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): February 24, 1997
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RTI INC.
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(Exact name of registrant as specified in its charter)
New York 0-5887 11-2163152
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(State or Other Jurisdiction (Commission) (IRS Employer
of Incorporation) File Number) Identification No.)
108 Lake Denmark Road, Rockaway, New Jersey 07866
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 656-1004
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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Pursuant to an agreement among (i) Refrigeration Technology Inc.
("RefTech"), a newly-formed Delaware corporation wholly-owned by RTI Inc. (the
"Company"), (ii) Quality Air, Inc., a New Mexico corporation ("QAI"), (iii) Rick
E. Bacchus, Rockney D. Bacchus and Ron Bacchus, the principal officers of QAI
(the "Officers"), and (iv) Margie J. Bacchus, Philis Bacchus and Opal Simmons,
the principal owners of QAI ( the "Owners"), dated February 24, 1997 (the
"Acquisition Agreement"), among other things, QAI sold its business and
substantially all of its assets to RefTech (the "Transaction"). Prior to the
Transaction, QAI was a manufacturer of high-efficiency residential air coolers
and central air conditioners, manufactured in Sunland Park, New Mexico and,
through an affiliated Mexican company, Industrias QAI, S.A. de C.V. ("Industrias
QAI"), in Ciudad Juarez, Mexico. The Company, through RefTech, intends to
continue the acquired business.
In accordance with the Transaction, which was consummated on February
24, 1997 (the "Closing"), RefTech delivered to QAI 235,000 shares of the
Company's common stock, par value $.08 per share ("Common Stock"), 50,000 shares
of which are being held in escrow for purposes of covering claims of RefTech
which may arise under the indemnification provisions of the Acquisition
Agreement. In addition, RefTech agreed to deliver to QAI (i) an additional
100,000 shares of Common Stock, if and when the Company's pre-tax fiscal year
earnings from operations exceed $800,000, and (ii) an additional 125,000 shares
of Common Stock, if and when such earnings exceed $1,200,000; provided, however,
that such events occur prior to January 1, 2002.
As part of the Transaction, RefTech acquired substantially all of the
assets of QAI, the tangible assets of which, as of January 31, 1997 (unaudited),
consisted primarily of approximately (i) $302,000 of inventory (a portion of
which was at Industrias QAI), (ii) $159,000 (net of accumulated depreciation and
amortization) of furniture, equipment and vehicles, (iii) $223,000 of loans to,
and receivables from, Industrias QAI, (iv) $268,000 of third party receivables,
and (v) $45,000 of cash. In addition, RefTech acquired all of the intangible
assets of QAI, including a patent application of one
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of the Officers which had been assigned to QAI. In the Transaction, RefTech
assumed certain specified liabilities of QAI, consisting of QAI's (i)
indebtedness to the Company aggregating $670,000 plus accrued interest, which
was incurred by QAI prior to its December 1996 letter of intent with the
Company, (ii) indebtedness to Theo W. Muller, chief executive officer and
Chairman of the Company, and his affiliated companies aggregating $830,000 plus
accrued interest, $780,000 of which was incurred by QAI subsequent to its
December 1996 letter of intent with the Company, (iii) QAI purchase commitments
incurred in the ordinary course of QAI's business for inventories, supplies and
services aggregating approximately $1,300,000, and (iv) other QAI scheduled
liabilities incurred in the ordinary course of QAI's business aggregating
approximately $45,000.
It is anticipated that QAI will promptly liquidate and distribute its
remaining assets (including its shares of Common Stock and its contingent rights
to receive additional shares of Common Stock) to the shareholders of QAI.
The Acquisition Agreement provides that, during the period through
December 31, 2001, the Officers, as a group, are to have the non-assignable
right to nominate three of the seven directors constituting the Company's Board
of Directors.
Prior to the Closing, the Company amended its By-Laws to provide that
the Company's Chairman (currently Theo W. Muller) is to be the Company's Chief
Executive Officer. Effective at the Closing, (i) the Company elected Rick E.
Bacchus as President of the Company and Rockney D. Bacchus and Ron Bacchus as
Vice Presidents of the Company, and (ii) each of the Officers entered into
five-year employment agreements with RefTech (the "Employment Agreements"),
pursuant to which Rick E. Bacchus was appointed President of RefTech (reporting
to RefTech's Chairman and Chief Executive Officer, currently Theo W. Muller),
Rockney D. Bacchus was appointed Vice President - Development of RefTech and Ron
Bacchus was appointed Vice President - Manufacturing of RefTech. The Employment
Agreements each provide that the employee is to receive annual base compensation
of $80,000 and may be terminated without cause upon payment of two months'
salary.
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RefTech has agreed to lend up to an aggregate of $240,000 to the
Officers, repayable with interest at 1% over prime during the period ending
December 31, 2001. RefTech (i) has the right to purchase from Bacchus
Industries, an affiliate of the Owners and the Officers, equipment and vehicles
which had been leased to QAI, for an amount equal to their fair market value,
and (ii) has agreed to lease from Bacchus Industries the factory building in
Sunland Park, New Mexico, which had been occupied by QAI, for a three-year
period at a net rental of the lesser of (a) $6,500 per month, or (b) the
payments due the Small Business Administration (the "SBA") under a loan between
the SBA and the landlord.
In contemplation of, as an integral part of, the Transaction, on
February 19, 1997, RefTech entered into a sale and purchase agreement with
Industrias QAI and its two shareholders, Opal Simmons and Robert Given (the
"Industrias QAI Agreement"), pursuant to which RefTech was given the right to
acquire either the capital stock of Industrias QAI or the business and assets of
Industrias QAI, at its election at any time within sixty days after February 19,
1997. RefTech paid no additional consideration for its rights under the
Industrias QAI Agreement. The purchase price to be paid upon closing of the
Industrias QAI Agreement will be the higher of the book value of the capital
stock of Industrias QAI (which had a deficit book value (unaudited) of
approximately $12,000 as of January 31, 1997) or 1,000 Mexican pesos. RefTech
has been granted the sole authority to manage Industrias QAI, whose only
customer has been QAI, until such closing.
The foregoing information with respect to the Transaction is qualified
in its entirety by the complete text of the Acquisition Agreement and the other
agreements referred to therein, copies of which are filed as exhibits hereto and
are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED - It is impracticable to provide
the information required by this Item 7(a) at this time. Such financial
statements will be filed under cover of a Form 8-K/A as soon as practicable, but
not later than
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60 days from March 14, 1997, the last date on which this Report on Form 8-K was
required to have been filed.
(b) PRO FORM FINANCIAL INFORMATION - It is impracticable to provide the
information required by this Item 7(b) at this time. Such pro forma financial
information will be filed under cover of a Form 8-K/A as soon as practicable,
but not later than 60 days from March 14, 1997, the last date on which this
Report on Form 8-K was required to have been filed.
(c) EXHIBITS -
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1. Acquisition Agreement, dated February 24, 1997, by and among
Refrigeration Technology, Inc., Quality Air, Inc., Margie J. Bacchus, Philis
Bacchus, Rick E. Bacchus, Rockney D. Bacchus, Ron Bacchus and Opal Simmons.
2. Escrow Agreement, dated as of February 24, 1997, by and among
Refrigeration Technology, Inc., Quality Air, Inc., Margie J. Bacchus, Philis
Bacchus, Rick E. Bacchus, Rockney D. Bacchus, Ron Bacchus and Opal Simmons, and
Warshaw Burstein Cohen Schlesinger & Kuh, LLP, as escrow agent.
3. Lease, dated February , 1997, between Stanley Jobe and Quality Air,
Inc. and/or assigns.
4. Employment Agreement, dated February 24, 1997, between Refrigeration
Technology, Inc. and Rick E. Bacchus.
5. Employment Agreement, dated February 24, 1997, between Refrigeration
Technology, Inc. and Rockney D. Bacchus.
6. Employment Agreement, dated February 24, 1997, between Refrigeration
Technology, Inc. and Ron Bacchus.
7. Conditional Sale and Purchase Agreement, dated February 19, 1997, by
and between Industrias Q.A.I., S.A. de C.V., Opal Elizabeth Simmons Wheeler,
Robert Harvey Given Trackman and Refrigeration Technology, Inc.
8. Contract of Lease, dated February 1, 1996, between Polifibras de
Chihuahua, S.A. de C.V. and Industrias Q.A.I., S.A. de C.V.
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9. Revolving Credit Note, dated December 2, 1996, in the principal
aggregate amount of $720,000, between RTI, Inc. and Quality Air, Inc.
10. Form of Promissory Note from Quality Air, Inc. to Theo W. Muller
and his assigns.
11. Amendment of Sections 5.6 and 5.7 of the By-Laws of RTI, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RTI INC.
By: /s/ Theo W. Muller
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Theo W. Muller
Chairman and Chief
Executive Officer
Date: March 6, 1997
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EXHIBIT 1
ACQUISITION AGREEMENT
between
QUALITY AIR, INC.
and
REFRIGERATION TECHNOLOGY INC.
Dated February 24, 1997
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TABLE OF CONTENTS
PAGE
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Recitals ........................................................... -1-
I. Definitions................................................ -1-
1.1 Certain Defined Terms................................ -1-
II. Assets......................................................... -3-
2.1 Assets............................................... -3-
2.2 Excluded Assets...................................... -3-
2.3 Exchange............................................. -4-
III. Assumption of Liabilities...................................... -4-
3.1 Assumption of Liabilities............................ -4-
IV. Exchange Consideration......................................... -4-
4.1 Exchange Consideration............................... -4-
4.2 RTI Shares Delivered at the Closing.................. -4-
4.3 Earn-Out Shares...................................... -4-
4.4 Allocation of the Exchange Consideration............. -5-
4.5 Sales and Transfer Taxes............................. -5-
4.6 Distributions to Principals.......................... -5-
V. Representations and Warranties of QAI and the Principals....... -5-
5.1 Corporate Matters.................................... -5-
5.2 Qualification........................................ -5-
5.3 Authorization........................................ -5-
5.4 Effect of Agreement, Etc............................. -6-
5.5 Consents............................................. -6-
5.6 Balance Sheet........................................ -6-
5.7 Subsidiaries......................................... -6-
5.8 Absence of Certain Changes or Events................. -6-
5.9 Assets............................................... -7-
5.10 Compliance........................................... -7-
5.11 Leases............................................... -8-
5.12 Insurance............................................ -8-
5.13 Taxes................................................ -9-
5.14 Employee Plans....................................... -9-
5.15 Agreements, Plans, Arrangements, Etc................. -9-
5.16 Litigation...........................................-10-
5.17 No Violation of Environmental, Health or Safety Laws.-10-
5.18 No Violation of Other Laws...........................-10-
5.19 Intellectual Property................................-10-
5.20 Permits, Licenses, Etc...............................-11-
5.21 Interest in Competitors, Etc.........................-11-
5.22 Customers............................................-11-
5.23 Books and Records....................................-11-
5.24 Labor Relations......................................-11-
5.25 Employees............................................-11-
5.26 Warranties and Returns...............................-12-
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5.27 Manufacturing by the Affiliate.......................-12-
5.28 Investment Representations...........................-12-
5.29 Disposition of Shares................................-12-
5.31 Organization and Authority of the Affiliate..........-13-
5.33 Effect of this Agreement on the Affiliate............-13-
5.34 Authorization by the Affiliate and its Shareholders..-13-
5.35 Consents required by the Affiliate...................-13-
5.36 Balance Sheet of the Affiliate.......................-13-
5.37 Assets of the Affiliate..............................-14-
5.38 Other Information....................................-14-
VI. Representations and Warranties of RefTech......................-14-
6.1 Corporate Matters....................................-14-
6.2 Information..........................................-15-
6.3 Authorization........................................-15-
6.4 Effect of Agreement, Etc.............................-15-
6.5 Government Consents..................................-15-
6.6 Litigation...........................................-15-
VII. Closing........................................................-15-
7.1 The Closing..........................................-15-
7.2 Deliveries by QAI....................................-15-
7.3 Deliveries by RefTech................................-16-
VIII.Conditions to the Closing......................................-16-
8.1 Conditions to QAI's Obligation to Close..............-16-
8.2 Conditions to RefTech's Obligation to Close..........-17-
8.3 Title Defects........................................-17-
IX. Conduct of the Parties.........................................-17-
9.1 Affirmative Pre-Closing Obligations of QAI and the
Principals ..........................................-17-
9.2 Negative Covenants Pre-Closing.......................-18-
9.3 Post Closing Management of RefTech...................-19-
X. Indemnification................................................-19-
10.1 By QAI and the Principals............................-19-
10.2 By RefTech...........................................-19-
10.3 Notices, Defense, Etc................................-19-
10.4 Recourse Against QAI and the Principals..............-20-
XI. Termination....................................................-20-
11.1 Termination..........................................-20-
XII. Miscellaneous..................................................-20-
12.1 Further Assurances..................................-20-
12.2 Finders' Fees.......................................-20-
12.3 Expenses............................................-20-
12.4 Survival of Representations and Warranties..........-20-
12.5 Arbitration.........................................-20-
12.6 Specific Performance................................-21-
12.7 Notices.............................................-21-
12.8 Entire Agreement....................................-21-
12.9 Binding Effect; Benefits............................-21-
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12.10 Amendments and Waivers..............................-21-
12.11 Assignment..........................................-21-
12.12 Section and Other Headings..........................-22-
12.13 Execution in Counterparts...........................-22-
12.14 Separability........................................-22-
12.15 Governing Law.......................................-22-
12.16 Attorneys' Fees.....................................-22-
12.17 Public Information..................................-22-
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EXHIBITS
Exhibit 2.1 January 31, 1997 Balance Sheet of QAI
Exhibit 4.2 Escrow Agreement
Exhibit 5.1A QAI Certificate of Incorporation
Exhibit 5.1B QAI By-Laws
Exhibit 5.11.2 Mexican Factory Lease
Exhibit 5.11.3 Texas Warehouse Lease
Exhibit 5.31 Articles of the Affiliate
Exhibit 5.36 January 31, 1997 Balance Sheet of the Affiliate
Exhibit 8.2A Rick E. Bacchus Employment Agreement
Exhibit 8.2B Rockney D. Bacchus Employment Agreement
Exhibit 8.2C Ron Bacchus Employment Agreement
Exhibit 8.2D Industrias QAI, S.A. de C.V. Acquisition Agreement
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SCHEDULES
Schedule 2.2 Excluded assets
Schedule 3.1.A Assumed commitments
Schedule 3.1.B Other assumed liabilities
Schedule 4.4 Allocation of purchase price
Schedule 5.2 State qualifications
Schedule 5.6 Creditors
Schedule 5.8 Post-Balance Sheet changes
Schedule 5.9.1 Exceptions to title; liens
Schedule 5.9.3 Accounts receivable
Schedule 5.11.4 Leased and other equipment and vehicles
Schedule 5.12 Insurance
Schedule 5.13 Taxes
Schedule 5.15 Material agreements
Schedule 5.16 Litigation
Schedule 5.19 Intellectual property
Schedule 5.20 Permits, licenses, etc.
Schedule 5.21 Interest in competitors, etc.
Schedule 5.25 Employees
Schedule 5.26 Warranties and returns
Schedule 5.30 Affiliate's stockholders
Schedule 12.2 Finders
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ACQUISITION AGREEMENT
AGREEMENT, dated February 24, 1997, by and among REFRIGERATION
TECHNOLOGY INC., a Delaware corporation ("RefTech"), and QUALITY AIR, INC., a
New Mexico corporation ("QAI"), and MARGIE J. BACCHUS, PHILIS BACCHUS, RICK E.
BACCHUS, ROCKNEY D. BACCHUS, RON BACCHUS and OPAL SIMMONS (each a "Principal"
and, collectively, the "Principals").
Recitals
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A. QAI, with its affiliated company, Industrias QAI, S.A. de C.V.
(the "Affiliate" and, together with QAI, the "Company") is engaged in
the business of manufacturing, marketing and selling high efficiency,
residential coolers and central air conditioners (the "Business").
B. The Principals own in excess of 90% of all of the issued and
outstanding capital stock of QAI and control QAI.
C. RefTech is a wholly owned subsidiary of RTI Inc., a New York
corporation ("RTI").
D. The Company desires to transfer substantially all of its
assets to RefTech in exchange for shares of common stock, par value
$.08 per share, of RTI (the "Common Stock"), and the assumption by
RefTech of certain of the Company's liabilities, upon the terms and
conditions herein set forth.
E. Simultaneously with, or within 60 days after, the exchange
referred to in Recital D, either (i) the owners of the Affiliate are
transferring all of the capital stock of the Affiliate to RefTech and
RTI, or (ii) the Affiliate is transferring the business and
substantially all of the Affiliate's assets to RefTech.
F. Upon consummation of the exchange referred to in Recital D,
QAI intends to distribute the Common Stock which it receives to the
Principals as a distribution in liquidation of QAI.
NOW, THEREFORE, in consideration of the premises and in reliance upon
the mutual representations, warranties, covenants and agreements hereinafter set
forth, the parties agree as follows:
I. DEFINITIONS
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1.1 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.1 or in
other provisions of this Agreement in the singular or plural shall have the same
meanings when used in the plural or singular, respectively):
"AFFILIATE" shall have the meaning defined in Recital A.
"AFFILIATE DOCUMENTS" shall mean the Stock Purchase Agreement among the
stockholders of the Affiliate, RefTech and RTI, which provides for the sale of
all of the capital stock of the Affiliate to RefTech and RTI, including all
exhibits and schedules annexed thereto, as the same may be amended and
supplemented through the closing thereunder.
"AGREEMENT" shall mean this agreement and all Exhibits and Schedules
annexed or to be annexed hereto, as same may be amended from time to time.
"ASSUMED LIABILITIES" shall mean the liabilities referred to in Section
3.1 which are being assumed by RefTech at the Closing.
"ASSETS" shall have the meaning defined in Section 2.1.
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"BALANCE SHEET" shall have the meaning defined in Section 2.1.
"BALANCE SHEET DATE" shall have the meaning defined in Section 2.1.
"BUSINESS" shall have the meaning defined in Recital A.
"CLOSING" shall have the meaning defined in Section 7.1
"CLOSING DATE" shall have the meaning defined in Section 7.1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITMENTS" shall have the meaning defined in Section 5.15.2.
"COMMON STOCK" shall have the meaning defined in Recital D.
"COMPANY" shall have the meaning defined in Recital A.
"EARN-OUT PERIOD" shall have the meaning defined in Section 4.3.
"EARN-OUT SHARES" shall mean the shares of Common Stock which are
required to be delivered pursuant to Section 4.2.
"ESCROW AGENT" shall mean the escrow agent appointed pursuant to the
Escrow Agreement.
"ESCROW AGREEMENT" shall mean the escrow agreement attached as Exhibit
4.2.
"EXCHANGE" shall have the meaning defined in Section 2.3.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"EXCHANGE CONSIDERATION" shall have the meaning defined in Section 4.1.
"EXCLUDED ASSETS" shall have the meaning defined in Section 2.2.
"INTELLECTUAL PROPERTY" shall mean all patents and all applications
therefor, trademarks and all applications therefor, trade names, trade styles,
copyrights and all applications therefor, inventions, proprietary technology,
trade secrets and all other intellectual property and property rights.
"LAW" shall mean with respect to QAI all United States, state and local
laws, statutes, rules, ordinances and regulations and, with respect to the
Affiliate, all Mexican Federal, state and local laws, statutes, rules,
ordinances and regulations.
"LIENS" shall mean any charge, lien, mortgage, pledge, security
interest or other encumbrance of any nature whatsoever upon, of or in property
or other assets of a person or entity, whether absolute or conditional,
voluntary or involuntary, and whether created pursuant to agreement, arising by
force of statute, by judicial proceedings or otherwise.
"MEXICAN FACTORY" shall mean the premises leased and occupied by the
Affiliate, located at Carretera Juarez- Casas Grandes Km 1.1 in Cuidad Juarez,
Chihuahua, Mexico.
"MEXICAN FINANCIAL STATEMENT" shall have the meaning defined in Section
5.36.
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"PRINCIPALS" shall have the meaning defined in the heading of this
Agreement.
"QAI" shall have the meaning defined in the heading of this Agreement.
"REFTECH" shall have the meaning defined in the heading of this
Agreement.
"RTI" shall have the meaning defined in Recital C.
"RTI SHARES" shall mean the shares of Common Stock which are being
delivered as part of the Exchange.
"SECURITIES ACT" shall mean the Securities Act of 1933, and the rules
and regulations of the Securities and Exchange Commission promulgated
thereunder.
"TEXAS WAREHOUSE" shall mean the premises located at 8909 Kingsway,
Westway, Texas.
"U.S. FACTORY" shall mean the premises leased and occupied by QAI,
located at 301 Antone Street, Sunland Park, New Mexico.
II. ASSETS
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2.1 ASSETS. At the Closing, QAI shall assign, convey, transfer
and deliver to RefTech, free and clear of all Liens (except the liens securing
the indebtedness referred to in Section 3.1(i) and Section 3.1(ii)), all of the
assets, properties and rights, including contractual rights, of QAI of every
type and description, real, personal and mixed, tangible and intangible,
wherever located and whether or not reflected on the books and records of QAI,
as the same shall exist on the Closing (collectively, the "Assets"), excepting
only the Excluded Assets, and including, without limitation, all those assets,
properties and rights reflected on the balance sheet of QAI, as at January 31,
1997 (the "Balance Sheet Date"), a copy of which is annexed as Exhibit 2.1 (the
"Balance Sheet"), subject to such changes in the Assets through the Closing
which occur in the ordinary course of the Business without violation of the
provisions of this Agreement. Without limiting the generality of the foregoing,
the Assets include inventory (work in process, finished goods, parts and raw
materials), accounts receivable, furniture and fixtures, vehicles, machinery and
equipment, customer orders, lists and files, contractual rights (including any
rights to defenses, set-offs and counterclaims against third parties which QAI
may have with respect to any of the Assets or Assumed Liabilities), books and
records, rights in and to the name "Quality Air" (and any variants thereof) and
all other trade or product names used by QAI, Intellectual Property, franchises,
licenses, permits and authorizations, catalogs and merchandise sheets, and all
other assets, properties and rights of every kind and nature used by QAI in the
conduct of the Business, and all other assets, properties and rights of every
kind and nature owned or held by QAI, or in which QAI has an interest; and the
good will associated with each of the foregoing. To the extent that, at the
Closing, any portion of the Assets is temporarily located in Mexico, then and in
such event, and irrespective of the first sentence of this Section, such assets
shall not be assigned, conveyed, transferred and delivered to RefTech at the
Closing but shall be assigned, conveyed, transferred and delivered to RefTech,
free and clear of all Liens (except the liens securing the indebtedness referred
to in Section 3.1(i) and Section 3.1(ii)), promptly upon the export of such
assets from Mexico and the jurisdiction of Mexican Customs into the United
States.
2.2 EXCLUDED ASSETS. There shall be excluded from the Assets, the
corporate seals, minute books and capital stock records of QAI and all other
items listed on Schedule 2.2 (collectively, the "Excluded Assets").
2.3 EXCHANGE. In consideration of the assignment, conveyance,
transfer and delivery of the Assets by QAI to RefTech at the Closing, and in
exchange therefor, RefTech shall deliver to QAI the Exchange Consideration
described in Section 4.1 (the "Exchange") and shall assume the Assumed
Liabilities. Each of the parties intends that the Exchange constitute and
qualify as a tax-free reorganization pursuant to the provisions of Section
368(A)(i)(c) of the Code. No consideration of any kind, other than the Exchange
Consideration, shall be paid or transferred by RefTech to QAI, or to the
Principals, in connection with the Exchange.
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III. ASSUMPTION OF LIABILITIES
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3.1 ASSUMPTION OF LIABILITIES. RefTech shall not assume, and
shall not become liable or responsible for, any liabilities, obligations or
commitments of QAI, all of which shall remain the responsibility of QAI, except
that RefTech at the Closing shall assume (i) QAI's indebtedness to RTI, in the
principal sum of $ 670,000, and all accrued interest thereon, as evidenced by
QAI's promissory note, dated December 2, 1996, (ii) QAI's indebtedness to Theo
W. Muller and his affiliates, which was in the principal sum of $ 830,000 as of
the close of business on February 14, 1997, and all accrued interest thereon,
(iii) the purchase commitments of QAI listed on Schedule 3.1.A, all of which
were incurred in the ordinary course of QAI's business and are necessary for the
Business, and (iv) other liabilities in an aggregate amount, not to exceed
$75,000, incurred by QAI in the ordinary course of business, which shall be
scheduled at the Closing, and annexed to this Agreement as Schedule 3.1.B.
IV. EXCHANGE CONSIDERATION
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4.1 EXCHANGE CONSIDERATION. "Exchange Consideration" means (i)
235,000 shares of Common Stock to be delivered to QAI at the Closing, plus (ii)
the Assumed Liabilities, plus (iii) any of the 225,000 additional shares of
Common Stock constituting the Earn-Out Shares which may be required to be
delivered by RefTech based on the earnings of RTI, as provided in Section 4.2.
The Common Stock is publicly traded, and the market price therefor may increase
or decrease between the date of this Agreement and the Closing; notwithstanding
any such increase or decrease in the market price of the Common Stock, the
number of shares of Common Stock constituting the RTI Shares shall not be
increased or decreased. The RTI Shares, when issued, shall be fully paid and
non-assessable shares of Common Stock. None of the RTI Shares have been or shall
be registered under the Securities Act, and the certificates therefor shall
contain a legend restricting their transfer, substantially as follows:
"The securities represented by this certificate have not been
registered or qualified under the Securities Act of 1933, or the
securities law of any state, and may be offered and sold only if
registered and qualified pursuant to the relevant provisions of
the Federal and applicable State securities laws, or if RTI Inc.
is provided with an opinion of counsel, which counsel and opinion
shall be satisfactory to RTI Inc., that registration and
qualification under the Federal and applicable State securities
laws is not required."
4.2 RTI SHARES DELIVERED AT THE CLOSING. Certificates evidencing
235,000 shares of Common Stock, registered in the name of QAI, shall be
delivered at the Closing as follows: (i) a certificate for 185,000 shares of
Common Stock shall be delivered to QAI, and (ii) a certificate for the remaining
50,000 shares of Common Stock (with a stock power duly executed by QAI) shall be
delivered to the escrow agent, identified in and pursuant to the terms of an
Escrow Agreement to be entered into at the Closing, in the form annexed as
Exhibit 4.2.
