permits and allocations, agreements for utilities, bonds, sureties
and the like, relating to the Land or the Improvements or
appurtenant facilities erected or to be erected upon or about the
Land; and
(vii) all right, title and interest of Mortgagor in, to and under
any and all contracts, now or hereafter entered into by Mortgagor
covering any part of the Land or Improvements or relating to the
Fixtures or the Personalty; and
(viii) all right, title and interest of Mortgagor in and to any
and all governmental permits, licenses and the like respecting the
use, construction, occupancy, operation or maintenance of the
Mortgaged Property; and
(ix) all right, title and interest of Mortgagor in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to the Land,
the Improvements, the Fixtures and the Personalty, hereafter
acquired by, or released to, Mortgagor or constructed, assembled or
placed by Mortgagor on the Land, and all conversions of the security
constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may
be, and in each such case, without any further mortgage, conveyance,
assignment or other act by Mortgagor, the same shall become subject
to this Mortgage as fully and completely, and with the same effect,
as though now owned by Mortgagor and specifically described in the
granting clause hereof. At any and all times, Mortgagor will
execute and deliver to Mortgagee such further assurances, mortgages,
conveyances or assignments thereof as Mortgagee may reasonably
require for the purpose of expressly and specifically subjecting the
same to the lien of this Mortgage; and
(x) all right, title and interest of Mortgagor in and to all trade
or style name(s) under or by which any or all of the Improvements
may at any time be operated or known, the good will of the Mortgagor
in connection therewith and the right of Mortgagor to carry on
business under any or all such trade or style name(s) and any
variant or variance thereof, insofar as the same may be transferable
by Mortgagor without the breach of any agreement pursuant to which
Mortgagor may have obtained its right to use such trade or style
name(s);
(xi) any and all other, further or additional title, estate,
interest or right which may at any time be acquired by Mortgagor in
or to the Mortgaged Property or any portion thereof.
Mortgagee shall mean the party hereinabove designated as such, its
successors and assigns, and any subsequent holder or holders of this
Mortgage.
Mortgagor shall mean the party hereinabove designated as such, its
successors and assigns, and any subsequent owner or owners of the
equity of redemption in the Mortgaged Property, but nothing in this
sentence or any reference in this instrument to successors in title
to the Mortgagor shall be construed as derogating from the
restrictions on transfer of the Mortgagor's interest in the
Mortgaged Property contained herein.
Obligations shall mean any and all of the covenants, promises and
other obligations (other than the Indebtedness) made or owing by the
Mortgagor to or due to the Mortgagee pursuant to or as otherwise set
forth in the Note, this Mortgage and other Loan Documents or in any
other instrument(s) to which Mortgagor is a party or by which
Mortgagor is bound.
Permitted Encumbrances shall mean zoning laws and ordinances,
easements, and similar restrictions to title that are described in
the policy of title insurance issued to the Mortgagee in connection
herewith or that do not individually or in the aggregate materially
detract from the value of the Mortgaged Property or impair the use
thereof for the purposes intended or subject such use to the risk of
being impaired.
Personalty shall mean all of the right, title, interest, estate,
claim or demand of Mortgagor in and to any furniture, furnishings,
equipment, machinery and other personal property (other than the
Fixtures) including, without limitation, all venetian blinds,
shades, draperies, drapery and curtain rods, brackets, bulbs, vacuum
cleaning systems and cleaning apparatus, mirrors, lamps, ornaments,
rugs, linoleum and other floor covering, refrigerating and cooling
apparatus and equipment, refrigerators, ranges and ovens, garbage
disposals, dishwashers, mantels, and any and all such property which
is at any time hereafter installed in, affixed to, placed upon or
used in connection with the Land or the Improvements and all
replacements thereof, additions thereto and substitutions therefor,
excluding, however, (i) all items of personal property owned by
occupancy tenants of the Improvements and installed for the purpose
of their tenancies with the right of removal by the tenant upon the
expiration of its tenancy and (ii) all personal property leased by
Mortgagor as lessee.
Rents shall mean all of the rents, revenues, income, profits and
other benefits arising from the use and enjoyment of ownership of
all or any portion of the Mortgaged Property.
2. REPRESENTATIONS. Mortgagor warrants and represents to the
Mortgagee that (i) Mortgagor will pay the Indebtedness in the
manner provided in the Note or in any modification, renewal or
extension thereof, (ii) this Mortgage has been duly authorized,
executed and delivered by and on behalf of the Mortgagor, (iii) if
applicable, the Mortgagor is duly existing and in good standing
with all power, authority, and legal right to engage in the
transaction contemplated by this Mortgage and the Loan Documents,
(iv) the execution and delivery of this Mortgage and the Loan
Documents and the carrying out of the transaction contemplated
thereby will not conflict with or result in a breach of the terms
of any agreement to which the Borrower or any endorser of the Note
or any guarantor is a party or will not conflict with any law or
order of any court or governmental body, (v) there are no actions,
suits or proceedings, including, without limitation, eminent
domain proceedings, pending, or, to the knowledge of the
Mortgagor, threatened before any court or any other governmental
body or agency which could adversely affect the Mortgaged Property
or the Mortgagor or the Mortgagor's ability to perform its
obligations under this Mortgage or under the other Loan Documents,
(vi) the Mortgagor has not generated, stored or disposed of any
oil, hazardous waste or hazardous material as such material is
defined in Massachusetts General Laws C. 21E, the Resource
Conservation and Recovery Act, as amended, and other applicable
State or Federal laws or regulations as they may be amended from
time to time, excluding customary amounts of such materials
commonly and lawfully used in residential and office buildings,
and to Mortgagor's knowledge and except as reported in the 21E
Site Assessmentheretofore supplied to the Mortgagee by the
Mortgagor, no third party has generated, stored, or disposed of
any such materials on the Mortgaged Property or on any other
property owned or operated by the Mortgagor, and no such materials
are presently located on the Mortgaged Property or on any other
property owned or operated by the Mortgagor except in compliance
with all applicable laws and regulations, (vii) the Mortgaged
Property is in compliance with applicable zoning, building,
environmental and all other laws, ordinances and regulations
relating to the use and occupancy thereof and the Mortgagor has no
knowledge of any claim of violation of any such legal
requirements, (viii) all necessary licenses and permits for the
use and occupancy of the Mortgaged Property have been issued and
are in full force and effect, (ix) the Improvements and the
Personalty are in good working order and free from structural
defects, (x) the Mortgagor has no knowledge of any existing
default, or claim thereof, under any leases or other arrangements
for the use or occupancy of the Mortgaged Property either on the
part of the Mortgagor or any other party thereto, and the
Mortgagor's title to the Mortgaged Property is free from defects,
liens or encumbrances except for the Permitted Encumbrances, and
(xi) any and all financial statements heretofore delivered to the
Mortgagee by or on behalf of the Mortgagor and any other financial
statements of individuals and/or entities for which financial
statements have been furnished to Mortgagee in connection with the
Loan, are true and correct in all material respects, have been
prepared in accordance with generally accepted accounting
principles, consistently applied, and fairly present the
respective financial conditions of the subjects thereof as of the
respective dates thereof. No materially adverse change has
occurred in the financial conditions reflected therein since the
respective dates thereof and no additional borrowings have been
made or guaranteed by the subjects thereof since the respective
dates thereof which would cause a material adverse change in the
financial condition of Mortgagor, or other person or entity
endorsing the Note or delivering a guaranty of the Loan, other
than the borrowing secured hereby or previously approved by the
Mortgagee, including borrowings to facilitate Guarantor's
acquisition of Mortgagor.
3. UCC REPRESENTATIONS. The Mortgagor warrants that the
Mortgagor's principal place of business in Massachusetts is at 10
Betnr Industrial Drive, Pittsfield, Massachusetts. The Mortgagor
agrees to maintain complete and accurate records listing and
describing the Fixtures and the Personalty and to deliver such
records to the Mortgagee from time to time upon request of the
Mortgagee.
4. SECURITY INTEREST UNDER THE UNIFORM COMMERCIAL CODE. Upon
demand, Mortgagor shall make, execute and deliver such security
agreements (as such term is defined in the Uniform Commercial Code
of the Commonwealth of Massachusetts) as Mortgagee at any time may
deem necessary or proper or require to grant to Mortgagee a
perfected security interest in the Personalty, and upon
Mortgagor's failure to do so, Mortgagee is authorized to sign any
such agreement as the agent of Mortgagor. Mortgagor hereby
authorizes Mortgagee to file financing statements (as such term is
defined in said Uniform Commercial Code) with respect to the
Personalty, at any time, without the signature of Mortgagor.
Mortgagor will, however, at any time upon request of Mortgagee,
sign such financing statements. Mortgagor will pay all filing
fees for the filing of such financing statements and for the
refiling thereof at the times required, in the opinion of
Mortgagee, by said Uniform Commercial Code. If the lien of this
Mortgage be subject to any security agreement covering the
Personalty, then in the event of any default under this Mortgage,
all the right, title and interest of Mortgagor in and to any and
all of the Personalty is hereby assigned to Mortgagee, together
with the benefit of any deposits or payments now or hereafter made
thereof by Mortgagor or the predecessors or successors in title of
Mortgagor in the Mortgaged Property. This Mortgage is considered
to be a financing statement pursuant to the provisions of the
Uniform Commercial Code of the Commonwealth of Massachusetts
covering Fixtures and Personalty located on or used in connection
with the Land.
5. LEASES. The Mortgagor shall observe and perform all the
obligations imposed upon the Mortgagor under any lease of the
Mortgaged Property, or any portion thereof, and shall not do or
permit anything to be done, without the prior written consent of
the Mortgagee, which would impair the security of any such lease
to the Mortgagee, or, except where the lessee is in default
thereunder, terminate or consent to the cancellation or surrender
of any lease of the Mortgaged Property, or any part thereof, or
modify any such lease so as to shorten the unexpired term thereof
or so as to decrease the amount of the Rents payable thereunder.
