U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORTS PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal years ending December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to_____________
Commission file number 0-23892
ENVIROMETRICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 57-0941152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9229 University Blvd.
Charleston, South Carolina 29406
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (843) 553-9456
Securities registered pursuant to Section 12(b) of the Exchange Act
Title of Each Class Name of Each Exchange of Which Registered
None None
Securities registered pursuant to Section 12(g) of the Act::
Common Stock, $.001 par value
(Title of Class)
Check whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes NO X
Transitional Small Business Disclosure Format Yes NO X
Check if there is no disclosure of delinquent filers in response to item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
The issuer's net revenues for its most recent fiscal year ended December
31, 1998 were $843,500. The aggregate market value of the voting stock held by
non-affiliates for the issuer as of January 3, 2000 was $794,015.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of the registrant's Common Stock, $.001
Par Value, on January 3, 2000 was 3,640,880 shares.
Documents incorporated by reference: None
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
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GENERAL
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The Company is a public holding company. It formerly had 3 operating
subsidiaries: Trico Envirometrics, Inc., Envirometrics Products Company ("EPC"),
and Azimuth, Inc. As a result of a "Turnaround" phase which began in 1996, it
currently has one operating subsidiary: Azimuth, Incorporated ("Azimuth").
Azimuth provides the following services: industrial hygiene laboratory services;
environmental health and occupational health and safety consulting; and asbestos
testing services.
On July 26, 1996 the Company entered into an agreement with its then Chief
Operating Officer, the former owner of both Trico Engineering & Surveying, Inc.
and Land Planning & Design, Inc. (collectively "Old Trico"), Mr. Andrew C.
Gillette, to repurchase the operations of Trico Envirometrics, Inc., its then
wholly owned subsidiary ("Trico"). The sale resulted from failure to achieve
anticipated synergy between the Company's core operations and the Old Trico
assets. The Company was not able to leverage the Old Trico assets to expand its
work beyond the local area and to include environmental services successfully in
its service offering. The acquisition of Old Trico from Mr. Gillette closed on
November 30, 1994. During 1996 it was determined that Trico was not a cash
contributor to the operations of the Company, and due to the nature of its
business the Company was unable to finance Trico's trade receivables. Under the
terms of Mr. Gillett's repurchase, the Company received Trico's note for
$600,000, representing net advances by the Company to the former subsidiary,
45,000 shares of Envirometrics common stock, and a pledge of Mr. Gillette's
Trico stock and his personal guarantee to secure repayment of the $600,000 note.
During December 1996 the Company entered a formal "Turnaround" phase.
Management analyzed all operations of the Company to determine which operations
were draining cash flow. The extreme debt load (see Item 7. Financial
Statements) and poor cash position required that significant steps be taken
immediately. The asbestos air monitoring product business had become very
competitive and profit margins had deteriorated to the point that a business
decision was made to sell off this product line and mediate debt to the extent
possible. The core product in this line was the 25mm air monitoring cassette and
the supplier that produced the plastic cassette component of this product was
owed approximately $250,000. The supplier informed the Company that it could not
continue to manufacture the cassette parts if it could not be assured of
payment. On April 28, 1997 the Company entered into an agreement with
Multi-Metrics, Inc. for the sale of the Company's injection molds for cassette
production, with the proceeds of this sale going to reduce related trade
payables (see Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations).
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The Company had also developed, demonstrated and commercialized an
innovative technology for passive on-site and real-time monitoring of
atmospheric hazardous and toxic chemicals for personal exposure safety. Products
based upon this technology, sold under the name of the ACT Monitoring Card
System ("ACT"), consisted of personal badges for specific chemicals and an
electronic/optical reader. These products were used to measure chemicals in a
variety of industrial (chemical, pulp and paper, petrochemical, semiconductor,
etc.) and commercial (hospitals, etc.) environments.
In its prior effort to commercialize ACT, the Company had signed a
definitive Master Distribution Agreement with Zellweger Analytics, Inc.
("Zellweger") in January 1996. This agreement (the "Zellweger Agreement") gave
Zellweger exclusive worldwide distribution rights to ACT. Zellweger is a
division of Zellweger Luwa Organisation, a major world-wide Swiss supplier of
environmental and pollution monitoring systems.
The initial term of the Zellweger Agreement was for two (2) years beginning
in January 1996. The Zellweger Agreement was to automatically renew at the end
of such two-year period, but only on terms and conditions mutually acceptable to
both parties. Although it was not obligated to meet any sales targets, Zellweger
forecasted minimum purchases of $675,000 in 1996 and $2,058,000 in 1997.
Zellweger advanced purchase deposits to the Company based on its forecast of
purchases.
Zellweger produced actual sales in 1996 of $180,150 in comparison to
$482,693 of direct sales produced by the Company in 1995. Zellweger submitted a
revised forecast for 1997 of $191,812. Envirometrics considered this forecast to
be unacceptable based on 1995 sales and the perceived potential for the product.
Upon notifying Zellweger of its refusal to accept the 1997 forecast, Zellweger
canceled the contract on January 13, 1997 and demanded repayment of the prepaid
purchase deposits of $494,849 advanced to the Company. Unable to reach an
acceptable resolution, the Company notified Zellweger on March 12, 1997 that it
had also terminated the contract and commenced notifying all ACT customers that
Zellweger was no longer the exclusive distributor of ACT.
On November 14, 1997, the Company sold the ACT technology to Zellweger in a
settlement of the Master Distribution Agreement disputes (see Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations).
In 1998 the Company ceased operation of its environmental products
businesses. In addition to ACT, this business had encompassed sales of many
varieties of equipment and supplies, primarily for asbestos monitoring,
surveying and abatement services, including standard air sampling cassettes and
its patented Bellmouth cassette which could be utilized for sampling atmospheric
lead, asbestos and other ceramic or man-made vitreous fibers. The Company also
sold and distributed asbestos sampling products under its own trade name,
"Asbestos Analytics", as well as those of other manufacturers with whom it had
distributorship agreements.
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The Company's only current operating subsidiary, Azimuth, operates a fully
accredited Industrial Hygiene ("IH") laboratory, certified by the American
Industry Hygiene Association ("AIHA"), to perform analyses of air samples for
asbestos, metals and organic vapors. Azimuth also provides related consulting
services to its clients.
The Company's first steps to exit the "Turnaround" phase focus on
increasing the revenue of Azimuth. The increase in revenue is predicated on
changing the Azimuth service offering from mainly Industrial Hygiene Services to
broader based Safety Services (see "Company Services--Consultative Services"),
and cultivating the rising emphasis placed on Indoor Air Quality (see "Industry
Overview"). Management and the Board of Directors agree that, with the small
existing revenue base currently generated from Azimuth, sizable growth must come
from a merger and acquisition strategy. The Company's ongoing process of
attempting to continue financial stabilization through internal growth, as part
of its first steps in exiting the "Turnaround" phase, is expected to expedite
the Company's merger and acquisition strategy. Any merger and acquisition
activity is anticipated to bring further dilution to the shareholders of the
Company. In addition, as part of exiting the "Turnaround" phase, in January
1999, the Company was able to obtain prepayment of the purchase price for the
sale of Trico, evidenced by a promissory note bearing $600,000 principal, for a
cash payment of $260,000 (current balance at the time of sale was $364,400),
which payment was applied to working capital for further debt mediation and
rebuilding of operations.
Historical Background
- ---------------------
The consultative and laboratory services now conducted by Azimuth were
begun in 1984 as an asbestos consulting partnership founded by Mr. Richard D.
Bennett, CIH, current President of Azimuth, and Charles E. Feigley, Ph.D., CIH,
a current Director . Between 1987 and 1989, the Azimuth laboratory evolved from
an asbestos laboratory to a fully accredited AIHA Industrial Hygiene laboratory
for testing asbestos, metals and organic vapors (e.g., solvents) and capable of
analyzing air samples taken to evaluate worker exposure to toxic chemicals. The
Company believes that such accreditation provides it with a significant
advantage in light of more stringent, costly and time consuming accreditation
procedures now applicable to existing and potential competitors seeking
industrial hygiene accreditation for their laboratories.
With an accredited laboratory, the Company was able to expand its services
into the area of industrial hygiene and diversify from its earlier focus on
purely asbestos consulting. In 1988, the Company obtained a contract from the
National Cancer Institute in which Azimuth evaluated levels of exposure to
formaldehyde in the embalming and mortician fields. This project terminated in
1990.
In 1989, the Company entered into an agreement with Palmetto Hospital Trust
("PHT") to conduct annual surveys and manage worker exposure to a comprehensive
range of workplace industrial hygiene and safety matters. PHT is the general
agent for stop-loss/workers' compensation insurance for its 72-member hospitals
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and long-term care facilities. The Company continues to provide these services
to PHT. On September 4, 1997 the Company entered into a Strategic Alliance with
PHT Services, Ltd.("PHTS"). PHTS grew out of PHT and was created to broker
services to the members of PHT. Under the terms of this Agreement, PHTS will
actively market the services of Azimuth to the members of PHT and in return will
receive 10% of the gross revenue from contracts it obtains from its members less
subcontracted expenses.
On May 10, 1991 the Company was incorporated in Delaware for the purpose of
consolidating the operations of Azimuth and certain of its former environmental
products businesses and acquiring the assets of four general partnerships which
were then leasing real estate and laboratory and other equipment to Azimuth and
the products businesses. The acquisition was accomplished pursuant to an
agreement dated November 15, 1991, at which time the Company also acquired the
assets of the four partnerships by the assumption of existing mortgage and
installment notes and by the issuance of subordinated notes to the partners. The
partners of these partnerships were also shareholders in Azimuth and
Envirometrics, Inc.
In September 1991, the Company began to manufacture and sell ACT cards and
in August 1992 acquired a license to manufacture and sell electronic card
readers. These items provided a convenient monitoring system for personal
exposure to hazardous chemicals. The Company manufactured the ACT cards under a
proprietary process and had an exclusive worldwide license to manufacture and
sell readers with the ACT cards.
On April 27, 1993, the Company was issued a patent on its Bellmouth
cassette. Sales of the Bellmouth cassette effectively began in 1994, and the
Company received approval for this product from the relevant Federal agencies
(OSHA, EPA and NIOSH).
On November 30, 1994, the Company acquired substantially all the operating
assets of Old Trico. These businesses specialized in engineering, surveying,
landscape architecture, tank management, RCRA/CERCLA site management and Phase I
and II environmental services. This acquisition was intended to enable the
Company to make available from one source a more complete line of environmental
consulting and professional engineering services. On July 26, 1996 the Company
sold the Old Trico businesses that it had operated as Trico (see "General",
above).
On August 8, 1995, the Company acquired certain operating assets, including
cassette injection molds, of the Corning Costar Nucleopore Air Monitoring
Division, which assets (and others of its former environmental products
businesses) were sold on April 28, 1997 to Multi-Metrics, Inc. As part of this
sale, Multi-Metrics agreed to sell the non-cassette inventory of this business
for the Company on a consignment basis. This sale was prompted by the need to
reduce debt and cut unprofitable business lines as a part of the "Turnaround".
In January 1996 the Company signed the Zellweger Agreement pursuant to
which Zellweger was granted the exclusive marketing rights worldwide for the
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Company's proprietary ACT technology. On November 14, 1997, to terminate and
settle the Zellweger Agreement: the Company sold ACT to Zellweger for $344,849,
which the Company used to repay certain prepaid purchase deposits made by
Zellweger under the Zellweger Agreement; Zellweger exchanged, $140,000 of
additional prepaid purchase deposits for the Company's issuance to Zellweger of
70,000 shares of Series A Preferred Stock; and the Company made a cash payment
to Zellweger of $10,000.
In 1996 the Company entered into a "Turnaround" phase. The major components
of this "Turnaround" strategy included: salary cuts of 5% to 30% that spanned
all levels of employees from management to hourly employees, with the highest
paid employees taking the largest percentage cut; the sale of Trico back to the
original owner in July 1996, thus eliminating a cash intensive, marginally
profitable subsidiary; in December 1996 all of the Company's real property was
sold to retire the mortgage with Bank of America (formerly NationsBank), which
was due to mature in early 1997, and a $100,000 operating loan made by a former
Director; in April 1997 the Company sold its air monitoring cassette molds to
Multi-Metrics, Inc. with the proceeds used to retire approximately 50% of a
trade payable owed to Precision Southeast, Inc., the former molder of the
Company's cassettes; and in November 1997 the Company entered into a settlement
of the Zellweger Agreement, retiring in excess of $490,000 in debt and avoiding
the potential of a costly legal confrontation. During the twelve month period
ending 1998, trade payables were mediated and a gain of $325,900 was realized
for financial reporting purposes. On June 29, 1998, Company's secured creditors
converted $546,500 of outstanding indebtedness to an aggregate of 281,268 shares
of Series B and C Preferred Stock of the Company. As a result of this debt
conversion, certain notes receivable in favor of the Company, which had been
held as collateral for these creditors were released, payments were made to the
Company and the proceeds were used for needed operating capital (see Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations).
Industry Overview
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The occupational health and safety industry (the "Industry") represents the
convergence of safety and industrial hygiene, both of which consist of
professionals and product manufacturers specializing in the recognition,
evaluation and control of hazardous chemical, physical and biological agents in
or around the workplace. The Company's principal areas of focus for provision of
these services are Industrial Hygiene Consulting, Industrial Hygiene Laboratory
Services, Occupational Safety and Health consulting, and Indoor Air Quality.
Occupational Health and Safety
------------------------------
The occupational health and safety segment of the Industry has
traditionally been the domain of the certified industrial hygienist (the "CIH")
and the certified safety professional (the "CSP"). The CIH is an expert in the
recognition, evaluation and control of hazardous chemicals and physical and
biological agents in the work place. The Company also employs CSP's to assist
with determining OSHA regulation compliance and identifying potential liability
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resulting from non-compliance. The Company has a multi-disciplinary program
called Occupational HealthGuard that combines all of the Company's
environmental health and occupational health and safety consulting and
laboratory services. This program involves performing OSHA/EPA compliance
Strategic Diagnostic Review ("SDR") assessments for the OSHA and/or the EPA
component. The Company uses this proprietary SDR process to enable clients to
identify problem areas, rank the importance of such non-compliance areas,
quantify exposure and implement appropriate action plans for remediation.
Indoor Air Quality
------------------
This segment includes the testing, remediation and control of indoor air
pollutants and is also serviced by the CIH, reflecting the demand for consulting
and analytical services as well as indoor environmental monitors. This area of
the market is experiencing considerable attention as occupants of buildings are
becoming more attuned to the potential for contaminants adversely affecting
health. For example, the Company began a large project in December 1998, which
was completed in July 1999, involving mold contamination in a public school. The
Company acted in a project management capacity and the reaction to this growing
problem is exemplified in the requirement for evacuation of the occupants and
complete facility wide abatement of the contamination under strict containment
conditions.
Factors Affecting the Industry
------------------------------
Governmental Regulation. Governmental regulation is a key factor affecting
the development of the Industry. The two principal regulatory agencies are OSHA
and the EPA. These agencies complement each other, as OSHA is concerned with the
worker and the environment within a corporate facility, and the EPA is concerned
with the general public and the environment generally outside a corporate
facility. OSHA regulations have established permissible exposure limits over an
eight-hour period as well as short-term exposure limits in fifteen minute
intervals for certain specified types of hazardous or toxic chemicals.
Rising Legal/Criminal Liability Risk and Penalties. Many violations that
formerly involved only civil penalties for violation of environmental
regulations applicable to the Industry, now carry potential criminal liability.
The language in the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act (RCRA), the Oil Pollution Act, the Pollution
Prosecution Act of 1990, and the U.S. Sentencing Commission Guidelines Manual
are exposing corporations and their personnel to significantly increased fines
and criminal sanctions. The referral of criminal cases by the EPA to the
Department of Justice has significantly increased since 1993, and the number of
criminal cases prosecuted and the number of cases ending in convictions have
also significantly increased in that time period.
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Company Services
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Laboratory Services
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The Company's certified industrial hygiene laboratory, operated by its
Azimuth subsidiary, is one of approximately 130 AIHA fee for service
laboratories in the United States. This laboratory services clients on a
nation-wide basis, but the majority of its clients are located primarily in the
southeastern part of the United States. The synergy of a full service laboratory
is consistent with the Company's overall strategic plan, supports the Company's
Occupational HealthGuard and consulting programs, and facilitates immediate
market expansion through increased services to existing industrial hygiene
customers. The market for industrial hygiene analyses includes
architects/engineers, environmental consultants, industrial hygienists, safety
professionals, manufacturing companies in the private sector and governmental
agencies, such as the Department of Energy, Department of Defense, Federal,
state and local government agencies.
The Company's laboratory is accredited by the American Industrial Hygiene
Association. The Company's laboratory has also received accreditation under the
AIHA, Environmental Lead Laboratory Accreditation Program, New York State Dept.
of Health accreditation for Lead and other metals in non-potable water, air and
emissions, and solid and hazardous waste.
Industrial hygiene laboratory services involve the analyses of air samples
taken to evaluate worker exposure to hazardous or toxic chemicals. The samples
are called "air samples", but the media analyzed is not air. Rather, analyzing
devices extract particles of the chemical from the air. These devices are called
sampling media and consist of filters, sorbent tubes, liquids, cassettes or
other specialty sampling devices. The sampling media and instrumentation used by
the industrial hygienist depend on the type of chemical being tested. An
industrial hygienist is primarily concerned with airborne chemicals, respirable
particulates, metals including lead, and organic vapor (i.e. vapor containing
carbon and hydrogen).
The Laboratory is a leading provider of lead analytical services, and was
one of the first industrial hygiene laboratories in the nation to receive
accreditation under the AIHA/EPA Environmental Lead Laboratory Accreditation
Program (ELLAP).
The Company, through its laboratory, provides laboratory services for
Housing Environmental Services (HES), a major, national consultant in Cambridge,
Massachusetts. HES provides lead based paint assessment to housing authorities
in accordance with HUD guidelines.
Consultative Services
---------------------
Consultative services are grouped into five categories:
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- Safety Consulting Services - involves program development for fire,
electrical and process safety and OSHA compliance;
- Industrial Hygiene Consulting Services - involves on-site audit and
assessment surveys for compliance with OSHA standards in the areas of indoor air
quality and worker exposure to toxic chemicals and metals; and other physical
health hazards;
- Asbestos and Lead Consulting Services - includes hazard assessments
(surveys, sampling and analyses), design engineering, project management for
abatement and removal of asbestos or lead; and
- Training - involves the establishment of programs and subsequent delivery
of safety, asbestos, lead and industrial hygiene, and OSHA and EPA compliance
training.
The Company's Occupational HealthGuard service is a multi-disciplinary
program that combines all of the Company's environmental health and occupational
health and safety consulting and laboratory services. This program involves
performing OSHA/EPA compliance SDR assessments for the OSHA and/or the EPA
component, together with a comprehensive range of corrective action, training
and on-going monitoring services. The review is conducted by a two-to-three
person team of Company environmental and occupational safety and health
professionals. Depending upon the size and complexity of the assignment, such a
review costs between $3,000 and $5,000 per day, plus expenses, and takes one to
two days of on-site work to complete. The work product from this effort consists
of a written report to the customer that lists and prioritizes non-compliance
findings and delineates a custom designed, cost effective, corrective action
plan. The corrective action plan is then implemented by the customer utilizing
its own internal technical resources, the Occupational HealthGuard technical
professionals, or a combination thereof. The efficacy of the corrective action
and the status of on-going compliance are then evaluated through a quarterly,
semi-annual or annual compliance audit.
Asbestos consulting services had been performed by Azimuth's field
operators until 1996, when it made a transition to providing these services
through subcontractors. Through the subcontractor, the Company continues to
offer these services including both asbestos and lead services inclusive of
building surveys, operations and maintenance plan development, removal cost
estimates, removal specifications, project management, and on-site air sampling
and analysis for abatement projects. The Company has relationships with three
individuals, two who were former employees of the Company, which act as
subcontractors providing Asbestos consultative services. Two of these providers
operate under an oral agreement and the other under a written subcontractor
agreement.
In October 1999 the Company implemented a plan to change the focus of its
service offering from mainly Industrial Hygiene Services to an emphasis on
expanded Safety Services. Safety Services are specialty consulting and on-site
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training products which assist clients to set goals and achieve reductions in
frequency and severity of accidental losses through the process of identifying
and controlling harmful employee behavior and hazardous conditions in the
workplace. Safety Services, when properly implemented, assist clients achieve
compliance with regulatory requirements established by state and Federal OSHA,
transportation, and environmental agencies. Management believes that Safety
Services represent a broader need within the industry, especially for employers
having between 50 and 150 employees. This industry segment makes up the greater
percentage of the market potential for the services of the Company and comprises
the segment in which the Company is focusing its greatest sales effort. It is
Management's belief, based on market trends, that leading with Safety Services
establishes a customer relationship that allows other services, i.e. Industrial
Hygiene Services and Environmental Services, to be sold to the same customer.
Former Company Products
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ACT Cards and Electronic Card Readers
-------------------------------------
Prior to November 1997, when the ACT card business was sold to Zellweger,
the Company manufactured, sold and distributed ACT cards and sold and
distributed electronic card readers through its environmental products
subsidiary. In 1996 the Company distributed this product line through Zellweger
under the terms of the Zellweger Agreement. The terms of this agreement gave
Zellweger exclusive world-wide distributor rights to the ACT cards and
electronic card readers. The ACT cards and readers provided a chemical-free,
on-site monitoring system for measuring personal exposure to hazardous chemicals
in a variety of industrial and medical environments. See "General" and
"Historical Background", above, for information concerning the Company's
relationship with Zellweger.
The ACT cards (sometimes referred to as badges) could be worn by all, or
certain designated personnel within a selected area. The ACT cards were able to
detect specified levels of formaldehyde, hydrogen sulfide, sulfur dioxide,
methyl ethyl ketone, ammonia, chlorine, nitrogen dioxide, ethylene oxide, carbon
monoxide and glutaraldehyde in the air. These toxic and hazardous chemicals
exist in many industrial and healthcare environments.
Using passive diffusion and colorimetric chemistry, the Company's ACT cards
provided both visual indicators, through color changes, and quantitative
readings of air levels of exposure to hazardous or toxic chemicals.
On March 26, 1992 the Company entered into an agreement, which was also
amended in 1996, with Computer Control Corporation ("CCC") of Pompton Plains,
New Jersey, to develop the electronic card reader for quantitative ACT cards.
Under the agreement, CCC granted to the Company an exclusive world-wide license
to manufacture and sell in perpetuity electronic card readers for use with ACT
cards; provided, that CCC retained the non-exclusive right to manufacture and
sell electronic card readers to the Company. On August 25, 1997 the Company
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received notice from CCC that it was canceling the 1992 Agreement and amended
1996 Agreement because of failure by the Company to cure certain defaults. Cash
flow problems and the sale of ACT to Zellweger prevented the Company from curing
the defaults.
Air Sampling Cassettes and Industrial Hygiene Supplies
------------------------------------------------------
The Company's former environmental products business manufactured and
marketed air sampling cassettes, including its patented Bellmouth cassette, for
the monitoring of levels of asbestos and certain metals and fibers in the air.
It also sold and distributed a diversified line of equipment and supplies for
the industrial hygiene and occupational health and safety consultant and
laboratory markets. On April 28, 1997, the Company sold the principal operating
assets of the environmental products business. See "General" and "Historical
Background", above, for information concerning this sale.
Intellectual Property
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Patents and Licenses
--------------------
The Company's only patent was issued on April 27, 1993 covering the
Bellmouth cassette technology. This cassette technology, including patent rights
was sold to Multi-Metrics, Inc. in 1997. See "General" and "Historical
Background".
The Company manufactured its ACT cards under proprietary chemistry. The
Company had negotiated a revised employment agreement with each of its two
chemists to include a base salary and a royalty equal to 2.5% of annual gross
sales of all ACT cards and a cash bonus of $5,000 for each new card that was
developed. The initial term of the employment agreement was to extend until
December 31, 2000 with two year automatic renewals at the end of the first term.
On October 20, 1997 the Company signed a Mutual Release of Claims Agreement to
supersede the Employment, Royalty and Non-disclosure Agreement dated May 15,
1996. The Mutual Release Agreement released the chemists from employment and
released the Company from its obligations under their employment agreement.
On March 26, 1992, the Company entered into an agreement with CCC for the
development of the electronic card readers. Under such agreement, the Company
(i) advanced $30,000 to CCC, (ii) agreed to reimburse CCC for up to $5,000 of
expenses incurred in prosecuting any letters patent in respect to such
electronic card reader, and (iii) agreed to pay CCC a royalty equal to 3% of net
sales of all ACT cards using the ACT electronic card readers for a period of
five years from February 2, 1993 (the date of the first sale of an ACT card
reader), subject to minimum annual royalties to CCC of $25,000 and $30,000 per
annum for the first and second years of the five-year period, respectively. In
addition, the Company agreed to pay CCC a royalty equal to 10% of all net
proceeds received by the Company from the sale or rental of ACT card readers for
a period of five years, subject to extending the period of payment of such
royalty to the life of any patents which CCC may obtain during the initial five
year period.
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Under the agreement, CCC granted to the Company an exclusive world-wide
license to manufacture and sell in perpetuity electronic card readers for use
with ACT cards; provided, that CCC retained the non-exclusive right to
manufacture and sell electronic card readers to the Company. The Company was
prohibited from sublicensing or assigning the license to any third party without
CCC's consent. All technology developed under the agreement was the sole
property of CCC; provided that CCC must disclose to the Company (and may not
disclose to any third party other than the Company) all technical know-how,
trade secrets and other proprietary information which was required in order to
manufacture the electronic card readers.
On June 18, 1996 CCC and the Company amended the 1992 Agreement. In this
amendment CCC addressed certain defaults of the Company and dates in which those
defaults must be cured. The defaults were failure by the Company to make certain
payments due to CCC under the terms of the 1992 Agreement. The 1996 amendment
extended the Monitor and Reader Royalty Period that was due to expire in 1997
until June 30, 2000. On July 17, 1997 CCC noticed the Company again that it had
defaulted under the terms of the 1992 and 1996 amended Agreement. The Company
had cured some of the stated defaults in the 1996 amendment, but because of cash
flow problems were unable to cure all defaults. On August 25, 1997 the Company
received notice from CCC that it was canceling the 1992 and amended 1996
Agreement and pursuing all remedies available to it under the Agreements. On
April 9, 1998 the Company and CCC signed a Mutual Settlement and Release in
which the Company conveyed to CCC 31,713 shares of its common stock in lieu of
the $31,712 of outstanding royalties owed CCC. None of this technology was
conveyed to Zellweger in the sale of ACT in 1997.
Trademarks and Trade Names
--------------------------
AirChem Technologies ("ACT")and the ACT logo were registered trademarks of
the Company's Envirometrics Products Company subsidiary. Under the purchase
agreement with Zellweger, these trademarks were sold as apart of the asset
purchase.
Azimuth and Occupational Healthguard are registered service marks of
Azimuth. Asbestos Analytics is a registered trademark of Envirometrics Products
Company. "Envirometrics" is a registered servicemark with the State of South
Carolina.
Former Manufacturing
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The company manufactured and assembled air sampling cassettes, in both
standard 25mm and 37mm sizes and its patented Bellmouth cassette at a 4,800
square foot leased facility (see ITEM 2. DESCRIPTION OF PROPERTIES) in
Summerville, South Carolina, and manufactured the ACT cards at a 1,200 square
foot leased facility in Raleigh, North Carolina. Under the terms of settlement
with the chemists employed to manufacture the ACT cards, the lease of the 1,200
square foot facility in Raleigh, NC was assumed by the chemists. Under the terms
of the previously discussed asset purchase agreements by Zellweger Analytics,
Inc. and Multi-Metrics, Inc. the Company no longer manufactures or sells these
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products. ACT card readers were produced exclusively for the Company by CCC
under a manufacturing requirements agreement until August 25, 1997 when CCC
canceled the agreement because of failure by the Company to cure certain
defaults. For terms of settlement with CCC see "Intellectual Property" above.
Sales and Marketing
- -------------------
The Company's laboratory services are marketed through telemarketing
efforts and by attending local and national Industrial Hygiene and Safety trade
conferences.
As the Company exits the "Turnaround" phase, emphasis has been placed on
internal growth of the consultative services in the state of South Carolina. In
South Carolina there exists an industrial corridor that geographically extends
along Interstate 85 that crosses the northern quadrant of the state. The Company
has never had an office or a presence in this area. In October 1999 a sales
representative domiciled in this corridor was hired to make direct sales calls
in this geographic area.
The Company has determined that employers having from 50 to 150 employees
typically do not have the internal resources to comply with OSHA and EPA
regulations and have the greatest need to secure outside services. This is the
target market to which the Company is directing its sales focus for growth of
Azimuth sales.
Management has evaluated a strategy to increase its revenue per customer.
It has determined that by offering Safety Services, a greater potential exists
to generate higher sales per customer and allow for the integration of other
Company service offerings, i.e. Industrial Hygiene and Environmental Services.
This shift in marketing strategy is anticipated to generate higher revenues per
customer in the future.
EMPLOYEES
- ---------
Presently the Company has a total of 13 employees down from 95 in 1996. The
number of employees at December 31 of each fiscal year was as follows:
Year Total Parent Lab & Consultative Products Engineering
---- ----- ------ ------------------ -------- -----------
1996 95 9 21 30 35
---- ----- ------ ------------------ -------- -----------
1997 21 6 11 4
---- ----- ------ ------------------ -------- -----------
1998 15 2 13
---- ----- ------ ------------------ -------- -----------
None of the Company's employees are represented by a labor organization.
The Company considers its relations with employees to be satisfactory.
The Company utilizes the services of three subcontractors in the provision
of Asbestos Consultative services (see "Company Services--Consultative Services"
above).
12
<PAGE>
Insurance
---------
The Company presently maintains insurance as required by law (e.g.,
workers' compensation insurance), and liability insurance in respect to hazards
on the Company's business premises. The Company continues to carry product
liability insurance for its former products, generally providing for coverage of
$1.0 million for each occurrence or project, plus a $3.0 million umbrella
liability insurance policy that also covers product liability claims. In
addition, the Company maintains up to $1.0 million of errors and omissions
insurance for consultative services. The Company believes that such insurance is
adequate to cover potential claims relating to its past and existing business
activities. To date, its claims history has been minimal.
Competition
- -----------
Technological competition from other and longer established environmental
and industrial hygiene companies is significant and expected to increase. Cut
backs in the early 1990's of large Occupational Health and Safety corporate
staffs have resulted in a fragmentation of the Industry through the entry of
such released personnel into private consulting practice. The Company believes
that environmental and industrial hygiene laboratories and consulting firms will
compete intensely to maintain or improve their revenue levels and market shares.
The Company's competitors have, or are developing, consulting and laboratory
services similar to the Company's current service line. Most of these companies
have substantially greater capital resources than the Company and can be
expected to be long-term competitors.
The Company believes that its primary market competition for environmental
consulting and laboratory services comes from the General Engineering Laboratory
division of Coastal Marine Trading Company, Clayton Environmental Consultants,
Inc., Dames and Moore, Inc., Schneider Laboratory and Data Chem Laboratories.
The Company believes that its laboratory services benefit from its full service
orientation, its technical understanding of its related consulting services and
the reputation of the Company founder, Richard D. Bennett, CIH.
Post "Turnaround" Phase
- -----------------------
During 1996 the Company entered a formal "Turnaround" phase as a result of
the critical financial condition that the Company was then facing. Management
analyzed all operations of the Company to determine which operations were
draining cash flow. The extreme debt load (see Item 7. Financial Statements) and
poor cash position required that significant steps be taken immediately. The
Company embarked on a plan to mediate debt through the sale of real estate, sale
of other Company assets and negotiation with vendors. The result is that the
Company has reduced its debt load from $3,203,600 at December 31, 1995 to
$477,200 at December 31, 1999.
13
<PAGE>
The Company has now turned its attention to moving out of the "Turnaround"
phase. Management has devised a plan to accomplish this exit in two steps. Step
One will focus on the internal growth of Azimuth and Step Two will focus on the
development and implementation of a merger and acquisition strategy.
Step One. In October 1999, Azimuth changed its service provision to shift
more focus to broader Safety Services offerings. This change is expected to
expand the customer base by offering a wider range of services and by leading
the sales process with Safety Services. Once a customer relationship is
established with Safety Services, it is expected to allow for the sale of other
service offerings, resulting in a higher revenue base per customer and
ultimately an internal growth in revenue. In October 1999, Azimuth hired a sales
representative to increase the visibility of Azimuth in the strong industrial
base along the Interstate 85 corridor located in the upper quadrant of South
Carolina. The combination of the change in service offering focus and the hiring
of an additional sales representative in a strong industrialized area is
expected to produce an increase in revenue for Azimuth.
Step Two. The Company and its management agree that any appreciable growth
in revenue will only result through a strategy of mergers and/or acquisitions or
other consolidation with other service providers operating in the Company's
fragmented industry. The Company doesn't compete in a market that lends itself
to quick internal growth; therefore, substantial increases in revenues must come
from a roll-up of other synergistic companies. The occupational health and
safety consulting segment of the Industry is very fragmented and lends itself to
a roll-up strategy model. The Company is in the midst of developing its merger
and acquisition strategy. Although the Company is not currently a party to any
binding agreements with respect to any specific targets in the implementation of
this strategy, a broad profile of target companies around which this plan will
be developed consists of the following:
1. Companies that are operating profitably.
2. Companies that have depth of personnel with the requisite experience to
fill needs in the Company's expanding service offerings.
3. Companies that are strategically and geographically located in the
Eastern United States .
4. Companies whose principals have the potential to fill senior corporate
positions with the Company as the need develops.
Management believes that an important first step in the post "Turnaround"
phase is Step One. The execution of Step One further stabilizes the Company
financially and brings credibility to the merger and acquisition strategy
described in Step Two. Steps One and Two will be executed concurrently, but the
Company expects Step One to take the highest priority through June 2001.
14
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTIES
- ----------------------------------
The following table sets forth information as to each of the principal real
properties owned or leased by the Company as of December 31, 1996, and the
current ownership lease status of that property. No other properties have been
purchased or leased since December 31, 1996.
Location & Use Title/Lessor Expiration Annual Square Lien
-------------- ------------ Date Rental Ft Holder
---- ------ -- ------
4055 Faber Place Dr. LPC of SC.,Inc. 1/31/99 $133,018 9,094 N/A
SUITE 201 Expired &
Charleston, SC 29405 not Renewed
1019 BANKTON DRIVE SOLD N/A N/A 7,680 N/A
CHARLESTON, SC 12/96 1.14 acres
(Manufacturing, distribution
and warehouse)
9229 UNIVERSITY BLVD SOLD 12/96 & 12/30/01 $66,271 6,694 N/A
Charleston, SC Leased back
(Corporate offices, James W. Miller
Consulting offices
& Laboratory)
1018-E Morrisville Pkwy Reba H. 4/30/97 $10,825 1,732 N/A
Raleigh, NC Wilkinson
(Research, Development Expired
and production facility
for Act Monitoring Card System(TM))
OakBrook Center Nicholas & 8/14/97 $19,200 4,800 N/A
10040 Dorchester Rd. Thalia Pavlatos
SUMMERVILLE, SC 29485 Expired
All leases are on a "net, net" basis which requires the Company to pay its
pro-rata share of all utilities, heat, air conditioning, taxes and other charges
assessed against the leased premises. Annual rental figures shown exclude sales
taxes, if any.
The Company believes that its facilities are adequate for its current and
anticipated requirements for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
The Company currently has no legal proceedings pending.
15
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
In November 1996, Mr. Richard Bennett resigned as President and CEO.
Because of the financial difficulty that the Company was facing the Board of
Directors directed the new President and CEO to develop and implement a
"Turnaround" plan. Because the cash position of the Company was severely
deteriorated, past audit fees were not paid to the auditor, as well as other
vendors. This non-payment created a delay in performing the annual audits for
1996-98. Because no audits were completed, no 10KSB's were filed and no annual
meetings of shareholders were conducted. As a result, there have been no matters
submitted for vote to the security holders since 1995.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
- ------------------------------------------------------------------
The Company's Common Stock has been publicly traded separately and was
initially quoted on the Nasdaq Smallcap Market ("Nasdaq") under the symbol
"EVRM" on August 12, 1994. Upon the divestiture of the Trico subsidiary the
Company fell below the listing requirements of Nasdaq. On December 3, 1996, the
Company's common stock and warrants were delisted from The Nasdaq SmallCap
Market and were subsequently traded on Over the Counter Bulletin Board. On
January 4, 1999, the Securities and Exchange Commission (SEC) approved
amendments to NASD Rules 6530 and 6540 to limit quotations on the OTC Bulletin
Board ("OTCBB") to the securities of companies that report their current
financial information to the SEC. On November 18, 1999, the Company's common
stock and warrants were delisted from the OTCBB because of failure to have the
required SEC periodic filings submitted by that date. Price Quotations for the
Company's common stock are currently listed on the National Bureau of
Quotation's Electronic Pink Sheets (the "Pink Sheets"). It is expected that once
the Company has become current with filing its period filings with the SEC, the
necessary number of market makers will re-file the appropriate forms with the
OTCBB to permit the Company's common stock to be re-listed on OTCBB.
On December 31, 1999 there were approximately 453 shareholders of record of
the Company's common stock, based on information provided by the Company's
transfer agent. The Company also has warrants, each to purchase one share of
Common Stock (the "Warrants"), which were previously quoted on OTCBB under the
symbol "EVRMW". On December 31, 1999, there were approximately 244 holders of
record of the Warrants, based on information provided by the Company's transfer
agent.
On April 15, 1999 the Company amended its Warrant Agreement to extend the
expiration date of the Warrants from April 29, 1999 until April 30, 2001. This
extension was executed to permit the Company to retain the ability to obtain
additional capital without incurring the expense and experiencing the delays
inherent in either a secondary public offering or a private placement of
securities.
16
<PAGE>
Price Range of Outstanding Common Stock
- ---------------------------------------
The following table sets forth the high and low bid prices for the Common
Stock as reported in the trading media and for the periods reflected above for
each fiscal quarter commencing January 1996 through December 31, 1998. The
quotations listed below reflect inter-dealer prices, without retail mark-up,
mark-down on commission and do not necessarily represent actual transactions.
1996 HIGH LOW
---- ---- ---
First Quarter 2.7344 1.5
Second Quarter 2.375 1.1875
Third Quarter 1.375 0.75
Fourth Quarter 1.125 0.1875
1997
----
First Quarter 0.375 0.187
Second Quarter 0.593 0.031
Third Quarter 0.125 0.031
Fourth Quarter 0.156 0.020
1998
----
First Quarter 1.250 0.02
Second Quarter 0.812 0.25
Third Quarter 0.625 0.125
Fourth Quarter 0.437 0.062
On December 30, 1999, the last sale price of a share of Common Stock as
reported in the Pink Sheets was $0.025.
DIVIDENDS
- ---------
The Company has never paid dividends on its Common Stock and does not
anticipate that it will do so in the foreseeable future. For the foreseeable
future any future earnings or funds otherwise available, if any, for the payment
of dividends will be used to pay dividends on the outstanding Preferred Stock
(see Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations) or for reinvestment in the Company's business. Any future
determination to pay cash dividends on the Common Stock will be at the
discretion of the Board of Directors and will reflect such other factors
(including contractual requirements) as the Board of Directors deems relevant.
The Company was in arrears for payment of dividends of its Preferred Stock
in the approximate amount of $19,700 at December 31, 1998 ($34,700 at December
14, 1999). In addition, under the terms of the Preferred Stock, the holder can
"put" outstanding shares of Preferred Stock back to the Company for repurchase.
As discussed in the financial statements, "put" obligations for 1999 through
17
<PAGE>
2003 range from $35,000 to $89,000 annually. The Company will not be able to
meet these obligations if its current revenue trends continue.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and Notes thereto, appearing elsewhere in
this Form 10-KSB.
General Overview
- ----------------
As discussed earlier, the Company formerly had 3 operating subsidiaries. As
a result of a "Turnaround" phase which began in 1996, it currently has one
operating subsidiary, Azimuth, Incorporated, which provides the following
services: industrial hygiene laboratory services; environmental health and
occupational health and safety consulting; and asbestos services. Azimuth
operates a fully accredited Industrial Hygiene ("IH") laboratory, certified by
the American Industry Hygiene Association ("AIHA"), to perform analyses of air
samples for asbestos, metals and organic vapors. In October 1999, Azimuth
changed its service offering to put more focus on broader Safety Services. See
Item 1. Description of Business -"General" and "Historical Background".
Pursuant to authority expressly granted to and vested in the Board of
Directors by the Certificate of Incorporation, in connection with effecting the
mediation of outstanding obligations of the Company, the Board ratified the
creation and issuance of the following Series (the "Series") of Preferred Stock
(the "Preferred Stock") and Classes of each such Series (the "Classes") to
Company creditors, all of which are currently issued and outstanding and
non-voting.
1. Shares of Preferred Stock designated "Series A Preferred Stock", to
consist of 70,000 shares divided into four Classes as follows:
Class 1 17,500 Shares
Class 2 17,500 Shares
Class 3 17,500 Shares
Class 4 17,500 Shares
No dividends will be paid on the Series A Preferred Stock, and the Series A
Preferred Stock is convertible at the ratio of one such share for three shares
of Company Common Stock. All shares of Series A Preferred Stock can be "put"
back to the Company by holders, at $2.00 per share, on the following schedule:
Class 1 - From December 31, 1999 to
December 31, 2003;
Class 2 - From December 31, 2000 to
December 31, 2003;
Class 3 - From December 31, 2001 to
December 31, 2003; and
Class 4 - From December 31, 2002 to
December 31, 2003.
Any shares of Series A Preferred Stock that are neither converted nor put
to the Company on or prior to December 31, 2003, shall at that time lose all
such conversion and redemption rights.
2. Shares of Preferred Stock designated "Series B Preferred Stock," to
consist of 208,640 shares divided into five Classes as follows:
Class 1 41,728 Shares
Class 2 41,728 Shares
Class 3 41,728 Shares
Class 4 41,728 Shares
Class 5 41,728 Shares
Shares of Series B Preferred Stock bear cumulative dividends at the rate of
$.14 per annum, and the Series B Preferred Stock is convertible at the ratio of
one such share for five shares of Company Common Stock. All shares of Series A
Preferred Stock can be "put" back to the Company by holders at the amounts per
share and on such timing as meets the following schedule:
Class 1 $2.36 From June 15, 2004 to
June 14, 2009;
Class 2 $2.42 From June 15, 2005 to
June 14, 2009;
Class 3 $2.48 From June 15, 2006 to
June 14, 2009;
Class 4 $2.54 From June 15, 2007 to
June 14, 2009; and
Class 5 $2.60 From June 15, 2008 to
June 14, 2009.
Series B Preferred Stock can be "called" by the Company by the Company's
payment of the following redemption amounts on the following schedule:
Call Date Amounts Per Share
- From June 15, 1998 to $2.00;
June 14, 1999
- From June 15, 1999 to $2.06;
June 14, 2000
- From June 15, 2000 to $2.12;
June 14, 2001
- From June 15, 2001 to $2.18;
June 14, 2002
- From June 15, 2002 to $2.24;
June 14, 2003
- From June 15, 2003 to $2.30;
June 15, 2004
- From June 15, 2004 to $2.36;
June 14, 2005
- From June 15, 2005 to $2.42;
June 14, 2006
- From June 15, 2006 to $2.48;
June 14, 2007
- From June 15, 2007 to $2.54; and
June 14, 2008
- From June 15, 2008 to $2.60.
June 14, 2009
Any shares of Series B Preferred Stock that are not converted or put to the
Company on or prior to June 14, 2009, or tendered by the Company pursuant to a
"call" by the Company, shall not be entitled thereafter to any dividend,
conversion, put or other rights.
3. Shares of Preferred Stock designated "Series C Preferred Stock," to
consist of 74,878 shares divided into three Classes
as follows:
Class 1 24,959 Shares
Class 2 24,959 Shares
Class 3 24,960 Shares
Shares of Series C Preferred Stock bear cumulative dividends at the rate of
$.14 per annum, and the Series C Preferred Stock is convertible at the ratio of
one such share for five shares of Company Common Stock. All shares of Series C
Preferred Stock can be "put" back to the Company by holders at the amounts per
share and on such timing as meets the following schedule:
Class 1 $2.12 From June 15, 2000 to
June 14, 2003;
Class 2 $2.18 From June 15, 2001 to
June 14, 2003; and
Class 3 $2.24 From June 15, 2002 to
June 14, 2003.
Series C Preferred Stock can be "called" by the Company by the Company's
payment of the following redemption amounts on the following schedule:
Call Date Amounts Per Share
- From June 15, 1998 to $2.00;
June 14, 1999
- From June 15, 1999 to $2.06;
June 14, 2000
- From June 15, 2000 to $2.12;
June 14, 2001
- From June 15, 2001 to $2.18; and
June 14, 2002
- From June 15, 2002 to $2.24.
June 14, 2003
Any shares of Series C Preferred Stock that are not converted or put to the
Company on or prior to June 14, 2003, or tendered by the Company pursuant to a
"call" by the Company, shall not be entitled thereafter to any dividend,
conversion, put or other rights.
18
<PAGE>
RESULTS OF OPERATIONS
---------------------
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
- ---------------------------------------------------------------------
Revenue for the year ended December 31, 1996 amounted to $2,302,000, which
was $1,585,600 (40.8%) lower than the $3,887,600 reported for the year ended
December 31, 1995 after restatement for discontinued operations of the Products
Division. Included in the Service Division revenue reduction of $1,585,600 is a
decrease of $999,500 related to the Trico business, which was disposed at July
31, 1996. The Service Division reported $586,100 less revenues for 1996 as
compared to 1995.
The Products Division lost revenues of $766,100 (29.3%) and reported
$1,852,500 for the year ended December 31, 1996 as compared to $2,618,500 for
the year ended December 31, 1995(with such amounts included in discontinued
operations).
Cost of revenue decreased by 40.2% or $1,180,800 to $1,760,100 for the year
ended December 31, 1996 as compared to $2,941,000 reported for the year ended
December 31, 1995. Included in the Service Division cost of revenue reduction of
$1,180,800 is a decrease of $758,000 related to the Trico business, which was
disposed at July 31, 1996. The Service Division reported $422,800 less cost of
revenues for 1996 as compared to 1995.
The Products Division cost of revenue decreased by $85,500 (5.7%) and
reported $1,428,000 for the year ended December 31, 1996 as compared to
$1,513,500 for the year ended December 31, 1995(with such amounts included in
discontinued operations).
19
<PAGE>
The gross profit for the year ended December 31, 1996 decreased by
$404,800, a decrease of 42.8% to $541,900 as compared to $946,700 for the year
ended December 31, 1995. The Services Division's decrease in its gross profit
for 1996 as compared to 1995 is related to the decrease in revenue discussed
above.
Excluding discontinued operations of the Products Division, the gross
profit decrease for 1996 would have been $1,084,500 lower, a decrease of 52.9%,
or $967,200 as compared to $2,051,700 for the year ended December 31, 1995. The
Products Division also experienced a significant decrease of 61.6%, or a
$680,500 reduction, in its gross profit for 1996 as compared to 1995 due to
significant declines in the gross margins on sales of its air sampling cassette
products resulting from an agreement with a major customer(with such amounts
included in discontinued operations).
Percentage comparisons of gross margins reported by the Company are as
follows:
Year Ended Total
December 31, 1996 23.5%
December 31, 1995 24.4%
Percentage comparisons of gross margins reported by the Company, without
reporting the Products Division as discontinued operations are as follows:
Year Ended Total Services Products
December 31, 1996 23.3% 23.6% 22.9%
December 31, 1995 31.5% 24.4% 42.2%
Operating expenses were $563,300 lower and amounted to $1,257,300 for the
year ended December 31, 1996, as compared to $1,871,600 reported for the year
ended December 31, 1995, after restatement for discontinued operations related
to the Products Division. Sales and marketing expenses decreased by $29,700 to
$98,800 for 1996 as compared to $128,500 for 1995 due to reductions in
personnel. General and administrative costs decreased by $533,400 to $989,300
for 1996, as compared to $1,522,700 reported for 1995. Included in 1996 general
and administrative expenses is the recovery of approximately $80,000 of amounts
expensed in 1995 related to a financial settlement with a former officer. A
significant portion of the decrease, $243,900 is due to a reduction in personnel
and restructuring of costs to the disposition of the Trico business. Purchased
services decreased by $135,600 for 1996 as a result of the restructuring of an
agreement with The United States Company and disposal of a subsidiary;
facilities and equipment costs decreased by $98,300 for 1996 and supplies
decreased by $17,200 for 1996. Depreciation and amortization costs decreased by
$51,200 to $169,200 for 1996 as compared to $220,400 for 1995. Most of the
decreases discussed above are attributable to the disposition of the Trico
business group.
20
<PAGE>
The Company incurred an operating loss before discontinued operations and
extraordinary item of $715,400 for the year ended December 31, 1996 as compared
to an operating loss before discontinued operations and extraordinary item of
$924,900 for the year ended December 31, 1995 based on the reasons stated above.
Interest income for 1996 was $7,400 higher and amounted to $18,000 as
compared to $10,600 recorded for 1995. All interest earned in 1996 resulted from
a note that was exchanged in connection with the disposition of the Trico
business completed on July 31, 1996. Interest expense of $239,900 for 1996 was
$58,100 higher than the amount reported for 1995, which was $181,800. The
increase is attributable to the increasing principal of debt and additional
interest related to the mortgage and asset based line of financing.
The Company recorded a net gain of $102,300 for 1996, most of which is
attributable to the sale of its real property. $96,700 of gain, related to the
real property disposition, was deferred at December 31, 1996 due to the
leaseback of the University Boulevard property, the Company's current operating
facility, and will be recognized over the 5-year initial term of the lease.
Included in 1996 is a net charge of approximately $490,400 related to the
disposition of the Trico business in July 1996, that had been acquired November
30, 1994. Amortization of loan costs for 1996 was $48,600 and was $70,400 lower
than the $119,000 reported for 1995. These lower net amortization costs were
related to pay-off of certain debt; however, the asset based line of financing
initiated in May 1996 and the refinancing of the mortgage in July 1996 resulted
in additional loan costs to be amortized over the terms of those agreements.
The Company incurred a loss from continuing operations of $1,374,100 for
1996 as compared to a loss from continuing operations of $1,215,100 for 1995 due
to the items discussed above. The loss from continuing operations for 1996,
excluding the one time charge of $490,400 related to the disposition of the
Trico business and the recovery of approximately $80,000 of amounts previously
expensed, would have been $963,700, which is $251,400 (20.1%) lower than the
$1,215,100 reported for 1995.
Discontinued operations related to the Products Division for 1996 resulted
in a loss of $358,900 as compared to income of $19,500 for 1995. The Products
Division experienced significant declines in the gross margins on its air
sampling cassettes products due to an agreement with a major customer. Gross
profit for that group decreased by $680,500. Operating expenses decreased by
$297,500, of which $261,200 was a savings of sales and marketing expenses
attributable to the agreement with Zellweger for the distribution of the ACT
product line.
The Company recorded an extraordinary item, gain from mediation of vendor
debt, of $18,200 in 1996.
21
<PAGE>
The Company incurred a net loss of $1,714,800 for year ended December 31,
1996 as compared to a net loss of $1,195,700 for the year ended December 31,
1995. The net loss for 1996, excluding the Trico business which was disposed on
July 31, 1996, would have been $1,223,700, which is $491,100 (28.6%) lower than
the $1,714,800 reported for 1996.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
- ---------------------------------------------------------------------
Revenue for the year ended December 31, 1997 amounted to $908,000 which was
$1,394,100 (60.6%) lower than the $2,302,000 reported for the year ended
December 31, 1996. Included in the Service Division revenue reduction is a
decrease of nearly $1,000,000 ($999,500) related to the Trico business which was
disposed at July 31, 1996. The Service Division reported $394,600 less revenues
for 1997 as compared to 1996. This revenue decrease is a result of the general
cut backs in Asbestos field operations industry-wide in 1997.
The Products Division lost revenues of $1,097,500 (59.2%) and reported
$755,000 for the year ended December 31, 1997 as compared to $1,852,500 for the
year ended December 31, 1996 (with such amounts included in discontinued
operations for both years).
Cost of revenue decreased by 65.0%, or $1,143,500, to $616,600 for the year
ended December 31, 1997, as compared to $1,760,100 reported for the year ended
December 31, 1996. Included in the Service Division cost of revenue reduction is
a decrease of $758,000 related to the Trico business, which was disposed at July
31, 1996. The Service Division reported $385,500 less cost of revenues for 1997
as compared to 1996.
The Products Division decreased its cost of revenue by $903,500 or 63.3%,
to $524,500 for 1997 as compared to $1,428,000 for 1996 (with such amounts
included in discontinued operations for both years). The reason for the
reduction in Products Division revenue is related to the decrease in activity in
the asbestos air monitoring industry and the disposition of this product line
during 1997.
The gross profit for the year ended December 31, 1997 decreased by
$250,600, a decrease of 46.2%, to $291,300, as compared to $541,900 for the year
ended December 31, 1996. Included in the Service Division gross profit reduction
is a decrease of $241,400 related to the Trico business, which was disposed at
July 31, 1996. Excluding the decrease from the disposition of the Trico
business, the gross profit for the remaining services decreased by $9,200, which
is related to the reduced revenue discussed above.
The Products Division decreased gross profit by $193,900 and reported
$236,600 of gross profit for 1997 as compared to $424,500 for 1996 (with such
amounts included in discontinued operations for both years). The reason for the
22
<PAGE>
reduction in the Products Division revenue is the decrease in activity in the
asbestos air monitoring industry and the disposition of this product line during
1997.
Percentage comparisons of gross margins reported by the Company are as
follows:
Year Ended Total
December 31, 1997 32.1%
December 31, 1996 23.5%
Percentage comparisons of gross margins reported by the Company, without
reporting the Products Division as discontinued operations are as follows
Year Ended Total Services Products
December 31, 1997 31.4% 32.1% 30.5%
December 31, 1996 23.3% 23.6% 22.9%
The reason for the significantly improved gross margin in the Services
Division and the $250,600 decrease in the amount of gross profit reported by
that group is related to the Trico business, which was disposed at July 31,
1996, and the efficiency gained from downsizing of personnel and reduction of
nonbillable expenses, including compensation.
Operating expenses were $554,800 lower and amounted to $702,500 for the
year ended December 31, 1997, as compared to $1,257,300 reported for year ended
December 31, 1996. The operating expenses for 1996 include $223,500 routine
operating expenses for the Trico business. Sales and marketing expenses
decreased by $52,500 from $98,800 in 1996 to $46,300 in 1997, which savings were
attributable to a reduction in personnel. General and administrative costs
decreased by $406,900 to $582,400 for 1997, as compared to $989,300 reported for
1996. Included in the 1996 general and administrative expenses is approximately
$84,700 of consulting fees and expenses that were related to a contract that was
terminated in August 1996 and $180,500 of amounts attributable to the Trico
business, which was disposed on July 31, 1996. In addition, $74,700 of expenses
related to terminated merger activities were expensed during 1997. Depreciation
and amortization costs decreased by $95,400 to $73,800 for 1997 as compared to
the $169,200 reported for 1996, of which $43,000 was attributable to the Trico
business which was disposed on July 31, 1996.
23
<PAGE>
The Company incurred an operating loss before discontinued operations and
extraordinary item of $433,300 for the year ended December 31, 1997, as compared
to an operating loss before discontinued operations and extraordinary item of
$1,374,100 for the year ended December 31, 1996. The operating loss before
discontinued operations and extraordinary item for the year ended December 31,
1996 would have been $867,000, excluding the Trico business, which was disposed
on July 31, 1996.
Interest income for 1997 was $41,800 higher and amounted to $59,800 as
compared to the $18,000 reported for 1996. Interest income in 1997 resulted from
interest earned on a note that was exchanged in connection with the disposition
of the Trico business completed on July 31, 1996 and a mortgage note that was
recorded as a result of the sale of real property in December 1996. Interest
expense of $87,700 for 1997 was $152,200 lower than the amount reported for
1996, which was $239,900. The decrease in interest expense is attributable to
reduced borrowing under the Company's asset based factoring agreement and the
payoff of mortgages in December 1996 when the related real estate was sold.
Amortization of loan costs for 1997 was $21,500, and was $27,100 lower than
the $48,600 reported for 1996.
The Company reported a loss from continuing operations of $433,300 for 1997
as compared to a loss from continuing operations of $1,374,100 in 1996 due to
the reasons discussed above.
Discontinued operations for 1997 resulted in net income of $106,300, which
is comprised of a loss from operations of $154,600 and a gain on disposal of
discontinued operations of $260,900. The asbestos product line was disposed in
April 1997 at approximately a break-even amount, and the ACT product line was
disposed in November 1997. The loss from operations of $154,600 in 1997 was
$204,300 less than the $358,900 loss reported for 1996. The Products Division
experienced significant declines in the gross margins on its air sampling
cassettes products due to an agreement with a major customer. Gross profit for
that group decreased by $193,900. Operating expenses decreased by $409,200, of
which $143,300 was a savings of sales and marketing expenses attributable to the
agreement with Zellweger for the distribution of the ACT product line. General
and administrative expenses decreased by $119,200 due to reductions in
personnel. Other operating expenses related to the ACT product line decreased by
$147,700, which was disposed in 1997.
The Company recorded an extraordinary item, gain from mediation of vendor
debt, in 1997 of $15,500 as compared to $18,200 reported for 1996.
The Company incurred a net loss of $311,500 for 1997 as compared to a net
loss of $1,714,800 for 1996. The net loss for 1996, excluding the Trico
business, which was disposed on July 31, 1996, would have been $491,100 lower or
$1,223,700. Exclusion of the discontinued operations of the Products Division
would have resulted in reporting $417,800 in net loss for 1997 and $824,800 in
net loss for 1996.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
- ---------------------------------------------------------------------
The following financial information reports operating trends taking into
account the discontinued operations of the Products Division for 1997. Revenue
for the Service Division, which is comprised of Azimuth (the remaining operating
24
<PAGE>
subsidiary), for the year ended December 31, 1998 amounted to $843,500, which
was $64,500 (7.1%) lower than the $908,000 reported for the year ended December
31, 1997. $61,600 of the decrease is attributable to reduced sample analysis
during the year ended 1998. $32,400 of the decrease resulted from the
elimination of air quality services from the consultative service offering when
employee positions were not filled. Additional revenue that would have been
reported without discontinuation of the Products Division would have been
$755,000 for 1997.
Cost of revenue was $26,700 lower and amounted to $590,000 for the year
ended December 31, 1998, as compared to $616,700 reported for the year ended
December 31, 1997. Most of the decrease is due to reduced laboratory revenue
volume discussed above. The Service Division experienced higher direct service
costs from the use of subcontractors on an "as needed" basis. Additional cost of
revenue that would have been reported without the discontinuation of the
Products Division would have been $524,500 for the year ended December 31, 1997.
The gross profit for the year ended December 31, 1998 decreased by $37,800,
a decrease of 13.0% to $253,500, as compared to $291,300 for the year ended
December 31, 1997. Additional gross profit that would have been reported without
the discontinuation of the Products Division would have been $230,500 for the
year ended December 31, 1997.
The Company reported a 30.1% gross margin for 1998 as compared to a 32.1%
gross margin for the same period in 1997. The reason for the deterioration in
gross margin in the Services Division is due to the higher consultative group
costs discussed above.
Operating expenses were $200,500 lower and amounted to $502,000 for the
year ended December 31, 1998 as compared to the $702,500 reported for the year
ended December 31, 1997. Sales and marketing expenses increased by $4,300 to
$50,600 for 1998 as compared to $46,300 reported for 1997, which increases were
mostly attributable to a reallocation of staff responsibilities in this area for
1998. General and administrative costs decreased by $177,400 to $405,000 for
1998 as compared to the $582,400 for 1997. Approximately $40,000 of the decrease
was due to reduced personnel costs; $75,600 of terminated merger costs in 1997
were reported that year. In addition, lower insurance and outside professional
services' costs contributed to the cost reduction in 1998 over 1997.
The Company negotiated the sale of the Trico note receivable to a
shareholder, which resulted in a loss on the transaction of $104,400. Cash
received by the Company amounted to $260,000, of which $200,000 was collected in
January 1999.
Depreciation and amortization costs decreased overall by $27,500 to $46,300
in 1998 from $73,800 in 1997 due to the reduction in the number of vehicles
owned by the Service Division for 1998.
25
<PAGE>
The Company incurred an operating loss (before discontinued operations and
extraordinary item) of $248,400 in 1998 as compared to the $411,200 operating
loss (before discontinued operations and extraordinary item) reported for 1997
due to the reasons discussed above. Additional operating loss that would have
been reported without the discontinuation of the Products Division would have
been $154,600 for 1997.
Interest income for the year ended December 31, 1998 was $54,300 compared
to $59,800 reported for the year ended December 31, 1997. The decrease is due to
the reduction in the principal balance outstanding for a note receivable that
was executed during 1996 in connection with the disposition of the Trico
business. The note was sold in January 1999 and a loss of $104,400 was recorded
at December 31, 1998.
Interest expense of $27,300 for 1998 was $60,400 lower than the amount
reported for 1997 which was $87,700. The decrease in interest expense is
attributable to elimination of borrowing under the Company's asset based lending
arrangement for the Products Division which was disposed during 1997 and
conversion of long-term debt to equity at June 30, 1998. Amortization of loan
costs for the first nine months of 1998 was $9,900 and $21,500 for the same
period in 1997.
The Company reported a loss from continuing operations of $320,400 for the
year ended December 31, 1998 as compared to a loss from continuing operations of
$433,300 for the year ended 1997 for the reasons stated above.
Discontinued operations for the year ended 1997 resulted in $106,300 of net
income, comprised of a loss of $154,600 from operational activities and the gain
on disposal of the discontinued operations of $260,900 for 1997.
The Company reported $325,900 of extraordinary gain from mediation of
vendor debt in 1998 as compared to $15,500 extraordinary gain for 1997.
Net income for the year ended December 31, 1998 was $5,500, which is a
$316,900 improvement over the net loss of $311,500 reported for the year ended
1997.
FINANCIAL CONDITION
- -------------------
The Company's financial condition significantly improved during 1998 over
1997 due principally to conversion of debt of secured creditors to equity, and
negotiation of trade payable balances with vendors. However, the Company is
continuing to experience cash flow problems.
Approximately $551,000 of debt was converted to shares of Company Preferred
Stock (see"General Overview") and approximately $21,800 of debt was converted to
shares of Common Stock of the Company during 1998. $232,100 of extraordinary
gain was recorded when vendor trade payables were negotiated during 1998.
26
<PAGE>
The working capital deficiency has decreased by $1,219,300, from a
deficiency of $1,222,400 at December 31, 1997 to a deficiency of only $3,100 at
December 31, 1998. This is primarily due to the conversion of debt owed to
related party secured creditors to preferred stock, sale of a note receivable,
and mediation of vendor trade payables as discussed in the following paragraphs.
Shakespeare Partners, LTD, whose general partner is a stockholder of the
Company, had outstanding notes due from the Company amounting to $195,000,
$287,685 and $250,000 at December 31, 1998, 1997 and 1996, respectively. During
1998, approximately $149,700 of outstanding debt was converted to 74,878 shares
of Series C Preferred Stock of the Company.
In December 1998 the Company entered into an agreement with Shakespeare
Partners, LTD and its General Partner to sell the Company's secured note
receivable from Trico Incorporated, received upon the sale of the Trico
business, bearing outstanding principal of $364,427, to such General Partner's
retirement plan for $260,000. This resulted in a loss to the Company of
$104,427, which was recorded in December 1998.
The United States Company, a stockholder of the Company, had outstanding
notes due from the Company bearing principal of $208,727 and $221,000 in 1997
and 1996, respectively. Certain principals in the United States Company serve
the Company as Secretary, Treasurer and as directors. During 1998, $207,296 (93
%) of debt to the United States Company was converted to 111,648 shares of
Series B Preferred Stock.
The President and CEO converted to equity 100% of his outstanding notes
during 1998. Approximately $17,700 was converted to 8,835 shares of Series B
Preferred Stock.
Vendor trade payables of $171,800 during 1998 were converted to 85,907
shares of Series B Preferred Stock of the Company. An extraordinary gain of
$325,900 was recognized in 1998 by settlement of $232,100 for cash and by
settlement of $93,800 for options and common stock.
On November 14, 1997 the Company disposed of its manufacturing and
distribution operations, related to ACT, to Zellweger for: $344,849, which was
used by the Company to reduce an equivalent liability to Zellweger; the issuance
of 70,000 shares of Series A Preferred Stock; and a cash payment of $10,000 in
settlement of liabilities under the Zellweger Agreement.
Trade accounts receivable increased approximately $63,900 to $183,200 at
December 31, 1998 from $117,300 at December 31, 1997 due to a large project with
a public school system that was initiated during the last quarter of 1998.
27
<PAGE>
The Company received interest income in 1998 of approximately $5,000 per
month from two notes receivable executed during 1996, related to the disposition
of the Trico business on July 31, 1996 and sale of the real estate in December
1996.
The Company was in arrears for payment of dividends on its Preferred Stock
in the approximate amount of $34,700 at December 14, 1999. In addition, other
terms of the Preferred Stock issued during 1997 and 1998 permit the holders to
"put" the shares back to the Company. As discussed in the financial statements,
"put" obligations for 1999 through 2003 range from $35,000 to $89,000 annually.
The Company will not be able to meet these obligations if its current revenue
trends continue.
During 1999, the Company continued to eliminate its debt and recorded
approximately $56,000 of extraordinary gain from mediation of vendor debt.
In January 1999, the Company was able to liquidate the Trico note
recievable and net $260,000 in working capital. These funds were used to
continue debt mediation and begin a focused exit from the "Turnaround" phase.
The first steps to exit the "Turnaround" phase now focus on increasing the
revenue of Azimuth, Inc. The increase in revenue is predicated on changing the
service offering from mainly Industrial Hygiene Services to broader based Safety
Services, and cultivating the rising emphasis placed on Indoor Air Quality.
Management and the Board of Directors agree that, with the small revenue base,
which currently is generated in the one operating subsidiary, sizable growth
must come from a merger and acquisition strategy. The process of further
financial stabilization through internal growth in the first steps exiting the
"Turnaround" phase is expected to expedite the Company's merger and acquisition
strategy. Any merger and acquisition activity is anticipated to bring further
dilution to the shareholders of the Company. The Company, in turn, is developing
its merger and acquisition strategy to minimize the impact on current
shareholders, especially with respect to earnings per share, anticipating the
dilution that will inevitably occur.
The Company will be required to invest in certain equipment and supplies to
better service its expanded client base both in its laboratory and field
operations. Equipment is not being replaced currently because of tight cash
constraints being experienced by the Company. Additional amounts required to
replace laboratory and field equipment will be funded by cash flow from
operations when and if it is available considering the current cash requirements
at that time. However, there is no guaranty that the Company will be able to
finance the acquisition of such needed equipment resulting in a material adverse
impact on the Company's continuing operations.
Effects of Inflation
- --------------------
Inflation has not been a material factor affecting the Company's business.
However, the Company's consulting, laboratory and manufacturing operations are
subject to the effects of inflation to the extent that it may adversely affect
interest rates and the availability of credit which directly and adversely
affects the construction industry, a primary user of the Company's products and
services.
28
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
- ----------------------------- Page No.
Independent Auditor's Report - Welch, Roberts & Amburn
Certified Public Accountants, LLP 30
Independent Auditor's Report - McGladrey & Pullen,
LLP Certified Public Accountants and Consultants 31
Consolidated Balance Sheets as of December 31, 1998,1997 & 1996 32-33
Consolidated Statements of Operations for the years
ended December 31, 1998, 1997, 1996, and 1995 34
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1998, 1997, 1996, and 1995 35
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997, 1996, and 1995 36-37
Notes to the Consolidated Financial Statements 38-48
29
<PAGE>
Independent Auditors' Report
To the Board of Directors
Envirometrics, Inc.
Charleston, South Carolina
We have audited the accompanying consolidated balance sheets of Envirometrics,
Inc. and subsidiaries as of December 31, 1998, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The consolidated
statements of operations, stockholders' equity and cash flows of Envirometrics,
Inc. and subsidiaries for the year ended December 31, 1995, were audited by
other auditors whose report dated February 6, 1996, included an explanatory
paragraph describing conditions that raised substantial doubt about the
Company's ability to continue as a going concern.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Envirometrics, Inc.
and subsidiaries as of December 31, 1998, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years ended December
31, 1998, in conformity with generally accepted accounting principles.
Welch, Roberts & Amburn, LLP
December 10, 1999, except for Note 16 as
to which the date is December 30, 1999.
30
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Envirometrics, Inc.
Charleston, South Carolina
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Envirometrics, Inc. and subsidiaries for
the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has suffered
recurring losses from operations and has a deficit working capital and
stockholders' equity position. This raises substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/McGladrey and Pullen, LLP
Charlotte, North Carolina
February 6, 1996, except for
Note 8 to which the date is
December 10, 1999
31
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ------------ -----------
ASSETS
- ------
<S> <C> <C> <C>
Current Assets
- --------------
Cash and cash equivalents $ 40,934 $ 54,096 $ 29,604
Notes receivable, current portion 418,294 100,548 95,421
Trade receivables, less allowance for doubtful accounts
1998 $5,000; 1997 $28,081; 1996 $36,353 183,155 117,280 411,065
Other receivables 22,213 501 2,000
Inventories 14,974 17,334 287,541
Prepaid expenses 27,077 53,821 87,867
----------- ----------- -----------
Total Current Assets 706,647 343,580 913,498
----------- ----------- -----------
Other Assets and Intangibles
- ----------------------------
Deposits 2,951 21,093 30,737
Notes receivable, less current portion - 596,197 696,745
Organization and loan costs, net of accumulated
amortization 1998 $-0-; 1997 $51,958; 1996 $41,981 - 9,880 31,801
License and distribution agreements, net of accumulated
amortization 1996 $8,000 - - 22,000
Other, net of accumulated amortization 1996; $16,695
- - 55,512
----------- ----------- -----------
2,951 627,170 836,795
----------- ----------- -----------
Property and Equipment
- ----------------------
Furniture and equipment 997,754 1,079,738 1,240,727
Vehicles 9,490 44,033 88,991
----------- ----------- -----------
1,007,244 1,123,771 1,329,718
Less accumulated depreciation and amortization 913,919 963,843 961,431
----------- ----------- -----------
93,325 159,928 368,287
----------- ----------- -----------
$ 802,923 $ 1,130,678 $ 2,118,580
=========== =========== ===========
<FN>
See Notes to Consolidated Financial Statements
</FN>
32
</TABLE>
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ------------ -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
<S> <C> <C> <C>
Current Liabilities
- -------------------
Notes payable $ 23,260 $ 26,570 $ 80,762
Current maturities of long-term debt
Stockholders 195,000 557,031 157,112
Other 32,094 189,844 130,296
Accounts payable 247,074 546,669 884,583
Customer deposit - - 509,724
Accrued expenses and other 212,328 245,864 126,993
- -------------------------- ----------- ----------- -----------
709,756 1,565,978 1,889,470
----------- ----------- -----------
Total Current Liabilities
Noncurrent Liabilities
- ----------------------
Long-Term Debt - Less current maturities
Stockholders - - 439,507
Other 85,350 107,167 149,098
Deferred gain on asset sale 48,333 72,499 96,665
--------------------------- ----------- ----------- -----------
Total Noncurrent Liabilities 133,683 179,666 685,270
----------- ----------- -----------
Redeemable Preferred Stock
- ---------------------------
Par value $.001; authorized 2,500,000 shares;
issued 1998 - 353,518 shares; 1997 - 70,000 shares 700,974 140,000 -
----------- ----------- -----------
Common Stock and Accumulated Deficit
- ------------------------------------
Common stock, par value $.001;authorized 10,000,000shares
shares; issued 1998 - 3,010,186 shares; 1997 - 2,667,399
shares; 1996 - 2,469,123 shares 3,010 2,667 2,469
Additional paid-in capital 5,103,334 5,095,673 5,083,219
Accumulated deficit (5,847,834) (5,853,306) (5,541,848)
----------- ----------- -----------
(741,490) (754,966) (456,160)
----------- ----------- -----------
$ 802,923 $ 1,130,678 $ 2,118,580
============ ============ ===========
<FN>
See Notes to Consolidated Financial Statements
</FN>
33
</TABLE>
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1998 1997 1996 1995
------------ ------------ ------------ ------------
Service Revenue $ 843,497 $ 907,961 $ 2,302,034 $ 3,887,633
- ---------------
Direct Service Costs 589,975 616,652 1,760,117 2,940,957
- -------------------- ------------ ------------ ------------ ------------
Gross Profit 253,522 291,309 541,917 946,676
Operating Expenses
- ------------------
Sales and marketing 50,621 46,269 98,820 128,485
General and administrative 405,020 582,429 989,336 1,522,774
Depreciation and amortization 46,328 73,817 169,169 220,361
------------ ------------ ------------ ------------
501,969 702,515 1,257,325 1,871,620
------------ ------------ ------------ ------------
Operating Loss (248,447) (411,206) (715,408) (924,944)
Other Income (Expense)
- ----------------------
Interest income 54,275 59,813 17,961 10,603
Interest expense (27,268) (87,721) (239,927) (181,776)
Gain on disposition of property 15,350 27,343 102,289 -
Loss on disposition of subsidiary - - (490,385)
Loss on note receivable (104,427) - - -
Amortization of loan costs (9,880) (21,500) (48,597) (119,017)
------------ ------------ ------------ ------------
(Loss) From Continuing Operations (320,397) (433,271) (1,374,067) (1,215,134)
------------ ------------ ------------ ------------
Discontinued Operations
- -----------------------
Income (loss) from operations - (154,650) (358,929) 19,469
Gain on disposal of discontinued operations - 260,948 - -
------------ ------------ ------------ ------------
Total - 106,298 (358,929) 19,469
Loss before extraordinary item (320,397) (326,973) (1,732,996) (1,195,665)
Extraordinary item - gain on vendor debt
mediation 325,869 15,515 18,201 -
------------ ------------ ------------ ------------
Net Income (Loss) $ 5,472 $ (311,458) $(1,714,795) $ (1,195,665)
------------ ------------ ------------ ------------
Earnings Per Common Share
- -------------------------
Continuing operations (.115) (.167) (.553) (.501)
============ ============ ============ ============
Net loss before extraordinary item (.126) (.126) (.697) (.493)
Extraordinary item .117 .006 .007 -
------------ ------------ ------------ ------------
Net (Loss) Per Common Share $ (0.009) $ (0.120) $ (0.690) $ (0.493)
============ ============ ============ ============
Weighted average number of common shares
outstanding $ 2,786,695 $ 2,589,795 $ 2,484,849 $ 2,424,929
============ ============ ============ ============
<FN>
See Notes to Consolidated Financial Statements
</FN>
34
</TABLE>
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCK AND ACCUMULATED DEFICIT
YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Additional Accumulated
Common Stock Paid-in Capital Deficit
------------ --------------- -----------
Balance, December 31, 1994 2,225 4,781,493 (2,631,388)
Net loss - - (1,195,665)
Issuance of 150,000 shares of common stock in
consideration of interest and loan costs 150 84,473 -
Issuance of 125,000 shares of common stock in
connection with Regulation S offering 125 244,476 -
Issuance of 300,000 warrants to purchase shares
of common stock - 7,500 -
------------ ------------ ------------
Balance, December 31, 1995 $ 2,500 $ 5,117,942 $(3,827,053)
Net loss - - (1,714,795)
Issuance of 13,923 shares of common stock
in consideration of vendor debts 14 2,732 -
Common stock retired (45) (44,955) -
Issuance of 300,000 warrants to purchase shares
of common stock
- 7,500 -
------------ ------------ ------------
Balance, December 31, 1996 $ 2,469 $ 5,083,219 $(5,541,848)
Net loss - - (311,458)
Issuance of 170,000 shares of common stock
in consideration of loan cost 170 7,486 -
Issuance of 28,273 shares as compensation to
employees
28 4,968 -
------------ ------------ ------------
Balance, December 31, 1997 $ 2,667 $ 5,095,673 $(5,853,306)
Net income 5,472
Issuance of 180,287 shares of common stock
in consideration of vendor debt 180 21,810 -
Issuance of 162,500 shares of common stock in
consideration of loan cost 163 15,478 -
Dividends accrued and accretion on preferred
shares
- (29,627) -
------------ ------------ ------------
Balance, December 31, 1998 $ 3,010 $ 5,103,334 $(5,847,834)
============ ============ ============
<FN>
See Notes to Consolidated Financial Statements
</FN>
35
</TABLE>
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1998 1997 1996 1995
------------ ------------ ------------ ------------
Cash Flows From Operating Activities
Net income/(loss) $ 5,472 $ (311,458) $ (1,714,795) $ (1,195,665)
Adjustments to reconcile net income/(loss) to net cash
provided by (used in) operations:
Depreciation 46,328 88,416 176,891 211,467
Amortization 9,880 60,761 97,887 156,265
Provision for doubtful accounts 5,385 11,021 10,039 56,000
Non-cash expense paid by issuance of warrants - - 7,500 7,500
Non-cash expense paid by issuance of common
stock - 12,652 - -
(Gain) loss of disposal of property & equipment (15,350) (27,343) (102,289) 7,974
Extraordinary Item - Gain on debt restructuring (325,869) (15,515) (18,201) -
Gain on sale of discontinued operations - (260,948) - -
Loss on disposition of subsidiary - - 490,385 -
Loss on sale of note receivable 104,427 - - -
Change in assets and liabilities, net of effect of
Trico:
(Increase) decrease in cash, restricted - - 125,644 511,309
(Increase) decrease in accounts receivable (92,972) 284,263 321,654 (476,436)
(Increase) decrease in inventory 2,360 185,419 276,440 (150,103)
(Increase) decrease in prepaid expenses 26,744 34,046 (935) 48,818
(Increase) decrease in other assets 18,142 32,060 (128,037) (38,451)
Increase (decrease) in accounts payable and
accrued expenses 68,266 (276,459) 331,779 736,733
------------ ------------ ------------ ------------
Net Cash Provided by (Used in) Operations (138,187) (183,085) (126,038) (124,589)
------------ ------------ ------------ ------------
Cash Flows From Investing Activities
- ------------------------------------
Proceeds from sale of property and equipment 3,456 167,758 71,819 22,616
Purchase of property and equipment - - (129,949) (101,665)
Collections on notes receivable 174,023 95,421 37,834 -
------------ ------------ ------------ ------------
Net Cash Provided by (Used in) Investing
Activities 177,479 263,179 (20,296) (79,055)
Cash Flows From Financing Activities
- ------------------------------------
Proceeds from borrowing on revolving credit
agreements and short-term notes - - 242,346 610,697
Principal payments on revolving credit agreements
and short-term notes (3,310) (54,192) (408,064) (378,972)
Proceeds from long-term borrowing 20,000 349,492 478,062 -
Principal payments on long-term borrowing (69,144) (350,902) (189,549) (222,834)
Proceeds from issuance of common stock: 125,000
shares
- - - 244,601
------------ ------------ ------------ ------------
Net Cash Provided by (Used in) Financing
Activities (52,454) (55,602) 122,795 253,492
------------ ------------ ------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents (13,162) 24,492 (23,539) 49,848
</TABLE>
36
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1998 1997 1996 1995
------------ ------------ ------------ ------------
Cash and Cash Equivalents
Beginning 54,096 29,604 53,143 3,295
------------ ------------ ------------ ------------
Ending $ 40,934 $ 54,096 $ 29,604 $ 53,143
============ ============ ============ ============
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash Payments for Interest $ 2,972 $ 69,871 $ 220,963 $ 151,969
============ ============ ============ ============
Supplemental Schedule of Noncash Investing and
- ----------------------------------------------
Financing Activities
--------------------
Conversion of Debt to Preferred Stock $ 551,035 - - -
============ ============ ============ ============
Debt Assumed on Disposition of Property and
Equipment $ 8,003 $ 22,569 $ 799,940 -
============ ============ ============ ============
Issuance of Common Stock in Settlement of Vendor
Debt $ 21,810 $ 12,652 - -
============ ============ ============ ============
Issuance of Options in Settlement of Vendor Debt - $ 3,272 - -
============ ============ ============ ============
Receipt of Note Receivable on Sale of Building - - $ 230,000 -
============ ============ ============ ============
Property and Equipment Additions Financed Through
Issuance of Debt - - - $ 146,650
============ ============ ============ ============
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
37
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant Accounting Policies
------------------------------------------------------
Nature of Business. The Company functions as a holding company for its
subsidiaries; Azimuth, Incorporated, ("Azimuth"), Envirometrics Products
Company, ("EPC"),and Trico Envirometrics, Inc., ("Trico"). Azimuth operates as
consultants in environmental and occupational health matters and in addition
provides the services of an American Industrial Hygiene Association ("AIHA") and
National Voluntary Laboratory Accreditation Program ("NVLAP") accredited
industrial hygiene laboratory. Trico provided civil engineering, surveying and
environmental consulting services until its disposition in 1996. EPC was a
manufacturer and distributor of equipment and supplies for the industrial
hygiene industry until its disposition in 1997. The Company's primary facilities
are located in Charleston, South Carolina, with sales throughout the United
States.
A summary of the Companies' significant accounting policies follows:
Principles of Consolidation. The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents. For purposes of reporting the statements of cash
flows, the Company considers all cash accounts, which are not subject to
withdrawal restrictions or penalties, and all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents.
Accounts Receivable. Accounts receivable are evaluated for collectibility by
aging, with an allowance for doubtful accounts maintained based on historical
losses and recoveries. Accounts are written off when deemed to be uncollectible.
Inventories. Inventories are stated at the lower of cost (first-in, first-out
method) or market. Inventory consisted of the following at December 31:
1998 1997 1996
---- ---- ----
Merchandise held for sale $ - $ - $ 90,197
Supplies 14,974 17,334 31,771
Raw materials - - 165,573
-------- -------- --------
$ 14,974 $ 17,334 $ 287,541
Property and Equipment. Property and equipment is stated at cost. Depreciation
is computed using primarily accelerated methods, over the following useful
lives:
Furniture and equipment 5 - 7 years
Vehicles 3 - 5 years
Organization and Loan Costs. The organization and loan costs were amortized on
the straight-line basis over 5 years.
Goodwill. Goodwill includes the excess of acquisition costs over fair value of
the net assets acquired in the purchase of Trico and was being amortized on the
straight-line basis over 20 years. Acquisition costs relate to the direct costs
associated with the acquisition of Trico and were amortized on the straight-line
basis over 20 years. The remaining unamortized portion of such costs were
written off in June 1996.
Revenue Recognition. Revenue from services are recognized when the services are
performed. Revenue from product sales are recognized when the products are
shipped to the customer.
38
<PAGE>
Note 1. Nature of Business and Significant Accounting Policies- continued
-----------------------------------------------------------------------
License Agreement. The Company had entered into a license agreement for the
manufacture of equipment specific to an ACT Monitoring Card System. The original
cost of the agreement was $30,000. The Company began to amortize the license in
1995 on a straight-line basis over 5 years. The remaining unamortized portion of
such costs were written off in 1997 upon disposition of that product line.
Income Taxes. Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
losses, and tax credit carryforwards and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets may not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
Concentration of Credit Risk. Financial instruments that potentially subject the
Company to credit risk consists principally of cash, notes and accounts
receivable. The Company provides product and services to various local and
national clients and, therefore, issues credit under binding contracts to these
entities. The Company places its cash with a high credit quality financial
institution. At times such cash may be in excess of the FDIC insurance limit.
Notes receivable resulted from the disposition of "Trico" and of certain real
property. The "Trico" note is collateralized by all of "Trico's" assets and the
personal guarantees of its shareholders. The real property note is secured by a
mortgage on the property. Management believes the collateral is sufficient.
Loss per Common Share. Loss per common share is based upon the weighted average
number of common shares outstanding.
Loss before extraordinary item attributable to common shareholders is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1998 1997 1996 1995
---- ---- ---- ----
Loss before extraordinary item $ (320,397) $ (326,973) $ (1,732,996) $ (1,195,665)
Preferred stock dividend require-
ments 29,677 - - -
---------- ------------ ------------- -------------
Loss before extraordinary item
attributable to common share-
holders $ (350,074) $ (326,973) $ (1,732,996) $ (1,195,665)
========== ============ ============= =============
Per share amount $ (.126) $ (.126) $ (.697) $ (.493)
========== ============ ============= =============
Weighted average number of
common shares outstanding $2,786,695 $ 2,589,795 $ 2,484,849 $ 2,424,929
========== ============ ============ =============
</TABLE>
Primary and fully diluted earnings per common share and common share equivalents
are calculated using the weighted average number of common shares outstanding
during the year and on the net additional number of shares which would be
issuable upon the exercise of all stock options and warrants, assuming that the
Company used the proceeds received to purchase additional common shares at
market value. The impact of the incremental shares is anti-dilutive.
39
<PAGE>
Note 1. Nature of Business and Significant Accounting Policies - continued
------------------------------------------------------------------
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications. Certain amounts in the 1995 financial statements have been
reclassified to conform to the presentation adopted for 1996 through 1998.
Note 2. Notes Receivable
----------------
Notes receivable are comprised of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
Mortgage note receivable payable interest only
at 10% per annum through January 1999. $ 218,294 $ 230,000 $ 230,000
Note receivable from former shareholder due
$10,979 per month including interest at 7%
through July 15, 2008 (see Note 7) 200,000 466,745 562,166
---------- ---------- ----------
418,294 696,745 792,166
Less current portion 418,294 100,548 95,421
---------- ---------- ----------
$ - $ 596,197 $ 696,745
========== ========== ==========
</TABLE>
Note 3. Notes Payable, Long-Term Debt and Pledged Assets
------------------------------------------------
<TABLE>
<CAPTION>
Notes payable at December 31, consisted of the following:
<S> <C> <C> <C>
1998 1997 1996
---- ---- ----
A note with interest at 8% per annum due in
monthly principal and interest payments
beginning at $1,000 and increasing to $2,345
with a final payment due in January 1998. $ 22,129 $ 22,129 $ 22,975
Due to factor 1,131 4,441 57,787
---------- ---------- ----------
Total $ 23,260 $ 26,570 $ 80,762
========== ========== ==========
</TABLE>
In 1996, the Company entered into a two year agreement to factor up to $800,000
of eligible accounts receivable. Interest under the agreement on the uncollected
amounts remitted to the Company is at the rate of 4.75% in excess of the prime
interest rate.
40
<PAGE>
Note 3. Notes Payable, Long-Term Debt and Pledged Assets - continued
------------------------------------------------------------
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
U.S. Small Business Administration (SBA) loans (two loans)
4% interest rate, due in monthly installments of $1,408,
including interest, due July 2005,collateralized by equipment,
furniture and fixtures. $ 98,520 $ 110,019 $ 121,786
Various installment loans, with interest rates ranging from
6% to 24%, due in monthly installments ranging from
$290 to $2,500, including interest due collateralized by
vehicles, equipment and furniture and fixtures.
The final payment is scheduled for June 1999. 18,924 186,992 157,608
Note payable to stockholders, collateralized by shares of
stock of certain officers, directors and former employees. 195,000 557,031 596,619
---------- ---------- ----------
312,444 854,042 876,013
Less current maturities 227,094 746,875 287,408
- ----------------------- ---------- ---------- ----------
$ 85,350 $ 107,167 $ 588,605
</TABLE>
Maturities of long-term debt are as follows:
December 31:
------------
1999 $ 227,094
2000 13,708
2001 14,267
2002 14,848
2003 and thereafter 42,527
----------
$ 312,444
At December 31, 1998, substantially all Company assets are pledged as collateral
on the above-mentioned debt agreements.
Note 4. Operating Leases
----------------
The Company leases various office facilities and equipment under noncancellable
operating leases. The Company also sublet an office facility. Rental expense
from operating leases were as follows:
Sublease Net
Rent Expense Rental Income Rental Expense
December 31,
1995 $ 170,182 $ - $ 170,182
1996 230,872 (38,056) 192,816
1997 285,198 (127,989) 157,209
1998 242,488 (142,106) 100,382
41
<PAGE>
Note 4. Operating Leases - continued
----------------------------
Future obligations for minimum rentals on remaining noncancellable leases in
excess of one year are as follows:
1999 $ 84,624
2000 84,624
2001 84,624
2002 70,710
2003 70,557
Thereafter 223,848
During 1996, the Company sold its laboratory and office facilities along with
other properties resulting in a gain of $223,120. Concurrently therewith, the
Company entered into a lease with the purchaser for the continued use of the
facilities for a five year term at $66,276 per year. In accordance with SFAS 13,
gain in the amount of $120,831 has been deferred and is being recognized in the
financial statements over the lease term, $24,166 per year.
Note 5. Income Taxes
------------
As explained in Note 1, the liability method requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the reported amounts of assets and liabilities and
their tax bases.
Net deferred tax assets consist of the following components as of December 31:
1998 Current Long-Term Total
- ---- ------- --------- -----
Deferred tax assets:
Receivable allowances $ 1,950 $ - $ 1,950
Other 2,535 - 2,535
Operating loss carryforwards - 1,739,527 1,739,527
Less valuation allowance (4,485) (1,935,331) (1,739,816)
----------- ---------- -------------
- 4,196 4,196
Deferred tax liability:
Property and equipment - (4,196) (4,196)
----------- ---------- -------------
$ - $ - $ -
=========== ========== ============
1997 Current Long-Term Total
- ---- ------- --------- -----
Deferred tax assets:
Receivable allowances $ 7,052 $ - $ 7,052
Other 2,535 - 2,535
Operating loss carryforwards - 1,740,488 1,740,488
Less valuation allowance (9,587) (1,734,781) (1,744,368)
----------- ---------- -------------
- 5,707 5,707
Deferred tax liability:
Property and equipment - (5,707) (5,707)
----------- ---------- -------------
$ - $ - $ -
=========== ========== ============
42
<PAGE>
Note 5. Income Taxes - continued
------------------------
1996 Current Long-Term Total
- ---- ------- --------- -----
Deferred tax assets:
Receivable allowances $ 10,356 $ - $ 10,356
Other 2,535 - 2,535
Operating loss carryforwards - 1,639,602 1,639,602
Less valuation allowance (12,891) (1,620,157) (1,633,048)
----------- ---------- -------------
- 19,445 19,445
Deferred tax liability:
Property and equipment - (19,445) (19,445)
----------- ---------- -------------
$ - $ - $ -
=========== ========== ============
The Company recorded a valuation allowance of $1,617,066, $1,560,089 and
$1,463,759 on deferred tax assets at December 31, 1998, 1997 and 1996,
respectively. Realization of deferred tax assets is dependent upon sufficient
future taxable income during the period that deductible temporary differences
and carryforwards are expected to be available to reduce taxable income. The net
valuation allowance increased (decreased) $(4,552), $104,766 and $430,757 for
the years ended December 31, 1998, 1997 and 1996, respectively, due primarily to
the change in loss carryforwards.
Loss carryforwards for tax purposes as of December 31, 1998, have the following
expiration dates:
Expiration Date Amount
2001 $ 9,469
2002 3,027
2003 33,108
2004 118,331
2005 132,119
2006 280,783
2007 633,538
2008 226,315
2009 518,545
2010 890,256
2011 1,312,613
2012 258,683
-----------
$ 4,416,787
============
The following is a reconciliation of income tax at the federal statutory rate to
the Company's income tax provision.
1998 1997 1996
---- ---- ----
Tax (benefit) at statutory rate of 35% .. $ 1,915 $(109,010) $(600,178)
State tax (benefit) - net ............... 219 (12,458) (68,592)
Non deductible charges .................. 2,808 23,684 239,460
Change in valuation allowance ........... (4,552) 104,766 430,757
Other net ............................... (390) (6,982) (1,447)
--------- --------- ---------
Provision for taxes .................. $ - $ - $ -
--------- --------- ---------
43
<PAGE>
Note 6. Debt Mediation
--------------
During 1996, the Company began an active campaign to mediate debt with vendors
and suppliers. Extraordinary gain is recognized to the extent the applicable
debt exceeds the cash or the fair market value of stock issued and is summarized
as follows:
1998 1997 1996
---- ---- ----
Debt settled for cash ....................... $ 232,061 $ - $ -
Debt settled for options and common stock ... 93,808 15,515 18,201
-------- -------- --------
$ 325,869 $ 15,515 $ 18,201
========= ======== ========
Note 7. Disposition of Subsidiary
-------------------------
During 1996 the Company sold the Trico business to a former shareholder and
director as follows.
Note received $ 600,000
Liabilities assumed 383,425
Common stock retired 45,000
Book value of assets sold including goodwill (1,518,810)
----------
Loss on disposition $ (490,385)
Note 8. Discontinued Operations
-----------------------
In November 1997, the Company disposed of its manufacturing and distributing
operations. Accordingly, the results of the operations as well as the gain on
the sale of its assets have been reported separately as discontinued operations
in the accompanying statements of operations. Prior years have been restated.
Operating results for the discontinued operations are as follows:
1997 1996 1995
---- ---- ----
Operating revenue $ 755,017 $1,852,470 $ 2,618,529
=========== ========== ===========
Income/(Loss) from operations $ (154,650) $ (358,929) $ 19,469
=========== ========== ===========
Per share $ (0.060) $ (0.144) $ 0.008
=========== ========== ===========
In connection with the disposition, the Company sold certain assets and
technology and issued 70,000 preferred shares (see Note 8) to Zellweger
Analytics, Inc. in settlement of deposits held by the Company as follows:
Customer deposit retained ............................... $ 484,850
Preferred shares issued ................................. (140,000)
Cost incurred .......................................... (35,000)
Book value of assets sold (48,902)
----------
Gain on disposition ................................ $ 260,948
==========
44
<PAGE>
Note 9. Redeemable Preferred Stock
---------------------------
In 1997 the Company issued 70,000 shares of Series A preferred stock, $2 stated
value, which have preferences in the event of a liquidation of the Company, to
settle all liabilities with Zellweger Analytics, Inc.(Zellweger). These
preferred shares are convertible into common shares at the ratio of one share of
preferred stock for three shares of common stock and are puttable, 17,500 shares
annually by Zellweger beginning in December 1999 through 2002 at a put price of
$2 for each preferred share. Shares not put back to the Company may be carried
forward to the next year.
During 1998, the Company issued 283,518 shares of Series B and C preferred
stock, $2 stated value, to certain officers and related parties in exchange for
the conversion of outstanding debt by the Company. These shares provide for
cumulative dividends of $.14 per share, per annum. The preferred shareholders
have the right at any time on or before June 14, 2009 (the "Maturity Date") to
convert all or a portion of the Preferred Stock, into shares of Company's Common
Stock, upon sixty (60) days prior written notice to Company. At all times up
until the Maturity Date, the conversion ratio shall be one share of Preferred
Stock for five shares of Common Stock. If the shareholder elects to convert less
than all of the Preferred Stock owned by it, all remaining shares of Preferred
Stock shall be convertible under the same terms. As an alternative to the
conversion into Common stock as set forth above, the shareholder has the right
to put the shares of Preferred Stock issued back to the Company in exchange for
a cash payment. The put price on these shares of preferred stock accretes at a
rate of three percent annually. Shares that are not put by the shareholder back
to the Company in any given year may be carried forward to the next year at the
price for that year.
Obligations under the put options discussed above are as follows:
1999 $ 35,000
2000 35,000
2001 87,913
2002 89,411
2003 55,910
Thereafter 519,428
------------
$ 820,662
============
Dividends on Preferred Shares
- -----------------------------
The Company is in arrears for payment of dividends of its preferred stock in the
amount of $34,652 ($.1225 per share) at December 14, 1999. The Company continues
to accrue dividends at the stated rate of $.14 per share per annum. This amount
accrued for the first year (through June 30, 1999) and is to be divided equally
among and added to the quarterly payments for the second year. The accrued
amount at December 31, 1998 was $19,689. The next payment of $17,326 will be due
on January 1, 2000. This consists of $7,403 for 1998 and $9,923 for 1999.
<PAGE>
Note 10. Unregistered Stock and Regulation S Offering
---------------------------------------------
During 1995, the Company issued 150,000 shares of unregistered stock in
consideration of interest and loan costs on a note payable (See Note 3). The
loan agreement provides the lender with piggyback registration rights. In
addition, the agreement provides that the lender may demand registration at any
time after April 29, 1996. The transaction was recorded at a discounted price of
approximately $.56 per share due to a lack of marketability, liquidity and
control related to the shares issued.
On April 27, 1995 the Company completed an offering of 125,000 shares of common
stock pursuant to Regulation S under the Securities Act of 1993, as amended. The
Company recognized net proceeds of $244,601 from the offering.
45
<PAGE>
In consideration of loan costs on notes payable to shareholders, the company
issued 170,000 and 162,500 shares of unregistered common stock in 1997 and 1998,
respectively. The transactions were recorded at discounted prices due to lack of
marketability, liquidity and control related to the shares issued.
During 1998 the Board of Directors approved the issuance of options for 700,000
shares subject to approval by the shareholders. The options had an exercise
price of $.10 per share. As of December 31, 1998 the options had yet to be
approved and accordingly, no amounts have been recorded in these financial
statements.
Note 11. Related Party Transactions and Balances
---------------------------------------------------------
Shakespeare Partners, LTD, whose general partner is a stockholder of the
Company, had outstanding notes due from the Company amounting to $195,000,
$287,685 and $250,000 at December 31, 1998, 1997 and 1996, respectively. No
interest was paid by the Company. During 1998, approximately $149,700 of debt
was converted to 74,878 preferred shares.
In December 1998 the Company entered into an agreement with Shakespeare
Partners, LTD and its General Partner to sell its note receivable from Trico
Incorporated amounting to $364,427 to the General Partner's retirement plan for
$260,000 which resulted in a loss to the Company of $104,427 and was recorded in
December 1998.
The United States Company, a stockholder, had outstanding notes due from
the Company in the amounts of $208,727 and $221,000 in 1997 and 1996,
respectively. Certain principals in the United States Company serve the Company
as Secretary, Treasurer and directors. During 1998, $207,296 of debt to the
United States Company was converted to 111,648 preferred shares.
The President and CEO converted 100% of his outstanding notes during 1998.
No interest was paid by the Company. Approximately $17,700 was converted to
8,835 preferred shares.
A shareholder/employee advanced the Company $90,000 in 1996. Interest was paid
at the rate of prime plus 3.25%. The amount due under the arrangement amounted
to $55,000 and $10,000 at December 31, 1996 and 1997, respectively.
An officer converted $4,500 of accrued salary to 2,250 preferred shares in
December 1998.
In addition to the related party transactions discussed above, approximately
$171,812 of vendor debt was converted to 85,907 preferred shares during 1998.
Note 12. Stock Option Plan
-----------------
In January 1994, the Board of Directors of the Company adopted the Company's
Stock Option Plan, (the "Plan") as previously authorized by the Company's
stockholders. Under the Plan, officers, directors, key employees and/or
consultants of the Company can receive incentive stock options and nonqualified
stock options to purchase up to an aggregate of 150,000 shares of the Company's
common stock (of which no more than 50,000 shares may be pursuant to incentive
stock options, and no more than 100,000 shares may be pursuant to nonqualified
stock options). In January 1994, the Company's Board of Directors awarded, under
the Plan, nonqualified stock options for an aggregate of 75,000 shares, all of
which provide for an exercise price of $2.00 per share, are exercisable
beginning on January 1, 1995 and expire on December 31, 1998 (subject to prior
termination in accordance with the applicable stock option agreements).
46
<PAGE>
Note 12. Stock Option Plan - continued
-----------------------------
On March 31, 1995, the Board of Directors awarded, under the Plan, non-qualified
stock options to purchase an aggregate of 34,500 shares. The Board of Directors
granted 23,000 incentive stock options to certain employees, 10,000
non-qualified stock options to a Director and 1,500 non-qualified stock options
to an individual under its stock option plan. All such options provide for an
exercise price of $3.625 per share, all are exercisable at the grant date and
all expire on March 20, 2005 (subject to prior termination in accordance with
the applicable stock option agreements). The exercise price applicable under
such outstanding stock options represents 100% of the fair market value of the
underlying Common Stock as of the date that such options were granted, as
determined by the Board of Directors of the Company on the date that such
options were granted.
On April 17, 1996 the Board of Directors awarded under the Plan incentive stock
options to purchase an aggregate of 23,750 shares. All such options provide for
an exercise price of $1.88 per share, all are exercisable at the grant date and
all expire on April 16, 2006 (subject to prior termination in accordance with
the applicable stock option agreements). On December 10, 1996 the Board of
Directors awarded under the Plan non-qualified stock options to purchase an
aggregate of 30,000 shares. All such options provide for an exercise price of
$2.38 per share, all are exercisable at the grant date and all expire on
December 9, 2004 (subject to prior termination in accordance with the applicable
stock option agreements). The exercise price applicable under such outstanding
stock options represents 100% of the fair market value of the underlying common
stock as of the date that such options were granted, as determined by the Board
of Directors of the Company on the date that such options were granted.
The Company applied Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" in accounting for stock-based employee compensation
arrangements whereby no compensation cost related to stock options is deducted
in determining net income (loss). Had compensation cost for the Company's stock
option plans been determined pursuant to SFAS No. 123, "Accounting for
Stock-Based Compensation," the effect on the Company's net income (loss) and
earnings (loss) per share would not have been material.
In 1997, the Company issued options to purchase 100,000 shares at $0.25 per
share in consideration of vendor debt. The settlement resulted in a gain of
$15,515 as described in Note 6.
Note 13. Fair Value of Financial Instruments
---------------------------------------
The following disclosure of estimated fair value of financial instruments is
made in accordance with the requirements of Financial Accounting Standards No.
107, Disclosure About Fair Value of Financial Instruments. The estimated fair
value amounts have been determined by the Company using available market
information. Accordingly, the estimates presented herein may not be indicative
of the amounts the Company could realize in a current market exchange. The use
of different market assumptions or valuation methodologies may have a material
effect on the estimated fair value amounts.
The carrying values of cash, accounts receivable and account payable approximate
fair values due to the short-term maturities of these instruments. The carrying
value of note receivable, notes payable and long-term debt approximate fair
values based on the discounted cash flow of those instruments, using current
interest rates and remaining maturities at December 31, 1998.
47
<PAGE>
Note 14. Other
-----
Loss of Listing from NASDAQ
The Company's Common Stock has been publicly traded separately and was initially
quoted on the Nasdaq Smallcap Market ("Nasdaq") under the symbol "EVRM" on
August 12, 1994. Upon the divestiture of the Trico Envirometrics, Inc.
subsidiary the Company fell below the listing requirements of Nasdaq. On
December 3, 1996 the Company's common stock and warrants were delisted from The
Nasdaq SmallCap Market and were subsequently traded on the Over the Counter
Bulletin Board. On January 4, 1999, the Securities and Exchange Commission (SEC)
approved amendments to NASD Rules 6530 and 6540 to limit quotations on the OTC
Bulletin Board ("OTCBB") to the securities of companies that report their
current financial information to the SEC. On November 18, 1999 the Company's
common stock and warrants were delisted from the OTCBB because of failure to
have the required SEC periodic filings submitted by that date. Price Quotations
for the Company's common stock are currently listed on the National Bureau of
Quotation's Electronic Pink Sheets (the "Pink Sheet"). It is expected that once
the Company has become current with filing its period filings with the SEC, the
necessary number of market makers will re-file the appropriate forms with the
OTCBB to permit the Company's common stock to be re-listed on OTCBB.
Note 15. Going Concern
-------------
The Company incurred losses from continuing operations of $320,397, $433,271 and
$1,374,067 for the years ended December 31, 1998, 1997 and 1996, respectively.
At December 31, 1998, current liabilities exceeded current assets by $3,000. In
December 1996 the Company initiated a formal "Turnaround" plan because of the
severe financial condition it was facing.
The Company has now turned its attention to moving out of the "Turnaround"
phase. Management has devised a plan to accomplish this exit in two steps. Step
One will focus on the internal growth of Azimuth and Step Two will focus on the
development and implementation of a merger and acquisition strategy.
Step One. In October 1999, Azimuth changed its service provision to shift more
focus to broader Safety Services offerings. This change is expected to expand
the customer base by offering a wider range of services and by leading the sales
process with Safety Services. Once a customer relationship is established with
Safety Services, it is expected to allow for the sale of other service
offerings, resulting in a higher revenue base per customer and ultimately an
internal growth in revenue.
Step Two. The Company and its management agree that any appreciable growth in
revenue will only result through a strategy of mergers and/or acquisitions or
other consolidation with other service providers operating in the Company's
fragmented industry. The Company is in the midst of developing its merger and
acquisition strategy and although the Company is not currently a party to any
binding agreements with respect to any specific targets of this strategy, a
broad profile of target companies has been developed.
Note 16. Subsequent Event
----------------
On December 30, 1999 the Board of Directors awarded stock options to the
directors to purchase an aggregate of 350,000 shares. All such options provide
for an exercise price of $.10 per share, all are exercisable at the grant date
and all expire on December 30, 2004. The exercise price applicable under such
outstanding stock options represent 100% of the fair market value of the
underlying common stock as of the date that such options were granted, as
determined by the Board of Directors of the Company on the date that such
options were granted.
48
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
----------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
CHANGE IN AUDITOR
- -----------------
The Company contacted its auditor, McGladrey & Pullen, LLC ("McGladrey"),
in May of 1999 to discuss the need to complete the audits of its financial
statements for the years ended December 31, 1998, 1997 and 1996 so that it could
file the require annual10-KSB reports for those years. The Company had $37,812
outstanding in past due fees to McGladrey of which $20,657 related to fees for
the 1995 audit; $12,750 related to accounting services in connection with due
diligence services for a terminated merger and regulatory matters during 1996;
and $4,405 related to fees in connection with preliminary audit services for the
1996 calendar year performed in early 1997. The 1996 audit was not completed as
the Company was experiencing severe cash flow problems.
In discussing the past due fees and the audit services, McGladrey
communicated that it might not be possible for them to continue as auditors.
Company management indicated to McGladrey that it would consider alternatives
and make a decision regarding these matters.
In connection with the audit of financial statements as of and for the year
ended December 31, 1995, there were no disagreements with McGladrey & Pullen,
LLP on any matter of accounting principles, financial disclosure, or auditing
scope or procedures, which disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreement.
The audit report of McGladrey & Pullen, LLP on the consolidated financial
statements of Envirometrics, Inc. as of and for the year ended December 31, 1995
did not contain any adverse opinion or disclaimer of opinion; however, the 1995
opinion was modified with respect to an emphasis of a matter paragraph
discussing recurring losses from operations and decreases in working capital
issues confronting the Company.
In October 1999 the Company notified McGladrey that it had engaged the firm
of Welch, Roberts & Amburn, Certified Public Accountants, LLP, to conduct the
audits of its financial statements for the years ended December 31, 1998, 1997
and 1996.
49
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
- --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- -------------------------------------------------
On January 26, 1996 Robin A. Bowers was elected as Secretary of the
Company. On February 28, 1996, Patrick H. Cooper, Vice President of Operations
of the Company's subsidiary, Envirometrics Products Company, resigned as an
Officer and Director of the Company. On March 22, 1996, at a regularly scheduled
meeting of the Board of Directors, Richard D. Bennett submitted his resignation
as Chairman of the Board of Directors, a position he held since March 1995.
Richard H. Guilford was elected as Chairman of the Board at that time. At that
meeting the following Directors were also elected; Ward W. Johnson, Andrew C.
Gillette and Maurizio F. Giabbai.
As of May 4, 1996, Mr. Bennett L. Helms resigned from the Board of
Directors. Mr. Andrew C. Gillette resigned as Director on July 31, 1996. David
R. Drescher resigned as a Director on October 15, 1996. In November 1996, Mr.
Ward Johnson resigned from the Board of Directors.
On November 14, 1996, Mr. Richard D. Bennett resigned as President & Chief
Executive Officer and Director of Envirometrics, Inc. At that time, the
remaining Board of Directors requested that Mr. Walter H. Elliott, III step into
the position as acting President and CEO. Mr. Elliott accepted such positions
and also became a member of the Board of Directors of the Company.
On October 31, 1997 Ms. Robin Bowers resigned as Secretary of the
Corporation and as an employee. Ms. Elsie L. Rose was elected as Secretary at
that time.
On January 28, 1999 Ms. Elsie L. Rose was appointed as a Director of the
Company.
The following table sets forth certain information concerning the directors
and executive officers of the Company as of December 31, 1999.
Directors and Executive Officers
- --------------------------------
Name Age Position
---- --- --------
Walter H. Elliott, III 44 President,Chief Executive Officer; Director
Elsie L. Rose, CPA 44 Treasurer, Acting Chief Financial Officer,
Secretary; Director
50
<PAGE>
Charles E. Feigley, Ph.D. 54 Director
Richard H. Guilford 70 Chairman of the Board of Directors
Maurizio F. Giabbai, Ph.D. 50 Director
Walter H. Elliott, III - President, Chief Executive Officer & Director. He
joined the Company in 1988 as Director of Marketing for Azimuth, Inc. and took
on these duties as well for Envirometrics Products in 1989. He subsequently was
appointed as the Chief Operating Officer in March 1990, with responsibility for
complete business operations at Envirometrics Products. Mr. Elliott brings many
years of marketing and sales experience which he gained as a sales and technical
service representative and Product Manager from 1982 to 1986 at Organon Teknika,
Inc. (formerly Litton Bionetics, Inc.), a provider of health care products. Mr.
Elliott graduated with honors from Clemson University with a B.S. in
Microbiology (1977).
Elsie L. Rose, CPA - Ms. Rose was elected Treasurer of the Company in
August 1995, Acting CFO in November of 1996 and Director in January 28, 1999.
Ms. Rose was a founder of of The United States Company and is a Director and its
Treasurer. The United States Company is a privately held management company
specializing in forming strategic partnerships with small and medium sized
businesses to provide management, financing, accounting, marketing, and
technology support. Ms. Rose has practiced public accounting, primarily in
Richmond, Virginia, for over 18 years. Ms. Rose was a senior manager at Deloitte
& Touche, LLC before joining a local Richmond, Virginia Certified Public
Accounting Firm in 1989. She began practicing as a sole practitioner before
formation of the firm of Rose, Sanderson & Creasy, LLC, in 1992. Ms. Rose is
currently a member of that firm. Ms. Rose graduated with honors from Virginia
Commonwealth University with a B.S. in Accounting in 1979.
Charles E. Feigley, Ph.D., MSPH, CIH - Dr. Feigley co-founded Azimuth,
Incorporated while serving as Chairman of Environmental Health Sciences at the
University of South Carolina. Dr. Feigley brings extensive experience in
engineering and research through his employment history with the University of
South Carolina as an Assistant and Associate Professor, a Research Associate at
the University of North Carolina, as an Environmental Control Engineer at
Diamond Shamrock Chemical Company, a chemical manufacturer, and as an
Engineering Aid with the U.S. Naval Marine Engineering Laboratory. Dr. Feigley
is a Board Member of the Company, and currently serves in various positions
within industry councils and professional societies. He is also a Diplomat for
the American Academy of Industrial Hygiene and a member of the Editorial Board
of Applied Industrial Hygiene. Dr. Feigley is a graduate of the University of
Delaware with a B.S. degree in Chemical Engineering (1967), of Rutgers
University with a M.S. degree in Environmental Sciences (1971), and of the
University of North Carolina with a Ph.D. in Environmental Sciences and
Engineering (1977). He is certified in the "Comprehensive Practice of Industrial
Hygiene" by the American Board of Industrial Hygiene.
51
<PAGE>
Richard H. Guilford - Mr. Guilford is currently employed by and serves as
the Executive Vice President and Director of Imtek, Incorporated and Imtek
Office Solutions, Inc. From March 1995 until August 1999, Mr. Guilford had been
the Chairman of The United States Company, a privately held management company
specializing in forming strategic partnerships with small and medium sized
business to provide management, financing, accounting, marketing and technology
support. Mr. Guilford was a founder of HazWaste Industries Incorporated in 1987
and served as Chairman of the Board and Treasurer until February 1995. HazWaste
was ranked by Inc. Magazine among the top 500 fastest growing privately held
companies in the Untied States in 1992, 1993 and 1994. In early 1995, HazWaste
Industries Incorporated was acquired by The Earth Technology Corporation, USA, a
publicly owned international environmental company. Mr. Guilford graduated from
the Executive Management Program of the University of Virginia Graduate School
of Business in 1964 where he was President of his class. He was a finalist in
the Entrepreneur of the Year contest in 1993 and 1994 conducted by Merrill
Lynch, Ernst & Young, and Inc. Magazine.
Maurizio F. Giabbai, Ph.D. - Dr. Giabbai was elected Director of the
Company in March 1996. Dr. Giabbai a co-founder of The STAR* Group (formerly
HazWaste Inc.) and is Chairman of The United States Company. Dr. Giabbai has
over 23 years of professional experience in analytical and environmental
chemistry and management of major projects applied to environmental/hazardous
waste management programs. He held positions in academia for over 10 years as a
research scientist, and has over 10 years business management experience of
environmental consulting/engineering/remediation companies. He was the
co-founder of HazWaste Industries Incorporated in 1987, a $50 million
consulting/remediation firm, which was listed for three consecutive years among
the Inc. 500 fastest growing companies in U.S. Dr. Giabbai was with HazWaste
Industries Incorporated until February 1995. He is a graduate of the Technical
Institute G.L. Bernini (1968). He received his Doctorate in Chemistry from the
University of Rome in 1976 and served as Post-doctoral Research Associate at the
University of Alabama in 1977-1978 when he relocated to the United States of
America. He recently completed the MBA program at Georgia State University (May
1999).
