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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): January 12, 1999
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Colorado 0-21821 93-0962072
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State or Other Jurisdiction Commission IRS Employer
Of Incorporation or Organization File Number Identification No.
410 17th Street, Suite 400 Denver, Colorado 80202
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Address of Principal Executive Offices and Zip Code
Registrant's telephone number, including area code (888) 313-8051
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Item 2. Acquisition or Disposition of Assets.
Effective December 31, 1998, Consolidated Capital of North
America, Inc. (the "Company"), through its wholly-owned
subsidiary, TPSS Acquisition Corp. ("TPSS Acquisition"),
purchased substantially all of the assets of Toledo Pickling and
Steel Sales, Inc. ("Toledo Pickling"), a privately held steel
processing and service center, headquartered in Toledo, Ohio.
Toledo Pickling is one of the largest flat rolled carbon steel
service centers in the Mid-West. It sells and processes carbon
flat rolled steel products. Toledo Picklings' services include
pickling, slitting, and leveling steel coils of various sizes
into steel sheets, slit coils, and pickled and oiled whole coils.
Toledo Pickling occupies 10 acres with a 175,000 square foot
facility, which TPSS has leased on a long-term basis. The
company employs approximately 85 people.
The total consideration for the purchase of Toledo Pickling was
approximately $18,470,000 and consisted primarily of the
assumption of certain liabilities of Toledo Pickling including,
(i) the liabilities and obligations of Toledo Pickling under the
Restated Loan and Security Agreement by and among Toledo
Pickling, National Bank of Canada ("NBC") and Finova Capital
Corporation ("Finova") as to which the outstanding principal loan
balance due thereunder as of January 12, 1999 was approximately
$5,417,725 (the "Revolving Loan Agreement"); (ii) the liabilities
and obligations under the Loan and Security Agreement by and
between Seller and Finova as to which the outstanding principal
loan balance due thereunder, as of January 12, 1999 was
approximately $2,686,964 (the "Term Loan Agreement"); and (iii)
the liabilities and obligations of Toledo Pickling under certain
existing leases and contracts existing as of January 12, 1999
which were assumed by TPSS Acquisition (the "Contracts"). In
addition, TPSS Acquisition also assumed future liabilities and
obligations under the Contracts. The Revolving Loan Agreement
and the Term Loan Agreement were assumed by TPSS Acquisition and
guaranteed by the Company on January 12, 1999 and are required to
be refinanced or repaid by April 12, 1999.
In connection with the acquisition of Toledo Pickling, Security
Income Trust, LP ("SIT") loaned $1,250,000 to the Company which
the Company invested in TPSS Acquisition. TPSS Acquisition
utilized $1 million of the funds to reduce the amount outstanding
under the Revolving Loan Agreement. SIT is a privately held
company controlled by Paul Bagley, the Chairman and Chief
Executive Officer of the Company. The SIT loan is evidenced by a
promissory note of the Company with an 18% annual interest rate
payable in arrears together with the principal on July 10, 1999.
The Company may, at its option, extend the Maturity Date of the
Note for two successive ninety-day periods. In connection with
and at the time of each such extension, the Company shall issue
to SIT 1,000,000 shares of the Common Stock of the Company. As
additional consideration for the loan, the Company issued
1,000,000 shares of Common Stock of the Company to SIT. The
shares issued to SIT and issuable upon any extension of the SIT
Note are to be covered by a registration statement to be filed
with the SEC by March 2, 1999.
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Item 7. Financial Statements and Exhibits:
(a) And (b) Financial Statements and Pro Forma Financial
Information will be filed by amendments within sixty (60) days of
the date hereof.
(c) Exhibits
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10.77 Asset Purchase Agreement dated as of December 31, 1998
by and between Toledo Pickling and TPSS Acquisition
[Schedules and Exhibits omitted.
10.78 Assignment and Bill of Sale dated as of January 12,
1999 from Toledo Pickling to TPSS Acquisition.
10.79 Assumption Agreement dated as of January 12, 1999 by
and between Toledo Pickling and TPSS Acquisition.
10.80 Employment and Noncompetition Agreement dated as of
January 12, 1999 between TPSS Acquisition and William
Ciralsky.
10.81 Equipment Purchase Agreement dated as of January 12,
1999 by and among TPSS Acquisition and William Ciralsky
and Nancy Ciralsky. [Exhibit omitted]
10.82 Unconditional and Continuing Guaranty of the Company
dated as of January 12, 1999 with respect to the
Unconditional and Continuing Guaranty July 6, 1998,
issued by William Ciralsky in favor of Toledo Blank,
Inc. [Exhibit A omitted]
10.83 Indemnification Agreement dated as of January 12, 1999
by TPSS Acquisition to William Ciralsky.
10.84 Lease dated as of January 12, 1999 by and between
Campbell Investors, as lessor, and TPSS Acquisition, as
lessee [real property located at 1149 Campbell Road,
Toledo, Ohio].
10.85 Consent to Assignment to Equipment Lease Agreement
dated as of January 12, 1999 of Equipment Lease
Agreement between Toledo Pickling and William Ciralsky
and Nancy Ciralsky dated as of June 1, 1998 [Herr-
Voss .50 inch maximum level line].
10.86 Consent to Assignment to Equipment Lease Agreement
dated as of January 12, 1999 of the Equipment Lease
Agreement between Toledo Pickling and William
Ciralsky dated as of June 1, 1998 [Herr-Voss .25 inch
maximum level line].
10.87 Equipment Lease Agreement dated as of June 1, 1998
between Toledo Pickling and William Ciralsky and Nancy
Ciralsky [Herr-Voss .50 inch maximum level line].
10.88 Equipment Lease Agreement dated as of June 1, 1998
between Toledo Pickling and William Ciralsky [Herr-Voss
.25 inch maximum level line].
10.89 Assumption and Consent Agreement dated as of January
12, 1999 among Toledo Pickling, TPSS Acquisition and
Finova.*
10.90 Secured Promissory Note A.*
10.91 Secured Promissory Note B.*
10.93 Assumption and Consent Agreement dated as of January
12, 1999 among Toledo Pickling, TPSS Acquisition, NBC
and Finova.*
10.94 NBC Credit Note.*
10.95 FINOVA Credit Note.*
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10.96 Guaranty of the Company dated as of January 12, 1999.*
10.97 Note Purchase Agreement dated January 11, 1999 by and
between the Company and Security Income Trust, LP.
10.98 18% Note dated January 11, 1999 issued by the Company
to Security Income Trust, L.P. in the principal amount
of $1,250,000.
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* To be filed by Amendment
Safe Harbor Statement: The statements contained in this report
that are not historical facts may contain forward looking
statement that involve a number of know and unknown risks and
uncertainties that could cause actual results to differ
materially from those discussed or anticipated by management.
Potential risks and uncertainties include, among other factors,
general business conditions, competitive market conditions,
success of the Company's growth and sales strategy, whether the
Company will suffer customer attrition, whether the transaction
between the Company and TPSS will be successfully integrated,
whether the Company will have sufficient resources to realize its
growth plans, fluctuations in margins, and other risks and
uncertainties currently unknown to management.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
By: /s/ Richard Bailey
-------------------------------------
President and Chief Operating Officer
Date: January 27, 1999
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EXHIBIT 10.77
This Asset Purchase Agreement (this "Agreement"), dated as
of December 31, 1998 is made and entered into by and among TOLEDO
PICKLING AND STEEL SALES, INC., an Ohio corporation, (hereinafter
referred to as "Seller"), and TPSS ACQUISITION CORPORATION, an
Ohio corporation (hereinafter referred to as "Purchaser").
RECITALS:
A. Seller is in the business of processing, warehousing
and selling steel (the "Business"). The principal customers of
Seller are located in Ohio, Michigan, Indiana and Illinois.
B. Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, substantially all of the assets of
Seller and to assume certain liabilities of Seller, upon the
terms and conditions set forth in this Agreement.
Now, Therefore, in consideration of the recitals and of the
terms and conditions set forth below, the parties hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement to Purchase and Sell. Subject
to all of the terms and conditions of this Agreement, at the
Closing (as defined in Section 2.1), Seller shall sell, transfer
and deliver to Purchaser, and Purchaser shall purchase, all
right, title and interest of Seller in and to all of the Assets
(as defined in Section 1.2), free and clear of all mortgages,
liens, security interests and encumbrances, except for the
Assumed Liabilities, as hereinafter defined.
Section 1.2 Assets to be Sold. The term "Assets"
shall mean all of the assets, properties and rights of Seller
used directly or indirectly in the conduct of, or generated by or
constituting, the Business, except as expressly set forth in
Section 1.3, including, without limitation:
(a) all cash and cash equivalents, in transit, on hand or in
bank accounts, all checks, drafts and deposits of any kind or
nature, investments, and the cash surrender value of any life
insurance policies net of loans (collectively, "Cash");
(b) all notes and accounts receivable;
(c) all inventory, consisting of raw materials, spare parts and
supplies;
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(d) all prepaid items and assets;
(e) all machinery, equipment, furniture, fixtures, leasehold
improvements, data processing and other systems, capitalized
leases, and other tangible personal property;
(f) to the extent permitted by applicable law, all rights under
all written or oral contracts, purchase orders, sales orders,
commitments, agreements, leases, subleases, instruments,
licenses, certificates of occupancy, operating permits or any
other permit or approvals of any nature, or other document,
commitment, arrangement, undertaking, practice or authorization
to which Seller is a party;
(g) all of Seller's right, title and interest in and to the name
"Toledo Pickling and Steel Sales, Inc." and Seller's business
telephone numbers;
(h) all rights under any trademark, service mark, trade name or
copyright, whether registered or unregistered, and any
applications therefor;
(i) all technologies, methods, formulations, data bases, trade
secrets, know-how, inventions and other intellectual property
used in the Business or under development;
(j) all information, files, accounts, books, records, data and
plans related to the Business, including customer and supplier
lists;
(k) the Seller's Business as a going concern and its goodwill.;
and
(l) all claims, rights of action and choses in action of Seller
that arose or accrued or relate to time periods prior to Closing.
Section 1.3 Excluded Assets. Notwithstanding the
foregoing, the term "Assets" shall not include any of the
following, as the Seller is not selling and Purchaser is not
purchasing or assuming obligations with respect to the following
(collectively the "Excluded Assets"):
(a) the items set forth on Schedule 1.3;
(b) the corporate seal, certificate of incorporation, minute
books, stock transfer records, tax returns, books of account and
other records having to do with the corporate organization of the
Seller; and
(c) all rights accruing to Seller under this Agreement and the
instruments and certificates delivered in connection with this
Agreement.
Section 1.4 Purchase Price; Assumption of Liabilities;
Excluded Liabilities
(a) As consideration for the purchase of the Assets,
Purchaser shall, at Closing, assume and agree to pay, discharge,
or perform, as appropriate, the following liabilities and
obligations of Seller (collectively, the "Assumed Liabilities")
set forth in this Section 1.4(a); provided, however, that (i)
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Purchaser shall not assume, agree to pay, discharge or perform
the liabilities and obligations of Seller set forth in Section
1.4(b) and (ii) Purchaser's obligations hereunder are further
subject to the limitations set forth in Section 1.4(c):
(i) Seller's liabilities and obligations under the Restated Loan
and Security Agreement by and among Seller, National Bank of
Canada ("NBC") and Finova Capital Corporation ("Finova"), dated
December 1, 1997, as to which the outstanding principal loan
balance due thereunder as of November 30, 1998 (the "Balance
Sheet Date") was approximately $6,570,814 (the "Revolving Loan
Agreement");
(ii) Seller's liabilities and obligations under the Loan and
Security Agreement by and between Seller and Finova, dated
December 1, 1997, as to which the outstanding principal loan
balance due thereunder, as of the Balance Sheet Date was
approximately $2,686,964 (the "Term Loan Agreement");
(iii) all liabilities and obligations relating to product
liability claims for use of goods or products manufactured,
sold, tested, handled or distributed by Seller in connection
with the Business prior to or on the Closing Date or by the
Purchaser in connection with the Business after the Closing
Date which causes or caused, or allegedly causes or caused, or
is deemed to cause or have caused personal injury or property
damage taking place with respect to all injured persons and
damaged property subsequent to the Closing Date;
(iv) any liabilities or obligations of Seller relating to
warranty claims for products sold by Seller within 90 days
prior to the Closing Date;
(v) all liabilities and obligations of the Seller existing as of
the Closing Date under the Leases and Contracts listed as items
3, 4, 5, 6, 14, 15, 19, 22, 32, 33 and 34 of Schedule 3.21
("Assumed Leases and Contracts"); and
(vi) the items set forth on Schedule 1.4(a).
(b) Notwithstanding Section 1.4(a), in no event shall
Purchaser assume or incur any liability or obligation under this
Section 1.4 or otherwise in respect of any of the following
(collectively, the "Excluded Liabilities"):
(i) any liability or obligation in respect of any claim of any
breach by Seller of any provision of any agreements, contracts,
commitments, purchase orders, equipment leases, real property
leases, subleases, documents, instruments and undertakings
relating to the Business which are outstanding on the Closing
Date (collectively, the "Contracts"), regardless of when made
or asserted, which arises out of Seller's operation of the
Business prior to the Closing or any service performed or any
product designed, sold, manufactured or shipped by or on
behalf of Seller prior to the Closing;
(ii) any liability or obligation relating to the Excluded
Assets;
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(iii) subject to Section 8.2, any liability or obligation of
Seller arising or incurred in connection with the negotiation,
preparation and execution of this Agreement and the
transactions contemplated hereby, including any fees or
expenses of Seller's counsel, accountants or other experts,
and any brokerage or finders fee or commission or other
payment to any entity or person in connection with the
consummation of the transactions contemplated hereby; and
(iv) any liability or obligation of Seller identified on
Schedule 1.4(b) as an "Excluded Liability".
(c) Purchaser and Seller acknowledge and agree that
the total amount of Seller's debt to NBC and Finova ("Secured
Debt") which is to be assumed, paid or discharged by Purchaser
pursuant to the terms and provisions of this Agreement, and as
specifically set forth in Section 1.4(a)(i) and (a)(ii), shall
not exceed Ten Million Nine Hundred Thousand Dollars
($10,900,000). The total amount of Seller's liabilities other
than Secured Debt ("Non-Secured Debt") which is to be assumed,
paid or discharged by Purchaser pursuant to the terms and
provisions of this Agreement shall not exceed Eight Million Eight
Hundred Thousand Dollars ($8,800,000). Accordingly, the total
amount of the Assumed Liabilities shall not exceed Nineteen
Million Seven Hundred Thousand Dollars ($19,700,000). In the
event that the amount of the Secured Debt to be assumed, paid or
discharged by Purchaser is greater than $10,900,000 and/or the
amount of the Non-Secured Debt to be assumed, paid or discharged
by Purchaser is greater than $8,800,000, Seller shall deliver to
Purchaser at Closing, in immediately available funds, an amount
equal to the amount by which the Secured Debt and/or the Non-
Secured Debt exceed their respective above-stated ceilings.
Section 1.5 Allocation of Purchase Price. The
purchase price shall be allocated among the Assets as set forth
in a purchase price allocation statement (the "Purchase Price
Allocation") to be executed and delivered by each party at the
Closing. The Purchase Price Allocation may be adjusted after
Closing by Purchaser and Seller in writing. The Purchase Price
Allocation shall be arrived at arm's length between the parties.
Each party agrees to complete and to file IRS Form 8594 with its
federal income tax return consistent with the Purchase Price
Allocation for the tax year in which the Closing occurs, and no
party shall take a position on any tax return before any
governmental agency or in any judicial proceeding that is in any
manner inconsistent with the Purchase Price Allocation without
prior consent of the other party.
ARTICLE II
CLOSING
Section 2.1 Time and Place of Closing. The closing
(the "Closing") of the transactions contemplated herein shall be
held at the offices of Purcell & Scott at 6035 Memorial Drive,
Dublin, Ohio, at 10:00 a.m., on December __, 1998 or such other
place or date as the parties may agree (the "Closing Date").
<PAGE> 5
Section 2.2 Items to be Delivered at Closing. At
the Closing, the following documents (the "Closing Documents")
shall be executed and delivered by the parties thereto:
(a) Seller shall execute and deliver to Purchaser:
(i) an assignment and bill of sale, substantially in the form of
Exhibit A;
(ii) an assumption agreement substantially in the form of
Exhibit B (the "Assumption Agreement");
(iii)the Purchase Price Allocation;
(iv) UCC-1 Financing Statement, as appropriate; and
(v) such other documents or instruments as Purchaser may
reasonably require.
(b) Purchaser shall execute and deliver to Seller:
(i) the Assumption Agreement;
(ii) the Purchase Price Allocation;
(iii)an Employment/Consulting Agreement between William
Ciralsky and Purchaser in substantially the form attached
hereto as Exhibit C;and
(iv) such other documents or instruments as Seller may
reasonably require.
(c) Purchaser shall deliver to Seller:
(i) the Equipment Purchase Agreement relating to Herr-Voss .50
inch maximum level line and the Herr-Voss .25 inch maximum
level line in the form attached hereto as Exhibit D;
(ii) the Unconditional and Continuing Guaranty of
Consolidated Capital of North America, Inc. with respect to
the Unconditional and Continuing Guaranty July 6, 1998,
issued by William Ciralsky in favor of Toledo Blank, Inc.
(iii)Purchaser's Consent and Acknowledgment of Capital Bank,
N.A.'s security interest in the equipment subject to the
Equipment Lease Agreements referenced in paragraph (d)(iv)
and(d)(v);
(iv) an agreement by the Purchaser to indemnify Shareholder
regarding any liabilities that Shareholder may have under
the Leases and Contracts listed in items 7 through 13, 16,
17, 18, 20, 21 and 24 through 30 of Schedule 3.21, in the
form attached hereto as Exhibit G hereto; and
(v) legal opinions of Purchaser's counsel in substantially the
same form as Exhibit E attached hereto.
(d) Seller shall deliver to Purchaser:
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(i) an Employment/Consulting Agreement between William Ciralsky
and Purchaser in substantially the form attached hereto as
Exhibit C, executed by William Ciralsky;
(ii) lease for the real property occupied by Seller and
located at 1149 Campbell Road, Toledo, Ohio (the "Plant") by
and between Campbell Investors, as lessor, and Purchaser, in
form and substance satisfactory to Purchaser in its sole
discretion, and executed by the lessor;
(iii) the Equipment Purchase Agreement relating to Herr-Voss
.50 inch maximum level line and the Herr-Voss .25 inch maximum
level line in the form attached hereto as Exhibit D, as
executed by William Ciralsky and Nancy Ciralsky;
(iv) an assignment of the Equipment Lease Agreement between
Seller and William Ciralsky and Nancy Ciralsky dated as of June
1, 1998 relating to a Herr-Voss .50 inch maximum level line;
(v) an assignment of the Equipment Lease Agreement between
Seller and William Ciralsky dated as of June 1, 1998 relating
to a Herr-Voss .25 inch maximum level line; and
(vi) legal opinions of Seller's counsel in substantially the
same form as Exhibit F attached hereto.
Section 2.3 Delivery of Possession. At the Closing,
Seller shall deliver possession of the Assets and, simultaneously
with such delivery shall take all steps as may be required to put
Purchaser in actual possession and operating control of the
Assets, including, without limitation, delivery to Purchaser of
all keys to the premises on which the Business is operated or the
Assets are located, all access codes, security codes, passwords
and the like. Seller shall execute and deliver such further
documents and instruments as Purchaser may reasonably request in
order to cause full possession and control of all of the Assets
and of all other things and matters pertaining to the operation
of the Business to be transferred and delivered to Purchaser.
Section 2.4 Third Party Consents. If Purchaser
closes notwithstanding the absence of any necessary third-party
consents, Seller, at its expense, shall use commercially
reasonable efforts to obtain any such required consents as
promptly as possible after Closing, provided that Seller shall
not be required to expend any money for such purposes.
Section 2.5 Further Assurances. From time to time
after the Closing, at Purchaser's request and expense, Seller
shall execute, acknowledge and deliver to Purchaser such other
instruments of conveyance and transfer and shall take such other
actions and execute and deliver such other documents,
certifications and further assurances as Purchaser may reasonably
require in order to put Purchaser more fully in possession of any
of the Assets, or to better enable Purchaser to perform or
discharge any of the Assumed Liabilities. Each of the parties
hereto shall cooperate with the other and execute and deliver to
the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time
to time by the other party hereto as necessary to carry out,
<PAGE> 7
evidence, and confirm the intended purposes of this Agreement and
the consummation of the transactions hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as
follows:
Section 3.1 Corporate Existence. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio. Seller is duly qualified to
do business, and is in good standing as a foreign corporation in
each jurisdiction where the conduct of the Business by it
requires it to be so qualified, except where the failure to be so
qualified or licensed would not have a material adverse effect on
Seller, Purchaser or the Business. Seller has not, within the
six (6) year period immediately preceding the date of this
Agreement, changed its name, been the surviving entity of a
merger or consolidation, or acquired all or substantially all of
the assets of any person or entity. Schedule 3.1 sets forth all
the fictitious names under which Seller or its predecessors have
conducted business.
Section 3.2 Corporate Power; Authorization;
Enforceable Obligations. Seller has the corporate power and
authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Seller
has been duly authorized by all necessary corporate action. This
Agreement has been, and the other agreements, documents and
instruments required to be executed and delivered by Seller
hereunder (the "Seller's Documents") will be, duly executed and
delivered by Seller and constitute valid and legally binding
obligations of Seller, enforceable against it in accordance with
the terms hereof and thereof.
Section 3.3 No Conflicts. The execution, delivery
and performance of this Agreement and the Seller's Documents does
not and will not violate, conflict with or result in the breach
of any term, condition or provision of, or require the consent of
any other person under: (a) any existing law or governmental rule
or regulation to which Seller is subject, (b) any judgment,
order, writ, injunction or decree of any court, arbitrator or
governmental or regulatory authority applicable to Seller, (c)
the charter documents or code of regulations of, or any
securities issued by, Seller, or (d) any mortgage, indenture,
agreement, contract, lease or other instrument or document to
which Seller is a party, by which Seller may have rights or by
which any of the Assets may be bound or affected, or which gives
any party with rights thereunder the right to terminate, modify,
accelerate or otherwise change the existing rights or obligations
of Seller thereunder.
Section 3.4 Consents and Approvals. No
authorization, approval, consent, or other action by, or
registration or filing with, any governmental or regulatory
authority, or any other person or entity, which consent has not
been obtained and is in full force and effect, is required in
connection with the execution, delivery or performance of this
Agreement or any of Seller's Documents (as such term is defined
in Section 3.2) by Seller. Seller has all licenses, permits,
<PAGE> 8
consents, approvals, authorizations, qualifications and orders of
governmental authorities required for the conduct of its business
as presently conducted.
Section 3.5 Absence of Defaults and Certain
Liabilities. Except as set forth on Schedule 3.5, Seller is not
in default under or in violation of (1) any contract, indenture,
instrument or other agreement, arrangement or understanding to
which such Seller is a party and by which the Business may be
bound or affected, and no fact, circumstance or event has
occurred which, upon notice, lapse of time or both, would
constitute such a default or violation; (2) any applicable law,
rule or regulation affecting the Business; or (3) any judgment,
order, decree or award of any court, arbitrator, mediator or
governmental agency or instrumentality by which the Business is
bound or affected. Seller is not in default under, or in
violation of, any provision of its Articles of Incorporation or
Code of Regulations. Seller has no liability or obligation
relating to product liability claims for use of goods or products
manufactured, sold, tested, handled or distributed by Seller in
connection with the Business prior to or on the Closing Date
which causes or caused, or allegedly causes or caused, or is
deemed to cause or have caused personal injury or property damage
taking place with respect to any injured person or damaged
property. Seller has no liability or obligation relating to
warranty claims for products manufactured by Seller and delivered
to the purchaser thereof 90 days or more prior to the Closing
Date.
Section 3.6 Title to Properties. Except as set
forth on Schedule 3.6 and for assets which are currently being
leased, as of the Closing Date, Seller shall have good and
marketable title to all of the Assets (except for inventory or
other assets sold in the ordinary course of business consistent
with past practice), free and clear of all mortgages, liens,
security interests and other encumbrances and defects of title.
Section 3.7 Condition of Tangible Assets. Except as
set forth in Schedule 3.7, all tangible property included in the
Assets, including, without limitation, all equipment of Seller,
is in good operating condition and repair, except for normal wear
and tear, is not obsolete, and is available for immediate use in
the regular and ordinary course of business. Seller has not
delayed or deferred any maintenance or repair of the tangible
Assets other than consistent with good industry practices.
Section 3.8 Litigation. Except as set forth on
Schedule 3.8, there is no pending litigation, including any
arbitration, investigation or other proceeding before any court,
arbitrator or governmental or regulatory authority, or, to
Seller's knowledge, threatened against Seller relating to the
Assets, the Business or the transactions contemplated by this
Agreement. Seller is not a party to or subject to any judgment,
order, writ, injunction, or decree of any court, arbitrator or
governmental or regulatory authority which may adversely affect
Seller, the Assets or the transactions contemplated hereby.
Section 3.9 Disclosure. No representation or
warranty made in this Agreement or any exhibit or schedule hereto
and no statement or certificate or memorandum furnished or to be
furnished to Purchaser pursuant hereto or in connection with the
<PAGE> 9
transactions covered hereby contains or will contain any untrue
statement of a material fact, or omit any material fact, the
omission of which would be misleading.
Section 3.10 Financial Statements. The unaudited
consolidated balance sheet of Seller as of September 30, 1998 and
the audited financial statements for the periods ended September
30, 1997 and 1996, copies of which have been previously delivered
or are attached hereto as Schedule 3.10 (the "Financial
Statements"), are true and correct and have been prepared in
accordance with generally accepted accounting principles
consistently applied. The balance sheets contained in the
Financial Statements fairly present, in all material respects,
the Seller's financial position as of their respective dates and
set forth in full and reflect all liabilities of such business as
of such dates that would properly be reflected or reserved
against in a balance sheet prepared in accordance with generally
accepted accounting principles, and the income statements fairly
present, in all material respects, the results of the Seller's
operations for the periods indicated and covered thereby. The
footnotes contained in the financial statements for the periods
ended September 30, 1997 and 1996 disclose or describe all
contingent liabilities to the extent such liabilities are
required to be disclosed or described in financial statement
footnotes under generally accepted accounting principles. The
inventory valuations are based upon pricing the inventories at
the lower of cost or market in accordance with the established
practice of Seller for a number of years, with all obsolete or
unusable or not readily saleable inventories having been either
eliminated, properly written down or reserved against. Seller
does not know or have any reason to know of any liability or any
basis for the assertion against Seller of any liability required
to be reflected or reserved against in the balance sheets
according to generally accepted accounting principles,
consistently applied, and not so reflected or reserved. Since
September 30, 1998, no liabilities or obligations have been
incurred by Seller except for liabilities and obligations
(absolute, accrued, contingent or otherwise) incurred in the
ordinary course of business and consistent with past practice, or
as disclosed in this Agreement.
Section 3.11 Pending Claims. Except as set forth in
Schedule 3.11:
(i) there are no claims, actions, suits, disputes,
audits by a governmental authority, including claims for unpaid
taxes of any kind, pending or, to Seller's knowledge, threatened
against or affecting Seller's business;
(ii) there are no unpaid judgments of any kind against
Seller relating to its business or the Assets; and
(iii) Seller is not charged with or, to its
knowledge threatened, with a charge or violation nor, to its
knowledge, is it under investigation with respect to any alleged
violation of any provision of any federal, state or local law or
administrative ruling or regulation relating to any aspect of its
business or the Assets.