The Mortgagor shall not accept prepayments of any installments of
Rent to become due under such leases more than thirty (30) days in
advance, except prepayments in the nature of security for the
performance of the obligations of the lessee thereunder. The
Mortgagor warrants that no Rent reserved under any lease of the
Mortgaged Property has been previously assigned or anticipated,
and no rent for any period subsequent to the date hereof has been
collected more than thirty (30) days in advance of the due date
thereof. If any of such leases provide for the giving by the
lessee of estoppel certificates with respect to the status of such
leases, Mortgagor shall exercise its right to request such
estoppel certificates within five (5) days of any demand therefor
by Mortgagee.
6. ASSIGNMENT OF LEASES AND RENTS. As additional security for the
obligations secured hereby, the Mortgagor hereby assigns to the
Mortgagee all of the Mortgagor's rights under any and all leases
or other arrangements for the use or occupancy of all of any part
of the Mortgaged Property, including, without limitation, the
right to receive the Rents from the Mortgaged Property provided,
however, that the Mortgagor shall retain the right to receive and
enjoy the Rents and exercise its other rights under such leases
and other contractual arrangements for the use and/or occupancy of
the Mortgaged Property until the occurrence of an Event of Default
under this Mortgage. After an Event of Default, the Mortgagee
shall be entitled to modify, alter, amend and otherwise deal with
all such leases and other arrangements with the same power and
discretion which the Mortgagee would have if it were the Lessor or
obligee thereof, and the Mortgagee shall be entitled to collect
all of the Rents to collect and endorse any checks issued in the
name of the Mortgagor and to apply the same to the Indebtedness
and other charges outstanding under any of the Loan Documents.
Mortgagor hereby agrees to enter into any other agreement
requested by the Mortgagee to evidence further this assignment of
leases and rents described in this Section.
7. OTHER SECURITY INTERESTS AND EQUIPMENT LEASING. The Mortgagor
shall not permit, without the prior written consent of Mortgagee,
(i) the creation or continued existence, whether by voluntary
action or operation of law, of any security interest in or other
encumbrance on the Mortgaged Property other than the Permitted
Encumbrances or a lien for unpaid real estate taxes and betterment
assessments prior to the commencement of interest and penalties
thereon, or (ii) the leasing of any equipment to be used by the
Mortgagor at or in connection with the operation of the Mortgaged
Property, other than in the ordinary course of Mortgagor's
business. The Mortgagor shall notify the Mortgagee promptly of
the existence of and the terms of any security interest affecting
any portion of the Mortgaged Property and any lease of personal
property, except for those equipment leases made in the ordinary
course of Mortgagor's business, to be used by the Mortgagor at or
in connection with the operation of the Premises, whether now
existing or hereafter arising, shall make all payments that become
due to any secured party having any such security interest or to
any lessor of such equipment, and, at the request of the
Mortgagee, shall assign to the Mortgagee all of Mortgagor's right,
title and interest in and to any and all agreements evidencing
such security interest or lease. The Mortgagor hereby grants to
the Mortgagee full power and authority as attorney-in-fact of the
Mortgagor, which appointment is acknowledged by the parties hereto
to be coupled with an interest, to make, execute, acknowledge and
deliver such assignments. The Mortgagor represents that, except
for the Permitted Encumbrances, no such security interest or lease
presently exists.
8. INSURANCE. The Mortgagor agrees, at the Mortgagor's sole cost
and expense, to keep the Mortgaged Property insured at all times
throughout the term of this Mortgage with policies of insurance of
the type set forth below:
(a) Casualty Insurance. Physical hazard insurance on an "all
risks" basis including, without limitation, the hazards of
earthquake and collapse, with a full replacement cost endorsement
(including builder's risk during any period or periods of time
that construction or remodeling is being performed on the
Mortgaged Property), in an amount equal to 100% of the full
replacement cost of all Improvements (excluding only the
reasonable value of footings and foundations) and the Mortgagor's
contents therein, determined to the reasonable satisfaction of the
Mortgagee, and, in any event, in an amount sufficient to prevent
the Mortgagor from incurring any co-insurance liability. This
insurance policy shall be first payable in case of loss to the
Mortgagee by means of the Commonwealth of Massachusetts standard
non-contributory mortgagee clause and shall name Mortgagee as an
additional insured thereunder.
(b) Boiler Insurance. Policies of insurance against loss or
damage to the major components of the air-conditioning and/or
heating system, fly wheel, steam pipes, steam turbines, steam
engines, steam boilers, other pressure vessels, high-pressure
piping and machinery if any, such as are installed in the
buildings and improvements in an amount reasonably satisfactory to
the Mortgagee.
(c) Liability Insurance. Policies of comprehensive general
liability insurance on an occurrence basis against claims for
bodily injury and property damage with limits of liability
satisfactory to the Mortgagee. The Mortgagor and the Mortgagee
shall be named as insureds under such policies as their interests
may appear.
(d) Workers' Compensation Insurance, Disability Benefits
Insurance, and such other form of insurance which the Mortgagor is
required by law to provide, covering loss resulting from injury,
sickness, disability or death of employees of Mortgagor who are
located at or assigned to the Land or who are responsible for the
construction of the Improvements.
(e) Business Interruption and/or Loss of Rental Value Insurance.
Business interruption and/or loss of rental insurance for a period
of twelve (12) months in such amounts as are reasonably
satisfactory to the Mortgagee.
(f) Flood Insurance. If the Mortgaged Property is located in an
area designated by any governmental authority as an area of
special flood hazard, such insurance against damage caused by
flooding as the Mortgagee shall reasonably require.
(g) Additional Insurance. Insurance with respect to such other
insurable risks relating to the Mortgaged Property or the
Mortgagor in such amounts and containing such terms and conditions
as the Mortgagee may reasonably require from time to time.
No insurance shall be blanketed with insurance on other properties
without the prior written consent of the Mortgagee, such consent
not to be unreasonably withheld. The Mortgagor shall deposit all
insurance policies (or certificates thereof acceptable to the
Mortgagee) providing coverage applicable to the Mortgaged
Property, whether or not required by this Mortgage, with the
Mortgagee forthwith after the binding of such insurance, and shall
deliver to the Mortgagee new policies (or certificates thereof
acceptable to the Mortgagee) for any insurance about to expire at
least thirty (30) days before such expiration. All such insurance
policies shall be written by such companies on such terms and in
such form and for such periods and amounts as the Mortgagee shall
from time to time designate or approve, shall be primary and
without right of contribution from any other insurance which may
be available, shall waive any right of set-off, counterclaim,
subrogation, or any deduction in respect of any liability of the
Mortgagor and the Mortgagee, shall provide that, with respect to
the Mortgagee, the insurance shall not be invalidated by any
action or inaction by the Mortgagor including, without limitation,
any defect in any representations made by the Mortgagor in the
procurement of such insurance, and shall provide that the
insurance policies may not be cancelled or amended without at
least thirty (30) days prior written notice to the Mortgagee. The
Mortgagor hereby grants the Mortgagee full power and authority as
attorney-in-fact of the Mortgagor, which appointment is
acknowledged by the parties hereto to be coupled with an interest,
to cancel or transfer such insurance, to collect and endorse any
checks issued in the name of the Mortgagor and to retain any
premium and to apply the same against the Indebtedness and other
charges outstanding under the Loan Documents.
9. MAINTENANCE AND ALTERATIONS. The Mortgagor shall maintain the
Mortgaged Property at all times in as good repair and condition as
the same now is or may hereafter be put, damage from casualty
expressly not excepted. The Mortgagor shall not take any action,
or permit any condition or activity, which could diminish the
value of the Mortgaged Property or invalidate any insurance
required to be provided under this Mortgage. The Mortgagor shall
not remove or alter or demolish any of the Improvements,
equipment, appliances, furnishing and Fixtures constituting part
of the Mortgaged Property without the prior written consent of the
Mortgagee and without promptly replacing any such item with an
item of equivalent utility and value. Upon notice at least 24
hours in advance of Mortgagee's inspection, the Mortgagor shall
permit the Mortgagee and its agents and employees to enter upon
the Mortgaged Property during normal business hours for the
purpose of inspecting the condition of the Mortgaged Property and
determining the Mortgagor's compliance with the covenants
contained herein.
10. USE AND COMPLIANCE WITH LAW. The Mortgagor shall not permit
any violation of any law, by-law, ordinance, public or private
restriction, regulation, order or code (including without
limitation, any rule or order of any Board of Fire Underwriters)
affecting the Mortgaged Property or the use thereof or take any
action or permit any condition or activity which could invalidate
any license or permit needed for the use and occupancy of the
Mortgaged Property. Additionally, Mortgagor warrants and
represents that:
(a) Mortgagor has not committed any act or omission and is not,
to the best of its knowledge, aware of any action or omission by
any prior owner that would cause the Mortgaged Property to be
subject to forfeiture pursuant to any Federal or State law, rule
or regulation; and
(b) the Mortgaged Property has not been acquired with any proceeds
from a transaction or an activity that would cause the Mortgaged
Property to be subject to such forfeiture.
Mortgagor covenants that Mortgagor will not use, operate or
occupy, and will not permit any third party to use operate or
occupy the Mortgaged Property, or any portion thereof, for any
purpose or activity that may give rise to such a forfeiture of the
Mortgaged Property.