Significant Employees
- ---------------------
Richard D. Bennett, MSPH, CIH - Mr. Bennett co-founded Azimuth,
Incorporated and serves as its President. He also serves as Senior Vice
President of the Company and the Director of Technical Services. Prior to
co-founding Azimuth, Mr. Bennett was the supervising Industrial Hygienist at
Charleston Naval Hospital (1983 to 1986), an Industrial Hygienist at the
Charleston Naval Shipyard (1981 to 1983), an Industrial Hygiene Research
Assistant at the University of South Carolina (1980-1981), and a Chemist at
Campbell Soup Company (1977 to 1979). Mr. Bennett graduated with a B.S. degree,
cum laude, from Clemson University in 1977 and earned an MSPH (Master of Science
in Public Health) in Environmental Health Sciences, School of Public Health,
University of South Carolina in 1982. He is certified in the "Comprehensive
Practice of Industrial Hygiene" by the American Board of Industrial Hygiene.
52
<PAGE>
Mr. Bennett has recently informed the Company's management that he intends
to resign his positions as Senior Vice President and Director of Technical
Services for the Company, and President of Azimuth, effective February 18, 2000.
(The Company intends to commence an executive search to find a replacement for
Mr. Bennett in advance of his departure).
James W. Brown, CSP, CHMM - Mr. Brown joined Azimuth, Inc. in October, 1999
and is Director of Risk Management Services for Azimuth, Incorporated. His
expertise in OSHA, EPA, and DOT regulatory compliance consulting, safety and
environmental program administration, technical training, and risk management
decision-making spans 21 years in Federal government and private industry. Mr.
Brown's employment history includes assignments as Corporate
Safety/Environmental Manager for an international machining and assembly
company; Commercial Sales Executive for an insurance broker providing loss
prevention and environmental liability products; Risk Control Consultant for an
insurance company servicing clients in general industry and construction; and
Safety Director for a manufacturing plant in the secondary lead smelting &
refining industry. Mr. Brown holds a B.S. in Engineering/Management from the U.
S. Naval Academy and an M.S. in Systems Management from the University of
Southern California. He is designated a Certified Safety Professional
(CSP/Comprehensive Practice) and a Certified Hazardous Materials Manager
(CHMM/Senior Level). Mr. Brown is President-Elect of the American Society of
Safety Engineers' Low Country Chapter in Charleston, SC. He is a Commander in
the U.S. Navy Reserves.
Board Committees
- ----------------
The Company has Audit and Compensation Committees. The responsibilities of
the Audit Committee include recommending to the Board of Directors the firm of
independent accountants to be retained by the Company, reviewing with the
Company's independent accountants the scope and results of their audits, and
reviewing with the independent accountants and Management the Company's
accounting and reporting principles, policies and practices, as well as the
Company's accounting, financial and operating controls and staff. The
Compensation Committee has responsibility for establishing and reviewing
employee compensation plans. The Compensation Committee also administers the
Company's stock option plan.
During the "Turnaround" phase of the Company's operations, the full Board
of Directors has acted to function as the Audit and Compensation Committees of
the Board of Directors and there have not been separate meetings of those
committees.
Compliance with Section 16(a) Of the Exchange Act.
- --------------------------------------------------
To the knowledge of the Company, except as set forth below, no officers,
directors, beneficial owners of more than 10 percent of any class of equity
securities of the Company registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any other person
subject to Section 16 of the Exchange Act with respect to the Company, failed to
file on a timely basis reports required by Section 16(a) of the Exchange Act
during the fiscal years, which ended December 31, 1996, 1997 and 1998.
53
<PAGE>
None of Walter H. Elliott, III, Richard H. Guilford, Elsie L. Rose, Charles
E. Feigley, Maurizio F. Giabbai, Richard D. Bennett, The United States Company,
H. E. Igoe and Shakespeare Partners, L.P. who are all Directors, Officers and/or
10% stock holders have timely filed reports under Section 16 of the Exchange Act
with respect to the Company since the beginning of the Company's 1996 fiscal
year. On January 27, 2000 each of such persons filed a Form 5 under Section 16
of the Exchange Act with respect to their holdings of relevant equity securities
of the Company as of the end of the Company's 1999 fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
- -------------------------------
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation*
-------------------- Other Annual
Year Salary Bonus Compensation($)
---- ------ ----- ---------------
($) ($)
Name and Principal Position
- ---------------------------
Walter H. Elliott, III 1998 $59,500 0 0
President and Chief 1997 59,500 0 0
Executive Officer (Nov.96 1996 85,000 10,000 0
until present) 1995 65,000 0 0
President, EPC (Until Nov 96) 1994 65,000 0 0
Richard D. Bennett 1996 90,000 0 0
President and Chief Executive 1995 90,000 0 0
Officer (Feb.95-Nov.96) 1994 90,000 0 0
Ex. V.P. (Until Feb.95)
================================================================================
Long-Term Compensation
----------------------
Awards Payouts
------ -------
Securities
Restricted Underlying
Stock Options/ LTIP All Other
AWARD(S) SARS(#)(1) PAYOUTS($) COMPENSATION(2)
-------- ---------- ---------- ---------------
($) ($)
Walter H. Elliott, III
1998 0 0 0 0
1997 0 0 0 0
1996 0 0 0 0
1995 5,000 0 0 0
1994 0 0 0 0
Richard D. Bennett
1996 0 15,000 0 0
1995 0 15,000 0 1,871
1994 0 15,000 0 1,828
================================================================================
* Does not include personal benefits and other forms of non-cash
compensation that did not in the aggregate exceed 10% of the aggregate
amount of cash compensation for the subject individual.
(1) Represents stock options granted in January 1994. See "Stock
Option Plan".
54
<PAGE>
(2) Amounts for Richard D. Bennett includes: Company matching
payments to Section 401(k) Plan - $15 for 1994 and $18 for 1995, and
disability insurance premiums of $1,813 for 1994 and $1,873 for 1995.
Employment Agreements
- ---------------------
Effective as of September 1, 1991 (as amended effective October 1, 1993),
the Company entered into a separate employment, non-disclosure and
non-competition agreement with each of Messrs. Richard D. Bennett and Charles E.
Feigley, pursuant to which such persons agreed to serve as President and Chief
Executive Officer and Executive Vice President and Vice President of Azimuth
Incorporated, respectively, through December 31, 1996. Mr. Bennett was appointed
to the positions of Chairman, President and Chief Executive Officer of the
Company in February 1995. (Mr. Bennett served as the Chairman of the Board until
March 22, 1996 and as President and CEO until November 14, 1996). The employment
agreements (as amended) provide for minimum annual base salaries to each of
Messrs. Bennett and Feigley of $90,000 and $12,000, respectively, and benefits
comparable to those provided to other Company employees. The agreements further
provide that each such executive officer is required to (i) devote substantially
all of his business time to the performance of his duties and responsibilities
to the Company, (ii) assign to the Company all proprietary technology,
inventions and other intellectual property relating to the Company's business,
designed, developed or created by any one or more of such persons or their
affiliates, and (iii) keep confidential all proprietary information, trade
secrets and other confidential information acquired or obtained by him during
the course of his employment. Each of such employment agreements prohibits the
employee from engaging in any competitive activities with the Company during the
course of his employment with the Company, and for a period of one year
following termination of employment if such employee terminates his employment
or is terminated for cause (as defined).
In January 1997 the Company terminated employment with Charles E. Feigley
because of the financial condition of the Company. Dr. Feigley continues to
serve as a Director of the Company and works for the Azimuth subsidiary under an
informal subcontractor arrangement.
On November 14, 1996 Mr. Richard Bennett resigned as President, Chief
Executive Officer and Director. Effective January 1997 the Company entered into
a separate employment agreement with Mr. Bennett pursuant to which Mr. Bennett
agreed to serve as Senior Vice President of the Company and President of
Azimuth, Inc. The employment agreement provides for a minimum annual base salary
to the employee of $65,000 and benefits comparable to those provided to other
Company employees. In addition to the base salary, the employment agreement
provides for a Performance Bonus Plan whereby a bonus is paid when "New Clients"
contribute Net Revenues. Net Revenues are defined as gross revenues minus any
subcontractor expenses. The bonus equates to 3% of the first $100,000, 4% of the
second $100,000 and 5% of the third $100,000 in Net Revenues. The employment
agreement prohibits the employee from engaging in any competitive activities
with the Company during the course of his employment with the Company, and for a
period of six months following termination of employment for any reason.
55
<PAGE>
On May 15, 1996 the Company entered into a revised employment agreement
with each of its two chemists, Thomas Wilkie and Cameron Stephens. In addition
to the base salary of $60,000, the Company agreed to pay each a royalty equal to
2.5% of annual gross sales of all ACT cards and a cash bonus of $5,000 for each
new chemical for which a monitoring card was developed. The initial term of the
employment agreement terminated on December 31, 2000, with two-year automatic
renewals at the end of the first term. On October 20, 1997, the Company signed a
Mutual Release of Claims Agreement with Messrs. Wilkie and Stephens to supersede
the Employment, Royalty and Non-disclosure Agreement, dated May 15, 1996. The
Mutual Release Agreement released the chemists from employment and released the
Company from its future obligations under their employment agreements. Under the
terms of this Agreement the chemists are granted options to purchase 50,000
shares each of the Common Stock of the Company at $0.25 per share.
Stock Option Plan
- -----------------
In January 1994, the Board of Directors of the Company adopted the
Company's Stock Option Plan, as previously authorized by the Company's
stockholders (the "Plan"). Under the Plan, officers, directors, key employees
and/or consultants of the Company can receive incentive stock options and
non-qualified stock options to purchase up to an aggregate of 150,000 shares of
the Company's Common Stock (of which no more than 50,000 shares may be pursuant
to incentive stock options, and no more than 100,000 shares may be pursuant to
non-qualified stock options). On January 1, 1994, the Company's Board of
Directors awarded under the Plan non-qualified stock options to purchase an
aggregate of 75,000 shares. All of such options were granted to the then serving
officers of the Company, all provide for an exercise price of $2.00 per share,
all were exercisable beginning on January 1, 1995 and all expired on December
31, 1998 (subject to prior termination in accordance with the applicable stock
option agreements). The exercise price applicable under such outstanding stock
options represents 100% of the fair market value of the underlying Common Stock
as of the date that such options were granted, as determined by the Board of
Directors of the Company on the date that such options were granted.
On March 31, 1995 the Board of Directors awarded under the Plan stock
options to purchase an aggregate of 34,500 shares. The Board of Directors
granted 23,000 incentive stock options, and 11,500 non-qualified stock options
to plan participants. All of such options provide for an exercise price of
$3.625 per share, all are exercisable at the grant date and 23,000 incentive
stock options expire on March 20, 2005, 1,500 non-qualified stock options
expired on March 20, 1998 and 10,000 non-qualified stock options expire on March
20, 2003 (subject to prior termination in accordance with the applicable stock
option agreements). The exercise price applicable under such outstanding stock
options represents 100% of the fair market value of the underlying common stock
as of the date that such options were granted, as determined by the Board of
Directors of the Company on the date that such options were granted.
56
<PAGE>
On April 17, 1996 the Board of Directors awarded under the Plan incentive
stock options to purchase an aggregate of 23,750 shares. All of such options
provide for an exercise price of $1.88 per share, all are exercisable at the
grant date and all expire on April 16, 2006 (subject to prior termination in
accordance with the applicable stock option agreements). On December 10, 1996
the Board of Directors awarded under the Plan non-qualified stock options to
purchase an aggregate of 30,000 shares. All of such options provide for an
exercise price of $2.38 per share, all are exercisable at the grant date and all
expire on December 9, 2004 (subject to prior termination in accordance with the
applicable stock option agreements). The exercise price applicable under such
outstanding stock options represents 100% of the fair market value of the
underlying common stock as of the date that such options were granted, as
determined by the Board of Directors of the Company on the date that such
options were granted.
During the period 1996 through 1998, 23 employees who were holding
incentive stock options left the employment of the Company without exercising
their options. Subject to the stock option agreements, their options terminated
on the effective dates of their resignations. Of the 88,250 issued in March,
1995 and April and December, 1996, 42,250 options have expired, (40,750
incentive stock options and 1,500 non-qualified stock options).
On January 28, 1999 the Board of Directors awarded under the Plan incentive
stock options to purchase an aggregate of 40,000 shares. All of such options
provide for an exercise price of $0.10 per share, all are exercisable at the
grant date and all expire on January 27, 2009 (subject to prior termination in
accordance with the applicable stock option agreements). The exercise price
applicable under such outstanding stock options represents 100% of the fair
market value of the underlying common stock as of the date that such options
were granted, as determined by the Board of Directors of the Company on the date
that such options were granted. 10,000 options expired on September 4, 1999 when
the employee resigned employment.
With respect to incentive stock options, the Plan provides that the
exercise price of each such option must be at least equal to 100% of the fair
market value of the common stock on the date that such option is granted (and
110% of fair market value in the case of stockholders who, at the time the
option is granted, own more than 10% of the total outstanding common stock), and
requires that all such options have an expiration date not later than that date
which is one day before the tenth anniversary of the date of the grant of such
options (or the fifth anniversary of the date of grant in the case of 10%
stockholders). However, with certain limited exceptions, in the event that the
option holder ceases to be associated with the Company, or engages in or is
involved with any business similar to that of the Company, such option holder's
incentive options immediately terminate. Pursuant to the provisions of the Plan,
the aggregate fair market value, determined as of the date(s) of grant, for
which incentive stock options are first exercisable by an option holder during
any one calendar year cannot exceed $100,000.
57
<PAGE>
With respect to non-qualified stock options, the Plan requires that the
exercise price of all such options be at least equal to 100% of the fair market
value of the Common Stock on the date such option is granted, provided that
non-qualified options may be issued at a lower exercise price (but in no event
less than 85% of fair market value) if the net pre-tax income of the Company in
the full fiscal year immediately preceding the date of the grant of such option
(the "Prior Year") exceeded 125% of the mean annual average net pre-tax income
of the Company for the three fiscal years immediately preceding such Prior Year.
Non-qualified options must have an expiration date not later than that date
which is the day before the eighth anniversary of the date of the grant of the
subject option. However, with certain limited exceptions, in the event that the
option holder ceases to be associated with the Company, or engages in or becomes
involved with any business similar to that of the Company, such option holder's
non-qualified options immediately terminate.
The Plan further provides that non-qualified options may (but need not)
include a provision that, in the event of any change in control and management
of the Company or any sale of the business of the Company, except to the extent
that the subject option holder affirmatively elects during a limited period of
time following such event to permanently revoke and terminate the subject
non-qualified option (in whole or in part) and/or to reaffirm all or any portion
of such non-qualified option without giving effect to the reduction in exercise
price herein described, then the otherwise applicable exercise price in respect
of such option may thereafter be reduced (but not by more than 50%) in the event
that, and at such time(s) as, the subject option holder thereafter exercises
such option (or the non-revoked and non-reaffirmed portion thereof, as the case
may be).
The Plan is administered by the Compensation Committee of the Company's
Board of Directors, which has wide discretion in determining the recipients of
options, the amounts of options awarded, and various other terms and conditions
applicable to options granted under the Plan. In determining whether and to what
extent specific employees will be awarded options, the Compensation Committee
takes into account the value of the specific employee's services to the Company,
the employee's time in service, the long-term prospects for the employee to
handle additional responsibilities within the Company, and such other factors as
the Compensation Committee may deem relevant in order to reward and motivate the
Company's key employee.
The following tables set forth information concerning the exercise of
options during the 1996,1997 and 1998 fiscal years, the number of unexercised
options, and the value of such unexercised options, for the executive officers
named in the Summary Compensation Table.
58
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercise
in Fiscal Year ended 12/31/96 and FY-End Option/SAR Value
<S> <C> <C> <C> <C>
Value of Unexercised in the
Shares Number of Money Options/
Acquired On Value Unexercised Options/ SAR at FY-End($)
Name Exercise# Realized($) SAR AT Year End(#) Exercisable/Unexercisable
- ---- ----------- ----------- ------------------- -------------------------
Walter H. Elliott, III - - ---/5,000 $---/$938
Richard D. Bennett - - ---/15,000 $---/$2,814
Aggregated Option/SAR Exercise
in Fiscal Year ended 12/31/97 and FY-End Option/SAR Value
Value of Unexercised in the
Shares Number of Money Options/
Acquired On Value Unexercised Options/ SAR at FY-End($)
Name Exercise# Realized($) SAR AT Year End(#) Exercisable/Unexercisable
- ---- ----------- ----------- ------------------- -------------------------
Walter H. Elliott, III - - ---/5,000 $---/$100
Aggregated Option/SAR Exercise
in Fiscal Year ended 12/31/98 and FY-End Option/SAR Value
Value of Unexercised in the
Shares Number of Money Options/
Acquired On Value Unexercised Options/ SAR at FY-End($)
Name Exercise# Realized($) SAR AT Year End(#) Exercisable/Unexercisable
- ---- ----------- ----------- ------------------- -------------------------
Walter H. Elliott, III - - ---/5,000 $---/$310
</TABLE>
Compensation Policy and Other Compensation
- ------------------------------------------
During the fiscal years ended December 31, 1996 through 1998 the Company's
Board of Directors determined all compensation matters relating to the Company's
executive officers.
The Board of Directors of the Company in the past determined that the best
way to attract and retain highly capable employees on a basis that will
encourage them to perform at increasing levels of effectiveness and to use their
best efforts to promote the growth and profitability of the Company and its
subsidiaries, was to enter into employment agreements with its senior executive
officers. Mr. Bennett is employed under such a contract with the Company. During
the "Turnaround" phase there have been no additional senior executive officers
recruited and Mr. Elliott has served without an employment contract. The Company
believes that its compensation levels as to all of its employees are comparable
to industry standards. See "Employment Agreements".
59
<PAGE>
In setting levels of compensation under Mr. Bennett's employment contract,
and in approving management's compensation of all other Company employees
(including Mr. Elliott), the Board of Directors has evaluated the Company's
overall performance, the contribution of particular individuals to Company
performance and industry compensation standards.
The Company has adopted a policy of compensating non-employee Directors at
the rate of $500 per meeting (plus reasonable out-of-pocket expenses in a manner
consistent with past practice) for attendance at meetings of the Company's Board
of Directors. At this time, Richard H. Guilford, Maurizio F. Giabbai, PhD,
Charles E. Feigley, PhD and Elsie L. Rose, CPA are the only directors eligible
to be compensated pursuant to this policy. The Board agreed to suspend this
policy until such time as the Company is financially stable.
On December 30, 1999 the Board of Directors awarded stock options outside
of the Plan to members of the Board of Directors and to Mr. Elliott to purchase
an aggregate of 350,000 shares. All of such options provide for an exercise
price of $.10 per share, all are exercisable at the grant date and all expire on
December 29, 2004. The exercise price applicable under such outstanding stock
options represents 100% of the fair market value of the underlying common stock
as of the date that such options were granted, as determined by the Board of
Directors of the Company on the date that such options were granted.
Item 11. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------
The following table sets forth certain information regarding shares of
common stock beneficially owned as of December 31, 1999 by (i) each person known
by the Company to be the beneficial owner of more than 5% of outstanding common
stock, (ii) each of the Company's officers and/or directors, and (iii) all
officers and directors as a group. Except as otherwise indicated, the Company
believes, based on information furnished by such owners, that the beneficial
owners of the Common Stock listed below have sole investment and voting power
with respect to such shares, subject to community property laws where
applicable.
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<PAGE>
================================================================================
Amount of Common Stock Percentage of Outstanding
Name Beneficially Owned Common Stock
================================================================================
Richard D. Bennett 384,597(1) 10.56%
107 Springfield Place
Goose Creek, SC 29445
- --------------------------------------------------------------------------------
Charles E. Feigley, PhD 187,864(10) 5.09%
2538 Wheat Street
Columbia, SC 29205
- --------------------------------------------------------------------------------
Walter H. Elliott, III 349,849(2)(3)(6)(11) 9.11%
205 Walnut Hill Drive
Summerville, SC 29485
- --------------------------------------------------------------------------------
Patrick H. Cooper 221,614 6.09%
3306 Cottonfield Drive
Mt. Pleasant, SC 29464
- --------------------------------------------------------------------------------
Jack E. Bennett 229,503(5) 6.30%
403 E. Marion Street
Kershaw, SC 29067
- --------------------------------------------------------------------------------
Shakespeare Partners, L.P. 584,730(9) 14.56%
21 Legare Street
Charleston, SC 29401
- --------------------------------------------------------------------------------
H. E. Igoe 724,730(8) 18.05%
21 Legare Street
Charleston, SC 29401
- --------------------------------------------------------------------------------
Michael McGehee 304,080 8.35%
1 North Adgers Wharf
Charleston, SC 29401
- --------------------------------------------------------------------------------
The United States Company 683,240(7) 16.27%
1051 Technology Park Drive
Glen Allen, Virginia 23060
- --------------------------------------------------------------------------------
Richard H. Guilford 277,747(7)(10) 7.16%
5900 Patterson Avenue, Chalet 9
Richmond, Virginia 23226
- --------------------------------------------------------------------------------
Maurizio F. Giabbai, PhD 277,747(7)(10) 7.16%
5652 Buttonwood Court
Stone Mountain, Georgia 30087
- --------------------------------------------------------------------------------
Elsie L. Rose 340,280 (4)(7)(10) 8.75%
12645 Mount Hermon Road
Ashland, Virginia 23005
================================================================================
All Directors and Executive Officer 1,433,486(2) (3) 4)(6) 31.10%
as a group (five persons) (7)(10)(11)
================================================================================
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<PAGE>
(1) Includes 127,011 shares issued in November 1999.
(2) Includes 93,174 shares issued in November 1999.
(3) Includes exercisable options to purchase up to 5,000 shares of Common Stock
at $3.63 per share granted under the Plan.
(4) Includes 14,400 shares issued in lieu of 1998 accrued compensation in
January 1999 and 31,884 shares issued in November 1999.
(5) Includes exercisable options to purchase up to 2,000 shares of Common Stock
at $2.00 per share granted under the Plan.
(6) Includes 44,175 shares of Common Stock assuming conversion of shares of the
Series B Preferred stock held at a 5 shares of Common Stock to 1 share of
Preferred Stock conversion rate.
(7) Includes 125,000 shares of Common Stock issued to The United States Company
("USC"). Includes 558,240 shares of Common Stock, assuming conversion of the
shares of Series B Preferred Stock held at a 5 shares of Common Stock to 1 share
of Preferred Stock conversion rate. Richard H. Guilford, Chairman of the Board
of the Company, Maurizio F. Giabbai, Ph.D., a Director of the Company, and Elsie
L. Rose, CPA, the Treasurer of the Company, are principals in USC. Messrs.
Guilford and Giabbai, and Ms. Rose, each owns a one-third interest in The United
States Company and based upon the organizational documents of USC has beneficial
ownership of one-third of the securities in which it invests (including the
Company's Securities).
(8) H. E Igoe is the General Partner of Shakespeare Partners, LP. Includes
shares of Common Stock and Preferred Stock held by Shakespeare Partners, L.P.,
of which Mr. Igoe has beneficial ownership.
(9) Includes 374,390 shares of Common Stock, assuming conversion of the Series C
Preferred Stock held at a 5 shares of Common Stock to 1 share of Preferred Stock
conversion rate.
(10) Includes exercisable options to purchase up to 50,000 shares of Common
Stock at $0.10 per share, awarded in December 1999 to Directors: Guilford, Rose,
Giabbai and Feigley.
(11) Includes exercisable options to purchase up to 150,000 shares of Common
Stock at $0.10 per share, awarded in December 1999.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Pursuant to a Loan Agreement, dated March 9, 1995 (the "Loan Agreement"),
by and among the Company, Messrs. Richard D. Bennett, Robert J. Nagy (a former
officer) and Patrick H. Cooper (a former director) (the "Pledgors"), and H. E.
Igoe, Jr. ("Igoe"), Igoe agreed to lend to the Company up to $300,000 in two
installments of $150,000 each (collectively, the "Loan Principal"). To date,
150,000 shares of common stock have been issued to Igoe's designee under the
Loan Agreement. On January 15, 1996, $100,000 was paid to Igoe's designee and
the agreement was modified and the due date on the remaining balance of $200,000
was extended to January 15, 1997. The note agreement contains a conversion
62
<PAGE>
option which allows the stockholder/lender to convert the note to shares of
common stock at a conversion price of $1.50 per share. Igoe released 95,340
shares of Company common stock pledged by Richard D. Bennett and 141,133 of
shares of Company common stock pledged by Patrick H. Cooper, which resulted in
226,020 of shares of Company common stock pledged by the Pledgors.
On July 11, 1995 the Company entered into an agreement with The United
States Company ("USC") for USC to provide management services to the Company.
The agreement provided for monthly expense fees of $15,000 and for warrants to
purchase up to 600,000 shares of the Company's stock at a price of $2.0625 per
share. The warrants, which are unregistered, vested based on performance
standards and time. During the year ended December 31, 1995, 300,000
unregistered warrants were issued under this agreement. During 1996, 300,000
additional warrants were issued under this agreement.
On December 24, 1996, the Company, USC and each of Messrs. Guilford and
Giabbai and Ms. Rose (with such individuals being collectively referred to as
the "USC Principals") entered into an agreement (the "Memorandum Agreement")
pursuant to which certain outstanding indebtedness owed to USC by the Company
and all other expense reimbursements and compensation which may have been owed
by the Company at that date to any of USC or the USC Principals, was settled and
paid with the delivery by the Company of two promissory notes (the "New Notes")
in the aggregate principal of $171,000, which New Notes were made payable by the
Company to USC. The principal of the New Notes was to be paid as follows: (i)
out of the proceeds of certain mortgage loans held by the Company (which
resulted from the Company's sale of certain real property), with the resulting
note bearing interest at 8.75% per annum; and (ii) $136,000 being due and
payable in 60 equal monthly installments of $2,629.26 (including 6% per annum
interest), with the final payment to be made on December 15, 2001, with
principal payments to USC only made to the extent that the Company receives
interest payments under a specified second mortgage held by the Company on
property owned by a non-affiliate of the Company.
Any unpaid principal due under the New Notes is payable out of the net
proceeds of a public or private securities offering by the Company which exceed
$1,000,000.
Repayment of the New Notes was secured under a security agreement granting
to USC (i) a security interest in the Company's rights under the $600,000 Trico
Note delivered to the Company upon its sale of the Trico Business on July 26,
1996; and (ii) all of the Company's rights under a pledge agreement, dated July
26, 1996, between Andrew Gillette and the Company, pursuant to which Mr.
Gillette pledged to the Company all of his interest in the Trico shares he
acquired from the Company in connection with his purchase of the Trico business.
As part of the Memorandum Agreement, the Company also issued to USC 125,000
unregistered shares of its Common Stock (the"Exchange Shares").
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<PAGE>
As a result of the Memorandum Agreement, all outstanding or unissued
warrants, options or other rights for the issuance of Company shares held by USC
or the USC principals were terminated and released, and the Company, USC and the
USC principals extended mutual releases of all existing and potential claims and
liabilities one against the other, related to that certain agreement, dated July
11, 1995, between USC and the Company (see above). The Exchange Shares were
subject to limited demand and piggyback registration rights granted by the
Company.
The United States Company, had outstanding notes due from the Company
bearing principal of $208,727 and $221,000 in 1997 and 1996, respectively.
During 1998, $207,296 (93 %) of debt to the United States Company was converted
to 111,648 shares of Series B Preferred Stock. Richard H. Guilford, Chairman of
the Board of the Company, Maurizio F. Giabbai, Ph.D., a Director of the Company,
and Elsie L. Rose, CPA, the Treasurer of the Company, are Principals in USC.
Shakespeare Partners, LTD, whose general partner is a stockholder of the
Company, had outstanding notes due from the Company amounting to $250,000,
$287,685 and $195,000 at December 31, 1998, 1997 and 1996, respectively. During
1998, approximately $149,700 of outstanding debt was converted to 74,878 shares
of Series C Preferred Stock.
In December 1998 the Company entered into an agreement with Shakespeare
Partners, LTD and its General Partner to sell the Company's secured note
receivable from Trico Incorporated, received upon the sale of the Trico
business, bearing outstanding principal of $364,427, to the General Partner's
retirement plan for $260,000. This resulted in a loss to the Company of
$104,427, which was recorded in December 1998.
The President and CEO converted to equity 100% of his outstanding notes
during 1998. Approximately $17,700 was converted to 8,835 shares of Series B
Preferred Stock.
Pursuant to an agreement, dated February 4, 1999, Azimuth agreed to engage
Patrick Cooper as an independent contractor to provide asbestos analysis and
other consulting services. The services are provided at rates specified in the
Agreement (generally 50% of the rate charged to Azimuth clients for work
performed by Mr. Cooper), with the term of the agreement being initially
one-year, subject to successive one-year renewal periods; provided, that the
agreement may be terminated by either party on 30 days notice.
64
<PAGE>
On November 23, 1999, the Board of Directors who were recipients of options
to acquire an aggregate of 700,000 shares of Company Stock at an exercise price
of $0.10 per share, agreed to terminate all such options (the "Terminated
Option"). On December 30, 1999 the Board of Directors awarded stock options
outside of the Plan to the Board of Directors and CEO to purchase an aggregate
of 350,000 shares. All of such options provide for an exercise price of $.10 per
share (the "New Options"), all are exercisable at the grant date and all expire
on December 29, 2004. The exercise price applicable under such outstanding stock
options represents 100% of the fair market value of the underlying common stock
as of the date that such options were granted, as determined by the Board of
Directors of the Company on the date that such options were granted. All of the
Terminated Options and the New Options were granted by the Board of Directors to
the recipients in lieu of directors fees and other monetary compensation, in
order to maintain the continued service of the recipients on behalf of the
Company. All references to stockholdings give effect to all prior stock splits.
.
65
<PAGE>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
- -------------------------------------------------
(a) The following exhibits are filed along with this Report on Form 10-KSB:
Number Description of Exhibit
- ------ ----------------------
3.1 Amended and Restated Certificate of Incorporation of Registrant ........
3.2 Amended and Restated By-laws of Registrant .............................
3.3 Certificate of Designation of Series A, B, and C Preferred Stock of
Envirometrics, Inc.
4.2 1993 Stock Option Plan, including form of Stock Option Agreement. (1.)
4.3 Warrant Amendment Extension dated April 15, 1999.
10.1 Share Purchase Agreement dated October 17, 1991 between the Registrant
and J. Buck Dowdy holder of all outstanding stock of Optichem,
rightful owner of the ACT Card technology.
10.2 March 26, 1992 Agreement between Registrant and Computer Control
Corporation regarding the development of electronic card readers.
10.3 Employment, Non-Disclosure and Non-Competition Agreement between
Registrant and Richard Bennett, effective October 1, 1993. (1.)
10.4 Certifications of accreditation from American Industrial Hygiene
Association and State of New York Department of Health in respect of
of Registrant's Azimuth Laboratory. (1.)
10.5 Master Distributorship Agreement, dated as of January 1, 1996 by and
between Envirometrics Products Company and Zellweger Analytics, Inc.
10.6 Office Lease at 4055 Faber Place dated January 17, 1996 between Trico
Envirometrics, Inc. (a wholly owned subsidiary of Registrant) and LPC of
SC, Inc.
10.7 Lease Amendment dated April 9, 1996 by and between the Registrant and
Reba H. Wilkinson for research facility in NC.
10.8 Master Factoring Agreement dated May 3, 1996 by and between Registrant,
it's subsidiaries and Reservoir Capital Corporation
10.9 Employment, Royalty and Non-Disclosure Agreement between Registrant
and Cameron Stephens, chemist responsible for the ACT Card.
10.10 Employment, Royalty and Non-Disclosure Agreement between Registrant and
Tom Wilkie, chemist responsible for the ACT Card.
10.11 Amendment to the March 26,1992 Agreement between Registrant and Computer
Control Corporation dated June 18, 1996.
66
<PAGE>
10.12 Stock Purchase Agreement for Trico Envirometics, Inc. dated July 26,
1996 between Registrant, Andrew C. Gillette and Trico Envirometics, Inc.
10.13 Unconditional Guaranty Agreement dated July 26, 1996 between Registrant,
Andrew C. Gillette and Deborah B. Gillette in favor of Registrant.
10.14 Security Agreement dated July 26, 1996 between Registrant and Trico
Envirometrics, Inc.
10.15 Pledge Agreement dated July 26, 1996 between Registrant and Andrew C.
Gillette.
10.16 $600,000 Promissory Note for the repurchase of Trico Envirometrics, Inc.
dated July 26, 1996.
10.17 Sublease of Suite 102 at 4055 Faber Place by Registrant, Trico
Envirometrics, Inc.("Sublessee") and LPC of SC, Inc.(a subsidiary of The
Liberty Corporation).
10.18 Lease Agreement dated August 8, 1996 between Envirometrics Products
Company (wholly owned subsidiary of Registrant) and Nicholas and Thalia
Pavlatos.
10.19 Commercial Real Estate Sales Agreement between the Registrant and James
W. Miller, M.D. dated October 7, 1996, regarding 9229 University Blvd.
10.20 Commercial Real Estate Sales Agreement between the Registrant and James
W. Miller, M.D. dated October 7, 1996, regarding 1019 Bankton Dr.
10.21 Lease Expiration Amendment dated November 13, 1996 by and between
Azimuth, Inc.(wholly owned subsidiary of the Registrant) and Centoff
Realty Co., Inc.
10.22 Lease Agreement dated November 19, 1996 between Envirometrics Products
Company (wholly owned subsidiary of Registrant) and Nicholas and Thalia
Pavlatos.
10.23 Lease Agreement dated December 17, 1996 by and between Registrant and
James W. Miller, M.D. for the Corporate Facitlity located at 9229
University Blvd.
10.24 Title to Real Estate from the Registrant to James W. Miller dated
December 19, 1996, for Charleston County property.
10.27 Title to Real Estate from the Registrant to James W. Miller dated
December 19, 1996, for Berkeley County property.
10.28 Memorandum of Lease between Registrant and its subsidiaries dated
December 19, 1996.
10.29 Tenant's Estoppel Certificate from Registrant, in favor of Beard
Development Corporation dated December 19, 1996.
10.30 Subordination Agreement by and between Registrant and Beard Development
Corporation, dated December 19, 1996, for Charleston County.
10.31 Promissory Note from James W. Miller to Registrant dated December 19,
1996, in the amount of $230,000.
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<PAGE>
10.32 Mortgage and Security Agreement from James W. Miller to Registrant,
dated December 19, 1996 for Berkeley County.
10.33 Mortgage and Security Agreement from James W. Miller to Registrant,
dated December 19, 1996 for Charleston County.
10.34 Assignment of Leases and Guaranties from James W. Miller to Registrant
dated December 19, 1996 for Berkeley County.
10.35 Assignment of Leases and Guaranties from James W. Miller to Registrant
dated December 19, 1996 for Charleston County.
10.36 Closing Statement for Seller and Buyer dated December 19, 1996.
10.37 Collateral Assignment of Proceeds for the James W. Miller, M.D. Real
Estate Promissory Note by and between the Registrant and certain secured
parties dated December 20, 1996.
10.38 Employment Agreement for Richard Bennett after resignation as President
and CEO.
10.39 Sublease of Suite 210 at 4055 Faber Place dated March 18, 1997 by
Registrant,Chase Mortagage Brokers, Inc.("Sublessee")and LPC of SC, Inc.
10.40 Asset Purchase Agreement dated April 28, 1997 between Registrant and
Multi-Metrics, Inc.
10.41 Amendment to Master Factoring Agreement dated May 14, 1997 by and be-
tween Registrant, its subsidiaries and Reservoir Capital Corporation.
10.42 Agreement and Mutual Release of Claims between Registrant and Thomas A.
Wilkie and Cameron R. Stephens.
10.43 Asset Purchase Agreement dated November 14, 1997 between Registrant and
Zellweger Analytics, Inc.
10.44 Mutual Settlement and Release dated November 14, 1997 between Registrant
and Zellweger Analytics, Inc.
10.45 Preferred Stock Subscription and Conversion Agreement and Investment
Representations dated November 14, 1997 by Zellweger Analytics, Inc.
10.46 Agreement by J. Buck Dowdy to settle due and unpaid royalties of $47,723
under the October 17, 1991 Share Purchase Agreement for Common Stock.
10.47 Collateral Assignment of Proceeds for the Trico Envirometrics, Inc.
Promissory Note by and between the Registrant and certain secured
parties dated January 1, 1997.
10.48 Promissory Note for Precision Southeast, Inc. in the amount of
$275,958.27 dated January 23, 1997.
10.49 Promissory Note and Security Agreement for Shakespeare Partners, L.P. in
the amount of $50,000.
10.50 Letter of Settlement between Registrant and Reservoir Capital Corpora-
tion dated December 2, 1999.
10.51 Letter from LeClair Ryan in settlement of $25,200 of legal fees for
Common Stock of the Registrant.
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<PAGE>
10.52 Mutual Settlement and Release between Registrant and Computer Control
Corporation dated April 9, 1998.
10.53 Preferred Stock Agreement between Registrant and Ten State Street, LLP
dated June 30, 1998.
10.54 Preferred Stock Agreement between Registrant and The United States
Company dated June 30, 1998.
10.55 Preferred Stock Agreement between Registrant and Precision Southeast,
Inc. dated June 30, 1998.
10.56 Preferred Stock Agreement between Registrant and Shakespeare Partners,
L.P. dated June 30, 1998.
10.57 Preferred Stock Agreement between Registrant and Walter H. Elliott, III
dated June 30, 1998.
10.58 Letter to Gast Manufacturing, Inc. in settlement of a trade payable
equaling $21,856 for Common Stock of the Registrant.
10.59 Preferred Stock Agreement between Registrant and Elsie L. Rose dated
January 1, 1999
10.60 Promissory Note from the Registrant to Shakespeare Partners LLP in the
principal amount of $20,000.
10.61 Assignment of Trico Note to Salomon Smith Barney for the benefit of H.E.
Igoe.
10.62 PHT Services, LTD. Strategic Alliance Agreement with Azimuth, Inc. dated
September 4, 1998.
10.63 Amendment to Lease Agreement dated January 18, 1999 by and between
Registrant and James W. Miller, M.D. for the Corporate Facility located
at 9229 University Blvd.
10.64 Payoff Letter Re: Promissory Note and Mortgage from James W. Miller to
Registrant
10.65 Consulting Agreement by and between Azimuth, Inc. and Patrick H. Cooper
dated February 4, 1999.
10.66 Memorandum of Agreement and Mutual Release by and between Registrant and
The United States Company dated December 24, 1996.
Item 21 - Subsidiaries of Registrant.
(1) Incorporated by reference, filed as an Exhibit to Report on Form 10-KSB
for 1995, filed on March 25, 1996, (SEC File No. 0-23892).
69
<PAGE>
(b) No reports were filed on Form 8-K during 1996, 1997 or 1998 except the
following: January 12, 1996; August 15, 1996; November 5, 1996; November 6,
1996; December 3, 1996 and December 5, 1996.
70
<PAGE>
SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: January 28, 2000
ENVIROMETRICS, INC.
BY: S/WALTER H. ELLIOTT, III
Walter H. Elliott, III, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
SIGNATURES TITLE DATE
s/Richard H. Guilford
- ------------------------ Chairman of the Board January 28, 2000
Richard H. Guilford
s/Walter H. Elliott, III
Director, President, Chief
- ------------------------ Executive Officer January 28, 2000
Walter H. Elliott, III
s/Elsie L. Rose
Treasurer, Chief Accounting Officer
- ------------------------ & Acting Chief Financial Officer January 28, 2000
Elsie L. Rose
s/Charles E. Feigley
- ------------------------ Director January 28, 2000
Charles E. Feigley
s/Maurizio F. Giabbai
- ------------------------ Director January 28, 2000
Maurizio F. Giabbai
71
<PAGE>
EXHIBIT 21 SUBSIDIARIES OF ENVIROMETRICS, INC.
- ----------------------------------------------
1. Azimuth, Incorporated
72
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ENVIROMETRICS, INC.
Original Certificate of Incorporation filed with the Secretary of State on May
10, 1991, such Certificate having been amended by First Amendment to Certificate
of Incorporation filed with the Secretary of State on January 28, 1992, and
having been further amended by Second Amendment to Certificate of Incorporation
filed with the Secretary of State on September 24, 1993. Such Certificate is
being further amended and restated, inter alia, providing for the right of
directors to issued preferred stock, providing for no preemptive rights to the
stockholders and providing for no cumulative voting rights and other general
provisions.
This Amended and Restated Certificate of Incorporation of Envirometrics, Inc.
was duly adopted by the directors and shareholders of the corporation in
accordance with the provisions of Sections 242 and 245 of the Delaware General
Corporation Law, and restates, integrates and amends the provisions of the
corporation' s Certificate of Incorporation as heretofore amended or
supplemented. The adoption of this Restated Certificate of Incorporation does
not result in any reduction in the aggregate amount of the corporation's
capital. The undersigned officers of the Corporation hereby certify and set
forth as follows:
FIRST: The name of the Corporation is Envirometrics, Inc. (the
"Corporation").
SECOND: The address, including street, number, city and county, of the
registered office of the Corporation in the State of Delaware is One Rodney
Square, 10th Floor, Tenth and King Streets, in the City of Wilmington,
County of New Castle, 19801. The name of the registered agent of the
corporation in the State of Delaware at such address is RL&F Service Corp.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is TEN MILLION (10,000,000)
shares consisting of common stock, $.001 par value per share ("Common
Stock") and TWO MILLION FIVE HUNDRED THOUSAND (2,500,000) of preferred
stock, $.0l per share ("Preferred Stock").
PART A
COMMON STOCK
1. General.
(a) Each share of Common Stock issued and outstanding shall be
identical in all respects one with the other, and no dividends shall be
paid on any shares of Common Stock unless the same dividend is paid on all
shares of Common Stock outstanding at the time of such payment.
(b) Except for and subject to those rights expressly granted to the
holders of Preferred Stock, if any is issued, or except as may be provided
by the Delaware General Corporation Law, the holders of Common Stock shall
have exclusively all other rights of stockholders including, but not by way
of limitation, (i) the right to receive dividends, when, as and if declared
by the Board of Directors out of assets lawfully available therefor, and
(ii) in the event of any distribution of assets upon liquidation,
dissolution or winding up of the Corporation or otherwise, the right to
receive ratably and equally all the assets and funds of the Corporation
remaining after payment to the holders of Preferred Stock of the
Corporation of the specific amounts which they are entitled to receive upon
such liquidation, dissolution or winding up of the Corporation as herein
provided.
(c) In the event that the holder of any share of Common Stock shall
receive any payment of any dividend on, liquidation of, or other amounts
payable with respect to, any shares of Common Stock, which he is not then
entitled to receive, he will forthwith deliver the same to the holders of
shares of Preferred Stock, and if in existence, the holders of shares of
Preferred Stock (as their respective interests may appear) , as the case
may be, in the form received, and until it is so delivered, will hold the
same in trust for such holders.
(d) Each holder of shares of Common Stock shall be entitled to one
vote for each share of such Common Stock held by him, and voting power with
respect to all classes of securities of the Corporation shall be vested
solely in the Common Stock, other than as specifically provided in the
Corporation's Certificate of Incorporation, as it may be amended, with
respect to the preferred stock, if and when issued. There shall be no
cumulative voting rights accorded to any holder of shares of Common Stock.
(e) No stockholder shall be entitled to a preemptive right to purchase
or subscribe for any unissued stock of any class or any additional shares
of any class to be issued by reason of any increase in the authorized
capital stock of the Corporation.
PART B
PREFERRED STOCK
Authority is hereby vested in the Board of Directors of the Corporation to
provide for the issuance of Preferred Stock and in connection therewith to fix
by resolution providing for the issue of such series, the number of shares to be
included and such of the preferences and relative participating, optional or
other special rights and limitations of such series, including, without
limitation, rights of redemption or conversion into Common Stock, to the fullest
extent now or hereafter permitted by the Delaware General Corporation Law.
FIFTH: The Corporation is to have perpetual existence
SIXTH: The Corporation expressly elects to be subject to the provisions of
Section 203 of the Delaware General Corporation Law.
SEVENTH: The board of directors is expressly authorized to adopt, amend or
repeal the by-laws of the Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the Corporation shall otherwise provide.
NINTH: Special meetings of the stockholders of the Corporation may only be
called by the board of directors of the Corporation or by the duly elected
officers of the Corporation.
TENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of the Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case maybe, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which said application has been made, be binding
on all the creditors or class of creditors, and/or on all of the
stockholders or class of stockholders of the Corporation, as the case may
be, and also on the Corporation.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute or by
this Amended and Restated Certificate of Incorporation, and all rights
conferred upon stockholders herein are granted subject to this reservation.
TWELFTH: No director and/or officer of the Corporation shall be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director and/or officer, except for liability (i) for
any breach of such person's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a 'knowing violation of law, (iii) under Section
174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which such person derived an improper personal
benefit.
THIRTEENTH: Except as may otherwise be specifically provided in this
Amended and Restated Certificate of Incorporation, no provision of this
Amended and Restated Certificate of Incorporation is intended by the
Corporation to be construed as limiting, prohibiting, denying or abrogating
any of the general or specific powers or rights conferred under the General
Corporation Law upon the Corporation, upon its shareholders, bondholders
and security holders, and upon its directors, officers and other corporate
personnel, including, in particular, the power of the Corporation to
furnish indemnification to directors and officers in the capacities defined
and prescribed by the General Corporation Law and the defined and
prescribed rights of said persons to indemnification as the same are
conferred under the General Corporation Law. The Corporation shall, to the
fullest extent permitted by the laws of the State of Delaware, including,
but not limited to Section 145 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented, indemnify any and
all persons whom it shall have power to indemnify under said Section or
otherwise under Delaware law from and against any and all of the expenses,
liabilities or other matters referred to or covered by said Section. The
indemnification provisions contained in the Delaware General Corporation
Law shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any By-Law, agreement, resolution of
shareholders or disinterested directors, or otherwise, and shall continue
as to a person who has ceased to be a director, officer, employee, or
agent, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall inure to the benefit
of the heirs, executors and administrators of such person.
FOURTEENTH: The number of directors constituting the Board of Directors
shall be determined from time to time by the Board of Directors, but such
number of directors shall not be less than three (3) nor more than nine
(9), provided that no decrease in the number of directors shall have the
effect of shortening the term of any incumbent director. Any vacancy in the
Board of Directors, whether arising from death, resignation, removal (with
or without cause), an increase in the number of directors or any other
cause, may be filled by the vote of either a majority of the directors then
in office, though less than a quorum, or by the stockholders at the next
annual meeting thereof or at a special meeting called for the purpose
therefor. Stockholders may not apply to request that the Delaware Court of
Chancery summarily order an election to be held to fill any vacancies in
the Board of Directors whether or not, at the time of filling any vacancy
or any newly created directorship, the directors then in office shall
constitute less than a majority of the whole Board of Directors as
constituted immediately prior to any such vacancy or increase. Each
director so elected shall hold office until the next meeting of the
stockholders in which the election of directors is in the regular order of
business and until his successor shall have been elected and qualified.
IN WITNESS WHEREOF, the undersigned hereunto sign their names and affirm
that the statements made herein are true and correct under the penalties of
perjury this day-of, April 1994.
R. William Metzger
Chairman and Chief Executive Officer
ATTEST:
Robert J. I Nagy, Secretary
AMENDED AND RESTATED BYLAWS
OF ENVIROMETRICS, INC
ARTICLE I
OFFICES
Section 1.1. Location. The address of the registered office of the
Corporation in the State of Delaware and the name of the registered agent at
such address shall be as specified in the Certificate of Incorporation or, if
subsequently changed, as specified in the most recent Certificate of Change
filed pursuant to law. The Corporation may also have other offices at such
places within or without the State of Delaware as the Board of Directors may
from time to time designate or the business of the Corporation may require.
Section 1.2. Change of Location. In the manner permitted by law, the Board
of Directors or the registered agent may change the address of the Corporation's
registered office in the State of Delaware and the Board of Directors may make,
revoke or change the designation of the registered agent.
ARTICLE 11
MEETINGS OF STOCKHOLDERS
Section 2. 1. Annual Meeting The annual meeting of the stockholders of the
Corporation for the election of Directors and for the transaction of such other
business as may properly come before the meeting shall be held at the registered
office of the Corporation, or at such other place within or without the State of
Delaware as the Board of Directors may fix by resolution or as set forth in the
notice of the meeting. In the event that the Board of Directors shall not
otherwise fix the time, date. and place of meeting, the annual meeting shall be
held at the registered office of the Corporation at 10 o'clock a.m. local time
on the first Tuesday after the first Wednesday in May of each year, commencing
with the year 1992, but if such a date is a legal holiday, then on the next
succeeding business day.
Section 2.2. Special Meeting. Special meetings of stockholders, unless
otherwise prescribed by law, may not be called at any time by the stockholders
but may be at any time by the Chairman of the Board, by the President or by
order of the Board of Directors. Special meetings of stockholders prescribed by
law for the election of Directors shall be called by the Board of Directors, the
Chairman of the Board, the President, or the Secretary whenever required to do
so Pursuant to applicable law. Special meetings of stockholders shall be held at
such time and such place, within or without the State of Delaware, as shall be
designated in the notice of meeting.
Section 2.3. List of Stockholders Entitled to Vote. The officer who has
charge of the stock ledger of the corporation shall prepare and make, or cause
to be prepared and made, at least ten days before every meeting of stockholders,
a complete list, based upon the record date for such meeting determined pursuant
to Section 5.8, of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place (other than the meeting place) within the city where
the meeting is to be held, and the place where the list of stockholders is
located shall be identified in the notice of the meeting, or, if such place
shall not be identified in the notice of the meeting, the list of stockholders
shall be kept at the place where the meeting is to be held. The list also shall
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list of stockholders entitled to vote
at any meeting, or to inspect the books of the Corporation, or to vote in person
or by proxy at any meeting of stockholders.
Section 2.4. Notice of Meetings. Written notice of each annual and special
meeting of stockholders, other than any meeting the giving of notice of which is
otherwise prescribed by law, stating the place, date and hour of the meeting,
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered or mailed, in writing, at least ten but
not more than sixty days before the date of such meeting, to each stockholder
entitled to vote thereat. if mailed, such notice shall be deposited in the
United States mail, postage prepaid, directed to such stockholder at his address
as the same appears on the records of the Corporation. An affidavit of the
Secretary, an Assistant Secretary or the transfer agent of the Corporation that
notice has been duly given shall be evidence of the facts stated therein.
Section 2.5. Adjourned Meetings and Notice Thereof. Any meeting of
stockholders may be adjourned to another time or place in the manner provided
below, and the Corporation may transact at any adjourned meeting any business
which might have been transacted at the original meeting. Notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken, unless (a) any adjournment or
series of adjournments causes the original meeting to be adjourned for more than
thirty days after the date originally fixed there, or (b) a new record date is
fixed for the adjourned meeting. If notice of an adjourned meeting is given,
such notice shall be given to each stockholder of record entitled to vote at the
adjourned meeting in the manner prescribed in Section 2.4 for the giving of
notice of meetings. A meeting may be adjourned to another time or place, or
both, by the affirmative vote of the holders of a majority of the shares present
or represented by proxy at the meeting (whether or not constituting a quorum),
and, in the absence of a quorum, the meeting may be adjourned from one day to
the next by the presiding officer of the meeting.
Section 2.6. Quorum. At any meeting of stockholders, except as otherwise
expressly required by law or by the Certificate of Incorporation, the holders of
record of at least one-third of the outstanding shares of capital stock entitled
to vote or act at such meeting shall be present or represented by proxy in order
to constitute a quorum for the transaction of any business, but less than a
quorum shall have power to adjourn any meeting until a quorum shall be present.
when a quorum is once present to organize a meeting, the quorum cannot be
destroyed by the subsequent withdrawal or revocation of the proxy of any
stockholder. Shares of capital stock owned by the Corporation or by another
corporation, if a majority of the shares of such other corporation entitled to
vote in the election of Directors is held by the Corporation, shall not be
counted for quorum purposes or entitled to vote.
Where a separate vote by a class or classes is required by law, the
Certificate of Incorporation or these Bylaws, one third of the outstanding
shares of such class or classes, present in person or represented by proxy,
shall constitute a quorum entitled to take action with respect to that vote on
that matter, and the affirmative vote of the majority of shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class.
Section 2.7. Voting. At any meeting of stockholders, each stockholder
holding, as of the record date, shares of stock entitled to be voted on any
matter at such meeting shall have one vote on each such matter submitted to vote
at such meeting for each such share of stock held by such stockholder, as of the
record date, as shown by the list of stockholders entitled to vote at the
meeting, unless the Certificate of Incorporation provides for more or less than
one vote for any share, on any matter, in which case every reference in these
Bylaws to a majority or other proportion of stock shall refer to such majority
or other proportion of the votes of such stock. Each stockholder entitled to
vote at a meeting of stockholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person or persons to
act for him by proxy, provided that no proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only so long as, it is coupled with an interest, whether in the stock itself
or in the Corporation generally, sufficient in law to support an irrevocable
power.
The Board of Directors, the Chairman of the Board, the President, or the
person presiding at a meeting of stockholders may appoint one or more persons to
act as inspectors of voting at any meeting with respect to any matter to be
submitted to a vote of stockholders at such meeting, with such powers and
duties, not inconsistent with applicable law, as may be appropriate.
Section 2.8. Action by Consent of Stockholders. Unless otherwise provided
in the Certificate of Incorporation, whenever any action by the stockholders at
a meeting thereof is required or permitted by law, the Certificate of
Incorporation,, or these Bylaws, such action may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of the
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
such action without a meeting and by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered in the manner required by this Section 2.8 to the
Corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested.
ARTICLE III
BOARD OF DIRECTORS
Section 3. 1.General Powers. The property, business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors.
The Board of Directors may exercise all such powers of the Corporation and have
such authority and do all such lawful acts and things as are permitted by law,
the Certificate of Incorporation or these Bylaws.
Section 3.2. Number of Directors. The Board of Directors of the Corporation
shall consist of one or more members; provided, however, that in no event shall
the number of the members of the Board of Directors exceed ten. Subject to the
first sentence of this Section 3.2, the exact number of Directors which shall
constitute the whole Board of Directors shall be fixed from time to time by
resolution adopted by a majority of the whole Board of Directors. Until the
number of Directors has been so fixed by the Board of Directors, the number of
Directors constituting the whole Board of Directors shall be six. Subject to the
first sentence of this Section 3.2, after fixing the number of Directors
constituting the whole Board of Directors, the Board of Directors may, by
resolution adopted by a majority of the whole Board of Directors, . from time to
time change the number of Directors constituting the whole Board of Directors.
Section 3.3. Qualification. Directors need not be stockholders of the
corporation. Directors who willfully neglect or refuse to produce a list of
stockholders entitled to vote at and meeting for the election of Directors shall
be ineligible for election to any office at such meeting.
Section 3.4. Election. Except as otherwise provided by law, the Certificate
of Incorporation or these Bylaws, after the first meeting of the Corporation at
which Directors are elected, Directors of the Corporation shall be elected in
each year at the annual meeting of stockholders, or at a special meeting in lieu
of the annual meeting called for such purpose, by a plurality of votes cast at
such meeting. The voting on Directors at any such meeting shall be by written
ballot unless otherwise provided in the Certificate of Incorporation. At any
such meeting, nominations for the office of Director may be made from the floor
by any shareholder entitled to vote for the election of Directors at such
meeting; provided, however, that such nominations may be made from the floor
only if written notice of such proposed nominations (including the name or names
of the person or persons proposed to be nominated) is given to the Corporation's
Secretary, at the Corporation's principal office, not less than thirty days
before the meeting at which the proposed nominations are to be made.
Section 3.5. Term. Each Director shall hold office until his successor is
duly elected and qualified, except in the event of the earlier termination of
his term of office by reason of death, resignation, removal or other reason.
Section 3.6. Resignation and Removal. Any Director may resign at any time
upon written notice to the Board of Directors, the Chairman of the Board, the
President or the Secretary. The resignation of any Director shall take effect
upon receipt of notice thereof or at such later time as shall be specified in
such notice, and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Any Director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares of capital stock then
entitled to vote at an election of Directors, except as otherwise provided by
applicable law.
Section 3.7. Vacancies. Vacancies in the Board of Directors and newly
created Directorships resulting from any increase in the authorized number of
Directors shall be filled by a majority of the Directors then in office, though
less than a quorum, or by a sole remaining Director.
If one or more Directors shall resign from the Board of Directors effective
at a future date, a majority of the Directors then in office shall have power to
fill such vacancy or vacancies, the vote thereon to take effect and the vacancy
to be filled when such resignation or resignations shall become effective, and
each Director so chosen shall hold office as provided in this Section 3.7 in the
filling of other vacancies.
Each Director chosen to fill a vacancy on the Board of Directors shall hold
office until the next annual election of Directors and until his successor shall
be elected and qualified. or until his earlier resignation or removal.
Section 3.8. Quorum and Voting. Unless the Certificate of Incorporation
provides otherwise, at all meetings of the Board of Directors, a majority of the
total number of Directors shall be present to constitute a quorum for the
transaction of business. A Director interested in a contract or transaction may
be counted in determining the presence of a quorum at a meeting of the Board of
Directors which authorizes the contract or transaction. In the absence of a
quorum, a majority of the Directors present may adjourn the meeting until a
quorum shall be present.
Unless the Certificate of Incorporation provides otherwise, members of the
Board of Directors or any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or such committee by means of
a conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
such a meeting shall constitute presence in person at such meeting.
The vote of the majority of the Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors unless the
Certificate of Incorporation or these Bylaws shall require a vote of a greater
number.
Section 3.9. Regulations. The Board of Directors may adopt such rules and
regulations for the conduct of the business and management of the Corporation,
not inconsistent with law or the Certificate of Incorporation or these Bylaws,
as the Board of Directors may deem proper. The Board of Directors may hold its
meetings and cause the books and records of the Corporation to be kept at such
place or places within or without the State of Delaware as the Board of
Directors may from time to time determine. A member of the Board of Directors,
or a member of any committee designated by the Board of Directors shall, in the
performance of his duties,, be fully protected in relying in good faith upon the
records of the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers or
employees, by committees of the Board of Directors, or by any other person as to
matters the member reasonably believes are within such other personas
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation.
Section 3.10. Annual Meeting of Board of Directors. An annual meeting of
the Board of Directors shall be called and held for the purpose of organization,
election of officers and transaction of any other business. If such meeting is
held promptly after and at the place specified for the annual meeting of
stockholders, no notice of the annual meeting of the Board of Directors need be
given. Otherwise, such annual meeting shall be held at such time (not more than
thirty days after the annual meeting of stockholders) and place as many be
specified in a notice of the meeting.
Section 3.11. Regular Meeting. Regular meetings of the Board of Directors
shall be held at the time and place, within or without the State of Delaware,,
as shall from time to time be determined by the Board of Directors. After there
has been such determination and notice thereof has been given to each member of
the Board of Directors, no further notice shall be required for any such regular
meeting. Except as otherwise provided by law, any business may be transacted at
any regular meeting.
Section 3.12. Special Meetings. Special meetings of the Board of Directors
may, unless otherwise prescribed by law, be called from time to time by the
Chairman of the Board or the President, and shall be called by the Chairman of
the Board, the President or the Secretary upon the written request of a majority
of the whole Board of Directors directed to the Chairman of the Board, the
President or the Secretary. Except as provided below, notice of any special
meeting of the Board of Directors, stating the time, place and purpose of such
special meeting, shall be given to each Director.
Section 3.13. Notice of Meetings; Waiver of Notice. Notice of any meeting
of the Board of Directors shall be deemed to be duly given to a Director (a) if
mailed to such Director addressed to him at his address as it appears upon the
books of the corporation, or at the address last made known in writing to the
Corporation by such Director as the address to which such notices are to be
sent, at least five days before the day on which such meeting is to be held, or
(b) if sent to him at such address by telegraph, cable, radio or wireless not
later than the day before the day on which such meeting is to be held, or (c) if
delivered to him personally or orally, by telephone or otherwise, not later than
the day before the day on which such meeting is to be held. Each such notice
shall state the time and place of the meeting and the purposes thereof.
Notice of any meeting of the Board of Directors need not be given to any
Director if waived by him in writing (or by telegram, cable, radio or wireless
and confirmed in writing) whether before or after the holding of such meeting,
or if such Director is present at such meeting. Any meeting of the Board of
Directors shall be a duly constituted meeting without any notice thereof having
been given if all Directors then in office shall be present thereat.
Section 3.14. Committees of Directors. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board of Directors
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation.
Except as hereinafter provided, vacancies in membership of any committee
shall be filled by the vote of a majority of the whole Board of Directors. The
Board of Directors may designate one or more Directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of any member of a
committee (arid his alternate appointed pursuant to the immediately preceding
sentence, if any), the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Members of a
committee shall hold office for such period as may be fixed by a resolution
adopted by a majority of the whole Board of Directors, subject, however, to
removal at any time by the vote of a majority of the whole Board of Directors.
Section 3.15. Powers and Duties of Committees. Any committee, to the extent
provided in the resolution or resolutions creating such committee, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it. No
such committee shall have the power or authority with regard to amending the
Certificate of Incorporation adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the Bylaws. The Board of Directors may, in the resolution creating a
committee, grant to such committee the power and authority to declare a dividend
or authorize the issuance of stock.
Each committee may adopt its own rules of procedure and may meet at stated
times or on such notice as such committee may determine. Except as otherwise
permitted by these Bylaws, each committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required.
Section 3.16. Compensation of Directors. Each Director shall be entitled to
receive for attendance at each meeting of the Board of Directors or any duly
constituted committee thereof which he attends, such fee as is fixed by the
Board and in connection therewith shall be reimbursed by the Corporation for
travel expenses. The fees to such Directors may be fixed in unequal amounts
among them, taking into account their respective relationships to the
Corporation in other capacities. These provisions shall not be construed to
preclude any Director from receiving compensation in serving the Corporation in
any other capacity.
Section 3.17. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board of Directors or of such committee, As the case may be, and such written
consent is filed with the minutes of proceedings of the Board of Directors or
such committee.
ARTICLE IV OFFICERS Section 4.1. Principal officers. The principal officers
of the Corporation shall be elected by the Board of Directors and shall include
a Chairman of the Board, a President, a Secretary and a Treasurer and may, at
the discretion of the Board of Directors, also include one or more Vice Chairmen
of the Board and one or more Vice Presidents. Except as otherwise provided in
the Certificate of Incorporation or these Bylaws, one person may hold the
offices and perform the duties of any two or more of said principal offices
except the offices and duties of President and Vice President or of Chairman of
the Board or President and Secretary. None of the principal officers need be
Directors of the Corporation.
Section 4.2. Election of Principal Officers; Term of Office. The principal
officers of the Corporation shall be elected annually by the Board of Directors
at such annual meeting of the Board of Directors. Failure to elect any principal
officer annually shall not dissolve the Corporation.
If the Board of Directors shall fail to fill any principal office at an
annual meeting, or if any vacancy in any principal office shall occur, or if any
principal office shall be newly created, such principal office may be filled at
any regular or special meeting of the Board of Directors.
Each principal officer shall hold office until his successor is duly
elected and qualified, or until his earlier death, resignation or removal,
provided that the terms of office of all Vice Presidents shall terminate at any
annual meeting of the Board of Directors at which the President or any Vice
President is elected.
Section 4.3. Subordinate Officers, Agents and Employees. In addition to the
principal officers, the Corporation may have one or more Assistant Treasurers,
Assistant Secretaries and such other subordinate officers, agents and employees
as the Board of Directors may deem advisable, each of whom shall hold office for
such period and have such authority and perform such duties as the Board of
Directors, the Chairman of the Board, the President, or any officer designated
by the Board of Directors, may from time to time determine. The Board of
Directors at any time may appoint and remove, or may delegate to any principal
officer the power to appoint and to remove, any subordinate officer, agent or
employee of the Corporation.
Section 4.4. Delegation of Duties of Officers. The Board of Directors may
delegate the duties and powers of any officer of the Corporation to any other
officer or to any Director for a specified period of time for any reason that
the Board of Directors may deem sufficient.
Section 4.5. Removal of officers. Any officer of the Corporation may be
removed,, with or without cause, by resolution adopted by a majority of the
Directors then in office at any regular or special meeting of the Board of
Directors or by a written consent signed by all of the Directors then in office.
Section 4.6. Resignations. Any officer may resign at any time by giving
written notice of resignation to the Board of Directors, to the Chairman of the
Board, to the President or to the Secretary. Any such resignation shall take
effect upon receipt of such notice or at any later time specified therein.
Unless otherwise specified in the notice the acceptance of a resignation shall
not be necessary to make the resignation effective.
Section 4.7. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of stockholders and of the Board of Directors at which he is
present. The Chairman of the Board shall have such other powers and perform such
other duties as may be assigned to him from time to time by the Board of
Directors.
Section 4.8. President. The President shall, in the absence of the Chairman
of the Board, preside at all meetings of the stockholders and of the Board of
Directors at which he is present. The President shall be the Chief Executive
Officer of the Corporation and shall have general supervision over the business
and affairs of the Corporation and shall be responsible for carrying out the
policies and objectives established by the Board of Directors. The President
shall have all powers and duties usually incident to the office of the
President, except as specifically limited by a resolution of the Board of
Directors. The President shall have such other powers and perform such other
duties as may be assigned to him from time to time by the Board of Directors.
Section 4.9. Vice President. In the absence or disability of the President
or if the office of President be vacant, the Vice Presidents in the order
determined by the Board of Directors, or if no such determination has been made,
in the order of their seniority, shall perform the duties and exercise the
powers of the President, subject to the right of the Board of Directors at any
time to extend or confine such powers and duties or to assign them to others.
Any Vice President may have such additional designation in his title as the
Board of Directors may determine. The Vice Presidents shall generally assist the
President in such manner as the President shall direct. Each Vice President
shall have such other powers and perform such other duties as may be assigned to
him from time to time by the Board of Directors or-the President.
Section 4.10. Secretary. The Secretary shall act as Secretary of all
meetings of stockholders and of the Board of Directors at which he is present,
shall record all the proceedings of all such meetings in a book to be kept for
that purpose, shall have supervision over the giving and service of notices of
the Corporation, and shall have supervision over the care and custody of the
records and seal of the Corporation. The Secretary shall be empowered to affix
the corporate seal to documents, the execution of which on behalf of the
Corporation under its seal is duly authorized, and when so affixed may attest
the same. The Secretary shall have all powers and duties usually incident to the
office of Secretary, except as specifically limited by a resolution of the Board
of Directors. The Secretary shall have such other powers and perform such other
duties as maybe assigned to him from time to time by the Board of Directors or
the President.
Section 4.11. Treasurer. The Treasurer shall report directly to the
President or such other officer as the Board of Directors may from time to time
determine and shall carry out the duties hereinafter specified under the direct
supervision of such officer. The Treasurer shall have general supervision over
the care and custody of the funds and over the receipts and disbursements of the
Corporation and shall cause the funds of the Corporation to be deposited in the
name of the Corporation in such banks or other depositories as the Board of
Directors may designate. The Treasurer shall have supervision over the care and
safekeeping of the securities of the Corporation. Subject to the first sentence
of this Section 4.11, the Treasurer shall have all powers and duties usually
incident to the office of Treasurer, except as specifically limited by a
resolution of the Board of Directors. The Treasurer shall have such other powers
and perform such other duties as may be assigned to him from time to time by the
Board of Directors or the President.
Section 4.12. Bond. The Board of Directors shall have power, to the extent
permitted by law, to require any officer, agent or employee of the Corporation
to give bond for the faithful discharge of his duties in such form and with such
surety or sureties as the Board of Directors may determine.
ARTICLE V
CAPITAL STOCK
Section 5.1. Issuance of Certificates of Stock. Each stockholder of the
Corporation shall be entitled to a certificate or certificates in such form as
shall be approved by the Board of Directors, certifying the number of shares of
capital stock of the corporation owned by such stockholder.
Section 5.2. Signatures on Stock Certificates. Certificates for shares of
capital stock of the Corporation shall be signed by, or in the name of the
Corporation by, the Chairman of the Board, any Vice Chairman of the Board, the
President or a Vice President and by, or in the name of the Corporation by, the
Secretary, the Treasurer, an Assistant Secretary or an Assistant Treasurer. Any
of or all the signatures on the certificates may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if such signer were
such officer, transfer agent or registrar at the date of issue.
Section 5.3. Stock Ledger. A record of all certificates for capital stock
issued by the Corporation shall be kept by the Secretary or any other officer or
employee of the Corporation designated by the Secretary or by any transfer clerk
or transfer agent appointed pursuant to Section 5.4 hereof. Such record shall
show the name and address of the person, firm or corporation in which
certificates for capital stock are registered, the number of shares represented
by each such certificate, the date of each such certificate, and in case of
certificates which have been canceled, the dates of cancellation thereof.
The Corporation shall be entitled to treat the holder of record of shares
of capital stock as shown on the stock ledger as the owner thereof and as the
person entitled to receive dividends thereon, to vote such shares and to receive
notice of meetings, and for all other purposes. The Corporation shall not be
bound to recognize any equitable or other claim to or interest in any share of
capital stock on the part of any other person whether or not the Corporation
shall have express or other notice thereof.
Section 5.4. Regulations Relating to Transfer. The Board of Directors may
make such rules and regulations as it may deem expedient, not inconsistent with
law, the Certificate of Incorporation or these Bylaws, concerning issuance,
transfer and registration of certificates for shares of capital stock of the
Corporation. The Board of Directors may appoint, or authorize any principal
officer to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars and may require all certificates for capital stock to
bear the signature or signatures of any of them.
Section 5.5. Transfers. Transfers of capital stock shall be made on the
books of the Corporation only upon delivery to the corporation or its transfer
agent of (a) a written direction of the registered holder named in the
certificate or such holder's attorney lawfully constituted in writing, (b) the
certificate for the shares of capital stock being transferred, and (c) a written
assignment of the shares of capital stock evidenced thereby.
Section 5.6. Cancellation. Each certificate for capital stock surrendered
to the Corporation for exchange or transfer shall be canceled and no new
certificate or certificates shall be issued in exchange for any existing
certificate (other than pursuant to Section 5.7) until such existing certificate
shall have been canceled.
Section 5.7. Lost, Destroyed, Stolen and Mutilated Certificates. In the
event that any certificate for shares of capital stock of the Corporation shall
be mutilated, the Corporation shall issue a new certificate in place of such
mutilated certificate. In case any such certificate shall be lost, stolen or
destroyed, the Corporation may, in the discretion of the Board of Directors or a
committee designated thereby with power so to act, issue a new certificate for
capital stock in the place of any such lost, stolen or destroyed certificate.
The applicant for any substituted certificate or certificates shall surrender
any mutilated certificate or, in the case of any lost, stolen or destroyed
certificate, furnish satisfactory proof of such loss, theft or destruction of
such certificate and of the ownership thereof. The Board of Directors or such
committee may, in its discretion, require the owner of a lost or destroyed
certificate, or his representatives, to furnish to the Corporation a bond with
an acceptable surety or sureties and in such sum as will be sufficient to
indemnify the Corporation against any claim that may be made against it on
account of the lost, stolen or destroyed certificate or the issuance of such new
certificate. A new certificate may be issued without requiring a bond when, in
the judgment of the Board of Directors, it is proper to do so.
Section 5.8. Fixing of Record Dates. Unless otherwise provided in the
Certificate of Incorporation:
(a) The Board of Directors may fix a record date, which shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors and which shall not be more than sixty nor less than ten days
before the date of any meeting of stockholders, for the purpose of determining
stockholders entitled to notice of or to vote at such meeting of stockholders or
any adjournment thereof. If no record date is fixed by the Board of Directors,
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders shall be given at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meetings;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
(b) The Board of Directors may fix a record date, which shall not precede
nor be more than ten days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors, for the purpose of determining
stockholders entitled to consent to corporate action in writing without a
meeting. If no record date has been f ixed by the Board of Directors, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
required, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to the Corporationals registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the day
on which the Board of Directors adopts the resolution taking such prior action.
(c) The Board of Directors may fix a record date, which shall not precede
the date upon which the resolution fixing the record date is adopted and which
shall not be more than sixty days prior to such action, for the purpose of
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or stockholders entitled to exercise any
rights in respect of any change, conversion, or exchange of stock, or for the
purpose of any other lawful action. If no record date is fixed, the record date
for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
ARTICLE VI
INDEMNIFICATION
Section 6.1. Indemnification. The Corporation shall, to the full extent
permitted by applicable law, indemnify any person (and the heirs, executors and
administrators of such person) who, by reason of the f act that he is or was a
Director, officer, employee or agent of the Corporation or of a constituent
corporation absorbed by the Corporation in a consolidation or merger or is or
was serving at the request of the Corporation or such constituent corporation as
a director, officer, employee or agent of any other corporation, partnership,
joint venture, trust or other enterprise, was or is a party or is threatened to
be a party to:
(a) any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation), against expenses (including attorneys
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with any such action, suit or proceeding,
or,
(b) any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor, against expenses
(including attorneys, fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit.
Expenses incurred by a Director or officer of the Corporation in defending
an action, suit or proceeding described in subsections (a) and (b) above may be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt by the Corporation of an undertaking by or on behalf
of the Director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Section 6.1. Expenses incurred by an employee or agent of the
Corporation who is not a Director or officer in defending such an action, suit
or proceeding may be so paid by the Corporation upon, such terms and conditions,
if any, as the Board of Directors deems appropriate.
Any indemnification by the Corporation pursuant hereto shall be made only
in the manner and to the extent authorized by applicable law, and any such
indemnification shall not be deemed exclusive of any other rights to which those
seeking indemnification may otherwise be entitled.
Section6.2. Indemnification Insurance. The Corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under applicable
law.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Corporate Seal. The seal of the Corporation shall be circular
in form with the name of the Corporation in the circumference and the words
"Corporate Seal, Delaware" in the center. The seal may be used by causing it to
be affixed or impressed, or a facsimile thereof may be reproduced or otherwise
used in such manner as the Board of Directors' may determine.
Section 7.2. Fiscal Year. The fiscal year of the Corporation shall be from
the 1st day of January to the 31st day of December, inclusive, in each year, or
such other twelve consecutive months as the Board of Directors may designate.
Section 7.3. Waiver of Notice. Whenever any notice is required to be given
under any provision of law, the Certificate of Incorporation, or these Bylaws, a
written waiver thereof, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, Directors, or members of a
committee of Directors, need be specified in any written waiver of notice unless
so required by the Certificate of Incorporation.
Attendance of a person at a meeting shall constitute a waiver of notice of
such meeting, except when the person attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
Section 7.4. Execution of Instruments, Contracts, Etc.
(a) All checks, drafts, bills of exchange, notes or other obligations or
orders for the payment of money shall be signed in the name of the Corporation
by the President or such other officer or officers or person or persons, as the
Board of Directors may from time to time designate. (b) Except as otherwise
provided by law, the Board of Directors, any committee given specific authority
in the premises by the Board of Directors, or any committee given authority to
exercise generally the powers of the Board of Directors during the intervals
between meetings of the Board of Directors, may authorize any officer, employee
or agent, in the name of and on behalf of the Corporation, , to enter into or
execute and deliver deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances. (c) All applications, written instruments and papers required by or
filed with any department of the United States Government or any state, county,
municipal or other governmental official or authority, may, if permitted by
applicable law, be executed in the name of the Corporation by any principal
officer or subordinate officer of the Corporation,, or, to the extent designated
for such purpose from time to time by the Board of Directors, by an employee or
agent of the Corporation. Such designation may contain the power to substitute,
in the discretion of the person named, one or more other persons.
ARTICLE VIII
AMMENDMENTS
Section 8.1. By Stockholders. These Bylaws may be amended, altered or
repealed, or new Bylaws may be adopted, at any meeting of stockholders by the
affirmative vote of the holders of not less than a majority of the outstanding
shares of stock entitled to vote thereat, provided that, in the case of a
special meeting, notice that an amendment is to be considered and acted upon
shall be inserted in the notice or waiver of notice of said meeting.
Section 8.2. By Directors. To the extent permitted by the Certificate of
Incorporation, these Bylaws may be amended, altered or repealed, or new Bylaws
may be adopted, at any regular or special meeting of the Board of Directors by
(he affirmative vote of a majority of the whole Board.
Robert J. Nagy, Secretary
1993
CERTIFICATE OF DESIGNATION
OF
SERIES A, B AND C PREFERRED STOCK
OF
ENVIROMETRICS, INC.
Pursuant to Section 151 of the Delaware General Corporation Law,
Envirometrics, Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the provisions of the Delaware General Corporation Law,
and pursuant to authority conferred upon the Board of Directors of the
Corporation (the "Board") by the Certificate of Incorporation of the
Corporation, the Board, by a Unanimous Written Consent dated January 11, 1999,
adopted the following resolution (a) ratifying previous actions taken by the
Board in authorizing the creation and issuance of Series A, B and C Preferred
Stock of the Corporation, and (b) defining with specificity the terms of said
Series, as follows:
RESOLVED, that pursuant to authority expressly granted to and vested in the
Board of Directors by the Certificate of Incorporation, as amended, of the
Corporation, the Board hereby ratifies its creation of the following Series (the
"Series") of Preferred Stock (the "Preferred Stock") and Classes of each such
Series (the "Classes"), and authorizes the issuance thereof, and hereby fixes
the designation thereof, preferences and relative, participating, optional and
other special limitations or restrictions thereon (in addition to the
designations, preferences and relative, participating and other special rights,
and the qualifications, limitations or restrictions thereof, set forth in the
Certificate of Incorporation, as amended, of the Corporation, which are
applicable to the Preferred Stock of all Series and Classes) as follows:
I. SERIES A PREFERRED STOCK
1. Designation. The shares of the Series A Preferred Stock shall be
designated "Series A Preferred Stock", shall consist of 70,000 shares and shall
be divided into four Classes as follows:
Class 1 17,500 Shares
Class 2 17,500 Shares
Class 3 17,500 Shares
Class 4 17,500 Shares
2. Dividends. No Dividend will be paid on the Series A Preferred Stock.
3. Conversion Rights. Holders of the Series A Preferred Stock ("Series A
Holders") shall have the right, which they may exercise at any time on or before
December 31, 2001 (the "Maturity Date"), to convert all or a portion of their
Series A Preferred Stock into shares of the Corporation's Common Stock upon Ten
(10) days prior written notice to the Corporation of (i) their intention to so
convert; (ii) the amount of the Series A Preferred Stock to be converted; and
the conversion date which shall be no fewer than ten (10) days from the receipt
of such notice. At all times up until the Maturity Date: (a) the conversion
ratio shall be one share of the Series A Preferred Stock for three shares of
Common Stock, $.001 par value, of the Corporation (the "Common Stock"); and (b)
a Series A Holder may, from time to time, elect to convert less than all of its
Series A Preferred Stock holdings without impairment to its right to convert
other portions of the balance thereof.
4. Adjustment for Recapitalization, Etc. If the Corporation shall at any
time subdivide its outstanding shares of Common Stock by recapitalization,
reclassification or split-up thereof, or if the Corporation shall declare a
stock dividend or distribute shares of Common Stock to its shareholders, the
number of shares of Common Stock subject to the conversion rights pursuant to
Paragraph I (3) above shall be proportionately increased; and if the Corporation
shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of shares
of Common Stock subject to the conversion rights pursuant to Paragraph I (3)
above shall be proportionately decreased. Any such adjustments pursuant to this
Paragraph I (4) shall be effective at the close of business on the effective
date of such subdivision or combination or, if any adjustment is the result of a
stock dividend or distribution, then the effective date for such adjustment
shall be the record date therefor.
5. Put Options. The various Classes of Series A Preferred Stock may be put
to the Corporation, upon Sixty (60) days prior written notice to Corporation, in
exchange for cash payments out of funds legally available therefor in accordance
with the following schedule and prices:
Class Date Per Share Price
#1 12/31/99-12/31/03 $2.00
#2 12/31/00-12/31/03 $2.00
#3 12/31/01-12/31/03 $2.00
#4 12/31/02-12/31/03 $2.00
Any Series A Preferred Stock put options not exercised by December 31, 2003
shall expire on that date. Any Series A Preferred Stock not converted to common
stock by the Maturity Date nor put to the Corporation by December 31, 2003 as
above, will not be entitled thereafter to any dividend, conversion or other
rights.
6. Liquidation.
(a) Liquidation Preference. Upon any liquidation, dissolution, or winding
up of the Corporation, whether voluntary or involuntary, and after provision for
the payment of creditors, the Series A Holders shall be entitled to be paid an
amount equal to Two Dollars per share ("Liquidation Value") of Series A
Preferred Stock held, before any distribution or payment is made upon any other
shares of Preferred Stock or of Common Stock.
(b) Ratable Distribution. If upon any liquidation, dissolution or winding
up of the Corporation, the net assets of the Corporation to be distributed among
the Series A Holders shall be insufficient to permit payment in full to such
Series A Holders, then all remaining net assets of the Corporation after the
provision for the payment of the Corporation's debts shall be distributed
ratably in proportion to the full amounts to which such Series A Holders would
otherwise be entitled to receive.
(c) Corporate Changes. The sale, lease or exchange of all or substantially
all of the Corporation's assets or the merger or consolidation of the
Corporation which results in the holders of Common Stock receiving in exchange
for such Common Stock cash, notes, debentures or other evidences of indebtedness
or obligations to pay cash, or preferred stock of the surviving entity which
ranks on a parity with or senior to the Series A Preferred Stock upon
liquidation, dissolution or winding-up shall be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of this Paragraph 3. In the case of mergers or consolidations of the Corporation
where holders of Common Stock receive, in exchange for such Common Stock, common
stock or preferred stock in the surviving entity (whether or not the surviving
entity is the Corporation) of such merger or consolidation, or common stock or
preferred stock of another entity (in either case, such preferred stock to be
received in exchange for common stock is herein referred to as "Exchanged
Preferred Stock"), which is junior upon liquidation, dissolution or winding up
to the Series A Preferred Stock, the merger agreement or consolidation agreement
shall expressly provide that the Series A Preferred Stock shall become preferred
stock of such surviving entity or other entity, as the case may be, with the
same equivalent rights to the rights set forth herein; provided, however, that
if the Exchanged Preferred Stock is to be mandatorily redeemed in whole or in
part through the operation of a sinking fund or otherwise, the merger or
consolidation agreement shall expressly provide that, or other provisions shall
be made so that, all shares of the Series A Preferred Stock shall be mandatorily
redeemed prior to the first mandatory redemption of the Exchanged Preferred
Stock; and provided further, that in the event the Corporation or an affiliate
of the Corporation optionally redeems or otherwise acquires any or all of the
then outstanding shares of Exchanged Preferred Stock, the Corporation shall
redeem all shares of Series A Preferred Stock prior to the first such redemption
of the Exchanged Preferred Stock. In the event of a merger or consolidation of
the Corporation where the consideration received by the holders of common stock
consists of two or more types of the consideration set forth above, the holders
of the Series A Preferred Stock shall be entitled to receive either cash or
securities based upon the foregoing in the same proportion as the holders of
Common Stock of the Corporation are receiving cash or securities or equity
securities in the surviving entity or other entity.
II. SERIES B PREFERRED STOCK
1. Designation. The shares of the Series B Preferred Stock shall be
designated "Series B Preferred Stock," shall consist of 208,640 shares and shall
be divided into five Classes as follows:
Class 1 41,728 Shares
Class 2 41,728 Shares
Class 3 41,728 Shares
Class 4 41,728 Shares
Class 5 41,728 Shares
2. Dividends. Holders of the Series B Preferred Stock (the "Series B
Holders") shall be entitled to an annual cumulative dividend of Fourteen Cents
($0.14) per share payable quarterly in arrears out of the funds legally
available therefor, commencing on September 15, 1999. Dividends which have
accrued up to that date shall be divided equally among and added to the four
successive quarterly dividend payments commencing on and following that date and
shall be paid together with such payments. Dividends shall begin to accrue on
206,390 of such shares on June 15, 1998, and shall begin to accrue on the
remaining 2,250 shares on January 1, 1999. Dividends payable for any period less
than a full year will be computed on the basis of a 360 day year with equal
months of 30 days.
3. Conversion Rights. Series B Holders shall have the right, which they may
exercise at any time on or before June 14, 2009 (the "Maturity Date"), to
convert all or a portion of their Series B Preferred Stock into shares of the
Common Stock upon Sixty (60) days prior written notice to the Corporation of (i)
their intention to so convert, and (ii) the amount of the Series B Preferred
Stock to be converted. At all times up until the Maturity Date: (a) the
conversion ratio shall be one share of the Series B Preferred Stock for five
shares of Common Stock; and (b) a Series B Holder may, from time to time, elect
to convert less than all of its Series B Preferred Stock holdings without
impairment to its right to convert other portions of the balance thereof.
4. Adjustment for Recapitalization, Etc. If the Corporation shall at any
time subdivide its outstanding shares of Common Stock by recapitalization,
reclassification or split-up thereof, or if the Corporation shall declare a
stock dividend or distribute shares of Common Stock to its shareholders, the
number of shares of Common Stock subject to the conversion rights pursuant to
Paragraph II (3) above shall be proportionately increased; and if the
Corporation shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of shares
of Common Stock subject to the conversion rights pursuant to Paragraph II (3)
above shall be proportionately decreased. Any such adjustments pursuant to this
Paragraph II (4) shall be effective at the close of business on the effective
date of such subdivision or combination or, if any adjustment is the result of a
stock dividend or distribution, then the effective date for such adjustment
shall be the record date therefor.
5. Put Options. The various Classes of Series B Preferred Stock may be put
to the Corporation, upon Sixty (60) days prior written notice to Corporation, in
exchange for cash payments out of funds legally available therefor in accordance
with the following schedule and prices:
Class Date Per Share Price
#1 6/15/04-6/14/09 $2.36
#2 6/15/05-6/14/09 $2.42
#3 6/15/06-6/14/09 $2.48
#4 6/15/07-6/14/09 $2.54
#5 6/15/08-6/14/09 $2.60
Any Series B Preferred Stock put options not exercised by June 14, 2009
shall expire on that date.
6. Call Option. The Corporation shall have the right to redeem all or any
portion of the Series B Preferred Stock which has not been previously converted
or put to the Corporation, upon Sixty (60) days prior written notice to the
holders thereof and payment to them of the following amounts (in addition to any
accrued and unpaid dividends thereon) according to the following schedule and
prices:
Redemption Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
6/15/03-6/15/04 $2.30
6/15/04-6/14/05 $2.36
6/15/05-6/14/06 $2.42
6/15/06-6/14/07 $2.48
6/15/07-6/14/08 $2.54
6/15/08-6/14/09 $2.60
Any Series B Preferred Stock not (a) converted to common stock or put to
the Corporation by the Maturity Date, or (b) tendered back to the Corporation in
response to a call by the date so specified in such notice of call, will not be
entitled thereafter to any dividend, conversion or other rights. A purported
exercise of a put option under Paragraph (5) above with respect to any Series B
Preferred Stock which has been called in a prior notice of redemption pursuant
to this Paragraph (6) shall be null and void.
7. Liquidation.
(a) Liquidation Preference. Upon any liquidation, dissolution, or winding
up of the Corporation, whether voluntary or involuntary, and after provision for
the payment of creditors, the Series B Holders shall be entitled to be paid an
amount equal to Two Dollars ($2.00) per share ("Liquidation Value") of Series B
Preferred Stock held, before any distribution or payment is made upon any shares
of Common Stock and any other preferred stock junior to the Series B Preferred
Stock but subject to the priority of Series A Preferred Stock.
(b) Ratable Distribution. If upon any liquidation, dissolution or winding
up of the Corporation, the net assets of the Corporation to be distributed among
the Holders shall be insufficient to permit payment in full to the Series B
Holders, then all remaining net assets of the Corporation after the provision
for the payment of the Corporation's debts and distribution to the Series A
Holders shall be distributed ratably in proportion to the full amounts to which
they would otherwise be entitled to receive among the Series B Holders and
Series C Holders.
(c) Corporate Changes. The sale, lease or exchange of all or substantially
all of the Corporation's assets or the merger or consolidation of the
Corporation which results in the holders of Common Stock receiving in exchange
for such Common Stock cash, notes, debentures or other evidences of indebtedness
or obligations to pay cash, or preferred stock of the surviving entity which
ranks on a parity with or senior to the Series B Preferred Stock as to dividends
or upon liquidation, dissolution or winding-up shall be deemed to be a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Paragraph 7. In the case of mergers or consolidations of the
Corporation where holders of Common Stock receive, in exchange for such Common
Stock, common stock or preferred stock in the surviving entity (whether or not
the surviving entity is the Corporation) of such merger or consolidation, or
common stock or preferred stock of another entity (in either case, such stock to
be received in exchange for common stock is herein referred to as "Exchanged
Stock"), which is junior to the Series B Preferred Stock as to dividends,
liquidation, dissolution or winding up, the merger agreement or consolidation
agreement shall expressly provide that the Series B Preferred Stock shall become
preferred stock of such surviving entity or other entity, as the case may be,
with the same annual dividend rate and equivalent rights to the rights set forth
herein; provided however that if the Exchanged Stock is to be mandatorily
redeemed in whole or in part through the operation of a sinking fund or
otherwise, the merger or consolidation agreement shall expressly provide that,
or other provisions shall be made so that, all shares of the Series B Preferred
Stock shall be mandatorily redeemed prior to the first mandatory redemption of
the Exchanged Stock; and, provided further, that in the event the Corporation or
an affiliate of the Corporation optionally redeems or otherwise acquires any or
all of the then outstanding shares of Exchanged Stock, the Corporation shall
redeem all shares of Series B Preferred Stock prior to the first such redemption
of the Exchanged Stock. In the event of a merger or consolidation of the
Corporation where the consideration received by the holders of Common Stock
consists of two or more types of the consideration set forth above, the Series B
Holders shall be entitled to receive either cash or securities based upon the
foregoing in the same proportion as the holders of Common Stock are receiving
cash or debt securities, or equity securities in the surviving entity or other
entity.
III. SERIES C PREFERRED STOCK
1. Designation. The shares of the Series C Preferred Stock shall be
designated "Series C Preferred Stock," shall consist of 74,878 shares and shall
be divided into three Classes as follows:
Class 1 24,959 Shares
Class 2 24,959 Shares
Class 3 24,960 Shares
2. Dividends. Holders of the Series C Preferred Stock (the "Series C
Holders") shall be entitled to an annual cumulative dividend of Fourteen Cents
($0.14) per share payable quarterly in arrears out of the funds legally
available therefor, commencing on September 15, 1999. Dividends which have
accrued up to that date shall be divided equally among and added to the four
successive quarterly dividend payments commencing on and following that date and
shall be paid together with such payments. Dividends shall begin to accrue on
the Series C Preferred Stock on June 15, 1998. Dividends payable for any period
less than a full year will be computed on the basis of a 360 day year with equal
months of 30 days.
3. Conversion Rights. Series C Holders shall have the right, which they may
exercise at any time on or before June 14, 2003 (the "Maturity Date"), to
convert all or a portion of their Series C Preferred Stock into shares of the
Common Stock upon Sixty (60) days prior written notice to the Corporation of (i)
their intention to so convert, and (ii) the amount of the Series C Preferred
Stock to be converted. At all times up until the Maturity Date: (a) the
conversion ratio shall be one share of the Series C Preferred Stock for five
shares of Common Stock; and (b) a Series C Holder may, from time to time, elect
to convert less than all of its Series C Preferred Stock holdings without
impairment to its right to convert other portions of the balance thereof.
4. Adjustment for Recapitalization, Etc. If the Corporation shall at any
time subdivide its outstanding shares of Common Stock by recapitalization,
reclassification or split-up thereof, or if the Corporation shall declare a
stock dividend or distribute shares of Common Stock to its shareholders, the
number of shares of Common Stock subject to the conversion rights pursuant to
Paragraph III (3) above shall be proportionately increased; and if the
Corporation shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of shares
of Common Stock subject to the conversion rights pursuant to Paragraph III (3)
above shall be proportionately decreased. Any such adjustments pursuant to this
Paragraph III (4) shall be effective at the close of business on the effective
date of such subdivision or combination or, if any adjustment is the result of a
stock dividend or distribution, then the effective date for such adjustment
shall be the record date therefor.
5. Put Options. The various Classes of Series C Preferred Stock may be put
to the Corporation, upon Sixty (60) days prior written notice to Corporation, in
exchange for cash payments out of funds legally available therefor in accordance
with the following schedule and prices:
Class Date Per Share Price
#1 6/15/00-6/14/03 $2.12
#2 6/15/01-6/14/03 $2.18
#3 6/15/02-6/14/03 $2.24
Series C Preferred Stock put options not exercised by June 14, 2003
shall expire on that date.
6. Call Option. The Corporation shall have the right to redeem all or
any portion of the Series C Preferred Stock which has not been previously
converted or put to the Corporation, upon Sixty (60) days prior written
notice to the holders thereof and payment to them of the following amounts
(in addition to any accrued and unpaid dividends thereon) according to the
following schedule and prices:
Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
Any Series C Preferred Stock not (a) converted to common stock or put to
the Corporation by the Maturity Date, or (b) tendered back to the Corporation in
response to a call by the date so specified in such notice of call, will not be
entitled thereafter to any dividend, conversion or other rights. A purported
exercise of a put option under Paragraph (5) above with respect to any Series C
Preferred Stock which has been called in a prior notice of redemption pursuant
to this Paragraph (6) shall be null and void.
7. Liquidation.
(a) Liquidation Preference. Upon any liquidation, dissolution, or winding
up of the Corporation, whether voluntary or involuntary, and after provision for
the payment of creditors, the Series C Holders shall be entitled to be paid an
amount equal to Two Dollars ($2.00) per share ("Liquidation Value") of Series C
Preferred Stock held, before any distribution or payment is made upon any shares
of Common Stock and any other preferred stock junior to the Series C Preferred
Stock but subject to the priority of Series A Preferred Stock.
(b) Ratable Distribution. If upon any liquidation, dissolution or winding
up of the Corporation, the net assets of the Corporation to be distributed among
the Holders shall be insufficient to permit payment in full to the Series C
Holders, then all remaining net assets of the Corporation after the provision
for the payment of the Corporation's debts and distribution to the Series A
Holders shall be distributed ratably in proportion to the full amounts to which
they would otherwise be entitled to receive among the Series B Holders and
Series C Holders.
(c) Corporate Changes. The sale, lease or exchange of all or substantially
all of the Corporation's assets or the merger or consolidation of the
Corporation which results in the holders of Common Stock receiving in exchange
for such Common Stock cash, notes, debentures or other evidences of indebtedness
or obligations to pay cash, or preferred stock of the surviving entity which
ranks on a parity with or senior to the Series C Preferred Stock as to dividends
or upon liquidation, dissolution or winding-up shall be deemed to be a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Paragraph 7. In the case of mergers or consolidations of the
Corporation where holders of Common Stock receive, in exchange for such Common
Stock, common stock or preferred stock in the surviving entity (whether or not
the surviving entity is the Corporation) of such merger or consolidation, or
common stock or preferred stock of another entity (in either case, such stock to
be received in exchange for common stock is herein referred to as "Exchanged
Stock"), which is junior to the Series C Preferred Stock as to dividends,
liquidation, dissolution or winding up, the merger agreement or consolidation
agreement shall expressly provide that the Series C Preferred Stock shall become
preferred stock of such surviving entity or other entity, as the case may be,
with the same annual dividend rate and equivalent rights to the rights set forth
herein; provided, however, that if the Exchanged Stock is to be mandatorily
redeemed in whole or in part through the operation of a sinking fund or
otherwise the merger or consolidation agreement shall expressly provide that, or
other provisions shall be made so that, all shares of the Series C Preferred
Stock shall be mandatorily redeemed prior to the first mandatory redemption of
the Exchanged Stock; and provided further, that in the event the Corporation or
an affiliate of the Corporation optionally redeems or otherwise acquires any or
all of the then outstanding shares of Exchanged Stock, the Corporation shall
redeem all shares of Series C Preferred Stock prior to the first such redemption
of the Exchanged Stock. In the event of a merger or consolidation of the
Corporation where the consideration received by the holders of Common Stock
consists of two or more types of the consideration set forth above, the Series C
Holders shall be entitled to receive either cash or securities based upon the
foregoing in the same proportion as the holders of Common Stock are receiving
cash or debt securities, or equity securities in the surviving entity or other
entity.
IV. ADDITIONAL TERMS OF PREFERRED STOCK
1. For purposes of Paragraphs II (7) and III (7) there shall be parity
among Series B Holders and Series C Holders.
2. Voting Rights. Except as required under Delaware law, the Series A,
Series B and Series C Holders (hereinafter, collectively, the ("Holders") shall
not have any right or power to vote on any question or in any proceeding or to
be represented at or to receive notice of any proceeding or meeting of the
stockholders.
3. No Preemptive Rights. No Holders shall have any preemptive right
whatsoever to purchase, subscribe for or otherwise acquire stock of the
Corporation nor any security convertible into, nor of any warrant, option or
right to purchase, subscribe for or otherwise acquire, stock of the Corporation,
whether now or hereafter authorized.
4. Exclusion of Other Rights. Except as may otherwise be required by law,
the said Holders shall not have any preferences or relative, participating,
optional or other special rights, other than those specifically set forth in
this Certificate of Designation (as same may be amended from time to time) and
in the Corporation's Certificate of Incorporation.
5. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
6. Severability of Provisions. If any right, preference or limitation of
the Preferred Stock set forth in this Certificate (as such Certificate may be
amended from time to time) is invalid, unlawful or incapable of being enforced
by reason of any rule of law or public policy, all other rights, preferences and
limitations set forth in this Certificate (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.
7. Status of Reacquired Shares. Preferred Stock which has been issued and
reacquired in any manner shall (upon compliance with any applicable provisions
of the laws of the State of Delaware) have the status of authorized and unissued
shares of Preferred Stock and may be redesignated and reissued.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed in its name and on its behalf by its President and attested as of this
11th day of January, 2000.
ENVIROMETRICS, INC.
By: ____________________________________
Walter H. Elliott III, President
and Chief Executive Officer
ATTEST: ________________
Debra Kizer,
Assistant Secretary
AMENDED WARRANT AGREEMENT
AMENDED WARRANT AGREEMENT dated as of April I5, 1999 between
ENVIRONMETRICS, INC., a Delaware corporation (the "Company"), and CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, as Warrant Agent (the "Warrant Agent") (the
"Amended Warrant Agreement.").
WHEREAS, the Company proposes to extend the expiration date of its
outstanding Redeemable Common Stock Purchase Warrants ("Warrants"), which are
currently exercisable at $6.00 per whole share, until April 30, 2001 in order to
permit the Company to retain the ability to obtain additional capital without
incurring the expense and experiencing the delays inherent in either a secondary
public offering or a private placement of securities;
WHEREAS, in connection with the expiration of the date of the Company's
outstanding Warrants, the Company hereby enters into this Amended Warrant
Agreement in order to amend that certain Warrant Agreement dated as of April,
1994 between Envirometrics, Inc. and Continental Stock Transfer & Trust Company,
and American Stock Transfer & Trust Company (the "Warrant Agreement").
NOW, THEREFORE, in consideration of the forgoing and for the purposes of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company and the registered owners of the Warrants
(the "Holders"), the Company and the Warrant Agent hereby agree as follows:
1. Definitions. All terms not expressly defined herein shall the have the
same meaning as set forth in the Warrant Agreement.
2. Amendment to Section 6 of the Warrant .Agreement. Section 6 of the
Warrant Agreement is hereby amended to read as follows:
Exercise of Warrants. Subject to the provisions of this Agreement, each
registered holder of Warrants shall have the right, which may be exercised
through April 30, 2001 commencing from the Separation Date and ending at the
close of business on April 30, 2001, to purchase froth the Company (and the
Company shall issue and sell to such registered holder of Warrants) the number
of fully paid and non-assessable Common Shares specified in such Warrants, upon
surrender to the Company at the office of the Warrant Agent of such Warrants,
with the form of election to purchase duly filled in and signed, and upon
payment to the order of the Company of the Warrant Price, determined in
accordance with Sections 10 and 11 herein, for the number of shares in respect
of which such Warrants are then exercised. Payment of such Warrant Price shall
be made in cash or by certified check or bank draft or postal or express money
order payable, in United States dollars, to the order of the Company. No
adjustment shall be made for any dividends on any Common Shares issuable upon
exercise of a
Warrant. Subject to Section 7, upon such surrender of Warrants, and payment
of the Warrant Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants and in such name or names as such registered
holder may designate, a certificate or certificates for the largest number of
whole Common Shares so purchased upon the exercise of such Warrants. The Company
shall not be required to issue any fraction of a share of Common Stock or make
any cash or other adjustment except as provided in Section 12 herein, in respect
of any fraction of a Common Share otherwise issuable upon such surrender. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares as of the date of the surrender of such Warrants and
payment of the Warrant Price as aforesaid provided, however, that if, at the
date of surrender of such Warrants and payment of such Warrant Price, the
transfer books for the Common Shares or other class of stock purchasable upon
the exercise of such Warrants shall be closed, the certificates for the shares
in respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall be opened and until such date the Company shall
be under no duty to deliver any certificate for such shares; provided, further,
however, that the transfer books aforesaid, unless otherwise required by law or
by applicable role of any national securities exchange, shall not be closed at
any one time for a period longer than 20 days. The rights of purchase
represented by the Warrants shall be exercisable, at the election of the
registered holders thereof, either as an entirety or from time to time for part
only of the shares specified therein and, in the event that any Warrant is
exercised in respect of less than all of the shares specified therein at any
time prior to the date of expiration of the Warrant, a new Warrant or Warrants
will be issued to such registered holder for the remaining number of shares
specified in the Warrant so surrendered, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the required new Warrants
pursuant to the provisions of this Section during the Warrant exercise period,
and the Company, whenever requested by the Warrant exercise period, and the
Company, whenever requested by the Warrant Agent, will supply the Warrant Agent
with Warrants duly executed on behalf of the Company for such purpose.
2. Amendment to Section 19 of the Warrant Agreement. Section 19 of the
Warrant Agreement is hereby amended to read as follows:
"Section 19. Notice. Any notice pursuant to this Agreement to be given or
made by the Warrant Agent or by the registered holder of any Warrant to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing by the
company with the Warrant Agent) as follows"
ENVIROMETRICS, INC.
9229 University Boulevard
Charleston, South Carolina 29406
Attn: Walter H. "Skip" Elliott, III, President
With a copy to:
NIXON, HARGRAVE, DEVANS & DOYLE LLP
437 Madison Avenue
New York, New York 10022
Attn: Peter W. Rothberg, Esq.
Any notice pursuant to this Agreement to be given or made by the Company or
by the registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
2 Broadway
New York, New York 10004"
4. Provisions Not Amended. All terms of the Warrant Agreement not otherwise
amended by this Amended Warrant Agreement shall continue to remain in full force
and effect.
5. Successors. All the covenants and provisions of this Amended Warrant
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns.
6. Applicable Law. This Amended Warrant Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any principles of conflicts of law.
7. Benefits of this Amended Warrant Agreement. Nothing in this Amended
Warrant Agreement shall be construed to give any person or corporation other
than the Company, the Warrant Agent and the Holders any legal or equitable
right, remedy or claim under this Amended Warrant Agreement; this Amended
Warrant Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the Holders of the Warrants.
8. Counterparts. This Amended Warrant Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
9. Captions. The captions of the sections and subsections of this Amended
Warrant Agreement have been inserted for convenience only and shall have no
substantive effect.
ENVIROMETRICS, INC.
By:
Name: Walter H. "Skip" Elliott, II1
Title: President
]
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By:
Name:
Title:
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT, made and entered into as of this 17th day of
October, 1991 ("Agreement"), by and between J. BUCK DOWDY ("Seller") , being the
holder of all of the outstanding shares of capital stock of OPTICHEM
TECHNOLOGIES, INC., a North Carolina corporation ("Optichem"), and ENVIROMETRICS
DEVELOPMENT CO., INC., a South Carolina corporation ("Purchaser" or "EDC") .
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller all of the shares of outstanding capital stock of Optichem,
being all the outstanding shares of all classes of common or preferred stock for
valuable consideration and upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises, payments, covenants and
agreements hereinafter stipulated to be made, kept and performed, it is mutually
understood and agreed by and between the parties as follows:
1. Sale and Purchase of Stock. Seller hereby agrees to sell to Purchaser
and Purchaser agrees to purchase from Seller all of the aforementioned shares of
voting and nonvoting common stock of Optichem and Purchaser shall pay Seller for
the shares of stock as provided in this Agreement.
2. Effective Date of Transfer. The stock transferred pursuant to this
Agreement shall be transferred effective the date of closing and upon receipt of
the stock certificates by purchaser, purchaser shall have all rights to vote the
stock and all dividend distribution and liquidation rights as a shareholder of
Optichem.
3. Purchase Price. The purchase price of the shares of stock shall be an
amount not to exceed one hundred thousand and no/100 ($100,000.00) dollars
payable on the terms and conditions set forth below.
4. Payment of Purchase Price. Purchaser will pay Seller the purchase price
in quarterly payments based on five percent (5%) of net sales of products sold
by Optichem, Purchaser or a Related Party of either (as that term is defined
herein) , which are developed or manufactured utilizing the technology licensed
pursuant to that certain License Agreement dated December 16, 1986 between
Optichem and Perfect View, Inc., a North Carolina corporation ("License
Agreement"). It is understood by all parties that Optichem will be the sole
manufacturer of the products. The quarterly payments from Purchaser to Seller
shall be made within thirty (30) days of the end of each calendar quarter based
on the net sales of that quarter. For example, the first payment pursuant to
this Section will be made no later than July 30, 1992, based on the sales for
the calendar quarter ending June 30, 1992. Payments will only be made, and
Purchaser will only be obligated to make payments as long as Optichem, Purchaser
or a Related Party of either is selling the product. If for any reason such
sales cease, the quarterly payments will also cease and Purchaser will not be
obligated to make any further payments unless and until sales by Optichem,
Purchaser or a Related Party of either resume. For purposes of this Section,
sales shall include sales by Purchaser, Optichem or any party who is a "Related
Person" to Purchaser or Optichem within the meaning of Section 267 of the
Internal Revenue Code of 1986, as amended (collectively "Related Party") . Net
sales shall be defined as gross sales of Purchaser, Optichem or a Related Party
to its third-party customers, less any discounts, allowances, or returns.
5. Access to Sales Records. With the quarterly payment, Purchaser will
provide the necessary financial information to Seller and Seller shall have the
right to inspect the sales records of Optichem, Purchaser or any Related Party,
upon reasonable notice to Purchaser, to evidence the amount of the quarterly
payment. In the event Seller disputes the amount of the quarterly payment and
the parties are unable to resolve the dispute themselves, the Seller and
Purchaser mutually agree and understand that the accounting firm of McGladrey &
Pullen will perform an audit of all net sales by Purchaser for the monitors
discussed herein and the results will determine the quarterly payment. In the
event the accounting firm is retained, the expenses will be shared equally
between the Seller and Purchaser and Purchaser may deduct Seller's portion of
the expenses from the quarterly payment.
6. Transfer of Shares. Upon execution of this Agreement, Seller shall
deliver, assign and transfer all share certificates representing outstanding
shares of common stock in Optichem, said certificates being duly endorsed
without restriction or encumbrance to Purchaser. With delivery of the share
certificates, Seller shall also deliver to Purchaser all corporate records,
minutes, resolution, and financial statements.
7. Representations and Warranties of Seller. Seller hereby represents,
warrants, covenants and agrees that:
(a) Optichem is a corporation duly organized and existing and in good
standing under the laws of the State of North Carolina.
(b) The entire authorized capital stock of Optichem consists of 80,000
shares of Class A voting Common Stock and 20,000 shares of Class B nonvoting
Common Stock, both with a par value of $1.00 per share;
(c) all financial statements, whether audited or unaudited, lists of assets
and liabilities and all corporate records and other documents previously
delivered to EDC by Seller, (i) are true, correct and complete in all material
respects and (ii) fairly present the financial condition of Optichem on such
balance sheet dates and the results of the operations of Optichem for the
periods covered by such statements. The charges, accruals, and reserves on
Optichem's books in respect of taxes for all periods to date are, in the opinion
of Seller, adequate, and they do not anticipate any additional assessments for
any of such periods.
(d) Except as otherwise disclosed in Exhibit A (which shall be prepared and
dated as of the Closing Date, notwithstanding the date of this Agreement);
Optichem has no liabilities, contingent or otherwise and is not in default under
any contracts, including loan agreement provisions; it has no material
obligation or liability, contingent, anticipated or otherwise; no claims for
federal or state taxes are pending against it and it has no obligation or
liability for federal or state taxes; and Optichem is not a party in any
litigation or administrative proceeding which would adversely affect its
financial condition or its operations, nor is any such litigation or proceeding
threatened.
(e) Optichem is a Subchapter S corporation for federal income tax purposes
and no events have occurred and no actions have been taken that would terminate
its S corporation status prior to the closing hereunder; and that Optichem and
its shareholders will maintain the S corporation status of Optichem until the
closing. Seller agrees to execute and to cause Optichem to execute an Election
to Close Books Upon S Corporation Termination and Consent of Shareholders, in
the form attached hereto as Exhibit B, with respect to the termination of the S
corporation status of Optichem that will be caused by the purchase of its stock
by Purchaser. Seller agree to pay all federal and state income taxes relating to
the operations of Optichem for the period from January 1, 1989 to the closing
hereunder, and shall indemnify and hold harmless EDC from and against any tax
liability attributable to the operations of Optichem prior to the date of
closing.
(f) Optichem has such valid franchises, licenses and/or permits, free from
unreasonably burdensome restrictions, as are necessary to carry on its business
as the same is being conducted and to own or hold the properties or assets
owned, held or operated by it.
(g) Seller is the owner of record of all of the outstanding capital stock
of Optichem, have full right to sell said stock, and upon sale and transfer
thereof to EDC pursuant hereto and payment of the purchase price therefor, EDC
shall acquire good title to said stock free and clear of all restrictions,
liens, encumbrances and other adverse claims.
(h) Except as disclosed in writing to EDC prior to the date of closing,
Optichem has no long-term agreements with either individuals or corporations,
leases, employment agreements, deferred compensation plans, pension plans or
profit-sharing plans.
(i) Seller represents that there are no outstanding unresolved discussions
or negotiations with or offers from or contracts with any other company or
person for the purchase or acquisition of securities or assets of Optichem.
(j) This Agreement constitutes a valid and legally binding obligation of
Seller enforceable in accordance with its terms.
(k) Seller and/or Optichem, as of the date of this Agreement, have not
taken any action or executed any documents which would negate the potential
validity and enforceability of the License Agreement held by Optichem and
described in this Agreement. Seller further agrees not to take any action or
cause any action to be taken which would affect the validity or enforceability
of the License Agreement and agrees to cooperate fully with Purchaser and/or
Optichem in the defense of any claim or action affecting the validity or
enforceability of the License Agreement. Purchaser will reimburse Seller for
reasonable costs and expenses incurred in cooperating with Purchaser/Optichem in
the defense of any litigation. Notwithstanding the foregoing, Seller makes no
representation or warranty as to the validity or enforceability of the License
Agreement.
8. Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants that:
(a) EDC is a corporation duly organized and existing and in good standing
under the laws of the State of South Carolina and has full corporate power and
authority to acquire the capital stock of Optichem as herein contemplated.
(b) This Agreement constitutes a valid and legally binding obligation of
EDC enforceable in accordance with its terms, and approved by the Board of
Directors of EDC prior to the closing, as evidenced by the Corporate Resolution
attached as Exhibit C and incorporated herein by reference.
(c) Purchaser understands that the stock purchased pursuant to this
Agreement is being purchased for investment only and Purchaser understands that
the stock is an unregistered security under federal and state law.
9. Continuing Nature of Representations and Warranties It is understood and
agreed that the representations, warranties, covenants and agreements of Seller
and EDC contained herein shall survive the closing of the purchase and sale of
capital stock of Optichem and continue to be binding.
10. Indemnification by Seller. Seller hereby agrees to indemnify and hold
Optichem and Purchaser harmless from any and all liabilities, costs and
expenses, including reasonable attorney fees, paid by Purchaser or Optichem as a
result of the operations of Optichem prior to the closing of this Agreement and
the transfer of stock, or as a result of a breach by Seller of any provisions of
this Agreement. In the event Purchaser or Optichem incur any liability, cost or
expense pursuant to this Section, the Purchaser shall have the option of seeking
immediate recovery from Seller, deducting any liability, cost or expenses
incurred from the quarterly payments due under this Agreement; provided,
however, Seller shall have no obligation to indemnify Optichem or Purchaser for
any claim, damage, or loss arising out of or associated with the defense or
validity of the licensed technology and License Agreement.
11. Inspection of Records by Purchaser. Prior to the closing hereunder,
Seller will cause Optichem to permit EDC and its representatives to visit, at
EDC's expense, any of the property of Optichem, to inspect its books, records
and accounts and to discuss its affairs and finances with its officers at such
reasonable times as EDC may desire and will cause Optichem to furnish to EDC
such corporate records of Optichem and other documents as EDC may from time to
time reasonably request, provided, however, that any furnishing of such
information to EDC and any investigation by EDC shall not affect EDC's right to
rely on the representations and warranties made by Seller hereinabove.
12. Obligation to Close. The obligation to consummate the transaction
contemplated herein is subject to the fulfillment, on or before the date of the
closing, of the following conditions:
(a) all representations and warranties made by EDC herein shall be true and
correct at the time of the closing as if made again on and as of said date;
(b) EDC shall have performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed and complied with by
it prior to or at the closing;
(c) all representations and warranties made by Seller herein shall be true
and correct at the time of the closing as if made again on and as of said date;
(d) Seller shall have performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed and complied with by
them prior to or at the closing.