Section 3.12 Compliance with Laws. Except as set
forth in Schedule 3.12, Seller has conducted since September 30,
1995, and is presently conducting, its business in material
<PAGE> 10
compliance with all applicable U.S. and foreign laws, statutes,
ordinances, rules and regulations, except where failure to comply
would not have a material adverse effect on the Business or the
Assets. Seller is not in violation of any term of any judgment,
writ, decree, injunction or order entered by any court or
governmental authority (domestic or foreign) and outstanding
against Seller with respect to any of the Assets or the business
of Seller.
Section 3.13 Inventory. The inventory being
transferred on the Closing Date consists of items of a quality
and quantity useable or salable in the ordinary course of
business of Seller except as reserved for in the Financial
Statements. The inventory is not subject to any material write-
down or write-off for which appropriate reserves have not been
included in the Financial Statements.
Section 3.14 Other Property. Schedule 3.14 to this
Agreement is a complete and accurate schedule describing all
machinery, equipment, furniture, and other tangible personal
property owned by, in the possession of, or used by Seller in
connection with the Business, except items with net book value of
less than One Thousand Dollars ($1,000). Except as set forth on
Schedule 3.14, all property described on Schedule 3.14 is
situated at the location set forth on Schedule 3.14. Except as
stated in Schedule 3.14, no personal property used by Seller in
connection with its business is held under any lease, security
agreement, conditional sales contract, or other title retention
or security arrangement, or is located other than in possession
of Seller.
Section 3.15 Customers and Suppliers. Schedule 3.15
to this Agreement is a correct and current list, in all material
respects, of the twenty largest (by dollar volume) customers and
suppliers of the Seller's business during the last 24 months.
Seller has not received any communication from any material
customer or supplier of any intention to terminate or materially
reduce purchases from, or supplies to, Seller or the business.
Section 3.16 Corporate Documents. Seller has
furnished to Purchaser for its examination true and correct
copies of the following:
(i) the articles of incorporation and all amendments
thereto to date and Code of Regulations, as amended to date, of
Seller;
(ii) the minute book of Seller for the period
commencing June 27, 1984, containing all records required to be
set forth of all proceedings, consents, actions and meetings of
shareholders and the board of directors (including committee
meetings) of Seller; and
(iii) all governmental permits, orders and consents
issued with respect to Seller's business, and all applications
for such permits, order and consents.
Section 3.17 Zoning. Seller's business as conducted
on the Closing Date and all current uses of the Plant do not
conflict with applicable federal, state or local laws,
<PAGE> 11
ordinances, regulations, orders or zoning laws so as to interfere
with or prevent, in any material adverse manner, its continued
use for the purposes for which it is being used.
Section 3.18 OSHA. Other than as described on
Schedule 3.18, Seller and its operations and properties as such
relate to the Business are presently, in all material respects,
in compliance with all applicable Occupational Safety and Health
Administration ("OSHA") rules, regulations and laws and Seller
has not received any notice of any potential occupational safety
and health problem in connection with the operations or
properties of Seller where such problem would have a material
adverse effect on the operation of the Business.
Section 3.19 Intellectual Property. All U.S. and
foreign intellectual property owned by or licensed to Seller,
including without limitation, all license agreements relating to
patents and/or inventions, and all patents and patent
applications, all copyrights, trademarks (whether registered or
unregistered) and trade names owned by or licensed to Seller
which are of any value or importance to its business or which it
is authorized to use in the production or marketing of any
products now produced or proposed to be produced by Seller
(collectively, the "Intellectual Property") are listed in
Schedule 3.19, and to the extent indicated therein have been duly
registered in, filed in or issued by the United States and
foreign Patent Offices or other appropriate governmental office.
Except as set forth in Schedule 3.19, except for any residual
rights retained by the owners of any third party-owned
Intellectual Property licensed to Seller (all of which are
described on Schedule 3.19), Seller is the sole person entitled
to use the Intellectual Property, free and clear of any claims or
demands of any other person. Except as noted above, Seller does
not use any of the Intellectual Property by consent of any other
rightful owner thereof and there are no attachments, liens or
encumbrances thereon. Except as set forth on Schedule 3.19,
Seller does not pay any licensing fee, royalty or other payment
to any other person or entity with respect to any of the
Intellectual Property or the use thereof, and Seller's right to
use and transfer any and all of the Intellectual Property is
perpetual and unrestricted. Except as set forth on Schedule
3.19, there are no claims or demands of any other person, firm or
corporation pertaining to any of the Intellectual Property and no
actions or proceedings which have been instituted or are pending
or, to Seller's knowledge, threatened, which challenge the
validity of, or the rights of Seller with respect thereto, and,
to Seller's knowledge, no Intellectual Property infringes or is
being infringed by others or is subject to any outstanding order,
decree, judgment or stipulation.
Section 3.20 Environmental Matters. (a) Except as
disclosed on Schedule 3.20:
(i) the property and assets of Seller's business and
any of Seller's operations conducted thereon or elsewhere do not
violate, and during the period of any applicable statute of
limitations have not violated, in a material manner, any
applicable Environmental Law (as hereinafter defined), and Seller
reasonably believes that compliance with any Environmental Law
that is applicable to the Plant or the Assets, or to any of
Seller's operations conducted thereon or elsewhere on or prior to
the Closing, has been timely attained and maintained, and Seller
is not subject to any existing or, to Seller's knowledge, pending
or threatened investigation, inquiry or proceeding involving
<PAGE> 12
Environmental Laws by any person or to any order, decree,
judgment, agreement or similar obligation under any Environmental
Law;
(ii) all notices, permits, licenses or similar
authorizations, if any, currently required to be obtained or
filed under any Environmental Law in connection with (i) the use
of the Plant and Assets including, without limitation, any
underground storage tanks, and (ii) the operations of the
Business including, without limitation, past or present
treatment, storage, disposal or release of any or all petroleum
products, and any or all Hazardous Substances (as such term is
hereinafter defined) into the environment (hereinafter the
"Environmental Permits"), have been obtained or filed and Seller
has not been advised (A) that the Environmental Permits will not
be timely renewed and complied with, without material expense,
and (B) that any additional Environmental Permits that may be
required will not be timely obtained and complied with, without
material expense;
(iii) all Hazardous Substances generated at or in
connection with the Plant and operations of the Business have
been transported and otherwise handled, treated, and disposed of
in compliance with all applicable Environmental Laws;
(iv) no Hazardous Substances have been disposed of or
otherwise released, handled or stored by Seller in violation of
applicable Environmental Laws.
(b) "Environmental Laws" shall mean any and all
applicable laws, rules, orders, regulations, statutes,
ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common
law) of the United States, or any state, local, municipal or
other governmental authority, regulating, relating to or imposing
liability or standards of conduct concerning protection of the
environment or of human health or safety.
(c) "Hazardous Substances" shall mean any petroleum
products, asbestos, radioactive material, or hazardous, acutely
hazardous, or toxic substance or waste defined and regulated as
such under Environmental Laws, including without limitation the
Federal Comprehensive Environmental Response, Compensation and
Liability Act and the Federal Resource Conservation and Recovery
Act.
(d) Except as disclosed on Schedule 3.20, (i) no
notice of any violation of any Environmental Laws has been
received by Seller concerning the Plant or Assets used by Seller
and to Seller's knowledge there are no existing or pending
requirements of any governmental authority relating to
environmental matters requiring any remedial action or other
work, repairs, construction or capital expenditures with respect
to the Plant; and (ii) Seller has not been named as a
"potentially responsible party" in connection with any
environmental litigation, investigation or similar matter, and
Seller does not know of any matter in which Seller may be so
named.
(e) Except as set forth in Schedule 3.20, there is
not located in, on or under the real properties owned or used by
the Business (1) electrical transformers or other equipment
<PAGE> 13
containing PCBs, (2) to Seller's knowledge, underground storage
tanks, whether or not regulated under the Resource Conservation
and Recovery Act, (3) to Seller's knowledge, urea-formaldehyde
foam insulation, or (4) asbestos in friable form.
Section 3.21 Leases and Contracts.
(a) Schedule 3.21 hereto sets forth a complete and
accurate list of all contracts, agreements, purchase orders,
leases, subleases, options and commitments, oral or written, and
all assignments, amendments, schedules, exhibits and appendices
thereof, affecting or relating to any asset, the Business, or any
interest therein, to which Seller is a party or by which Seller
or the Assets is bound or affected, including without limitation,
service contracts, management agreements, equipment leases,
leases of space and ground leases pertaining to any real estate
that involve commitments in excess of $2,500 (collectively the
"Leases and Contracts" and individually a "Lease and Contract").
Except as set forth on Schedule 3.21, all Leases and Contracts
are valid and in full force, and there does not exist any default
or event that notice or lapse of time, or both, would constitute
a default or event of acceleration under any of these Leases and
Contracts. Except as set forth on Schedule 3.21, no officer,
director or key employee of Seller, nor any spouse, child or
relative of any of these persons owns or has any interest,
directly or indirectly, in connection with the Leases and
Contracts.
(b) Other than as described on Schedule 3.21, none of
the Leases and Contracts has been modified, amended, assigned or
transferred and each of the Leases and Contracts is in full force
and effect and is valid, binding and enforceable in accordance
with its respective terms on each party thereto.
(c) Other than as described on Schedule 3.21, no event
or condition has happened or presently exists which constitutes a
default or breach or, after notice or lapse of time or both,
would constitute a default or breach by any party under any of
the Leases and Contracts, and Seller shall do no act nor omit to
do any act which would cause such a default or breach. There are
no counterclaims or offsets under any of the Leases and
Contracts.
(d) Except as set forth on Schedule 3.21, there does
not exist, and between the date hereof and the Closing Date
Seller will not grant or suffer, any security interest, lien,
encumbrance, mortgage or claim of others created or suffered to
exist on any interest created under any of the Leases or
Contracts.
(e) None of the Leases or Contracts shall be amended
in any material respect between the date hereof and the Closing
Date without the prior written consent of Purchaser.
(f) Except as identified on Schedule 3.21, hereto,
none of the Leases and Contracts is: (1) a capitalized lease
within the meaning of generally accepted accounting principles;
or (2) a lease with a remaining term of one (1) year or more from
Closing and which cannot be canceled within thirty (30) days at
the option of Seller without penalty.
<PAGE> 14
(g) Other than as described on Schedule 3.21, the
assignment to Purchaser of the Leases and Contracts (to the
extent that such are assigned hereunder) will not cause a default
under, alter or terminate any of the Leases and Contracts, and
such assignment will confer all Seller's rights thereunder to
Purchaser except for those consents described on Schedule 3.21,
not received by the Closing Date which were waived by Purchaser
in writing. Other than as set forth on Schedule 3.21, hereto,
the assignment to Purchaser of the Leases and Contracts (to the
extent that such are assigned hereunder) does not require any
consents. Seller has provided true and correct copies of the
Leases and Contracts, including true, correct and complete copies
of any and all written modifications and interpretations thereof
and descriptions of any and all oral modifications and
interpretations thereof.
Section 3.22 Employees. Except as provided on
Schedule 3.22, Seller does not have any employment agreements
with its employees and all such employees are employed on an "at
will" basis. Except for the liabilities assumed by Purchaser
hereunder pursuant to Section 1.4(a) above, Seller shall be
responsible for, and shall indemnify and hold harmless Purchaser
from and against any and all claims of Seller's employees for
claims arising out of their pre-Closing employment by Seller, and
Seller shall retain sole responsibility for and fully and timely
pay all salaries, wages and benefits (including long-term
disability and payroll taxes) that have accrued to their
employees through the Closing Date (whether or not such amounts
are payable prior to the Closing Date).
Section 3.23 Labor Matters. Other than as described
on Schedule 3.23 hereto, Seller is not a party to any labor
contract, collective bargaining agreement, contract, letter of
understanding (or to Seller's knowledge any other agreement,
formal or informal) with any labor union or organization which
obligates Seller to compensate its employees at prevailing rates
or union scale, nor are any of its employees represented by any
labor union or organization. Other than as set forth on Schedule
3.23, there is no pending, or to Seller's knowledge, threatened
labor dispute, work stoppage, unfair labor practice complaint,
strike, administrative, arbitration or court proceeding or order
between Seller and any present or former employees of Seller or
affecting the Seller or the Business. Seller has provided to the
Purchaser true, correct and complete copies of the executed
collective bargaining agreements, including true, correct and
complete copies of any and all written modifications and
interpretations thereof and descriptions of any and all oral
modifications and interpretations thereof. No representations
have been made to Seller, its employees or agents to employees of
Seller with respect to the Purchaser's intentions to employ, or
not to employ, Seller's employees, other than Robert Mang and
Robert Ciralsky.
Section 3.24 Employee Benefit Plans. (a) Schedule
3.24 hereto contains a correct and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (including multiemployer plans within the meaning of
Section 3(37) of ERISA)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs,
policies or other arrangements relating to the employees of
Seller, whether or not subject to ERISA (including any funding
<PAGE> 15
mechanism therefor now in effect or required in the future as a
result of the transactions contemplated in this Agreement or
otherwise), whether formal or informal, oral or written, under
which any employee or former employee of the Seller has any
present or future right to benefits or under which the Seller has
any present or future liability. All such plans, agreements,
programs, policies and arrangements are referred to collectively
as "Seller's Plans".
(b) The Seller has delivered, or made available, to
Purchaser a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) of Seller's
Plans and, to the extent applicable and in existence, with
respect to Seller's Plans, (i) any related trust agreement,
annuity contract or other funding instrument; (ii) the most
recent determination letter; (iii) any summary plan description
and other written communications (or a description of any oral
communications) by Seller to its employees concerning the extent
of the benefits provided under Seller's Plans; and (iv) for the
three most recent years (A) the Form 5500 and attached schedules;
(B) audited financial statements; and (C) attorney's response to
an auditor's request for information.
(c) Seller's Plans have been administered
substantially in compliance with the terms of such Plans and all
applicable laws and no event or condition exists which, by virtue
of the transaction contemplated by this Agreement, with respect
to Seller's Plans, could reasonably be likely to result in any
liability to Purchaser, except such liabilities as are expressly
set forth in the Seller's Plans assumed by Purchaser hereunder.
(d) Except for the liabilities assumed by Purchaser
hereunder pursuant to Section 1.4(a) above, Purchaser shall not
be liable and not be responsible for any debt, obligation,
contribution, responsibility, withdrawal liability or other
liability of Seller under any of Seller's Plans.
Section 3.25 Brokers' Fee. Other than The Parkland
Group, whose fee will be settled by Seller, Seller has not
employed and is not liable for the payment of any fee to any
finder, broker, consultant or similar person in connection with
the transactions contemplated by this Agreement.
Section 3.26 Receivables. Seller's accounts
receivable and other receivables being sold pursuant to this
Agreement (collectively, "Receivables") arose from bona fide
transactions in the ordinary course of business. Other than
ordinary course adjustments not material in the aggregate, no
counterclaims or offsetting claims with respect to presently
outstanding Receivables are pending or, to the knowledge of
Seller, threatened.
Section 3.27 Insurance. Schedule 3.27 hereto sets
forth a complete and accurate list of Seller's insurance policies
maintained on its respective properties and assets (including the
Assets) and with respect to its employees and representatives and
business and which, in the reasonable judgment of Seller, covers
risks customarily insured by businesses similar to the business
of Seller.
<PAGE> 16
Section 3.28 Absence of Certain Changes or Events.
Since November 30, 1998, and except as otherwise disclosed herein
or set forth in Schedule 3.28 or other Schedules hereto, there
has not been (i) any material adverse change in the condition
(financial or otherwise), results of operations, Assets,
properties, business or prospects of Seller taken as a whole,
(ii) any material damage, destruction or loss relating to the
business or assets of Seller, whether or not insured, (iii) any
liability created or incurred which Purchaser will assume
hereunder pursuant to this Agreement other than liabilities
created or incurred in the ordinary course of business and in
amounts not unusual in respect of the business of Seller as
customarily conducted, (iv) any material lien created on any
Asset, (v) any material capital expenditures or commitment to
make any such expenditures with respect to the Assets or as to
which Purchaser will become obligated after the Closing pursuant
to Section 1.4 of this Agreement, (vi) any condemnation
proceedings commenced with respect to any Asset or notice
received by Seller as to the proposed commencement of any such
proceedings, (vii) any rights of substantial value knowingly
waived with respect to the Assets or the business of Seller,
(viii) any sale or transfer of any Assets other than dispositions
in the ordinary course of business, or (ix) any labor disputes or
organizational activities by Seller's employees. Since June 30,
1998, other than acts relating to the transactions contemplated
by this Agreement, the business of Seller has been conducted in
all significant respects only in the ordinary course, consistent
with past practice.
Section 3.29 Tax Matters. (a) Except as set forth on
Schedule 3.29, all Tax Returns required to be filed by Seller (or
any of their predecessors) on or before the Closing Date have
been or shall be timely filed and all Taxes which are due or
which may be claimed to be due have been or shall be paid when
due. There are no liens upon any of the Assets in respect of
Taxes except for liens for current Taxes that are not yet due and
payable. All Taxes required to be withheld by Seller have been
withheld and paid over to the appropriate Tax authority. Seller
(or any predecessor) is not a party to and has not received any
written notice with respect to any proposed or pending action by
any governmental authority for assessment or collection of Taxes,
nor is party to any dispute or, to its knowledge, any threatened
dispute in which an adverse determination of such action or
dispute reasonably could be expected to result in a foreclosure
of the Assets and no such claim for assessment or collection of
Taxes has been made upon Seller. Seller has properly accrued and
reflected on the financial statements and will from the date
hereof through the Closing Date, properly accrue, all liabilities
for taxes and assessments, all such accruals being in the
aggregate sufficient for payment of all such taxes and
assessments. True , correct and complete copies of the federal
and state income tax returns and state and local sales, use, real
property and personal property tax returns of Seller for the past
three years have been delivered to Purchaser.
(b) For purposes of this Agreement, (i) the term "Tax"
or "Taxes" shall mean all income, gross receipts, gains, sales,
use, employment, franchise, profits, excise, property, value
added and other taxes, fees, stamp taxes and duties, assessments
or charges of any kind, together with any interest and penalties,
additions to tax or additional amounts imposed by any Tax
authority with respect thereto, (ii) the term "Tax Returns" shall
mean any and all returns, reports and information statements with
respect to Taxes required to be filed with the Internal Revenue
Service or other Tax authority, whether domestic or foreign,
including, without limitation any and all consolidated, combined
<PAGE> 17
and unitary tax returns and (iii) the term "Tax authority" shall
mean any authority having jurisdiction over Taxes.
Section 3.30 Real Property. (a) Schedule 3.30 hereto
is a correct and current list, by address, owner and usage, a
true and complete list of all real property agreements (including
any amendments thereto) pursuant to which Seller leases,
subleases or otherwise occupies any real property (the "Real
Property Leases") which list is true and complete (including all
amendments and supplements thereto) and copies of which have been
furnished to Purchaser. Pursuant to the Real Property Leases,
Seller has validly existing and enforceable leasehold,
subleasehold or occupancy interests in the property leased
thereunder, in each case free and clear of all liens and free
from defaults and events which with the passage of time or notice
or both would constitute a default. The Real Property Lease is
in full force and effect and is a valid and binding obligation of
each of the parties in accordance with its terms. Except as set
forth in Schedule 3.30, the consummation of the transaction
contemplated by this Agreement will not require any consent or
approval of any landlord or sublandlord under any such Real
Property Lease, result in any increase in rent or penalty to the
party which is a tenant or subtenant thereunder or result in the
early termination of any Real Property Lease. Seller has not
transferred, assigned, hypothecated, pledged or encumbered any of
its rights or interest under any Real Property Lease. Seller has
not received any notice from any landlord or sublandlord or any
other party of the termination of any Real Property Lease.
(b) To Seller's knowledge, Seller has all permits
(including operating permits) and certificates of occupancy
necessary to operate the Plant and the equipment therein as such
is currently being operated and used, and no such permits will be
required, as a result of the consummation of the transaction
contemplated by this Agreement, to be reissued, amended, modified
or supplemented after the Closing in order to permit Purchaser
following the consummation of the transaction contemplated by
this Agreement to continue to operate the Plant and the equipment
therein as such is currently being operated and used, other than
any such permits which are ministerial in nature and are listed
in Schedule 3.30.
(c) There is no pending or, to Seller's knowledge,
threatened condemnation, expropriation, eminent domain or other
governmental taking of all or any part of any of the Leased Real
Property and Seller has not received any oral or written notice
of any of the same.
(d) None of the Leased Real Property is subject to any
contract or other restriction of any nature whatsoever (recorded
or unrecorded) preventing or limiting Seller's right to use it as
currently operated.
(e) All components of buildings, structures and other
improvements included within the Leased Real Property, including,
but not limited to, the roofs and structural elements thereof and
the heating, ventilation, air conditioning, plumbing, electrical,
mechanical, sewer, waste water, storm water, paving and parking,
and systems and facilities included therein, are in good working
order and repair (ordinary wear and tear excepted) and free of
structural defects.
<PAGE> 18
(f) All Leased Real Property and the improvements
thereon are supplied with the utilities necessary for the
operation of such facilities as currently operated.
(g) Seller has not received written notice of any
special assessment relating to any Leased Real Property or any
portion thereof, and Seller has no knowledge of any pending or
threatened special assessments.
Section 3.31 Entire Business. On the Closing Date,
Seller will transfer to Purchaser all of the Assets used by
Seller in and necessary for the conduct by Purchaser of the
Business, except for the Assets excluded from purchase hereunder
pursuant to Section 1.3.
Section 3.32 Disclaimer of Other Representations and
Warranties. Except as expressly set forth in this Article III,
Seller makes no representations or warranties, express or
implied, at law or in equity, in respect of the Business or the
Assets, including, but not limited to, the liabilities or
operation of the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and its
successors and assigns, that:
Section 4.1 Organization. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of Ohio.
Section 4.2 Authority. Purchaser has taken all
necessary corporate action on its part as may be required under
the laws of Ohio, and under its Certificate of Incorporation and
Code of Regulations to authorize the execution, delivery and
carrying out of this Agreement on its behalf. Purchaser has the
corporate power and authority to execute, deliver and perform
this Agreement, and the other agreements, documents and
instruments required to be executed and delivered by Purchaser
hereunder (the "Purchaser Documents").
Section 4.3 Enforceability. This Agreement and the
other agreements, documents and instruments required to be
executed and delivered by Purchaser hereunder are and will be,
duly executed and delivered by Purchaser. This Agreement
constitutes a valid and legally binding obligation of Purchaser
enforceable in accordance with the terms hereof.
Section 4.4 Brokers' Fee. Purchaser has not
employed and is not liable for the payment of any fee to any
finder, broker, government official, consultant or similar person
in connection with the transactions contemplated by this
Agreement.
<PAGE> 19
Section 4.5 No Conflicts. The execution, delivery
and performance of this Agreement and the Purchaser's Documents
by Purchaser does not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or
require the consent of any other party to: (a) any existing law,
ordinance, or governmental rule or regulation to which Purchaser
is subject, (b) any judgment, order, writ, injunction or decree
of any court, arbitrator or governmental or regulatory authority
which is applicable to Purchaser, (c) the charter documents or by-
laws of Purchaser, or (d) any mortgage, indenture, agreement,
contract, lease or other instrument or document to which
Purchaser is a party or by which Purchaser is bound. No
authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory authority or third
party is required in connection with the execution, delivery and
performance of this Agreement.
Section 4.6 No Litigation. There is no claim,
litigation, investigation or proceeding pending or to the
knowledge of the Purchaser, threatened against Purchaser which
would challenge, prevent or delay the consummation of the
transactions contemplated by this Agreement.
Section 4.7 Disclaimer of Other Representations and
Warranties. Except as expressly set forth in this Article IV,
Purchaser makes no representations or warranties, express or
implied, at law or in equity.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Preservation of Business and Assets.
From the date hereof until the Closing, Seller agrees to use its
best efforts and shall do or cause to be done all such acts and
things as may be necessary to preserve, protect and maintain
intact the Assets, the Business and operation of the Business as
a going concern consistent with prior practice and in the
ordinary course of business, to preserve, protect and maintain
for Purchaser the goodwill of the Business' customers, suppliers,
employees, tenants and others having business relations with
Seller. Seller shall continue to collect accounts receivable
consistent with its past practices. Seller shall provide
Purchaser promptly with interim financial statements of Seller
and any other management reports, as and when they are available.
In the event there is any damage to or loss of any of the Assets
(whether by fire, theft, vandalism or other cause or casualty)
between the date hereof and the Closing Date, the Purchase Price
shall be reduced by the amount necessary to repair the damage,
which reduction shall be offset by any amounts paid by Seller's
insurance company assigned to Purchaser.
Section 5.2 Conduct of Business. Without limiting
the generality of Section 5.1, Seller agrees that, except as
required or contemplated by this Agreement or otherwise consented
to in writing by Purchaser, during the period commencing on the
date hereof and ending on the Closing Date, it will:
<PAGE> 20
(a) (i) maintain its books, accounts and records
relating to Seller's business in the usual, regular and ordinary
manner, on a basis consistent with past practice, (ii) comply
with all laws and contractual obligations applicable to Seller
and the conduct of the business and (iii) perform all of its
material obligations relating to the Business;
(b) not (i) make any capital expenditures, (ii)
dispose of any of the Assets owned by it, (iii) modify or change
in any material respect or enter into or terminate any material
contract relating to the business of Seller; except in each case
for such actions taken in the ordinary course of business and
consistent with past practice; provided that the aggregate of
such capital expenditures shall not exceed $10,000 per month,
(iv) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial portion of the stock or
assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other
business organization or division thereof, or (v) upgrade its
computer system;
(c) not make any change in its accounting policies
from those applied in the preparation of the 1997 audited
financial statements;
(d) not (i) permit or allow any of the Assets owned by
it to become subject to any liens or other security interest
(except as set forth in Schedule 3.6 hereto), (ii) waive any
material claims or rights relating to the business of Seller,
(iii) grant any increase in the compensation of any of Seller's
employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment), except for
reasonable increases in the ordinary course of business and
consistent with past practice, or as a result of contractual
arrangements or sales compensation plans existing on the date
hereof or (iv) enter into any agreements giving rise to
obligations on the part of Seller with respect to the business in
excess of $5,000 individually or $25,000 in the aggregate or
otherwise not terminable by the parties upon 30 days' notice,
except commitments to purchase raw materials and other trade
obligations in the ordinary course of business and consistent
with past practice;
(e) maintain such insurance as is currently in effect;
(f) give Purchaser a copy of any notice received
during the period from the date hereof to the Closing Date from
any governmental or regulatory authority or any other person
alleging any violation of any rule, regulation, law, order or
ruling;
(g) not enter into any material arrangement or
transaction between, or with its shareholder or any officer,
director, employee or affiliate of such shareholder or Seller;
(h) not amend its charter or Code of Regulations;
(i) not declare, set aside or pay any dividends on, or
make any other distributions in respect of its capital stock; and
<PAGE> 21
(j) not enter into any contract or agreement that
violates any of the foregoing.