11. TAXES AND ASSESSMENTS. The Mortgagor shall pay or cause to be
paid, not later than the last day upon which payment may be made
without penalty or interest, all Impositions, whether or not
assessed against the Mortgagor or the Mortgagee whether or not
assessed pursuant to the authority adopted before or after the
date of this Mortgage, if applicable or related in any way to the
Mortgaged Property, any interest in the Mortgaged Property of the
Mortgagor or the Mortgagee or the debt, obligations or performance
secured hereby, or the disbursement or application of the proceeds
therefrom excluding, however, any income or corporation excise tax
of the Mortgagee. If, at any time, the Mortgagee does not require
the escrow of payments for the Impositions, the Mortgagor shall
furnish to the Mortgagee receipted real estate tax bills for the
Mortgaged Property not later than ten (10) days after the date
from which any interest or penalty would accrue for non-payment
thereof unless such Imposition is being challenged, in good faith
by Mortgagor. The Mortgagor shall also furnish to the Mortgagee
evidence and payment of all other Impositions within fifteen (15)
days after written request therefor by the Mortgagee. If the
Mortgagor is not permitted by applicable law to pay any Imposition
or the payment of such Imposition would violate any usury law
applicable to the transaction contemplated hereby and by the other
Loan Documents, then, at the option of the Mortgagee, the
Indebtedness and other charges outstanding under the Loan
Documents shall become due and payable on the date specified by
written notice given by the Mortgagee to the Mortgagor, which date
shall be at least thirty (30) days after the date of such notice.
If requested by the Mortgagee, the Mortgagor shall pay to the
Mortgagee monthly, on the first day of each month, a sum
reasonably determined by the Mortgagee to be sufficient to provide
in the aggregate a fund adequate to pay each Imposition at least
thirty (30) days before it becomes delinquent, and, in addition,
shall pay to the Mortgagee, on demand, any balance necessary to
pay in full each Imposition at least ten (10) days before the date
on which it becomes due and payable. If such request is made by
Mortgagee, such sums must be applied by the Mortgagee to the
payment of the Impositions. The Mortgagor shall furnish to the
Mortgagee all original bills relating to any Impositions promptly
upon request by Mortgagee.
The Mortgagor shall have the right, after giving written notice to
the Mortgagee and subject to the conditions stated below, to
contest by appropriate legal proceedings the amount or validity of
any Imposition. In no event shall the Mortgagor be entitled to
delay payment of any Imposition if the delay in payment would
subject any portion of the Mortgaged Property to possible
foreclosure or, in any event, unless the Mortgagor deposits with
the Mortgagee a sum of money or such other security as the
Mortgagee deems reasonable to cover the amount of any such
Imposition plus any interest or penalty that may become due as a
result of such contest.
12. FILING FEES/TAXES.
(a) Mortgagor will pay all taxes, filing fees and other charges,
in connection with any transfer of the Mortgaged Property by the
Mortgagor or the Mortgagee, including the making or satisfaction
of this Mortgage, the taking of any action permitted to be taken
hereunder by the Mortgagee, the granting of a deed or assignment
in lieu of foreclosure, the appointment of a receiver or any
transfer pursuant to any sale of the Mortgaged Property on a
foreclosure, or by deed in lieu of foreclosure, or the removal of
any prior or subordinate mortgage.
(b) The provisions of this Section shall survive any sale of the
Premises on a foreclosure of this Mortgage or by deed in lieu of
foreclosure.
13. REPORTING REQUIREMENTS. The Mortgagor shall furnish
information concerning the Mortgaged Property as Mortgagee may
reasonably request together with financial statements of the owner
of the Mortgaged Property and any guarantors and endorsers and, if
requested, shall furnish such information on a periodic basis
without additional requests. Any financial statements required
herein shall be prepared in accordance with generally accepted
principles of accounting, consistently applied, shall be in form
and substance satisfactory to the Mortgagee, and, if requested by
the Mortgagee, shall be certified by an independent public
accountant satisfactory to the Mortgagee. Notwithstanding the
foregoing, the Mortgagor shall provide the Mortgagee with
Mortgagor's complete Federal and State tax returns (together with
all relevant schedules) and a financial statement at such times
and in a form required by the Note.
14. TRANSFERS. The Mortgagor shall not suffer or permit a change,
whether affected by voluntary act or by operation of law, in the
legal or direct or indirect beneficial ownership of (i) the
Mortgaged Property, or any portion thereof, or (ii) any interest
in the Mortgagor. The Mortgagor shall not enter into any lease or
combination of leases or other arrangements which have the effect
of transferring to any other person or affiliated group the right
to own, use or occupy all or substantially all of the Mortgaged
Property without the prior written consent of the Mortgagee. The
Mortgagee may, without notice to the Mortgagor, deal with the
Mortgagor's successor or successors in interest with reference to
this Mortgage and the Indebtedness in the same manner as with the
Mortgagor without in any way releasing, discharging or modifying
the Mortgagor's liability or obligations with respect to this
Mortgage or the Indebtedness. No transfer of any interest in any
part of the Mortgaged Property shall operate to release,
discharge, modify, change or affect the original liability of the
Mortgagor, or the priority of this Mortgage, either in whole or in
part.
<PAGE>
15. CASUALTY AND CONDEMNATION-AWARD.
(a) Notice to Mortgagee. In the case of any act or occurrence of
any kind or nature which results in damage, loss or destruction to
the Mortgaged Property ("Casualty"), or commencement of any
proceedings or actions which might result in a condemnation or
other taking for public or private use of the Mortgaged Property
or which relates to injury, damage, benefit or betterment thereto
("Taking"), Mortgagor shall promptly notify Mortgagee describing
the nature and the extent of the Taking or the Casualty, as the
case may be. Mortgagor shall promptly furnish to Mortgagee copies
of all notices, pleadings, determinations and other papers in any
such proceedings or negotiations.
(b) Repair and Replacement. In case of a Casualty or Taking,
Mortgagor shall promptly (at Mortgagor's sole cost and expense and
regardless of whether the Insurance Proceeds or the Taking
Proceeds, if any, shall be sufficient or made available to
Mortgagee for the purpose) restore, repair, replace and rebuild
the Mortgaged Property as nearly as possible to its quality,
utility value, condition, and character immediately prior to the
Casualty or the Taking, as the case may be. However, upon a
Casualty or Taking resulting in a restoration cost that exceeds
25% of the then replacement value of the Improvements or a Taking
of more than 25% of the area of the Land, and application by
Mortgagee of the Insurance Proceeds or the Taking Proceeds to
reduction of the Indebtedness in accordance with this Mortgage,
Mortgagor shall be obligated only to remove any debris from the
Mortgaged Property and take such actions as are necessary to make
the undamaged or non-taken portion of the Mortgaged Property into
a functional economic unit insofar as it is possible under the
circumstances.
(c) Insurance Proceeds and Taking Proceeds.
(i) Collection. Mortgagor shall use its best efforts to collect
the maximum amount of insurance proceeds payable on account of any
Casualty ("Insurance Proceeds"), and the maximum award, payment or
compensation payable on account of any Taking ("Taking Proceeds").
In case of a Casualty, Mortgagee may, in its sole unfettered
discretion, make proof of loss to the insurer, if not made
promptly by Mortgagor. Mortgagor shall not settle or otherwise
compromise any claim for Insurance Proceeds or Taking Proceeds
without giving Mortgagee notice thereof at least 10 days in
advance.
(ii) Assignment to Mortgagee. Mortgagor hereby assigns, sets
over and transfers to Mortgagee all Insurance Proceeds and Taking
Proceeds and authorizes payment of such Insurance Proceeds and
Taking Proceeds to be made directly to Mortgagee. Mortgagee shall
apply the Insurance Proceeds and Taking Proceeds first to pay all
reasonable expenses incurred by Mortgagee in connection with the
Casualty or Taking, including, without limitation, attorney's fees
and title fees. Unless Paragraph (d) regarding Insurance Proceeds
applies, Mortgagee may, in its sole unfettered discretion, apply
the balance of such Insurance Proceeds or Taking Proceeds ("Net
Proceeds") to either of the following, or any combination thereof:
(aa) payment of the Indebtedness, either in whole or in party, in
any order determined by Mortgagee in its sole unfettered
discretion;
(bb) repair or replacement, either partly or entirely, of any part
of the Mortgaged Property so destroyed, damaged or taken, in which
case Mortgagee may impose such terms, conditions and requirements
for the disbursement of the Insurance Proceeds or the Taking
Proceeds as it, in its sole unfettered discretion, deems
advisable. Mortgagee shall not be a trustee with respect to any
Insurance Proceeds or Taking Proceeds, and may commingle Insurance
Proceeds or Taking Proceeds with its funds without obligation to
pay interest thereon.
If any portion of the Indebtedness shall thereafter be unpaid,
Mortgagor shall not be excused from the payment thereof in
accordance with the terms of the Loan Documents. Mortgagee shall
not, in any event or circumstance, be liable or responsible for
failure to collect or exercise diligence in the collection of any
Insurance Proceeds or Taking Proceeds.
(d) Disbursement of Insurance Proceeds to Mortgagor. Mortgagee
will disburse the Insurance Proceeds to Mortgagor provided: (i)
there exists no Event of Default or occurrence or facts which with
the passage of time, the giving of notice, or both, will be an
Event of Default which remains uncured at any time before or
during the Restoration; (ii) the Casualty does not occur within
nine months of the Maturity Date; and (iii) the conditions in this
Paragraph 15 are satisfied.
As to any loss or damage which Mortgagee estimates can be repaired
for less that 1/2 of 1% of the then Indebtedness, Mortgagee shall
disburse to Mortgagor from the Net Proceeds the amount which it
determines is necessary to repair the damage, which amounts shall
be used by Mortgagor to restore the damage to the Mortgaged
Property caused by the Casualty.