13. Continuation of Business. Until the closing, Seller agrees to cause the
business of Optichem to be conducted only in the ordinary course and on a basis
consistent with past practices. Seller will not cause Optichem, without EDC's
written consent, to (i) declare or pay any dividend on any outstanding shares of
its capital stock (other than regular cash dividends declared on a basis
consistent with past practices) or acquire any such shares, Or declare or make
any other payments or distributions of assets to its shareholders, except
payment of compensation for services rendered consistent with past practices or
(ii) issue shares of its capital stock or options to purchase any thereof,
purchase or redeem any outstanding shares of its capital stock, or amend its
Articles of Incorporation in any way.
14. Closing. The closing shall take place at the offices of Optichem, or at
such other place or date as the parties may agree, by April 15, 1992, or within
five (5) business days following receipt of all necessary consents or approvals
and completion of satisfactory due diligence reviews by Purchaser. At the
closing Seller shall deliver to EDC:
(a) certificates representing all outstanding shares of capital stock of
Optichem duly endorsed and in proper form for transfer to EDC;
(b) the written resignation of all Directors of Optichem;
(c) a certificate confirming that all representations and warranties made
by Seller herein remain true and correct at the time of the closing as if made
again on and as of said date, and confirming further that Seller have performed
and complied with all covenants, agreements and conditions required by this
Agreement to be performed and complied with by them prior to or at the closing;
and
(d) all share certificates and corporate records of Optichem, specifically
including but not limited to the original License Agreement between Optichem and
Perfect View, Inc. dated December 16, 1986.
EDC shall deliver to Seller at the closing:
(a) a certified copy of the resolutions adopted by the Board of Directors
of EDC authorizing this Agreement and the consummation of the transaction herein
contemplated; and
(b) a certificate from an executive officer of EDC confirming that all
representations and warranties made by EDC herein remain true and correct at the
time of the closing as if made again on and as of said date, and confirming
further that EDC has performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed and complied with by it
prior to or at the closing.
In the event that the closing does not take place in person at one
location, Seller agrees to execute all documents and provide the original
agreements, exhibits, certificates, corporate records, and stock certificates to
Purchaser, to be held in escrow by Robinson, McFadden & Moore, P.C. at 1901 Main
Street, Columbia, South Carolina, until Purchaser has executed all documents and
provided a fully executed original agreement and all exhibits and necessary
certificates to Seller.
15. No Brokers. EDC and the Seller represent and warrant to each other that
no broker has been employed in connection with the sale contemplated by this
Agreement and the Seller agrees to indemnify the Purchaser and the Purchaser
agrees to indemnify the Seller against all loss, cost, damage or expense,
including reasonable attorney's fees, arising out of or resulting from a
judicially valid claim based upon employment by the other of a broker.
16. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing, and shall be deemed to have been duly given if
delivered or mailed first class postage prepaid, if to
Seller:
J. Buck Dowdy
3301 Bramer Drive
Raleigh, North Carolina 27604
With a Copy to:
Adam H. Broome, Esquire Petree, Stockton
Post office Box 300004
Raleigh, North Carolina 27622
Purchaser:
Robert J. Nagy, Secretary
Envirometrics Development Co., Inc
9229 University Blvd.
Charleston, South Carolina, 29418
With a Copy to:
R. William Metzger, Jr., Esquire Robinson, McFadden & Moore, P.C.
Post Office Box 944
Columbia, South Carolina, 29202
17. Entire Agreement. This Agreement is the consummation of all
negotiations between Seller and Purchaser or any related entities and
constitutes the entire contract between EDC and the Seller and no warranties and
representations have been made by either which are not contained herein.
18. Modification of Agreement. This Agreement may not be changed or
modified except by a similar instrument in writing executed by EDC and the
Seller.
19. Counterparts to Agreement. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.
20. Binding Effect. This Agreement shall be binding on and inure to the
benefit of Seller, their heirs-at-law, legatees, distributees, executors,
administrators and other legal representatives, and shall be binding on and
inure to the benefit of EDC, its successors and assigns.
IN WITNESS WHEREOF, the parties hereto have herein respectively executed
this Agreement.
ENVIROMETRICS DEVELOPMENT CO., INC
By: R. William Metzer
Its: President
ATTEST
_____________________________________
Robert J. Nagy, Secretary
(Affix Corporate Seal) J. BUCK DOWDY
________________________
EXHIBIT A
TO
SHARE PURCHASE AGREE
ENTERED INTO AS OF OCTOBER 17, 1991
DISCLOSURE OF LIABILITIES
To the actual knowledge of Seller, the following items represent all of the
outstanding obligations and liabilities of Optichem Technologies, Inc.
("Optichem") as of April 15, 1992:
1. All obligations and duties under the License Agreement, dated December
16, 1986, by and between Optichem and Perfect View, Inc.
2. All claims and liabilities, actual and contingent, asserted by
Sensidyne, Inc. as described in that certain letter dated April 3, 1992, from
Sensidyne, Inc. to Optichem.
3. All liens, encumbrances and liabilities associated with the outstanding
obligations of Optichem under that certain Promissory Note to the Town of
Morrisville, North Carolina with a balance in the amount of Thirty Seven
Thousand Seven Hundred Forty-six and 26/100 Dollars ($37,746.26) as of June 30,
1992.
Exhibit B to
Purchase Agreement entered into as of
October 17, 1991
ELECTION TO CLOSE BOOKS UPON S CORPORATION TERMINATION
Optichem Technologies, Inc. (the "Corporation"), with the consent of all
the shareholders of the Corporation during the short S year and all the
shareholders of the Corporation on the first day of the short C year, elects
under Section 1362 (e) (3) of the Internal Revenue Code of 1986, as amended (the
"Code"), not to have the pro rata allocation of S corporation items under Code
Section 1362 (e) (2) apply to the S termination year ending #I 19 9 2. The date
of termination of the Corporation's S termination was the purchase of its stock
by a C corporation.
Date: Optichem Technologies, Inc.
By:
Its:
CONSENT OF SHAREHOLDERS
The undersigned, being all the shareholders owning any stock of the
Corporation during the short S year and all the shareholders owning stock on the
first day of the short C year, hereby consent to the above election by the
Corporation under Code Section 1362 (e) (3) not to apply the rules under Code
Section 1362(e)(2) to the S termination year ending 1992. The date of
termination of the Corporation's S corporation status was , 1992
Date:
J. Buck Dowdy
Identification No. 24062-4052
Date:
Envirometrics Development, Co., Inc.
By:
Its:
EXHIBIT C
CORPORATE RESOLUTION OF ENVIROMETRICS DEVELOPMENT CO., INC.
DATED APRIL 13, 1992
BE IT RESOLVED that pursuant to a meeting of the Board of Directors of
Envirometrics Development Co., Inc. (the "Corporation") that the Board of
Directors unanimously authorized the Corporation to enter into a Share Purchase
Agreement to purchase all outstanding shares of stock in Optichem Technologies,
Inc., a North Carolina corporation, pursuant to the terms and conditions of the
Share Purchase Agreement between the parties dated October 17, 1991.
FURTHER BE IT RESOLVED that R. William Metzger, as President, and Robert J.
Nagy, a Secretary, are authorized to execute the Share Purchase Agreement and
any and all other documents related thereto.
This Resolution adopted this 13th day of April, 1992.
ENVIROMETRICS
DEVELOPMENT CO, INC. By: R. William Metzger
Its: Chairman, Board of Directors
ATTEST:
Robert J. Nagy, Secretary
(Affix Corporate Seal)
CLOSING AGREEMENT
THIS CLOSING AGREEMENT is made, entered into and effective this 16th day of
April, 1992, by and between OPTICHEM TECHNOLOGIES, INC. ("OPTICHEM") , a North
Carolina corporation, ENVIROMETRICS DEVELOPMENT CO., INC. ("PURCHASER"), a South
Carolina Corporation; and J. BUCK DOWDY ("SELLER").
NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants made hereunder, and other good and valuable consideration received by
each party hereto, the sufficiency and receipt of which is acknowledged by all
such parties, the parties hereto agree as follows:
1. DISCLOSURE OF ALL MATERIAL, INFORMATION. PURCHASER acknowledges that,
all information (financial or otherwise) necessary for PURCHASER to reach a
decision to purchase the stock of SELLER under the terms and on the conditions
of that certain Share Purchase Agreement, dated October 17, 1991 by and between
PURCHASER and SELLER, has been provided to and examined by PURCHASER. PURCHASER
further understands that third parties (other than SELLER) have disputed and
challenged the enforceability and validity of the License Agreement, dated
December 16, 1986, between OPTICHEM and Perfect View, Inc. (the 'License
Agreement") and the right of Licensor to grant the license. Such claims if
valid, will prevent OPTICHEM or any other party, from manufacturing,
distributing and selling any product utilizing the licensed technology pursuant
to the License Agreement. PURCHASER specifically acknowledges that, pursuant to
a letter dated April 3, 1992, Sensidyne, Inc. has claimed that:
(i) it holds all rights and interests to the patents issued on the
application referenced in the License Agreement; and
(ii) the License Agreement is, among other reasons, unenforceable and
invalid due to the Licensor, Perfect View, Inc., having no rights and interests
in the underlying patents, that the License Agreement has expired by its express
terms and that the License is nontransferable, directly or indirectly, to any
party.
Sensidyne has threatened to pursue all available remedies against SELLER
and any other party, including PURCHASER, and in likely to commence litigation
it necessary to defend its position.
2. IDEMNIFICATION OF SELLER BY PURCHASER. PURCHASER hereby assumes full
responsibility for the discharge and satisfaction of all claims, costs, losses,
damages, penalties, fines and expenses that PURCHASER or OPTICHEM may incur in
connection with the above matters. PURCHASER further agrees to defend (with
counsel reasonably satisfactory to SELLER) , hold harmless and indemnify SELLER
from any and all claims, costs, losses, damages, penalties, fines, and expenses
including reasonable attorneys, fees of SELLER, resulting Or arising from (1)
any of the matters in paragraph I above; (2) the defense enforceability, or
validity of the licensed technology or License Agreement; and (3) the operations
of Optichem on and after the closing of this transaction which were not a result
of the breach of any provision of this Agreement or the Share Purchase Agreement
executed concurrently herewith and incorporated herein by reference. SELLER
acknowledges that PURCHASER shall have control and authority over any litigation
in which PURCHASER defends SELLER and the costs associated therewith, and
PURCHASER will use its best efforts to obtain counsel for SELLER which is
reasonably satisfactory to SELLER, however, in the event that a mutually agreed
upon counsel cannot be chosen, SELLER has the option of obtaining individual
counsel but will be responsible for all fees and costs associated with said
independent counsel.
3. INDEMNIFICATION OF PURCHASER BY SELLER. The outstanding debt of OPTICHEM
to the Town of Morrisville, North Carolina in the amount of Thirty Seven
Thousand Seven Hundred Forty-Six and 26/100 Dollars ($37,746.26), which matures
on June. 30, 1992, shall be the responsibility of SELLER. In addition to any
obligation of SELLER to indemnify PURCHASER under the Share Purchaser Agreement,
SELLER hereby agrees to indemnify and hold harmless PURCHASER and OPTICHEM from
and against such liability in accordance with Section 9 of the Share Purchase
Agreement.
PURCHASER: ENVIROMETRICS DEVELOPMENT CO. INC.
BY:
ATTEST:
(Asst.) Secretary
[CORPORATE SEAL]
SELLER:
J. BUCK DOWDY
SELLER'S CERTIFICATE OF
AFFIRMATION OF REPRESENTATIONS AND WARRANTIES
Pursuant to Share Purchase Agreement ("AGREEMENT") by and between
ENVIROMETRICS DEVELOPMENT Co., INC. ("PURCHASER") ; OPTICHEM TECHNOLOGIES, INC.
("SELLER) ; SELLER hereby represents, warrants and certifies that:
All of the representations, warranties and covenants made by SELLER in the
AGREEMENT are true and correct on April 16, 1992 (the "CLOSING DATE,,) and all
of the terms and conditions of the AGREEMENT to be complied with and performed
by SELLER on or prior to the CLOSING DATE have been timely complied with and
performed.
SELLER:
J. Buck Dowdy, Seller
PURCHASER'S CERTIFICATE OF
AFFIRMATION OF REPRESENTATIONS AND WARRANTIES
Pursuant to Share Purchase Agreement ("AGREEMENT") by and between
ENVIROMETRICS DEVELOPMENT CO., INC. ("PURCHASER") and OPTICHEM TECHNOLOGIES,
INC. ("SELLER") ; PURCHASER hereby represents, warrants and certifies that:
All of the representations, warranties and covenants made by PURCHASER in
the AGREEMENT are true and correct on April 16, 1992 ("CLOSING DATE") and all of
the terms and conditions of the AGREEMENT to be complied with and performed by
PURCHASER on or prior to the CLOSING DATE have been timely complied with and
performed.
PURCHASER: ENVIROMETRICS DEVELOPMENT CO., INC
By:
Its President
April 16, 1992
Optichem Technologies, Inc.
9229 University Blvd
Charleston, South Carolina 29418
Gentlemen:
The undersigned as sole director of Optichem Technologies, Inc. does hereby
tender his resignation as Director of the Corporation. The undersigned further
represents that all existing officers have tendered their resignations and that
said resignations have been approved and accepted.
J. Buck Dowdy
Sole Director
OPTICHEM TECHNOLOGIES, INC.
HEREBY ACCEPTED
By:
AGREEMENT
THIS AGREEMENT is entered into this day of 1 1992, by and between Computer
Control Corporation, a New Jersey corporation having offices at 230 West
Parkway, Pompton Plains, New Jersey 07444 ("Computer Control") and Envirometrics
Development Company, Inc., a South Carolina corporation having offices at 9229
University Boulevard, North Charleston, South Carolina 29418 ("Envirometrics")
WITNESSETH
WHEREAS, Computer Control is in the business of developing various
electronic devices with integrated computer capabilities for the industrial
hygiene/environmental market; and
WHEREAS, Envirometrics desires to have Computer Control develop an
electronic reader for utilization with a new line of passive air monitors based
upon photometry devices which change color or other optical characteristics
after exposure to airborne chemicals.
NOW, THEREFORE, in consideration of the above premises and the covenants
hereinafter set forth, the parties hereto do hereby agree as follows:
1. Computer Control hereby agrees to use its best efforts to develop an
electronic reader (the "Reader") for utilization with Quantitative Photometry
Monitors. For purposes of this Agreement, a "Quantitative Photometry Monitor"
shall mean a passive air monitor based upon photometry devices which change
color or other optical characteristics after exposure to airborne chemicals and
which can be utilized with an electronic reader. The Reader shall satisfy the
specifications set forth on Schedule A hereto, subject to such modifications to
such specifications as the parties shall mutually agree.
2. Envirometrics hereby agrees to make the following payments to Computer
Control:
a. Upon execution of this Agreement, Envirometrics shall pay to Computer
Control the sum of $10,000.00.
b. Upon completion of a prototype Reader by June 1, 1992 which shall
satisfy the specifications set forth on Schedule A hereto (subject to such
modifications to such specifications as the parties shall mutually agree) ,
Envirometrics shall pay to Computer Control an additional $20,000.00. If such a
prototype is not completed by June 1, 1992, (i) this Agreement shall
automatically terminate, (ii) Computer Control shall return to Envirometrics the
$10,000.00 payment made by Envirometrics pursuant to subparagraph 2(a), and
(iii) both parties shall be relieved of all further obligations hereunder.
C. Envirometrics hereby agrees to pay to Computer Control a royalty equal
to 3% of gross revenues collected from sales of Quantitative Photometry Monitors
by Envirometrics during the five year period commencing upon the first sale by
Envirometrics of a Reader (the "Monitor Royalty Period"). It is expressly
understood that royalties shall be payable on all revenues in respect of
Quantitative Photometry Monitors which are sold during the Monitor Royalty
Period, including revenues from such sales which are collected after the Monitor
Royalty Period. The minimum royalty which Envirometrics shall pay to Computer
Control pursuant to this clause (c) for the first year of the Monitor Royalty
Period shall be $25,000.00 and the minimum royalty which Envirometrics shall pay
to Computer Control pursuant to this clause (c) for the second year of the
Monitor Royalty Period shall be $30,000.00.
d. Envirometrics shall also pay to Computer Control a royalty equal to 10%
of gross revenues collected from sales, rentals and leases of Readers by
Envirometrics during the five year period commencing upon the first sale by
Envirometrics of a Reader developed by Computer Control (the "Reader Royalty
Period"; provided, however, that if Computer Control shall obtain a patent on
the Reader, the Reader Royalty Period shall continue until the expiration of
such patent. It is expressly understood that royalties shall be payable on all
revenues in respect of Readers which are sold, rented or leased during the
Reader Royalty Period, including revenues from such sales, rentals and leases
which are collected after the Monitor Royalty Period. Notwithstanding the
foregoing, no royalty shall be payable by Envirometrics in respect of Readers
Purchased by Envirometrics from Computer Control.
e. Envirometrics shall reimburse Computer Control for all legal fees,
filing fees and other out-of-pocket costs incurred by Computer Control in
connection with obtaining patents on the Reader or any components thereof or any
technology incorporated therein ("Patent Costs"), up to $5,000.00; all Patent
Costs incurred by Computer Control in excess of $5,000.00 shall be borne by
Computer Control. Envirometrics shall reimburse Computer Control for Patent
Costs in accordance with the preceding sentence within ten (10) days following
submission of an invoice by Computer Control.
3. The technology utilized by Computer Control to develop the Reader and
the technology embodied in the Reader, to the extent not already in the public
domain, shall be and remain the property of Computer Control. All patents
awarded shall be owned by Computer Control.
4. Computer Control hereby grants to Envirometrics an exclusive worldwide
license to manufacture and sell Readers for use with Quantitative Photometry
Monitors; provided, however, that Computer Control reserves the nonexclusive
right to manufacture and sell Readers to Envirometrics. The license granted
hereunder shall not be assignable. Envirometrics may not sublicense its rights
under the license granted hereunder. The license granted hereunder shall be
perpetual, subject, however, to termination by either party in the event of a
breach of this Agreement by the other party which remains uncured for thirty
(30) days following notice of such breach by the non-breaching party to the
breaching party. It is expressly understood that Computer Control reserves unto
itself the exclusive right to utilize the technology utilized by Computer
Control to develop the Reader and the technology embodied in the Reader for any
purpose other than the manufacture and sale of Readers for use with Quantitative
Photometry Monitors. In order to enable Envirometrics to manufacture Readers,
Computer Control shall disclose to Envirometrics all technical know-how, trade
secrets and proprietary information of Computer Control which is required to
manufacture Readers. All such trade secrets and proprietary information shall
remain the sole and exclusive property of Computer Control.
5. The royalties payable pursuant to clauses l(c) and l(d) above shall be
computed and paid quarterly. Within fifteen (15) days following the end of each
calendar quarter during the respective royalty periods for Quantitative
Photometry Monitors and Readers, and Envirometrics shall furnish to Computer
Control a statement of the gross revenues during such calendar quarter of
Envirometrics from the sale of Quantitative Photometry Monitors and from the
sale, leasing and rental of Readers and of the royalty due for such calendar
quarter. Within fifteen (15) days following the end of each calendar quarter
during the year following the termination of the respective royalty periods for
Quantitative Photometry Monitors and Readers, Envirometrics shall furnish to
Computer Control a statement of the gross revenues during such calendar quarter
of Envirometrics from the sale of Quantitative Photometry Monitors which were
sold during the Monitor Royalty Period and from the sale, leasing and rental of
Readers during the Reader Royalty Period and of the royalty due for such
calendar quarter. Each such statement shall be accompanied by payment of the
royalty due. Envirometrics agrees to keep accurate records pertaining to sales
of Quantitative Photometry Monitors and sales, leases and rentals of Readers.
Computer Control shall have the right to inspect and make copies of such records
upon reasonable notice to Envirometrics. In the event of a dispute regarding the
computation of royalties payable hereunder, Computer Control and Envirometrics
shall attempt to resolve the dispute among themselves and adjust the applicable
statement and royalty payment. In the event Computer Control and Envirometrics
are unable to resolve the dispute within thirty (30) days following notice by
Computer Control to Envirometrics of a dispute, then they shall attempt to agree
upon a nationally recognized accounting firm to act as "Umpire" hereunder. In
the event Computer Control and Envirometrics are unable to select an Umpire
within five days following the end of said thirty (30) day period, then each of
the parties will select a nationally recognized accounting firm within ten (10)
days following the end of said thirty (30) day period, and those accounting
firms shall agree upon a third nationally recognized accounting firm to serve as
Umpire within twenty (20) days following the end of said thirty (30) day period.
The nationally-recognized accounting firm which is selected to act as Umpire
hereunder shall review the books and records of Envirometrics and shall
determine the amount of royalties which should have been paid in respect of the
periods in question. The determination of the Umpire shall be final and binding
on the parties. Each party shall bear whatever fees and expenses are incurred by
the accounting firm selected by it. In the event that the Umpire determines that
there has been an underpayment of royalties, the Umpire's fees shall be borne by
Envirometrics; in the event that the Umpire determines that there has not been
an underpayment of royalties, the Umpire's fees shall be borne by Computer
Control.
6. In the event the Reader is ever held by a court of competent
jurisdiction to infringe any patent or patents owned by others, Computer Control
shall have the right, at its own expense, to redesign the reader to avoid the
infringement or obtain a license to enable Envirometrics to continue to sell the
Reader. If within ninety (90) days following a final determination of
infringement, Computer Control fails to redesign the Reader so as to avoid the
infringement or to obtain a license, then Envirometrics may forthwith terminate
all its obligations outlined under clauses l(c) and l(d) above. In the event
Envirometrics is named as a defendant in a suit alleging that the Reader
infringes any patent or patents owned by others and Computer Control is also
named as a defendant in the suit, then Computer Control shall control the
defense and settlement of the suit and Envirometrics and Computer Control shall
each bear 50% of the cost of defending and settling such suit; provided,
however, that the selection of a law firm to defend any such suit and any
settlement thereof shall be subject to the approval of Envirometrics, which
approval shall not be unreasonably withheld or delayed. In the event
Envirometrics is named as a defendant in a suit alleging that the Reader
infringes any patent or patents owned by others and Computer Control is not also
named as a defendant in the suit, then Envirometrics shall control the defense
and settlement of the suit and Computer Control shall reimburse Envirometrics
for 50% of the cost of defending and settling such suit. Envirometrics and
Computer Control shall provide reasonable cooperation to one another, and shall
keep one another apprised of developments in, any such suit
7. In the event of infringement of the herein proposed licensed patent
rights by others, Computer Control shall have the right to, but shall have no
duty to, enforce said patent rights. If Computer Control does not agree to
enforce said Patent rights within sixty (60) days following a written request by
Envirometrics that it do so, then Computer Control shall assign to Envirometrics
the right to enforce said patent rights against the party or parties named in
the request, in which case the expenses of any such litigation shall be borne by
Envirometrics and Envirometrics shall be entitled to any recovery on account of
infringement. Computer Control shall provide reasonable cooperation in any such
enforcement action upon the request of Envirometrics, provided that
Envirometrics shall reimburse Computer Control for its reasonable out-of-pocket
expenses incurred by Computer Control in providing such cooperation.
8. Computer Control represents and warrants that (i) it has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder; (ii) this Agreement constitutes a valid and binding
obligation of Computer Control, enforceable in accordance with its terms; and
(iii) neither the execution nor performance of this Agreement by Computer
Control has or will violate any provisions of Computer Controls Articles of
Incorporation or Bylaws or of any material agreement or instrument to which
Computer Control is a party or by which Computer Control is bound.
9. Envirometrics represents and warrants that (i) it has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder; (ii) this Agreement constitutes a valid and binding
obligation of Envirometrics, enforceable in accordance with its terms; (iii)
neither the execution nor performance of this Agreement by Envirometrics has or
will violate any provisions of Envirometrics' Articles of Incorporation or
Bylaws or of any material agreement or instrument to which Envirometrics is a
party or by which Envirometrics is bound; and (iv) the manufacture and sale of
Quantitative Photometry Monitors by Envirometrics and the use of Quantitative
Photometry Monitors in conjunction with Readers will not violate any patent or
other rights of any third parties. Envirometrics covenants that it shall, upon
delivery of the prototype Reader due June 1, 1992, deliver to Computer Control a
true and complete copy of a valid license to Envirometrics for the manufacture
and sale of Quantitative Photometry Monitors worldwide for a period of not less
than six (6) years from the date hereof, which license shall be in full force
and effect on the date hereof. Envirometrics hereby covenants to take all
actions necessary to maintain the license referred to in the preceding sentence
in good standing until the termination of the Monitor Royalty Period. In the
event Computer Control is named as a defendant in a suit alleging that the
manufacture, use or sale of Quantitative Photometry Monitors, or their use in
conjunction with Readers, infringes any patent or patents owned by others,
Envirometrics shall bear the cost of defending and settling such suit.
10. (a) Computer Control hereby covenants to indemnify and hold harmless
Envirometrics from and against any and all damages, losses, obligations,
liabilities, claims, actions or causes of action sustained or suffered by
Envirometrics and arising from a breach of any agreement, representation,
warranty or covenant of Computer Control contained in or made pursuant to this
Agreement, including all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by Envirometrics in connection
therewith.
(b) Envirometrics hereby covenants to indemnify and hold harmless Computer
Control from and against any and all damages, losses, obligations, liabilities,
claims, actions or causes of action sustained or suffered by Computer Control
and arising from a breach of any agreement, representation, warranty or covenant
of Envirometrics contained in or made pursuant to this Agreement, including all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees) incurred by Computer Control in connection therewith.
In the course of negotiating and performing this Agreement, the parties
have and will continue to provide to one another proprietary and confidential
product, financial and technical information, including but not limited to (a)
the specifications contained on Exhibit A hereto which were developed by
Envirometrics, (b) information regarding Quantitative Photometry Monitors
manufactured or being developed by Envirometrics, (c) sales information of
Envirometrics and (d) technical know-how, trade secrets and proprietary
information now owned by Computer Control or which may be developed by Computer
Control in connection with this project, including technical know-how, trade
secrets and proprietary information required to manufacture Readers (hereafter
referred to as "Confidential Information") . Confidential Information includes
not only written information but also information transferred orally, visually,
electronically or by any other means. Each of the parties hereto hereby
covenants that (i) it will use the other party's Confidential Information solely
for the purposes permitted by this Agreement and (ii) it shall keep all
Confidential Information of the other party secret and confidential and shall
not disclose it to anyone except to a limited group of its own employees and
consultants who are actually engaged in the design, development and manufacture
of Readers. Each person to whom such Confidential Information is disclosed must
be advised of its confidential nature and of the terms of this agreement and
prior to receiving any Confidential Information thereof (unless already bound by
obligations of confidentiality) must agree to abide by such terms. The term
"Confidential Information" does not include information which (i) is already in
the possession of the receiving party, provided that such information is not
known by the receiving party to be subject to another confidentiality agreement
with or other obligation of secrecy to the disclosing party, or (ii) becomes
generally available to the public other than as a result of a disclosure by the
receiving party or its directors, officers, employees, agents or advisors, or
(iii) becomes available to the receiving party on a non-confidential basis from
a source other than the disclosing party or its advisors, provided that such
source is not known by the receiving party to be bound by a confidentiality
agreement with or other obligation of secrecy to the disclosing party or another
party, or (iv) has been independently acquired or developed by the receiving
party without violating any of its obligations to the disclosing party under
this Agreement. In the event that a receiving party or anyone to whom a
receiving party transmits Confidential Information pursuant to this Agreement
becomes legally compelled to disclose any of the Confidential Information, such
receiving party will provide the disclosing party with prompt notice so that the
disclosing party may seek a protective order or appropriate remedy and/or waive
compliance with the provisions of this Agreement; in the event that such
protective order or other remedy is not obtained or that the disclosing party
waives compliance with the provisions of this Agreement, the receiving party
will furnish only that portion of the Confidential Information which it is
advised by counsel is legally required.
12. The following shall constitute Events of Default hereunder: (i) Failure
by either party hereto to make any payment due hereunder on the date such
payment is due, provided such failure is not cured within ten (10) days
following the giving of written notice of such breach to the breaching party by
the nonbreaching party; (ii) the material breach by either party hereto of any
covenant, representation or warranty contained herein, other than covenants to
pay money, provided such breach is not cured within thirty (30) days following
the giving of written notice of such breach to the breaching party by the
nonbreaching party; or (iii) if either party hereto should ever be adjudged a
bankrupt. If an Event of Default shall have occurred and shall be continuing,
the nondefaulting party may, by written notice to the defaulting party,
terminate this Agreement, whereupon both parties shall be relieved of all
further obligations hereunder and the license granted in Section 4 hereof shall
immediately terminate. The remedy provided for above shall be in addition to,
and not in lieu of, any and all other rights and remedies which either party may
have at law or in equity in the event of a breach of this Agreement by the other
party.
13. This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns. If Computer Control sells, assigns or transfers any patent rights
obtained or created as a result of this Agreement, the terms and conditions of
this Agreement shall be binding on the purchaser, assignee or transferee of such
rights, and Envirometrics shall continue to pay the royalties due under this
Agreement to Computer Control absent written notice from Computer Control to the
contrary. Nothing expressed or implied in this Agreement is intended or shall be
construed to confer upon or give to any person other than the parties hereto any
rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
14. This Agreement contains the entire understanding of the parties with
respect to its subject matter. This Agreement supersedes all prior agreements
and understandings between the parties with respect to its subject matter.
Without limiting the generality of the foregoing, there are no restrictions,
promises, representations, warranties, covenants or understandings other than
those expressly set forth or referred to herein.
15. This Agreement may be amended, modified or supplemented only by a
written instrument duly executed by the parties hereto.
16. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned or sub-licensed by either party hereto without the
prior written consent of the other party hereto. In the event of a permitted
assignment by either party of this Agreement, the assignor shall cause such
assignee to assume all of the assignor's obligations hereunder, which assumption
shall be by a written instrument addressed to both parties hereto in form and
substance reasonably satisfactory to the non-assigning party and its counsel.
Provided, the sale of the stock of either party hereto shall not require the
consent of the other party. In the event that Envirometrics intends to sell all
or substantially all of its assets, it shall notify Computer Control at least
twenty (20) days prior to such sale and, if requested to do so by Computer
Control within ten (10) days of the giving of such notice, Envirometrics shall
assign its rights hereunder to the purchaser of such assets and shall cause such
purchaser to assume all of Envirometrics' obligations hereunder, which
assumption shall be by a written instrument addressed to Envirometrics and
Computer Control in form and substance reasonably satisfactory to Computer
Control and its counsel.
17. All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, sent by facsimile transmission (and
confirmed by mail) or mailed (by registered or certified mail, return receipt
requested and postage prepaid) to the parties as follows:
If to Computer Control:
Computer Control Corporation
230 West Parkway
Pompton Plains, New Jersey 07444
Attention: Mr. Harvey Padden, President
Fax No.: 201-839-7445
with copy to:
Stuart M. Geschwind, Esq.
Williams, Caliri, Miller & Otley
1428 Route 23
Wayne, New Jersey 07470
Fax No.: 210-694-0302
If to Seller:
Environmetrics Development Company, Inc.
9229 University Boulevard
North Charleston, South Carolina 29418
Attention: Mr. R. William Metzger, CEO
Fax No.:
with copy to:
Attention:
Fax No.:
or to such other address or facsimile number as the party to whom notice is
to be given may have furnished to the other parties in writing in accordance
herewith. Any such communication shall be deemed to have been given on the date
it is received by the addressee (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt) . Provided that any
communication sent by facsimile transmission and confirmed by mail, shall be
deemed to have been given at the time of transmission.
18. This Agreement may be executed in any number of counterparts, and by
the different parties on separate counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement. 9
19. This Agreement and the legal relations between the parties hereto shall
be governed by and construed in accordance with the laws of the State of New
Jersey, without giving effect to the choice of law principles thereof.
20. Any reference expressed in any gender shall be deemed to include each
of the other genders, and the singular shall be deemed to include the plural and
vice versa, unless the context otherwise requires. The term "person" as used in
this Agreement, unless the context otherwise requires, shall include any
individual and any corporation, partnership, association, or other entity or
group. This Agreement has been jointly prepared by the parties hereto and the
terms hereof shall not be construed in favor of or against any party on account
of its participation in such preparation.
21. To the fullest extent permitted by applicable law, any party to this
Agreement may waive any provision of this Agreement; provided, that no such
waiver shall be of any force or effect unless the same is evidenced by a writing
executed by the party against which enforcement of such waiver is sought. The
waiver by any party hereto of a failure of any condition or of any breach of
this Agreement shall not operate or be construed as a waiver of, or estoppel
with respect to, any subsequent or other failure or breach.
22. Each of the parties hereto agrees to execute and deliver such
instruments and take such other actions as any other party hereto may reasonably
require in order to carry out the intent of this Agreement.
23. Upon execution of this Agreement, Envirometrics shall furnish to
Computer Control an attorneys opinion, addressed to Computer Control, in the
form of Schedule B hereto.
IN WITNESS WHEREOF, the parties hereto have executed this agreement in
duplicate.
ENVIROMETRICS DEVELOPMENT COMPANY, INC.
Signed By:
R. William Metzger
Chief Executive Officer
COMPUTER CONTROL CORPORATION
Signed By:
Harvey Padden
President
GUARANTY
Envirometrics, Inc., as an inducement to Computer Control Corporation
("Computer Control") to enter into the preceding Agreement between Computer
Control and Envirometrics Development Company, Inc. ("Envirometrics") , dated of
even date herewith (the "Agreement") hereby guarantees the performance by
Envirometrics of Envirometrics' obligations under the Agreement.
ENVIROMETRICS, INC.
Signed By:
R. William Metzger
Chief Executive Officer
EXHIBIT A - PRELIMINARY SPECIFICATION
March 23, 1992
PHYSICAL:
- Portable
- Rechargeable battery, 8 hour operating life
- Charger can power unit on AC with discharged batteries
- Input: 16 position keypad
- Outputs: 16 character by 2 or 4 line LCD display
Parallel printer port (IBM compatible)
- single well design - Unit will memorize each badge's
baseline (unexposed) value. 100 badge capacity.
- Program memory in user-changeable chip for updatesChip
contains correction curves or tables for each badge type.
"INITIALIZE" OPERATING MODE:
- - Warning: All prior data will be cleared. Does user want to print?
- - Enter hazard type and badge ID (1 to 256)
- - Error warning if ID is already in use
- - Badge is inserted and unit stores baseline value
"READ" OPERATING MODE:
- Lowest stored ID is offered as a default. Subsequently the
number is incremented for each badge. Default number can be
overwritten from keypad.
- Relative humidity and temperature are entered for each read
session. Prior values are offered as default and can be
overwritten.
- Exposure time is entered for each badge. Prior value is offered
as default and can be overwritten.
- If badge is not already inserted, unit will prompt.
- Computer will search by ID for previous reading and use it with
present reading to display:
- Hazard
- ID number
- Interval concentration
- Cumulative concentration
- Computer will ask whether to store,, warning that prior
baseline will be destroyed. If printer is detected, unit will ask
whether to print prior data before overwriting it.
- Next badge ID is offered (and can be overwritten) "PRINT"
OPERATING MODE - Continuous print mode prints each reading as
taken
- "Print" button allows printing on demand
- "Batch" mode allows choice of ID range, all readings, complete
session or only previously unprinted readings
"CALIBRATE" OPERATING MODE
- Prompts to insert white card and stores reading for later
calculations
"OUT OF MEMORY WARNING"
- If EEROM is full, user is asked which range of samples to
delete (by ID, previous session or all). User is prompted "Are
you sure?" to make certain data is not lost accidentally.
MASTER DISTRIBUTORSHIP AGREEMENT
This MASTER DISTRIBUTORSIHP AGREEMENT ("Agreement") is made effective as
of the 1st day of January, 1996, by and between ENVIROMETRICS PRODUCTS COMPANY,
a corporation organized and existing under the laws of South Carolina and having
its principal place of business at 1019 Bankton Drive, Charleston, South
Carolina, 29406 (hereinafter "Company"), and ZELLWEGER ANALYTICS, INC., a
company organized and existing under the laws of Texas, and its subsidiaries and
affiliates, having its principal place of business at 405 Barclay Boulevard,
Lincolnshire, Illinois, 60069 (hereinafter "Master Distributor").
WHEREAS, Company develops, manufactures, markets and sells certain of the
Products as defined below, and desires to sell and market the Products in the
Territory, as defined below, exclusively through Master Distributor; and
WHEREAS, Master Distributor desires to market and sell the Products in the
Territory and is or will become knowledgeable of the market for the Products in
the Territory; and
WHEREAS, Company and Master Distributor desire to enter into this Agreement
authorizing Master Distributor to promote, market, and sell Products to
Sub-Distributors and Customers in the Territory;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto, intending to
be legally bound, hereby agree as follows:
1. DEFINITIONS.
1.1 The ACT Monitoring Card System TM. The term "The ACT Monitoring Card
System TM means the system comprised of the ACT Electronic Reader and the
Cards, which system has been developed and is currently being distributed by
Company as part of the Business of Company, as listed and identified in Exhibit
1, attached hereto.
1.2 ACT Electronic Reader. The term " ACT Electronic Reader" means the
device produced by or on behalf of Company to read the Cards, as more fully
described on Exhibit 1, attached hereto.
1.3 Affiliate. The term "Affiliate" means a person, partnership, joint
venture, company, corporation, limited liability company, or the functional or
substantial equivalent of any of the foregoing under the laws of any political
subdivision in the Territory, who or which controls, or is controlled by, or is
under direct or indirect common control with, Master Distributor.
1.4 Business of Company The term "Business of Company" means the research,
design, development, manufacture, sale, distribution and service of air
monitoring and other environmental testing and measuring technologies and
products, including, without limitation, the Products.
1.5 Cards. The term "Cards" means the passive, calorimetric dosimeters
developed by Company and (i) used with the ACT Electronic Reader to perform the
function of quantitatively measuring the presence of hazardous gases, and (ii)
those cards used for qualitative measurement of the presence of hazardous gases,
but which are read visually rather than with a reader, all as listed and
described in Exhibit 1, attached hereto.
1.6 Competing Business. The term "Competing Business" means any person or
entity in the same business or substantially the same business as the Business
of Company.
1.7 Competing Product. The term "Competing Product" means any good that
performs substantially the same function(s) as any of the Cards; provided,
however, no product currently produced by Master Distributor shall be deemed to
be a "Competing Product" for purposes of this Agreement.
1.8 Copyrights. The term "Copyrights" means all original works of
authorship including literary, artistic, pictorial, graphic and other
intellectual works owned or claimed by Company which are registered with the
United States Copyright Office or the copyright office of any nation, state or
political jurisdiction within the Territory, are eligible to be so registered,
or are entitled to protection by and under the copyright laws and treaties of
the United States or under the equivalent laws of the political subdivisions,
nations and/or states within the Territory.
1.9 Customer. The term "Customer" means any end-user of a Product.
1.10 Intellectual Property. The term "Intellectual Property" means the
Copyrights, Marks and Patents, collectively or in combination, as the context
suggests.
1.11 Marketing and Sales Reports. The term "Marketing and Sales Reports"
means the reports to be developed by the Parties and by which Master Distributor
will submit to Company from time to time relating to the promotion, manner of
distribution, locations and recipients of the Products. Without limiting the
foregoing, the Marketing and Sales Reports initially agreed by the Parties
include the Sales Rollout Plan Report, attached hereto as Exhibit 3, and the
Product Tracking Report, attached hereto as Exhibit 4.
1.12 Marks. The term "Marks" means all trade names, word marks, trademarks,
service marks and logos or designs (including any trade dress that is
susceptible to protection under the laws of the United States or any other
political subdivision in the Territory), whether or not registered with the
United States Patent and Trademark Office or trademark office or registry of any
nation, state or political jurisdiction within the Territory, placed upon or
used in connection with the Business of Company or the sale, distribution,
promotion and marketing of the Products or of any other goods or services
provided or distributed by Company from time to time, and includes, without
limitation, "ACT and design," "Air-Chem Technologies" and "The ACT Monitoring
Card System; provided, however, the term "Marks" shall not include the trademark
"MDA Scientific," which is owned by Master Distributor or its Affiliate.
1.13 Parties. The term "Parties" means Envirometrics Product Company and
Zellweger Analytics, Inc.
1.14 Patents. The term "Patents" means all inventions or letters patent
owned or licensed by or on behalf of Company, and which are registered with the
United States Patent and Trademark Office or the patent office or registry in
any political subdivision, nation or state in the Territory or are eligible for
registration and/or other protection under the laws and treaties of the United
States or of any other political subdivision, nation or state in the Territory.
1.15 Products. The term "Products" means and includes only the ACT
Monitoring Card System , the ACT Electronic Reader and the Cards, together
with accessories sold in connection therewith, all as described in Exhibit 1,
attached hereto, together with any enhancements to or upgrades of such Products
as may be developed by Company from time to time during the Initial Term.
1.16 Product and Price List. The term "Product and Price List" means and
includes the list of initial prices for Products, attached hereto as Exhibit 1,
as the same may be amended from time to time during the Term as provided herein.
1.17 Purchase Order. The term "Purchase Order" means Company's standard
Purchase Order that must be used by Master Distributor when ordering Products
hereunder, the form of Purchase Order currently being used by Company being
attached hereto as Exhibit 5.
1.18 Sub-Distributor. The term "Sub-Distributor" means any distributor,
retail dealer, re-seller, or wholesaler of any of the Products (other than
Master Distributor itself), and including Affiliates of Master Distributor, and
with whom Master Distributor contracts or otherwise agrees to distribute, market
or sell some or all of the Products or to whom Master Distributor provides
Products for such distribution.
1.19 Term. The term "Term" means the Initial Term of this Agreement,
together with any Renewal Term (s) as provided herein.
1.20 Territory. The term "Territory" means the world.
2. APPOINTMENT OF MASTER DISTRIBUTOR.
2.1 Grant of Distribution Rights. Company hereby grants to Master
Distributor, and Master Distributor hereby accepts, the exclusive,
non-assignable, non-transferable and non-divisible right to promote and
distribute the Products to Sub-Distributors and Customers, to the extent
provided in this Agreement.
2.2 No Partnership or Agency Relationship. This Agreement does not create,
and shall not be construed as creating, any relationship of association,
partnership, agency, or employment between Company and the Master Distributor or
any Affiliate of either Party, and Master Distributor agrees that it is and will
conduct its business as an independent contractor with respect to Company and
its Affiliates. Master Distributor agrees not to assume, create, or enter into
any obligation, agreement, or commitment on behalf of or for the account of
Company or obligate Company or its Affiliates in any manner. Master Distributor
is not authorized to accept any service of process upon Company or to hold
itself out as the agent of Company for any reason whatsoever.
2.3 Sub-Distributor(s). Master Distributor may appoint Sub-Distributors to
distribute Products in sub-territories of the Territory, at Master Distributor's
sole discretion; provided, however, any Sub-Distributor(s) appointed by Master
Distributor (including, without limitation, Affiliates of Master Distributor)
shall agree in writing to abide, mutatis mutandis, by each and every obligation
of Master Distributor under this Agreement, and Company shall be expressly named
as a third party beneficiary of each such agreement for purposes of enforcing
its interests thereunder. Master Distributor agrees that it shall not appoint or
allow the appointment of any sub-distributors of Sub-Distributors without the
prior written consent of Company. Master Distributor agrees to provide Company
with copies of the written agreements between it and Sub-distributor(s) upon
request by Company.
2.4 No Set-Off, The existence of any claim, demand, action, or cause of
action by Master Distributor, any Sub-Distributor, or any Customer against
Company, or any parent, subsidiary, affiliate, officer, employee, agent or
director of Company, whether predicated upon this Agreement or otherwise, shall
not constitute a defense to the enforcement by Company of any of its rights
hereunder, and the dollar amount thereof may not be set-off against any sums due
from Master Distributor to Company under this Agreement, any rule of law to the
contrary notwithstanding.
3 . OBLIGATIONS OF COMPANY.
3.1 Duties of Company. Company agrees to do the following in connection
with the sale of the Products to Master Distributor and the performance of its
obligations hereunder:
a. Supply of Products. Company agrees to use its best efforts to supply, or
to cause to be supplied, to Master Distributor, at mutually agreed delivery
times and dates which Company will use its best efforts to meet, those Products
duly ordered by Master Distributor pursuant to the Purchase Order attached as
Exhibit 5 to this Agreement, but in no event shall Company be required to modify
any of the Products to meet the requirements of Master Distributor, of any
Sub-Distributor or Customer, or of any political subdivision of the Territory.
b. List of Purchasers. Within ten (10) days of the date of execution of
this Agreement, Company will provide Master Distributor a list of all purchasers
of the Products prior to the date hereof.
c. Technical Support. Company will use its best efforts during the Term of
this Agreement to provide the following technical support in connection with the
sale of the Products hereunder, the details and implementation of which shall be
mutually agreed upon by the parties:
i. Initial and periodic training of Master Distributor and duly appointed
Sub-Distributors;
ii. Technical support literature, including warranty information, if any,
pertaining to the Products shipped;
iii. Toll-free (800) number available in the United States to Master
Distributor, Sub-Distributors and Customers;
iv. Receive, track and follow-up on Product complaints reported to Company
by Master Distributor, Sub-Distributors and Customers on a form to be mutually
agreed upon by Master Distributor and Company, and provide Master Distributor
with reports of such activities within fifteen (15) days of the last day of each
calendar year quarter during the term of this Agreement;
v. In conjunction with and with the assistance and advice of Master
Distributor, present one (1) user seminar per year on the Products in
association with and during the same period of time as the annual American
Industrial Hygiene Conference and Exposition (AIHCE); and
vi. Develop text and language and provide camera-ready artwork for
production by Master Distributor of Technical Bulletins which Master Distributor
shall maintain and update as and when reasonably necessary to reflect
modifications in, usage of, or changes in the specifications, warranties, laws,
or regulations pertaining to the Products.
d. Development of New Cards. Company will use its best efforts to develop
new Cards for detecting the presence of additional chemicals and which can be
used with The ACT Monitoring Card System TM, and, during the Term of this
Agreement, Company agrees to make available for distribution by Master
Distributor, under the terms of this Agreement at prices mutually agreed by the
Parties, any such cards, which shall constitute "Products" for purposes of this
Agreement.
e. Coordination of Product Evaluations. Company will coordinate and monitor
Product evaluations and reporting activities by academia, governmental agencies
and other groups, except for routine evaluations by Customers with regard to
purchasing decisions.
f. European CE Mark Certification. Company will use its best efforts to
confirm its eligibility to use the CE Mark certification in the European Union
(ELD for the Products.
3.2 Standard of Performance. Company agrees to use its best efforts to
perform each of its duties and obligations described in this Agreement in a
commercially reasonable manner.
3.3 Survival of Obligations. The duties and obligations set forth in
Section 3.1 shall survive the termination of this Agreement for any reason.
3.4 No Solicitation of Employees. During the term of this Agreement and for
a period of one (1) year following termination, for any reason, of this
Agreement, Company will not, either directly or indirectly, on its own behalf or
on behalf of others, solicit, divert, or hire away, or attempt to solicit,
divert, or hire away any person employed by Master Distributor, whether or not
such person is a full-time or part-time employee of Master Distributor, and
whether or not such employment is pursuant to a written agreement, is for a
determined period, or is at will.
4. WARRANTIES; REPAIRS AND REPLACEMENT
4.1 Product Warranties. Products shall be provided to Master Distributor,
Sub-Distributors and Customers pursuant to the terms of this Agreement only with
the warranties (limited, extended or otherwise), if any, then in use by Company
and customarily provided by Company in connection with the sale of a specific
Product. The current warranties to accompany the Products will be provided to
Master Distributor within ten (10) days following the execution of this
Agreement by both Parties.
4.2 No Additional or Modified Warranties by Master Distributor or
Sub-Distributors. Master Distributor and Sub-Distributors shall give or make no
other or different warranties or representations as to quality, merchantibility,
fitness for a particular use or purpose, or any other features of the Products
other than those contained in the warranty (limited, extended or otherwise), if
any, given by Company and set forth in the literature accompanying and
applicable to specific Products.
4.3 New, Additional, or Amended Warranties by Company. From time to time
during the term of this Agreement, Company may provide to Master Distributor
certain warranty and product labeling materials, disclosure literature, and
directions for the use and availability of such materials and literature as
required by applicable law and Company policy as communicated to Master
Distributor. Master Distributor shall promptly, diligently, strictly and
continuously comply with the instructions for the use and availability of all
such materials and literature and with any instructions and procedures imposed
by law or promulgated by Company regarding the sale, safety, or recall of any of
the Products.
4.4 Disclaimer of Warranties THE WARRANTIES CONTAINED OR DESCRIBED IN THIS
SECTION 4 ARE MADE EXPRESSLY IN LIEU OF ANY AND ALL WARRANTIES EXPRESSED OR
IMPLIED. COMPANY DOES NOT WARRANT THAT THE PRODUCTS ARE OR WILL BE MERCHANTABLE
OR FIT FOR ANY PARTICULAR PURPOSE, EXCEPT AS EXPRESSLY PROVIDED HEREIN. THE
LIABILITY OF COMPANY IS SOLELY LIMITED TO THE REIMBURSEMENT OF THE PURCHASE
PRICE PAID FOR ANY PRODUCTS WHICH DO NOT CONFORM TO THE WARRANTIES HEREUNDER.
4.5 Repair or Replacement of Products. Company will, at its sole option,
repair or replace Products which contain defects appearing or which develop (i)
under proper use of the Product, (ii) within the period of time specified by
Company in the literature accompanying Products or communicated to Master
Distributor at the time the Products have been delivered, and (iii) result
solely from faulty design, materials or workmanship; provided, however, to
remain eligible for such warranty, the allegedly defective Products must be
returned to Company at Master Distributor's expense within thirty (30) days
(sixty (60) days for Products located outside of the United States) of discovery
of the alleged defect(s), but in any event before (30) days (sixty (60) days for
Products located outside of the United States) after the expiration of the
applicable warranty period. Master Distributor will assume charges for freight
both to and from Company on warranty and non-warranty work unless otherwise
agreed by the parties hereto. Prior to the return of any such allegedly
defective Products, Company must assign such Product to be returned a Return
Goods Authorization ("RGA") number, under protocols established by Company and
Master Distributor. Master Distributor shall attach to each Product to be
returned a written explanation of the defect in such Product, along with the
assigned RGA number.
4.6 Limitation of Liability. In no event shall Company, its agents,
affiliates, employees, officers or directors be liable to Master Distributor,
Sub-Distributors, or Customers for any special, consequential or incidental
damages, or for any claim, loss, or damage, whether in contract, tort or
otherwise, arising from or relating to (i) any breach of warranty, (ii) the use,
performance, or failure to function of any of the Products, or (iii) any repair
work performed or replacements made in connection therewith, in excess of the
price paid to Company for such Products. Furthermore, Company shall not be
responsible for any claims, causes of action, or damages resulting from Master
Distributor or a Sub-Distributor giving erroneous, false or misleading technical
or warranty information regarding any Products to any Sub-Distributors or
Customers, or by virtue of any modification or extension of any such warranties.
4.7 Warranties to Master Distributor. The only warranty to be provided to
Master Distributor in connection with the Products is a warranty that the
Products conform to their description on the Purchase Orders submitted by Master
Distributor to Company and to the technical literature submitted by Company to
Master Distributor.
5. OBLIGATIONS OF MASTER DISTRIBUTOR.
5.1 Duties of Master Distributor. During the Term of this Agreement, and in
addition to fulfilling each of its other duties under this Agreement, Master
Distributor agrees and covenants to:
a. Advertising. Advertise and promote the Products in appropriate
commercial media; provided, however, Master Distributor shall consult with
Company and receive prior written approval of Company for all advertising copy
or materials of any sort prior to publication or distribution of the same;
b. Sub-Distributor and Customer Contact. Identify and contact
Sub-Distributors and Customers in person, by telephone, and using direct
mailings, and advise and provide Sub-Distributors and Customers with the
specifications, warranties (if any), use, functionality, and performance
characteristics of the Products in strict accordance with any specifications or
warranties given by Company as provided in this Agreement;
c. Records. Maintain reasonably detailed records and information concerning
all Sub-Distributors and Customers, and provide on the fifteenth (15th) day
after the last day of each calendar year quarter the reports and information on
the Marketing and Sales Reports;
d. Reports. Promptly provide Company with all periodic reports, including
the Sales and Marketing Reports, pursuant to the terms of this Agreement;
e. Translations. Translate, prior to distribution of Products and at its
sole expense, all literature accompanying Products, including any warranties or
specifications offered therein, into the language(s) customarily used or legally
required to be used in the political subdivisions, nations and states in the
Territory to and in which Products will be sold or distributed. In connection
with such obligation, Master Distributor shall bear all liability for, and shall
indemnify Company against, any and all damages, claims, causes of action, or
loss of any kind arising out of, caused by, or related to improper, incomplete,
false, or misleading translations;
f. Investigation of Laws Governing Warranties. Ensure, prior to
distribution of Products and at its sole expense, that (i) the warranties, if
any, offered with the Products carry the same effect and obligations for Company
under, and do not contravene, the laws and regulations of any nation or state in
the Territory in or to which Products will be distributed, (ii) no other
warranties are imposed on or otherwise created with respect to the Products by
the laws and regulations of the nations and states in the Territory in or to
which Products will be distributed, and (iii) provide Company with notice and
the exact nature of any such deficiencies in or additions to the warranties
proposed to be offered with the Products. Master Distributor agrees it shall not
distribute the Products subject to such deficiencies or additional warranties
without the prior written approval of Company;
g. Certification and Labeling. Ensure, prior to distribution of Products
and at its sole expense, that the Products are properly certified and labeled
for distribution according to the laws and regulations of all political
subdivisions or nations in the Territory in which Products will be distributed;
provided, however, that necessary modifications to Products to meet
certification and labeling requirements shall be made only at the expense of
Master Distributor and upon written approval by Company;
h. European CE Mark Certification. Cooperate with and assist Company in
confirming and/or certifying that the Products meet the CE Mark certification
requirements for sales of Products in the European Union;
i. Notification of Defects. Notify Company promptly of any known defects or
other technical problems concerning the installation, use, or performance of the
Products pursuant to Section 4, and provide on the fifteenth (I 5th) day of
after the last day of each calendar year quarter the Sales and Marketing Reports
and any other reports developed and mutually agreed upon by the Parties;
j. Notification of Evaluation. Notify Company, prior to any discussion,
sales or other distribution of Products, of any contact with or from academia or
regulatory agencies of any government in the Territory (other than contacts or
sales made to or with either of them solely as a Customer), and obtain the
written consent of Company prior to selling or otherwise providing Products to
any entity which Master Distributor knows or should know intends to publish
material or information which describes or evaluates any of the Products, or
parts thereof;
k. Payment of Amounts Due. Promptly pay when due, all monies owed Company
pursuant to the terms of this Agreement;
l. Intellectual Property Search. Conduct, prior to distribution of Products
and at its sole expense, a diligent search of the patent, trademark, copyright
and all other intellectual property records, whether such rights exist at common
law or by statute, in all nations and states within the Territory to or in which
the Products will be distributed, except for the United States, to determine if
the sale of the Products in those nations or states would infringe any
proprietary rights of third parties therein, and provide a copy of the search
results to Company; and Master Distributor shall not distribute Products in or
to those nations or states without the prior written approval of Company; and
m. Notification of Infringement. Promptly notify Company in writing of any
potential (based on the search described in the preceding paragraph (1)) or
alleged infringement of, or any alleged infringement of the property rights of
another by, the Products in any nation or state in the Territory, giving full
information in regard to such potential and/or alleged infringement and any and
all legal proceedings or claims which may have been or may be brought or made
relating to such alleged infringement; and Master Distributor shall not respond,
contest, settle, or otherwise conduct such proceeding or handle such claims
without prior consultation with and written approval from Company, unless a
response is necessary to avoid compromising the rights of Company in such
proceedings or with regard to such claims.
5.2 Limitations on Activities of Master Distributor. During the Term of
this Agreement, Master Distributor agrees and covenants as follows:
a. No Competition. During the term of this Agreement and for a period of
two (2) years following termination, for any reason, of this Agreement, Master
Distributor shall not, either directly or indirectly, on its own behalf or on
behalf of others, engage in the manufacture, distribution, or service of any
Competing Products, nor shall it assist, engage in, or represent a Competing
Business.
b. No Repackaging. Master Distributor and Sub-Distributors shall not
obfuscate, modify or discard the packaging of, or repackage in any respect, the
Products.
C. No Unauthorized Advertising. Master Distributor and Sub-Distributors
shall not advertise, market, or promote in any manner the Products without prior
consultation with and written approval of Company.
5.3 Standard of Performance. Master Distributor agrees to use its best
efforts to perform each of its duties and obligations described in this
Agreement in a commercially reasonable manner that preserves and protects
Company's business reputation and Intellectual Property rights in the Territory.
5.4 Survival of Obligations. The duties and obligations set forth in this
Section shall survive the termination of this Agreement for whatever reason.
5.5 No Solicitation of Employees. During the term of this Agreement and for
a period of one (1) year following termination, for any reason, of this
Agreement, Master Distributor will not, either directly or indirectly, on its
own behalf or on behalf of others, solicit, divert, or hire away, or attempt to
solicit, divert, or hire away any person employed by Company at any time during
the Term, whether or not such person is a full-time or part-time employee of
Company, and whether or not such employment is pursuant to a written agreement,
is for a determined period, or is at will.
6. PRICE AND PAYMENT.
6.1 Price and Payment. Company agrees to supply the Products to Master
Distributor at the prices specified in the Price List; provided, however,
Company may only modify the prices reflected on the Price List as provided in
Section 6.4, below. Master Distributor agrees to pay Company for Products
ordered hereunder as follows:
a. Quarterly Prepaid Purchase Deposits. Master Distributor shall pay to
Company, in cash or immediately available funds, on the first day of each
calendar quarter during the Term of this Agreement, the full amount of the
Quarterly Prepaid Purchase Deposit for that quarter as specified on the schedule
attached hereto as Exhibit 2 (each a "PPD" and collectively the "PPDs"), which
shall be credited by Company toward purchases of Products by Master Distributor
upon actual shipment(s) of Products. The PPDs for each of the calendar quarters
in 1997 shall be agreed and signed by the Parties on or before December 15,
1996, and both parties covenant and agree to negotiate in good faith the amounts
of such second-year PPDS. The Parties further agree that the PPDs for the year
1997, when agreed and incorporated into a writing signed by the Parties as
provided herein, shall constitute an amendment to Exhibit 2 and a part thereof
for all purposes hereunder.
b. Refunds of Quarterly PPD. Within fifteen (15) days following the end of
each calendar year during the Term, Company shall provide a written report to
Master Distributor of the cost and amount of Product ordered by Master
Distributor hereunder during such calendar year (the "Report Year"). Company
agrees that, if the cost of Products ordered by Master Distributor during the
Report Year is less than the total amount of PPDs paid during the Report Year,
Company will refund to Master Distributor, on or before January 30 of the year
next following the Report Year, the amount of the difference between the PPDs
for such year and the orders for such year, less the full amount of the
applicable PPD for the quarter first following the close of the Report Year. The
Parties agree that, except as expressly provided herein, no amount of any PPD
shall be refunded by Company to Master Distributor.
C. Additional Orders. For orders of Products which, during any calendar
quarter, exceed in value the PPD for such quarter, Master Distributor shall pay
Company pursuant to prices set forth on the then-current Price List for
Products.
Reduction of Obligation to Pay PPDS. The Parties agree that the amount of
the PPD for a quarter shall be automatically reduced by twenty-five percent
(25%) if Company is not certified to use the CE Mark certification during such
quarter; provided, however, the PPD for the first quarter of 1996 shall not be
so reduced unless Company shall fail to obtain the CE Mark certification prior
to March 1, 1996; provided, further as to any subsequent calendar quarter, the
PPD for any such quarter shall be paid in full for such quarter, immediately in
arrears, if the CE Mark certification, although not certified at the beginning
of such quarter, is obtained by the close of the first month of such quarter.
Termination for Late Payment. In the event Master Distributor shall, at any
time, fail to pay when due any PPD or any amounts due to Company under this
Agreement, Company may terminate this Agreement.
6.4 Price Changes. Company shall have the right to change, at any time and
from time to time, the price(s) charged for Products during the Term; provided,
however, Company agrees not to change such prices during the first year this
Agreement is in effect, except to pass on to Master Distributor the actual
increase in the cost to Company for the Products, or for the materials or
sub-components to be included in Products, to be purchased by Master Distributor
(hereinafter, a "Cost Increase"). Company agrees to provide Master Distributor
with ninety (90) days prior written notice of the effective date of any increase
in the prices charged for Products (the "Price Change Notice Period"). In such
case, the purchase price of Products ordered under a Purchase Order and accepted
by Company (as provided herein) prior to the commencement of a Price Change
Notice Period requesting delivery of all or a part of such Products during the
Price Change Notice Period shall be the purchase price in effect prior to the
effective date of such price change for that portion of the Products with a
requested delivery date within the Price Change Notice Period, whether or not
delivered prior to the effective date of the price change, and shall be the
price as changed for any such Products with a requested delivery date after the
Price Change Notice Period.
7. PRODUCT ORDERS and DELIVERY.
7.1 Orders. Master Distributor shall order Products only on Company's
then-current Purchase Order, and no purchase terms other than as contained in
the Purchase Order or in this Agreement shall apply to the sale or purchase of
Products hereunder unless agreed in writing by the Parties.
7.2 Quarterly Orders. Master Distributor shall provide Company, at the time
of payment of the Quarterly PPD, with completed Purchase Orders for Products to
be delivered during that quarter, and the value of such orders (calculated by
multiplying the quantity of Products ordered by their respective price per item
listed on Exhibit 1) shall be credited against the PPD for such quarter upon
delivery to Master Distributor as provided herein. Orders during any quarter
which exceed in value the amount of the PPD applicable to that quarter shall be
paid by Master Distributor- within thirty days from the invoice date for such
Products, and Master Distributor shall not be allowed to credit such additional
purchases against future PPDs unless expressly provided herein or otherwise
agreed by Company in writing.
7.3 Packing and Packaging. The Products shall be packed and shipped by
Company in accordance with Company's standard packaging procedures; provided,
however, the packaging of the Products may bear Master Distributor's name and
design(s) (as provided by Master Distributor to Company in camera-ready form),
so long as the same shall be mutually acceptable to the Parties.
7.4 Acceptance of Orders. All Product Purchase Orders submitted by Master
Distributor shall be subject to acceptance and approval, in writing or by
shipment of the Products ordered, by Company at its principal place of business.
Orders shall not be binding until the earlier of such acceptance or shipment,
but only as to the portion of the Purchase Order actually shipped. Company shall
not be liable for any delays in the delivery of the products to Master
Distributor, Sub-Distributors, or Customers that result from Force Majeure (as
defined hereinbelow).
7.5 Cancellation of Order. Product orders or portions of Product orders may
not be canceled by Master Distributor unless written notice of cancellation is
actually received by Company prior to initiation of the manufacturing process by
Company or shipment of ordered Products to Company by Company's supplier(s).
7.6 Inspection by Master Distributor. The Master Distributor shall be
obligated to inspect all Products upon arrival at the first storage or delivery
point after the same are placed on Master Distributor's carrier at the shipping
point, and Master Distributor shall, within ten (10) days of arrival at such
storage or delivery point, give written notice to Company of any claim for
non-conformity, damages or shortages. If Master Distributor fails to give such
notice or to obtain an extension in writing from Company prior to the expiration
of such ten (10) day period, the Products shall be deemed to be accepted.
Modifications or Substitutions. Company reserves the right at any time to
make changes to the Products whenever Company reasonably believes such changes
will facilitate the performance of the Products or represent non-substantial
substitutions or modifications not adversely affecting such performance.
Taxes and Other Charges. Master Distributor agrees to pay, collect, and
remit on the dates when they are due all value-added, sales, use, property, and
other taxes, duties, and assessments imposed by any governmental agency in the
Territory in respect to the Products, other than income or similar withholding
taxes imposed upon Company by any governmental agency of the Territory, and
Master Distributor agrees to indemnify and hold Company harmless against any
such liabilities, including such fines and costs as may be incurred for the
failure to pay such taxes, duties, and assessments.
7.9 Compliance with Export and Import Laws and Requirements. Master
Distributor agrees to comply fully with all applicable export and import laws,
regulations, and orders of the United States and each other political
subdivision of the Territory and to adopt such policies and procedures as may be
required to comply with such laws, regulations, and orders. Notwithstanding any
other provisions of this Agreement, Master Distributor agrees not to export or
allow trans-shipment or otherwise make the Products available to any third party
within the Territory if Master Distributor knows, or has reasonable grounds to
suspect, that such third party is planning to use or otherwise transfer the
Products in violation of such export laws, regulations, or orders. All of
Company's obligations under this Agreement shall be subject to the grant and
effectiveness of all necessary United States export authorizations and
approvals.
7.10 Shipment and Risk of Loss. All Products to be sold hereunder shall be
sold F.O.B. (as defined in the Uniform Commercial Code, Article 2, as in force
under the laws of the State of South Carolina) Company's docks, and Company's
sole obligation as to such delivery shall be to make such Products available to
a carrier designated by Master Distributor. Risk of loss for Products so
delivered shall pass when they are handled by the said carrier in connection
with such delivery.
7.11 Title to the Products shall not pass to Master Distributor, but shall
be retained by Company, until payment in full for the Products has been received
by Company from Master Distributor.
Delivery. Company shall use its reasonable efforts to accommodate
Master Distributor's requests to deliver the Products on the date(s)
requested by Master Distributor; provided, however, and notwithstanding the
foregoing or any other term of this Agreement or of the Purchase Order,
Company reserves the right to make partial deliveries of Products from time
to time prior to the requested delivery date. Each delivery which Company
shall make of Products in response to accepted Purchase Orders shall be
regarded as a separate contract of sale and no one default in delivery
shall be cause for terminating the relationship of the Parties under the
Agreement.
8. PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY.
8.1 License, Confidentiality and Non-Disclosure Agreement. In order to
protect the proprietary information and intellectual property of Company,
Master Distributor and Company agree to execute the License,
Confidentiality and Non-Disclosure Agreement attached hereto as Exhibit 6
and expressly incorporated herein. The termination of this Agreement for
any reason whatsoever shall not affect, alter or terminate the License,
Confidentiality and Non-Disclosure Agreement other than the License
contained therein whereby Master Distributor may use certain Marks, which
shall automatically terminate along with this Agreement.
9. TERM AND TERMINATION
9.1 Term of Agreement. The initial term of this Agreement shall be for
a period of two (2) years from the effective date of execution of this
Agreement (the "Initial Term"); provided, however, this Agreement shall be
automatically renewed, but only upon terms and conditions to be mutually
negotiated and agreed by the parties, for an additional period of two (2)
years following the expiration of the Initial Term, unless (i) either party
shall give to the other party written notice of its intention to terminate
this Agreement no fewer than thirty (30) days prior to the end of the
Initial Term, 1-5, 1996, this Agreement is earlier terminated as provided
herein.
9.2 Termination by Company. Notwithstanding the provisions of this
Article, Company may terminate this Agreement at any time by providing
Master Distributor not less than fifteen (15) days prior written notice
thereof, and thirty (3 0) days opportunity to cure the same, after the
occurrence of any of the following events:
a. Failure to Pay. Failure to pay any and all amounts due, including
without limitation, any Quarterly PPD;
b. Failure to Report. Failure to promptly prepare and deliver to
Company the reports to be provided pursuant to this Agreement;
c. Insolvency. Master Distributor, or its parent company, is declared
or acknowledges that it is insolvent or is otherwise unable to pay its
debts as they become due; upon the filing of any proceeding by or against
Master Distributor, whether voluntary or involuntary, for bankruptcy,
insolvency, relief from creditors, arrangement, reorganization,
composition, receivership or similar relief under the laws of any
government in the Territory; or upon the appointment of a receiver or
manager in respect to any part of Master Distributor's business;
d. Sale of Business. Master Distributor enters into any agreement
relating to the acquisition of Master Distributor of all or substantially
all of its assets by an unaffiliated third party, or a majority of the
equity interest in Master Distributor is sold or otherwise transferred to a
third party which is not an Affiliate of Master Distributor;
e. Assignment of Master Distributorship. Master Distributor assigns or
transfers this Agreement or any of its rights or obligations hereunder
without Company's prior written consent; or
f. Violation of Material Provision. Master Distributor violates any
other material provision of this Agreement or of the Confidentiality and
Non-Disclosure Agreement.
g. Failure to Agree. The Parties fail to reach agreement as to the
PPDs for the year 1997 on or before December 15, 1996, as provided in
Section 6.l.a, above.
9.3 Termination by Master Distributor. Notwithstanding the provisions of
this Agreement, Master Distributor may terminate this Agreement at any time by
providing Company not less than fifteen (I 5) days prior written notice thereof
and thirty (30) days opportunity to cure the same (and provided that Master
Distributor is not then in breach of this Agreement), after the occurrence of
any of the following events:
a. Failure to Deliver Products. Subject to the other terms and conditions
of this Agreement concerning delivery of Products, if Company fails to deliver
Products ordered by Master Distributor within sixty (60) days of acceptance of
the Purchase Order for the same by Company.
b. If Company is declared or acknowledges in writing that it is insolvent
or I otherwise unable to pay its debts as they become due; upon the filing of
any proceeding, whether voluntary or involuntary, for bankruptcy, insolvency,
relief from creditors, arrangement, reorganization, composition, receivership or
similar relief under federal or state laws; or upon the appointment of a
receiver or manager in respect to any part of its business;
c. Violation of Material Provision. Company violates any material provision
of this Agreement, which is not cured within a reasonable period of time after
written notice from Master Distributor to Company.
d. Failure to Agree The Parties fail to reach agreement as to the PPDs for
the year 1997 on or before December 15, 1996, as provided in Section 6.1.a,
above.
9.4 Actions Following Termination. Upon termination of this Agreement for
any reason, the Parties agree to continue cooperating with each other and to
carry out an orderly termination of their relations, as follows:
a. Master Distributor's Agreement. Master Distributor agrees, not later
than ten (10) days following the effective date of such termination, to
immediately provide Company with all outstanding Sales and Marketing Reports and
payments due hereunder, to immediately cease continued marketing of the
Products, and to return to Company all Products, Proprietary Information,
Intellectual Property, promotional or other materials, and all other information
of Company, proprietary or otherwise, in Master Distributor's possession or
under its or its Affiliates' control; provided, however, any Product not
repurchased by Company hereunder upon termination may be sold by Master
Distributor pursuant to the terms of this Agreement, so long as Company is
provided a reasonable time to determine whether to repurchase such Products.
b. Company's Actions. Company agrees to allow the return of any Products
delivered to Master Distributor and for which Master Distributor has paid
Company, so long as the said Products to be returned represent Products
purchased in excess of the value of the aggregate PPDs paid by Master
Distributor up until the time of termination; and in such event Company agrees
to promptly refund to Master Distributor (less costs of shipping and handling)
the amounts actually paid by Master Distributor to Company for such returned
Products, so long as the same are returned by Master Distributor in their
original packaging, unaltered, unused, and with no fewer than six (6) months
remaining until the date of expiration printed on the Product packaging.
9.5 Refunds and Restocking Charges:
a. Restocking- Charges. Upon termination of this Agreement for any reason,
Master Distributor agrees to pay to Company a restocking charge equal to twenty
percent (20%) of the value of (i) any Product in Company's inventory that is
packaged using Master Distributor's name or Marks, and (ii) any Product returned
by Master Distributor under Section 9.4.b. In connection therewith, the Parties
agree that the restocking charge described above (A) represents a sum reasonably
calculated to cover the cost to Company of repackaging and restocking affected
units of Product for sale by Company, and not a penalty or liquidated damages,
(B) shall be based upon the actual cost to Master Distributor of Products as
determined by the then current Price List, (C) shall be paid immediately upon
calculation by Company and may be deducted by Company from and set off against
any sums due to Master Distributor from Company under this Agreement, and (D)
shall be due to Company in addition to any other sums, if any, due by Master
Distributor to Company at the time such charge is assessed.
b. Refunds of Quarterly PPD Upon Termination. Within fifteen (15) days
following the termination of this Agreement, Company shall provide a written
report to Master Distributor of the cost and amount of Product ordered by Master
Distributor hereunder during the calendar year in which such termination takes
effect (the " Termination Report Year"). Company agrees that, if the cost of
Products ordered by Master Distributor during the Termination Report Year is
less than the total amount of PPDs paid during the Termination Report Year,
Company will refund to Master Distributor, within thirty (30) days thereafter,
the amount of the difference between the PPDs for such year and the orders for
such year, less any applicable Restocking Charges.
9.6 Continuing Obligation. No termination of this Agreement for any reason
whatsoever shall affect the continuing obligations of Master Distributor under
any provisions of this Agreement relating to indemnification of Company for the
proprietary or confidential nature of the information provided to Master
Distributor by Company or under the License, Confidentiality and Non-Disclosure
Agreement. The Parties agree that the provisions of this Paragraph are
reasonable and necessary to protect the interest of Company and Master
Distributor.
9.7 Liability on Termination Company shall not have any liability to Master
Distributor solely by reason of the termination of this Agreement including, but
not limited to, any liability or obligation, statutory or otherwise, to
compensate or reimburse Master Distributor for any indemnity, claims, or damages
whatsoever including, but not limited to, claims relating to lost revenue or
lost profits or reimbursement of any expenditures, investments, leasehold, or
employment obligations, or other continuing commitments incurred by such party
in the performance of its duties or obligations hereunder. Master Distributor
hereby expressly waives all indemnities, compensations, and similar claims, to
which it might otherwise be entitled under applicable law of any nation or state
in the Territory, agrees to indemnify and hold Company, its officers, directors,
agents and employees, harmless from and against all claims of Master
Distributor's officers, employees, agents and Sub-Distributors for compensation,
commissions, severance, social security, or other similar payments, and agrees
to withdraw promptly as the registered distributor of Company from the
commercial registry in each jurisdiction within the Territory and agrees not to
so register thereafter.
10. INDEMNIFICATION
10.1 Indemnification by Master Distributor. Without limiting any other duty
of indemnification contained in this Agreement, Master Distributor agrees to
indemnify and hold harmless Company and its Affiliates, and any of their
officers, employees, directors and agents, from and against any and all damages,
claims, liabilities, costs, and expenses, including attorney's fees, arising out
of (i) any misrepresentations by Master Distributor or Sub-Distributor(s) and
their respective officers, agents or employees, (ii) any violation by Master
Distributor or Sub-Distributor(s) of any of the material provisions of this
Agreement, (iii) any wrongful or intentional act or omissions on the part of
Master Distributor or Sub-Distributor(s) and their respective officers, agents
or employees, or (iv) any action based on the infringement of any patent,
trademark or copyright in any jurisdiction within the Territory.
10.2 Indemnification by Company. Company agrees to indemnify and hold
harmless Master Distributor and its Affiliates, and any of their officers,
agents directors and employees, from and against any and all damages, claims,
liabilities, costs, and expenses with respect to (i) any misrepresentations by
Company or its officers, agents or employees with respect to the Products, (ii)
any violation by Company of any of the material provisions of this Agreement.
GENERAL PROVISIONS.
11.1 Complete Agreement/Incorporation of Exhibits. This Agreement sets
forth the entire understanding between the Parties hereto with respect to the
subject matter hereof. All Exhibits to this Agreement referred to herein are
incorporated by reference. This Agreement merges all previous discussions and
negotiations between the Parties or the named Guarantors of this Agreement and
supersedes and replaces any and every other agreement which may have existed
between Company and Master Distributor, including the Letter of Intent executed
on or about December 12, 1995, the Non-Disclosure and Confidentiality Agreement
executed on or about September 1, 1994, and the Confidentiality Agreement
executed on or about October 11, 1995, by and between Company and Master
Distributor.
11.2 Modification or Amendment. Any modification or amendment of any
provision of this Agreement must be in writing and bear the signatures of the
duly authorized representative of both Parties and both Guarantors, unless any
such modification is expressly permitted to be made by one of the Parties.
11.3 No Implied Waivers. Failure of either Party to exercise any right or
option that is granted herein, or to require the performance by the other Party
hereto of any provision of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent a subsequent exercise or enforcement
of such provision or be deemed a waiver of any subsequent breach of the same or
any other provision of the Agreement.
11.4 Assignability. Master Distributor shall not sell, assign, transfer,
convey, delegate, or encumber its duties and obligations hereunder, or any
rights or interest hereunder, and shall not suffer or permit any voluntary
assignment or transfer or encumbrance thereof, by operation of law or otherwise,
without the prior written consent of Company. Company reserves the right to
assign this Assignment or any of its duties, obligations, rights, or interest
hereunder to any direct or indirect subsidiary or Affiliate of Company.
Notice. All notices, requests, reports, submissions, and other
communications permitted or required to be given under this Agreement shall be
in the English language and shall be deemed to be duly given if such notice or
communication shall be in writing and received by the Parties at the following
addresses until such time as either Party hereto shall given the other party
written notice of a change of address in accordance with the provisions hereof.
If to Company:
Envirometrics Products Company
Attn.: Walter H. Elliott, III, President
10 1 9 Bankton Drive
Charleston, South Carolina 29406
Facsimile: 803-740-1721
With a copy to:
Timothy D. Scrantom, Esquire
Ten State Street, LLP
10 State Street
Charleston, SC 29401
Facsimile: 803-937-4310
If to Master Distributor:
Zellweger Analytics, Inc.
Attn.: Mr. Jon McAlear, President 405 Barclay Boulevard
Lincolnshire, IL 60069
Facsimile:
Conformity With Local Laws. The rights and obligations of the Parties
hereunder are subject to all applicable laws, orders, and regulations of the
various governmental authorities having jurisdiction over the Parties. In the
event that any of the foregoing shall result in a modification or alteration of
this Agreement, either Party hereto may request that this Agreement be modified
with respect thereto, to the mutual satisfaction of the Parties hereto, or
either party may, in its sole discretion, terminate this Agreement.
Compliance with Foreign Corrupt Practices Act and Boycott Laws Master
Distributor agrees to comply fully with all applicable laws, regulations, and
orders promulgated by the United States pursuant to the Foreign Corrupt
Practices Act, any United States Boycott Laws, and the United States
Anti-Boycott Laws, as the same may be amended from time to time, and to adopt
such policies and procedures as may be required to comply with such laws,
regulations, and orders. Notwithstanding any other provisions of this Agreement,
Master Distributor agrees not to export or otherwise make the Products available
to any third party if Master Distributor knows, or has reasonable grounds to
suspect, that such third party has conducted, is conducting, or will conduct its
business in the Territory in violation of the laws, regulations, or orders
promulgated by the United States pursuant to the Foreign Corrupt Practices Act
or other applicable United States laws.
Governing Law: Jurisdiction and Venue. This agreement shall be governed and
construed in accordance with the laws of the State of South Carolina and of the
United States, including any applicable treaties or conventions to which the
United States is a party, but excepting any South Carolina or United States rule
which would result in the application of the law of a jurisdiction other than
the State of South Carolina; provided, however, that any and all disputes under
this Agreement are expressly submitted to arbitration as described in paragraph
II. II below in reliance on 9 U.S.C. Sections 1-14, as amended from time to
time, and in reliance on enforcement of any arbitral award pursuant to the
Convention on Recognition and Enforcement of Foreign Arbitration Awards of June
10, 1958, as codified at 9 U.S.C. Sections 201-208.
Arbitration
a. Location Rules: Binding Decision. Without limiting the application of
any dispute settlement provisions contained in the Exhibits hereto, the Parties
agree that all disputes, controversies or differences which may arise between
the parties out of or in relation to or in connection with this Agreement shall
be finally settled by arbitration to be held in Atlanta, Georgia, United States,
in accordance with the Rules of the American Arbitration Association, New York,
New York, United States, before a single arbitrator appointed by the Parties
from among the members of the National Panel of Arbitrators of the American
Arbitration Association. If the Parties are unable to agree on an arbitrator
within thirty (30) days following receipt of a notice to submit to arbitration
sent as provided in this Agreement, the Parties expressly agree that such
arbitrator shall be chosen by the Chief Judge of the U.S. Federal District Court
for the Northern District of Georgia, Atlanta Division. To the extent not
inconsistent with the Rules of the American Arbitration Association, the United
States federal rules of civil procedure shall apply to such proceedings. The
determinations of such arbitrator will be final and binding upon the parties to
this Agreement, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction and application may be made to such
court for a judicial acceptance of the award and an order of enforcement, as the
case may be. Each Party shall bear its own costs of the arbitration and shall
equally bear the costs of the arbitrator.
b. Stipulation of Submission. The parties hereto stipulate that submission
of disputes to arbitration as provided in sub-paragraph 11.11(a) hereof and
arbitration pursuant thereto shall be a condition precedent to any suit, action,
or proceeding instituted in any court or before any administrative tribunal with
respect to this Agreement. The arbitration provisions hereof shall, with respect
to any controversy or dispute arising out of this Agreement, survive the
termination or expiration of this Agreement.
11.10 Force Majeure. The Parties hereto shall be not be liable for any
failure to perform any of their duties and obligations under this Agreement if
such failure is caused by the occurrence of any event beyond the reasonable
control of such party, including, without limitation, fire, flood, strikes and
other industrial disputes, failure of raw material suppliers or equipment
manufacturers, accidents, wars, riots, insurrections, acts of God, or orders of
any government department or agency; provided, however, performance by the
affected Party shall only be suspended (a) for such time as the unforeseen event
prevents performance of the party's duties and obligations hereunder and, upon
cessation of the unforeseen event, the party shall immediately resume
performance under this Agreement, or (b) for six (6) months from the
commencement of the unforeseen event after which this Agreement shall be
terminated and the Parties shall have the obligations set forth in Article 9.
11.11 Severability. If any provision of this Agreement is determined to be
in violation of any applicable law or otherwise invalid or un-enforceable, such
provision shall, to such extent as it shall be determined to be legal, invalid,
or un-enforceable under such law, be deemed null and void, but this Agreement
shall otherwise remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
MASTER DISTRIBUTOR: ZELLWEGER
ANALYTICS, INC.
By:
Its:
ATTEST:
Corporate Secretary
COMPANY: ENVIROMETRICS PRODUCTS COMPANY
By:
Walter H. Elliott, III, President
ATTEST:
Corporate Secretary
<PAGE>
<TABLE>
<CAPTION>
Exhibit I
Air Chem Technologies (ACTTM)
Product and Price List
<S> <C> <C> <C> <C> <C> <C>
Units Per Suggested Master Distributor Master Distributor
Product Catalog Type Package User List Price Discount % Cost
- ------- ------- ---- ------- --------------- ---------- ----
Formaldehyde 403202100 Qualitative PEL 8hr 20 180.00/box 25/25 101.25
403202101 Quantitative PEL 8hr 10 300.00/box 25/25 168.75
403202102 Quantitative STEL 15min 10 300.00/box 25/25 168.75
403202105 Qualitative PEL 8 hr 5 80.00/box 25/25 45.00
Hydrogen Sulfide 403202200 Qualitative STEL 15 min 20 180.00/box 25/25 101.25
403202201 Quantitative PEL 8hr 10 300.00/box 25/25 168.75
403202202 Quantitative STEL 15 min 10 300.00/box 25/25 168.75
403202205 Qualitative PEL 8hr 5 80.00/box 25/25 45.00
Glutaraldehyde 403202300 Qualitative PEL 8hr 20 180.00/box 25/25 101.25
403202305 Qualitative PEL 8 hr 5 80.00/box 25/25 45.00
Ammonia 403202400 Qualitative STEL 15 min 20 180.00/box 25/25 101.25
403202402 Quantitative STEL 15 min 10 300.00/box 25/25 168.75
403202405 Qualitative STEL 15 min 5 80.00/box 25/25 45.00
Carbon Monoxide 403202500 Qualitative Ceiling 15 min 20 180.00/box 25/25 101.25
403202501 Quantitative PEL 8 hr 10 300.00/box 25/25 168.75
403202502 Quantitative Ceiling 15 min 10 300.00/box 25/25 168.75
403202505 Qualitative Ceiling 15 min 5 80.00/box 25/25 45.00
Ethylene Oxide 403202601 Quantitative PEL 8 hr 10 300.00/box 25/25 168.75
403202602 Quantitative Ceiling 15 min 10 300.00/box 25/25 168.75
Chlorine 403202700 Qualitative STEL 15 min 20 180.00/box 25/25 101.25
403202701 Quantitative PEL 8 hr 10 300.00/box 25/25 168.75
403202702 Quantitative STEL 15 min 10 300.00/box 25/25 168.75
403202704 Qualitative PEL 8 hr 20 180.00/box 25/25 101.25
403202705 Qualitative STEL 15 min 5 80.00/box 25/25 45.00
403202706 Qualitative PEL 8 hr 5 80.00/box 25/25 45.00
Sulfur Dioxide 403202900 Qualitative STEL 15 min 20 180.00/box 25/25 101.25
403202901 Quantitative PEL 8 hr 10 300.00/box 25/25 168.75
403202902 Quantitative STEL 15 min 10 300.00/box 25/25 168.75
403202904 Qualitative PEL 8 hr 20 180.00/box 25/25 101.25
403202905 Qualitative STEL 15 min 5 80.00/box 25/25 45.00
403202906 Qualitative PEL 8 hr 5 80.00/box 25/25 45.00
Nitrogen Dioxide 403203100 Qualitative STEL 15 min 20 180.00/box 25/25 101.25
403203101 Quantitative PEL 8 hr 10 300.00/box 25/25 168.75
403203102 Quantitative STEL 15 min 10 300.00/box 25/25 168.75
403203105 Qualitative STEL 15 min 5 80.00/box 25/25 45.00
Methyl Ethyl Keton403203201 Quantitative PEL 8 hr 10 300.00/box 25/25 168.75
ACT Electronic 403215000 Includes charger, software 12000.00ea 25/25 1125.00
Reader and Data Cables
ACT Field Case 401910303 1 200.00 ea 25/25 125.50
ACT Starter Kit 403201600 Includes 50 record sheets, 1 20.00ea 25/25 11.25
5 collar clips, 1 permanent marker
ACT Collar Clips 403204001 5 5.00/pack 25/25 2.81
</TABLE>
EXHIBIT 2
1996 Quarterly Prepaid Purchase Deposits
1996 QUARTER QUARTERLY DEPOSIT
1 $101,250.00
2 $135,000.00
3 $202,500.00
4 $236,250.00
EXHIBIT 3
SALES ACTIVITY
U.S. SALES BY TERRITORY
AND
INTERNATIONAL SALES BY COUNTRY
SALES REPS/COUNTRY PRESENTATIONS DEMOS EVALUATIONS SALES
EXHIBIT 3
PRODUCT TRACKING
U.S. & INTERNATIONAL SALES
SALES REPS/COUNTRY PRESENTATIONS DEMOS EVALUATIONS SALES
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
LICENSE, CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT (the "Agreement') is effective as of the 1st' of January,
1996, by and between ENVIROMETRICS PRODUCTS COMPANY, a corporation organized and
existing under the laws of South Carolina and having its principal place of
business at 1019 Bankton Drive, Charleston, South Carolina, 29406 (hereinafter
the "Company"), and ZELLWEGER ANALYTICS, INC., a company organized and existing
under the laws of Texas, and its subsidiaries and affiliates, having its
principal place of business at 405 Barclay Boulevard, Lincolnshire, Illinois,
60069 (hereinafter the "Master Distributor").
WHEREAS, the Company is engaged in the Business of the Company throughout
the United States and, in the course of such activities, has acquired or
developed certain Trade Secrets, Confidential Information and Proprietary
Information (as such terms are hereinafter defined) not generally known in the
Company's industry or otherwise;
WHEREAS, such Trade Secrets, Confidential Information and Proprietary
Information provide the Company with a competitive advantage in the marketplace
in which it competes;
WHEREAS, the Company and Master Distributor have entered into a Master
Distributorship Agreement, dated as of the date hereof, pursuant to which Master
Distributor will promote, market, and sell Products to Sub-Distributors and
Customers in the Territory, as is more particularly defined in the Master
Distributorship Agreement
WHEREAS, as a result of the execution of the Master Distributorship
Agreement, Master Distributor is in a position involving the trust and
confidence of the Company and will receive access to the Companys Trade Secrets,
Confidential Information and Proprietary Information, and, through the use of
Company facilities or resources, may develop, or contribute to the development
of, additional Trade Secrets, Confidential Information and Proprietary
Information; and
WHEREAS, the Company and Master Distributor are entering into this
Agreement in order to protect the Company's Trade Secrets, Confidential
Information and Proprietary Information.
NOW THEREFORE, in consideration of the execution of the Master
Distributorship Agreement, the mutual agreements contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Definitions.
(a) The ACT Monitoring Card System TM. The term "The ACT Monitoring
Card System TM means the system composed of the ACT Electronic Reader and
the Cards, which system has been developed and is currently being
distributed by the Company as part of the Business of Company.
(b) ACT Electronic Reader. The term "ACT Electronic Reader" means the
device produced by or on behalf of the Company to read the Cards.
(c) Business of Company. The term "Business of Company" means the
research, design, development, manufacture, sale and service of air
monitoring and other environmental testing technologies and products,
including the Products.
(d) Cards. The term "Cards" means the cards developed by the Company
and used by the ACT Electronic Reader to perform the function of
quantitatively measuring elements present in the atmosphere, and the cards
used for qualitative measurement which are read visually.
(e) Competing Business. 'Me term "Competing Business" means any person
or entity in the same business or substantially the same business as the
Business of Company.
(f) Competing Product. The term "Competing Product" means any good
that performs substantially the same functions as either of the Cards.
(g) Confidential Information. The term "Confidential Information'
means any and all data and information relating to the business conducted
by the Company (whether constituting a Trade Secret or not) which is or has
been disclosed to Master Distributor or of which Master Distributor became
aware as a consequence of or through his relationship with Company and
which has value to the Company and is not generally known by its
competitors; provided, however, no information will be deemed
"confidential" unless such information is treated by the Company as
confidential. Confidential Information shall not include any data or
information that has been voluntarily disclosed to the public by the
Company (except where such public disclosure has been made by Master
Distributor or any other person or entity without authorization), or that
has been independently developed and disclosed by others (except where such
independent development and disclosure has been made by Master Distributor
or any other person or entity without authorization), or that otherwise
enters the public domain through lawful means.
(h) Copyrights. The term "Copyrights" means all original works of
authorship including literary, artistic, pictorial, graphic and other
intellectual works owned or claimed by the Company which are registered
with the United States Copyright Office or the copyright office of any
nation, state or political jurisdiction within the Territory, are eligible
to be so registered, or are entitled to protection by and under the laws
and treaties of the United States or the substantial equivalent laws of any
political subdivision, nation and/or state within the Territory.
i) Customer. The term "Customer" means any end-user of a Product
"Intellectual Property". The term "Intellectual Property" means the
Copyrights, Marks and Patents, collectively or in combination, as the
context suggests.
(k) Marks. The term "Marks" means all trade names, word marks,
trademarks, service marks and logos or designs (including any @e dress that
is susceptible to protection under the laws of the United States or any
other political subdivision in the Territory), whether or not registered
with the United States Patent and Trademark Office or trademark office or
registry of any nation, state or political jurisdiction within the
Territory, placed upon or used in connection with the Business of Company
or the sale, distribution, promotion and marketing of the Products or any
other goods or services provided or distributed by Company, including,
without limitation, "ACT and design," "Air-Chem Technologies W" and "The
ACT Monitoring Card System TM", together with any and all other marks that
may be developed for use or are used in connection with the marketing or
distribution of the Products or any other goods or services provided or
distributed by Company; provided, however, the term "Marks" shall not
include the trademarks and, which are owned by Master Distributor.
(1) Master Distributorship Agreement The term "Master Distributorship
Agreement" means that certain Agreement by and between Company and Master
Distributor dated as of the 1st day of January, 1996.
(m) Patents. The term "Patents" means all inventions or letters patent
owned or obtained by or on behalf of Company, and which are registered with
the United States Patent and Trademark Office or the patent office or
registry in any political subdivision, nation or state in the Territory or
are eligible for registration and/or other protection under the laws and
treaties of the United States or of any other political subdivision, nation
or state in the Territory.
(n) Products. The term "Products" means and includes the Products to
be distributed by the Master Distributor under the Master Distributorship
Agreement.
(o) Proprietary Information. The term "Proprietary Information"
means all of the following materials and information, whether or not
patentable or protected or protectable, by copyright or equivalent design,
registration law or regulation existing from time to time with any part of
the Territory, to which Master Distributor has received access or which
Master Distributor receives, develops, or has developed, in whole or in
part, as a direct or indirect result of performing this Agreement or
through the use of any of Company's facilities or resources:
(i) Production processes, quality control processes and/or
procedures, marketing techniques, purchasing information, pricing
policies, quoting procedures, financial information, customer names
and requirements, customer data and other materials or information
relating to the manner in which Company does business;
(ii) Discoveries, concepts and ideas, and the embodiment thereof,
whether or not patentable or subject to protection by a copyright, I
including, without limitation, the nature and results of research and
development activities, processes, formulas, techniques and
"know-how";
(iii) Any other materials or information related to the business
or activities of Company which are not generally known to others
engaged in similar business or activities;
(iv) Trade Secrets, Confidential Information or other proprietary
information which Company has acquired or may in the future acquire
from any third party, including, without limitation, operating
principles, documentation, drawings, programs and performance
specifications and results, provided to Company by such third parties
pursuant to agreements, understandings and/or acknowledgments to the
effect that such trade secrets and confidential or proprietary
information provided to Company by such third parties (collectively
"Third Party Confidential Information") is the proprietary and/or
confidential information of such respective third party and is to be
treated by Company as if such Third Party Confidential Information
were Company's Confidential Information.
(p) Territory. The term "Territory" means the world.
(q) Trade Secrets. The term "Trade Secrets" means the whole or any portion
or phase of any data or information developed, owned, or licensed from a third
party by the Company, including any formula, pattern, compilation, program,
device, method, technique, improvement, or process that:
(i) derives independent economic value, actual or potential, from not
being generally known to, and not being readily ascertainable through
proper means by, other persons who can obtain economic value from its
disclosure or use, and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
Trade Secrets shall not include any data or information (i) that has
been voluntarily disclosed to the public by Company or has become generally
known to the public (except when such public disclosure has been made by or
through Master Distributor, or by a third person or entity with the
knowledge of Master Distributor, without authorization from Company); (ii)
that has been independently developed and disclosed by parties other than
Master Distributor or Company, the public generally or to Master
Distributor without a breach of obligation of confidentiality by any such
parties running directly or indirectly to Company; or (iii) that otherwise
enters the public domain through lawful means.
2. Term. The term of this Agreement shall commence on the 1st day of January,
1996, and shall end on the termination of the Master Distribution Agreement,
except where a different date of termination or survival is herein specified.
3. Exclusive-Ownership by Company. Master Distributor agrees and acknowledges
that all Proprietary Information, Intellectual Property, Trade Secrets and
Confidential Information, and any and all embodiments thereof (herein, the
"Property"), is and shall remain at all times the exclusive property of and
owned by the Company, and that Master Distributor's performance of its duties
and obligations and its use or awareness of the Property during the term of this
Agreement or the Master Distributorship Agreement shall create no rights, at law
or in equity, under the laws and decisions of any nation or state within the
Territory, in Master Distributor in or to the Property, or any aspect or
embodiment thereof. Master Distributor further agrees not to copy, reverse
engineer, disassemble, decompile or otherwise reproduce any Product or its
equivalent, in whole or in part.
4. Non-Disclosure of Trade Secrets. Master Distributor shall not, during the
term of this Agreement and the Master Distributorship Agreement, and at any and
all times following termination, for any reason, of this Agreement or the Master
Distributorship Agreement, disclose, use, reveal, report, publish, disclose,
transfer, or make available, directly or indirectly, to any person, business
concern, or other entity, any Trade Secrets except in the proper performance of
its duties hereunder; provided, however, Master Distributor is not prohibited
hereby from disclosing or using any Trade Secrets which subsequently becomes
part of the public domain through no breach of this Agreement or the Master
Distributorship Agreement and through no fault of Master Distributor.
5. Non-Disclosure of Confidential Information or Proprietary Information. Master
Distributor shall not, during the term of this Agreement and the Master
Distributorship Agreement, and for a period of three (3) years following
termination, for any reason, of the Master Distributorship Agreement, disclose,
use, reveal, report, publish, disclose, transfer, or make available, directly or
indirectly, to any person, business concern, or other entity, any Confidential
Information or Proprietary Information except in the proper performance of its
duties hereunder; provided, however, Master Distributor is not prohibited hereby
from disclosing or using any Confidential Information or Proprietary Information
which subsequently becomes part of the public domain through no breach of this
Agreement and the Master Distributorship Agreement and through no fault of
Master Distributor.
6. Confidentiality Procedures. Master Distributor shall take all appropriate
steps to ensure that the Confidential Information and Trade Secrets and any
other similar information and data set forth in this Agreement and the Master
Distributorship Agreement are not divulged or disclosed to any unauthorized
person.
7. License and Use of Marks. Company hereby grants to Master Distributor, during
the term of this Agreement only, the non-exclusive, royalty-free limited right
and license to use the Marks only in connection with the performance of Master
Distributor's duties and obligations under this Agreement and under the Master
Distributorship Agreement. Master Distributor agrees not to use the Marks in
connection with any other business, products or services. Master Distributor
agrees not to use the Marks, or any of them, or any confusingly similar name or
symbol, in whole or in part, as part of Master Distributor's business or trade
name. The Parties shall mutually approve all promotional material used by Master
Distributor in connection with the distribution and marketing of the Products to
ensure that Master Distributor properly uses the Marks.
8. Protection Against Infringement. Master Distributor agrees to cooperate fully
with Company to protect company's proprietary rights in the Intellectual
Property, yet acknowledges and agrees that Company shall have the sole right,
opportunity and duty to protect the Intellectual Property from legal action or
suit for infringement thereof, and Master Distributor shall not respond,
contest, settle, or otherwise conduct any proceedings or handle any claims
without prior consultation with and written approval from Company, unless a
response is necessary to avoid compromising the rights of Company in such
proceedings or with regard to such claims.
9. No Registration without Notice. Master Distributor agrees it will not,
without the prior written consent of Company, directly or indirectly register,
apply for registration, or attempt to acquire any legal protection for any of
the Intellectual Property or the Products or any proprietary rights therein, or
take any other action which may adversely affect Company's right, title, or
interest in or to the Intellectual Property or the Products in any nation or
state within the Territory.
10. No Challenges. Master Distributor shall not challenge, directly or
indirectly, the right, title, and interest of Company in and to the Proprietary
Information, Intellectual Property and Products, nor the validity or
enforceability of Company's claimed rights therein under the laws of any nation
or state within the Territory.
11. No Warranty of Intellectual Prop. Company expressly disclaims and makes no
warranty, promise or representation that the Intellectual Property does not
infringe upon the proprietary rights of third parties under the laws of the
nations and states in the Territory.
12. Termination upon Breach. Master Distributor acknowledges that in the event
of a breach by Master Distributor of its obligations under this Agreement or the
Master Distributorship Agreement, Company may immediately terminate this
Agreement and the Master Distribution Agreement without liability and may bring
appropriate legal action to enjoin any breach of this Agreement, and shall be
entitled to recover from Master Distributor legal fees and costs in addition to
other appropriate legal and equitable relief in any nation or state within the
Territory.
13. No Recourse for Loss Caused by Intellectual Property. Master Distributor
shall have no recourse against Company for any loss, liability, damages or costs
which may at any time be suffered or incurred by Master Distributor by reason
of, or in reliance upon, any of the Intellectual Property furnished hereunder by
Company, or by reason of any suit or proceeding against Master Distributor on
account of any Intellectual Property, or by reason of the defense of any such
suit or proceeding, unless such loss, liability, damages or costs are caused by
gross negligence or fraud of Company.
14. Covenants/Severability. Master Distributor recognizes and agrees: (i) that
the covenants and agreements contained in Sections 2, 3, 4, 5, 6, 7, 8, 9, 10,
11, 12 and 13 of this Agreement are of the essence of this Agreement; (ii) that
each of such covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company and the Business of Company; (iii) that
irreparable loss and damage will be suffered by Company should Master
Distributor breach any of such covenants and agreements; (iv) that each of such
covenants and agreements is separate, distinct and severable from the other and
remaining provisions of this Agreement; (v) that, if any such covenant is found
by a court of competent jurisdiction to be over broad in any respect, Master
Distributor desires and directs that such covenant be amended by such court to a
reasonable breadth; (vi) that, in addition to other remedies available to it,
Company shall be entitled to both temporary and permanent injunctions to prevent
a breach or contemplated breach by Master Distributor of any of such covenants
or agreements; (vii) that the prevailing party s ' hall be reimbursed for any
costs or expenses (including reasonable attorneys' fees) in attempting to
enforce or defend against any such covenants; and (viii) in the event Company
seeks a temporary or preliminary injunction hereunder, Master Distributor hereby
waives any requirement that Company post a bond or other security.
15, Binding Effect. This Agreement shall ensure to the benefit of, and shall be
binding upon, the parties hereto and their respective heirs, successors,
assigns, and legal representatives.
16. Governing Law, Forum for Litigation. This Agreement shall be interpreted and
governed by the laws of the State of South Carolina, without giving effect to
its conflicts of laws rules. Notwithstanding alternative dispute settlement
provisions in the Master Distributorship Agreement, any action or proceeding to
enforce or interpret this Agreement shall be brought only in the state or
federal courts sitting in Charleston County, South Carolina, United States, and
Master Distributor hereby irrevocably submits and consents to such exclusive
jurisdiction and venue.
17. Severability. The provisions of this Agreement shall be deemed severable and
the invalidity or the unenforceability of any one or more of the provisions
hereof shall not affect the validity or enforceability of the other provisions
hereof.
18. Entire Agreement. This Agreement is executed in connection with the Master
Distributorship Agreement, but, with respect to the subject matter hereof, sets
forth the entire understanding between the parties hereto and supersedes and
replaces any and every other agreement with respect to the subject matter hereof
which may have existed between Company and Master Distributor, including,
without limitation, the Non-Disclosure and Confidentiality Agreement executed on
or about September 1, 1994, and the Confidentiality Agreement executed on or
about October 11, 1995.
19. Amendments and Waivers. This Agreement may not be modified or amended except
by an instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought. Either party hereto
may by an instrument in writing waive compliance by the other party of any term
or provision of this Agreement on the part of such other party. The waiver by
any party of a breach of any term or provision shall not be construed as a
waiver of any subsequent breach.
20. Section Headings. The section headings contained in this Agreement are for
reference purposes only and shall not be deemed to control or affect the meaning
or construction of any provision.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
MASTER DISTRIBUTOR: ZELLWEGER
ANALYTICS INC.
By:
ATTEST:
Corporate Secretary
COMPANY-. ENVIROMETRICS PRODUCTS
COMPANY
By
Walter H. Elliott, III, President
ATTEST:
Corporate Secretary
OFFICE LEASE
between
LPC OF S.C., INC
(a Subsidiary of The Liberty Corporation)
LANDLORD
and
Trico Envirometrics, Inc.
TENANT
4055 Faber Place Drive
The Executive Park at Faber Place
No. Charleston, South Carolina
Date:
OFFICE LEASE
LEASE made this/ day of January, 1996, by and between LPC of S. C., Inc. ,
a corporation organized and existing under the laws of the State of South
Carolina (hereinafter called "Landlord"), and Trico Envirometrics. Inc.
(hereinafter called "Tenant").
WITNESSETH:
1. Demised Premises. Landlord. for the term and subject to the provisions
and conditions hereof, leases to Tenant, and Tenant rents from Landlord, Suite
201 (inclusive of Suite 210) the space (hereinafter referred to as the "Demised
Premises" and more particularly delineated on the floor plans annexed hereto as
Exhibit "A"), consisting of approximately 9,094 square feet of rentable space
(which includes the area outlined in Exhibit "A" Tenant's proportionate share of
common areas) on the second floor of the commercial office building located at
4055 Faber Place Drive in Executive Park at Faber Place in North Charleston.
South Carolina. The office building and adjacent land (consisting of
approximately 4.5 acres) on which it is situated is referred to hereinafter as
the Building. Landlord and Tenant agree that the Total Rentable Space in the
Building is 54.270 rentable square feet.
2. Term.
A. Duration. This Lease shall become fully effective and rent shall begin
to accrue on February 1, 1996, (the "Rent Commencement Date") and further
outlined on Exhibit "B" attached hereto and made a part hereof. The Lease Term
shall commence on the Rent Commencement date, except that the Lease Term shall
commence on the first day (the "Term Commencement Date") of the first calendar
month following the rent commencement Date if the Rent Commencement Date is
'other than the first day of a calendar month. The Lease Term shall continue for
a period of Three (3) years unless extended or sooner terminated as herein
provided. The Lease Term shall expire at midnight of the last day of the last
month of the Lease Term. If Landlord has not delivered possession of the Demised
Premises to Tenant by said Rent Commencement Date, the Rent Commencement Date
and Term Commencement Date shall be the date such possession is actually
delivered. Provided. however. that if possession has not been delivered by the
thirtieth day after the Rent Commencement Date specified above, Tenant may
cancel this lease at any time before possession is actually delivered. by giving
Landlord written notice thereof
B. Memorandum. 'When the date of commencement of the term of this Lease is
established, Landlord shall prepare and deliver to Tenant and Tenant shall
promptly execute and acknowledge a memorandum in form substantially as set forth
in hereto, containing the information set forth in said Exhibit. which. when
executed. shall be incorporated herein by reference.
3. Minimum Rent.
A. Minimum Rent shall accrue during the term at the annual rate specified
in Exhibit "B" hereto.
Such Minimum Rent shall be payable in advance. in equal monthly
installments of one twelfth (1/12th) of the annual amount, the installment for
the first full calendar to be payable upon execution of this Lease and
subsequent installments to be payable on the first day of each successive month
of term hereof following the first month of such term.
B. If the Rent Commencement Date of this Lease falls on a day other than
the first day of rent a month, Minimum Rent from such day until the first day of
the following month shall be prorated (on the basis of the number of days during
the first month) and shall be payable, in advance, on the Rent Commencement
date. In such event, the installment of rent paid at execution hereof shall be
applied to the due for the first full calendar month of the term hereof
C. Tenant hereby covenants and agrees to pay when due all Minimum Rent,
Additional Rent and other sums due to Landlord hereunder at such address as
Landlord may designate, from time to time, by written notice to Tenant, without
demand and without deduction, set- of, counterclaim or abatement for any reason.
D. If Landlord, at any time or times. shall accept said rent or any other
sum due to it hereunder after the same shall become due and payable. such
acceptance shall not excuse delay upon subsequent occasions or constitute, or be
construed as, a waiver of any Landlord's rights hereunder.
E. All sums payable by Tenant under this Lease, whether or not stated to be
Minimum Rent or Additional Rent. shall be collectible by Landlord as Additional
Rent, and on default in payment thereof Landlord shall have the same rights and
remedies as for failure to pay rent (without prejudice to any other right or
remedy available therefor).
F. Late Charge. Landlord may impose a late charge, due on demand. of not
more than five (5%) percent of any installment of Base Rent that is not received
within five (5) days after it is due. Any such late charge is in lieu of
interest on such installment, but it otherwise is in addition to, and does not
waive, limit, or otherwise impair, any other right or remedy of Landlord.
4. Rent Adjustment, Increment in Taxes and Operating.- Expenses.
A. Definitions. As used in this Paragraph 4. the followin2 terms shall be
defined as hereinafter set forth:
(I.) "Taxes" shall mean all taxes, assessments. and charges levied upon or
with respect to the Building or any personal property of Landlord used in the
operation thereof. Taxes shall include. without limitation. all general real
property taxes and general and special assessments. charges, fees. or
assessments for sit, housing, police, fire or other governmental services or
purported benefits to the Building, service payments in lieu of taxes. and any
tax. fee, or excise on the act of entering, into this Lease or any other lease
of space in the Building-, on the use or occupancy of the Building or any part
thereof, or on the rent payable under any lease or in connection with the
business of renting space in the Building, that are now or hereafter levied or
assessed against Landlord by the United States of America, the State of South
Carolina or any political subdivision, public corporation, district, or other
political or public entity. Taxes shall also include any other tax, fee, or
other excise, however. described, that may be levied or assessed as a substitute
for or as an addition to, in whole or in part, any other Taxes, whether or not
now customary or in the contemplation of the parties on the date of this Lease.
Taxes shall not include franchise, transfer, inheritance, or capital stock taxes
or income taxes measured by the net income of Landlord from all sources, unless,
due to a change in the method of taxation, any such tax is levied or assessed
against Landlord as a substitute for or as an addition to, in whole or in part,
any other tax that would otherwise constitute a property tax. Taxes shall also
include reasonable legal fees, costs, and disbursements incurred in connection
with proceedings to contest, determine. or reduce Taxes.
(2.) "Operating Expenses" shall include all expenses, costs and charges
paid or incurred by Landlord for the management, operation, maintenance and
repair ("repair" as used in connection with operating expenses shall not include
alterations or other capital expenditures made by Landlord. but shall include
the cost of any capital improvements made that were required under any
governmental law or regulation that was not applicable to the premises at the
time of delivery of possession of the Demised Premises to Tenant) of the
Building as a first class office building and shall include. but not be limited
to. the following:
a. Salaries or wages and fringe benefits and related costs for the services
of Landlord's employees performing services required in connection with the
operation. repair and maintenance of the Building; on a regular basis including:
(i) watchmen and persons engage d in patrolling and protecting the
Building;
(ii) carpenters. engineers. architects, mechanics. electricians, painters
and plumbers engaged in the operation, repair and maintenance of any part of the
Building, the plazas and sidewalks around the Building and the heating,
air-conditioning, ventilating, plumbing, electrical, elevator and other such
systems of the Building.
(iii) such other personnel employed from time to time in order to properly
maintain and operate the Building; and
(iv) personnel engaged exclusively in supervision of any of the persons
mentioned above.
b. The cost of materials and supplies used in the operation, repair and
maintenance of the Building.
c. The cost of replacement for tools and equipment used in the operation.
repair and maintenance of the Building.
d. The costs incurred by Landlord for building management and reasonable
legal, accounting or other professional fees incurred in connection with the
operation of the Building.
e. Amounts charged to Landlord by contractors for services. materials and
supplies furnished in connection with the operation, repair and maintenance of
any part of the Building, and the heating, air-conditioning, ventilating,
plumbing, electrical. elevator and other systems of the Building.
f. Amounts charged to Landlord by contractors for window cleaning, and
cleaning, janitorial and landscaping maintenance services in about the Building.
9. Premiums paid by Landlord for All Risk Insurance for the Building,
including, without limitation, fire insurance, with such extended coverage,
vandalism and malicious mischief coverage. and rent insurance coverage. of the
type and character usually carried by landlords of similar first class buildings
and premiums paid for comprehensive general public liability insurance against
claims for bodily or other personal injury, death or property damage, and if
carried by Landlord, boiler and machinery insurance and war risk insurance. and
such other insurance as may from time to time be reasonably require d by
Landlord to protect Landlord against other insurable hazards, which at the time
are commonly insured against in the case of premises similar to the Building.
h. Water and sewer charges.
i. Utility Costs for the operation. maintenance and repair of the Building.
The term "Utility Costs" shall include Landlord's annual expenses for the
operation and maintenance of the Building and the Office Space with respect to
utility charges for furnishing, heat, air conditioning, electricity, water.
sewage. gas, garbage removal, etc. If the final lease year (to include renewals)
during which escalation may occur shall contain less than twelve months. the
increases hereunder shall be prorated. the Tenant's obligation to pay such
increase to survive the expiration of the Lease (and renewal) term.
Any other expense or charge which, in accordance with sound accounting and
management principles generally accepted with respect to first class buildings
in Charleston, SC area would be construed as an operating expense.
Operating expenses shall be "net only". and for that purpose shall be
reduced by the amounts of any reimbursement. credit. recoupment. discount. or
allowance actually received by Landlord in connection with such expenses.
The following items shall be excluded from Operating Expenses:
(i) Labor Costs in respect of officers and executives of Landlord or
individual partners of a successor of Landlord if such successor be a
partnership;
(ii) Any insurance premium to the extent that Landlord is reimbursed
for such premium (other than by Additional Rent payments);
(iii) The cost of any items for which Landlord is reimbursed by
insurance or otherwise compensated;
(iv) The cost of any additions to the Building subsequent to the date
of original construction or any alterations or refurbishing of space leased
to other tenants of the Building.
(v) "Tenant's Share" means a pro rata portion which is a percentage
calculated by dividing the number of rentable square feet in the Demised
Premises by the Total Rentable Square feet in the Building, as set forth in
Article 1.
B. Payment of Tenant's Share
(1.) Tenant's Share of Taxes and Operating Exi2enso. For and with
respect to each calendar year within which the term of this Lease (and any
renewal or extension thereof) falls, during which the total of "Operating
Expenses" and the "Taxes" as hereinabove defined exceeds Four ($4.00)
Dollars per rentable square foot of Building- space per annum (the
"Operating Expense Base"), there shall accrue as Additional Rent Tenant's
Share of such excess Taxes and Operating Expenses for such year. Such
Additional Rent shall be prorated on a per them basis for any partial
calendar year included within the beginning and end of the term. For
purposes of this Paragraph 4B (I.), any assessment upon which Tenant's
Share of Taxes is based shall be deemed to be the amount initially assessed
until such time as a refund, rebate or increase, if any (retroactive or
otherwise), shall be finally determined to be due. and upon such final
determination, Landlord shall promptly notify Tenant of the amount, if any.
due to Tenant or Landlord. as the case may be. as a result of the
adjustment, and appropriate payment to Landlord or Tenant, as the case may
be. shall thereafter be promptly made. Landlord shall have no duty to
Tenant to contest. appeal or otherwise challenge any Taxes. In the event of
any reduction in Taxes by reason of legal or other action taken by Landlord
in contest of same. there shall be added to and be deemed a part of the
Taxes in question the amount of Landlord reasonable legal and other costs
and expenses in obtaining- the reduction (but not an amount in excess of
the tax saving for one year).