4.3 EARN-OUT SHARES. The Exchange Consideration shall be
increased by (i) 100,000 Earn-Out Shares, if and when the pre-tax earnings of
RTI for any fiscal year through RTI's fiscal year ending December 31, 2001 (the
"Earn-Out Period") exceed $800,000, and (ii) an additional 125,000 Earn-Out
Shares, if and when the pre-tax earnings of RTI for any subsequent fiscal year
during the Earn-Out Period exceed $1,200,000. For the purposes hereof, pre-tax
earnings (i) shall be exclusive of any items of revenue or expense relating to
RTI's Rockaway, New Jersey property, and (ii) shall be determined from RTI's
audited annual consolidated financial statements prepared in accordance with
generally accepted accounting principles, promptly after the release of such
audited financial statements, by RTI's then regularly engaged independent
accountants, whose determination (a) shall be evidenced by a certificate of such
accountants delivered to RefTech, RTI and the Principals, and (b) shall be final
and binding on all parties. Certificates evidencing any Earn-Out Shares to be
delivered shall be delivered by RefTech within thirty days after RefTech's
receipt of the accountants' determination that Earn-Out Shares have been earned.
Such certificates shall be delivered to the Escrow Agent, unless the Escrow
Agreement has been terminated.
4.4 ALLOCATION OF THE EXCHANGE CONSIDERATION. RefTech and QAI
agree that the Exchange Consideration shall be allocated as set forth on
SCHEDULE 4.4. Reftech and QAI further agree that each of them shall (i) execute
such elections and/or agreements as may be required pursuant to the applicable
provisions of the Code,
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and the applicable regulations thereunder, and any other statute or regulation
which may require the same, and (ii) prepare and file their respective tax
returns in a manner consistent with Schedule 4.4.
4.5 SALES AND TRANSFER TAXES. Any and all sales and use or
transfer taxes, or the like, arising out of the Exchange shall be borne by, and
be paid by, RefTech.
4.6 DISTRIBUTIONS TO PRINCIPALS. Following the Closing, in
complete liquidation of QAI, QAI shall distribute to the Principals the RTI
Shares (including all rights to the RTI Shares held by the Escrow Agent and all
rights to the Earn-Out Shares) in exchange for the surrender and cancellation of
all QAI capital stock; and, in connection therewith and in accordance with the
provisions of Section 368(A)(i)(g) of the Code, QAI (i) shall distribute all of
its remaining assets and provide for the payment of any remaining liabilities as
required by law, and (ii) shall thereupon dissolve. Upon effecting the
dissolution of QAI, the Principals shall deliver a notice, signed by each of
them, to RefTech and to the Escrow Agent (if the Escrow Agreement is then still
in effect), instructing RefTech and the Escrow Agent as to how any RTI Shares
which may thereafter be distributed are to be allocated as among the Principals.
V. REPRESENTATIONS AND WARRANTIES OF QAI AND THE PRINCIPALS
--------------------------------------------------------
QAI and the Principals, jointly and severally, make the following
representations and warranties to Reftech, in order to induce RefTech to enter
into and perform this Agreement:
5.1 CORPORATE MATTERS. QAI is a corporation duly and validly
organized and validly existing in good standing under the laws of the State of
New Mexico and has all requisite corporate power, authority, licenses, permits
and franchises to own or lease and operate its properties and carry on its
business as currently being conducted. QAI has heretofore furnished RefTech with
a copy of its Certificate of Incorporation as amended to date, certified by the
Secretary of State of the State of New Mexico, a copy of which is annexed as
Exhibit 5.1.A and its By-Laws, as amended to date, certified by the Secretary of
QAI, a copy of which is annexed as Exhibit 5.1.B, and QAI is not in violation of
any of the provisions thereof. All of the issued and outstanding shares of
capital stock of QAI are owned by one or more of the Principals, and there is no
agreement or understanding with any third party to issue or transfer any QAI
capital stock.
5.2 QUALIFICATION. The Company does business in the States listed
on Schedule 5.2. Except as set forth on Schedule 5.2, the Company is duly
licensed or qualified and in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature of the business
transacted by it, or the character of its properties owned or leased by it,
makes such qualification or licensing necessary.
5.3 AUTHORIZATION. The Company has the unqualified right and full
power and authority (when authorized by requisite corporate actions) to sell,
transfer, assign, convey and liquidate all of its assets and properties, without
the consent of any person. The Board of Directors of QAI has duly adopted
resolutions (i) authorizing the execution of this Agreement by QAI and the
consummation by QAI of the transactions contemplated herein, and (ii)
recommending such transactions to the shareholders of QAI and directing the
submission thereof to a vote of such shareholders; thereafter, (i) notice
thereof was given to each shareholder of record of QAI, (ii) such transactions
were duly authorized by the shareholders of QAI, and (iii) neither at nor prior
to the time of such due authorization did any shareholder of QAI file with QAI a
written objection to the proposed corporate action. In addition to the
foregoing, QAI has taken all other necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. Each of the Principals is legally
competent to enter into this Agreement. This Agreement has been duly and validly
executed and delivered by QAI and each of the Principals, and constitutes the
valid and binding obligation of each of them, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium, fraudulent conveyance or other similar laws currently or hereafter
in effect affecting the enforcement of creditors rights generally.
5.4 EFFECT OF AGREEMENT, ETC. The execution, delivery and
performance of this Agreement by QAI and the Principals, and the consummation of
the transactions contemplated hereby shall not, with or without the giving
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of notice or the lapse of time, or both (i) violate any provision of Law, (ii)
violate any judgment, order, writ or decree of any court applicable to the
Company or any of the Principals, or (iii) result in the breach of or conflict
with any term, covenant, condition or provision of, result in the modification
or termination of, constitute a default under, or result in the creation or
imposition of any Lien upon any of the properties or assets of the Company
pursuant to any corporate charter or by-law, or any commitment, contract or
other agreement or instrument to which the Company or any of the Principals is a
party or by which any of the Company's assets or properties is or may be bound.
5.5 CONSENTS. No consent, authorization or approval of, or
exemption by, any governmental or public body or authority, nor any consent of
any third party, is required to be obtained by the Company in connection with
the execution, delivery and performance by QAI and the Principals of this
Agreement, or any of the instruments or agreements herein referred to or the
taking of any action herein contemplated.
5.6 BALANCE SHEET. The Balance Sheet makes full and adequate
provision for all obligations and liabilities (fixed and contingent) of QAI, as
of the Balance Sheet Date, and QAI had, as of the Balance Sheet Date, no
obligations, liabilities or commitments (fixed or contingent) required to be
reserved against on the Balance Sheet or to be disclosed in any notes thereto,
in accordance with generally accepted accounting principles, which are not so
reserved against or disclosed, except for any such obligations or liabilities
which are not material to the financial condition of QAI, the Business, the
Assets or the Assumed Liabilities. The list of QAI's creditors and the amounts
owed to each, as of the Balance Sheet Date, are as set forth on Schedule 5.6,
and since the Balance Sheet Date, except as set forth on Schedule 5.6, QAI has
had no additional creditors and the amounts set forth on Schedule 5.6 have not
materially increased.
5.7 SUBSIDIARIES. QAI owns no capital stock or other equity
participation in any entity, either directly or indirectly, and is not a partner
in, nor a member of, any other entity.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet
Date, and except as set forth on Schedule 5.8, the Company has not (i) incurred
any obligation or liability (fixed or contingent) except (A) trade or business
obligations incurred in the ordinary course of business consistent with normal
and usual past practices, none of which are materially adverse to the financial
condition of the Company or the continuity of the Business, or (B) under this
Agreement, (ii) subjected any of its assets to a Lien, (iii) sold, transferred
or leased any of its assets, except in the ordinary course of the Business, (iv)
entered into any transaction other than in the ordinary course of the Business,
(v) canceled or compromised any claim or debt, (vi) waived or released any
rights of any material value, (vii) transferred or granted any rights under any
lease, license, agreement, patent, invention, proprietary right, trademark,
trade name, copyright, or with respect to know-how, (viii) declared any
dividend, made any distribution to its shareholders or purchased or redeemed any
of its capital stock, (ix) created or assumed any obligation for borrowed money,
or (x) suffered any change in its financial condition, results of operations,
properties, operations or business which, individually or in the aggregate, has
had or reasonably may be expected to have a material adverse effect on its
assets, the financial condition of the Company, the continuity of the Business
or the prospects of the Business.
5.9 ASSETS.
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5.9.1 OWNERSHIP AND LIENS. The Company has the ownership in
fee and good and marketable title to the Assets which are reflected in the
Balance Sheet (except to the extent that, subsequent to the Balance Sheet Date,
such Assets have been sold or otherwise disposed of in the ordinary course of
the Business) and all other Assets acquired by the Company since the Balance
Sheet Date, free and clear of all Liens, other than (i) the Liens relating to
the indebtedness referred to in Section 3.1(i) and Section 3.1(ii), (ii) Liens
for taxes not yet due and payable, and (iii) Liens for taxes being contested in
good faith by appropriate proceedings, details with respect to which are set
forth on Schedule 5.9.1.
5.9.2 MACHINERY AND IMPROVEMENTS. The machinery and
equipment included in the Assets is in good operating condition, and such
machinery and equipment, as well as all of the Company's inventory, is located
at (i) the U.S. Factory, (ii) the Mexican Factory, or (iii) month-to month
leased premises located in Anthony,
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New Mexico (which will terminate February 28, 1997), or (iv) the Texas
Warehouse. The fixed assets of the Company, including those referred to in the
Balance Sheet, are all located on or at the U.S. Factory or the Mexican Factory,
which are leased by the Company. The U.S. Factory and Mexican Factory
improvements (including the roof and roof membrane, exterior and structural
walls, foundations, floor slabs, and other load-bearing components) as well as
all heating, ventilation and air conditioning systems, plumbing, electrical,
wiring, life safety, and other equipment, appurtenances and systems are in
operable condition and repair, which means that there are no material defects or
state of disrepair that have a material adverse effect on the operations of the
Business. The leases and other agreements or instruments under which the Company
holds, leases or is entitled to the use of any real or personal property are in
full force and effect and all rentals, royalties or other payments accruing
thereunder prior to the date hereof have been duly paid or payment has been duly
waived or forgiven. No default or event of default exists (which has not been
waived) and no event which with notice or lapse of time, or both, would
constitute a default, has occurred and is continuing under the terms or
provisions, express or implied, of any of such leases, agreements or other
instruments or under the terms or provisions of any agreement to which any of
such properties are subject.
5.9.3 RECEIVABLES AND INVENTORY. Except as set forth on
Schedule 5.9.3, all accounts receivable, whether included on the Balance Sheet
or arising after the Balance Sheet Date, are collectable in the amounts thereof,
net of any allowance for doubtful accounts specified in the Balance Sheet; and
there are no defenses, offsets or counterclaims threatened or pending with
respect to any of the accounts receivable. The inventory of QAI included on the
Balance Sheet, or purchased after the Balance Sheet Date, and on hand at the
Closing is and shall be of a quality, quantity and mix consistent with QAI's
past business practices, and is usable and saleable at a price at least equal to
its book value in the ordinary course of QAI's business within six months after
the Closing.
5.10 COMPLIANCE. The Assets, and the operation of the Business,
are in conformance in all material respects with all Federal, state and local
environmental protection, labor, safety and other Laws, orders and requirements,
including without limitation the regulations and requirements of the Federal
Occupational Safety and Health Act of 1970. The Company has not received notice
of violation of any applicable Law, order or requirement relating to its Assets
or operations. The Company has obtained all permits, certificates, licenses,
authorizations, consents, instructions, registrations, directions or approvals,
issued or required by any applicable governmental authorities pursuant to any
applicable statutes, rules, regulations, ordinances, orders, decrees, judgments,
permits, licenses, consents, approvals, authorizations, and governmental
requirements or directives or other obligations lawfully imposed by governmental
authority under federal, state, foreign or local law pertaining to the
protection of the environment, protection of public health, protection of worker
health and safety, the treatment, emission and/or discharge of gaseous,
particulate and/or effluent pollutants, and/or the handling of hazardous
materials with respect to the operations of the Company in connection with the
Business, and all such environmental approvals are current, valid and in good
standing in all respects, and there are no proceedings commenced or, to the
knowledge of the Company or the Principals, threatened to revoke or amend any
such environmental approvals. All operations of the Business have been and are
now in compliance with all applicable environmental Laws. There has not been any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of any hazardous materials which is now
present in, on or under the U.S. Factory or the Mexican Factory (including
underlying soils and substrata, surface water and groundwater) at levels which
exceed any action levels or remediation standards under any applicable
environmental Laws or standards published or administered by any applicable
governmental authorities responsible for establishing or applying such
standards.
5.11 LEASES.
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5.11.1 U.S. FACTORY. The lease for the U.S. Factory is in
full force and effect, and can be terminated by QAI at the Closing with no
penalty or obligation being imposed on RefTech. The owner of the U.S. Factory is
a company affiliated with the Principals, and such owner has agreed to the
re-lease of the U.S. Factory to RefTech at the Closing in accordance with
Section 7.2(vi) of this Agreement. The Company has not received any notice of
violation of any applicable Law or of any requirement relating to its use or
occupancy of the U.S. Factory or the operations conducted thereat.
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5.11.2 MEXICAN FACTORY. The lease for the Mexican Factory (a
complete copy of which has been delivered to RefTech and is annexed to this
Agreement as Exhibit 5.11.2) (i) is in full force and effect, (ii) no event of
default, or event which with or without the giving of notice or the lapse of
time, or both, will constitute an event of default, has occurred and is
continuing under such lease, and (iii) the transactions contemplated by this
Agreement will not cause or give rise to a default under such lease. The Company
has not received any notice of violation of any applicable Law or of any
requirement relating to its use or occupancy of the Mexican Factory or the
operations conducted thereat.
5.11.3 TEXAS WAREHOUSE. The lease for the Texas Warehouse (a
complete copy of which has been delivered to RefTech and is annexed to this
Agreement as Exhibit 5.11.3) (i) is in full force and effect, (ii) no event of
default, or event which with or without the giving of notice or the lapse of
time, or both, will constitute an event of default, has occurred and is
continuing under such lease, (iii) such lease can be assigned to RefTech at the
Closing, if RefTech so desires, without any consideration to the landlord
thereof, and (iv) the transactions contemplated by this Agreement will not cause
or give rise to a default under such lease. The Company has not received any
notice of violation of any applicable Law or of any requirement relating to its
use or occupancy of the Texas Warehouse.
5.11.4 EQUIPMENT AND VEHICLES. The equipment and vehicles
owned, operated, or leased by the Company are in good condition and repair
(ordinary wear and tear which are not such as to affect adversely the operation
of the Business excepted) and suitable for the uses for which intended. Schedule
5.11.4 contains a complete and correct listing, by location, of all (i) leased
equipment and vehicles, indicating each lessor thereof, (ii) other equipment and
vehicles which are used by the Company but which are not owned by the Company,
and (iii) equipment, vehicles and other items owned by the Company (having a
value in excess of $5,000) which are necessary or in use in the operations of
the Company. The leases with respect to any of the leased equipment and vehicles
which will not be sold to RefTech at the Closing can be assigned to RefTech at
the Closing if RefTech so desires, without any consideration to the lessors
thereof. Except as set forth on Schedule 5.11.4, all of the Company's equipment
and vehicles are in conformity with all foreign, Federal, state and local
environmental protection, labor, safety and other applicable laws, ordinances,
regulations, orders, and other requirements relating thereto currently in effect
or currently scheduled to come into effect.
5.12 INSURANCE. Schedule 5.12 sets forth a description of all
insurance policies carried by the Company and the coverages thereunder. The
Company has carried since its inception, and continues to carry (i) workers
compensation insurance for all employees to the full extent as required by Law,
and (ii) reasonable amounts of public liability insurance. There are no
outstanding requirements or recommendations by any insurance company, agent or
broker, or by any Board of Fire Underwriters, or other body exercising similar
functions or by any governmental authority requiring or recommending any repairs
or other work to be done on or with respect to the Company's properties or
Assets, or requiring or recommending that any equipment or facilities be
installed on or in connection with such properties or Assets.
5.13 TAXES. Each of QAI and the Affiliate has (i) properly
prepared and filed all federal, state, local and foreign tax returns which are
required to have been filed by it, and (ii) paid all taxes indicated on such
returns, except taxes being contested in good faith and by appropriate
proceedings, and for which QAI has set up reserves on the Balance Sheet and the
Affiliate has set up reserves on the Mexican Financial Statement; and no claims
have been assessed and remain unpaid with respect to such taxes.
5.14 EMPLOYEE PLANS. QAI has never had an "Employee Pension
Benefits Plan", as defined in Section 3 of the Employee Retirement Income
Security Act of 1974 ("ERISA"), and has never been a party to or incurred any
liability (actual or contingent) under a "Multi-Employer Plan", as defined in
the Multi-Employer Pension Plan Amendments Act of 1980. The Affiliate (i) is
registered with the Mexican Institute of Social Security and with the Workers
Housing Fund Institute and is current with all dues, assessments and other
payments required to be made by it, and (ii) has made all contributions for
retirement insurance on behalf of its employees as required by Mexican Law.
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5.15 AGREEMENTS, PLANS, ARRANGEMENTS, ETC.
------------------------------------
5.15.1 Except as set forth in SCHEDULE 5.15, or on any other
Schedule hereto, neither QAI nor the Affiliate is a party to, nor are QAI or the
Affiliate or any of their respective properties or assets bound or affected by,
any (i) lease agreement (whether as lessor or lessee) relating to real or
personal property; (ii) license agreement, assignment or contract (whether as
licensor or licensee, assignor or assignee) relating to trademarks, patents or
copyrights (or applications therefor), unpatented designs or styles, know-how or
technical assistance; (iii) employment agreement not terminable without
liability to the employer upon notice to the employee of not more than 30 days,
or employment agreement providing compensation of more than $25,000 per year
(including all salary, bonuses and commissions) to any employee; (iv) agreement
for the purchase or sale of goods, materials, supplies, machinery or capital
assets in excess of $10,000 in any one case; (v) agreement with any labor union;
(vi) policy of insurance (including surety bonds) in force with respect to such
corporation or any of its properties, assets, executive officers, agents or
employees; (vii) agreement with any distributor, dealer, sales agent or
representative; (viii) agreement with any manufacturer or supplier with respect
to discounts or allowances not generally made by such manufacturer or supplier
in the ordinary course of its business; (ix) agreement guaranteeing,
indemnifying or otherwise becoming liable for the obligations or liabilities of
another; (x) agreement for the borrowing or lending of money; (xi) agreement
with any bank, finance company or similar organization which acquires from such
corporation consumer paper or contracts for the sale of merchandise on credit;
(xii) agreement granting any person a lien, security interest or mortgage on any
property or asset of such corporation, including, without limitation, any
factoring agreement or agreement for the assignment of accounts receivable or
inventory; (xiii) agreement for the construction or modification of any building
or structure or for the incurrence of any other capital expenditures; (xiv)
bonus, deferred compensation, profit sharing, pension, retirement, stock option,
stock purchase, hospitalization, insurance or other plan, arrangement or
practice providing employee or executive benefits; (xv) advertising agreement
with any newspaper, magazine or radio or television station; (xvi) agreement
which restricts it from doing business anywhere in the world; (xvii) agreement,
statute or regulation giving any party the right to renegotiate or require a
reduction in prices or the repayment of any amount previously paid; (xviii)
agreement with any consultant; or (xix) other agreement affecting such
corporation or its assets or business, except written contracts for the purchase
or sale of goods made in the usual and ordinary course of business terminable
without liability to such corporation upon notice to the other party thereto of
not more than 30 days and not otherwise referred to above.
5.15.2 Correct and complete copies of all of the agreements,
plans, policies and arrangements referred to in Section 5.15.1 ,and such other
instruments as are material to QAI or the Affiliate (or, where they are oral,
true and complete written summaries thereof)(collectively referred to herein as
the "Commitments"), have been delivered to the RefTech. Each of the Commitments
is now valid, in full force and effect and enforceable in accordance with its
terms, and QAI and the Affiliate each have fulfilled, or taken all action
reasonably necessary to enable it to fulfill when due, all of its obligations
under the Commitments. There has not occurred any default by QAI or the
Affiliate, or any event which with or without the giving of notice or the lapse
of time, or both, will become a default, nor to the knowledge of QAI or the
Principals has there occurred any default by others, except defaults, if any,
which will not result in any material loss to or liability of the Company.
Neither the Company, nor, to the knowledge of QAI or the Principals, any other
party, is in arrears in respect of the performance or satisfaction of the terms
or conditions on its part to be performed or satisfied under any of the
Commitments and no waiver or indulgence has been granted by any of the parties
thereto. There are no existing laws, regulations or decrees nor, to the
knowledge of the Company or the Principals, any proposed laws, regulations or
decrees which adversely affect or might adversely affect the rights of the
Company under any of the Commitments by reason of the present ownership by the
Company of its assets and properties or by reason of the proposed transfer of
ownership of such assets and properties as contemplated by this Agreement. Each
of the Commitments is assignable by the Company to RefTech without the consent
of the other parties thereto or, with respect to any of the Commitments which
may not be so assigned without such consent, the Company has obtained all such
consents to such assignment.
5.16 LITIGATION. There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any Federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal, or, to the knowledge of QAI or the
Principals, relating to or affecting QAI or the Affiliate or any of their
respective assets, properties or businesses, or the transactions contemplated by
this
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Agreement; nor to the knowledge of QAI or the Principals is there any basis for
any such claim, action, suit, proceeding, arbitration, investigation or inquiry
which may have any adverse effect upon the assets or properties of the Company,
or upon the Business, or upon the transactions contemplated by this Agreement.
Neither QAI nor the Affiliate, nor any officer, director or employee of either
of them, has been permanently or temporarily enjoined by order, judgment or
decree of any court or other tribunal or any agency from engaging in or
continuing any conduct or practice in connection with the businesses engaged in
the Company. There is not in existence any order, judgment or decree of any
court or other tribunal or any agency enjoining or requiring QAI or the
Affiliate to take any action of any kind or to which QAI or the Affiliate or
their respective businesses, properties or assets are subject or bound. Neither
QAI nor the Affiliate is in default under any order, license, regulation or
demand of any federal, state or municipal or other governmental agency or with
respect to any order, writ, injunction or decree of any court. Schedule 5.16
summarizes each suit, action, investigation or proceeding pending at any time
against QAI or the Affiliate.
5.17 NO VIOLATION OF ENVIRONMENTAL, HEALTH OR SAFETY LAWS.
Neither QAI nor the Affiliate has received any notice, or petition or similar
document, in connection with or arising out of any violation or possible
violation of any environmental, health or safety Law, and neither QAI nor the
Principals knows of any condition or facts which would constitute any such
violation.
5.18 NO VIOLATION OF OTHER LAWS. Neither QAI nor the Affiliate is
in violation of any Law or order which would have an adverse effect on the
Company or which would affect RefTech after the Closing.
5.19 INTELLECTUAL PROPERTY. SCHEDULE 5.19 sets forth a correct
and complete list of all Intellectual Property, now or heretofore used or which
is presently contemplated will be used in the conduct of the Business, including
all Intellectual Property which may be the property of Rockney D. Bacchus.
Except as disclosed in such Schedule, (i) QAI and the Affiliate own or possess
adequate perpetual licenses or other valid perpetual rights to use (without the
making of any payment to others or the obligation to grant rights to others in
exchange) all Intellectual Property, know-how and other proprietary information
necessary to or used in the conduct of the Business as presently being
conducted, all of which may be fully and validly transferred to RefTech at the
Closing without the payment of any additional consideration by RefTech; (ii) the
validity of the Intellectual Property and of QAI's or the Affiliate's title
thereto has not been questioned in any litigation, nor is any such litigation
threatened; and (iii) to the knowledge of QAI and the Principals, the conduct of
the Business, as now operated, does not conflict with any Intellectual Property
or licenses of third parties. No infringement of any Intellectual Property right
owned by QAI or the Affiliate is known to QAI or the Principals. There is no
Intellectual Property, or rights to inventions, owned or held by any Principal
or by any employee or officer of QAI or the Affiliate relating to the Business
which has not been duly and effectively transferred to the Company.
5.20 PERMITS, LICENSES, ETC. QAI and the Affiliate have all
permits, licenses, orders and approvals of Federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit QAI to
carry on the Business as presently conducted. SCHEDULE 5.20 sets forth a correct
and complete list of all such permits, licenses, orders and approvals, all of
which are in full force and effect, and neither QAI nor the Principals has any
knowledge or reason to know that any suspension or cancellation of any of them
is threatened.
5.21 INTEREST IN COMPETITORS, ETC. Except as set forth on
SCHEDULE 5.21, neither QAI, the Affiliate, the Principals nor any officers or
directors of QAI or the Affiliate, directly or indirectly, owns any interest in
or controls or is an employee, officer, director or partner of, or participant
in, or consultant to, any corporation, partnership, limited partnership, joint
venture, association, or other entity which is a competitor, supplier, customer
or landlord of the Company.
5.22 CUSTOMERS. Neither QAI nor the Principals has any knowledge
of any termination, cancellation or limitation of, or any modification or change
in, the business relationship of the Company with any customer or group of
customers whose purchases, individually or in the aggregate, provide more than
5% of the gross revenues or net income of the Business.
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5.23 BOOKS AND RECORDS. The financial and corporate records,
sales registers and ledgers, payroll registers, cost accounting records,
customer and vendor lists and files, inspection reports and product liability
records of QAI and the Affiliate have been kept in the normal course of
business, and to the extent maintained are in all material respects correct.
5.24 LABOR RELATIONS. Each of QAI and the Affiliate is in
compliance with all applicable Law respecting employment and employment
practices, terms and conditions of employment, and wages and hours and is not
engaged in any unfair labor practice. There is no unfair labor practice
complaint against QAI pending before the National Labor Relations Board or any
State or local agency. There is no labor strike, dispute, grievance, controversy
or other labor trouble pending or, to the knowledge of QAI, the Affiliate or the
Principals threatened, affecting QAI or the Affiliate, nor does any basis
therefore exist. No representation question exists respecting the employees of
QAI or the Affiliate. There are no collective bargaining agreements binding upon
QAI or the Affiliate or which restrict QAI or the Affiliate.
5.25 EMPLOYEES. Neither QAI nor the Principals know, or have
reason to know, that any employee of the Company is a party to any confidential
information or other agreement that in any way adversely affects the performance
of his or her duties as such an employee, or is a party to or threatened by any
litigation which could affect the Company or the Business. Neither QAI nor the
Affiliate has received notice of its violation of any of the civil rights of its
employees, and QAI and the Affiliate are each in compliance with the regulations
and guidelines of the Federal Equal Opportunity Employment Commission and
comparable Mexican, State and local authorities. All accrued obligations of QAI
and the Affiliate, as of the Closing, whether arising by operation of Law, by
contract or by past custom, for payments by it to trusts or other funds or to
any governmental agency, with respect to unemployment compensation, social
security, pension, welfare benefits, dues or any other benefits for its
employees, and all reasonably anticipated obligations of QAI and the Affiliate,
whether arising by operation of Law, by contract or by past custom, for
salaries, vacation and holiday pay, bonuses, welfare benefits and other forms of
compensation or benefit accrued or payable to any employee of the Company as at
the Closing will be timely paid before or at the Closing; and the Balance Sheet
makes adequate provision for such obligations of QAI as of the Balance Sheet
Date. Schedule 5.25 sets forth a correct and complete list of the names of all
persons whose aggregate annual compensation (including bonuses) from QAI and/or
the Affiliate will equal or exceed $25,000 per annum at the present base salary
rate for such person, together with a statement as to the full amount paid or
payable to each such person (including the approximate bonus payments paid or to
be paid to such person) for services rendered during the past year.