Section 5.3 Access to Books and Records. (a) From
the date hereof until the Closing, Seller shall give to Purchaser
and to Purchaser's counsel, accountants, and other
representatives, full access during normal business hours to all
of Seller's offices, properties, books, contracts, commitments,
records and affairs relating to the Assets and to the Business so
that Purchaser may inspect and audit them (including, without
limitation, a Phase I, Phase II, or such other environmental
assessment as may be reasonably requested) and shall furnish to
Purchaser a copy of all documents and information concerning the
properties and affairs of the Assets as Purchaser may reasonably
request. If any such books, records and materials are in the
custody of third parties, Seller shall direct such third parties
to promptly provide them to Purchaser. Copies of documents
furnished to Purchaser by Seller will be returned to Seller upon
request if the transaction is not consummated.
(b) Following the Closing Date, Purchaser shall permit
Seller's representatives (including, without limitation, their
counsel and auditors), during normal business hours, to have
reasonable access to, and examine and make copies of all books
and records of the Seller's prior business which are transferred
to Purchaser hereunder and which relate to transactions or events
occurring prior to the Closing Date.
(c) Followin g the Closing Date, Seller shall permit
Purchaser and its representatives (including, without limitation,
its counsel and auditors), during normal business hours, to have
reasonable access to, and examine and make copies of all books
and records of Seller relating to Seller's business or the
Assets, including tax records, which are retained by Seller and
which relate to transactions or events contemplated by this
Agreement occurring prior to the Closing Date. For a period of
seven (7) years after the Closing, Seller agrees that, prior to
the destruction or disposition of any such books or records,
Seller shall provide not less than forty-five (45) days nor more
than ninety (90) days prior written notice to Purchaser of such
proposed destruction or disposal. If Purchaser desires to obtain
any such documents, it may do so by notifying Seller in writing
at any time prior to the date scheduled for such destruction or
disposal. In such event, Seller shall not destroy such documents
and the parties shall then promptly arrange for the delivery of
such documents to Purchaser, its successors or assigns. All out-
of-pocket costs associated with the delivery of the requested
documents shall be paid by Purchaser.
Section 5.4 Confidentiality. Unless and until the
Closing has been consummated, Purchaser and Seller will hold, and
shall cause their officers, directors, employees, counsel,
independent certified public accountants, bankers, appraisers and
other agents to hold, in confidence all documents, records, data
and information made available to them in connection with this
Agreement with respect to the Business (the "Confidential
Information"). Prior to the Closing Date, Purchaser shall not
use any Confidential Information or other information relating to
Business which is not otherwise publicly available for any
purpose unrelated to the consummation of the transactions
contemplated hereby. Prior to the Closing Date or in the event
this Agreement is terminated, Purchaser shall not disclose any
such Confidential Information or other information to any person,
unless and until such time as such Confidential Information or
<PAGE> 22
other information is otherwise publicly available or as the
parties are advised by counsel that such Confidential Information
or other information is required by law to be disclosed (in which
case, the other party shall be promptly notified). In the event
this Agreement is terminated, the parties agree, upon request, to
return promptly every document furnished to the other in
connection with the transactions contemplated hereby, any copies
that may have been made, and the parties shall cause their
representatives and agents to whom such documents were furnished
promptly to return such documents and any copies thereof.
Section 5.5 Expenses. Except as otherwise set forth
herein, without regard to whether the sale contemplated herein is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses. The foregoing shall
not affect the legal right of any party to recover expenses
pursuant to any breach of this Agreement.
Section 5.6 Additional Agreements. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including but not limited to,
using its reasonable best efforts to obtain all necessary
waivers, consents, authorizations and approvals of or exemptions
by any governmental authority, self-regulatory authority or third
party, and effecting all necessary registrations and filings. In
case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the parties, as
the case may be, shall promptly take all such necessary action.
Where the consent of any third party is required under the terms
of any of the leases or contracts to be assumed by Purchaser
hereunder, the Seller which is a party to such lease or contract
will take all reasonable and necessary steps to obtain such
consent on terms and conditions not materially less favorable
than as in effect on the date hereof or to otherwise provide
Purchaser with the benefits of such leases or contracts. The
costs incurred in connection with the obtaining of such consents
shall be the responsibility of Seller. Seller and Purchaser
shall cooperate fully with each other to the extent reasonably
required to obtain such consents. Notwithstanding anything to
the contrary set forth in this Agreement, to the extent that any
consent or approval is not obtained with respect to any lease,
contract or any other agreement as contemplated above, this
Agreement shall not constitute an assignment or an attempted
assignment thereof. In each such case, Seller agrees to
cooperate with Purchaser in any reasonable arrangement designed
to (i) provide for Purchaser the benefits under any such lease,
contract or agreement, including enforcement at the cost and for
the account of Purchaser or any and all rights of Purchaser
against the other party or otherwise and (ii) insure performance
by Purchaser of Seller's obligations thereunder to the extent
Purchaser receives such benefits. Notwithstanding any other
provision of this Agreement, to the extent that such arrangement
cannot be made, Purchaser shall not have any obligation with
respect to any such lease, contract or agreement.
<PAGE> 23
Section 5.7 Notification. Seller shall promptly
notify Purchaser of, and furnish Purchaser any information
Purchaser may reasonably request, and keep Purchaser advised of,
the occurrence of any event or condition or the existence of any
fact that would cause any of the conditions to Purchaser's
obligations to consummate the transactions contemplated by this
Agreement not to be fulfilled, including, but not limited to the
occurrence of (i) any litigation or administrative proceeding
pending or, to the knowledge of Seller, threatened against Seller
which could, if adversely determined, have a material adverse
effect; (ii) any material damage or destruction of any of the
Assets; and (iii) any material adverse change in the condition
(financial or other), results of operations, assets, business or
prospects of Seller taken as a whole.
Section 5.8 Affiliate Transactions. Except as set
forth in Schedule 5.8 hereto, Seller shall terminate any
transactions or agreements between Seller, on the one hand, and
any officers, directors, or employees of Seller, on the other
hand.
Section 5.9 Certain Post-Closing Matters. Seller
has represented to Purchaser that Seller intends to continue its
existence following the Closing. Seller covenants that it will
not dissolve for at least one year following the Closing Date.
Seller also agrees not to provide goods or services of the kind
it provided prior to the Closing Date in competition with
Purchaser for at least twenty four months following the Closing
Date.
ARTICLE VI
SELLER'S CONDITIONS TO CLOSE
The obligations of Seller under this Agreement are subject
to the satisfaction, or waiver by Seller, on or prior to Closing,
of the following conditions:
Section 6.1 Representations and Warranties True at
Closing; Compliance with Agreement. The representations and
warranties of Purchaser contained in this Agreement (including
the Schedules and Exhibits hereto) or in any certificate or
document delivered to Seller pursuant hereto, shall be deemed to
have been made again at the Closing Date and shall then be true
in all material respects; and Purchaser shall have performed and
complied with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by it prior to
or at the Closing Date.
ARTICLE VII
PURCHASER'S CONDITIONS TO CLOSE
The obligations of Purchaser under this Agreement are
subject to the satisfaction, or waiver by Purchaser, on or prior
to Closing, of the following conditions:
Section 7.1 Representations and Warranties True at
Closing; Compliance with Agreement. The representations and
warranties of Seller contained in this Agreement (including the
<PAGE> 24
Schedules and Exhibits hereto) or in any certificate or document
delivered to Purchaser pursuant hereto, shall be deemed to have
been made again at the Closing Date and shall then be true in all
material respects; and Seller shall have performed and complied
with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at
the Closing Date.
ARTICLE VIII
INDEMNIFICATION AND SURVIVAL OF PROVISIONS
Section 8.1 Survival. The covenants and agreements
contained in this Agreement and any agreements, certificates or
other instruments delivered pursuant to this Agreement, shall
survive the Closing and remain in full force and effect from the
date hereof. The representations and warranties set forth herein
shall survive the Closing and remain in full force and effect
until eighteen (18) months after the Closing Date; provided, that
the representations and warranties which relate to title of the
Assets shall survive indefinitely.
Section 8.2 Seller's and Shareholder's
Indemnification Obligation. If the Closing occurs, then from and
after the Closing, for a period of eighteen (18) months, Seller
and Shareholder jointly and severally shall reimburse, indemnify
and hold harmless and defend Purchaser, its officers, directors,
employees, representatives and other agents, and their successors
and assigns, against and in respect of:
(a) except for the Assumed Liabilities and for those
matters identified on Schedule 8.2 hereto, any and all claims,
demands, causes of action, damages, losses, liabilities, costs,
expenses, fees (including, without limitation, reasonable
attorneys' fees), judgments and good faith settlements of claims
or judgments arising out of or resulting from:
(i) any breach or violation of this Agreement by Seller;
(ii) any breach of the representations, warranties or
covenants made by Seller in this Agreement;
(iii) any inaccuracy or misrepresentation in the schedules
hereto or in any certificate or document delivered by
Seller in accordance with the terms of this Agreement
or in connection with the closing of the transactions
contemplated hereby; and
(iv) the Excluded Liabilities, and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation,
reasonable attorneys' fees and expenses) incident to any of the
foregoing or to the enforcement of this Section.
<PAGE> 25
Section 8.3 Purchaser's Indemnification Obligation.
If the Closing occurs, then from and after the Closing, for a
period of eighteen (18), Purchaser shall reimburse, indemnify and
hold harmless Seller, its officers, directors, employees,
representatives and other agents, and their successors and
assigns, against and in respect of:
(a) except for the Excluded Liabilities, any and all
claims, demands, causes of action, damages, losses, liabilities,
costs, expenses, fees (including, without limitation reasonable
attorneys' fees), judgments and good faith settlements of claims
or judgments arising out of or resulting from:
(i) any breach or violation of this Agreement by Purchaser;
(ii) any breach of the representations, warranties or
covenants made by Purchaser in this Agreement;
(iii) any inaccuracy or misrepresentation in any certificate
or document delivered by Purchaser in accordance with the
terms of this Agreement or in connection with the closing
of the transactions contemplated hereby; and
(iv) the Assumed Liabilities (including the Assumed Leases
and Contracts); and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation,
reasonable attorneys' fees and expenses) incident to any of the
foregoing or to the enforcement of this Section.
Section 8.4 Method of Asserting Claims, etc.
(a) In the event that any claim or demand ("Claim")
for which a party (the "Indemnifying Party") is asserted against
or sought to be collected from the Indemnified Party by a third
party, the Indemnified Party shall promptly notify the
Indemnifying Party of such Claim, specifying the nature of the
Claim and the amount or estimated amount thereof (which estimate
shall not be conclusive of the final amount of such Claim) (the
"Claim Notice"). The Indemnifying Party shall have 30 days from
the Claim Notice (the "Notice Period") to notify the Indemnified
Party (i) whether or not it disputes liability to the Indemnified
Party with respect to such Claim, and (ii) notwithstanding any
such dispute, whether or not it desires, at its sole cost and
expense, to defend the Indemnified Party against such Claim.
(b) If the Indemnifying Party disputes its liability
with respect to the Claim (whether or not the Indemnifying Party
desires to defend the Indemnified Party against such Claim as
provided below), the Claim shall be resolved in accordance with
the provisions hereof relating to arbitration. Pending
resolution of the dispute, such Claim shall not be settled
without prior consent of the Indemnified Party.
<PAGE> 26
(c) In the event that the Indemnifying Party notifies
the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such Claim then the
Indemnifying Party shall have the right to defend the Indemnified
Party by appropriate proceedings. If the Indemnified Party
desires to participate in (but not control) any such defense, it
may do so at its sole cost and expense.
(d) If the Indemnifying Party does not dispute its
liability with respect to such Claim, the amount of such Claim,
or if the same be defended by the Indemnifying Party then that
portion thereof as to which such defense is unsuccessful, shall
be conclusively deemed to be a liability of the Indemnifying
Party.
(e) In the event an Indemnified Party has a Claim
against the Indemnifying Party hereunder that is not being
asserted against or sought to be collected from the Indemnified
Party by a third party, the Indemnified Party shall promptly send
a Claim Notice with respect to such Claim to the Indemnifying
Party. If the Indemnifying Party disputes its liability with
respect to such Claim, such dispute shall be resolved in
accordance with the terms hereof. If the Indemnifying Party does
not notify the Indemnified Party within the Notice Period that it
disputes such Claim, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party
hereunder.
Section 8.5 Payment. Upon the determination of
liability of the Indemnifying Party hereunder, the Indemnifying
Party shall pay to the Indemnified Party, within 10 days after
such determination, the amount of the liability. The
Indemnifying Party shall receive a credit for any insurance
proceeds or other third-party payment received or receivable by
the Indemnified Party with respect to the Claim. Upon payment in
full, the Indemnifying Party shall be subrogated to the rights of
the Indemnified Party against any third person, firm or
corporation with respect to the Claim.
Section 8.6 Limitation on Indemnification.
Notwithstanding anything to the contrary herein, no Indemnified
Party shall be entitled to be indemnified until the amount of the
Claims against such Indemnifying Party equals or exceeds $25,000.
Once the amount of such Claims equals or exceeds $25,000, then
the Indemnified Party shall be entitled to full indemnification
for all Claims against the Indemnifying Party. Notwithstanding
anything to the contrary herein, Seller's total obligation to
indemnify Purchaser in respect of Purchaser's claims for
indemnification hereunder shall not exceed $1,100,000 (the
"Indemnification Cap"); provided, however, that said limitation
on liability shall not apply with respect to claims for a breach
of the representations set forth in Section 3.20 hereof, which
claims shall be limited to the Indemnification Cap plus the value
of the Shareholder's interest in Campbell Investors, an Ohio
general partnership.
<PAGE> 27
Section 8.7 Arbitration. All disputes under this
Section shall be settled by arbitration in Lucas County, Ohio
before a single arbitrator pursuant to the rules of the American
Arbitration Association ("AAA"). Arbitration may be commenced at
any time by any party hereto giving written notice to each other
party to a dispute that such dispute has been referred to
arbitration under this Section. The arbitrator shall be selected
by the joint agreement of Seller and Purchaser, but if they do
not so agree within 20 days after the date of the notice referred
to above, the selection shall be made pursuant to AAA rules. Any
award rendered by the arbitrator shall be accompanied by a
written opinion of the arbitrator giving the reasons for the
award, and shall be conclusive and binding upon the parties.
This provision for arbitration shall be specifically enforceable
by the parties. The decision of the arbitrator shall be final
and binding, and there shall be no right of appeal therefrom.
Any arbitration award shall be enforceable in the Common Pleas
Court of the State of Ohio, County of Lucas. The prevailing
party in such arbitration, as determined by the arbitrator, shall
be entitled to reasonable attorney's fees and costs of such
arbitration, costs of suit to enforce such arbitration award and
all costs of collection of such arbitration award.
ARTICLE IX
TERMINATION
Section 9.1 General. This Agreement may be
terminated and the transactions contemplated herein may be
abandoned prior to Closing, (a) by the Purchaser upon written
notice to Seller, (b) by either Purchaser or Seller, if any
permanent injunction or action by any governmental authority
preventing the consummation of the Closing shall have become
final and nonappealable, or (c) by any party by notice to the
other party in the event that the Closing Date shall not have
occurred on or before December 31, 1998.
Section 9.2 No Liabilities in Event of Termination.
In the event of any termination of the Agreement as provided in
Section 10.1 above, this Agreement shall forthwith become wholly
void and of no further force and effect and there shall be no
liability on the part of Purchaser or Seller, except that the
obligations of Purchaser and Seller under Section 9 of this
Agreement shall remain in full force and effect, and except that
termination shall not preclude any party from suing the other
party for breach of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Headings. The subject headings of the
sections, paragraphs and subparagraphs of this Agreement are
included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
Section 10.2 Entire Agreement, Modification and
Waiver. This Agreement constitutes the entire agreement between
the parties pertaining to its subject matter and supersedes all
<PAGE> 28
prior and contemporaneous agreements, representations and
understandings of the parties. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by all the parties. No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver
of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
Section 10.3 Counterparts. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
Section 10.4 Rights of Parties. Nothing in this
Agreement, whether expressed or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on
any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of
any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or
action over or against any party to this Agreement.
Section 10.5 Assignment. Purchaser shall not assign
this Agreement except to an affiliated designee. This Agreement
shall be binding on, and shall inure to the benefit of, the
parties to it and their respective heirs, legal representatives
and successors. Seller shall be free to assign its right to
receive payments under this Agreement to any party.
Section 10.6 Remedies. Each party's obligation under
this Agreement is unique. If any party should default in its
obligations under this Agreement, the parties each acknowledge
that it would be extremely impracticable to measure the resulting
damages; accordingly, the nondefaulting party, in addition to any
other available rights or remedies, may sue in equity for
specific performance, and the parties each expressly waive the
defense that a remedy in damages will be adequate.
Section 10.7 Effect of Certain Actions. No action
taken pursuant to or related to this Agreement, including without
limitation any investigation by or on behalf of any party, shall
be deemed to constitute a waiver by the party taking such action
of compliance with any representation, warranty, condition or
agreement contained herein.
Section 10.8 Notices. All notices, requests, demands
and other communications under this Agreement shall be in writing
and shall be deemed to have been duly given on the date of
service if served personally on the party (including without
limitation service by overnight courier service) to whom notice
is to be given, or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, at the address set
forth below, or on the date of service if delivered by facsimile
to the facsimile number set forth below which facsimile is
confirmed within three days by deposit of a copy of such notice
<PAGE> 29
in first class mail, registered or certified, postage prepaid at
the address set forth below. Any party may change its address
for purposes of this paragraph by giving the other parties
written notice of the new address in the manner set forth above.
If to Seller: TOLEDO PICKLING & STEEL SALES, INC.
1149 Campbell Road
Toledo, Ohio 43607
Facsimile number 419) 255-2243
Attention: Mr. William Ciralsky
with a copy to: Roetzel & Andress Co., L.P.A.
1375 East Ninth Street, 16th Floor
Cleveland, OH 44114
Facsimile number (216) 623-0134
Attention: Howard Groedel, Esq.
If to TPSS Acquisition Corporation
Purchaser: 20000 So. Western Avenue
Torrance, CA 90501
Facsimile number (310) 787-3177
Attention: Richard D. Bailey
With copies to: Purcell & Scott
6035 Memorial Drive
Dublin, OH 43017
Facsimile number (614) 761-9474
Attention: Timothy J. Kincaid, Esq.
Section 10.9 Severability. If any provision of this
Agreement shall be declared by any court of competent
jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall
remain in full force and effect.
Section 10.10 Governing Law. This Agreement shall be
construed in accordance with, and governed by the laws of, the
State of Ohio.
In Witness Whereof, the parties to this Agreement have duly
executed it as of the date first set forth above.
Toledo Pickling & Steel Sales, Inc. Tpss Acquisition
Corporation
<PAGE> 30
By /s/ William Ciralsky By /s/ Richard D. Bailey
--------------------- ----------------------
Name: William Ciralsky Name: Richard D. Bailey
Title: President Title: President
The Shareholder by execution of this Agreement acknowledges and
confirms his obligations under Article VIII hereof.
/s/ William Ciralsky
- ---------------------
William Ciralsky
<PAGE> 31
List of Exhibits
Exhibit A: Assignment and Bill of Sale
Exhibit B: Assumption Agreement
Exhibit C: Employment/Consulting Agreement
Exhibit D: Equipment Purchase Agreement
Exhibit E: Legal opinion of Purchaser's counsel
Exhibit F: Legal opinion of Seller's counsel
Exhibit G: Indemnification of Shareholder
<PAGE> 1
EXHIBIT 10.78
This ASSIGNMENT AND BILL OF SALE, is dated as of January 12,
1999 from Toledo Pickling & Steel Sales, Inc., an Ohio
corporation ("Seller"), to TPSS Acquisition Corporation, an Ohio
corporation ("Purchaser").
RECITALS:
WHEREAS, on the terms and subject to the conditions set
forth in the Asset Purchase Agreement dated as of December 31,
1998 between the Seller and Purchaser (the "Asset Purchase
Agreement"), Seller has agreed to sell, transfer and deliver to
Purchaser, and Purchaser has agreed to purchase, all right, title
and interest of Seller in and to all of the Assets, as defined in
the Asset Purchase Agreement;
WHEREAS, on the Closing Date hereof, in accordance with the
terms of the Asset Purchase Agreement, Seller is selling,
transferring and delivering to Purchaser, and Purchaser is
purchasing from Seller, all of the Seller's right, title and
interest in and to all Assets of the Seller as defined in the
Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
1. Recitals. Each of the above recitals is incorporated
herein as a term and provision of this Assignment and Bill of
Sale.
2. Defined Terms. All capitalized terms used in this
Assignment and Bill of Sale shall have the meanings ascribed to
such terms in the Asset Purchase Agreement unless otherwise
specifically defined herein.
3. Assignment and Sale. In consideration of the premises
and the payment by Purchaser of the Purchase Price and other good
and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, Seller does hereby sell,
transfer and deliver to Purchaser and its successors and assigns
forever, the Assets of the Seller as defined in, and in
accordance with the terms of, the Asset Purchase Agreement, free
and clear of all mortgages, liens, security interests and
encumbrances.
4. Representations, Warranties and Covenants. Except as
otherwise disclosed in the Asset Purchase Agreement, Seller does
hereby represent and warrant to the Purchaser, and covenant and
agree, that:
<PAGE> 2
(A) Seller is the owner of, and has good title to, the Assets,
which are free and clear of all claims, liens, encumbrances,
security interests, charges, pledges, or assignments;
(B) Seller has not made any prior sale, assignment or transfer
of the Assets and will not further sell, assign, transfer or
otherwise dispose of any of the Assets, nor will the Seller
create, incur or permit to exist any pledge, lien, encumbrance or
security interest whatsoever with respect to any of the Assets or
the proceeds thereof;
(C) Seller has the present right, power and authority to sell
the Assets to Purchaser;
(D) All action has been taken which is required to make this
Assignment and Bill of Sale a legal, valid and binding obligation
of Seller;
(E) All representations, warranties and covenants of the Seller
set forth in the Asset Purchase Agreement are true and correct on
and as of the date hereof, before and after giving effect to the
purchase of the Assets evidenced hereby and to the application of
the proceeds therefrom, as though on and as of such date; and
(F) No event has occurred, or would result from such purchase or
from the application of the proceeds therefrom, which constitutes
or would constitute a breach or default if any one or more of the
representations, warranties and covenants set forth in the Asset
Purchase Agreement but for the requirement that notice be given
or time elapse or both.
5. Further Assurances. The Seller agrees that at any time
and from time to time, after the execution of this Assignment and
Bill of Sale, upon the request of Purchaser to execute,
acknowledge and deliver, or to cause to be done, executed,
acknowledged and delivered all such further acts, assignments,
transfers, conveyances, and assurances as may be required for the
consummation of the transactions contemplated by this Assignment
and Bill of Sale and the Asset Purchase Agreement.
6. Waiver. No waiver of a breach of, or default under,
any provisions of this Assignment and Bill of Sale, or failure to
enforce any right or privilege hereunder, shall be deemed a
waiver of such provision or of any subsequent breach or default
of the same or similar nature or of any other provision or
condition of this Assignment and Bill of Sale, or as a waiver of
any of such provisions, rights or privileges hereunder. Neither
the execution, delivery or performance of this Assignment and
Bill of Sale shall serve as or constitute a waiver of Purchaser's
rights under the Asset Purchase Agreement, nor do the terms and
provisions hereof amend or modify the Asset Purchase Agreement,
which remains in full force and effect.
7. Amendment. This Bill of Sale and Assignment may not be
changed orally, but only by an instrument in writing signed by
all the parties hereto.
<PAGE> 3
8. Headings. The heading of the sections and subsections
contained in this Bill of Sale and Assignment are inserted for
convenience only and do not form a part or affect the meaning
thereof.
9. Governing Law. This Assignment and Bill of Sale shall
be governed by and construed and enforced in accordance with the
laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Bill of Sale to be duly signed by an authorized
officer on the day and year first above written.
SELLER:
Toledo Pickling & Steel Sales,
Inc.
By: /s/ William Ciralsky
----------------------
Title: President
PURCHASER:
TPSS Acquisition Corporation
By: /s/ Richard Bailey
----------------------
Title: President
<PAGE> 1
EXHIBIT 10.79
This ASSUMPTION AGREEMENT ("Assumption Agreement"), dated as
of January 12, 1999 is executed by and between Toledo Pickling &
Steel Sales, Inc., an Ohio corporation ("Seller"), and TPSS
Acquisition Corporation, an Ohio corporation ("Purchaser").
RECITALS:
WHEREAS, on the terms and subject to the conditions set
forth in the Asset Purchase Agreement dated as of December 31,
1998 between the Seller and the Purchaser (the "Asset Purchase
Agreement"), Purchaser has agreed to assume and pay, discharge or
perform, as appropriate, certain liabilities and obligations of
Seller ("Assumed Liabilities");
WHEREAS, on the Closing Date hereof, in accordance with the
terms of the Asset Purchase Agreement, Purchaser is assuming the
Assumed Liabilities of the Seller and will pay, discharge or
perform such Assumed Liabilities as consideration for the
purchase of the Assets;
NOW, THEREFORE, the parties agree as follows:
1. Recitals. Each of the above recitals is incorporated
herein as a term and provision of this Assumption Agreement.
2. Defined Terms. All capitalized terms used in this
Assumption Agreement shall have the meanings ascribed to such
terms in the Asset Purchase Agreement unless otherwise
specifically defined herein.
3. Assumption of Liabilities. The Purchaser hereby
expressly assumes and agrees to pay, discharge or perform all of
the Seller's obligations with respect to the Assumed Liabilities
as set forth in Section 1.4(a) (including, without limitation,
those liabilities set forth on Schedule 1.4(a)) of the Asset
Purchase Agreement. Purchaser and Seller agree that the Excluded
Liabilities are beyond the scope of this Assumption Agreement and
any assumption of such liabilities is expressly disclaimed by
Purchaser hereunder.
4. Representations and Warranties. Seller does hereby
represent and warrant to the Purchaser, and covenants and agrees,
that other than as set forth in the Asset Purchase Agreement,
Seller is not in default of any of it obligations constituting
part of the Assumed Liabilities
5. Further Assurances. The parties hereto agree that at
any time and from time to time, after the execution of this
Assumption Agreement upon the request of the other party hereto
to execute, acknowledge and deliver, or to cause to be done,
executed or acknowledged and delivered all such further acts,
assignments, transfers, conveyances, and assurances as may be
required for the consummation of the transactions contemplated
hereby.
<PAGE> 2
6. Governing Law. This Assumption Agreement shall be
governed by and construed in accordance with the internal laws of
the State of Ohio.
7. Waiver. No waiver of a breach of, or default under,
any provisions of this Assumption Agreement, or failure to
enforce any right or privilege hereunder, shall be deemed a
waiver of such provision or of any subsequent breach or default
of the same or similar nature or of any other provision or
condition of this Assumption Agreement, or as a waiver of any of
such provisions, rights or privileges hereunder.
9. Amendment. This Assumption Agreement may not be
changed orally, but only by an instrument in writing signed by
all the parties hereto.
10. Headings. The heading of the sections and subsections
contained in this Assumption Agreement are inserted for
convenience only and do not form a part or affect the meaning
thereof.
11. Entire Agreement. This Assumption Agreement shall be
binding upon the parties hereto and their successors and assigns.