Time and Manner of Payment. Prior to the end of each calendar year
during the Term (and any renewal period), Landlord shall deliver to Tenant
a statement setting forth the amount by which the Operating Expenses and
Taxes are projected to exceed the Operating Expense Base. During, each
month of the ensuing calendar year, Tenant shall pay to Landlord as
Additional Rent, contemporaneously with payment of Minimum Rent, an amount
equal to one-twelfth (1/12) of Tenant's Share of such excess.
(3.) Tax and Operating- Expense Statements. On or about April I
following the end of each calendar year, or at such later time as Landlord
may be able to determine the actual amounts of Taxes and Operating Expenses
for the calendar year last ended, Landlord shall notify Tenant in writing
of such actual amounts. If the actual amounts exceed the amounts paid by
Tenant as Additional Rent on account thereof in the calendar Year last
ended, Tenant shall, within thirty (30) days of receipt of such notice, pay
to Landlord Tenant's Share of such excess. If the actual amounts of Taxes
and Operating Expenses for the calendar year last ended are less than the
amounts paid by Tenant in the calendar year last ended, then Landlord shall
credit such excess to installments of rent payable after the date of
Landlord's notice until such credit is exhausted. No interest or penalty
shall accrue to Tenant on any amounts which Landlord may be obligated to
credit or pay to Tenant by reason of this paragraph.
C. Survival After Termination. If. upon termination of this Lease for
any cause, the amount of any Additional Rent due pursuant to this Paragraph
4 has not yet been determined, Tenant shall pay Landlord an estimated
amount of Additional Rent as determined by Landlord based upon the
preceding year's Additional Rent, and an appropriate payment from Tenant to
Landlord or refund from Landlord to Tenant shall be made promptly after
such determination.
5. Use of Demised Premises. The Demised Premises shall be used by
Tenant as a business or professional office and for no other purposes
without the prior written consent of Landlord. Tenant will not use the
Demised Premises for the purpose of retail sales. Tenant shall not do or
permit to be done in or about the Demised Premises, nor bring or keep or
permit to be brought or kept therein, anything which is prohibited by or
will in any way conflict with any law, statute, ordinance or government
rule or regulation now in force or which may hereafter be enacted or
promulgated, or which is prohibited by any standard form of fire insurance
policy or will in any way increase the existing rate or affect any fire or
other insurance upon the Building or any of its contents, or cause a
cancellation of any insurance policy covering the Building or part thereof
or any of its contents. Tenant shall not do or permit anything to be done
in or about the Demised Premises which will in any way obstruct or
interfere with the rights of other tenants of the Building, or injure or
annoy them or use or allow the Demised Premises to be used for any
improper, immoral. unlawful or objectionable purpose nor shall Tenant
cause. maintain. or permit any nuisance in, on, or about the Demised
Premises, or commit or suffer to be committed any waste in. on or about the
Demised Premises. Tenant shall occupy the Demised Premises during the term
and use it for the uses permitted herein.
. Improvement of the Demised Premises. Landlord's standard finish in
the Demised premises for Tenant shall be limited to the items set forth in
Exhibit A- I attached hereto. It shall be presumed that all work performed
by or on behalf of Landlord as required herein was satisfactorily performed
in accordance with, and meeting the requirements of. this Lease. unless
within sixty (60) days after delivery of possession of the space to Tenant
and completion of such work Tenant shall notify Landlord, in writing, of
the specific deficiencies.
7. Services. The following provisions relating to Building services
shall be applicable:
A. HVAC. Landlord shall furnish heat, ventilation and air-conditioning
to the Demised Premises Monday through Friday from 8:00 a.m. to 6:00 p.m.,
and 8:00 a.m. to 1:00 p.m. Saturdays, holidays (meaning New Year's Day,
Memorial Day, July 4th. Labor Day, Thanksgiving Day, Christmas Day or such
days as are customarily designated for observance of such days) excepted.
Heat and conditioned air required by Tenant at times other than those
mentioned above shall be supplied upon reasonable prior notice, and shall
be paid for by Tenant, promptly upon billing, at such rates as Landlord
shall from time to time establish therefor. The heating and
air-conditioning systems intended to service the Demised Premises have been
designed to be capable of providing comfortable occupancy for normal office
use. Any additional or supplementary heating or cooling systems required or
desired by Tenant and approved by Landlord shall be installed at Tenant's
cost in accordance with the provision of paragraph 6 hereof The furnishing
of heat and conditioned air shall be subject to any statute, ordinance.
rule, regulation. resolution or recommendation for energy conservation
which may be promulgated by any governmental agency or organization which
Landlord shall be required to abide by, or in good faith may elect to abide
with.
B. Access. Tenant and its employees and agents shall have access to
the Demised Premises at all times, subject to the compliance with such
security measures as shall from time to time be in effect for the Building.
C. Janitorial. Landlord shall provide janitorial services to the
Demised Premises as specified on Exhibit "E" annexed hereto. Any and all
additional or specialized janitorial service desired by Tenant may be
contacted for by Tenant directly with Landlord's janitorial agent, and the
cost and payment therefor shall be and remain the sole responsibility of
Tenant. Tenant shall not place nor store any trash or other refuse matter
or debris in any corridors or common areas of the Building,. unless in
receptacles provided therefor by Landlord.
D. Repairs. Landlord shall be responsible for making structural
repairs to the Building, for maintaining the Building roof and exterior.
and for making repairs to systems, facilities and equipment located outside
of but furnishing service to the Demised Premise. In the event that any
such repair is required by reason of the negligence or abuse of Tenant or
its agents. employees. invitees or of any other person using the Demised
Premises with Tenant's consent, express or implied. Landlord may make such
repair and add the cost thereof to the first installment of rent which will
thereafter become due, unless Landlord shall have actually recovered or has
the right to recover such cost through insurance proceeds. All other
repairs of every type and nature including those to windows, plate glass
and doors. excluding repairs required by reason of acts of God. latent
defects in and settlement of the Building-. shall be Tenant's sole
responsibility,
E. Common Areas. Landlord shall keep and maintain the common areas and
facilities of the Building clean and in good working, order.
F. Lighting. Landlord will provide replacement of Building standard
lighting tubes, bulbs and ballast's.
G. Electricity. Landlord shall furnish the Demised Premises with
electric current for lighting and normal office use and for heating and
air-conditioning. Tenant shall not install or operate in the Demised
Premises any electrically operated equipment or other machinery, other than
typewriters, adding machines. reproduction machines. and other machinery
and equipment using I 10 voltage normally used in modem offices, without
first obtaining the prior written consent of the Landlord. Landlord may
condition such consent upon the payment by Tenant of Additional Rent as
compensation for the additional consumption of electricity occasioned by
the operation of said equipment or machinery. Landlord may require that
special. high electricity consumption installations of Tenant (such as
mainframe computer or reproduction facilities) be separately submetered for
electrical consumption, at Tenant's cost. In such case. Tenant shall pay
for such metered consumption based upon the retail rate (including all
applicable taxes and adjustment charges) which Tenant would have paid had
Tenant purchased such electricity directly from electric utility company.
8. Limitation Regarding Services. Landlord reserves the right, without
any liability to Tenant and without being in breach of any covenant of this
Lease, to interrupt or suspend service of any of the heating, ventilating,
air-conditioning, electric, or other Building systems serving the Demised
premises, or the rendition of any of the other services required of
Landlord under this Lease. whenever, and for so long as may be necessary by
reason of accidents. emergencies. strikes or the making of repairs or
changes which Landlord is required by this Lease or by law to make or in
good faith deems advisable, or by reason of difficulty in securing proper
supplies of fuel, steam, water, electricity, labor or supplies. or by
reason of any other cause beyond Landlord's reasonable control, including
without limitation. mechanical failure and governmental restrictions on the
use of materials or the use of any of the Building- systems. In each
instance, however, Landlord shall exercise reasonable diligence to
eliminate the cause of interruption and to effect restoration of service.
and shall give Tenant reasonable notice, when practicable, of the
commencement and anticipated duration of such interruption. Tenant shall
not be entitled to any diminution or abatement of rent or other
compensation nor shall this Lease or any of the obligations of the Tenant
be affected or reduced by reason of the interruption. stoppage or
suspension of the Building systems or services arising out of the causes
set forth in this paragraph.
9. Care of the Demised Premises. Tenant agrees that it shall comply
with the following requirements:
A. Governmental Requirements. Tenant shall at all times comply with
any and all Federal, state and local statues. regulations, ordinances. and
other requirements, of any of the constituted public authorities and of all
insurance underwriters, relating- to its use and occupancy of the Demised
Premises.
B. Access. Tenant shall give Landlord access to the Demised Premises
at all reasonable times, without charge or diminution of rent. and upon
reasonable prior notice (except that no prior notice shall be required in
an emergency), to enable Landlord: (1) to examine the same and to make such
repairs. additions and alterations as Landlord may be permitted or required
to make hereunder or as Landlord may deem advisable for the preservation of
the integrity. safety and good order of the Building or any part thereof.
and (2) to show the Demised Premises to prospective mortgages and
purchasers and, during the twelve (12) month period prior to expiration of
the term hereof. to prospective tenants. Except in the case of emergency,
and, such repairs. additions and alterations made by Landlord in the
Demised Premises shall be made during nonbusiness hours and in such manner
as not to unreasonably interfere with the conduct of Tenant's business.
unless required by virtue of Tenant's negligence or fault.
C. Condition. Tenant shall keep the Demised Premises and all
installations and systems therein in safe. good order and condition
generally and except for such structural repairs as are Landlord's
obligation under this Lease, Tenant shall, at its own cost. make all
repairs and replacements to the Demised Premises of every type and nature,
ordinary and extraordinary, foreseen or unforeseen, as are necessary to
maintain same in such safe, good order and condition. excluding repairs
required by reason of acts order of God, latent defects and settlement of
Building.
D. Surrender. Upon the termination of this Lease for any cause
whatsoever, Tenant shall remove Tenant's goods and effects and those of any
other person claiming under Tenant, and quit and deliver up the Demised
Premises to Landlord peaceably and quietly in as good order and condition
as at the inception of the term of this Lease (or in such condition as the
same hereafter may be improved by Landlord or Tenant), reasonable wear and
tear, damage by fire or other casualty and repairs which are Landlord's
obligation excepted. Goods and effects not removed by Tenant at the
termination of this Lease shall be considered abandoned and Landlord may,
upon ten (IO) days' notice to Tenant. treat the same as its own and use,
dispose of and/or store the same as it deems expedient, the cost of
disposal or storage to be charged to Tenant.
E. Tenant shall not place. paint or display signs lettering. logo or
advertising matter on the exterior or interior of the Building except with
the prior written approval of the Landlord.
F. Care, Insurance. Tenant shall not overload, damage or deface the
Demised Premisesor do any act which might make void or voidable any
insurance on the Demised Premises or the Building, or which may render an
increased or extra premium payable for insurance (and without prejudice to
any right or remedy of Landlord regarding, this subparagraph. Landlord
shall have the right to collect from Tenant upon demand, any such increase
or extra premium).
G. Alterations: Additions. Tenant shall not make any alterations of or
additions to the Demised Premises without the prior written approval of
Landlord. Said approval shall not be unreasonably withheld for
nonstructural interior alterations, provided reasonably detailed plans and
specifications for the work are furnished to Landlord. All such alterations
and additions, as well as all fixtures. equipment. improvements and
appurtenances installed in the Demised Premises (but excluding- Tenant's
trade fixtures) shall, upon installation. become and remain the property of
Landlord and shall be maintained by Tenant during the term hereof. and any
renewals and extensions thereof. in the same good order and repair in which
the Demised Premises are generally required to be maintained. Tenant shall,
at the expiration of the term hereof. remove Tenant's trade fixtures and
other personal property which can be removed without damage to the Demised
Premises. All alterations and additions by Tenant shall be performed in
accordance with the plans and specifications therefor submitted to
Landlord. in a good and workmanlike manner and in conformity with all laws,
regulations, rules, ordinances. and other requirements of any governmental
or quasi-governmental authorities having jurisdiction.
H. Rules and Regulations Tenant shall observe the rules and
regulations annexed hereto as Exhibit "D", as the same may from time to
time be amended by Landlord for the general safety, comfort and convenience
of occupants and tenants of the Building.
1. System Changes. Tenant shall not exceed the capacity of any of the
electrical conductors and equipment in the Demised Premises or Building and
shall not install any equipment of any kind or nature whatsoever which
would or might necessitate any changes, replacements or additions to (or
which might cause damage to) the plumbing system, the heating system,
air-conditioning system or the electrical system servicing the Demised
Premises or any other portion of the Building without the prior written
consent of the Landlord, and in the event such consent is granted. all
costs in connection with such replacements. changes or additions shall be
paid for by Tenant in advance.
10. Subletting and Assigning: Mortgages
A. General Restrictions. Tenant shall not assign this Lease or sublet
all or any portion or portions of the Demised Premises without obtaining
Landlord's prior written consent thereto, which consent, if given, will not
release Tenant from its obligations hereunder unless expressly so stated in
the consent and will not be deemed a consent to any further subletting or
assignment. Tenant shall furnish to Landlord, in connection with any
request for such consent, reasonably detailed information as to the
identity and business history of the proposed assignee or subtenant, as
well as the proposed effective date of the assignment or sublease. If
Landlord consents to any such subletting or assignment, it shall
nevertheless be a condition to the effectiveness thereof that a fully
executed copy of the sublease or assignment, in form and substance approved
by Landlord, be furnished to Landlord and that any assignee assume in
writing all obligations of Tenant hereunder. Tenant shall not mortgage or
encumber this Lease. Any profit made by Tenant from such assignment or
subletting shall be paid by Tenant to Landlord.
B. Affiliates. Landlord shall not unreasonably withhold its consent to
an assignment of this Lease or to a subletting of all or any portion of the
Demised Premises to a corporate affiliate of Tenant, for the uses permitted
in this Lease. For purposes hereof, the term corporate affiliate shall mean
a business entity or corporation that controls or is controlled by, or is
under common control with, Tenant. The word "control" means the right and
power, direct or indirect, to direct or cause the direction of the
management policies of an entity-,, through ownership of voting,
securities, contract or otherwise.
11. Fire or Other Casualty. In the event of damage to the Demised
Premises or those portions of the Building PTOvidin2 access or essential
services thereto. by fire, hurricane or other casualty, Landlord shall at
its expense cause the damage to be repaired to a condition as nearly as
practicable to that existing prior to the damage. with reasonable speed and
diligence. Landlord shall not however. be obligated to restore or rebuild
the Demised Premises to a condition in excess of that in which it was
delivered from Landlord to Tenant as specified in Paragraph 6 hereof. nor
in an, event to repair, restore or rebuild any of Tenant's property or any
alterations or additions made by Tenant after commencement of the term
hereof. To the extent and for the time that the Demised Premises are
thereby rendered untenantable. the rent shall proportionately abate unless
the damage was due to the negligence of Tenant. In the event the damage
shall involve the Building generally and shall be so extensive that
Landlord shall decide not to repair or rebuild the Building. or if any
mortgagee of the Building shall not permit the application of adequate
insurance proceeds for repair or restoration of the Building, or if the
casualty of the Building shall not be of a type insured against under
standard fire policies with extended type coverage. this Lease shall, at
the option of Landlord, exercisable by written notice to Tenant given
within sixty (60) days thereof. be terminated as of a date specified in
such notice (which shall not be more than thirty (30) Davis thereafter) and
the rent (taking into account any abatement as aforesaid) shall be prorated
to the termination date and Tenant shall thereupon promptly vacate the
Demised Premises.
12. Liability.
A. Damage in General. Tenant agrees that Landlord and its respective
officers, employees and agents. shall not be liable to Tenant, and Tenant
hereby releases said parties, for any personal injure or damage to or loss
of personal property in or about the Demised Premises c,;- Building, from
any cause whatsoever, unless such damage. loss or injury results from the
gross negligence or willfulness of Landlord or its officers, employees or
agents. Landlord and its officers, employees and agents shall not be liable
to Tenant for any such damage or loss whether or not such damage or loss
results from the gross negligence, or willfulness, to the extent Tenant is
compensated therefor by Tenant's insurance or could have obtained insurance
at customary rates to cover such damage or loss.
B. Indemnity. Tenant shall defend. indemnify and save harmless
Landlord and its agents and employees against and from all liabilities.
obligations. damages, penalties, claims, costs, charges and expenses,
including reasonable attorneys' fees, which may be imposed upon or incurred
by or asserted against Landlord and/or its agents by reason of any of the
following which shall occur during the term of this Lease or during any
period of time prior to the commencement date hereof when Tenant may have
been given access to or possession of all or any part of the Demised
Premises:
(I.) any work or act done in. on or about the Demised Premises or any
licensees or part thereof at the direction of Tenant, its agents,
contractors, subcontractors, servants, employees, invitees;
(2.) any negligence or other wrongful act or omission on the part of
Tenant or any of its agents. contractors. subcontractors. servants.
employees. subtenants, licensees or invitees;
(3.) any accident, injury or damage to any person or property
occurring in. on or about the Demised Premises or any part thereof, unless
caused by the gross negligence of Landlord. its employees or agents: and
(4.) any failure on the part of Tenant to perform or comply with any
of the covenants, agreements, terms, provisions, conditions or limitations
contained in this Lease on its part to be performed or complied with.
13. Eminent Domain. If all or any part of the Building shall be taken
or condemned for a public or quasi-public use under any statute or by right
of eminent domain or private purchase in lieu thereof by any competent
authority. Tenant shall have no claim against Landlord and shall not have
any claim or right to any portion of the amount that my be awarded as
damages or paid as a result of any such condemnation or purchase. and all
rights of the Tenant to damages therefor are hereby assigned by Tenant to
Landlord. The foregoing shall not. however. deprive Tenant of any separate
award for moving expenses, business dislocation damages or for any other
award which would not reduce the award payable to Landlord. Upon the date
the right to possession shall vest in the condemning authority. this Lease
shall cease and terminate with rent prorated to such date and Tenant shall
have no claim against Landlord for the value of any unexpired term of this
Lease. Notwithstanding the foregoing, if the condensation does not affect
the tenantabilitv of the Demised Premises, Landlord may,. at its sole
option, continue this Lease in full force and effect.
14. Insolvency. (a) The appointment of a receiver or trustee to take
possession of all or a substantial portion of the assets of Tenant, or (b)
an assignment by Tenant for the benefit of creditors, (c) the institution
by or against Tenant of any proceedings for bankruptcy or reorganization
under any state or federal law (unless, in the case of involuntary
proceedings, the same shall be dismissed within sixty, (60) days after
institution). or (d) any execution issued against a significant portion of
the assets of Tenant or against Tenant's leasehold interest hereunder which
is not stayed or discharged at least twenty (20) days prior to a scheduled
execution sale, shall constitute a breach of this Lease by Tenant.
Landlord, in the event of such a breach, shall have, without need of
further notice, the rights enumerated in Section 15 herein.
15. Default,
A. Events of Default. If Tenant shall fail to pay minimum Rent.
Additional Rent or any other s= payable to Landlord hereunder when due. or
if Tenant shall fail to perform or observe any of the other covenants,
terms or conditions contained in this Lease within ten (10) days (or such
longer period as is reasonably required to correct any such default, but
not more than thirty ('30.) days, provided Tenant promptly commences and
diligently continues to effectuate a cure) after written notice thereof by
Landlord, or if any of the events specified in Paragraph 14 hereof occur.
or if Tenant vacates or abandons the Demised Premises during- the term
hereof or removes or manifests an intention to remove any substantial
portion of Tenant's code or property. therefrom other than in the ordinary
and usual course of Tenant's business. or in the event Tenant's interest
under this Lease is assigned by operation of law without Landlord's
acceptance thereof. - if any of Tenant's property or goods in the Demised
Premises are seized or impounded by legal authority, then. and in any of
said cases (notwithstanding any former breach of covenant or waiver thereof
in a former instance), Landlord, in addition to all other rights and
remedies available to it by law or equity or by any other provisions
hereof. may at any time thereafter: upon five (5) days' notice to Tenant.
declare to be immediately due and payable, on account of the rent and other
charges herein reserved for the balance of the term of this Lease (taken
without regard to any early termination of said term on account of
default). a sum equal to the Accelerated Rent Component (as hereinafter
defined), and Tenant shall remain liable to Landlord as hereinafter
provided; and/or
(2.) whether or not Landlord has elected to recover the Accelerated
Rent Component. terminate this Lease on at least five (5) days' notice to
Tenant and. on the date specified in said notice. this Lease and the term
hereby demised and all rights but not obligations of Tenant hereunder shall
expire and terminate and Tenant shall thereupon quit and surrender
possession of the Demised premises to Landlord in the condition elsewhere
herein required and Tenant shall remain liable to Landlord as hereinafter
provided.
B. Accelerated Rent Component. For purposes hereof. the Accelerated
Rent Component shall mean the aggregate of-.
(I.) all rent and other charges, payments, costs and expenses due from
Tenant to Landlord and in arrears at the time of the election of Landlord
to recover the Accelerated Rent Component,
(2.) the Minimum Rent reserved for the then entire unexpired balance
of the term of @s Lease (taken without regard to any early termination of
the term by virtue of any default), plus all other charges, payments, costs
and expenses herein agreed to be paid by Tenant up to the end of said term
which shall be capable of precise determination at the time of Landlord's
election to recover the Accelerated Rent Component. discounted to present
value at the then existing prime rate of Wachovia National Bank or its
successor; and
(').) Landlord's good faith estimate of all charges, payments, costs
and expenses herein agreed to be paid by Tenant up to the end of said term
which shall not be capable of precise determination as aforesaid (and for
such purposes no estimate of any component of Additional Rent to accrue
pursuant to the provisions of Paragraph 4 hereof shall be less than the
amount which would be due if each such component continued at the highest
monthly rate or amount in effect during the twelve (12) months immediately
preceding the default) discounted to present value at the then existing
prime rate of Wachovia National Bank or its successor.
C. Re-entry. In any case in which this Lease shall have been
terminated, or in any case in which Landlord shall have elected to recover
the Accelerated Rent Component and any portion of such sum shall remain
unpaid, Landlord may, without further notice, enter upon and repossess the
Demised Premises, by summary proceeding( ejectment or otherwise, and may
dispossess Tenant and remove Tenant and all other persons and property from
the Demised Premises and may have. hold and enjoy the Demised Premises and
the rents and profits therefrom. Landlord may, in its own name, as agent
for Tenant. if this Lease has not been terminated, or in its own behalf. if
this Lease has been terminated, relet the Demised Premises or any part
thereof for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the term of
this Lease) and on such conditions and provisions (which may include
concessions or free rent) as Landlord 'in its sole discretion may
determine. Landlord may, in connection with any such relenting, cause the
Demised Premises to be redecorated. altered. divided. consolidated with
other space or otherwise changed or prepared for reletting. No reletting-
shall be deemed a surrender and acceptance of the Demised Premises.
D. Continuing, Liability. Tenant shall. with respect to all periods of
time up to and including the expiration of the term of this Lease (or what
would have been the expiration date in the absence of default or breach)
remain liable to Landlord as follows:
(I.) in the event of termination of this Lease on account of Tenant's
default or breach. Tenant shall remain liable to Landlord for damages equal
to the rent and other charges payable under this Lease b,,- Tenant as if
this Lease were still in effect, less the net proceeds of any relenting
after deducting all costs incident thereto (including- without limitation
all repossession costs. brokerage-e and management commissions. operating
and legal expenses annual tees, alteration 0 costs and expenses of
preparation for reletting) and to the extent such damages shall not have
been recovered by Landlord by virtue of payment by Tenant of the
Accelerated Rent Component (but without prejudice to the night of Landlord
to demand and receive the Accelerated Rent Component), such damage shall be
payable to Landlord monthly upon presentation to Tenant of a bill for the
amount due: and
(2.) in the event and so long as this Lease shall not have been
terminated after default or breach by Tenant, the rent and all other
charges payable under this Lease shall be reduced by the net proceeds of
any reletting by Landlord (after deducting all costs incident thereto as
above set forth) and by any portion of the Accelerated Rent Component paid
by Tenant to Landlord, and any amount due to Landlord shall be payable
monthly upon presentation to Tenant of a bill for the amount due.
E. Credit. In the event Landlord shall, after default or breach by
Tenant, recover the Accelerated Rent Component from Tenant and it shall be
determined at the expiration of the term of this Lease (taken without
regard to early termination for default) that a credit is due Tenant
because the net proceeds of relating, as aforesaid, plus the amounts paid
to Landlord by Tenant exceed the aggregate of rent and other charges
accrued in favor of Landlord to the end of said term. Landlord shall refund
such excess to Tenant. without interest, promptly after such determination.
F. No Duty to Relet. Landlord shall in no event be responsible or
liable for any failure to relet the Demised Premises or any part thereof,
or for any failure to collect any rent due upon a reletting.
G. Additional Rights. As a cumulative and alternative remedy of
Landlord in the event of termination of this Lease by Landlord following
any breach or default by Tenant, Landlord, at its option, shall be entitled
to recover damages for such breach in an amount equal to the Accelerated
Rent Component (determined from and after the date of Landlord's election
under this subsection (G) less the discounted present value of the fair
rental value of the Demised Premises for the remainder of the term of this
Lease (taken without regard to the early termination), and such damages
shall be payable by Tenant upon demand. All remedies set forth in this
Section 15 shall be in addition to any other remedies provided by law.
H. Bankruptcy. Nothing contained in this Lease shall limit or
prejudice the right of Landlord to prove for and obtain as damages incident
to a termination of this Lease, in any bankruptcy, reorganization or other
court proceedings. the maximum amount allowed by any statute or rule of law
in effect when such damages are to be proved.
I. Overdue Payments. If rent or any other sum due from Tenant to
Landlord shall be overdue for more than fifteen (15) days after the due
date. it shall thereafter bear interest at the rate of eighteen percent (I
8%) per annum (or, if lower. the hi2hest le2al rate) until paid.
16. Subordination.
A. General. This Lease is and shall be subject to and subordinate to
all ground or underlying- leases of the entire Building and to all
mortgages which may now or hereafter be secured upon the Building and/or
Land. and to all renewals, modifications, consolidations, replacements and
extensions thereof This clause shall be self-operative and no further
instrument of subordination shall be required by any lesser or mortgagee.
but in confirmation of such subordination. Tenant shall execute, within
fifteen (15) days after request, any certificate that Landlord may
reasonably require acknowledging such subordination. Notwithstanding the
foregoing, the party holding the instrument to which this Lease is
subordinate shall have the right to recognize and preserve this Lease in
the event of any foreclosure sale or possessory action. and in such case,
this Lease shall continue in full force and effect at the option of the
party holding the superior lien or interest and Tenant shall attorn to such
party and shall execute, acknowledge and deliver any instrument that has
for its purpose and effect the confirmation of such attornment. If
Landlords shall so request. Tenant shall send to any mortgagee or ground
lessor or lessor of the entire Building designated by Landlord. a copy of
any notice given by tenant to Landlord alleging a material breach by Land
lord in its obligations under this Lease. The foregoing provisions
concerning subordination shall be subject to the further limitation that
this Lease shall not be subordinated to any mortgage other than a first
mortgage unless the holder of such first mortgage shall consent thereto.
B. Rights of Mortgagee. In the event of any act or omission of
Landlord which would give Tenant the right. immediately or after lapse of a
period of time. to cancel or terminate this Lease, or to claim a partial or
total eviction. Tenant shall not exercise such right:
(I.) until it has given written notice of such act or omission to the
holder of each such mortgage and ground lease or underlying lease of the
entire Building whose name and address shall previously have been furnished
to Tenant in writing; and
(2.) until a reasonable period for remedying such act or omission
shall have elapsed following the giving of such notice (which reasonable
period shall in no event be less than the period to which Landlord would be
entitled, under this Lease or otherwise. after similar notice. to effect
such remedy).
C. Non-disturbance Agreement. The subordination of this Lease and of
Tenant's leasehold interest hereunder to the lien of any mortgage, ground
lease or other encumbrance hereafter placed on the Demised Premises is
conditioned upon execution and delivery by such mortgagee, ground lessor or
other encumbrancer to the Tenant of an agreement in form acceptable to
Landlord and the holder of such superior lien and in recordable form, under
which such mortgagee, around lessor or other encumbrancer (for itself, its
successors and assigns, and for anyone asserting title to, or right to
possession of, the Demised Premises under the remedies afforded by the
mortgagee, ground lease or other encumbrance). shall covenant and agree for
the benefit of Tenant. its successors and assigns:
(I.) to take no action to interfere with the possession and use of the
Demised Premises by Tenant. its successors and assigns and/or Tenant's
rights hereunder, except to the extent permitted to Landlord by the express
provisions of this Lease: and
(2.) upon any, foreclosure sale or other sale, the purchaser shall
become the Landlord under this Lease and agrees to be bound by all of its
terms, provided Tenant attorns to such purchaser.
17. Reservations in Favor of Landlord All walls, windows and doors
bounding the Demised Premises (including exterior Building walls, core
corridor walls and doors and any core corridor entrance), except the inside
surfaces thereof. any terraces or roofs adjacent to the Demised Premises,
and any space in or adjacent to the Demised Premises used for shafts.
pipes, conduits, fan rooms. ducts. electric or other utilities. sinks or
other Building facilities, and the use thereof. as well as reasonable
access thereto throu2h the Demised Premises for the purposes of operation,
maintenance. decoration and repair, are reserved to Landlord.
18. Notices. All bills. statements, notices or other communications
given hereunder shall be deemed sufficiently . given or rendered only if in
writing delivered personally or sent by certified mail, return receipt
requested, postage prepaid, as follows:
If to Tenant
Envirometrics, Inc.
Attn:
Faber Place Drive Suite 201
North Charleston, South Carolina 29405
If to Landlord: LPC of S.C.. Inc.
Attn: C. G. Whitmire, Jr.
Post Office Box 789
Greenville. South Carolina 29602-0789
Copy to: Liberty Properties Group, Inc.
Attn: Peggy Campbell
4055 Faber Place Drive
Charleston. South Carolina 29405
or to such other person or place as a party may designate by notice as
aforesaid. Notice by mail shall be deemed given on the date or receipt as
shown on the return receipt. Notices requesting after-hours Building
services may be given. in writing by Tenant to' the Building superintendent
designated by Landlord for such purposes.
19. Holding Over. Should Tenant wrongfully continue to occupy the
Demised Premises after expiration of the term of this Lease or any renewal
or renewals thereof, except on expiration of the term of this Lease or any
renewal or renewals thereof occasioned by default, such tenancy shall
(without limitation on any of Landlord's rights or remedies therefor) be
one at sufferance from month to month at a minimum monthly rent equal to
twice the total Minimum Rent and Additional Rent payable for the last month
of the term of this lease prior to the holdover. The foregoing right to
recover double rent shall not apply if Tenant shall experience any
unavoidable delay in moving due to strikes. accidents or acts of God. not
in excess of fifteen (I 5) days.
20. Waiver of Subordination. Each party hereto hereby, waives any and
every claim which arises or which may arise in its favor and against the
other party hereto during the term of this Lease or any extension or
renewal thereof for-any and all loss of. or damage to, any of its property
located within or upon or constituting a part of the Building. to the
extent that such loss or damage is recovered under an insurance policy or
policies and to the extent such policy or policies contain provisions
permitting such waiver of claims. Each party agrees to request its insurers
to issue policies containing such provisions and if any extra premium is
payable therefor, the party which would benefit from the provision shall
have the option to pay such additional premium in order to obtain such
benefit.
21. Rent Tax. If, during the term of this Lease or any renewal or
extension thereof. any tax is imposed upon the privilege of renting or
occupying the Demised Premises or upon the amount of rentals collected
therefor. Tenant will pay each month, as Additional Rent. a sum equal to
such tax or charge that is imposed for such month. but nothing herein shall
be taken to require Tenant to pay any income. estate, inheritance or
franchise tax imposed upon Landlord.
22. Prior Agreements, Amendments. This Lease constitutes the entire
agreement between the parties relating to the subject matter contained
herein. Neither party hereto has made any representations or promises
except as contained herein. This Lease supersedes all prior negotiations.
agreements, informational brochures, letters, promotional information and
other statements and materials made or furnished by Landlord or its agents.
No agreement hereinafter made shall be effective to change. modify,
discharge or effect an abandonment of this Lease, in whole or in part,
unless such agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge is sought. No agent or
employee of Landlord has authority to make or offer any modification or
amendment hereof except as provided herein.
23. Captions. The captions of the paragraphs in this Lease are
inserted and included solely for convenience and shall not be considered or
given any effect in construing the provisions hereof
24. Mechanic's Liens. Tenant shall, within twenty (20) days after
notice from Landlord, discharge or bond against any mechanic's lien for
material or labor or other 'reason for which mechanic's liens may be filed
claimed to have been furnished to the Demised Premises on Tenant's behalf
(except for work contracted for by Landlord) and shall indemnify, defend
and hold harmless Landlord from any loss incurred in connection therewith.
If Tenant fails to do so. Landlord may secure such discharge or bond
without liability to Tenant and all amounts paid and costs incurred therein
by Landlord shall be payable by Tenant to Landlord as Additional Rent with
the next due installment of Minimum Rent.
25. Landlord's Right to Cure. Landlord may (but shall not be
obligated), on five (5) days' notice to Tenant (except that no notice need
be given in case of emergency) cure on behalf of, and without liability to,
Tenant any default hereunder by Tenant. and the cost of such cure
(including any attorney's fees incurred) shall be deemed Additional Rent
payable upon demand.
26. Public Liability Insurance. Tenant shall at all times during the
period in which it has any occupancy rights in the Demised Premises,
maintain in full force and effect comprehensive public liability insurance.
naming Landlord and its Building management firm. if any. as additional
insureds, covering injury to persons in amounts at least equal to
$1.000,000 for bodily injury or death to any one person, $1.000,000 for any
one occurrence. and $500.000 for property damage. occurring in or about the
Demised Premises. Tenant shall deliver to Landlord duplicate originals or
certificates ' of such insurance at or prior to the date Tenant shall make
any entry into the Demised Premises. together with evidence of paid up
premiums. and shall deliver to Landlord renewals thereof at least thirty
(30) days prior to expiration. All such policies of insurance shall provide
that they shall not be canceled or amended without at least twenty (20)
days' prior notice to Landlord.
27. Estoppel Statement. Tenant shall from time to time. within ten
(10) days after request by, Landlord. execute. acknowledge and deliver to
Landlord a statement. which may be relied upon by Landlord or any proposed
mortgagee or ground lessor, certifying that this Lease is unmodified and in
full force and effect (or that same is in full force and effect as
modified, listing the instruments of modification). the dates to which rent
and other charges have been paid, and whether or not, to the best of
Tenant's knowledge, Landlord is in default hereunder or whether Tenant has
any claims or demands against Landlord (and. if so. the default. claim
and/or demand shall be specified).
28. Quiet Enjoyment. Tenant. upon payment of all rent and performance
of all obligations imposed under this Lease, shall have the peaceful and
quiet enjoyment of the Demised Premises without hindrance or disturbance by
Landlord or those claiming by, through, or under Landlord, subject,
however, to the terms of the Lease and to any mortgagee or lease which is
superior to this Lease.
29. Brokers. Tenant represents and warrants that it has not dealt with
any broker or agent in the negotiation for or the obtaining of this Lease
and that there are no claims for commissions or finders fees in connection
herewith and agrees to indemnify and hold Landlord harmless from any and
all cost or liability for compensation claimed by an broker or agent
employed by Tenant or claiming to have been engaged by Tenant in connection
with this Lease.
30. Certain Meanings, Limitation of Liability-,,.
A. Tenant. The word "Tenant" as used in this Lease shall be construed
to mean tenants in all cases where there is more than one tenant, and the
necessary grammatical changes required to make the provisions hereof apply
to corporations, partnerships or individuals. men or women, shall in all
cases be assumed as though in each case fully expressed. Each provision
hereof shall extend to and shall, as the case may require. bind and inure
to the benefit of Tenant and its successors and assigns, provided that this
Lease shall not inure to the benefit of any assignee of Tenant except upon
the express written consent of Landlord as herein provided.
B. Landlord. Mortgagee-. The term "Landlord" as used in this Lease
means the fee owner of the Building or. if different. the party holding and
exercising the right. as against all others (except space tenants of the
Building) to possession of the entire Building. Landlord above-named
represents that it is the fee owner as of the date hereof. In the event of
the voluntary or involuntary transfer of such ownership or right to a
successor-in-interest of Landlord, Landlord shall be freed and relieved of
all liability and obligation hereunder which shall thereafter accrue and
Tenant shall look solely to such successor-in-interest for the performance
of the covenants and obligations of the Landlord hereunder which shall
thereafter accrue. The liability of Landlord and its
successors-in-interest, under or with respect to this Lease, shall be
strictly limited to and enforceable only out of its or their interest in
the Buildings. and shall not be enforceable out of any other assets. No
mortgagee or around lessor which shall succeed to the interest of Landlord
hereunder (either in terms of ownership or possessor rights) shall: (i) be
liable for any previous act or omission of a prior landlord; (ii) be
subject to any rental offsets or defenses against a prior landlord- (iii)
be bound by any amendment of this Lease made without its written consent.
or by payment by Tenant of rent in advance in excess of one (1) month's
rent; (iv) be liable for any security not actually received by it: or (v)
be liable for an initial construction of the Improvements to be made to the
Demised Premises. Subject to the fore-foregoing,. the provisions hereof
shall be binding upon and inure to the benefit of the successors and
assigns of Landlord.
Miscellaneous.
A. Nonwaiver. The failure of either party to insist in any one or more
instances upon the strict performance of any one or more of the agreements.
terms, covenants, conditions or obligations of this Lease. or to exercise
any right. remedy or election herein contained. shall not be construed as a
wavier or relinquishment in the future of such performance or exercise. but
the same shall continue and remain in full force and effect with respect to
any subsequent breach. act or omission.
B. Partial Payment. No payment by Tenant or receipt by Landlord of a
lesser amount than the correct Minimum Rent or Additional Rent due
hereunder shall be deemed to be other than a payment on account, nor shall
any endorsement or statement on any check or any letter accompanying any
check or payment be deemed to effect or evidence an accord and
satisfaction. and Landlord may accept and negotiate .3uch check or payment
without prejudice to Landlord's right to recover the balance or pursue any
other remedy in this Lease or at law provided. No term or condition to the
contrary set forth on such check or payment shall be effective or valid to
any extent.
C. Requested Modifications. If. in connection with obtaining,
continuing or renewing financing for which the Building or the Demised
Premises or any interest therein represents collateral in whole or in part.
a banking. insurance other lender (even if the lender is Landlord) shall
require modifications of this Lease as a condition of such financing.
Tenant hereby expressly agrees to consent to any such required changes or
modifications to this Lease. except such as would alter the amount of
Minimum Rent or the term hereof or substantially impair Tenant's use and
enjoyment of the Demised Premises for the uses permitted herein.
D. Partial Invalidity. If any of the provisions of this Lease, or the
application thereof to any person or circumstances. shall. to any extent.
be invalid or unenforceable, the remainder of this Lease. or the
application of such provision or provisions to persons or circumstances
other than those as to whom or which it is held invalid or unenforceable.
shall not be affected thereby, and every provision of this Lease shall be
valid and enforceable to the fullest extent permitted by law.
E. Common Facilities. Tenant and its agents. employees and invitees,
shall have the right to use, in common-non with all others granted such
rights by Landlord, in a proper and lawful manner, the common walkways and
sidewalks on the Land, the common entranceways, elevators and lobbies
furnshing, access to the Demised Premises, and the common lobbies. hallways
and toilet rooms on the floors on which the Demised Premises are located.
Such use shah be subject to such reasonable rules, regulations and
requirements as Landlord may from time to time prescribe with respect
thereto.
F. Governing. Law-. This Lease shall be governed in all respects by
the laws of the State of South Carolina.
32. Parking Landlord shall provide and maintain parking,-, areas in
-good condition in common with other tenants in the Building. Landlord
reserves the right to control the method. manner and time of park-in-. to
designate or assign specific spaces to Tenant and to designate areas where
tenants employees working regularly in the Building must park. Tenant shall
require its employees to abide by any such rules.
33. Effectiveness of Lease. The submission of this Lease for
examination does not constitute a reservation or offer of nor an option for
the Demised Premises or any other space within the Building and shall vest
no right in either party. This Lease shall not be binding nor become
effective to any degree unless and until it is fully executed and delivered
by both parties.
34. Rent A Separate Covenant. Tenant shall not for any reason withhold
or reduce Tenant's required payments of rentals and other charges provided
in this Lease, it being agreed that the obligations of Landlord hereunder
are independent of Tenant's obligations.
35. Joint And Several Liability. If two
A. or more individual corporations, partnerships, or other business
associations (or any combination of two or more thereof) shall sign this
Lease as Tenant, the liability of each such individual, corporation.
partnership or other business association to pay rent and perform all other
obligations hereunder shall be deemed to be joint and several. In like
manner, if the Tenant named in this Lease shall be a partnership or other
business association, the members of which are, by virtue of statute or
-general law, subject to personal liability, the liability of each such
member shall be joint and several.
36. Corporate Tenancy. If Lessee is a corporation. the undersigned
officer of Lessee hereby warrants and certifies to Lessor that Lessee is a
corporation in good standing and is authorized to do business in the State
of South Carolina. The undersigned officer of Lessee hereby further
wan-ants and certifies to Lessor that he or she as such office, is
authorized and empowered to bind the corporation to the terms of this Lease
by his or her signature thereto.
37. Force Majeure. Whenever a period of time is herein prescribed for
action to be taken by Landlord. Landlord shall not be liable or responsible
for. and there shah be excluded from the computation of any such period of
time. any delays due to strikes. riots, acts of God. shortages of labor or
materials, theft. fire. public enemy, injunction. insurrection, court
order. requisition of other governmental body or authority. war,
governmental laws, regulations or restrictions or any other causes of any
kind whatsoever are beyond the control of Landlord.
IN WITNESS WHEREOF. the parties hereto have caused this Lease to be
executed by their duly authorized representatives the day and year first
above written.
TENANT:
ENVIROMETRICS, INC
By:
Its:
LANDLORD:
LPC of S.C.. Inc.
By:
Its:
WITNESS:
SCHEDULE OF EXHIBITS
EXHIBIT CONTENTS
A FLOOR PLAN
A-1 LANDLORD'S WORK
B RENT SCHEDULE
c CONFIRMATION OF LEASE TERM
D BUILDING AND REGULATIONS
E JANITORIAL SPECIFICATIONS
WORK LETTER
1. Prior to the Commencement Date, Landlord shall, at its sole cost and
expense, do the work (herein called the "Work") necessary to furnish and install
within the Premises in accordance with the Working, Drawings (defined below) to
be prepared by the Landlord and approved in writing, by the Tenant, the
following Building Standard Tenant Improvements and Allowances (hereinafter
referred to as "Build Standard") and any Tenant's Non-Standard Work are
collectively referred to herein as the "Leasehold Improvements":
A. BUILDING STANDARD TENANT IMPROVEMENTS
1. CEILINGS Lay-in acoustical tile ceiling system (24" x 24" tile material
suspension system with cross "Ts") in pattern indicated on ceiling plan as it is
developed.
2. HEATING, VENTILATION, AND AIR CONDITIONING Heating, ventilating and air
conditioning (HVAC) system on each floor. HVAC system consists of packaged,
roof-mounted, cooling only, variable air volume air conditioning units (one unit
for each floor); primary duct system from roof mounted units to variable air
volume (VAV), or fan-powered variable air volume (FPVAV) terminal units:
secondary duct system from each VAV or FPVAV terminal unit to air distribution
devices (diffusers, registers and grilles). Landlord's HVAC system will provide
conditioned air in quantities necessary to support typical office use occupancy
(one person per 150 square feet two watts per square foot lighting, one watt per
square foot miscellaneous sensible heat load for office equipment).
3. TOILET ROOMS Centrally located toilet rooms on each floor, including all
plumbing fixtures, toilet accessories, lighting, wall, floor an ceiling
finishes.
4. ELECTRICAL, TELEPHONE, AND JANITOR CLOSETS Electrical, telephone, and
janitor closets will be provided on each floor.
5. TENANT FINISH See attached Contractor's Work Letter.
OFFICE: (803)566-0656 FAX-. (803)566-1210
CONTRACT PROPOSAL
JANUARY 4,1996
LIBERTY PROPERTIES
ATTN.: BOB CALDWELL
Premises below described: Carolina Services, Inc. (here inafter known as
Contractor), hereby proposed to perform the following work, and to furnish
necessary material, labor and workmanship to install, construct and place the
improvement according to do following specification terms and condition on the
premises below described.
JOB. FABER PLACE, 4055 FABER PLACE DR. 2ND FLR -TRICO
Contractor submits the specification and estimates for the following:
CONSTRUCT WALLS AS PER PLANS IN Rm. 104 AND 109. WALLS TO BE 3 5/8 Metal
Studs WITH1/2' DRYWALL BOTH SIDES BUILT FLOOR TO WIDER SIDE OF CEILING GRID,
FURNISH AND INSTALL FOUR HOLLOW METAL DOORS FRAMES AND SOLID CORE BIRCH VENEER
DOOR WITH HARDWARE AND FINISH TO MATCH EXISTING. RM. 104 AND 109.FURNISH AND
INSTALL TWO WOOD FRAME FIXE GLASS WINDOWS IN ROOM 109. PAINT WALL TWO COATS FLAT
LATEX COLOR TO BE SELECTED WINDOW AND DOOR FRAMES TWO COATS SEMI GLOSS COLOR TO
BE SELECTED DOORS T\STAINED TO MATCH EXISTING AND REMOVE. AND REPLACE CARPET IN
RM. 10 1, 102,103,104,105,107AM 109. REMOVE AND REPLACE ALL COVE BASE. RELOCATE
AND/OR ADD FOUR SPRINKLER HEADS, ELECTRICAL -RELOCATE TWO 2/4 LIGHTS ADD FOUR
2.4 LIGHTS TOMATCH EXISTING ADD FOUR SWITCHES ADD FIVE OUTLETS
TOTAL $14.599.00
EXHIBIT ""
RENT SCHEDULE
Minimum Rent during the Lease Term and each renewal period shall be as
follows for approximately 9,094 square feet of space:
Suite 201
6,243 SF
Effective Dates Rate Annual Monthly
02/01/96 - 01/31/97 $14.00 $87,402.00 $7,283.50
02/01/97 - 01/31/98 $15.50 $96,766.50 $8,063-88
02/01/98 - 01/31/99 $16.12 $100,637.16 $8,386.43
Suite 210
2,851 SF
Effective Dates Rate Annual Monthly
02/01/96 - 01/31/97 $16.00 $45,616.00 $3,801.33
02/01/97 - 01/31/98 $16.64 $47,440.64 $3,953.39
02/01/98 - 01/31/99 $17.31 $49,350.81 $4,112.57
Combined Suites 201 &
9,094 SF
Effective Dates Rate Annual Monthly
02/01/96 - $14.63 $133,018.00 $11,084.83
01/31/97
02/01/97 - $15.86 $144,207.14 $12,017.26
01/31/98
02/01/98 - $16.49 $149,987.97 $12,499.00
01/31/99
EXHIBIT C
CONFIRMATION OF LEASE TERM
AGREEMENT made this 17 day of January, 1996, by and between LPC of S.C.,
Inc., (hereinafter referred to as "Landlord") and Trico Envirometrics, Inc.
(hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, under a lease dated the day of January, 1996, between Landlord and
Tenant (the "Lease"), Tenant leased from Landlord certain space containing
approximately 9,094 square feet on the 2nd floor in Landlords building at 4055
Faber Place Drive, North Charleston, South Carolina, upon the terms and
conditions set forth in the Lease; and
WHEREAS, the Lease provides that the parties shall execute a confirmation
of certain information when the commencement date of the term has beer
determined;
NOW, THEREFORE the parties hereto confirm that the Rent Commencement Date
is Feb 1, 1996 and the Term Commencement Date is Feb 1, 1996 the Lease Term
shall continue until midnight on the 31 day 1999 unless sooner terminated as
provided in the Lease.
Tenant acknowledges that it is in possession of the Demised Premises
pursuant to the Lease that rent the amount specified in the Lease has begun
accruing, in accordance with the terms of the Lease; that said premises, as
completed, have been accepted by Tenant as being- in accordance with the terms
of the Lease except as follows:
Landlord and Tenant both acknowledge that as of the date hereof, the Lease
is in full force by the other under the Lease except as follows:
This Memorandum is hereby incorporated into and made part of the Lease. IN
WITNESS WHEREOF, the parties hereto have caused this document to be duly
executed the day and year first above written. LANDLORD: TENANT: LPC of S.C.,
Inc. Envirometrics. Inc.
BUILDING RULES AND REGULATIONS
1. The sidewalks, entryways, passages, corridors, stairways and elevators
shall not be obstructed by any of the tenants, their employees or agents. or
used by them for purposes other than ingress or egress to and from their
respective suites.
All safes or other heavy articles shall be carried up or into the leased
premises only, at such times and in such manner shall be prescribed by the
Landlord. and the Landlord shall in all cases have the right to specify a
maximum weight and proper position or location of any such safe or other heavy
article. Any damage done to the Building by taking in or removing, any safe or
from overloading any floor in any way shall be paid by the Tenant. The cost of
repairing or restoring any part of the Building which shall be defaced or
injured by a tenant, its agents, invitees or employees, shall be paid for by the
tenant.
2. Landlord shall have the right to approve all contractors'
representatives and installation technicians rendering any contract service on
or to the leased premises for the tenant before performance. This provision
shall apply to all work performed in the Building, including installation of
telephones, telegraph equipment computer equipment, electrical devices and
attachments and installations of any nature affecting, floors, walls, woodwork,
windows, ceilings, equipment or any other physical portion of the Building.
3. Landlord shall furnish a reasonable number of door keys to Tenant's
Demised Premises and/or Building, which shall be surrendered on termination of
the Lease. Landlord reserves the right-ht to require a deposit for such keys to
insure their return at the termination of the Lease. Tenant shall -et keys only
from Landlord and shall not obtain duplicate keys from any outside source.
Further. Tenant shall not alter the locks or effect any substitution of such
locks as are presently being- used in Tenant's Demised Premises or the Building.
No additional locks shall be placed upon any doors without the written consent
of the Landlord. All keys shall be surrendered upon the termination of a lease.
4. No windows or other openings that reflect or admit light into the
corridors or passageways, or to any other place in the Building, shall be
covered or obstructed BV any of the tenants.
5. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse or abuse by a tenant or its agents, employees or
invitees, shall be borne by the tenant.
6. No person shall disturb the occupants of the Building, by the use of any
musical instruments, the making or transmittal of noises which are audible
outside the leased premises, or any unreasonable use. No dogs or other animals
or pets of any kind will be allowed in the Building.
7. No bicycles or similar vehicles will be allowed in the Building.
8. Nothing shall be thrown out the windows of the Building or down the
stairways or other passages.
9. Tenant shall not be permitted to use or to keep in the Building any
kerosene. camphene, burning, fluid or other illuminating- materials, or to bum
any article or material (except ordinary smoking tobacco products).
10. If any tenant desires telegraphic. telephonic or other electrical
connections, Landlord or its agents will direct the electricians as to where and
how the wires may be introduced, and without such directions no boring or
cutting for wires will be permitted. 26
11. No portion of the Building shall be used for the purpose of lodging
rooms or for any immoral or unlawful purposes.
12. The delivery of supplies to tenants in the Building will be permitted
only in a manner and at times approved by the Lessor.
13. All entrance doors leading from the hallways are to be kept closed at
all times.
14. Landlord reserves the right at all times to exclude newsboys,
loiterers. vendors, solicitors, and peddlers from the Building and to require
registration or satisfactory identification or credentials from all persons
seeking access to any part of the Building- outside ordinary business hours.
Landlord will exercise its best judgment in the execution of such control but
not be liable for the granting or refusal of such access.
15. Landlord reserves the right at all times to exclude the general public
from the Building upon such days and at such hours as in Landlord's sole
judgment will be in the best interest of the Building- and its tenants.
16. No wires of any kind or type (including but not limited to TV and radio
antennas) shall be attached to the outside of the Building and no wires shall be
run or installed in any part of the Building, without Landlord's prior written
consent.
17. If the Demised Premises are furnished with carpeting, Tenant shall
provide a Plexiglas or comparable carpet protection mat for each desk chair
customarily used by Tenant. For default or carelessness in these respects,
Tenant shall pay Landlord the cost of repairing- or replacing said carpets, in
whole or in part, as Additional Rent when, in Landlord's sole judgment, such
repair or replacement is necessary.
18. No smoking is allowed in the interior common areas of the Building.
Smoking may be permitted in designated exterior areas on the Property.
SPECIFICATIONS FOR CLEANING AND JANITORIAL SERVICES
DAILY:
1. All desks and other furniture will be dusted with specially treated dust
cloths.
2. All window sills, chair rails, baseboards. molding, partitions, picture
frames under six feet in height will be hand dusted and wiped clean.
3. All floors will be dust mopped with specially treated dust mops.
4. All bright metal work will be maintained and kept in a clean, polished
condition.
5. All drinking fountains will be thoroughly cleaned and sanitized.
6. All stairways will be vacuumed or mopped as needed.
7. Replacement of light bulbs as needed.
8. All elevators will be wet mopped, once coat of finish applied to floor
and machine buffed. If floors are carpeted, carpet will be vacuumed nightly.
Interior of cabs will be wiped clean and all metal hardware polished.
9. Empty, clean and dust all wastepaper baskets, ash trays, receptacles,
etc.
10. Remove trash and wastepaper to designated areas.
11. Carpeting and rugs to be vacuumed nightly.
12. All tile floors in all areas will maintain a satin finish. Trafficked
areas to receive regularly programmed floor maintenance to insure luster and
remove black marks and scuffs.
LAVATORIES
1. Floors to be swept and washed, using- antiseptic liquid detergent.
2. Bowls, urinals and bases will be cleaned nightly. A safe antiseptic and
deodorant bowl cleaner will be used.
3. All metal and mirrors will be cleaned and polished.
4. Fill and maintain mechanical operations of all tissue, towel. soap and
sanitary napkin dispensers. Materials to be supplied from contractor's stock.
5. Remove wastepaper and refuse.
WEEKLY:
1. Spot clean all interior partition -glass as required.
2. Remove fingerprints. smudges and scuff marks from all vertical and
horizontal surfaces (doors, walls, sills) under six feet in height.
3. Wash and refinish resilient floors in public areas, strip, wax and
polish as needed.
MONTHLY:
1. Polish and buff (no wax) resilient floors in tenant areas as needed.
2. Dust all louvers, grills and other than flush light fixtures.
OUARTERLY:
1. Dust clean all vertical surfaces; such as walls, partitions, doors,
etc. not reached in nightly cleaning.
EVERY FOUR MONTHS:
Wax and buff all resilient flooring in tenant areas, or as needed. Floors
shall be stripped, rewaxed and buffed when required. Unusual traffic conditions
will receive special attention.
EVERY SIX MONTHS:
1. Dust and damp wipe all ceiling vents.
2. Wash windows, inside and out.
Lease Amendment
THIS AGREEMENT made the 9th day of April, 1996, by and between
Envirometrics, Inc. hereafter referred to as "Lessee" and Reba H. Wilkinson
hereafter referred to as "Lessor";
WITNESSETH
For and in consideration of the sum of One Dollar ($1.00) and other good
and valuable considerations paid by Lessee to Lessor, receipt of which is hereby
acknowledged, and in consideration of the mutual covenants and agreements herein
contained, the parties hereto do agree as follows:
1. The expiration date of the term of the Lease Agreement shall be amended
to be May 31, 1999.
2. Rental payments described in paragraph 3 of the Lease Agreement will be
amended to be following:
Year From To Monthly Annual
Year 1 June 1, 1996 May 31, 1997 $ 1,262.92 $ 15,155.00
Year 2 June 1, 1997 May 31, 1998 $ 1,371.17 $ 16,454.00
Year 3 June 1, 1998 May 31, 1999 $ 1,515.50 $ 18,186.00
3. Landlord will give the Tenant an allowance of up to $15,000 for
improvements requested by the Tenant. The total cost of the improvements are
projected to be $18,908.00. Plans and actual construction of the improvements
are subject to approval compliance with applicable building codes and final
approval by the owner.
All other terms and conditions of the Lease Agreement shall remain
unchanged and in full effect.
LESSOR: Reba H. Wilkinson
BY: Witness
LESSEE: Envirometrics, Inc.
BY: Witness
FOR USE BY TENANT/CORPORATION
I, a Notary Public of Charleston County, South Carolina do certify that
Robin A. Bowers personally came before me this day and acknowledged that (s)he
is Secretary of Envirometrics, Inc., a corporation, and that by authority duly
given and as the act of the corporation the foregoing instrument was signed in
its name by its President, sealed with its corporate seal, and attested by
him/her as Secretary.
My Commission Expires: 4-26-2003
Notary Public
FOR USE BY LANDLORD
I, a Notary Public of Johnston County, North Carolina do certify that Reba
H. Wilkinson personally came before me this day and acknowledged that (s)he is
Secretary of a corporation, and that by authority duly given and as the act of
the corporation the foregoing instrument was signed in its name by its
President, sealed with its corporate seal, and attested by him/her as Secretary.
My Commission Expires: 3-22-97
Notary Public
MASTER FACTORING AGREEMENT
THIS MASTER FACTORING AGREENMENT ("this Agreement") is made this 3rd day of
May, 1996 by and between the Assignor, Envirometrics, Inc., Azimuth Incorporated
("AZI"), Envirometrics Products Company ("EPC"), and Trico Envirometrics, Inc.
("TEI") (referred to throughout this Agreement as "you", "your" and "yours") and
the Assignee, RESERVOIR CAPITAL CORPORATION (referred to throughout this
Agreement as "we", "us", "our" and "ours").
I. Sale and Assignment of Accounts Receivable.
1.1. Purchase and Sale of Accounts. From time to time during the term of
this Agreement, you will offer to sell to us selected of your Accounts
(hereinafter defined), and we will consider purchasing, in our sole discretion,
such Accounts which are acceptable to us. At any one time, the aggregate
outstanding purchase price for all Accounts which we will purchase or consider
purchasing shall be not greater than $800,000.00. As used herein, the term
"Accounts" means, collectively, accounts, contract rights and other forms of
obligation arising in the ordinary course of business from the sale of goods or
rendition of services. Any purchase of Accounts will be evidenced by the
execution of an Agreement for Assignment and Transfer of Accounts Receivable
(each an "Assignment Agreement") in the form of Exhibit A. Any Account which we
purchase is hereinafter called an "Assigned Account." Each purchase shall be
subject to the terms of this Agreement.
1.2. Assignment Price. We will pay to you for each Assigned Account a price
(an "Assignment Price") equal to Eighty percent (80%) for EPC, Seventy-Five
percent (75%) for TEI, and Eighty percent (80%) for All of the outstanding
amount of such Account. We will not purchase All accounts until the existing
security interest on accounts receivable is either released or fully
subordinated.
1.3. Sale and Assignment of Accounts. You agree to sell, assign and
transfer to us all of your right, title and interest to the Assigned Accounts,
together with (a) any notes or drafts related thereto, (b) the contracts under
which such Accounts arose, C your books and records relating thereto, (d) the
goods (if any) giving rise to such Accounts, (e) your rights as an unpaid vendor
or lienor, (f) all rights of stoppage in transit, replevin, repossession, and
reclamation, (g) all security therefor and guarantees thereof, and (h) all
rights to insurance proceeds resulting therefrom (all of the foregoing being
included in the term "Assigned Accounts").
1.4. Account Documentation. Upon acceptance by us of any Assignment
Agreement, you will deliver to us: (a) copies of all documents evidencing the
Accounts listed thereon and (b) such other documentation as we require, in form
satisfactory to us in all respects.
You will maintain all shipping documents, delivery receipts and invoices
relating to Assigned Accounts, available for inspection and copying by us, and
you will deliver them to us promptly upon our request. Each sale of Accounts
will be reflected as a sale on your books and financial statements.
1.5. Processing, Fee. In consideration of our purchase of Accounts from you
and our rendition of processing and monitoring services, you agree to pay to us
a fee (the "Processing Fee") as set out in the rate sheet attached hereto as
Exhibit B. The Processing Fee shall be due and payable at the time each Account
is collected or, if not collected in a timely manner, upon repurchase. It is
contemplated that the minimum volume of accounts to be assigned to us will be
$400,000 per month (face value amount) based upon a rolling three month average
of Accounts assigned, as calculated commencing on the first day of the first
calendar month after the date of the first assignment of Accounts. If you fail
to provide the contemplated volume of acceptable Accounts for us to consider
purchasing, you will pay us a processing fee based upon the difference between
the processing fee charged for the actual Accounts assigned and a processing fee
computed as if the minimum volume had been assigned.
1.6. Servicing Fee. In further consideration of our purchase of Accounts
from you and our rendition of processing and monitoring services, you agree to
pay to us a servicing fee (the "Servicing Fee") of three quarters of a percent
(.75%) of the face amount of Accounts purchased by us payable at the time of
purchase.
1.7. Payments on Accounts. You shall, and we may, notify all persons
obligated to make payments with respect to Accounts (collectively, "Account
Debtors") to make all payments on or with respect to Accounts directly into a
special banking account over which we have exclusive dominion, control, and
power of access and withdrawal (the "Collection Account"). In connection
therewith, you agree to reference our payment instructions on all invoices
submitted to Account Debtors. In addition, if any Account Debtor is an agency,
department, or instrumentality of the United States Government, you shall
execute such forms of notice and assignment, and shall conform to all applicable
procedures, as may be required pursuant to the Federal Assignment of Claims Act
of 1940, as amended, in order to perfect our rights in the Accounts of such
Account Debtor. You hereby authorize us to collect and receive all payments from
all Account Debtors, and to facilitate our collection and receipt, you hereby
irrevocably appoint and constitute us, or any of our agents or employees, as
your lawful Attorney-in-Fact to exercise at any time any of the following
powers: (1) to receive, endorse, and deposit in our name all payments from
Account Debtors; (ii) to transmit to any party notice that you have granted to
us a security interest in the Accounts or that an Assigned Account has been sold
to us; (iii) to institute any proceedings deemed by us necessary to effect
collection of Accounts; and (iv) to sign your name on any financing statements,
or any amendment or continuation statement relating thereto with respect to any
Account. Any act of ours as your lawful Attorney-in-Fact shall not render us
liable for any acts of omission or commission, nor for any error of judgment or
mistake of fact or law. If you receive any payment on any Account, you shall
promptly remit such payment in the form received (with any necessary
endorsement) directly to us. Until so remitted, you will hold such payment in
trust for us separate and apart from all of your other funds.
1.8. Remittance of Holdback and Payments on Accounts Not Assigned. Upon our
receipt of any payment under an Assigned Account, so long as you are not in
default hereunder, we shall remit to you the difference, if any, between the
payment received by us and the Assignment Price of that Assigned Account, less
all unpaid Processing Fees (which amount is herein called the "Holdback"). If an
Assigned Account is part of a group of Accounts for which we paid an aggregate
Assignment Price, the Holdback shall not be paid until an amount equal to the
aggregate Assignment Price plus Processing Fees has been paid to us by the
Account Debtors obligated on the group of Accounts. Upon our receipt of any
payment under an Account (other than an Assigned Account), so long as you are
not in default hereunder, we shall remit such payment to you promptly or, at
your request, apply such payment as you may direct. Remittances required by this
Paragraph 1.8 will be paid to you weekly on Friday or if not a business day, the
next succeeding business day.
2. Presentations, Warranties and Promises. To induce us to purchase
Accounts from time to time, you make the following representations, warranties,
and promises, each of which survives the execution and delivery of this
Agreement and is deemed to be incorporated by reference in each Assignment
Agreement:
2.1. Power and Authority. You have all requisite power and authority to
execute, deliver and perform this Agreement and each Assignment Agreement, and
such performance does not contravene your articles of incorporation, by-laws, or
partnership agreement, as applicable, or any other agreement by which you are
bound.
2.2. Representations and Warranties with Respect to Accounts. With respect
to each Account: (a) your principal place of business and your books and records
relating to the Accounts are located at the address set forth at the end of this
Agreement; (b) you are the sole owner of each Account, free and clear of all
liens and encumbrances, and you will not assign, sell, transfer, pledge, grant a
security interest in or encumber or otherwise dispose of or abandon any part or
all of the Accounts; C you have made proper entries in your books disclosing the
sale of Accounts to us; (d) each of your Account Debtors has legal capacity to
contract and is indebted to you in the amount indicated in your books and
records; (e) each Account is valid, legally enforceable, and represents a bona
fide undisputed indebtedness; (f) no Account is subject to any valid defense,
offset, counterclaim, allowance, or is contingent; (g) each Account Debtor is
solvent, and each Account will be paid in full on or before its maturity date;
(h) no agreement for any deduction or allowance of any kind exists or will be
made by you; (I) all information appearing in your books and records relating to
each Account is true and correct in all respects; and 0) all signatures and
endorsements appearing on the invoices and documents relating to the Accounts
are genuine, and all signatories and endorsers have full capacity and authority
and were fully authorized to contract for the purchase of the goods and/or
services giving rise to the Accounts.
2.3. Books and Records; Inspections. You will maintain books and records in
accordance with generally accepted accounting principles consistently applied.
We shall have full access to, and the right to audit and make copies from, your
books and records relating to the Collateral or this Agreement. You will furnish
to us such financial statements and other information regarding your business
affairs as we may request.
2.4. Subsidiaries. You have no subsidiaries other than those disclosed in
writing to us, and you will not create any additional subsidiaries without our
prior written consent, which consent may be withheld in our absolute discretion
or conditioned upon any such subsidiary entering into a factoring agreement
similar to this Agreement with us.
2.5 Advances and Loans. You will not, without our prior written consent,
invest in, or make loans or advances to, any of your stockholders.
2.6. Financial Statements. Within thirty (30) days following the end of
each month you will provide to us a Balance Sheet as of the end of such month
and an Income Statement for the current fiscal year to date in a form acceptable
to us, prepared in accordance with Generally Accepted Accounting Principles.
2.7. Title to and Condition of Collateral Other than Accounts. You are the
sole owner of the Collateral (other than the Accounts, which are covered by
Paragraph 2.2 above) and have the right to grant to us a lien on and security
interest in such Collateral; and the Collateral is, or will be when acquired by
you, free and clear of all liens, security interests, taxes and other
encumbrances of any nature except for those created by this Agreement or
permitted by us in writing. As to inventory which is included in the Collateral,
such inventory is not stored with a bailee, warehouseman or similar party
without our prior written consent, such inventory is not under consignment to or
from any person, and such inventory is currently salable or usable in the normal
course of your business.
2.8. Insurance on Collateral Other than Accounts. During the term of this
Agreement, you shall maintain with financially sound, well rated and reputable
insurance companies comprehensive fire and extended coverage insurance on your
inventory against such risks, with such loss deductible amounts and in such
amounts not less than those which may be satisfactory to us but in all events
conforming to prudent business practices and in such minimum amounts that you
will not be deemed a co-insurer under applicable insurance laws, regulations,
policies and practices. Each policy of such insurance covering your inventory
shall contain a provision or endorsement satisfactory to us naming us as loss
payee and providing that (a) such policy may not be canceled or altered and we
may not be removed as loss payee without at least thirty (30) days prior written
notice to us, and (b) no act or default of you or any other person shall affect
our right to recover under such policy. You will pay, when due, all premiums on
such insurance and will pay to us, upon request, evidence of payment of such
premiums and other information as to the insurance carried by you. You hereby
irrevocably (x) assign and grant to us a security interest in any and all
proceeds of each such insurance policy covering your inventory, (y) direct each
insurance company to pay all such proceeds directly to us, and (z) constitute
and appoint us (and all officers, employees or agents designated by us) as your
true and lawful attorney-in-fact (coupled with an interest) with authority and
power on your behalf to make, adjust, settle or compromise all claims under each
such insurance policy and to endorse any check, draft or instrument for such
proceeds. Any proceeds of such insurance received by us (less the amount of any
reasonable costs of settlement of such losses) shall be held and applied, at our
option, to the Obligations (whether matured or un-matured) in such manner and at
such times as we may determine in our sole discretion or to the replacement of
the damaged or destroyed inventory upon terms and conditions reasonably
satisfactory in all material respects to us.
2.9 Compliance with Laws, Etc. You are in compliance in all material
respects with all applicable federal, state and local laws, statutes, orders,
rules, regulations and judgments.
2.10 No Material Adverse Change. There has been no material adverse change
in your management, financial condition or business prospects or in the personal
financial condition of any guarantor of your Obligations under this Agreement
from that represented in any application, financial statement or other
information provided to us prior to the date of this Agreement.
3. Account Disputes; Breaches of Representations Warranties and Promises;
Repurchase of Accounts.
3.1 Dispute Resolution Authority. You will notify us promptly of and, if
requested by us, will settle all disputes concerning any Assigned Account, at
your sole cost and expense. However, you shall not, without our prior written
consent, settle, compromise or adjust any Assigned Account or grant any
additional discounts, allowances or credits thereon. If we demand repurchase or
exchange of an Assigned Account which is subject to dispute under Section 3.2
and you fail to repurchase or exchange such Assigned Account, we may, but are
not required to, attempt to settle, compromise, or litigate the dispute upon
such terms as we in our sole discretion deem advisable, for your account and
risk and at your sole expense.
3.2 Repurchase of Assigned Account. If any Assigned Account is not paid
within 90 days of its invoice date, or if there exists any breach of your
representations, warranties and promises under this Agreement with respect to
any Assigned Account, or if there is a dispute concerning any Assigned Account,
you agree, upon demand by us at our sole option, either (I) to repurchase from
us such Assigned Account (or the unpaid portion thereof) for the amount of the
applicable Assignment Price (or the unpaid portion thereof), together with all
unpaid Processing Fees, or (ii) to accept a reassignment from us of such
Assigned Account in exchange for an assignment of an Assigned Account of equal
or greater value.
4. Security Interest in Collateral.
4.1. Grant of Security Interest-, Collateral Defined. To secure payment and
performance of all of your obligations under this Agreement, including, without
limitation, repurchase and reassignment obligations, processing fees, costs, and
expenses (collectively, the "Obligations"), you pledge, assign and grant to us a
continuing lien and security interest in the following property, both now owned
and existing and hereafter created, acquired and arising, regardless of where
located (collectively, the "Collateral"):
(1) all of your Accounts (whether or not accepted by us or specifically
assigned to us and whether arising before or after termination of this
Agreement);
(2) all of your present and @e instruments, documents, chattel paper and
general intangibles (as those terms are defined in the Uniform Commercial Code);
(3) all reserves, balances, deposits, credits, moneys, securities, and
other property at any time owing or belonging to you which are now or hereafter
in the possession of, or in transit to, us, whether for safekeeping, pledge or
otherwise (including, without limitation, all Holdbacks at any time owing by us
to you, whether then or thereafter payable, under or in connection with this
Agreement);
(4) all of your claims against us at any time existing;
(5) all books and records and other property relating to the Assigned
Accounts, the Collateral and your Obligations; and
(6) all cash and non-cash proceeds and products of any of the foregoing,
including any claim against third parties in any way related to the foregoing.
We are irrevocably authorized at any time to charge your account (and any
credit balance on our books in your favor) for the amount of any or all of your
Obligations.
4.2. Perfection of Security Interest. You shall execute and deliver to us
such documents and instruments, including, without limitation, Uniform
Commercial Code ("UCC") financing statements, as we may request from time to
time in order to evidence and perfect our security interest in the Collateral.
5. No Agency. Nothing in this Agreement shall be construed to constitute us
as your agent or to obligate us to assume any of your obligations with respect
to any Account. We will not have any liability for any error or omission or
delay occurring in the settlement, collection or payment of any Account.
Notwithstanding the foregoing, if you fail to perform any obligation you are
required to perform in order to maintain the obligation of an Account Debtor to
make payments on an Assigned Account, we may perform, or retain others to
perform, such obligation, at your sole expense, and such expense shall
constitute part of your Obligations.
6. Collection Costs. You shall reimburse us on demand for all costs
incurred by us in efforts to enforce payment of Assigned Accounts. All fees,
costs and expenses (including attorneys' fees), of any kind and nature, which we
may incur in (a) filing notices, (b) making lien or title examinations, C
protecting, maintaining, preserving or enforcing Assigned Accounts, or (d)
defending or prosecuting any actions or proceedings related to this Agreement
shall be added to and deemed part of your Obligations. In addition, in the
absence of a Default under Paragraph 7 below, you shall be responsible for the
fees, costs and expenses for all field examinations (not to exceed $400 per day
plus out of pocket expenses) in addition to the initial field audit performed
prior to the date of this Agreement.
7. Default. All of your Obligations shall, at our option, be and become
immediately due and payable without notice or demand upon the occurrence of any
one or more of the following events (each a "Default"): (1) default in the
payment, when due and payable, of any of your Obligations; (ii) if any of your
representations or warranties are false or misleading in any material respect;
(iii) if you fail to perform any promise contained in this Agreement or any
Assignment Agreement; (iv) the discontinuance or suspension of your present
business operation without our consent such consent to not be unreasonably
withheld, or if you become insolvent or unable to meet your debts as they
mature, or any proceeding is commenced against you for relief under any
provision of any Federal or State bankruptcy, insolvency or other similar law,
the issuance or filing of any injunction, attachment, judgment or lien against
you or any of your property, or the appointment of a receiver, custodian or
trustee of any kind for you or any of your property; and (v) if a default occurs
under any Guaranty Agreement executed in conjunction with this Agreement and is
not cured within any applicable grace period.
8. Remedies.
8.1. Our Rights. Upon the occurrence of any Default, without further notice
to you, we shall have the right to (I) cease purchasing Accounts; (ii) terminate
this Agreement and enforce the liquidated damages provisions of Paragraph 9.4;
(iii) enforce against you immediate payment of all of your Obligations; (iv)
collect all amounts due and owing on all Accounts; (v) require you to assemble
the Collateral and make it available to us at a place designated by us; (vi)
enter upon your premises to take possession of the Collateral; and (vii)
appropriate, set off and apply the Collateral to the payment of your Obligations
in such order and manner as we in our sole discretion shall determine, or
settle, compromise or release, in whole or in part, any amounts owing on the
Collateral, or prosecute any proceeding with respect to the Collateral, or
extend the time of payment of any or all of the Collateral, or issue credits
regarding the Collateral, or sell, assign and deliver the Collateral (or any
part thereof), at public or private sale and apply the net cash proceeds
resulting from the exercise of any of the foregoing rights or remedies to the
payment of your Obligations in such order as we in our sole discretion may
elect, and you shall remain liable to us for any deficiency.
8.2. Confession of Judgment. Upon the occurrence of a Default, you hereby
authorize and empower any attorney designated by us or any clerk of any court of
record to appear for you in any court of record and confess judgment against you
without prior hearing, in favor of us for and in the amount of your Obligations
then outstanding, costs of suit and attorneys' fees in an amount equal to 10% of
the Obligations then outstanding. Such authority and power may be exercised on
one or more occasions, from time to time, in the same or different
jurisdictions, as often as Assignee shall deem necessary or desirable, for all
of which this Agreement shall be a sufficient warrant.
8.3. Application of Collections; Deficiency. All collections we receive
from realizing upon the Collateral, less expenses of collection (including,
without limitation, attorneys' fees and court costs) incurred by us, shall be
applied to your Obligations. If for any reason collections received by us exceed
your Obligations, we will account to you for the surplus. However, if the
collections we receive are insufficient to pay all of your Obligations, you
shall be liable to us for the deficiency.
8.4. Remedies Cumulative. Each right, power, and remedy provided for herein
or otherwise existing shall be cumulative and concurrent and shall be in
addition to every other right, power, and remedy existing hereunder, by law or
otherwise.
8.5. Charge-back Not a Reassignment. The charge-back of an Assigned Account
to you shall not constitute a reassignment of such Account to you, and title
thereto and to the goods, if any, represented thereby shall remain in us unless
such charge-back is accompanied by a simultaneous sale and assignment of another
Account as provided in Paragraph 3.2 of this Agreement, or until all of your
Obligations are paid in full.
9. Term of Agreement and Termination.
9.1. Initial Term, Renewal. The term of this Agreement shall be 24 months.
Unless terminated in accordance with this Paragraph 9, the provisions of this
Agreement shall automatically renew for successive one year periods without any
notice or action on the part of either party hereto. During the term of this
Agreement, you shall deal exclusively with us in the factoring, financing and
sale of Accounts.
9.2. Facility Fee. You will pay to us an Annual Facility Fee of one percent
(1.0%) of the $800,000.00 maximum factoring arrangement payable at closing and
on the anniversary date of the agreement.
9.3. Termination in Absence of Default. This Agreement may be terminated at
any time (a) by us giving you written notice stating a termination date not less
than ten (10) days after the date such notice is mailed or dispatched, or (b) if
you obtain bank, equity or subordinated debt financing, you may terminate after
twelve months (12) without payment of termination fees by giving us written
notice stating a termination date not less than sixty (60) days prior to the
first anniversary ate of closing. However, if we do not receive written
termination, you shall pay to us a termination in an amount equal to $7,500.00
for each month or portion of a month remaining in the initial or renewal term.
9.4. Effect of Termination. Notwithstanding any termination, all of our
rights and interests, all of your Obligations, and all of the terms, conditions,
and provisions hereof shall continue in full force and effect until all
transactions entered into prior to the effective date of termination have been
fully concluded and all of your Obligations have been paid in full. After
termination of this Agreement, you shall pay to us on demand the amount of your
Obligations then outstanding and any of your Obligations arising thereafter.
9.5. Termination After Default; Liquidated Damages. If a Default occurs
hereunder, we shall have the right at our sole option to terminate this
Agreement at any time thereafter without notice to you. If we exercise such
option, in addition to all other rights and remedies we may have, and in
addition to all of your other Obligations, you agree to pay to us upon demand as
liquidated damages for our lost fee earnings, a sum equal to $7,500.00 for each
month or portion of a month remaining in the initial or renewal term of this
Agreement.
10. Notices. Notices shall be deemed given when sent or dispatched by
certified or registered mail, by private overnight express mail, or by telegram,
postage or charges prepaid, to the parties at their respective addresses set
forth below.
I 1. Binding Effect; Complete Agreement. This Agreement will bind you and
your personal representatives, successors and assigns, and will inure to the
benefit of us and our successors and assigns, and is the complete agreement
between the parties.
12. Waiver. No delay or failure by us in exercising any of our rights or
remedies shall operate as a waiver of such or of any other right or remedy, and
no waiver shall be valid unless in writing signed by us and then only to the
extent therein set forth.
13. Governing Law, Etc. This Agreement shall be governed by and interpreted
according to the laws of the State of Maryland. You consent to the nonexclusive
jurisdiction of the courts of the State of Maryland with respect to any
controversy relating to this Agreement or to any transaction in connection
herewith, and waive personal service of the summons and complaint or other
process to be issued therein and agree that service of such summons and
complaint or process may be made by registered or certified mail addressed to
you at your address appearing herein. Your failure to appear or answer within
thirty (30) days after the mailing of such summons, complaint or process shall
constitute a default entitling us to enter a judgment or order as demanded or
prayed for therein.
14. Waiver of Jury Trial. You and we each agree that any suit, action or
proceeding, whether claim or counterclaim, brought or instituted by either party
hereto or any successor or assign of any party on or with respect to this
Agreement or which in any way relates, directly or indirectly, to this Agreement
or any event, transaction or occurrence arising out of or in any way connected
with this Agreement, or the dealings of the parties with respect thereto, shall
be tried only by a court and not by a jury. EACH PARTY HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.
15. Legal Counsel. You have had the opportunity to obtain legal counsel,
and you agree that you fully understand the terms, provisions and legal
consequences of this Agreement.
IN WITNESS WHEREOF, this Agreement is executed and delivered under seal as
of the date first above written.
ASSIGNOR: ASSIGNEE:
Envirometrics, Inc., AI, EPC, and TEI RESERVOIR CAPITAL CORPORATION
By: (SEAL) By: (SEAL)
Title: Title:
Address:4055 Faber Place Drive, Ste. 201 Address:6 Reservoir Circle, Suite 105
Charleston, SC 29405 Baltimore, Maryland 21208
Address of Chief Executive Office,
if different:
State of
TO WIT:
County of
I HEREBY CERTIFY, that on this day of
Public of said State, personally appeared
199_, before me, a Notary known to me (or satisfactorily proven) to be
the person whose name is subscribed to the foregoing Agreement and
acknowledged that executed the same for the purposes therein contained.
WITNESS my hand and Notarial Seal.
Notary Public
My Commission Expires:
SCHEDULE A
Schedule
Date
This is to certify that the account debtors named below are indebted
to borrower in the sums set out opposite their respective names for goods
sold, shipped and delivered (or, in case borrower's principal business is
rendering of service, for services rendered) on open account.
SCHEDULE OF ASSIGNED ACCOUNTS
The Account(s) identified below and the invoices, contracts and/or
other evidence thereof attached hereto (is) (are) being sold, assigned and
transferred by the Assignor to RESERVOIR CAPITAL CORPORATION pursuant to
all of the terms and conditions of the foregoing Assignment Agreement.
ACCOUNT DEBTOR Customer Invoice Contract Invoice Date Ship Invoice
(Customer) Date Received Amount
TOTALS
(a) Total Amount of Invoices on this schedule $
Advance Rate _________%
Total Advance Requested (line a x line b) $
EXHIBIT A
AGREEMENT FOR
ASSIGNMENT AND TRANSFER OF ACCOUNTS RECEIVABLE
ASSIGNOR Envirometrics Inc., All, EPC, and TEI 4055 Faber Place Drive,
Suite 201 Charleston, SC 29405 (referred to herein as "we", "0urs"," our",
and "yours")
ASSIGNEE Reservoir Capital Corporation 6 Reservoir Circle, Suite 105
Baltimore, MD 21208 (referred to herein as we, "us", "our", and "yours").
Subject to the terms and conditions of that certain Master Factoring
Agreement executed between you and us (the "Factoring Agreement") (capitalized
terms used herein and not defined having the meaning set forth in the Factoring
Agreement), we agree as follows:
1. Assignment of Accounts. In consideration of our payment to you of the
Assignment Price shown in Schedule receipt of which is hereby acknowledged, you
hereby sell, assign and transfer to us all of your right, title and interest to
the Accounts arising from the invoices identified in Schedule A.
2. Aged Account. If an Assigned Account is not paid by the Account Debtor
in full within 90 days of its invoice date, or if the Account Debtor refuses to
make any payment due under any Assigned Account, then upon our demand, you agree
(a) to repurchase such Account for a price equal to the Assignment Price plus
any unpaid Processing Fees, less any payments on such Account which we may have
received, or (b) at our sole option, to replace such Account with another
account of equal or greater value.
3. Default. You shall be in default upon the occurrence of- (i) default in
the payment of any amount due us hereunder. Upon any such occurrence, we may
exercise any remedies set forth in the Factoring Agreement, it being understood
and agreed that a Default under this Agreement shall be deemed a Default under
the Factoring Agreement. 4. Effective Date. The effective date of this Agreement
shall be the date set forth below as the effective date of our acceptance.
IN WITNESS WHEREOF, the parties have executed this Agreement under their
respective seals.
ASSIGNOR: ASSIGNEE:
Envirometrics, Inc., All, EPC and TEI Reservoir Capital Corporation
By: (SEAL) By: (SEAL)
Title: Title-,
Dated: Effective Date:
EXHIBIT B
RATE SHEET
The Processing Fee payable by The TPI Group, LTD. ("Assignor") under the
Master Factoring Agreement between Assignor and Reservoir Capital Corporation
("Assignee") shall be calculated at a per annum rate equal to the "Prime Rate"
(as hereinafter defined) plus five percent (5.0%) from the date on which the
Assignment Price for each Assigned Account is paid to Assignor to and including
the date which is two (2) business days after the date on which payment under
such Assigned Account is received by Assignee, such rate to be applied to the
Assignment Price for each Assigned Account and calculated on the basis of actual
days elapsed and a month of 30 days. The term 'Prime Rate" shall mean the prime
rate of interest as charged by NationsBank on the last business day of the
preceding calendar month, and any change in the Prime Rate shall be effective on
the first business day of the month following the month in which such change was
first published.
INDEMNIFICATION AGREEMENT AND FIDELITY GUARANTY
THIS INDEMNIFICATION AGREEMENT AND FIDELITY GUARANTY this "Agreement") is
made as of this _ day of April, 1996, to RESERVOIR CAPITAL CORPORATION, a
Maryland corporation (the "Assignee"), by A. C. Gillette, a (the "Guarantor"),
witnesseth: Recitals
A. Pursuant to a Master Factoring Agreement (which, as the same may from
time to time be amended, restated, supplemented, or otherwise modified, is
hereinafter called the "Master Factoring Agreement") date herewith by and
between Envirometrics, Inc., Azimuth Incorporated, Envirometrics Products
Company and Trico Envirometrics, Inc., (the "Assignor") and the Assignee, the
Assignor and the Assignee have entered into a factoring arrangement (the
"Factoring Arrangement") pursuant to which the Assignor has offered to sell
certain of its accounts receivable to the Assignee from time to time, and the
Assignee has agreed to consider the purchase thereof. As used in this Agreement,
the term "Factoring Documents" means collectively any instrument or agreement
previously, simultaneously, or hereafter executed and delivered by the Assignor,
the Guarantor, or any other person as evidence of, security for, guaranty of, or
in connection with, the Factoring Arrangement, as any of such instruments of
agreements may from time to time be amended, restated, supplemented, extended,
or otherwise modified, including, without limitation, the Master Factoring
Agreement.
B. The Guarantor has requested the Assignee to enter into the Master
Factoring Agreement, and the Assignee has required, as a condition to entering
into the Master Factoring Agreement, the execution of this Agreement by the
Guarantor.
NOW, THEREFORE, in order to induce the Assignee to enter into the Master
Factoring Agreement with the Assignor, the Guarantor covenants and agrees with
the Assignee as follows:
1. Guaranty and Indemnification. The Guarantor hereby unconditionally and
irrevocably guarantees to the Assignee the fidelity of the Assignor, and hereby
agrees to indemnify and save harmless the Assignee and its agents, servants,
employees and successors and assigns from and against any all liabilities,
claims, debts, obligations, losses and proceedings and any costs attributable to
them (including reasonable attorney's fees), of any nature or kind whatsoever,
that may result from (a) any fraud or misrepresentation by the Assignor or the
Guarantor in connection with the Factoring Arrangement, or (b) any breach of any
representation or warranty by the Assignor or the Guarantor under any of the
Factoring Documents. The Guarantor shall pay the amount of any such liabilities,
claims, debts, obligations, losses and proceedings (together with all costs
attributable to them) immediately upon demand.
2. Nature of Obligations. The obligations and liabilities of the Guarantor
under this Agreement are primary obligations of the Guarantor, are continuing,
absolute, and unconditional, shall not be subject to any counterclaim,
recoupement, set-off, reduction, or defense based upon any claim that the
Guarantor may have against the Assignor or the Assignee, are independent of any
other guaranty or guaranties at any time in effect, and may be enforced
regardless of the existence of such other guaranty or guaranties. This Agreement
shall continue to be effective, or be reinstated, as the case may be, if at any
time any payment, or any part thereof, of any of amounts due to the Assignee
under the Master Factoring Agreement is rescinded or must otherwise be restored
or returned by the Assignee upon the insolvency, bankruptcy, receivership,
dissolution, liquidation or reorganization of the Assignor or the Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Assignor or the Guarantor or any
substantial part of the property of the Assignor or the Guarantor, or otherwise,
all as though such payment had not been made and irrespective of whether such
payment is returned to the party who originally made it or to some other party.
The obligations and liabilities of the Guarantor under this Agreement shall not
be affected, impaired, lessened, modified, waived, and/or released by the
invalidity or unenforceability of any or all of the Factoring Documents.
3. Consents. The Guarantor hereby consents that at any time and from time
to time, the Assignee may, without in any manner affecting, impairing,
lessening, modifying, waiving, and/or releasing any or all of the obligations
and liabilities of the Guarantor under this Agreement, do any one or more of the
following, all without notice to, or further consent of, the Guarantor, or with
or without consideration: (a) renew, extend, or otherwise modify the Factoring
Arrangement; (b) extend and/or change the time and/or terms for performance of
any other obligations, covenants, or agreements under the Factoring Documents of
the Assignor or any other party to the Factoring Documents; (c) fail, omit, lack
diligence, or delay to enforce, assert, or exercise any right, power, privilege,
or remedy conferred upon the Assignee under the provisions of any of the
Factoring Documents or under applicable laws; (d) grant consents or indulgences
or take action or omit to take action under, or in respect of, any or all of the
Factoring Documents; and (e) apply any payment received by the Assignee of, or
on account of, any of the Factoring Arrangement in whatever order and manner the
Assignee elects.
4. Waiver by Guarantor. The Guarantor unconditionally waives, to the extent
permitted by applicable laws: (a) notice of the execution and delivery of the
Factoring Documents; or (b) notice of the Assignee's acceptance of and reliance
on this Agreement or the execution of the Master Factoring Agreement or the
other Factoring Documents.
5. Enforcement Expenses. The Guarantor shall indemnify and hold harmless
the Assignee against any loss, liability, or expense, including attorneys' fees
and disbursements and any other fees and disbursements, that may result from any
failure of the Guarantor to pay any amount due under paragraph 1 hereof
immediately upon demand.
6. Delay and Waiver by Assignee. No delay in the exercise of, or failure to
exercise, any right, remedy, or power accruing upon any default or failure of
the Guarantor in the performance of any obligation under this Agreement shall
impair any such right, remedy, or power or shall be construed to be a waiver
thereof, but any such right, remedy, or power may be exercised from time to time
and as often as may be deemed by the Assignee expedient. In order to entitle the
Assignee to exercise any right, remedy, or power reserved to it in this
Agreement, it shall not be necessary to give any notice to the Guarantor. No
waiver, amendment, release, or modification of this Agreement shall be
established by conduct, custom, or course of dealing.
7. Notices and Communications. All notices and other communications
hereunder shall be in writing and shall be effective when sent by certified
mail, return receipt requested: (a) if to the Guarantor, at 1085 Stonehenge
Road, Hanahan, SC 29406 or at such other address as the Guarantor shall have
furnished in writing to the Assignee; or (b) if to the Assignee, addressed to it
at 6 Reservoir Circle, Suite 105, Baltimore, Maryland 21208, or at such other
address as the Assignee shall have furnished in writing to the Guarantor.
8. Successors and Assigns. All covenants and agreements of the Guarantor
set forth in this Agreement shall bind the Guarantor and its heirs, personal
representatives, successors, and assigns and shall inure to the benefit of, and
be enforceable by, the Assignee and its successors and assigns, including,
without limitation, any holder of any or all of the Factoring Documents.
9. Waiver of Trial by Jury. The Guarantor hereby waives trial by jury in
any action or proceeding to which the Guarantor and the Assignee may be parties,
arising out of or in any way pertaining to this Agreement or any of the other
Factoring Documents.
10. Miscellaneous. Neither this Agreement nor any term hereof may be
terminated, amended, supplemented, waived, released, or modified orally, but
only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver, release, or
modification is sought. Whenever used herein, the singular number shall include
the plural, the plural the singular, and the use of the masculine, feminine, or
neuter gender shall include all genders. Whenever used herein, the word "person"
or "persons" shall mean and include a corporation, an association, a
partnership, an organization, a business, an individual, a government or
political subdivision or agency thereof, or an estate or trust. This Agreement
shall in all respects be deemed to be made in, and governed by, construed and
enforced in accordance with the laws of, the State of Maryland. The Assignee
shall have the right to grant participation's in the Factoring Arrangement to
others at any time and from time to time, and the Assignee may divulge to any
such participant or potential participant all information, reports, financial
statements, and documents obtained in connection with this Agreement, any of the
Factoring Documents, or otherwise. If any term of this Agreement or any
obligation thereunder shall be held to be invalid, illegal, or un-enforceable,
the remainder of this Agreement and any other application of such term shall not
be affected thereby. The paragraph and section headings of this Agreement have
been inserted for convenience only and shall not modify, define, limit, or
expand the express provisions hereof. This Agreement may be executed in
duplicate originals or in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one instrument, and it shall
not be necessary in making proof hereof to produce or account for more than one
such duplicate original or counterpart.
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be signed,
sealed, and delivered as of the day and year first written above.
WITNESS: A. C. Gillette
(SEAL)
INDEMNIFICATION AGREEMENT AND FIDELITY GUARANTY
THIS INDEMNIFICATION AGREEMENT AND FIDELITY GUARANTY this "Agreement") is
made as of this _ day of April, 1996, to RESERVOIR CAPITAL CORPORATION, a
Maryland corporation (the "Assignee"), by Richard D. Bennett, a (the
"Guarantor"), witnesseth:
Recitals
A. Pursuant to a Master Factoring Agreement (which, as the same may from
time to time be amended, restated, supplemented, or otherwise modified, is
hereinafter called the "Master Factoring Agreement") date herewith by and
between Envirometrics, Inc., Azimuth Incorporated, Envirometrics Products
Company and Trico Envirometrics, Inc., (the "Assignor") and the Assignee, the
Assignor and the Assignee have entered into a factoring arrangement (the
"Factoring Arrangement") pursuant to which the Assignor has offered to sell
certain of its accounts receivable to the Assignee from time to time, and the
Assignee has agreed to consider the purchase thereof. As used in this Agreement,
the term "Factoring Documents" means collectively any instrument or agreement
previously, simultaneously, or hereafter executed and delivered by the Assignor,
the Guarantor, or any other person as evidence of, security for, guaranty of, or
in connection with, the Factoring Arrangement, as any of such instruments of
agreements may from time to time be amended, restated, supplemented, extended,
or otherwise modified, including, without limitation, the Master Factoring
Agreement.
B. The Guarantor has requested the Assignee to enter into the Master
Factoring Agreement, and the Assignee has required, as a condition to entering
into the Master Factoring Agreement, the execution of this Agreement by the
Guarantor.
NOW, THEREFORE, in order to induce the Assignee to enter into the Master
Factoring Agreement with the Assignor, the Guarantor covenants and agrees with
the Assignee as follows:
1. Guaranty and Indemnification. The Guarantor hereby unconditionally and
irrevocably guarantees to the Assignee the fidelity of the Assignor, and hereby
agrees to indemnify and save harmless the Assignee and its agents, servants,
employees and successors and assigns from and against any all liabilities,
claims, debts, obligations, losses and proceedings and any costs attributable to
them (including reasonable attorney's fees), of any nature or kind whatsoever,
that may result from (a) any fraud or misrepresentation by the Assignor or the
Guarantor in connection with the Factoring Arrangement, or (b) any breach of any
representation or warranty by the Assignor or the Guarantor under any of the
Factoring Documents. The Guarantor shall pay the amount of any such liabilities,
claims, debts, obligations, losses and proceedings (together with all costs
attributable to them) immediately upon demand.
2. Nature of Obligations. The obligations and liabilities of the Guarantor
under this Agreement are primary obligations of the Guarantor, are continuing,
absolute, and unconditional, shall not be subject to any counterclaim,
recoupement, set-off, reduction, or defense based upon any claim that the
Guarantor may have against the Assignor or the Assignee, are independent of any
other guaranty or guaranties at any time in effect, and may be enforced
regardless of the existence of such other guaranty or guaranties. This Agreement
shall continue to be effective, or be reinstated, as the case may be, if at any
time any payment, or any part thereof, of any of amounts due to the Assignee
under the Master Factoring Agreement is rescinded or must otherwise be restored
or returned by the Assignee upon the insolvency, bankruptcy, receivership,
dissolution, liquidation or reorganization of the Assignor or the Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Assignor or the Guarantor or any
substantial part of the property of the Assignor or the Guarantor, or otherwise,
all as though such payment had not been made and irrespective of whether such
payment is returned to the party who originally made it or to some other party.
The obligations and liabilities of the Guarantor under this Agreement shall not
be affected, impaired, lessened, modified, waived, and/or released by the
invalidity or unenforceability of any or all of the Factoring Documents.
3. Consents. The Guarantor hereby consents that at any time and from time
to time, the Assignee may, without in any manner affecting, impairing,
lessening, modifying, waiving, and/or releasing any or all of the obligations
and liabilities of the Guarantor under this Agreement, do any one or more of the
following, all without notice to, or further consent of, the Guarantor, or with
or without consideration: (a) renew, extend, or otherwise modify the Factoring
Arrangement; (b) extend and/or change the time and/or terms for performance of
any other obligations, covenants, or agreements under the Factoring Documents of
the Assignor or any other party to the Factoring Documents; (c) fail, omit, lack
diligence, or delay to enforce, assert, or exercise any right, power, privilege,
or remedy conferred upon the Assignee under the provisions of any of the
Factoring Documents or under applicable laws; (d) grant consents or indulgences
or take action or omit to take action under, or in respect of, any or all of the
Factoring Documents; and (e) apply any payment received by the Assignee of, or
on account of, any of the Factoring Arrangement in whatever order and manner the
Assignee elects.
4. Waiver by Guarantor. The Guarantor unconditionally waives, to the extent
permitted by applicable laws: (a) notice of the execution and delivery of the
Factoring Documents; or (b) notice of the Assignee's acceptance of and reliance
on this Agreement or the execution of the Master Factoring Agreement or the
other Factoring Documents.
5. Enforcement Expenses. The Guarantor shall indemnify and hold harmless
the Assignee against any loss, liability, or expense, including attorneys' fees
and disbursements and any other fees and disbursements, that may result from any
failure of the Guarantor to pay any amount due under paragraph 1 hereof
immediately upon demand.
6. Delay and Waiver by Assignee. No delay in the exercise of, or failure to
exercise, any right, remedy, or power accruing upon any default or failure of
the Guarantor in the performance of any obligation under this Agreement shall
impair any such right, remedy, or power or shall be construed to be a waiver
thereof, but any such right, remedy, or power may be exercised from time to time
and as often as may be deemed by the Assignee expedient. In order to entitle the
Assignee to exercise any right, remedy, or power reserved to it in this
Agreement, it shall not be necessary to give any notice to the Guarantor. No
waiver, amendment, release, or modification of this Agreement shall be
established by conduct, custom, or course of dealing.
7. Notices and Communications. All notices and other communications
hereunder shall be in writing and shall be effective when sent by certified
mail, return receipt requested: (a) if to the Guarantor, at 2059 Emerald
Terrace, Mt. Pleasant, SC 29464 or at such other address as the Guarantor shall
have furnished in writing to the Assignee; or (b) if to the Assignee, addressed
to it at 6 Reservoir Circle, Suite 105, Baltimore, Maryland 21208, or at such
other address as the Assignee shall have furnished in writing to the Guarantor.
8. Successors and Assigns. All covenants and agreements of the Guarantor
set forth in this Agreement shall bind the Guarantor and its heirs, personal
representatives, successors, and assigns and shall inure to the benefit of, and
be enforceable by, the Assignee and its successors and assigns, including,
without limitation, any holder of any or all of the Factoring Documents.
9. Waiver of Trial by Jury. The Guarantor hereby waives trial by jury in
any action or proceeding to which the Guarantor and the Assignee may be parties,
arising out of or in any way pertaining to this Agreement or any of the other
Factoring Documents.
10. Miscellaneous. Neither this Agreement nor any term hereof may be
terminated, amended, supplemented, waived, released, or modified orally, but
only by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver, release, or
modification is sought. Whenever used herein, the singular number shall include
the plural, the plural the singular, and the use of the masculine, feminine, or
neuter gender shall include all genders. Whenever used herein, the word "person"
or "persons" shall mean and include a corporation, an association, a
partnership, an organization, a business, an individual, a government or
political subdivision or agency thereof, or an estate or trust. This Agreement
shall in all respects be deemed to be made in, and governed by, construed and
enforced in accordance with the laws of, the State of Maryland. The Assignee
shall have the right to grant participation's in the Factoring Arrangement to
others at any time and from time to time, and the Assignee may divulge to any
such participant or potential participant all information, reports, financial
statements, and documents obtained in connection with this Agreement, any of the
Factoring Documents, or otherwise. If any term of this Agreement or any
obligation thereunder shall be held to be invalid, illegal, or un-enforceable,
the remainder of this Agreement and any other application of such term shall not
be affected thereby. The paragraph and section headings of this Agreement have
been inserted for convenience only and shall not modify, define, limit, or
expand the express provisions hereof. This Agreement may be executed in
duplicate originals or in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one instrument, and it shall
not be necessary in making proof hereof to produce or account for more than one
such duplicate original or counterpart.
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be signed,
sealed, and delivered as of the day and year first written above.
WITNESS: Richard D. Bennett
(SEAL)
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (herein, the "Agreement") is made by and
between RESERVOIR CAPITAL CORPORATION (herein, 'Reservoir'), a Maryland
corporation and The United States Company, Inc. (herein, the 'Lender'), and
Envirometrics, Inc. (herein 'Debtor'), a Delaware Corporation.
RECITALS
A. Reservoir has extended a credit facility to the Debtor and is receiving
from the Debtor a lien and security interest in the accounts receivable and
other property of the Debtor.
B. The Debtor has outstanding certain indebtedness and other obligations to
the Lender pursuant to a Security Agreement dated as of pursuant to which Lender
has a prior security interest in the accounts receivable and other property of
the Debtor and has made the appropriate UCC filings to place such security
interest of record in the appropriate jurisdictions.
C. The Debtor has requested that Reservoir provide funding to the Debtor in
the form of accounts receivable factoring pursuant to, among other things,
Reservoir's form of Master Factoring Agreement (the 'Reservoir Master Factoring
Agreement') and form of Assignment and Transfer Agreement (the 'Reservoir
Assignment Agreement') (the Reservoir Master Factoring Agreement and the
Reservoir Assignment Agreement, as the same may from time to time be amended,
restated, supplemented or otherwise modified being hereinafter called
collectively the 'Reservoir Security Agreements').
D. In consideration of the terms of the credit facility between Reservoir
and the Debtor pursuant to which Reservoir will make additional funds available
to the Debtor, and Reservoir have agreed that the Lender shall subordinate its
prior security interest in all accounts receivable and other property of the
Debtor as more fully described in the attached UCC-1 financing statement (the
'Collateral') to the lien position of Reservoir in such Collateral.
WITNESSETH
NOW, THEREFORE, in consideration of the premise and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1 Subordination.
1.1 The Lender does hereby subordinate its first lien security interest in
the Collateral in favor of the lien, operation and effect of the Reservoir
Security Agreements with respect to all indebtedness and other obligations of
the Debtor to Reservoir under the credit facility between the Debtor and
Reservoir, as the same may be amended from time to time.
1.2 The Debtor consents to the filing of this Agreement by Reservoir in the
UCC records of any jurisdiction in which Reservoir determines it should file
such agreement to protect its first lien security interest in the Collateral,
and does hereby covenant and agree to take such further actions and execute such
further instruments as Reservoir shall reasonably request in making any such UCC
filings.
1.3 The Lender agrees that it will not pursue any remedies under its
agreement(s) with the Debtor without the prior written consent of Reservoir.
1.4 Without the prior written consent of Reservoir, Debtor will not make
and Lender will not accept payments of principal or interest on Lender's debt.
Reservoir, Debtor and Lender agree that weekly payments of principal plus
interest are permitted on Friday of each week from Debtor's available rebates
and non-factored cash up to but not exceeding $50,000 principal per month plus
interest to Lender provided Debtor is not in default under the Reservoir Master
Factoring Agreement. Debtor will provide a monthly certificate to Reservoir
showing the outstanding balance (principal and interest) on the Debtor's
obligation to the Lender.
2. Rights of Debtor. The provisions of this Agreement shall not in any way
expand, alter or modify the rights of the Debtor under the documents evidencing
their obligations to the Lender and Reservoir, respectively, including, without
limitation, the right to cure any default with respect thereto. This Agreement
is for the sole and exclusive benefit of the parties hereto and shall govern
their relationship inter se as creditors of the Debtor.
3. Modification. The agreement(s) between the Lender and the Debtor shall
not be modified, altered or amended without the written consent of Reservoir.
4. Limitations. The rights, remedies, privileges and duties expressed
herein or in any or all of the documents evidencing the Debtor's obligations to
the Lender and Reservoir shall be subject to and may be limited by bankruptcy,
insolvency or similar laws and the rules, orders, decrees and similar directives
of any court of competent authority possessing and exercising jurisdiction with
respect to the Debtor, its property, or any guarantor of the Debtor's
obligations to " and Reservoir, and nothing contained in this Agreement
constitutes any assurance by either party to the other that the rights,
remedies, privileges and duties will, in all events, be available, enforceable
or exercisable in full. Notwithstanding the foregoing, the institution of legal
proceedings by or against the Debtor, its property, or any guarantor of the
Debtor's obligations to the Debtor and Reservoir shall not limit, restrict,
discharge, satisfy or in any manner alter or affect the rights, remedies,
privileges and duties of the parties expressed herein as between themselves.
5. Relationship of Parties. Reservoir and the Lender shall not be
fiduciaries with respect to each other and shall not be the agent of the other.
Notwithstanding the foregoing, however, until all of the obligations of the
Debtor to Reservoir as set forth in the Reservoir Security Documents have been
indefeasibly paid in full, if any of the Collateral or proceeds of the
Collateral shall be received by the Lender at any time for any reason, such
Collateral or proceeds shall be held in trust for the benefit of, and promptly
remitted to, Reservoir.
6. Notices. Any notices required or permitted by this Agreement shall in
writing and shall be deemed delivered if hand delivered, sent by facsimile
transmission, sent by Federal Express, or sent by certified mail, return-receipt
requested, postage prepaid, to the address as follows, unless such address is
changed by written notice hereunder, and shall be deemed given on the earlier of
the date of hand delivery, the date of facsimile transmission, one (1) business
day after the date of delivery to Federal Express, or two (2) business days
after the date of mailing, as the case may be:
(a) If to Reservoir:
Reservoir Capital Corporation
6 Reservoir Circle, Suite 105
Baltimore, Maryland 21208
FAX: (410) 653-1871
(b) If to the Lender:
The United States Company
1051 Technology Park Drive
Glen Allen, VA 23060
FAX: (804) 553-1908
c) If to the Debtor:
Envirometrics, Inc.
4055 Faber Place Drive, Suite 201
Charleston, SC 29405
FAX: (804) 740-7707
7. Authority of Parties. Any notification, consultation or communication
required or permitted under this Agreement shall be directed to the parties at
the addresses set forth above in Section 6, and to the specific individuals
named therein, and their respective successors who may be designated and
appointed hereafter from time to time, all of whom are duly authorized to act
for and on behalf of the corporate parties hereto.
8. Assignability. The rights and obligations under the Agreement may not be
assigned unless any such assignment is subject to the terms and conditions of
this Agreement.
9. Miscellaneous. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and shall be binding upon and shall
inure to the benefit of the parties and their heirs, successors and assigns; no
person who is not a party to this Agreement shall have any rights or benefits
hereunder; this Agreement may be amended, modified or altered only in writing
signed by the party to be bound thereby and making specific reference to the
amendment, modification or alteration of this Agreement; time is of the essence
in the performance and satisfaction of the terms and conditions of this
Agreement; and the laws of the State of Maryland, exclusive of its conflicts of
laws rules, shall govern the rights and obligations of the parties to this
Agreement and the interpretation, construction and enforceability thereof.
IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals
as of the
day of 199___with the intention that signatures conveyed by facsimile
transmission shall serve as original signatures and a facsimile transmission
including the signature of both parties shall serve as an original document
until such time as the parties have delivered original documents.
RESERVOIR CAPITAL CORPORATION
THE UNITED STATES COMPANY
ENVIROMETRICS, INC.
EMPLOYMENT, ROYALTY AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 15th day of May, 1996,
by and between ENVIROMETRICS PRODUCTS COMPANY, a corporation organized under the
laws of the State of South Carolina and including its agents, representatives,
divisions, subdivisions, subsidiaries, wholly or partly owned, parent
corporations, affiliates, assignees, related entities and successors in interest
(hereafter "the Company"), and CAMERON STEPHENS, an individual resident of the
State of North Carolina ("Employee").
WITNESSETH:
WHEREAS, the Company is engaged in the Business of the Company and, in the
course of such activity, has acquired or developed certain Trade Secrets,
Confidential Information, Intellectual Property and Proprietary Information (as
such terms are hereinafter defined not generally known in the Company's
industry or otherwise;
WHEREAS, the Company understands that the Employee has brought to the
Company and provided the Company with certain proprietary technology allowing
the Company advantages in the marketplace it would not otherwise enjoy; and
WHEREAS, such Trade Secrets, Confidential Information, Intellectual
Property and Proprietary Information provide the Company with a competitive
advantage in the marketplace;
WHEREAS, Employee has been, and after and by virtue of the execution of
this Agreement will continue to be, employed by the Company in a position
involving the trust and confidence of the Company; and
WHEREAS, in the course of his employment with the Company, or through his
use of the Company's facilities or resources, Employee has had and will have
access to, and has developed and may develop or contribute to the development
of, Trade Secrets, Confidential Information, Intellectual Property and
Proprietary Information, all solely in connection with his activities as an
employee of the Company; and
WHEREAS, Employee understands and agrees that substantial benefits and
consideration will inure to him under this Agreement that he would not otherwise
enjoy were he not to execute the same.
NOW THEREFORE, in consideration of and as an express condition to the
continuance of employment of Employee by the Company, the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows: 1. DEFINITIONS.
(a) "Bonus" has the meaning ascribed to it in Section 4 hereof.
(b) "Business of the Company" means and includes the business and
commercial activities of the Company, as such business is conducted while this
Agreement is in effect, including, without limitation, designing, developing,
testing, manufacturing, advertising, distributing and selling industrial hygiene
and environmental air monitoring and related products.
(c) "Cause" means (i) fraud, dishonesty, demonstrated incompetence in the
performance of professional duties; (ii) excessive unexcused absences from work;
(iii) engaging in activities prohibited by the policies of the Company as
communicated in writing to Employee or expressly prohibited by the terms of this
Agreement; or injury, accident, illness or other incapacity which wholly, or
continuously and materially, disables Employee from performing his duties
hereunder for a period of ninety (90) days and thereafter for ten (10) days
after the Company shall have given Employee written notice of the Company's
intention to terminate this Agreement and its employment relationship with
Employee because of such disability. The Company will at all times during his
employment with the company and at no cost to the Employee provide the Employee
with disability insurance sufficient to provide Employee with a minimum of sixty
(60) percent of his earnings until recovery or age sixty-five (65) and will
furnish Employee with a current copy of such policy and immediately notify
Employee of any changes or amendments made to such policy.
(d) "Colorimetric Device." means any device that indicates through
corresponding changes in its reflectance or absorbance of light, the presence
and/or level of exposure to an indicated chemical(s) or substance.
(e) "Company" means ENVIROMETRICS PRODUCTS COMPANY, its agents,
representatives, divisions, subdivisions, subsidiaries, wholly or partly owned,
parent corporations, affiliates, assignees, related entities and successors in
interest.
(f) "Competing Busines" means any person or entity in the same business or
substantially the same business as the Business of Company.
(g) "Competing Product' means any good that performs substantially the same
function(s) as any of the Products.
(h) "Confidential Information" means any and all data and information
relating to the Business of the Company (whether constituting a Trade Secret or
not) which is or has been developed by or disclosed to Employee or of which
Employee became aware as a consequence of or through his relationship with the
Company and which has value to the Company and is not generally known by its
competitors.
(i) "Copyrights" means all original "works of authorship", "compilations",
and/or "derivations" including, without limitation, literary, artistic,
pictorial, graphic and other intellectual works owned or claimed by Company
which are registered with the United States Copyright Office or the copyright
office of any other jurisdiction, or are eligible to be so registered, or are
entitled to protection by and under the copyright laws and treaties of the
United States or under the equivalent laws of any other jurisdiction.
(j)"Gross Sales" means the total, without geographical limitations, of all
sales of the Products by Company at invoice prices reduced by discounts,
rebates, and return of products defined herein.
(k) "Intellectual Property" means the Copyrights, Marks and Patents,
collectively or in combination, as the context suggests.
(l) "Marks" Means all trade names, word marks, trademarks, service marks
and logos or designs (including any trade dress that is susceptible to
protection under the laws of the United States or any other political
subdivision in the world), whether or not registered with the United States
Patent and Trademark Office or trademark office or registry of any jurisdiction
in the world, placed upon or used in connection with the Business of the Company
or the sale, distribution, promotion and marketing of the Products or of any
other goods or services provided or distributed by Company from time to time,
and includes, without limitation, "ACT and design", "Air-Chem Technologies"
and "The ACT Monitoring Card System".
(m) "Patents" Means all inventions or letters patent owned or licensed by
or on behalf of the Company, and which are registered with the United States
Patent and Trademark Office or the patent office or registry in any jurisdiction
in the world or are eligible for registration and/or other protection under the
laws and treaties of the United States or of any such jurisdiction
(n) "Products" means any chemical based colorimetric device(s) developed by
the Company and/or produced by the Company or licensee(s) or other agent(s) of
the Company to perform the function of quantitatively or qualitatively measuring
and/or indicating chemicals present in the atmosphere.