As to all other Casualties, Mortgagee shall disburse the Net
Proceeds related thereto to Mortgagor on the following terms and
conditions:
(i) Prior to the first and each subsequent disbursement, Mortgagor
shall give proof satisfactory to the Mortgagee that:
(aa) Mortgagee is holding a fund comprised of the Net Proceeds
and, if necessary, additional deposits made by Mortgagor
sufficient to restore the Property to its condition and use
required of Mortgagor under the terms of the Leases
("Restoration"), together with a fund comprised of Net Proceeds or
funds deposited by Mortgagor, sufficient to pay operating
expenses, Property Taxes and Charges, the Monthly Payments (as
defined in the Note) and other so-called "carrying costs" of the
Mortgaged Property during the period of Restoration;
(bb) there are no laws preventing Restoration of the Mortgaged
Property;
(cc) the Restoration will be conducted under the supervision of
an architect, engineer and/or a general contractor selected by and
paid by Mortgagor and approved by Mortgagee;
(dd) the Restoration will be performed pursuant to plans and
specifications approved by Mortgagee and by a contractor or
contractors approved by Mortgagee; and
(ee) the Mortgaged Property, after such Restoration, shall be in
compliance with applicable laws.
(ii) With respect to each disbursement and accompanying each
request therefor, there shall be delivered to Mortgagee:
(aa) a certificate addressed to Mortgagee and executed by
Mortgagor and by the architect, engineer or general contractor
supervising the Restoration that such disbursement is to pay for
costs of the Restoration not paid previously by any other prior
disbursement, that the amount of such disbursement does not exceed
the aggregate of such costs incurred or paid on account of work,
labor or services performed and materials installed in or stored
upon the Mortgaged Property at the date of such certificate and
that the disbursement requested, together with the disbursements
made prior thereto, collectively, as a percentage of the total Net
Proceeds, do not exceed the percentage of completion of the
Restoration; and
(bb) an endorsement to Mortgagee's title insurance policy, in
which the making of the disbursement is recognized and the
effective date of coverage is changed to the date of disbursement.
(iii) Each disbursement shall be in the amount not greater than
90% of the costs described in the certificate referred to in
Paragraph (d)(ii)(aa) hereof. Disbursement of the final balance
of the Net Proceeds, constituting not less than ten percent (10%)
thereof, shall be disbursed only upon delivery to Mortgagee of the
following, in addition to the foregoing:
(aa) evidence satisfactory to Mortgagee that all claims then
existing for labor, services and materials enforceable by lien
upon the Mortgaged Property have been paid in full or provision
acceptable to Mortgagee has been made therefor;
(bb) a certificate of such architect, engineer or general
contractor that the Restoration of the Mortgaged Property has been
completed in a good workmanlike manner and in accordance with all
laws;
(cc) an estoppel affidavit in form satisfactory to Mortgagee from
each tenant occupying or leasing space in the Mortgaged Property
affected by the Casualty; and
(dd) an as-built survey of the Improvements certified to
Mortgagee and in form satisfactory to Mortgagee.
(iv) Mortgagor shall complete the Restoration within 180 days of
the Casualty subject to delay beyond Mortgagor's control other
than lack of funds. If Mortgagor does not complete the
Restoration within such time, Mortgagee, at its option, may
restore the Mortgaged Property for and on Mortgagor's behalf and
may do any act or thing as Mortgagee deems necessary or
appropriate to that end and the expenses of Restoration in excess
of Net Proceeds shall be borne by Mortgagor.
(v) If the quality of the Restoration is at least equal to the
quality of the Improvements before the Casualty, any Net Proceeds
in excess of the amount used in payment of the Restoration shall
be distributed to Mortgagor.
Mortgagee shall not be a trustee with respect to any Insurance
Proceeds and may mingle Insurance Proceeds with its funds without
obligation to pay interest thereon. Mortgagee shall in no event
be liable for the performance or observance of any covenant or
condition arising under any lease in connection with the Mortgaged
Property nor obligated to take any action to restore the Mortgaged
Property.
16. HAZARDOUS WASTE AND SUBSTANCES; OCCUPATIONAL HEALTH AND SAFETY
AND ENVIRONMENTAL LAWS, STANDARDS AND REGULATION. Mortgagor shall
comply with all laws, governmental standards and regulations
applicable to Mortgagor or to the Mortgaged Property in respect of
occupational health and safety, hazardous wastes and substances
and the environment. Mortgagor shall promptly notify Mortgagee of
its receipt of any notice of violation of or non-compliance with
any such law, standard or regulation.
Mortgagor covenants that it shall not unlawfully "release" or
cause an unlawful "threat of release" of any "hazardous materials"
or "oil" (as such terms are defined in the Massachusetts Oil and
Hazardous Material Release Prevention and Response Act, Chapter
21E of the Massachusetts General Laws) on the Mortgaged Property
or on any other property in the Commonwealth of Massachusetts,
whether or not owned by the Mortgagor. Furthermore, Mortgagor
covenants, and it shall be a further condition of this Mortgage:
(a) that Mortgagor will not incur due to its acts or omissions
during the term of this Mortgage any liability to the Commonwealth
of Massachusetts under such Act on the Mortgaged Property or
elsewhere;
(b) that no lien on the Mortgaged Property will arise due to the
acts or omissions of Mortgagor during the term of this Mortgage
under such Act;
(c) that no portion of the Mortgaged Property during the term of
this Mortgage shall be used for the generation, storage,
treatment, use, transport or disposal of any substance for which a
license is required by Chapter 21C of the Massachusetts General
Laws, viz, so-called hazardous wastes except for customary
quantities in compliance with all applicable laws and regulations;
In furtherance of the foregoing, Mortgagor covenants and agrees to
take all steps necessary in order to prevent any such lien from
attaching to the Mortgaged Property or any part thereof.
Mortgagor hereby agrees to indemnify and hold Mortgagee harmless
from all loss, costs, damage, claim and expense incurred by
Mortgagee on account of Mortgagor's failure to perform the
obligations of this Section or arising out of or in any way
connected with the application to the Mortgaged Property or any
part thereof of any current or future legislation related to the
presence of any hazardous waste or materials upon the Mortgaged
Property. The preceding sentence shall not constitute a
limitation on any similar or additional rights to indemnity in
favor of Mortgagee, whether or not same exist hereunder or under
any of the other Loan Documents, and whether existing at law or
equity.
17. EVENT OF DEFAULT. The Indebtedness and all other charges due
under the Note, this Mortgage and the other Loan Documents shall
become due, at the option of Mortgagee, if one or more of the
following events (an "Event of Default") shall occur:
(a) Mortgagor fails to pay any interest or principal when due or
within applicable grace and cure periods, if any, provided in the
Note;
(b) breach of any covenant contained in the sections herein
entitled "Insurance", "Transfers", and "Taxes and Assessments";
(c) breach of any other covenant, condition or agreement contained
herein and in the Loan Documents remaining uncured for a period in
excess of ten (10) days after Mortgagee has provided Mortgagor
with written notice of such breach; provided that in a case of any
breach which is susceptible to cure but cannot be cured within ten
(10) days through the exercise of reasonable diligence, so long as
the Mortgagor commences such cure within such ten (10) day period,
such breach remains susceptible to cure, and the Mortgagor
diligently pursues such cure, such breach shall not be deemed to
create an Event of Default hereunder;
(d) The actual or threatened removal, demolition or structural
alteration, in whole or in part, of any Improvement, without the
prior written consent of Mortgagee; or the removal, demolition or
destruction in whole or in part, of any Fixtures without replacing
the same with Fixtures at least equal in quality and condition to
those replaced, free from any security interest or other
encumbrance thereon and free from any reservation of title
thereto; or the commission of any waste in respect to the
Mortgaged Property; or
(e) breach of any other covenant, condition or agreement in any
loan document or in any other mortgage, debt or obligation of or
from the Mortgagor to the Mortgagee or in any other mortgage or
instrument which constitutes a lien on all or any part of the
Mortgaged Property;
(f) failure of the Mortgagor to cause to be dismissed any
proceeding against the Mortgagor, and, if applicable, any holder
of a general partnership interest in the Mortgagor, any guarantor
of any of the Obligations or any endorser of the Note (the
Mortgagor and, if applicable, any such general partner, guarantor
or endorser hereinafter referred to as an "Obligor") under any law
relating to bankruptcy, reorganization, insolvency or relief of
debtors, within ninety (90) days from the date upon which such
proceeding is filed or instituted, or the filing or other
institution of a proceeding by any Obligor under any such law;
(g) failure of an Obligor to cause to be dismissed a proceeding
for the enforcement of a money judgement under the Laws of the
Commonwealth of Massachusetts, and which materially affects the
financial condition of Mortgagor, instituted against said Obligor
within thirty (30) days from the date upon which such proceeding
is filed or instituted unless such proceeding is contested in good
faith by the Obligor and bonded or otherwise secured to
Mortgagee's satisfaction;
(h) the liquidation, termination, dissolution, merger or a
consolidation of any Obligor which is not an individual, the
insolvency of any Obligor or the inability of any Obligor to pay
such Obligor's debts when due;
(i) failure of Mortgagor to pay within fifteen (15) days after
notice and demand any filing or refiling fees required hereunder;
or
(j) material inaccuracy of any statement, representation or
warranty made by the Mortgagor to the Mortgagee in this Mortgage
or in any Loan Document, or any instrument or statement submitted
to the Mortgagee by an Obligor, and which results in any loss or
damage to the Mortgagee.
18. STATUTORY POWER OF SALE. This Mortgage is upon the STATUTORY
CONDITION and upon the further condition that all covenants and
agreements on the part of Mortgagor herein undertaken shall be
kept and fully and seasonably performed and that no breach of any
other of the conditions specified herein shall be permitted, for
any breach of which covenants or conditions, Mortgagee shall have
the STATUTORY POWER OF SALE.