This Assumption Agreement may only be amended by written
instrument executed by each of the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Assumption Agreement to be executed by their duly authorized
officers as of the date first above written.
SELLER:
Toledo Pickling & Steel Sales, Inc.
By: /s/ William Ciralsky
-------------------------
Name: William Ciralsky
----------------
Title: President
---------
PURCHASER:
TPSS Acquisition Corporation
By: /s/ Richard D. Bailey
-----------------------
Name: Richard D. Bailey
-----------------
Title: President
---------
<PAGE> 1
EXHIBIT 10.80
This Employment and Noncompetition Agreement (the
"Agreement") is entered into as of the 12 day of January,
1999 by and between William Ciralsky ("Ciralsky"), an
individual residing at 2504 Edgehill, Toledo, Ohio 43615,
and TPSS Acquisition Corporation, an Ohio corporation having
its principal place of business at 1149 Campbell Road,
Toledo, Ohio 43607 ("TPSS").
WITNESSETH
WHEREAS, TPSS has acquired all of the assets and
assumed certain of the liabilities of Toledo Pickling &
Steel Sales, Inc. ("Toledo Pickling") pursuant to an Asset
Purchase Agreement dated as of December 31, 1998 between
TPSS and Toledo Pickling (the "Asset Purchase Agreement");
WHEREAS, TPSS has required, as a condition to the
purchase of the assets and the assumption of certain
liabilities described in the Asset Purchase Agreement, that
Ciralsky enter into this Agreement; and
WHEREAS, Ciralsky desires to be employed by TPSS, each
under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual promises hereinafter set forth, and
other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
Section 1. Employment. TPSS hereby employs Ciralsky,
and Ciralsky hereby accepts employment with TPSS, on the
terms and conditions hereinafter set forth. Ciralsky shall
have the title of Vice-Chairman of TPSS. Any title given to
Ciralsky hereunder or pursuant to any action by the board of
directors of either TPSS or TPSS's parent company,
Consolidated Capital of North America, Inc. ("Consolidated
Capital") shall be subject to change from time to time at
the discretion of the board of directors of TPSS or
Consolidated Capital, as the case may be. In his capacity
as Vice-Chairman of TPSS, Ciralsky shall have all of the
responsibilities normally associated with such position,
subject to such responsibilities being added to or narrowed
or otherwise modified by TPSS's or Consolidated Capital's
board of directors. The parties stipulate and agree that
Ciralsky is not an "employee at will" under any applicable
law.
Section 2. Term. Except as expressly provided in this
Section 2, or in Sections 4 or 5 below, the term of this
Agreement shall commence as of the date hereof and shall
<PAGE> 2
continue for three (3) TPSS is under no duty or obligation
to extend this Agreement upon expiration of the three year
term.
Section 3. Compensation.
(a) Ciralsky's annual salary shall be $250,000, payable by
TPSS in equal bi-monthly installments in arrears.
(b) Ciralsky shall also be entitled to an annual bonus in
the amount set forth below, to be paid no later than 120
days after the end of calendar years 1999, 2000 and 2001.
The amount of the annual bonus under this Section 3(b) shall
be an amount equal to 10% of the first One Million Dollars
($1,000,000) of net profits of TPSS, as calculated according
to generally accepted accounting principles and after all
extraordinary items are taken into account, and thereafter,
an amount equal to 5% of each successive $1,000,000 of net
profits of TPSS, also calculated according to generally
accepted accounting principles and after all extraordinary
items are taken into account.
(c) Ciralsky shall also be entitled to receive options to
purchase 750,000 shares of Consolidated Capital's common
stock to be vested pursuant to the following schedule:
options for 250,000 shares shall be issued upon closing of
the transaction contemplated in the Asset Purchase Agreement
described above; and options for an additional 500,000
shares shall be issued upon completion of the first year of
employment pursuant to this Agreement, provided that at the
completion of said first year of employment, TPSS reports a
positive EBITDA (as defined in Section 3(d) below) for the
most recently-completed fiscal quarter. All such stock
options will be made pursuant to Consolidated Capital's 1997
Stock Incentive Plan, as amended from time to time and shall
have an exercise price equal to the fair market value of
Consolidated Capital's common stock at the time of issuance.
(d) For purposes of this Section 3, the term "EBITDA" shall
mean the earnings of TPSS, determined in accordance with
generally-accepted accounting principles, consistently
applied, before reduction for interest, corporate income
taxes, depreciation and amortization charges.
(e) Ciralsky shall also be entitled to participate in all
miscellaneous benefits and perquisites generally available
to all employees of TPSS, on a basis consistent with other
employees of similar rank.
(f) All ordinary and necessary expenses reasonably incurred
by Ciralsky in connection with the performance of his duties
hereunder, including expenses for travel, entertainment and
other business activities, shall be paid by TPSS or
reimbursed to Ciralsky as the case may be, all in accordance
with TPSS's policies and procedures generally applicable to
such expenses.
<PAGE> 3
(g) Ciralsky shall be entitled to four (4) weeks per year
paid vacation time. All such vacations shall be taken at
times approved in advance by the chief executive officer or
president of TPSS's parent corporation. Vacation will not
accumulate and there is no right to be paid for unused
vacation time.
(h) TPSS will provide Ciralsky with a car allowance of
$700.00 per month. In addition, TPSS will be responsible
for all maintenance and operating costs thereof.
Section 4. Termination By TPSS.
(a) Ciralsky's employment under Section 1 of this Agreement
may be terminated by TPSS at any time with or without Cause
(as hereinafter defined).
(b) If Ciralsky's employment is terminated for Cause,
Ciralsky shall have no further rights to a salary or any
other benefits or compensation under Section 3, and,
following such termination, the provisions of Sections 6 and
7 of this Agreement shall continue in full force and effect
in accordance with their terms.
(c) If Ciralsky's employment is terminated without Cause,
Ciralsky shall continue to be entitled to receive the
compensation set forth in Section 3 of this Agreement
through the date of such termination and for one (1) year
following such termination. During such period, the
provisions of Sections 6, excluding Section 6(a), and
Section 7 of this Agreement shall continue in full force and
effect in accordance with their terms.
(d) Ciralsky's employment shall be automatically terminated
upon Ciralsky's death, legal incapacity or a determination
by the board of directors that due to changes in his
physical or mental condition he is unable to continue to
perform his duties under this Agreement. If Ciralsky's
employment is terminated pursuant to the immediately
preceding sentence, Ciralsky (or his estate) shall be
entitled to receive the salary set forth in Section 3(a) of
this Agreement through the date of such termination, but not
thereafter. In addition, if Ciralsky's employment is
terminated pursuant to the first sentence of this Section
4(d), neither Ciralsky nor his estate shall have any further
rights to participate in any bonus or stock options as set
forth in Section 3(b) and (c).
(e) For purposes of this Agreement, the term "Cause" shall
mean (i) neglect of his duties to TPSS or Consolidated
Capital, (ii) breach of fiduciary duties to TPSS or
Consolidated Capital, (iii) commission of a felony in the
course of performing his duties to TPSS or Consolidated
Capital, (iv) usurpation of a corporate opportunity of TPSS
or Consolidated Capital, (v) mismanagement of TPSS or
Consolidated Capital, (vi) a willful and material failure to
follow a legal and reasonable order or directive by the
board of directors of TPSS or Consolidated Capital, or (vii)
a failure to perform the duties described herein.
<PAGE> 4
Section 5. Resignation By Ciralsky. Ciralsky may
resign as an employee of TPSS under this Agreement upon (i)
TPSS's material breach of this Agreement, provided that
Ciralsky has given TPSS notice of such breach and TPSS has
failed to cure such breach within thirty (30) days following
its receipt of such notice, or (ii) upon thirty (30) days'
prior written notice to TPSS. Upon a resignation by
Ciralsky under any provision in the prior sentence, Ciralsky
shall be entitled to that portion of his salary accrued
through the date of such resignation but shall be entitled
to no further salary or benefits under this Agreement unless
Ciralsky resigns pursuant to clause (i) above, in which
event, Ciralsky shall be entitled to the compensation set
forth in Section 4(c) herein. In the event that Ciralsky
resigns other than as expressly permitted by this Section 5,
TPSS may withhold all amounts then owing to Ciralsky as
liquidated damages for such wrongful termination.
Section 6. Noncompetition, Nondisclosure and
Noninducement.
(a) During the term of his employment, Ciralsky will
have direct responsibilities with respect to a number of
clients or customers of TPSS. Ciralsky acknowledges that
all such clients and customers are the clients and customers
of TPSS and that in dealing with such clients and customers,
he occupies a position of trust with TPSS. Accordingly,
until one year following the termination of this Agreement
pursuant to the terms and provisions of Sections 2, 4 and 5
hereof, Ciralsky will not, either directly or indirectly, on
his own behalf or on behalf of any other enterprise, render
or offer to render goods or services of the kind generally
rendered by TPSS to any of the clients or customers of TPSS
to which goods or services have been rendered by TPSS during
the twelve months immediately preceding the termination of
his employment with TPSS.
(b) As a result of the position that he occupied with
Toledo Pickling and the confidences placed in him by TPSS
and its affiliates, Ciralsky has been entrusted with
significant responsibilities. The parties recognize that if
Ciralsky were to engage in direct competition with TPSS or
its affiliates while employed by TPSS or during the period
immediately after termination of his employment, TPSS would
be unfairly damaged. Accordingly, during the term of his
employment and until the termination of this Agreement
pursuant to the terms and provisions of Sections 2, 4 and 5
hereof, Ciralsky will not provide, directly or indirectly,
on his own behalf or on behalf of any other enterprise, in
the Noncompetition Territory (as herein after defined),
goods or services of the kind generally provided by TPSS
during the term of this Agreement. For purposes of this
Agreement, the term "Noncompetition Territory" shall mean an
area in or within a 1000-mile radius of any facility
operated by TPSS during the term of this Agreement.
(c) Ciralsky acknowledges that during the course of
his employment, he will continue to have free access to
confidential and proprietary information, forms and other
materials, all of which Ciralsky acknowledges to be the
property of TPSS and its affiliates, valuable to its and
their business and not publicly available. Ciralsky agrees
that he will not, either during the term of his employment
by TPSS or thereafter, (i) disclose to any other person or
entity any confidential or proprietary information, trade
secret, forms or other material of TPSS or its affiliates,
except for disclosures to directors, officers, key
employees, independent accountants and counsel of TPSS and
its affiliates as may be necessary or appropriate in the
performance of his duties hereunder, or (ii) use any such
confidential or proprietary information, trade secret, forms
<PAGE> 5
or other material of TPSS or its affiliates, except as may
be necessary or appropriate in the performance of his duties
hereunder. Ciralsky agrees not to take with him upon
leaving the employ of TPSS any document or paper containing,
constituting or relating to any confidential information or
trade secret of TPSS or its affiliates.
(d) Ciralsky agrees that, for a period of one (1) year
following the termination of his employment with TPSS, he
will not directly or indirectly, on his own behalf or on
behalf of any other enterprise, induce or attempt to induce
any of the employees of TPSS or TPSS's affiliates to leave
the employment of TPSS or of such affiliates.
(e) Ciralsky stipulates that monetary damages will not
adequately compensate TPSS for any violation of this Section
6 and further stipulates that he will not assert that TPSS
lacks an interest that could be protected by injunctive
relief if TPSS ceases business following a breach of the
terms hereof by Ciralsky.
(f) The parties agree that nothing in this Agreement
shall prohibit or hinder Ciralsky from conducting brokerage
activities in secondary steel.
Section 7. Miscellaneous.
(a) Ciralsky represents and warrants that neither the
execution and delivery of this Agreement nor the performance
of his duties hereunder violates the provisions of any other
agreement to which he is a party or by which he is bound.
(b) Any notice, request, or other communication given
hereunder shall be in writing and, (i) if given to TPSS,
shall be sent by certified or registered mail, by
telecopier, or by a nationally recognized overnight delivery
service, addressed to TPSS c/o Consolidated Capital at 20000
So. Western Avenue, Torrance, CA 90501; telecopier (310)
787-3177; and (ii) if given to Ciralsky, shall be sent by
certified or registered mail, by telecopier, or by a
nationally recognized overnight delivery service, addressed
to Ciralsky at 2504 Edgehill, Toledo, Ohio 43615. Any party
may change the address to which notices, requests and other
communications are to be addressed by notice given to the
other parties in accordance with the provisions of this
Section 7(b). Notices, requests and other communications
shall be deemed to be given when received, which shall be
the date and time indicated on the receipt therefor or
identified by the delivery service with respect thereto.
(c) If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in
part, such invalidity and unenforceability shall not affect
the remaining provisions hereof which shall remain in full
force and effect.
<PAGE> 6
(d) No modification or waiver of any of the provisions
of this Agreement and no consent by either party to any
departure therefrom shall be effective unless in writing
signed by or on behalf of the party so modifying or waiving,
and the same shall be effective only for the period and on
the conditions and for the specific instance and purposes
specified in such writing.
(e) This Agreement supersedes all prior agreements,
understandings and representations (oral, written, implied
or expressed) between Ciralsky and TPSS relating to the
subject matter hereof.
(f) This Agreement shall be governed by the laws of
the State of Ohio.
(g) In the event that TPSS should be dissolved during
the period of time TPSS is obligated to make payments to
Ciralsky hereunder, the balance due or to become due
hereunder shall be considered a debt of TPSS and shall not
be discharged by reason of such dissolution.
(h) This Agreement is personal in nature and neither
of the parties hereto shall, without the consent of the
other, assign or transfer this Agreement or any rights or
obligations hereunder, except that TPSS shall assign or
transfer this Agreement to any successor corporation in the
event of a merger, consolidation, or transfer or sale of all
or substantially all of the assets of TPSS; provided,
however, that in the case of any such assignment or
transfer, (i) TPSS will require that the assignee or
transferee be bound by and benefit from this Agreement and
(ii) Ciralsky shall release TPSS from any further liability
hereunder following such assignment.
IN WITNESS WHEREOF, this Agreement has been duly executed by
Ciralsky and on behalf of TPSS by its duly authorized
representative, all as of the date first above written.
/s/ William Ciralsky
- --------------------
William Ciralsky
TPSS ACQUISITION CORPORATION
By: /s/ Richard D. Bailey
-------------------------
Name: Richard D. Bailey
Title: President
<PAGE> 7
The undersigned executes this Employment and Noncompetition
Agreement for the sole and express purpose of acknowledging
its obligations under Section 3(c) and guaranteeing the
Purchaser's obligations under Section 4(c) hereof. It is
understood and stipulated by the parties hereto that the
undersigned shall have no further obligations hereunder.
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
By: /s/ Richard D. Bailey
----------------------
Name: Richard D. Bailey
Title: President
<PAGE> 1
EXHIBIT 10.81
This Equipment Purchase Agreement, (this "Agreement"), dated
as of January 12, 1999 is made and entered into by and among TPSS
Acquisition Corporation, an Ohio corporation (hereinafter
referred to as "Purchaser"), and William Ciralsky and Nancy
Ciralsky, husband and wife, having an address at 2504 Edgehill
Road, Toledo, Ohio (hereinafter collectively referred to as the
"Seller").
RECITALS:
A. WHEREAS, William Ciralsky, as trustee under Self
determination of Trust dated December 5, 1985, as amended by an
amendment dated July 31, 1998, is the sole shareholder of Toledo
Pickling & Steel Sales, Inc. ("Toledo Pickling");
B. WHEREAS, Toledo Pickling is selling substantially all
of its assets to Purchaser pursuant to a certain Asset Purchase
Agreement ("Asset Purchase Agreement") dated as of December 31,
1998, by and between Toledo Pickling, as seller, and Purchaser,
as buyer, and, pursuant to the terms and conditions of such Asset
Purchase Agreement, Purchaser is assuming certain liabilities of
Toledo Pickling, including Toledo Pickling's rights and
obligations under leases of the Equipment (as defined below)
between Toledo Pickling and the Sellers;
C. WHEREAS, Purchaser desires to purchase such leased
Equipment and to use the same in Purchaser's business; and
D. WHEREAS, Seller desires to sell such Equipment to
Purchaser on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
promises and covenants hereinafter set forth and other good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE
Section 1.1 Agreement to Purchase and Sell. Subject to
all of the terms and conditions of this Agreement, Purchaser
shall purchase and the Seller shall sell at the Closing (as
hereinafter defined), all right, title and interest of Seller in
and to the Equipment identified in Section 2 hereof, free and
clear of all mortgages, liens, security interests and
encumbrances. Purchaser shall not exercise its rights hereunder
while there remains an uncured breach of the payment obligations
set forth in Section 4 of the leases of the Equipment between
Toledo Pickling and the Sellers.
<PAGE> 2
Section 1.2 Equipment to be Sold. The term "Equipment"
shall mean, collectively, (1) the Herr-Voss .50 inch maximum
level line (serial number 43315-96) and (2) the Herr-Voss .25
inch maximum level line.
Section 1.3 Purchase Price. As consideration for the
purchase of the Equipment, Purchaser shall, at Closing pay to or
on behalf of Seller the sum of Two Million Five Hundred Thousand
and 00/100 Dollars ($2,500,000.00) as follows (the "Purchase
Price"):
(a) Purchaser shall pay to Seller in immediately available funds
the amount of One Million One Hundred Thousand and no/100 Dollars
($1,100,000.00); and
(b) Purchaser shall deliver to Sellers shares of Series E
Convertible Preferred Stock (stated value $10,000) in
Consolidated Capital of North America, Inc., issued in the name
of William Ciralsky and Nancy Ciralsky, having an aggregate
stated value equal One Million Four Hundred Thousand and no/100
Dollars ($1,400,000.00), which Preferred Stock shall have such
rights, preferences and features as are set forth in the Articles
of Amendment to Articles of Incorporation attached hereto and
incorporated by reference herein as Exhibit A.
ARTICLE II
CLOSING
Section 2.1 Time and Place of Closing. The Closing of
the transaction contemplated by this Agreement occur on April 30,
1998 at 10:00 a.m. at the offices of Purcell & Scott, 6035
Memorial Drive, Dublin, Ohio 44060, or at such earlier date and
time and such other place, as Purchaser shall reasonably identify
in writing to Seller (the "Closing Date").
Section 2.2 Items to be Delivered at Closing and Delivery
of Possession. At Closing, (a) Seller shall deliver to Purchaser
a bill of sale transferring title to the Equipment to the
Purchaser free and clear of all mortgages, liens, security
interests and encumbrances, and shall take all steps as may be
required to put Purchaser in actual possession and operating
control of the Equipment; and(b) Purchaser shall deliver to or on
behalf of Seller the Purchase Price as set forth in Section 1.3
above.
Section 2.3 Further Assurances. From time to time after
the Closing, at Purchaser's request and expense, Seller shall
execute, acknowledge and deliver to Purchaser such other
instruments of conveyance and transfer and shall take such other
actions, including but not limited to, efforts to obtain any
necessary third-party consents, as Purchaser may reasonably
require.
<PAGE> 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as
follows:
Section 3.1 Title to Equipment; Prior Sale. As of
Closing, Seller shall have good and marketable title to the
Equipment, free and clear of all mortgages, liens, security
interests and other encumbrances and defects of title. Seller
shall have not made any prior sale, assignment, or transfer of
the Equipment, provided that nothing herein shall be construed to
prohibit Purchaser's assumption of the existing Lease with
respect to the Equipment.
Section 3.2 Right, Power and Authority. Seller has the
right, power and authority to execute, deliver and perform this
Agreement. All agreements and instruments required to be
executed by Seller hereunder will be duly executed and delivered
by Seller and constitute the valid and legally binding obligation
of Seller, enforceable against Seller in accordance with the
terms hereof and thereof.
Section 3.2 Implied Warranties. The Equipment is being
sold "as is." Seller makes no warranties with respect to the
Equipment, except as set forth in this Article III, including but
not limited to implied warranties of merchantability and fitness
for a particular purpose.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Headings. The subject headings of the
sections of this Agreement are included for purposes of
convenience only, and shall not affect construction or
interpretation of any of its provisions.
Section 4.2 Entire Agreement; Modification and Waiver.
This Agreement constitutes the entire agreement between the
parties pertaining to its subject matter and supersedes all prior
and contemporaneous agreements, representations and
understandings of the parties. No modification of this Agreement
shall be binding unless executed in writing by all the parties.
No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision. No
waiver shall be binding unless executed in writing by the party
making the waiver.
Section 4.3 Governing Law. This Agreement shall be
construed in accordance with, and governed by the laws of, the
State of Ohio.
<PAGE> 4
IN WITNESS WHEREOF, this Agreement has been executed as of the
12th day of January, 1999.
Seller: William Ciralsky Seller: Nancy Ciralsky
Signature: /s/ William Ciralsky Signature: /s/ Nancy Ciralsky
-------------------- ------------------
Purchaser: TPSS Acquisition Corporation
By: /s/ Richard D. Bailey
---------------------
Name: Richard D. Bailey
Title: President
<PAGE> 1
EXHIBIT 10.82
Consolidated Capital of North America, Inc., hereby
unconditionally guarantees the obligations of William Ciralsky
("Ciralsky") under that certain Unconditional and Continuing
Guaranty, dated July 6, 1998, attached hereto as Exhibit A (the
"Toledo Blank Guaranty"), for the joint benefit of Ciralsky and
Toledo Blank, Inc. ("Blank"). Guarantor hereby further covenants
and agrees as follows:
1. Guarantor (i) acknowledges that Ciralsky is obligated
under the Toledo Blank Guaranty; (ii) warrants that
Guarantor has received good and valuable consideration
for this Guaranty; and (iii) waives notice of the
acceptance of this Guaranty.
2. This Guaranty is a guaranty of payment and not of
collection.
3. Guarantor hereby waives Ciralsky's presentment,
protest, notice, demand or action together with notice
of acceptance of this Guaranty.
4. Ciralsky, his successors and assigns shall not be
required to proceed first against TPSS Acquisition
Corporation or against any other guarantor, person,
firm or corporation, or against any collateral security
before resorting to the undersigned Guarantor for
payment.
5. Ciralsky shall provide Guarantor with notice of any
claim ("Claim") made against Ciralsky by Blank under
the Toledo Blank Guaranty within ten (10) days of
Ciralsky's receipt of written notice of any such Claim.
Guarantor shall have a reasonable opportunity, but in
no event more than thirty (30) days, to cure the
default or payment deficiency that is the basis of the
Claim. In the event that the Claim is paid to Blank
pursuant to this Guaranty, Guarantor shall be
subrogated to any and all rights of Blank against
Ciralsky with respect to the Claim.
6. Guarantor shall not be obligated under this Guaranty in
respect of any payments made by Ciralsky with respect
to a Claim paid or agreed to be paid by Ciralsky
without the prior written consent of Guarantor.
Guarantor's liability hereunder shall be further
subject to Ciralsky's cooperation with Guarantor in
connection with any negotiations with Blank regarding
all Claims.
7. This Guaranty shall be binding upon the successors and
assigns of Guarantor and shall inure to the benefit of
the heirs, executors, administrators, successors and
assigns of Ciralsky.
8. Guarantor waives all suretyship and other similar
defenses.
<PAGE> 2
9. This Guaranty shall be governed, construed and
interpreted in accordance with the laws of the State of
Ohio.
10. No forbearance by Ciralsky in exercising any right
under this Guaranty shall operate as a waiver thereof.
IN WITNESS WHEREOF, Guarantor executes and delivers to
Ciralsky this Guaranty on January 12, 1998.
GUARANTOR
CONSOLIDATED CAPITAL OF NORTH
AMERICA, INC.
By: /s/ Richard D. Bailey
---------------------
Title: President
Ciralsky represents and warrants that all currently outstanding
obligations of Toledo Pickling & Steel Sales, Inc. and Toledo
Pickling Steel Group (collectively, "Toledo Pickling") to Blank
as of November 30, 1998 are fully accounted for on the November
30, 1998 Balance Sheet of Toledo Pickling & Steel Sales, Inc.
/s/ William Ciralsky
--------------------
William Ciralsky
<PAGE> 1
EXHIBIT 10.83
THIS INDEMNIFICATION AGREEMENT, dated as of January 12,
1999, (hereinafter referred to as the "Agreement"), is entered
into by and among TPSS Acquisition Corporation, an Ohio
corporation (hereinafter referred to as "Purchaser"), and William
Ciralsky, having an address at 2504 Edgehill Road, Toledo, Ohio,
(hereinafter referred to as the "Shareholder").
RECITALS:
A. WHEREAS, William Ciralsky, as Trustee of Self-
Determination of Trust dated December 5, 1985 and as amended July
31, 1992, is the sole shareholder of Toledo Pickling & Steel
Sales, Inc. ("Toledo Pickling");
B. WHEREAS, Toledo Pickling is selling substantially all
of its assets to Purchaser pursuant to a certain Asset Purchase
Agreement ("Asset Purchase Agreement") dated as of December 31,
1998, by and between Toledo Pickling, as seller, and Purchaser,
as buyer, and, pursuant to the terms and conditions of such Asset
Purchase Agreement, Purchaser is assuming certain liabilities of
Toledo Pickling,
C. WHEREAS, Purchaser, as a condition to the purchase of
the assets pursuant to the Asset Purchase Agreement, shall not
assume certain liabilities detailed in Schedule 3.21 of the Asset
Purchase Agreement,
D. WHEREAS, Shareholder, as a condition to the sale of the
assets pursuant to the Asset Purchase Agreement, seeks
indemnification with regard to certain contracts which
Purchaser specifically is not assuming on Schedule 3.21 of the
Asset Purchase Agreement,
NOW, THEREFORE, in consideration of the premises, the mutual
promises and covenants hereinafter set forth and other good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Shareholder and Purchaser hereby agree as
follows:
1. Recitals. The recitals set forth above are hereby
incorporated as terms and provisions hereof.
2. Indemnification. Subject to the terms of this Agreement,
Purchaser shall indemnify and hold harmless Shareholder, in his
individual capacity, any liability he personally has solely with
regard to any contract or lease in Schedule 3.21 (which is
attached and fully incorporated herein) of the Asset Purchase
Agreement that Purchaser is not assuming. Shareholder shall
provide notice to Purchaser of any claim, suit or other action,
whether brought or threatened, immediately upon becoming aware of
such action. In the event of any claim, suit or other action
brought or threatened against Shareholder, Purchaser, in its sole
discretion, shall have the right to determine whether it shall
<PAGE> 2
personally defend such action itself or reimburse Shareholder for
his reasonable costs and expenses related to his defense of such
claim, suit or other action. Shareholder shall not compromise or
settle such litigation without the express, written approval of
Purchaser.
3. Best Efforts. In the event that Purchaser is required to
defend Shareholder under the terms of this Agreement,
Shareholder shall exercise his best efforts to fully assist and
cooperate with Purchaser in such undertaking in his capacity of
an officer of Toledo Pickling and as an employee of TPSS
Acquisition Corporation.
4. Representation of Shareholder. Shareholder hereby
represents that he has not personally guaranteed, in writing or
otherwise, any of the contracts or leases that are a part of
Schedule 3.21 of the Asset Purchase Agreement, except items
number 2 and 23 as noted thereon.