(o) "Proprietary Information" Means all of the following materials and
information, whether or not patentable or protected by a copyright, trademark,
or service mark, to which Employee receives or has received access or which
Employee develops or has developed as a result of his employment with the
Company or during the term of his employment with the Company or through the use
of any of the Company's facilities or resources, or those of its affiliates or
of its agents or distributors:
(i) Production processes, purchasing information, price lists, performance
and scheduling information and data, and other materials or information relating
to the Business of the Company;
(ii) Discoveries, concepts and ideas, and the embodiment(s) thereof,
whether or not actually constituting Intellectual Property hereunder, and the
nature and results of research and development activities and "know-how"
acquired while in the employ of the Company;
(iii) Any other materials or information related to the Business of the
Company which are not generally known to others engaged in similar business or
activities;
(iv) All inventions and ideas which are derived from or related to
Employees's access to knowledge of any of the above enumerated materials and
information while in the employ of the Company; and
(v) Any trade secrets, confidential information or proprietary information
which the Company has acquired or may in the future acquire from any third party
during employee's service to the company, including, without limitation,
operating principles, documentation, drawings, programs and performance
specifications and results provided to the Company by such third parties
pursuant to agreements, understandings and/or acknowledgments to the effect that
such trade secrets and confidential or proprietary information provided to the
Company by such third parties (collectively "Third Party Confidential
Information") is the proprietary and/or confidential information of such
respective third part and is to be treated by the Company as if such Third Party
Confidential Information were the Company's Confidential Information.
(p) "Royalty" means two and one-half percent of Gross Sales of the Products
described herein.
(q) "Salar" has the meaning ascribed to it in Section 4 hereof.
(r) "Term" means the Initial Term and any Renewal Term, as such terms are
defined below.
(s) "Trade Secrets" means the whole or any portion or phase of any data or
information developed, owned or licensed from a third party by the Company to
which Employee has gained access as a result of his employment with the Company,
including any formula, pattern, compilation, program, device, method technique,
improvement, or process that:
(i) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by a proper means by,
other persons who can obtain economic value from its disclosure or use; and
(ii) Is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
Trade Secrets shall not include any data or information (i) that has been
voluntarily disclosed to the public by the Company or has become generally known
to the public (except when such public disclosure has been made by or through
Employee, or by a third person or entity with the knowledge of Employee, without
authorization from the Company); (ii) that has been independently developed and
disclosed to parties other than the Company, and the public generally or to
Employee with a breach of obligation of confidentiality by any such parties
running directly or indirectly to the Company; or (iii) that otherwise enters
the public domain through lawful means.
2. TERMS OF ENGAGEMENT; DUTIES.
(a) Capacity. The Company hereby employs Employee as Research Chemist and
Employee accepts such employment in such capacity by the Company subject to the
terms and conditions hereof.
(b) Duties. Employee recognizes and agrees that he shall: (i) devote all of
his time, energy and skill during regular business hours to faithfully and
industriously develop colormetric technology and products and other technology
and products as directed by the Company exclusively for the use and benefit of
the Company (vacation time and reasonable sick leave excepted); (ii) diligently
follow and implement all policies and decisions communicated to him by the
Company, to the best of his ability with the resources provided by the Company,
including without limitation, those concerning the production, sale of or
further research and development concerning, the Products; and (iii) faithfully
and to the best of his ability perform the duties and obligations set forth in
this Agreement.
3. TERM; TERMINATION.
(a) Initial term. The term of the employment of Employee by the Company
hereunder shall commence on the date hereof and shall end on December 31, 2000
(the "Initial Term").
(b) Renewal Terms(s). At the expiration of the Initial Term, this Agreement
shall be automatically renewed for separate and successive two (2) year terms
(individually, a "Renewal Term" and, collectively, "Renewal Terms"); provided,
however, the parties may agree in writing to modify the compensation to be paid
pursuant to Section 4 hereof during any such Renewal Term, but shall not be
bound to do so; provided, further, this Agreement shall not be automatically
renewed if either party shall give to the other party written notice of his or
its intent not to renew this Agreement no fewer than thirty (30) days prior to
the expiration of the Initial Term or any Renewal Term, as applicable.
(c) Voluntary Termination by Employee. Employee may terminate this
Agreement at any time during the Term upon no fewer than sixty (60), but no more
than ninety (90) days prior written notice to the Company, in which event this
Agreement and all of the Company's obligations hereunder shall terminate as of
the date contained in such notice except that the Royalty shall be payable as
provided as in Section (f) hereof. Notwithstanding the foregoing, in the event
Employee shall terminate this Agreement as a result of a major illness or
disability which prevents him from performing his services hereunder, Employee
shall thereafter be entitled to receive Salary (as defined below) for a period
of ninety (90) days following the date of the occurrence of such injury or
disability, and all of the other terms of this Agreement, including all Benefits
payable by the Company on behalf of the Employee, shall continue until the end
of the Annual Term in which such termination occurs, and all Royalty shall be
payable as provided in Section (f) hereof and Section 4(c).
(d) Termination by the Company for cause. This Agreement may be terminated
by the Company for Cause at any time during the Term, upon ten (10) days prior
written notice to Employee, in which event this Agreement and all of the
Company's obligations hereunder shall terminate as of the notice date, except
that the Royalty shall be payable as provided in Section (f) hereof and Section
4(c).
(e) Termination by the Company other Than for Cause. In the event the
Company terminates this Agreement during the Term for reasons other than for
Cause, then, in addition to any other remedy available at law or equity,
Employee shall be entitled to continue to receive his Salary, plus all Benefits
to be paid by the Company on behalf of Employee for a period equal to one month
for every full year of service, but not to exceed six months, after such
termination occurs, plus the Royalty as provided in Section (f) hereof and
Section 4(c).
(f) Survival of Royalty Payments. The Royalty as defined in Section 4(c) of
this Agreement shall continue to be paid to Employee notwithstanding termination
for any reason of this Agreement until the first occurrence of one of the
following events:
(i) Employee dies, in which event any Royalty accrued and payable on the
date of death shall be paid to Employee's estate, and the Royalty shall not
thereafter be payable to any other person or entity;
(ii) Employee develops Competing Products for any Competing Business, or
any employer, person, or entity other than the Company or its affiliates, in
which event the Royalty shall cease being paid to Employee or any other person
or entity; or
(iii) Employee becomes employed by or affiliated with a Competing Business
as, without limitation, an employee, officer, director, agent, consultant, or
advisor, in which capacity Employee develops, or assists the Competing Business
or its affiliates, employees, officers, directors, agents, consultants, or
advisors in the development of, Competing Products, in which event the Royalty
shall cease being paid to Employee or any other person or entity.
(g) Return of Embodiments of Proprietary Information Upon Termination. All
notes, data, reference materials, sketches, drawings, memoranda and records in
any way relating to any of the Proprietary Information or the Business of the
Company and any other physical embodiment of the Proprietary Information shall
belong exclusively to the Company, and Employee agrees to turn over to the
Company the originals and all copies of such materials developed or generated by
the Employee or coming into his possession during the term of or as a result of
his employment by the Company at the request of the Company or, in the absence
of such a request, upon termination (for whatever reason) of Employee's
employment with the Company.
(h) Survival of Covenants. The Covenants of Employee set forth in Section 5
hereof shall survive the termination of this Agreement for any reason whatsoever
and shall not be extinguished thereby so long as the Royalty is paid in
accordance with Section 4(c) and Section 3(f).
4. COMPENSATION.
(a) Salary. During the Term, the Company shall pay Employee an annual
salary of Sixty Thousand and No/100 Dollars ($60,000.00) (the "Salary"), which
Salary shall be payable in the manner and at the times which the Company
regularly compensates its employees, less applicable state and federal taxes. In
addition, but subject to conditions of termination set forth above, the Company
shall pay Employee the Bonus and Royalty, as defined herein. If the Bonus
outlined in 4(b), when added to the base salary at the end of each year does not
equal the cost of living based on the U.S. Dept Of Labor cost of living index,
the Company shall make an adjustment to the base salary for the following year
equal to the cost of living index.
(b) Bonus. The Company shall pay Employee a bonus equal to Five Thousand
and No/100 Dollars ($5000.00) plus grant a ten-year option to purchase Five
Thousand (5000) shares of the Company's (EVRM) Common Stock. Such options will
be granted at the then market price of the Stock and shall be fully vested at
issuance. This bonus will be awarded for each additional chemical for which
monitoring device(s) is developed by Employee (the "Bonus"); provided, however,
the chemical must be approved by the Marketing Department of the Company. The
monitoring device(s) indicating such chemical will be considered "developed" for
purposes hereof upon the completion of the standard validation protocol and an
algorithm defining the devices'(s') performance has been developed and/or an
acceptable color match(s) has been identified in the case of qualitative
device(s). Bonus shall be paid to Employee within thirty (30) days after
monitoring device has been "developed".
(c) Royalty. By the thirtieth (30th) day after the last day of each
calendar year quarter (each a "Royalty Quarter"), the Company shall pay to
Employee a Royalty (The "Royalty") equal to Two and One-Half Percent (2.5%) of
Gross Sales of the Products as defined herein for the immediate preceding
calendar quarter. A written statement of the value and quantity of each
colorimetric device sold during the "Royalty Quarter" shall be given to Employee
with each quarterly payment. In the event that such a written statement is not
provided employee shall have the right to examine any of Company's State Sales
Tax Reports for sale of Products as defined herein. Employee shall also have the
right to examine all books of account recording Gross Sales as defined herein.
The parties expressly agree that the payment of the Royalty as described in this
Agreement shall survive any termination of this Agreement except as provided in
Section 3(f) of this agreement. In the event of bankruptcy either voluntary or
involuntary, or the non-payment of Royalty payments to the Employee by the
Company as specified in this Agreement and not cured in ten (10) days after
written notification of delinquency by the Employee, all obligations of Employee
under this agreement or which could or might be imposed by statutory or common
law shall be extinguished. In the event that the technology required to produce
the Product is transferred through sale or any other means to any other entity,
the Royalty as defined herein shall be paid by such entity.
(d) Payment on Death. In the event Employee dies during the Term of
Agreement, and so long as this Agreement was not the subject of a notice of
terminating as provided in Section 3 hereof, the Company shall pay to his estate
any Salary, Royalty or Bonus that would have been payable up until the end of
the month in which Employee dies.
(e) Benefits. Employee shall be entitled to participate in any retirement,
profit sharing, hospital, medical, disability and life insurance programs
regularly maintained by the Company for its employees.
(f) Expense Reimbursement. The Company will reimburse Employee for all
ordinary, reasonable necessary expense incurred by him in carrying out his
duties under this Agreement upon Employee's presentation to the Company from
time to time of an itemized account of the receipts for such expenses in such
form as may be required by the Company; provided, however, such reimbursement
shall be conditioned upon deductibility by the Company of such expenses from
gross income for federal tax purposes.
(g) Product Liability. The Employee is in no way responsible for any
product liability. The Company accepts full and complete responsibility for the
Product and any claims made by the Company regarding the Product or its
capabilities or performance, and the Company will maintain at all times product
liability insurance specifically protecting the employee against any legal
claims made against him in his capacity as developer of the Product. The Company
will furnish the Employee with evidence of such insurance and notify employee
immediately of any cancellation, modification or amendment thereto.
5. COVENANTS OF EMPLOYEE.
(a) Ownership of Trade Secrets, Confidential Information, Proprietary
Information and Intellectual Property. Employee agrees that the Trade Secrets,
Confidential Information, Proprietary Information, Intellectual Property, and
all physical embodiments thereof (collectively the "Information") to which the
employee has come into possession of as a result of or during the term of his
employment by the Company; are, and shall at all times remain, the sole and
exclusive property of the Company, and that any of the Information produced or
developed by him as an employee of the Company shall be considered work for hire
under United States law. Employee agrees to (a) immediately disclose or transfer
to the Company all Information developed in whole or part by him during the
Term, (b) assign to the Company any right, title or interest he may have in such
Information, and (c) at the request and expense of the Company, to do all things
and sign all documents or instruments reasonably necessary to eliminate any
ambiguity as to the ownership of the Company of such Information including,
without limitation, providing to the Company his full cooperation in any
litigation or other proceedings to establish, protect or obtain such rights
while he is in the employee of the Company.
(b) Non-Disclosure or Use of Trade Secrets or Confidential Information.
During the term of his employment with the Company and at any and all times
following the termination of such employment, Employee agrees not to use,
reveal, report, publish, disclose or transfer, directly or indirectly, any Trade
Secret or Confidential Information of which he came into possession as a result
of his employment by the Company for any purpose including, without limitation,
the solicitation of existing company customers of which the Employee is aware,
except in the course of performing duties assigned to him by the Company.
(c) Non-Disclosure or Use of Proprietary Information. During the term of
his employment with the Company and for a period of one (1) year after
termination (for whatever reason) of such employment, Employee agrees not to
use, reveal, report, publish, disclose or transfer, directly or indirectly, any
Proprietary Information for any purpose.
(d) No Solicitation. Employee covenants and agrees that, while he is
employed by the Company and for a period of two (2) years following termination
(for any reason) of such employment, he will not, directly or indirectly,
solicit, induce or hire away, or assist any third person or entity in inducing,
diverting, soliciting or hiring away, (i) any employee of the Company, whether
such employee is employed pursuant to a written contract, is for a determined
period or is at will, or (ii) any person or entity which, at the time of
termination of employment, was a client or customer of the Company or with whom
or which, at the time of termination of employment, the Company was negotiating
regarding the sale or distribution of the Company's services or products.
(e) Return of Company Property. Employee covenants and agrees that, upon
termination (for any reason) of this Agreement, he will return or turn over to
the Company all physical embodiments of the Information including without
limitation, all notes, data reference materials sketches, drawings, memoranda,
records, laboratory equipment, chemicals, tools, implements, computers, drives,
diskettes, tapes, renditions, models, mock-ups, prototypes, evaluations,
measurements, and tests, and all originals copies or other physical embodiments
thereof, which in any way relate to any of the Information or to the Business of
the Company which belong to the Company or were developed or generated while in
the employment of the Company.
(f) Additional Provisions. Employee recognizes and agrees: (i) that the
covenants and agreements contained in Section 5 of this Agreement are of the
essence of this Agreement; (ii) that each of such covenants is reasonable and
necessary to protect and preserve the interests and properties of the Company
and the Business of the Company; (iii) that loss and damage may be suffered by
the Company should Employee breach any of such covenants or agreements; (iv)
that each of such covenants and agreements is separate, distinct and severable
from the other and remaining provisions of this Agreement.
6. MISCELLANEOUS PROVISIONS.
(a) Binding Effect. This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective heirs, successors,
assigns and legal representatives.
(b) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or the unenforceability of any one or more of the
provisions hereof shall not affect the validity or enforceability of the other
provisions hereof.
(d) Notices. All notices and other communications which are required or
permitted hereunder shall be in writing and shall be sufficient if delivered by
hand or mailed by certified mail return receipt requested, postage prepaid, to
the addresses set forth below or to such other address as the parties shall
specify by notice in writing to the other party. All such notices and
communications made by mail shall be deemed to have been received on the date of
actual delivery or on the fifth (5th) business day after the mailing thereof,
whichever is earlier:
Company: Envirometrics Products Company
1019 Bankton Dr.
Charleston, SC 29406
Employee: Cameron R. Stephens 7 New Hope Trails Pittsboro, North Carolina
27312 (e) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and supersedes and terminates any and all prior written
agreements and understandings between the parties hereto with respect to the
employment of, or work performed in the capacity of an independent contractor by
the Employee or payments to Employee by the Company for any reason or work
product, including, without limitation, the Employee Invention Assignment
Agreement and the Employee Non-Disclosure and Non-Competition Agreement, both
Agreements executed on or about March 13, 1992, and any subsequent amendments,
modifications and understandings related thereto.
(f) Amendments and Waivers. This Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the party against
whom enforcement of any such modification or amendment is sought, Either party
hereto may by an instrument in writing waive compliance by the other party of
any other provision of this Agreement on the part of such other party. The
waiver by any party of a breach of any term or provision shall not be construed
as a waiver of any subsequent breach.
(g) Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not be deemed to control or affect the
meaning or construction of any provision.
The Company is a corporation in good standing under the laws of South
Carolina and is duly authorized to carry on the business presently conducted by
it and its signers of this Agreement are properly authorized to execute, deliver
and perform this Agreement on behalf of the Company and that this Agreement
constitutes a valid and legally binding obligation of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date and year first written above.
ATTEST The Company: Envirometrics Products Company
__________________________ __________________________ Secretary
By: Walter H. Elliott, III President
[CORPORATE SEAL]
EMPLOYEE:
__________________________________________
Cameron R. Stephens
EMPLOYMENT, ROYALTY AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 15th day of May, 1996,
by and between ENVIROMETRICS PRODUCTS COMPANY, a corporation organized under the
laws of the State of South Carolina and including its agents, representatives,
divisions, subdivisions, subsidiaries, wholly or partly owned, parent
corporations, affiliates, assignees, related entities and successors in interest
(hereafter "the Company"), and CAMERON STEPHENS, an individual resident of the
State of North Carolina ("Employee").
WITNESSETH:
WHEREAS, the Company is engaged in the Business of the Company and, in the
course of such activity, has acquired or developed certain Trade Secrets,
Confidential Information, Intellectual Property and Proprietary Information (as
such terms are hereinafter defined) not generally known in the Compan's
industry or otherwise;
WHEREAS, the Company understands that the Employee has brought to the
Company and provided the Company with certain proprietary technology allowing
the Company advantages in the marketplace it would not otherwise enjoy; and
WHEREAS, such Trade Secrets, Confidential Information, Intellectual
Property and Proprietary Information provide the Company with a competitive
advantage in the marketplace;
EMPLOYMENT, ROYALTY AND NON-DISCLOSURE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 15th day of May, 1996,
by and between ENVIROMETRICS PRODUCTS COMPANY, a corporation organized under the
laws of the State of South Carolina and including its agents, representatives,
divisions, subdivisions, subsidiaries, wholly or partly owned, parent
corporations, affiliates, assignees, related entities and successors in interest
(hereafter "the Company"), and TOM WILKIE, an individual resident of the State
of North Carolina ("Employee").
WITNESSETH:
WHEREAS, the Company is engaged in the Business of the Company and, in the
course of such activity, has acquired or developed certain Trade Secrets,
Confidential Information, Intellectual Property and Proprietary Information (as
such terms are hereinafter defined) not generally known in the Company's
industry or otherwise;
WHEREAS, the Company understands that the Employee has brought to the
Company and provided the Company with certain proprietary technology allowing
the Company advantages in the marketplace it would not otherwise enjoy; and
WHEREAS, such Trade Secrets, Confidential Information, Intellectual
Property and Proprietary Information provide the Company with a competitive
advantage in the marketplace;
WHEREAS, Employee has been, and after and by virtue of the execution of
this Agreement will continue to be, employed by the Company in a position
involving the trust and confidence of the Company; and
WHEREAS, in the course of his employment with the Company, or through his
use of the Company's facilities or resources, Employee has had and will have
access to, and has developed and may develop or contribute to the development
of, Trade Secrets, Confidential Information, Intellectual Property and
Proprietary Information, all solely in connection with his activities as an
employee of the Company; and
WHEREAS, Employee understands and agrees that substantial benefits and
consideration will inure to him under this Agreement that he would not otherwise
enjoy were he not to execute the same.
NOW THEREFORE, in consideration of and as an express condition to the
continuance of employment of Employee by the Company, the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows: 1. DEFINITIONS.
(a) "Bonus" has the meaning ascribed to it in Section 4 hereof.
(b) "Business of the Company" means and includes the business and
commercial activities of the Company, as such business is conducted while this
Agreement is in effect, including, without limitation, designing, developing,
testing, manufacturing, advertising, distributing and selling industrial hygiene
and environmental air monitoring and related products.
(c)"Cause" means (i) fraud, dishonesty, demonstrated incompetence in the
performance of professional duties; (ii) excessive unexcused absences from work;
(iii) engaging in activities prohibited by the policies of the Company as
communicated in writing to Employee or expressly prohibited by the terms of this
Agreement; or injury, accident, illness or other incapacity which wholly, or
continuously and materially, disables Employee from performing his duties
hereunder for a period of ninety (90) days and thereafter for ten (10) days
after the Company shall have given Employee written notice of the Company's
intention to terminate this Agreement and its employment relationship with
Employee because of such disability. The Company will at all times during his
employment with the company and at no cost to the Employee provide the Employee
with disability insurance sufficient to provide Employee with a minimum of sixty
(60) percent of his earnings until recovery or age sixty-five (65) and will
furnish Employee with a current copy of such policy and immediately notify
Employee of any changes or amendments made to such policy.
(d) "Colorimetric Device" means any device that indicates through
corresponding changes in its reflectance or absorbance of light, the presence
and/or level of exposure to an indicated chemical(s) or substance.
(e) "Company" means ENVIROMETRICS PRODUCTS COMPANY, its agents,
representatives, divisions, subdivisions, subsidiaries, wholly or partly owned,
parent corporations, affiliates, assignees, related entities and successors in
interest.
(f) "Competing Business" means any person or entity in the same business or
substantially the same business as the Business of Company.
(g) "Competing Product" means any good that performs substantially the same
function(s) as any of the Products.
(h) "Confidential Information" means any and all data and information
relating to the Business of the Company (whether constituting a Trade Secret or
not) which is or has been developed by or disclosed to Employee or of which
Employee became aware as a consequence of or through his relationship with the
Company and which has value to the Company and is not generally known by its
competitors.
(i) "Copyrights" means all original "works of authorship", "compilations",
and/or "derivation" including, without limitation, literary, artistic,
pictorial, graphic and other intellectual works owned or claimed by Company
which are registered with the United States Copyright Office or the copyright
office of any other jurisdiction, or are eligible to be so registered, or are
entitled to protection by and under the copyright laws and treaties of the
United States or under the equivalent laws of any other jurisdiction.
(j) "Gross Sales" means the total, without geographical limitations, of all
sales of the Products by Company at invoice prices reduced by discounts,
rebates, and return of products defined herein.
(k) "Intellectual Property" means the Copyrights, Marks and Patents,
collectively or in combination, as the context suggests.
(l) "Marks" Means all trade names, word marks, trademarks, service marks
and logos or designs (including any trade dress that is susceptible to
protection under the laws of the United States or any other political
subdivision in the world), whether or not registered with the United States
Patent and Trademark Office or trademark office or registry of any jurisdiction
in the world, placed upon or used in connection with the Business of the Company
or the sale, distribution, promotion and marketing of the Products or of any
other goods or services provided or distributed by Company from time to time,
and includes, without limitation, "ACT and design" , "Air-Chem Technologies"
and "The ACT Monitoring Card System".
(m) "Patents" Means all inventions or letters patent owned or licensed by
or on behalf of the Company, and which are registered with the United States
Patent and Trademark Office or the patent office or registry in any jurisdiction
in the world or are eligible for registration and/or other protection under the
laws and treaties of the United States or of any such jurisdiction
(n) "Products" means any chemical based colorimetric device(s) developed by
the Company and/or produced by the Company or licensee(s) or other agent(s) of
the Company to perform the function of quantitatively or qualitatively measuring
and/or indicating chemicals present in the atmosphere.
(o) "Proprietary Information" Means all of the following materials and
information, whether or not patentable or protected by a copyright, trademark,
or service mark, to which Employee receives or has received access or which
Employee develops or has developed as a result of his employment with the
Company or during the term of his employment with the Company or through the use
of any of the Company's facilities or resources, or those of its affiliates or
of its agents or distributors:
(i) Production processes, purchasing information, price lists, performance
and scheduling information and data, and other materials or information relating
to the Business of the Company;
(ii) Discoveries, concepts and ideas, and the embodiment(s) thereof,
whether or not actually constituting Intellectual Property hereunder, and the
nature and results of research and development activities and "know-how"
acquired while in the employ of the Company;
(iii) Any other materials or information related to the Business of the
Company which are not generally known to others engaged in similar business or
activities;
(iv) All inventions and ideas which are derived from or related to
Employees's access to knowledge of any of the above enumerated materials and
information while in the employ of the Company; and
(v) Any trade secrets, confidential information or proprietary information
which the Company has acquired or may in the future acquire from any third party
during employee's service to the company, including, without limitation,
operating principles, documentation, drawings, programs and performance
specifications and results provided to the Company by such third parties
pursuant to agreements, understandings and/or acknowledgments to the effect that
such trade secrets and confidential or proprietary information provided to the
Company by such third parties (collectively "Third Party Confidential
Information") is the proprietary and/or confidential information of such
respective third part and is to be treated by the Company as if such Third Party
Confidential Information were the Company's Confidential Information.
(p) "Royalty" means two and one-half percent of Gross Sales of the Products
described herein.
(q) "Salary" has the meaning ascribed to it in Section 4 hereof.
(r) "Term" means the Initial Term and any Renewal Term, as such terms are
defined below.
(s) "Trade Secrets" means the whole or any portion or phase of any data or
information developed, owned or licensed from a third party by the Company to
which Employee has gained access as a result of his employment with the Company,
including any formula, pattern, compilation, program, device, method technique,
improvement, or process that:
(i) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by a proper means by,
other persons who can obtain economic value from its disclosure or use; and
(ii) Is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
Trade Secrets shall not include any data or information (i) that has been
voluntarily disclosed to the public by the Company or has become generally known
to the public (except when such public disclosure has been made by or through
Employee, or by a third person or entity with the knowledge of Employee, without
authorization from the Company); (ii) that has been independently developed and
disclosed to parties other than the Company, and the public generally or to
Employee with a breach of obligation of confidentiality by any such parties
running directly or indirectly to the Company; or (iii) that otherwise enters
the public domain through lawful means.
2. TERMS OF ENGAGEMENT; DUTIES.
(a) Capacity. The Company hereby employs Employee as Research Chemist and
Employee accepts such employment in such capacity by the Company subject to the
terms and conditions hereof.
(b) Duties. Employee recognizes and agrees that he shall: (i) devote all of
his time, energy and skill during regular business hours to faithfully and
industriously develop colormetric technology and products and other technology
and products as directed by the Company exclusively for the use and benefit of
the Company (vacation time and reasonable sick leave excepted); (ii) diligently
follow and implement all policies and decisions communicated to him by the
Company, to the best of his ability with the resources provided by the Company,
including without limitation, those concerning the production, sale of or
further research and development concerning, the Products; and (iii) faithfully
and to the best of his ability perform the duties and obligations set forth in
this Agreement.
3. TERM; TERMINATION.
(a) Initial term. The term of the employment of Employee by the Company
hereunder shall commence on the date hereof and shall end on December 31, 2000
(the "Initial Term").
(b) Renewal Terms(s). At the expiration of the Initial Term, this Agreement
shall be automatically renewed for separate and successive two (2) year terms
(individually, a "Renewal Term" and, collectively, "Renewal Terms"); provided,
however, the parties may agree in writing to modify the compensation to be paid
pursuant to Section 4 hereof during any such Renewal Term, but shall not be
bound to do so; provided, further, this Agreement shall not be automatically
renewed if either party shall give to the other party written notice of his or
its intent not to renew this Agreement no fewer than thirty (30) days prior to
the expiration of the Initial Term or any Renewal Term, as applicable.
(c) Voluntary Termination by Employee. Employee may terminate this
Agreement at any time during the Term upon no fewer than sixty (60), but no more
than ninety (90) days prior written notice to the Company, in which event this
Agreement and all of the Company's obligations hereunder shall terminate as of
the date contained in such notice except that the Royalty shall be payable as
provided as in Section (f) hereof. Notwithstanding the foregoing, in the event
Employee shall terminate this Agreement as a result of a major illness or
disability which prevents him from performing his services hereunder, Employee
shall thereafter be entitled to receive Salary (as defined below)for a period of
ninety (90) days following the date of the occurrence of such injury or
disability, and all of the other terms of this Agreement, including all Benefits
payable by the Company on behalf of the Employee, shall continue until the end
of the Annual Term in which such termination occurs, and all Royalty shall be
payable as provided in Section (f) hereof and Section 4(c).
(d) Termination by the Company for cause. This Agreement may be terminated
by the Company for Cause at any time during the Term, upon ten (10) days prior
written notice to Employee, in which event this Agreement and all of the
Company's obligations hereunder shall terminate as of the notice date, except
that the Royalty shall be payable as provided in Section (f) hereof and Section
4(c).
(e) Termination by the Company other Than for Cause. In the event the
Company terminates this Agreement during the Term for reasons other than for
Cause, then, in addition to any other remedy available at law or equity,
Employee shall be entitled to continue to receive his Salary, plus all Benefits
to be paid by the Company on behalf of Employee for a period equal to one month
for every full year of service, but not to exceed six months, after such
termination occurs, plus the Royalty as provided in Section (f) hereof and
Section 4(c).
(f) Survival of Royalty Payments. The Royalty as defined in Section 4(c) of
this Agreement shall continue to be paid to Employee notwithstanding termination
for any reason of this Agreement until the first occurrence of one of the
following events:
(i) Employee dies, in which event any Royalty accrued and payable on the
date of death shall be paid to Employee's estate, and the Royalty shall not
thereafter be payable to any other person or entity;
(ii) Employee develops Competing Products for any Competing Business, or
any employer, person, or entity other than the Company or its affiliates, in
which event the Royalty shall cease being paid to Employee or any other person
or entity; or
(iii) Employee becomes employed by or affiliated with a Competing Business
as, without limitation, an employee, officer, director, agent, consultant, or
advisor, in which capacity Employee develops, or assists the Competing Business
or its affiliates, employees, officers, directors, agents, consultants, or
advisors in the development of, Competing Products, in which event the Royalty
shall cease being paid to Employee or any other person or entity.
(g) Return of Embodiments of Proprietary Information Upon Termination. All
notes, data, reference materials, sketches, drawings, memoranda and records in
any way relating to any of the Proprietary Information or the Business of the
Company and any other physical embodiment of the Proprietary Information shall
belong exclusively to the Company, and Employee agrees to turn over to the
Company the originals and all copies of such materials developed or generated by
the Employee or coming into his possession during the term of or as a result of
his employment by the Company at the request of the Company or, in the absence
of such a request, upon termination (for whatever reason) of Employees
employment with the Company.
(h) Survival of Covenants. The Covenants of Employee set forth in Section 5
hereof shall survive the termination of this Agreement for any reason whatsoever
and shall not be extinguished thereby so long as the Royalty is paid in
accordance with Section 4(c) and Section 3(f).
4. COMPENSATION.
(a) Salary. During the Term, the Company shall pay Employee an annual
salary of Sixty Thousand and No/100 Dollars ($60,000.00) (the "Salary"), which
Salary shall be payable in the manner and at the times which the Company
regularly compensates its employees, less applicable state and federal taxes. In
addition, but subject to conditions of termination set forth above, the Company
shall pay Employee the Bonus and Royalty, as defined herein. If the Bonus
outlined in 4(b), when added to the base salary at the end of each year does not
equal the cost of living based on the U.S. Dept Of Labor cost of living index,
the Company shall make an adjustment to the base salary for the following year
equal to the cost of living index.
(b) Bonus. The Company shall pay Employee a bonus equal to Five Thousand
and No/100 Dollars ($5000.00) plus grant a ten-year option to purchase Five
Thousand (5000) shares of the Company's (EVRM) Common Stock. Such options will
be granted at the then market price of the Stock and shall be fully vested at
issuance. This bonus will be awarded for each additional chemical for which
monitoring device(s) is developed by Employee (the "Bonus"); provided, however,
the chemical must be approved by the Marketing Department of the Company. The
monitoring device(s) indicating such chemical will be considered "developed" for
purposes hereof upon the completion of the standard validation protocol and an
algorithm defining the devices'(s') performance has been developed and/or an
acceptable color match(s) has been identified in the case of qualitative
device(s). Bonus shall be paid to Employee within thirty (30) days after
monitoring device has been "developed".
(c) Royalty. By the thirtieth (30th) day after the last day of each
calendar year quarter (each a "Royalty Quarter"), the Company shall pay to
Employee a Royalty (The "Royalty") equal to Two and One-Half Percent (2.5%) of
Gross Sales of the Products as defined herein for the immediate preceding
calendar quarter. A written statement of the value and quantity of each
colorimetric device sold during the "Royalty Quarter" shall be given to Employee
with each quarterly payment. In the event that such a written statement is not
provided employee shall have the right to examine any of Company's State Sales
Tax Reports for sale of Products as defined herein. Employee shall also have the
right to examine all books of account recording Gross Sales as defined herein.
The parties expressly agree that the payment of the Royalty as described in this
Agreement shall survive any termination of this Agreement except as provided in
Section 3(f) of this agreement. In the event of bankruptcy either voluntary or
involuntary, or the non-payment of Royalty payments to the Employee by the
Company as specified in this Agreement and not cured in ten (10) days after
written notification of delinquency by the Employee, all obligations of Employee
under this agreement or which could or might be imposed by statutory or common
law shall be extinguished. In the event that the technology required to produce
the Product is transferred through sale or any other means to any other entity,
the Royalty as defined herein shall be paid by such entity.
(d) Payment on Death. In the event Employee dies during the Term of
Agreement, and so long as this Agreement was not the subject of a notice of
terminating as provided in Section 3 hereof, the Company shall pay to his estate
any Salary, Royalty or Bonus that would have been payable up until the end of
the month in which Employee dies.
(e) Benefits. Employee shall be entitled to participate in any retirement,
profit sharing, hospital, medical, disability and life insurance programs
regularly maintained by the Company for its employees.
(f) Expense Reimbursement. The Company will reimburse Employee for all
ordinary, reasonable necessary expense incurred by him in carrying out his
duties under this Agreement upon Employee's presentation to the Company from
time to time of an itemized account of the receipts for such expenses in such
form as may be required by the Company; provided, however, such reimbursement
shall be conditioned upon deductibility by the Company of such expenses from
gross income for federal tax purposes.
(g) Product Liability. The Employee is in no way responsible for any
product liability. The Company accepts full and complete responsibility for the
Product and any claims made by the Company regarding the Product or its
capabilities or performance, and the Company will maintain at all times product
liability insurance specifically protecting the employee against any legal
claims made against him in his capacity as developer of the Product. The Company
will furnish the Employee with evidence of such insurance and notify employee
immediately of any cancellation, modification or amendment thereto.
5. COVENANTS OF EMPLOYEE.
(a) Ownership of Trade Secrets, Confidential Information, Proprietary
Information and Intellectual Property. Employee agrees that the Trade Secrets,
Confidential Information, Proprietary Information, Intellectual Property, and
all physical embodiments thereof (collectively the "Information") to which the
employee has come into possession of as a result of or during the term of his
employment by the Company; are, and shall at all times remain, the sole and
exclusive property of the Company, and that any of the Information produced or
developed by him as an employee of the Company shall be considered work for hire
under United States law. Employee agrees to (a) immediately disclose or transfer
to the Company all Information developed in whole or part by him during the
Term, (b) assign to the Company any right, title or interest he may have in such
Information, and (c) at the request and expense of the Company, to do all things
and sign all documents or instruments reasonably necessary to eliminate any
ambiguity as to the ownership of the Company of such Information including,
without limitation, providing to the Company his full cooperation in any
litigation or other proceedings to establish, protect or obtain such rights
while he is in the employee of the Company.
(b) Non-Disclosure or Use of Trade Secrets or Confidential Information.
During the term of his employment with the Company and at any and all times
following the termination of such employment, Employee agrees not to use,
reveal, report, publish, disclose or transfer, directly or indirectly, any Trade
Secret or Confidential Information of which he came into possession as a result
of his employment by the Company for any purpose including, without limitation,
the solicitation of existing company customers of which the Employee is aware,
except in the course of performing duties assigned to him by the Company.
(c) Non-Disclosure or Use of Proprietary Information. During the term of
his employment with the Company and for a period of one (1) year after
termination (for whatever reason) of such employment, Employee agrees not to
use, reveal, report, publish, disclose or transfer, directly or indirectly, any
Proprietary Information for any purpose.
(d) No Solicitation. Employee covenants and agrees that, while he is
employed by the Company and for a period of two (2) years following termination
(for any reason) of such employment, he will not, directly or indirectly,
solicit, induce or hire away, or assist any third person or entity in inducing,
diverting, soliciting or hiring away, (i) any employee of the Company, whether
such employee is employed pursuant to a written contract, is for a determined
period or is at will, or (ii) any person or entity which, at the time of
termination of employment, was a client or customer of the Company or with whom
or which, at the time of termination of employment, the Company was negotiating
regarding the sale or distribution of the Company's services or products.
(e) Return of Company Property. Employee covenants and agrees that, upon
termination (for any reason) of this Agreement, he will return or turn over to
the Company all physical embodiments of the Information including without
limitation, all notes, data reference materials sketches, drawings, memoranda,
records, laboratory equipment, chemicals, tools, implements, computers, drives,
diskettes, tapes, renditions, models, mock-ups, prototypes, evaluations,
measurements, and tests, and all originals copies or other physical embodiments
thereof, which in any way relate to any of the Information or to the Business of
the Company which belong to the Company or were developed or generated while in
the employment of the Company.
(f) Additional Provisions. Employee recognizes and agrees: (i) that the
covenants and agreements contained in Section 5 of this Agreement are of the
essence of this Agreement; (ii) that each of such covenants is reasonable and
necessary to protect and preserve the interests and properties of the Company
and the Business of the Company; (iii) that loss and damage may be suffered by
the Company should Employee breach any of such covenants or agreements; (iv)
that each of such covenants and agreements is separate, distinct and severable
from the other and remaining provisions of this Agreement.
6. MISCELLANEOUS PROVISIONS.
(a) Binding Effect. This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective heirs, successors,
assigns and legal representatives.
(b) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or the unenforceability of any one or more of the
provisions hereof shall not affect the validity or enforceability of the other
provisions hereof.
(d) Notices. All notices and other communications which are required or
permitted hereunder shall be in writing and shall be sufficient if delivered by
hand or mailed by certified mail return receipt requested, postage prepaid, to
the addresses set forth below or to such other address as the parties shall
specify by notice in writing to the other party. All such notices and
communications made by mail shall be deemed to have been received on the date of
actual delivery or on the fifth (5th) business day after the mailing thereof,
whichever is earlier:
Company: Envirometrics Products Company
1019 Bankton Dr.
Charleston, SC 29406
Employee: Thomas A. Wilkie
1370 Lamont Norwood Rd.
Pittsboro, North Carolina 27312
(e) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and supersedes and terminates any and all prior written
agreements and understandings between the parties hereto with respect to the
employment of, or work performed in the capacity of an independent contractor by
the Employee or payments to Employee by the Company for any reason or work
product, including, without limitation, the Employee Invention Assignment
Agreement and the Employee Non-Disclosure and Non-Competition Agreement, both
Agreements executed on or about March 13, 1992, and any subsequent amendments,
modifications and understandings related thereto.
(f) Amendments and Waivers. This Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the party against
whom enforcement of any such modification or amendment is sought, Either party
hereto may by an instrument in writing waive compliance by the other party of
any other provision of this Agreement on the part of such other party. The
waiver by any party of a breach of any term or provision shall not be construed
as a waiver of any subsequent breach.
(g) Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not be deemed to control or affect the
meaning or construction of any provision.
The Company is a corporation in good standing under the laws of South
Carolina and is duly authorized to carry on the business presently conducted by
it and its signers of this Agreement are properly authorized to execute, deliver
and perform this Agreement on behalf of the Company and that this Agreement
constitutes a valid and legally binding obligation of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date and year first written above.
ATTEST The Company: Envirometrics Products Company
__________________________ __________________________________________
Secretary By: Walter H. Elliott, III, President
[CORPORATE SEAL]
EMPLOYEE:
__________________________________________
Thomas A. Wilkie
AGREEMENT
THIS AGREEMENT is entered into this 18th day of June, 1996, by and between
Computer Control Corporation, a New Jersey corporation having offices at 230
West Parkway, Pompton Plains, New Jersey 07444 ("Computer Control") and
Envirometrics Development Company, Inc., a South Carolina corporation having
offices at 1019 Bankton Drive, Charleston, South Carolina 29406
("Envirometrics").
WHEREAS, Computer Control and Envirometrics are parties to an Agreement
dated March 26, 1992 (the 111992 Agreement"), pursuant to which, among other
things, Computer Control granted to Envirometrics a license to manufacture and
sell electronic readers ("Readers") for use with Quantitative Photometry
Monitors ("Monitors") and Envirometrics agreed to pay royalties to Computer
Control on sales of Monitors and Readers; and
WHEREAS, Computer Control formally notified Envirometrics that
Envirometrics has failed to make certain royalty payments required pursuant to
the 1992 Agreement and has failed to furnish certain quarterly statements
required to compute the royalties due under the 1992 Agreement;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto do hereby agree as follows:
1. All capitalized terms used in this Agreement which are not otherwise
defined herein shall have the meanings ascribed to them in the 1992 Agreement.
2. Unless Envirometrics shall have breached its obligations pursuant to
this Agreement, Computer Control shall not exercise its right to terminate the
1992 Agreement or the license granted thereunder until the Payment Deadline. For
purposes of this Agreement, the "Payment Deadline" shall mean the first to occur
of July 31, 1996 or completion of the sale of securities of Envirometrics, Inc.
contemplated by that certain letter agreement dated June 6, 1996 between
Envirometrics, Inc., J.D. Feltman & Co. and Carter, Kaplan & Co.
3. Envirometrics shall, on or before the Payment Deadline, pay the
following amounts to Computer Control: (a) All royalties due under the 1992
Agreement, (b) all amounts due on the invoices listed on Schedule A hereto and
(c) interest at the rate of 9% per annum on all minimum royalties due under
Section 2.c. of the 1992 Agreement from the date such amounts became due.
4. Envirometrics shall, not later than June 21, 1996,furnish to Computer
Control an accounting of all royalties payable pursuant to clauses 1(c) and 1(d)
of the 1992 Agreement. Such accounting shall include a statement of the gross
revenues of Envirometrics during each calendar quarter (commencing with the
second calendar quarter of 1992) from the sale of Quantitative Photometry
Monitors and from the sale, leasing and rental of Readers and of the royalties
due pursuant to clauses 1(c) and 1(d) of the 1992 Agreement for each calendar
quarter.
5. The cost of any work required to modify or redesign the Reader
(including but not limited to redesign work required to keep the current version
of the Reader functional, such as redesign work caused by the discontinuation of
manufacture of the computer chip used in the current version of the Reader)
shall be borne by Envirometrics. Computer Control shall have no obligation to
perform such work unless and until it shall enter into a written agreement with
Envirometrics to do so.
Notwithstanding the foregoing, Computer Control agrees to enter a maximum
of five (5) new hazard-specific conversion algorithms into the Reader computer
program at no charge to Envirometrics during each year that Readers are
manufactured by Computer Control for Envirometrics. Envirometrics agrees to
supply the algorithms in equation form ready for integration into the Reader
computer program. If necessary, other algorithms (as selected by Envirometrics)
will be deleted from the Reader computer program to allow sufficient memory
space for the new algorithms. If Envirometrics wishes to expand memory space to
accommodate additional algorithms, the design will be modified at the expense of
Envirometrics in accordance with the preceding paragraph.
6. The 1992 Agreement is hereby amended as follows:
a. The Monitor Royalty Period is hereby extended through June 30, 2000.
b. The Reader Royalty Period is hereby extended through June 30, 2000.
c. From and after the last to occur of the Payment Deadline or the date any
payment under the 1992 Agreement shall become due and payable, interest shall
accrue thereon at the "default rate" until such amount shall be paid. The
"default rate" shall mean the "prime rate" plus 3 percentage points; the "prime
rate" shall mean the rate of interest per annum published from time to time as
the "prime rate" in the Wall Street Journal (New York edition). In no event
shall the rate of interest on late payments exceed the maximum rate authorized
by applicable law. Computer Controls right to receive interest on late payments
shall be in addition to, and not in lieu of, any and all other rights and
remedies which Computer may have at law or in equity or pursuant to any other
provision of the 1992 Agreement in the event of a breach of the 1992 Agreement
by Envirometrics.
d. Section 12 of the 1992 Agreement is hereby amended to read in its
entirety as follows:
12. The following shall constitute Events of Default hereunder: (i)
Failure by either party hereto to make any payment due hereunder on the date
such payment is due, provided such failure is not cured within ten (10) days
following the giving of written notice of such breach to the breaching party by
the non-breaching party; (ii) failure by Envirometrics to pay any other amount
owed to Computer Control as identified in Section 3 of the Agreement dated June
18, 1996 between Computer Control and Envirometrics when such payment is due,
provided such failure is not cured within ten (1 0) days following the giving of
written notice of such breach to Envirometrics by Computer Control; (iii) the
material breach by either party hereto of any covenant, representation or
warranty contained herein, other than covenants to pay money, provided such
breach is not cured within thirty (30) days following the giving of written
notice of such breach to the breaching party by the non-breaching party; or (iv)
if either party hereto should ever be adjudged a bankrupt. For purposes of this
Agreement, an entity shall be deemed an affiliate of another entity if it
controls, is controlled by or is under common control with such other entity. If
an Event of Default shall have occurred and shall be continuing, the
non-defaulting party may, by written notice to the defaulting party, terminate
this Agreement, whereupon both parties shall be relieved of all further
obligations hereunder and the license granted in Section 4 hereof shall
immediately terminate. The remedy provided for above shall be in addition to,
and not in lieu of, any and all other rights and remedies which either party may
have at law or in equity or pursuant to any other provision of this Agreement in
the event of a breach of this Agreement by the other party. Except as expressly
provided herein or in any subsequent agreement between the parties, breach of
any other agreement between the parties shall not constitute an Event of Default
hereunder; without limiting the foregoing, it is expressly agreed that clause
(ii) of this Section 12 is limited only to failures to pay amounts due under
Section 3 of the June 18, 1996 Agreement.
e. Section 17 of the 1992 Agreement is hereby ended to read in its entirety
as follows:
17. All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, sent by facsimile transmission (and
confirmed by mail) or mailed (by registered or certified mail, return receipt
requested and postage prepaid) to the parties as follows:
If to Computer Control:
Computer Control Corporation
230 West Parkway, Unit 1
Pompton Plains, New Jersey 07444
Attention: Mr. Harvey Padden, President
Fax No: 201-839-7445
with copy to:
Stuart M. Geschwind, Esq.
Williams, Caliri, Miller & Otley
1428 Route 23
Wayne, New Jersey 07470
Fax No: 210-694-0302
If to Seller:
Envirometrics Development Company, Inc.
1019 Bankton Drive
Charleston, South Carolina 29406
Attention: Mr. W. Elliott, President
Fax No: 803-740-1721
or to such other address or facsimile number as the party to whom notice is
to be given may have furnished to the other parties in writing in accordance
herewith. Any such communication shall be deemed to have been given on the date
it is received by the addressee (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt. Provided that any
communication sent by facsimile transmission and confirmed by mail, shall be
deemed to have been given at the time of transmission."
f. The following is hereby added to the Agreement as a new paragraph 24:
24. In the event that Envirometrics shall default in the payment of any
amount due hereunder, Envirometrics pay to Computer Control the costs of
collection of such amount, including reasonable attorney's fees."
g. The following is hereby added to the Agreement as a new paragraph 25:
25. Notwithstanding any provision of this Agreement to the contrary:
Computer Control shall not be required to disclose to Envirometrics any
technical know-how, trade secrets or proprietary information required to
manufacture Readers at any time that any amount owed by Envirometrics,
Envirometrics, Inc. or any other affiliate of Envirometrics to Computer Control,
BIOS International, Inc. or any other affiliate of Computer Control (including
but not limited to royalties under the 1992 Agreement and invoices for products)
shall be overdue."
7. Subject to the modifications hereinabove set forth, the 1992 Agreement
is hereby ratified and confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have executed this agreement in
duplicate.
ENVIROMETRICS DEVELOPMENT COMPANY, INC.
Signed By:____________________
Name:
Title:
COMPUTER CONTROL CORPORATION
Signed By:_____________________
Harvey Padden
President
CONSENT
The undersigned hereby consents to the foregoing Agreement.
ENVIROMETRICS, INC.
Signed By:
Name:
Title:
SCHEDULE A
The following invoices issued by Computer Control:
Invoice Number Date Invoice Amount Owed
003944 3/11/96 Envirometrics, Inc. $7,120.00
003949 3/11/96 Envirometrics, Inc. 10,724.00
003952 3/27/96 Envirometrics, Inc. 205.05
003964 5/21/96 Envirometrics, Inc. 410.04
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of July 26,
1996 and effective as of July 31, 1996, between ENVIROMETRICS, INC., a Delaware
corporation ("Seller"), ANDREW C. GILLETTE, a South Carolina resident ("Buyer"),
and TRICO ENVIROMETRICS, INC., a South Carolina corporation (the "Company").
RECITALS:
A, Buyer was the subscriber to the original Articles of Incorporation of
Trico Engineering & Land Surveying, the former entity which all business
activity was conducted by the Company filed in South Carolina and has served as
an officer of the Company and the former entity since its organization.
B. Buyer was the owner of 100 % of the outstanding shares of capital stock
of the former entity through which activities of the Company were performed from
its organization until November 30, 1994, at which time Buyer sold all of his
interest in the Company to Seller through an asset purchase.
C, Seller now wishes to sell to Buyer, and Buyer wishes to buy from Seller,
all of the outstanding shares of capital stock of the Company, consisting of
1,000 shares of common stock (the "Stock").
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and agreements herein set
forth and in reliance on the representations and warranties contained herein,
the parties agree as follows:
1. Purchase and Sale of Stock.
1.1 Method of Transfer. Seller hereby agrees to sell, transfer, assign and
deliver to the Buyer and Buyer agrees to purchase from Seller all of the Stock
free and clear of all liens, charges and encumbrances.
1.2 Purchase Price and Method of Payment. The "Purchase Price" for the
Stock shall be 45,000 shares of Envirometrics common shares owned by Buyer,
which shall be delivered by Buyer to Seller on the Closing Date.
2. Conditions to Obligations of Seller and Buyer.
2.1 Conditions to Obligations of Buyer, The obligations of Buyer at Closing
to consummate the transactions herein contemplated are subject to the
fulfillment at or prior to Closing of each of the following conditions:
2.1.1 Release from Liability for Reservoir Capital Corporation. The Company
shall have been released from any obligation that it may have under the Seller's
$800,000.00 financing facility with Reservoir Capital Corporation, and none of
the Company's assets shall remain as collateral for the payment of such
operating line of credit.
2.1.2. Sublease of Faber Place Office Space. The Company and the Seller
shall have executed and delivered a Sublease substantially in the forms attached
hereto as Exhibits __ and __, providing for the Seller's sublease from the
Company of the office space the Company's and Seller's employees currently
occupy in Charleston, South Carolina.
2.1.3. Truth of Representations and Warranties, The representations and
warranties of Seller contained in this Agreement or in any other document
delivered at Closing shall be true and correct on and as of the Closing Date.
2.1.4. Performance of Agreements. Each agreement of Seller to be performed
on or before the Closing Date pursuant to the terms hereof or as contemplated
herein shall have been duly performed.
2.1.5. Minute and Stock Books. The minute books and stock certificate books
of the Company in the possession of Seller shall have been delivered to Buyer.
2.2. Conditions to the Obligations of Seller. The obligations of Seller to
consummate the transactions herein contemplated are subject to the satisfaction
on or before the closing Date of the Following conditions:
2.2.1. Acknowledgment and Collateralization of Company's Debt to Seller.
The Company shall have executed and delivered to Seller (i) a Promissory Note
substantially in the form attached hereto as Exhibit (the 'Note") evidencing the
Company's agreement to repay to the Seller the outstanding inter-corporate debt
of the Company as of the Closing Date and certain other post-closing advances
from Seller to the company contemplated by the parties, and (ii) a Security
Agreement substantially in the form attached hereto as Exhibit __ (the "Security
Agreement") granting the Seller a blanket security interest in the assets of the
Company, but subject to the Seller's agreement to subordinate such security
interest to that of a financial institution hereafter providing an operating
tine of credit to the Company in an amount no greater than $350,000,00 without
permission from the Note holder.
2.2.2. Guaranty of Company's Note. The Buyer and his wife shall have
executed and delivered an Unconditional Guaranty Agreement substantially in the
form attached hereto as Exhibit __ (the "Guaranty") in favor of the Seller
guaranteeing payment of the Note and all other indebtedness of the Company to
the Seller now existing or hereafter arising prior to the repayment of the Note
in full.
2.2.3 Truth of Representations and Warranties. The representations and
warranties of each of buyer and the Company contained in this Agreement or in
any other document delivered at Closing shall be true and correct on and as of
the Closing Date.
2.2.4. Performance of Agreements. Each agreement of Buyer to be performed
on or before the Closing Date pursuant to the terms hereof or as contemplated
herein shall have been duly performed.
3. Representations and Warranties of Seller.
3.1. Representation and Warranties of Seller. Seller represent sand
warrants that:
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has the corporate power to own its
property and conduct its business in the manner in which such business is now
being conducted.
(b) The execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized and approved by all
necessary corporate action of Seller. Seller has full corporate power to enter
into and perform this agreement and the transactions contemplated hereby, and
this agreement constitutes a valid and binding agreement of Seller enforceable
in accordance with its terms.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under, or result in the creation of any lien or encumbrance upon the
property or assets of Seller pursuant to the articles of incorporation or bylaws
of Seller or any agreement, indenture, mortgage, deed of trust or other
instrument to which Seller is a party or by which it is bound or to which its
properties are subject, or any law, rule, regulation, judgment, order or decree.
(d) The stock of the company consists of 100,000 authorized shares of
common stock, One Dollar ($1.00) par value, or which 1,000 shares are issued.
All such issued shares are owned of record by Seller, free and clear of all
liens, charges and encumbrances. There are no commitments, plans or arrangements
to issue, and no outstanding options, warrants or other rights calling for the
issuance of, shares of capital stock of the Company.
(e) The assets of the Company include, without limitation, the assets
listed on Schedule attached hereto.
(f) The books of account of the Company that have been maintained by the
Seller have been maintained in the usual, regular and ordinary manner on a
consistent bases.
(g) This Agreement and the consummation of the transactions contemplated
hereby will not give rise to any valid claim against the Seller for a finder's
fee, brokerage commission, or other like payment.
3.2, Representations and Warranties of Buyer. Buyer represents and warrants
that:
(a) Buyer has full power to enter into and perform this Agreement and the
transactions contemplated hereby. This Agreement constitutes a valid and binding
agreement of Buyer enforceable in accordance with its terms except as may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws, from time to time in effect, and any equity principles
relating to or affecting generally the enforcement of creditors' rights.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not conflict or be inconsistent with
or result in the termination of terms of any indenture, mortgage, deed of trust,
covenant agreement, or other instrument to which buyer or his wife is a partner
or by which they are bound, or to which any of their property is subject.
(c) The execution and delivery of this Agreement and the performance of the
agreements contemplated hereby to which the Company is a party, have been duly
authorized and approved by all necessary corporate action of the Company.
(d) Buyer is acquiring the shares of capital stock of the Company hereunder
for his own account for investment, with no present intention of reselling or
otherwise distributing the same except (i) pursuant to an offering of shares
duly registered under the Securities Act of 1933, as amended, or (ii) under
other circumstances which in the opinion of counsel to the company at the time
does not require registration under such Act.
(e) This Agreement and the consummation of the transactions contemplated
hereby will not give rise to any valid claim against the buyer or the company
for a finder's fee, brokerage commission, or other like payment.
3.3 Survival of Representations and Warranties, The representations,
warranties, convenants, and agreements of the parties shall be true and accurate
as of, and shall survive, the Closing Date.
4. Indemnification.
4.1. Indemnification of Buyer and Company Seller covenants and agrees to
indemnify and hold harmless Buyer and the Company from and against any loss,
claim, liability, obligation or expense (including reasonable attorney's fees)
suffered of paid by Buyer or the company, after the Closing Date, arising out of
or resulting from:
(a) any representation or warranty of Seller under this Agreement being
untrue or misleading when made as of the Closing Date;
(b) any breach of the obligations or covenants of Seller under this
Agreement.
(c) the parent/subsidiary relationship of Seller and the Company prior to
Closing, but not from any activities of the Company or its directors, officers,
employees or agents; or
(d) any matter addressed in Section 6.2 in which the Company is a
non-benefiting party as such
term is used therein.
4.2. Indemnification of Seller. Buyer and Company hereby covenant and agree
to indemnify and hold harmless Seller from and against any loss, claim,
liability, obligation or expense (including reasonable attorneys' fees) suffered
or paid by Seller, after the Closing Date, arising out of or resulting from:
(a) any representation or warranty of Buyer under this Agreement being
untrue or misleading when made or as of the Closing Date;
(b) any breach of the obligations or covenants of Buyer or the Company
under this Agreement;
(c) the parent/subsidiary relationship of Seller and the Company prior to
Closing, but not any activities or the Seller, its subsidiaries other than the
Company, or their directors, officers, employees or agents; or
(d) any matter addressed in Section 6.2 in which the Company is a
non-benefiting party as such term is used herein.
5. Closing.
(a) The closing ("Closing") under this Agreement shall be held on July 26,
1996 (the "Closing Date") or at such time thereafter as Seller and Buyer may
agree, but in no event later than July 31, 1996, at the offices of Ten State
Street or at such other place as the parties may mutually agree.
(b) At the Closing, Seller shall deliver or cause to be delivered to Buyer
stock certificates, endorsed in blank or accompanied by duly executed stock
powers, the aggregate of such certificates representing the Stock of the company
and all other instruments and documents required to be delivered by Seller under
this Agreement of which counsel for Buyer may reasonable request for the purpose
of closing this Agreement.
(c) At the Closing, Buyer shall deliver to Seller the Purchase Price in the
amount and form specified herein before in Section 1.2 and shall deliver all
other instruments and documents required to be delivered by Buyer and the
Company under this Agreement or which Seller may reasonably request for the
purpose of closing this Agreement.
6. Post-Closing Agreements.
6.1. Post-Closing Reconciliation of Inter-corporate Accounts. The parties
acknowledge and agree that the principal amount of the Note is the parties' best
estimate of the net amount owed by the Company to Seller on the Closing Date.
The parties will use their best efforts to determine the actual amount owed by
the Company to Seller on the Closing Date and agree on such amount. Upon the
agreement of the parties as to the correct amount, the principal amount
outstanding under the Note as set forth on the schedule attached thereto, shall
be debited or credited as appropriate, effective as of the Closing Date
6.2 Release from Mutual Obligations. Each of the Company and Seller
acknowledge that at the time of Closing, the other may continue to be a primary
obligor or co-obligor, whether through mutual undertaking, joint obligation,
guaranty, indemnification or other means, on certain debts, obligations and
contracts of such party, pursuant to which the other party derives no immediate
benefit, e.g. equipment leases entered into by Seller for equipment used and
possessed by the Company. The parties agree to use their best efforts to relieve
or remove promptly after Closing the potential liability of the non-benefiting
party in such situations and, in any event, the benefiting party agrees to
indemnify the non-benefiting party for any expenses, damages or losses incurred
after the Closing Date as a result of the failure to remove such potential
liability as of the Closing Date.
6.3. Insurance. At the Closing, the Company agrees to have obtained
policies of insurance, with respect to all its insurance needs, separate and
apart from those of Seller and its remaining subsidiaries. The Company
acknowledges that neither Seller nor any of its subsidiaries will pay premiums
on behalf of the Company after the Closing Date.
6.4 Further Assurances. The parties hereto agree to execute and deliver or
cause to be executed and delivered at the Closing, and at such other reasonable
times and places as the parties may agree thereafter, such additional documents
and instruments as any other party hereto may reasonably request for the purpose
of carrying out this Agreement.
6.5 Expenses. Each party shall pay its own expenses and costs, including
without limitation, counsel fees and transfer taxes incurred in connection with
this Agreement and the transactions contemplated hereby.
7. Miscellaneous.
7.1. Notices. Any notice or other communication required or permitted
hereunder shall be sufficiently given if sent by certified mail, postage
prepaid, addressed as follows:
In the case of Seller, to:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina
Attention: Richard D. Bennett
with a copy to:
Timothy D. Scrantom, Esquire
Ten State Street
Charleston, South Carolina
in the case of buyer, to:
Andrew C. Gillette
4055 Faber Place Drive Suite 201
Charleston, SC 29405
or
1085 Stonehenge Drive
Hanahan SC 29406
with a copy to:
Steven L. Smith, Esquire
Smith Collins & Dusebury
4455 Cross Country Road
Suite 1
Charleston, SC 29423
Any such notice or communication shall be deemed to have been given as of
the date so mailed.
7.2. Benefits. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their assigns and successors in interest.
7.3. Entire Agreement. The exhibits hereto and the certificates and other
documents to be furnished in connection herewith are an integral part of this
Agreement. All understandings and agreements between the parties are merged into
this Agreement which fully and completely expresses their agreements and
supersedes any prior agreement or understanding relating to the subject matter,
and no party has made any representations or warranties, express or implied, not
herein expressly set forth. This Agreement shall not be changed or terminated
except by written amendment signed by the parties hereto.
7.4. Governing Law. This Agreement and the agreements contemplated hereby
shall be construed in accordance with and governed by the laws of the State of
South Carolina, without regard to the choice of law principles of it or any
other jurisdiction,
7,5. Venue, Any cause of action arising from the terms of the Agreement
shall be brought only in a state or federal court located in Charleston, South
Carolina. Such court shall be the exclusive and sole venue for the adjudication
of any disputes hereunder, and each party hereby consents to the jurisdiction of
such court over such party.
7.6. Counterparts. This Agreement may be executed in several counterparts,
all of which taken together shall constitute one instrument.
7.7. Headings. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not be deemed to affect
the meaning or construction on any of the provision hereof,
IN Witness WHEREOF, this Agreement is executed by each of the parties, or
their duly authorized representative, as of the day and year first above
written.
ENVIROMETRICS. INC.
By:
Title: President & CEO
Title: Treasurer
ATTEST:
By: ANDREW C. GILLETTE TRICO ENVIROMETRICS, INC. By:
Title: ATTEST:
List of Schedules:
Schedule
- - List of Assets
- -List of Exhibits:
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
UNCONDITIONAL GUARANTY AGREEMENT
THIS UNCONDITIONAL GUARANTY AGREEMENT (this "Guaranty") is made as of
July 26, 1996 and effective as of July 31, 1996, by Andrew C. Gillette and
Deborah B. Gillette, South Carolina residents and husband and wife, (the
"Guarantors"), in favor of ENVIROMETRICS, 1NC., a Delaware corporation (the
"Creditor").
RECITALS:
A. Trico Envirometrics, Inc. a South Carolina corporation (the
"Debtor") is currently indebted to the Creditor in an approximate aggregate
amount of Six Hundred, Thousand Dollars ($600,000.00 US), which
indebtedness is subject to increase (as such may change from time to time,
the "Indebtedness"), and is now evidenced by a certain Promissory Note of
even date herewith in favor of the Creditor (the "Note").
B. Concurrent herewith, Andrew C. Gillette is purchasing from the
Creditor pursuant to a certain Stock Purchase Agreement, of even date, all
of the outstanding shares of common stock of the Debtor for a purchase
price of 45,000 shares of Envirometrics, Inc. common stock. The Creditor
has agreed to sell such stock for such price to Andrew C. Gillette subject
to, among other conditions, the Guarantors executing and delivering this
Guaranty to the Creditor.
C. To induce the Creditor to sell to Andrew C. Gillette all of the
outstanding shares of common stock of the Debtor for such purchase price,
the Guarantors wish to guarantee, jointly and severally, (i) payment of all
the indebtedness, and (ii) performance of all of the respective covenants,
obligations and agreements of each of the Debtor and Andrew C. Gillette, as
set forth in the documents evidencing, securing the repayment of, executed
in connection with, or otherwise related to the Indebtedness or the sate of
stock to Andrew C. Gillette, including without limitation, the Stock
Purchase Agreement, the Note, the Pledge Agreement, the Security Agreement,
this Agreement and the Accounting Services Agreement, all of even date
(collectively, as hereafter amended, modified, extended or renewed from
time to time, the "Transaction Documents"), all according to the terms and
conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the representations, warranties
and covenants herein set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and as an
inducement to the Creditor to sell all of the issued and outstanding common
stock of the Debtor to Andrew C. Gillette, each of the Guarantors hereby
covenants and agrees as follows:
1. Guaranty of Obligations. Each of the Guarantors hereby guarantee,
absolutely and unconditionally, to the Creditor (i) payment of all the
indebtedness and (ii) performance of all of the respective covenants,
obligations and agreements of each of the Debtor and Andrew C. Gillette, as
set forth in the Transaction Documents, or any of them (collectively, the
"Obligations"). The term "Obligations" shall include all of the foregoing
matters, whether matured or un-matured, or absolute or contingent, and
whether they are from time to time reduced, thereafter increased, or
entirely extinguished and thereafter reincurred. The term "Obligations"
shall further include, without limitation, all liability of the Debtor to
the Creditor, whether now or hereafter incurred; whether direct, indirect
or contingent; whether incurred as primary debtor, co-maker or guarantor;
whether otherwise guaranteed or secured; and whether on open account,
evidenced by an instrument or otherwise.
2. Continuing Obligations. This Guaranty is a continuing guaranty,
shall remain in full force and effect irrespective of any interruptions in
the business relations of the Debtor with the Creditor or any of the
Guarantors, and shall apply to and guarantee any and all of the
Obligations.
3. Application of Sums Received. All assets and monies available to
the Creditor for application in payment or reduction of the Obligations may
be applied by the Creditor in such manner in such amounts, and at such time
or times as it may see fit, to the payment or reduction of such of the
Obligations as the Creditor may elect.
4. Renewal or Extension. The Guarantors hereby agree that the Creditor
may, from time to time and for any period or periods of time, either before
or after any default by the Debtor, with or without further notice to the
Guarantors, renew or extend the time for payment or performance of any of
the Obligations and grant and allow such indulgences or compromises in
connection therewith as the Creditor may deem advisable or expedient, may
change, renew, extend, surrender, release, substitute and compromise, deal
with and refuse to accept, in whole or in part, any security at any time
held by or available or offered to the Creditor for any Liability or for
any obligation of any other person, partnership or corporation secondarily
or otherwise liable for any of the Obligations, and may abstain from taking
advantage of and from realizing upon any security interest or other
guaranty securing or otherwise related to all or any of the Obligations.
The Creditor may set off or release, in whole or in part, any balance of
any account or credit on its books in favor of the Debtor, or of any such
other person, partnership or corporation, and may extend credit in any
manner whatsoever to the Debtor, and generally deal with the Debtor or any
such security or other person, partnership or corporation as the Creditor
may see fit. The Creditor may release any Guarantor from any or all
obligations hereunder without affecting, in any manner, the obligations of
the other Guarantor hereunder.
5. Waiver. The Guarantors hereby waive the following:
(a) Notice of acceptance of this Guaranty, of any renewals or
extensions of time for payment or performance of any of the Obligations, of
any changes in the terms of the Obligations, including, without limitation,
any increase or decrease in installment payments or any interest rate
adjustment, of any extensions of credit by the Creditor to the Debtor, and
of any other change in the Obligations, including, without limitation, any
change in the business structure of the Debtor;
(b) Presentment and demand for payment of any of the Obligations;
(c) Protest and notice of dishonor or default to the Guarantors or to
any other party with respect to any of the Obligations;
(d) Notice of the financial condition or other status of the Debtor
and of any other party obligated for all or any part of the Obligations;
(e) Any impairment of collateral for any of the Obligations,
including, without limitation, any failure to perfect a security interest
in such collateral; and
(f) Any demand (except expressly specified herein) of proof of
nonpayment of the principal of or interest on the Note, or other payments
of money required by the Transaction Documents or the Debtor's Agreements
or of any default by the Debtor in performing and keeping any other
covenant, condition or agreement under the Transaction Documents.
6. No Limitation. This Guaranty is an unconditional guaranty, and the
liability of each of the Guarantors to the Creditor shall not be terminated
or in any way limited by reason of or as a result of anything set forth or
contained in any writing evidencing all or any part of the Obligations nor
shall it be further limited to a proportionate part of the total of the
Obligations.
7. Guaranty of Payment. This Guaranty is a guaranty of payment and not
of collection, and the Guarantors further waive any right to require that
any action be brought against the Debtor or any other person, partnership
or corporation or to require that resort be had to any security or to any
balance of any account or credit on the books of the Creditor in favor of
the Debtor or any other person, partnership or corporation, and agree that
the Creditor assumes no responsibility for the validity or enforceability
of any security for the Obligations.
8. No Discharge or Impairment. This Guaranty, and the obligations of
the Guarantors hereunder, shall not be discharged, impaired or affected in
any manner as a result of (a) any right of setoff, counterclaim or defense
of the Debtor with respect to the payment or performance of any of the
Obligations, including, without limitation, failure of consideration,
breach of warranty, payment, statute of frauds, statute of limitations,
accord and satisfaction and usury, (b) the termination of the right of the
Debtor to continue to exist as a legal entity, or (c) any lack of power or
authority of the Debtor to execute or deliver any of the Transaction
Documents.
9. No Subrogation Setoff. Notwithstanding anything to the contrary
contained herein, each Guarantor hereby irrevocably waives all rights that
he or she may have at law or in equity (including, without limitation, any
law surrogating a Guarantor to the rights of the Creditor) to seek
contributions, indemnification, or any other form of reimbursement from the
Debtor, any other Guarantor, or any other person now or hereafter primarily
or secondarily liable for any obligations of the Debtor to the Creditor,
for any disbursement made by a Guarantor under or in connection with the
guaranty or otherwise, which waiver shall be effective until (a) all
Obligations have been paid in full, (b) 370 days have lapsed since the date
that all Obligations have been paid in full, and (e) no petition for relief
under Title 11 of the United States Code has been filed by or against the
Debtor or any Guarantor within the 370 days following the payment in full
of all such obligations. The Creditor shall have the right, immediately and
without further action by it, to set off against any obligation of the
Guarantors to the Creditor hereunder all money owed by the Creditor in any
capacity to the Debtor or to any of the Guarantors, whether or not due; and
the Creditor shall be deemed to have exercised such right of setoff and to
have made a charge against any such sums immediately upon the occurrence of
any default in the payment or performance of the Obligations, even though
such charges are made or entered on the books of the Creditor subsequent
thereto. Any funds or other property at any time received by the Guarantors
from the Debtor shall be held in trust for, and shall be paid or
transferred to, the Creditor.
10. Subsequent Guaranty. A subsequent guaranty by any of the
Guarantors of the Obligations shall not be deemed to be in lieu of or to
supersede or terminate this Guaranty, but shall be construed as an
additional or supplemental guaranty unless otherwise expressly provided
therein.
11. Reimbursement Revocation. The Guarantors agree, upon demand, to
reimburse the Creditor, to the extent that such reimbursement is not made
by the Debtor, for all expenses (including, without limitation, attorneys'
fees) incurred by the Creditor in connection with any of the Obligations or
the obligations of the Guarantors hereunder or the collection thereof. The
guaranties contained herein shall remain in full force and effect until all
of the Obligations shall have been paid or performed in full, and a period
of ninety-five (95) days, beginning with the date oft he last payment made
in satisfaction of the Obligations, shall have elapsed during which no
petition in bankruptcy shall be filed by or against the Debtor or any of
the Guarantors, Revocation of this Guaranty shall be effective only as to
that portion of the Obligation incurred after written notice of revocation
has been received by the Creditor at its address set forth in the
Transaction Documents, and this Guaranty shall remain in full force and
effect as to all Obligations incurred before or at that time. Regardless of
when a renewal or extension of pre-revocation Obligations occurs (with or
without adjustment of interest rate or other terms), for all purposes
hereunder such Obligations shall be deemed to have been incurred prior to
revocation to the extent of the renewal or extension and to be fully
covered by this Guaranty.
12. Successors and Assigns. Each reference herein to the Debtor shall
be deemed to include its successors and assigns, unless the Creditor
specifically waives in writing the benefits of this guaranty as to the
specific obligation or agreement assigned by the Debtor, Each reference
herein to the Creditor shall be deemed to include its successors and
assigns, in whose favor the provisions of this Guaranty also shall inure,
Each reference herein to the Guarantors shall be deemed to include the
respective successors, assigns, heirs, administrators, executors, and
personal representatives of each of the Guarantors, all of whom shall be
bound by the provisions of this Guaranty.
13. Joint and Several Obligations. Each undertaking and obligation
herein contained shall be the joint and several undertaking and obligations
of each of the Guarantors.
14. No Waiver. No delay on the part of the Creditor in exercising any
rights hereunder or failure to exercise the same shall operate as a waiver
of such rights, and no notice to or demand on the Guarantors shall be
deemed to be a waiver of the obligation of the Guarantors or of the right
of the Creditor to take further action without notice or demand as provided
herein.
15. Representations and Warranties. Each of the guarantors represents
and warrants that:
(a) There has been no material adverse change in his general affairs,
financial condition or assets subsequent to the effective date of all
financial and other information furnished to the Creditor.
(b) Each is fully capable and empowered (being under no legal
restriction, limitation or disability) to enter into, execute and deliver
this Guaranty and to perform his obligations hereunder.
(c) Each has duly executed and delivered the Guaranty, and this
Guaranty constitutes a valid and binding obligation, enforceable in
accordance with its terms, except as such enforceability may be affected by
bankruptcy and other insolvency laws and general principles of equity.
(d) Except as previously disclosed to the Creditor in writing, there
are no pending or, to the best of his knowledge, threatened actions, suits,
proceedings or investigations of a legal, equitable, regulator,
administrative or legislative nature that, if adversely determined, would
or might materially adversely affect his business, assets, condition
(financial or otherwise) or prospects or his ability to perform his
obligations under this Guaranty.
(e) To the best of his knowledge, after due inquiry, no event that
would constitute an "Event of Default" (as hereinafter defined), or that,
with notice or lapse of time or both, would become an Event of Default, has
occurred and is continuing.
16. Events of Default. Each of the Following events shall constitute
an (Event of Default" hereunder:
(a) Failure of any Guarantor to pay or perform the Obligations
immediately upon demand by the Creditor;
(b) Failure of any Guarantor to observe or perform any of the
covenants, conditions or agreements hereunder (other than the payment of
money) for a period of thirty (30) days after notice from the Creditor,
specifying such failure and requesting that it be remedied; and
(c) Occurrence of an event of Default" under any of the Transaction
Documents that is not remedied within the time permitted.
Whenever an Event of Default hereunder shall have occurred and is
continuing, the Creditor may declare the entire unpaid principal of and
interest on the Note and the other Obligations to be immediately due and
payable and may take whatever action at law or in equity as may appear
necessary or desirable to collect payments when due or thereafter to become
due hereunder or to enforce observance or performance of any covenant,
condition or agreement of the Guarantors under this Guaranty.
17. Rules of Construction.
(a) Singular words shall connote the plural as well as the singular,
and vice versa, and the masculine general shall connote the neuter and the
feminine genders, and vice versa, as the context may require.
(b) The paragraph headings set forth herein are solely for convenience
of reference and shall not constitute a part of the Guaranty nor shall they
affect its meaning, construction or effect.
18. Written Modification. No modification or waiver of the provisions
of this guaranty shall be effective unless in writing, nor shall any such
waiver be applicable except in the specific instance for which it is given.
19. Governing Law. This guaranty, and the respective rights and
obligations of the Creditor and the guarantors hereunder, shall be
interpreted, governed, and enforced according to the laws of South
Carolina, without regard to the choice of taw principles of it or any other
jurisdiction.
20. Venue and In Personam Jurisdiction Any cause of action arising
from the terms of this Agreement shall be brought only in a state or
federal court in the City of Charleston, South Carolina, which shall be the
exclusive and sole venue for the adjudication of any disputes hereunder.
The Guarantors consent to exercise by the aforementioned courts of in
personam jurisdiction over each of them with respect to any cause of action
brought pursuant to this Agreement.
21. Severability. Should any one or more of the terms, provisions,
convenants or conditions of the Guaranty be held to be void, invalid,
illegal or un-enforceable in any respect, the same shall, at the option of
the Creditor, not affect any other term, provision, covenant or condition
of this guaranty, but the remainder hereof shall be effective as though
such term, provisions, covenant or condition had never been contained
herein.
22. Merger. This Guaranty constitutes the final expression of the
guaranty agreement between the Creditor and the Guarantors with respect to
the guaranty effected hereunder, and is the complete and exclusive
statement of the terms and conditions of such guaranty agreement. No course
of dealing, course of performance or trade usage, and no parol evidence of
any nature, shall be used to supplement or modify any of the provisions
hereof, and there are no conditions to the full effectiveness of this
Guaranty.
WITNESS the following signatures as of the date first above written
Andrew C. Gillette
Deborah B. Gillette
STATE OF SOUTH CAROLINA
CITY/COUNTY OF CHARLESTON
The foregoing instrument was acknowledged before me this 1999 by
Andrew C. Gillette.
My commission expires:
Notary Public
STATE OF SOUTH CAROLINA ) ) to-wit: CITY/COUNTY OF CHARLESTON ) The
foregoing instrument was acknowledged before me this 10th day of Jan. 19977
by Deborah B. Gillette.
My commission expires:
Notary Public
SCHEDULE 1
Collateral Locations.
1.
2.
3.
4.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made as of July 26, 1996 and
effective as of July 31, 1996, between TRICO ENVIROMETRICS, INC., a South
Carolina corporation (the "Debtor'), and ENVIROMETRICS, INC, a Delaware
corporation (the "Secured Party").
A. The Debtor is currently indebted to the Secured Party in an approximate
aggregate amount of Six Hundred Thousand Dollars ($600,000.00US), which
indebtedness is, subject to increase (as such may change from time to time), the
amount transaction documents, and is now evidenced by a certain Promissory Note
of even date, herewith in favor of the Secured Party (the "Note").
B. Concurrent herewith, Andrew C. Gillette ("Gillette") is purchasing from
the Secured Party pursuant to a certain Stock Purchase Agreement, of even date,
all of the outstanding shares of common stock of the Debtor for a purchase price
of 45,000 shares of Envirometrics, Inc. common stock. The Secured Party has
agreed to sell such stock for such price to Gillette subject to, among other
conditions, the Debtor executing and delivering this Agreement to the Secured
Party.
C. To induce the Secured Party to sell to Gillette all of the outstanding
shares of common stock of the Debtor for such purchase price, the Debtor wishes
to grant to the Secured Party a security interest in substantially all of the
assets of the Debtor to secure (i) payment of all of the Indebtedness, and (ii)
performance of all of the respective covenants, obligations and agreements of
each of the Debtor and Gillette, as set forth in the documents evidencing,
securing the repayment of, executed in connection with, or otherwise related to
the Indebtedness or sale of stock to Gillette, including, without limitation,
the Stock Purchase Agreement, the Note, the Pledge Agreement, this Agreement,
the Unconditional Guaranty Agreement and the Accounting Services Agreement, all
of even date (collectively, as hereafter amended, modified, extended or renewed
from time to time, the "Transaction Documents"), all according to the terms and
conditions hereinafter set forth,
D. The purpose of this security agreement is to secure all amounts due from
debtor to secure the promissory note which represents all such sums being owed
to creditor.
AGREEMENT:
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and as an inducement
to the Secured Party to sell all of the issued and outstanding common stock of
the Debtor to Gillette, the parties hereby covenant and agree as follows:
1. Grant of Security Interest. The Debtor hereby grants to the Secured
Party, to secure (i) payment of all the Indebtedness and (ii) performance of the
respective covenants, obligations and agreements of each of the Debtor and
Gillette, as set forth in the Transaction Documents, or any of them
(collectively, the "Obligations"), a security interest in the property described
in Section 2 of this Agreement (the "Collateral").
2. Collateral. The collateral subject to this Agreement is all of the
Debtor's inventory, chattel paper, accounts, accounts receivable, contract
fights, equipment and general intangibles and all other assets, whether real or
personal, and the proceeds thereof, (all such terms as defined in the Uniform
Commercial Code of South Carolina).
3. Obligations Secured The security interests herein granted are to secure
the Obligations, ratably and without priority of one over another. The term
"Obligations" shall include all Obligations, whether matured or un-matured, or
absolute or contingent, and whether they are from time to time reduced,
thereafter increased, or entirely extinguished and thereafter reincurred. The
term "Obligations" shall further include, with limitation, all liability of the
Debtor to the Secured Party (specifically the mortgage repayment and the
interest in the lease in, the Faber Place facility), whether now or hereafter
incurred; whether direct, indirect, or contingent; whether otherwise guaranteed
or secured; and whether on open account, evidenced by an instrument or
otherwise.
4. Subordination of Security Interest. The Secured Party agrees that, upon
written request of the Debtor, it will subordinate by agreement reasonably
satisfactory to its counsel the lien of the security interest granted by this
Agreement to the lien of a security interest in all or part of the Collateral in
favor of a bank providing an operating line of credit to Debtor in an aggregate
amount not to exceed Three Hundred Fifty Thousand Dollars ($350,000.00 US)
without the written permission of the Note holder, which is also the Secured
Party. Such subordination shall in no way affect the priority of the security
interest granted hereunder as to any other security interest in the collateral
granted by the Debtor to the bank or any other person or entity. The Secured
Party's reasonable out-of-pocket expenses incurred in connection with such
subordination shall be paid by Debtor from the proceeds of the line of credit.
5. Covenants.
5.1. Use of Collateral. The Debtor warrants and covenants that the
Collateral will be used exclusively for business purposes.
5.2. Debtor's Name. The Debtor warrants that the only name by which the
Debtor is known or does business is shown in the caption hereof. The Debtor
shall notify the Secured Party immediately upon any change in the Debtor's
natural, corporate or other name.
5.3. Care of Collateral. The Debtor warrants and covenants that it will (a)
maintain the collateral at the locations set forth on Schedule 1 attached hereto
and in good and salable condition, repair or replace it, if necessary, deal with
the Collateral in all such ways as are considered good practice by owners of
like property, and allow the Secured Party to inspect the Collateral at any
reasonable time; (b) pay when due all taxes and assessments now or hereafter
imposed upon the Collateral, (c) cause the Collateral to be insured against
casualties in reasonable amounts; and (d) take all necessary steps to preserve
the liability of account debtors, obligors, and secondary parties whose
obligations are part of the Collateral.
5.4 Release of Collateral. The Secured Party warrants and covenants to
execute promptly such Termination Statements, and to take such other actions at
Debtor's expenses are reasonably requested by the Debtor to facilitate the
release of the Collateral upon the full and complete payment and performance of
all of the Obligations.
5.5 Financial Information The Debtor agrees to provide quarterly financial
statements to the Secured Party within 30 days of the quarter close and to
provide annual financial statements to the Secured Party within 60 days of the
fiscal year end. In addition, the Debtor must provide annual audited financial
statements prepared in accordance with generally accepted accounted principles
if the Secured Party does not waive such requirement, but in any event must
engage a Certified Public Accountant to perform, at a minimum, agreed upon
procedures to selected accounts of the Debtor, including billed and unbilled
trade receivables, service revenues, and debt as of the fiscal year end. Debtor
agrees to pay all such fees related to the auditing or accounting services
described above.
5.6 Miscellaneous Covenants.
a. The Debtor agrees to pay all fees for the filing of statement(s) and to
take such other actions as might be necessary for the perfection, continuation
and/or termination of the security interests hereby granted to the Secured
Party, including the execution and filing of UCC financing statements, and
renewals thereof.
b. The parties hereto agree that this Agreement shall be construed and
enforced in accordance with the laws of the State of South Carolina. In case any
one or more of the provisions contained in this Agreement should be invalid,
illegal or un-enforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall in no way be
affected or impaired thereby.
6. Rights of the Secured Party. Subject to the fights of prior lien
holders, the Secured Party may upon default under this Agreement or any of the
Obligations: (i) require the Debtor to give possession or control of the
Collateral to the Secured Parties: (ii) take control of proceeds and use cash
proceeds to reduce any part of the Note; ('iii) take any action required of the
Debtor or otherwise necessary to obtain, preserve, and enforce the security
interest granted herein, and maintain and preserve the Collateral, without
notice to the Debtor, and add costs of the same to the Note, but the Secured
Party is under no duty to take such action; (iv) take control of funds generated
by the Collateral and to use the same to reduce any part of the Note; (v) waive
any of its rights hereunder without such waiver prohibiting the later exercise
of the same or similar rights; (vi) revoke any permission or waiver previously
granted to the Debtor; and (vii) proceed to enforce any other rights against the
Collateral which may be available pursuant to this Agreement, the Transaction
Documents, and applicable law,
7. Default.
7.1 Events of Default. Any of the following shall be an Event of Default
under this Agreement: (i) failure of the Debtor to pay the Note in accordance
with its terms, or the occurrence of any other default under the Note, or
failure of the Debtor to perform any act or duty required of it under the
Transaction Documents; (ii) material falsity of any warranty or representation
in this Agreement when made; (iii) substantial loss, theft, destruction, sale,
reduction in value, damage to, or change in the Collateral; and (iv) levy on,
seizure, or attachment of the Collateral.
7.2. Occurrence of Event of Default. When an Event of Default occurs, all
of the Note shall become immediately due and payable at the Secured Party's
option without notice to the Debtor, and the Secured Party may proceed to
enforce payment of the same and exercise any and all of the fights or remedies
available to a Secured Party under the Uniform Commercial Code of South
Carolina, as well as any other rights or remedies available to the secured party
under law or transaction documents.. When the Debtor is in default, the Debtor,
upon demand by the Secured Party, shall assemble the Collateral and make it
available to the Secured Party at a place reasonable convenient to both parties.
If the Secured Party disposed of the Collateral following default, the proceeds
of such disposition available to satisfy the indebtedness shall be applied to
the Note in such manner as the Secured Party in its sole discretion deems best.
The Debtor is entitled to any surplus.
7.3. Application of Proceeds. If the Secured Party sells the collateral or
any part thereof, the proceeds shall be applied by the Secured Party in the
following order:
(a) First to the payment of the reasonable costs and expenses of care,
safekeeping, collection and sale incurred by the Creditor, including without
limitation, reasonable attorneys' fees and all other reasonable expenses,
liabilities and costs incurred by the Creditor in connection therewith;
(b) Next to the payment of all amounts then owing and unpaid, whether
principal, interest or otherwise, pursuant to the obligations, in such order as
the Creditor may elect; and
(c) Finally to the payment to the Debtor or as required by applicable law
of any surplus then remaining from such proceeds.
8. Miscellaneous. The rights and privileges of the Secured Party shall
inure to its successors and assigns. All representations, warranties and
agreements of the Debtor shall bind the Debtor's successors and assigns.
Definitions in the Uniform Commercial Code of South Carolina apply to words and
phrases in this agreement, If Code Definitions conflict, Title 8.9 definitions
apply. The debtor waives presentment, demand, notice or dishonor, protest, and
extension of time without notice as to any instruments and chattel paper in the
Collateral. Notice to the Debtor's address at 1085 Stonehenge, Hanahan, SC
29406, or to the Debtor's most recent change of address on file with Secured
Party, at least ten (10) days prior to the related action (or, if the Uniform
Commercial Code of South Carolina specifies a longer period, such longer period
prior to the related action), shall be deemed reasonable. Photographic or other
reproduction of this Agreement, or any financing statements signed by the Debtor
is sufficient as a financing statement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
TRICO ENVIROMETRICS
By:
Andrew C. Gillette, Vice President
ENVIROMETRICS, INC.
By:
Richard D. Bennett
President and CEO
By:
Elsie L, Rose, CPA Treasurer
List of Schedules:
Schedule 1 - Collateral Locations
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of July 26, 1996 and
effective as of July 31, 1996, between ENVIROMETRICS a Delaware corporation (the
"Creditor"), and Andrew C. Gillette, a South Carolina resident ("Gillette").
RECITALS:
A. Trico Envirometrics, Inc., a South Carolina corporation (the "Debtor")
is currently indebted to the Creditor in an approximate aggregate amount of Six
Hundred Thousand Dollars ($600,000.00 US), which indebtedness is subject to
increase (as such may change from time to time, the "Indebtedness") and is now
evidenced by a certain Promissory Note of even date herewith in favor of the
Creditor (the "Note").
B. Concurrent herewith, Gillette is purchasing from the Creditor pursuant
to a certain Stock Purchase Agreement of even date, all of the outstanding
shares of common stock of the Debtor for a purchase price of 45,000 shares of
Envirometrics, Inc. common stock. The Creditor has agreed to sell such stock for
such price to Gillette subject to, among other conditions, Gillette's executing
and delivering this Agreement to the Creditor.
C. To induce the Creditor to sell to Gillette all of the outstanding shares
of common stock of the Debtor for such purchase price, Gillette wishes to pledge
to the Creditor all of his interest in Trico Envirometrics, Inc.. and to options
to the purchase of shares of common stock of the Creditor to secure (i) payment
of the Indebtedness, and (ii) performance of all of the respective covenants,
obligations and agreements of each of the Debtor and Gillette, as set forth in
the documents evidencing, securing the repayment of, executed in connection
with, or otherwise related to the Indebtedness or sale of stock to Gillette,
including without limitation, the Stock Purchase Agreement, the Unconditional
Guarantee Agreement, the Promissory Note, this Agreement, the Security Agreement
and the Accounting Services Agreement, all of even date (collectively, as
hereafter amended, modified, extended or renewed from time to time, the
"Transaction Documents") all according to the terms and conditions hereinafter
set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and as an inducement
to the Creditor to sell all of the issued and outstanding common stock of the
Debtor to Gillette, the parties hereby covenant and agree as follows:
1. Method and Terms of Pledge. To secure (i) the payment of all of the
Indebtedness, and (ii) performance of all of the respective covenants,
obligations and agreements of each of the Debtor and Gillette, as set forth in
the Transaction Documents, or
any of them (collectively, the "Obligations"), Gillette hereby pledges,
assigns and grants a security interest in all of his interest in Trico
Envirometrics Inc. stock and to options to purchase shares of common stock of
the Creditor (together with any other securities substituted therefor or issued
in addition thereto as herein provided, the "Pledged Securities") to the
Creditor. The term "Obligations" shall include all Obligations, whether matured
or un-matured, or absolute or contingent, and whether they are from time to time
reduced, increased, or entirely extinguished and thereafter reincurred. The term
"Obligations" shall further include, without limitation, all liability of the
Debtor to the Creditor, whether now or hereafter incurred; whether direct,
indirect, or contingent; whether incurred as primary debtor, co-maker or
guarantor; whether otherwise guaranteed or secured; and whether on open account,
evidenced by an instrument or otherwise. Immediately after execution and
delivery of this Agreement, Gillette will deposit or cause to be deposited with
the Creditor a certificate in Gillette's name representing the Pledged
Securities' or common stock certificates if pledged options are exercised or,
with stock powers duly endorsed in blank, and the Creditor will acknowledge
receipt thereof.
2. Representations and Warranties of Gillette. Gillette represents and
warrants that he owns the Pledged Securities and that the Pledged Securities are
not subject to any lien, pledge, charge, encumbrance or security interest or
right or option on the part of any third party to purchase or otherwise acquire
the Pledged Securities or any part thereof.
3. Right to Vote and to Receive Dividends With Respect to Pledged
Securities. So long as a default in the payment or performance of any of the
Obligations shall not have occurred and be continuing, (i) Gillette shall from
time to time be entitled to receive and collect for his own use all dividends
paid in cash out of the earned surplus or net profits of the Creditor on any of
the Pledged Securities, and (ii) Gillette shall from time to time have the right
to vote or to execute waivers or consents with respect to the Pledged
Securities. However, all stock dividends, stock splits or other stock
distributions on any or all of the Pledged Securities shall be pledged to and
deposited with the Creditor as part of the Pledged Securities pursuant to this
Agreement.
4. Reclassification, Sale, Merger, and Consolidation. The capital stock of
the Creditor of Gillette may be sold or exchanged, by merger or otherwise, may
be increased or reduced or reclassified and additional shares may be issued to
Gillette, provide that any certificates for such additional or reclassified
securities shall be pledged to a deposited with the Creditor as part of the
Pledged Securities pursuant to this Agreement. Gillette agrees to take all such
action, including without limitation, signing such stock powers and UCC
financing statements, as may be reasonably requested from time to time by
Creditor to perfect or maintain the security interest of Creditor in the Pledged
Securities.
5. Rights and Remedies of Creditor; Exercise. j of Same.
5.1. Rights and Remedies of Creditor. With respect to the Pledged
Securities, the Creditor shall have the rights and remedies of a secured party
under the Uniform Commercial Code of South Carolina. Such rights and remedies
shall include, without limitation:
(a) The right, upon the occurrence of any default under the Transaction
Documents or in the payment or performance of any of the Obligations (an "Event
of Default"), to have the Pledged Securities, or any part thereof, transferred
to its name or in the name of its nominee(s);
(b) The right, upon an Event of Default, to sell, assign, give option or
options to purchase, contract to sell or otherwise dispose of, and deliver as
much of the Pledged Securities, or any part thereof, in one or more parcels at
public or private sale, at any exchange or broker's board as the Creditor may
elect, either for cash or on credit, and upon such terms and conditions and at
such prices as the Creditor deems best without assumption of any credit risk and
without demand or advertisement (unless otherwise required by law);
(c) At any such private or public sale of the Pledged Securities then
remaining, or part thereof, the Creditor may purchase and pay for the same by
cancellation of any amount due under the Note, or any other of the Obligations,
equal to the purchase price and free of any right of redemption on the pan of
Gillette, which right is hereby expressly waived.
5.2 Exercise of Rights and Remedies by Creditor. The Creditor may exercise
any and all of its rights hereunder without demand of performance or other
demand, advertisement or notice of any kind to or upon Gillette or any other
person or entity, all of which demands, advertisements and notices are hereby
expressly waived by Gillette. However, notwithstanding the foregoing sentence,
the Creditor shall give then (10) days notice of the time and place of any
public sale hereunder or of the time after which a private sale or other
intended disposition may occur. In the event of any sale hereunder, the Creditor
shall apply the proceeds in the order set forth in Section 6 below. The Creditor
may have to resort to the Pledged Securities or any portion thereof with no
requirement on its part to proceed first against any other person, entity or
property.
6. Application of Proceeds. The proceeds from the sale of the Pledged
Securities or any pan thereof shall be applied by the Creditor in the following
order:
(a) First to the payment of the reasonable costs and expenses of care,
safekeeping, collection and sale incurred by the Creditor, including without
limitation, reasonable attorneys' fees and all other reasonable expenses,
liabilities and costs incurred by the Creditor in connection therewith;
(b) Next to the payment of all amounts then owing and unpaid, whether
principal, interest or otherwise, pursuant to the Obligations, in such order as
the Creditor may elect; and
(c) finally to the payment to Gillette or as required by applicable law of
any surplus then remaining from such proceeds.
7. Anticipation and Release of Collateral.
(a) The Debtor may anticipate payment of the Note in whole or in part
without penalty as specified in the Note.
(b) Upon full and complete payment and performance of all of the
Obligations and upon written notice by Gillette to the Note holder as defined in
the Note, the Creditor shall duly transfer and deliver to Gillette the Pledged
Securities deposited hereunder, and this Agreement shall terminate.
8. Payment of Installments and Release of Collateral. Beginning on the
second anniversary of this Agreement, and continuing on every anniversary
thereafter, the Creditor shall, at the request of Gillette, release and deliver
to Gillette a number of Trico Envirometrics, Inc. stock and options (or shares
if options have been exercised); provided, however, that at no time shall the
Creditor be obligated to release any such options or shares unless the value of
the shares retained by the Creditor equals at least two (2) times the amount of
the Obligations then outstanding. For purposes of this Section 8, the value of
each option or share of the Pledged Securities shall be deemed to equal (i) the
anniversary date, if the security is then traded on a recognized public market,
or (ii) an amount agreed by the parties or determined by a qualified appraiser
(who shall be agreeable to the parties and paid for by Gillette) to be the value
of a share of such security as of the applicable anniversary date, if such
security is not then traded on a recognized public market. Any shares to be
released to Gillette pursuant to this Section 8 shall be released within thirty
(30) days of the determination of the value of the Pledged Securities. Upon the
payment to the Creditor of all remaining unpaid principal, interest and all
other amounts due under the Note, the Creditor shall deliver the stock
certificate or option agreement evidencing the remaining Pledged Securities to
Gillette.
9. Further Assurances. Gillette agrees that he will duly execute and
deliver to the Creditor any additional documents which may be reasonably
requested by Creditor to give effect fully to the security interest granted to
the Creditor hereunder.
10. Notices. All notices, requests and demands to or upon the respective
parties shall be in writing and shall be deemed to have been given or made when
sent by certified mail, postage prepaid, addressed:
In the case of Gillette to:
Andrew C. Gillette
4055 Faber Place Drive
Suite 201
Charleston, SC 29405
and
1085 Stonehenge Drive Hanahan, SC 29406
with a copy to:
Steveri L. Smith, Esquire
Smith, Collins & Dusenbury, P.A. 7455 Cross County Road
Suite 1
Charleston, SC 29423
In the case of the Creditor, to:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina
Attn.: Richard D. Bennett, President
with a copy to:
Timothy D. Scrantom, Esquire
Ten State Street
Charleston, South Carolina
or to such other address as may be specified by any party in a written
notice given to the other parties.
11. Governing Law. This Agreement, and the respective rights and
obligations of the parties hereunder, shall be interpreted, governed, and
enforced according to the laws of South Carolina, without regard to the choice
of law principles of it or any other jurisdiction.
12. Venue and in Personam Jurisdiction. Any cause of action arising from
the terms of this Agreement shall be brought only in a state or federal court in
the City of Charleston, South Carolina, which shall be the exclusive and sole
venue for the adjudication of any disputes hereunder. Gillette consents to
exercise by the aforementioned courts of in personam jurisdiction over him with
respect to any cause of action brought pursuant to this Agreement.
13. .Parties In Interest. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto.
1N WITNESS WHEREOF, the parties have caused this Agreement executed as of
the day and year first above written.
ENVIROMETRICS, INC.
By: Richard D. Bennett
President & CEO
By:
Elsie L. Rose, CPA Treasurer
I, Deborah B. Gillette 1085 Stonehenge Drive, Hanahan, SC 29406 Gillette, a
South Carolina resident, hereby pledge and grant to Envirometrics, Inc. pursuant
to the terms of the foregoing Pledge Agreement any and all rights which I many
now or hereafter have in or to any of the Pledged Securities, as defined in the
foregoing Pledge Agreement, including without limitation, any and all fights in
or to the Pledged Securities which may have arisen or at any time hereafter may
arise under the laws of any jurisdictions a result of my marital relationship
with Andrew C. Gillette or otherwise
Deborah B. Gillette Jan 10, 1997
$600,000.00 US
PROMISSORY NOTE
Charleston, South Carolina July 26, 1996
FOR VALUE RECEIVED, TRICO ENVIROMETRICS, INC., a South Carolina corporation
(the 'debtor"), unconditionally promises to pay to the order of ENVIROMETRICS,
INC., a South Carolina corporation (the "Note holder") without offset or
deduction, at its office at 9229 University Boulevard, Charleston, South
Carolina (29406), or, at such other place as the holder of this Note may
designate, in lawful money of the United States of America, the principal sum of
SIX HUNDRED THOUSAND DOLLARS ($600,000,00 US), or so much as may be advanced
hereunder and unpaid, together with interest on the unpaid principal balance of
such sum from the date hereof at the rate and on the terms hereinafter provided
in this Promissory Note (this "Note").
The Debtor authorizes the Note holder to maintain in its customary manner a
computer generated schedule of the amount of all disbursements of principal and
all payments of principal and interest. In the absence of manifest error, the
endorsements on the schedule shall be presumptive evidence of the outstanding
balance of this Note; provided, however, the failure to maintain the schedule
shall not limit or affect the obligation of the Debtor on this Note.
Principal. The principal balance shall be paid in 66 monthly installments.
Interest. Interest on the unpaid principal balance hereof shall accrue
monthly and be payable monthly on the 15th day of each month. The rate of
interest shall accrue monthly on the unpaid principal balance of this Note shall
be equal to 7.0 %. Such interest shall be compounded monthly and paid for the
actual number of months elapsed.
Adjusted to Principal Amount, The Debtor and the initial Note holder
acknowledge and agree that the face principal amount of this Note is their best
estimate of the net amount owed by the Debtor to the initial Note holder on the
date of this Note. The Debtor and the initial Note holder agree that within
thirty days after the date of this Note, they will use their best efforts to
determine the actual amount owed by the Debtor to the initial Note holder on the
date of this Note and to agree on such amount. Upon the agreement of the Debtor
and initial Note holder or, if required, determination by an arbitrator, as to
the correct amount, the principal amount outstanding under the Note shall be
debited or credited as appropriate, effective as of the date of this Note.
No Other Advances. The Debtor understands and agrees that the Note holder
is under no obligation to make any advances not specifically referenced herein.
Security. This Note is secured by a Stock Pledge Agreement between Andrew
C. Gillette and the Note holder and a Security Agreement between the Debtor and
the Note holder, both dated as of the date hereof, reference to which is hereby
made for a description of the collateral provided for thereunder and the rights
of the parties thereto with respect to such collateral. This Note is also
secured by an Unconditional Guaranty Agreement of Andrew C. Gillette and Deborah
B. Gillette in favor of the Note holder, dated as of the date hereof Together,
the Stock Pledge Agreement, the Security Agreement and the Unconditional
Guaranty Agreement are hereinafter referred to as the "Security Documents".
Default and Acceleration. The happening of any one of the following events
shall constitute a default under this Note: (1) the failure of the Debtor, or
any endorser or any guarantor "Party") to make within ten (10) days of the date
due, any installment or other payment described herein, whether of principal,
interest, late charges or otherwise; (2) the failure of any Party to observe or
perform any covenant, condition or undertaking contained herein, subject to any
applicable notice and cure periods; (3) the occurrence of any uncured default or
event of default under this Note or any of the Security Documents; (4) the
suspension of payment by a Party of its obligations, or an admission by a Party
in writing of its inability to pay its debts generally as they become due; (5)
the making of an assignment by a Party for the benefit of creditors or a trustee
or receiver of the Party; (6) the commencement, whether voluntarily or
involuntarily, or any proceeding involving a Party under any bankruptcy,
reorganization, insolvency, readjustment of debt, marshaling of assets and
liabilities, dissolution or liquidation law or statute of the United States or
of any state; (7) the sale or transfer of all or substantially all of a Party's
assets or the merger or consolidation of a Party with any other entity; (8) the
failure of Andrew C. Gillette to hold all of the issued and outstanding stock of
Debtor, (9) the payment, without the Note holder written consent, to Andrew C.
Gillette, of annual compensation, in aggregate in excess of $120,000, or to
Andrew C. Gillette, combined with any of his family members or other affiliates,
of annual compensation, in aggregate in excess of $200,000 (10) the payment by
the Debtor, without the Note holder written consent, of any dividend.
Upon the happening of any such default, the Note holder obligation to make
advances shall automatically terminate, the rate of interest on the unpaid
balance hereof shall be increased to the announced prime rate of BB&T plus three
percent, and this Note shall, at the sole option of the Note holder, become
immediately due and payable without further notice to or demand on any Party.
Thereupon, the Note holder shall have the right, immediately and without notice
to any Party or further action by it, to set-off against this Note all
obligations for money or money's worth owed by the Note holder in any capacity
to any Party, whether or not due and to exercise all rights and remedies granted
under this Note, the Security Documents, or applicable law.
Right of Anticipation. The Debtor reserves the right to anticipate payment
hereof in whole or in part, at any time or times, without penalty.
Covenants and Conditions. In the event the Debtor fails to fully pay any
installment of principal or interest or otherwise fails to make any payment due
under this Note within ten (10) days of its due date, the Debtor agrees to pay
the Note holder a late charge of five percent (5%) of such payment.
The Parties, individually and collectively hereby: waive presentment,
demand, protest and notice of dishonor; waive the benefit of all homestead and
similar exemptions as to this Note; proceed against any other Party or person or
any property securing this Note and agree that their liability hereunder shall
not be affected or impaired by the release or discharge of any other Party from
liability hereunder, the release or discharge of any collateral securing this
Note or by any failure, neglect or omission of the Note holder to exercise any
remedies of set-off or otherwise that it may have or by any determination that
any security interest or lien taken by the Note holder to secure this Note is
invalid or unperfected; subordinate any and all rights against the Debtor to the
payment of this Note, whether by subrogation, agreement or otherwise, until this
Note is paid in full; agree to pay all reasonable costs and expenses incurred by
the Note holder in connection with the enforcement of this Note, and the
collection of the indebtedness evidence hereby, and the collection of any
judgment rendered hereon, and/or the preservation or disposition of any property
or collateral securing the payment hereof, and/or the defense of any claim
arising out of, or in any way related to, this Note or either of the Security
Documents or any other instrument securing this Note or related to the making of
the obligations evidenced hereby, including, without limitation, reasonable
attorney's fees if this Note is placed in the hands of an attorney for
collection, or if the Note holder finds it necessary to secure the services or
advice of an attorney with regard to collection hereof or the preservation or
disposition of any property or collateral securing this Note,
Any failure by the Note holder to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other rights at
any time.
Miscellaneous Provisions. The term "Note holder" used herein shall include
any future holder of this Note. This Note shall be governed by and construed in
accordance with the laws of South Carolina. Whenever possible each provision of
this Note shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Note shall be prohibited by
or invalid under such 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 Note. This Note shall apply to and
bind each Party's heirs, personal representatives, successors and assigns and
shall inure to the benefit of the Note holder, successors and assigns.
Substituted Service of Process. Should the Debtor ever fail to maintain a
registered agent in the state of South Carolina the Debtor hereby appoints the
clerk of the South Carolina Corporation Commission as its agent for the
acceptance of substituted service of process upon it, and it is understood and
agreed that each Party hereby subjects itself to the in personam jurisdiction of
any duly constituted federal or state court located in Charleston, South
Carolina, wherein any action may be brought by the holder of this Note for the
enforcement thereof.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed, in
its name and behalf by its duly authorized officer as of the day, month and year
first above written.
TRICO ENVIROMETRICS. INC.
By:
Seen and Agreed:
Andrew C. Gillette, Guarantor
SOUTH CAROLINA Sublease for Suite 210 at
CHARLESTON COUNTY 4055 Faber Place Drive
The Executive Park
Faber Place
This Sublease is made this 1st day of August, 1996, by and between
ENVIROMETRICS, INC., successor by merger to Trico Envirometrics, Inc.
("Sublessor") and TRICO ENGINEERING CONSULTANTS, INC. ("Sublessee"); and LPC of
SC, INC. (a subsidiary of The Liberty Corporation) ("Landlord").
WITNESSETH:
WHEREAS, Landlord leased approximately 9,094 square feet of office space to
Trico Envirometrics, Inc. described as Suite 102 (inclusive of Suite 210) of the
commercial office building located at 4055 Faber Place Drive in The Executive
Park at Faber Place in North Charleston, South Carolina (the "Demised
Premises"), pursuant to that certain office lease dated January 17, 1996 (the
"Lease"); and
WHEREAS, Envirometrics, Inc. is the successor by merger to Trico
Envirometrics, Inc., and therefore, is now the tenant under the Lease;
WHEREAS, Sublessee desires to sublease a portion of the Demised Premises
known as Suite 201 consisting of approximately 6243 square feet rentable and
Sublessor desires to sublet Suite 201 to Sublessee;
WHEREAS, Landlord consents to this Sublease, and all of the requirements
set forth in Section 10 of the Lease have been completely satisfied.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Sublessee hereby takes and
leases from Sublessor approximately 6243 square feet rentable in the Demised
Premises known as Suite 201 (the "Premises") in the commercial office building
located at 4055 Faber Place in The Executive Park at Faber Place in North
Charleston, South Carolina, according to the terms and conditions of the Lease
which is attached hereto as Exhibit A and incorporated by reference as fully as
if set forth herein. All defined terms contained in the Lease shall be used
herein with the same meaning unless otherwise expressly defined herein.
Sublessee acknowledges that it has received a copy of the lease and has reviewed
it to its satisfaction. The parties agree as follows:
1. Incorporation of Recitals. The above recitals are incorporated herein by
reference.
2. Incorporation of Lease Amendment. Except as provided herein, the terms
and conditions of the Lease are incorporated into this Sublease by reference.
All of the obligations contained in the Lease, except as modified
and amended by this Sublease, and all rights and privileges conferred upon
Sublessor as tenant therein, are hereby also conferred and imposed upon
Sublessee. Sublessee covenants and agrees to fully and faithfully perform the
terms and conditions of the Lease and this Sublease. Sublessee shall not do or
cause to be done or suffer or permit any act to be done which would or might
cause the Lease, or the rights of the Sublessor under the Lease to be
endangered, canceled, terminated, forfeited or surrendered, or which would or
might cause Sublessor to be in default thereunder or liable for any damages,
claim or penalty.
3. Term; Payment of Rent. Sublessee shall lease the Premises from Sublessor
commencing as of February 1, 1996 and continuing until January 31, 1999 at the
following rent schedule:
Effective Dates Rate Annual Monthly
02/01/96 - 01/31/97 $14.63 $91,335.09 $7,611.26
02/01/97 - 01/31/98 $15.86 $99,013.98 $8,251.16
02/01/98 - 01/31/99 $16.49 $102,947.07 $8,578.92
such amounts listed above should be paid in advance on the fifteenth day of
each month during the term of this Sublease, and shall be due and owing without
notice, demand, abatement, deduction or set-off.
Rent and any other charges to be paid by Sublessee to Sublessor will be
paid when due at such times as are specified above directly to Landlord with
verification of payment to be sent to:
c/o Envirometrics, Inc. 9229 University Boulevard Charleston, SC 29406
Attention: Walter H. Elliott, III
4. Indemnification. Sublessee hereby agrees to defend, indemnify, and save
Sublessor harmless from any liability resulting from any claim, action or suit
made against Sublessor by Landlord in connection with Sublessee's breach of the
Lease or this Sublease.
5. Notices. Any notice, demand or other instrument or written communication
required or permitted to be given, or served hereunder, shall be made or
delivered by hand delivery or by mailing the same certified mail, postage
prepaid, and, if to Sublessor addressed as follows:
c/o Envirometrics, Inc.
9229 University Boulevard
Charleston, SC 29406
Attention: Walter H. Elliott, III
and to Sublessee addressed as follows:
Trico Engineering Consultants, Inc.
4055 Faber Place Drive, Suite 201
Charleston, SC 29405
Attention: Andrew C. Gillette, Jr.
7. Consent. Landlord hereby consents to the Sublease set forth herein. This
sublease may not be assigned, sublet or otherwise transferred without the prior
written consent of Landlord as set forth in Section 1 0 of the Lease.
8. Binding Agreement. This Sublease applies to and inures to the benefit
of, and binds all parties hereto and their respective heirs, legal
representatives, successors and assigns. This Sublease shall be construed in
accordance with the laws of the State of South Carolina.
IN WITNESS WHEREOF, the parties herein execute this Sublease for the
purpose herein expressed the day and year first written above. Signed, sealed
and delivered in the presence of:
WITNESSETH: SUBLESSOR:
ENVIROMETRICS, INC., successor by merger to Trico
Envirometrics, Inc.
By:
Name: Walter H. Elliott, III
Title: President and CEO
SUBLESSEE:
TRICO ENGINEERING CONSULTANTS, INC.
By:
Name: Andrew C. Gillette, Sr.
Title: President
LEASE AGREEMENT
THIS LEASE AGREEMENT is made at Charleston, South Carolina, on this 7th day
of August, 1996, by and between Nicholas & Thalia Pavlatos herein after referred
to as "Landlord") and ENVIROMETRICS PRODUCTS COMPANY (hereinafter referred to as
"Tenant").
1. PREMISES:
(a) Landlord does hereby lease to Tenant and Tenant hereby leases from
Landlord that certain space (hereinafter referred to as the "Premises"),
consisting of approximately 3,000 square feet of floor area. The location and
dimensions of said Premises are delineated in red on Exhibit "A", which is
attached hereto and incorporated herein by reference. Said Premises are part of
that certain retail/office complex known as the Oakbrook Center, in the County
of Dorchester City of Summerville, South Carolina (hereinafter said complex is
referred to as "Shopping Center").
(b) This lease is subject to the terms, covenants and conditions herein set
forth, and the Tenant covenants as material part of the consideration for this
lease to keep and perform each and all of said terms, covenants and conditions
by it to be kept and performed.
2. USE OF PREMISES:
(a) Tenant shall use the premises for light assembly.
(b) Tenant agrees that the premises shall be open for business for the
purpose described herein, operating during usual business hours, within one
hundred twenty (120) days of the date of this Lease, or otherwise as shall be
mutually agreed upon by the parties. In the event that Tenant shall not comply
with this sub-paragraph, Landlord shall have the sole option to terminate this
Lease upon five (5) days written notification to Tenant, and thereafter the
parties shall be returned to their original status as if the Lease had never
been executed. In the event that the Landlord shall exercise its option
hereunder, Landlord shall have the right to retain all sums which Tenant has
paid hereunder as liquidated damages, it being agreed by the parties that said
sum is a fair and equitable estimate as to the amount of damages which Landlord
shall suffer as a result of Tenant's breach hereof
3. TERM: This lease shall be for a term of I year commencing August
15, 1996 and ending August 14, 1997.
4. MINIMUM RENT: (a) Tenant agrees to pay Landlord as a minimum Rent,
without notice or demand, the monthly sum of one thousand
dollars($1,000.00)GROSSLEASE($4.OO PER SQ.FT.
Rent is payable on the first (1st) day of each month.
5. CONSIDERATION: Concurrently with the execution of this Lease,
Tenant shall deposit with Landlord a sum equivalent to pro-rata share of
first months rent ( $500) and a security deposit of $ 1,000. 00 shall be
held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants and conditions of this Lease to be kept and performed
by Tenant during the term hereof If Tenant defaults with respect to any
provision of this Lease, including, but not limited to, the provisions
relating to the payment of rent, Landlord may, but shall not be required to
use, apply or retain all or any part of this security deposit for the
payment of any rent or any other sum in default, or for the payment of any
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default, or to compensate Landlord for any other loss or damage
which Landlord may suffer by reason of Tenant's default. If any portion of
said deposit is so used or applied, Tenant shall, within five(5)days after
written demand therefore, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount, and
Tenant's failure to do shall be a default under this Lease.