5.26 WARRANTIES AND RETURNS. Schedule 5.26 sets forth a summary
of all previous and present practices followed by the Company with respect to
guarantees, warranties, servicing or repairs of any products manufactured or
sold by it, whether or not such practices are verbal or in writing, or are
deemed to be guarantees, or are deemed to be legally enforceable. Except as set
forth in Schedule 5.26, there is not presently, nor has there been, any failure
of any product or component part thereof sold by the Company or any of its
predecessors such as to require, or which may require, a general replacement
campaign with respect to such product or component part thereof, nor has there
been any acceptance of returns of defective goods in excess of one percent of
any product sold by the Company or any of its predecessors during either of the
last two years. 5.27 Manufacturing by the Affiliate. All manufacturing done by
the Affiliate is performed in a free trade zone. There are no duties, levies,
taxes or other charges due and payable, or assessable, by reason of the
exportation by QAI, on a temporary basis, to the Affiliate of parts and
materials for assembly and manufacture, or by reason of the delivery by the
Affiliate to QAI of finished products and/or sub-assemblies.
5.28 INVESTMENT REPRESENTATIONS. Neither QAI, nor the Principals
or any of their affiliates (as such term is defined in the Securities Act),
directly or indirectly, have engaged, or shall engage, in any transaction with
respect to the Common Stock prior to the Closing. Neither QAI nor the Principals
have agreed to, or shall agree prior to the Closing to, sell, assign, transfer
or otherwise dispose of any of the RTI Shares, including any of the Earn-Out
Shares, or any interest therein, to any person except that QAI will transfer the
RTI Shares to the Principals in connection with the liquidation of QAI. The RTI
Shares shall be acquired by the Principals for investment for such Principals'
own accounts, and not as a nominee or agent and not with a view to resale or
distribution of any part thereof, and neither QAI nor the Principals have any
present intention of selling, granting any participation in or
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otherwise distributing the RTI Shares or any interest therein, except as
aforesaid. QAI and the Principals understand that none of the RTI Shares have
been, or are intended to be, registered under the Securities Act, and that the
Exchange provided for in this Agreement, and the issuance of the RTI Shares,
will be exempt from registration under the Securities Act, pursuant to Section
4(2) thereof, and that RefTech's reliance on such exemption is based upon the
representations of QAI and the Principals set forth herein. QAI and the
Principals have reviewed RTI's recent periodic filings with the Securities and
Exchange Commission and each of them has received all additional information
that it considers necessary or appropriate for deciding whether to effect the
Exchange.
5.29 DISPOSITION OF SHARES. QAI and the Principals understand
that the RTI Shares may not be sold, transferred or otherwise disposed of
without registration under the Securities Act and that, absent an effective
registration covering the RTI Shares, the RTI Shares may be disposed of only
pursuant to an applicable exemption from registration under the Securities Act.
QAI and the Principals acknowledge that, pursuant to Rule 144 promulgated under
the Securities Act, unless all the conditions of that rule are met (including
among other requirements, the requirement that a minimum of two years elapse
between the date of the acquisition of the RTI Shares and any resale of the RTI
Shares), any resale of the RTI Shares in reliance on Rule 144 cannot be
effected.
5.30 OWNERSHIP OF THE AFFILIATE. The owners of all of the issued
capital stock of the Affiliate are listed, with the amount of such ownership, on
Schedule 5.30. All of such capital stock has been validly issued, is fully paid
and non-assessable, has no personal liability attaching to the ownership
thereof, and is owned free and clear of all Liens. There are no outstanding
warrants, options or other rights to acquire any capital stock of the Affiliate,
and no such rights will be granted prior to the Closing. The owners of the
capital stock of the Affiliate have the free and unencumbered right to liquidate
the Affiliate, as well as the free and unencumbered right to transfer all legal,
record and beneficial interest in and to all of the issued capital stock of the
Affiliate.
5.31 ORGANIZATION AND AUTHORITY OF THE AFFILIATE. The Affiliate
is a corporation validly existing and in good standing under the laws of the
Republic of Mexico, and has all requisite corporate power, authority, licenses,
permits and franchises to own or lease and operate its properties and carry on
its business as currently being conducted. The Affiliate operates as an in-bond
manufacturing corporation, and the Affiliates's inventory and other tangible
moveable assets have been temporarily imported into Mexico under the In-Bond
Manufacturing Program of Mexico (commonly known as the "Maquiladora Program").
QAI has heretofore furnished RefTech with a copy of the Affiliate's Articles, as
amended to date, a copy of which is annexed as Exhibit 5.31. The capitalization
of the Affiliate consists of fifty ordinary shares, with a nominal value of one
thousand pesos each, all of which have been duly issued and are outstanding, and
all of which are permitted to be held by non-Mexican nationals.
5.32 QUALIFICATION OF THE AFFILIATE TO DO BUSINESS, ETC. The
Affiliate is duly licensed or qualified and in good standing as a corporation
authorized to do business in each jurisdiction in which the nature of the
business transacted by it or the character of its properties owned or leased
makes such qualification or licensing necessary. The Affiliate and its
operations are not in violation of any Law or of any judgment, order, writ or
decree. The Affiliate is not in breach or default of its Articles or any
commitment, contract or other agreement or instrument to which the Affiliate is
a party or by which any of the Affiliate's assets or properties is or may be
bound.
5.33 EFFECT OF THIS AGREEMENT ON THE AFFILIATE. The consummation
of the transactions contemplated hereby and by the Affiliate Documents will not,
with or without the giving of notice or the lapse of time, or both (i) violate
any provision of Law, (ii) violate any judgment, order, writ or decree of any
court applicable to the Affiliate, or (iii) result in the breach of or conflict
with any term, covenant, condition or provision of, result in the modification
or termination of, constitute a default under, or result in the creation or
imposition of any Lien upon any of the properties or assets of the Affiliate
pursuant to any corporate charter or by-law, or any commitment, contract or
other agreement or instrument to which the Affiliate is a party or by which any
of the Affiliate's assets or properties is or may be bound.
5.34 AUTHORIZATION BY THE AFFILIATE AND ITS SHAREHOLDERS. The
Affiliate and its shareholders have taken all necessary corporate action to
authorize the execution, delivery and performance of the Affiliate Documents and
the consummation of the transactions contemplated thereby. Each of the
shareholders of the Affiliate is legally
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competent to enter into the Affiliate Documents. The Affiliate Documents have
been duly and validly executed and delivered by the Affiliate and each of its
shareholders, and constitutes the valid and binding obligation of each of them,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other
similar laws currently or hereafter in effect affecting the enforcement of
creditors rights generally.
5.35 CONSENTS REQUIRED BY THE AFFILIATE. No consent,
authorization or approval of, or exemption by, any governmental or public body
or authority, nor any consent of any third party, is required to be obtained by
the Affiliate in connection with the performance of any of the transactions
contemplated by this Agreement or the Affiliate Documents, or any of the
instruments or agreements herein or therein referred to.
5.36 BALANCE SHEET OF THE AFFILIATE. The balance sheet of the
Affiliate, as of the Balance Sheet Date (the "Mexican Financial Statement"), a
copy of which is annexed as Exhibit 5.36, makes full and adequate provision for
all obligations and liabilities (fixed and contingent) of the Affiliate, as of
the Balance Sheet Date, and the Affiliate had, as of the Balance Sheet Date, no
obligations, liabilities or commitments (fixed or contingent) required to be
reserved against on the Mexican Financial Statement or to be disclosed in any
notes thereto, in accordance with United States generally accepted accounting
principles, which are not so reserved against or disclosed, except for any such
obligations or liabilities which are not material to the financial condition of
the Affiliate, the Business, the assets of the Affiliate or any liabilities of
the Affiliate which may be assumed by RefTech under the Affiliate Documents. The
liabilities of the Affiliate as of the Balance Sheet Date, are as set forth on
the Mexican Financial Statement and, since the Balance Sheet Date, the Affiliate
has had no additional creditors and the amount of each of its liabilities has
not materially increased.
5.37 ASSETS OF THE AFFILIATE.
-----------------------
5.37.1 OWNERSHIP AND LIENS. The Affiliate has the ownership
in fee and good and marketable title to the assets which are reflected on the
Mexican Financial Statement (except to the extent that, subsequent to the
Balance Sheet Date, such assets have been sold or otherwise disposed of in the
ordinary course of the Business) and all other assets acquired by the Affiliate
since the Balance Sheet Date, free and clear of all Liens, other than Liens for
taxes not yet due and payable.
5.37.2 MACHINERY AND IMPROVEMENTS. The machinery and
equipment included in the assets is in good operating condition, and such
machinery and equipment, as well as all of the Affiliate's inventory, is located
at the Mexican Factory. The fixed assets of the Affiliate, including those
referred to in the Mexican Financial Statement, are all located on or at the
Mexican Factory, which is leased by the Affiliate. The leases and other
agreements or instruments under which the Affiliate holds, leases or is entitled
to the use of any real or personal property are in full force and effect and all
rentals, royalties or other payments accruing thereunder prior to the date
hereof have been duly paid or payment has been duly waived or forgiven. No
default or event of default exists (which has not been waived) and no event
which with notice or lapse of time, or both, would constitute a default, has
occurred and is continuing under the terms or provisions, express or implied, of
any of such leases, agreements or other instruments or under the terms or
provisions of any agreement to which any of such properties are subject.
5.37.3 RECEIVABLES AND INVENTORY. All accounts receivable of
the Affiliate, whether included on the Mexican Financial Statement or arising
after the Balance Sheet Date, are collectable in the amounts thereof, net of any
allowance for doubtful accounts specified in the Mexican Financial Statement;
and there are no defenses, offsets or counterclaims threatened or pending with
respect to any of the accounts receivable. The inventory of the Affiliate
included on the Mexican Financial Statement, or purchased after the Balance
Sheet Date, and on hand at the Closing is and shall be of a quality, quantity
and mix consistent with the Affiliate's past business practices, and is usable
and saleable at a price at least equal to its book value in the ordinary course
of the Affiliate's business within six months after the Closing.
5.38 OTHER INFORMATION. None of the information and
documents which have been or may be furnished by the Company or the Principals
or any of their respective representatives to RTI or RefTech, or any of
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their representatives, in connection with the transactions contemplated by this
Agreement is or will be materially false or misleading or contains or will
contain any material misstatement of fact or omits or will omit any material
fact necessary to be stated in order to make the statements therein not
misleading.
VI. REPRESENTATIONS AND WARRANTIES OF REFTECH
-----------------------------------------
RefTech makes the following representations and warranties to QAI
and the Principals in order to induce QAI and the Principals to enter into and
perform this Agreement:
6.1 CORPORATE MATTERS. RefTech is a corporation validly existing
in good standing under the laws of the State of Delaware, and has all requisite
power, authority, licenses, permits and franchises to own or lease and operate
its properties and carry on its business as currently being conducted. All of
the issued and outstanding shares of capital stock of RefTech are owned by RTI.
6.2 INFORMATION. RTI is a public company and the Common Stock is
registered under the Exchange Act and traded on the Nasdaq SmallCap Market. RTI
has filed all reports required to be filed by Section 13 of the Exchange Act
during the past twelve months, and the information contained therein is correct
and complete in all material respects.
6.3 AUTHORIZATION. RTI and RefTech have taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by RefTech and constitutes the
valid and binding obligation of RefTech, enforceable in accordance with its
terms, except as such enforcement may be limited by bank ruptcy, insolvency,
moratorium or other similar laws currently or hereafter in effect affecting the
enforcement of creditors rights generally.
6.4 EFFECT OF AGREEMENT, ETC. The execution, delivery and
performance of this Agreement by RefTech and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both (i) violate any provision of Law to which RefTech
or RTI is subject, (ii) violate any judgment, order, writ or decree of any court
applicable to RefTech or RTI, or (iii) result in the breach of or conflict with
any term, covenant, condition or provision of, result in the modification or
termination of, constitute a default under, any commitment, contract or other
agreement or instrument to which RefTech or RTI is a party or by which any of
their respective assets or properties is or may be bound.
6.5 GOVERNMENT CONSENTS. No consent, authorization or approval
of, or exemption by, any governmental or public body or authority, is required
to be obtained by Reftech or RTI in connection with the execution, delivery and
performance by RefTech of this Agreement or any of the instruments or agreements
(other than the Affiliate Documents) herein referred to or the taking by RefTech
or RTI of any action (other than in connection with the Affiliate Documents)
herein contemplated.
6.6 LITIGATION. There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry, pending before any Federal, state, local,
foreign or other court or governmental or administrative body or agency, or any
private arbitration tribunal, or, to the knowledge of RefTech threatened against
RefTech or RTI, relating to or affecting the transactions contemplated by this
Agreement.
VII. CLOSING
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7.1 THE CLOSING. The Closing of the transactions contemplated by
this Agreement (the "Closing") is scheduled to take place at the offices of
Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth Avenue, New York, New
York at 10:00 a.m. local time on February __, 1997, or at such other place or on
such other date and time (i) as to which RefTech and QAI may agree, or (ii)
three business days after the respective conditions to Closing have been or
scheduled to be satisfied (the "Closing Date"). For accounting, tax and other
purposes not inconsistent herewith, the Exchange shall be deemed effective as of
the opening of business on the Closing Date.
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7.2 DELIVERIES BY QAI. At the Closing, QAI shall deliver the
following to RefTech: (i) evidence, satisfactory to RefTech, that all corporate
or other actions necessary to be taken by the Company and the Principals to
authorize and approve the transactions contemplated herein have been duly taken;
(ii) all necessary deeds, conveyances, assurances, transfers, assignments and
consents and any other documents, necessary or reasonably required to transfer
effectively to RefTech good and marketable title to the Assets, free and clear
of all Liens, including a duly executed Bill of Sale; (iii) a duly authorized
and executed Certificate of Amendment to its Certificate of Incorporation, in
form acceptable for filing with the Secretary of State of New Mexico, to change
QAI's name to a name not similar to its present name nor incorporating either of
the words "Quality" or "Air", and such other documents as may be appropriate to
discontinue doing business under any assumed name used by the Company, as well
as all other trade names utilized by the Company in the conduct of the Business;
(iv) an assignment of the Texas Warehouse lease, or a new lease for the Texas
Warehouse, in form and substance satisfactory to RefTech; (v) either (A) a
three-year triple net lease for the U.S. Factory at a rental equal to the lesser
of (1) $6,500 per month, or (2) the payments due under the U.S. Small Business
Administration Authorization and Loan Agreement, Loan No. GP- 453125 2005-EP, in
form and substance satisfactory to RefTech, or (B) a one-year lease, terminable
by RefTech on one month's notice, which provides that it is to be replaced by a
triple-net lease as aforesaid, except that the term will be decreased by the
period from the Closing Date until the date the replacement lease commences, and
which further provides that, until such time, if any, as the replacement lease
is entered into, the rental thereon will be equal to the cost of taxes and
insurance thereon incurred by the lessor; (vi) an aged accounts receivable
schedule (on a 30, 60 and 90 day basis) with respect to all accounts receivable
in existence on the business day immediately preceding the Closing; (vii) a
schedule of inventory (by location), separately identifying raw materials, work
in process and finished goods, prepared as of the last calendar day of the month
immediately preceding the month in which the Closing occurs; (viii) a schedule
of open purchase orders and of open customer orders, prepared as of a date
within three business days of the Closing; (ix) a schedule, satisfactory to
RefTech, of the liabilities to be assumed by RefTech as provided for in Section
3.1; (x) a Certificate of Good Standing for QAI, dated no earlier than ten days
prior to the Closing, issued by the Secretary of State of New Mexico, which also
contains a listing of all charter documents on file with the Secretary of State;
and (xi) such other and further documents and instruments as may reasonably
requested by RefTech to effectuate the transactions contemplated hereby,
including but not limited to duly executed stock powers sufficient in form to
allow the transfer of the RTI Shares deposited pursuant to the Escrow Agreement,
and the Certificate of the President of QAI as provided for in Section 8.1(iv).
7.3 DELIVERIES BY REFTECH. At the Closing, RefTech shall deliver
the following: (i) to QAI and the escrow agent identified in the Escrow
Agreement, the Escrow Agreement and the RTI Shares required to be delivered at
the Closing; and (ii) to QAI (a) appropriate evidence that all corporate or
other actions necessary to be taken by RefTech and RTI to authorize and approve
the transactions contemplated herein have been duly taken; (b) an appropriate
instrument of assumption pursuant to which RefTech assumes certain QAI
liabilities to the extent provided for in Section 3.1; (c) Certificates of Good
Standing for each of RefTech and RTI, dated no earlier than ten days prior to
the Closing, issued by the respective Secretaries of State in the states of
their incorporation; and (d) such other and further documents and instruments as
may be reasonably requested by QAI to effectuate the transactions contemplated
herein, including but not limited to the Certificate of the President of RefTech
as provided for in Section 8.2(vi).
VIII. CONDITIONS TO THE CLOSING
-------------------------
8.1 CONDITIONS TO QAI'S OBLIGATION TO CLOSE. The obligation of
QAI to close the transactions contemplated by this Agreement shall be subject to
the following conditions, any one or more of which may be waived by QAI: (i)
RefTech shall have delivered at the Closing all items provided in Section 7.3;
(ii) RefTech shall have entered into a lease for the Texas Warehouse and a lease
for the U.S. Facility; (iii) RefTech shall have entered into a Credit Agreement
with certain of the Principals whereby such Principals may borrow from RefTech,
on a full- recourse basis, the sum of $240,000, (a) the principal amount of
which shall be repayable over the Earn-Out Period in equal monthly installments,
with interest payable monthly at one percent (1%) in excess of the prime rate as
published in The Wall Street Journal, Eastern Edition, from time to time, except
that upon the sale of the residence located at 113 Jeweled Mesa Drive, Santa
Teresa, New Mexico the full amount of any net proceeds of sale received
therefrom, directly or indirectly, by any of the Principals shall be immediately
applied in reduction of such loan, and
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(b) repayment of such loan shall be secured by a pledge of all of the QAI
capital stock and all of the RTI Shares owned by such Principals; (iv) a
Certificate of RefTech's President that all representations and warranties of
RefTech contained in this Agreement are true and correct on the Closing as
though made on the Closing, except as affected by the transactions contemplated
by this Agreement and except to the extent that such representations and
warranties were made as of a specified date and as to such representations and
warranties the same shall have been true as of the specified date, and that
RefTech has complied with all agreements and conditions contained in this
Agreement to be complied with or observed by RefTech.
8.2 CONDITIONS TO REFTECH'S OBLIGATION TO CLOSE. The obligation
of RefTech to close the transactions subject to this Agreement shall be subject
to the following conditions, any one or more of which may be waived by RefTech:
(i) QAI shall have delivered at the Closing all items provided in Section 7.2;
(ii) each of the Rick E. Bacchus, Rockney D. Bacchus and Ron Bacchus shall have
duly executed and delivered an employment agreement with RefTech, in the form of
EXHIBIT 8.2A, EXHIBIT 8.2B and EXHIBIT 8.2C, respectively; (iii) QAI and the
Principals shall have entered into the Escrow Agreement, and the stock powers
required to be delivered by them pursuant thereto shall have been duly executed
and delivered to the Escrow Agent; (iv) RefTech shall have entered into an
agreement with Bacchus Industries, Inc. to purchase from Bacchus Industries,
Inc. the rolling stock and other equipment listed on Schedule 5.11.3 and used by
the Company in the Business at its then fair market value, all such rolling
stock and other equipment to be delivered free and clear of all Liens and in
good working condition and repair; (v) between the date of this Agreement and
the Closing, there shall not have occurred (A) any casualty to any facility,
property, equipment or inventory owned by the Company as a result of which
either: (1) the monetary amount of damage or destruction aggregates ten percent
or more of the aggregate book value shown on the Company's books of the entire
facilities, property, equipment and inventory of the Company; or (2) the total
monetary amount of damage or destruction is less than ten percent of such
aggregate book value and such loss shall not be substantially covered by valid
and existing insurance underwritten by responsible insurers; or (B) any
condemnation, seizure, expropriation or liquidation by any governmental
authority or any officer or instrumentality thereof of facilities, property,
equipment or inventory owned by the Company; (vi) the closing shall have
occurred under the Affiliate Documents, a copy of which is annexed as EXHIBIT
8.2D; and (vii) QAI shall have delivered a Certificate of QAI's President and of
each of the Principals that all of their respective representations and
warranties contained in this Agreement are true and correct on the Closing as
though made on the Closing, except as affected by the transactions contemplated
by this Agreement and except to the extent that such representations and
warranties were made as of a specified date and as to such representations and
warranties the same shall have been true as of the specified date, and that QAI
has complied with all agreements and conditions contained in this Agreement to
be complied with or observed by QAI. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or incidental thereto and all other related legal matters shall have been
satisfactory to and approved by counsel for RefTech and RTI, and such counsel
shall have been furnished with such certified copies of actions and proceedings
and such other instruments and documents as they shall have reasonably
requested.
8.3 TITLE DEFECTS. In the event that there are any Liens on or
defects in QAI's title to any of the Assets which are not expressly contemplated
under this Agreement then RefTech may elect to either (i) cancel and terminate
this Agreement, without liability hereunder to RefTech, or (ii) proceed with the
Closing without waiving any of its rights to recover its actual damages as a
result thereof.
IX. CONDUCT OF THE PARTIES.
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9.1 AFFIRMATIVE PRE-CLOSING OBLIGATIONS OF QAI AND THE
PRINCIPALS. Between the date of this Agreement and the Closing, QAI and the
Principals shall:
9.1.1 INFORMATION. Give RefTech, RTI and their counsel,
accountants, consultants and other representatives, full access, during normal
business hours, to all of the Company's management and administrative personnel,
properties, books, accounts, tax returns, contracts, commitments and records;
and furnish to RefTech and RTI all such information concerning the Business as
RefTech or RTI reasonably may request; PROVIDED, HOWEVER, that RefTech and RTI
shall, and shall use their best efforts to cause their representatives to (i)
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hold in strict confidence all data and information so obtained, and (ii) if the
Closing does not occur, return to QAI, or destroy, all of such data as QAI may
reasonably request.
9.1.2 CONDUCT OF BUSINESS. Operate the Business only in the
usual, regular and ordinary manner and, to the extent consistent with such
operation and the provisions of this Agreement, use their best efforts to (i)
preserve and keep intact the Company's present business organizations, (ii) keep
available the services of its present employees, (iii) preserve the Company's
present relationships with customers, suppliers and others having business
dealings with them, and (iv) timely pay and discharge all of the Company's bills
and monetary obligations and otherwise timely and properly perform all of the
Company's obligations and commitments.
9.1.3 MAINTENANCE. Maintain all of the Company's (i)
properties necessary for the conduct of the Business, whether owned or leased,
in good repair, order and condition, reasonable wear and use excepted, (ii)
books, accounts and records in the usual, regular and ordinary manner, at least
on a basis consistent with prior periods, and (iii) insurance.
9.1.4 COMPLIANCE WITH LAW. Comply with all Law applicable to
the Company and to the conduct of the Business.
9.1.5 MATERIAL CHANGES. Promptly notify RefTech upon the
occurrence of any event which would make any of their representations and
warranties herein contained incorrect, incomplete or misleading in any material
respect (as if such representations and warranties were being remade as at such
time).
9.1.6 APPROVALS, CONSENTS, ETC. Use its best efforts to
obtain in writing as promptly as possible all approvals and consents required to
be obtained by any of them in order to effectuate the transactions contemplated
hereby and deliver to RefTech copies of such approvals and consents in form and
substance satisfactory to RefTech's counsel.
9.2 NEGATIVE COVENANTS PRE-CLOSING. Between the date of this
Agreement and the Closing and except as contemplated by this Agreement, the
Company shall not:
9.2.1 CORPORATE. Amend QAI's Certificate of Incorporation or
By-Laws or the Affiliate's Articles, or merge or consolidate with, or sell all
or any portion of its Assets or change the character of the Business, or take
any action not in the ordinary course of the Business.
9.2.2 CHANGE IN COMPENSATION OR BENEFITS. Increase the
compensation payable or to become payable to any employee or agent; pay or make
any bonus, stock option, profit sharing, pension, retirement or other similar
payment or arrangement except in the ordinary course of the administration of
existing welfare, pension or retirement plans or arrangements; or enter into any
employment agreement (except that the Affiliate may enter into such employment
agreement, upon prior notice to RefTech, to the extent required by Mexican Law),
sales agency or other contract or arrangement with respect to the performance of
personal services.
9.2.3 COMMITMENTS. Make any commitments to employees or any
other third party which will or may become effective upon or after consummation
of the transactions contemplated by this Agreement.
9.2.4 AMENDMENT OF CONTRACTUAL ARRANGEMENTS. Modify or
change any existing right, concession, license, lease, contract, commitment or
agreement affecting any asset to be sold hereunder, or sell or otherwise dispose
of any right or privilege relating to any such asset except in the ordinary
course of business and except as and to the extent contemplated herein.
9.2.5 COMPLIANCE WITH CLOSING CONDITIONS. Enter into any
transaction, take any action or by inaction permit any event to occur, which
would result in any of the representations and warranties of the Company and the
Principals herein contained not being true and correct at and as of the time
immediately after the occurrence of such transaction or event.
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9.3 POST CLOSING MANAGEMENT OF REFTECH. During the Earn-Out
Period, Rick E. Bacchus, Rockney D. Bacchus and Ron Bacchus, as a group, shall
have the non-assignable right to nominate three of the seven directors
constituting RTI's Board of Directors. RTI covenants and agrees that, subject to
its fiduciary duties, as the sole stockholder of RefTech, it will encourage the
directors of RefTech to elect Rick E. Bacchus as its President, and to elect a
chief financial officer who shall be recommended by Theo W. Muller as long as he
is the chief executive officer of RTI.
9.4 REORGANIZATION TREATMENT. RefTech and QAI shall take all
actions necessary to cause the Exchange and the other transactions contemplated
by this Agreement to be treated for tax purposes as a reorganization under Code
Section 368(a)(1)(C), including all actions necessary to comply with the
"continuity of business enterprise" and "continuity of interest" requirements
with respect thereto.
X. INDEMNIFICATION
---------------
10.1 BY QAI AND THE PRINCIPALS. After the Closing, QAI and the
Principals agree to jointly and severally indemnify and hold RefTech and RTI
harmless against and in respect of any and all loss, liability or damage
incurred or sustained by RefTech or RTI in connection with any breach by (i) the
Company or the Principals of any provision of this Agreement, including, without
limitation, any breach of any representations, warranties and covenants made by
any of them herein, and (ii) by the Affiliate or any of its stockholders of any
provision of the Affiliate Documents, including, without limitation, any breach
of any representations, warranties and covenants made by any of them therein, in
each case including, subject to the provisions of Section 10.3, all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by RefTech
and RTI in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any such matter.