5. Confidentiality of Agreement. Shareholder acknowledges that
the existence and content of this Agreement is confidential as
between the parties hereto and Toledo Pickling, whose
confidentiality shall not be breached provided that disclosure
may be made to Shareholder's attorneys, accountants, financial
advisors and lenders. Except as provided herein, Shareholder
warrants that he shall not disclose, in any manner, to any
individual or entity, including, but not limited to the parties
set forth on Schedule 3.21 of the Asset Purchase Agreement, the
existence of this Agreement nor the terms or content contained
herein. Should Shareholder be required to disclose this
Agreement or any of the terms hereunder by subpoena or receipt of
subpoena of a court of competent jurisdiction, he shall first
notify Purchaser immediately upon notice of such a court order,
and allow Purchaser to defend such order if it so chooses.
Should Shareholder fail to comply with any of the material terms
under this paragraph the entirety of this Agreement shall become
null and void.
6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
7. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this
Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument
executed by Purchaser and Shareholder.
(b) Purchaser shall not by any act (except by a
written instrument pursuant to Section 7(a)
hereof), be deemed to delay, indulge, omit or
otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any
breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in
exercising on the part of Purchaser, any right,
<PAGE> 3
power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall
preclude any other or further exercise thereof or
the exercise of any other right, power or
privilege. A waiver by Purchaser of any right or
remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which
Purchaser would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or
concurrently and are not exclusive of any other
rights or remedies provided by law.
8. Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in
the interpretation hereof.
9. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of Purchaser and shall inure to
the benefit of Purchaser and its successors and assigns.
Shareholder may not assign any of his rights or obligations under
this Agreement.
10. Governing Law; Submission to Jurisdiction; Venue. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF OHIO. THE PARITES HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF OHIO AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE SOUTHERN DISTRICT OF OHIO,
AND WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THEM AND
CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED
MAIL AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)
BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE
U.S. MAILS, POSTAGE PREPAID. THE PARTIES HEREBY WAIVE ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO
VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT
THE RIGHT OF THE PARTIES AND/OR ANY OF THEIR AFFILIATES TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHTS OF THE PARTIES AND/OR ANY OF THIER AFFILIATES TO BRING
ANY ACTION OR PROCEEDING AGAINST THE OTHER SHAREHOLDER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. THE PARTIES
HEREBY AGREE THAT THE EXCLUSIVE AND APPROPRIATE FORUMS FOR ANY
DISPUTE HEREUNDER ARE THE COURTS OF THE STATE OF OHIO AND THE
UNITED STATES DISTRICT COURT LOCATED IN THE SOUTHERN DISTRICT OF
OHIO AND AGREE NOT TO INSTITUTE ANY ACTION IN ANY OTHER FORUM.
THE PARTIES HEREBY WAIVE ANY RIGHT TO HAVE A JURY
<PAGE> 4
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY
DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
11. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute a binding
and enforceable agreement with respect to each party. Signatures
received via facsimile shall be effective and binding on the
parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed by each
party hereto as of the date and year first above written.
TPSS ACQUISITION CORPORATION
/s/Willaim Ciralsky By /s/ Richard D. Bailey
------------------- ----------------------
William Ciralsky Richard D. Bailey
<PAGE> 1
EXHIBIT 10.84
THIS LEASE effective as of the 12th day of January, 1999
(the "Lease") between CAMPBELL INVESTORS, an Ohio general
partnership (the "Lessor"), having and address in care of William
Ciralsky, General Partner, at 2504 Edgehill, Toledo, Ohio 43615
and TPSS ACQUISITION CORPORATION, an Ohio corporation (the
"Lessee"), having an address at 20000 So. Western Avenue,
Torrence, California 90501.
1. Premises; Title and Condition.
In consideration of the rents and covenants herein
stipulated to be paid and performed by Lessee and upon the terms
and conditions herein specified, Lessor hereby leases to Lessee,
and Lessee hereby leases from Lessor, the premises (the
"Premises") consisting of the land (the "Land") described on
Schedule A, all buildings and other improvements now or hereafter
located or under construction on the Land (the "Improvements"),
the equipment described on Schedule B (the "Equipment") and the
respective easements, rights and appurtenances relating to the
Land and the Improvements. Subject to the terms and conditions
of this Lease, the Premises are leased to Lessee in their "AS IS"
present condition without representation or warranty by Lessor,
and subject to the rights of parties in possession and to the
existing state of title.
2. Use.
Lessee may use the Premises for the operation of a steel
service center and shall not use the same for any other purpose
absent the prior written consent of Lessor.
3. Quiet Enjoyment.
So long as no event of default has occurred and is
continuing hereunder, Lessor warrants that neither Lessor nor
anyone claiming by, through, or under Lessor shall interfere with
the peaceful and quiet occupation and enjoyment of the Premises
by Lessee. However, Lessor and its agents may, upon twenty-four
(24) hours prior notice to Lessee, enter upon and examine the
Premises, and may show the Premises to prospective purchasers,
mortgagees or tenants so long as such examination or showing
shall not unreasonably interfere with the business operations of
Lessee or subtenants on the Premises.
4. Term.
Subject to the terms of this Lease, Lessee shall hold the
Premises for:
A. An initial term (the "Initial Term") beginning on
the date hereof, and ending at midnight on December 31, 2003.
B. Thereafter, if Lessee shall not be in default
hereunder, Lessee shall have the option to extend the term of
this Lease for two consecutive option terms of five years each
(the "Option Terms"). Lessee shall exercise each option to
extend by giving written notice to Lessor at least one hundred
eighty (180) days prior to the end of the term then in effect.
If Lessee shall fail to give such notice, or if an Event of
Default exists at the time of the giving of such notice or at the
time an Option Term would otherwise begin, then this Lease shall
<PAGE> 2
automatically terminate at the end of the term (Initial or
Option) then in effect, and Lessee shall have no further option
to extend this Lease.
5. Rent; Additional Rent.
A. For the Initial Term Lessee shall pay to Lessor as
base rent ("Base Rent") for the Premises the sum of One Million
Nine Hundred Forty-Four Thousand Dollars ($1,944,000.00) which
shall be due and payable as follows: (i) for the first two years
of the Initial Term, the sum of Seven Hundred Twenty Thousand
Dollars ($720,000.00) payable in twenty-four (24) consecutive
equal monthly installments in the amount of Thirty Thousand
Dollars ($30,000.00) each due in advance on the first day of each
month commencing on the date hereof; (ii) for years three, four
and five of the Initial Term, the sum of One Million Two Hundred
Twenty-Four Thousand Dollars ($1,224,000.00) payable in thirty-
six (36) consecutive equal monthly installments in the amount of
Thirty-Four Thousand Dollars ($34,000.00) each due in advance on
the first day of each month commencing on the first day of the
twenty-fifth (25th) month of the Initial Term. Notwithstanding
the foregoing, the first rent payment shall be due and payable on
the date hereof in an amount which shall be prorated on the basis
of the number of days remaining in December, 1998.
B. Base Rent for the first Option Term shall be
adjusted for the first year of such Option Term by (i) dividing
the annual rental for the prior lease year (i.e. $408,000.00) by
the index number in the line for "All items" in the Table
entitled d-1, Consumer Price Index - All-city average; all items
groups, subgroups and special groups of items, published monthly
in the "Monthly Labor Review" as part of the Labor Statistics of
the United States Department of Labor for the latest date noted
in the issue of said "Monthly Labor Review" published for the
month next preceding the month during which the Initial Term of
this Lease commenced, and (ii) subsequently multiplying that
amount by the index for the month next preceding the first month
of the Option Term. Thereafter upon each anniversary of the
commencement of the Option Term (including, if applicable, upon
exercise of the second five year option and on each anniversary
thereof) the Base Rent for the next lease year shall be adjusted
as follows: The annual rental for the prior lease year shall be
divided by the index number in the line for "All items" in the
Table entitled d-1, Consumer Price Index - All-city average; all
items groups, subgroups and special groups of items, published
monthly in the "Monthly Labor Review" as part of the Labor
Statistics of the United States Department of Labor for the
latest date noted in the issue of said "Monthly Labor Review"
published for the month next preceding the month during which the
prior lease year commenced and subsequently multiplying that
amount by the index for the month next preceding the first month
of the lease year for which the computation is being made. In
the event that the Bureau of Labor shall change the base period
(1957-59=100), the new index shall be substituted for the old
index. In no event shall rent decrease at any time.
C. All amounts (other than Base Rent) which Lessee is
required to pay pursuant to this Lease shall constitute
additional rent. If Lessee shall fail to pay any such additional
rent or any other sum due hereunder when due, Lessor shall have
all the rights, powers, and remedies with respect thereto as are
provided herein or by law in the case of non-payment of Base
Rent. Lessee shall pay to Lessor on demand interest at the rate
of twelve percent (12%) per annum, or at the highest rate
permitted by law, whichever is less, on all overdue Base Rent or
additional rent from the due date thereof until paid. Lessee
shall perform all of its obligations under this Lease at its sole
cost and expense, and shall pay all Base Rent and additional rent
and other sums due hereunder when due and payable, without
notice, setoff or demand, unless mutually agreed to the contrary.
D. In addition, Lessee agrees to pay the sum of
Thirty Thousand Dollars ($30,000.00) to Lessor, as a security
deposit for the faithful performance of the commitments contained
in this Lease. It is agreed that the security deposit may be
applied, at the discretion of the Lessor to cure any default of
the terms or covenants of this Lease. If the damages shall
exceed the security deposit, the Lessee agrees to reimburse
<PAGE> 3
Lessor for the same upon billing thereof. In the event Lessor
applies the security deposit in whole or part and elects not to
terminate this Lease by reason of default, the Lessee shall
restore the security deposit to its full amount within ten (10)
days after written notice from Lessor. No application of the
security deposit to cure any default of the terms and covenants
of this Lease shall constitute a waiver of such default. The
remedies hereunder are cumulative and in addition to all others
allowable at law or equity. The security deposit shall be
returned to Lessee upon the termination of this Lease.
6. Net Lease.
A. This lease is a net net net lease and except as
expressly provided otherwise in this Lease, Lessee shall be
responsible for (i) all maintenance, repair and replacements,
both structural (subject to the provisions of Section 10 hereof)
and non-structural; (ii) all real estate taxes and assessments
(general and special) and any similar impositions; (iii)
insurance with such coverages and limits as are provided for in
this Lease; and (iv) each and every other cost or expense arising
in connection with the Premises.
B. Any present or further law to the contrary
notwithstanding, this Lease shall not terminate except as
specifically provided herein. The parties intend that the
obligations of Lessee hereunder shall be separate and independent
covenants and agreements and shall continue unaffected unless its
obligations shall have been modified or terminated pursuant to an
express provision of this Lease.
C. Lessee shall remain obligated under this Lease in
accordance with its terms, and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any
bankruptcy, insolvency, reorganization, liquidation, dissolution
or other proceeding affecting Lessor, or any assignee or Lessor,
or any action with respect to this Lease which may be taken by
any trustee, receiver or liquidator or by any court.
7. Taxes and Assessments; Compliance With Law.
A. Lessee shall pay, prior to delinquency: (i) all
taxes, assessments, levies, fees, and other governmental charges
which are at any time imposed or levied upon or assessed against
the Premises, any Base Rent, additional rent or other sum payable
hereunder, or against the Lease, or the leasehold estate hereby
created or which arises in respect of the operation, possession
or use of the Premises; (ii) all gross receipts or similar taxes
imposed or levied upon, assessed against or measured by any Base
Rent, or any additional rent or other sum payable hereunder;
(iii) all sales, value added, use and similar taxes at any time
levied, assessed or payable on account of the leasing or use of
the Premises; and (iv) all charges of utilities and
communications services serving the Premises; provided however,
that Lessee shall not in any event be responsible for any of the
foregoing amounts accruing but not payable prior to the date of
this Lease or for any taxes or other amounts owing by Lessor
unrelated to the Premises, and Lessee will furnish to Lessor
promptly after demand therefor, proof of payment of all items
referred to above which are payable by Lessee. Notwithstanding
the foregoing, Lessee shall pay all the items referred to in
subsections A(i) through (iii) above relative to the Premises
that are billed after the date hereof and payable prior to the
termination (but in any event prorated in the event of any
termination or expiration hereof other than by reason of Lessee's
default); provided, however, it is intended that Lessee shall not
be responsible for payment of an amount in the aggregate which
exceeds the product obtained by multiplying 1/12th of the annual
amount of such items times the number of months during the term
hereof prorated for any partial month. Lessor shall provide all
bills and statements related to the real estate taxes and items
to be paid by Lessee to the Lessee within five (5) days of
Lessor's receipt of same and Lessee shall not be responsible for
any late charges or penalties caused by Lessor's failure to
provide such bills and statements in a timely fashion. In the
event of an early termination or expiration of this Lease (other
<PAGE> 4
than by reason of Lessee's default) Lessee may deduct from the
final month's (or two months', if necessary) base rents and other
amounts due to Lessor hereunder, any proration due Lessee by
reason of application of the foregoing provisions.
B. Lessee shall comply with and cause the Premises to
comply with (i) all laws, ordinances and regulations, and other
governmental rules, orders and determinations now or hereafter
enacted, applicable to the Premises or the use thereof, and (ii)
all contracts, agreements, covenants, conditions and restrictions
applicable to the Premises or the ownership, occupancy or use
thereof. However, Lessee shall not be required to comply with
any such contracts, agreements, covenants, conditions or
restrictions affecting the Premises if entered into on or after
the commencement date of this Lease unless Lessee has consented
thereto. Lessor shall indemnify, defend, and hold harmless
Lessee, its officers, directors, beneficiaries, shareholders,
partners, and agents from all fines, suits, procedures, claims,
and actions of every kind and all costs associated therewith
(including reasonable attorneys' and consultants' fees) arising
out of or in any way connected with (i) any deposit, spill,
discharge, or other release of Hazardous Substances by Lessor
that occurs during the term of the Lease and as extended (other
than fines, suits, procedures, claims, and actions for which
Lessee is liable under Section 17 hereof), and (ii) any other
actions of Lessor which are in violation of laws, ordinances or
regulations.
8. Liens.
Subject to the terms and provisions of Section 16 hereof,
Lessee shall, within thirty (30) days after notice from Lessor,
remove and discharge any charge, lien, security interest or
encumbrance upon the Premises or Base Rent, or any additional
rent or other sum payable hereunder which arises during the term
of this Lease, except for (i) those charges, liens, security
interests and encumbrances existing on the date of this Lease or
arising as a result of events or circumstances existing prior to
the date hereof, and (ii) charges by Lessor and any mortgage,
charge, lien, security interest or encumbrance created as a
result of actions by Lessor after the date of this Lease without
the consent of Lessee. Lessor warrants and represents to Lessee
that Lessor as of the date hereof is not in default under any of
its obligations under any mortgage on the premises as of the date
hereof.
9. Indemnification.
Lessee shall defend all actions accruing after the date of
this Lease, against Lessor and any officer, director or
shareholder of Lessor, and shall pay, protect, indemnify and save
harmless Lessor, and any officer, director or shareholder of any
of Lessor from and against any and all liabilities, losses,
damages, costs, expenses (including reasonable attorney fees and
expenses), causes of action, suits, claims, demands or judgments
of any nature to which Lessor, or any officer, director of
shareholder of Lessor is subject because of Lessor's estate in
the Premises, or arising from (i) injury to or death of any
person, or damage to or loss of property on the Premises or on
adjoining sidewalks, streets or ways, or connected with the use,
condition or occupancy of any thereof, (ii) violation of this
Lease by Lessee, and (iii) any act or omission of Lessee or its
agents, contractors, licensees, sublessees or invitees.
10. Maintenance and Repair.
Throughout the term of this Lease, Lessee at its expense
will maintain, repair and replace all portions and components
(whether structural or non-structural) of the Premises and keep
the same in good repair and condition; provided, however, that
Lessee shall have no responsibility for any structural repair
arising as the result of any action or non-action prior to the
date hereof, including conditions existing on the date hereof.
11. Alterations; Lessee's Equipment.
<PAGE> 5
Lessee may, at its expense, make non-structural alterations
and Improvements provided that (i) the market value of the
Premises shall not be lessened thereby, (ii) such work shall be
expeditiously completed in a good and workmanlike manner and in
compliance with all applicable legal requirements and the
requirements of all insurance policies required to be maintained
by Lessee hereunder, and (iii) the character and use of the
Premises shall not be materially changed as a consequence
thereof. Lessee shall make no structural alterations or
construct any additions to the Improvements without first having
obtained the written consent of Lessor. Lessor may engage an
architect or other professional to assist in evaluating any
request by Lessee for approval of structural alteration or
addition, in which case Lessor shall pay the fees of such
architect or professional as additional rent. All additions and
alterations shall be and remain part of the realty and the
property of Lessor, and shall be subject to this Lease.
Lessee may place upon the Premises any trade fixtures,
machinery, equipment, materials, inventory, furniture, computers
and/or other personal property belonging to Lessee or third
parties, whether or not the same shall be affixed to the
Premises, which are used in connection with any of Lessee's
business operations on the Premises, and may remove the same at
any time during the term of this Lease provided such removal does
not cause any irreparable harm. Lessee shall repair any damage
to the Premises caused by such removal. It is understood and
agreed that the Equipment will not be removed from the Premises
by Lessee without the consent of the Lessor, which consent shall
not be unreasonably withheld.
12. Condemnation and Casualty.
A. Lessee hereby irrevocably assigns to Lessor any
award, compensation or insurance payment to which Lessee may
become entitled by reason of Lessee's interest in the Premises
(i) if the use, occupancy or title of the Premises or any part
thereof is taken, requisitioned or sold in, by or on account of
any actual or threatened eminent domain proceeding or the action
by any person having the power of eminent domain, or (ii) if the
Premises or any part thereof are damaged or destroyed by fire,
flood or other casualty. Lessee shall, promptly upon obtaining
knowledge of such damage or destruction, or of any such
proceeding or action for the taking or the Premises or any part
thereof, notify Lessor of the pendency thereof. Lessor may
appear at any proceeding or action to negotiate, prosecute and
adjust any claim for any award, compensation or insurance payment
on account of any such damage, destruction, taking, requisition
or sale, and Lessor shall collect any such award, compensation or
insurance payment. All amounts paid in connection with any such
damage, destruction, taking, requisition or sale shall be applied
pursuant to this paragraph, and all such amounts (minus the
expense of collecting such amounts) are herein called the Net
Proceeds. Lessor shall pay all reasonable costs and expenses in
connection with each such proceeding, action, negotiation,
prosecution and adjustment, for which costs and expenses Lessor
shall be reimbursed out of any award, compensation or insurance
payment received. Lessee shall be entitled to participate in any
such proceeding, action, negotiation, prosecution or adjustment.
The foregoing notwithstanding, nothing in this Lease shall impair
Lessee's right to any award or payment on account of Lessee's
trade fixtures, equipment and other tangible personal property,
moving expenses and loss of business, if available, to the extent
Lessee shall have a right to make a claim, therefor against the
person having the power of eminent domain, but in no event shall
any such claim be based upon the value of Lessee's leasehold
interest.
B. In the event of any occurrence described in clause
(i) above which does not render the Improvements and Equipment
unsuitable for restoration for continued use and occupancy, or in
the event of any occurrence of the character referred to in
clause (ii) above, Lessee shall, out of and to the extent of the
Net Proceeds collected by Lessor, rebuild, replace or repair any
damage to the Premises caused by such event so as to restore the
Premises (in the case of condemnation, as nearly practicable) to
the condition and market value thereof immediately prior to any
such occurrence. Prior to any such rebuilding, Lessor and Lessee
<PAGE> 6
shall agree on the maximum cost of such rebuilding (the
"Restoration Cost"). The Restoration Cost shall be paid out of
the Net Proceeds available in connection with such occurrence.
In the event Net Proceeds are insufficient by reason of Lessee's
failure to procure required insurance with adequate limits,
Lessee shall be responsible for any insufficiency. Lessee shall
deliver certificates to Lessor, from time to time as such work of
rebuilding, replacement and repair progresses, each such
certificate describing the work for which payment is requested.
Any portion of the Net Proceeds remaining after final payment has
been made for any such work and after Lessee has been reimbursed
for any portions it contributed to the Restoration Cost, shall be
retained by Lessor in the case of an occurrence of the character
referred to in clause (i), and shall be paid to or at the
discretion of Lessee in the event of an occurrence of the
character referred to in clause (ii). In the event of any
temporary requisition, this Lease shall remain in full effect and
Lessee shall be entitled to receive the Net Proceeds allocable to
the period after the termination of the term of this Lease shall
be paid to Lessor. If the cost of any repairs required to be
made by Lessee pursuant to this paragraph shall exceed the amount
of the Net Proceeds, the deficiency shall be paid by Lessee.
C. In the event an occurrence of the character
referred to in clause (i) above shall affect all or a substantial
portion of the Land and Improvements and shall render the
Improvements unsuitable for restoration for continued use and
occupancy for the purpose set forth in this Lease, Lessee shall
have the option to terminate this Lease, in which event Lessor
shall retain all awards or compensation granted for the
occurrence of such event, except for those awards or
compensations which are payable to Lessee and/or any subtenant as
set forth above.
13. Insurance.
A. Lessee will maintain or cause to be maintained
insurance on the Premises of the following character:
1. Insurance against loss by fire, flood,
lightning, vandalism, malicious mischief or other risks which at
the time are included under "all-risk" policies, in amounts
sufficient to prevent Lessor or Lessee from becoming a co-insurer
of any loss, but in any event in amounts not less than one
hundred percent (100%) of the actual replacement value of the
Improvements, exclusive of foundations and excavation, and the
Equipment.
2. Comprehensive public liability insurance
against claims for bodily injury, death or property damage
occurring on, in or about the Premises and adjoining streets and
sidewalks, in the minimum amounts of Three Million Dollars
($3,000,000.00) for bodily injury or death in any one occurrence,
Three Million Dollars ($3,000,000.00) in the aggregate, and Three
Million Dollars ($3,000,000.00) for property damage, or in such
greater amounts as are then customary for property similar in use
to the Premises.
3. Workers' compensation insurance to the extent
required by the law of the State of Ohio, and to the extent
necessary to protect Lessor and the Premises against workers'
compensation claims.
4. Explosion insurance in respect of any boilers
and similar apparatus located on the Premises in the minimum
amount of Two Hundred Fifty Thousand Dollars ($250,000.00), or in
such greater amounts as are then customary for property similar
in use to the Premises.
5. At any time when construction is being
performed, completed value builder's risk insurance for the
Premises, including building materials on the Premises, covering
loss or damage for fire, lightning, extended coverage perils,
sprinkler leakage, vandalism and malicious mischief and perils
<PAGE> 7
covered under a difference in conditions policy and in any amount
not less than the final cost, as estimated by Lessee, of such
construction.
6. Such other insurance, in such amounts and
against such risks, as is commonly obtained in the case of
property similar in use to the Premises and located in the State
of Ohio, including war risk insurance when and to the extent
obtainable from the United States government or any agency
thereof.
B. All of the above described insurance shall be
written by companies of nationally recognized financial standing
and legally qualified to issue such insurance, and shall name
Lessor as an additional insured party and shall include any
mortgagee of the Premises, and Lessee, as their interests may
appear. Further, Lessor and/or Lessor's mortgagee shall be made
the loss payee upon all casualty insurance.
Every policy referred to above shall provide that it will
not be canceled or materially modified except after thirty (30)
days written notice to Lessor and all mortgagees of the Premises,
and that it shall not be invalidated by any act or negligence of
Lessor, Lessee or any person or entity having an interest in the
property, nor by occupancy or use of the Premises for purposes
more hazardous than permitted by such policy, nor by any
foreclosure or other proceedings relating to the Premises, nor by
change in title to or ownership of the Premises or Lessor's
interest therein.
C. Lessee shall deliver to Lessor and all mortgagees
of the Premises original or duplicate certificates of insurance
evidencing the existence of all insurance which is required to be
maintained by Lessee hereunder, such delivery to be made (i)
promptly after the execution and delivery hereof, and (ii) at
least thirty (30) days prior to the expiration of any such
insurance. Lessee shall not obtain or carry separate insurance
concurrent in form or contributing in the event of loss with that
required by this section unless Lessor and all mortgagees of the
Premises are named insureds therein, with loss payable as
provided herein.
Lessee shall at all times comply with and cause the Premises
to comply with all insurance policies to the extent necessary to
prevent cancellation thereof and to insure full payment of any
claims made under such policies.
14. Assignment and Subletting.
Lessee may not assign this Lease or sublet any portion of
the Premises, except ot its affiliates, without the prior written
consent of Lessor, which consent shall not be unreasonably
withheld. Any assignee or subtenant shall be bound by all of the
terms and conditions of this Lease, and shall agree to assume
Lessee's responsibilities hereunder. Any assignment or
subletting shall not relieve Lessee from liability for payment of
rent or other sums herein provided or from the obligation to keep
and be bound by the terms, conditions and covenants of this
Lease. The acceptance of rent from any other person shall not be
deemed to be a waiver of any of the provisions of this Lease or
to be a consent to the assignment of this Lease or subletting of
the Premises.
15. Holding Over.
If Lessee shall remain in possession of all or any part of
the Premises after the expiration of the term of this Lease or
any rental thereof, then Lessee shall be deemed a tenant of the
Premises from month to month at Base Rent equal to 110% of the
prior Base Rent and subject to all of the terms and provisions
hereof, except only as to the term of this Lease.
16. Permitted Contests.
<PAGE> 8
Lessee shall not be required to pay, discharge or remove any
tax, assessment, levy, fee, charge, lien or encumbrance
referenced in Section 8 hereof, or to comply with any legal
requirement applicable to the Premises or the use thereof, so
long as Lessee shall contest or cause to be contested the
existence, amount of validity thereof by appropriate proceedings
which shall prevent the collection of or other realization upon
the tax, assessment, levy, fee, charge or encumbrance so
contested, and which also shall prevent the sale, forfeiture or
loss of the Premises or any Base Rent, any additional rent or any
other sum required to be paid by Lessee hereunder to satisfy the
same or legal requirements, and which shall not affect the
payment of any Base Rent, any additional rent or any other sum
required to be paid by Lessee hereunder. However, such contest
shall not subject Lessor to the risk of any criminal liability or
any material civil liability. Lessee shall give such reasonable
security as may be demanded by Lessor or any mortgagee of the
Premises to ensure ultimate payment of such tax, assessment,
levy, fee, charge, lien or encumbrance and compliance with legal
requirements and to prevent any sale or forfeiture of the
Premises, any Base Rent, any additional rent or any other sum
required to be paid by Lessee hereunder by reason of such non-
payment or non-compliance.
17. Environmental.
A. The term "Hazardous Substance" as used in this
section shall mean any hazardous substance, pollutant,
contaminant or waste regulated under the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended (42 U.S.C. 9601 et. seq.); asbestos and asbestos-
containing materials; oil and petroleum products and natural gas,
natural gas liquids, liquefied natural gas, and synthetic gas
usable for fuel; pesticides regulated under the Federal
Insecticide, Fungicide and Rodenticide Act, as amended (7 U.S.C.
136 et. seq.); PCB's and other substances regulated under Toxic
Substances Control Act, as amended (7 U.S.C. 136 et. seq.);
source material, special nuclear material, byproduct materials,
and any other radioactive materials or radioactive wastes however
produced, regulated under the Atomic Energy Act or the Nuclear
Waste Policy Act; Chemicals subject to the Occupational Safety
and Health Act Hazard Communication Standard (29 U.S.C.
1910.1200 et. seq.); industrial process and pollution control
wastes whether or not hazardous within the meaning of the
Resource Conservation and Recovery Act, as amended (42 U.S.C.