6. CONDITION OF PREMISES: Tenant shall not make any repairs,
alterations, or additions to Premises or enter into any contract for
repairs, alterations, or additions without first procuring Landlord's
written consent and delivering to Landlord plans and specifications
prepared by licensed architect as well as copies satisfactory to Landlord
of indemnification against liens, costs, damages, and expenses as may be
required by Landlord. At it's own expense tenant shall obtain all requisite
building and other permits before starting any work in or upon the
premises. Tenant shall, in all events, provide Landlord with professionally
prepared drawings bearing the seal of an architect or engineer currently
licensed in and by the State of South Carolina before Tenant, its
representative, agent, or contractor starts any work in or upon the
premises. The aforesaid drawing shall include plumbing, electrical, climate
control, insulation, wall structure, finish, materials and all other
specifications intended to be included in improving and/or completing the
premises. Landlord shall have the right of final approval of any such plans
for improving and/or completing the premises.
7. WASTE, NUISANCE OR UNLAWFUL USE: Tenant shall not commit, or allow
to be committed, any waste on the Premises, create or allow any nuisance to
exist on the Premises, or use or allow the Premises to be used for any
unlawful purpose.
8. PAYMENT OF UTILITIES: Tenant shall pay for and be liable for all
utilities furnished the Premises during the term of this Lease, or any
extension thereof, including, but not limited to, electricity, gas, water
and telephone service. In the event that utilities are not separately
metered, Tenant agrees to pay his proportionate share of such utilities
based upon the formula set forth in paragraph 7 (b) hereof Tenant to pay
all water and sewer, impact fees, and backflow preventor bills assessed on
the unit.
9. REPAIRS AND MAINTENANCE: Tenant shall at it's own expense, maintain
and keep the Premises, including, but not limited to, the windows, doors,
skylights, storefront, HVAC or water heaters, and all interior walls in
good repair. The same shall not be altered, repaired or changed without the
written consent of the Landlord, which shall not be reasonably withheld.
Landlord shall maintain the building roof and all exterior walls in good
condition, subject to the terms of Paragraph 7 hereof All alterations,
improvements and changes that may be done with the consent of the Landlord,
and shall remain upon and be surrendered with the Premises at the
termination of the Lease herein. TENANT'S EXPENSE TO REPAIR OR REPLACE HVAC
SHALL NOT EXCEED $500.00 PER OCCURANCE.
10. DELIVERY, ACCEPTANCE, & SURRENDER OF PREMISES: Landlord represents
that the Premises are in a condition fit for the uses hereinabove
described. Tenant agrees to accept the Premises on possession as being in a
good state of repair and in sanitary condition. At the termination of this
Lease, by the expiration thereof, or otherwise, the Tenant shall deliver up
the Premises to the Landlord, reasonable wear and tear and casualty
excepted. Tenant agrees to pay for all damages to the appurtenances thereto
during the term of this Lease.
11. TOTAL OR PARTIAL DESTRUCTION OF PREMISES: Partial destruction of
the Premises shall not render this Lease void or voidable, or terminate it,
except as herein provided. If the Premise are partially destroyed during
the term of this Lease, Landlord shall repair them when such repairs can be
made in conformity with Local, State and Federal laws and regulations,
within sixty (60) days of the partial destruction. Rent for the Premises
will be reduced proportionately to the extent to which the repair
operations interfere with the normal conduct of the said time limit,
Landlord may, at its option, make them at a reasonable time and continue
this Lease in effect, with proportional rent rebate to he Tenant, as herein
provided. If the repairs cannot be made within the time period allowed, and
Landlord elects not to make them in a reasonable time, either party hereto
has the option to terminate this Lease, in accordance with the termination
provisions herein.
12. LANDLORD'S ENTRY FOR INSPECTION AND MAINTENANCE: Landlord reserves
the right to enter upon the Premises at reasonable times to inspect them,
to perform required maintenance and repair, and to make additions and
alterations to any part of the building of which the Premises is located,
and Tenant agrees to permit Landlord to do the same. Landlord may, in
connection with such alterations, additions, or repairs, erect scaffolding,
fences, and similar structures, post the relevant notices, and place
moveable equipment without any obligation to reduce Tenant's rent for the
Premises during such period, and without incurring liability to Tenant for
disturbance of their quiet enjoyment of the Premises or their loss of
occupation thereof
13. TRADE FIXTURES: Tenant may install and maintain during the term of
this Lease, trade fixtures and other equipment necessary for Tenant's use
of the building, as hereinabove provided; provided that such fixtures, by
reason of the manner in which they are affixed, do not become an integral
part of the Shopping Center or of the Premises herein. Tenant may, if not
in default hereunder, and from time to time during the term hereof, alter
or remove any such trade fixtures so installed by them. Said trade fixtures
or equipment of the Tenant shall be removed at the termination or
expiration of this Lease, by the Tenant in an expeditious manner. Any
damage to the Premises caused by any such installation alteration, or
removal of any such trade fixture or equipment shall be promptly repaired
by the Tenant at their own expense.
14. POSTING OF SIGNS: Landlord reserves the right to place any and all
signs reasonable necessary for the sale of the Shopping Center upon said
Shopping Center during the term of the Lease, provided however, that no
such signs may be posted in the Premises, or to place any and all
reasonable signs on the Premises at any time within ninety (90) days of the
expiration of this Lease, for rental or lease of said Premises.
15. RESTRICTIONS ON POSITION OF SIGNS: Tenant will not construct or
place, or permit to be constructed or placed, any signs awnings, marquees,
or other structures projecting from the exterior of the Premises without
the written consent of the Landlord thereto and subject to all governmental
law or regulations for the posting of said signs. Tenant further agrees to
remove all signs, displays, advertisements, or decoration which they have
placed, or permitted to be placed on the Premises which, in the opinion of
the Landlord are offensive or otherwise objectionable. If Tenant fails to
remove such signs, displays, advertisements, or decorations within sixty
(60) days of receiving written notice from Landlord to do the same,
Landlord reserves the right to enter the Premises and remove the same, at
Tenant's expense.
16. HOLD HARMLESS AND NON-LIABILITY: Landlord shall not be liable for
any loss, damage, or injury, or for any liability or damage claims for
injury to persons, including Tenant, or any officer, agent, employee,
independent contractor, invitee or guest of Tenant, or any other persons
acting at their direction or in concert with them; or for any property
damage form any cause whatsoever related to Tenant's occupancy of the
Premises, including those arising out of damages or losses occurring on
sidewalks or other common areas of the Shopping Center arising out of any
act or negligence of Tenant, or any officer, agent, employee, independent
contractor, guest or invitee of Tenant, as well as any damages resulting
form Tenant's use of the premises during the term of this Lease, or any
extension thereof Tenant hereby agrees to indemnify and hold harmless
Landlord against any and all such claims for damages, including all costs,
attorney's fees and liabilities incurred in the defense of any such claim
or claims. In case any such action is brought against Landlord, or any
officer, agent or employee of Landlord, Tenant agrees to defend Landlord
from any and all such claim or claims made by any persons whatsoever
resulting from or arising out of Tenant's use and occupancy of the Premises
herein, at Tenant's sole expense.
17, ASSIGNMENT OR SUBLEASE: Tenant agrees not to assign or sublease
the premises herein, or any part thereof, without first obtaining the
written consent of the Landlord hereto. Landlord expressly covenants that
such consent shall not be unreasonably or arbitrarily refused. One consent
by the Landlord shall not be a consent to a subsequent assignment,
sublease, or occupation by any other persons. Tenant's unauthorized
assignment, sublease, or license to occupy the Premises herein shall be
void and shall terminate the Lease, at the option of Landlord. Tenant's
interest in this lease is not assignable to operation of law, nor is any
assignment of their interest herein, without the written consent of the
Landlord.
18. DEFAULTS: The occurrences of any of the following shall constitute
a material default and breach of this Lease. (a) The vacation or
abandonment of the Premises herein by Tenant. (b) The failure by Tenant to
pay installment of rent, or to make any other payments required under this
Lease, where such failure continued for a period of ten (IO) days after
written notice thereof by the Landlord to the Tenant. C Failure by Tenant
to observe or perform any of the provisions of this Lease to be observed or
performed by the Tenant, except the Provision concerning the payment of
rent, where such failure continues for a period of thirty (30) days after
written notice thereof by the Landlord to the Tenant; provided, however,
that if the nature of such default is such that the same cannot reasonably
be cured within such thirty (30) day period, Tenant shall not be deemed to
be in default if Tenant shall, within such period, commence such cure, and
thereafter diligently prosecute the same to completion. (d) The making by
Tenant of any general assignment for the benefit of creditors; the filing
be or against Tenant of a petition to have Tenant adjudged a bankrupt, or
of a petition for reorganization or arrangement, under any law relating to
bankruptcy, unless the same is dismissed within ninety (90) days; the
appointment of a trustee or receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in
this Lease, where possession is not restored to the Tenant within ninety
(90) days; or the attachment, execution, or other judicial seizure of
substantially all of Tenant's assets located on the Premises, or of
Tenant's interest in this Lease, where such seizure is not discharged
within ninety (90) days.
19. LANDLORD'S REMEDIES ON TENANT BREACH: If Tenant shall breach this
Lease, pursuant to the terms of Paragraph 18 above, Landlord shall have the
following remedies, in addition to any other rights or remedies they may
have either by law or otherwise:
(a) Landlord may re-enter the Premises immediately, and remove therefrom
all Tenant's personal property. Landlord may store said property at a public
warehouse at Tenant's expense, or for Tenant's account.
(b) After re-entry, Landlord may terminate the Lease upon giving thirty
(30) days prior written notice of such termination to Tenant. Re-entry only,
without notice of termination, will not terminate this Lease.
(c) After re-entry upon the Premises, Landlord may re-Lease the Premises,
or any part thereof, for any term, without terminating the Lease, upon such rent
and upon such terms and conditions as they may choose. Landlord may make any
alterations and repairs to the Premises that are necessary to the Premises, as
herein provided, Tenant shall be liable for, in addition to any other liability
for breach of this Lease, all expenses incurred to restore unit to its original
condition, which is incurred by the Landlord. In addition, Tenant shall be
liable to Landlord for the difference between rent received by Landlord during
the reorganization or arrangement, under any law relating to period of
re-leasing, and the monthly installment of rent that are due by Tenant during
the term of this Lease.
(d) In the event that Landlord chooses to re-lease the Premises, pursuant
to Subparagraph C above, the Landlord may, at their option, apply any rent
received as a result thereof, in the following manner:
(1) Reduce indebtedness of the Tenant to the Landlord under this
Lease, not including indebtedness for rent;
(2) For expenses of the re-leasing, including any expenses of
alterations and repairs made as a result thereof,
(3) Rental installments due under this Lease;
(4) Payment of any future rent due under this Lease, as it becomes
due.
(e) Landlord may, at any time after such re-leasing, terminate the Lease
for the breach because of which they have re-entered and re-lease the Premises.
Upon terminating this Lease for Tenant's breach hereof, Landlord may recover all
damages proximately resulting from the breach, including the cost of recovering
the Premises, any rental installments not paid by the new Tenant, and the work
for the balance of this Lease over the reasonable rental value of the Premises
will remain during the lease term.
(f) Upon re-entry, Landlord may procure the appointment of a receiver to
take possession of and collect rents and profits from Tenant's business. If
necessary to collect such rents and profits, the receiver may carry on Tenant's
business and take possession of Tenant's personal property used in the business,
including inventory, equipment, trade fixtures, and furnishings, and use them in
the business without compensating the Tenant therefor. Proceedings for
appointment of a receiver, and the conducting by him of Tenant's businesses,
shall not terminate this Lease unless Landlord has given written notice of such
termination, as provided herein.
(g) Tenant hereby waives all claims for damages, which may be caused by
Landlord's re-entry, taking possession of the Premises herein and will save
Landlord harmless from loss, costs or damages occasioned by Landlord thereby.
Any such re-entry or retaking of possession of the premises shall not be
considered or construed to be a forcible entry.
20. PARKING AND COMMON AREAS:
(a) Landlord covenants that an area approximately equal to the common and
parking areas as shown on the attached Exhibit "A" shall be at all times
available for the nonexclusive use of Tenant during the full term of this Lease,
or any extension thereof, provided that the condemnation or other taking by any
public authority, or sale in lieu of condemnation, of any or all of such common
and parking area shall not constitute a violation of this covenant. Landlord
reserves the fight to change the entrances, exits, traffic lanes and the
boundaries and locations of such parking area or areas, provided however, that
anything to the contrary notwithstanding, said parking area or areas shall at
all times be substantially equal or equivalent to that shown on the attached
Exhibit "A".
(b) Landlord shall keep said parking and common areas in a neat, clean and
orderly condition, and shall repair any damage to the facilities thereof, but
all such expenses in connection with said parking and common areas shall be
charged and prorated as addition rent as set forth in Paragraph 7 hereof
(c) Tenant shall, for its use and benefit, and for the use and benefit of
its agents, customers, licensees, and subtenants, have the nonexclusive right in
common with Landlord, and other present and future owners, tenants, and their
agents, customers, licensees and subtenants, to use said common and parking
areas during the entire term of this Lease, or any extension thereof, for
ingress and egress, and automobile parking only.
(d) Tenant shall, in the use of said common and parking areas, comply with
such reasonable rules, regulations and charges for parking as the Landlord may
adopt from time to time of the orderly and proper operation of said common and
parking areas. Such rules may include, but shall not be limited to, the
following:
(1) The prohibition of employee parking in the common area and parking
areas; and
21. MERCHANT'S ASSOCIATION: N/A
22. PERSONAL PROPERTY TAXES: Tenant shall pay before they become delinquent
all taxes and assessments imposed on any personal property or trade fixtures
belonging to Tenant and located on said Premises.
23. ATTORNEY'S FEES: If Landlord shall file an action to enforce any
covenant of this Lease, or for breach of any covenant herein, including any
action for recovery of rent herein, Tenant agrees to pay Landlord the reasonable
sum for accrued from the commencement of such action and shall be paid whether
or not such action is prosecuted to judgment.
24. NOTICE: Notice is given pursuant to the provisions of this Lease, when
necessary to carry out the provisions, shall be in writing, and delivered
personally to the person to whom the notice is to be given, and mailed postage
prepaid, addressed to such person(s). Landlord's address for the purpose of such
notice shall be:
Atlantic International
2050 Spaulding Drive
Suite 4-A
North Charleston, SC 29406
or at such other address or addresses as Landlord may designate to Tenant
in writing from time to time.
Tenant's address for the purpose of such notice shall be the Premises
herein, or ENVIROMETRICS PRODUCTS CO., 9229 UNIVERSITY BLVD., CHARLESTON, SC
29406
25. HEIRS, SUCCESSORS AND ASSIGNS: This Lease, and the covenant s and
conditions hereof, apply to and are binding upon the heirs, successors, legal
representatives, and assigns of the parties.
26. SALE OF PREMISES BY LANDLORD: In the event of any sale of the Premises
by Landlord, Landlord shall be and is hereby entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence or omission occurring
after the consummation of such sale: and the purchase, at such sale or any
subsequent sale of the Premises shall be deemed, without further agreement
between the parties and any such purchaser, to have assumed and agreed to carry
out any and all of the covenants and obligations of the Landlord under this
Lease.
27. LATE CHARGES-. Tenant hereby acknowledges that late payment by Tenant
to Landlord of rent or other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Landlord by terms of any mortgage or deed of trust covering the Shopping Center.
Accordingly, if any installment of rent or any sum due from Tenant shall not be
received by Landlord, or Landlord's agent, within five (5) days after the due
date set forth herein, then Tenant shall pay to Landlord a late charge in the
amount of ten (100/o) percent of such overdue amount, plus any attomey's fees
and/or costs incurred by Landlord by reason of Tenant's failure to pay rent
and/or other charges when due. The parties hereby agree that such late charges
represent a fair and reasonable estimate of the cost that Landlord will incur by
reason of the late payment by Tenant. Acceptance of such late charges of the
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any other rights
and remedies granted hereunder.
28. COMPLETE AGREEMENT: This Lease contains all of the agreements of their
parties hereto with respect to any matter covered or mentioned in this Lease,
and there are not prior agreements or understandings which have not been
incorporated herein. No provision of this Lease may be amended or added to
except by the agreement in writing signed by all the parties hereto or their
respective successors in interest.
29. CHOICE OF LAW: This Lease shall be governed by the Laws of the State of
South Carolina.
30. ATTORNMENT: This Lease may at Landlord's option, be subordinate to any
ground lease, mortgage, deed of trust or other hypothecation or security now or
hereafter placed upon the real property of which the Premises are a part, and to
any and all advances made on a security thereof, and to all renewals,
modifications, consolidations, replacements, and extensions thereof
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust, or ground lease, and shall give written
notice thereof to Tenant, this Lease shall be deemed prior to such mortgage,
deed of trust or ground lease, whether this Lease is dated prior to or
subsequent to the date of said mortgage, deed of trust or ground lease, or the
date of recording thereof Tenant agrees to execute any and all documents
required to effectuate an attornment, a subordination or to make this lease
subsequent to the hen of any mortgage, deed of trust or ground lease, as the
case may be. Tenant's failure to execute such documents within ten (10) days
after written demand by Landlord shall constitute a material default by Tenant
hereunder, or, at Landlord's option, Landlord shall execute such documents on
behalf of Tenant as Tenant's attorney in fact. For that purpose, Tenant does
hereby make, constitute and irrevocable appoint Landlord as Tenant's attorney in
fact and in Tenant's name, place and stead, to execute such documents in
accordance with this paragraph.
3 1. OPTION TO RENEW: (a) Landlord hereby grants to tenant an option to
renew this Lease for ONE additional period(s) ONE years each after the
expiration of the term of this Lease, under the same terms, conditions and
covenants so far as is applicable, as in this Lease, except that any rents
payable for the first Option Period shall be calculated in the same manner as
set forth in Paragraph 4 hereof, except that any percentage limitations on the
increase in rent to be effective during the first and/or second Option Periods
shall be negotiated by the parties at the time any such Option Period takes
effect, and shall be mutually agreed upon by the parties. If Tenant exercises
the options for the first and/or second Option Periods, and if at the
commencement of the second and/or third Option Periods, Landlord and Tenant have
not reached an agreement, despite their best efforts and good faith to do so, as
to the applicable percentage limitations non the increases in the rental to be
paid during such Option Periods, or if there shall then be a dispute between
Landlord and Tenant as to the good faith of the other party to so negotiate,
Tenant shall have the obligation to pay the rental during such Option Periods as
the same would be calculated pursuant to Paragraph 4 hereof, without reference
to any percentage limitations contained therein. In the event percentage
eliminations shall be agreed upon at any time after Tenant shall have exercised
its option for the second and/or third Option Periods, any overpayment or
underpayment by Tenant shall be immediately adjusted.
(b) Each option provided for herein shall be exercised by written notice
form the Tenant to the Landlord setting forth the Tenant's election to exercise
the option, and delivered to the Landlord in person or by registered or
certified mail at least ninety (90) days prior to the expiration of the term of
this Lease, or any prior Option Period.
32. EMINENT DOMAIN: Eminent domain proceedings resulting in the
condemnation of a part of the Premises leased herein, the rest usable by Tenant
for the purpose of the business of which the Premises are leased herein, will
not terminate this Lease unless Landlord, at this option, terminates it by
giving written notice of termination to Tenant. The effect of such condemnation,
should such option not be exercised, will be to terminate the Lease as to the
portion of the premises condemned, and the Lease shall remain in effect as to
the remainder of the Premises. Tenant's rental for the remainder of the Lease
term shall, in such case, be reduced by the amount of the usefulness of the
Premises to him for such business purposes is reduced. AU compensation awarded
in the eminent domain proceedings as the result of such condemnation shall be
the Landlords. Tenant hereby assigns and transfers to Landlord any claim that
they may have for compensation for damages as a result of such condemnation.
33. AUTHORITY OF TENANT: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation, represents and warrants that
he is duly authorized to exercise and deliver this Lease on behalf of said
corporation, in accordance with the By-Laws of said corporation, and that this
Lease is binding upon said corporation.
34. TENANT'S STATEMENT: Tenant shall, at any time from time to time, upon
not less than ten (10) days prior written notice from Landlord, execute,
acknowledge and deliver to Landlord a statement in writing: (a) Certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease as so modified is
in full force and effect), and the date to which the rental and other charges
are paid in advance, if any and (b) Acknowledging that their are not, to
Tenant's knowledge, any incurred defaults on the part of Landlord hereunder, or
specifying such defaults if any are claimed, and Setting forth the date of
commencement of rents and expiration of the term hereof And any such statement
may be relied upon by the prospective purchaser or encumbrancer of all or any
portion of the Shopping Center.
35. INSURANCE REQUIREMENTS: (a) Tenant shall, at Tenant's expense, obtain
and keep in force during the term of this Lease a policy or Bodily Injury and
Property Damage Insurance with a company or companies approved by Landlord
insuring tenant and Landlord against any liability arising out of the use,
occupancy or maintenance of the Premises an all other areas appurtenant thereto.
Such insurance shall be in an amount not less than $1,000,000, combined single
limit. Tenant shall name Landlord as an addition insured, and shall provide
Landlord with a certificate of insurance within thirty (30) days hereof
Notwithstanding anything herein to the contrary, the limits of said insurance
shall not limit the liability of Tenant hereunder.
36. OTHER CONTINGENCIIES:
1. LANDLORD WILL INSTALL NEW 10 TON HVAC UNIT FOR PRENUSES.
2. LANDLORD WELL REPAIR EMSTING ROOF LEAKS AND ALL OTBERS AS
PROVIDED FOR IN LEASE
37. HOLDING OVER: It is expressly understood by all parties that Tenant
shall not be permitted to holdover at the end of the lease term. It is further
understood by all parties that failure to renegotiate or otherwise enter into a
new lease agreement before sixty (60) days from the expiration of this lease
constitutes termination of this lease at the end of the lease period, and as
such, Tenant understands that it shall vacate the demised premises at the exact
end of the lease term. In addition, tenant will pay a 10% surcharge for each
month it is in default.
38. TENANT UP FITTING: Tenant will be allowed to remove partition wall in
rear of building to allow use of roll up door. Tenant may also, if necessary,
remove carpet and finish concrete floor with epoxy paint. 39. TIME: Time is of
the essence in this Lease. 10
IN WITNESS W]HEREOF, the above parties have executed this Lease on the date
first written above.
WITNESS:
AGENT FOR LANDLORD,
WITNESS: TENANT(S):
Walter Elliott
President
COMMERCIAL REAL ESTATE
SALES AGREEMENT
THIS AGREEMENT ("Agreement") is made this 7th day of October, 1996, by and
between Envirometrics, Inc., a Delaware Corporation ("Seller"), and Dr. James W.
Miller, M,D., ("Buyer").
RECITALS
A. Seller owns that certain parcel or premises of real property known as:
Unit F-2, 9229 University Boulevard North Charleston, South Carolina and more
particularly identified as T.M.S. #486-00-00-059 (hereafter the "Property".
B.
Buyer desires to acquire the Property from Seller and Seller is willing to sell
the Property to the Buyer upon, subject to and in accordance with the terms and
provisions set form In this Agreement. WITNESSETH: NOW, THEREFORF, in
consideration of the sum of One Thousand Dollars ($1,000.00), the receipt and
sufficiency of which are hereby acknowledged, and the mutual covenants of Seller
and Buyer contained in this Agreement, Seller and Buyer agree as follows:
1.
Property. Seller agrees to sell and convey to Buyer, and Buyer agrees to
purchase from Seller, the Property in fee simple.
2. Purchase Price. The
purchase price for the Property (the "Purchase Price") shall be Five Hundred
Seventy Five Thousand and no/100s Dollars ($575,000.00). The Purchase Price
shall be paid by Buyer to the Seller in the following manner:
(A) Deposit. Immediately upon execution of this Agreement by all parties,
the Buyer shall tender to LeClair Ryan, P, C., as Escrow Agent, the sum of One
Thousand Dollars ($1,000.00) to be held as a Deposit for Buyer's performance
under this Agreement, which sum shall be applied to the purchase price at
settlement or refunded to the Buyer in the event that the Agreement is timely
terminated because of a defect in title, or because of the termination of this
Agreement pursuant to the terms thereof.
(B) Balance of Purchase Price- Buyer shall pay to Seller at Closing the
amount of the Purchase Price remaining due as of Closing after payment by Buyer
of the Deposit, as follows:
$433.000.00 (a) -Third Party First Trust: This sale is subject to Buyer
obtaining a conventional loan secured by a first deed of trust lien on the
Property in the principal amount of $433,000.00 hearing interest at a fixed rate
not exceeding 10.0% per year, amortized over a term of not less than 20 years,
and requiring not more than a total of 1.5 loan discount points, excluding a
loan origination fee.
$1,000.00 Deposit: See Paragraph A above.
$141,000.00 Balance of the Purchase Price: To be paid by Purchaser at
Settlement
$575,000.00 Total Purchase Price: This Contract is contingent upon Buyer
obtaining a written commitment or commitments, as the case may be, for the third
party financing required above. Buyer agrees to make written application for
such financing within 5 business days of the date of acceptance of the Agreement
and to diligently pursue obtaining a commitment therefore.
(b) In the event that Buyer does not obtain such a written commitment and
so notifies Seller or Selling Broker or the Listing Broker in writing before
5:00 P.M. local time on November 15, 1996, then this contract shall terminate
upon the giving of such notice and the Deposit shall be refunded to Buyer.
3. Closing. The conveyance of the Property and the payment of the balance
of the Purchase Price ('Closing') shall take place at the office of the Buyer's
title company or settlement attorney, during normal business hours, within
thirty (30) days following the expiration of the Feasibility Period as hereafter
defined, unless the parties mutually agree in writing to extend the date for
Closing to a subsequent date certain. At Closing, Seller shall also deliver to
Buyer a General Warranty Deed; standard No-Lien Affidavit; FIRPTA certification
any other documents reasonably necessary to convey marketable title to the
Property to Buyer.
4. Closing Adjustments. Real estate taxes, including special assessments,
shall be prorated between Buyer and Seller as of the date of settlement,
according to the number of days in the year each party owns the Property. Seller
shall pay any statutory grantor's or transfer tax on deed. All other Clerk's
fees and transfer taxes and recordation taxes shall be paid for by the Buyer.
Buyer shall pay for all costs of its survey, title insurance, attorney's fees
and other incidental costs of Settlement.
5. Possession. Possession of the Property shall be given to Buyer at
Closing, subject only to those tenancies accepted and approved by Buyer in
writing prior to settlement, which approval shall be a material condition of
Buyer's performance hereunder. It is agreed by the parties that BUYCr'3
performance hereunder shall be further conditioned upon acceptance and approval
by Buyer of a leaseback lease agreement to Seller at settlement upon terms and
conditions mutually acceptable to the parties.
6. Conveyancing. At Closing and upon payment of the Purchase Price as
provided for in this Agreement, Seller shall convey the Property to Buyer in fee
simple by a general warranty deed. Seller shall convey marketable fee simple
title to Buyer, subject only to: (A) the lien for real estate taxes not yet due
and payable; (B) existing easements for public utilities recorded among the Land
Records- (C) such tenancies as Buyer shall have given prior written consent to
following disclosure by Seller; and, (D) restrictions, covenants and other
matters affecting title (other than mortgages, mechanics' liens and other
matters that may be discharged by the payment of money at Closing, which Seller
covenants to do), recorded among the Land Records as of the date of this
Agreement.
7. Marketability of Title: Seller covenants that the title to the Property
is marketable and free from valid objections. The Seller shall deliver to the
Buyer, upon settlement, a duly executed and acknowledged Deed of Bargain and
Sale, with General Warranty of Title, subject only to those easements,
conditions and restrictions which do not constitute objections to the title to
the Property. In the event an examination of title shall reveal any objection or
circumstances adversely affecting the marketability of title to the Property,
the Buyer shall promptly notify the Seller in writing prior to the expiration of
the Feasibility Period of such defects; and, Seller shall remove at Seller's
expense any such defect or circumstances adversely affecting the marketability
of title on or before the settlement date. If Seller is unable or refuses to
remove the Buyer's objections to marketability of title, then this Agreement
shall terminate, the Deposit shall be released to Buyer and both Buyer and
Seller shall thereafter be relieved from further liability under this Agreement.
In the event Seller is unable or refuses to remove the buyer's objections to
title, then in that event the Buyer shall have the option to accept title with
said objections with an acceptable offset or adjustment in the sales price and
may proceed to Closing in accordance with the terms of this Agreement.
8. Feasibility Period: Within thirty (30) days following execution of this
Agreement by both parties (the 'Feasibility Period"), Buyer, at its sole
expense, shall complete necessary inspections or inquiries of any kind relating
to the Buyer's intended use of the Property. These inspections shall include,
without limitation, completion and review of an acceptable Phase 1 Environmental
Report.
In the event that the Buyer determines for any reason that the Property is
not acceptable for Buyer's purposes, Buyer shall give written notice thereof to
Seller within the Feasibility Period; and, upon receipt of such timely notice
from Buyer, the Deposit shall be immediately released to ]3uyer, this Agreement
shall terminate and both Buyer and Seller shall thereafter be relieved from
further liability under this Agreement. Buyer hereby agrees to indemnify and
hold Seller harmless from any and all claims for loss, damage or injury
resulting to Buyer, its agents, employees, invitees, licensees, third parties,
etc. or to the Property, relating to or resulting from inspections by or on
behalf of Buyer at the Property. Seller agrees to cooperate with Purchaser to
facilitate the Purchaser's various inspections of the Property and, to the
extent available, Seller %hall provide Purchaser with a copy of any existing
prior surveys, title policies, environmental audits or studies, zoning
information or other related information in the Seller's possession with regard
to the Property.
Buyer's performance hereunder shall be further conditioned upon acceptance
by Seller of Buyer's offers to purchase those parcels owned by Seller and
identified as:
1012 Bankton Drive (Lot 14)
Hanahan, Berkeley County, S.C. (T.M.S. #266-09-00-016)
and 1019 Bankton Drive (Lot 10)
Berkeley Business Center,
Hanahan, Berkeley County, S.C. (T-M-S- #266-0592-071).
9. Seller's Representations. Seller represents and warrants to Buyer as of
the date hear and as of Closing that: Seller owns marketable fee simple title to
the Property; Seller has the authority to execute this Agreement and to transfer
marketable fee simple title to the
Property to Buyer;
To the best of Seller's knowledge and belief, there are no existing
violations of any laws or regulations of applicable governmental authorities
affecting the , no governmental actions pending nor, to the best of Seller's
knowledge, being threatened against Seller or the Property, except that certain
taking proposed by the Virginia Department of Transportation, which has been
disclosed previously by Seller to Buyer;
There are no suits or other legal proceedings pending, nor to the best of
Seller's knowledge and belief threatened or reasonably anticipated against
Seller with respect to the Property or affecting the Property before any Court
or governmental authority;
Seller hereby covenants that the Property in its present condition complies
with all requirements of all state, local and federal governmental agencies with
regards to the presence and use of compacted soils and/or fill upon the
Property. Seller represents and warrants that no hazardous or toxic materials as
those terms are defined in any applicable federal, state of local laws or
regulations ("Hazardous Materials'), have been used, discharged, stored on or
about the Property. Seller further warrants that he has no actual knowledge of
the presence of any hazardous environmental materials located upon or under the
Property; and, there are no storage tanks located on or below the Property.
10. Notices. All notices and requests or permitted hereunder shall be sent
by United States certified mail, return receipt requested, or by hand delivery
and, to be effective, 3haU be actually received by the party entitled to such
notice. To Seller: Envirometrics, Inc.
To Sellers Agent: Palmetto Properties, Inc.
To Buyer: Dr. James W. Miller, M.D.
and to: E. Duffy Myrtetus, Esquire
LeClair Ryan, P.C.
707 Eastmain Street, II th Floor
Richmond, Virginia 23219
To Buyer's Agent: John Beard
Such addresses may be changed at any time and from time to time by like
written notice given by either MM to the other,
11. Brokers. Buyer and Seller represent and wan-ant that they have dealt
with no Realtor or broker in connection with this Agreement other than Beard
Development Corporation which shall be paid a commission to be paid by Seller in
the amount of eight percent (8%) of the purchase price.
12. Cost of Litigation. In the event of litigation between Buyer and Seller
arising out of this Agreement, the party which substantially prevails in such
litigation shall be entitled to recover from the other party the reasonable cost
of such litigation, including court costs and reasonable attorney's fees through
the appellate levels.
13. Entire Agreement and Modification. This Agreement embodies and
constitutes the final and entire Agreement between Buyer and Seller and neither
party shall be bound by any terms, covenants, conditions, representations or
warranties not expressly contained herein. This agreement may not be altered,
changed or amended except by an instrument in writing, executed by both parties
hereto.
14. Applicable Law . This Agreement shall be governed, construed and
enforced according to the laws of the State of South Carolina.
15. Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
16. Counterparts . This Agreement may not be executed in any number of
counterparts and each such counterpart shall be deemed to be an original,
but all such counterparts together shall constitute one Agreement.
17. Interpretation. Whenever the context shall require, the singular
shall include the plural, the plural the singular, and the use of any
gender shall be applicable to all genders.
18. Severability. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
19. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
Each party agrees to furnish the other, upon demand, a corporate resolution
or other appropriate and customary documentationevidencing the due
authorization of such party to enter Into this Agreement and consummate the
transaction contemplated hereunder.
20. Section 1031 Exchange. The parties acknowledge and agree that the
Buyers' purchase of the above described real Property from Seller is
intended to be an interdependent part of an overall plan to effect a
like-kind exchange for a Replacement Property as designated by Buyers in
accordance with 1301 of the Internal Revenue Code.
21. Assignment. The parties acknowledge that Buyer may assign his
interest in the Contract, including an assignment to a qualified
intermediary contemplated under Internal Revenue Code 1. 1031 (k)-l (k).
Seller hereby agrees to execute any documents necessary to complete
'Buyer's intended 1301 exchange.
22. Offer by Buyer. This Agreement constitutes an offer by Buyer to
purchase the, Property and unless sooner terminated or withdrawn this offer
shall expire unless three (3) fully executed copies of this Agreement are
received by Buyer by 5:00 P.M. Eastern Time on October 8 , 1999).
IN WITNESS WHEREOF and with the intent to be legally bound, the
Parties hereto have executed this Agreement the day and year first written,
under seal, with the intent that it be a sealed instrument.
WITNESS: BUYER:
Dr. James W. Miller, M.D. (Seal)
SELLER: Envirometrics, Inc.
By: (Seal)
COMMERCIAL REAL ESTATE
SALES AGREEMENT
THIS AGREEMENT ("Agreement") is made this 7th day of October, 1996, by
and between Envirometrics, Inc., a Delaware Corporation ("Seller"), and Dr.
James W. Miller, M.D., ("Buyer")
RECITALS
A. Seller currently owns that certain parcel or parcels of real
property known as1019 Bankton Drive (Lot 10), Berkeley Business Center,
Hanahan, Berkeley County, South Carolina and more particularly identified
as T.M.S. #266-05-92-071 (hereafter the 'Property').
B. Buyer desires to acquire the Property from Seller and Seller is
willing to sell tile Property to the Buyer upon, subject to and in
accordance with the terms and provisions set forth in this Agreement.
WITNESSETH:
NOW, THEREFORE, in consideration of the sum of One Thousand Dollars
($1,000.00), the receipt and sufficiency of which are hereby acknowledged,
and the mutual covenants of Seller and Buyer contained in this Agreement,
Seller and Buyer agree as follows:
1. Property- Seller agrees to sell and convey to Buyer, and Buyer
agrees to purchase from Seller, the Property in fee simple.
2. Purchase Price. The purchase price for the Property (the 'Purchase
Price') shall be Five Hundred Twenty Five Thousand and no/100s Dollars
($525,000.00). The Purchase Price shall be paid by Buyer to the Seller in
the following manner:
(A) Deposit. Immediately upon execution of this Agreement by all
parties, the Buyer shall tender to LeClair Ryan, P.C.. as Escrow Agent, the
sum of One Thousand Dollars ($1,000.00) to be held as a Deposit for Buyer's
performance under this Agreement, which sum shall be applied to the
purchase price at settlement or refunded to the Buyer in the event that the
Agreement is timely terminated because of a defect in title, or because of
the termination of this Agreement pursuant to the terms thereof.
(B) Balance of Purchase Price. Buyer shall pay to Seller at Closing the amount
of the Purchase Price remaining due as of Closing after payment by Buyer of the
Deposit, as follows: $390.000.00 (a) Third Party First Trust: This sale is
subject to Buyer obtaining a conventional loan secured by a first deed of trust
lien on the Property in the principal amount of $390,000.00 bearing interest at
a fixed rate not exceeding 10.0% per year, amortized over a term of not less
than 20 years, and requiring not more than a total of 1.5 loan discount points,
excluding a loan origination fee,
$1,000.00 Deposit. See Paragraph A above.
$134,000.00 Balance of the Purchase Price: To be paid by Purchaser at Settlement
$525,000.00 Total Purchase Price This Contract is contingent upon Buyer
obtaining a written commitment or commitments, as the case may be, for the third
party financing required above. Buyer agrees to make written application for
such financing within 5 business days of the date of acceptance of the Agreement
and to diligently pursue obtaining a commitment therefore.
(b) In the event that Buyer does not obtain such a written commitment and
so notifies Seller or Selling Broker or the Listing Broker in writing before
5:00 P.M. local time on November 15, 1996, then this contract shall terminate
upon the giving of such notice and the Deposit shall be refunded to Buyer.
3. Closing. The conveyance of the Property and the payment of the balance
of the Purchase Price ("Closing") shall take place at the office of the Buyer's
title company or settlement attorney, during normal business hours, within
thirty (30) days following the expiration of the Feasibility Period as hereafter
defined, unless the parties mutually agree in writing to extend the date for
Closing to a subsequent date certain. At Closing, Seller shall also deliver to
Buyer a General Warranty Deed; standard No-Lien Affidavit; FIRPTA certification;
any other documents reasonably necessary to convey marketable title to the
Property to Buyer.
4. Closing Adjustments. Real estate taxes, including special assessments,
shall be prorated between Buyer and Seller as of the date of settlement,
according to the number of days in the year each party owns the Property. Seller
shall pay any statutory grantor's or transfer tax on the deed. All other Clerk's
fees and transfer taxes and recordation taxes shall be paid for by the Buyer.
Buyer shall pay for all costs of its survey, title insurance, attorney's fees
and other incidental costs of Settlement.
5. Possession. Possession of the Property shall be given to Buyer at
Closing, subject only to those tenancies accepted and approved by Buyer in
writing prior to settlement, which approval shall be a material condition of
Buyer's performance hereunder. Seller shall provide to Buyer within fifteen (15)
days of the execution by both parties of this Agreement complete copies of any
and all existing lease agreements together with a Estoppel Certificate from each
tenant satisfactory to Buyer in substantially the form set forth on Exhibit "A"
to this agreement.
6. Conveyancing. At Closing and upon payment of the Purchase Price as
provided for in this Agreement, Seller shall convey the Property to Buyer in fee
simple by a general warranty deed. Seller shall convey marketable fee simple
title to Buyer, subject only to: (A) the lien for real estate taxes not yet due
and payable; (B) existing easements for public utilities recorded among the Land
Records; ( C ) such tenancies as Buyer shall gave given prior written consent to
following disclosure by Seller; and, (D) restrictions, covenants and other
matters affecting title (other than mortgages, mechanics' liens and other
matters that may be discharged by the payment of money at Closing, which Seller
covenants to do), recorded among the Land records as of the date of this
Agreement.
7. Marketability of Title: Seller covenants that the title to the Property
is marketable and free from valid objections. The Seller shall deliver to the
Buyer, upon settlement, a duly executed and acknowledged Deed of Bargain and
Sale, with General Warranty of Title, subject only to those easements,
conditions and restrictions which do not constitute objections to the title to
the Property. In the event an examination of title shall reveal any objection or
circumstances adversely affecting the marketability of title to the Property,
the Buyer shall promptly notify the Seller in writing prior to the expiration of
the Feasibility Period of such defects: and, Seller shall remove at Seller's
expense any such defect or circumstances adversely affecting the marketability
of title on or before the settlement date. If Seller is unable or refuses to
remove the Buyer's objections to marketability of title, then this Agreement
shall terminate, the Deposit shall be released to Buyer and both Buyer and
Seller shall thereafter be relieved from further liability under this Agreement.
In the event Seller is unable or refuses to remove the Buyer's objections to
title, then in that event the Buyer shall have the option to accept title with
said objections with an acceptable offset or adjustment in the sales price and
may proceed to Closing in accordance with the terms of this Agreement.
8.
Feasibility Period: Within thirty (30) days following execution of this
Agreement by @ parties (the "Feasibility Period"), Buyer, at its sole expense,
shall complete necessary inspections or inquiries of any kind relating to the
Buyer's intended use of the Property. These inspections shall include, without
limitation, completion and review of an acceptable Phase I Environmental Report.
In the event that the Buyer determines for any reason that the Property is not
acceptable for Buyer's purposes, Buyer shall give written notice thereof to
Seller within the Feasibility Period; and, upon receipt of such timely notice
from Buyer, the Deposit shall be immediately released to Buyer, this Agreement
shall terminate and both Buyer and Seller shall thereafter be relieved from
further liability under this Agreement. Buyer hereby agrees to indemnify and
hold Seller harmless from any and all claims for loss, damage or injury
resulting to Buyer, its agents, employees, invitees, licensees, third parties,
etc. or to the Property, relating to or resulting from inspections by or on
behalf of Buyer at the Property. Seller agrees to cooperate with Purchaser to
facilitate the Purchaser's various inspections of the Property and, to the
extent available, Seller shall provide Purchaser with a copy of any existing
prior surveys, title policies, environmental audits or studies, zoning
information or other related information in the Seller's possession with regard
to the Property. Buyer's performance hereunder shall be further conditioned upon
acceptance by Seller of buyer's offers to purchase those parcels owned by Seller
and identified as : 1012 Bankton Drive (Lot 14), Hanahan, Berkeley county, S.C.
(T.M.S. #266-09-00-016) and Unit F-2, 9229 University Boulevard, South Carolina,
S.C. (T.M.S. #486-00-00-059).
9. Seller's Representations. Seller represents and warrants to Buyer as of
the date hereof and as of Closing that:
(A) Seller owns marketable fee simple title to the Property;
(B) Seller has the authority to execute this Agreement and to transfer
marketable fee simple title W the Property to Buyer;
( C) To the best of Seller's knowledge and belief, there are no existing
violations of any laws or regulations of applicable governmental authorities
affecting the Property, no governmental actions pending nor, to the best of
Seller's knowledge, being threatened against Seller or the Property, except that
certain taking proposed by the Virginia Department of Transportation, which has
been disclosed previously by Seller to Buyer;
(D) There are no suits or other legal proceedings pending, nor to the best
of Seller's knowledge and belief threatened or reasonably anticipated against
Seller with respect to the Property or affecting the Property before any Court
or government2l authority;
(E) Seller hereby covenants that the Property in its present condition
complies with all requirements of all state, local and federal governmental
agencies with regards to the presence and use of compacted soils and/or fill
upon the Property. Seller represents and warrants that no hazardous or toxic
materials, as those terms are defined in any applicable federal, state or local
laws or regulations ("Hazardous Materials'), have been used, discharged, stored
on or about the Property. Seller further warrants that he has no actual
knowledge of the presence of any hazardous environmental materials located upon
or under the Property; and, there are no storage tanks located on or below the
Property.
10. Notices. All notices and requests or permitted hereunder shall be sent
by United States certified mail, return receipt requested, or by hand delivery
and, to be effective, shall be actually received by the party entitled to such
notice. To Seller: Envirometrics, Inc.
To Sellers Agent: Palmetto Properties, Inc.
To Buyer: Dr. James W. Miller, M.D.
and to: E- Duffy Myrtetus, Esquire
LeClair Ryan, P.C.
707 East Main Street, 11th Floor
Richmond, Virginia 23219
To Buyer's Agent: John Beard
Such addresses may be changed at any time and from time to time by like
written notice given by either party to the other.
11. Brokers Buyer and Seller represent and warrant that they have dealt
with no Realtor or broker in connection with this Agreement other than Beard
Development Corporation and Palmetto Properties, Inc. which shall share equally
in a commission to be paid by Seller in the amount of eight percent (8 %) of the
purchase price.
12. Cost of Litigation. In the event of litigation between Buyer and Seller
arising out of this Agreement, the party which substantially prevails in such
litigation shall be entitled to recover from the other party the reasonable cost
of such litigation, including court costs and reasonable attorney's fees through
the appellate levels.
13. Entire Agreement and Modification. This Agreement embodies and
constitutes the final and entire Agreement between Buyer and Seller and neither
party shall be bound by any terms, covenants, conditions, representations or
warranties not expressly contained herein. This Agreement may not be altered,
changed or amended except by an instrument in writing, executed by both parties
hereto.
14. Applicable Law. This Agreement shall be governed, construed and
enforced according to the laws of the State of South Carolina.
15. Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
16. Counterparts. This Agreement may not be executed in any number of
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts together shall constitute one Agreement.
17. Interpretation. Whenever the context shall require, the singular shall
include the plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
18. Severability. If any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.
19. Binding, Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors. Each party
agrees to furnish the other, upon demand, a corporate resolution or other
appropriate and customary documentation evidencing the due authorization of such
party to enter into this Agreement and consummate the transaction contemplated
hereunder-
20. Section 1031 Exchange,. The parties acknowledge and agree that the
Buyers' purchase of the above-described real Property from Seller is intended to
be an interdependent part of an overall plan to effect a like-kind exchange for
a Replacement Property as designated by Buyers in accordance with $01301 of the
Internal Revenue Code.
21. Assignment. The parties acknowledge that Buyer may assign his interest
in the Contract, including an assignment to a qualified intermediary
contemplated under Internal Revenue Code $1.103 1 (k)-l (k). Seller hereby
agrees to execute any documents necessary to complete Buyer's intended $1301
exchange.
22. Offer by Buyer. This Agreement constitutes an offer by Buyer to
purchase the Property and unless sooner terminated or withdrawn this offer shall
expire unless three (3) fully executed copies of this Agreement are received by
Buyer by 5:00 P.M. Eastern Time on October 4 8, 1996.
IN WITNESS WHEREOF and with the intent to be legally bound, the parties
hereto have executed this Agreement the day and year first written, under seal,
with the intent that it be a sealed instrument.
WITNESS: BUYER: Dr. James W. Miller, M.D.
WITNESS: SELLER' Envirometrics, Inc.
By: _______________________(Seal)
"EXHIBIT A"
ESTOPPEL CERTIFICATE
Dr. James W. Miller, M.D.
C/o E. Duffy Myrtetus, Esq.
LeClair Ryan, P.C.
707 E. Main Street, Eleventh Floor
Richmond, VA 23219
RE: Lease dated 19 , a copy of which is attached hereto as Exhibit A (the
"Lease")
Landlord: Envirometrics, Inc.
Tenant:
Location:
Gentlemen:
I understand that you have committed to purchase the property briefly
described as: - . South Carolina and as a condition to the closing of such
purchase, you have required this certificate by the undersigned-
The undersigned, as Tenant, hereby confirms the following;
1. I/we hereby ratify the Lease and the same represents the entire
agreement between the parties as to this leasing.
2. All conditions under the lease to be performed by the Landlord have been
satisfied.
3. The Lease is in full force and effect and has not been modified,
altered, supplemented or amended in any way, except as indicated on those
written instruments which are provided with this certification
4. On this date there are no existing claims, defenses, off-sets or credits
which the undersigned has against the enforcement of the Lease by the Landlord
nor have rentals been prepaid.
5. I/we have no notice of a prior assignment, hypothecation or pledge of
rents on the Lease.
6. I/we are in full and complete possession of the premises and are fully
occupying the same and conducting my/our business therefrom.
7. There is no work which needs to be done to the Leased Premises, except
those items listed on Exhibit "B" attached hereto and incorporated herein which
are currently in the process of being completed by the Landlord.
8. Rent under the Lease commenced to accrue on 19_ and has been paid
through _______, 1996, and no rent credits or other offsets have been given by
Landlord or taken by Tenant.
9. The current rent due under the Lease is ($ ) per month. The Tenant has
not advanced any amounts to or on behalf of the Landlord under the Lease for
which Tenant has not been reimbursed.
10. Tenant has no right of first refusal, option or other right to purchase
the Premises or any part thereof
11. There has not been filed by or against, nor, to the best of the
knowledge and belief of Tenant, is there threatened against or contemplated by,
Tenant, any insolvency relief proceeding, appointment of a Receiver or other
Custodian for Tenant's benefit or on behalf of Tenant's creditors, any petition
in bankruptcy, voluntary or otherwise, any assignment for the benefit of
creditors, any petition seeking reorganization or arrangement under the
bankruptcy laws of the United States or of any state thereof, or any other
action brought under such bankruptcy laws or judicial action in any state or
federal court brought against the Tenant-
12. Tenant has received no notice of any sale, transfer, pledge or
assignment of the Lease or of the rentals thereunder by Landlord, except the
proposed assignment to Dr. James W. Miller and/or assigns (hereafter
"Purchaser,) in connection with his proposed purchase of the Leased Premises
from the Landlord.
Tenant understands that the Lease shall be assigned to Purchaser, or his
assigns, in connection with the purchase of the Leased Premises by him from
Landlord and that rent under the Lease may not be prepaid nor the Lease amended,
modified or superseded without the prior written approval of Purchaser or hi-s
assigns. The undersigned acknowledges that Purchaser proposes to obtain a loan
from _____________________ (hereafter the "Lender"), secured in part by a
mortgage and/or deed or trust on the real property of which the Leased Premises
are a part and by a collateral assignment of the Lease, and that the Lender will
materially rely on the statements made herein in making such loan. The
undersigned acknowledges and agrees that the statements made herein are true and
complete to the best of its knowledge and may be relied upon by the Lender, and
its successors and assigns to the loam
Executed this _ day of 1996.
Tenant: (SEAL)
LEASE EXPIRATION AMENDMENT
THIS LEASE AMENDMENT, dated 13 November 96 by and between Centoff Realty
Co.. Inc.. Delaware Corporation ("Landlord") with its principal office at 522
Fifth Avenue. New York. NY 10036, and AZIMUTH. INC.. a corporation organized and
existing under the laws of the State of South Carolina, ("Tenant") with its
principal office at 9229 University Blvd. Charleston. S.C. 29461
WITNESSETH
In consideration of$4,961.00 in hand paid by the Tenant to the Landlord.
the receipt of which is hereby acknowledged. it is mutually agreed between
Landlord and Tenant that the Lease dated 06 April 95 for space designated as 236
comprising approximately 1108 square feet, located at 100 Executive Center Drive
is hereby amended to change the expiration date of the Term to be October 31,
1996.
Any options to renew or extend the term and any automatic extensions of
hereby canceled and are of no further force and effect.
1. Security deposit in the amount of $414.00 to be forfeited to the
Landlord.
IN WITNESS WHEREOF. the Landlord and the Tenant have executed or caused to
be executed this Amendment on the dates shown below their signatures to be
effective as of the date set forth above.
Tenant: AZIMUTH, INC. Landlord: Centoff Realty Co.. Inc.
By
By: Koger Equity, Inc. as Agent
(SEAL)
LEASE AGREEMENT
THIS LEASE AGREEMENT is made at Charleston, South Carolina, on this 19th
day of November , 1996, by and between Nicholas & Thalia Pavlatos hereinafter
referred to as "Landlord") and Envirometrics Products Company (hereinafter
referred to as "Tenant").
1. PREMISES:
(a) Landlord does hereby lease to Tenant and Tenant hereby leases from
Landlord that certain space (hereinafter referred to as the "Premises"),
consisting of approximately 1,800 square feet of floor area. The location and
dimensions of said Premises are delineated in red on Exhibit "A", which is
attached hereto and incorporated herein by reference. Said Premises are part of
that certain retail/office complex known as Oakbrook Center, in the County of
Dorchester, City of Summerville , South Carolina (hereinafter said complex is
referred to as "Shopping Center").
(b) This lease is subject to the terms, covenants and conditions herein set
forth, and the Tenant covenants as material part of the consideration for this
lease to keep and perform each and all of said terms, covenants and conditions
by it to be kept and performed.
2. USE OF PREMISES:
(a) Tenant shall use the premises for light assembly
(b) Tenant agrees that the premises shall be open for business for the
purpose described herein, operating during usual business hours, within one
hundred twenty (120) days of the date of this Lease, or otherwise as shall be
mutually agreed upon by the parties. In the event that Tenant shall not comply
with this subparagraph, Landlord shall have the sole option to terminate this
Lease upon five (5) days written notification to Tenant, and thereafter the
parties shall be returned to their original status as if the Lease had never
been executed. In the event that the Landlord shall exercise its option
hereunder, Landlord shall have the right to retain all sums which Tenant has
paid hereunder as liquidated damages, it being agreed by the parties that said
sum is a fair and equitable estimate as to the amount of damages which Landlord
shall suffer as a result of Tenant's breach hereof.
3. TERM:
This lease shall be for a term of eight months, 15 days commencing December
1. 1996 and ending August 14, 1997
4. MINIMUM RENT:
(a) Tenant agrees to pay Landlord as a Minimum Rent, without notice or
demand, the monthly sum of six hundred dollars (S600) GROSS LEASE ($4.00 per sq.
ft) .
Rent is payable on the first (St.) day of each month.
5. CONSIDERATION:
Concurrently with the execution of this Lease, Tenant shall deposit with
Landlord a sum equivalent to the first ($ n/a ) months rent and the last ($ n/a)
months rent. 0.0 -($ 0.0 shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of this Lease
to be kept and performed by Tenant during the term hereof - If Tenant defaults
with respect to any provision of this Lease, including, but not limited to, the
provisions relating to the payment of rent, Landlord may, but shall not be
required to use, apply or retain all or any part of this security deposit for
the payment of any rent or any other sum in default, or for the payment of any
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
deposit is so used or applied, Tenant shall, within five(5)days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
the security deposit to its original amount, and Tenant's failure to do shall be
a default under this Lease.
6. CONDITION OF PREMISES:
Tenant shall not make any repairs, alterations, or additions to Premises or
enter into any contract for repairs, alterations, or additions without first
procuring Landlord's written consent and delivering to Landlord plans and
specifications prepared by licensed architect as well as copies satisfactory to
Landlord of indemnification against liens, costs, damages, and expenses as may
be required by Landlord. At it's own expense tenant shall obtain all requisite
building and other permits before starting any work in or upon the premises.
Tenant shall, in all events, provide Landlord with professionally prepared
drawings bearing the seal of an architect or engineer currently licensed in and
by the State of South Carolina before -Tenant, its representative, agent, or
contractor starts any work in or upon the premises. The aforesaid drawing shall
include plumbing, electrical, climate control, insulation, wall structure,
finish, materials and all other specifications intended to be included in
improving and/or completing the premises. Landlord shall have the right of final
approval of any such plans for improving and/or completing the premises.
9. WASTE, NUISANCE OR UNLAWFUL USE:
Tenant shall not commit, or allow to be committed, any waste on the
Premises, create or allow any nuisance to exist on the Premises, or use or allow
the Premises to be used for any unlawful purpose.
10. PAYMENT OF UTILITIES:
Tenant shall pay for and be liable for all utilities furnished the Premises
during the term of this Lease, or any extension thereof, including, but not
limited to, electricity, gas, water and telephone service. In the event that
utilities are not separately metered, Tenant agrees to pay his proportionate
share of such utilities based upon the formula set forth in paragraph 7 (b)
hereof.
1. REPAIRS AND MAINTENANCE:
Tenant shall at it's own expense, maintain and keep the Premises,
including, but not limited to, the windows, doors, skylights, storefront, air
conditioners or heaters, and all interior walls in good repair. The same shall
not be altered, repaired or changed without he written consent of the Landlord,
which shall not be reasonably withheld. Landlord shall maintain the building
roof and all exterior walls in good condition, subject to the terms of Paragraph
7 hereof. All alterations, improvements and changes that may be done with the
consent of the Landlord, and shall remain upon and be surrendered with the
Premises at the termination of the Lease herein. HVAC replacement, due to age,
Landlord's responsibility.
12. DELIVERY, ACCEPTANCE, & SURRENDER OF PREMISES:
Landlord represents that the Premises are in a condition fit for the uses
hereinabove described. Tenant agrees to accept the Premises on possession as
being in a good state of repair and in sanitary condition. At the termination of
this Lease, by the expiration thereof, or otherwise, the Tenant shall deliver up
the Premises to the Landlord, reasonable wear and tear and casualty excepted.
Tenant agrees to pay for all damages to the appurtenances thereto during the
term of this Lease.
13. TOTAL OR PARTIAL DESTRUCTION OF PREMISES:
Partial destruction of the Premises shall not render this Lease void or
voidable, or terminate it, except as herein provided. If the Premises are
partially destroyed during the term of this Lease, Landlord shall repair them,
when such repairs can be made in conformity with Local, State and Federal laws
and regulations, within sixty (60) days of the partial destruction. Rent for the
Premises will be reduced proportionately to the extent to which the repair
operations interfere with the normal conduct of the said time limit, Landlord
may, at its option, make them at a reasonable time and continue this Lease in
effect, with proportional rent rebate to he Tenant, as herein provided. If the
repairs cannot be made within the time period allowed, and Landlord elects not
to make them in a reasonable time, either party hereto has the option to
terminate this Lease, in accordance with the termination provisions herein.
14. LANDLORD'S ENTRY FOR INSPECTION AND MAINTENANCE:
Landlord reserves the right to enter upon the Premises at reasonable times
to inspect them, to perform required maintenance and repair, and to make
additions and alterations to any part of the building of which the Premises is
located, and Tenant agrees to permit Landlord to do the same. Landlord may, in
connection with such alterations, additions, or repairs, erect scaffolding,
fences, and similar structures, post the relevant notices, and place moveable
equipment without any obligation to reduce Tenant's rent for the Premises during
such period, and without incurring liability to Tenant for disturbance of their
quiet enjoyment of the Premises or their loss of occupation thereof.
15. TRADE FIXTURES:
Tenant may install and maintain, during the term of this Lease, trade
fixtures and other equipment necessary for Tenant' use of the building, as
hereinabove provided; provided that such fixtures, by reason of the manner in
which they are affixed, do not become an integral part of the Shopping Center or
of the Premises herein. Tenant may, if not in default hereunder, and from time
to time during the term hereof, alter or remove any such trade fixtures so
installed by them. Said trade fixtures or equipment of the Tenant shall be
removed at the termination or expiration of this Lease, by the Tenant in an
expeditious manner. Any damage to the Premises caused by any such installation,
alteration, or removal of any such trade fixture or equipment shall be promptly
repaired by the Tenant at their own expense.
16. POSTING OF SIGNS:
Landlord reserves the right to place any and all signs reasonable necessary
for the sale of the Shopping Center upon said Shopping Center during the term of
the Lease, provided however, that no such signs may be posted in the Premises,
or to place any and all reasonable signs on the Premises at any time within
ninety (90) days of the expiration of this Lease, for rental or lease of said
Premises.
17. RESTRICTIONS ON POSITION OF SIGNS:
Tenant will not construct or place, or permit to be constructed or placed,
any signs, awnings, marquees, or other structures projecting from the exterior
of the Premises without the written consent of the Landlord thereto and subject
to all governmental law or regulations for the posting of said signs. Tenant
further agrees to remove all signs, displays, advertisements, or decoration
which they have placed, or permitted to be placed on the Premises which, in the
opinion of the Landlord are offensive or otherwise objectionable. If Tenant
fails to remove such signs, displays, advertisements, or decorations within
sixty (60) days of receiving written notice from Landlord to do the same,
Landlord reserves the right to enter the Premises and remove the same, at
Tenant's expense.
18. HOLD HARMLESS AND NON-LIABILITY:
Landlord shall not be liable for any loss, damage, or injury, or for any
liability or damage claims for injury to persons, including Tenant, or any
officer, agent, employee, independent contractor, invitee or guest of Tenant, or
any other persons acting at their direction or in concert with them; or for any
property damage form any cause whatsoever related to Tenant's occupancy of the
Premises, including those arising out of damages or losses occurring on
sidewalks or other common areas of the Shopping Center arising out of any act or
negligence of Tenant, or any officer, agent, employee, independent contractor,
guest or invitee of Tenant, as well as any damages resulting form Tenant's use
of the premises during the term of this Lease, or any extension thereof.
Tenant hereby agrees to indemnify and hold harmless Landlord against any
and all such claims for damages, including all costs, attorney's fees and
liabilities incurred in the defense of any such claim or claims. In case any
such action is brought against Landlord, or any officer, agent or employee of
Landlord, Tenant agrees to defend Landlord from any and all such claim or claims
made by any persons whatsoever resulting from or arising out of Tenant's use and
occupancy of the Premises herein, at Tenant's sole expense.
19. ASSIGNMENT OR SUBLEASE:
Tenant agrees not to assign or sublease the premises herein, or any part
thereof, without first obtaining the written consent of the Landlord hereto.
Landlord expressly covenants that such consent shall not be unreasonably or
arbitrarily refused. One consent by the Landlord shall not be a consent to a
subsequent assignment, sublease, or occupation by any other persons. Tenant's
unauthorized assignment, sublease, or license to occupy the Premises herein
shall be void and shall terminate the Lease, at the option of Landlord. Tenant's
interest in this lease is not assignable to operation of law, nor is any
assignment of their interest herein, without the written consent of the
Landlord.
20. DEFAULTS:
The occurrences of any of the following shall constitute a material default
and breach of this Lease.
(a) The vacation or abandonment of the Premises herein by Tenant.
(b) The failure by Tenant to pay installment of rent, or to make any other
payments required under this Lease, where such failure continued for a period of
ten (10) days after written notice thereof by the Landlord to the Tenant.
(c ) Failure by Tenant to observe or perform any of the provisions of this
Lease to be observed or performed by the Tenant, except the Provision concerning
the payment of rent, where such failure continues for a period of thirty (30)
days after written notice thereof by the Landlord to the Tenant; provided,
however, that if the nature of such default is such that the same cannot
reasonably be cured within such thirty (30) day period, Tenant shall not be
deemed to be in default if Tenant shall, within such period, commence such cure,
and thereafter diligently 'prosecute the same to completion.
(d) The making by Tenant of any general assignment for the benefit of
creditors; the filing be or against Tenant of a petition to have Tenant adjudged
a bankrupt, or of a petition for reorganization or arrangement, under any law
relating to bankruptcy, unless the same is dismissed within ninety (90) days;
the appointment of a trustee or receiver to take possession of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where possession is not restored to the Tenant within ninety (90) days;
or the attachment, execution, or other judicial seizure of substantially all of
Tenant's assets located on the Premises, or of Tenant's interest in this Lease,
where such seizure is not discharged within ninety (90) days.
21. LANDLORD'S REMEDIES ON TENANT BREACH:
If Tenant shall breach this Lease, pursuant to the terms of Paragraph 20
above, Landlord shall have the following remedies, in addition to any other
rights or remedies they may have either by law or otherwise:
(a) Landlord may re-enter the Premises immediately, and remove therefrom
all Tenant's personal property. Landlord may store said property at a public
warehouse at Tenant's expense, or for Tenant's account.
(b) After re-entry, Landlord may terminate the Lease upon giving thirty
(30) days prior written notice of such termination to Tenant. Re-entry only,
without notice of termination, will not terminate this Lease.
( c) After re-entry upon the Premises, Landlord may re-Lease the Premises,
or any part thereof, for any term, without terminating the Lease, upon such rent
and upon such terms and conditions as they may choose. Landlord may make any
alterations and repairs to the Premises that are necessary to the Premises, as
herein provided, Tenant shall be liable for, in addition to any other liability
for breach of this Lease, all expenses incurred to restore unit to its original
condition, which is incurred by the Landlord. In addition, Tenant shall be
liable to Landlord for the difference between rent received by Landlord - during
the reorganization or arrangement, under any law relating to period of
re-leasing, and the monthly installment of rent that are due by Tenant during
the term of this Lease.
(d) In the event that Landlord chooses to re-lease the Premises, pursuant
to Subparagraph C above, the Landlord may, at their option, apply any rent
received as a result thereof, in the following manner:
(1) Reduce indebtedness of the Tenant to the Landlord under this Lease, not
including indebtedness for rent;
(2) For expenses of the re-leasing, including any expenses of alterations
and repairs made as a result thereof;
(3) Rental installments due under this Lease;
(4) Payment of any future rent due under this Lease, as it becomes due.
(e) Landlord may, at any time after such re-leasing, terminate the Lease
for the breach because of which they have reentered and re-lease the Premises.
Upon terminating this Lease for Tenant's breach hereof, Landlord may recover all
damages proximately resulting from the breach, including the cost of recovering
the Premises, any rental installments not paid by the new Tenant, and the work f
or the balance of this Lease over the reasonable rental value of the Premises
will remain during the lease term.
(f) Upon re-entry, Landlord may procure the appointment of a receiver to
take possession of and collect rents and profits from Tenant's business. If
necessary to collect such rents and profits, the receiver may carry on Tenant's
business and take possession of Tenant's personal property used in the business,
including inventory, equipment, trade fixtures, and furnishings, and use them in
the business without compensating the Tenant therefor. Proceedings for
appointment of a receiver, and the conducting by him of Tenant's businesses,
shall not terminate this Lease unless Landlord has given written notice of such
termination, as provided herein.
(g) Tenant hereby waives all claims for damages, which may be caused by
Landlord's re-entry, taking possession of the Premises herein and will save
Landlord harmless from loss,costs or damages occasioned by Landlord thereby. Any
such re-entry or retaking of possession of the premises shall not be considered
or construed to be a forcible entry.
22. PARKING AN COMMON AREAS:
(a) Landlord covenants that an area approximately equal to the common and
parking areas as shown on the attached Exhibit "A" shall be at all times
available for the nonexclusive use of Tenant during the full term of this Lease,
or any extension thereof, provided that the condemnation or other taking by any
public authority, or sale in lieu of condemnation, of any or all of such common
and parking area shall not constitute a violation of this covenant. Landlord
reserves the right to change the entrances, exits, traffic lanes and the
boundaries and locations of such parking area or areas, provided however, that
anything to the contrary notwithstanding, said parking area or areas shall at
all times be substantially equal or equivalent to that shown on the attached
Exhibit "A".
(b) Landlord shall keep said parking and common areas in a neat, clean and
orderly condition, and shall repair any damage to the facilities thereof, but
all such expenses in connection with said parking and common areas shall be
charged and prorated as addition rent as set forth in Paragraph 7 hereof.
( c) Tenant shall, for its use and benefit, and for the use and benefit of
its agents, customers, licensees, and subtenants, have the nonexclusive right in
common with Landlord, and other present and future owners, tenants, and their
agents, customers, licensees and subtenants, to use said common and parking
areas during the entire term of this Lease, or any extension thereof, for
ingress and egress, and automobile parking only.
(d) Tenant shall, in the use of said common and parking areas, comply with
such reasonable rules, regulations and charges for parking as the Landlord may
adopt from time to time of the orderly and proper operation of said common and
parking areas. Such rules may include, but shall not be limited to, the
following:
(I) The prohibition of employee parking in the common area and parking
areas; and
MERCHANT'S ASSOCIATION:N/A
24. PERSONAL PROPERTY TAXES:
Tenant shall pay before they become delinquent all taxes and assessments
imposed on any personal property or trade fixtures belonging to Tenant and
located on said Premises.
25. ATTORNEY'S FEES:
If Landlord shall file an action to enforce any covenant of this Lease, or
for breach of any covenant herein, including any action for recovery of rent
herein, Tenant agrees to pay Landlord the reasonable sum for accrued from the
commencement of such action and shall be paid whether or not such action is
prosecuted to judgment.
26. NOTICE:
Notice is given pursuant to the provisions of this Lease, when necessary to
carry out the provisions, shall be in writing, and delivered personally to the
person to whom the notice is to be given, and mailed postage prepaid, addressed
to such person(s). Landlord's address for the purpose of such notice shall be:
Atlantic International
2050 Spaulding Drive
Suite 4-A
North Charleston, SC 29406
or at such other address or addresses as Landlord may designate to Tenant in
writing from time to time.
Tenant's address for the purpose of such notice shall be the Premises
herein, or : ENVIROMETRICS PRODUCTS CO., 9229 UNIVERSITY BLVD., CHARLESTON, SC
29406 OFFICE:553-9554
27. HEIRS, SUCCESSORS AND ASSIGNS:
This Lease, and the covenant s and conditions hereof, apply to and are
binding upon the heirs, successors, legal representatives, and assigns of the
parties.
28. SALE OF PREMISES BY LANDLORD:
In the event of any sale of the Premises by Landlord, Landlord shall be and
is hereby entirely freed and relieved of all liability under any and all of its
covenants and obligations contained in or derived rom this Lease arising out of
any act, occurrence or omission occurring after the consummation of such sale;
and the purchase, at such sale or any subsequent sale of the Premises shall be
deemed, without further agreement between the parties and any such purchaser, to
have assumed and agreed to carry out any and all of the covenants and
obligations of the Landlord under this Lease.
29. LATE CHARGES:
Tenant hereby acknowledges that late payment by Tenant to Landlord of rent
or other sums due hereunder will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Landlord by terms of any
mortgage or deed of trust covering the Shopping Center. Accordingly, if any
installment of rent or any sum due from Tenant shall not be received by
Landlord, or Landlord's agent, within five (5) days after the due date set forth
herein, then Tenant shall pay to Landlord a late charge in the amount of ten
(10%) percent of such overdue amount, plus any attorney's fees and/or costs
incurred by Landlord by reason of Tenant's failure to pay rent and/or other
charges when due. The parties hereby agree that such late charges represent a
fair and reasonable estimate of the cost that Landlord will incur by reason of
the late payment by Tenant. Acceptance of such late charges of the Landlord
shall in no event constitute a waiver of Tenant's default with respect to such
overdue amount, nor prevent Landlord from exercising any other rights and
remedies granted hereunder.
30. COMPLETE AGREEMENT:
This Lease contains all of the agreements of their parties hereto with
respect to any matter covered or mentioned in this Lease, and there are not
prior agreements or understandings which have not been incorporated herein. No
provision of this Lease may be amended or added to except by the agreement in
writing signed by all the parties hereto or their respective successors in
interest.
31. CHOICE OF LAW:
This Lease shall be governed by the Laws of the State of South Carolina.
32. ATTORNMENT:
This Lease may at Landlord's option, be subordinate to any ground lease,
mortgage, deed of trust or other hypothecation or security now or hereafter
placed upon the real property of which the Premises are a part, and to any and
all advances made on a security thereof, and to all renewals, modifications,
consolidations, replacements, and extensions thereof. Notwithstanding such
subordination, Tenant's right to quiet possession of the Premises shall not be
disturbed if Tenant is not in default and so long as Tenant shall pay the rent
and observe and perform all of the provisions of this Lease, unless this Lease
is otherwise terminated pursuant to its terms. If any mortgagee, trustee or
ground lessor shall elect to have this Lease prior to the lien of its mortgage,
deed of trust, or ground lease, and shall give written notice thereof to Tenant,
this Lease shall be deemed prior to such mortgage, deed of trust or ground
lease, whether this Lease is dated prior to or subsequent to the date of said
mortgage, deed of trust or ground lease, or the date of recording thereof.
Tenant agrees to execute any and all documents required to effectuate an
attornment, a subordination or to make this lease subsequent to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to
execute such documents within ten (10) days after written demand by Landlord
shall constitute a material default by Tenant hereunder, or, at Landlord's
option, Landlord shall execute such documents on behalf of Tenant as Tenant's
attorney in fact. For that purpose, Tenant does hereby make, constitute and
irrevocable appoint Landlord as Tenant's attorney in fact and in Tenant's name,
place and stead, to execute such documents in accordance with this paragraph.
33. OPTION TO RENEW: (See Attached Addendum)
(a) Landlord hereby grants to tenant an option to renew this Lease for ONE
additional period(s) of ONE years each after the expiration of the term of this
Lease, under the same terms, conditions and covenants so far as is applicable,
as in this Lease, except that any rents payable for the first Option Period
shall be calculated in the same manner as set forth in Paragraph 4 hereof;
except that any percentage limitations on the increase in rent to be effective
during the first and/or second Option Periods shall be negotiated by the parties
at the time any such Option Period takes effect, and shall be mutually agreed
upon by the parties. If Tenant exercises the options for the first and/or second
Option Periods, and if at the commencement of the second and/or third Option
Periods, Landlord and Tenant have not reached an agreement, despite their best
efforts and good faith to do so, as to the applicable percentage limitations non
the increases in the rental to be paid during such Option Periods, or if there
shall then be a dispute between Landlord and Tenant as to the good faith of the
other party to so negotiate, Tenant shall have the obligation to pay the rental
during such Option Periods as the same would be calculated pursuant to Paragraph
4 hereof, without reference to any percentage limitations contained therein. In
the event percentage eliminatio's shall be agreed upon at any time after Tenant
shall have exercised its option for the second and/or third Option Periods, any
overpayment or underpayment by Tenant shall be immediately adjusted.
(b) Each option provided for herein shall be exercised by written notice
form the Tenant to the Landlord setting forth the Tenant's election to exercise
the option, and delivered to the Landlord in person or by registered or
certified mail at least ninety (90) days prior to the expiration of the term of
this Lease, or any prior option Period.
34. EMINENT DOMAIN:
Eminent domain proceedings resulting in the condemnation of a part of the
Premises leased herein, the rest usable by Tenant for the purpose of the
business of which the Premises are leased herein, will not terminate this Lease
unless Landlord, at this option, terminates it by giving written notice of
termination to Tenant. The effect of such condemnation, should such option not
be exercised, will be to terminate the Lease as to the portion of the premises
condemned, and the Lease shall remain in effect as to the remainder of the
Premises. Tenant's rental for the remainder of the Lease term shall, in such
case, be reduced by the amount of the usefulness of the Premises to him for such
business purposes is reduced. All compensation awarded in the eminent domain
proceedings as the result of such condemnation shall be the Landlords. Tenant
hereby assigns and transfers to Landlord any claim that they may have for
compensation for damages as a result of such condemnation.
35. AUTHORITY OF TENANT
If Tenant is a corporation, each individual executing this Lease on behalf
of said corporation, represents and warrants that he is duly authorized to
exercise and deliver this Lease on behalf of said corporation, in accordance
with the By-Laws of said corporation, and that this Lease is binding upon said
corporation.
36. TENANT'S STATEMENT:
Tenant shall, at any time f rom time to time, upon not less than ten (10)
days prior written notice from Landlord, execute, acknowledge and deliver to
Landlord a statement in writing:
(a) Certifying that this Lease is unmodified and in full force and effect
(or, if modified, stating the nature of such modification and certifying that
this Lease as so modified is in full force and effect), and the date to which
the rental and other charges are paid in advance, if any and
(b) Acknowledging that their are not, to Tenant's knowledge, any incurred
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed, and
(c) Setting forth the date of commencement of rents and expiration of the
term hereof. And any such statement may be relied upon by the prospective
purchaser or encumbrancer of all or any portion of the Shopping Center.
37. HOLDING OVER:
It is expressly understood by all parties that Tenant shall not be
permitted to holdover at the end of the lease term. It is further understood by
all parties that failure to re-negotiate or otherwise enter into a new lease
agreement before ten (10) days from the expiration of this lease constitutes
termination of this lease at the end of the lease period, and as such, Tenant
understands that it shall vacate the demised premises at the exact end of the
lease term. In addition, tenant will pay a 10% surcharge for each month is in
default.
38. INSURANCE REQUIREMENTS:
(a) Tenant shall, at Tenant's expense, obtain and keep in force during the
term of this Lease a policy or Bodily Injury and Property Damage Insurance with
a company or companies approved by Landlord insuring tenant and Landlord against
any liability arising out of the use, occupancy or maintenance of the Premises
an all other areas appurtenant thereto. Such insurance shall be in an amount not
less than $1,000,000, combined single limit. Tenant shall name Landlord as an
addition insured, and shall provide Landlord with a certificate of insurance
within thirty (30) days hereof. Notwithstanding anything herein to the contrary,
the limits of said insurance shall not limit the liability of Tenant hereunder.
(b) Landlord shall obtain and keep in force during the term of this Lease a
policy of Bodily Injury and Property Damage Insurance, insuring Landlord, but
not Tenant, against any liability arising out of the ownership, use, occupancy
of maintenance of the Shopping Center in an amount not less than $1,000,000,
combined single limit. The premiums for such insurance shall be paid by
Landlord, but shall be a part of the additional rent paid by Tenant provided for
in Paragraph 7 hereof.
c In addition to the insurance set forth in Subparagraph (b) hereof,
Landlord shall obtain and keep in force during the term of this Lease a policy
or policies of insurance covering loss or damage to the Shopping Center, but not
Tenant's fixtures, equipment, or tenant improvements in an amount not to exceed
the full replacement value thereof, as the same may exist from time to time,
providing protection against all perils included within the classification of
fire, extended coverage, vandalism, malicious mischief, flood (in the event same
is required by lender having a lien on the insurance industry), but not plate
glass insurance. In addition, the Lessor shall obtain and keep in force, during
the term of this Lease, a policy of rental value insurance covering a period of
one (1) year, with loss payable to Lessor, which insurance shall also cover all
real estate taxes and insurance costs for said period. The premiums for such
insurance shall be paid by Landlord, but shall be part of the additional rent
paid by Tenant as provided in Paragraph 7 hereof.
39. OTHER CONTINGENCIES:
1. TENANT WILL ACCEPT PREMISE "AS IS".
2. TENANT WILL BE ALLOWED TO CONSTRUCT PASSTHROUGH/DOORWAY IN DEMISING WALL
FROM UNIT 102 INTO UNIT 103 AND CONSTRUCT OFFICE SPACE. TENANT WILL RETURN UNIT
TO ORIGINAL CONDITION WHEN VACATED.
3.THIS LEASE IS TO EXPIRE IN CONJUNCTION WITH CURRENT LEASE FOR UNIT 102.
40. TIME: Time is of the essence in this Lease.
IN WITNESS WHEREOF, the above parties have executed this Lease on the date
first written above.
WITNESS: _____________
LANDLORD: DENISE BOYD AGENT FOR LANDLORD
WITNESS: _____________
TENANT(S) WALTER ELLIOTT, PRESIDENT
December 16,1996
LEASE AGREEMENT
Lease Agreement (this "Lease") made this 17th day of December 1996 by and
between James W. Miller, M.D. (hereinafter referred to as "Landlord"); and
Envirometrics, Inc., Envirometrics Products Company and Azimuth Incorporated,
jointly and severally (hereinafter referred to collectively as "Tenant").
WHEREAS the parties are desirous of entering into this Lease;
NOW THEREFORE, it is agreed:
1. PREMISES
The Landlord does hereby lease unto the Tenant and the Tenant does hereby
lease from the Landlord, upon the terms and conditions set forth herein the real
estate more specifically described as 9229 University Boulevard, Unit F-2, North
Charleston, South Carolina, containing 6,694 square feet (TMS # __________),
which is hereinafter referred to in Agreement as the 'Premises" or "Property".
2. TERM
The Tenant is to have and to hold the Premises above described for a term
of five (5) years, with said term commencing December 1, 1996 and ending at
midnight December 2001 (the "Initial Term"), subject to extension and renewal as
provided in paragraph 3 below.
3. OPTION TO RENEW
So long as the 'tenant is not in default under the terms of this Lease, the
Tenant shall I have an option to extend the term of this Lease for an additional
five (5) years subsequent to the Initial Term (the "Extended Term"; the Initial
Term and the Extended Term being collectively the "Term of this Lease"). If the
Tenant exercises this renewal option, then the rent established for the Premises
as provided in paragraph 4 below ("Rent") shall be increased to reflect the then
current fair market rental rate for the Premises. Except for this Rent
adjustment, if the Tenant exercises the renewal option, it shall hold the
Premises during the Extended Term upon the terms, covenants and conditions set
forth in this Lease. 'The Landlord shall, not less than four (4) months prior to
the expiration of the Initial Term, notify the Tenant what rental rate Landlord
believes to be the fair market rental rate for space comparable to the Premises,
taking into consideration location, amenities, etc. If the parties, bargaining
in good faith, are unable to agree upon Rent for the Extended Term prior to the
expiration of the Initial Term, the 'tenant's exercise of its renewal option
shall be deemed to be revoked and this Lease shall terminate upon expiration of
the Initial Term.
4. RENT
The rent for the Premises ("Rent") during, the Initial Term shall be $9.90
per square foot per Lease year ($66, 271.00 per Lease year, or $331,380 total
Rent for the Initial Term). The Rent shall be paid in 60 equal monthly
installments, each in the amount of $5,523-00. The first month's Rent shall be
paid on or before October 31, 1996, and each subsequent month's Rent shall be
due on the first day of each month during the term hereof. In addition to Rent,
Tenant is responsible for the payment of all condominium regime fees assessed by
the Condominium Association.
5. ABSOLUTE NET LEASE
This Lease shall be deemed and construed to be an absolute net Lease, and
during the Lease Term, Tenant shall pay Rent free of all deductions,
diminutions, or set-offs of any kind and without abatement for casualty, loss,
damages, condemnation or any reason whatsoever. For purposes of this section,
the parties acknowledge and agree that in-addition to Rent Tenant shall be
responsible, without limitation, for real estate-taxes, as provided in Paragraph
11 below, personal property taxes on all personalty owned by Tenant, insurance
costs, as provided in Paragraph 13 below, sewer and utility charges, maintenance
of the Premises.
6. LATE FEES
Rent payments are due on the first of every month during the term of this
Lease. If payments are not received by 5:OOPM on the 10th day of any month, a
5.00% late fee will be added to the monthly Rent installment due in respect of
such month.
7. DEPOSIT
Concurrently with the execution and delivery of this Lease, the Tenant is
depositing in Landlord's special Segregated account (the "Segregated Account")
at Signet Bank (the "Bank") the sum of $16,569, equal to three months' Rent, as
a security deposit against Tenant's timely payment of Rent- Concurrently with
the discharge of the Guarantors of Tenant's obligations under this Lease (as
provided in the Guarantee set forth at the end of this Lease, which Guarantors
have executed), the Tenant shall deposit an additional $16,569 into the
Segregated Account. Landlord shall not commingle moneys on deposit in the
Segregated Account (the "Deposit") with any other funds. The Segregated Account
shall bear interest at the Bank's advertised interest rate for savings accounts
as in effect from time to time, and all interest earned on fund!-, in the
Segregated Account shall be used by Landlord as provided in Paragraph 20(b) with
respect to defaults in Rent, and to the extent not so used, shall be paid to the
Tenant together with all other moneys remaining on deposit in the Segregated
Account upon the expiration or termination of this Lease. Landlord may apply the
Deposit against unpaid Rent as provided in Paragraph 20(b) below.
8. NOTICE
Any and all notices or other communications provided for in this Agreement
shall be in writing, shall be signed by the party giving the same and shall be
delivered personally, or mailed, by certified mail, return receipt requested,
postage prepaid, addressed to the party to whom such communication is directed
as herein below provided. Notice shall be deemed to be given and received
hereunder on the date of delivery if personally delivered and on the date of
mailing if mailed as aforesaid. Any party may change his or its address at any
time by giving the other party notice thereof. Such notice shall be addressed as
follows:
If to Landlord:
Family Practice Specialists of Richmond
Attn: James W.Miller, MD
1447 Johnston-Willis Drive
Richmond, VA 23235
If to Tenant: Envirometrics, Inc.
Attn: Richard Bennett, President
9229 University Boulevard
North Charleston, SC 29406
If to Leasing:
Beard Development Corporation
Representative: Attn: John R. Beard
1076 Thomas Jefferson Street, NW
Washington, DC 20007
9. USE
The Tenant will not use the Premises or any part thereof for () any
purposes other than for administrative and sales offices, and for occupational
and environmental health consultative offices and laboratories, without the
Landlord's prior written consent, which shall not be unreasonably withheld.
10. UTILITIES
Tenant shall pay for all utilities used or consumed in or at the Premises
including, but not limited to electricity, gas, water, sewer and telephones as
well as any solid waste user fees or other user fees that may be imposed from
time to Lime.
11. TAXES
Tenant shall be responsible for and shall reimburse the Landlord for any
and all real estate taxes and assessments levied on the Premises during the Term
of this Lease. Upon receipt by the Landlord of bills for taxes or assessments,
the Landlord shall forward such bills to the Tenant Payment shall be made by
Tenant to Landlord no later than thirty (30) days following the date on which
the Landlord delivered a bill to the Tenant. If the initial year or final year
of the Lease term fails to coincide with a tax year, then the Tenant shall pay
its pro rata share for the Lime Tenant occupies the Premises under this Lease.
In addition, Tenant shall at all times during the term of this Lease be
responsible for and shall pay before delinquency all municipal, county, state
and federal taxes assessed against its leasehold interest or any of its
fixtures, equipment, stock and trade or any other personal property of any kind
installed or used in or on the premises.
12. REPAIR, MAINTENANCE AND SERVICE RESPONSIBILITIES; ALTERATIONS OF THE
PREMISES
a) RESPONSIBILITIES OF TENANT. During the Term of this Lease, Tenant shall,
at its sole cost and expense, maintain and keep in good order, condition and
repair the entire leased premises including all buildings, structures, plumbing,
electrical systems, the HVAC system and other improvements located thereon. Such
repairs by Tenant shall include but are not limited to electrical and plumbing
systems and fixtures, air conditioning and heating systems.
In addition, the Tenant shall at its expense contract with a reputable firm
for periodic servicing of the heating, air conditioning and ventilation systems
as recommended by the manufacturers of such equipment and shall keep on file
with Landlord or its agent a copy of said contract or other substantial proof of
each servicing.
Tenant shall also have a qualified pest control company treat the Premises
and building as required. The Tenant shall also maintain all grass, shrubs and
parking areas on the Leased Premises.
Tenant shall keep the Premises in a good state of repair, cleanliness, and
preservation, and shall, upon the termination of this Lease, render the same to
the Landlord in at least as good condition as the same were upon the
commencement of-the Lease, reasonable wear and tear excepted.
Tenant shall repair and be responsible for all damage to the building and
grounds caused by Tenant, its employees, agents, invitees and licensees.
Landlord gives to Tenant exclusive control of Premises and shall be under no
obligation to inspect the premises. Tenant shall promptly repair any defective
condition. Tenant responsible to Landlord for any liability incurred by Landlord
by reason of such defect. Landlord shall have no duty or obligation to repair or
replace any portion of the Premises or to expend any monies in connection
therewith except as expressly stated in this Agreement.
At the termination of this Lease, the Tenant at its sole cost and expense
shall be responsible for removing any and all hazardous materials or waste, of
any kind or nature, which were placed upon the Premises during the Lease Term by
the Tenant, its agents, successors or assigns and shall redeliver the Premises
to the Landlord in at least as good condition as the same were upon the
commencement of this Lease.
Tenant may alter the Premises from time to time at its own expense,
provided that in so doing and giving effect to such alterations, no
contravention of any term of this Lease shall occur.
13. INSURANCE
a) During the Term of this Lease Tenant shall, at its sole cost and
expense, obtain and maintain insurance coverage against loss or damage by fire
or any and all other casualties on the Premises and the buildings, structures
and permanent improvements located thereon in the amount of full replacement
value of Five Hundred Seventy Five Thousand and 00/1 00 Dollars ($575,000.00).
The Landlord shall be named in the policy as an additional Insured and shall
have sole right to and control over any proceeds for the structure, but not the
contents of the structure.
b) Tenant shall also be responsible for obtaining suitable insurance
coverage on all personal property, fixtures, inventory, or other property
located an the Premises for Tenants sole protection.
c) Tenant shall obtain and maintain throughout the term of this Lease at
its sole cost and expense comprehensive public or general liability insurance
against injury or death to persons and/or destruction or damage to property
occurring in or about the Premises with a combined single limit for bodily
injury and property damage for one event with a minimum of $1,000,000,00 written
on an occurrence basis- This policy shall be in the name of the Landlord and
Tenant as insured under the policy.
d) Certificates of Insurance shall be delivered to Landlord upon request at
the commencement of the Term of this Lease. All policies provided for in
subparagraphs (a) and (c) shall contain a clause or endorsement to the effect
that they may not be terminated or materially emended except after twenty (20)
days written notice thereof to Landlord.
14. DAMAGE TO PREMISES
a) In the event that damage occurs to the Premises and the cost to repair
the Premises exceeds the amount of $287,500 (being 50% of the aforesaid
appraised value of the Premises), and provided that the Tenant has maintained
insurance coverage required by Paragraph 13., then the Tenant shall have the
option to either terminate this Lease or to require the Landlord to restore the
Premises to their original condition. If the Landlord is required to repair the
Premises hereunder, then the Landlord shall have a reasonable time within which
to repair the Premises and the Rent payable hereunder shall abate in its
entirety during the time that the Premises are being repaired.
b) In the event that damage occurs to the Premises and the cost to repair
the Premises is equal to or less than $287,500, and provided that the Tenant has
maintained Insurance coverage required by Paragraph 13, then the Landlord shall
restore the Premises to their original condition.
The Landlord shall have a reasonable time within which to repair the
Premises. If the undamaged portion of the Premises is sufficient to permit the
Tenant to continue to operate its business, then the Rent payable hereunder
shall abate in proportion to the loss of use of the Premises by the Tenant. If
the damage is such that the Tenant cannot to operate its business without
substantial detriment, then the Rent payable hereunder shall abate in its
entirety during the time that Premises cannot be occupied by the Tenant.
15. CONDEMNATION
If all of the Premises shall be appropriated or taken for public use by
eminent domain or if so much of the Premises shall be so taken so as to render
the Premises not suitable for such rise as bad been made thereof by Tenant
immediately prior to such taking, without substantial detriment., then this
Lease shall terminate as of the date of such taking. If however a portion of the
Premises shall be so taken, and a sufficient part thereof remains which is
suitable for such use as had been made thereof by Tenant immediately prior to
such taking, without substantial detriment, then the Tenant shall have the right
to continue leasing the Premises and the Rent payable hereunder shall abate in
proportion to the loss of use of the Premises by 'Tenant.
16. INDEMINITY BY TENANT OF LANDLORD
The Tenant shall defend, indemnify and hold harmless the Landlord from and
against any claims, damages or expenses whether damage is to the Premises, or
claims for injuries to persons or property where such claims arise arising out
of or result from the use or occupancy of the Premises, by the Tenant, its
agents, employees or invitees, except where such damage or claims are caused by
the sole negligence of the Landlord, its employees or agents.
Tenant shall indemnify and hold harmless the Landlord from all claims,
mechanics and material man's liens, damages and costs relating from or arising
out of any alterations, extensions, improvements, additions or restorations to
the property performed by the Tenant, its agents or employees-
If it becomes necessary for the Landlord to defend an action or asserted
claim the Tenant will reimburse the Landlord for all costs and expenses
including its actual attorney's fees, witness fees, expert fees and all other
costs and expenses incurred in effecting such defense in addition to other sums
which the Landlord may be called upon to pay by reason of the entry of judgment
against the Landlord in litigation or otherwise.
17. [Reserved]
18. GENERAL COVENANTS OF TENANT
The Tenant covenants and agrees that during the Term of this Lease it
shall:
(a) Comply with all lawful rules, regulations, and laws applicable to the
Premises.
(b) Use all reasonable precautions to protect persons and property against
fires and other casualty.
(c) Provide Landlord reasonable access for inspection of the Premises,
during normal working hours, which inspection Landlord may, but shall have not
any duty to make. In performing any such inspection, Landlord shall not
interfere in any material way with Tenant's operation of its business.
19. ENFORCEMENT
If any action at law or in equity shall be brought to recover any Rent or
other amount under this Lease or for or on account of any breach of this Lease
by either the Landlord or the Tenant, or to enforce or interpret any of the
covenants, terms or conditions of this Lease, or fur the recovery of the
possession of the Leased Premises, the prevailing party shall be entitled to
recover from the losing party all its costs including reasonable attorney's
fees, witness fees, expert fees, and all other reasonable costs and expenses
incurred in connection with such action-
20. DEFAULT OF TENANT
(a) If the Tenant defaults in fulfilling any of the Tenant's obligations
under this Lease, other than the covenants for the payment of Rent or if the
Premises become vacant or deserted or if the Premises arc damaged by reason of
negligent or willful acts of the Tenant or the Tenant's employees, agents,
licensees or invitees, the Landlord may serve written notice upon the Tenant
specifying the nature of said default. Upon the expiration of ten (I 0) days
following the giving of such notice, if the Tenant
(i) has failed to cure such default or
(ii) in the case of a default which by its nature cannot be completely
cured within said ten (10) day period, does not deliver to the Landlord
assurances reasonably satisfactory to the Landlord that the Tenant will promptly
cure such default and if the Tenant does not thereafter within a reasonable time
period cure such default, then the Landlord may serve a written notice of
termination of this Lease upon Tenant, this Lease shall terminate on the
Tenant's receipt of such notice, and the Tenant shall then quit and surrender
the Premises to the Landlord but the Tenant shall remain liable as herein
provided until Landlord either occupies the Premises or lets the Premises to a
third party. Landlord shall use its best efforts to relet the Premises promptly.
(b) The First time during any twelve (12) month period that the Tenant
defaults in the' payment of Rent the Landlord shall provide Tenant ten (I 0)
days' written notice of such default. Unless Landlord receives such Rent payment
within ten (1O) days, the Landlord shall apply the Deposit to satisfy the
delinquent Rent obligation- If the remaining Deposit is insufficient to satisfy
such obligation in full, Landlord may, upon ten (10) days' prior written
notice, give notice of default under this Lease and the Tenant shall, at
Landlord's election. quit and surrender the Premises to the Landlord, but the
Tenant shall remain liable as hereinafter provided. If Tenant has cured the Rent
delinquency, or if the delinquency has been cured by application of the Deposit,
but Tenant is again delinquent in the payment of Rent during the same twelve
12) month period, Landlord may give the Tenant five (5) days' notice of the
delinquent payment. Unless Landlord receives such Rent payment within five days,
the Landlord shall apply the Deposit to satisfy the delinquent Rent obligation.
If the remaining Deposit is insufficient to satisfy such obligation in full,
Landlord may terminate this Lease without further giving of notice, but Tenant
shall remain liable a-, herein provided.
21. ASSIGNMENT OR SUBLETTING
Tenant may not assign or sublet its rights under this Lease, except to
affiliates of Tenant without Landlord's prior, written consent, which shall not
be unreasonably withheld,
22. RESERVED.
23. QUIET ENJOYMENT
If Tenant shall pay the Rent and perform and observe all of the other
covenants and conditions to be performed and observed by it hereunder. Tenant
shall at all times during the term hereof and during any renewal have quiet,
peaceable enjoyment of the Premises without interference from the Landlord or
any other person claiming through the Landlord or Landlords predecessors.
24. NOT A JOINT VENTURE
The relationship between the parties hereto is not a joint venture but of
Landlord and Tenant.
25. PARAGRAPH HEADINGS
Paragraph headings herein are for convenience only and do not constitute a
substantive part of this Lease.
26. LEASING COMMISSION
Landlord agrees to pay at occupancy a real estate leasing fee to Beard
Development Corporation (hereinafter "Broker') a leasing fee of 4% of the
aggregate lease plus any renewals thereafter at 4% also. Landlord represents and
warrants to Tenant that it has not retained or employed any other broker or
agent (other than Broker), finder or other person to net on Landlord's behalf in
connection with this transaction. Tenant represents and wan-ants to Landlord has
not retained or employed any broker, agent, finder or other person to act on its
behalf in connection with this transaction. Landlord and Tenant hereby each
hereby agree to indemnify and hold the other party harmless against any and all
claims, demands. causes of actions and damages arising out of or by reason of
truth and accuracy or incompleteness of representations and warranties set forth
in this Paragraph 26.
27. ESTOPPEL CERTIFICATES STATEMENT ATTORNMENT, SUBORDINATION AND EXECUTION
OF DOCUMENTS.
a. Tenant agrees that at any time and from time to time at reasonable
intervals, within ten (10) business days after written request by Landlord
Tenant shall execute, acknowledge and deliver to Landlord, Landlord's mortgagee,
or other designates of Landlord, a Certificate in such form as may from time to
time be provided, certifying:
(i) that this Lease is in full force and effect and has not been assigned,
modified, supplemented, or amended in any way (or if there has been any
assignment, modification, supplement, or amendment identifying the same);
(ii) that this Lease represents the entire agreement between Landlord and
Tenant as to the subject matter hereof (or if there has been any assignment,
modification, supplement or amendment, identifying the same);
(iii) the commencement date and termination date;
(iv) that all covenants and conditions under this Lease to be performed by
Landlord have been performed or satisfied (and if not, what covenants and
conditions remain unperformed or unsatisfied), specifying each Landlord default,
defense or offset of which the signer may have knowledge,
(v) that no Rent has been paid in advance other than for the month in which
such certificate is signed by Tenant; and
(vi) the date to which all Rent has been paid under this Lease.
b. Tenant shall, in the event any proceedings are brought for the
foreclosure or deed-in lieu of foreclosure of or in the event of exercise of the
power of sale under any mortgage covering the Leased Premises or conveyance of
title by Landlord, attorn to the purchaser upon any such Foreclosure, conveyance
or sale and recognize such purchaser as the Landlord, subject to all of Tenant's
duties, obligations, rights and options under this Lease.
c. Upon request by the Landlord, Tenant shall subordinate its rights
hereunder to the lien of any mortgage or mortgages, or the lien resulting from
any other method of financing a refinancing, now or hereafter in force against
the land and/or the buildings hereafter placed upon the land of' which the
Premises are a part and to all advances made or hereafter to be made upon the
security thereof provided however, that a condition precedent to tenants
requirement to subordinate hereunder shall be that Tenant upon any default in
the terms of such financing by Landlord, shall have the right to pay Rent
directly to the mortgagee or other persons to whom Landlord may be obligated
under such financing and, so long as Tenant pays Rent a.-, herein provided, this
Lease and all Tenant's rights and options hereunder shall remain in full force
and effect as to such mortgagee or other financing obligee of Landlord.
d. The Tenant, upon request of any party in interest, shall execute, within
ten (10) days of Tenant's receipt, such instruments or certificates to carry out
the intent of these paragraphs above as shall be requested by the Landlord;
provided, however, that nothing contained in such instruments or certificates
required by Landlord shall be derogation of any rights granted to Tenant
hereunder, not expand Tenant's obligations hereunder, and if any such
instruments or certificates would have the effect of accomplishing one or both
of the foregoing either explicitly or implicitly, then Tenant shall not be
obligated to execute the same.
28. ENVIRONMENTAL PROTECTION
a) The Tenant represents and warrants that: (i) the Tenant has no knowledge
of the presence of or of any discharge, spillage, uncontrolled loss, seepage or
filtration of oil, petroleum or chemical liquids or solids, liquid or gaseous
products or any hazardous waste or hazardous substance (the "Hazard"), as those
terms are used in the Comprehensive Environmental response Compensation and
Liability Act or 1980 42 U.S.C. 9601 et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986; the Resource Conservation and
Recovery Act or 1976, (the Solid Waste Disposal Act or RCRA), 42 U.S.C. 6901 et
seq., as amended; the Toxic Substance Control Act (TSCA) 15 U.S.C. 2601 et seq;
or in any other federal, state or local law governing hazardous substances, as
such laws may be amended from time to time, (collectively, the 'Act') at, upon,
under or within the Property: and (ii) the Tenant has not caused or permitted to
occur and shall use its best efforts not to permit to exist, any condition which
may cause or constitute a Hazard at, upon, under or within the Property. The
term "Hazard" includes but is not limited to polychlorinated biphenyl (PCB's)
and lead based paints.
b)The Tenant further represents and warrants that (i) neither the Tenant
nor any other party is or with It be involved in operations upon the Property
which operations could lead. to (a) the imposition of liability on the Landlord
or on any other subsequent or former owner of the Property under the Act or (b)
the creation of a lieu on the Property under the Act or under any similar laws
or regulations: and (ii) the Tenant has not permitted, and, shall not permit any
tenant, occupant, employee, agent or licensee to engage in any activity at or
upon the Property that could impose liability under the Act on Landlord, Tenant
or occupant or on any other owner of any of the Property.
c) The Tenant has complied, and shall comply, in all material respects with
the requirements of the Act and related regulations and with all similar laws
and regulations and shall notify the Landlord immediately in the event of any
Hazard or the discovery of any Hazard at, upon, under or within the Property,
except Hazards present on the Premises in the ordinary course of Tenant's
business' as described in subparagraph (d) below. The Tenant shall promptly
forward to the Landlord copies of all orders, notices, permits, applications or
other communications and reports in connection with any Hazard or the presence
of any Hazard or other matters relating to the Act or any similar laws or
regulations as they may attract the Property.
d) Notwithstanding the provisions of subparagraphs (a) through (c) of t@
Paragraph 28, Landlord acknowledges that the nature of Tenant's business may
result in the regular presence of Hazards on the Premises for purposes of
analysis and measurement, and agrees that Tenant may continue to operate its
business on the Premises as it sees fit. Landlord expressly consents to the
presence of Hazards intentionally brought onto the Premises by 'tenant or its
customers or agents the ordinary course of Tenant's business as it may be
conducted now or in the future, and agrees that the presence of such Hazards
during the Term of this Lease shall not be deemed to create any default
hereunder or any right of termination on the part of Landlord, provided that
Tenant complies with the requirements of subparagraphs (e) through (g) below.
e) At the expiration or termination of this Lease. upon the written request
of the Landlord , the tenant shall provide to the Landlord at the Tenant's
expense, an environmental site assessment or environmental audit report,
prepared by an environmental engineering firm acceptable in the reasonable
opinion of the Landlord to assess with a reasonable degree of certainty the
presence or absence of any Hazard and the potential costs in connection with
abatement, cleanup or removal of any Hazard found on, under, at or within the
Property.
f) The tenant shall defend and indemnify the Landlord and hold the Landlord
harmless from and against all actual loss, liability, damage and expense,
including reasonable attorney's fees. suffered or incurred by the Landlord,
whether as owner under or on account of the Act or any similar laws or
regulations, including the assertion of any lien thereunder- (i) with respect to
any Hazard, or the presence of any Hazard affecting the Property whether or
not the same originates or emanates from the Property including any loss of
value of the Property as a result of the foregoing so long as no such loss,
liability, damage and expense is attributable to any Hazard resulting from
actions on the part of the Landlord; and (ii) with respect to any other matter
affecting the Property within the jurisdiction of the Environmental Protection
Agency, any other ,federal agency, or any state or local environmental agency,
the Tenant's obligations under this Section shall arise upon the discovery of
the presence of any Hazard under the Act, whether or not the environmental
Protection Agency, any other federal agency or any state or local environmental
agency has taken or threatened any action in connection with the presence of any
Hazard.
In the event of any Hazard or the presence of any hazardous substance
affecting the Property, whether or not the same originates or emanates from the
Property or any contiguous real estate, and if the Tenant shall fail to comply
with any of the requirements of the Act or related regulations or any other
environmental law or regulation within the time established by any regulatory
agency, the Landlord may at its election, but without the obligation to do so:
(i) give such notices and/or cause such work to be performed at the Property;
and/or (ii) take any and all other actions as the Landlord shall reasonably deem
necessary or advisable in order to abate the Hazard, remove the hazardous
substance or cure the Tenant's noncompliance. Any amounts so paid by the
Landlord pursuant to this Section, together with interest thereon at the highest
rate of interest permitted under prevailing law from the date of payment by the
Landlord, shall be immediately due and payable by the Tenant to the Landlord and
until paid shall be added to and become a part of the rent due under the terms
of this Lease.
h) The provisions of subparagraphs (e) through (g) shall automatically
expire, at the end of the 730th calendar day after the earlier of the last day
of the term of this Lease, or the last day of Tenant's possession of the
Premises if this Lease is terminated before the end of the Term; but this
subparagraph (h) shall not affect Tenant's liability for any matter of which
Tenant has actual knowledge before the end of such 730th day.
29. GENERAL CONDITIONS
(a)At the expiration or termination of this Lease, the Tenant will
redeliver quietly and peaceably unto the Landlord the Premises, together with
all improvements and changes which may have been made thereto or therein by the
Tenant (except that Tenant may remove any fixtures installed by Tenant which
Tenant- uses in the ordinary conduct of its business, provided that such removal
does not materially damage the Premises)-, the condition of the Premises and
improvements at such time shall be in good, usable state of repair and subject
only to normal wear and tear.
(b)No waiver of a breach of any of the covenants in this Agreement by
either party shall be construed to be a waiver of any other succeeding breach of
the same or any other covenant or condition herein.
(c)This Agreement contains the entire Agreement between the parties with
respect to subject matter hereof; the execution hereof has not been induced by
either of the parties through any representations, promises, or understandings
not expressed herein; and there am no other collateral agreements, stipulations,
promises, or understandings whatsoever between the parties hereto, with respect
to subject matter, which are not expressly contained herein. This Agreement
shall be binding upon the parties hereto, their heirs, legal representatives,
successors and assigns. This Agreement may be modified only by a writing
executed by the parties hereto or their successors, heirs or assigns.
(d) No release, discharge, or waiver of any provision hereof shall be of
effect unless in writing and signed.
(e) This Lease Agreement shall be deemed to have been entered into at
Charleston, South Carolina and shall be construed in accordance with the laws of
the State of South Carolina.
(f) Tenant shall not seek any variances, zoning permits, building permits
or take any action respecting the Premises which would limit Landlord's use of
its other property which adjoins the Premised, without first obtaining
Landlord's written approval.
(g) Either party may record a long or short form version of this Lease
Agreement and shall have the cooperation of the other party in so doing.
IN WITNESS WHEREOF the parties have executed this Lease as of the day of
December, 1996.
WITNESS:
TENANT:
Envirometrics, Inc.
Envirometrics Products Company
Azimuth, Incorporated
LANDLORD
James W. Miller, MD
LEASE GUARANTY
The undersigned Guarantors hereby guarantee to Landlord, jointly and
severally, Tenant's performance of all terms, covenants and conditions of the
foregoing Lease, subject to the sole condition that this guaranty and each
Guarantor's liability hereon shall automatically expire and become void on the
earlier of (I) the first anniversary of the date of the Lease or (ii) the date
of Landlord's discharge from liability to Beard Development Corp. on the
promissory note executed by Landlord in the principal amount of $600,000 on the
date hereof. Such automatic expiration shall not affect the Guarantor's
liability, if any, asserted by Landlord in writing before the applicable
expiration date.
WITNESS:
GUARANTORS:
Richard D. Bennett
Charles E. Feigley
STATE OF SOUTH CAROLINA
TITLE TO REAL ESTATE
COUNTY OF CHARLESTON
KNOW ALL MEN BY THESE PRESENTS, that ENVIROMETRICS, INC. ("the Grantor"), a
Delaware corporation, for and in consideration of the sum of Ten and No./100
Dollars ($10.00), and other valuable consideration, to it in hand paid at and
before the sealing of these presents by JAMES W. MILLER ( the "Grantee"), the
receipt of which is hereby acknowledged by the Grantee, has granted, bargained,
sold and released, and by these presents does grant, bargain, sell and release
unto the Grantee, his heirs, personal representatives, successors and assigns,
forever, the following described real property, to wit:
FOR LEGAL DESCRIPTION OF PROPERTY SEE EXHIBIT "A"
ATTACHED HERETO AND MADE PART HEREOF
TOGETHER with all and singular the rights, members, tenements,
hereditaments and appurtenances to said premises belonging or in any wise
incident or appertaining.
TO HAVE AND TO HOLD, all and singular the premises before mentioned unto
the grantee, his heirs, personal representatives, successors and assigns,
forever.
AND, the grantors do hereby bind the Grantor and Grantor's heirs, personal
representatives, successors and assigns to warrant and forever defend all and
singular said premises unto the Grantee and the Grantee's heirs, personal
representatives, successors and assigns, against Grantor's and Grantor's' heirs,
personal representatives, successors and assigns, and every person whomsoever
lawfully claiming or to claim the same or any part thereof
WITNESS the Grantor's hand and seal this 19th day of December 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
ENVIROMETRICS, INC.
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
PERSONALLY appeared before me the undersigned witness and made oath that
(s)he saw the within named Envirometrics, Inc., by Walter H. Elliott, III, its
President, sign, seal and as its act and deed, deliver the within written Deed,
and that (s)he with the other witness witnessed the execution thereof.
Sworn to before me this
day of December, 1996.
Notary Public for South Carolina
My Commission Expires:
EXHIBIT A
LEGAL DESCRIPTION
All that certain unit, known as Unit F-2, situate, lying and being in
Trident Executive Village Horizontal property Regime as shown on the Declaration
(Master Deed), dated October 20, 1986, establishing the Trident Executive
Village Horizontal Property Regime, recorded in Deed Book R-158, at Page 497, in
the Office of the Register of Mesne Conveyances for Charleston County, South
Carolina; and Expansion Amendment recorded in Deed Book J-160, at Page 7-27; and
Expansion Amendment recorded in Book 0-166, at Page 159; and Subdivision
Amendment recorded in Book N-168, at Page 299; and Subdivision Amendment dated
October 12, 1987, and recorded in Book 0-169, at Page 586.
Being the same property conveyed to Envirometrics, Inc., by deed of Bennett
and Associates Leasing dated November 15, 1991, and recorded on November 15,
1991, in Book A-208, at Page 636.
TMS # 486-00-00-059
c/o E. Duffy Myrtetus/ Esq.
Grantee's Address: LeClair Ryan, P.C.
707 East Main Street, llth Floor
Richmond, VA 23219
STATE OF SOUTH CAROLINA
AFFIDAVIT
COUNTY OF CHARLESTON
PERSONALLY appeared before me the undersigned, who, being duly sworn,
deposes and says:
1. Property located at Trident Executive Village, Unit F-2, bearing
Charleston County Tax Map Number 486-00-00-059 was transferred by Envirometrics,
Inc. to James W. Miller on December 19, 1996.
2. The transaction was (Check one):
an arm's length real property transaction and the sales price paid or
to be paid in money or money's worth was $ 575,000.00.
not an arm's length real property transaction and the fair market
value of the property is $
The above transaction is exempt, or partially exempt, from the recording
fee as set forth in S.C. Code Ann. Section 12-24-10, et. seq., because the deed
is"
As required by Code Section 12-24-70, I state that I am a responsible
person who was connected with the transaction as: President of Envirometrics,
Inc.
I further understand that a person required to furnish this affidavit who
willfully furnishes a false or fraudulent affidavit is guilty of a misdemeanor
and, upon conviction, must b ore than one thousand dollars or imprisoned not
more than one year, or both.
Sworn to before me this
19th day of December, 1996.
Notary Public
My Commission Expires: 10-31-2001
The fee is based on the real property's value. Value means the realty's
fair market value. In arm's length real property transactions, this value is the
sales price to be paid in money or money's worth (e.g. stocks, personal
property, other realty, forgiveness of debt, mortgages assumed or placed on the
realty as a result of the transaction). However, a deduction is allowed from
this value for the amount of any lien or encumbrance existing on land, tenement,
or realty before the transfer and remaining on it after the transfer.
STATE OF SOUTH CAROLINA
TITLE TO REAL ESTATE
COUNTY OF BERKELEY
KNOW ALL MEN BY THESE PRESENTS, that ENVIROMETFICS, INC. (the "Grantor"), a
Delaware corporation, for and in consideration of the sun of Ten and No/100
Dollars ($10.00), and other valuable consideration, to it in hand paid at and
before the sealing of these presents by JAMES W. MILLER (the "Grantee"), the
receipt of which is hereby acknowledged by the Grantee, has granted, bargained,
sold and released, and by these presents does grant, bargain, sell and release
unto the Grantee, his heirs, personal representatives, successors and assigns,
forever, the following described real property, to-wit:
FOR LEGAL DESCRIPTION OF PROPERTY SEE EXHIBIT "A"
ATTACHED HERETO AND MADE A PART HEREOF
TOGETHER with all and singular the rights, members, tenements,
hereditaments and appurtenances to said
premises belonging or in any wise incident or appertaining.
TO HAVE AND TO HOLD, all and singular the premises before mentioned unto
the grantee, his heirs, personal representatives, successors and assigns,
forever.
AND, the grantors do hereby bind the Grantor and Grantor's heirs, personal
representatives, successors and assigns to warrant and forever defend all and
singular said premises unto the Grantee and the Grantee's heirs, personal
representatives, successors and assigns, against Grantor's and Grantors' heirs,
personal representatives, successors and assigns, and every person whomsoever
lawfully claiming or to claim the same or any part thereof.
WITNESS the Grantor's hand and seal this 19th day of December., 1996.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
ENVIROMETRICS,
BY
Its
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
PERSONALLY appeared before me the undersigned witness and made oath that
(s)he saw the within named Envirometrics, Inc., by Walter H. Elliott, III, its
President, sign, seal and as its act and deed, deliver the within written Deed,
and that (s)he with the other witness witnessed the execution thereof.
Sworn to before me this
day of December, 1996.
Notary Public for South Carolina
My Commission Expires: 10-31-2001
EXHIBIT A
LEGAL DESCRIPTION
All that piece, parcel or lot of land with the buildings and improvements
thereon, situate, lying and being in Berkeley County, South Carolina, and being
shown and designated as "Lot 10, 1.14 Ac.11 on a plat by Trico Surveying, Inc.,
dated March, 1985, and having revisions dated December 18, 1985, March 17, 1986,
and October 17, 1986, entitled in part "FINAL PLAT Showing Lots 6 Thru 18,
Located in Berkeley Business Center, In The City of Hanahan, Berkeley County,
S.C., Property of North Rhett Enterprises, A Partnership, About to be Conveyed
to BBC., A Limited Partnership" recorded in Plat Cabinet G, Page 52, RMC Office
for Berkeley County, South Carolina, and having such size, shape, buttings,
boundings, dimensions and location as will appear by reference to said plat
which is incorporated herein by reference, be all the dimensions and
measurements shown thereon a little more or less.
Being the same property conveyed to Envirometrics, Inc., a Delaware
corporation, by Bankton Associates, a Delaware partnership, by deed dated
September 14, 1995, and recorded September 19, 1995, in the RMC Office for
Berkeley County in Book 733, at Page 77.
TMS # 266-05-02-071
C/O E. Duffy Myrtetus, Esq.