19. APPLICATION OF DEPOSITS AFTER DEFAULT. If the Mortgagor shall
default in the performance or observance of any covenant or
agreement contained herein or in the Note or other Loan Documents,
the Mortgagee may apply any deposit, payment or any sum due from
the Mortgagee to any Obligor toward the Indebtedness and other
charges outstanding under the Loan Documents without first
enforcing any other rights of the Mortgagee against any Obligor or
against the Mortgaged Property.
20. SEPARATE FORECLOSURE SALES AND WAIVER OF MARSHALLING. The
Mortgagee may sell the Mortgaged Property and other security in
one lot or in parts or parcels. Such sales may be held from time
to time by public sale and the power of sale herein given to the
Mortgagee shall not be fully executed until all of the Mortgaged
Property and other security not previously sold shall have been
sold. If surplus proceeds are realized from such a foreclosure
sale, the Mortgagee shall not be liable for any interest thereon
pending distribution of such proceeds to the Mortgagor by the
Mortgagee. Any separate items of property sold together for a
single price may be accounted for in one account without
distinction between the items of security or without assigning to
them any proportion of such proceeds. The Mortgagor hereby waives
the application of any doctrine of marshalling of assets.
The Mortgagor agrees that the requirement of the Uniform
Commercial Code with respect to personal property that a secured
party give a debtor reasonable notice of any proposed sale or
disposition of the collateral shall be met if such notice is given
to Mortgagor at least five (5) days before such time of sale or
disposition.
21. COLLECTION OF ACCOUNTS. After an Event of Default, the
Mortgagee may communicate with account debtors in order to verify
the existence, amount and terms of any accounts or contract rights
and to notify account debtors of the Mortgagee's security interest
in their accounts. When requested by the Mortgagee, the Mortgagor
shall notify account debtors and indicate on all billings that
payments are to be made directly to the Mortgagee. After an
Event of Default, the Mortgagee may require that payments on
accounts be made directly to the Mortgagee and the Mortgagee shall
have full power to collect, compromise, endorse, sell or otherwise
deal with the accounts or proceeds thereof and to perform the
terms of any contract in order to create accounts in the
Mortgagee's name or in the name of the Mortgagor with respect to
the business conducted with respect to and at the location of the
Mortgaged Property.
22. APPOINTMENT OF RECEIVER. Mortgagee, in any action to
foreclose this Mortgage, shall be entitled, without notice and as
a matter of right and without regard to the adequacy of any
security for the Indebtedness or the solvency of Mortgagor, upon
application to any court of competent jurisdiction, to the
appointment of a receiver of the rents, issues and profits of the
Mortgaged Property.
23. WAIVER OF JURY TRIAL. THE MORTGAGOR AND THE MORTGAGEE EACH
HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS MORTGAGE,
ANY OTHER LOAN DOCUMENT OR THE LOAN, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR THE
RELATIONSHIP BETWEEN MORTGAGOR AND MORTGAGEE AS BORROWER AND
LENDER, OR ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE
MORTGAGOR AND MORTGAGEE.
24. INTEREST TO ACCRUE. If the outstanding Indebtedness shall
either mature or become due because of an acceleration by the
Mortgagee of the Mortgagor's obligation to repay the Indebtedness
caused by an Event of Default, then interest on the Indebtedness
shall continue to accrue at the Default Rate, as defined in the
Note, until paid in full.
25. EFFECT OF RELEASES AND WAIVERS. Any failure by Mortgagee to
insist upon the strict performance by Mortgagor of any of the
covenants, terms and provisions of this Mortgage or any of the
other Loan Documents shall not be deemed to be a waiver of any of
the covenants, terms and provisions of this Mortgage or any of the
Loan Documents, and Mortgagee, notwithstanding any such failure,
shall have the right thereafter to insist upon the strict
performance by Mortgagor of any and all of the covenants, terms
and provisions of this Mortgage and any of the Loan Documents.
Neither Mortgagor nor any other person or entity now or hereafter
obligated for the payment of the whole or any part of the
Indebtedness shall be relieved of such obligation by reason of (i)
the failure of Mortgagee to comply with any request of Mortgagor,
or of any other person or entity so obligated, (ii) the failure of
Mortgagee to take action to foreclose this Mortgage or otherwise
enforce any of the covenants, terms and provisions of this
Mortgage or any of the Loan Documents, (iii) the release,
regardless of consideration, of the whole or any part of the
security held for payment of the Indebtedness and the performance
of all other obligations hereunder and under the other Loan
Documents, or (iv) any agreement or stipulation between the
Mortgagee and any subsequent owner or owners of the equity of
redemption in the Mortgaged Property modifying the covenants,
terms and provisions of this Mortgage or the Note without first
having obtained the consent of Mortgagor or such other person or
entity. In the last mentioned event, Mortgagor and all such other
persons or entities shall continue to be liable to make such
payments according to the terms and provisions of the Mortgage as
amended, unless expressly released and discharged of record by
Mortgagee. Mortgagee may release, regardless of consideration,
any part of the security held for payment of the Indebtedness and
performance of the Obligations without, as to the remainder of the
security, in any way impairing or affecting the lien of this
Mortgage or the priority of such lien over any subordinate lien.
Mortgagee may resort for the payment of the Indebtedness and
performance of the Obligations to any other security therefor held
by Mortgagee, in such order and manner as Mortgagee may elect.
26. MORTGAGEE RIGHT TO CURE AND EXPENSES. The Mortgagee shall be
entitled, but not obligated, to cure any failure of the Mortgagor
hereunder and under the other Loan Documents and to commence,
intervene in or otherwise participate in any legal or equitable
proceeding which, in the Mortgagee's sole judgement, affects the
Mortgaged Property or any rights or obligations created or secured
by this Mortgage or the other Loan Documents. If the Mortgagee
shall become involved in any action or course of conduct with
respect to the Note, this Mortgage, any of the other Loan
Documents, the Mortgaged Property or other security for the
Indebtedness and the Obligations in order to protect its interest
therein or to cure any default of the Mortgagor hereunder or under
the other Loan Documents, the Mortgagor shall, on demand,
reimburse the Mortgagee for all charges, cost and expenses
incurred by the Mortgagee in connection therewith, including,
without limitation, reasonable attorneys' fees. All such charges
incurred through the operation of this paragraph, together with
interest thereon as described in this paragraph, shall be added to
the outstanding Indebtedness and shall be secured by the Loan
Documents.
27. INTERVENING LIENS. Should any agreement be hereafter entered
into modifying or changing the terms of any Loan Document, the
rights of the parties to such agreement shall be superior to the
rights of the holder of any intervening lien.
28. REMEDIES CUMULATIVE. The rights and remedies herein afforded
to Mortgagee and its successors and assigns shall be cumulative
and supplementary to and not exclusive of any other rights and
remedies which the Mortgagee and its successors and assigns may
have under the other Loan Documents, at law or in equity.
29. FURTHER ASSURANCES. The Mortgagor agrees to execute and cause
to be filed or recorded, and hereby appoints the Mortgagee its
duly authorized attorney-in-fact, which appointment is
acknowledged by the parties hereto to be coupled with an interest
and is irrevocable, with full power of substitution and with
authority to execute, file and record on behalf of the Mortgagor,
all instruments from time to time deemed by the Mortgagee to be
necessary or appropriate to evidence further the obligations of
the Mortgagor pursuant to or secured by this Mortgage or the other
Loan Documents, or to secure further to the Mortgagee the security
intended to be provided by this Mortgage. Mortgagor will pay all
costs, expenses and fees incurred as a result of the operation of
this paragraph.
30. STATEMENT OF AMOUNT DUE. Mortgagor, within five (5) days upon
request in person or within fifteen (15) days upon request by
mail, will furnish a written statement duly acknowledged of the
amount due on this Mortgage and whether any offsets or defenses
exist against the Indebtedness.
31. NOTICES. Any notices required or permitted to be given
hereunder shall be: (i) personally delivered or (ii) given by
registered or certified mail, postage prepaid, return receipt
requested, or (iii) forwarded by overnight courier service, in
each instance addressed to the addressee at the address for such
party set forth at the head of this Mortgage, or such other
address as each may designate in writing to the other. All
notices given hereunder shall be in writing and shall be deemed
given, in the case of notice by personal delivery, upon actual
delivery, and in the case of mail or courier service, upon
deposit with the U.S. Postal Service or delivery to the courier
service.
32. TIME OF THE ESSENCE. Time is of the essence with respect to
each and every covenant, agreement and obligation of Mortgagor
under this Mortgage, the Note and any and all other Loan
Documents.
33. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(a) Mortgagor shall indemnify, defend and hold Mortgagee harmless
against: (i) any and all claims for brokerage, leasing, finders or
similar fees which may be made relating to the Mortgaged Property
or the Loan, and (ii) against any and all liability, obligations,
losses, damages, penalties, claims, actions, suits, costs, and
expenses (including its reasonable attorneys' fees, together with
reasonable appellate counsel fees, if any) of whatever kind or
nature which may be imposed on or incurred by Mortgagee at any
time pursuant either to a judgement or decree or other order
entered into by a court or administrative agency or to a
settlement reasonably approved by Mortgagor, which judgment,
decree, order or settlement relates in any way to or arises out of
the offer, sale or lease of the Mortgaged Property and/or the
ownership, use, occupation or operation of any portion of the
Mortgaged Property, unless such judgment or decree arises from
Mortgagee's negligence after Mortgage takes control of the
Mortgaged Property.