6901 et. seq.); and other substances and materials regulated
under Laws (as defined below) relating to environmental quality,
health, safety, contamination and clean-up. For purposes of this
section, Laws shall mean all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements of all governments, departments, commissions,
boards, courts, authorities, agencies, officials and officers,
foreseen and unforeseen, ordinary and extraordinary, which now or
at any later time may be applicable to the Building or any part
thereof.
B. Lessee, its employees, agents and representatives
shall not cause: (i) any violation of any law related to
environmental conditions on, under, or about the Premises, or
arising from Lessee's use or occupancy of the Premises,
including, but not limited to, soil and ground water conditions;
or (ii) the use, generation, release, manufacture, refining,
production, processing, storage or disposal of any Hazardous
Substances on, under, or about the Premises, or the
transportation to or from the Premises of any Hazardous
Substances other than customary quantities of such Hazardous
Substances customarily used in the operation of Lessee's business
and then only in accordance with all laws.
C. Lessee shall, at Lessee's expense, comply with all
Laws regulating the use, generation, storage, transportation, or
disposal of Hazardous Substances.
D. During the term of this Lease, Lessee shall, at
Lessee's expense, make all submissions to, provide all
information required by, and comply with all requirements of, all
governmental authorities (the "Authorities"); provided, however,
<PAGE> 9
that Lessee shall not have any responsibility under this
subsection D for information required to be provided which is not
in Lessee's possession or control unless specifically required
due to Lessee's operations.
E. If any Authority of any court demands that a clean-
up plan be prepared and that a clean-up be undertaken because of
any deposit, spill, discharge, or other release of Hazardous
Substances that occurs during the term of this Lease, including
any portion of the term as hereby extended, and which results
from Lessee's use or occupancy of the Premises, then Lessee
shall, at Lessee's expense, prepare and submit the required plans
and all related bonds and other financial assurances; and Lessee
shall carry out all work required by such clean-up plans.
F. Lessee shall promptly provide all information
regarding Lessee's use, generation, storage, transportation or
disposal of Hazardous Substances that is requested by Lessor. If
Lessee fails to fulfill any duty imposed under this section,
within a reasonable time, Lessor may do so; and in such case,
Lessee shall cooperate with Lessor in order to prepare all
documents deemed reasonably necessary or appropriate to determine
the applicability of the Laws to the Leased Premises and Lessee's
use thereof, and for compliance therewith, and Lessee shall
execute all documents promptly upon Lessor's request. No such
action by Lessor and no attempt made by Lessor to mitigate
damages under any Law shall constitute a waiver of any of
Lessee's obligations under this section.
G. Lessee shall indemnify, defend, and hold harmless
Lessor, its officers, directors, beneficiaries, shareholders,
partners, and agents from all fines, suits, procedures, claims,
and actions of every kind and all costs associated therewith
(including reasonable attorneys' and consultants' fees) arising
out of or in any way connected with any deposit, spill,
discharge, or other release of Hazardous Substances that occurs
during the term of the Lease and as extended, and which results
from Lessee's use or occupancy of the Premises, including,
without limitation, from Lessee's failure to provide all
information, make all submissions, and take all actions required
by all Authorities under the Laws, pursuant to subsection D
hereof.
H. Lessee's obligations and liabilities under this
section shall survive the expiration or termination of this
Lease.
18. Option to Purchase.
A. During the Initial Term and any Option Term then
in effect, provided the Lessee is not then in default under this
Lease, Lessee shall have the option to purchase ("Option to
Purchase") the Premises for its fair market value at the date of
the exercise of this Option to Purchase.
B. The Option to Purchase shall be exercised by
Lessee providing written notice of election to exercise which
notice shall be accompanied by a copy of an appraisal of the
Premises obtained by Lessee from an MAI appraiser doing business
in the County of Lucas, State of Ohio, and an offer to purchase
from Lessee at no less than the appraised value set forth in such
appraisal. Lessor shall notify Lessee in writing whether the
proposed value is acceptable to Lessor. If the proposed value is
acceptable, then such value shall be the purchase price of the
Premises and sale shall be concluded as provided in this section.
If the proposed value is not acceptable to Lessor, then Lessor
shall notify Lessee and shall within ninety (90) days obtain an
appraisal of the Premises from an MAI appraiser doing business in
the County of Lucas, State of Ohio. If the appraisal obtained by
Lessor is equal to or less than the proposed value set forth by
Lessee in its original notice, then such proposed value shall be
the purchase price. If the appraisal obtained by Lessor is
within 10% higher of the proposed value set forth in Lessee's
notice, then the purchase price shall be the average of the
proposed value and the value in Lessor's appraisal. If the
<PAGE> 10
appraisal obtained by Lessor is more than 10% higher than the
proposed value in Lessee's notice, then the two appraisers shall
select a third MAI appraiser doing business in the County of
Lucas, State of Ohio. The purchase price shall then be the
greater of (i) the proposed value in the Lessee's notice or (ii)
the average of the third appraisal and the next closest appraisal
in terms of dollar value to the third appraisal, but if the two
appraisals are equally close in terms of dollar value then the
value in the third appraisal shall be the purchase price. Lessee
shall pay for its appraisal. Lessor shall pay for its appraisal.
Lessor and Lessee shall share the expense of the third appraisal.
The purchase price determined above is referred to as the
Purchase Price.
C. The closing of a sale under the Option to Purchase
shall take place within sixty (60) days after determination of
the Purchase Price. Base Rent and additional rent shall be
prorated in escrow to the date of closing. A nationally
recognized title company with offices in Cleveland, Ohio shall be
designated by the Lessor to act as escrow agent and to issue the
title policy required herein.
D. At closing, Lessor shall convey title to the
Premises to Lessee by statutory form Limited Warranty Deed, free
and clear of all liens and encumbrances except (i) real estate
taxes and assessments, not then due and payable (assessments then
being paid in installments shall not be considered as due and
payable), (ii) legal highways, (iii) building and zoning
ordinances, (iv) any encumbrance suffered or permitted by Lessee,
(v) this Lease, and (vii) such other matters of record as do not
materially adversely affect the use of the Premises as permitted
under this Lease.
E. Lessor shall pay the following closing costs: (i)
the transfer tax; (ii) the cost of a title search; (iii) one-half
the base premium for an Owner's Policy of Title Insurance; (iv)
the deed preparation costs; and (v) one-half the escrow agent's
fee. Lessee shall pay the following closing costs: (i) one-half
the base premium for an Owner's Policy of Title Insurance and the
full cost of any endorsements desired by Lessee; (ii) the cost to
record the deed; and (iii) one-half the escrow agent's fee. In
addition, Lessor shall credit against the purchase price an
amount equal to all unpaid real estate taxes and assessments
(whether or not billed) prorated to the date of closing (to the
extent the same were not payable by Lessee under this Lease).
19. Default.
A Any of the following occurrences or acts shall
constitute an event of default ("Event of Default") under this
Lease:
(i) if Lessee shall fail to pay any Base Rent, additional rent
or other sum, as and when required to be paid by Lessee
hereunder, and such failure shall continue for five (5) days
after notice by Lessor to Lessee of such failure;
(ii) if Lessee shall fail to observe or perform any other
provision hereof and such failure shall continue for thirty (30)
days after notice by Lessor to Lessee of such failure (provided,
that in the case of any such default which cannot be cured by the
payment of money and cannot with diligence be cured within such
thirty (30) day period, if Lessee shall commence promptly to cure
the same and thereafter prosecute the curing thereof with
diligence, the time within such default may be cured shall be
extended for such period as is necessary to complete the curing
thereof with diligence);
(iii) if Lessee shall file a petition in bankruptcy or for an
arrangement pursuant to any federal or state bankruptcy law or
any similar federal or state law;
(iv) if Lessee shall be adjudicated a bankrupt;
<PAGE> 11
(v) if Lessee shall become insolvent;
(vi) if Lessee shall make an assignment for the benefit of
creditors;
(vii) if Lessee shall admit in writing its inability to pay
its debts generally as they become due;
(viii) if a petition or answer proposing the adjudication of
Lessee as a bankrupt pursuant to any federal or state bankruptcy
law or any similar federal or state law shall be filed in any
court and Lessee shall consent to or acquiesce in the filing
thereof or such petition or answer shall not be discharged or
denied within sixty (60) days after the filing thereof; or
(ix) if the Premises shall have been left unoccupied and
unattended for a period of sixty (60) days.
B. If an Event of Default shall have happened and be
continuing, Lessor shall have the right to give Lessee notice of
Lessor's termination of the term of this Lease. Upon the giving
of such notice, the term of this Lease and the estate hereby
granted shall expire and terminate on the date set forth in such
notice, and all rights of Lessee hereunder shall expire and
terminate, but Lessee shall remain liable as hereinafter
provided.
C. If an Event of Default shall have happened and be
continuing, Lessor shall have the immediate right, whether or not
the term of this Lease shall have been terminated pursuant to
this section, to re-enter and repossess the Premises by summary
proceedings, ejectment, or any other legal action as is available
by law or in any lawful manner Lessor determines to be necessary
or desirable, and shall have the right to remove all persons and
property therefrom. No such re-entry or repossession of the
Premises shall be construed as an election by Lessor to terminate
the term of this Lease unless a notice of such termination is
given to Lessee pursuant to this section.
D. At any time or from time to time after the re-
entry or repossession of the Premises pursuant to this section,
whether or not the term of this Lease shall have been terminated
pursuant to this section, Lessor shall be obligated to mitigate
damages, and may re-let the Premises for the account of Lessee,
in the name of Lessee or Lessor or otherwise, without notice to
Lessee, for such term or terms and on such conditions and for
such uses as Lessor, in its absolute discretion, may determine.
Lessor may collect and receive any rents payable by reason of
such re-letting. Except as otherwise provided by law, Lessor
shall not be liable for any failure to re-let the Premises or for
any failure to collect any rent due upon any such re-letting.
E. No expiration or termination of the term of this
Lease pursuant to this section, by operation of law or otherwise,
and no re-entry or repossession of the Premises pursuant to this
section or otherwise, shall relieve Lessee of its liabilities and
obligations hereunder, all of which shall survive such
expiration, termination, re-entry, or repossession except as
provided in subsection F below.
F. In the event of any expiration or termination of
the term of this Lease, or re-entry or repossession of the
Premises by reason of the occurrence of an Event of Default,
Lessee will pay to Lessor all Base Rent, additional rent and
other sums required to be paid by Lessee to and including the
date of such expiration, termination, re-entry or repossession;
and thereafter, Lessee shall, until the end of what would have
been the term of this Lease in the absence of such expiration,
termination, re-entry or repossession, be liable to Lessor for,
and shall pay to Lessor, as liquidated and agreed current
damages: (i) all Base Rent, additional rent and other sums which
would be payable under this Lease by Lessee in the absence of
such expiration, termination, re-entry or repossession, less (ii)
the net proceeds, if any, of re-letting effected for the account
of Lessee pursuant to this section, after deducting from such Net
Proceeds all expenses of Lessor in connection with such re-
letting. Lessee will pay such current damages on the days on
which Base Rent would be payable under this Lease in the absence
<PAGE> 12
of such expiration termination, re-entry or repossession, and
Lessor shall be entitled to recover the same from Lessee on such
day.
20. Additional Rights of Lessor.
A. Except as expressly provided in Section 19 hereof,
no right or remedy hereunder shall be exclusive of any other
right or remedy, but shall be cumulative and in addition to any
other right or remedy hereunder or now or hereafter existing.
Failure to insist upon the strict performance of any provision
hereof or to exercise any option, right, power or remedy
contained herein shall not constitute a waiver or relinquishment
for the future. Receipt by Lessor of any Base Rent, additional
rent or other sum payable hereunder with knowledge of the breach
of any provision hereof shall not constitute waiver of such
breach, and no waiver by Lessor of any provision hereof shall be
deemed to have been made unless made in writing.
B. If Lessee shall be in default in the performance
of any of its obligations hereunder, Lessee shall pay to Lessor,
on demand, all out of pocket expenses incurred by Lessor as a
direct result thereof. If Lessor shall be made a party to any
litigation commenced against Lessee, and Lessee shall fail to
provide Lessor with counsel approved by Lessor and pay the
expense thereof, Lessee shall pay all costs and reasonable
attorney fees in connection with such litigation.
21. Notices.
All given pursuant to this Lease shall be in writing and
shall be validly given when (i) deposited in the United States
Mail and posted for certified or registered mail, return receipt
requested, (ii) deposited with a nationally-recognized overnight
delivery service for next day delivery and confirmation of such
delivery is received by the sender or (iii) by confirmed
telephone facsimile transmission, as follows:
(a) if to Lessor: c/o William Ciralsky, General Partner, 2504
Edgehill, Toledo, Ohio 43615, and
(b) if to Lessee: c/o Consolidated Capital of North America,
Inc., 20000 So. Western Avenue, Torrance, CA 90501, facsimile:
(310) 787-3177.
Notwithstanding the foregoing, notice to Lessee may be made by
posting a copy of such notice upon the Premises, provided a copy
is also sent by each of the foregoing methods to the Lessee's
last known address as shown by the Lessor's records.
22. Estoppel Certificates.
Lessee will, upon five (5) days notice at the request of
Lessor, execute, acknowledge and deliver to Lessor a certificate
of Lessee stating that this Lease is unmodified and in full
effect (or, if there have been modifications, that this Lease is
in full effect as modified, and setting forth such modifications)
and the dates to which Base Rent, additional rent and other sums
payable hereunder or any payments payable under such sublease, as
the case may be, have been paid, and either stating that to the
knowledge of the signer of such certificate no default exists
hereunder or specifying each such default of which the signer has
knowledge and whether or not the Premises are still being
occupied or operated. Any such certificate may be relied upon by
any prospective mortgagee or purchase or the Premises.
23. Surrender.
<PAGE> 13
Upon the expiration or termination of the term of this
Lease, Lessee shall surrender the Premises and the Equipment to
Lessor in the condition in which the Premises and the Equipment
were at the commencement of the term, except for ordinary wear
and tear, and except for a termination of this Lease as provided
in Section 12 hereof. Lessee shall remove from the Premises on
or prior to such expiration or termination all property situated
thereon which is not owned by Lessor, and shall repair any damage
caused by such removal. The property not so removed shall become
the property of Lessor, and Lessor may cause such property to be
removed from the Premises and disposed of, but the cost of any
such removal and disposition and of repairing any damage caused
by such removal shall be borne by Lessee. It is understood and
agreed that the Equipment is owned by the Lessor and will not be
removed by Lessee without the consent of the Lessor.
24. Subordination; Attornment.
Lessee agrees that this Lease shall, at the request of the
Lessor, be subordinate to any mortgages or deeds of trust that
may be placed upon the Premises. Lessee agrees that, upon the
request of Lessor, Lessee shall execute whatever instruments may
be required to carry out such subordination. Lessor shall use
its good faith efforts to obtain the lender's standard form of
non-disturbance agreement in connection with such subordination.
In the event any proceedings are brought for the foreclosure
of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercising the sale of power
under, any mortgage made by Lessor covering the Premises, Lessee
shall attorn to, and agrees to execute an instrument reasonably
satisfactory to the new owner whereby Lessee attorns such
successor in interest and recognizes such successors as the
Lessor under this Lease.
25. Separability; Binding Effect.
Each provision hereof shall be separate and independent and
the breach of any such provision by Lessor shall not discharge or
relieve Lessee from its obligations to perform each and every
covenant to be performed by Lessee hereunder. If any provision
hereof or the application thereof to any person or circumstance
shall to any extent be invalid or unenforceable, the remaining
provisions hereof, or the application of such provision to
persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each
provision hereof shall be valid and shall be enforceable to the
extent permitted by law. All provisions contained in this Lease
shall be binding upon, and inure to the benefit of, and be
enforceable by, the respective successors and assigns of Lessor
and Lessee to the same extent as if each such successor and
assign were names as a party hereto. This Lease may not be
changed, modified or discharged except by a writing signed by
Lessor and Lessee. This Lease shall be governed by the laws of
the State of Ohio.
26. Headings.
The headings of the various sections and schedules of this
Lease have been inserted for reference only and shall not to any
extent have the effect of modifying, amending or changing the
expressed terms and provisions of this Lease.
27. Memorandum of Lease.
This Lease shall not be recorded but at the request of
Lessee, Lessor shall execute a Memorandum of Lease for recording
in accordance with Ohio law.
<PAGE> 14
IN WITNESS WHEREOF, the undersigned have executed this Lease on
the date above written.
Witnesses: CAMPBELL INVESTORS
/s/ Howard Groedel By: /s/ William Ciralsky
- -------------------- ----------------------
First Witness
Howard Groedel William Ciralsky
- -------------------- ------------------
(Print or Type Name) (Print or Type Name)
/s/ Eileen Rigby
- --------------------
Second Witness
Eileen Rigby
- --------------------
(Print or Type Name)
Witnesses: TPSS ACQUISITION CORPORATION
/s/ Timothy T. Kincaid By: /s/ Richard D. Bailey
- ---------------------- ---------------------
First Witness
Timothy T. Kincaid Richard D. Bailey
- ---------------------- ---------------------
(Print or Type Name) (Print or Type Name)
/s/ Robert G. Many
- ----------------------
Second Witness
Robert G. Many
- ----------------------
(Print or Type Name)
<PAGE> 15
STATE OF OHIO )
)ss:
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said county and
state, personally appeared William Ciralsky, as Partner of
CAMPBELL INVESTORS, an Ohio general partnership, who acknowledged
that he/she did execute the foregoing instrument for and on
behalf of said general partnership.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal
as of this 12th day of January, 1999.
/s/ Cathy S. Masters
--------------------
Notary Public
Cathy S. Masters
--------------------
Print Name
Cathy s. Masters, Notary Public
Resident of Portage County
State wide Jurisdiction, Ohio
My Commission Expires
October 3, 1999
STATE OF OHIO )
)ss:
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said county and
state, personally appeared Richard D. Bailey, as President of
TPSS ACQUISITION CORPORATION, an Ohio corporation, who
acknowledged that he/she did execute the foregoing instrument for
and on behalf of said general corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal
as of this 12th day of January 1999.
/s/ Cathy S. Masters
--------------------
Notary Public
Cathy S. Masters
--------------------
Print Name
Cathy s. Masters, Notary Public
Resident of Portage County
State wide Jurisdiction, Ohio
My Commission Expires
October 3, 1999
<PAGE> 16
SCHEDULE A
DESCRIPTION OF LAND
PARCEL 1: That part of the Southeast quarter (1/4) of Section
three (3), Township three (3), in the United States Reserve of
Twelve (12) miles square at the foot of the Rapids of the Miami
of Lake Erie, in the City of Toledo, Lucas County, Ohio, and
being part of the land as described in the deed from Matthew
Johnson to Northern Indiana Railroad Company dated June 15, 1853
and recorded in Volume 23, Page 1, of the Deed records of said
County being bounded and described as follows:
Beginning at the point of intersection of the South line of
Campbell Street, Sixty (60) feet wide, and the West line of
Robison and Holbrook Addition, as recorded in Volume 17, Page 25
of Plat in Register of Deeds Office of said County. Course 1 -
thence due south along said West line of said addition in the
prolongation thereof a distance of eight hundred fourteen and
fifty three hundredths (814.53) feet to a point marked by an iron
pipe; Course 2 - thence North eighty one (81) degrees twenty five
(25) minutes zero (00) seconds west a distance of seven hundred
sixty six and eighty hundredths (766.80) feet to a point marked
by an iron pipe; Course 3 - thence North one (1) degree fifty
(50) minutes thirty (30) seconds east a distance of seven hundred
and forty five hundredths (700.45) feet to a point marked by an
iron pipe in the South line of the aforesaid Campbell Street;
Course 4 - thence due East along the South line of Campbell
Street a distance of seven hundred thirty five and sixty eight
hundredths (735.68) feet to the place of beginning, according to
the survey made April 23 and 24, 1957 by Lewendowski Engineers,
per Louis Lewendowski, Ohio Registered Surveyor No. 838.
PARCEL 2: A parcel of land being part of the Southeast quarter
1/4 of the Southeast quarter (1/4) of Section three (3); Town
three (3), United States Reserve, in the City of Toledo, Lucas
County, Ohio, said parcel of land being bounded and described as
follows:
Commencing at the intersection of the centerline of Klondike
Street (sixty (60) feet wide) with the East line of said section
three (3) as shown on the Plat of "Robison & Holbrook Addition"
recorded in Volume 17, Page 26, Lucas County Plat Records, said
section line along being the centerline of Hawley Street, thence
in a southerly direction along said east line of Section 3 having
an assumed bearing of south one (1) degree twenty three (23)
minutes thirty one (31) seconds East a distance of one hundred
forty eight and forty three hundredths (148.43) feet to the
intersection of the southerly line of said Robison and Holbrook
addition. Said intersection also being the true point of
beginning; thence continuing south one (1) degree twenty three
(23) minutes thirty one (31) seconds east along said east line of
section 3 a distance of two hundred eighty eight and seventy
eight hundredths (288.78) feet to a point. Thence North eighty
one (81) degrees six (6) minutes forty seven (47) seconds west a
distance of thirty and forty nine hundredths (30.49) feet to a
point on the westerly line of Hawley Street a distance of thirty
and zero hundredths (30.00) feet westerly of by perpendicular
measurement from the said East line of Section 3 and being also
distance one hundred and zero hundredths (100.00) feet
Northeasterly of by perpendicular measurement from the center
line of the West bound main track of the railroad formerly of the
Penn Central Transportation Company. Thence continuing North
eighty one (81) degrees six (6) minutes forty seven (47) seconds
West a distance of eight hundred seventy seven and sixty two
hundredths (877.62) feet to the point on the Westerly line of
said Robison and Holbrook addition (extended in the southerly
direction) thirty three and zero hundredths (33.00) northeasterly
of by perpendicular measurement from the said center line of the
west bound main track of Railroad Formerly of the Penn Central
Transportation Company thence north one (1) degree twenty three
(23) minutes thirty one (31) seconds west along said westerly
line of Robison and Holbrook addition extended in a southerly
direction a distance of one hundred ninteen and ninety eight
hundredths (119.98) feet to the intersection of said southerly
line of Robison and Holbrook addition thence North eighty eight
(88) degrees ten (10) minutes twenty nine (29) seconds east along
<PAGE> 17
said southerly line of Robison & Holbrook addition a distance of
eight hundred ninety three and fifty six hundredths (893.56) feet
to the true point of beginning.
Containing 182,621 square feet or 4.392 acres of land more or
less.
Subject to legal highways.
<PAGE> 18
SCHEDULE B
EQUIPMENT
1. Bay 1 - Overhead Crane and Related Equipment
2. Bay 3* - Overhead Crane and Related Equipment
3. Bay 4 - Overhead Crane and Related Equipment
4. Bay 5 - Overhead Crane and Related Equipment
5. Outside Building - Overhead Crane and Related Equipment
* In Bay 3 on the floor, there is a Gantry Crane - Floor Unit,
which is Lessee's.
<PAGE> 1
EXHIBIT 10.85
This Consent To Assignment Of Equipment Lease Agreement
("Consent") is entered into as of this 12th day of January, 1999,
by and between William Ciralsky and Nancy Ciralsky (the
"Lessors") and TPSS Acquisition Corporation (the "Assignee").
RECITALS
WHEREAS, the Lessors are the lessors under that certain
Equipment Lease Agreement dated as of June 1, 1998 with Toledo
Pickling and Steel Sales, Inc. ("Toledo Pickling") as the lessee
for a Herr-Voss .50 inch maximum level line with serial number
43315 (the "Lease");
WHEREAS, Toledo Pickling is selling certain of its assets to
Assignee and in connection therewith desires to assign its rights
and obligations under the Lease to Assignee;
WHEREAS, in connection with the assignment of the Lease, the
Assignee requires that this Consent be executed by the Lessors;
and
WHEREAS, the Lessors desire to have the Assignee as the
obligor on the Lease.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. The Lessors consent to the assignment by Toledo
Pickling of the Lease to the Assignee and, subject to Section 3
hereof, Lessor and Assignee agree that the Assignee shall have
all rights and obligations of the Lessee under the Lease.
Section 2. The Assignee agrees to assume, discharge and
perform all obligations of the Lessee under the Lease.
Section 3. Notwithstanding the provisions of Section 9 of
the Lease, the Assignee shall not be responsible for any portion
of any federal, state or local sales, use, excise, personal
property or other taxes or governmental assessments, fees or
charges imposed on or in connection with the Equipment (as that
term is defined in the Lease) or on the lease, use, ownership or
possession thereof pursuant to the Lease, which relates to any
period prior to the date of this Consent.
Section 4. The Lessors represent that the Lease is not in
default and is in full force and effect in accordance with its
terms as of the date hereof.
<PAGE> 2
Section 5. Except as modified by this Consent, the Lease
shall remain in full force and effect in accordance with its
terms.
IN WITNESS WHEREOF, the parties have caused this Consent to
be executed on their behalf as of the date first above written
/s/ William Ciralsky
- --------------------
William Ciralsky
/s/ Nancy Ciralsky
- --------------------
Nancy Ciralsky
TPSS Acquisition Corporation
By: /s/ Richard D. Bailey
---------------------
Name: Richard D. Bailey
Title: President
TPSS Acquisition Corporation
By: /s/ Richard D. Bailey
----------------------
<PAGE> 1
EXHIBIT 10.86
This Consent To Assignment Of Equipment Lease Agreement
("Consent") is entered into as of this 12th day of January, 1999,
by and between William Ciralsky (the "Lessor") and TPSS
Acquisition Corporation (the "Assignee").
RECITALS
WHEREAS, the Lessor is the lessor under that certain
Equipment Lease Agreement dated as of June 1, 1998 with Toledo
Pickling and Steel Sales, Inc. ("Toledo Pickling") as the lessee
for a Herr-Voss .25 inch maximum level line (the "Lease");
WHEREAS, Toledo Pickling is selling certain of its assets to
Assignee and in connection therewith desires to assign its rights
and obligations under the Lease to Assignee;
WHEREAS, in connection with the assignment of the Lease, the
Assignee requires that this Consent be executed by the Lessor;
and
WHEREAS, the Lessor desires to have the Assignee as the
obligor on the Lease.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. The Lessor consents to the assignment by Toledo
Pickling of the Lease to the Assignee and, subject to Section 3
hereof, Lessor and Assignee agree that the Assignee shall have
all rights and obligations of the Lessee under the Lease.
Section 2. The Assignee agrees to assume, discharge and
perform all obligations of the Lessee under the Lease.
Section 3. Notwithstanding the provisions of Section 9 of
the Lease, the Assignee shall not be responsible for any portion
of any federal, state or local sales, use, excise, personal
property or other taxes or governmental assessments, fees or
charges imposed on or in connection with the Equipment (as that
term is defined in the Lease) or on the lease, use, ownership or
possession thereof pursuant to the Lease, which relates to any
period prior to the date of this Consent.
Section 4. The Lessor represents that the Lease is not in
default and is in full force and effect in accordance with its
terms as of the date hereof.
<PAGE> 2
Section 5. Except as modified by this Consent, the Lease
shall remain in full force and effect in accordance with its
terms.