Grantee's Address: LeClair Ryan, P.C.
707 East Main Street, llth Floor
Richmond, VA 23219
STATE OF SOUTH CAROLINA
AFFIDAVIT
COUNTY OF BERKELEY
PERSONALLY appeared before me the undersigned, who, being duly sworn,
deposes and says:
1. Property located at 1019 Bankton Drive, bearing Berkeley County Tax Map
Number 266-05-02-071, was transferred by Envirometrics, Inc. to James W. Miller
on December 19, 1999.
2. The transaction was (Check one):
_______________an arm's length real property transaction and the sales
price paid or to be paid in money or money's worth was $ 525,000.00*
____________not an arm's length real property transaction and the fair
market value of the property is $
The above transaction is exempt, or partially exempt, from the recording
fee as set forth in S.C. Code Ann. Section 12-24-10, I state that I am a
responsible person who was connected with the transaction as seq., because the
deed ______________________________________________.
As required by Code Section 12-24-70, I state that I am a responsible
person who was connected with the transaction as President of Envirometrics,
Inc.
I further understand that a person required to furnish this affidavit who
willfully furnishes a false or fraudulent affidavit is guilty of a misdemeanor
and, upon conviction, must be fined not more than one thousand dollars or
imprisoned not more than one year, or both.
Sworn to before me this
19th day of December, 1996.
Notary Public for South Carolina
My Commission Expires: 10-31-2001
STATE OF SOUTH CAROLINA
MEMORANDUM OF LEASE
COUNTY OF CHARLESTON
THIS MEMORANDUM OF LEASE dated this 19th day of December 1996 by
Envirometrics Inc., (a Delaware Corporation), Envirometrics Products Company, (a
South Carolina Corporation), and Azimuth Incorporated (a South Carolina
Corporation) (collectively, "Lessees") whose notice addresses are 9229
University Blvd, North Charleston, South Carolina 29406.
BE IT KNOWN, that James W. Miller and Lessees executed and entered into
that certain Lease Agreement dated December 19, 1996 (the "Lease") for the real
property described in Exhibit A attached hereto and incorporated herein by
reference.
The purpose of this Memorandum of Lease is to give record notice of the
Lease and the rights created thereby, all of which are hereby confirmed.
IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease
as of the date first written above.
Envirometrics, Inc.
By:
Name:
Title:
Envirometrics Products Company
By:
Name:
Title:
Azimuth Incorporated
By:
Name:
Title:
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
PERSONALLY appeared before me the undersigned witness and made oath that
(s)he saw the within named Envirometrics, Inc., by Walter H. Elliott, III, its
President, sign, seal and as its act and deed, deliver the within written
Memorandum of Lease, and that (s)he with the other witness witnessed the
execution thereof.
Sworn to before me this day of December, 1996.
Notary Public for South Carolina
My Commission Expires: 10-31-2001
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
PERSONALLY appeared before me the undersigned witness and made oath that
(s)he saw the within named Envirometrics Products Company, by Walter H. Elliott,
III, its President, sign, seal and as its act and deed, deliver the within
written Memorandum of Lease, and that (s)he with the other witness witnessed the
execution thereof.
Sworn to before me this
day of December, 1996.
Notary Public for South Carolina
My Commission Expires:
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
PERSONALLY appeared before me the undersigned witness and made oath that
(s)he saw the within named Azimuth, Incorporated, by Walter H. Elliott, III, its
President, sign, seal and as its act and deed, deliver the within written
Memorandum of Lease, and that (s)he with the other witness witnessed the
execution thereof.
Sworn to before me this
day of December, 1996.
Notary Public for South Carolina
My Commission Expires: 10-31-2001
EXHIBIT A
LEGAL DESCRIPTION
All that piece, parcel or lot of land with the buildings and improvements
thereon, situate, lying and being in Berkeley County, South Carolina, and being
shown and designated as "Lot 10, 1.14 Ac." on a plat by Trico Surveying, Inc.,
dated March, 1985, and having revisions dated December 18, 1985, March 17, 1986,
and October 17, 1986, entitled in part "FINAL PLAT showing Lots 6 Thru 18,
Located in Berkeley Business Center, in The City of Hanahan, Berkeley county,
S.C., Property of North Rhett Enterprises, A Partnership, About to be conveyed
to BBC, A Limited Partnership" recorded in Plat Cabinet G, Page 52, RMC Office
for Berkeley County, South Carolina, and having such size, shape, buttings,
boundings, dimensions and locations as will appear by reference to said plat
which is incorporated herein by reference, be all the dimensions and
measurements shown thereon a little more or less.
TENANT'S ESTOPPEL CERTIFICATE
TO: Beard Development Corporation
1076 Thomas Jefferson
N.W. Washington, D.C. 20007
RE: James W. Miller
The undersigned, as Tenant of approximately 6,694 square feet under that
certain-Lease dated December 19, 1 996, made with James W. Miller ("Landlord")
as of even date herewith covering space in Landlord's office building located in
Charleston County, South Carolina, hereby certifies as follows:
(1) That the undersigned shall enter into occupancy of the premises
described in said Lease by the commencement date of the Lease as set forth
therein;
(2) That said Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way except: N/A
(3) That said Lease, as amended as indicated in paragraph 2 hereof,
represents the entire agreement between the parties as to said leasing;
(4) That the commencement date of the term of said Lease is as of the date
hereof;
(5) That the expiration date of the term of said Lease is November 30,
2001. The undersigned has no rights to renew or extend the term of the Lease
except for an additional five (5) year extension as described in the Lease;
(6) That all conditions of said Lease to be performed by Landlord as of
this date and necessary to the enforceability of said Lease have been satisfied;
(7) That there are no defaults by either Tenant or Landlord thereunder, and
no event has occurred or situation exists which would, with the passage of time,
constitute a default under the Lease. All improvements or work required under
the Lease to be made by the Landlord to date, if any, have been completed to the
satisfaction of the undersigned. Charges for all labor and materials used or
furnished in connection with improvements and/or alterations made for the
account of the undersigned in the building have been paid in full.
(8) That no rents have been prepaid more than __0__ months in advance and
full rental, including basic minimum rent, if any, has not yet commenced to
accrue;
(9) That on this date there are no existing defenses, offsets, claims or
credits which the undersigned has against the enforcement of said Lease by
Landlord except for prepaid rent through (not to exceed two months);
(10) The undersigned has paid to Landlord a security deposit in the amount
of $16,569.00;
(11) The undersigned does not have all governmental permits, licenses and
consents required for the activities and operations being conducted or to be
conducted by it in or around the building but shall acquire such approval by the
time the undersigned has begun occupying the premises; and
(12) That as of the date there are no actions, whether voluntary or
otherwise, pending against the undersigned under the bankruptcy or insolvency
laws of the United States or any state thereof.
The undersigned acknowledges that Beard Development Corporation will rely
on this certificate in connection with the making of a loan to Landlord, that
the truthfulness and accuracy of the foregoing are conditions precedent to the
funding of said loan and that assignment of Landlord's interest in the Lease is
required as additional collateral for the Loan.
EXECUTED this day of December, 1996.
Witnesses:
ENVIROMETRICS, INC. (SEAL)
By:
Name:
Title:
STATE OF SOUTH CAROLINA SUBORDINATION AGREEMENT
COUNTY OF CHARLESTON (INCLUDING SUBORDINATION OF MORTGAGES)
THIS SUBORDINATION AGREEMENT ("Agreement") is made and entered into as of
this 19th day of December, 1996, by and between ENVIROMETRICS, INC. (hereinafter
referred to as "Subordinator") and BEARD DEVELOPMENT CORPORATION, its successors
and/or assigns (hereinafter referred to as "Lender").
BACKGROUND INFORMATION
WHEREAS, Lender has agreed to loan James W. Miller ("Borrower") a loan (the
"Loan") in the original principal amount of up to six hundred twenty-five
thousand and no/l00 dollars ($ 625,000.00) as evidenced by a promissory note
from Borrower to Lender dated as of even date herewith (as amended or modified,
the "Promissory Note"). The proceeds of the Loan shall be used by Borrower to
purchase (i) that certain real property and improvements located at 1019 Bankton
Drive, Charleston, South Carolina ("Berkeley County Property"), and (ii) that
certain real property and improvements located at 9229 University Boulevard,
Charleston, South Carolina ("Charleston County Property") (the Berkeley County
Property and Charleston County Property shall collectively be referred to herein
as the "Properties");
WHEREAS, Borrower has agreed to execute and deliver as of even date
herewith to Lender a first mortgage and security agreement, an assignment of
leases and guaranties, and UCC-1 financing statements for each of the Properties
and such security documents shall be recorded in the Office of the RMC for
Berkeley County and Charleston County, respectively, (the Promissory Note, first
mortgages, first assignment of leases and guaranties, and other related
documents, as amended, modified, or extended, shall collectively be referred to
herein as "Loan Documents") (all real and personal property securing the Loan,
whether now existing or hereafter arising, shall be referred to herein as the
"Collateral");
WHEREAS, the Subordinator has made a loan in the original principal amount
of two hundred thirty thousand and no/l00 dollars ($230,000.00) as evidenced by
a promissory note dated as of even date herewith (as amended or modified, the
"Subordinated Note") and the proceeds of said Subordinated Note were or are
being delivered to Borrower to provide additional capital for the purchase of
the Properties described above. In return, Borrower has agreed to execute and
deliver to the Subordinator a second mortgage and security agreement for each of
the Properties and said second mortgages shall be recorded in the Office of the
RMC for Berkeley County and Charleston County respectively, immediately prior to
the recording of this Agreement but after the recording of the first mortgages
described above;
WHEREAS, the Lender and Subordinator now desire to evidence their
relationship with respect to the Borrower and the Collateral securing the Loan
and agree that for now and forever, the Subordinator shall subordinate its
interests in the Subordinated Debt to the interests of Lender as more
particularly described hereinbelow;
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Subordinator, and in order to
induce Lender, at its option, now or from time to time-hereafter, to make loans
or extend credit or any other financial accommodation or benefit to or for the
account of Borrower; or to grant such renewals or extensions thereof as Lender
may deem advisable; and to better secure Lender in respect of the foregoing,
Subordinator hereby agrees with Lender as follows:
1. Subordination of Debt. Except as set forth in Section 4 hereof,
Subordinator will not ask for, demand, sue for, take or receive from the
Borrower, by setoff or in any other manner, the whole or any part of any monies
which may now or hereafter be owing by the Borrower to Subordinator, principal
or interest, due or not sums due, direct or indirect, absolute or contingent,
whether now existing or hereafter arising, including, without limitation, any
sums due under the Subordinated Note (all such indebtedness, obligations and
liabilities hereinafter collectively referred to as the "Subordinated Debt"),
unless and until all obligations, liabilities, and indebtedness of Borrower to
Lender arising pursuant to the Promissory Note from Borrower to Lender dated
even date herewith together with all extensions, modifications and future
advances thereunder, whether now existing or hereafter arising directly between
Borrower and Lender, or acquired outright, conditionally or as collateral
security from another by Lender, shall have been fully paid and satisfied (all
such obligations, indebtedness and liabilities of Borrower to Lender is
hereinafter collectively referred to as the "Senior Indebtedness") and all
financing arrangements between the Borrower and Lender have been terminated in
writing by Lender.
2. Subordination of Security. Notwithstanding the order of filing of any
mortgages, deeds of trust, assignments of leases, or financing statements, or
the physical possession of any of Borrower's assets by Subordinator (or any
other person, firm or corporation), or the order of granting of any security
interest in the assets of Borrower, any and all rights and security interests of
Subordinator, whether now existing or hereafter acquired or arising and
howsoever existing, in the assets of Borrower and all products and proceeds
thereof shall be and hereby are subordinated to the rights and interests of
Lender therein. Subordinator shall not ask for, demand, sue for, take, receive,
or possess from Borrower, by setoff or in any other manner, the whole or any
part of the assets of Borrower or any products or proceeds thereof, or foreclose
or otherwise realize upon the whole or any part of the assets of Borrower,
whether by judicial action under power of sale, by self-help repossession or
otherwise, unless and until all of the Senior Indebtedness of Borrower to Lender
has been paid and fully satisfied, and all financing arrangements between
Borrower and Lender have been terminated in writing by Lender. Subordinator
further agrees that any and all instruments, documents or agreements creating,
evidencing or perfecting any lien on or security interest in any asset of
Borrower as security for the Subordinated Debt shall expressly state that it is
subject to the terms of this Agreement.
3. Subrogation. Except as set forth in Section 4 hereof, Subordinator also
agrees that, regardless of whether the Senior Indebtedness is secured or
unsecured, Lender shall be subrogated to Subordinator with respect to
Subordinator's claims against Borrower and Subordinators' rights, liens and
security interests, if any, in the Collateral and the proceeds thereof until all
of the Senior Indebtedness of Borrower to Lender shall have been paid and fully
satisfied and all financing arrangements between Borrower and Lender have been
terminated in writing by Lender.
4. Permitted Transactions. Notwithstanding anything to the contrary set
forth herein, Borrower may make, and Subordinator may accept, the regularly
scheduled payments of interest and principal provided for in the Subordinated
Note (without giving effect to any amendment or modification thereof which would
have the effect of increasing any such payment or accelerating the maturity
thereof), provided that, at the time any such payment becomes due and owing
there does not exist any Default or Event of Default (as such terms are defined
in the Mortgages and other Loan Documents) or any event or condition which, with
the making of such payment, would constitute a Default or Event of Default.
5. Subordinated Debt Owed Only to Subordinator. Subordinator warrants and
represents that Subordinator has not previously assigned any interest in the
Subordinated Debt or Subordinated Note to any party other than Lender, that no
party owns an interest in the Subordinated Debt or Subordinated Note other than
Subordinator (whether as joint holders of the Subordinated Debt, participants or
otherwise), and that the entire Subordinated Debt is owing to the Subordinator,
subject only to the rights of Lender hereunder.
6. Priority on Distribution. In the event of any distribution, division or
application, partial of complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of Borrower or readjustment of
the obligations and indebtedness of Borrower, whether by reason of liquidation,
bankruptcy, arrangement, receivership, assignment for the benefit of creditors
or any other action or proceeding involving the readjustment of all or any of
the Subordinated Debt, or the application of the assets of Borrower to the
payment or liquidation thereof, or the dissolution or other winding up of
Borrower's business, or upon the sale or other disposition of all or
substantially all of Borrower's assets or of all of the issued and outstanding
shares of capital stock of Borrower, then, and in any such event, Lender shall
be entitled to receive payment in full of any and all of the Senior Indebtedness
then owing to it prior to the payment of all or any part of the Subordinated
Debt, and any payment or distribution of any kind or character, either in cash,
securities or other property, which shall be payable or deliverable upon or with
respect to any or all of the Subordinated Debt shall be paid or delivered
directly to Lender for application on any of the Senior Indebtedness owing to
Lender, due or not due, until such Senior Indebtedness shall have first been
fully paid and satisfied.
7. Payments Received by Subordinator. Except as provided in Section 4
hereof, should any payment or distribution or security or instrument or proceeds
thereof be received by Subordinator upon or with respect to the Subordinated
Debt prior to the satisfaction of all of the Senior Indebtedness owing to Lender
and termination in writing by Lender of all financing arrangements between
Borrower and Lender, the Sub-ordinator shall receive and hold the same in trust,
as trustee, for the benefit of Lender and shall forthwith deliver the same to
Lender in precisely the form received (except for endorsement or assignment by
Sub-ordinator where necessary), for application on any of the Senior
Indebtedness of Borrower to Lender, due or not due, and, until so delivered, the
same shall be held in trust by Sub-ordinator as the property of Lender. In the
event of the failure of Sub-ordinator to make any such endorsement or assignment
to Lender, Lender, or any of its officers or employees, is hereby irrevocably
authorized to make the same.
8. Instrument Legend. Any instruments evidencing any of the Subordinated
Debt, or any portion, thereof, including, without limitation, the Subordinated
Note, will, on the date hereof or promptly hereafter, be inscribed with a legend
conspicuously indicating the payment thereof is subordinated to the claims or
Lender, pursuant to the terms of this Agreement. Any instrument evidencing any
of the Subordinated Debt, or any portion thereof, which is hereafter executed by
Borrower, will, on the date thereof, be inscribed with the aforesaid legend.
9. Transfer of Claims. Sub-ordinator agrees not to assign or transfer to
others any claims Sub-ordinator has or may have against Borrower while any of
the Senior Indebtedness remains unpaid unless such assignment or transfer is
made expressly subject to this Agreement.
10. Term. This Agreement shall constitute a continuing agreement of
subordination, and Lender may continue, without notice to Sub-ordinator, to lend
monies, extend credit and make other accommodations to or for the account of
Borrower on the faith hereof, and this Agreement shall be irrevocable by
Sub-ordinator until all Senior Indebtedness of Borrower to Lender shall have
been paid and fully satisfied, and all financing arrangements between the
Borrower and Lender have been terminated in writing by Lender.
11. Additional Agreements Between Lender and Borrower. Lender, at any time
and from time to time, and without providing notice to Borrower and without
obtaining Borrower's consent, may enter into such agreement or agreements with
Borrower as Lender may deem proper, extending the time of payment of or renewing
or otherwise altering, amending, modifying, or assigning the terms of all or any
of the Senior Indebtedness of Borrower to Lender or affecting the security
underlying any or all of the Senior Indebtedness of Borrower to Lender, or may
exchange, sell, release, surrender or otherwise deal with any such security,
without in any way impairing or affecting this Agreement thereby. Sub-ordinator
agrees to waive any rights that it may have with respect to advancing its lien
priority against the Lender as a purchase money mortgagee regardless of whether
the Loan is amended, modified, assigned or extended in any way.
12. Sub-ordinator Waivers. All of the Senior Indebtedness of Borrower to
Lender shall be deemed to have been made or incurred in reliance upon this
Agreement, and Sub-ordinator expressly waives all notice of the acceptance by
Lender of the subordination and other provisions of this Agreement, all other
notices whatsoever, and reliance by Lender upon the subordination and other
agreements as herein provided. Sub-ordinator agrees that; (a) Lender has made no
warranties or representations with respect to the due execution, legality,
validity, completeness or enforceability of the Loan Agreement between Lender
and Borrower or the other Loan Documents (as such term is defined in the Loan
Agreement), or the collectability of the Senior Indebtedness of Borrower to
Lender; (b) Lender shall be entitled to manage and supervise its loans to the
Borrower in accordance with its usual practices, modified from time to time as
it deems appropriate under the circumstances, without regard to the existence of
any rights that Sub-ordinator may now or hereafter have in or to any of the
assets of the Borrower; and (c) Lender shall have no liability to Sub-ordinator
for, and Sub-ordinator waives any claim which he may now or hereafter have
against Lender arising out of, any and all actions which Lender, in good faith,
takes or omits to take (including, without limitation, actions with respect to
the creation, perfection or continuation of liens or security interests in the
Collateral, actions with respect to the occurrence of an Event of Default,
actions with respect to the foreclosure upon, sale of, release of, depreciation
of or failure to realize upon, any of the Collateral and actions with respect to
the collection of any claim for all or any part of the Senior Indebtedness of
Borrower to Lender from any account debtor, guarantor or any other party) with
respect to the Loan Agreement or the other Loan Documents or to the collection
of the Senior Indebtedness of Borrower to Lender or the valuation, use,
protection or release of the Collateral.
13. Lender's Waivers. No waiver shall be deemed to be made by Lender of any
of its rights hereunder, unless the same shall be in writing signed by Lender,
and each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair the rights of Lender or the
obligations of Sub-ordinator to Lender in any other respect at any other time.
14. Application of Payments. The Sub-ordinator hereby agrees that all
payments received by Lender from Borrower may be applied and reapplied, in whole
or in part, to any of the Senior Indebtedness of Borrower to Lender, as Lender,
in its sole discretion, deems appropriate.
1 5. Representations and Warranties. Sub-ordinator hereby represents and
warrants to Lender as follows:
A. Sub-ordinator has all requisite power and authority to execute, deliver
and perform this agreement and without other or further action or approval of
any kind;
B. This Agreement constitutes the valid and legally binding obligation of
Sub-ordinator, enforceable in accordance with its terms (except that
enforceability may be limited by bankruptcy, insolvency and other laws affecting
creditors' rights generally), and no consent or approval of any other party and
no consent, license, approval or authorization of any governmental authority,
bureau or agency is required in connection with the execution, delivery,
performance, validity and enforceability of this Agreement.
16. CONSENT TO JURISDICTION. AS PART OF THE CONSIDERATION FOR THE FINANCIAL
ACCOMMODATIONS EXTENDED TO THE BORROWER BY LENDER, SUB-ORDINATOR CONSENTS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
SOUTH CAROLINA AND WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED HEREUNDER, AND FURTHER AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK
OF JURISDICTION OR VENUE.
17. Governing Law. This Agreement has been delivered and accepted in and
shall be deemed to have been made in Charleston, South Carolina, and shall be
interpreted, and the rights and liabilities of the parties hereto determined, in
accordance with the laws and decisions of the State of South Carolina without
regard to its conflicts of law rules.
18. No Third Party Beneficiary. This Agreement shall inure to the sole
benefit of Lender and no other person or entity shall be entitled to rely
thereon.
19. Parties. This Agreement shall be binding upon, and shall inure to the
benefit of, Lender, Sub-ordinator and their respective successors and assigns.
The term "Borrower" as used herein shall also refer to the successors and
assigns of Borrower, including, without limitation, a receiver, trustee,
custodian, debtor in possession, or corporation created by, or surviving, a
merger or acquisition transaction with Borrower.
20. Section Titles. The section titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
21. Counterparts. This Agreement may be executed in any number of
counterparts, all of which, taken together, shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
IN WITNESS WHEREOF, This instrument has been signed and sealed by the
undersigned as of the day and year first above written.
SUB-ORDINATOR:
WITNESSES:
ENVIROMETRICS, INC (SEAL)
By:
Name:
Title:
LENDER:
BEARD DEVELOPMENT CORPORATION (SEAL)
By:
Name:
Title:
The undersigned Borrower hereby accepts and acknowledges receipt of a copy of
the foregoing Subordination Agreement and agrees that it will not pay any of the
Subordinated Debt (as defined in the foregoing Agreement) owing by them to
Sub-ordinator, except as the foregoing Agreement provides.
Name:
Title:
LENDER:
BEARD DEVELOPMENT CORPORATION (SEAL)
Name:
Title:
The undersigned Borrower hereby accepts and acknowledges receipt of a copy
of the foregoing Subordination Agreement and agrees that it will not pay any of
the Subordinated Debt (as defined in the foregoing Agreement) owing by them to
Sub-ordinator, except as the foregoing Agreement provides. In the event of a.
breach by Borrower of any of the provisions herein, all of the Senior
Indebtedness (as defined in the foregoing Agreement) of Borrower to Lender
shall, without presentment, demand, protest or notice of any kind, become
immediately due and payable unless Lender shall otherwise elect in writing.
BORROWER:
Witnesses:
(SEAL)
James W. Miller
STATE OF
PROBATE
COUNTY OF
PERSONALLY appeared before me the undersigned witness, who, after first
being duly sworn, deposes and says that (s)he saw the within-named
Envirometrics, Inc., by its __________, sign, seal and, as its act and deed,
deliver the within-written Subordination Agreement (including Subordination of
Mortgages) for the uses and purposes therein mentioned and that (s)he together
with the other witness whose signature appears above, witnessed the execution
thereof.
WITNESS
SWORN and subscribed to before me
this day of 1996.
Notary Public for
My commission expires:
STATE OF PROBATE
COUNTY OF
PERSONALLY appeared before me the undersigned witness, who, after first
being duly sworn, deposes and says that (s)he saw the within-named Beard
Development Corporation, by its, sign, seal and, as its act and deed, deliver
the within-written Subordination Agreement (including Subordination of
Mortgages) for the uses and purposes therein mentioned and that (s)he together
with the other witness whose signature appears above, witnessed the execution
thereof.
WITNESS
SWORN and subscribed to before me
this day of 1996.
Notary Public for
My commission expires:
B
In the event of a breach by Borrower of any of the provisions herein, all
of the Senior Indebtedness (as defined in the foregoing Agreement) of Borrower
to Lender shall, without presentment, demand, protest or notice of any kind,
become immediately due and payable unless Lender shall otherwise elect in
writing.
BORROWER:
Witnesses:
(SEAL)
James W. Miller
STATE OF
PROBATE
COUNTY OF
PERSONALLY appeared before me the undersigned witness, who, after first
being duly sworn, deposes and says that (s)he saw the within-named James W.
Miller, sign, sea[ and, as his act and deed, deliver the within-written
Subordination Agreement (Including Subordination of Mortgages) for the uses and
purposes therein mentioned and that (s)he together with the other witness whose
signature appears above, witnessed the execution thereof.
WITNESS
SWORN and subscribed to before me
this day of 1996.
(L. S.)
Notary Public for
My commission expires:
EXHIBIT A
LEGAL DESCRIPTION
All that certain unit, known as Unit F-2, situate, lying and being in
Trident Executive Village Horizontal property Regime as shown on the Declaration
(Master Deed), dated October 20, 1986, establishing the Trident Executive
Village Horizontal Property Regime, recorded in Deed Book R-158, at Page 497, in
the office of the Register of Mesne Conveyances for Charleston County, South
Carolina; and Expansion Amendment recorded in Deed Book J-160, at Page 727; and
Expansion Amendment recorded in Book 0-166, at Page 159; and Subdivision
Amendment recorded in Book N-168, at Page 299; and Subdivision Amendment dated
October 12, 1987, and recorded in Book 0-169, at Page 586.
Borrower's Social Security
No. ###-##-####
PROMISSORY NOTE
$230,000.00 Charleston, South Carolina
FOR VALUE RECEIVED, as of December 19, 1996, JAMES W. MILLER, an individual
and resident of the State of Virginia (the "Borrower"), promises to pay to the
order of ENVIROMETRICS, INC. (the "Lender"), whose address for payment purposes
is 9229 University Boulevard, Charleston, SC 29481, the principal sum of up to
Two Hundred Thirty Thousand and No/100 Dollars ($230,000.00) (the "Loan") under
the terms and conditions of this promissory note (the "Note").
Background. Borrower has entered into real estate purchase contracts with
Lender to purchase (i) that certain real property and improvements located at
1019 Bankton Drive, Charleston, South Carolina ("Berkeley County Property"); and
(ii) 9229 University Boulevard, Charleston, South Carolina ("Charleston County
Property") (the Berkeley County Property and Charleston County Property shall
collectively be referred to herein as the "Properties"). In connection
therewith, Lender has agreed to loan Borrower up to $230,000.00 to be used for
the acquisition of a portion of the Properties, and in return, Borrower has
agreed to execute and deliver to Lender second priority mortgages and security
agreements ("Mortgages"), second priority assignments of leases and guaranties
("Assignments of Leases and Guaranties"), and UCC-1 Financing Statements for
each of the Properties (the Note, Mortgages, Assignments of Leases and
Guaranties and other related documents shall collectively be referred to as
"Loan Documents"). Beard Development Corporation ("BDC") shall contemporaneously
provide a loan to Borrower in the amount of up to $625,000.00 ("BDC Loan") which
shall be secured by first priority mortgages and assignments of leases on the
Properties. The Lender agrees to subordinate to BDC its right to payment and
collection under this Note as long as any sum is due and payable under BDC Loan
including any future advances under the BDC Loan, and including all extensions
and modifications related thereto.
Interest. The interest rate on the outstanding principal balance of the
Loan shall accrue at a fixed rate per annum equal to ten percent (10.00%).
Interest shall be calculated on the bases of a 360-day year and the actual
number of days elapsed.
Maturity Date. Unless earlier paid, the Loan shall mature two (2) years
from the date hereof ("Maturity Date"). In the event the Note is not paid in
full on the Maturity Date and the Lender and the Borrower have not agreed in
writing on the terms and conditions for an extension of the Maturity Date, then
in addition to all other amounts due and payable hereunder, the Borrower shall
pay the Lender an extension fee equal to one and one-half percent (1.5%) of the
outstanding balance of principal and interest due on the Note on the first day
of each month until the Note is paid in full.
Repayment of Principal and Interest. Monthly installments of accrued
interest only shall be due and payable during the term of this Note on the first
(1st) day of each month commencing January 1, 1997 and continuing until the
Maturity Date. Unless the Note is accelerated as provided below, all remaining
principal and interest shall be due and payable on the Maturity Date. All
payments shall be made to Lender at the address first set forth above or at some
other address designated by the Lender in writing. If a payment date falls on a
weekend or holiday recognized by the State of South Carolina, the payment shall
be due the first (1st) business day after such payment date.
Disbursements Under the Loan. All of the proceeds of the Loan shall be
disbursed at closing.
Acceleration. If Borrower fails to make any payment due hereunder and such
failure to pay continues for a period of five (5) days (the grace period shall
no longer apply if such failure to timely pay occurs more than two (2) times
during the term of this Note), Lender may, without notice or demand, accelerate
all outstanding principal and other sums due hereunder immediately. If payment
of all sums due hereunder is accelerated, the then outstanding principal and all
accrued but unpaid interest shall bear interest at the rate provided for
hereunder plus four percent (4%) per annum until such principal and interest has
been paid in full; provided, however, that in no event shall this or any other
provision herein permit the collection of any interest which would be usurious
under the law governing this transaction, and if any such interest is collected,
the amount above the maximum rate permitted by law shall be deemed to be a
principal payment hereunder. Further, in the event of such acceleration, the
Loan, and all other indebtedness of the Borrower to the Lender arising out of or
in connection with the Loan shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrower.
Late Charges. In the event any payment of interest or principal is
delinquent more than five (5) days, the Borrower will pay to Lender a late
charge of eighteen percent (18%) of the amount of the overdue payment. This
provision for late charges shall not be deemed to extend the time for payment or
be a "grace period" or "cure period" that gives the Borrower a right to cure any
default under this Note. Imposition of late charges is not contingent upon the
giving of notice or demand.
Application of Payments. All sums received by the Lender for application to
the Loan may be applied by the Lender to late charges, expenses, costs,
interest, principal and other amounts owing to the Lender in connection with the
Loan in the order selected by the Lender in its sole discretion.
Waiver by Borrower. Lender's failure to exercise any right or option
available to it hereunder, including without limitation the right or option to
make demand for immediate payment in full of the amount due hereunder, shall not
constitute a waiver of such right or option at any subsequent time or a consent
to the subsequent occurrence of the same or any other event giving rise to such
right or option. Lender's acceptance of any payment hereunder which is less than
payment in full of all amounts due and payable at the time of such payment shall
not constitute a waiver of any right or option available to Lender at that time
or at any subsequent time and shall not nullify any prior exercise of any such
right or option, except as and to the extent otherwise provided by law. Borrower
hereby waives presentment, protest, demand, notice of protest, notice of
dishonor, and any and all other notices and demands which may be made or
required to be made by Lender hereunder. Borrower also expressly agrees that
Lender may, without in any way affecting the liability of Borrower or any
endorser or guarantor hereof, (i) extend the time for payment of any amount
hereunder, (ii) accept further security or release security for payment of this
Note, (iii) otherwise modify the terms of this Note or of any other document
delivered in connection with the Note, and (iv) sell or assign all or a part of
Lender's interest and rights in and under this Note. No extension of time for
payment of any amount hereunder or renewal or modification hereof made by
agreement by Lender with any person shall affect Borrower's liability under this
Note, if Borrower is not a party to such agreement. This Note may not otherwise
be modified except in writing executed by, at least, the party against whom such
modification is sought to be enforced.
Prepayment. Borrower may prepay the principal balance of this Note, in full
at any time or in part from time to time; provided, however, that Borrower shall
pay a prepayment penalty equal to two percent (2%) of any principal amount
prepaid during the thirteen (13) month period commencing on the date hereof.
Taxes and Insurance. In addition to all requirements set forth herein, the
Mortgages, the Assignments of Leases and Guaranties, and other Loan Documents,
during the term of the Note the Lender shall require (i) title, hazard and
public liability insurance on the Properties securing the Note, (ii) a
commitment for title insurance coverage be issued in favor of the Lender on the
date hereof, (iii) a certificate of insurance indicating that the Borrower has
obtained hazard and public liability insurance (with limits acceptable to the
Lender) with the Lender shown as first mortgagee and/or loss payee be delivered
to the Lender on the date hereof, and (iv) all costs of such title, hazard and
public liability insurance (including all title rundowns and abstracts of title)
be paid by the Borrower. The Borrower shall pay the Lender an amount equal to
one-twelfth of the annual real estate taxes on the Properties on the first day
of each month during the term of this Note.
Tax Free Exchange. Borrower intends to acquire the Properties as part of a
deferred exchange of like-kind property in accordance with Section 1031 of the
Internal Revenue Code. In connection therewith, Borrower agrees to indemnify and
hold Lender harmless from any liabilities, claims, and causes of action
associated with the like-kind exchange and the transaction contemplated thereby.
References. All references herein to Lender shall, as may be appropriate,
include and refer to any successor to Lender as well as the then-holder of this
Note, its heirs, successors, and assigns. All references herein to Borrower
shall include and refer to the undersigned, its heirs, successors, and assigns.
All references herein to the neuter gender shall include the masculine and
feminine genders as may be appropriate, and all references herein to the
singular number shall include the plural and vice versa.
Expenses. In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower will pay, in addition to principal and
interest, all reasonable costs of collection and costs related to the
enforcement of this Note, and other related matters, including without
limitation attorneys' fees incurred therewith.
Taxpayer Identification Number. This Note provides for the Borrower's
federal taxpayer identification number or social security number to be inserted
on the first page of this Note. If such number is not available at the time of
execution of this Note or is not inserted by Borrower, Borrower hereby
authorizes and directs the Lender to fill in such number on the first page of
this Note when the Borrower advises the Lender of such number.
Governing Law. This Note shall be governed by, and construed in accordance
with, the laws of the State of South Carolina.
This Note is dated as of the date first written above.
Borrower's Address: (SEAL)
James W. Miller
Family Practice Specialists
1447 Johnston Willis Drive
Richmond, Virginia 23235
STATE OF SOUTH CAROLINA
MORTGAGE AND SECURITY AGREEMENT
COUNTY OF BERKELEY
Mortgagor: James W. Miller ("Mortgagor") )
Family Practice Specialists
1447 Johnston Willis Drive
Richmond, Virginia 23235
Mortgagee: Envirometrics, Inc. ("Mortgagee"
9229 University Boulevard
Charleston, SC 29461
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made and entered
into to be effective as of the 19th day of December, 1996, by Mortgagor to
Mortgagee pursuant to the terms of that certain Promissory Note, dated as of
even date herewith, between Mortgagee and Mortgagor regarding a loan in the
original principal amount of $230,000.00 (the "Note"). Unless otherwise defined
herein, all capitalized terms shall have the meaning set forth in the Note (with
all references to the Note to include all amendments, extensions, renewals,
restatements, and replacements of the same).
NOW, THEREFORE, for valuable consideration (the receipt of which is hereby
acknowledged), to induce Mortgagee to enter into and perform its obligations
under the Note, and to secure payment and performance of all obligations
(collectively, the "Obligations') of Mortgagor arising out of or related to (i)
the Note, the Assignment of Leases and Guaranties dated as of even date
herewith, and all other Loan Documents; and (ii) all future obligations and
future advances made by Mortgagee, related to subsection (i), Mortgagor hereby
bargains, grants, sells, and conveys to Mortgagee and the heirs, successors and
assigns of Mortgagee, the following described property (the Land [defined below]
and all other property described in paragraphs (a)-(e) below are collectively
referred to as the "Premises"):
All that certain parcel or tract of land (the "Land") more fully described
in Exhibit A attached hereto and incorporated herein located in Berkeley County,
State of South Carolina.
Together with:
(a) all singular rights, members, hereditaments, and appurtenances
belonging or in any way incident or appertaining thereto;
(b) all buildings and improvements of every kind and description now or
hereafter erected or placed on the Land (the "Improvements") and all materials
intended for construction, reconstruction, alteration, and repair of the
Improvements now or hereafter erected thereon, all of which materials shall be
deemed to be included within the Premises immediately upon the delivery thereof
to the Land, and all fixtures and articles of personal property now or hereafter
owned by Mortgagor and attached to or contained in and used in connection with
the Land and Improvements or any part thereof or derived from or acquired by any
proceeds of the Land or Improvements or any part thereof, including all goods,
furniture, appliances, furnishings, apparatus, machinery, equipment, motors,
elevators, fittings, radiators, ranges, refrigerators, awnings, shades, screens,
blinds, carpeting, office equipment and other furnishings, and all plumbing,
heating, lighting, cooking, laundry, ventilating, refrigerating, incinerating,
air conditioning, and sprinkler equipment, telephone systems, televisions and
television systems, computer systems and fixtures and appurtenances thereto, and
all renewals or replacements thereof or articles in substitution thereof,
whether or not the same are or shall be attached to the Land and Improvements in
any manner (the "Tangible Property");
(c) all easements, rights of way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, and tenements,
hereditaments and appurtenances whatsoever, in any way belonging, relating, or
appertaining to any of the Premises, or which hereafter shall in any, way
belong, relate, or be appurtenant thereto, whether now owned or hereafter
acquired by Mortgagor, and the reversion and reversions, remainder and
remainders, rents, issues, and profits thereof, and all the estate, right,
title, interest, property, possession, claim, and demand whatsoever, at law as
well as in equity, of Mortgagor of, in, and to the same, including all
judgments, awards of damages, and settlements hereafter made resulting from
condemnation proceedings or the taking of any of the Premises or any part
thereof under the power of eminent domain, or for any damage (whether caused by
such taking or otherwise) to the Premises or any part thereof, or to any rights
appurtenant thereto (together, the "Easements and Other Interests");
(d) all proceeds of any sales or other dispositions of any of the Premises
or any part thereof, including cash proceeds, non-cash proceeds, insurance
proceeds, products, replacements, additions, substitutions, renewals, and
accessions of any of the foregoing (the "Proceeds"); and
(e) as additional collateral and further security for the Obligations,
Mortgagor hereby conditionally assigns to Mortgagee all the leases, security
deposits, rents, issues, profits, revenues, accounts, accounts receivable,
contract rights, rights to payments for goods sold or leased or services
rendered, checks, notes, drafts, acceptances, instruments, deposit accounts,
chattel paper, documents, securities, rentals receivables, installment payment
obligations, book debts, actions, choses in action, judgments, awards, money,
general intangibles, other forms of obligations and receivables, all monies due
or to become due, and all returned or repossessed goods now or hereafter
pertaining to or resulting from the Premises or any part thereof (the
"Intangible Property") or constituting or derived from or acquired by any
proceeds of the Premises or any part thereof (the "Rents and Profits") reserving
only the right to Mortgagor to collect the same as long as there shall exist no
Event of Default (hereafter defined), together with all proceeds, including cash
proceeds, non-cash proceeds, insurance proceeds, products, replacements,
additions, substitutions, renewals, and accessions of the Rents and Profits or
any part thereof, and all replacements, modifications, renewals, and
substitutions thereof or therefore.
All Tangible Property which comprises a part of the Premises shall, to the
extent permitted by law, be deemed to be affixed to the Land. As to the balance
of the Tangible Property and Intangible Property, this Mortgage shall constitute
a security agreement and Mortgagor grants to Mortgagee a security interest in
the Tangible Property, the Intangible Property and the Rents and Profits,
together with all of the rights and remedies of a secured party under the Loan
Documents and applicable law, including the South Carolina Uniform Commercial
Code.
To Have and To Hold all and singular the Premises unto Mortgagee and the
heirs, successors, and assigns of Mortgagee forever.
Mortgagor covenants that Mortgagor is lawfully seized of the Premises in
fee simple absolute, that Mortgagor has good right and is lawfully authorized to
sell, convey, or encumber the same, and that the Premises are free and clear of
all encumbrances except as expressly provided herein. Mortgagor further
covenants to warrant and forever defend all and singular the Premises unto
Mortgagee and the heirs, successors, or assigns of Mortgagee from and against
Mortgagor and all persons whomsoever lawfully claiming the Premises or any part
of the Premises.
Provided Always, nevertheless, and it is the true intent and meaning of
Mortgagor and Mortgagee, that if Mortgagor pays or causes to be paid to
Mortgagee the Obligations, the estate hereby granted shall cease, determine, and
be utterly null and void; otherwise, said estate shall remain in full force and
effect.
It Is Agreed that Mortgagor shall be entitled to hold and enjoy the
Premises until an Event of Default has occurred.
Mortgagor further warrants, covenants and agrees with Mortgagee as follows:
Future Advances. This Mortgage is given wholly or partly to secure all
present and future advance and re-advances, if any, made or to be made to
Mortgagor by Mortgagee related to the Loan Documents or the Note. The maximum
principal amount, including present and future advances and other Obligations,
which may be secured by this Mortgage at any one time shall not exceed twice the
face amount of the Note as stated above. Future obligations may be incurred and
future advances may be made at any time within fifteen (1 5) years of the date
of this Mortgage. If Mortgagee reserves the right to make future advances in
excess of the face amount of the Note, it is not an indication that Mortgagee
intends to make such future advances.
2. Maintenance. Mortgagor will maintain the Premises in good condition and
repair and will neither permit nor allow waste of any portion of the Premises.
Mortgagor will promptly repair or restore any portion of the Premises which is
damaged or destroyed by any cause whatsoever and will promptly pay when due all
costs and expenses of such repair or restoration. Mortgagor will not remove or
demolish any improvement or fixture which is now or hereafter part of the
Premises and will cut no timber on the Premises without the express written
consent of Mortgagee. Mortgagee shall be entitled to specific performance of the
provisions of this paragraph.
3. Insurance. Mortgagor will keep all Tangible Property insured by such
company or companies as Mortgagee may reasonably approve for the full insurable
value thereof against all risks including, if coverage is available, flood and
earthquake. Such insurance will be payable to Mortgagee as the interest of
Mortgagee may appear pursuant to the New York standard form of mortgagee clause
or such other form of mortgagee clause as may be required by Mortgagee and will
not be cancelable by either the insurer or the insured without at least thirty
(30) days prior written notice to Mortgagee. Mortgagor hereby assigns to
Mortgagee the right to collect and receive any indemnity payment otherwise owed
to Mortgagor upon any policy of insurance insuring any portion of the Premises,
regardless of whether Mortgagee is named in such policy as a person entitled to
collect upon the same. Any indemnity payment received by Mortgagee from any such
policy of insurance may, at the option of Mortgagee, (ii) be applied by
Mortgagee to payment of any Obligations in such order as Mortgagee may determine
(ii) be applied in a manner determined by Mortgagee to the replacement, repair,
or restoration of the portion of the Premises damaged or destroyed, (iii) be
released to Mortgagor upon such conditions as Mortgagee may determine, or (iv)
be used for any combination of the foregoing purposes. No portion of any
indemnity payment which is applied to replacement, repair, or restoration of any
portion of the Premises which is released to Mortgagor shall be deemed a payment
against any Obligations. Mortgagor will keep the Premises continuously insured
as herein required and will deliver to Mortgagee the original of each policy of
insurance required hereby. Mortgagor will pay each premium coming due on any
such policy of insurance and will deliver to Mortgagee proof of such payment at
least ten (1 0) days prior to the date such premium would become overdue or
delinquent. Upon the expiration or termination of any such policy of insurance,
Mortgagor will furnish to Mortgagee at lease ten (1 0) days prior to such
expiration or termination the original of a renewal or replacement policy of
insurance meeting the requirements of this Mortgage. Upon foreclosure of this
Mortgage, all right, title, and interest of Mortgagor in and to any policy of
insurance upon the Premises which is in the custody of Mortgagee, including the
right to unearned premiums, shall vest in the purchaser of the Premises at
foreclosure, and Mortgagor hereby appoints Mortgagee as the attorney in fact of
Mortgagor to assign all right, title, and interest of Mortgagor in and to any
such policy of insurance to such purchaser. This appointment is coupled with an
interest and shall be irrevocable.
4. Taxes and Assessments. Mortgagor will pay all taxes, assessments, and
other charges which constitute or are secured by a lien upon the Premises and
will deliver to Mortgagee proof of payment of the same not less than ten (1 0)
days prior to the date the same becomes delinquent; provided that Mortgagor
shall be entitled by appropriate proceedings to contest the amount or validity
of such tax, assessment, or charge so long as the collection of the same is
stayed during the pendency of such proceedings and Mortgagor deposit with the
authority to which such tax, assessment, or charge is payable or with Mortgagee
appropriate security for payment of the same, together with any applicable
interest and penalties, should the same be determined due and owing.
5. Environmental Site Assessment. Mortgagor shall pay when due the cost of
providing to Mortgagee, at Mortgagee's request from time to time, a then-current
environmental site assessment, audit, or survey ("Assessment") of the Premises,
which Assessment shall be prepared by an environmental auditor acceptable to
Mortgagee, in Mortgagee's sole discretion; provided that Mortgagee shall make
such request no more frequently than once every second year unless the Note is
being renewed, extended, modified, or accelerated or Mortgagee is otherwise
required by any law, regulation, order, or other directive from any regulatory
agency having jurisdiction over Mortgagee to obtain any such Assessment.
6. Appraisal. Mortgagor shall pay when due the cost of providing to
Mortgagee, at Mortgagee's request from time to time, a then-current appraisal of
the market value of the Premises prepared by an appraiser acceptable to
Mortgagee in its discretion; provided that Mortgagee shall make such request no
more frequently than once every third year unless the Note is being renewed,
extended modified, or accelerated or Mortgagee is otherwise required by any law,
regulation, order, or other directive from any regulatory agency having
jurisdiction over Mortgagee to obtain any such appraisal.
7. Expenditures by Mortgagee. If Mortgagor fails to make payment for
restoration or repair of the Premises, for insurance premiums, for taxes,
assessments, or other charges as required in this Mortgage, or for performance
of any other covenant or condition hereof, Mortgagee may, but shall not be
obligated to, pay for the same, and any such payment by Mortgagee will be
secured by this Mortgage and have the same rank and priority as the principal
Obligation secured by this Mortgage and bear interest from the date of payment
at the rate payable from time to time on outstanding principal under the Note
after the occurrence of an Event of Default. Payments made for taxes by
Mortgagee shall be a first lien on the Premises to the extent of the taxes so
paid with interest from the date of payment, regardless of the rank and priority
of this Mortgage.
8. After Acquired Premises. The lien of this Mortgage will automatically
attach, without further act, to all fixtures now or hereafter located in or on,
or attached to, or used or intended to be used in connection with or with the
operation of, the Premises or any part of the Premises.
9. Environmental Indemnification's. Mortgagor shall indemnify, defend, and
hold Mortgagee and its employees, agents, officers, attorneys, and successors
and assigns harmless from and against any and all claims, demands, suits,
losses, damages, assessments, fines, penalties, costs, or other expenses
(including reasonable attorneys' fees and litigation expenses) arising out of or
related directly or indirectly to the Loan Documents or any transaction
described therein, including any violation of any law related to hazardous
materials and any and all matters arising out of any act, omission, event, or
circumstance (including without limitation the presence on, generation at,
disposal of at, or release from the Premises of any hazardous substance or
waste), regardless of whether the act, omission, event, or circumstance
constituted a violation of any law related to hazardous materials at the time of
its existence or occurrence, including hazardous materials located on or about
any real property owned by any Mortgagor or for which any Mortgagor may
otherwise be responsible. Mortgagor's Obligations under this Section shall
survive the repayment of the Loan and satisfaction of all Loan Documents.
10. C6ndemnation. Mortgagee shall be entitled to be made a party to, be
notified by Mortgagor of, and to participate in any proceeding, whether formal
or informal, for condemnation or acquisition pursuant to power of eminent domain
of any portion of the Premises. Mortgagor assigns to Mortgagee the right to
collect and receive any payment or award to which Mortgagor would otherwise be
entitled by reason of condemnation or acquisition pursuant to power of eminent
domain of any portion of the Premises. Any such payment or award received by
Mortgagee may, at the option of Mortgagee, (i) be applied by Mortgagee to
payment of any Obligations in such order as Mortgagee may determine, (ii) be
applied in a manner determined by Mortgagee to the replacement of the portion of
the Premises taken and to the repair or restoration of the remaining portion of
the Premises, (iii) be released to Mortgagor upon such conditions as Mortgagee
may determine, or (iv) be used for any combination of the foregoing purposes. No
portion of an indemnity payment which is applied to replacement, repair, or
restoration of any portion of the Premises or which is released to Mortgagor
shall be deemed a payment against any Obligations.
11. Transfer. At the option of Mortgagee, the Obligations shall become due
and payable if, without the prior written consent of Mortgagee, Mortgagor shall
convey away the Premises or any interest therein, further encumber the Premises,
or suffer the placement of any mechanics' lien on the Premises which is not
removed within 30 days after filing; or if the legal or beneficial ownership
shall become vested in any other person in any manner whatsoever.
12. Event of Default. An "Event of Default" shall be the occurrence or
existence of the occurrence of any of the following shall constitute an event of
default ("Event of Default"):
(a) Payment. Any payment of principal, interest, or other sum owed to
Mortgagee under the Loan Documents or otherwise due from Mortgagor to Mortgagee
is not made when due.
(b) Additional Defaults. Any provision or covenant of the Loan Documents is
breached, or any warranty, representation, or statement made or furnished to
Mortgagee by Mortgagor in connection with the Loan and the Loan Documents
(including any warranty, representation, or statement in Mortgagor's financial
statements) or to induce Mortgagee to make the Loan, is untrue or misleading in
any material respect.
(c) Insecurity. Mortgagee reasonably deems itself, any collateral, or any
lien or security interest, insecure or unsafe; or Mortgagee, in good faith,
believes that its prospects for payment of the Loan have been impaired.
1 3. Mortgagee's Remedies and Grace Period.
(a) Acceleration/Grace Period. Upon the occurrence of an Event of Default
which continues beyond the applicable Grace Period, Mortgagee shall have the
option to declare the entire unpaid principal amount of the Loan, accrued
interest, and all other Obligations immediately due and payable, without
presentment, demand, or notice of any kind. Prior to exercising any right to
accelerate, Mortgagee will provide written notice to Mortgagor of the Event of
Default and Mortgagor will have five (5) days to cure in the case of a monetary
default and fifteen (1 5) days to cure in the case of a monetary default (the
"Grace Period(s)"), such Grace Periods to commence on the date that notice is
sent to Mortgagor by Mortgagee.
(b) Remedies. Upon the occurrence of an Event of Default which continues
beyond the applicable Grace Period, Mortgagee shall be entitled to pursue all
Rights (hereafter defined) available under each of the Loan Documents, as well
as all Rights and remedies available at law or in equity. Without in any way
limiting the generality of the foregoing, Mortgagee shall also have the
following non-exclusive Rights:
A. Immediate Possession of Collateral. To take immediate possession of all
collateral, whether now owned or hereafter acquired, without notice, demand,
presentment, or resort to legal process, and, for those purposes, to enter any
premises where any of the collateral is located and remove the collateral
therefrom or render it unusable;
B. Assembly of Collateral. To require Mortgagor to assemble and make the
collateral available to Mortgagee at a place to be designated by Mortgagee which
is also reasonably convenient to Mortgagor.
C. Sale of Personal Property. To retain all non-real estate collateral in
satisfaction of any unpaid Obligations as provided in the Uniform Commercial
Code or sell the collateral at public or private sale after giving at least ten
(1 0) days' notice of the time and place of the sale, with or without having the
collateral physically present at the place of the sale (such notice constituting
reasonable notice under the Uniform Commercial Code).
D. Repair of Collateral. To make any repairs to the collateral which
Mortgagee deems necessary or desirable for the purposes of sale.
E. Set-off. To exercise any and all Rights of set-off which Mortgagee may
have against any account, fund, or property of any kind, tangible or intangible,
belonging to Mortgagor which shall be in Mortgagee's possession or under its
control.
F. Cure. To cure any Event of Default in such manner as deemed appropriate
by Mortgagee.
G. Foreclosure. If the Loan is secured by a lien on any real property, to
foreclose on such real property pursuant to the terms of this Mortgage or other
Loan Documents, or at law or in equity. Mortgagee shall be entitled to sue and
recover judgment, as set forth above, either before, after, or during the
pendency of any proceedings for the enforcement of this Mortgage, and the right
of Mortgagee to recover such judgment shall not be affected by any taking,
possession, or foreclosure sale under this Mortgage, or by the exercise of any
other right, power, or remedy for the enforcement of the terms of this Mortgage,
or the foreclosure of the lien of this Mortgage. At the foreclosure Mortgagee
shall be entitled to bid and to purchase the Premises and shall be entitled to
apply the Obligations, or any portion thereof, in payment for the Premises. The
proceeds of the sale shall be applied to the cost of sale, the amount due to
Mortgagee, and as otherwise required by then existing laws related to
foreclosure or as deemed necessary by Mortgagee. In case of a foreclosure sale
of all or any part of the Premises and of the application of the proceeds of
sale to the payment of the Obligations, Mortgagee shall be entitled to enforce
payment of and to receive all amounts then remaining due and unpaid and to
recover judgment for any portion thereof remaining unpaid, with interest. The
remedies provided to Mortgagee in this paragraph shall be in addition to and not
in lieu of any other rights and remedies provided in this Mortgage or any other
Loan Document, by law or in equity, all of which rights and remedies may be
exercised by Mortgagee independently, simultaneously, or consecutively in any
order without being deemed to have waived any right or remedy previously or not
yet exercised.
Without in any way limiting the generality of the foregoing, Mortgagee
shall also have the following specific rights and remedies:
(c) To make any repairs to the Premises which Mortgagee deems necessary or
desirable for the purposes of sale.
(d) To exercise any and all rights of set-off which Mortgagee may have
against any account, fund, or property of any kind, tangible or intangible,
belonging to Mortgagor which shall be in Mortgagee's possession or under its
control.
(e) To cure such Event of Default, with the result that all costs and
expenses incurred or paid by Mortgagee in effecting such cure shall be
additional charges on the Loan which bear interest at the interest rate set
forth in the Note and are payable upon demand.
(f) To foreclose on the Premises and to pursue any and all remedies
available to Mortgagee at law or in equity, and in any order Mortgagee may
desire, in Mortgagee's sole discretion.
14. Appointment of Receiver. Upon the occurrence of an Event of Default,
Mortgagee shall be entitled to the appointment of a receiver to enter upon and
take and maintain full control of the Premises in order to perform all acts
necessary and appropriate for the operation and maintenance of the Premises
including the execution, cancellation, or modification of leases, the making of
repairs to the Premises, and the execution or termination of contracts providing
for the construction, management, or maintenance of the Premises, all on such
terms as are deemed best to protect the security of this Mortgage. The receiver
shall be entitled to receive a reasonable fee for so managing the Premises. All
rents collected pursuant to this paragraph shall be applied first to the costs
of taking control of and managing the Premises and collecting the rents,
including attorneys' fees, receiver's fees, premiums on receiver's bonds, costs
of repairs to the Premises, premiums on insurance policies, taxes, assessments
and other charges on the Premises, and the costs of discharging any obligation
or liability of Mortgagor as lessor or landlord of the Premises and then to the
Obligations. Mortgagee or the receiver shall have access to the books and
records used in the operation and maintenance of the Premises and shall be
liable to account only for those rents actually received. Mortgagee shall not be
liable to Mortgagor or anyone claiming under or through Mortgagor, or anyone
having an interest in the Premises by reason of anything done or left undone by
Mortgagor under this Section. If the rents of the Premises are not sufficient to
meet the costs of taking control of and managing the Premises and collecting the
rents, Mortgagee, at its sole option, may advance funds to meet the costs. Any
funds expended by Mortgagee for such purposes shall become Obligations of
Mortgagor to Mortgagee. Unless Mortgagee and Mortgagor agree in writing to other
terms of payment, such amounts shall be payable upon notice from Mortgagee to
Mortgagor requesting payment thereof and shall bear interest from the date of
disbursement at the rate stated in the Note after the occurrence of an Event of
Default. The entering upon and taking and maintaining of control of the Premises
by Mortgagee or the receiver and the application of rents as provided in this
Mortgage shall not cure or waive any Event of Default or invalidate any other
right or remedy of Mortgagee under this Mortgage. Notwithstanding the
appointment of any receiver or other custodian, Mortgagee shall be entitled as
secured party hereunder to the possession and control of any cash deposits or
instrument at the time held by, or payable or deliverable under the terms of
this Mortgage to, Mortgagee.
1 5. Waiver by Mortgagor. Mortgagor understands that upon default under
this Mortgage, among other remedies set out in this Mortgage, the Note, and the
Loan Documents, Mortgagee may foreclose upon the Premises or any portion thereof
in the sole discretion of Mortgagee and ask for a deficiency judgment.
Mortgagor, to the extent permitted by law, hereby expressly waives and
relinquishes any rights of redemption, valuation, appraisement, marshalling of
assets, and sale in inverse order of alienation and homestead, which Mortgagor
may have under any statute or governing law and understands and agrees that a
deficiency judgment, if pursued by Mortgagee, shall be determined by the highest
price bid at the foreclosure sale of the property. -
1 6. Notices. Any notice given to Mortgagor or Mortgagee by one of these
parties shall be in writing and shall be signed by the party giving notice. Any
notice or other document to be delivered to Mortgagor or Mortgagee by one of
these parties shall be deemed delivered if (i) mailed postage prepaid, or (ii)
sent via nationally recognized overnight courier, to the party to whom directed
at the address of such party described above. This paragraph shall not be deemed
to prohibit any other manner of delivering a notice or other document.
1 7. Additional Documents. The Mortgagor agrees to execute and deliver to
the Mortgagee, upon the request of the Mortgagee from time to time hereafter,
all financing statements and other documents reasonably required to perfect and
maintain the lien and security interest created by the Mortgage.
1 8. Partial Foreclosure. In the event the Property is comprised of more
than one parcel of real property, Mortgagor hereby waives any right to require
Mortgagee to foreclose or exercise any of its other remedies against all of the
Property as a whole or to require Mortgagee to foreclose or exercise such
remedies against one portion of the Property prior to the foreclosure or
exercise of said remedies against other portions of the Property.
19. Greater Estate. In the event that Mortgagor is the owner of a
leasehold estate with respect to any portion of the Premises and, prior to the
satisfaction of the Obligations and the cancellation of this Mortgage of record,
Mortgagor obtains a fee estate in such portion of the Premises, then, such fee
estate shall automatically, and without further action of any kind on the part
of Mortgagor, be and become subject to the security lien of this Mortgage.
20. Imposition of Tax. In the event of the passage of any state, federal,
municipal, or other governmental law, order, rule, or regulation in any manner
changing or modifying the laws now in force governing the taxation of debts
secured by deeds of trust or the manner of collecting taxes so as to affect
adversely Mortgagee, Mortgagor will promptly pay any such tax on or before the
due date; and if Mortgagor fails to make such prompt payment or if any such
state, federal, municipal, or other governmental law, order, rule, or regulation
prohibits Mortgagor from making such payment or would penalize Mortgagee if
Mortgagor makes such payment, then the entire balance of the Obligations
evidenced by the Note shall become due and payable upon demand at the option of
Mortgagee.
21. Amendments. Neither this Mortgage nor any term hereof may be changed,
waived, discharged, or terminated orally, or by any action or inaction, but only
by an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought. Any agreement made after
the execution of this Mortgage by Mortgagor and Mortgagee relating to this
Mortgage shall be superior to the rights of the holder of any intervening lien
or encumbrance on the Premises.
22. Miscellaneous.
(a) The terms "Mortgagor" and "Mortgagee" shall refer to and include the
heirs, legal representatives, successors, and assigns of Mortgagor and Mortgagee
and all covenants and agreements contained in this Mortgage by or on behalf of
Mortgagor or Mortgagee shall bind and inure to the benefit of their
representatives, heirs, successors, and assigns, whether so expressed or not.
(b) This Mortgage shall be governed by, construed, and enforced in
accordance with the laws of South Carolina.
(c) Mortgagee may make or cause to be made reasonable entries onto the
Premises for inspections, appraisals, environmental tests, or assessments upon
the giving to Mortgagor of prior notice, and to this end, Mortgagor grants an
easement to Mortgagee over and onto the Premises for such purposes.
(d) If this is not a first mortgage, any prior mortgages and the maximum
amount thereof are shown below: Mortgage and Security Agreement provided by
Mortgagor in favor of Beard Development Corporation in the principal amount of
$625,000.00 dated as of even date herewith and recorded immediately prior to the
recording of this Mortgage.
(e) Mortgagor represents to Mortgagee that such Mortgagor is benefited by
the Loan evidenced by the Note, whether or not Mortgagor is the maker thereof,
that Mortgagor's obligations under this Mortgage will not render Mortgagor
insolvent, and that adequate and sufficient consideration has been given to
Mortgagor for its execution and delivery of this Mortgage.
23. Subordination. Mortgagee, for itself and its successors and assigns,
agrees and does hereby now and forever subordinate and postpone this Mortgage
lien in favor of the mortgage lien of Beard Development Corporation ("BDC"), and
its successors and assigns, made pursuant to that certain mortgage and security
agreement ("BDC Mortgage") executed by Mortgagor in favor of BDC and recorded in
the RMC's office in the county in which the Land is situate immediately prior to
the recording of this Mortgage. The BDC Mortgage secures a loan in the
original principal amount of $625,000.00 dated as of even date herewith, and
Mortgagee consents and agrees that the BDC Mortgage shall have priority and
precedence over this Mortgage until the BDC Loan is satisfied in full.
In Witness Whereof, Mortgagor has executed this Mortgage under seal as of
the day and year first above written.
MORTGAGOR:
Signed, sealed and delivered in (SEAL)
the presence of: James W. Miller
STATE OF VIRGINIA
PROBATE
COUNTY OF CHESTERFIELD
PERSONALLY appeared before me the undersigned witness who after first being
duly sworn, deposes and says that s/he saw the within-named James W. Miller,
sign, seal and as his act and deed, deliver the within-written Mortgage and
Security Agreement for the uses and purposes therein mentioned, and that s/he
together with the other witness whose signature appears above, witnessed the
execution thereof.
WITNESS
SWORN TO BEFORE ME THIS
19th day of December, 1996.
(L.S.)
Notary Public for VIRGINIA
My commission expires: 4/30/2000
EXHIBIT A
LEGAL DESCRIPTION
All that piece, parcel or lot of land with the buildings and improvements
thereon, situate, lying and being in Berkeley County, South Carolina, and being
shown and designated as "Lot 10, 1.14 Ac.11 on a plat by Trico Surveying, Inc.,
dated March, 1985, and having revisions dated December 18, 1985, March 17, 1986,
and October 17, 1986, entitled in part "FINAL PLAT Showing Lots 6 Thru 18,
Located in Berkeley Business Center, In The City of Hanahan, Berkeley County,
S.C., Property of North Rhett Enterprises, A Partnership, About to be Conveyed
to BBC, A Limited Partnership" recorded in Plat Cabinet G, Page 52, RMC Office
for Berkeley County, South Carolina, and having such size, shape, buttings,
boundings, dimensions and location as will appear by reference to said plat
which is incorporated herein by reference, be all the dimensions and
measurements shown thereon a little more or less.
Being the same property conveyed to the Mortgagor herein by deed of
Envirometrics, Inc., dated December 1996, and recorded simultaneously herewith.
TMS 266-05-02-071
REC'D PAYMENT- 12-20-1996
STATE OF SOUTH CAROLINA PER CLERK MORTGAGE AND SECURITY AGREEMENT
RMC OFFICE
COUNTY OF CHARLESTON CHARLESTON COUNTY, SC
Mortgagor: James W. Miller ("Mortgagor")
Family Practice Specialists
1447 Johnston Willis Drive
Richmond, Virginia 23235
Mortgagee: Envirometrics, Inc. ("Mortgagee")
9229 University Boulevard
Charleston, SC 29461
THIS MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is made and entered
into to be effective as of the 19th day of December, 1996, by Mortgagor to
Mortgagee pursuant to the terms of that certain Promissory Note, dated as of
even date herewith, between Mortgagee and Mortgagor regarding a loan in the
original principal amount of $230,000.00 (the "Note"). Unless otherwise defined
herein, all capitalized terms shall have the meaning set forth in the Note (with
all references to the Note to include all amendments, extensions, renewals,
restatements, and replacements of the same).
NOW, THEREFORE, for valuable consideration (the receipt of which is hereby
acknowledged), to induce Mortgagee to enter into and perform its obligations
under the Note, and to secure payment and performance of all obligations
(collectively, the "Obligations") of Mortgagor arising out of or related to (i)
the Note, the Assignment of Leases and Guaranties dated as of even date
herewith, and all other Loan Documents; and (ii) all future obligations and
future advances made by Mortgagee, related to subsection (i), Mortgagor hereby
bargains, grants, sells, and conveys to Mortgagee and the heirs, successors and
assigns of Mortgagee, the following described property (the Land [defined below]
and all other property described in paragraphs (a)-(e) below are collectively
referred to as the "Premises"):
All that certain parcel or tract of land (the "Land") more fully described
in Exhibit A attached hereto and incorporated herein located in Charleston
County, State of South Carolina.
Together with:
(a) all singular rights, members, hereditaments, and appurtenances
belonging or in any way incident or appertaining thereto;
(b) all buildings and improvements of every kind and description now or
hereafter erected or placed on the Land (the "Improvements") and all materials
intended for construction, reconstruction, alteration, and repair of the
Improvements now or hereafter erected thereon, all of which materials shall be
deemed to be included within the Premises immediately upon the delivery thereof
to the Land, and all fixtures and articles of personal property now or hereafter
owned by Mortgagor and attached to or contained in and used in connection with
the Land and Improvements or any part thereof or derived from or acquired by any
proceeds of the Land or Improvements or any part thereof, including all goods,
furniture, appliances, furnishings, apparatus, machinery, equipment, motors,
elevators, fittings, radiators, ranges, refrigerators, awnings, shades, screens,
blinds, carpeting, office equipment and other furnishings, and all plumbing,
heating, lighting, cooking, laundry, ventilating, refrigerating, incinerating,
air conditioning, and sprinkler equipment, telephone systems, televisions and
television systems, computer systems and fixtures and appurtenances thereto, and
all renewals or replacements thereof or articles in substitution thereof,
whether or not the same are or shall be attached to the Land and Improvements in
any manner (the "Tangible Property");
(c) all easements, rights of way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, and tenements,
hereditaments and appurtenances whatsoever, in any way belonging, relating, or
appertaining to any of the Premises, or which hereafter shall in any way belong,
relate, or be appurtenant thereto, whether now owned or hereafter acquired by
Mortgagor, and the reversion and reversions, remainder and remainders, rents,
issues, and profits thereof, and all the estate, right, title, interest,
property, possession, claim, and demand whatsoever, at law as well as in equity,
of Mortgagor of, in, and to the same, including all judgments, awards of
damages, and settlements hereafter made resulting from condemnation proceedings
or the taking of any of the Premises or any part thereof under the power of
eminent domain, or for any damage (whether caused by such taking or otherwise)
to the Premises or any part thereof, or to any rights appurtenant thereto
(together, the "Easements and Other Interests");
(d) all proceeds of any sales or other dispositions of any of the Premises
or any part thereof, including cash proceeds, non-cash proceeds, insurance
proceeds, products, replacements, additions, substitutions, renewals, and
accessions of any of the foregoing (the "Proceeds"); and
(e) as additional collateral and further security for the Obligations,
Mortgagor hereby conditionally assigns to Mortgagee all the leases, security
deposits, rents, issues, profits, revenues, accounts, accounts receivable,
contract rights, rights to payments for goods sold or leased or services
rendered, checks, notes, drafts, acceptances, instruments, deposit accounts,
chattel paper, documents, securities, rentals receivables, installment payment
obligations, book debts, actions, choses in action, judgments, awards, money,
general intangibles, other forms of obligations and receivables, all monies due
or to become due, and all returned or repossessed goods now or hereafter
pertaining to or resulting from the Premises or any part thereof (the
"Intangible Property") or constituting or derived from or acquired by any
proceeds of the Premises or any part thereof (the "Rents and Profits") reserving
only the right to Mortgagor to collect the same as long as there shall exist no
Event of Default (hereafter defined), together with all proceeds, including cash
proceeds, non-cash proceeds, insurance proceeds, products, replacements,
additions, substitutions, renewals, and accessions of the Rents and Profits or
any part thereof, and all replacements, modifications, renewals, and
substitutions thereof or therefore.
All Tangible Property which comprises a part of the Premises shall, to the
extent permitted by law, be deemed to be affixed to the Land. As to the balance
of the Tangible Property and Intangible Property, this Mortgage shall constitute
a security agreement and Mortgagor grants to Mortgagee a security interest in
the Tangible Property, the Intangible Property and the Rents and Profits,
together with all of the rights and remedies of a secured party under the Loan
Documents and applicable law, including the South Carolina Uniform Commercial
Code.
To Have and To Hold all and singular the Premises unto Mortgagee and the
heirs, successors, and assigns of Mortgagee forever.
Mortgagor covenants that Mortgagor is lawfully seized of the Premises in
fee simple absolute, that Mortgagor has good right and is lawfully authorized to
sell, convey, or encumber the same, and that the Premises are free and clear of
all encumbrances except as expressly provided herein. Mortgagor further
covenants to warrant and forever defend all and singular the Premises unto
Mortgagee and the heirs, successors, or assigns of Mortgagee from and against
Mortgagor and 'all persons whomsoever lawfully claiming the Premises or any part
of the Premises.
Provided Always, nevertheless, and it is the true intent and meaning of
Mortgagor and Mortgagee, that if Mortgagor pays or causes to be paid to
Mortgagee the Obligations, the estate hereby granted shall cease, determine, and
be utterly null and void; otherwise, said estate shall remain in full force and
effect.
It Is Agreed that Mortgagor shall be entitled to hold and enjoy the
Premises until an Event of Default has occurred.
Mortgagor further warrants, covenants and agrees with Mortgagee as follows:
1. Future Advances. This Mortgage is given wholly or partly to secure all
present and future advance and re-advances, if any, made or to be made to
Mortgagor by Mortgagee related to the Loan Documents or the Note. The maximum
principal amount, including resent and future advances and other Obligations,
which may be secured by this Mortgage at any one time shall not exceed twice the
face amount of the Note as stated above. Future obligations may be incurred and
future advances may be made at any time within fifteen (15) years of the date of
this Mortgage. If Mortgagee reserves the right to make future advances in excess
of the face amount of the Note, it is not an indication that Mortgagee intends
to make such future advances.
2. Maintenance. Mortgagor will maintain the Premises in good condition and
repair and will neither permit nor allow waste of any portion of the Premises.
Mortgagor will promptly repair or restore any portion of the Premises which is
damaged or destroyed by any cause whatsoever and will promptly pay when due all
costs and expenses of such repair or restoration. Mortgagor will not remove or
demolish any improvement or fixture which is now or hereafter part of the
Premises and will cut no timber on the Premises without the express written
consent of Mortgagee. Mortgagee shall be entitled to specific performance of the
provisions of this paragraph.
3. Insurance. Mortgagor will keep all Tangible Property insured by such
company or companies as Mortgagee may reasonably approve for the full insurable
value thereof against all risks including, if coverage is available, flood and
earthquake. Such insurance will be payable to Mortgagee as the interest of
Mortgagee may appear pursuant to the New York standard form of mortgagee clause
or such other form of mortgagee clause as may be required by Mortgagee and will
not be cancelable by either the insurer or the insured without at least thirty
(30) days prior written notice to Mortgagee. Mortgagor hereby assigns to
Mortgagee the right to collect and receive any indemnity payment otherwise owed
to Mortgagor upon any policy of insurance insuring any portion of the Premises,
regardless of whether Mortgagee is named in such policy as a person entitled to
collect upon the same. Any indemnity payment received by Mortgagee from any such
policy of insurance may, at the option of Mortgagee, (i) be applied by Mortgagee
to payment of any Obligations in such order as Mortgagee may determine, (ii) be
applied in a manner determined by Mortgagee to the replacement, repair, or
restoration of the portion of the Premises damaged or destroyed, (iii) be
released to Mortgagor upon such conditions as Mortgagee may determine, or (iv)
be used for any combination of the foregoing purposes. No portion of any
indemnity payment which is applied to replacement, repair, or restoration of any
portion of the Premises which is released to Mortgagor shall be deemed a payment
against any Obligations. Mortgagor will keep the Premises continuously insured
as herein required and will deliver to Mortgagee the original of each policy of
insurance required hereby. Mortgagor will pay each premium coming due on any
such policy of insurance and will deliver to Mortgagee proof of such payment at
least ten (10) days prior to the date such premium would become overdue or
delinquent. Upon the expiration or termination of any such policy of insurance,
Mortgagor will furnish to Mortgagee at lease ten (10) days prior to such
expiration or termination the original of a renewal or replacement policy of
insurance meeting the requirements of this Mortgage. Upon foreclosure of this
Mortgage, all right, title, and interest of Mortgagor in and to any policy of
insurance 'upon the Premises which is in the custody of Mortgagee, including the
right to unearned premiums, shall vest in the purchaser of the Premises at
foreclosure, and Mortgagor hereby appoints Mortgagee as the attorney in fact of
Mortgagor to assign all right, title, and interest of Mortgagor in and to any
such policy of insurance to such purchaser. This appointment is coupled with an
interest and shall be irrevocable.
4. Taxes and Assessments. Mortgagor will pay all taxes, assessments, and
other charges which constitute or are secured by a lien upon the Premises and
will deliver to Mortgagee proof of payment of the same not less than ten (10)
days prior to the date the same becomes delinquent; provided that
Mortgagor shall be entitled by appropriate proceedings to contest the
amount or validity of such tax, assessment, or charge so long as the collection
of the same is stayed during the pendency of such proceedings and Mortgagor
deposit with the authority to which such tax, assessment, or charge is payable
or with Mortgagee appropriate security for payment of the same, together with
any applicable interest and penalties, should the same be determined due and
owing.
5. Environmental Site Assessment. Mortgagor shall pay when due the cost of
providing to Mortgagee, at Mortgagee's request from time to time, a then-current
environmental site assessment, audit, or survey ("Assessment") of the Premises,
which Assessment shall be prepared by an environmental auditor acceptable to
Mortgagee, in Mortgagee's sole discretion; provided that Mortgagee shall make
such request no more frequently than once every second year unless the Note is
being renewed, extended, modified, or accelerated or Mortgagee is otherwise
required by any law, regulation, order, or other directive from any regulatory
agency having jurisdiction over Mortgagee to obtain any such Assessment.
6. Appraisal. Mortgagor shall pay when due the cost of providing to
Mortgagee, at Mortgagee's request from time to time, a then-current appraisal of
the market value of the Premises prepared by an appraiser acceptable to
Mortgagee in its discretion; provided that Mortgagee shall make such request no
more frequently than once every third year unless the Note is being renewed,
extended, modified, or accelerated or Mortgagee is otherwise required by any
law, regulation, order, or other directive from any regulatory agency having
jurisdiction over Mortgagee to obtain any such appraisal.
7. Expenditures by Mortgagee. If Mortgagor fails to make payment for
restoration or repair of the Premises, for insurance premiums, for taxes,
assessments, or other charges as required in this Mortgage, or for performance
of any other covenant or condition hereof, Mortgagee may, but shall not be
obligated to, pay for the same, and any such payment by Mortgagee will be
secured by this Mortgage and have the same rank and priority as the principal
Obligation secured by this Mortgage and bear interest from the date of payment
at the rate payable from time to time on outstanding principal under the Note
after the occurrence of an Event of Default. Payments made for taxes by
Mortgagee shall be a first lien on the Premises to the extent of the taxes so
paid with interest from the date of payment, regardless of the rank and priority
of this Mortgage.
8. After Acquired Premises. The lien of this Mortgage will automatically
attach, without further act, to all fixtures now or hereafter located in or on,
or attached to, or used or intended to be used in connection with or with the
operation of, the Premises or any part of the Premises.
9. Environmental Indemnification's. Mortgagor shall indemnify, defend, and
hold Mortgagee and its employees, agents, officers, attorneys, and successors
and assigns harmless from and against any and all claims, demands, suits,
losses, damages, assessments, fines, penalties, costs, or other expenses
(including reasonable attorneys' fees and litigation expenses) arising out of or
related directly or indirectly to the Loan Documents or any transaction
described therein, including any violation of any law related to hazardous
materials and any and all matters arising out of any act, omission, event, or
circumstance (including without limitation the presence on, generation at,
disposal of at, or release from the Premises of any hazardous substance or
waste), regardless of whether the act, omission, event, or circumstance
constituted a violation of any law related to hazardous materials at the time '
of its existence or occurrence, including hazardous materials located on or
about any real property owned by any Mortgagor or for which any Mortgagor may
otherwise be responsible. Mortgagor's Obligations under this Section shall
survive the repayment of the Loan and satisfaction of all Loan Documents.
10. Condemnation. Mortgagee shall be entitled to be made a party to, be
notified by Mortgagor of, and to participate in any proceeding, whether formal
or informal, for condemnation or acquisition pursuant to power of eminent domain
of any portion of the Premises. Mortgagor assigns to Mortgagee the right to
collect and receive any payment or award to which Mortgagor would otherwise be
entitled by reason of condemnation or acquisition pursuant to power of eminent
domain of any portion of the Premises. Any such payment or award received by
Mortgagee may, at the option of Mortgagee, (i) be applied by Mortgagee to
payment of any Obligations in such order as Mortgagee may determine, (ii) be
applied in a manner determined by Mortgagee to the replacement of the portion of
the Premises taken and to the repair or restoration of the remaining portion of
the Premises, (iii) be released to Mortgagor upon such conditions as Mortgagee
may determine, or (iv) be used for any combination of the foregoing purposes. No
portion of an indemnity payment which is applied to replacement, repair, or
restoration of any portion of the Premises or which is released to Mortgagor
shall be deemed a payment against any Obligations.
11. Transfer. At the option of Mortgagee, the Obligations shall become due
and payable if, without the prior written consent of Mortgagee, Mortgagor shall
convey away the Premises or any interest therein, further encumber the Premises,
or suffer the placement of any mechanics' lien on the Premises which is not
removed within 30 days after filing; or if the legal or beneficial ownership
shall become vested in any other person in any manner whatsoever.
1 2. Event of Default. An "Event of Default" shall be the occurrence or
existence of the occurrence of any of the following shall constitute an event of
default ("Event of Default"):
(a) Payment. Any payment of principal, interest, or other sum owed to
Mortgagee under the Loan Documents or otherwise due from Mortgagor to Mortgagee
is not made when due.
(b) Additional Defaults. Any provision or covenant of the Loan Documents is
breached, or any warranty, representation, or statement made or furnished to
Mortgagee by Mortgagor in connection with the Loan and the Loan Documents
(including any warranty, representation, or statement in Mortgagor's financial
statements) or to induce Mortgagee to make the Loan, is untrue or misleading in
any material respect.
(c) Insecurity. Mortgagee reasonably deems itself, any collateral, or any
lien or security interest, insecure or unsafe; or Mortgagee, in good faith,
believes that its prospects for payment of the Loan have been impaired.
1 3. Mortgagee's Remedies and Grace Period.
(a) Acceleration/Grace Period. Upon the occurrence of an Event of Default
which continues beyond the applicable Grace Period, Mortgagee shall have the
option to declare the entire unpaid principal amount of the Loan, accrued
interest, and all other Obligations immediately due and payable, without
presentment, demand, or notice of any kind. Prior to exercising any right to
accelerate, Mortgagee will provide written notice to Mortgagor of the Event of
Default and Mortgagor will have five (5) days to cure in the case of a monetary
default and fifteen (15) days to cure in the case of a non-monetary default (the
"Grace Period(s)"), such Grace Periods to commence an the date that notice is
sent to Mortgagor by Mortgagee.
(b) Remedies. Upon the occurrence of an Event of Default which continues
beyond the applicable Grace Period, Mortgagee shall be entitled to pursue all
Rights (hereafter defined) available under each of the Loan Documents, as well
as all Rights and remedies available at law or in equity. Without in any way
limiting the generality of the foregoing, Mortgagee, shall also have the
following non-exclusive Rights:
A. Immediate Possession of Collateral. To take immediate possession of all
collateral, whether now owned or hereafter acquired, without notice, demand,
presentment, or resort to legal process, and, for those purposes, to enter any
premises where any of the collateral is located and remove the collateral
therefrom or render it unusable;
B. Assembly of Collateral. To require Mortgagor to assemble and make the
collateral available to Mortgagee at a place to be designated by Mortgagee which
is also reasonably convenient to Mortgagor.
C. Sale of Personal Property. To retain all non-real estate collateral in
satisfaction of any unpaid Obligations as provided in the Uniform Commercial
Code or sell the collateral at public or private sale after giving at least ten
(1 0) days' notice of the time and place of the sale, with or without having the
collateral physically present at the place of the sale (such notice constituting
reasonable notice under the Uniform Commercial Code).
D. Repair of Collateral. To make any repairs to the collateral which
Mortgagee deems necessary or desirable for the purposes of sale.
E. Set-off. To exercise any and all Rights of set-off which Mortgagee may
have against any account, fund, or property of any kind, tangible or intangible,
belonging to Mortgagor which shall be in Mortgagee's possession or under its
control.
F. Cure. To cure any Event of Default in such manner as deemed appropriate
by Mortgagee.
G. Foreclosure. If the Loan is secured by a lien on any real property, to
foreclose on such real property pursuant to the terms of this Mortgage or other
Loan Documents, or at law or in equity. Mortgagee shall be entitled to sue and
recover judgment, as set forth above, either before, after, or during the
pendency of any proceedings for the enforcement of this Mortgage, and the right
of Mortgagee to recover such judgment shall not be affected by any taking,
possession, or foreclosure sale under this Mortgage, or by the exercise of any
other right, power, or remedy for the enforcement of the terms of this Mortgage,
or the foreclosure of the lien of this Mortgage. At the foreclosure Mortgagee
shall be entitled to bid and to purchase the Premises and shall be entitled to
apply the Obligations, or any portion thereof, in payment for the Premises. The
proceeds of the sale shall be applied to the cost of sale, the amount due to
Mortgagee, and as otherwise required by then existing laws related to
foreclosure or as deemed necessary by Mortgagee. In case of a foreclosure sale
of all or any part of the Premises and of the application of the proceeds of
sale to the payment of the Obligations, Mortgagee shall be entitled to enforce
payment of and to receive all amounts then remaining due and unpaid and to
recover judgment for any portion thereof remaining unpaid, with interest. The
remedies provided to Mortgagee in this paragraph shall be in addition to and not
in lieu of any other rights and remedies provided in this Mortgage or any other
Loan Document, by law or in equity, all of which rights and remedies may be
exercised by Mortgagee independently, simultaneously, or consecutively in any
order without being deemed to have waived any right or remedy previously or not
yet exercised.
Without in any way limiting the generality of the foregoing, Mortgagee
shall also have the following specific rights and remedies:
(c) To make any repairs to the Premises which Mortgagee deems necessary or
desirable for the purposes of sale.
(d) To exercise any and all rights of set-off which Mortgagee may have
against any account, fund, or property of any kind, tangible or intangible,
belonging to Mortgagor which shall be in Mortgagee's possession or under its
control.
(e) To cure such Event of Default, with the result that all costs and
expenses incurred or paid by Mortgagee in effecting such cure shall be
additional charges on the Loan which bear interest at the interest rate set
forth in the Note and are payable upon demand.
(f) To foreclose on the Premises and to pursue any and all remedies
available to Mortgagee at law or in equity, and in any order Mortgagee may
desire, in Mortgagee's sole discretion.
14. Appointment of Receiver. Upon the occurrence of an Event of Default,
Mortgagee shall be entitled to the appointment of a receiver to enter upon and
take and maintain full control of the Premises in order to perform all acts
necessary and appropriate for the operation and maintenance of the Premises
including the execution, cancellation, or modification of leases, the making of
repairs to the Premises, and the execution or termination of contracts providing
for the construction, management, or maintenance of the Premises, all on such
terms as are deemed best to protect the security of this Mortgage. The receiver
shall be entitled to receive a reasonable fee for so managing the Premises. All
rents collected pursuant to this paragraph shall be applied first to the costs
of taking control of and managing the Premises and collecting the rents,
including attorneys' fees, receiver's fees, premiums on receiver's bonds, costs
of repairs to the Premises, premiums on insurance policies, taxes, assessments
and other charges on the Premises, and the costs of discharging any obligation
or liability of Mortgagor as lessor or landlord of the Premises and then to the
Obligations. Mortgagee or the receiver shall have access to the books and
records used in the operation and maintenance of the Premises and shall be
liable to account only for those rents actually received. Mortgagee shall not be
liable to Mortgagor or anyone claiming under or through Mortgagor, or anyone
having an interest in the Premises by reason of anything done or left undone by
Mortgagor under this Section. If the rents of the Premises are not sufficient to
meet the costs of taking control of and managing the Premises and collecting the
rents, Mortgagee, at its sole option, may advance funds to meet the costs. Any
funds expended by Mortgagee for such purposes shall become Obligations of
Mortgagor to Mortgagee. Unless Mortgagee and Mortgagor agree in writing to other
terms of payment, such amounts shall be payable upon notice from Mortgagee to
Mortgagor requesting payment thereof and shall bear interest from the date of
disbursement at the rate stated 'in the Note after the occurrence of an Event of
Default. The entering upon and taking and maintaining of control of the Premises
by Mortgagee or the receiver and the application of rents as provided in this
Mortgage shall not cure or waive any vent of Default or invalidate any other
right or remedy of Mortgagee under this Mortgage. Notwithstanding the
appointment of any receiver or other custodian, Mortgagee shall be entitled as
secured party hereunder to the possession and control of any cash deposits or
instrument at the time held by, or payable or deliverable under the terms of
this Mortgage to, Mortgagee.
15. Waiver by Mortgagor. Mortgagor understands that upon default under this
Mortgage, among other remedies set out in this Mortgage, the Note, and the Loan
Documents, Mortgagee may foreclose upon the Premises or any portion thereof in
the sole discretion of Mortgagee and ask for a deficiency judgment. Mortgagor,
to the extent permitted by law, hereby expressly waives and relinquishes any
rights of redemption, valuation, appraisement, marshalling of assets, and sale
in inverse order of alienation and homestead, which Mortgagor may have under any
statute or governing law and understands and agrees that a deficiency judgment,
if pursued by Mortgagee, shall be determined by the highest price bid at the
foreclosure sale of the property.
1 6. Notices. Any notice given to Mortgagor or Mortgagee by one of these
parties shall be in writing and shall be signed by the party giving notice. Any
notice or other document to be delivered to Mortgagor or Mortgagee by one of
these parties shall be deemed delivered if (i) mailed postage prepaid, or (ii)
sent via nationally recognized overnight courier, to the party to whom directed
at the address of such party described above. This paragraph shall not be deemed
to-prohibit any other manner of delivering a notice or other document.
1 7. Additional Documents. The Mortgagor agrees to execute and deliver to
the Mortgagee, upon the request of the Mortgagee from time to time hereafter,
all financing statements and other documents reasonably required to perfect and
maintain the lien and security interest created by the Mortgage.
1 8. Partial Foreclosure. In the event the Property is comprised of more
than one parcel of real property, Mortgagor hereby waives any right to require
Mortgagee to foreclose or exercise any of its other remedies against all of the
Property as a whole or to require Mortgagee to foreclose or exercise such
remedies against one portion of the Property prior to the foreclosure or
exercise of said remedies against other portions of the Property.
1 9. Greater Estate. In the event that Mortgagor is the owner of a
leasehold estate with respect to any portion of the Premises and, prior to the
satisfaction of the Obligations and the cancellation of this Mortgage of record,
Mortgagor obtains a fee estate in such portion of the Premises, then, such fee
estate shall automatically, and without further action of any kind on the part
of Mortgagor, be and become subject to the security lien of this Mortgage.
20. Imposition of Tax. In the event of the passage of any state, federal,
municipal, or other governmental law, order, rule, or regulation in any manner
changing or modifying the laws now in force governing the taxation of debts
secured by deeds of trust or the manner of collecting taxes so as to affect
adversely Mortgagee, Mortgagor will promptly pay any such tax on or before the
due date; and if Mortgagor fails to make such prompt payment or if any such
state, federal, municipal, or other governmental law, order, rule, or regulation
prohibits Mortgagor from making such payment or would penalize Mortgagee if
Mortgagor makes such payment, then the entire balance of the Obligations
evidenced by the Note shall become due and payable upon demand at the option of
Mortgagee.
21. Amendments. Neither this Mortgage nor any term hereof may be changed,
waived, discharged, or terminated orally, or by any action or inaction, but only
by an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought. Any agreement made after
the execution of this Mortgage by Mortgagor and Mortgagee relating to this
Mortgage shall be superior to the rights of the holder of any intervening lien
or encumbrance on the Premises.
22. Miscellaneous.
(a) The terms "Mortgagor" and "Mortgagee" shall refer to and include the
heirs, legal representatives, successors, and assigns of Mortgagor and Mortgagee
and all covenants and agreements contained in this Mortgage by or on behalf of
Mortgagor or Mortgagee shall bind and inure to the benefit of their
representatives, heirs, successors, and assigns, whether so expressed or not.
(b) This Mortgage shall be governed by, construed, and enforced in
accordance with the laws of South Carolina.
(c) Mortgagee may make or cause to be made reasonable entries onto the
Premises for inspections, appraisals, environmental tests, or assessments upon
the giving to Mortgagor of prior notice, and to this end, Mortgagor grants an
easement to Mortgagee over and onto the Premises for such purposes.
(d) If this is not a first mortgage, any prior mortgages and the maximum
amount thereof are shown below: Mortgage and Security Agreement provided by
Mortgagor in favor of Beard Development Corporation in the principal amount of
$625,000.00 dated as of even date herewith and recorded immediately prior to the
recording of this Mortgage.
(e) Mortgagor represents to Mortgagee that such Mortgagor is benefited by
the Loan evidenced by the Note, whether or not Mortgagor is the maker thereof,
that Mortgagor's obligations under this Mortgage will not render Mortgagor
insolvent, and that adequate and sufficient consideration has been given to
Mortgagor for its execution and delivery of this Mortgage.
23. Leaseback Offset. The Mortgagor and Mortgagee acknowledge and agree
that, contemporaneously with the execution of this Mortgage, they have entered
into a leaseback lease agreement (the "Lease") for the lease of the Charleston
County Property by Mortgagor as landlord to Mortgagee as tenant. As a further
covenant and condition of this Mortgage, the parties hereby covenant and agree
during the term of the Lease, or any extension thereof, that in the event
Mortgagee breaches the Lease or is delinquent in the payment of rent or any
other charges due under the Lease for a period of ninety (90) days, then in that
event, Mortgagor shall be immediately entitled to an offset against payment due
under the Note and this Mortgage in an amount equal to any such unpaid rent or
charges due under the Lease, together with interest thereon in the amount of ten
percent (10%) from the date of default. The offset granted herein shall, at the
election of Mortgagor, be applied against the unpaid principal balance due on
the Note or may be applied as against current monthly payments due pursuant to
the Note and Mortgage.
24. Subordination. Mortgagee, for itself and its successors and assigns,
agrees and does hereby now and forever subordinate and postpone this Mortgage
lien in favor of the mortgage lien of Beard Development Corporation ("BDC"), and
its successors and assigns, made pursuant to that certain mortgage and security
agreement ("BDC Mortgage") executed by Mortgagor in favor of BDC and recorded in
the RMC's office in the county in which the Land is situate immediately prior to
the recording of this Mortgage. The BDC Mortgage secures a loan in the
original principal amount of $625,000.00 dated as of even date herewith, and
Mortgagee consents and agrees that the BDC Mortgage shall have priority and
precedence over this Mortgage until the BDC Loan is satisfied in full.
[Signature Page Attached]
In Witness Whereof, Mortgagor has executed this Mortgage under seal as of
the day and year first above written.
MORTGAGOR:
Signed, sealed and delivered in (SEAL)
the presence of:
James W. Miller
STATE OF VIRGINIA
PROBATE
COUNTY OF CHESTERFIELD
PERSONALLY appeared before me the undersigned witness who after first being
duly sworn, deposes and says that s/he saw the within-named James W. Miller,
sign, seal and as his act and deed, deliver the within-written Mortgage and
Security Agreement for the uses and purposes therein mentioned, and that s/he
together with the other witness whose signature appears above, witnessed the
execution thereof.
WITNESS
SWORN TO BEFORE ME THIS
day of , 1996.
(L. S.)
My commission expires:
EXHIBIT A
LEGAL DESCRIPTION
All that certain unit, known as Unit F-2, situate, lying and being in
Trident Executive Village Horizontal property Regime as shown on the Declaration
(Master Deed), dated October 20, 1986, establishing the Trident Executive
Village Horizontal Property Regime, recorded in Deed Book R-158, at Page 497, in
the Office of the Register of Mesne Conveyances for Charleston County, South
Carolina; and Expansion Amendment recorded in Deed Book J-160, at Page 727; and
Expansion Amendment recorded in Book 0-166, at Page 159; and Subdivision
Amendment recorded in Book N-168, at Page 299; and Subdivision Amendment dated
October 12, 1987, and recorded in Book 0-169, at Page 586.
Being the same premises conveyed to the Mortgagor herein by deed of
Envirometrics, Inc., dated December 1996, and recorded simultaneously herewith.
TMS # 486-00-00-059
STATE OF SOUTH CAROLINA
ASSIGNMENT OF LEASES
COUNTY OF BERKELEY AND GUARANTIES
Assignor: James W. Miller ("Assignor")
Family Practice Specialists
1447 Johnston Willis Drive
Richmond, Virginia 23235
Lender: Envirometrics, Inc. ("Lender")
9229 University Boulevard
Charleston, SC 29481
THIS ASSIGNMENT OF LEASES AND GUARANTIES (this "Assignment") is made and
entered into to be effective as of the ___ day of December, 1996, by Assignor to
Lender pursuant to the terms of that certain Promissory Note, dated as of even
date herewith, between Lender and Assignor regarding a loan in the original
principal amount of up to $230,000. Unless otherwise defined herein, all
capitalized terms shall have the meaning set forth in said Note (with all
references to any Note or other Loan Document to include all amendments,
extensions, renewals, restatements and replacements of the same).
PRELIMINARY STATEMENT:
Assignor is the owner of certain land more particularly described on
Exhibit A attached hereto and incorporated herein by reference, improvements
constructed thereon (or to be constructed thereon) and personal property located
thereon (or to be located thereon) and used in connection therewith
(collectively the land, improvements and personal property are referred to as
the "Premises").
NOW, THEREFORE, for valuable consideration (the receipt of which is hereby
acknowledged), to induce Lender to enter into and perform its obligations under
the Note, and to secure payment and performance of all obligations
(collectively, the "Obligations") of Obligors arising out of or related to (i)
the Note, that certain Mortgage and Security Agreement dated as of even date
herewith securing the Premises ("Mortgage"), and all other Loan Documents; and
(ii) all future obligation, including future advances made by Lender, related
to subsection (i), Assignor does hereby immediately and absolutely sell, assign,
transfer, and set over unto Lender, its successors and assigns, the rights,
interests and privileges which Assignor as lessor has and may have in any and
all leases now existing or hereafter made and affecting the Premises as such
leases may have been or may from time to time hereafter be modified, extended,
renewed or replaced (individually, a "Lease" and collectively, the "Leases"),
and all guaranties of such leases (individually, a "Guaranty" and collectively,
the "Guaranties") together with all rents, issues, income and profits, and
proceeds due and becoming due from the Leases and Guaranties.
Assignor further warrants, covenants and agrees with Lender as follows:
1. Application of Rents by Assignor. So long as there shall exist no Event
of Default, Assignor shall have the right under a license granted hereby (but
limited as provided in the following section) to collect, but not more than two
months prior to accrual, all rents, arising from or out of the Leases, or from
or out of the Premises or any part thereof, and Assignor shall receive such
rents, as a trust fund to be applied, and Assignor hereby covenants to so apply
the rents, () the payment of taxes and assessments upon the Premises before
penalty or interest are due thereon, (ii) the cost of such insurance and of such
maintenance and repairs as is required by the terms of the Loan Documents, (iii)
the cost of utilities and all other expenses reasonably incurred related to the
ownership, operation and maintenance of the Premises and (iv) the payment of
interest and principal and other amounts becoming due on the Loan, before using
any part of the rents for any other purposes.
2. Collection of Rents by Lender. in furtherance of this Assignment,
Assignor hereby authorizes Lender, by its employees or agents, at its option,
after the occurrence of an Event of Default to (ii) terminate the license
granted in this Assignment to Assignor to collect rents, income, issues and
profits from the Premises, (ii) enter upon the Premises, and (iii) collect, in
the name of Assignor or in its own name, as assignee, the rents accrued but
unpaid and in arrears at the date of an Event of Default as well as the rents
thereafter accruing and becoming payable during the period of the continuance of
an Event of Default or any other Event of Default; and to this end, Assignor
further agrees that it will facilitate in all reasonable ways Lender's
collection of any rents, and will, upon request by Lender, execute a written
notice in the form acceptable to Lender to each tenant directing the tenant to
pay rent to Lender. In any event, presentment of a photostatic copy of this
Assignment to any tenant shall be conclusive evidence of Lender's authority to
thereafter collect all rents and other sums due under the Leases and all tenants
shall be entitled to rely upon the same in making all such payments to Lender.
Acceptance of this Assignment and the collection of rents or the payments under
the Leases shall not constitute a waiver of any rights of Lender under the terms
of the Loan Documents.
3. Lender's Entry Upon Premises. Upon any entry unto the Premises by
Lender, Lender shall be authorized, but not obligated, to (i) take over and
assume the control, care, management, operation, repair and maintenance of the
Premises; (ii) perform such other acts as Lender in its discretion may deem
proper; and (iii) expend such sums out of the income of the Premises as may be
needful in connection with the Premises in the same manner, to the same extent
as Assignor (including the right to effect new Leases, to cancel or surrender
existing Leases, to evict tenants, to bring or defend any suits in connection
with the possession of any portion of the Premises in Lender's own name or in
the name of Assignor, to alter or to amend the terms of existing Leases, to
renew existing Leases, and to make concessions to the tenants. Assignor releases
all claims against Lender arising out of such management, operation, repair and
maintenance, except claims arising from the gross negligence or willful
misconduct of Lender.
4. Collection under the Guaranties by Lender. In furtherance of this
Assignment, Assignor hereby authorizes Lender, at its option, after the
occurrence of an Event of Default to pursue any and all actions which are
available to Assignor at law, in equity, or in contract under the Guaranties.
5. Indemnity. Lender shall not be obligated to perform or discharge any
obligation or duty to be performed or discharged by Assignor under any of the
Leases or the Guaranties, and Assignor hereby agrees to indemnify Lender for,
and to hold Lender harmless from, any liability arising from any of the Leases,
Guaranties, or from this Assignment, and this Assignment shall not place
responsibility for the conduct, care, management, or repair of the Premises upon
Lender, or make Lender responsible or liable for any negligence in the
management, operation, upkeep, repair or control of the Premises resulting in
loss or injury or death to any tenant, licensee, employee or stranger.
6. Covenants and Representations of Assignor. Assignor covenants and
represents that (i) except as otherwise set forth in this Assignment, Assignor
has full right and title to assign to Lender the Leases, Guaranties, and the
rents, income and profits due or to become due under the Leases; (ii) no prior
assignment of any interest has been made; (iii) true and correct copies of all
Leases presently in existence, together with all modifications and side
agreements related thereto, have been provided to Lender and there are no
existing defaults under the provisions of the Leases or Guaranties; (iv)
Assignor will promptly perform all obligations imposed upon Assignor as landlord
in the Leases and otherwise keep the Leases in full force and effect; and (v)
without the prior written consent of Lender, Assignor will not cancel, surrender
or terminate any of the Leases or Guaranties or change, alter, or modify any of
the Leases or Guaranties, or require or accept prepayment of more than two
months' rent, or allow premature termination of any of the Leases, Guaranties,
or execute any other assignment of Assignor's interest in any of the Leases,
rents, income or profits from the Premises.
7. Application of Rents by Lender. Lender shall, after payment of such
charges and expenses as Lender may, in its sole discretion, elect to pay,
including reasonable compensation to such managing agent as Lender may select
and employ, and after the accumulation of a reserve to meet taxes, assessments,
water rents, fire and liability insurance and maintenance and replacement
expenses in requisite amounts, credit the net amount of income received by
Lender from the Premises by virtue of this Assignment, to any amount due and
owing to Lender by Assignor under the terms of the Loan Documents, but the
manner of the application of such net income and what items shall be credited
shall be determined in the sole discretion of Lender. Lender shall not be
accountable for more moneys than it actually receives from the Premises, nor
shall Lender be liable for failure to collect rents. Lender shall make
reasonable effort to collect rents, reserving, however, within Lender's own
discretion, the right to determine the method of collection and the extent to
which enforcement of collection of delinquent rents shall be prosecuted.
8. Reinstatement of License; Possession. In the event that Assignor shall
reinstate the Loan completely after an Event of Default, having complied with
all the terms, covenants and conditions of the Loan Documents and any other
requirements of Lender, then the license granted under Section 1 shall be
reinstated at the option of Lender, and Lender, if the license is reinstated,
shall redeliver possession of the Premises to Assignor, who shall remain in
possession unless and until another Event of Default occurs, at which time the
license shall terminate and Lender may at its option again take possession of
the Premises in accordance with this Assignment.
9. Mortgagee in Possession. It is not the intention of the parties hereto
that an entry by Lender upon the Premises under the terms of this Assignment
shall constitute Lender a "mortgagee in possession" in contemplation of law,
except at the option of Lender.
10. Duration of Assignment. This Assignment shall remain in full force and
effect as long as the Loan or any other sums due and owing under the Loan
Documents remain unpaid in whole or in part. It is understood and agreed that a
full and complete cancellation of record of the Mortgage Instrument shall
operate as a full and complete release of all Lender's rights and interest
hereunder, and that after the Mortgage Instrument has been so canceled, this
Assignment shall be void and of no further effect.
11. Subordination. Lender, for itself and its successors and assigns,
agrees and does hereby now and forever subordinate and postpone this Assignment
in favor of the lien created by the assignment of leases made in favor of Beard
Development Corporation ("BDC"), and its successors and assigns, from Assignor
("BDC Assignment") executed by Assignor in favor of BDC and recorded in the
RMC's office in the county in which the Land is situate immediately prior to the
recording of this Assignment. The BDC Assignment secures a loan in the
original principal amount of $625,000-00 dated as of even date herewith, and
Lender consents and agrees that the BDC Assignment shall have priority and
precedence over this Assignment until the BDC Loan is satisfied in full.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed
under seal as of the day and year first above written.
ASSIGNOR:
Signed, sealed and delivered in
of:
(SEAL)
Name: James W. Miller
(SEAL)
STATE OF VIRGINIA
COUNTY OF CHESTERFIELD PROBATE
PERSONALLY appeared before me the undersigned witness, who, after first
being duly sworn, deposes and says that (s)he saw the within-named James W.
Miller, sign, sea[ and, as his act and deed, deliver the within-written
Assignment of Leases and Guaranties for the uses and purposes therein mentioned
and that (s)he together with the other witness whose signature appears above,
witnessed the execution thereof.
SWORN and subscribed to before me
day of 1996.
(L. S.)
Notary Public for Virginia
My commission expires:
EXHIBIT A
LEGAL DESCRIPTION
All that piece, parcel or lot of land with the buildings and improvements
thereon, situate, lying and being in Berkeley County, South Carolina, and being
shown and designated as "Lot 10, 1.14 Ac." on a plat by Trico Surveying, Inc.,
dated March, 1985, and having revisions dated December 18, 1985, March 17, 1986,
and October 17, 1986, entitled in part "FINAL PLAT Showing Lots 6 Thru 18,
Located in Berkeley Business Center, In The City of Hanahan, Berkeley County,
S.C., Property of North Rhett Enterprises, A Partnership, About to be Conveyed
to BBC, A Limited Partnership" recorded in Plat Cabinet G, Page 52, RMC Office
for Berkeley County, South Carolina, and having such size, shape, buttings,
boundings, dimensions and location as will appear by reference to said plat
which is incorporated herein by reference, be all the dimensions and
measurements shown thereon a little more or less.
STATE OF SOUTH CAROLINA REC'D PAYMENT
ASSIGNMENT OF LEASES PER CLERK
COUNTY OF CHARLESTON AND GUARANTIES RMC OFFICE
CHARLESTON COUNTY, SC
Assignor: James W. Miller ("Assignor")
Family Practice Specialists
1447 Johnston Willis Drive
Richmond, Virginia 23235
Lender: Envirometrics, Inc. ("Lender")
9229 University Boulevard
Charleston, SC 29481
THIS ASSIGNMENT OF LEASES AND GUARANTIES (this "Assignment") is made and
entered into to be effective as of the 19th day of December, 1996, by Assignor
to Lender pursuant to the terms of that certain Promissory Note, dated as of
even date herewith, between Lender and Assignor regarding a loan in the original
principal amount of up to $230,000. Unless otherwise defined herein, all
capitalized terms shall have the meaning set forth in said Note (with all
references to any Note or other Loan Document to include all amendments,
extensions, renewals, restatements and replacements of the same).
PRELIMINARY STATEMENT:
Assignor is the owner of certain land more particularly described on
Exhibit A attached hereto and incorporated herein by reference, improvements
constructed thereon (or to be constructed thereon) and personal property located
thereon (or to be located thereon) and used in connection therewith
(collectively the land, improvements and personal property are referred to as
the "Premises").
NOW, THEREFORE, for valuable consideration (the receipt of which is hereby
acknowledged), to induce Lender to enter into and perform its obligations under
the Note, and to secure payment and performance of all obligations
(collectively, the "Obligations") of Obligors arising out of or related to (i)
the Note, that certain Mortgage and Security Agreement dated as of even date
herewith securing the Premises ("Mortgage"), and all other Loan Documents; and
(ii) all future obligations, including future advances made by Lender, related
to subsection (i), Assignor does hereby immediately and absolutely sell, assign,
transfer, and set over unto Lender, its successors and assigns, the rights,
interests and privileges which Assignor as lessor has and may have in any and
all leases now existing or hereafter made and affecting the Premises as such
leases may have been or may from time to time hereafter be modified, extended,
renewed or replaced (individually, a "Lease' and collectively, the "Leases"),
and all guaranties of such leases (individually, a "Guaranty" and collectively,
the "Guaranties") together with all rents, issues, income and profits, and
proceeds due and becoming due from the Leases and Guaranties.
Assignor further warrants, covenants and agrees with Lender as follows:
1. Application of Rents by Assignor. So long as there shall exist no Event
of Default, Assignor shall have the right under a license granted hereby (but
limited as provided in the following section) to collect, but not more than two
months prior to accrual, all rents, arising from or out of the Leases, or from
or out of the Premises or any part thereof, and Assignor shall receive such
rents, as a trust fund to be applied, and Assignor hereby covenants to so apply
the rents, (i) the payment of taxes and assessments upon the Premises before
penalty or interest are due thereon, (ii) the cost of such insurance and of such
maintenance and repairs as is required by the terms of the Loan Documents, (iii)
the cost of utilities and all other expenses reasonably incurred related to the
ownership, operation and maintenance of the Premises and (iv) the payment of
interest and principal and other amounts becoming due on the Loan, before using
any part of the rents for any other purposes.
2. Collection of Rents by Lender. In furtherance of this Assignment,
Assignor hereby authorizes Lender, by its employees or agents, at its option,
after the occurrence of an Event of Default to (i) terminate the license granted
in this Assignment to Assignor to collect rents, income, issues and profits from
the Premises, (ii) enter upon the Premises, and (iii) collect, in the name of
Assignor or in its own name, as assignee, the rents accrued but unpaid and in
arrears at the date of an Event of Default as well as the rents thereafter
accruing and becoming payable during the period of the continuance of an Event
of Default or any other Event of Default; and to this end, Assignor further
agrees that it will facilitate in all reasonable ways Lender's collection of any
rents, and will, upon request by Lender, execute a written notice in the form
acceptable to Lender to each tenant directing the tenant to pay rent to Lender.
In any event, presentment of a photostatic copy of this Assignment to any tenant
shall be conclusive evidence of Lender's authority to thereafter collect all
rents and other sums due under the Leases and all tenants shall be entitled to
rely upon the same in making all such payments to Lender. Acceptance of this
Assignment and the collection of rents or the payments under the Leases shall
not constitute a waiver of any rights of Lender under the terms of the Loan
Documents.
3. Lender's Entry Upon Premises. Upon any entry unto the Premises by
Lender, Lender shall be authorized, but not obligated, to (ii) take over and
assume the control, care, management, operation, repair and maintenance of the
Premises; (ii) perform such other acts as Lender in its discretion may deem
proper; and (iii) expend such sums out of the income of the Premises as may be
needful in connection with the Premises in the same manner, to the same extent
as Assignor (including the right to effect new Leases, to cancel or surrender
existing Leases, to evict tenants, to bring or defend any suits in connection
with the possession of any portion of the Premises in Lender's own name or in
the name of Assignor, to alter or to amend the terms of existing Leases, to
renew existing Leases, and to make concessions to the tenants. Assignor releases
all claims against Lender arising out of such management, operation, repair and
maintenance, except claims arising from the gross negligence or willful
misconduct of Lender.
4. Collection under the Guaranties by Lender. In furtherance of this
Assignment, Assignor hereby authorizes Lender, at its option, after the
occurrence of an Event of Default to pursue any and all actions which are
available to Assignor at law, in equity, or in contract under the Guaranties.
5. Indemnity. Lender shall not be obligated to perform or discharge any
obligation or duty to be performed or discharged by Assignor under any of the
Leases or the Guaranties, and Assignor hereby agrees to indemnify Lender for,
and to hold Lender harmless from, any liability arising from any of the Leases,
Guaranties, or from this Assignment, and this Assignment shall not place
responsibility for the conduct, care, management, or repair of the Premises upon
Lender, or make Lender responsible or liable for any negligence in the
management, operation, upkeep, repair or control of the Premises resulting in
loss or injury or death to any tenant, licensee, employee or stranger.
6. Covenants and Representations of Assignor. Assignor covenants and
represents that (i) except as otherwise set forth in this Assignment, Assignor
has full right and title to assign to Lender the Leases, Guaranties, and the
rents, income and profits due or to become due under the Leases; (ii) no prior
assignment of any interest has been made; (iii) true and correct copies of all
Leases presently in existence, together with all modifications and side
agreements related thereto, have been provided to Lender and there are no
existing defaults under the provisions of ,the Leases or Guaranties; (iv)
Assignor will promptly perform all obligations imposed upon Assignor as landlord
in the Leases and otherwise keep the Leases in full force and effect; and (v)
without the prior written consent of Lender, Assignor will not cancel, surrender
or terminate any of the Leases or Guaranties or change, alter, or modify any of
the Leases or Guaranties, or require or accept prepayment of more than two
months' rent, or allow premature termination of any of the Leases, Guaranties,
or execute any other assignment of Assignor's interest in any of the Leases,
rents, income or profits from the Premises.
7. Application of Rents by Lender. Lender shall, after payment of such
charges and expenses as Lender may, in its sole discretion, elect to pay,
including reasonable compensation to such managing agent as Lender may select
and employ, and after the accumulation of a reserve to meet taxes, assessments,
water rents, fire and liability insurance and maintenance and replacement
expenses in requisite amounts, credit the net amount of income received by
Lender from the Premises by virtue of this Assignment, to any amount due and
owing to Lender by Assignor under the terms of the Loan Documents, but the
manner of the application of such net income and what items shall be credited
shall be determined in the sole discretion of Lender. Lender shall not be
accountable for more moneys than it actually receives from the Premises, nor
shall Lender be liable for failure to collect rents. Lender shall make
reasonable effort to collect rents, reserving, however, within Lender's own
discretion, the right to determine the method of collection and the extent to
which enforcement of collection of delinquent rents shall be prosecuted.
8. Reinstatement of License; Possession. In the event that Assignor shall
reinstate the Loan completely after an Event of Default, having complied with
all the terms, covenants and conditions of the Loan Documents and any other
requirements of Lender, then the license granted under Section 1 shall be
reinstated at the option of Lender, and Lender, if the license is reinstated,
shall redeliver possession of the Premises to Assignor, who shall remain in
possession unless and until another Event of Default occurs, at which time the
license shall terminate and Lender may at its option again take possession of
the Premises in accordance with this Assignment.
9. Mortgagee in Possession. It is not the intention of the parties hereto
that an entry by Lender upon the Premises under the terms of this Assignment
shall constitute Lender a "mortgagee in possession" in contemplation of law,
except at the option of Lender.
10. Duration of Assignment. This Assignment shall remain in full force and
effect as long as the Loan or any other sums due and owing under the Loan
Documents remain unpaid in whole or in part. It is understood and agreed that a
full and complete cancellation of record of the Mortgage Instrument shall
operate as a full and complete release of all Lender's rights and interest
hereunder, and that after the Mortgage Instrument has been so canceled, this
Assignment shall be void and of no further effect.
11. Subordination. Lender, for itself and its successors and assigns,
agrees and does hereby now and forever subordinate and postpone this Assignment
in favor of the lien created by the assignment of leases made in favor of Beard
Development Corporation ("BDC"), and its successors and assigns, from Assignor
("BDC Assignment") executed by Assignor in favor of BDC and recorded in the
RMC's office in the county in which the Land is situate immediately prior to the
recording of this Assignment. The BDC Assignment secures a loan in the
original principal amount of $625,000.00 dated as of even date herewith, and
Lender consents and agrees that the BDC Assignment shall have priority and
precedence over this Assignment until the BDC Loan is satisfied in full.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed
under seal as of the day and year first above written.
ASSIGNOR-.
Signed, sealed and delivered in
of: (SEAL)
Name: James W.Miller
(SEAL)
STATE OF VIRGINIA
PROBATE
COUNTY OF CHESTERFIELD
PERSONALLY appeared before me the undersigned witness, who, after first
being duly sworn, deposes and says that (s)he saw the within-named James W.