10.2 BY REFTECH. After the Closing, RefTech agrees to indemnify
and hold QAI and the Principals harmless against and in respect of any and all
loss, liability or damage incurred or sustained by QAI in connection with any
breach by RefTech of any provision of this Agreement, including, without
limitation, any breach of any representations, warranties and covenants made by
RefTech herein, including, subject to the provisions of Section 10.3, all
reasonable costs and expenses (including reasonable attorneys' fees) incurred by
QAI or the Principals in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any such matter.
10.3 NOTICES, DEFENSE, ETC. Promptly upon receipt by an
indemnified party of notice of any claim or the commencement of any action for
which indemnity may be sought hereunder, the indemnified party (i) if RefTech or
RTI, shall notify Rick E. Bacchus or his nominee, and (ii) if QAI or the
Principals, shall notify RTI, in writing of the claim or the commencement of
such action, attaching to such notice a copy of the claim or judicial pleading
received. The indemnifying party shall be entitled to participate in the defense
of any such claim or action that may be brought against an indemnified party,
and may elect, by notice to the indemnified party within a reasonable time
following notification by the indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party, and to settle and
compromise any such claim or action; provided, however, that if the indemnified
party has elected to be represented by separate counsel pursuant to the proviso
to the following sentence, such settlement or compromise shall be effected only
with the consent of the indemnified party, which consent shall not be
unreasonably withheld, delayed or conditioned. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the indemnified party
shall have the right to employ counsel to represent it if, in the indemnified
party's sole reasonable judgment, it is advisable for the indemnified party to
be represented by separate counsel due to a conflict of interest and, in that
event, the reasonable fees and expenses of such separate counsel shall
thereafter be paid by the indemnifying party. The parties agree to render to
each other such assistance as may reasonably be requested in order to insure the
proper and adequate defense of any such claim or action.
10.4 RECOURSE AGAINST QAI AND THE PRINCIPALS. In the event that
RefTech or RTI shall be entitled to indemnification as provided in this Article,
upon the determination thereof it shall give Rick E. Bacchus or his
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nominee notice thereof. Unless RefTech shall have received payment in the full
amount of the indemnified claim within thirty days of its giving such notice, it
shall give notice to the Escrow Agent that it is entitled to indemnification, in
which event the Escrow Agent shall cause to be redelivered to RefTech or to RTI,
out of the RTI Shares held in escrow pursuant to the Escrow Agreement, such
number of RTI shares as when multiplied by their market value per share, as
herein determined, equals the amount of the unreimbursed indemnified claim. For
the purposes of this Section, "market value" means the average closing price of
the Common Stock as quoted on NASDAQ or any national securities exchange on
which the Common Stock may then be traded during the thirty day period
immediately prior to delivery of such notice to the Escrow Agent, and if at such
time the Common Stock is not so traded then at the most recent ask price as
quoted by the National Quotation Bureau, Inc. (or any successor organization
performing a similar reporting function). If the RTI Shares held by the Escrow
Agent shall be insufficient to reimburse RefTech in full, QAI and the Principals
shall be jointly and severally responsible for the balance.
XI. TERMINATION
-----------
11.1 TERMINATION. This Agreement and the transactions
contemplated herein may be terminated at or prior to the Closing (i) by mutual
consent of RefTech and QAI, or (ii) by RefTech pursuant to notice delivered at
or prior to the Closing if the Company or the Principals fail in any material
respect to satisfy all of the conditions to the Closing to be satisfied by them.
XII. Miscellaneous
-------------
12.1 FURTHER ASSURANCES. The parties shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
12.2 FINDERS' FEES. Each of the parties (i) represents and
warrants that, except as set forth on Schedule 12.2, it has not taken and shall
not take any action which would cause the other parties to have any obligation
or liability to any person for finders' fees, brokerage fees, agents'
commissions or like payments in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby, and
(ii) agrees to indemnify and hold the other parties harmless for any loss,
liability, cost or expense (including, without limitation, legal expenses)
arising out of the breach or inaccuracy of the foregoing representation and
warranty.
12.3 EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, the parties shall pay the fees and expenses of
their respective counsel, accountants and other experts, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement and the transactions contemplated
hereby; provided, however, that if this Agreement is terminated because of any
party's breach of this Agreement, such party shall remain liable in damages to
the other party to this Agreement.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements contained in this
Agreement or in any instrument or document delivered or to be delivered pursuant
to this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby, notwithstanding any investigation at any time
made by or on behalf of any party or parties hereto.
12.5 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or the breach of any term or provision thereof shall
be settled by arbitration in accordance with the Rules of the American
Arbitration Association and judgment upon the award rendered by the Arbitrator
or Arbitrators may be entered in any Court having jurisdiction. In the event
that the parties to the controversy or claim can not agree on the location of
the arbitration, the arbitration shall be conducted in New York City, New York.
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12.6 SPECIFIC PERFORMANCE. QAI and the Principals acknowledge
that (i) the Assets and Business to be transferred to RefTech pursuant to this
Agreement are unique, (ii) RefTech will not have any adequate remedy at law if
QAI and the Principals fail to perform any of their respective obligations
hereunder, and (iii) RefTech shall have the right, in addition to any other
rights it may have, to specific enforcement of this Agreement if QAI and the
Principals fail to perform any of their respective obligations hereunder.
12.7 NOTICES. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given on the earlier of (i) when actually
received or when receipt is refused, or (ii) five days after being mailed by
United States first class, registered or certified mail, return receipt
requested, postage prepaid, addressed to the party at the following addresses or
to such other address as any party shall hereafter specify by notice to the
other parties:
a. If to RefTech, to: RTI Inc.
c/o Mr. Theo W. Muller
20 Peach Hill Road
Darien, Connecticut 06820
with a copy to: Warshaw Burstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Attention: Arthur A. Katz, Esq.
b. If to QAI or the
Principals, to: Rick E. Bacchus
Quality Air, Inc.
301 Antone Street
Sunland Park, New Mexico 88063
Notice of change of address shall be effective only upon actual receipt.
12.8 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
and Schedules annexed hereto, constitutes the entire agreement among the parties
and supersedes all prior agreements, understandings and arrangements, oral or
written, among the parties with respect to the subject matter hereof.
12.9 BINDING EFFECT; Benefits. This Agreement shall inure to the
benefit of and shall be binding upon the parties and their respective successors
and permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to or shall (i) confer on any person other than the parties, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, or (ii) constitute the
parties partners or participants in a joint venture.
12.10 AMENDMENTS AND WAIVERS. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party may, by an instrument in writing, waive performance or compliance by any
other party with respect to any term or provision of this Agreement on the part
of such other party to be performed or complied with. The waiver by any party of
a breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach.
12.11 ASSIGNMENT. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by any party without the prior written consent of all of the other
parties.
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12.12 SECTION AND OTHER HEADINGS. The Article, section and other
headings contained in this Agreement are for reference purposes only and shall
not be deemed to be a part of this Agreement or to affect the meaning or
interpretation of this Agreement.
12.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
12.14 SEPARABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
12.15 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
12.16 ATTORNEYS' FEES. In any proceedings relating to this
Agreement, including a proceeding with respect to any instrument, document or
agreement made under or in connection with this Agreement, the prevailing party
shall be entitled to recover its costs and reasonable attorneys' fees and
expenses.
12.17 PUBLIC INFORMATION. Neither the Company nor the Principals
shall issue any press release or other public document or make any public
statement relating to, connected with or arising out of this Agreement or the
transactions contemplated hereunder without first obtaining the prior written
approval of RTI.
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<PAGE>
IN WITNESS WHEREOF, QAI and RefTech have caused this Agreement to
be signed in their respective names by an officer thereunto duly authorized and
each of the Principals have executed this Agreement as of the date first above
written.
QUALITY AIR, INC. REFRIGERATION TECHNOLOGY INC.
By:/s/ Rick E. Bacchus By:/s/ Theo W. Muller
---------------------- -----------------------
Rick E. Bacchus Theo W. Muller
President Sole Director
/s/ Rick E. Bacchus /s/ Margie J. Bacchus
----------------------- -----------------------
Rick E. Bacchus Margie J. Bacchus
/s/ Rockney D. Bacchus /s/ Philis Bacchus
------------------------ -----------------------
Rockney D. Bacchus Philis Bacchus
/s/ Ron Bacchus /s/ Opal Simmons
- ------------------------- -----------------------
Ron Bacchus Opal Simmons
Agreed to with respect to Section 9.3 only.
RTI INC.
By: /s/ Theo W. Muller,
------------------------------
Theo W. Muller, President
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EXHIBIT 2
ESCROW AGREEMENT (this "Agreement") dated as of February --,
1997, by and among Refrigeration Technology Inc., a Delaware corporation
("RefTech"), Quality Air, Inc., a New Mexico corporation ("QAI"), Margie J.
Bacchus, Philis Bacchus, Rick E. Bacchus, Rockney D. Bacchus, Ron Bacchus and
Opal Simmons (each a "Principal" and collectively, the "Principals"), and the
Escrow Agent named herein.
Recitals
--------
RefTech, QAI and the Principals have entered into an
Acquisition Agreement, dated as of the date hereof (the "Acquisition
Agreement"), which provides for the acquisition by RefTech of the
business and substantially all of the assets of QAI. Capitalized terms
used in this Agreement, and not otherwise defined herein, have the
meanings defined in the Acquisition Agreement. It is the intention of
the parties that if the Closing does not take place, this Agreement,
and all obligations and rights of each party hereunder, shall
immediately terminate as if this Agreement had never been entered into.
The Acquisition Agreement provides that (i) 50,000 shares of
Common Stock, which are part of the Exchange Consideration, be
deposited in escrow at the Closing under this Agreement, and (ii) any
Earn-Out Shares subsequently delivered by RefTech after the Closing, if
delivered prior to the time that this Agreement has been terminated in
accordance with its terms, likewise be deposited in escrow under this
Agreement (all such shares so deposited being the "Escrow Shares"), to
secure certain obligations of QAI and the Principals under the
Acquisition Agreement, on the terms and conditions set forth therein
and herein. The Escrow Shares, together with all stock powers related
thereto, are collectively the "Escrow Deposit".
The Acquisition Agreement provides for the complete
liquidation of QAI and the distribution of its assets, including its
interest in the Escrow Shares, to certain or all of the Principals (the
"Liquidation").
The parties desire to establish the terms and conditions
pursuant to which the Escrow Deposit will be held and disbursed by the
Escrow Agent.
NOW, THEREFORE, in consideration of the premises and in
reliance upon the mutual representations, warranties, covenants and agreements
hereinafter set forth, the parties agree as follows:
1. ADMINISTRATION. For the purposes of this Agreement, the
Principals have agreed that the Notice Agent shall represent them and QAI, and
that they and QAI shall be irrevocably bound by any action of, or notice given
by, the Notice Agent. QAI and the Principals hereby initially designate Rick E.
Bacchus as the "Notice Agent". The Notice Agent shall have the right to appoint
a substitute Notice Agent, on notice to each of the other parties to this
Agreement. The Principals shall have the right to replace the Notice Agent by
giving like notice signed by all of the Principals.
2. ESCROW.
2.1 ESCROW. The Escrow Deposit will be held in escrow by
Warshaw Burstein Cohen Schlesinger & Kuh, LLP (the "Escrow Agent"), with an
office at 555 Fifth Avenue, New York, New York 10017, as collateral for the
obligations of QAI and the Principals under Article X of the Acquisition
Agreement, subject only to release pursuant to the terms of this Agreement. The
Escrow
<PAGE>
Agent agrees to accept delivery of the Escrow Deposit, and to hold the Escrow
Deposit in escrow subject to the terms and conditions of this Agreement.
2.2 DELIVERY AT THE CLOSING. At the Closing, the Escrow Shares
being delivered at the Closing will be delivered by QAI to the Escrow Agent,
together with a stock power duly executed in blank by QAI, sufficient in form to
permit the transfer of the Escrow Shares upon delivery.
2.3 LIQUIDATION OF QAI. The Notice Agent shall give prompt
notice of the Liquidation to RefTech and the Escrow Agent, as provided for in
Section 4.6 of the Acquisition Agreement (the "Liquidation Notice"). The copy of
the Liquidation Notice sent to the Escrow Agent shall be accompanied by separate
stock powers, duly executed in blank by each Principal being distributed Escrow
Shares by QAI, sufficient in form to permit the transfer of the Escrow Shares
upon delivery. Such stock powers shall be part of the Escrow Deposit. Upon
receipt of the Liquidation Notice, the Escrow Agent shall deliver the stock
certificate evidencing the Escrow Shares deposited under this Agreement to
RefTech, for the sole purpose of reflecting the change in record ownership of
such Escrow Shares. RTI, by its execution of this Agreement, agrees to issue
certificates to each of the Principals as provided in the Liquidation Notice and
to deliver such reissued certificates to the Escrow Agent.
2.4 CLAIMS. In the event that RefTech or RTI believes that it
may be entitled to indemnification as provided in Article X of the Acquisition
Agreement, notice thereof may be given to the Escrow Agent (a "Pending Claim
Notice", provided evidence is delivered to the Escrow Agent that a copy thereof
has been delivered to the Notice Agent). In the event that RefTech or RTI
becomes entitled to indemnification as provided in such Article X, then upon
determination thereof (a "Claim Amount"), RefTech and/or RTI, as is applicable,
shall give the Notice Agent and the Escrow Agent notice thereof (a "Notice of
Claim"). Unless RefTech or RTI, as the case may be, shall have received payment
in the full amount of the Claim Amount within thirty (30) days of its giving
such Notice of Claim, it shall give further notice to the Escrow Agent (with
evidence that such notice has been delivered to the Notice Agent) that it is
entitled to indemnification, in which event fifteen (15) days thereafter the
Escrow Agent shall cause to be delivered to RefTech or to RTI, out of the Escrow
Deposit, such number of Escrow Shares as when multiplied by their market value
per share, as herein determined, equals the Claim Amount. For the purposes of
this Section, "market value" means the average closing price of the Common Stock
as quoted on NASDAQ or any national securities exchange on which the Common
Stock may then be traded during the thirty (30) day period immediately prior to
delivery of such Notice of Claim to the Escrow Agent, and if at such time the
Common Stock is not so traded then at the most recent ask price as quoted by the
National Quotation Bureau, Inc., (or successor organization performing a similar
reporting function).
2.5 PENDING CLAIM NOTICE. Each Pending Claim Notice shall
contain the following information, to the extent it is reasonably available to
RefTech or RTI: (i) RefTech's or RTI's good faith estimate of the reasonably
foreseeable maximum amount of the Claim Amount; and (ii) a brief description in
reasonable detail of the facts, circumstances or events giving rise to the Claim
Amount.
2.6 NOTICE OF CLAIM. Each Notice of Claim shall contain the
following information: (i) the Claim Amount; and (ii) a brief description of the
facts, circumstances or events giving rise to the Claim Amount.
2.7 TERMINATION OF ESCROW. Within thirty (30) days after
receiving notice from the Notice Agent (with evidence that a copy thereof has
been delivered to RefTech and RTI), given on or after the second anniversary of
the date hereof, the Escrow Agent shall deliver to the Notice Agent any Escrow
Shares then held by it (other than any Escrow Shares the Escrow Agent reasonably
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believes [which belief may be based solely upon a written statement of RefTech
or RTI, a copy of which has been delivered to the Notice Agent] may be needed to
satisfy a then outstanding Claim Amount which has not yet been fully satisfied
and any pending Claim Amount referred to in a then outstanding Pending Claim
Notice); provided that the Escrow Agent shall deliver any remaining Escrow
Shares then held by it six (6) months thereafter, unless there is then pending
an arbitration with respect thereto under Section 12.5 of the Acquisition
Agreement, or a dispute under Section 3, in which event the Escrow Agent may
continue to hold such Escrow Shares until conclusion of such arbitration. In all
other cases, the Escrow Agent shall deliver to RefTech, QAI and/or the
Principals, as the case may be, the certificates (and the related executed stock
powers) representing the Escrow Deposit as set forth in joint instructions, or
separate instructions of like effect, signed and delivered by RefTech and the
Notice Agent.
2.8 DIVIDENDS AND VOTING. Until termination of escrow, all
dividends on the Escrow Shares shall be retained by the Escrow Agent as part of
the Escrow Deposit. Until the Escrow Deposit is released from escrow, QAI, and
upon the Liquidation the Principals, shall be entitled to vote the Escrow
Shares.
2.9 STOCK POWERS. QAI and each of the Principals shall, from
time to time, at the request of RefTech, furnish the Escrow Agent with stock
powers in blank that will allow the Escrow Agent to perform its obligations
hereunder. QAI and each of the Principals hereby appoints RefTech as its
attorney-in-fact to execute appropriate stock powers on its behalf in the event
that they, or any one of them, does not comply with RefTech's reasonable request
to furnish stock powers to the Escrow Agent. Such power of attorney may not be
revoked as long as this Agreement remains in effect. All such stock powers shall
be part of the Escrow Deposit.
2.10 NO ENCUMBRANCE. No interest in the Escrow Deposit, or any
beneficial interest therein, may be pledged, sold, assigned or transferred,
other than by operation of law, by any party hereto or their respective
successors and permitted assigns, or be taken or reached by any legal or
equitable process in satisfaction of any debt or other liability of any such
person, as long as this Agreement remains in effect.
3. RESOLUTION OF DISPUTES. In the event of any dispute
concerning or arising out of this Agreement, the parties in good faith shall
attempt to resolve the same. In the event that the parties, despite their good
faith efforts cannot resolve the dispute, then any of such parties may demand
arbitration of the dispute as provided in Section 12.5 of the Acquisition
Agreement, unless the Claim Amount is at issue in pending or threatened
litigation with a third party, in which event arbitration with respect thereto
may not be commenced until such amount is ascertained or both RefTech and the
Notice Agent agree to arbitration. The non-prevailing parties to an arbitration
hereunder shall pay their own expenses, the fees of each arbitrator, the
administrative fee of the American Arbitration Association and the expenses
(including, without limitation, attorneys' fees and costs) incurred by the other
parties to the arbitration. Unless the Escrow Agent is determined to be at fault
by the arbitration, the Escrow Agent shall have a claim against the Escrow
Deposit for all of its expenses therein or arising in connection therewith.
4. LIMITATION OF ESCROW AGENT'S LIABILITY.
4.1 LIMITATION. The Escrow Agent will incur no liability with
respect to any action taken or suffered by it in reliance upon any notice,
direction, instruction, consent, statement or other document believed by it to
be genuine and duly authorized, nor for any other action or inaction, except its
own willful misconduct or gross negligence. The Escrow Agent will not be
responsible for the validity or sufficiency of this Agreement or any agreement
amendatory or supplemental hereto. In all questions arising under this
Agreement, the Escrow Agent may rely on the advice or opinion of legal counsel,
and for anything done, omitted or suffered in good faith by the
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Escrow Agent based on such advice or opinion, the Escrow Agent will not be
liable to anyone. The Escrow Agent will not be required to take any action
hereunder involving any expense unless the payment of such expense is made or
provided for in a manner satisfactory to it.
4.2 CONFLICTING DEMANDS. In the event that conflicting demands
are made upon, or conflicting notices are received by, the Escrow Agent, the
Escrow Agent will have the absolute right, at the Escrow Agent's election, to do
either or both of the following: (i) resign so that a successor can be appointed
pursuant to Section 8, or (ii) file a suit in interpleader and obtain an order
from a court of competent jurisdiction requiring the parties to interplead and
litigate their several claims and rights among themselves. In the event that
such an interpleader suit is brought, the Escrow Agent will thereby be fully
released and discharged from all further obligations imposed upon it under this
Agreement, the Escrow Agent will have a priority claim against the Escrow
Deposit for all costs, expenses and reasonable attorneys' fees and expenses
expended or incurred by the Escrow Agent under this Agreement and pursuant to
the exercise of the Escrow Agent's rights under this Section, and the other
parties to this Agreement, jointly and severally, shall be personally
responsible for payment of all such costs, expenses and fees.
4.3 INDEMNIFICATION IN FAVOR OF ESCROW AGENT. In consideration
of the Escrow Agent's acceptance of its appointment as escrow agent hereunder,
the other parties hereto, jointly and severally, agree to (i) indemnify the
Escrow Agent, and hold the Escrow Agent harmless from, any liability incurred by
it to any person, firm or corporation by reason of its having accepted its
appointment and in carrying out any of the terms of this Agreement, and (ii)
reimburse the Escrow Agent for all its costs and expenses, including, but not
limited to, reasonable attorneys' fees and expenses, incurred by reason of any
matter as to which an indemnity is paid; provided that no indemnity shall be
paid by reason of the Escrow Agent's gross negligence or willful misconduct.
4.4 ESCROW AGENT'S RESPONSIBILITIES
4.4.1 The Escrow Agent shall be under no obligation to
deliver any instrument or documents to a court or arbitrator or to take any
legal action in connection with this Agreement or towards its enforcement, or to
appear in, prosecute or defend any action or proceeding which, in the Escrow
Agent's opinion, would or might involve it in any cost, expense, loss or
liability unless, as often as the Escrow Agent may require, the Escrow Agent is
furnished with security and indemnity reasonably satisfactory to it against all
such costs, expenses, losses or liability.
4.4.2 The Escrow Agent's obligations hereunder shall be
as a depository only, and the Escrow Agent shall not be responsible or liable in
any manner whatever for the sufficiency, correctness, genuineness or validity of
any notice, written instructions or other instrument furnished to it or
deposited with it, or for the form of execution of any thereof, or for the
identity, authority or rights of any person executing, furnishing or depositing
the same, except to the extent of its gross negligence or willful misconduct.
4.4.3 The Escrow Agent shall not have any duties or
responsibilities except those set forth in this Agreement, and shall not incur
any liability in acting upon any signature, notice, request, waiver, consent,
receipt or other paper or document reasonably believed by it to be genuine, and
the Escrow Agent may presume that any person purporting to give any notice or
advice on behalf of any party in accordance with the provisions hereof has been
duly authorized to do so.
4.4.4 The Escrow Agent shall be entitled to consult
with counsel in connection with its duties hereunder.
4.4.5 The Escrow Agent has executed this Agreement
solely to confirm that Escrow Agent will hold the Escrow Deposit in escrow
pursuant to the provisions of this Agreement.
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4.4.6 QAI and the Principals acknowledge that the
Escrow Agent has been, and may continue to be, counsel to RefTech and RTI. QAI
and the Principals waive any objections to the Escrow Agent serving in the
capacity of escrow agent hereunder and waive any objection to the Escrow Agent
continuing to serve as counsel to RefTech and RTI, and their respective
affiliates, including with respect to a dispute with QAI and/or the Principals;
provided that such dispute does not involve this Agreement (unless prior to such
representation the Escrow Agent resigns from acting as escrow agent under this
Agreement).
5. NOTICES. For the purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given and duly received on the earlier of (i)
when actually received or when receipt is refused, or (ii) five days after being
mailed by United States first class, registered or certified mail, return
receipt requested, postage prepaid, addressed to the party at the following
addresses or to such other address as any party shall hereafter specify by
notice to the other parties; provided that notices and other communications to
the Escrow Agent, and notices of change of address, shall be deemed to have been
duly given and duly received only upon actual receipt:
If to RefTech, to: RTI Inc.
c/o Mr. Theo W. Muller
20 Peach Hill Road
Darien, Connecticut 06820
with a copy to: Warshaw Burstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Attention: Arthur A. Katz, Esq.
If to QAI or the Principals, to: Rick E. Bacchus
Quality Air, Inc.
301 Antone Street
Sunland Park, New Mexico 88063
If to the Escrow Agent, to: Warshaw Burstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
Attention: Arthur A. Katz, Esq.
6. GENERAL.
6.1 FURTHER ASSURANCES. The parties shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.2 SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
representations, warranties, covenants and agreements contained in this
Agreement or in any instrument or document delivered or to be delivered pursuant
to this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby, notwithstanding any investigation at any time
made by or on behalf of any party or parties hereto.
6.3 ENTIRE AGREEMENT. This Agreement, together with the
Acquisition Agreement, constitutes the entire agreement among the parties and
supersedes all prior agreements,
5
<PAGE>
understandings and arrangements, oral or written, among the parties with respect
to the subject matter hereof.
6.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to
the benefit of and shall be binding upon the parties and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to or shall (i) confer on any person other than the
parties, and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement, or
(ii) constitute the parties partners or participants in a joint venture.
6.5 ASSIGNMENT. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by any party without the prior written consent of all of the other
parties.
6.6 SECTION AND OTHER HEADINGS. The Section and other headings
contained in this Agreement are for reference purposes only and shall not be
deemed to be a part of this Agreement or to affect the meaning or interpretation
of this Agreement.
6.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
6.8 SEPARABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
6.9 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
6.10 WAIVERS. The observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
7. EXPENSES OF ESCROW AGENT. All fees and expenses of the
Escrow Agent incurred in the ordinary course of performing its responsibilities
hereunder will be paid by RefTech upon receipt of a written invoice by the
Escrow Agent. Any fees, including but not limited to, attorneys' fees (either
paid to retained attorneys or amounts representing the value of legal services
rendered to itself based upon its standard hourly rates) or expenses incurred by
the Escrow Agent in connection with a dispute over the distribution of the
Escrow Deposit or the validity of a Notice of Claim, will be a priority charge
upon the Escrow Deposit and will be the joint and several responsibility of the
other parties hereto, except as otherwise provided herein.
8. SUCCESSOR ESCROW AGENT. In the event that the Escrow Agent
becomes unavailable or unwilling to continue in its capacity hereunder, the
Escrow Agent may resign and shall be discharged from its duties and further
obligations hereunder by giving written notice of resignation to RefTech and the
Notice Agent, specifying the date, not less than thirty (30) days thereafter,
when such resignation will take effect; whereupon RefTech and the Notice Agent
shall attempt to agree on a successor escrow agent prior to the expiration of
such thirty (30) day period and shall give written notice to the Escrow Agent of
such designated successor. The Escrow Agent will promptly deliver the Escrow
Deposit at such time to such designated successor. In the event that no
successor escrow agent is appointed as provided in this Section, the Escrow
Agent may apply to a court of competent jurisdiction for the appointment of a
successor escrow agent.
9. AMENDMENT. This Agreement may be amended with the written
consent of RefTech, the Escrow Agent and the Notice Agent, provided that if the
Escrow Agent does not agree to such amendment, then RefTech and the Notice Agent
may appoint a successor escrow agent as provided in Section 8.
10. MISCELLANEOUS. The Escrow Agent may execute any of its
powers or responsibilities hereunder and exercise any rights hereunder either
directly or by or through its agents or attorneys.