IN WITNESS WHEREOF, the parties have caused this Consent to
be executed on their behalf as of the date first above written
/s/ William Ciralsky
- --------------------
William Ciralsky
TPSS Acquisition Corporation
By: /s/ Richard D. Bailey
---------------------
Name: Richard D. Bailey
Title: President
<PAGE> 1
EXHIBIT 10.87
This Equipment Lease Agreement (hereinafter called
"Agreement") is made as of the 1st day of June, 1998 by and
between William Ciralsky and Nancy Ciralsky (hereinafter
collectively called "Lessor") and Toledo Pickling and Steel
Sales, Inc., an Ohio corporation (hereinafter called "Lessee").
1. Prior Leases and Agreements. It is mutually agreed
between Lessor and Lessee that all prior agreements, if any,
concerning the leasing of equipment to Lessee by Lessor shall be
cancelled and of no effect, and neither Lessor nor Lessee shall
have any obligations regarding the lease of any equipment except
as provided herein.
2. Equipment Leased. Lessor hereby leases to
Lessee, and Lessee agrees to hire from Lessor, an Herr-Voss .50
inch maximum Level Line, Serial No. 43315-96 (hereinafter
referred to as the `Equipment") for the term and consideration,
and subject to the conditions and provisions hereinafter set
forth.
3. Term. This Agreement shall be effective as of the 1st
day of June, 1998, and shall continue in full force and effect
through the 31st day of May, 1999, unless earlier terminated as
provided herein. Thereafter, this Lease shall continue from year
to year unless terminated by either party upon written notice
provided at least thirty (30) days prior to the end of the then
current term
4. Rent. Lessee shall pay Lessor as rent for the Equipment,
by the 1st day of each month during the term hereof, the sum of
Twenty-six Thousand Eight Hundred Dollars ($26,800.00) per month,
commencing on the 1st day of June, 1998, in advance and without
demand. Rental payments not made within five (5) days after the
due date shall be subject to a late charge of one and one-half
<PAGE> 2
percent (1-1/2%) of the amount of the payment, or such other
lesser sum as mandated by applicable law, for each month or part
thereof for which said payment is delinquent.
5. Use. Lessee shall use the Equipment in a careful and
proper manner and shall comply with an conform to all national,
state, municipal and other laws, ordinances and regulations in
any way relating to the possession, use or maintenance of the
Equipment.
6. Lessee's Inspection; Conclusive Presumptions. Lessee
shall inspect the Equipment within forty-eight (48) hours after
receipt thereof or the signing of this Agreement whichever is
later. Unless Lessee within said period of time gives written
notice of Lessor, specifying any defect or other proper objection
to the Equipment, Lessee agrees that it shall be conclusively
presumed, as between Lessor and Lessee, that Lessee has fully
inspected and acknowledged that the Equipment is in good
condition and repair and that Lessee is satisfied with and has
accepted the Equipment in such good condition and repair.
7. Lessor's Inspection. Lessor shall at any an all times
during business hours have the right to enter into and upon the
premises where the Equipment may be located for the purpose of
inspecting the same or observing its use. Lessee shall give
Lessor immediate notice of any attachment or other judicial
process affecting any item of the Equipment and shall, whenever
requested advise Lessor of the exact location of the Equipment.
8. Alterations. Without the prior written consent of Lessor,
Lessee shall not make any alterations, additions or improvements
to the Equipment. Any alterations, additions or improvements
which are permitted by the Lessor may, at Lessee's option, be
<PAGE> 3
removed by Lessee upon the expiration or earlier termination of
this Lease, but only if such removal may be accomplished without
damage to the Equipment and only if they will not result in the
reduction of the value of the Equipment below that which it would
have had in the event no such alterations, additions or
improvements have been made.
9. Taxes. Lessee shall pay and bear all federal, state and
local sales, use, exercise, personal property and other taxes and
all governmental assessments, fees and charges imposed on or in
connection with the Equipment or on the lease, use, ownership or
possession thereof pursuant to this Agreement. Lessee shall file
any necessary returns connected therewith and shall furnish
adequate proof of payment or Lessor. Should it be necessary for
Lessor to pay any such taxes, assessments, fees or charges,
Lessee shall reimburse Lessor therefor plus any charges for
delinquency.
Lessee shall keep the Equipment free and clear of
all levies, liens and encumbrances other than those being
contested in good faith which as a result of such contest do not
adversely threaten Lessor's title to the Equipment and shall pay
when due all license fees, registration fees, assessments,
charges and taxes (municipal, state and federal) which may now or
hereafter be imposed upon the ownership, leasing, renting, sale,
possession or use of the Equipment, excluding, however, all taxes
on or measured by Lessor's income.
10. Equipment Maintenance. Lessee agrees to maintain the
Equipment hereby leased at all times in good and safe operating
condition agreeing to pay all costs incurred in so maintaining
the Equipment. Lessor and Lessee hereby agrees to cooperate
fully to unsure that the maximum permissible amount of repairs
<PAGE> 4
and adjustments to the Equipment are covered by any warranties
provided by the manufacturer of the Equipment.
11. Equipment Operation. Lessee agrees to pay all
costs incurred in the operation of the Equipment, including but
not limited to, painting and cleaning, and to pay all taxes,
assessments or other charges associated therewith.
12. Risk of Loss; Damage: Personal Injury. Lessee
covenants that the Equipment will not be used or operated in
violation of any law, rule, regulation, statue or ordinance
promulgated by any public body, or in such a manner as would tend
to void any insurance covering the Equipment, and Lessee hereby
agrees to indemnify and hold Lessor harmless from and against any
and all fines, forfeitures, seizures or penalties arising out of
or relating to any of the foregoing. Lessee hereby assumes and
shall bear the entire risk of loss and damage to the Equipment
from any and every cause whatsoever. No loss or damage to the
Equipment or any part thereof shall impair any obligation of
Lessee under this Lease which shall continue in full force and
effect.
In the event of loss or damage of any kind whatsoever
to the Equipment, Lessee shall place the same in good repair,
condition and working order, or replace the same with like
equipment in good repair, condition and working order unless
otherwise agreed by Lessor and Lessee.
Lessor further agrees to indemnify and hold harmless
Lessor from and against any and all claims, damages and
liabilities for and/or resulting from any an all injuries to
persons, including death, and any damage to property of any third
person, arising out of the operation, maintenance or storage of
the Equipment.
<PAGE> 5
13. Insurance. Lessee shall insure the Equipment for
theft, casualty, property damage and public liability in the
amounts stated on Exhibit A attached hereto. All such policies
shall list Lessor as loss payee and shall provide for thirty (30)
days prior notice of cancellation or modification to Lessor.
Lessee shall pay any deductibles and any amounts not
covered by insurance payments.
Lessor, Lessee, their employees and/or their agents
shall comply with all terms and conditions of said insurance
policies. All claims are to be reported immediately to both the
Lessor and the insurance company under this provision and any
other provision of this Agreement.
14. Warranties. LESSOR MAKES NO WARRANTIES, EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE.
15. Return of Leases Equipment. Upon the expiration or
earlier termination of this Agreement, with respect to the
Equipment, Lessee shall return the same to Lessor in good repair,
condition and working order, ordinary wear and tear resulting
from proper use thereof alone expected, by delivering the
Equipment to such place as Lessor shall specify within the city
and county in which the same was delivered to Lessee or to which
the same was moved with the written consent of Lessor. This
paragraph shall not apply if Lessee has exercised his option to
purchase the Equipment, as described below.
16. Operator of Equipment. Lessee agrees that only
qualified personnel shall operate the Equipment.
<PAGE> 6
17. Moving of Equipment. In the event that the
Equipment must be moved within or from Lessee's premises for any
reason, Lessee shall pay all costs associated therewith.
18. Payment by Lessor; Reimbursement. Lessee hereby
authorizes Lessor to take any action or pay any expenses and/or
charges which are the responsibility of the Lessee under this
Agreement. In the event Lessor takes any such actions or pays
any such charges and/or expenses the same shall be charged to
Lessee, and Lessee hereby agrees to reimburse Lessor for all of
its costs and expenses associated therewith, within seven (7)
days of the date lessor notifies Lessee of the amount due.
19. General Provisions.
(A) This Agreement is the entire Agreement between the
parties and nothing herein is to be construed as conveying to
Lessee any right, title or interest in or to the Equipment other
than a leasehold interest.
(B) This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, successors and
assign of the parties hereto.
(C) Lessee shall promptly notify Lessor in writing prior to
any substantial changes in the Lessee's financial responsibility
or any change of address.
(D) Lessor may at any time without consent of Lessee assign
this Agreement and Lessee acknowledges his consent to such
assignment by execution hereof.
20. Concurrent Remedies. No right or remedy herein
conferred upon or reserved by Lessor is exclusive of any other
right or remedy herein or by law or equity provided or permitted;
but each shall be cumulative of every other right or remedy given
<PAGE> 7
hereunder or now or hereafter existing at law or in equity or by
statue or otherwise, and may be enforced concurrently therewith
or from time to time.
21. Lessor's Expenses. Lessee shall pay Lessor all costs
and expenses, including reasonable attorneys' fees, incurred by
Lessor in exercising any of its rights or remedies hereunder to
enforcing any of the terms, conditions or provisions hereof.
22. Quiet Possession. Lessor covenants that it is the
lawful owner of the Equipment leased hereunder and that
conditioned upon the Lessee performing the conditions hereof,
Lessee shall peaceably and quietly hold, possess and use such
Equipment during the term of this Lease.
23. Interpretation of the Agreement. This Agreement shall
be interpreted under and governed by the laws of the State of
Ohio. Any provision hereof where the application of any
provision to any person or circumstances is held invalid or
unenforceable, the remainder hereof and the application of such
provision to other persons or circumstances shall remain valid
and enforceable.
<PAGE> 8
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement as of the day and year first above written.
WITTNESS:
LESSOR:
/s/ Darcy MacPherson By /s/ William Ciralsky
- --------------------- ---------------------
William Ciralsky
/s/ R. W. Keller /s/ Nancy Ciralsky
- --------------------- ---------------------
LESSEE: Toledo Pickling and
Steel Sales, Inc.
/s/ Darcy MacPherson By: /s/ William Ciralsky
- --------------------- ---------------------
William Ciralsky, Chairman
/s/ R. W. Keller
- ---------------------
<PAGE> 1
EXHIBIT 10.88
This Equipment Lease Agreement (hereinafter called
"Agreement") is made as of the 1st day of June, 1998 by and
between William Ciralsky and Nancy Ciralsky (hereinafter
collectively called "Lessor") and Toledo Pickling and Steel
Sales, Inc., an Ohio corporation (hereinafter called "Lessee").
1. Prior Leases and Agreements. It is mutually agreed
between Lessor and Lessee that all prior agreements, if any,
concerning the leasing of equipment to Lessee by Lessor shall be
cancelled and of no effect, and neither Lessor nor Lessee shall
have any obligations regarding the lease of any equipment except
as provided herein.
2. Equipment Leased. Lessor hereby leases to
Lessee, and Lessee agrees to hire from Lessor, an Herr-Voss .25
inch maximum Level Line, Serial No. 43315-96 (hereinafter
referred to as the `Equipment") for the term and consideration,
and subject to the conditions and provisions hereinafter set
forth.
3. Term. This Agreement shall be effective as of the 1st
day of June, 1998, and shall continue in full force and effect
through the 31st day of May, 1999, unless earlier terminated as
provided herein. Thereafter, this Lease shall continue from year
to year unless terminated by either party upon written notice
provided at least thirty (30) days prior to the end of the then
current term
4. Rent. Lessee shall pay Lessor as rent for the Equipment,
by the 1st day of each month during the term hereof, the sum of
Twenty-six Thousand Eight Hundred Dollars ($26,800.00) per month,
commencing on the 1st day of June, 1998, in advance and without
demand. Rental payments not made within five (5) days after the
<PAGE> 2
due date shall be subject to a late charge of one and one-half
percent (1-1/2%) of the amount of the payment, or such other
lesser sum as mandated by applicable law, for each month or part
thereof for which said payment is delinquent.
5. Use. Lessee shall use the Equipment in a careful and
proper manner and shall comply with an conform to all national,
state, municipal and other laws, ordinances and regulations in
any way relating to the possession, use or maintenance of the
Equipment.
6. Lessee's Inspection; Conclusive Presumptions. Lessee
shall inspect the Equipment within forty-eight (48) hours after
receipt thereof or the signing of this Agreement whichever is
later. Unless Lessee within said period of time gives written
notice of Lessor, specifying any defect or other proper objection
to the Equipment, Lessee agrees that it shall be conclusively
presumed, as between Lessor and Lessee, that Lessee has fully
inspected and acknowledged that the Equipment is in good
condition and repair and that Lessee is satisfied with and has
accepted the Equipment in such good condition and repair.
7. Lessor's Inspection. Lessor shall at any an all times
during business hours have the right to enter into and upon the
premises where the Equipment may be located for the purpose of
inspecting the same or observing its use. Lessee shall give
Lessor immediate notice of any attachment or other judicial
process affecting any item of the Equipment and shall, whenever
requested advise Lessor of the exact location of the Equipment.
8. Alterations. Without the prior written consent of Lessor,
Lessee shall not make any alterations, additions or improvements
to the Equipment. Any alterations, additions or improvements
which are permitted by the Lessor may, at Lessee's option, be
<PAGE> 3
removed by Lessee upon the expiration or earlier termination of
this Lease, but only if such removal may be accomplished without
damage to the Equipment and only if they will not result in the
reduction of the value of the Equipment below that which it would
have had in the event no such alterations, additions or
improvements have been made.
9. Taxes. Lessee shall pay and bear all federal, state and
local sales, use, exercise, personal property and other taxes and
all governmental assessments, fees and charges imposed on or in
connection with the Equipment or on the lease, use, ownership or
possession thereof pursuant to this Agreement. Lessee shall file
any necessary returns connected therewith and shall furnish
adequate proof of payment or Lessor. Should it be necessary for
Lessor to pay any such taxes, assessments, fees or charges,
Lessee shall reimburse Lessor therefor plus any charges for
delinquency.
Lessee shall keep the Equipment free and clear of
all levies, liens and encumbrances other than those being
contested in good faith which as a result of such contest do not
adversely threaten Lessor's title to the Equipment and shall pay
when due all license fees, registration fees, assessments,
charges and taxes (municipal, state and federal) which may now or
hereafter be imposed upon the ownership, leasing, renting, sale,
possession or use of the Equipment, excluding, however, all taxes
on or measured by Lessor's income.
10. Equipment Maintenance. Lessee agrees to maintain the
Equipment hereby leased at all times in good and safe operating
condition agreeing to pay all costs incurred in so maintaining
the Equipment. Lessor and Lessee hereby agrees to cooperate
fully to unsure that the maximum permissible amount of repairs
<PAGE> 4
and adjustments to the Equipment are covered by any warranties
provided by the manufacturer of the Equipment.
11. Equipment Operation. Lessee agrees to pay all
costs incurred in the operation of the Equipment, including but
not limited to, painting and cleaning, and to pay all taxes,
assessments or other charges associated therewith.
12. Risk of Loss; Damage: Personal Injury. Lessee
covenants that the Equipment will not be used or operated in
violation of any law, rule, regulation, statue or ordinance
promulgated by any public body, or in such a manner as would tend
to void any insurance covering the Equipment, and Lessee hereby
agrees to indemnify and hold Lessor harmless from and against any
and all fines, forfeitures, seizures or penalties arising out of
or relating to any of the foregoing. Lessee hereby assumes and
shall bear the entire risk of loss and damage to the Equipment
from any and every cause whatsoever. No loss or damage to the
Equipment or any part thereof shall impair any obligation of
Lessee under this Lease which shall continue in full force and
effect.
In the event of loss or damage of any kind whatsoever
to the Equipment, Lessee shall place the same in good repair,
condition and working order, or replace the same with like
equipment in good repair, condition and working order unless
otherwise agreed by Lessor and Lessee.
Lessor further agrees to indemnify and hold harmless
Lessor from and against any and all claims, damages and
liabilities for and/or resulting from any an all injuries to
persons, including death, and any damage to property of any third
person, arising out of the operation, maintenance or storage of
the Equipment.
<PAGE> 5
13. Insurance. Lessee shall insure the Equipment for
theft, casualty, property damage and public liability in the
amounts stated on Exhibit A attached hereto. All such policies
shall list Lessor as loss payee and shall provide for thirty (30)
days prior notice of cancellation or modification to Lessor.
Lessee shall pay any deductibles and any amounts not
covered by insurance payments.
Lessor, Lessee, their employees and/or their agents
shall comply with all terms and conditions of said insurance
policies. All claims are to be reported immediately to both the
Lessor and the insurance company under this provision and any
other provision of this Agreement.
14. Warranties. LESSOR MAKES NO WARRANTIES, EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE.
15. Return of Leases Equipment. Upon the expiration or
earlier termination of this Agreement, with respect to the
Equipment, Lessee shall return the same to Lessor in good repair,
condition and working order, ordinary wear and tear resulting
from proper use thereof alone expected, by delivering the
Equipment to such place as Lessor shall specify within the city
and county in which the same was delivered to Lessee or to which
the same was moved with the written consent of Lessor. This
paragraph shall not apply if Lessee has exercised his option to
purchase the Equipment, as described below.
16. Operator of Equipment. Lessee agrees that only
qualified personnel shall operate the Equipment.
<PAGE> 6
17. Payment by Lessor; Reimbursement. Lessee hereby
authorizes Lessor to take any action or pay any expenses and/or
charges which are the responsibility of the Lessee under this
Agreement. In the event Lessor takes any such actions or pays
any such charges and/or expenses the same shall be charged to
Lessee, and Lessee hereby agrees to reimburse Lessor for all of
its costs and expenses associated therewith, within seven (7)
days of the date lessor notifies Lessee of the amount due.
18. General Provisions.
(A) This Agreement is the entire Agreement between the
parties and nothing herein is to be construed as conveying to
Lessee any right, title or interest in or to the Equipment other
than a leasehold interest.
(B) This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, successors and
assign of the parties hereto.
(C) Lessee shall promptly notify Lessor in writing prior to
any substantial changes in the Lessee's financial responsibility
or any change of address.
(D) Lessor may at any time without consent of Lessee assign
this Agreement and Lessee acknowledges his consent to such
assignment by execution hereof.
19. Concurrent Remedies. No right or remedy herein
conferred upon or reserved by Lessor is exclusive of any other
right or remedy herein or by law or equity provided or permitted;
but each shall be cumulative of every other right or remedy given
hereunder or now or hereafter existing at law or in equity or by
statue or otherwise, and may be enforced concurrently therewith
or from time to time.
<PAGE> 7
20. Lessor's Expenses. Lessee shall pay Lessor all
costs and expenses, including reasonable attorneys' fees,
incurred by Lessor in exercising any of its rights or remedies
hereunder to enforcing any of the terms, conditions or provisions
hereof.
21. Quiet Possession. Lessor covenants that it is
the lawful owner of the Equipment leased hereunder and that
conditioned upon the Lessee performing the conditions hereof,
Lessee shall peaceably and quietly hold, possess and use such
Equipment during the term of this Lease.
22. Interpretation of the Agreement. This Agreement
shall be interpreted under and governed by the laws of the State
of Ohio. Any provision hereof where the application of any
provision to any person or circumstances is held invalid or
unenforceable, the remainder hereof and the application of such
provision to other persons or circumstances shall remain valid
and enforceable.
<PAGE> 8
IN WITNESS WHEREOF, the parties have hereunto executed
this Agreement as of the day and year first above written.
WITNESS:
LESSOR:
/s/ Darcy MacPherson By /s/ William Ciralsky
- -------------------- --------------------
William Ciralsky
/s/ R.W. Keller /s/ Nancy Ciralsky
- -------------------- --------------------
LESSEE: Toledo Pickling and
Steel Sales, Inc.
/s/ Darcy MacPherson By: /s/ William Ciralsky
- -------------------- --------------------
William Ciralsky, Chairman
/s/ R.W. Keller
- --------------------
<PAGE> 1
EXHIBIT 10.97
THIS AGREEMENT ("Agreement") is made as of this 11th day of
January 1999, between CONSOLIDATED CAPITAL OF NORTH AMERICA,
INC., a Colorado corporation (the "Company") and SECURITY INCOME
TRUST, L. P. (the "Purchaser").
RECITAL
WHEREAS, the Company has authorized the issuance and sale of
the Company's 18% Note in the principal amount of $1,250,000
having the terms set forth in Exhibit A attached hereto (the
"Note"); and
WHEREAS, the Purchaser desires to purchase, and the Company
desires to issue, the Note on the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
terms and conditions contained in this Agreement, the Company and
the Purchaser agree as follows:
1. PURCHASE AND SALE OF NOTES. Subject to the terms and
conditions contained in this Agreement, at the Closing (as
hereinafter defined) the Purchaser shall purchase from the
Company and the Company shall sell to the Purchaser the Note for
the sum of $1,250,000 (the "Loan Amount"). As further
consideration, the Company shall issue to the Purchaser 1,000,000
shares of the Common Stock of the Company, par value $0.0001 per
share (the "Common Stock").
2. CLOSING.
2.1 Closing Date. The closing of the purchase and sale of
the Note (the "Closing") shall take place simultaneously with the
acquisition by the Company's subsidiary of the assets of Toledo
Pickling and Steel Sales, Inc. (the "TPSS Acquisition") or on
such other day as agreed to by the parties (the "Closing Date").
2.2 Items to be Delivered at Closing. The following shall
be delivered on the Closing Date:
(a) The Note shall be delivered by the Company to the
Purchaser;
(b) The Common Stock shall be delivered by the Company
to the Purchaser;
(c) A legal opinion of counsel to the Company
acceptable to the Purchaser shall be delivered to the
Purchaser;
(d) A certificate of the secretary or an assistant
secretary of the Company certifying (i) an attached complete
and correct copy of its articles of incorporation, (ii) an
attached complete and correct copy of its bylaws, and (iii)
an attached complete and correct copy of resolutions duly
adopted by its board of directors authorizing the execution,
delivery and performance of this Agreement, the Note and the
issuance of the Common Stock shall be delivered by the
Company; and
(e) The purchase price shall be delivered by the
Purchaser by wire transfer to the account of the Company.
<PAGE> 2
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Company.
The Company represents and warrants that as of the date of this
Agreement:
(a) Existence. The Company is a corporation duly
organized and in good standing under the laws of the State
of Colorado and is duly qualified to do business and is in
good standing in all states where such qualification is
necessary, except for those jurisdictions in which the
failure to qualify would not, in the aggregate, have a
material adverse effect on the Company's financial
condition, results of operations or business.
(b) Authority. The execution and delivery by the
Company of this Agreement and the Note (i) are within the
Company's corporate powers; (ii) are duly authorized by the
Company's board of directors; (iii) are not in contravention
of the terms of the Company's certificate of incorporation
or bylaws; (iv) are not in contravention of any law or laws;
(v) except for the filing of a Form D Notice with the
Securities and Exchange Commission and any exemption filing
related thereto which may be required pursuant to applicable
state securities or "blue sky" laws, do not require any
governmental consent, registration or approval; (vi) do not
contravene any contractual or governmental restriction
binding upon the Company; and (vii) will not result in the
imposition of any lien, charge, security interest or
encumbrance upon any property of the Company under any
existing indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or instrument to which
the Company is a party or by which the Company or any of the
Company's property may be bound or affected.
(c) Binding Effect. This Agreement and the Note have
been duly authorized, executed and delivered by the Company
and constitute the valid and legally binding obligation of
the Company, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(d) Capitalization. The authorized capital stock of
the Company consists of 200,000,000 shares of Common Stock,
par value $.0001 per share, 47,984,384 shares of which are
issued and outstanding as of December 28, 1998 and
10,000,000 shares of Preferred Stock, par value $.01 per
share, of which the following Preferred Shares were
authorized, issued and outstanding as of December 28, 1998:
Series A Preferred Shares, par value $1.00 per share,
authorized 1,000,000 shares, 744,000 shares issued and
outstanding; Series B Preferred Shares, par value $1.00 per
share, authorized 1,000,000 shares, 449,000 shares issued
and outstanding; Series C Preferred Shares, stated value
$10,000 per share, authorized 200 shares, 0 shares issued
and outstanding; Series D Preferred Shares, stated value of
$10,000 per share, authorized 350 shares, 0 shares issued
and outstanding; and Series E Preferred Shares, stated value
$10,000 per share, authorized 140 shares, 0 shares issued
and outstanding. The shares of Common Stock issuable
pursuant to this Agreement (the "Initial Shares") and any
shares of common stock which may be issued upon extension of
the Maturity Date of the Note (the "Extension Shares") (the
Initial Shares and the Extension Shares collectively, the
"Shares") are not subject to preemption rights and have been
duly and validly authorized and reserved for issuance and,
when issued and delivered in accordance with the terms of
this Agreement and the Note, will be duly and validly
issued, fully paid and non-assessable and shall be free of
any and all encumbrances, claims, security interests or any
other rights or interests of third parties whatsoever.
(e) SEC Documents. The Company has furnished the
Purchaser with a true and complete copy of the Company's
Report on Form 8-K filed on January 27, 1998, as amended on
January 29, 1998 and March 27, 1998, Report on Form 8-K
filed on January 28, 1998 as amended on January 29, 1998,
Report on Form 8-K filed on March 18, 1998, Report on Form 8-
K filed on May 1, 1998, Report on Form 8-K filed on August
5, 1998, Report on Form 8-K filed on September 18, 1998,
<PAGE> 3
the Company's Form 10-KSB for the fiscal year ended December
31, 1997, Form 10-QSB for the quarterly period ended March
31, 1998, Form 10-QSB for the quarterly period ended June
30, 1998, Form 10-QSB for the quarter ended September 30,
1998 and the Registration Statement on Form SB-2 (No. 333-
60761) and the Proxy Statement dated October 16, 1998 (the
"Disclosure Documents"). Except as disclosed in the
Disclosure Documents, since December 31, 1997 the Company
has not incurred any material liability except in the
ordinary course of its business consistent with past
practice and there has not been any change in the business,
financial condition or results of operations of the Company
which has had a material adverse effect on the Company.
Since January 1, 1997, the Company has filed with the
Securities and Exchange Commission (the "SEC") all documents
required to be filed pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder. As of their respective
filing dates, the Disclosure Documents complied in all
material respects with the requirements of the Exchange Act,
and the rules and regulations of the SEC thereunder
applicable to such Disclosure Documents, and the Disclosure
Documents did not contain any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made,
not misleading. The financial statements of the Company
included in the Disclosure Documents (the "Financial
Statements") comply as to form in all material respects with
applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto. The
Financial Statements are accurate, complete and have been
prepared in accordance with the books and records of the
Company and in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto
and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments that are
not material) the consolidated financial position of the
Company as at the dates thereof and the consolidated results
of its operations and cash flows for the periods then ended.
(f) Litigation. There is neither pending nor, to the
Company's knowledge and belief, threatened any action, suit,
proceeding or claim, or any basis therefor, to which the
Company is or may be named as a party or its property is or
may be subject other than routine litigation in the ordinary
course of business or which calls into question any of the
transactions contemplated by this Agreement.
(g) Securities Matters. Subject to the accuracy of
the representations of the Purchaser set forth in Section
3.2 hereof, the offer, sale and issuance of the Note and the
Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933 as
amended (the "Securities Act"). The Company has complied
and will comply with all applicable state "blue sky" or
securities laws in connection with the offer, sale and
issuance of the Note and the Shares as contemplated by this
Agreement.