(b) If Mortgagee is made a party defendant to any litigation
concerning the Loan instituted by an individual or entity not
party to the Loan Documents, this Mortgage, the Mortgaged
Property, or any part thereof, or any interest therein, or the
occupancy thereof, then Mortgagor shall indemnify, defend and hold
Mortgagee harmless from all liability by reason of said
litigation, including reasonable attorneys' fees (together with
reasonable appellate counsel fees, if any) and expenses incurred
by Mortgagee in any such litigation, whether or not any such
litigation is prosecuted to judgment. If Mortgagee commences an
action against Mortgagor to enforce any of the terms hereof or to
prosecute any breach by Mortgagor of any of the terms hereof or to
recover any sum secured hereby, Mortgagor shall pay to Mortgagee
such reasonable attorneys' fees (together with reasonable
appellate counsel fees, if any) and expenses so incurred. The
right to such attorneys fees (together with reasonable appellate
counsel fees, if any) and expenses shall be deemed to have accrued
on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If
Mortgagor breaches any term of this Mortgage, Mortgagee may
employ an attorney or attorneys to protect its rights hereunder,
and in the event of such employment following any breach by
Mortgagor, Mortgagor shall pay Mortgagee reasonable attorneys'
fees (together with reasonable appellate counsel fees, if any) and
expenses incurred by Mortgagee, whether or not an action is
actually commenced against Mortgagor by reason of such breach.
(c) A waiver of subrogation shall be obtained by Mortgagor from
its insurance carrier and, consequently, Mortgagor waives any and
all right to claim or recover against Mortgagee, its officers,
employees, agents and representatives, for loss of or damage to
Mortgagor, the Mortgaged Property, Mortgagor's property or the
property of others under Mortgagor's control from any cause
insured against or required to be insured against by the
provisions of this Mortgage.
(d) All sums payable by Mortgagor hereunder shall be paid without
notice (except as may otherwise be provided herein), demand,
counterclaim, setoff, deduction or defense and without abatement,
suspension, deferment, diminution or reduction, and the
obligations and liabilities of Mortgagor hereunder shall in no way
be released, discharged or otherwise affected by reason of: (i)
any damage to or destruction of or any condemnation or similar
taking of the Mortgaged Property or any part thereof; (ii) any
restriction or prevention of or interference with any use of the
Mortgaged Property or any part thereof; (iii) any title defect or
encumbrance or any eviction from the Mortgaged Property or the
Improvements or any part thereof by title superior or otherwise;
(iv) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation, or other like proceeding
relating to Mortgagee, or any action taken with respect to this
Mortgage by any trustee or receiver of Mortgagee, or by any court,
in such proceeding; (v) any claim which Mortgagor has, or might
have, against Mortgagee; (vi) any default or failure on the part
of Mortgagee to perform or comply with any of the terms hereof or
of any other agreement with Mortgagor; or (vii) any other
occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not Mortgagor shall have notice or knowledge
of any of the foregoing. Mortgagor waives all rights now or
hereafter conferred by statute or otherwise to any abatement,
suspension, deferment, diminution, or reduction of any sum secured
hereby and payable by Mortgagor.
34. SEVERABILITY/HEADINGS/BINDING EFFECT. This Mortgage and the
other Loan Documents constitute the entire agreement between
Mortgagor, any guarantors or endorsers, and Mortgagee and, to the
extent that any writings not signed by Mortgagee or oral
statements at any time made or had are inconsistent with the
provisions of this Mortgage and the other Loan Documents, the
unsigned writings and oral statements shall be null and void.
This Mortgage and all of the other Loan Documents shall be
governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
In case any provision of the Note, this Mortgage, or any Loan
Documents shall be found unenforceable or invalid for any reason,
such provision shall be deemed modified to the extent necessary to
be enforceable or if such modification is not practicable, such
provision shall be deemed deleted from this Mortgage or such other
Loan Documents. The headings of Sections and Paragraphs shall be
ignored in interpreting this Mortgage. All of the covenants and
agreements of the Mortgagor herein contained shall be binding upon
the Mortgagor, its heirs, executors, administrators, successors
and assigns and shall be joint and several if more than one person
constitute the Mortgagor.
35. YEAR 2000 COMPLIANCE. Borrower represents and warrants that
(a) Borrower has performed a formal assessment of the effect of
year 2000 on Mortgagor's computer systems and business operations,
(b) Mortgagor has converted the assessment to a plan ("Year 2000
Compliance Plan") with budget and implementation dates, including
a statement of awareness of the problem, an inventory checklist of
equipment affected, and an assessment of complexity, remediation,
validation, testing and implementation, (c) Mortgagor has
sufficient resources to implement the Year 2000 Compliance Plan
and (d) the Year 2000 Compliance Plan has been completed.
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be
executed by William A. Frey, III, its duly authorized President
and Treasurer, and its corporate seal to be hereunto affixed as of
the date first above written.
PITTSFIELD MOLD & TOOL, INC.
By: /s/ William A. Frey, III
William A. Frey, III,
President and Treasurer
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss. September 29, 1999
Then personally appeared the above-named William A. Frey, III,
President and Treasurer, who acknowledged the foregoing instrument
to be the free act and deed of Pittsfield Mold & Tool, Inc.,
before me,
/s/ Gerald A. Denmark
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
EXHIBIT A TO
MORTGAGE AND SECURITY AGREEMENT
[description of real property]
Exhibit 99.18
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT OF RENTS AND LEASES (this "Assignment"), is made
this 29th day of September, 1999 by PITTSFIELD MOLD & TOOL, INC.,
a Massachusetts corporation with a mailing address, for the purposes
hereof at 10 Betnr Industrial Drive, Pittsfield, Massachusetts 01201
(the "Borrower") for the benefit of BERKSHIRE BANK, a Massachusetts
banking corporation, with its office and principal place of business
at 24 North Street, Pittsfield, Massachusetts 01201 (the "Lender").
W I T N E S S E T H:
Reference is made to two promissory notes (collectively, the "Note")
of even date herewith in the principal amounts of TWO MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00) and ONE MILLION
NINE HUNDRED THOUSAND and NO/100 DOLLARS ($1,900,000.00),
respectively, (collectively, the "Loan"), from the Borrower as
maker, to Lender as payee, to mortgages of even date herewith
granted by the Borrower to Lender securing the Note (collectively,
the "Mortgage") encumbering premises located at 10 Betnr Industrial
Drive, Pittsfield, Massachusetts, described on Exhibit A attached
hereto and made a part hereof (the "Premises"), and to any and all
other documents executed by either party evidencing, securing and/or
relating to the Loan (all of which are collectively referred to
herein as the "Loan Documents").
In order to secure further the prompt payment of the Loan and
performance of the obligations of Borrower under the Loan Documents,
and in consideration of the Loan, the Borrower does hereby assign,
transfer, and set over unto Lender (i) all rents and other payments
required of lessees, tenants, occupants, licensees, concessionaires,
or other persons or parties (hereinafter collectively referred to as
"Tenants"), whether or not designated as rent or additional rent
(including, without limitation, security deposits, tax or operating
expense escalation payments, percentage rent, or any other payments
from any license, use permit, or concession), (items in the nature
of monetary payments described herein are collectively referred to
herein as "Rents") arising from any rental units, space or rentable
facilities within, on or appurtenant to the Premises or any portion
thereof, whether under existing leases, licenses, tenancies,
occupancies, or concessions or agreements of any sort, written or
unwritten (collectively referred to as "Leases"), or under any
Leases hereafter arising, and (ii) all of the Borrower's contractual
rights, including, without limitation, the Leases, now existing or
hereafter arising between the Borrower and any Tenant with respect
to the Premises, regardless of whether or not such rights run with
the land.
The Borrower shall have a revocable license to collect and receive
the Rents and to retain, use and enjoy such rents and to exercise
and enforce the Borrower's contractual rights with respect to the
Premises described in item (ii) above. This license may be revoked
by the Lender without notice to the Borrower upon the occurrence of
an Event of Default (after any applicable notice provisions have
been complied with and cure provisions have expired) by the Borrower
under the terms of any of the Loan Documents.
The Borrower hereby authorizes Lender, its employees and agents, at
Lender's option, after the occurrence of an Event of Default (after
any applicable notice provisions have been complied with and cure
provisions have expired) under any of the Loan Documents and without
notice, to enter upon the Premises and to collect, in the name of
the Borrower or in Lender's name as assignee, the Rents accrued but
unpaid and in arrears at the date of such default, as well as the
Rents thereafter accruing and becoming payable. The Borrower
further agrees that the Borrower shall facilitate in all reasonable
ways Lender's collection of said Rents, and shall, upon request of
Lender, execute a written notice to each Tenant directing the Tenant
to pay rent to Lender.
The Borrower also authorizes Lender, its employees and agents, at
its option after any Event of Default (after any applicable notice
provisions have been complied with and cure provisions have expired)
under any of the Loan Documents, to enforce all or any of such
contractual rights as may have been assigned hereby, and the
Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
which appointment is acknowledged by the parties hereto to be
coupled with an interest, to do all acts pertaining thereto in its
place and stead.
The Borrower also authorizes Lender, its employees and agents, upon
such entry, at its option, to take over and assume the management,
operation and maintenance of the Premises and, in connection
therewith, to perform all acts and to expend such sums out of the
Rents or any other income of the Premises as Lender may deem
advisable, in the same manner and to the same extent as the Borrower
might do, including the right to enter into new Leases, to cancel or
surrender existing Leases, to alter or amend the terms of existing
Leases, to renew existing Leases, or to make concessions to or deal
in any other way with Tenants or to exercise any other rights
granted to Lender hereunder. The Borrower hereby releases all
claims against Lender arising out of or in connection with such
management, operation, and maintenance unless Lender shall be deemed
by a court of competent jurisdiction to have acted in bad faith or
with gross negligence.