6
<PAGE>
IN WITNESS WHEREOF, QAI and RefTech have caused this Agreement
to be signed in their respective names by an officer thereunto duly authorized
and each of the Principals have executed this Agreement as of the date first
above written.
QUALITY AIR, INC. REFRIGERATION TECHNOLOGY INC.
By:/s/ Rick E. Bacchus By:/s/ Theo W. Muller
---------------------- -----------------------
Rick E. Bacchus Theo W. Muller
President Sole Director
/s/ Rick E. Bacchus /s/ Margie J. Bacchus
----------------------- -----------------------
Rick E. Bacchus Margie J. Bacchus
/s/ Rockney D. Bacchus /s/ Philis Bacchus
------------------------ -----------------------
Rockney D. Bacchus Philis Bacchus
/s/ Ron Bacchus /s/ Opal Simmons
- ------------------------- -----------------------
Ron Bacchus Opal Simmons
Agreed to with respect to Section 2.3 only.
RTI INC.
By: /s/ Theo W. Muller,
------------------------------
Theo W. Muller, President
7
EXHIBIT 3
TEXAS STANDARD FORMS
COMMERCIAL LEASE
PARTIES: This Lease agreement made and entered into by and between Stanley Jobe
hereinafter designated Lessor, and Quality Air Inc. and/or assigns hereinafter
designated Lessee, whereby Lessor leases unto the Lessee the following described
property:
Lots 3 to 20 and 41 to 58 Block 15 Westway Unit #2, 8909 Kingsway.
TERM: For the term of (3) months, to begin on the 1st day of February, 1997, and
ending on the 30th day of April, 1997, to be continuously used and occupied
during the term of this Lease by the Lessee for no other purpose than Storage.
RENTAL: Lessee agrees to pay to Lessor, or his designated agent, at such place
as he shall designate in the County wherein the leased land lies, the sum of
Five Thousand per month ($5,000.00) Dollars, without demand, in monthly
installments in advance on the first day of each month during the term as
follows:
First months rent to be paid upon signing of this Lease in the amount
of $5,000.00. This Lease is made in conjunction with a contract to
purchase the above subject property. If the property is purchased
before the 3 months are up the rent will be prorated from the date of
the purchase and if the property is not purchased the lessee may give a
30 day notice to terminate this Lease and the rent will be pro-rated to
the termination date. No Security Deposit will be necessary. Lessee
accepts the property in its present condition as far as this Lease is
concerned. Lessee agrees to pay for all damages it does to the
property. Lessee agrees to provide Lessor with General Liability
Insurance holding Lessor harmless. Lessee to pay all utilities.
BROKERS COMMISSION: Lessor agrees to pay to Broker whose name(s) appear below as
such, a cash commission for negotiating this Lease, at the time this Lease is
signed by both Lessor and Lessee, in the sum of $300.00 per month which sum
shall irrevocably vest upon the execution hereof, notwithstanding subsequent
defaults. In the event the herein described property is sold or exchanged by
Lessor to Lessee, his successors or assigns during the term of this Lease, or
within ninety days after the termination hereof, Lessor agrees to pay Brokers
herein a commission on the gross sales price of 5%. The Broker(s) herein are
hereby granted a lien to secure payment of all commissions due hereunder, which
lien shall be subordinate to rights of the Lessor herein, banks, insurance
companies, savings and loan associations, and similar regulated financing
institutions.
REPAIRS: Lessee acknowledges that he has fully inspected the demised premises,
and on the basis of such inspection, Lessee hereby accepts the demised premises,
and the buildings and improvements situated thereon, as suitable for the
purposes for which same are leased, in their present condition, with such
changes therein as may be caused by reasonable deterioration between the date
hereof and the commencement date of this Lease.
Lessee shall throughout the term of this Lease take good care of the
demised including the buildings and other improvements located thereon, keep
them free from waste or nuisance of any kind, and make all necessary repairs,
except those expressly required to be made by Lessor. At the end or other
termination of this Lease, Lessee shall deliver up the demised premises with all
improvements located thereon in good repair and condition, reasonable wear and
tear and damage by fire, tornado, or other casually only excepted.
ASSIGNMENT: The Lessee shall not assign, sublet, mortgage or pledge this Lease,
not let the whole or any part of the demised premises without the Lessor's
written consent; nor in any event permit the premises to be occupied for any
purpose or business deemed illegal, disreputable, or extra hazardous on account
of fire, nor permit anything to be done in or about the demised premises which
will in any way increase the rate of fire insurance on the building or on the
property kept therein; and in the event that, by reason of acts of the Lessee,
there shall be any increase in the rate of insurance on the building or on the
contents thereof the Lessee hereby agrees to pay such increase.
LAWS: Lessee agrees to comply with all laws, rules and orders of Federal, State
and Municipal Governments and all of their departments applicable to the demised
premises; and shall comply promptly with the requirements of the Board of Fire
Underwriters. Lessee, at his own expense, will make application for occupancy
permit to the municipal authority involved within five (5) days from date. In
the event Lessee in unable to obtain an occupancy permit hereunder for any
reason, Lessor, at his option shall be given a reasonable time to cure any such
defects or declare this Lease null and void.
INDEMNITY: Lessee hereby covenants and agrees at all times to indemnify and save
harmless the lessor and the demised premises from [illegeble line of type] and
against any cost, liability, or expense arising out of any claims of any person
or persons whatsoever by reason of the use or misuse of the demised premises,
parking area, or common facilities by lessee or any person or persons holding
under lessee, and shall indemnify and save harmless the lessor from any penalty,
damage, or charge incurred or imposed by reason of any violation of law or
- 1 -
<PAGE>
ordinance by lessee or any person or persons holding under lessee, and from any
cost, damage, or expense arising out of the death of or injury to any person or
persons holding under lessee.
ALTERATIONS: The Lessee shall not made any alterations, additions, or
improvements to the demised premises without the prior written consent of the
Lessor. All fixtures (including floor coverings), alterations, additions and
improvements (except trade fixtures) put in at the expense of the Lessee, shall
be the property of the Lessor and shall remain upon and be surrendered with the
demised premises as a part thereof at the termination of this Lease.
ENTRY: The Lessor or his representatives shall have the right to enter the
demised premises at all reasonable times to inspect and examine demised premises
and to make alterations, changes, or repairs to the demised premises as are
herein required or as Lessor may deem necessary for the preservation of the
demised premises. Lessee shall not be entitled to any abatement or reduction of
rent by reason thereof. During the last thirty (30) days of the term of this
Lease or any extension thereof, the Lessor shall have the right to post "For
Lease" and/or "For Sale" signs on the demised premises and during said period
the Lessor or his representatives shall have the right to show the demised
premises to prospective tenants or purchaser at all reasonable times.
SIGNS: Lessee shall not place any signs or objects on the roof or any part of
the exterior of the building (except on the plate glass windows) nor place any
signs, show cases, displays or fences on the sidewalks, parking lot, driveways
or exterior of any building on the demised premises except as and where first
approved in writing by Lessor. Lessee shall remove all signs at the termination
of this Lease. Such installation and removals shall be made in such manner as to
avoid injury, defacement or overloading of the building or other improvements.
CONDEMNATION: If the whole of the demised premises, or such portion thereof as
will make premises unusable for the purposes herein leased, be condemned by any
legally constituted authority for any public use or purpose, then in either of
said events the term hereby granted shall cease from the time when possession
thereof is taken by public authorities, and rental shall be accounted for as
between Lessor and Lessee as of that date. Such termination, however, shall be
without prejudice to the right of either Lessor or Lessee to recover
compensation and damage caused by condemnation from the condemnor. It is further
understood and agreed that neither the Lessee nor Lessor shall have any rights
in any award made to the other by any condemnation authority.
NOTICE: Any demand to be made or notice to be given hereunder shall be made on,
or given to the Lessee either personally, or, at the Lessor's option, by sending
a copy of such demand or notice by mail addressed to the Lessee at the demised
premises.
WAIVER: No waiver at any time of the right to terminate this Lease shall impair
the right of the Lessor to insist upon such termination in the event of
subsequent breach or default by Lessee, nor shall the acceptance of rent at any
time constitute such waiver of default or waiver of damages, and in addition to
any other remedies which the Lessor may have, the Lessor may apply for and
obtain an injunction or use any other legal process to enforce the Lessor's
rights.
MORTGAGES: This Lease is and shall always be subordinate to any mortgage or
mortgages which now or shall at any time be placed upon the demised premises or
any part thereof, and the Lessee agrees to execute and deliver any instrument,
without cost, which may be deemed necessary to further effect the subordination
of this Lease to any such mortgage or mortgages.
LIEN: ALL PROPERTY OF THE LESSEE NOW OR HEREAFTER PLACED IN OR UPON THE DEMISED
PREMISES (EXCEPT SUCH PART OF THE MERCHANDISE THAT IS TO BE SOLD FROM TIME TO
TIME IN THE ORDINARY COURSE OF TRADE) IS HEREBY SUBJECTED TO A LIEN IN FAVOR OF
THE LESSOR AND SHALL BE AND REMAIN SUBJECT TO SUCH LIEN OF THE LESSOR FOR THE
PAYMENT OF ALL RENTS AND OTHER SUMS AGREED TO BE PAID BY THE LESSEE HEREIN. SAID
LIEN TO BE IN ADDITION TO ANY CUMULATIVE OF THE LANDLORD'S LIEN PROVIDED BY LAW.
POSSESSION: If, for any reason, the premises herein demised shall not be ready
for occupancy by the Lessee at the time of the commencement of this Lease, this
Lease shall not be affected thereby, nor shall the Lessee have any claim against
the Lessor by reason thereof, but no rent shall be payable for the period during
which the premises shall not be ready for occupancy; and all claims for damages
arising out of such delay are waived and released by the Lessee. Rent for any
fractional month at the beginning or the end of the Lease term shall be
prorated.
FIRE CLAUSE: In the event that the premises hereby demised, or the building of
which the same is a part, shall be partially damaged by fire, the elements,
civil disorder, or other casualty, the Lessee shall give immediate notice
thereof to the Lessor and the same shall be repaired at the expense of the
Lessor without unreasonable delay. Lessee shall receive an abatement of rent
proportionate to the damage to the demised premises; and in the event that the
damage should be so extensive as to render the demised premises untenantable,
the rent shall cease until
- 2 -
<PAGE>
such time as the premises shall again be put into repair, but in the event of
the building being damaged by fire or otherwise to such an extent as to render
it necessary in the judgment of the Lessor not to rebuild the same (and whether
or not the demised premises be affected), then, at the option of the Lessor, and
upon notice to Lessee, and from thenceforth this Lease shall cease and come to
an end, and the rent shall be apportioned and paid up to date of such damage. If
Lessor elects to rebuild the premises and continue this Lease, Lessor shall
notify Lessee of such intention within thirty (30) days of the date of the
damage; otherwise, this Lease shall be deemed canceled and of no further force
and effect.
DEFAULT: In the event that the Lessee shall default in the prompt payment of
rent when the same is due, or shall violate or omit to perform any of the
provisions of this Lease herein contained, or in the event that the Lessee shall
abandon the business or the premises or leave them vacant, Lessor may, if he so
elects, send written notice of such default, violation or omission to the
Lessee, by mail or otherwise, at the demised premises, and unless Lessee shall
have completely cured or removed said default within ten (10) days after the
sending of such notice by Lessor, Lessor may thereupon re-enter the demised
premises, by summary proceedings or by force or otherwise without being liable
for prosecution therefor, take possession of said premises and remove all
persons and property therefrom, and may elect to either cancel this Lease or
relet the premises as agent for the Lessee or otherwise, and receive the rent
therefor, applying the same first to the payment of such expenses as the Lessor
may be put to in entering and letting; and then to the payment of the rent
payable under this Lease and the fulfillment of the Lessee's covenants
hereunder; the balance (if any) to be paid to the Lessee who shall remain liable
for any deficiency. On any sums due under the terms of this Lease placed in the
hands of an attorney after default or collected through any judicial probate or
bankruptcy proceedings, Lessee agrees to pay a reasonable attorney's fee,
together with all court costs. Past due installments of rent shall bear interest
at the rate of eight (8) per cent per annum until paid. In the event the Lessee
shall continue to hold the demised premises, after demand therefor by Lessor, at
the termination of this Lease, or for default or breach of this Lease, that the
Lessor shall be entitled to institute and maintain a Forcible Entry and Detainer
suit in the Justice Court and obtain a writ of possession for the demised
premises.
BANKRUPTCY: In the event that the Lessee shall become bankrupt, voluntary or
involuntary, or shall make a voluntary assignment for the benefit of creditors,
or in the event that a receiver for the Lessee shall be appointed, then, at the
option of the Lessor and upon ten (10) days notice to the Lessee or Lessee's
representative, of the exercise of such notice, this Lease shall cease and come
to an end.
SEVERABILITY: In the event of litigation on this instrument and should one or
more clauses be found invalid all other provisions of the lease are to stand as
written.
TAXES: Lessor agrees to pay before they become delinquent all real property
taxes and assessments lawfully levied or assessed against the demised premises
or any part thereof, provided, however, Lessor may, at his sole expense dispute
and contest same, and in such case, such disputed item need not be paid until
finally adjudged to be valid. If after one year from the commencement date of
this Lease, the real estate taxes on the demised premises are increased by any
taxing authority at any time during the remaining portion of the primary term or
any renewal or extension thereof, Lessee agrees to pay to Lessor upon demand,
and as additional rental, an amount monthly equal to 1/12 of said increase.
Lessee shall pay all taxes levied against personal property, trade fixtures and
inventory placed by Lessee in, on or about the demised premises.
BINDING UPON PARTIES: The Covenants and agreements herein contained shall inure
to the benefit of and be binding upon the parties hereto, their respective
heirs, legal representatives, successors and assigns.
This Lease contains the entire agreement between the parties hereto,
and no representations, warranties, express or implied, inducements, promises or
agreements, oral or otherwise, between the parties not embodied herein shall be
of any force or effect.
EXECUTED in ----- original copies this the -- day of -------, 199-.
/s/ Stanley Jobe /s/
- -------------------------- -------------------------------
STANLEY JOBE Lessee, Quality Air Inc.
- -------------------------- -------------------------------
Broker(s)
- 3 -
EXHIBIT 4
EMPLOYMENT AGREEMENT, dated as of February 24, 1997, between
REFRIGERATION TECHNOLOGY INC., a Delaware corporation (the "Company"), and RICK
E. BACCHUS, residing at ---------------------------------------, New Mexico
- ----- ("Employee").
The Company desires to engage Employee to perform services for
the Company and its affiliates and (subject to Section 8) any successor or
assign of the Company, and Employee desires to perform such services, on the
terms and conditions hereinafter set forth.
1. TERM
----
The Company agrees to employ Employee, and Employee agrees to
serve, on the terms and conditions of this Agreement, including the provisions
of Section 7 providing for early termination, for a five year period commencing
with the date of the Closing, as defined in that Acquisition Agreement of even
date among the Company, Quality Air, Inc. ("QAI"), Employee and others (which
provides for the acquisition by the Company of the business and substantially
all of the assets of QAI). If the Closing does not take place, this Agreement
and all obligations of each party hereunder shall immediately terminate as if
never entered into. The period during which Employee is employed under this
Agreement is referred to as the "Employment Period".
2. DUTIES
------
a. During the Employment Period, Employee shall
devote his attention and energies to the business of the Company and its parent
and subsidiary companies (its "affiliates") on a full-time basis, and shall not
be engaged in any other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage; but this shall not be
construed as preventing Employee from investing his assets in such manner as
will not require him to expend any material time or effort in regard thereto or
to perform any services in connection therewith.
b. At all times during the Employment Period,
and thereafter if Employee continues in the employ of the Company or any of its
affiliates, Employee shall serve the Company and its affiliates faithfully,
diligently and in good faith.
c. During the Employment Period, Employee shall
perform such services as may be required of him by the Company and its
affiliates, under and subject to the instructions, directions and control of the
Board of Directors of the Company and its chief executive officer (the "CEO",
which term shall mean the Company's Chairman if Employee is the chief executive
officer), to whom he shall report. Employee shall serve as President of the
Company. In addition, Employee shall serve as President of the Company's parent,
RTI Inc. ("RTI"), and in such capacity shall be under and subject to the
instructions, directions and control of the Board of Directors and of the chief
executive officer of RTI, unless Employee is chief executive officer of RTI, in
which event he also shall report to the Chairman of RTI. Employee's primary
responsibility shall be to perform those duties reasonably required of, and
related to, his position and such other duties as may be assigned to Employee
from time to time which are not inconsistent with those customarily assigned to
responsible executive employees.
d. At all times during the Employment Period,
and thereafter if Employee continues in the employ of the Company or any of its
affiliates, Employee shall adhere to all rules and regulations that have been or
that hereafter may be established by the Company and its affiliates for the
conduct of their employees.
e. Employee recognizes that he shall be
available to travel as the needs of the business require.
<PAGE>
f. Employee represents that he is under no
contractual or other restriction or obligation which is inconsistent or in
conflict with his obligations under this Agreement or the rights of the Company
under this Agreement. Employee further represents that he is in good health,
with no chronic or recurring illness, and is insurable at normal rates. If
requested by the Company, Employee shall cooperate in applying for and
obtaining, at the Company's and RTI's expense, key-man insurance for the benefit
of the Company and RTI.
3. COMPENSATION
------------
As and for full and complete compensation to Employee under
this Agreement, the Company agrees to pay to him, and he agrees to accept, the
following:
a. The Company shall pay Employee during the
Employment Period an annual salary of no less than $80,000 (the "Base Salary")
payable in equal bi-weekly installments, or as otherwise may be the practice of
the Company in making salary payments.
b. The Company, in its sole and absolute
discretion, may consider the granting of a bonus to Employee in such form and
amount, if any, as the Company may determine.
c. All compensation paid to Employee shall be
subject to withholding and deductions to the extent required by applicable law.
d. Employee shall be eligible to participate
in, and to be covered by, each life insurance, accident insurance, health
insurance and hospitalization, or other plan or benefit, if any, effective
generally (and not only with respect to a specific individual or individuals)
with respect to employees of the Company, if he shall be eligible under the
terms of such plan, without restriction or limitation by reason of this
Agreement. Nothing contained herein, however, shall be construed to require the
Company to establish any plans not in existence on the date hereof, to continue
any plans in existence on the date hereof, or to prevent the Company from
modifying and/or terminating any of the plans in existence on the date hereof,
and no such act or omission shall be deemed to affect this Agreement or any of
the provisions contained herein.
e. During the Employment Term, Employee shall
be entitled to a vacation of three weeks, and also shall be entitled to all paid
holidays given by the Company to its employees generally. Vacation days not
taken shall not accumulate and shall not be available to Employee in subsequent
years of this Agreement. Vacations shall be coordinated with other executives of
the Company, the CEO and the Chairman or chief executive officer of RTI and
shall be scheduled by Employee with due regard to his activities with, and his
responsibilities for, the Company and its affiliates.
f. Employee shall be entitled to reimbursement
for all reasonable out-of- pocket expenses incurred in performing his services
hereunder, within the limits of authority which may be established by the
Company from time to time, provided that Employee properly accounts for such
expenses in accordance with Company policy.
4. NON-COMPETITION
---------------
In view of the unique and valuable services it is expected
Employee will render to the Company, Employee's knowledge of the customers,
trade secrets and other proprietary information relating to the business of the
Company and its customers and suppliers and similar knowledge regarding the
Company and its affiliates that it is expected Employee will obtain, and in
consideration of the acquisition by the Company of the business and
substantially all of the assets of QAI and the compensation to be received
hereunder, Employee agrees that, for the greater of (a) five years commencing
with the Closing, or (b) the period during which Employee continues to be
employed by the Company or any of its affiliates plus six months (the
"Restriction Period"), Employee will not engage in, or otherwise directly or
indirectly be employed by, or act as a consultant to, or be an owner of, any
other business or organization which may then be competing with the Company or
its affiliates; provided, however, that if Employee's employment hereunder is
terminated by the Company without Cause, such
2
<PAGE>
period of non-competition shall be limited to six months after such termination.
For purposes of this Agreement, mere ownership of not more than 1% of the
outstanding common stock of a corporation registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 shall not be
deemed to be a violation of this Section.
5. PATENTS, ETC.
------------
Any interest in patents, patent applications, inventions,
technological innovations, copyrights, copyrightable works, developments,
discoveries, designs, and processes (collectively, the "Inventions") which
Employee now or hereafter during the Restriction Period may own, conceive of or
develop, and which either relate to the fields in which the Company or any of
its affiliates may then be engaged or contemplates being engaged, or are
conceived of or developed utilizing the time, assets, facilities or information
of the Company or any of its affiliates, shall belong to the Company. As soon as
Employee owns, conceives of, or develops any Invention, he agrees immediately to
communicate such fact in writing to the CEO and the Chairman of RTI and, without
further compensation, but at the Company's expense, forthwith shall execute all
such assignments and other documents (including applications for patents,
copyrights, trademarks, and assignments thereof) and take all such other action
as the Company may reasonably request in order (a) to vest in the Company, or as
the Company may direct, all of Employee's right, title and interest in and to
the Inventions, free and clear of liens, mortgages, security interests, pledges,
charges and encumbrances, and (b) if patentable or copyrightable, to obtain
patents or copyrights (including extensions and renewals) therefor in any and
all countries and in such name as the Company may direct.
6. CONFIDENTIAL INFORMATION
------------------------
All confidential information which Employee may possess or may
obtain during the Restriction Period relating to the business of the Company or
any of its affiliates or of any customer or supplier of any of them shall not be
published, disclosed, or made accessible by him to any other person or entity
either during or after the termination of his employment or used by him, except
during the Employment Period in the business and for the benefit of the Company,
without prior written permission of the Company. Employee shall return all
tangible evidence of such confidential information to the Company prior to or at
the termination of his employment. For purposes of this Agreement, confidential
information does not include (a) information which at the time of disclosure to
Employee is generally available to the public, (b) information which, subsequent
to disclosure to Employee, becomes generally available to the public without
fault on Employee's part, (c) information which is known in general to
Employee's profession or to the industry in which the Company is engaged, or (d)
knowledge of skills which are known in general to Employee's profession.
7. TERMINATION.
a. DEATH. In the event that Employee shall die
during the Employment Period, then, notwithstanding any other provisions hereof,
Employee's employment hereunder shall terminate forthwith. In addition to any
unpaid compensation then accrued, Employee's estate shall be entitled to receive
the proceeds of any life insurance on Employee's life if and to the extent then
maintained by the Company for Employee's sole benefit.
b. DISABILITY. If Employee shall become
incapacitated during the Employment Period to such an extent that he shall be
unable to perform his duties hereunder, and such incapacity shall continue for
at least four consecutive weeks or for at least 45 days in any twelve-month
period, the Company may, at or at any time thereafter during the continuance of
such incapacity, give
3
<PAGE>
notice to Employee of the termination of his employment hereunder on a date
stated in such notice, and, in such event, Employee's employment hereunder shall
terminate on such date. Such termination shall not affect any disability
payments otherwise due hereunder to the Employee.
c. FOR CAUSE. If, during the Employment Period,
the employment of Employee by the Company should terminate by reason of
Employee's voluntary action, or by the Company for "Cause", then the Company's
obligations for payment or delivery of salary, bonus, if any, and other
entitlements under this Agreement with respect to any future period shall
thereupon terminate. Written notice of termination for Cause shall be given by
the Company to Employee and shall be effective upon receipt. For purposes of
this Agreement, Cause consists of (1) Employee's (A) refusal to carry out
specific lawful directions of the Company's Board of Directors or of the CEO, or
the Board of Directors, Chairman or chief executive officer of RTI, which
directions shall not be inconsistent with the provisions of this Agreement, or
(B) refusal or failure to properly, adequately and fully perform part of his
duties or achieve the goals assigned to him (including among other things
achieving minimum levels of profitability as determined by the Company's Board
of Directors and/or RTI's Board of Directors) which are not in violation of this
Agreement, which refusal or failure is not remedied promptly, but in no event
later than five days after notice thereof to Employee, (2) Employee's commission
of an act of fraud, misappropriation or dishonesty (including falsification of
information given to the Company in connection with Employee's hire) to the
Company or any of its affiliates or falsification of a written document
delivered to the Company or any of its affiliates or on the Company's or such
affiliate's behalf, and (3) Employee's commission of a crime with respect to
which, in the reasonable judgment of the Company, Employee is likely to be
incarcerated or as result of which the Company, in its reasonable judgement,
determines it would be inappropriate for Employee to continue as an employee of
the Company.
d. WITHOUT CAUSE. If, during the Employment
Period, the employment of Employee by the Company is terminated by the Company
without Cause, then the Company shall continue to pay Employee his salary for a
period of two months thereafter, and all other obligations of the Company for
payment or delivery of salary, bonus, if any, and other entitlements under this
Agreement with respect to any future period shall thereupon terminate.
8. MISCELLANEOUS PROVISIONS.
------------------------
a. ENTIRE AGREEMENT. This Agreement sets forth
the entire agreement and understanding between the parties with respect to the
employment of Employee by the Company and supersedes all prior agreements,
arrangements and understandings between the parties with respect thereto.
b. MODIFICATION AND WAIVER. This Agreement may
be amended, modified, superseded, canceled, renewed or extended, and the terms
or covenants hereof may be waived, only by an instrument executed by the party
to be charged or, in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require
4
<PAGE>
performance of any provision of this Agreement in no manner shall affect the
right at a later time to enforce the same. No waiver by either party of a breach
of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such breach, or a waiver of any other term
or covenant contained in this Agreement.
c. NOTICES. All notices, demands, consents,
waivers and other communications ("Communications") given under this Agreement
may be in writing and shall be given (and shall be deemed to have been duly
given and received) upon the earlier of actual receipt, one business day after
being sent by overnight courier service or telecopier or three business days
after being sent by certified mail to the Company (to the attention of the CEO
and with a second copy to the Chairman of RTI) and to Employee, each at their
respective home addresses or to such other address as either party may hereafter
specify by notice to the other party. Simultaneously with sending a
Communication to the Company, a copy of the Communication shall be sent to RTI's
counsel (currently Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth
Avenue, New York, New York 10017, Attention: Arthur Katz, Esq.). Irrespective of
the foregoing, notice of change of address shall be effective only upon receipt.
d. GOVERNING LAW. This Agreement shall be
construed in accordance with and governed by the laws of the State of Delaware,
without regard to its principles of conflicts of laws.
e. SURVIVAL. The covenants, agreements,
representations, and warranties contained in or made pursuant to this Agreement
shall survive the execution of this Agreement and the conclusion of the
Employment Period, irrespective of any investigation made by or on behalf of any
party.
f. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective legal
representatives, heirs, successors and permitted assigns.
g. INVALIDITY. The invalidity of any part of
this Agreement is not intended to render invalid the remainder of this
Agreement. If any provision of this Agreement is so broad as to be
unenforceable, such provision is intended to be interpreted to be only so broad
as is enforceable.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
REFRIGERATION TECHNOLOGY INC.