(h) Conflict with Other Agreements; Approvals. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will
not, conflict with or (i) result in any violation of, or
default (with or without notice of lapse of time, or both)
under, or giver rise to a right of termination, cancellation
or acceleration of any obligation or the loss of a material
benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets (any such conflict,
violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to
any provision of the Articles of Incorporation or By-laws or
any organizational document of the Company or (ii) result in
any Violation of any loan or credit agreement, note,
mortgage, indenture, lease benefit plan or other agreement,
obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or its
properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity") or any other third party
<PAGE> 4
is required by or with respect to the Company in connection
with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the
transactions contemplated hereby.
3.2 Representations and Warranties of each Purchaser.
The Purchaser represents and warrants that as of the date of the
execution of this Agreement:
(a) Authorization. This Agreement constitutes a valid
and legally binding obligation of the Purchaser.
(b) Investment Representations (i) The Purchaser has
received and reviewed the Company's Disclosure Documents and
the Purchaser or the Purchaser's designated representatives
have concluded a satisfactory due diligence investigation of
the Company and have had an opportunity to review the
documents provided by the Company and to have all of their
questions related thereto satisfactorily answered.
(ii) The Purchaser acknowledges that the Notes and the
Shares are speculative and involve a high degree of risk and
the Purchaser represents that it is able to sustain the loss
of the entire amount of its investment.
(iii) The Purchaser (or its members and/or
officers) has previously invested in unregistered securities
and has sufficient financial and investing expertise to
evaluate and understand the risks of the Notes and the
Shares.
(iv) The Purchaser is not relying on any
representations and warranties with respect to the Company
except as set forth in this Agreement.
(v) The Purchaser is an "accredited investor" within
the meaning of Regulation D under the Securities Act.
(vi) The Purchaser is acquiring the Notes and the
Shares for investment purposes only without intent to
distribute the same, and acknowledges that the Notes and the
Shares have not been registered under the Securities Act and
applicable state securities laws, and accordingly,
constitute "restricted securities" for purposes of the
Securities Act and such state securities laws.
(vii) The Purchaser acknowledges that it will not
be able to transfer the Notes and the Shares except upon
compliance with the registration requirements of the
Securities Act, and applicable state securities laws, or
exemptions therefrom.
(viii) The certificates and/or instruments
evidencing the Notes and the Shares will contain a legend to
the foregoing effect.
4. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
4.1 Demand Registration Right. The Company agrees that on
or after thirty (30) days from the Closing Date it will, within
thirty (30) days of the Purchaser's written request for such and
at the Company's cost, file a Registration Statement under the
Securities Act to cause the Initial Shares to become registered
thereunder for resale by the Purchaser (the "Registration
Statement") and the Company agrees that it will use its best
efforts to cause such Registration Statement to be declared
effective as soon as possible. The Purchaser shall have one such
demand registration right.
4.2 Participation in Registered Offerings ("Piggyback
Rights" for Shares). If the Company at any time after the date
of this Agreement and prior to the third anniversary of the
Closing Date proposes or is required to register any of its
shares or other equity securities for public sale for cash under
<PAGE> 5
the Securities Act (other than on Forms S-4 or S-8), it will at
each such time or times give written notice to the Purchaser of
its intention to do so. Upon the written request of any
Purchaser given within twenty (20) days after receipt of any such
notice, the Company shall use its best efforts to cause to be
included in such registration any Shares held by such Purchaser
and requested to be registered under the Securities Act and any
applicable state securities laws; provided, that if the managing
underwriter advises that less than all of the shares to be
registered should be offered for sale so as not materially and
adversely to affect the price or salability of the offering being
registered by the Company, the Purchaser but not the Company to
the extent it desires to include shares for its own account)
shall reduce the number of its shares to be included in the
registration statement as required by the underwriter to the
extent requisite to permit the sale or other disposition (in
accordance with the intended method of disposition thereof as
aforesaid) by the prospective seller or sellers of the securities
so registered. The registration requested pursuant to this
Section 4.2 is referred to herein as the "Piggyback Registration"
and shall be in addition to the Registration Rights set forth in
Section 4.1 hereto.
4.3 Obligations of the Purchaser. It shall be a condition
precedent to the obligation of the Company to register any Shares
pursuant to this Section 4 that the Purchaser shall furnish to
the Company such information regarding the Shares held and the
intended method of disposition thereof and any other information
concerning the Purchaser as the Company shall reasonably request
and as shall be required in connection with the registration
statement to be filed by the Company. If after a registration
statement becomes effective the Company advises the Purchaser
that the Company considers it appropriate to amend or supplement
the applicable registration statement, the Purchaser shall
suspend further sales of the Shares until the Company advises the
Purchaser that such registration statement has been amended or
supplemented.
4.4 Registration Proceedings. Whenever the Company is
required by the provisions of this Section 4 to effect the
registration of the Shares under the Securities Act, the Company
shall:
(i) Prepare and file with the SEC a registration
statement with respect to such securities and use its best
efforts to cause such registration statement to become and
remain effective;
(ii) Prepare and file with the SEC such amendments to
such registration statement and supplements to the
prospectus contained therein as may be necessary to keep
such registration statement effective;
(iii) Furnish to the Purchaser and to the
underwriters of the securities being registered such
reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in
order to facilitate the public offering of such securities;
(iv) Use its best efforts to register or qualify the
securities covered by such registration statement under such
state securities or Blue Sky Laws of such jurisdictions as
the Purchaser may reasonably request within twenty (20) days
following the original filing of such registration
statement, except that the Company shall not for any purpose
be required to execute a general consent to service of
process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so
qualified;
(v) Notify the Purchaser, promptly after it shall
receive notice thereof, of the time when such registration
statement has become effective or a supplement to any
prospectus forming a part of such registration statement has
been filed;
(vi) Notify the Purchaser promptly of any request by
the SEC for the amending or supplementing of such
registration statement or prospectus or for additional
information; and
<PAGE> 6
(vii) Prepare and promptly file with the SEC and
promptly notify the Purchaser of the filing of such
amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities
Act, any event shall have occurred as the result of which
any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact
or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which
they were made, not misleading. Notwithstanding any
provision herein to the contrary, the Company shall not be
required to amend, supplement, or update a prospectus
contained in any registration statement if to do so would
result in an unduly burdensome expense to the Company.
4.5 Expenses. With respect to the inclusion of the Shares
in a registration statement pursuant to this Section 4, all
registration expenses, fees, costs and expenses of and incidental
to such registration, inclusion and public offering in connection
therewith shall be borne by the Company; provided, however, that
the Purchaser shall bear its own professional fees and pro rata
share of the underwriting discount and commissions. The fees,
costs and expenses of registration to be borne by the Company
shall include, without limitation, all registration, filing,
printing expenses, fees and disbursements of counsel and
accountants for the Company, fees and disbursements of counsel
for the underwriter or underwriters of such securities (if the
Company and/or selling security holders are required to bear such
fees and disbursements), and all legal fees and disbursements and
other expenses of complying with state securities or Blue Sky
Laws of any jurisdiction in which the securities to be offered
are to be registered or qualified.
4.6 Indemnification of the Holder. Subject to the
conditions set forth below, in connection with any registration
of the Shares pursuant to this Section 4, the Company agrees to
indemnify and hold harmless the Purchaser, any underwriter for
the Company or acting on behalf of the Purchaser and each person,
if any, who controls the Purchaser, within the meaning of Section
15 of the Securities Act, as follows:
(i) Against any and all loss, claim, damage and
expense whatsoever arising out of, based upon or resulting
from (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing
or defending any litigation, commenced or threatened, or any
claim whatsoever based upon) any untrue or alleged untrue
statement of a material fact contained in any preliminary
prospectus (if used prior to the effective date of the
registration statement), the registration statement or the
prospectus (as from time to time amended and supplemented),
or in any application or other document executed by the
Company or based upon written information furnished by the
Company filed in any jurisdiction in order to qualify the
Company's securities under the securities laws thereof, or
the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or any other violation of
applicable federal or state statutory or regulatory
requirements or limitations relating to action or inaction
by the Company in the course of preparing, filing, or
implementing such registered offering; provided, however,
that the indemnity agreement contained in this section shall
not apply to any loss, claim, damage, liability or action
arising out of or based upon any untrue or alleged untrue
statement or omission made in reliance upon and in
conformity with any information furnished in writing to the
Company by or on behalf of the Purchaser expressly for use
in connection therewith or arising out of any action or
inaction of the Purchaser;
(ii) Subject to the proviso contained in Subsection (i)
above, against any and all loss, liability, claim, damage
and expense whatsoever to the extent of the aggregate amount
paid in settlement of any litigation, commenced or
threatened, or of any claim whatsoever based upon any untrue
statement or omission (including, but not limited to, any
and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any such
litigation or claim) if such settlement is effected with the
written consent of the Company; and
<PAGE> 7
(iii) In no case shall the Company be liable under
this indemnity agreement with respect to any claim made
against such seller, underwriter or any such controlling
person unless the Company shall be notified, by letter or by
facsimile confirmed by letter, of any action commenced
against such persons, promptly after such person shall have
been served with the summons or other legal process giving
information as to the nature and basis of the claim. The
failure to so notify the Company, if prejudicial in any
material respect to the Company's ability to defend such
claim, shall relieve the Company from its liability to the
indemnified person under this Section 4, but only to the
extent that the Company was prejudiced. The failure to so
notify the Company shall not relieve the Company from any
liability which it may have otherwise than on account of
this indemnity agreement. The Company shall be entitled to
participate at its own expense in the defense of any suit
brought to enforce any such claim, but if the Company elects
to assume the defense, such defense shall be conducted by
counsel chosen by it, provided such counsel is reasonably
satisfactory to the sellers or controlling persons,
defendants in any suit so brought. In the event the Company
elects to assume the defense of any such suit and retain
such counsel, the sellers, underwriter or controlling
persons, defendants in the suit, shall, after the date they
are notified of such election, bear the fees and expenses of
any counsel thereafter retained by them, as well as any
other expenses thereafter incurred by them in connection
with the defense thereof; provided, however, that if the
sellers, underwriter or controlling persons reasonably
believe that there may be available to them any defense or
counterclaim different than those available to the Company
or that representation of such sellers, underwriters or
controlling persons by counsel for the Company presents a
conflict of interest for such counsel, then such sellers,
underwriter and controlling person shall be entitled to
defend such suit with counsel of their own choosing and the
Company shall bear the fees, expenses and other costs of
such separate counsel.
5. MISCELLANEOUS.
5.1 Indemnity Obligations of the Purchaser. The Purchaser
hereby agrees to indemnify, defend and hold the Company and any
director, officer, employee or representative of the Company (the
"Company Indemnified Parties") harmless from, and to reimburse
the Company Indemnified Parties for, any and all losses, damages,
deficiencies, liabilities, obligations, actions, claims, suits,
proceedings, demands, assessments, judgments, recoveries, fees,
penalties, interest, costs and expenses (including, without
limitation, out-of-pocket expenses, reasonable investigation
expenses and reasonable fees and disbursements of accountants and
counsel) of any nature whatsoever arising out of, based upon or
resulting from (i) any breach of any representation and warranty
of such Purchaser which is contained in this Agreement; or (ii)
any breach or nonfulfillment of, or any failure to perform, any
of the covenants, agreements or undertakings of the Purchaser
which are contained in or made pursuant to the terms and
conditions of this Agreement. Notwithstanding the foregoing, the
indemnification obligation of the Purchaser shall not exceed the
purchase price of the Notes paid by the Purchaser .
5.2 Indemnity Obligations of the Company. The Company
hereby agrees to indemnify, defend and hold the Purchaser and any
director, officer, employee or representative of the Purchaser
(the "Purchaser Indemnified Parties") harmless from, and to
reimburse the Purchaser Indemnified Parties for, any and all
losses, damages, deficiencies, liabilities, obligations, actions,
claims, suits, proceedings, demands, assessments, judgments,
recoveries, fees penalties, interest, costs and expenses
(including, without limitation, out-of-pocket expenses,
reasonable investigation expenses and reasonable fees and
disbursements of accountants and counsel) of any nature
whatsoever arising out of, based upon or resulting from (i) any
breach of any representation and warranty of the Company which is
contained in this Agreement; or (ii) any breach or nonfulfillment
of, or any failure to perform, any of the covenants, agreements
or undertakings of the Company which are contained in or made
pursuant to the terms and conditions of this Agreement.
Notwithstanding the foregoing, the indemnification obligation of
the Company shall not exceed the purchase price of the Note.
<PAGE> 8
5.3 Notification of Claims. In the event of the
occurrence of an event which any party asserts constitutes a
claim for which indemnification may be sought hereunder, such
party shall provide the indemnifying party with prompt notice of
such event and shall make available to the indemnifying party
information material to the claim which is in the possession of
the indemnified party. If such event involves the claim of any
third party, the indemnifying party shall have the right to elect
to join in the defense, settlement, adjustment or compromise of
any such third-party claim, and to employ counsel to assist such
indemnifying party in connection with the handling of such claim,
at the sole expense of the indemnifying party, and no such claim
shall be settled, adjusted or compromised, or the defense thereof
terminated, without the prior consent of the indemnifying party
unless and until the indemnifying party shall have failed, after
the lapse of a reasonable period of time, but in no event more
than 30 days after written notice to it of the third-party claim,
to join in the defense, settlement, adjustment or compromise of
the same. An indemnified party's failure to give timely notice
in connection with any third-party claim shall not constitute a
defense (in part or in whole) to any claim for indemnification by
such party except and only to the extent that the indemnifying
party is actually materially prejudiced by such delay. If so
desired by the indemnifying party such party may elect, at such
party's sole expense, to assume control of the defense,
settlement, adjustment or compromise of any third-party claim,
insofar as such claim relates to the liability of the
indemnifying party before entering into any settlement,
adjustment or compromise of such claim, or ceasing to defend
against such claim, and provided, further, that the indemnified
party shall have the right at its own expense, to be represented
by counsel of its own choosing and with whom counsel for the
indemnifying party shall confer on connection with such defense,
settlement, adjustment or compromise or ceasing to defend against
each claim.
5.4 [Intentionally Omitted].
5.5 Confidentiality. (a) The Purchaser agrees to keep
confidential any and all non-public information delivered or made
available to the Purchaser by the Company except for disclosures,
as necessary, made by the Purchaser to the Purchaser's officers,
directors, employees, agents, counsel and accountants each of
whom shall be notified by the Purchaser of this confidentiality
covenant and for whom the Purchaser shall be liable in the event
of any breach of this covenant by any such individual or
individuals; provided, however, that nothing herein shall prevent
the Purchaser from disclosing such information (a) upon the order
of any court or administrative agency, (b) upon the request or
demand of any regulatory agency or authority having jurisdiction
over the Purchaser, (c) which has been publicly disclosed or (d)
to any of its members provided that any such members agree in
writing (with a copy provided to the Company) to be bound by
confidentiality provisions in form and substance substantially as
are contained herein. In the event of a mandatory disclosure as
described in clause (a) and/or (b) of the preceding sentence, the
Purchaser shall promptly notify the Company in writing of any
applicable order, request or demand for such information,
cooperate with the Company if and to the extent that the Company
elects to seek an appropriate protective order or other relief
from such order, request, or demand, and disclose only the
minimal amount of information ultimately required to be
disclosed. No Purchaser shall use for its own benefit, nor
permit any other person to use for such person's benefit, any of
the Company's non-public information including, without
limitation, in connection with the purchase and/or sale of the
Company's securities.
(b) The Company shall in no event disclose non-public
information to the Purchaser, advisors to or representatives of
the Purchaser unless prior to disclosure of such information the
Company marks such information as "Non-Public Information -
Confidential" and provides the Purchaser, such advisors and
representatives with the opportunity to accept or refuse to
accept such non-public information for review.
(c) Nothing herein shall require the Company to disclose
non-public information to any Purchaser or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any Purchasers who purchase
stock in the Company in any offering, to money managers or to
securities analysts.
<PAGE> 9
5.6 [Intentionally Omitted].
5.7 Legends. To the extent applicable, the Note and any
Shares issued shall be endorsed with the legend set forth below,
and the Purchaser covenants that, except to the extent such
restrictions are waived by the Company, it shall not transfer the
Note or Shares without complying with the restrictions on
transfer described in the legends endorsed on such note or
certificate:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY AND
ITS COUNSEL AND FROM ATTORNEYS REASONABLY ACCEPTABLE TO
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."
5.8 Assignability; Successors. The provisions of this
Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of the parties hereto.
5.9 Survival. All agreements, covenants, representations
and warranties made by the Company or by the Purchaser herein
shall survive the execution and delivery of this Agreement.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF COLORADO WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAWS.
5.11 Counterparts: Headings. This Agreement may be executed
in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
and the same agreement. The descriptive headings in this
Agreement are inserted for convenience of reference only and
shall not affect the construction of this Agreement.
5.12 Entire Agreement, Amendments. This Agreement and the
Exhibits contain the entire understanding of the parties with
respect to the subject matter hereof, and supersede all other
representations and understandings, oral or written, with respect
to the subject matter hereof. No amendment, modification,
alteration, or waiver of the terms of this Agreement or consent
required under the terms of this Agreement shall be effective
unless made in a writing, which makes specific reference to this
Agreement and which has been signed by the Company and the
Purchaser. Any such amendment, modification, alteration, waiver
or consent shall be effective only in the specific instance and
for the specific purpose for which given.
5.13 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be
deemed to have been given or made when delivered in hand,
deposited in the mail, or sent by facsimile, with confirmation
(if sent by facsimile on a non-business day, receipt shall be
deemed to have occurred on the next succeeding business day).
Communications or notices shall be delivered personally or by
certified or registered mail, postage, or by facsimile and
addressed as follows, unless and until either of such parties
notifies the other in accordance with this Section of a change of
address:
<PAGE> 10
if to the Company Consolidated Capital of North America, Inc.
410 17th Street, Suite 400
Denver, Colorado 80202
Att: Secretary
Tel: (303) 446-2188
Fax: (303) 446-5972
with copies to: Gallagher, Briody & Butler
212 Carnegie Center, Suite 402
Princeton, New Jersey 08540
Att: Thomas P. Gallagher
Tel: (609) 452-6000
Fax: (609) 452-0090
if to the Purchaser: Security Income Trust, L.P.
c/o American National Security, Inc.
17th Street, Suite 400
Denver, Colorado 80202
Att: Secretary
Tel: (303) 446-2188
Fax: (303) 446-5972
5.14 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
5.15 Maximum Interest. It is expressly stipulated and
agreed to be the intent of the Company and the Purchaser at all
times to comply with the applicable law governing the maximum
rate of interest payable on or in connection with all
indebtedness and transactions hereunder (or applicable United
States federal law to the extent that it permits the Purchaser to
contract for, charge, take, reserve or receive a greater amount
of interest). If the applicable law is ever judicially
interpreted so as to render usurious any amount of money or
other consideration called for hereunder, or contracted for,
charged, taken, reserved or received with respect to any loan or
advance hereunder, or if acceleration of the maturity of the Note
results in the Company's having paid any interest in excess of
that permitted by law, then it is the Company's and the
Purchaser's express intent that all excess cash amounts
theretofore collected by the Purchaser be credited on the
principal balance of the Note (or if the Note has been or would
thereby be paid in full, refunded to the Company), and the
provisions of this Agreement immediately be deemed reformed and
the amounts thereafter collectible hereunder reduced, without the
necessity of the execution of any new document, so as to comply
with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder. The right to
accelerate the maturity of the Note does not include the right to
accelerate any interest which has not otherwise accrued on the
date of such acceleration, and the Purchaser does not intend to
collect any unearned interest in the event of acceleration.
<PAGE> 11
IN WITNESS WHEREOF, this Agreement has been duly executed as of
the day and year first above written.
CONSOLIDATED CAPITAL
OF NORTH AMERICA, INC.
By: /s/ Richard D. Bailey
----------------------
Richard D. Bailey
President and Chief Operating Officer
SECURITY INCOME TRUST, L.P.
By: AMERICAN NATIONAL
SECURITY MANAGEMENT, L.P.
General Partner
By: AMERICAN NATIONAL
SECURITY, INC.
By: /s/ Donald R. Jackson
---------------------
Donald R. Jackson, Treasurer and
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.98
THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED, AND THE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY AND ITS COUNSELANDFROM ATTORNEYS REASONABLY
ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED.
No. 1 January 11, 1999
CONSOLIDATED CAPITAL OF NORTH AMERICA, INC.
18% NOTE - A
FOR VALUE RECEIVED, Consolidated Capital of North America,
Inc., a Colorado corporation (the "Company") hereby promises to
pay to the order of Security Income Trust, L.P., having an
address at 410 17th Street, Suite 400, Denver, Colorado 80202
(the "Holder"), or registered assigns, or its registered assigns,
the principal sum of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000), and to pay interest from the date hereof on
the principal sum remaining unpaid at the rate of 18% per annum
based on a 365-day year, such interest to accrue from the date
hereof and to be payable, together with the principal sum, on
July 10, 1999 (the "Maturity Date"). Principal and interest shall
be payable in lawful money of the United States of America at the
principal office of the Holder or at such other place as the
registered holder may designate from time to time in writing to
the Company.
This Note has been issued one pursuant to a Note Purchase
Agreement dated as of January 11, 1999 between the Company and
the Holder. The Holder of this Note is entitled to the benefits
of the Note Purchase Agreement and to enforce the agreements of
the Company contained therein and herein. Capitalized terms used
herein and not otherwise defined shall have the meaning ascribed
thereto in the Note Purchase Agreement. All payments shall be
paid in lawful money of the United States of America at the
principal office of the Holder or at such other place as the
Holder may designate from time to time in writing to the Company.
1. PREPAYMENT. The Company may prepay and redeem this
Note, at the election of the Company, upon not less than 10 days'
notice, at any time in whole or in part, at a price equal to the
outstanding principal of this Note together with accrued interest
to the redemption date.
2. EXTENSION OF NOTE. The Company may, at its option,
extend the Maturity Date of this Note for two successive
additional periods of ninety (90) days each by giving notice to
the Holder on or before the Maturity Date or the Extended
Maturity Date, as applicable; provided that in connection with
and at the time of each such extension, it shall issue to the
Purchaser or its designees 1,000,000 shares of the Common Stock
of the Company, par value .0001 per share, in consideration for
such extension. The Company agrees that it shall provide the
same registration rights under the Securities Act of 1933, as
amended, for any additional shares issued in consideration for an
extension of this Note as are set forth in Section 4 of the Note
Purchase Agreement.
3. [Intentionally Omitted].
4. TRANSFER AND EXCHANGE. Subject to compliance with the
restrictions on transfer set forth in the Note Purchase
Agreement, the registered holder of this Note or any new Note
issued pursuant hereto may, prior to maturity, surrender such
Note or Notes at the principal office of the Company for transfer
<PAGE> 2
or exchange. Within a reasonable time after notice to the
Company from a registered holder of its intention to make such
exchange and without expense (other than applicable transfer
taxes, if any) to such registered holder, the Company shall
promptly issue in exchange therefor another Note or Notes dated
the date to which interest has been paid on, and for the unpaid
principal amount of, the Note or Notes so surrendered, containing
the same provisions and subject to the same terms and conditions
as the Note or Notes so surrendered. Subject to the restrictions
on transfer set forth in the Note Purchase Agreement, each new
Note shall be made payable to such person or entity, as the
registered holder of such surrendered Note or Notes may
designate. Notes issued upon any transfer or exchange shall be
only in authorized denominations, which shall be $20,000.
5. REPLACEMENT. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of any
Note and, if requested by the Company in the case of any such
loss, theft or destruction, upon delivery of an indemnity bond or
other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender
and cancellation of such Note, the Company will promptly issue a
new Note, of like tenor, in the amount of the unpaid principal of
such Note, and dated the date to which interest has been paid, in
lieu of such lost, stolen, destroyed or mutilated Note.
6. DEFAULT. The Company shall be in default under this
Note upon the occurrence of: (i) any of the events specified in
Section 6(a) hereof and the failure to cure such default within
five (5) days after receipt of written notice thereof from the
Holder; (ii) any of the events specified in Section 6(b) hereof
and the failure to cure such default within ten (10) days after
receipt of written notice thereof from the Holder; or (iii) any
of the events specified in Section 6(c) hereof (any of the
foregoing being an "Event of Default"):
(a) Failure to make any principal or interest payment
required under this Note on the due date of such payment;
(b) Any material default, breach or misrepresentation shall
occur under the terms and provisions of the Note Purchase
Agreement; or
(c) Insolvency of, or the business failure of, of the
Company or an assignment for the benefit of creditors by or the
filing of a petition under bankruptcy, insolvency or debtor's
relief law, or for any readjustment of indebtedness, composition
or extension by the Company, or commenced against the Company
which is not discharged within sixty (60) days.
7. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of
an Event of Default:
(a) specified in clause (c) of Section 6, then this
Note shall be automatically accelerated and immediately due and
payable at the option of Holder, without notice or demand, and
said amount shall accrue interest from the date of default at the
rate of twenty percent (20%) per annum;
(b) specified in clauses (a) or (b) of Section 6, then
(i) the Holder may declare this Note immediately accelerated, due
and payable and said amount(ii) the remaining principal and
accrued and unpaid interest thereon shall accrue interest from
the date of default at the rate of twenty percent (20%) per
annum; and
(c) the Holder shall have all of the rights and
remedies, at law and in equity, by statute or otherwise, and no
remedy herein conferred upon the Holder is intended to be
exclusive of any other remedy and each remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in, equity, by statute or
otherwise.
<PAGE> 3
8. AMENDMENTS; PARTIES. This Note can only be amended by
an agreement in writing signed by the Company and the Holder.
This Note shall inure to the benefit of and be binding upon the
Company and the Holder and their respective successors and
assigns.
9. WAIVER OF PRESENTMENT. The Company hereby waives
presentment, demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
10. MAXIMUM RATE OF INTEREST. It is expressly stipulated
and agreed to be the intent of the Company and Holder at all
times to comply with the applicable law governing the maximum
rate of interest payable on or in connection with all
indebtedness and transactions hereunder (or applicable United
States federal law to the extent that it permits Holder to
contract for, charge, take, reserve or receive a greater amount
of interest). If the applicable law is ever judicially
interpreted so as to render usurious any amount of money or other
consideration called for hereunder, or contracted for, charged,
taken, reserved or received with respect to any loan or advance
hereunder, or if acceleration of the maturity of this Note or the
indebtedness hereunder or if any prepayment by the Company
results in the Company's having paid any interest in excess of
that permitted by law, then it is the Company's and Holder's
express intent that all excess cash amounts theretofore collected
by Holder be credited on the principal balance of this Note (or
if this Note has been or would thereby be paid in full, refunded
to the Company), and the provisions of this Note immediately be
deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to
permit the recovery of the fullest amount otherwise called for
hereunder. The right to accelerate maturity of this Note does
not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and Holder
does not intend to collect any unearned interest in the event of
acceleration. All provisions of this Note are valid and
enforceable under current Colorado law.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING
TO THE LAWS OF THE STATE OF COLORADO WITHOUT GIVING EFFECT TO THE
PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAWS.
IN WITNESS WHEREOF, the Company has executed this Note as of the
day and year set forth above.
CONSOLIDATED CAPITAL OF
NORTH AMERICA, INC.
By: /s/ Richard D. Bailey
---------------------
Richard Bailey
President and Chief Operating Officer