Lender shall, after payment of all costs and expenses, including
reasonable attorneys' fees and reasonable compensation to itself or
to such managing agent as it shall, in the exercise of its sole
judgment, select and employ, and after the accumulation of all
proper reserves (including, without limitation, reserves for taxes,
assessments, utilities, and fire and liability insurance) credit the
net amount of income received by it from the Premises by virtue of
this Assignment to any amounts due and owing to it by Borrower under
the terms of any of the Loan Documents. The manner of the
application of such net income and what items shall be credited
shall be determined in the exercise of the sole discretion of the
Lender. Lender shall not be accountable for more monies than it
actually receives from the Premises nor shall it be liable for
failure to rent or lease vacant space, collect Rents or enforce
other obligations of Tenants. Lender shall make reasonable efforts
to collect Rents, reserving, however, within its own discretion, the
right to determine the method of collection and the extent to which
enforcement of collection of delinquent Rents or the eviction of
delinquent Tenants shall be prosecuted.
The Borrower covenants and warrants to Lender that neither the
Borrower nor any previous owner has executed any prior assignment or
pledge of the Rents of the Premises or any other contract rights
hereby assigned nor any prior assignment or pledge of the Borrower's
or other landlord's interest in any lease of the whole or any part
of the Premises. The Borrower also hereby covenants and agrees not
to collect the Rents of the Premises more than thirty (30) days in
advance, other than such payments as are required to be paid in
advance by the terms of any lease which has been approved by Lender,
and further agrees not to do any other act which would destroy or
impair the benefits to Lender of this Assignment.
The Borrower shall not, without having obtained the prior written
consent of Lender (which consent shall not be unreasonably
withheld): (a) release Tenants from any liability under the Leases
or otherwise, or consent to, suffer or permit or waive any act or
omission on the part of the Tenants which would otherwise constitute
a default under the Leases; or (b) cancel or surrender existing
Leases or alter or amend the terms of any Leases.
Lender shall not be obligated to perform or discharge any
obligation, duty or liability under any Leases, and the Borrower
shall indemnify and hold Lender harmless from any liability, loss,
or damage which it might incur under the Leases, by reason of this
Assignment or from any other claims or demands which may be asserted
against Lender by reason of any alleged obligation or undertaking on
its part to be performed or discharged under any of the Leases. If
Lender incurs any such liability, loss or damage in the defense of
any such claims or demands, the Borrower shall immediately, upon
demand, reimburse Lender for the amount thereof, including costs,
expenses, and attorneys' fees and any failure to promptly reimburse
Lender shall cause such amounts to be added to the debt secured by
the Loan Documents and shall earn interest at the Interest Rate set
forth in the Note.
Entry by Lender upon the Premises under the terms of this Assignment
shall not constitute Lender a "mortgagee in possession" in
contemplation of law, except at the option of Lender expressed in
writing.
The provisions of this Assignment shall be binding upon the Borrower
and the Borrower's legal representatives, successors and assigns and
shall inure to the benefit of the Lender and its successors and
assigns. The word "Borrower" shall be construed to mean any one or
more persons or parties who are holders of the legal title or equity
of redemption on the Premises.
This Assignment shall remain in full force and effect as long as the
obligations secured by the Loan Documents remain outstanding and
only a discharge of the Mortgage appearing of record where the
Mortgage is recorded shall operate as a release of all of Lender's
rights and interest hereunder.
IN WITNESS WHEREOF, Borrower has caused this instrument to be
executed by William A. Frey, III, its duly authorized President and
Treasurer, and its corporate seal to be hereunto affixed as of the
date first above written.
PITTSFIELD MOLD & TOOL, INC.
By: /s/ William A. Frey, III
William A. Frey, III,
President and Treasurer
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss. September 29, 1999
Then personally appeared the above-named William A. Frey, III,
President and Treasurer, who acknowledged the foregoing instrument
to be the free act and deed of Pittsfield Mold & Tool, Inc., before
me,
/s/ Gerald A. Denmark
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
Exhibit 99.19
AGREEMENT OF GUARANTY
THIS AGREEMENT OF GUARANTY (this "Guaranty") is made this 29th day
of September, 1999 by UNITED SHIELDS CORPORATION, a Delaware
corporation, with a business and post office address for the
purposes hereof at 655 Eden Park Drive, Suite 260, Cincinnati,
Ohio 45202 (the "Guarantor"), for the benefit of BERKSHIRE BANK,
a bank organized and existing under the laws of the Commonwealth
of Massachusetts with its principal place of business at 24 North
Street, Pittsfield, Massachusetts 01201 (the "Lender").
W I T N E S S E T H:
WHEREAS, in a transaction of even date herewith and pursuant to a
commitment letter dated July 8, 1999 (the "Commitment"), the
Lender is making two (2) loans (the "Loans") to PITTSFIELD MOLD &
TOOL, INC., a Massachusetts corporation, with a mailing address at
10 Betnr Industrial Drive, Pittsfield, Massachusetts 01201 (the
"Borrower"), in the principal amounts of TWO MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($2,500,000.00) and ONE MILLION NINE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,900,000.00), respectively;
and
WHEREAS, the Loans are evidenced by two (2) promissory notes
between the Borrower and the Lender; a loan and security agreement
between the Borrower and the Lender; two(2) mortgage and a
security agreements between the Borrower and the Lender; an
assignment of rents and leases from the Borrower to the Lender;
and other documentation evidencing, securing and/or relating to
the Loans (collectively, the "Loan Documents"), and one or more of
the Loan Documents encumber the Borrower's right, title and
interest in and to certain real and/or personal property more
particularly described therein; and
WHEREAS, pursuant to the Commitment, the Loan Documents are to be
accompanied by a separate agreement whereby the Guarantor agrees
to unconditionally guarantee the payment and performance of the
obligations represented by the Loan Documents; and
WHEREAS, the Guarantor desires to enter into this Guaranty in
order to set forth Guarantor's understanding and agreement with
respect to Guarantor's obligations vis-a-vis the Loan Documents.
NOW, THEREFORE, in consideration of the foregoing recitals and in
order to induce the Lender to make the Loans to the Borrower, the
Guarantor hereby covenants and agrees as follows:
1. Until: (a) such time as Lender has been paid in full the
principal indebtedness, interest and other charges due to Lender
under the Loan Documents on account of the Loans; and (b) such
time as the Guarantor has satisfied all of the Obligations, as
hereinafter defined, the Guarantor hereby irrevocably,
unconditionally and absolutely guarantees to Lender, its
successors and assigns: (i) to pay to Lender, upon demand, a sum
sufficient to discharge in full the obligation(s) represented by
the Loan Documents and all other obligations of the Borrower to
the Lender when due, whether direct or indirect, absolute or
contingent, now existing or hereafter arising, which are incurred
prior to the receipt by the Lender of written notice of
revocation, death or incapacity of the Guarantor (the
"Cancellation Notice"), which Cancellation Notice shall not affect
the rights acquired by the Lender prior to its receipt of the
Cancellation Notice; and (ii) to pay to Lender upon demand, all
reasonable fees and expenses, incurred as a result of enforcing
any of the rights of Lender against the Guarantor under this
Guaranty whether or not any legal proceedings are commenced. All
of the obligations to which this Guaranty applies are sometimes
herein referred to as the "Obligations." If the Lender grants
loans or extensions or takes other action, after the death or
incapacity of the Guarantor, or the revocation of this Guaranty by
the Guarantor, but prior to the receipt by Lender of a
Cancellation Notice, the Lender's rights shall be the same as they
would have been had the said death, incapacity or revocation not
occurred, and the Guarantor agrees to indemnify the Lender and
save it harmless from or against all losses, costs, liability, and
expenses which the Lender may incur or suffer by reason of any
action so taken by it.
2. Notwithstanding the exercise by Lender of any of its rights or
remedies under the other Loan Documents (including, without
limitation, foreclosure and/or taking possession of the property
mortgaged, assigned or pledged as security for the Loans), the
liability of the Guarantor under this Guaranty shall continue in
full force and effect until the payment, performance and
satisfaction of all of the Obligations.
3. This Guaranty is a guaranty of payment and performance and not
of collection; liability under this Guaranty shall be direct and
primary; and in the enforcement of its rights, Lender shall be
entitled to look to the Guarantor for the payment and performance
of the Obligations without first commencing any action or
proceeding against the Borrower. Lender's election to pursue
enforcement of its rights against the Borrower or the security
given by the Borrower for the Loans under the Loan Documents shall
not be construed as a waiver of Lender's rights under this
Guaranty or impair Lender's right to enforce this Guaranty, it
being acknowledged that any such action by Lender shall never
operate as a release of the liability of the Guarantor under this
Guaranty.
4. The validity of this Guaranty and the Obligations of the
Guarantor hereunder shall not be terminated, affected or impaired
by reason of (i) the granting by Lender of any indulgence to the
Borrower; (ii) any extension, modification, amendment or other
alteration of any of the Loan Documents, this Guaranty, or any of
the Obligations; or (iii) the relief, modification, impairment,
change or limitation of the liability of the Borrower from any of
the Borrower's obligations under the Loan Documents by operation
of law or otherwise (including, without limitation, in connection
with proceedings under any bankruptcy laws now or hereafter
enacted), the Guarantor hereby waiving all suretyship defenses and
defenses in the nature thereof.
5. Until such time as Lender has been paid in full the principal
indebtedness, interest and other charges due to Lender under the
Loan Documents on account of the Loans, the Guarantor shall have
no right of subrogation to Lender against the Borrower and the
Guarantor hereby waives any right to enforce any remedy which
Lender may have against the Borrower and any right to participate
in the Loans or any security for the Loans and further waives any
right or claim of right to cause a marshalling of the Borrower's
assets.
6. The Guarantor waives (i) notice of acceptance of this Guaranty
and of any action by Lender in reliance thereon, (ii) presentment,
demand of payment, notice of dishonor or nonpayment, protest and
notice of protest with respect to any of the Obligations, and the
giving of any notice of default or other notice to, or making any
demand on anyone (including, without limitation, the Borrower and
the Guarantor) liable in any manner for the payment of the
Obligations, and (iii) notice of any election by Lender to sell
any of the property mortgaged, assigned or pledged as security for
any of the Obligations at a public or private sale, but nothing
herein contained shall be deemed to be a waiver of any notice
required to be given to the Borrower pursuant to the Loan
Documents.