By: /s/ Theo W. Muller /s/ Rick E. Bacchus
--------------------------------- -------------------------------
Theo W. Muller, Sole Director Rick E. Bacchus
5
EXHIBIT 5
EMPLOYMENT AGREEMENT, dated as of February 24, 1997, between
REFRIGERATION TECHNOLOGY INC., a Delaware corporation (the "Company"), and
ROCKNEY D. BACCHUS, residing at ---------------------------------------, New
Mexico ----- ("Employee").
The Company desires to engage Employee to perform services for
the Company and its affiliates and (subject to Section 8) any successor or
assign of the Company, and Employee desires to perform such services, on the
terms and conditions hereinafter set forth.
1. TERM
----
The Company agrees to employ Employee, and Employee agrees to
serve, on the terms and conditions of this Agreement, including the provisions
of Section 7 providing for early termination, for a five year period commencing
with the date of the Closing, as defined in that Acquisition Agreement of even
date among the Company, Quality Air, Inc. ("QAI"), Employee and others (which
provides for the acquisition by the Company of the business and substantially
all of the assets of QAI). If the Closing does not take place, this Agreement
and all obligations of each party hereunder shall immediately terminate as if
never entered into. The period during which Employee is employed under this
Agreement is referred to as the "Employment Period".
2. DUTIES
------
a. During the Employment Period, Employee shall
devote his attention and energies to the business of the Company and its parent
and subsidiary companies (its "affiliates") on a full-time basis, and shall not
be engaged in any other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage; but this shall not be
construed as preventing Employee from investing his assets in such manner as
will not require him to expend any material time or effort in regard thereto or
to perform any services in connection therewith.
b. At all times during the Employment Period,
and thereafter if Employee continues in the employ of the Company or any of its
affiliates, Employee shall serve the Company and its affiliates faithfully,
diligently and in good faith.
c. During the Employment Period, Employee shall
perform such services as may be required of him by the Company and its
affiliates, under and subject to the instructions, directions and control of the
Board of Directors of the Company and its President (the "President"), to whom
he shall report. Employee shall serve as Vice President - Development of the
Company. Employee's primary responsibility shall be to perform those duties
reasonably required of, and related to, his position and such other duties as
may be assigned to Employee from time to time which are not inconsistent with
those customarily assigned to responsible executive employees.
d. At all times during the Employment Period,
and thereafter if Employee continues in the employ of the Company or any of its
affiliates, Employee shall adhere to all rules and regulations that have been or
that hereafter may be established by the Company and its affiliates for the
conduct of their employees.
e. Employee recognizes that he shall be
available to travel as the needs of the business require.
f. Employee represents that he is under no
contractual or other restriction or obligation which is inconsistent or in
conflict with his obligations under this Agreement or the rights of the Company
under this Agreement. Employee further represents that he is in good health,
with no chronic or recurring illness, and is insurable at normal rates. If
requested by the Company, Employee shall cooperate in applying for and
obtaining, at the Company's expense, key-man insurance for the benefit of the
Company.
3. COMPENSATION
------------
As and for full and complete compensation to Employee under
this Agreement, the Company agrees to pay to him, and he agrees to accept, the
following:
a. The Company shall pay Employee during the
Employment Period an annual salary of no less than $80,000 (the "Base Salary")
payable in equal bi-weekly installments, or as otherwise may be the practice of
the Company in making salary payments.
b. The Company, in its sole and absolute
discretion, may consider the granting of a bonus to Employee in such form and
amount, if any, as the Company may determine.
c. All compensation paid to Employee shall be
subject to withholding and deductions to the extent required by applicable law.
d. Employee shall be eligible to participate
in, and to be covered by, each life insurance, accident insurance, health
insurance and hospitalization, or other plan or benefit, if any, effective
generally (and not only with respect to a specific individual or individuals)
with respect to employees of the Company, if he shall be eligible under the
terms of such plan, without restriction or limitation by reason of this
Agreement. Nothing contained herein, however, shall be construed to require the
Company to establish any plans not in existence on the date hereof, to continue
any plans in existence on the date hereof, or to prevent the Company from
modifying and/or terminating any of the plans in existence on the date hereof,
and no such act or omission shall be deemed to affect this Agreement or any of
the provisions contained herein.
e. During the Employment Term, Employee shall
be entitled to a vacation of three weeks, and also shall be entitled to all paid
holidays given by the Company to its employees generally. Vacation days not
taken shall not accumulate and shall not be available to Employee in subsequent
years of this Agreement. Vacations shall be coordinated with other Company
executives and the President and shall be scheduled by Employee with due regard
to his activities with, and his responsibilities for, the Company and its
affiliates.
f. Employee shall be entitled to reimbursement
for all reasonable out-of-pocket expenses incurred in performing his services
hereunder, within the limits of authority which may be established by the
Company from time to time, provided that Employee properly accounts for such
expenses in accordance with Company policy.
4. NON-COMPETITION
---------------
In view of the unique and valuable services it is expected
Employee will render to the Company, Employee's knowledge of the customers,
trade secrets and other proprietary information relating to the business of the
Company and its customers and suppliers and similar knowledge regarding the
Company and its affiliates that it is expected Employee will obtain, and in
consideration of the acquisition by the Company of the business and
substantially all of the assets of QAI and the compensation to be received
hereunder, Employee agrees that, for the greater of (a) five years commencing
with the Closing, or (b) the period during which Employee continues to be
employed by the Company or any of its affiliates plus six months (the
"Restriction Period"), Employee will not engage in, or otherwise directly or
indirectly be employed by, or act as a consultant to, or be an owner of, any
other business or organization which may then be competing with the Company or
its affiliates; provided, however, that if Employee's employment hereunder is
terminated by the Company without Cause, such period of non-competition shall be
limited to six months after such termination. For purposes of this Agreement,
mere ownership of not more than 1% of the outstanding common stock of a
corporation registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 shall not be deemed to be a violation of this
Section.
2
<PAGE>
5. PATENTS, ETC.
------------
Any interest in patents, patent applications, inventions,
technological innovations, copyrights, copyrightable works, developments,
discoveries, designs, and processes (collectively, the "Inventions") which
Employee now or hereafter during the Restriction Period may own, conceive of or
develop, and which either relate to the fields in which the Company or any of
its affiliates may then be engaged or contemplates being engaged, or are
conceived of or developed utilizing the time, assets, facilities or information
of the Company or any of its affiliates, shall belong to the Company. As soon as
Employee owns, conceives of, or develops any Invention, he agrees immediately to
communicate such fact in writing to the President and, without further
compensation, but at the Company's expense, forthwith shall execute all such
assignments and other documents (including applications for patents, copyrights,
trademarks, and assignments thereof) and take all such other action as the
Company may reasonably request in order (a) to vest in the Company, or as the
Company may direct, all of Employee's right, title and interest in and to the
Inventions, free and clear of liens, mortgages, security interests, pledges,
charges and encumbrances, and (b) if patentable or copyrightable, to obtain
patents or copyrights (including extensions and renewals) therefor in any and
all countries and in such name as the Company may direct.
6. CONFIDENTIAL INFORMATION
------------------------
All confidential information which Employee may possess or may
obtain during the Restriction Period relating to the business of the Company or
any of its affiliates or of any customer or supplier of any of them shall not be
published, disclosed, or made accessible by him to any other person or entity
either during or after the termination of his employment or used by him, except
during the Employment Period in the business and for the benefit of the Company,
without prior written permission of the Company. Employee shall return all
tangible evidence of such confidential information to the Company prior to or at
the termination of his employment. For purposes of this Agreement, confidential
information does not include (a) information which at the time of disclosure to
Employee is generally available to the public, (b) information which, subsequent
to disclosure to Employee, becomes generally available to the public without
fault on Employee's part, (c) information which is known in general to
Employee's profession or to the industry in which the Company is engaged, or (d)
knowledge of skills which are known in general to Employee's profession.
7. TERMINATION.
-----------
a. DEATH. In the event that Employee shall die
during the Employment Period, then, notwithstanding any other provisions hereof,
Employee's employment hereunder shall terminate forthwith. In addition to any
unpaid compensation then accrued, Employee's estate shall be entitled to receive
the proceeds of any life insurance on Employee's life if and to the extent then
maintained by the Company for Employee's sole benefit.
b. DISABILITY. If Employee shall become
incapacitated during the Employment Period to such an extent that he shall be
unable to perform his duties hereunder, and such incapacity shall continue for
at least four consecutive weeks or for at least 45 days in any twelve-month
period, the Company may, at or at any time thereafter during the continuance of
such incapacity, give notice to Employee of the termination of his employment
hereunder on a date stated in such notice, and, in such event, Employee's
employment hereunder shall terminate on such date. Such termination shall not
affect any disability payments otherwise due hereunder to the Employee.
c. FOR CAUSE. If, during the Employment Period,
the employment of Employee by the Company should terminate by reason of
Employee's voluntary action, or by the Company for "Cause", then the Company's
obligations for payment or delivery of salary, bonus, if any,
3
<PAGE>
and other entitlements under this Agreement with respect to any future period
shall thereupon terminate. Written notice of termination for Cause shall be
given by the Company to Employee and shall be effective upon receipt. For
purposes of this Agreement, Cause consists of (1) Employee's (A) refusal to
carry out specific lawful directions of the Board of Directors or of the
President, which directions shall not be inconsistent with the provisions of
this Agreement, or (B) refusal or failure to properly, adequately and fully
perform part of his duties assigned to him which are not in violation of this
Agreement, which refusal or failure is not remedied promptly, but in no event
later than five days after notice thereof to Employee, (2) Employee's commission
of an act of fraud, misappropriation or dishonesty (including falsification of
information given to the Company in connection with Employee's hire) to the
Company or any of its affiliates or falsification of a written document
delivered to the Company or any of its affiliates or on the Company's or such
affiliate's behalf, and (3) Employee's commission of a crime with respect to
which, in the reasonable judgment of the Company, Employee is likely to be
incarcerated or as result of which the Company, in its reasonable judgement,
determines it would be inappropriate for Employee to continue as an employee of
the Company.
d. WITHOUT CAUSE. If, during the Employment
Period, the employment of Employee by the Company is terminated by the Company
without Cause, then the Company shall continue to pay Employee his salary for a
period of two months thereafter, and all other obligations of the Company for
payment or delivery of salary, bonus, if any, and other entitlements under this
Agreement with respect to any future period shall thereupon terminate.
8. MISCELLANEOUS PROVISIONS.
------------------------
a. ENTIRE AGREEMENT. This Agreement sets forth
the entire agreement and understanding between the parties with respect to the
employment of Employee by the Company and supersedes all prior agreements,
arrangements and understandings between the parties with respect thereto.
b. MODIFICATION AND WAIVER. This Agreement may
be amended, modified, superseded, canceled, renewed or extended, and the terms
or covenants hereof may be waived, only by an instrument executed by the party
to be charged or, in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require performance of any
provision of this Agreement in no manner shall affect the right at a later time
to enforce the same. No waiver by either party of a breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach, or a waiver of any other term or covenant
contained in this Agreement.
4
<PAGE>
c. NOTICES. All notices, demands, consents,
waivers and other communications ("Communications") given under this Agreement
may be in writing and shall be given (and shall be deemed to have been duly
given and received) upon the earlier of actual receipt, one business day after
being sent by overnight courier service or telecopier or three business days
after being sent by certified mail to the Company (to the attention of the
President and with second copies to the Chairman of the Company and of the
Company's parent, if any) and to Employee, each at their respective home
addresses or to such other address as either party may hereafter specify by
notice to the other party. Simultaneously with sending a Communication to the
Company, a copy of the Communication shall be sent to the Company's counsel
(currently Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth Avenue, New
York, New York 10017, Attention: Arthur Katz, Esq.). Irrespective of the
foregoing, notice of change of address shall be effective only upon receipt.
d. GOVERNING LAW. This Agreement shall be
construed in accordance with and governed by the laws of the State of Delaware,
without regard to its principles of conflicts of laws.
e. SURVIVAL. The covenants, agreements,
representations, and warranties contained in or made pursuant to this Agreement
shall survive the execution of this Agreement and the conclusion of the
Employment Period, irrespective of any investigation made by or on behalf of any
party.
f. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective legal
representatives, heirs, successors and permitted assigns.
g. INVALIDITY. The invalidity of any part of
this Agreement is not intended to render invalid the remainder of this
Agreement. If any provision of this Agreement is so broad as to be
unenforceable, such provision is intended to be interpreted to be only so broad
as is enforceable.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
REFRIGERATION TECHNOLOGY INC.
By: /s/ Theo W. Muller /s/ Rockney D. Bacchus
---------------------------------- ---------------------------
Theo W. Muller, Sole Director Rockney D. Bacchus
5
EXHIBIT 6
EMPLOYMENT AGREEMENT, dated as of February 24, 1997, between
REFRIGERATION TECHNOLOGY INC., a Delaware corporation (the "Company"), and RON
BACCHUS, residing at ---------------------------------------, New Mexico -----
("Employee").
The Company desires to engage Employee to perform services for
the Company and its affiliates and (subject to Section 8) any successor or
assign of the Company, and Employee desires to perform such services, on the
terms and conditions hereinafter set forth.
1. TERM
----
The Company agrees to employ Employee, and Employee agrees to
serve, on the terms and conditions of this Agreement, including the provisions
of Section 7 providing for early termination, for a five year period commencing
with the date of the Closing, as defined in that Acquisition Agreement of even
date among the Company, Quality Air, Inc. ("QAI"), Employee and others (which
provides for the acquisition by the Company of the business and substantially
all of the assets of QAI). If the Closing does not take place, this Agreement
and all obligations of each party hereunder shall immediately terminate as if
never entered into. The period during which Employee is employed under this
Agreement is referred to as the "Employment Period".
2. DUTIES
------
a. During the Employment Period, Employee shall
devote his attention and energies to the business of the Company and its parent
and subsidiary companies (its "affiliates") on a full-time basis, and shall not
be engaged in any other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage; but this shall not be
construed as preventing Employee from investing his assets in such manner as
will not require him to expend any material time or effort in regard thereto or
to perform any services in connection therewith.
b. At all times during the Employment Period,
and thereafter if Employee continues in the employ of the Company or any of its
affiliates, Employee shall serve the Company and its affiliates faithfully,
diligently and in good faith.
c. During the Employment Period, Employee shall
perform such services as may be required of him by the Company and its
affiliates, under and subject to the instructions, directions and control of the
Board of Directors of the Company and its President (the "President"), to whom
he shall report. Employee shall serve as Vice President - Manufacturing of the
Company. Employee's primary responsibility shall be to perform those duties
reasonably required of, and related to, his position and such other duties as
may be assigned to Employee from time to time which are not inconsistent with
those customarily assigned to responsible executive employees.
d. At all times during the Employment Period,
and thereafter if Employee continues in the employ of the Company or any of its
affiliates, Employee shall adhere to all rules and regulations that have been or
that hereafter may be established by the Company and its affiliates for the
conduct of their employees.
e. Employee recognizes that he shall be
available to travel as the needs of the business require.
f. Employee represents that he is under no
contractual or other restriction or obligation which is inconsistent or in
conflict with his obligations under this Agreement or the rights of the Company
under this Agreement. Employee further represents that he is in good health,
with no chronic or recurring illness, and is insurable at normal rates. If
requested by the Company, Employee shall cooperate in applying for and
obtaining, at the Company's expense, key-man insurance for the benefit of the
Company.
<PAGE>
3. COMPENSATION
------------
As and for full and complete compensation to Employee under
this Agreement, the Company agrees to pay to him, and he agrees to accept, the
following:
a. The Company shall pay Employee during the
Employment Period an annual salary of no less than $80,000 (the "Base Salary")
payable in equal bi-weekly installments, or as otherwise may be the practice of
the Company in making salary payments.
b. The Company, in its sole and absolute
discretion, may consider the granting of a bonus to Employee in such form and
amount, if any, as the Company may determine.
c. All compensation paid to Employee shall be
subject to withholding and deductions to the extent required by applicable law.
d. Employee shall be eligible to participate
in, and to be covered by, each life insurance, accident insurance, health
insurance and hospitalization, or other plan or benefit, if any, effective
generally (and not only with respect to a specific individual or individuals)
with respect to employees of the Company, if he shall be eligible under the
terms of such plan, without restriction or limitation by reason of this
Agreement. Nothing contained herein, however, shall be construed to require the
Company to establish any plans not in existence on the date hereof, to continue
any plans in existence on the date hereof, or to prevent the Company from
modifying and/or terminating any of the plans in existence on the date hereof,
and no such act or omission shall be deemed to affect this Agreement or any of
the provisions contained herein.
e. During the Employment Term, Employee shall
be entitled to a vacation of three weeks, and also shall be entitled to all paid
holidays given by the Company to its employees generally. Vacation days not
taken shall not accumulate and shall not be available to Employee in subsequent
years of this Agreement. Vacations shall be coordinated with other Company
executives and the President and shall be scheduled by Employee with due regard
to his activities with, and his responsibilities for, the Company and its
affiliates.
f. Employee shall be entitled to reimbursement
for all reasonable out-of- pocket expenses incurred in performing his services
hereunder, within the limits of authority which may be established by the
Company from time to time, provided that Employee properly accounts for such
expenses in accordance with Company policy.
4. NON-COMPETITION
---------------
In view of the unique and valuable services it is expected
Employee will render to the Company, Employee's knowledge of the customers,
trade secrets and other proprietary information relating to the business of the
Company and its customers and suppliers and similar knowledge regarding the
Company and its affiliates that it is expected Employee will obtain, and in
consideration of the acquisition by the Company of the business and
substantially all of the assets of QAI and the compensation to be received
hereunder, Employee agrees that, for the greater of (a) five years commencing
with the Closing, or (b) the period during which Employee continues to be
employed by the Company or any of its affiliates plus six months (the
"Restriction Period"), Employee will not engage in, or otherwise directly or
indirectly be employed by, or act as a consultant to, or be an owner of, any
other business or organization which may then be competing with the Company or
its affiliates; provided, however, that if Employee's employment hereunder is
terminated by the Company without Cause, such period of non-competition shall be
limited to six months after such termination. For purposes of this Agreement,
mere ownership of not more than 1% of the outstanding common stock of a
corporation registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 shall not be deemed to be a violation of this
Section.
2
<PAGE>
5. PATENTS, ETC
------------
Any interest in patents, patent applications, inventions,
technological innovations, copyrights, copyrightable works, developments,
discoveries, designs, and processes (collectively, the "Inventions") which
Employee now or hereafter during the Restriction Period may own, conceive of or
develop, and which either relate to the fields in which the Company or any of
its affiliates may then be engaged or contemplates being engaged, or are
conceived of or developed utilizing the time, assets, facilities or information
of the Company or any of its affiliates, shall belong to the Company. As soon as
Employee owns, conceives of, or develops any Invention, he agrees immediately to
communicate such fact in writing to the President and, without further
compensation, but at the Company's expense, forthwith shall execute all such
assignments and other documents (including applications for patents, copyrights,
trademarks, and assignments thereof) and take all such other action as the
Company may reasonably request in order (a) to vest in the Company, or as the
Company may direct, all of Employee's right, title and interest in and to the
Inventions, free and clear of liens, mortgages, security interests, pledges,
charges and encumbrances, and (b) if patentable or copyrightable, to obtain
patents or copyrights (including extensions and renewals) therefor in any and
all countries and in such name as the Company may direct.
6. CONFIDENTIAL INFORMATION
------------------------
All confidential information which Employee may possess or may
obtain during the Restriction Period relating to the business of the Company or
any of its affiliates or of any customer or supplier of any of them shall not be
published, disclosed, or made accessible by him to any other person or entity
either during or after the termination of his employment or used by him, except
during the Employment Period in the business and for the benefit of the Company,
without prior written permission of the Company. Employee shall return all
tangible evidence of such confidential information to the Company prior to or at
the termination of his employment. For purposes of this Agreement, confidential
information does not include (a) information which at the time of disclosure to
Employee is generally available to the public, (b) information which, subsequent
to disclosure to Employee, becomes generally available to the public without
fault on Employee's part, (c) information which is known in general to
Employee's profession or to the industry in which the Company is engaged, or (d)
knowledge of skills which are known in general to Employee's profession.
7. TERMINATION.
-----------
a. DEATH. In the event that Employee shall die
during the Employment Period, then, notwithstanding any other provisions hereof,
Employee's employment hereunder shall terminate forthwith. In addition to any
unpaid compensation then accrued, Employee's estate shall be entitled to receive
the proceeds of any life insurance on Employee's life if and to the extent then
maintained by the Company for Employee's sole benefit.
b. DISABILITY. If Employee shall become
incapacitated during the Employment Period to such an extent that he shall be
unable to perform his duties hereunder, and such incapacity shall continue for
at least four consecutive weeks or for at least 45 days in any twelve-month
period, the Company may, at or at any time thereafter during the continuance of
such incapacity, give notice to Employee of the termination of his employment
hereunder on a date stated in such notice, and, in such event, Employee's
employment hereunder shall terminate on such date. Such termination shall not
affect any disability payments otherwise due hereunder to the Employee.
c. FOR CAUSE. If, during the Employment Period,
the employment of Employee by the Company should terminate by reason of
Employee's voluntary action, or by the Company for "Cause", then the Company's
obligations for payment or delivery of salary, bonus, if any,
3
<PAGE>
and other entitlements under this Agreement with respect to any future period
shall thereupon terminate. Written notice of termination for Cause shall be
given by the Company to Employee and shall be effective upon receipt. For
purposes of this Agreement, Cause consists of (1) Employee's (A) refusal to
carry out specific lawful directions of the Board of Directors or of the
President, which directions shall not be inconsistent with the provisions of
this Agreement, or (B) refusal or failure to properly, adequately and fully
perform part of his duties assigned to him which are not in violation of this
Agreement, which refusal or failure is not remedied promptly, but in no event
later than five days after notice thereof to Employee, (2) Employee's commission
of an act of fraud, misappropriation or dishonesty (including falsification of
information given to the Company in connection with Employee's hire) to the
Company or any of its affiliates or falsification of a written document
delivered to the Company or any of its affiliates or on the Company's or such
affiliate's behalf, and (3) Employee's commission of a crime with respect to
which, in the reasonable judgment of the Company, Employee is likely to be
incarcerated or as result of which the Company, in its reasonable judgement,
determines it would be inappropriate for Employee to continue as an employee of
the Company.
d. WITHOUT CAUSE. If, during the Employment
Period, the employment of Employee by the Company is terminated by the Company
without Cause, then the Company shall continue to pay Employee his salary for a
period of two months thereafter, and all other obligations of the Company for
payment or delivery of salary, bonus, if any, and other entitlements under this
Agreement with respect to any future period shall thereupon terminate.
8. MISCELLANEOUS PROVISIONS.
a. ENTIRE AGREEMENT. This Agreement sets forth
the entire agreement and understanding between the parties with respect to the
employment of Employee by the Company and supersedes all prior agreements,
arrangements and understandings between the parties with respect thereto.
b. MODIFICATION AND WAIVER. This Agreement may
be amended, modified, superseded, canceled, renewed or extended, and the terms
or covenants hereof may be waived, only by an instrument executed by the party
to be charged or, in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require performance of any
provision of this Agreement in no manner shall affect the right at a later time
to enforce the same. No waiver by either party of a breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach, or a waiver of any other term or covenant
contained in this Agreement.
4
<PAGE>
c. NOTICES. All notices, demands, consents,
waivers and other communications ("Communications") given under this Agreement
may be in writing and shall be given (and shall be deemed to have been duly
given and received) upon the earlier of actual receipt, one business day after
being sent by overnight courier service or telecopier or three business days
after being sent by certified mail to the Company (to the attention of the
President and with second copies to the Chairman of the Company and of the
Company's parent, if any) and to Employee, each at their respective home
addresses or to such other address as either party may hereafter specify by
notice to the other party. Simultaneously with sending a Communication to the
Company, a copy of the Communication shall be sent to the Company's counsel
(currently Warshaw Burstein Cohen Schlesinger & Kuh, LLP, 555 Fifth Avenue, New
York, New York 10017, Attention: Arthur Katz, Esq.). Irrespective of the
foregoing, notice of change of address shall be effective only upon receipt.
d. GOVERNING LAW. This Agreement shall be
construed in accordance with and governed by the laws of the State of Delaware,
without regard to its principles of conflicts of laws.
e. SURVIVAL. The covenants, agreements,
representations, and warranties contained in or made pursuant to this Agreement
shall survive the execution of this Agreement and the conclusion of the
Employment Period, irrespective of any investigation made by or on behalf of any
party.
f. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective legal
representatives, heirs, successors and permitted assigns.
g. INVALIDITY. The invalidity of any part of
this Agreement is not intended to render invalid the remainder of this
Agreement. If any provision of this Agreement is so broad as to be
unenforceable, such provision is intended to be interpreted to be only so broad
as is enforceable.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
REFRIGERATION TECHNOLOGY INC.
By: /s/ Theo W. Muller /s/ Ron Bacchus
-------------------------- -----------------------
Theo W. Muller, Sole Director Ron Bacchus
5
EXHIBIT 7
CONDITIONAL SALE AND PURCHASE AGREEMENT entered into by and between
INDUSTRIAS Q.A.I., S.A. DE C.V., herein represented by Mrs. Philis Mollan
Bromfman, in her capacity as Sole Administrator, (hereinafter referred to as
"QAI"), by Mrs. OPAL ELIZABETH SIMMONS WHEELER, on her own behalf, and Mr.
ROBERT HARVEY GIVEN TRACKMAN, on his own behalf, (hereinafter jointly referred
to as "SELLERS"), and by REFRIGERATION TECHNOLOGY, INC. herein represented by
Mr. THEO MULLER, in his capacity as SOLE DIRECTOR, (hereinafter referred to as
"REF-TECH"), pursuant to the following Recitals and Clauses:
RECITALS
I. QAI hereby declares that:
a) It is a corporation duly incorporated and existing pursuant to
the laws of the Republic of Mexico, with its domicile in
Ciudad Juarez, Chihuahua.
b) It operates as an in-bond manufacturing corporation in Ciudad
Juarez, Chihuahua, and its owns and/or operates all of the
Assets included in the list attached hereto as Exhibit "A"
(hereinafter referred to as the "Assets").
c) The Assets have been temporarily imported under the In-Bond
Manufacturing Program of Mexico (hereinafter referred to as
the "Maquiladora Program"), and are used in the manufacture of
air conditioning equipment and other related products, which
are exported from Mexico.
d) It wishes to sell and/or transfer under the terms and
conditions hereof the Assets to REF-TECH or to a Mexican
company to be incorporated by REF-TECH (hereinafter referred
to as "NEWCO").
II. SELLERS hereby declare that:
a) They are individuals of United States nationality, with their
principal place of business in El Paso, State of Texas.
b) They own all of the issued and outstanding shares of QAI,
(hereinafter referred to as the "Shares").
c) They wish to sell, under the terms and conditions hereof, the
Shares to REF-TECH.