7. The liability of the Guarantor under this Guaranty shall be
irrevocable, unconditional, and absolute, continuing in full force
and effect according to its terms until all of the Obligations
hereby guaranteed to Lender under the Loan Documents have been
fully satisfied. The dissolution, liquidation or death (if
applicable) of the Guarantor, shall not operate to revoke or
impair this Guaranty, except as otherwise set forth herein. The
Guarantor shall from time to time deliver satisfactory
acknowledgments of the Guarantor's continued liability upon
request by the Lender.
8. The Guarantor expressly agrees not, at any time, to insist upon
or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any appraisement, valuation, stay, extension or
redemption laws, now or at any time hereafter in force, which may
delay, prevent, impair or otherwise affect payment and performance
by the Guarantor of the Obligations and expressly waives all
benefits or advantages of such laws and further covenant not to
hinder, delay or impede the execution of any power granted to
Lender hereunder, but will suffer and permit the execution of
every such power as though no such laws were in force.
9. Guarantor grants to the Lender a continuing lien for the amount
of the Obligations upon any and all monies, securities and other
property of the Guarantor and the proceeds thereof, now or
hereafter held or received by or in transit to the Lender from or
for the Guarantor whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and also upon any and all
deposits (general or special) and credits of the Guarantor with,
and any and all claims of the Guarantor against the Lender at any
time existing. Upon the occurrence of an Event of Default as
defined in the Note or any other Loan Documents, the Lender is
authorized at any time and from time to time, without notice to
the Guarantor, regardless of the adequacy of any other collateral,
and without requiring the Lender to proceed against any other
security interest, to set off, appropriate and apply any and all
items hereinabove referred to against the Obligations. Lender
shall be deemed to have exercised such right of set off
immediately at the time Lender elects to make such set off, even
though any charge therefor is made or entered on Lender's records
subsequent thereto.
10. If any provision hereof is found by a court of competent
jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or
unenforceability and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is
not prohibited or unenforceable, nor invalidate the other
provisions hereof, all of which shall be construed liberally in
favor of the Lender in order to effect the provisions hereof.
11. Whenever notice may be given to the Guarantor under this
Guaranty, such notice shall be: (i) personally delivered or (ii)
given by registered or certified mail, postage prepaid, return
receipt requested, or (iii) forwarded by overnight courier
service, at the address set forth herein, or such other address as
the Guarantor may designate in writing to the Lender. All notices
given hereunder shall be in writing and shall be deemed given, in
the case of notice by personal delivery, upon actual delivery, and
in the case of mail or courier service, upon deposit with the U.S.
Postal Service or delivery to the courier service.
12. The Obligations of the Guarantor shall be binding upon and
enforceable against the heirs, legal representatives, successors
and assigns of the Guarantor, and shall inure to the benefit of
and may be enforced by the Lender and/or its legal
representatives, successors and assigns.
13. This Guaranty and the rights and obligations of the Guarantor
and the Lender shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall have
the effect of a sealed instrument. THE LENDER AND THE GUARANTOR
HEREBY WAIVE TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONJUNCTION WITH, OR ARISING OUT OF THIS GUARANTY,
ANY OTHER LOAN DOCUMENTS OR THE LOANS, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR
ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN THE GUARANTOR
AND LENDER.
IN WITNESS WHEREOF, Guarantor has caused this instrument to be
executed by William A. Frey, III, its duly authorized Chairman and
CEO, and its corporate seal to be hereunto affixed as of the date
first above written.
UNITED SHIELDS CORPORATION
By: /s/ William A. Frey
William A. Frey, III,
Chairman and CEO
COMMONWEALTH OF MASSACHUSETTS
BERKSHIRE, ss. September 29, 1999
Then personally appeared the above-named William A. Frey, III,
Chairman and CEO, who acknowledged the foregoing instrument to be
the free act and deed of United Shields Corporation, before me,
/s/ Gerald A. Denmark
Gerald A. Denmark, Notary Public
My Commission Expires: 7/27/01
Exhibit 99.20
STANDBY AND SUBORDINATION AGREEMENT
For valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the loans made this date by
BERKSHIRE BANK, of 24 North Street, Pittsfield, Massachusetts
01201 (the "Bank") to PITTSFIELD MOLD & TOOL, INC., of 10 Betnr
Industrial Drive, Pittsfield, Massachusetts 01201 (the "Borrower")
in the amounts of $2,500,000.00 and $1,900,000.00, the
undersigned, HENRY A. KIRCHNER AND BARBARA J. KIRCHNER, TRUSTEES
OF THE KIRCHNER FAMILY NOMINEE TRUST, HENRY A. KIRCHNER, BARBARA
J. KIRCHNER, HENRY A. KIRCHNER AND BARBARA J. KIRCHNER, TRUSTEES
OF THE HENRY A. KIRCHNER REVOCABLE TRUST, and HENRY A. KIRCHNER
AND BARBARA J. KIRCHNER, TRUSTEES OF THE BARBARA J. KIRCHNER
REVOCABLE TRUST, agrees as follows:
1. The undersigned hereby subordinates all indebtedness
of the Borrower to the undersigned evidenced by $1,750,000.00 and
$2,200,000.00 promissory notes of even date herewith (the
"Subordinated Indebtedness"), to any and all indebtedness now or
hereafter extended to and owed by the Borrower to the Bank (the
"Senior Indebtedness"), and agrees not to demand, accept or
receive any payment of principal upon account of the Subordinated
Indebtedness, or any collateral therefore, without the approval in
advance and in writing by the Bank, such approval to be exercised
and given by the Bank in its sole and exclusive discretion.
Notwithstanding the foregoing, so long as the Borrower shall not
be in default of its obligation to the Bank pursuant to (a)
promissory notes in the face amount of $2.5 million and $1.9
million, respectively, of even date, or (b) any other obligation
to the Bank now or hereafter existing, the undersigned may collect
scheduled installment payments, but may not collect any pre-
payment of principal or accelerate the Subordinated Indebtedness
without the Bank's prior written approval, such approval to be
exercised and given by the Bank in its sole and exclusive
discretion, unless the source of such payment is that certain
Standby Letter of Credit issued on behalf of United Shields
Corporation to Henry A. Kirchner and Barbara J. Kirchner, Trustees
of The Kirchner Family Nominee Trust by First Citizens Bank, dated
September 24, 1999 in the face amount of $250,000.00.
2. In order to carry out the terms and the intent of this
Agreement more effectively, the undersigned will do all acts and
execute all further instruments necessary or convenient to
preserve for the Bank the benefit of this Standby and
Subordination Agreement.
3. No action which the Bank, or the Borrower with the
consent of the Bank, may take or refrain from taking with respect
to any Senior Indebtedness, or any note or notes representing the
same, or any collateral therefor, including a waiver or release
thereof, or any agreement or agreements (including guaranties) in
connection therewith, shall affect this Standby and Subordination
Agreement or the obligations of the undersigned hereunder. If any
Senior Indebtedness shall be extended or renewed, the provisions
of this Standby and Subordination Agreement shall apply to said
extended or renewed indebtedness.
4. No waiver shall be deemed to be made by the Bank of
any of its rights hereunder unless the same shall be in writing
and such a waiver, if any, shall be a waiver only with respect to
the specific instance involved, and it shall in no way impair the
Bank's rights or the undersigned's obligations to it in any other
respect or at any other time.
5. This Standby and Subordination Agreement shall bind
the undersigned and the undersigned's successors, assigns and
legal representatives and shall inure to the benefit of the Bank
and its successors and assigns.
6. The undersigned further agrees that its mortgage on
the real property of the Borrower and its security interest on the
personal property of the Borrower securing the Subordinated
Indebtedness shall in all respects be junior to the mortgage and
security interest of the Bank, even if the Bank's security
interest shall lapse through inadvertence or otherwise, of if
financing statements or mortgages shall be filed or recorded in
the incorrect order (in which event, the undersigned will execute
such documents as shall be required by the Bank to confirm the
Bank's senior security interest and mortgage as aforesaid until
the Senior Indebtedness is paid in full.
Signed and sealed this 29th day of September, 1999.
KIRCHNER FAMILY NOMINEE TRUST
________________________________ By:/s/Henry A. Kirchner
Witness -------------------------
Henry A. Kirchner, Trustee
________________________________ By:/s/Barbara J. Kirchner
Witness -------------------------
Barbara J. Kirchner, Trustee
________________________________ By:/s/Henry A. Kirchner
Witness -------------------------
Henry A. Kirchner
________________________________ By:/s/Barbara J. Kirchner
Witness -------------------------
Barbara J. Kirchner
THE HENRY A. KIRCHNER REVOCABLE
TRUST
________________________________ By:/s/Henry A. Kirchner
Witness -------------------------
Henry A. Kirchner, Trustee
________________________________ By:/s/Barbara J. Kirchner
Witness -------------------------
Barbara J. Kirchner, Trustee
THE BARBARA J. KIRCHNER
REVOCABLE TRUST
________________________________ By:/s/Henry A. Kirchner
Witness -------------------------
Henry A. Kirchner, Trustee
________________________________ By:/s/Barbara J. Kirchner
Witness -------------------------
Barbara J. Kirchner, Trustee
<PAGE>
The Borrower above-named hereby acknowledges notice of the
within and foregoing and agrees to be bound by all the terms,
provisions and conditions thereof.
PITTSFIELD MOLD & TOOL, INC.
_________________________ By:/s/William A. Frey, III
Witness -------------------------
William A. Frey, III, President
and Treasurer