III. REF-TECH hereby declares that:
a) It is a corporation incorporated and existing pursuant to the
laws of the State of Delaware, United States of America, with
its principal place of business in Darien, State of
Connecticut, United States of America.
<PAGE>
2
b) It wishes to either buy the Shares, or create a new Mexican
company (hereinafter referred to as "NEWCO"), to which the
Assets currently operated by QAI will be transferred, under
the terms and conditions hereof.
IV. The parties hereby declare that:
There has been no error, bad faith or duress amongst them.
IN VIEW OF THE FOREGOING, the parties agree on the following:
ARTICLES
ARTICLE 1. - SALE AND PURCHASE OF SHARES.
- ----------------------------------------
Subject to the condition of REF-TECH carrying out a due diligence
review of QAI, and being satisfied as to the operations carried out by said
company and the liabilities assumed or incurred by QAI, REF-TECH will acquire
from SELLERS the Shares, for a price equal to the book value of the Shares (net
worth of QAI once all liabilities are deducted from the value of assets divided
by the number of Shares), or the amount of $1,000.00 (ONE THOUSAND PESOS 00/100)
Mexican currency, whichever is higher.
The SELLERS hereby deliver to Mr. Terry Johnson, in his capacity as
Escrow Agent, stock certificates numbers 1 through 10, representing the Shares,
which have been endorsed by SELLERS, and which will be delivered by Mr. Johnson
to REF-TECH in the event that REF-TECH decides to acquire the Shares.
ARTICLE 2. - TRANSFER OF OPERATIONS.-
- -----------------------------------
In the event that after carrying a due diligence review, REF-TECH
decides that it does not wish to acquire the Shares, but rather, that it will
incorporate NEWCO and transfer the Assets and operations currently performed by
QAI to NEWCO, then QAI commits to undertake all steps which may be necessary in
order to transfer such operations, including but not limited to executing an
Employer Substitution Agreement with NEWCO and notifying each and everyone of
the employees of such substitution, as provided by Article 41 of the Federal
Labor Law, signing an Assignment Agreement of the facilities currently leased by
QAI, requesting the authorization to transfer the
<PAGE>
3
Maquila Program from QAI to NEWCO from the Ministry of Commerce and Industrial
Development and providing all information which may be necessary for NEWCO to be
in full compliance with Mexican Law.
In the event that REF-TECH decides to transfer the operations and
Assets to NEWCO, then NEWCO will pay to QAI a consideration equal to the book
value of the Assets owned by QAI.
ARTICLE 3. - TRANSITION PERIOD.-
- ------------------------------
From February 20, 1997 until the time that REF-TECH either buys the
Shares or transfers the operations and Assets from QAI to NEWCO, as the case may
be, REF-TECH will have the authority to manage QAI, for which purpose, SELLERS
and QAI commit to grant an irrevocable power of attorney for lawsuits and
collections, acts of management, to sign negotiable instruments and to grant
other powers of attorney, to the individual designated by REF-TECH.
ARTICLE 4. - TAXES.-
- ------------------
All taxes triggered by the transfer of Shares and/or the transfer of
operations and Assets from QAI to NEWCO, will be paid by the party which may
correspond in accordance with the applicable legal provisions.
ARTICLE 5. - TERM.-
- -----------------
REF-TECH will have a term of 60 (sixty) days counted from the date of
execution hereof, to decide whether to acquire the Shares or transfer the
operations from QAI to NEWCO. At such time, REF-TECH will notify SELLERS and QAI
of its decision.
In the event that REF-TECH decides to acquire the Shares, then the sale
must be completed (delivery of the Shares by Mr. Johnson to REF-TECH and of the
price by REF-TECH to SELLERS), within a term 3 (three) days from the date that
REF-TECH notifies the other parties of its decision.
<PAGE>
4
In the event that REF-TECH decides to incorporate NEWCO and to transfer
the operations from QAI to NEWCO, then such transfer will be completed within a
term of 120 (one hundred and twenty) days after REF-TECH notifies the other
parties of its decision.
ARTICLE 6. - NON-COMPETE.-
- ------------------------
SELLERS hereby commit not to either directly or indirectly compete or
engage in manufacturing of air conditioning equipment and related products, for
a term of 5 (five) years, counted from the date of execution hereof.
ARTICLE 7. - ENTIRE AGREEMENT; MODIFICATION.-
- -------------------------------------------
This Agreement and any documents executed in connection herewith
constitute the entire Agreement and understanding among the parties to this
Agreement and supersedes any and all prior agreements, understandings and
arrangements oral or written between the parties with respect to the subject
matter hereof except for the Acquisition Agreement of even date hereof entered
into by and between REF-TECH and Quality Air, Inc. This Agreement may be
modified or amended only by a written instrument executed by all of the parties
hereto.
ARTICLE 8. - CAPTIONS.-
- ---------------------
Articles, sections and paragraph titles or captions contained in this
Agreement are inserted only as a matter of convenience and for reference and in
no way defined, limit, extend or describe the scope of this Agreement or the
intent of any provisions hereof.
ARTICLE 9. - NOTICES.-
- --------------------
Any notices permitted or required to be given under this Agreement
shall be deemed given or made upon personal delivery to the person to whom
addressed, the day following delivery to a recognized overnight courier service
or upon acknowledgment of receipt of any notices delivered by a facsimile
machine.
Notices permitted or required to be given under this Agreement shall be
addressed as follows:
<PAGE>
5
QAI: INDUSTRIAS Q.A.I., S.A. DE C.V. c/o Quality Air, Inc.
301 Antone Street
Sunland Park, New Mexico 88063
SELLERS: Mrs. OPAL ELIZABETH SIMMONS WHEELER
6161 Doniphan #102
El Paso, Texas 79932
Mr. ROBERT HARVEY GIVEN TRACKMAN
4935 Meadow Lark
El Paso, Texas 79922
REF-TECH: REFRIGERATION TECHNOLOGY, INC.
c/o Mr. Theo W. Muller
20 Peach Hill Road
Darien, Connecticut 06820
ARTICLE 10. - ENFORCEABILITY.-
- ----------------------------
If any provision of this Agreement is determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of the other provisions of this Agreement.
ARTICLE 11. - BINDING EFFECT.-
- ----------------------------
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, administrators, legal representatives and
permitted assigns.
ARTICLE 12. - COUNTERPARTS.-
- --------------------------
This Agreement may be executed in one or more counterparts, any party
to this Agreement may execute and deliver this Agreement by executing and
delivering any of such counterparts, each of which when executed and delivered
shall be deemed to be an original and all of which taken together constitute and
the same instrument.
ARTICLE 13. - GOVERNING LAW.-
For the interpretation and enforcement of this Agreement, the parties
submit hereby to the applicable laws and competent courts in Ciudad Juarez,
Chihuahua hereby expressly waiving any other jurisdiction which may correspond
to them by reason of their present or future domiciles.
<PAGE>
6
HAVING READ THE FOREGOING, the parties signed this Agreement to their
full satisfaction in El Paso, Texas, on February 19, 1997.
"QAI" "REF-TECH"
INDUSTRIAS Q.A.I., REFRIGERATION TECHNOLOGY, INC.
S.A. DE C.V.
/s/ Philis Mollan Bromfman /s/ Theo Muller
-------------------------------- -------------------------
Mr. Philis Mollan Bromfman Mr. Theo Muller
Sole Administrator Sole Director
"SELLERS"
/s/ Opal Elizabeth Simmons Wheeler /s/ Robert Harvey Given Trackman
---------------------------------- --------------------------------
Mrs. Opal Elizabeth Simmons Wheeler Mr. Robert Harvey Given Trackman
EXHIBIT 8
CONTRATO DE ARRENDAMIENTO
CELEBRADO ENTRE
POLIFIBRAS DE CHIHUAHUA, S.A. DE C.V.
("ARRENDADOR")
Y
INDUSTRIAS Q.A.I., S.A. DE C.V.
("ARRENDATARIO")
EL
1O. DE FEBRERO DE 1996
<PAGE>
CONTRATO DE ARRENDAMIENTO
INDICE
PAGINA
DECLARACIONES 1
CLAUSULAS
Primera Arrendamiento de la PROPIEDAD ARRENDADA .............. 2
Segunda Titularidad de la propiedad arrendada
Tercera Vigencia y entrega de la propiedad arrendada .... 2
/vigencia opcional .................................. 3
Cuarta Uso de la propiedad arrendada ....................... 3
Quinta Precio del arrendamiento y deposito .................. 3
Sexta Modificaciones ....................................... 5
Septima Cesion y subarrendamiento ............................ 5
Octava Mantenimiento ........................................ 6
Novena Responsabilidad de las partes ........................ 6
Decima Seguros .............................................. 7
Decima primera Impuestos y Servicios Publicos ...................... 9
Decima segunda Entrega de la Propiedad Arrendada ................... 10
Decima tercera Retencion de la posesion ............................. 11
Decima cuarta Clausula ambiental .................................. 11
Decima quinta Derecho del Arrendador a desempenar las obligaciones
del Arrendatario. .................................... 12
Decima sexta Derecho del Arrendatario de desempenar las
obligaciones del arrendador. ........................ 12
Decima septima Acceso del Arrendador a la Propiedad Arrendada.13
Decima octava Letreros ............................................. 13
Decima novena Notificaciones ....................................... 13
Vigesima Titulos .............................................. 14
Vigesima primera Jurisdiccion ......................................... 14
Vigesima segunda Comisiones y gastos .................................. 14
A N E X O S
A1.- Plano de la "PROPIEDAD ARRENDADA" primer ano.
A2.- Plano de la "PROPIEDAD ARRENDADA" anos subsecuentes.
B.- Modificaciones
<PAGE>
CONTRATO DE ARRENDAMIENTO
CONTRATO DE ARRENDAMIENTO que celebran por una parte
POLIFIBRAS DE CHIHUAHUA, S.A. DE C.V., representada por el Ing. Edmundo Castillo
Ochoa, en su caracter de Representante Legal (a quien en lo sucesivo se le
denominara como el "ARRENDADOR"), e INDUSTRIAS Q.A.I., S.A. DE C.V. representad
por la senora Phillis Mollan Bromfman, en su caracter de Representante Legal de
dicha sociedad (a quien en lo sucesivo se le denominara el "ARRENDATARIO"), de
conformidad con las siguientes Declaraciones y Clausulas.
D E C L A R A C I O N E S
I. El ARRENDADOR declara:
a) Que es una sociedad debidamente constituida y existente de conformidad
con las leyes de la Republica Mexicana, con su principal asiento de
negocios en Ciudad Juarez, Chihuahua, Mexico.
b) Que tiene la propiedad y plena posesion y dominio, y la facultad de
arrendar un edificio industrial (el "Edificio") construido sobre un
terreno (el "Terreno") con una superficie de 24,072.07 m2 ubicado en la
Carretera Juarez-Casas Grandes Km. 1.1 en Cd. Juarez, Chihuahua,
Mexico. El Terreno fue adquirido mediante compra que se hizo al Ing.
Edmundo Castillo Ochoa y la Senora Armida Medina Nevarez de Castillo de
conformidad con la escritura publica no. 164 otorgada ante la fe del
Licenciado Humberto Martinez Vargas, Notario Publico Numero 21 para el
Distrito Bravos.
c) Desea dar en arrendamiento una superficie de 1,538.74 m2 que
corresponde a una porcion del edificio "A" el primer anos de
arrendamiento y de 2,317.00 m2 que es la totalida del edificio "A" los
anos subsecuentes (en lo sucesivo la "Propiedad Arrendada".) La
"Propiedad Arrendada" se resalta en forma achurada en los planos que se
ajuntan a este Contrato como Anexo "A1" y "A2", los cuales forman parte
integrante de este y se considera como aqui reproducido.
d) Que cuenta con los permisos y licencias necesarias para operar
debidamente la "Propiedad Arrendada" y para permitir al ARRENDATARIO el
uso de la misma para sus actividades de conformidad a los terminos y
condiciones aqui establecidos.
e) Que desea arrendar la "Propiedad Arrendada" al ARRENDATARIO de
conformidad a los terninos y condiciones que mas adelante se
establecen.
II. El ARRENDATARIO declara a traves de su representante legal:
<PAGE>
a) Que su representada es una sociedad mercantil debidamente constituida y
existente en terminos de la Ley General de Sociedades Mercantiles, con
su principal asiento de negocios en Ciudad Juarez, Chihuahua, Mexico.
b) Que su representada desea tener el uso y posesion temporal de la
"Propiedad Arrendada" mediante arrendamiento, sujeto a los t'erminos y
condiciones que aqui se estipulan.
c) Que su representada y ella, gozan de todas las facultades necesarias
para celebrar este contrato, facultades que no le han sido limitadas ni
revocadas.
III. Las partes declaran a traves de sus representantes legales que:
En la celebracion de este Contrato no ha existido error,
violencia, mala fe, o dolo entre ellas.
En atencion a las anteriores declaraciones, las partes
acuerdan las siguientes:
C L A U S U L A S
PRIMERA.- Arrendamiento de la "Propiedad Arrendada".
El ARRENDADOR por medio del presente contrato arrienda al
ARRENDATARIO y el ARRENDATARIO arrienda del ARRENDADOR la "Propiedad Arrendada"
conjuntamente con todas sus servidumbres y derechos de paso que le pertenezcan.
SEGUNDA.- Titularidad de la "Propiedad Arrendada".
El ARRENDADOR tiene el derecho de uso y posesion exclusivo de
la "Propiedad Arrendada", y garantiza que el ARRENDATARIO tendra el uso y goce
pacifico de la misma. Da la misma manera, el ARRENDADOR y el ARRENDATARIO estan
de acuerdo en que, segun lo establecido por el articulo 2308 del Codigo Civil
del Estado de Chihuahua, en caso de que la "Propiedad Arrendada" sea hipotecada
o gravada, este Contrato de Arrendamiento subsistira en los terminos del mismo y
que en caso de hipoteca de la "Propiedad Arrendada", el incumplimiento en los
pagos de la mencionada hipoteca o gravamen no perjudicara de manera alguna los
terminos y condiciones convenidas por las partes en el presente Contrato o sus
prorrogas y que cualquier cambio o modificacion realizada a dichos contratos de
hipoteca o gravamenes o la celebracion de nuevas hipotecas o gravamenes que
recaigan sobre la "Propiedad Arrendada", deberan hacer referencia en su texto y
contenido a la existencia y duracion del presente Contrato de Arrendamiento y en
su caso a las clausulas referentes a la prorroga o extension del mismo, si tal
derecho de prorroga se acuerda entre las partes al momento en el que dicha
hipoteca se celebre por el ARRENDADOR. El ARRENDADOR manifiesta que en este
momento y cuando s entregue la posesion de la "Propiedad Arrendada" al
ARRENDATARIO, no se estara en violacion de leyes federales, estatales o
municipales.
2
<PAGE>
TERCERA.- Vigencia y entrega de la "propiedad arrendada"/ vigencia opcional.
A. VIGENCIA. La vigencia inicial de este arrendamiento sera de
cinco (5) anos a partir del primero de Febrero de 1996 ("Vigencia del
Arrendamiento", o "Vigencia de este Arrendamiento").
B. ENTREGA. El ARRENDADOR entregara la posesion de la
"Propiedad Arrendada en, o, antes del 29 de Febrero de 1996. La obligacion del
ARRENDATARIO de pagar la renta comenzara el lo. de Febrero de 1996.
CUARTA.- Uso de la "Propiedad Arrendada".
El ARRENDATARIO utilizara la "Propiedad Arrendada" para la
manufactura de articulos le plastico reforzados con fibra de vidrio. Bajo
ninguna condicion o circunstancia podra el ARRENDATARIO utilizar la "Propiedad
Arrendada" para realizar operaciones quimicas u operaciones industriales que
sean consideradas violatorias o contrarias I disposiciones municipales,
estatales y federales aplicables.
QUINTA.-Precio del Arrendamiento y deposito.
A. RENTA. Durante la Vigencia de este Contrato de
Arrendamiento, el ARRENDATARIO pagara como renta por la "Propiedad Arrendada"
por m2 de superficie construida arrendada, por ano, en dolares moneda de curso
legal de los Estados Unidos de America, las siguientes cantidades:
SUPERFICIE PRECIO UNITARIO
ARRENDADA EN DOLARES PO TOTAL ANUAL
ANO M2 M2 EN DOLARES
- --- -- -- ----------
1 1,538.74 $41.00 $63,088.35
2 2,317.00 $43.47 $100,720.00
3 2,317.00 $46.27 $107,207.60
4 2,317.00 $48.96 $113,440.30
5 2,317.00 $52.08 $120,69.35
El importe total de la Renta por el primer ano es de (Sesenta
y tres mil ochenta y ocho dolars 35/100 US Cy)
El importe total de la Renta por el segundo ano es de (Cien
mil setecientos veinte dolares 00/100 US Cy)
El importe total de la Renta por el tercer ano es de (Ciento
siete mil doscientos siete dolares 60/100 US Cy)
3
<PAGE>
El importe total de la Renta por el cuarto ano es de (Ciento
trece mil cuatrocientos cuarenta dolares 30/100 US Cy)
El importe total de la Renta por el quinto ano es de (Ciento
veinte mil seiscientos sesenta y nueve dolares 35/100 US Cy)
B. PAGO. El pago mensual de la renta sera de una doceava parte
de los pagos totales al uales correspondientes segun la tabla del parrafo
anterior, esto es:
ANO RENTA MENSUAL
--- -------------
1 $ 5,257.36
2 $ 8,393.33
3 $ 8.933.97
4 $ 9,453.36
5 $10,055.78
A el importe mensual correspondiente se le agregara el
Impuesto al Valor Agregado vigente en la fecha de pago y el resultante, debera
pagarse por adelantado dentro de los primeros cinco dias de cada mes sin
necesidad de notificacion o requerimiento alguno. Una vez que el ARRENDADOR
reciba el pago de la renta, el ARRENDADOR debera entregar la factura
correspondiente al ARRENDATARIO, de conformidad con los requisitos fiscales
Mexicanos. La renta sera pagada en el domicilio del ARRENDADOR ubicado en la
CARRETERA JUAREZ A CASAS GRANDES NUMERO 149 PONIENTE EN ESTA CIUDAD sin
necesidad de que se le notifique por escrito al ARRENDATARIO.
C. DEPOSITO. El ARRENDATARIO debera entregar al ARRENDADOR la
cantidad de $ 5,257.36 (Cinco rnil docientos cincuenta y siete dolares 36/100 US
Cy) como deposito a conservarse en una cuenta del ARRENDADOR. Este deposito se
incrementara en adicion al deposito inicial por las cantidades que a
continuacion se dan, en cada ano subsecuente:
2do. ano ..............$3,135.00
3er. ano...............$ 540.64
4to. ano ..............$ 519.39
5to. ano ..............$ 602.42
El ARRENDADOR esta autorizado a utilizar el deposito para el pago de los
servicios publicos o cualesquier otro cargo realizado por reparaciones a la
"Propiedad Arrendada" que le correspondan al ARRENDATARIO de conformidad con los
terminos de este contrato.
Al momento del incumplimiento por parte del ARRENDATARIO y
despues habersele notificado por escrito el monto de la cantidad adeudada, ya
sea por consumo de los servicis publicos o cualesquier otro cargo realizado por
reparaciones a la "Propiedad Arrendada" que le correspondan al ARRENDATARIO, que
sea aplicable al deposito o cualquier cantidad
4
<PAGE>
que se encuentre pendiente de pago adeudada por el ARRENDATARIO de conformidad
con el presente contrato, el ARRENDADOR podra disponer d las cantidades erogadas
porel, deduciendolas del deposito dado en garantia.
D. PAGO EN MORA. La falta de pago puntual del precio del
arrendamiento dara derecho al ARRENDADOR a cobrarle al ARRENDATARIO, por pena
convencional, un cargo mensual igual al 1.5% sobre el monto total de la renta
atrasada hasta su total liquidacion.
E. PAGO DE IVA. El ARRENDATARIO pagara el Impuesto al Valor
Agregado ("IVA") que sea aplicable al pago de las rentas de conformidad con el
tipo de cambio al momento de hacer el pago.
SEXTA. MODIFICACIONES.
El ARRENDATARIO no podra modificar la estructura basica, la
apariencia exterior o los servicios publicos basicos de la "Propiedad Arrendada"
sin el consentimiento por escrito de el ARRENDADOR. El ARRENDADOR autoriza al
ARRENDATARIO a efectuar las modificaciones (las "Modificaciones") a la
"Propiedad Arrendada" que se senalan en el documento adjunto al presente como
Anexo "B". Las Modificaciones que se muestran en el Anexo "B" seran realizadas a
cuenta y riesgo del ARRENDATARIO. Las Modificaciones pasaran a formar parte de
la "Propiedad Arrendada". En ningun momento, durante el termino del presente
arrendamiento o a su terminacion, el ARRENDADOR sera responsable del pago de las
Modificaciones. Las Modificaciones seran hechas a riesgo y costo del
ARRENDATARIO unicamente. Despues del inicio de este arrendamiento, el
ARRENDATARIO queda autorizado para realizar modificaciones o alteraciones
menores a la "Propiedad Arrendada", a su propia costa y riesgo, siempre y cuando
dichas alteraciont o modificaciones no alteren o deterioren substancialmente la
estructura de la "Propiedad Arrendada" la cual es parte del Edificio. Todo el
equipo o accesorios de cualquier naturaleza que fuesen instalados ya sea en
forma permanente o no, continuara siendo p opiedad del ARRENDATARIO y deberan
ser retirados por el ARRENDATARIO a la expiracion o terminacion de este contrato
o de cualquier prorroga o ampliacion del mismo, salvo en el caso en que el
ARRENDATARIO reciba por adelar adelantado confirmacion por escrito de parte de
el ARRENDADOR, de cada caso especifico, que las mejoras hechas a la "Propiedad
Arrendada" puedan permanecer en dicha proopiedad hasta el termino de la vigencia
del arrendamiento, entendiendose no obstante que el ARRENDATARIO por su cuenta y
costo reparara cualquier dano que hubiese su iido la "Propiedad Arrendada" como
resultado de la remocion de dicho equipo y/o accesorios y regresara la
"Propiedad Arrendada" al ARRENDADOR en condiciones adecuadas de orden,
presentacion y limpieza.
SEPTIMA.-CESION Y SUBARRENDAMIENTO.
El ARRENDATARIO no podra ceder o subarrendar la "Propiedad
Arrendada" sin autorizacion expresa y por escrito del ARRENDADOR. Aun cuando el
ARRENDATARIO obtenga por escrito autorizacion del ARRENDADOR para subarrendr la
"Propiedad Arrendada", el ARRENDATARIO seguira siendo responsable respecto a
este arrendamiento.
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OCTAVA - MANTENINLIENTO.
A. MANTCNIMIELLTO POR EL ARRENDADOR. El ARRENDADOR, debera en
todo momento la durante vigencia del arrendamiento mantener v renarar a su
pronia costa los cimientos del Edificio, la estructura de los pisos, la
estructura de los muros exteriores, la estructura de los techos incluyendo muros
de soporte.
B. MANTENIMIENTO POR EL ARRENDATARIO. El ARRENDATARIO debera
en todo momento durante la vigencia del arrendamiento mantener y reparar a su
propia costa, el interior de la "Propiedad Arrendada" incluyendo la pintura
interior, los techos y botaguas asi como el aislamiento y los sistemas de aire
acondicionado y calefaccion y la jardineria que exista en el lugar, asi como de
todas las construcciones que haga como modificaciones al edificio.
NOVENA - RESPONSABILIDAD DE LAS PARTES.
De conformidad con las leyes aplicables, el ARRENDADOR
garantiza al ARRENDATARIO el uso y goce pacifico de la "Propiedad Arrendada"
durante todo el termino de este contrato y el ARRENDATARIO conviene y acepta
usar la "Propiedad Arrendada solamente para los fines aqui estipulados y de
conformidad con la naturaleza y el uso senalado para la "Propiedad Arrendada".
Las responsabilidades del ARRENDADOR y del ARRENDATARIO, en cada caso, se
regiran por las siguientes estipulaciones:
1. El ARRENDADOR o el ARRENDATARIO, respectivamente, seran responsables
por danos a la"Propiedad Arrendada" causados por su propia culpa o
negligencia, o la de sus agentes, empleados o visitantes, excepto en
caso de danos usualmente cubiertos por seguro contra incendio con
endoso de amplia cobertura.
2. En el caso de que el ARRENDATARIO se viese impedido al uso del edificio
por una causa no atribuible al ARRENDATARIO, ya sea parcial o
totalmente, la renta se reducira proporcionalmente a la parte cuyo uso
se impida. Pero si el ARRENDATARIO fuese impedido de usar la "Propiedad
Arrendada" de manera total, o en la medida que el ARRENDATARIO no la
pueda usar para los fines aqui estipulados, entonces la renta no se
pagara durante el tiempo en que la "Propiedad Arrendada" no sea
utilizada..
3. Si la "Propiedad Arrendada" fuera danada o destruida por causa
atribuible a cualquiera de las partes, la parte responsable conviene en
restituirlo y ponerlo en condicion apropiada para que el ARRENDATARIO
la use para los propositos establecidos en este contrato. Una vez que
la parte responsable haya restaurado la "Propiedad Arrendada" a su
condicion original, el ARRENDATARIO debera de continuar pagando la
renta completa establecida en este contrato. No obstante lo anterior,
la vigencia del arrendamiento no podra prolongarse sin el
consentimiento por escrito del ARRENDADOR.
4. La responsabilidad del ARRENDATARlO sera limitada a los danos causados
por su negligencia y al alcance de los riesgos especificos que puedan
ser asegurados bajo polizas
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de seguros mexicanos sobre la propiedad (incendio, rayos, explosion,
vientos huracanados, granizo, huelgas, motines, aeronaves, vehlculos,
humo, terremoto y erupcion volcanica). Si la destruccion es total o
excede de 50% del valor de reposicion total de la Propiedad Arrendada"
y es causada por caso fortuito o fuerza mayor, el ARRENDATARIO tendra
el derecho de elegir en no requerirle al ARRENDADOR la reconstruccion,
y en tal caso, este arrendamiento terminara sin mas responsabilidad
para cl alquiera de las partes.
5. Si el impedimendo fuese imputable al ARRENDATARIO o a sus agentes,
empleados o visitantes, el ARRENDATARIO continuara pagando la renta
como si estuviese utilizando la Propiedad Arrendada, a menos que tal
perdida fuere cubierta por un seguro de interrupcion de rentas u otro
seguro y la renta se paga por la compania de seguros.
6. En caso de impedimento parcial de uso, de conformidad con el segundo
parrafo de esta Clausula, las partes convendran en la proporcion en que
debera reducirse la renta; si no se pusiesen de acuerdo, cada parte
designara un perito, y si ambos peritos no se pusiesen de acuerdo,
ellos mismos designaran un tercer perito. La decision de la mayoria de
los peritos sera final y obligatoria para las partes, o si las partes
convinieran en designar a un solo perito, su decision sera final y
obligatoria para las partes.
7. Las re ponsabilidades de las partes que se contienen en esta clausula
estan sujetas a las estipulaciones de la Clausula Decima de este
Contrato.
DECIMA - Seguros.
La partes obtendran coberturas de seguros en clases y
cantidades adecuadas para proteger sus respectivos intereses contra cualesquiera
y toda clase de perdidas y/o riesgos.
Especifica llente queda convenido que:
1. SEGURO CONTRA INCENDIO. El ARRENDADOR contratara un seguro contra
incendio de cobertura amplia que proteja la "Propiedad Arrendada" en su
valor de reposicion, asi como la maquinaria, materia prima y otros
bienes propiedad del ARRENDADOR y del ARRENDATARIO durante la vigencia
inicial de este contrato de Arrendamiento y las prorrogas del mismo,
obligandose el ARRENDATARIO a pagar a el ARRENDADOR el importe de las
primas de seguro. El ARRENDATARIO pagara la cantidad de $2,900.00 (Dos
mil novecientos dolares 00/100 US Cy) por ano. Una doceava parte de tal
cantidad debera ser pagada al ARRENDADOR conjuntamente con la renta
mensual a partir de la fecha de entrega de la "Propiedad Arrendada". El
ARRENDATARIO debera pagar tal cantidad de manera mensual, es decir la
cantidad de $241.67 (Docientos cuarenta y uno dolares 67/100 US Cy). La
poliza de seguro por la "Propiedad Arrendada" normalmente caduca en 31
de Enero, en consecuencia, en el mes de Febrero de cada ano, el
ARRENDADOR podra ajustar el costa de los seguros durante la vigencia de
este contrato.
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2. SEGURO DE RESNONSABILIDAD. El ARRENDATARlO debera obtener a su propia
costa y mantener en vigor durante la vigencia de este Contrato las
siguientes coberturas bajo polizas de seguro validas, expedidas por una
compania de seguros aprobada por el ARRENDADOR:
a) Seguro de Responsabilidad Civil General, asegurando al ARRENDATARIO
y al ARRENDADOR asi como a otras partes interesadas que el ARRIENDADOR
designe contra responsabilidad de cualquier persona, firma o sociedad
por lesiones o danos que ocuran en la "Propiedad Arrendada" o en el
area de estacionamiento o en los terrenos adyacentes a la propiedad en
limites combinados de no menos de $500,000.00 (Quinientos mil dolares
00/100 US Cy), cada poliza debera de disponer que no podra cancelarse
por la compania aseguradora sin que medie una notificacion otorgada por
correo certificado o registrada por lo menos 15 dias antes de tal
cancelacion. El ARRENDATARIO debera entregar al ARRENDADOR o a otras
partes interesadas que el ARRENDADOR designe el certificado o
certificados expedidos por la compania aseguradora certificando que tal
seguro se encuentra en vigor por lo menos con 15 dias de anticipacion a
la expiracion de tal poliza, el ARRENDATARIO debera proporcionar al
ARRENDADOR la documentacion comprobatoria que acredite que tal poliza
ha sido renovada o reemplazada. Si el ARRENDATARIO omite obtener o
conservar tal seguro, pagar las primas sobre este cuando se adeuden y/o
hacer que las polizas de seguro se renueven, entonces el ARRENDADOR
tendra el derecho de contratar y pagar tales primas en cuyo caso las
cantidades pagadas por el ARRENDADOR deberan ser sumadas y convertirse
en parte de la renta adeudada el primer mes de los meses-siguientes.
b) Un seguro contra interrupcion de rentas, que cubra el riesgo de
perdida de rentas debido a la realizacion de cualquiera de los
siniestros cubiertos en esta Clausula, en una cantidad suficiente para
cubrir la renta, impuestos y primas de seguros que en ese momento se
requieran.
3. SUBROGACION. No existira renuncia de subrogacion respecto a cualquier
poliza de seguro referida en esta Clausula.
4. INCENDIO U OTROS SINIESTROS. En caso de siniestros a la "Propiedad
Arrendada" que resulten en dano o destruccion de la "Propiedad
Arrendada" el ARRENDATARIO debera inmediatamente dar una notificacion
por escrito al ARRENDADOR.. Los pedimientos de ajuste deberan de
comenzar de inmediato por el ARRENDATARIO.
Todas las cantidades de seguro pagadas por tal dano o destruccion menos
el costo, honorarios y gastos incurridos si se realizan estos en
relacion con el ajuste de la perdida, deberan de hacerse disponibles al
ARRIENDADOR o al ARRENDATARIO tal y c Imo aparezcan sus intereses
respectivos en relacion a este Arrendamiento, con el proposito de
reconstruir la "Propiedad Arrendada" de la manera mas rapida posible a
las condiciones y caracterlsticas que guardaba antes de tal dano o
destruccion.
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El ARRENDATARIO debera de acreditar al ARRENDADOR que ha obtenido las
coberturas de seguro requeridos antes de tomar posesion de la
"Propiedad Arrendada."
Si el ARRENDATARIO instala una caldera o compresor, debera de obtener
una cobertura de seguro contra perdidas o danos causados por el mal
funcionamiento o explosion de caldera o compresor, por una cantidad no
menor a $100,000.00 (Cien mil dolares 00/100 U.S. Cy.), de conformidad
a las condiciones satisfactorias para el ARRENDADOR antes de su
instalacion.
D'ECIMA PRIMERA.- IMPUESTOS Y SERVICIOS PUBLICOS
a) IMPUESTOS.
El ARRENDATARIO es responsable por el pago del Impuesto al
Valor Agregado causado por la renta.
El ARRENDATARIO sera responsable por el pago del impuesto
predial en forma proporcional a la superficie que este arrendando.
El ARRENDADOR o el ARRENDATARIO podran iniciar accion
judicial, a nombre del ARRENDADOR, del ARRENDATARIO o de ambos, para objetar la
validez o procedencia de cualquier carga fiscal que se impusiese sobre la
"Propiedad Arrendada", o la cantidad de impuestos que se estuviesen cargando, o
bien, accion para recobrar e] pago de los mismos. Cada una de las partes
cooperara con la otra respecto al procedimiento judicial hasta donde sea
razonablemente necesario. La cantidad neta de cualquier impuesto que se
recuperase, despues del pago de todos los gastos que hubiese, se devolvra a la
parte que los efectuo.
b) SERVICIOS PUBLICOS.
El ARRENDADOR manifiesta que todos los servicios publicos
necesarios para la "Propiedad Arrendada" a utilizarse por el ARRENDATARIO los
proporcionara de la siguiente manera:
El Servicio de AGUA mediante un pozo de agua de su propiedad
con agua no potable. E ARRENDATARIO pagara una suma de $100.00 dolares
mensuales. (Cien dolares 00/100 US Cy)
El servicio de DRENAJE mediante una fosa septica por los
cuales el ARRENDATARIO pagara la suma de $50.00 dolares (Cincuenta dolares
00/100 US Cy) mensuales.
Estas cantidades se pagaran conjuntamente con la renta mensual
y se les agregara el Impuesto al Valor Agregado correspondiente.
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El servicio de GAS sera contratado por el ARRENDATARIO en
forma independiente asi como el servicio de TELEFONOS.
El servicio de ELECTRICIDAD sera contratado por el
ARRENDATARIO.
Cualquier contratacion adicional para la "Propiedad Arrendada"
debera de ser responsabilidad del ARRENDATARIO.
D'ECIMA SEGUNDA.- ENTREGA DE LA PROPIEDAD ARRENDADA.
En el ultimo dia del plazo de este contrato, o de sus
prorrogas, si existe alguna, o en su caso, en la fecha correspondiente si
hubiese terminacion anticipada, el ARRENDATARIO debera devolver y entregar la
"Propiedad Arrendada" para la posesion y uso de el ARRENDADOR, sin demora y en
buen orden, en buena condicion y adecuado matenimiento, excepto por el desgaste
normal y razonable debido al uso normal y al transcurso del tiempo, con la
excepcion de danos por incendio u otro siniestro. Todos los letrerc,
inscripciones, celosias e instalaciones de naturaleza similar, realizadas por el
ARRENEATARIO deberan ser removidas antes o en la fecha de la expiracion del
plazo de este contrato. Todo el mobiliario, accesorios y equipo tales como
compresores, transformadores y demas equipo instalado por el ARRENDATARIO
continuaran sienclo propiedad del ARRENDATARIO y seran retiradas por el
ARRENDATARIO en cualquier momento durante o al final de la vigencia de este
contrato y el ARRENDATARIO debera, a su propia costa, reparar el dano que
resulte de la instalacion o remocion de dichos equipos y/o accesorios.
Cualquier articulo que permanezca en la "Propiedad Arrendada"
treinta (30) dias con posterioridad a la terminacion de este contrato podra ser
considerado, a opcian del ARRENDADOR, como que ha sido abandonado y el
ARRENDADOR podra conservarlo o disponer de el en la forma que mejor le convenga
y sin obligacion o responsabilidad. Cualquier mejora permanente realizada a la
"Propiedad Arrendada" por el ARRENDATARIO y/o por el ARRENDADOR subsecuente a la
fecha de firma del presente, se considerara como propiedad del ARRENDADOR y
permanecera en la "Propieda Arrendada" a la terminacion o antes de la
terminacion de este contrato de arrendamiiento sin que el ARRENDADOR compense al
ARRENDATARIO por dichas instalacior s o mejoras, sujeto al derecho del
ARRENDATARIO a usar los mismos durante el termino del presente.
D'ECIMA TERCERA. RETENCION DE LA POSESION.
El ARRENDATARIO debera entregar al ARRENDADOR al termino del
Arrendamiento la "Propiedad Arrendada" en las mismas condiciones en que las
recibio, excepto por el desgaste normal causado por el paso del tiempo.
a) En caso de que el ARRENDATARIO permanezca en posesion de la
"Propiedad Arrendada" despues del termino inicial sin haber ejercido su opcion a
prorrogar el contrato, o en caso de que el ARRENDATARIO permanezca en posesion
de la "Propiedad Arrendada" despues
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de la vigencia de la prorroga (si la hay), el ARRENDATARIO pagara al ARRENDADOR
como nueva renta por la "Propiedad Arrendad" un 100% de la renta que este en ese
momento pagando, mas otras cantidades que hayan sido requeridas de pago
inmediatamente antes de que dicha posesion se diera, y debera continuar pagando
dichas cantidades hasta que entregue la "Propiedad Arrendada" al ARREENDADOR.
Este parrafo no se considerara como el otorgamiento de un derecho para
permanecer en posesion de la "Propiedad Arrendada" despues de la expiracion de
la vigencia del Contrato de Arrendamiento. Esta expresamente entendido y
acordado entre el ARRENDADOR y el ARRENDATARIO en que cualquier posesion del
ARRENDATARIO sobre la "Propiedad Arrendada" despues de la expiracion de este
Contrato de Arrendamiento debera operar y constituirse como una tenencia y
debera ser inmediata llente terminable a voluntad del ARRENDADOR.
b) El ARRENDATARIO debera indemnizar al ARRENDADOR por
cualquier perdida o responsabilidad que directamente resulte del retraso del
ARRENDATARIO en la devolucion de la"Propiedad Arrendada" siempre y que tal
perdida o responsabilidad no exceda de tres (3) meses de renta a la renta
establecida en el parrafo (a) anterior.
c) El ARRENDATARIO reconoce que su obligacian a entregar la
"Propiedad Arrendada" estara sujeta a estas clausulas y aqui mismo renuncia
expresamente a cualquier derecho que pueda tener de acuerdo al Codigo Civil del
Estado de Chihuahua.
D'ECIMA CUARTA.- CLAUSULA AMBIENTAL.
A partir de la fecha de la celebracian del contrato, sera
obligacion del ARRENDATARIO observar las leyes y reglamentos en materia de
equilibrio ecologico y proteccion al ambiente. El ARRENDATARIO se obliga a
entregar al ARRENDADOR resultados de pruebas requeridas por la ley para
verificar que la "Propiedad Arrendada" se encuentra libre de contaminacion,
liberando de toda responsabilidad a este ultimo de cumplir con las sanciones y
penas o indemnizaciones y gastos que pudiesen imponerse o tuviesen que erogarse
como consecuencia de cualquier contaminacion causada por el ARRENDATARIO. El
ARRENDATARIO no sera responsable de cualquier contaminacion que provenga de
fuera de los limites de la "Propiedad Arrendada". El ARRENDATARIO es responsable
por la contaminacion ambiental que ocasione durante la vigencia de este
Arrendamiento.
El ARRENDADOR por su parte, se obliga frente al ARRENDATARIO y
ante cualquier autoridad competente a responder por la contaminacion que pudiese
presentar la "Propieda Arrendada", como consecuencia de las actividades que se
hayan realizado en el mismo con anterioridad al presente Contrato de
Arrendamiento, liberando de toda responsabilidad al ARRENDATARIO de cumplir con
las sanciones y penas o indemnizaciones y gastos que pudiesen imponerse o
tuviesen que erogarse como consecuencia de cualquier contaminacion que exista en
la "Propiedad Arrendada" a la fecha de la celebracion del presente contrato o
como consecuencia de actos u omisiones del ARRENDADOR. El ARRENDATARIO no sera
responsable por cualquier contaminacion que ocurra despues de la devolucion de
la "Propiedad Arrendada" al ARRENDADOR. El ARRENDADOR declara y garantiza que la
"Propiedad
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Arrendada" se encuentra libre de cualquier tipo de contaminacion al momento de
la entrega de la "Propiedad Arrendada."
D'ECIMA QUINTA.- DERECHO DEL ARRENDADOR A DESEMPENAR LAS OBLIGACIONES DEL
ARRENDATARIO.
Si el ARRENDATARIO dejara de cumplir con cualquiera de las
obligaciones que contrae en este Contrato, el ARRENDADOR, despues de diez (10)
dias de haberlo notificado por escrito (o sin notificacion previa en caso de
emergencia) y sin eximir o relevar al ARRENDATARIO de cualesquiera de las
obligaciones que contrae en este Contrato, podra realizar cualquier acto que
este el ARRENDATARIO obligado a desempenar de conformidad con este contrato, sin
que ello implique la obligacion del ARRENDADOR a realizar tales actos, y podra
entrar a la "Propiedad Arrendada con el proposito de realizar las acciones que
fuesen necesarias en ese caso. Todas las cantidades pagadas Por el ARRENDADOR y
todos los gastos y costos erogados por el ARRENDADOR en relacion con el
desempeno de dichas obligaciones de el ARRENDATARIO, seran pagaderas por el
ARRENDATARIO a el ARRENDADOR dentro de los diez (10) dias siguientes al recibo
del cobro de dichas cantidades.
D'ECIMA S'EXTA.-Derecho del ARRENDATARIO de desempenar las obligaciones del
ARREENDADOR.
Si el ARRENDADOR dejase de desempenar alguna o varias de sus
obligaciones contenidas en este contrato, el ARRENDATARIO despues de diez (10)
dias de haber entregado notificacion por escrito al ARRENDADOR (o sin
notificacion previa en caso de emergencia) y sin eximir o relevar al ARRENDADOR
de cualesquiera de sus obligaciones contenidas en este contrato, podra sin que
esto implique obligacion del ARRENDATARIO de realizar tales actos, desempenar
cualquier acto que deba ser desempenado por parte del ARRENDADOR. Todas las
cantidades pagadas por el ARRENDATARIO en conexion con el desempeno de
cualesquier obligacion del ARRENDADOR, sera pagado por el ARRENDADOR al
ARRENDATARIO dentro de los diez (10) dias de la recepcion del cobro de dichas
cantidades.
D'ECIMA S'EPTIMA.-ACCESO DEL ARRENDADOR A LA "PROPIEDAD ARRENDADA."
El ARRENDATARIO permitira al ARRENDADOR y a sus representantes
autorizados el acceso a la "Propiedad Arrendada" durante horas razonables, con
el proposito de inspeccionarla y realizar los trabajos que fuesen requeridos del
ARRENDADOR o necesarios como resultado de omisiones del ARRENDATARIO o en la
realizacion de trabajos, en la iniciacion de los mismos, diez (10) dias despues
de recibir aviso por escrito del ARRENDADOR.
Nada de lo que aqui se estipula implicara la obligacion del
ARRENDADOR a realizar dichos trabajos; y la realizacion de ellos por el
ARRENDADOR no constituira dispensa al incumplimiento del ARRENDATARIO en su
obligacion de llevarlos a cabo.
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Todos los agentes, empleados o trabajadores del ARRENDADOR que
entren a la "Propiedad Arrendada", deberan obedecer las reglas y obligaciones
del personal del ARRENDATARIO incluyendo, y sin limitarse, a mallas para el
cabello, batas, gorras, lentes, etc.
DECIMA OCTAVA.-LETREROS.
El ARRENDATARIO tendra el derecho de colocar en la "Propiedad
Arrendada" o de colocar en el exterior del Edificio sus letreros y otros
letreros que requieran para su operacion, incluyendo letreros relacionados con
la contratacion de personal. Ningun otro letrero debera instalarse en la
"Propiedad Arrendada" sin el consentimiento por escrito del ARRENDADOR, excepto
que el ARRENDADOR tiene el derecho de colocar letreros "Para Vent" o "Para
Renta" en la "Propiedad Arrendada."
DEClMA NOVENA.-Notificaciones.
Cuando alguna de las partes requiera o desee realizar
cualquier notificacion o reclamo a la otra conforme a las disposiciones de este
Arrendamiento, tal notificacion o reclamo se hara personalmente o a traves de
correo certificado o registrado con acuse de recibo dirigido a:
ARRENDADOR: Polifibras de Chihuahua, S.A. de C.V.
Carr. Juarez a Casas Grandes no. 149 Poniente
Edificio "B"
Cd. Juarez, Chih
At'n. Ing. Edmundo Castillo Ochoa
ARRENDATARIO: Industrias Q.A.I., S.A. de C.V.
Carr. Juarez a Casas Grandes no. 149 Poniente
Edificio "A"
Cd. Juarez, Chih.
At'n. Sra. Phillis Mollan Bromfman.
VIG'ESIMA.-Titulos.
La partes convienen mutuamente en que los titulos contenidos
en este Arrendamiento se insertan exclusivamente para referencia y no se
consideraran como parte de este Arrendamiento ni se utilizaran en su
interpretacion.
VIG'ESIMA PRIMERA.-Jurisdiccion.
Este Contrato debera interpretarse de acuerdo con las
disposiciones del Codigo Civil y leyl s del Estado de Chihuahua, Estados Unidos
Mexicanos, y ambas partes por el presente se someten a la jurisdiccion de los
tribunales de Ciudad Juarez, Estado de Chihuahua, Estados
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Unidos Mexicanos, y renuncian a cualquier otra jurisdiccion que les pudiera
corresponder por cualquier motivo. Las disposiciones de esta clausula no se
aplicaran a cualesquiera garantia(s) otorgadas por cualquier tercera persona al
ARRENDADOR para garantizar el cumplimiento por parte del ARRENDATARIO de
cualquiera de sus obligaciones.
VIG'ESIMA SEGUNDA.-Comisiones y gastos.
El ARRENDADOR reconoce que la operacion aqui concertada no ha
generado comisione u honorarios de corredores o agentes o algun otro similar, o
contraprestacion que tuvieran que pagarse las partes respecto a esta operacion.
Cada parte sera responsable por los propios gastos y honorarios de
representantes, abogados, auditores o consultores que hayan participado en este
contrato y la transaccion contemplada.
EN TEST MONIO DE LO ANTERIOR
Este contrato se firma por las partes en Ciudad Juarez,
Chihuahua, Mexico, el dia PRIMERO DE FEBRERO DE MIL NOVECIENTOS NOVENTA Y SEIS.
"ARRENDADOR" "ARRENDATARIO"
Polifibras de Chihuahua, S.A. de C.V. Industrias Q.A.I., S.A. de C.V.
/s/ Edmundo Castillo Ochoa /s/ Phillis Molan Bromfman
- ------------------------------- -------------------------------
EDMUNDO CASTILLO OCHOA PHILLIS MOLAN BROMFMAN
Ing. Edmundo Castillo Ochoa Sra. Phillis Molan Bromfman
Representante Legal Representante Legal
T E S T I G O T E S T I G O
/s/ Erick Simmons /s/ Lliana Castello
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ERICK SIMMONS LLIANA CASTELLO
Ing. Erick Simmons
14
EXHIBIT 9
REVOLVING CREDIT NOTE
$720,000 Darien, Connecticut
December 2, 1996
A. TERMS OF PAYMENT
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1. FOR VALUE RECEIVED, Quality Air Inc., a New Mexico corporation
("Borrower") promises to pay to RTI Inc., a New York corporation ("RTI") the
principal sum of Seven Hundred and Twenty Thousand ($720,000) DOLLARS or, if
less, the aggregate unpaid principal sum of all revolving loans made by RTI to
the Borrower from time to time, in one installment thirty (30) days after
written demand therefor is made.
RTI is authorized to enter on the schedule attached hereto the amount
of each revolving loan and each payment of principal thereon, without any
further authorization on the part of the Borrower, but RTI's failure to make
such entry will not limit or otherwise affect the obligation of the Borrower on
this Note.
The Borrower shall pay interest on the unpaid principal amount from
time to time outstanding, at a rate of eight point four percent (8.4%) per
annum. Interest on the unpaid principal amount of this Note accrued at the rate
of 0.7% during each calendar month, shall be payable before the tenth (10th) day
of each immediately succeeding calendar month and at maturity. In addition, the
Borrower shall pay interest on any overdue installment of principal for the
period for which overdue, on demand, at a rate equal to 6% per annum above the
rate of interest hereinabove indicated.
2. The Borrower shall have the right to prepay this Note, in whole or
in part, at any time without penalty or premium.
3. All payments by the Borrower on account of principal, interest or
costs hereunder shall be made in immediately available funds.
B. DEFAULT
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Upon the occurrence of an event of default, and during the continuance
thereof, the entire unpaid principal amount of this Note and all interest unpaid
hereon may be declared to be due and payable.
C. SECURITY
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Payment of this Note is secured by a security interest in all
"Accounts", as such term is defined in the Uniform Commercial Code, and in all
inventories of the Borrower and its Mexican subsidiaries. The Borrower shall
promptly file UCC-1 Financing Statements when and where requested by RTI.
<PAGE>
D. MISCELLANEOUS
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1. REPLACEMENT NOTE. This Note shall replace the Revolving Credit Note
dated November 1, 1996, between Borrower and RTI.
2. NO WAIVER: Rights and remedies cumulative. No failure on the part of
RTI to exercise, and no delay in exercising any right hereunder will operate as
a waiver thereof; nor will any single or partial exercise by RTI of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies herein provided are cumulative and not
exclusive of any remedies or rights provided by law or by any other agreement
between the Borrower and RTI.
3. COSTS AND EXPENSES. The Borrower shall reimburse RTI for all costs
and expenses incurred by it, including the reasonable fees and disbursements of
counsel to RTI in connection with the enforcement of RTI's rights hereunder
after occurrence of an event of default.
4. CONSTRUCTION. This Note shall be governed by the laws of the State
of New York, without giving effect to its choice of law principles.
5. SUCCESSORS. The Note is to be binding upon the Borrower and its
successors and the terms hereof shall inure to the benefit of RTI and its
successors and assigns, including subsequent holders hereof.
6. SEVERABILITY. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
7. WAIVER OF NOTICE. The Borrower hereby waives presentment, demand for
payment (except as expressly provided herein), notice of protest and all other
demands in connection with the delivery, acceptance, performance, default or
enforcement of this Note.
Quality Air Inc.
By: /s/ Rick E. Bacchus
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Rick E. Bacchus, President
EXHIBIT 10
PROMISSORY NOTE
----------------- --, 1997
FOR VALUE RECEIVED, the undersigned jointly and severally promise to
pay on demand to the order of Theo W. Muller of Darien, Connecticut or his
assigns, the sum of Thousand Dollars ($ ), with interest thereon at the rate of
8.5% per annum. This Promissory Note replaces and supersedes all previous
Promissory Notes issued by the undersigned to Theo W. Muller.
Interest shall be payable monthly on or before the tenth day following
the end of the month. In the event payment of interest and principal is not made
when due, interest on the unpaid balance shall accrue at the rate of 12% per
annum.
In the event of default, the undersigned agree to pay all reasonable
attorney's fees and costs of collection.
Each maker or endorser of this note waives presentation of payment,
notice of non-payment, protest and notice of protest, and agrees to all
extensions, renewals, or release, discharge or exchange of any other party or
collateral without notice.
Individually Quality Air, Inc.
/s/ Rick Bacchus /s/ Rick Bacchus
- --------------------------- By-------------------------
Rick Bacchus Rick Bacchus, President
EXHIBIT 11
Revisions to RTI By-Laws, as adopted by the Board of Directors at a
meeting thereof on February 21, 1997
5.6. CHAIRMAN. The Chairman, if one is elected or appointed by
the Board (a) shall, if present, preside at meetings of the stockholders and at
meetings of the Board, and (b) unless otherwise determined by the Board, shall
be the chief executive officer of the Corporation and shall have general
supervision over the business of the Corporation, subject, however, to the
control of the Board and of any duly authorized committee of directors. If the
Chairman is the chief executive officer of the Corporation, he (a) may, with the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer,
sign certificates for shares of the Corporation, and may sign and execute, in
the name of the Corporation, deeds, mortgages, bonds, contracts and other
instruments, except in cases where the signing and execution thereof shall be
expressly delegated by the Board or by the By-laws to some other officer or
agent of the Corporation, or shall be required by law otherwise to be signed or
executed. He shall be subject to the control of the Board and shall perform all
duties incident to the office of Chairman and such other duties as from time to
time may be assigned to him by the Board.
5.7. PRESIDENT. The President, if so determined by the Board,
shall be the chief executive officer of the Corporation and shall have general
supervision over the business of the Corporation, subject, however, to the
control of the Board and of any duly authorized committee of directors. The
President shall, in the absence of the Chairman, if any, and if present, preside
at meetings of the stockholders and at meetings of the Board. He may, with the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer,
sign certificates for shares of the Corporation. The President, if he is the
chief executive officer of the Corporation, may sign and execute, in the name of
the Corporation, deeds, mortgages, bonds, contracts and other instruments,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board or by the By-laws to some other officer or agent of the
Corporation, or shall be required by law otherwise to be signed or executed. If
the President is not the chief executive officer of the Corporation, he shall
perform such duties as requested by the Chairman, and at the request of the
Chairman, or in his absence at the request of the Board, the President shall
perform such of the duties of the Chairman as so requested, and so acting shall
have all the powers of and be subject to all restrictions upon the Chairman. In
general, the President shall perform all duties incident to the office of
President and such other duties as from time to time may be assigned to him by
the Board.