Miller, sign, seal and, as his act and deed, deliver the within-written
Assignment of Leases and Guaranties for the uses and purposes therein mentioned
and that (s)he together with the other witness whose signature appears above,
witnessed the execution thereof.
WITNESS
SWORN and subscribed to before me
day of 1996.
(L.S.)
My commission expires:
EXHIBIT A
LEGAL DESCRIPTION
All that certain unit, known as Unit F-2, situate, lying and being in Trident
Executive Village Horizontal property Regime as shown on the Declaration (Master
Deed), dated October 20, 1986, establishing the Trident Executive Village
Horizontal Property Regime, recorded in Deed Book R-158, at Page 497, in the
office of the Register of Mesne Conveyances for Charleston County, South
Carolina; and Expansion Amendment recorded in Deed Book J-160, at Page 727; and
Expansion Amendment recorded in Book 0-166, at Page 159; and Subdivision
Amendment recorded in Book N-168, at Page 299; and Subdivision Amendment dated
October 12, 1987, and recorded in Book 0-169, at Page 586.
BUYER'S CLOSING STATEMENT
Unit F-2, 9229 University Boulevard
North Charleston, South Carolina
DATE: December 19, 1996
PURCHASE PRICE: $575,000.00
less equity injection by Dr. James Miller -210,024.88
less first mortgage proceeds* -165,326.12
less second Mortgage proceeds -l37,500.00
( 37,851.00)
PLUS COSTS:
Title Abstract
(Sallie Avice du Buisson) 256.50
Title Insurance (Colonial
coast Title Agency) 1,000.00
Pro-rata Taxes 224.50
Lender origination Fee
(America's Home Mortgage Co.) 4,500.00
Lender Discount Fee
(America's Home Mortgage Co.) 4,500.00
Leasing Commission
(Beard Development) 13,255.00
Recording Fees
(Charleston County RMC) 115.00
Lender's Attorney's Fee
(Nexsen Pruet) 5,500.00
Buyer's Attorney's Fee
(LeClair Ryan) 7,250.00
Processing Fee (BDC) 500.00
Fee (Qualified Intermediary,
Inc.) 750.00
TOTAL COSTS $37,851.00
BALANCE DUE FROM BUYER $ 0.00
The undersigned has reviewed the closing statement and authorizes'
disbursements as indicated above.
QUALIFIED INTERMEDIARY, INC.
BY:
Gary T. Placentini, President
*An additional $110,589.74 will be disbursed to Buyer on or after December
20, 1996, under the first mortgage note.
BUYER'S CLOSING STATEMENT
1019 Bankton Drive
Hanahan, South Carolina
DATE: December 19, 1996
PURCHASE PRICE: $525,000.00
less equity injection by Dr. James Miller -210,024.89
less first Mortgage proceeds* -249,084.14
less second Mortgage - 92,500.00
26,609.03)
PLUS COSTS:
Lender origination Fee
(America's Home Mortgage Co.) 4,050.00
Lender Discount Fee
(America's Home Mortgage Co.) 4,050.00
Title Abstract
(Betty Weathers) 200.00
Recording Fees
(Berkeley County RMC) 125.00
Title insurance
(Colonial Coast Title 1,000.00
Prorata 1996 Taxes
(Berkeley County Treasurer) 184.03
Lender's Attorney's Fees
(Nexsen Pruet) 5,500.00
Buyer's Attorney's Fee
(LeClair Ryan) 7,250.00
Phase 11 (Albrecht & Assoc) 1,700.00
Phase I (Albrecht & Assoc) 1,300.00
Processing Fee (BDC) 500.00
Fee (Qualified Intermediary, Inc.) 750.00
TOTAL COSTS $26,609.03
BALANCE DUE FROM BUYER: 0.00
The undersigned has reviewed the closing statement and authorizes
disbursements as indicated above.
QUALIFIED INTERMEDIARY, INC.-
BY:-
Gary T. Piacentini' President
FINAL
SELLER'S CLOSING STATEMENT
Unit F-2, 9229 University Boulevard
North Charleston, South Carolina
DATE: December 19, 1996
SALES PRICE: $575,000.00
less second Mortgage to Envirometrics -137,500.00
$437,500.00
LESS COSTS:
Payoff to Beard Development Corporation 285,518.41
Payoff to Ward Johnson 52,660.80
Payoff to United States Company 0.00*
Payoff to Shakespeare Partners 18,422.34
Real Estate Commission (Beard) 46,000.00
December Lease Payment (prorata)
(James W. Miller, M.D.) 2,316.08
S.C. Doc. Stamps on Deed
(Charleston County RMC) 2,127.50
Reimbursement for Franchise Tax
(Ten State Street, L.P.) 3,352.00
Seller's Attorney Fee
(Ten State Street, L.P.) POC
Pro-rata 1996 taxes 6,574.50
Record Satisfactions 95.00
TOTAL COSTS $417,066.63
BALANCE DUE TO SELLER: $ 20,433.37
The undersigned has reviewed the closing statement and authorizes disbursements
as indicated above.
ENVIROMETRICS, INC.
BY:
ITS:
Mortgage to be satisfied for zero consideration
Security Deposit of $16,569.00 which is held in escrow shall be transferred to
Dr. Miller outside of closing.
FINAL
SELLER'S CLOSING STATEMENT
1019 Bankton Drive
Hanahan, South Carolina
DATE: December 19, 1996
SALES PRICE: $525,000.00
less second Mortgage to Envirometrics - 92,500.00
$432,500.00
LESS COSTS:
Payoff to Carolina Services 53,058.53
Payoff to Beard Development Corporation 260,405.89
Payoff to Ward Johnson 52,660.80
Payoff to United States Company 0.00*
Payoff to Shakespeare Partners 6,577.66
Payoff of Mechanics Lien
(SBF Design) 5,680.05
Real Estate Commission (Beard) 21,000.00
Real Estate Commission
(Palmetto Properties) 21,000.00
Recording Satisfactions
(Berkeley County RMC) 75.00
December Rent (GRC) (prorata)
(James W. Miller, M.D.) 2,254.06
Pro-rata 1996 taxes 4,501.16
Seller's Attorney Fee
(Ten State Street, L.P.) POC
S.C. Doc. Stamps on Deed
(Berkeley County RMC) 1,942.50
TOTAL COSTS $429,155.65
BALANCE DUE TO SELLER: $ 3,344.35
The undersigned has reviewed the closing statement and authorizes disbursements
as indicated above.
ENVIROMETRICS, INC.
BY:
ITS:
Mortgage to be satisfied for zero consideration
Security Deposit of $10,538.70 which is held in escrow shall be transferred to
Dr. Miller outside of closing.
COLLATERAL ASSIGNMENT OF PROCEEDS
COLLATERAL ASSIGNMENT OF PROCEEDS (this "Assignment"), dated as of December
20th,1996, by and among ENVIROMETRICS, INC. (Envirometrics, Inc. or any other
person or entity succeeding to the rights of Envirometrics, Inc. with respect to
any of the Collateral, as hereinafter defined, being the "Debtor"), a Delaware
corporation; and SHAKESPEARE PARTNERS, L.P. ("Shakespeare"), a South Carolina
limited partnership; THE UNITED STATES COMPANY ("USC"), a Virginia corporation;
CHARLES F. FEIGLEY ("Feigley"), an individual resident of South Carolina;
RICHARD D. BENNETT ("Bennett"), an individual resident of South Carolina; and
PRECISION SOUTHEAST, INC. ("PSI"). Shakespeare, USC, Feigley, Bennett and PSI
are hereinafter referred to collectively as the "Secured Parties" and each
individually as a "Secured Party"; and Feigley and Bennett are sometimes
hereinafter referred to collectively as the "Lease Guarantors" and each
individually as a "Lease Guarantor".
Preliminary Statement
Debtor is indebted to Shakespeare in the principal amount of $50,000,
evidenced (together with other indebtedness of Debtor to Shakespeare) by a
promissory note or duty executed by Debtor and delivered to Shakespeare (such
amount, together with interest thereon at the rate or rates specified in such
note and together with any costs, expenses, fees or other charges specified in
such notes, being the "Shakespeare Debt").
Debtor is indebted to USC in the principal amount of $35,000, evidenced by
a promissory note dated the date hereof (such amount, together with interest
thereon at the rate or rates specified in such note and together with any costs,
expenses, fees or other charges specified in such note, being the "USC Debt").
Debtor is indebted to PSI in the aggregate amount of $40,000 (the "PSI
Debt"), representing part of the unpaid portion of the purchase price of certain
goods sold and delivered by PSI to Debtor.
Debtor has entered into a Lease with James W. Miller, M.D., as landlord
("Miller"), dated the date hereof (the "Lease"), of certain real property in
which Debtor's main offices are located (the "Office Property"). Miller has
required as a condition to his execution of the Lease that Debtor's performance
thereunder be unconditionally guaranteed by the Lease Guarantors, and the Lease
Guarantors have accordingly executed the required guaranties on the Lease
instrument. Therefore, Debtor now has a contingent liability to each Lease
Guarantor in the amount of any payment or payments that such Lease Guarantor may
make in the future pursuant to the relevant Lease guaranty (such liability being
in each case a "Lease Liability"). The total amount of the Lease Liability of
both Lease Guarantors shall not exceed $66,271 in the aggregate.
Miller has, on the date hereof, purchased from Debtor the Office Property
and certain other real property (collectively, the "Real Property"), and has
delivered to Debtor his promissory note in the face amount of $230,000 (the
"Collateral Note") in payment of a portion of the aggregate purchase price of
the Real Property.
The Collateral Note is secured by a Mortgage and Security Agreement
("Miller Mortgage") covering the Office Property and related personalty and
fixtures, and by an Assignment of Leases and Guaranties ("Miller Assignment of
Leases") covering the Lease and certain other collateral, each dated the date
hereof, and each executed and delivered by Miller to Debtor (collectively, the
"Miller Security Documents"). Each of the Miller Security Documents is
subordinate to certain other security documents executed and delivered by Miller
on the date hereof in favor of Beard Development Corporation ("BDC"), by virtue
of a Subordination Agreement (Including Subordination of Mortgages) of even date
herewith between Debtor and BDC. The Miller Mortgage is recorded in the office
of the Register of Mesne Conveyances for Charleston County, South Carolina ("RMC
Office") in Book at Page and the Miller Assignment is recorded in the RMC Office
in Book - at Page _.
NOW, THEREFORE, the parties agree as follows:
Section I - Acknowledgment of Other Debt; Effect of Payment. The parties
acknowledge that Debtor is or may be indebted to one or more Secured Parties in
amounts and by instruments not described in this Assignment, and agree that any
such other indebtedness is entirely outside the scope of this Assignment, does
not affect any rights of the parties to this Assignment, and is not secured by
this Assignment.
The receipt of payments of Proceeds (as hereinafter defined) hereunder
shall not affect the right of any Secured Party to timely payment in full of the
debt owed to such Secured Party and secured hereby.
This Assignment shall terminate and become void when all Proceeds have been
received by Debtor and paid over in accordance with the terms hereof; except
that the provisions of Section 4 shall survive such termination.
Section 2. Assignment and Grant of Security Interest. For the purposes of
this Assignment: (a) "Proceeds" shall mean all payments received by Debtor and
made under the Collateral Note, in whatever form received, and all payments, in
whatever form received, made under either or both the Miller Security Documents
or received by Debtor upon the sale or other disposition of any collateral under
either of the Miller Security Documents (after payment of costs of disposition
of collateral), including without limitation payments of principal, interest,
penalty and late charges and other fees and charges to the extent required by
the Collateral Note or either Miller Security Document; and (b) "Collateral"
shall mean (i) all Proceeds, and (ii) all of Debtor's right, title and interest
in and to the Miller Security Documents.
Debtor hereby assigns the Collateral to the several Secured Parties to the
following extent and in the following priorities: (1) to the extent of the
Shakespeare Debt, to Shakespeare; (2) to the extent of the USC Debt, to USC; (3)
to the extent of the Lease following extent and in the following priorities: (1)
to the extent of the Shakespeare Debt, to Shakespeare; (2) to the extent of the
USC Debt, to USC; (3) to the extent of the Lease Liabilities, if any, to the
respective Lease Guarantors, as their interests may appear; and (4) all
remaining Proceeds, to the extent of the PSI Debt, to PSI. It is the intention
of the assignment made in the preceding sentence that Proceeds, when, as and if
received by Debtor, shall immediately be paid over by Debtor to the various
Secured Parties in the order set forth in the preceding sentence; i.e., Proceeds
shall first be paid over to Shakespeare, before any payment of Proceeds is made
to any other Secured Party, and when and if the Shakespeare Debt has been
satisfied in full, then Proceeds shall be paid to USC until the USC Debt has
been satisfied in full, and so forth in the order of priority set forth in the
preceding sentence. No Proceeds shall be paid to PSI, however, until both the
Lease Guarantors shall have been completely discharged from their respective
Guaranties, and payment over of Proceeds has been made in respect of any
payments made by either or both of the Lease Guarantors under their Guaranties.
Debtor is authorized to hold all Proceeds remaining after payments of Proceeds
to Shakespeare and to USC have been made in full, until such discharge of the
Lease Guarantors. The interests of the two Lease Guarantors rank pari passu, and
any payment of Proceeds to the Lease Guarantors shall be effected by dividing
the amount of applicable Proceeds into two parts in proportion to the aggregate
amount of Lease payments made by each, and then paying such parts simultaneously
to the Lease Guarantors.
All Proceeds paid over to a Secured Party hereunder shall be deemed applied
to interest on the debt owed to such Secured Party, then to accrued interest
thereon, and finally to fees, charges and costs owed by Debtor in connection
therewith.
Section 3. Intercreditor Provisions. Each Secured Party covenants with each
other Secured Party that until all Proceeds shall have been received and paid
over as required by this Assignment (a) such Secured Party shall not extend, and
Debtor covenants with each Secured Party that it shall not accept, any further
credit from any Secured Party, directly or indirectly, whether as loan or
forbearance or any other form of credit; (b) such Secured Party shall not ask
for or accept, and Debtor covenants with each Secured Party that it shall not
grant, any further security in any form for any indebtedness of Debtor to any
Secured Party, directly or indirectly; and (3) such Secured Party shall not ask
for, demand, sue for, take or accept from Debtor any monies now owing by Debtor
to such Secured Party except pursuant to this Assignment or with the written
consent of all other Secured Parties. Notwithstanding the foregoing provisions
of this Section 3, all parties acknowledge that Debtor may grant security
interests to one or more Secured Parties in a promissory note and related
security documents delivered to Debtor by Trico Engineering Consultants, Inc.
without the consent of any other Secured Party, and may pay over the proceeds of
such promissory note to any Secured Party.
Section 4. Debtor's Warranties, Disclaimers. Debtor warrants to each
Secured Party that (1) Debtor is the sole owner of the Collateral, free from any
adverse claim, security interest, lien or other encumbrance whatever; and (2)
Debtor has full legal authority to enter into this Assignment and make the
assignment of Collateral effected hereby.
Debtor has made no investigation and accordingly makes no representation or
warranty whatever as to the quality or condition of the Collateral, such quality
including, without limitation, the creditworthiness of Miller, the existence or
priority of any lien created by the Miller Security Documents, and any
representation or warranty made by Miller in any Security Document or the
Collateral Note. Each Secured party acknowledges familiarity with the terms and
conditions of the Collateral Note, the Miller Security Documents and the
Subordination Agreement.
Section 5. Debtor to Hold Collateral, Perfection and Notice Fillings. The
Secured Parties hereby authorize Debtor to hold the Collateral Note and the
Collateral, subject to the Debtor's duty to apply all Proceeds only as provided
herein. Debtor shall hold the Collateral only at its principal place of
business, which is on the date hereof 9229 University Boulevard, North
Charleston, South Carolina 29406. Debtor shall not change its principal place of
business without the prior written consent of all Secured Parties. Debtor shall
not transfer, sell or otherwise alienate or allow any transfer of the Collateral
Note or any Collateral or any interest therein. Debtor warrants that it will
not, without the prior written approval of the Secured Parties, release,
terminate, cancel, modify or amend the Collateral Note or the Miller Security
Documents in any material respect, it being understood that such approval will
not be unreasonably withheld by any Secured Party, and any such action by Debtor
without such approval by all Secured Parties shall be invalid and without legal
operation or effect.
As soon as practicable after the execution and delivery of this Assignment,
Debtor shall execute and deliver to the designated agent of the Secured Parties
for filing or recording all such financing statements and memoranda of
assignment as the Secured Parties or any of them may reasonably request, and
thereafter shall execute and deliver any further documents or instruments
reasonably requested by any Secured Party in order to confirm, protect or
continue the security interest or assignments effected hereby or any rights of
any Secured Party hereunder.
Section 6. Liability of Secured Parties with Respect to Assigned Note.
Neither this Assignment nor anything contained herein shall be construed to
impose any liability or obligation on any Secured Party on or with respect to
the Collateral Note or the Miller Security Documents. Debtor shall indemnify and
hold each Secured Party harmless against all costs, claims and other liabilities
that such Secured Party may incur to the extent that such costs, claims or other
liabilities are the result of such Secured Party's being a party to this
Assignment.
Section 7. Miscellaneous. (a) This Assignment represents the entire
agreement of the parties with respect to the subject matter hereof, and no
written or oral representation or statement of any kind, made by any person for
any purpose, is part of the agreement represented hereby unless set forth
herein; (b) no modification of the terms of this Assignment, nor any consent to
any departure from the terms hereof, shall be valid for any purpose unless in
writing and signed by the party or parties against whom enforcement is sought;
(c) this Assignment shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns; and (d) this Assignment shall be
governed by the law of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the
date first above written.
ENVIROMETRICS, INC.
By:
Walter H. Elliott, III, President
THE UNITED STATES COMPANY
By:
President
PRECISION SOUTHEAST, INC.
By
Title:
SHAKESPEARE PARTNERS, L.P.
By:
H.E.Igoe, Jr., General Partner
CHARLES F. FEIGLEY
RICHARD D. BENNETT
IN WITNESS WHEREOF, the parties have executed this Assignment as of the date
first above written.
ENVIROMETRICS, INC.
By:
Waiter H. Elliott, III, President
THE UNITED STATES COMPANY
By:
President
PRECISION SOUTHEAST,INC.
By:
President
SHAKESPEARE PARTNERS, L.P.
By:_
H.E.. Igoe, Jr.. (General Partner)
CHARLES F. FEIGLEY
RICHARD D. BENNETT
IN WITNESS WHEREOF, the parties have executed this Assignment as of the date
first above written
ENVIROMETRICS, INC.
By:
Walter H. Elliott, President
THE UNITED STATES COMPANY
By:
President
PRECISION SOUTHEAST INC.
By.
Title:
SHAKESPEARE PARTNERS, L.P.
By:
H.E. Igoe, Jr., General Partner
CHARLES F. FEIGLEY
RICHARD D. BENNETT
EMPLOYMENT AGREEMENT
THIS AGREEMENT has been entered into as of this 1st day of January 1997, by
and between ENVIROMETRICS Inc. (EVRM, referred to herein as "Employer") and
Richard D. Bennett ("Employee").
WHEREAS, Employer is engaged in the business of health/safety/environmental
consulting and laboratory services, and sales of related products and Employee
is presently employed by EVRM; and
WHEREAS, Employer recognizes and values Employee's service, loyalty and
capabilities, and continued employment of Employee is desired by the parties
hereto on the terms set forth herein; and
WHEREAS, Employer desires that additional benefits on the terms set forth
herein be provided to Employee under certain circumstances.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this agreement and for other good and valuable consideration, the
parties agree as follows:
1. Employment, Title and Duties. Employee will have the title of Senior
Vice President of EVRM and President of Azimuth Inc. of the Laboratory and
Consultative Group Operations and will report directly to the President & CEO.
Laboratory Operations - Employee will be responsible and accountable for
the overall management of the laboratory operations, which include profit/loss
responsibility, marketing/sales program to increase revenues, QA/QC program,
Health & Safety program, and maintaining all required regulatory certifications.
Consultative Group - Employee will be responsible and accountable for the
overall management of the Health & Safety Group of EVRM, including profit/loss
responsibility, marketing/sales program, technical and regulatory requirements.
Special Projects - Employee will be assigned from time to time to lead
special projects for the company. Examples include promoting the services of the
company to institutions such as hospital conglomerates, establishing joint
ventures with other companies, promoting EVRM's technologies. These and other
opportunities will be assigned by the President & CEO and it will be the
Employee's responsibility to prepare a plan for each of the assigned program,
which will be presented to the President & CEO and/or the Board of Directors for
review and approval.
While employed by Employer, Employee shall use his best efforts on
Employer's behalf and shall comply with all policies and guidelines issued by
Employer. While an employee of Employer and without the express written consent
of the President and CEO of EVRM, no employment shall be undertaken by Employee
in addition to employment with Employer nor shall Employee receive any
compensation for activities related to the business of the company in any form
from anyone other than Employer. Employee fully and completely understands and
accepts the obligation under this agreement.
2. Term. The term of this agreement shall be from January 1, 1997 to
December 31, 1997. The Employment Agreement will be renewed on a annual basis
with the agreement of both parties.
3. Compensation. (A) For all services rendered by Employee under this
agreement, Employee shall receive such compensation as may be determined from
time to time by Employer's Board of Directors or a designated representative
thereof. Employee's initial gross base salary under the agreement shall be paid
at the annual rate of $65,000.00 or $5,416.67 per month.
(B) An incentive performance bonus program shall also be awarded to
Employee for sales generated for the laboratory operations, the consultative
group, and other special projects. For details on the awards under the incentive
performance bonus program see Addendum I. In addition the stock compensation
program offered to current EVRM employees in consideration of salary cut will be
also extended to Employee based on the then current position with the Company.
(C) Employee shall be entitled to vacation and sick leave time as
determined by Employer's SOP. In addition, Employee shall be entitled to
participate in all other present or future benefit plans provided by Employer to
its employees and for which Employee may qualify.
4. Reconciliation of Wages and Past Expenses. All deferred compensation
that is still outstanding will be reconciled and compensated to Employee on a
timely manner and in line with the schedule used for the other Officers of
Employer. In addition all reimbursable expenses incurred for the company will be
reconciled and reimbursed to the Employee on a timely basis and according to the
schedule of all other Officers and Directors.
5. Outstanding Commitments for the Company. All outstanding personal
financial commitments made by the Employee for the company are listed hereafter:
(A) Stock Pledged by Employee for the "Igoe" Loan - The company will try
its best efforts to repay the loan in order to see that the personal stocks (a
total of 75,000 EVRM registered shares) that were pledged by the Employee be
released according to the signed loan agreement. In the event that the company
is in default of the current loan agreement and the collateral is retained
against the outstanding balance of the loan, a number of stocks equal to the
number of original stocks not returned to him will be issued by the company in
the name of the Employee, as per resolution passed by the EVRM Board of
Directors. The expenses for the registration of these shares will be paid by
EVRM. In the event a new company becomes the majority shareholder of EVRM, the
company will negotiate the repayment of this loan in full or the indemnification
of the personal collateral.
(B) Small Business Administration (SBA) Loan - Employee is a co-guarantor
to a loan to the SBA. Azimuth's outstanding accounts receivable were pledged as
a collateral to the loan. In addition, the company will continue its best
efforts to repay the loan to the SBA according to the agreement schedule. In the
event a new company becomes the majority shareholder of EVRM, the company will
negotiate the repayment of this loan in full or the indemnification of the
personal guaranty by the Employee.
(C) Personal Loan to the Company - As of April 2, 1997 the outstanding
balance of this loan is $45,000.00. Employee is presently receiving the
scheduled payments for interest and principal on this loan from the company. In
addition, Employee has received from the company 50,000 common shares of the
company as a compensation for his personal commitment for this loan. The company
will exercise its best efforts to continue to repay this loan according to the
mutually agreed schedule. Furthermore, the company will negotiate the repayment
of this loan in full or at an agreed accelerated schedule in the event a new
company will become the majority shareholder of EVRM.
(D) Keyman Life Insurance - The company will maintain a keyman life
insurance coverage for the Employee by paying the required premium for a
coverage of at least $500,000. The company will use the proceeds from this
insurance, in the event it becomes collectible, to pay off the above outstanding
Employee's commitments so that these commitments will not be a burden on his
estate or successors.
6. Acknowledgments. Employer is in the business of
health/safety/environmental consulting and laboratory services, and sales of
related products. Employee acknowledges that Employer has a proprietary interest
in the identity of its customers and customer lists and its inventory of
marketing personnel; and documents and information regarding Employer's
suppliers, methods of sales, costs, and the specialized requirements of
Employer's customers are highly confidential and constitute trade secrets.
Should Azimuth Inc. and/or Azimuth Laboratories be sold, whether by virtue of
sale of assets, sale of contracts, assignment of clients, the Employee shall be
released from the non-competition requirements of this agreement. The Employee
would be free to negotiate an employment agreement with the new owners.
7. Trade Secrets and Confidential Information. During the term of this
agreement, Employee will have access to and become familiar with various trade
secrets and confidential information of Employer, including but not necessarily
limited to the documents and information referred to in Sections 5(1) and 5(2)
above. Employee acknowledges that such confidential information and trade
secrets are owned and shall continue to be owned solely by Employer. During the
term of his employment and for twelve (12) months after such employment ceases,
Employee agrees not to use such information for any purpose whatsoever or to
divulge such information to any person other than Employer or persons to whom
Employer has given its written consent.
8. Documents. Under no circumstances shall Employee remove from the
Employer's office with intention to retain any of Employer's books, records,
documents, customer lists, personnel inventory lists, or any copies of such
documents without the written permission of Employer; nor shall Employee make
any copies of such books, records, documents, or lists for use and retention
outside of Employer's office except as specifically authorized in writing by
Employer.
9. Non-Competition. A. The employment contract may be terminated by either
party with three months (90 days) notice. Employee agrees that during this
period he will not contact directly or indirectly any client, employee, vendor,
outside professional consultant, contractor/subcontractor, lender/lessor,
stockholder, stockbroker/investment banker related to the Employer without the
express permission in writing of the President & CEO of the company and/or its
Board of Directors. During the same period of time Employee agrees that he will
not directly or indirectly, either as principal, agent, manager, employee,
partner, shareholder, director, officer, consultant or otherwise, become
associated with, employed by, or otherwise interested in any business operation,
whether financially or in any other capacity, if such operation competes with
Employer. This restriction shall not preclude Employee from becoming the holder
of any publicly traded stock provided Employee does not acquire stock interest
in excess of ten percent (10%).
B. In the event that Employee's employment ceases for Cause prior to
December 31, 1997, Employee agrees that for a period of three(3) months, he will
not directly or indirectly, either as principal, agent, manager, employee,
partner, shareholder, director, officer, consultant or otherwise, become
associated with, employed by, or otherwise interested in any business operation,
whether financially or in any other capacity, if such operation competes with
Employer. This restriction shall not preclude Employee from becoming the holder
of any publicly traded stock provided Employee does not acquire stock interest
in excess of ten percent (10%).
C. For a period of six (6) months after Employee's employment has
terminated for any reason (1) Employee will not directly or indirectly solicit
or sell any of Employer's services or products to those persons, companies,
firms, corporations or entities who are or were customers of Employer and for
whose accounts Employee was responsible to any degree while an employee of
Employer. (2) Employee will not solicit such accounts on behalf of himself or
any other person, firm, company, or corporation.
D. For a period of six (6) months after Employee's employment has
terminated for any reason, Employee will not in any way, directly or indirectly
through a third party, induce or attempt to induce any existing or future
employee of Employer to leave his/her position with Employer to become
associated with a business competing in any way with Employer.
10. Judicial Modification. The parties have attempted to limit Employee's
right to compete only to the extent necessary to protect Employer from unfair
competition. The parties recognize, however, that reasonable people may differ
in making such a determination. Consequently, the parties hereby agree that, if
the scope or enforceability of a restrictive covenant set forth in Sections 6,
7, 8 and 9 is in any way disputed at any time, a court or other tryer of fact
may modify and reform such provision to substitute such other terms as are
reasonable to protect the Employer's and Employee's legitimate business
interests.
11. Ability to Earn Livelihood. Employee further acknowledges that (1) in
the event his employment with Employer ceases for any reason, he will be able to
earn a livelihood without violating the foregoing restrictions; and (2) that his
ability to earn a livelihood without violating such restrictions is a material
condition to his employment with Employer.
12. Remedies. Employee acknowledges (1) that compliance with Sections 6, 7,
8 and 9 is necessary to protect the business and good-will of Employer and (2)
that a breach of those sections will irreparably and continually damage
Employer, for which money damages may not be adequate. Therefore, the parties
agree that in the event of such breach, Employer may seek any and all legal or
equitable relief available to it, specifically including but not limited to
injunctive relief, without the necessity of bond, and may hold the Employee
liable for all damages, including actual and consequential damages, costs and
expenses, as well as legal costs and reasonable attorney's fees incurred by the
Employer as a result of such breach.
13. Duration of Injunction. If the employee violates any of the terms of
Sections 6, 7, 8 or 9 and the Employer consequently seeks injunctive relief from
a court, such injunctive relief may be applied prospectively to include the
duration of the covenant unexpired at the time of the first breach,
notwithstanding that the covenant may have otherwise expired at the time a
lawsuit is filed and/or at the time relief is granted.
14. Waiver of Rights. If in one or more instances either party fails to
insist that the other party perform any of the terms of this agreement, such
failure shall not be construed as waiver by such party of any past, present, or
future right granted under this conditions of employment, all prior
representations or agreements having been superseded.
15. Survival. The obligations contained in Sections 6, 7, 8 and 9 shall
survive the cessation of Employee's employment. In addition, the cessation of
employment shall not affect any of the rights or obligations of either party
arising prior to or at the time of the cessation of this employment, or which
may arise by any event causing the cessation of this employment.
16. Severability. If any provision, paragraph, or sub-paragraph of this
agreement is adjudged by any court to be void or un-enforceable in whole or in
part, this adjudication shall not affect the validity of the remainder of the
agreement, including any other provision, paragraph, or sub-paragraph. Each
provision, paragraph, and sub-paragraph of the agreement is separable from every
other provision, paragraph, and sub-paragraph, and constitutes a separate and
distinct covenant.
17. Successors. This agreement shall be binding upon and shall inure to the
benefit of Employee, and, to the extent applicable, Employee's heirs, assigns,
executors, and personal representative, and upon Employer, its successors and
assigns, including without limitation, any person, partnership or corporation
that may require all or substantially all of Employer's assets and business, or
with or into which Employer may be consolidated or merged.
18. Complete Understanding. This agreement constitutes the complete
understanding between the parties regarding terms and conditions of employment,
all prior representations or agreements having been superseded.
19. Attorney's Fees. If any party to this agreement breaches any of the
terms of this agreement, that party shall pay to the non-defaulting party all of
the non-defaulting party's costs and expenses, including reasonable attorneys
fees, incurred by that party in enforcing the terms of this agreement, in
addition to any other remedies which may be imposed by a tryer of fact.
20. Modification. No alteration or modification to any of the provisions of
this agreement shall be valid unless made in writing and signed by both parties.
21. Headings. The headings have been inserted for convenience only and not
considered when construing the provisions of this agreement.
22. Governing Law. This agreement shall be subject to and governed by the
laws of the State of South Carolina. The parties agree that any cause of action
arising from the terms of this agreement shall be brought only in the Court of
the County of Charleston, South Carolina. The parties agree that such court
shall be the exclusive and sole venue for the adjudication of any disputes
hereunder.
ENVIROMETRICS Inc.: By: _____________________________
Walter "Skip" Elliott,
President & CEO
EMPLOYEE: _________________________________
Richard D. Bennett
_________________________________
Date
ADDENDUM I TO EMPLOYMENT AGREEMENT
This Addendum dated January 1, 1997 is an amendment to that certain
Employment Agreement ("Agreement") dated January 1, 1997 by and between
Envirometrics Inc. (EVRM referred to herein as "Employe") and Richard D.
Bennett ("Employee"); Section 3.B. ("Compensation") of the Agreement is hereby
amended by adding a Performance Bonus Plan based on the following formula:
First $100,000 in annual revenues from "New Clients" - 3% of Net Revenues*
Second $100,000 in annual revenues from "New Clients" - 4% of Net Revenues*
Third $100,000 in annual revenues from "New Client" - 5% of Net Revenues* The
above formula is applied for new clients and for the first year. The performance
bonus for the second and third years for these accounts will be compensated at
2.5% of Net Revenues. After the third year no performance bonus will be provided
on these accounts.
*Net Revenues = Gross Revenues minus any Subcontracted Expenses.
Envirometrics Inc.: By: ________________________________
Walter "Skip" Elliott,
President & CEO
EMPLOYEE: ____________________________________
Richard D. Bennett
____________________________________
Date
SOUTH CAROLINA SUBLEASE FOR SUITE 210 AT
CHARLESTON COUNTY 4055 FABER PLACE DRIVE
THE EXECUTIVE PARK
FABER PLACE
This Sublease is made this day of March, 1997, by and between
ENVIROMETRICS, INC., successor by merger to Trico Envirometrics, Inc.
(Sublessor); CHASE MORTGAGE BROKERS, INC. ("Sublessee"); and LPC of S.C., INC.
(a subsidiary of The Liberty Corporation) ("Landlord').
WITNESSETH:
WHEREAS, Landlord leased approximately 9,094 square feet of office space to
Trico Envirometrics, Inc. described as Suite 102 (inclusive of Suite 210) of the
commercial office building located at 4055 Faber Place Drive in The Executive
Park at Faber Place in North Charleston, South Carolina (the "Demised
Premises"), pursuant to that certain office lease dated January 17, 1996 (the
"Lease"); and
WHEREAS, Envirometrics, Inc. is the successor by merger to Trico
Envirometrics, Inc., and therefore, is now the tenant under the Lease;
WHEREAS, Sublessee desires to sublease a portion of the Demised Premises
known as Suite 210 consisting of approximately 2,851 square feet rentable and
Sublessor desires to sublet Suite 210 to Sublessee;
WHEREAS, Landlord consents to this Sublease, and all of the requirements
set forth in Section 1 0 of the Lease have been completely satisfied.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Sublessee hereby takes and
leases from Sublessor approximately 2,851 square feet rentable in the Demised
Premises known as Suite 210 (the 'Premises') in the commercial office building
located at 4055 Faber Place in The Executive Park at Faber Place in North
Charleston, South Carolina, according to the terms and conditions of the Lease
which is attached hereto as Exhibit A and incorporated by reference as fully as
if set forth herein. All defined terms contained in the Lease shall be used
herein with the same meaning unless otherwise expressly defined herein.
Sublessee acknowledges that it has received a copy of the lease and has reviewed
it to its satisfaction. The parties agree as follows:
1. Incorporation of Recitals. The above recitals are incorporated herein by
reference.
2. Incorporation of Lease Amendment. Except as provided herein, the terms
and conditions of the Lease are incorporated into this Sublease by reference.
All of the obligations contained in the Lease, except as modified and amended by
this Sublease, and all rights and privileges conferred upon Sublessor as tenant
therein, are hereby also conferred and imposed upon Sublessee. Sublessee
covenants and agrees to fully and faithfully perform the terms and conditions of
the Lease and this Sublease. Sublessee shall not do or cause to be done or
suffer or permit any act to be done which would or might cause the Lease, or the
rights of the Sublessor under the Lease to be endangered, canceled, terminated,
forfeited or surrendered, or which would or might cause Sublessor to be in
default thereunder or liable for any damages, claim or penalty.
3. Term; Payment of Rent. Sublessee shall lease the Premises from Sublessor
commencing as of March 31, 1997 and continuing until January 31, 1999, at the
rate of $13.85 per square foot per year. Thus, an amount equal to $39,486.35 is
due annually, and such amount shall be payable monthly in an amount equal to
$3,290.53 in advance on the first day of each month during the term of this
Sublease, and shall be due and owing without notice, demand, abatement,
deduction or set-off.
Rent and any other charges to be paid by Sublessee to Sublessor will be
paid when due at such times as are specified above at:
c/o Envirometrics, Inc.
9229 University Boulevard
Charleston, SC 29406
Attn: Mr. Walter H. Elliott, III
4. Security Deposit. A security deposit in the amount of one month's rent,
or $3,290.53 per month, shall be made by Sublessee to Sublessor at the time of
the execution of this Sublease. Said deposit shall be held by Sublessor, without
liability for interest, as security for the faithful performance by Sublessee of
all the terms, covenants and conditions of the Lease and this Sublease by said
Sublessee to be kept and performed during the term hereof. Should Sublessee fail
to keep and perform any of the terms, covenants and conditions of the Lease or
Sublease, Sublessor may appropriate and apply said entire deposit, or so much
thereof as may be necessary, to compensate Sublessor for loss or damage
sustained by Sublessor due to such breach, without prejudice to its further
rights and remedies. Should the entire security deposit or any portion thereof
be appropriated and applied by Sublessor for the payment of overdue rent or
other sums due from Sublessee hereunder, the Sublessee shall, upon the written
demand of Sublessor, forthwith remit to Sublessor a sufficient amount in cash to
restore said deposit to the original sum deposited. All amounts remaining of
said deposit shall be returned in full to Sublessee at the end of the term of
this Sublease or upon its earlier termination.
5. Taxes and Operating Expenses. All of the Taxes and Operating Expenses
which exceed Operating Expense Base and are borne pro rata by Sublessor under
the terms of Section 4B of the Lease shall continue to be the responsibility of
the Sublessor during the term of the Sublease; provided, however, that Sublessee
shall be responsible for Sublessor's pro rata share of any Operating Expenses
which arise from the acts or omissions of Sublessee and which are not normal and
customary Operating Expenses.
6. Indemnification. Sublessor hereby agrees to defend, indemnify, and save
Sublessor harmless from any liability resulting from any claim, action or suit
made against Sublessor by Landlord in connection with Sublessee's breach of the
Lease or this Sublease.
7. Notices. Any notice, demand or other instrument or written communication
required or permitted to be given, or served hereunder, shall be made or
delivered by hand delivery or by mailing the same certified mail, postage
pre-paid, and, if to Sublessor addressed as follows:
c/o Envirometrics, Inc.
9229 University Boulevard
Charleston, SC 29406
Attn: Mr. Walter H. Elliott, III
and to Sublessee addressed as follows:
Chase Mortgage
3208 Oleander Dr.
Wilmington, NC 28403
8. Consent. Landlord hereby consents to the Sublease set forth herein. This
sublease may not be assigned, sublet or otherwise transferred without the prior
written consent of Landlord as set forth in Section 1 0 of the Lease.
9. Binding Agreement. This Sublease applies to and inures to the benefit
of, and binds all parties hereto and their respective heirs, legal
representatives, successors and assigns. This Sublease shall be construed in
accordance with the laws of the State of South Carolina.
IN WITNESS WHEREOF, the parties herein execute this Sublease for the
purpose herein expressed the day and year first written above. Signed, sealed
and delivered in the presence of
WITNESSETH: SUBLESSOR:
ENVIROMETRICS, INC., successor by merger to
Trico-Envirometrics,Inc. (SEAL)
By:
Name:
Title:
SUBLESSEE:
CHASE MORTGAGE BROKER, INC.
(SEAL)
By:
Name:
Title:
LPC OF S.C., Inc. joins in the execution of this Sublease solely for the
purpose of evidencing its consent hereto. Nothing contained herein shall modify
Sublessor's obligations under the Lease.
WITNESSETH: LANDLORD:
(SEAL) LPC OF S.C., INC.
By:
Name:
Title:
ASSET PURCHASE AGREEMENT
AGREEMENT as of this28th day of April, 1997, by and between ENVIROMETRICS
PRODUCTS COMPANY, a South Carolina corporation with a principal place of
business at 9229 University Boulevard, Charleston, South Carolina 29406, Seller
(hereinafter "Envirometrics"), and MULTI-METRICS, INC., a New Hampshire
corporation with a principal place of business at P.O. Box 355, Marlborough, New
Hampshire 03455-0355, Buyer (hereinafter "MM")
WHEREAS, Envirometrics is in the asbestos and lead air monitoring business
and has manufactured and sold certain asbestos and lead air monitors which it no
longer desires to manufacture and sell, and owns certain assets of that air
monitoring business ("the Business") that it is willing to sell; and
WHEREAS, MMI desires to acquire said assets from Envirometrics on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and of the terms
and conditions set forth infra, Envirometrics and MMI agree as follows:
Purchase, Sale and Payment
A. Envirometrics shall sell to MMI, and MMI shall purchase from
Envirometrics, free and clear of all claims, mortgages, pledges, security
interests, liens, tax liens and other encumbrances whatsoever ("Encumbrances")
the following assets (the "Assets"):
(1) The fixed assets, molds, tooling, and equipment set forth on the Asset
List attached as Exhibit A hereto, which are all of the fixed assets, molds,
tooling and equipment solely and uniquely associated by Envirometrics with the
Business;
(2) The inventories of raw materials, work in progress, finished goods,
packing, and supplies, further identified in Exhibit B attached hereto.
(3) All price lists, materials vendors lists and costs, all literature and
related materials for the Business, and the comprehensive and complete customer
lists for the Business, showing both active and inactive accounts, aging trade
receivables, and order and payment history for all accounts.
(4) All of Envirometrics' other assets of whatever nature and wherever
situated, including, but not limited to, books and records, prints, engineering
data, process information records, including operating instructions and process
sheets, bills of material, and mold drawings, solely related to the Business
together with all patents, copyrights, trademarks, service marks and any other
intellectual property rights associated with the records and drawings, and all
other assets, tangible or intangible, used in or for the manufacturing,
development, sales, and administrative operations of the Business. Without
limiting the foregoing, Envirometrics expressly shall cause its parent company,
Envirometrics, Inc., to execute any and all documents necessary to assign to MMI
United States patent number 5205155 dated April 27, 1993 pursuant to assignment
forms attached as Exhibit C.
(5) Excluded from this sale are all assets related to the Act Monitoring
Card System, all cash on hand and in banks, government bonds, claims for tax
refunds, and other claims, notes, and accounts receivable.
B. Envirometrics shall deliver to MMI on April 28th 1997 one or more
written Instruments of Transfer and assignment reasonably satisfactory to MMI
evidencing Envirometrics' sale to MMI of all of the foregoing Assets, including
the Bill of Sale attached as Exhibit D. All said documents shall be held in
escrow by the Escrow Agent pending release of escrow as set forth in III. B.
C. In consideration for and conditioned upon delivery of the Instruments of
Transfer and assignment identified in 1. B., MMI shall pay for the benefit of
Envirometrics on the Closing date the sum of One Hundred Ten Thousand
($110,000.00) Dollars for all items on Exhibit A as well as price lists,
customer lists, and all other items identified in I.A. (1), (3), and (4), to be
held in escrow pending completion of all performance under this contract as set
forth in IV L., infra.
D. At Closing, Envirometrics shall transfer on consignment to MMI, and MMI
shall accept and take possession from Envirometrics, Envirometrics' remaining
inventory of raw materials, and other non-cassette finished inventory, as
identified in Exhibit B. MMI will thereafter use its best efforts to sell the
same on Envirometrics' behalf, reimbursing Envirometrics seventy-five (75%) per
cent of Envirometrics' actual cost of said inventory items--at the figures set
forth on Exhibit B, subject to modification as set forth therein. MMI will keep
this inventory segregated either physically or by computer records and
Envirometrics shall be allowed to audit said inventory a minimum of twice a year
until the same is sold or through November 30, 1998, whichever first occurs. MMI
will use its best efforts to sell this inventory prior to November 30, 1998, and
will make payment to Envirometrics at the specified rate as product is sold, no
less frequently than monthly. In addition, MMI will provide Envirometrics with
quarterly reconciliation's of inventory levels and make any payments then due.
Envirometrics shall have until December 31, 1998 to notify MMI in writing to
return any unsold inventory as of said date (F.O.B. Keene, New Hampshire). In
the event Envirometrics elects return of said inventory, it shall have the right
to market and sell the same, which shall be deemed not to violate the
noncompetition provisions of MMI, infra. In the event Envirometrics does not
elect return of any unsold inventory prior to December 31, 1998, any remaining
inventory shall thereafter come under the exclusive ownership, possession and
control of MMI, free and clear of any further claims under this Agreement or
otherwise.
E. Sale shall also include transfer to MMI of Envirometrics' 800 number as
of the date of Closing for a period of 120 days from the release of escrow set
forth in III.B. MMI promptly and courteously shall refer all calls relating to
the Act Monitoring Card System back to Envirometrics. After the 800 number is
retransferred to Envirometrics, Envirometrics promptly and courteously shall
refer all calls concerning MMI products back to MMI.
F. Upon release of escrow as set forth in III and IV L., the Escrow
Agent shall issue a 2-party check payable to Envirometrics and Precision
Southeast, Inc. ("Precision") in the amount of all sums due Envirometrics under
1 C. and/or III A, less the sum of $3.00 per box of cassettes delivered to
and accepted by MMI pursuant to HI, (which sum shall be paid directly to
Envirometrics). Envirometrics shall be responsible for delivering to MMI a
letter from Precision (on Precision's letterhead) in the form attached hereto as
Exhibit K, prior to release of escrow).
II.
Closing,
Closing ("Closing") of the transactions contemplated by this Agreement
shall take place on April 28th 1997 at such time and place as the parties
mutually may agree in Charleston, South Carolina. All assets, as itemized supra,
shall be delivered and transferred at closing, subject to the escrow provisions
of III, infra. MMI shall be responsible for all freight charges associated
with transferring the assets (F.O.B. Charleston, South Carolina).
III.
Envirometrics' Further Obligations and Maintenance of Escrow
A. Subsequent to closing, Envirometrics shall retain all of the assets
identified in Exhibit A in order to manufacture 5,000 boxes of standard 25mm
cassettes, packaged complete, at a total cost to MMI of $3.00 per box, plus the
amount of $40,050.72 for Envirometrics' pre-purchased inventory at
Envirometrics' cost as itemized in Exhibit E attached hereto. In addition, MMI
shall purchase directly and have shipped to Envirometrics all materials for said
5,000 boxes which Envirometrics does not have in inventory. As further and
integral consideration for this Agreement, Envirometrics shall complete
manufacture of all 5,000 boxes of said standard 25mm cassettes and ship the same
to MMI (F.O.B. Charleston, South Carolina), subject to Envirometrics' fight to
reserve up to 500 boxes for sale to its own retail customers (in which event,
MMI shall receive appropriate credit, including reimbursement for MMI-purchased
inventory at MMI's cost and credit for reduction of Envirometrics pre-purchased
inventory shown on Exhibit E). MMI shall have the right to inspect the same
before acceptance.
B. Envirometrics shall deliver to MMI for shipment to Marlborough, New
Hampshire all cassette parts identified in Exhibit E which Envirometrics has not
used in manufacture of the boxes as called for under III A, such delivery
(F.O.B. Charleston) to be made concurrently with transfer of the Exhibit A.
assets.
C. Upon closing under the contract, MMI shall place into escrow all of the
following:
the contract sales price of One Hundred Ten Thousand
($110,000.00) Dollars;
the sum of Fifteen Thousand ($15,000.00) Dollars (5000 boxes x
$3.00) against anticipated delivery of the boxes of cassettes as set
forth in III A, supra; and
the inventory price of $40,050.72, as set forth in Exhibit E.
D. H. Neil Berkson of Keene, New Hampshire, MMI's attorney, shall be the
Escrow Agent and shall maintain the funds in a passbook savings account. Upon
verification from MMI that Envirometrics has completed performance under this
Agreement; that MMI has completed arrangements to ship the assets identified in
Exhibit A from South Carolina to New Hampshire; that the South Carolina Bulk
Sales Act notice period has expired without notice from any creditor that it
intends to exercise fights under the Bulk Sales Act --and absent any evidence
that either party is in breach of any of the covenants, representations and/or
warranties set forth in Article IV, infra' or its other obligations under this
Agreement--the Escrow Agent forthwith shall transfer all funds which he is
holding as follows:
the sum of $3.00 per box of completed cassettes delivered to MMI
pursuant to III A. payable in a one party check directly to
Envirometrics;
all other sums due in a two party check issued to Precision and
Envirometrics, forwarded to S. Richard Averette, President; Precision
Southeast, Inc; P.O. Box 1405; Myrtle Beach, South Carolina 29578.
E. At the same time as funds are transferred, the Escrow Agent shall
release and deliver the Bill of Sale and all other instruments of transfer and
assignment to MMI.
F. In the event this transaction fails to come out of escrow:
1. MMI nevertheless shall cause the Escrow Agent to remit directly to
Envirometrics the sum of $13.50 per box of cassettes actually shipped to and
accepted by MMI pursuant to III A, less all costs of MMI's direct payments to
Palmetto Packaging, Corning Costar, Schleicher & Schuell, Inc, and any other
suppliers to whom MMI has made direct payments pursuant to III A;
2. the Escrow Agent shall redeliver to Envirometrics the Bill of Sale, all
other Instruments of Transfer and Assignment, and any documents or other
physical property which are in his possession or control;
3. the Escrow Agent shall redeliver all remaining funds to MMI- and
4. the parties thereafter shall have no further fights or obligations under
the contract.
H. Both parties hereby indemnify and hold the Escrow Agent harmless in the
performance of his duties.
IV.
Envirometrics Covenants, Representations and Warranties
Envirometrics covenants, represents and warrants to MMI, which covenants,
representations and warranties shall survive the Closing and release of escrow,
that:
A. Envirometrics has, and through and/or after the Closing date will have,
good and marketable title to each of the assets identified in I.A., I.D., and
III.A. to be sold and delivered hereunder, free and clear of all Encumbrances,
and has the requisite authority to sell and transfer good title to such assets.
B. The finished goods and material inventories represented on Exhibits B
and E, as well as the 4,500 boxes of standard 25mm cassettes referenced in
III.A., supra (1) were, are and will be respectively manufactured and purchased
(except for materials purchased by Envirometrics pursuant to HI.A., supra) in
the ordinary course of its business; (2) represent all existing inventory
manufactured and acquired by Envirometrics for and in the Business; (3) are of
the kind and quality salable or usable in the ordinary course of that Business;
and (4) are held by Envirometrics and sold and transferred to MMI with good and
marketable title. All such goods are warranted as merchantable and fit for the
ordinary purposes for which they are used.
C. The manufacture and sale of Business Products as heretofore or hereafter
manufactured and sold by Envirometrics, to the knowledge of Envirometrics, do
not infringe any patent, trademark, service mark, copyright or other proprietary
rights of any third party.
D. To the best of Envirometrics' knowledge, no claims, suits,
investigations or proceedings are pending or threatened by any third parties
involving the assets other than a disputed claim by Zellweger Analytics, Inc.;
and--notwithstanding Envirometrics' disclosure to MMI that it may be insolvent
under one or more tests of solvency as defined in the Uniform Fraudulent
Conveyance Act and/or the United States Bankruptcy Code--the sale and transfer
of the assets is not a fraudulent transfer, disposition or sale.
E. Exhibit B and all information transferred pursuant to I.A.(3), (4),
supra are true and accurate as they relate to historical information, and there
has not been any material adverse change in the Business from April 1, 1997 to
the date of this Agreement.
F. No consent by, approval or authorization of, or filing, registration or
qualification with, any federal, state or local governmental authority or other
person is required for the execution, delivery or performance of this Agreement
by Envirometrics or in connection with the consummation of the transactions
contemplated hereby by Envirometrics.
G. Envirometrics is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina.
H. Envirometrics has the full corporate power to execute, deliver and
perform this Agreement and has taken all action required by law, its certificate
of incorporation, its bylaws or otherwise to authorize such execution, delivery
and performance of this Agreement and this Agreement is a valid and binding
agreement of Envirometrics, enforceable in accordance with its terms.
I. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not: (1) violate any
provision of the certificate of incorporation or by-laws of Envirometrics- (2)
violate any provision of, or result in the termination or acceleration of any
obligation under any mortgage, note, lien, lease, franchise, license, permit,
agreement, instrument or obligation to which Envirometrics is a party or by
which Envirometrics is bound; or (3) violate or conflict with any other
restriction of any kind or character to which Envirometrics or the Business is
subject.
J. No approval, authorization, license, permit or other action or finding
by any governmental authority or any third party, shareholder, or board of
directors of Envirometrics is required that has not been obtained in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
K. The fixed assets, molds, tooling and equipment, as set forth on Exhibit
A, transferred to MMI hereunder (1) were purchased and acquired by Envirometrics
in the ordinary course of its business; (2) represent all existing fixed assets,
molds, tooling and equipment purchased and acquired by Envirometrics for use in
the Business- and (3) are held by Envirometrics and sold and transferred to MMI
with good and marketable title. Upon delivery of possession to MMI, said fixed
assets, molds, tooling and equipment will be in reasonably good repair and
working order, capable of producing sound and merchantable products, if properly
used.
The transfer and sale of the assets complies and shall comply with the Bulk
Sales or Transfers laws of the state of South Carolina. Toward that end
Envirometrics shall do all of the following:
(1) At Closing, Envirometrics shall deliver to MMI a list containing the
names and business addresses of all creditors--general or secured--with all
amounts owing and, in addition, the names of all persons known to be asserting
claims against Envirometrics, even if said claims are disputed. Envirometrics
shall affirm on the list that it is true and accurate to the best of
Envirometrics' knowledge, information and belief The list and affirmation shall
be in the form attached hereto as Exhibit F.
(2) At the same time, Envirometrics shall furnish MMI with a true and
accurate list of all names and business addresses used by Envirometrics within
the three years preceding this Agreement.
(3) Envirometrics shall cooperate with MMI in preparing a schedule of
property transferred in the form attached hereto as Exhibit G.
(4) Contemporaneously with the Closing, Envirometrics shall cooperate with
MMI in transmitting to each of Envirometrics' creditors, listed in Exhibit F, by
certified mail, return receipt requested, with the return receipts to be
addressed to MMI and/or MMI's attorney, a notice in the form attached hereto as
Exhibit H. In particular, without limiting the foregoing, Envirometrics shall
produce the requisite letters and envelopes, for signature by MMI.
(5) All proceeds of closing shall remain in escrow pending expiration of
the notice period under the South Carolina Bulk Sales Act without assertion of
any claims, and otherwise as provided in III.
(6) If Envirometrics fails to cooperate fully with MMI in effectuating
compliance with the Bulk Sales Act, or if any action is commenced by any
creditor against this transfer or either party to this Agreement, or if any levy
is made on the assets to be transferred, MMI may rescind the Agreement in whole
or in part.
M. Envirometrics has no written contracts or agreements with any customers
of the Business.
N. No agent or broker or other persons acting pursuant to authority given
by Envirometrics is entitled to any commission or finder's fee in connection
with the transaction contemplated by this Agreement.
O. Envirometrics shall provide the following training, technical
assistance, and consultation for MMI subsequent to the Closing date:
At the request of MMI, Envirometrics' President and CEO, Walter H. "Skip"
Elliott, or his designee possessing equal or greater knowledge, shall come to
MMI's point of manufacture in New Hampshire for up to the cumulative amount of
five business days, consisting of one to two days when all of the molds,
tooling, equipment and other fixed assets are transferred to New Hampshire for
the purpose of assisting MMI in setting up the same and conducting initial
training; an additional period of up to two days after setup to continue
training; and a further day to analyze samples and otherwise assist in any final
training and/or quality control. Elliott shall be reasonably available to MMI
within the first two months after the equipment is transferred, including at the
time of transfer. MMI shall pay all of Elliott's travel, lodging expenses, meals
and customary incidentals within forty-eight (48) hours after submission, but
shall not be responsible for any salary or other costs.
At no additional cost to MMI, Envirometrics shall train MMI personnel--up
to a maximum of two days--in quality control procedures for the Business related
to the Niosh 7400. Such training will take place, at MMI's request, subsequent
to the Closing date at Envirometrics' headquarters in Charleston, South
Carolina. MMI shall be responsible for all of the expenses of any employees sent
for training, but shall not otherwise pay any costs.
(3) In addition to the above, Envirometrics' personnel shall be available
to MMI, at reasonable cost, for future consulting if necessary.
P. Envirometrics makes no warranties to MMI other than those expressly set
forth herein.
V.
MMI's Covenants, Representations and Warranties
MMI covenants, represents and warrants to Envirometrics, which covenants,
representations and warranties shall survive the Closing and release of escrow,
that:
A. MMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Hampshire.
B, MMI has the full corporate power to execute, deliver and perform this
Agreement and has taken all action required by law, its certificate of
incorporation, its by-laws
or otherwise to authorize such execution, delivery and performance of this
Agreement and ties Agreement is a valid and binding agreement of MMI,
enforceable in accordance with its terms.
C. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not: (1) violate any
provision of the certificate of incorporation or by-laws of MMI; (2) violate any
provision of, or result in the termination or acceleration of any obligation
under any mortgage, note, lien, lease, franchise, license, permit, agreement,
instrument or obligation to which MMI is a party or by which MMI is bound; or
(3) violate or conflict with any other restriction of any kind or character to
which MMI or the Business is subject.
D. No approval, authorization, license, permit or other action or finding
by any governmental authority or any third party, shareholder, or board of
directors of MMI is required that has not been obtained in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
E. MMI has and will have funds available to pay all amounts due under this
contract.
F. MMI knows of no pending or threatened governmental investigation,
request for information or action by any third party which would prohibit or
prevent or claim damages as a result of this Agreement or the transactions
contemplated hereby and there is no litigation pending or threatened to the
knowledge of MMI which would affect MMI's ability to perform its obligations
hereunder.
G. Subsequent to closing and breaking of escrow, MMI reasonably shall
provide information and/or assistance to Envirometrics in Envirometrics'
collection of its outstanding accounts receivable.
H. No agent or broker or other persons acting pursuant to authority given
by MMI is entitled to any commission or finder's fee in connection with the
transaction contemplated by this Agreement.
VI.
Supply Agreement
Notwithstanding anything to the contrary, closing under this Agreement is
contingent upon MMI's ability to enter into a five (5) year supply agreement for
a certain mixed ester membrane, with Coming Costar Corporation, or a subsidiary
thereof, which agreement shall be to MMI's satisfaction.
VII.
Sales and Use Taxes
Envirometrics shall be responsible to pay all sales and use taxes which are
due as a result of the transfer and conveyances of any of the assets, and shall
indemnify and hold MMI harmless from any failure of Envirometrics to pay such
taxes when due.
VIII.
Business Transfer
A. Envirometrics and MMI shall agree prior to the Closing date upon the
text of. (I) a letter substantially in the form attached hereto as Exhibit I to
be delivered by Envirometrics on its letterhead and in its envelopes to MMI.
Said letters from MMI shall be addressed to each of Envirometrics' customers
which purchase the Business Products ("Customers"), advising such Customers of
the transfer of the Business from Envirometrics to MMI; and (ii) a letter
substantially in the form attached hereto as Exhibit J to be delivered by
Envirometrics on its letterhead and in its envelopes to each Envirometrics'
Materials Vendor. Said letters shall advise each said vendor of the transfer of
the tooling and other equipment located at their places of business to MMI. Said
letters shall be mailed by MMI upon breaking of escrow.
B. As soon as is practicable, but not more than ninety (90) days after
payment of the closing proceeds from escrow, MMI will modify all product
components, packaging, labeling, labels, brochures and sales aides bearing the
Envirometrics name or mark by use of stickers or other appropriate means,
provided, however: (i) that MMI may sell the assets purchased hereunder, and may
use the assets for production as is without making any modifications and without
being subject to the aforesaid time limitation except to sticker the outside of
the boxes or packages in which such products, parts or components are contained;
and (ii) has the fight to produce parts from molds acquired without removing the
Envirometrics mark and not more than one hundred eighty (180) days after
Closing, MMI shall remove the Envirometrics mark from all molds obtained
pursuant to this Agreement. In any event, all use of the Envirometrics name or
mark by MMI shall cease one (1) year from the date funds are paid out of escrow.
C. Neither MMI nor Envirometrics shall issue any press release or make any
public statement regarding the terms of this Agreement without the consent of
the other, which shall not be reasonably withheld, except where a press release
or public statement is required by any law or regulation.
D. Envirometrics warrants that the written communications described in
IV L. are sufficient to effect compliance with the Bulk Sales or Transfer laws
of the state of South Carolina and that no other act or activity is necessary as
a condition of such compliance.
IX.
Indemnification and Insurance
A. Envirometrics shall release, defend, indemnify and hold harmless MMI,
its officers, directors and employees, from and against all expenses, costs,
liabilities and judgments (including reasonable attorneys' fees) arising from:
claims solely relating to Envirometrics' operation of the Business, including,
but not limited to claims by purchasers, alleged owners or users of Business
Products for bodily injury, death, physical or property damage, infringement of
intellectual property rights or loss of wages assertedly resulting from an
alleged defect in such products manufactured or sold by Envirometrics prior to
the date of final shipment of the 4,500 boxes referred to in III.A., supra,
and claims resulting from or based upon any breach by Envirometrics of any its
representations, covenants, representations, warranties or agreements contained
in this Agreement.
B. MMI shall release, defend, indemnify and hold harmless Envirometrics,
its officers, directors and employees, from claims solely relating to MMI's use
and/or placement of Envirometrics' name or mark on products manufactured by MMI
after the release of escrow, except to the extent that materials furnished
and/or sold by Envirometrics to MMI constitute a basis of any claim.
C. Envirometrics shall maintain all existing products liability insurance
for the benefit of both itself and MMI, for any claims arising out of
Envirometrics manufacture of product, and shall provide MMI with certification
at Closing that said insurance remains in force.
D. Envirometrics shall continue to maintain all of the assets on its
property and casualty insurance through the time when the same are shipped from
Charleston, South Carolina. Envirometrics shall maintain all risk of loss
associated with the assets until all of the same come into the physical
possession of MMI, or its carrier. Notwithstanding anything to the contrary,
Envirometrics shall continue to maintain risk of loss for the consignment
inventory (Exhibit B) until the same is sold by MMI or released to MMI on or
after December 31,1998.
E. In the event that any replacement claims are made by purchasers or users
of Business Products resulting from an alleged defect in such products
manufactured or sold by Envirometrics, MMI shall sell Envirometrics such
replacement products at a price of Twenty Per Cent (20%) over the MMI production
cost under terms of sale extended to MMI's best customers, not to exceed $13.50
per box except to the extent that MMI has actual production costs in excess of
said amount.
X.
Limitation of Liability
Except as expressly stated in this Agreement, neither party shall be liable
to the other for special or consequential damages, including but not limited to
lost profits, loss of goodwill, loss of reputation, impairment of other goods,
work stoppage or breach of other contract.
XI.
Further Assurances and Actions
Subject to the provisions of this Agreement, Envirometrics will execute all
documents and take all such further actions as MMI shall reasonably request, and
MMI will execute all documents and take all such other actions as Envirometrics
may reasonably request, prior to, at or after the Closing date in order to
consummate the transactions provided herein and to accomplish the purposes of
this Agreement.
XII.
No Brokers
Envirometrics represents and warrants to MMI and MMI represents and
warrants to Envirometrics that all negotiations relative to this Agreement have
been carried on by it or its representatives directly with the other without the
intervention of any person in their behalf and that no broker brought about this
Agreement on their behalf
XIII.
Non-Competition
A. Envirometrics agrees that, for a period of three (3) years after the
Closing date, neither it nor any branch, division or subsidiary company, nor any
of its officers, executives, managers, key employees, directors, or engineers,
will, directly or indirectly, engage in any business in the United States or
Canada which is substantially the same as or materially competitive with the
Business. For purposes of this Section, "Business" means the business of
manufacturing, marketing, selling or distributing products or components that
are used in the asbestos and/or lead air monitoring business.
B. Envirometrics recognizes and agrees (i) that is has been engaged in the
Business throughout the United States and Canada; (ii) that the covenant
contained in this Article is of the essence of this Agreement- (iii) that the
covenant is reasonable and necessary to protect and preserve the interests and
properties of MMI and the Business; (iv) that the covenant was not made under
duress; (v) that irreparable loss and damage will be suffered by MMI should
Envirometrics breach the covenant; (vi) that the covenant is separate, distinct
and severable from the remaining provisions of this Agreement; (vii) that, if
the covenant is found by a court of competent jurisdiction to be over broad in
any respect, Envirometrics desires that the covenant be amended by such court to
a reasonable breadth; (viii) that, in addition to other remedies available to
it, MMI shall be entitled to both temporary and permanent injunctions to prevent
a breach or contemplated breach by Envirometrics of the covenant; and (ix) that,
if MMI incurs any costs or expenses (including reasonable attorneys' fees) in
attempting to enforce the covenant, Envirometrics agrees to reimburse to MMI,
and indemnify MMI against, any such costs or expenses in the event MMI is
successful in such enforcement action or activities.
Conditions Precedent to Obligations of Parties
A. The obligation of MMI to purchase the assets is subject to the
fulfillment on or prior to the Closing date--or as of the time all funds come
out of escrow, as the case may be--of each of the following conditions:
(1) Envirometrics shall have complied in all material respects with all of
its agreements and covenants contained herein to be performed as of the time of
Closing and/or as of the time of breaking of Escrow, and all of the
representations contained herein shall be true and accurate in all material
respects on, as of, and after the Closing date with the same effect as though
made on and as of the Closing date.
(2) No order of any court or governmental regulatory authority of body which
restrains or prohibits the transactions contemplated hereby shall be in effect
on the Closing date or the date that funds are to come out of escrow, and no
suit, proceeding, or investigation by a governmental agency or third party to
enjoin the transaction contemplated hereby or seek damages or other relief as a
result thereof shall be pending or threatened as of the Closing date or the
Escrow Date.
B. The obligation of Envirometrics to execute and deliver the Bill of Sale,
attached hereto as Exhibit D, is subject to:
MMI shall have complied in all material respects with all of its agreements
and covenants contained herein to be performed as of the time of Closing and/or
as of the time of breaking of Escrow, and all of the representations contained
herein shall be true and accurate in all material respects on, as of, and after
the Closing date with the same effect as though made on and as of the Closing
date.
No order of any court or governmental regulatory authority of body which
restrains or prohibits the transactions contemplated hereby shall be in effect
on the Closing date or the date that funds are to come out of escrow, and no
suite, proceeding, or investigation by an governmental agency or third party to
enjoin the transaction contemplated hereby or seek damages or other relief as a
result thereof shall be pending or threatened as of the Closing date or the date
of release of funds from escrow.
XV.
Notices
All notices, requests, demands or other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered or mailed,
by registered or certified mail, postage prepaid to the following addresses:
If to Envirometrics: Envirometrics Products Company
9229 University Boulevard
Charleston, SC 29406
Attn.: Walter H. "Skip" Elliott, III,
President and CEO
If to MMI: Multi-Metrics, Inc.
c/o Richard H. Prince, President
P.0 Box 355
Marlborough, NH 03455-0355
or at such other addresses as each such party may furnish to the other
parties in writing.
XVI.
Choice of Law
This Agreement shall be governed by and construed in accordance with the
laws of the state of New Hampshire, without regard to its conflicts of law
principles.
XVII.
Entire Agreement
This instrument constitutes the entire understanding between Envirometrics
and MMI with respect to the Business and as such supersedes all prior
representations, agreements and understandings between them with respect to such
subject matter. This Agreement or any term hereof may be changed, waived,
discharged or terminated only in a writing executed by the duly authorized
officers of Envirometrics and MMI, which writing shall indemnify this Agreement
and shall express the plan or intention to modify, waive or terminate it.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized offices as of the date hereof
ENVIROMETRICS PRODUCTS COMPANY
By: Walter H. "Skip" Elliott
President and CEO
MULTI-METRICS, INC.
By:
Richard H. Prince, President
JOINDER OF ENVIROMETRICS, INC. AND
WALTER H. "SKIP" ELLIOTT, PRESIDENT AND CEO
OF ENVIROMETRICS PRODUCTS COMPANY AND
ENVIROMETRICS, INC. IN CERTAIN PROVISIONS OF
ASSET PURCHASE AGREEMENT
In consideration of MMI's willingness to execute and proceed under the
above Asset Purchase Agreement, Envirometrics, Inc. and Walter H. "Skip" Elliott
join in all of the provisions of 13.A. and 13.B. of the Agreement relative to
noncompetition, agreeing to be bound thereby, and further agreeing that MMI
shall have the same remedies for breach by Envirometrics, Inc. and/or Walter H.
"Skip" Elliott of the provisions of 13.A. of the Agreement as provided in 13.B.
Envirometrics, Inc. and Elliott further agree that, at the request of MMI,
Elliott, or his designee possessing equal or greater knowledge, shall come to
Keene, New Hampshire for the cumulative amount of five business days, consisting
of one to two days when all of the molds, tooling, 6quipment and other fixed
assets are transferred to New Hampshire for the purpose of assisting MMI in
setting up the same and conducting initial training- an additional period of up
to two days after setup to continue training, and a further day to analyze
samples and otherwise assist in any final training and/or quality control.
Elliott (or his designee, as above) shall be reasonably available to MMI within
the first two months after the equipment is transferred, including at the time
of transfer. MMI shall pay all of Elliott's (or his designee's) travel and
lodging expenses, meals and customary incidentals within 48 hours after
submission, but shall not be responsible for any salary or other costs.
Envirometrics, Inc. further joins in the provisions of the contract calling
for transfer of United States Patent No. 5,205,155 to MMI, and executes the
instruments of transfer pursuant to authority from its officers and directors.
ENVIROMETRICS, INC.
By:
Walter H. Skip" Elliott Duly Authorized
Walter H. "Skip" Elliott, Individually
EXHIBIT LIST TO ASSET PURCHASE AGREEMENT
Exhibit A Asset List
Exhibit B Consignment Inventory of Raw Materials, Finished Goods,
Packing and Supplies.
Exhibit C Assignment of U.S. Patent No. 5,205,155
Exhibit D Bill of Sale
Exhibit E Itemized, and Cost to MMI of, Envirometrics' Cassette Parts
Inventory
Exhibit F Certified List of Creditors
Exhibit G Schedule of Property
Exhibit H Form Notice of Bulk Transfer to Creditors
Exhibit I Customer Letter
Exhibit J Materials Vendor Letter
Exhibit K Letter from Precision
EXHIBIT A
ASSET LIST
TOOLING LIST
1-16 cavity mold to produce the 25 mm Conductive Air Monitor Inlet
I-1 6 cavity mold to produce the 25 mm Conductive Air Monitor Outlet
I-1 6 cavity mold to produce the 25 mm Conductive Air Monitor Extension All
available spares for the above molds and Q. C. go-no go gauge
1-DNE Jiffy Ejector with spares for the above molds
1-1O cavity mold to produce the Long Luer Plug
Laminar flow hood with table(2)
Pneumatic closing stations (2)
Air compressor
Hydraulic press with dies
Heat tunnel with conveyor for the individual cassettes
Back winding equipment with table
Packaging box
Heat tunnel for box of cassettes
Mold - Bellmouth 25 mm inlet, 8 cavity
Mold - Bellmouth 25 mm retainer, 8 cavity
Mold - Bellmouth 25 mm outlet, 8 cavity
Mold - Bellmouth 25 mm plug, 48 cavity
2. ASSEMBLY EQUIPMENT and MISCELLANEOUS
I Static Eliminators
4 Chairs
Miscellaneous table lights
Miscellaneous trays for parts
All Totes
I Rack with rollers for Totes
Miscellaneous tables
I Roll-around Cart
I Labeling machine
Any other tools, fixtures and equipment associated with the assembly process
(including remaining Corning Costar equipment)
All available mold drawings (originals, if available)
All products drawings - copies only (originals if available)
EXHIBIT B
EXHIBIT B
CONSIGNMENT INVENTORY OF RAW MATERIALS,
FINISHED GOODS, PACKING AND SUPPLIES
(ATTACHED)
(NOTE: Notwithstanding anything to the contrary, the counts on the attached list
may be modified by Envirometrics prior to shipment after the breaking of escrow,
with the final submitted counts to be confirmed by MMI upon receipt.)
EXHIBIT C
ASSIGNMENT OF U.S. PATENT NO. 5,205,155
WHEREAS, Envirometrics, Inc. a Delaware corporation with a place of
business at 9229 University Blvd., Charleston, SC 29406 (hereafter "Assignor")
hereby represents and warrants that it is the sole and exclusive owner of United
States Patent No. 5,205,155, issued April 27, 1993, entitled "Air Monitoring
Cassette" by virtue of a written assignment from the named inventor, Patrick H.
Cooper, as recorded in the assignment Branch of the United States Patent and
Trademark Office; and
WHEREAS, Multi-Metrics, Inc. a New Hampshire corporation with a place of
business at 69 Island Street, Keene, New Hampshire 03431 (hereafter "Assignee")
is desirous of acquiring the entire and exclusive right, title and interest in
and to said U.S. Patent No. 5,205,155;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged by Assignor, Assignor hereby assigns, transfers and conveys
to Assignee all of Assignor's right, title and interest throughout the world
and to the U.S. Patent No. 5,205,155 and to all inventions described therein,
and all corresponding Letters Patent, whether U.S. or foreign, that are or may
be granted therefrom, including without limitation any extensions,
continuations, continuations-in-part, divisions, reissues and renewals thereof,
or other equivalents thereof
IN TESTIN0NY WHEREOF, the undersigned authorized representative of
Assignor has hereunto signed his name this 28th day of April, 1997.
ENVIROMETRICS, INC.
By: Walter Elliott III
Print Name:
Its:
EXHIBIT D
BILL OF SALE
FOR VALUE RECEIVED, ENVIROMETRICS PRODUCTS COMPANY, a South Carolina
corporation (hereinafter called "Seller") has bargained, sold, conveyed,
assigned and delivered unto MULTI-METRICS, INC., a New Hampshire corporation
(hereinafter called "Purchaser"), pursuant to an Asset Purchase Agreement
between the parties dated April 28, 1997 (the "Agreement"), all of the assets,
rights and properties listed and described in Exhibits A and B, attached hereto
and expressly incorporated herein by reference (hereinafter called the
"Assets").
TO HAVE AND TO HOLD all and singular the above-described Assets, and all
title thereto and interest therein, unto Purchaser, its successors and assigns,
to its own use and behoove forever.
Seller warrants and represents to, and covenants and agrees with, Purchaser
that Seller is the lawful owner of all of said Assets; that Seller has the right
to sell, convey, assign and deliver the same unto Purchaser as herein provided;
that Seller has taken no action that would give any party or entity any right or
interest in the Assets; that the purchase price for the Assets has been fully
paid- that there are no liens or encumbrances whatsoever affecting the Assets;
and that Seller will forever warrant and defend title to the Assets unto the
Purchaser, its successors and assigns.
The undersigned represents and warrants that he has all necessary and
requisite power and authority to execute the within Bill of Sale on behalf of
Seller.
IN WITNESS WHEREOF, Seller has set its hand and seal this 28th day of April,
1997.
ENVIROMETRICS PRODUCTS COMPANY
By: Walter H. "Skip" Elliott, III
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
Subscribed and sworn to before me this 28th day of April, 1997 by Walter H.
"Skip Elliott, III as the voluntary act and deed of Envirometrics Products
Company, duly authorized.
Notary Public
My Commission Expires:
EXHIBIT A
(To Bill of Sale)
ASSET LIST
TOOLING LIST
1- 1 6 cavity mold to produce the 25 mm Conductive Air Monitor Inlet
1- 1 6 cavity mold to produce the 25 mm Conductive Air Monitor Outlet
1- 1 6 cavity mold to produce the 25 mm Conductive Air Monitor Extension
All available spares for the above molds and Q.C. go-no go gauge
1-DME Jiffy Ejector with spares for the above molds
1-10 cavity mold to produce the Long Luer Plug
Laminar flow hood with table (2)
Pneumatic closing stations (2)
Air compressor
Hydraulic press with dies
Heat tunnel with conveyor for the individual cassettes
Back winding equipment with table
Packaging box
Heat tunnel for box of cassettes
Mold - Bellmouth 25 mm inlet, 8 cavity
Mold - Bellmouth 25 mm retainer, 8 cavity
Mold - Bellmouth 25 mm outlet, 8 cavity
Mold - Bellmouth 25 mm plug, 48 cavity
ASSEMBLY EQUIPMENT and MISCELLANEOUS
1-Static Eliminators
4-Chairs
Miscellaneous table lights
Miscellaneous trays for parts
All Totes
1-Rack with rollers for Totes
Miscellaneous tables
1-Roll-around Cart
1-Label' machine
Any other tools, fixtures and equipment associated with the assembly process
(including remaining Corning Costar equipment)
All available mold drawings (originals, if available)
All products drawings - copies only (originals if available)
Exhibit A - continued
All price lists, materials vendors lists and costs, all literature and related
materials for the Business, and the comprehensive and complete customer lists
for the Business, showing both active and inactive accounts, aging trade
receivables, and order and payment history for all accounts.
All of Envirometrics' other assets of whatever nature and wherever situated,
including, but not limited to, books and records, prints, engineering data,
process information records, including operating instructions and process
sheets, bills of material, and mold drawings, solely related to the Business
together with all patents, copyrights, trademarks, service marks and any other
intellectual property rights associated with the records and drawings, and all
other assets, tangible or intangible, used in or for the manufacturing,
development, sales, and administrative operations of the Business.
EXHIBIT B TO BILL OF SALE
ITEMIZED LIST AND COST TO MMI OF ENVIROMETRICS'
CASSETTE PARTS INVENTORY
(SEE ATTACHED)
(Note: Notwithstanding anything to the contrary, the counts on the attached list
may be modified by Envirometrics prior to shipment after the breaking of escrow,
with the final submitted counts to be confirmed by MMI upon receipt. MMI shall
only be responsible to pay Envirometrics for portions of the attached inventory
either used to manufacture cassettes shipped to MMI or otherwise transferred to
MMI pursuant to III B of the Agreement-)
25mm BellMouth Cassettes
On-hand Purchased Extended
Description Quantity Price Cost
Cassette Boxes 0.35
separators 0.209
Filter Material 9.27 -
Inlet 5,389 0,039 210.17
outlet 41,000 0-033 1,353.00
Retainer 12,389 0,039 483.17
Red Plug 0,009
Blue Plug 0-009
Labels 0.8 & 0.45 27,459 0,049 1,345.49
Support Pads 1.23
Warranty Sheets 0.04
Vinyl White Bands 0.00264
Vinyl Red Bands 0.00264
Case Boxes 0.82
Box Labels 0.008
Case Box Label 0.008
5mm Standard Cassettes
On-hand Purchase Extended
Description Quantity Price Cost
Cassette Boxes 675 0.35 236.25
Seperators 24,295 0.209 5,OT7.65
Filter Material 0 9.27
Inlet 217,152 0.022 4,777.34
Outlet 221,780 0.-023 5,100.94
Cowl 188,652 0.074 13,96025
Red Plug 191,000 0.009 1,719.00
Blue Plug 214,112 0.009 1,927.01
Labels 18,400 0,049 901.60
Support Pads 335 1.93 648.48
Warranty Sheets 30,416 0.04 1,218.64
Vinyl White Bands 156,000 0.00264 411.54
Vinyl Red Bands 22,000 0.00254 58-08
Case Boxes 750 0.82 615.00
B ox Labels 1,000 0.008 8.00
Case Box Label 100 0.008 0.80
EXHIBIT E
ITEMIZED LIST AND COST TO MMI OF ENVIROMETRICS'
CASSETTE PARTS INVENTORY
(SEE ATTACHED)
(NOTE: Notwithstanding anything to the contrary, the counts on the attached list
may be modified by Envirometrics prior to shipment after the breaking of escrow,
with the final submitted counts to be confirmed by MMI upon receipt. MMI shall
only be responsible to pay Envirometrics for portions of the attached inventory
either used to manufacture cassettes shipped to MMI or otherwise transferred to
MMI pursuant to III B of the Agreement.)
Final Revised Exhibit E Continued
25mm BellMouth Cassettes
On-hand Purchase Extended
Description Quantity Price $ Cost $
Cassette Boxes 0.35
Separators 0.209
Filter Material 9.27 -
Inlet 5,389 0.039 210.17
Outlet 41,000 0.033 1,353.00
Retainer 12,389 0.039 483.17
Red Plug 0.009
Blue Plug 0.009 -
Labels 0.8 & 0.45 25,156 0.049 1,232.64
Support Pads 1.93
Warranty Sheets 0.04
Vinyl White Bands 0.00264
Vinyl Red Bands 0.00264
Case Boxes 0.82
Box Labels 0.008
Case Box Label 0.008
3,278.99
Agreed to:
By: Walter H. "Skip" Elliott, III
For Envirometrics Products Company
By-. Richard H. Prince
For Multi-Metrics, Inc.
Date
Final Revised Exhibit E to Asset Purchase Agreement
25mm Standard Cassettes
29-May-97
To Build Purchase Extended
Description 4060 Boxes Price $ Cost $
Cassette Boxes 175 0.35 61.25
Separators 4,060 0.209 848.54
Filter Material 0 9.27
Inlet 203,000 0.022 4,466.00
Outlet 203,000 0.023 4,669.00
Cowl 203,000 0.074 15,022.00
Red Plug 203,000 0.009 1,827.00
Blue Plug 203,000 0.009 1,827.00
Labels 20,300 0.049 994.70
Support Pads 262 1.93 505.66
Warranty Sheets 4,060 0.04 162.40
Vinyl White Bands 131,000 0.00264 345.84
Vinyl Red Bands 22,000 0.00264 58.08
Case Boxes 406 0.82 332.92
Box Labels 4,060 0.008 32.48
Case Box Label 406 0.008 3.25
31,156.12
Filter material used to build 500 boxes for EPC (877.50)
30,278.62
Agreed to:
By: Walter H. Elliott, III
For Envirometrics Products Company
By: Richard H. Prince
For Multi-Metrics, Inc.
Date:
Final Revised Exhibit E
to Asset Purchase Agreement
25mm Standard Cassettes
On-hand Purchase Extended
Description Quantity Price $ Cost $
Cassette Boxes 0 0.35
Separators 19,735 0.209 4,124.62
Filter Material 0 9.27
Inlet 112,740 0.022 2,480.28
Outlet 93,000 0.023 2,139.00
Cowl 73,850 0.074 5,464.90
Red Plug 66,350 0.009 597.15
Blue Plug 149,840 0.009 1,348.56
Labels 0 0.049
Support Pads 0 1.93 -
Warranty Sheets 26,356 0.04 1,054.24
Vinyl White Bands 0 0.00264 -
Vinyl Red Bands 22,000 0.00264 58.08
Case Boxes 302 0.82 247.64
Box Labels 0 0.008
Case Box Label 0 0.008
17,514.47
Agreed to:
By: Walter H. "Skip" Elliott, III
For Envirometrics Products Company
By: Richard H. Prince
For Multi-Metrics, Inc.
Date:
EXHIBIT F
CERTIFIED LIST OF CREDITORS
Envirometrics Products Company now manufactures and sells Environrnental
Air Monitoring Products from a principal place of business at 9229 University
Boulevard, Charleston, South Carolina 29406, and has entered into an Agreement
dated April 28, 1997 to sell certain assets related to manufacture and sale of
its asbestos and lead air monitoring products to Multi-Metrics, Inc. a New
Hampshire Corporation.
Envirometrics Products Company, by its President, Walter H. "Skip" Elliott,
III, duly authorized, represents that attached hereto are one list of the names
of all of its creditors with the amount due and owing to each, if known (and the
nature of the product, services, claim, etc.) and a second list of the addresses
of all said creditors.
Dated at Charleston, South Carolina this 28th day of April, 1997
ENVIROMETRICS PRODUCTS COMPANY
By:
Walter H. "Skip" Elliott, III
Duly Authorized
STATE OF SOUTH CAROLINA
CHARLESTON, SC.
Walter H. "Skip" Elliott, III, being duly sworn, deposes and says that he
is the President of Envirometrics Products Company and is duly authorized to
make all of the representations contained in this Affidavit and the list of
creditors to which it attaches; that the attached lists include a full,
accurate, and complete list of all the names and addresses of the creditors of
Envirometrics Products Company and, if listed, of its indebtedness to each; that
the foregoing statement includes a full, accurate, and complete list of all
persons now known to the despondent to assert claims against Envirometrics
Products Company even though such claims are disputed; and that the foregoing
statement is intended to be delivered to Multi-Metrics, Inc. in accordance with
request made under Section 6-104 of the South Carolina U
Walter H. "Skip" Elliott, III
Sworn to before me this 28th day of April, 1997
Notary Public
AMENDMENT TO MASTER FACTORING AGREEMENT
THIS AMENDMENT TO MASTER FACTORING AGREEMENT (this "Amendment") is made
this 14 day of May 1997 by and between Envirometrics, Inc., Azimuth Incorporated
(the "Assignor") and Reservoir Capital Corporation, a Maryland corporation (the
"Assignee").
RECITALS
Pursuant to a Master Factoring Agreement (the "Master Factoring
Agreement") by and between the Assignor and the Assignee, the Assignor and
the have entered into a factoring arrangement (the "Factoring Arrangement")
which the Assignor has agreed to offer to sell certain of its Accounts to
the Assignee from time to time and the Assignee has agreed to consider the
purchase thereof.
The Assignee and the Assignor have now agreed to modify the processing
fee and servicing fee provisions of the Master Factoring Agreement subject
to and in accordance with the provisions of this Amendment.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the Assignor and the Assignee agree as
follows:
1. Recitals The Assignor and the Assignee acknowledge that the above
Recitals to this Amendment are true and correct and agree that the same are
incorporated by reference into the body of this Amendment.
2. Amendments and Modifications to Master Factoring Agreement. The
provisions of Section 1.5 and 1.6 of the Master Factoring Agreement is
hereby deleted and replaced with the following paragraph:
1.5. Processing Fee. In consideration of our purchase of accounts from
you and our rendition of processing and monitoring services you agree to
pay to us fee ( the "Processing Fee") as set out in the rate sheet attached
hereto as Exhibit B. The Processing Fee shall be due and payable at the
time each Account is collected or. if not collected in a timely manner,
upon repurchase. It is contemplated that the minimum volume of accounts to
be 3-,signed to us will be $50.000-00 Per month (face value amount) based
upon a rolling three month average of Accounts assigned. as calculated
commencing on the first day of the first calendar month after the date of
the first assignment of Accounts. If you fail to provide the contemplated
volume of acceptable Accounts for us to consider purchasing, you will pay
us a processing fee based upon the difference between the processing fee
charged for the actual accounts assigned and a processing fee computed as
if the minimum volume had been assigned.
1.6 Servicing- Fee. In further consideration of our purchase of
accounts from you and our rendition of processing and monitoring services,
you agree to pay to us a servicing fee (the "Service Fee") of one and
one-half payment (1 .50%' of the face amount of Accounts purchased by us
payable at the time of purchase.
3. Representations and Warranties In order to induce the Assignee to
enter into this Amendment, the Assignor represents and warrants to the
Assignee that as of the date hereof (a) no default exists under the
provisions of the Master Factoring Agreement or the other documents
executed in connection therewith (collectively, the "Factoring Documents"),
(b) no event exists which, with the giving of notice or lapse of time, or
both. could or would constitute a default under the provisions of the
Master Factoring Agreement or the other Factoring Documents, (c) all of the
representations and warranties of the, Assignor in the Factoring Documents
are true and correct on the date hereof as if the same were made on the
date hereof. (d) all collateral for the Assignor's obligations under the
Master Factoring Agreement is free and clear of all assignments, security
interests, liens and other encumbrances of any kind and nature whatsoever
except for those granted to or permitted by the Assignee.
4. Amendment and Modification Only. This Amendment is only an
agreement amending and modifying certain provisions of the Master Factoring
Agreement. All of the provisions of the Master Factoring Agreement are
incorporated herein by reference and shall continue in full force and
effect amended by this Amendment. The Assignor hereby ratifies and confirms
all of its obligations, liabilities and indebtedness under the provisions
of the Master Factoring Agreement as amended by this .Amendment. The
Assignor -and the Assignee agree it is their intention that nothing herein
shall be construed to extinguish, release or discharge or constitute.
create or effect a novation of, or an agreement to extinguish any of the
obligations, indebtedness and liabilities of the Assignor under the
provisions of the Factoring Documents or any assignment or pledge to the
Assignee of, or any security interest or lien granted to the Assignee in or
on. any collateral and security for such obligations, indebtedness and
liabilities.
5. Applicable Law, Etc. This Amendment shall be governed by the laws
of the State of Maryland and may be executed in any number of duplicate
originals or counterparts, each of such duplicate originals or counterparts
shall be deemed to be an original and all taken together shall constitute
one and the same instrument.
6. Binding Effect, This Amendment shall be binding upon and inure to
the benefit of the Assignor and the Assignee and their respective
successors -and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal as of the date first written above.
Envirometrics, Inc.
By:
Title:
Title:
RESERVOIR CAPITAL CORPORATION
By: (SEAL)
Title-.
AGREEMENT AND MUTUAL RELEASE OF CLAIMS
WHEREAS Envirometrics Products Company, a corporation organized under the laws
of the State of South Carolina (hereafter the "Company") desires to sever its
employer-employee relationship with Thomas A. Wilkie and Cameron R. Stephens
(hereafter ")Wilkie and Stephens") and,
WHEREAS The Company and Wilkie and Stephens wish to resolve the "Employment,
Royalty and Non-Disclosure Agreement" dated May 15, 1996 in an amicable and
mutually acceptable manner.
THEREFORE, in consideration of the mutual promises and undertakings contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Wilkie and Stephens and the
Company agree as follows:
Neither Wilkie nor Stephens have any obligation whatsoever to the Company after
this date under their contracts with the Company each being entitled
"Employment, Royalty and Non-Disclosure Agreement" dated May 15, 1996, and any
and all obligation of Wilkie and Stephens to the Company ceases with the signing
by all parties of this agreement, including any and all obligations, express or
implied arising from, under or through statutory or common law. The parties
agree that these contracts are void with the date of signing of this agreement.
All obligations of the Company to either Wilkie or Stephens as defined in the
"Employment, Royalty and Non-Disclosure Agreement" except as provided below
cease as of the dated of the signing by Wilkie and Stephens of this agreement.
The Company agrees to provide to Wilkie and Stephens, each, the following
consideration:
Salary paid through September 30, 1997 or a later date if additional time is
required to fill pending ACT CARD orders, but no later than October 31, 1997,
Health insurance and other company benefits paid through September 30, 1997 or a
later date if additional time is required to fill pending ACT CARD orders, but
no later than October 31, 1997,
Options, fifty vested at issuance and without conditions to be issued no later
than thirty (30) days after the signing date of this agreement, to purchase
fifty thousand (50,000) shares of Envirometrics Inc. common stock at an exercise
or strike price of $0.25 U.S. per share,
Option to purchase all things, laboratory equipment and supplies located at the
Company's facility at 10 I 8-E Morrisville Pkwy, Morrisville, N.C. except those
materials specific to the production of ACT monitoring cards for the sum of $
10.00 U. S. and copies of the formulary necessary to produce ACT cards for
sulfur dioxide, carbon monoxide, methyl-ethyl ketone, ethylene oxide, nitrogen
dioxide and arsine.
1. Mutual General Release. The parties agree that, in exchange for the mutual
consideration provided in this Agreement, the adequacy of which is hereby
acknowledged by both parties:
a. Wilkie and Stephens, by their signatures below, on behalf of themselves,
their heirs, successors and assigns, hereby covenant and agree not to bring any
lawsuit against the Company and fifty release and forever discharge the Company
and its affiliated and subsidiary entities, legal representatives, successors,
assigns, agents, directors, officers and employees, from any and all actions,
claims, and liabilities of whatsoever kind or character, in law or in equity,
now known or unknown, suspected or unsuspected, arising on or before the date of
the execution of this Agreement that they have or ever had or may now have
against the Company, including, without Nations and all claims directly or
indirectly related to or arising out of their employment by the Company or the
severing of that employment and including, without Stations any and all claims
for breach of employment contract or any other claim arising under any state or
federal statutory or common law.
b. The Company, through the signature of its authorized representative below, on
behalf of itself, its affiliated and subsidiary entities, legal representatives,
successors, assigns, agents, directors, officers and employees, hereby covenants
and agrees not to bring any lawsuit against either Wilkie or Stephens, jointly
or severally, and fully releases and forever discharges Wilkie and Stephens,
their heirs, successors and assigns, from any and all actions, claims and
liabilities of whatsoever kind or character, in law or in equity, now known or
unknown, suspected or unsuspected, arising on or after the date of the execution
of this Agreement that it has ever had or may ever have against them or any of
them, including without Stations any and all claims directly or indirectly
related to or arising out of its employment of Wilkie and/or Stephens, and
including, without limitation any and all claims for breach of employment
contract or any other claim arising under any state or federal statutory or
common law.
2. Governing Law. The parties agree that this Agreement win be construed and
governed by the laws of the State of North Carolina without regard to principles
of conflicts of law.
3. Modifications. This Agreement constitutes the entire understanding of the
parties and supersedes any and all previous agreements, written or otherwise,
between the parties, including but not limited to the employment contracts
referred to herein. The Parties agree that this Agreement will not be rescinded
or modified except in writing signed by the parties choosing to be so bound.
4. Voluntary Agreement. Wilkie, Stephens and the Company expressly affirm that
they have read and fully understand the Agreement and Release, and they have had
the opportunity to consult with counsel of their own choosing to have the terms
of the Agreement and Release explained to them and to receive advice concerning
their legal rights. Both parties expressly represent that, in executing this
Agreement and Release, they are not executing it in reliance upon any promises,
representations or inducements other than those contained in the Agreement and
Release, that they understand that they are giving up legal rights by signing
this Agreement and Release, and that they are executing it voluntarily, free of
any duress or coercion, and upon due deliberation.
We have read, accept and agree to the terms and conditions of the above
Agreement and Release.
B y:
President, Envirometrics Products Company
Thomas A. Wilkie
Date: 10/20/97
Cameron R. Stephens Attest:
Date: 10/20/97 Date:
ASSET PURCHASE AGREEMENT
AGREEMENT as of this 14th day of November 1997, by and among ENVIROMETRICS
PRODUCTS COMPANY, a South Carolina corporation with a principal place of
business at 9229 University Boulevard, Charleston, South Carolina 29406, Seller
(hereinafter "Envirometrics"), Envirometrics, Inc., a Delaware Corporation
("EV") and ZELLWEGER ANALYTICS, INC., a Texas corporation with a principal
place of business at 405 Barclay Boulevard, Lincolnshire, Illinois, 60069, Buyer
(hereinafter "ZA").
WHEREAS, Envirometrics is in the air monitoring business and has manufactured
and sold certain direct read passive air monitors which it no longer desires to
manufacture and sell, and owns certain Technology relating to that air
monitoring business ("the Business") that it is willing to sell; and
WHEREAS, ZA has agreed to accept certain assets (but not liabilities) of the
Business from Envirometrics in conjunction with the settlement of certain claims
of ZA against Envirometrics, as more specifically set forth in a Mutual
Settlement and Release between the parties executed concurrently herewith
("Releas");
NOW, THEREFORE, in consideration of the foregoing premises and of the terms and
conditions set forth infra, Envirometrics and ZA agree as follows:
I.
Purchase, Sale and Payment
A. Concurrently with the performance of the parties' other obligations under the
Release, at Closing, as hereinafter defined, Envirometrics shall sell to ZA, and
ZA shall purchase from Envirometrics, free and clear of all liabilities, claims,
obligations, mortgages, pledges, security interests, liens, tax liens and other
encumbrances whatsoever ("Encumbrances") the following Technology & Trade Names
(the "Asset"):
(1) The ACT Monitoring Card Technology (ACT Card), defined as a direct read
colormetric passive air monitor that measures the airborne concentration of
certain chemicals, attached as Exhibit A hereto, by changes in the color of
proprietary chromophores. Said changes are identified either Qualitatively by
visually comparing the chromophore to a printed standard or Quantitatively using
an Electronic Reader. Formulations for the chemistries for the compounds
outlined in Exhibit A are attached as Exhibit B.
(2) The ACT Monitoring Card System, ACT and design, ACT Monitoring Card,
Air-Chem Technologies and ACT Card, and the rights to any trademark, trade
name, service mark, copyright or patent relating thereto or used in conjunction
therewith.
B. Envirometrics shall deliver to ZA on November 19, 1997, one or more written
Instruments of Transfer and Assignment reasonably satisfactory to ZA evidencing
Envirometrics' sale to ZA of all of the foregoing assets, free of encumbrances,
including the Bill of Sale attached as Exhibit C.
C. In consideration for and conditioned upon delivery of the Instruments of
Transfer and Assignment identified in I. B. and the concurrent performance of
the parties' obligations under the Release, ZA shall at Closing reduce the
unused Prepaid Purchase Deposits that were paid to Envirometrics by ZA under the
Master Distributorship Agreement, dated as of January 1, 1996 by $344,849.90.
Said consideration is part of the Release defined in Exhibit D.
II.
Closing
Closing ("Closing") of the transactions contemplated by this Agreement shall
take place on November 19, 1997 ("Closing Dat") at such time and place as the
parties mutually may agree.. The Assets, as itemized supra, shall be delivered
and transferred at closing.
III.
Envirometrics Covenants, Representations and Warranties
Envirometrics covenants, represents and warrants to ZA, which covenants,
representations and warranties shall survive the Closing, that:
A. Envirometrics has, and through and/or after the Closing Date will have, good
and marketable title to the Assets identified in I.A to be sold and delivered
hereunder, free and clear of all Encumbrances, and has the requisite authority
to sell and transfer good title to the Assets to ZA.
B. The manufacture and sale of the products of the Business, including the
Assets, as heretofore or hereafter manufactured and sold by Envirometrics, to
the best of the knowledge of Envirometrics and its shareholders, directors and
officers, do not infringe any patent, trademark, service mark, copyright or
other proprietary rights of any third party and there are no actual, pending or
threatened claims, suits, investigations, lawsuits or other proceedings relating
to same.
C. No claims, suits, investigations, lawsuits or other proceedings are pending
or threatened by any third parties involving the Assets.
D. No consent by, approval or authorization of, or filing, registration or
qualification with, any federal, state or local governmental authority or other
person, including any which may be required by any "bulk sal" law, is required
for the execution, delivery or performance of this Agreement by Envirometrics or
in connection with the consummation of the transactions contemplated hereby by
Envirometrics.
E. Envirometrics is a corporation duly organized, validly existing and in good
standing under the laws of the State of South Carolina.
F. Envirometrics has the full corporate power to execute, deliver and perform
this Agreement and has taken all action required by law, its certificate of
incorporation, its by-laws or otherwise to authorize such execution, delivery
and performance of this Agreement and this Agreement is a valid and binding
agreement of Envirometrics, enforceable in accordance with its terms.
G.. The execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby will not: (1) violate any provision of the
certificate of incorporation or by-laws of Envirometrics; (2) violate any
provision of, or result in the termination or acceleration of any obligation
under any mortgage, note, lien, lease, franchise, license, permit, agreement,
instrument or obligation to which Envirometrics is a party or by which
Envirometrics is bound; or (3) violate or conflict with any other restriction of
any kind or character to which Envirometrics or the Business is subject.
H. No approval, authorization, license, permit or other action or finding by any
governmental authority or any third party, shareholder, or board of directors of
Envirometrics is required that has not been obtained in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
I. No agent or broker or other persons acting pursuant to authority given by
Envirometrics is entitled to any commission or finder's fee in connection with
the transaction contemplated by this Agreement.
J. Envirometrics makes no warranties to ZA other than those expressly set forth
herein.
IV.
ZA's Covenants, Representations and Warranties
ZA covenants, represents and warrants to Envirometrics, which covenants,
representations and warranties shall survive the Closing, that:
A. ZA is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas.
B. ZA has the full corporate power to execute, deliver and perform this
Agreement and has taken all action required by law, its certificate of
incorporation, its by-laws or otherwise to authorize such execution, delivery
and performance of this Agreement and this Agreement is a valid and binding
agreement of ZA enforceable in accordance with its terms.
C. The execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby will not: (1) violate any provision of the
certificate of incorporation or by-laws of ZA; (2) violate any provision of, or
result in the termination or acceleration of any obligation under any mortgage,
note, lien, franchise, license, permit, agreement, instrument or obligation to
which ZA is a party or by which ZA is bound; or (3) violate or conflict with any
other restriction of any kind or character to which ZA or the Business is
subject.
D. No approval, authorization, license, permit or other action or finding by any
governmental authority or any third party, shareholder, or board of directors of
ZA is required that has not been obtained in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
E. ZA knows of no pending or threatened government investigation, request for
information or action by any third party which would prohibit or prevent or
claim damages as a result of this Agreement or the transactions contemplated
hereby and there is no litigation pending or threatened to the knowledge of ZA
which would affect ZA's ability to perform its obligation hereunder.
F. No agent or broker or other persons acting pursuant to authority given by ZA
is entitled to any commission or finder's fee in connection with the transaction
contemplated by this Agreement.
V.
Sales and Use Taxes
Envirometrics shall be responsible to pay all sales, use and other taxes which
are due as a result of the transfer and conveyances of any of the Assets, and
shall indemnify and hold ZA harmless from any taxes, expenses, costs (including
reasonable attorneys' fees), liabilities and judgments arising from or relating
to any failure of Envirometrics to pay such taxes when due.
VI.
Business Transfer
A. Envirometrics and ZA agree upon the text of a letter in the form attached
hereto as Exhibit E. Said Letters from Envirometrics shall be addressed to each
of Envirometrics customers which purchased products of the business
("Customers"). These letters shall be sent to customers on, or before November
29, 1997.
B. Neither ZA nor Envirometrics shall issue any press release or make any public
statement regarding the terms of this Agreement without the consent of the
other, which shall not be reasonably withheld, except where a press release or
public statement is required by any law or regulation.
VII.
Indemnification
A. EVRM and Envirometrics shall release, defend, indemnify and hold harmless ZA,
its officers, directors and employees, from and against all expenses, costs,
liabilities and judgments (including reasonable attorneys' fees) arising from or
relating to claims relating to Envirometrics' operation of the Business,
including, but not limited to claims by purchasers, alleged owners or users of
products of the Business for bodily injury, death, physical or property damage,
infringement of intellectual property rights, loss of wages or other damages or
claims allegedly resulting from in whole or in part a defect in products
designed or manufactured or sold by Envirometrics prior to the Closing Date and
claims resulting from or based upon any breach by Envirometrics of any of its
representations, covenants, warranties or agreements contained in this
Agreement.
B. ZA shall release, defend, indemnify and hold harmless Envirometrics, its
officers, directors and employees, from claims solely relating to ZA's use of
the technology and/or the ACT Monitoring Card name or mark on products
manufactured by ZA after the Closing Date or based upon any breach by ZA of any
of its representations, covenants, warranties or agreements contained in this
Agreement.
C. The parties' obligations hereunder shall survive the Closing.
IX.
Further Assurances and Actions
Subject to the provisions of this Agreement, EV and Envirometrics will execute
all documents and take all such further actions as ZA shall reasonably request,
and ZA will execute all documents and take all such actions as Envirometrics may
reasonably request, prior to, at or after the Closing Date in order to
consummate the transactions provided herein and to accomplish the purposes of
this Agreement.
X.
No Brokers
Envirometrics represents and warrants to ZA and ZA represents and warrants to
Envirometrics that all negotiations relative to this Agreement have been carried
on by it or its representatives directly with the other without the intervention
of any person in their behalf and that no broker brought about this Agreement on
their behalf.
XI.
Non-Competition/Non-Solicitation
EV and Envirometrics, individually and collectively, and expressly including any
agent, employee, officer, parent or subsidiary, branch, division or affiliate,
agree that for a period of three years following the date of Closing, they will
not:
(a) of their own right or in concert with any other person, corporation or
business entity, knowingly, for themselves or for any person, corporation
or business entity, call upon, solicit, divert or take away, or attempt to
solicit, divert or take away any of the Customers;
(b) of their own right or in concert with any person, corporation or other
business entity, knowingly engage, for themselves or on account of or as an
agent or servant of another, directly or indirectly, in the business of
distributing, wholesaling, selling or marketing of Assets to Customers or
in the marketing or selling of products to Customers designed to compete
with the Assets; and
(c) of their own right or in concert with any other person, corporation or
business entity, knowingly, for themselves or for any person, corporation
or business entity, will not directly or indirectly, in the United States
and Canada, engage in any business or related activities which is the same
or similar to the Business or which designs, manufactures, markets,
distributes or sells goods or services the same as or similar to the
Business, the Assets or any component thereof.
The parties acknowledge that the giving of the foregoing restrictions and
covenants to ZA were a condition upon which ZA entered into the transactions
contemplated hereby and that the limitations of this section have been carefully
considered by the parties and are deemed to be reasonable and necessary to
protect the value of the Assets and that EV and Envirometrics are entering into
the foregoing without duress.
In the event of a breach or threatened breach of any of EV or Envirometrics'
foregoing obligations, ZA shall be entitled to temporary or permanent injunctive
relief, in addition to whatever other legal or equitable relief may be available
to it. EV and Envirometrics further acknowledge that in the event of a breach or
threatened breach of the foregoing, ZA has no adequate remedy at law and that
any monetary damages which may result as a consequence of its breach or
threatened breach may be difficult or impossible to measure. EV and
Envirometrics hereby waive and agree not to assert, now or in the future, the
claim or defense that a remedy at law exists and is adequate.
XII.
Conditions Precedent to Obligations of Parties
A. The obligation of ZA to purchase the assets is subject to the fulfillment on
or prior to the Closing Date as the case may be of each of the following
conditions:
(1) Envirometrics shall have complied in all material respects with all of its
agreements and convenants contained herein to be performed as of the time of
Closing including those under the Release and all of the representations
contained herein shall be true and accurate in all material respects on, as of,
and after the Closing Date.
(2) No order of any court or governmental regulatory authority or body which
restrains or prohibits the transactions contemplated hereby shall be in effect
on the Closing Date, and no suit, proceeding, or investigation by a government
agency or third party to enjoin the transaction contemplated hereby or seek
damages or other relief as a result thereof shall be pending or threatened as of
the Closing Date.
B. The obligation of Envirometrics to execute and deliver the Bill of Sale and
the other documents required to be provided hereunder, attached hereto as
Exhibit C, is subject to:
(1) ZA shall have complied in all material respects with all of its agreements
and covenants contained herein to be performed as of the time of Closing and all
of the representations contained herein shall be true and accurate in all
material respects on, as of, and after the Closing Date.
(2) No order of any court or governmental regulatory authority or body which
restrains or prohibits the transactions contemplated hereby shall be in effect
on the Closing Date and no suits proceeding, or investigation by a government
agency or third party to enjoin the transaction contemplated hereby or seek
damages or other relief as a result thereof shall be pending or threatened as of
the Closing Date.
XIII.
Notices
All notices, requests, demands or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed, by
registered or certified mail, postage prepaid to the following addresses:
If to Envirometrics: Envirometrics Products Company
9229 University Boulevard
Charleston, SC 29406
Attn: Walter H. "Skip" Elliott, III, President
If to ZA: Zellweger Analytics, Inc.
405 Barclay Boulevard
Lincolnshire, Illinois 60069
Attn: Jon McAlear, President and CEO
or at such other addresses as each such party may furnish to the other parties
in writing.
XIV.
Choice of Law
This Agreement shall be governed by and construed in accordance with the laws of
the state of Illinois, without regard to its conflicts of law principles.
XV.
Entire Agreement
This instrument and other documents referenced herein constitutes the entire
understanding between Envirometrics and ZA with respect to the Business and as
such supersedes all prior representations, agreements and understandings between
them with respect to such subject matter. This Agreement or any term hereof may
be changed, waived, discharged or terminated only in writing executed by the
duly authorized officers of EV and Envirometrics and ZA, which writing shall
indemnify this Agreement and shall express the plan or intention to modify,
waive or terminate it.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officers as of the date hereof.
ENVIROMETRICS PRODUCTS COMPANY
------------------------------------------------
By: Walter H. Elliott, III
President
ZELLWEGER ANALYTICS, INC.
------------------------------------------------
By: Jon McAlear
President and CEO
BILL OF SALE
EXHIBIT C
FOR VALUE RECEIVED, ENVIROMETRICS PRODUCTS COMPANY, a South Carolina Corporation
(hereinafter called "Seller") has bargained, sold, conveyed, assigned and
delivered unto ZELLWEGER ANALYTICS, INC., a Texas Corporation (hereinafter
called "Purchaser"), pursuant to an Asset Purchase Agreement between the parties
dated November 14, 1997 (the "Agreement"), all of the assets rights and
properties listed and described in Exhibit A, attached hereto and expressly
incorporated herein by reference (hereinafter called the "Assets").
TO HAVE AND TO HOLD all and singular the above-described Assets, and all title
thereto and interest therein, unto Purchaser, its successors and assigns, to its
own use and behoove forever.
Seller warrants and represents to, and covenants and agrees with Purchaser, that
Seller is the lawful owner of all of said Assets; that Seller has the right to
sell, convey, assign and deliver the same unto Purchaser as herein provided;
that the purchase price for the Assets has been fully paid; that there are no
liens or encumbrances whatsoever affecting the Assets.
The undersigned represents and warrants that he has all necessary and requisite
power and authority to execute the within Bill of Sale on behalf of the Seller.
IN WITNESS WHEREOF, Seller has set its hand and seal this November 18, 1997.
ENVIROMETRICS PRODUCTS COMPANY
----------------------------------------------
By: Walter H. Elliott, III
President
STATE OF SOUTH CAROLINA
COUNTY OF CHARLESTON
Subscribed and sworn to before me this 18th date of November, 1997 by Walter H.
Elliott, III as the voluntary act and deed of Envirometrics Products Company,
duly authorized.
----------------------------------------------
Notary Public
My Commission Expires :___________________
Exhibit A
(To Bill of Sale)
ASSET LIST
(1) The ACT Monitoring Card Technology (ACT Card), defined as a direct read
colormetric passive air monitor that measures the airborne concentration of
certain chemicals, by changes in the color of proprietary chromophores. Said
changes are identified either Qualitatively by visually comparing the
chromophore to a printed standard or Quantitatively using an Electronic Reader.
(2) Formulations for all ACT Monitoring Cards.
(3) The ACT Monitoring Card System, ACT and design, ACT Monitoring Card,
Air-Chem Technologies and ACT Card.
(4) Bills of materials, drawings, formulations and manufacturing procedures for
badges.
(5) Customer List(s).
12/15/99
MUTUAL SETTLEMENT AND RELEASE
This Mutual Settlement and Release ("Release") is entered into and delivered as
of this 14th day of November 1997 by and among ENVIROMETRICS PRODUCTS COMPANY, a
corporation organized and existing under the laws of the State of South Carolina
("EPC") and ENVIROMETRICS, INC. , a corporation organized and exiting under
the laws of the State of Delaware, ("EV"). EPC and EV are hereinafter
collectively known as ("EVRM") and ZELLWEGER ANALYTICS, INC., ("ZA") a
corporation organized and existing under the laws of the State of Texas with its
principal office located in Lincolnshire, Illinois.
WITNESSETH:
WHEREAS, EPC and ZA entered into a Master Distributorship Agreement, dated as of
January 1, 1996 ("Agreement"), wherein both parties had certain rights, duties
and obligations, and
WHEREAS, pursuant to Paragraph 6 of the Agreement, ZA timely paid EPC Quarterly
Prepaid Purchase Deposits ("PPD") which were to be credited by EPC towards ZA's
purchases under the Agreement,
WHEREAS, as of the date hereof, EPC has been paid $494,849.90 in PPD's which
remain unapplied to ZA's purchases under the Agreement,
WHEREAS, ZA claims that Agreement has terminated and that EPC is obligated to
immediately return the unapplied PPD's,
WHEREAS, EPC and ZA wish to resolved their remaining obligations under the
Agreement in an amicable and mutually acceptable manner,
THEREFORE, in consideration of the Recitals, which are incorporated herein by
this reference, and the mutual promises and undertakings contained in this
Release and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, EVRM and ZA agree as follows:
1. Obligations: Upon full performance of the parties obligations hereunder,
neither EVRM nor ZA have any further obligations whatsoever expressed or implied
after this date under the Agreement.
2. Settlement: ZA and EVRM agree to the following mutual consideration all of
which will occur on November 14, 1997 or such other date mutually agreed upon by
the parties:
(a) ZA will purchase the ACT Monitoring Card Technology as defined in the Asset
Purchase agreement dated November 14, 1997 which is incorporated herein by this
reference for $344,849.90 reduction in the unapplied PPD's due ZA.
(b) EVRM will issue 70,000 shares of preferred stock of Envirometrics, Inc. to
ZA or such other third party designated by it for $140,000 reduction in the
unapplied PPD's due ZA described in the Stock Subscription Agreement attached as
Exhibit F.
(c) $10,000 in the form of a cashier's or certified check payable to the order
of ZA will be delivered to ZA.
3. Mutual Release: The parties agree that, in exchange for, and upon full
performance of the mutual consideration provided in this Release, the adequacy
of which is hereby acknowledged by both parties:
(a) Release by EVRM. EVRM hereby and forever releases, holds harmless and
discharges ZA, its past and present shareholders, directors, officers,
employees, agents, representatives, subsidiaries, affiliates, successors and
assigns, from and against any and all claims, demands, counterclaims, actions,
costs, causes of action, damages, debts, obligations, and liabilities of
whatever nature (collectively, "ZA Liabilities"). This Release extends to all ZA
Liabilities known or unknown, now existing or existing only in the future,
matured or un-matured, foreseeable or unforeseeable, to the extent that ZA
Liabilities result or arise, directly or indirectly, from any relationship(s) of
ZA with EVRM through the date of this Release ("Relationships"), or from any act
of ZA on or before the date of this Release ("ZA Acts"). Relationships include,
but are not limited to, services rendered under or actions taken pursuant to the
Agreement and service rendered under or actions taken pursuant to any and all
other agreements between ZA and EVRM, whether oral or written, express or
implied. ZA Acts include without limitation those that might give rise to
liability in tort, in contract or by statutory rule.
(b) Release by ZA. ZA hereby and forever releases, holds harmless and discharges
EVRM, its past and present shareholders, directors, officers, employees, agents,
representatives, subsidiaries, affiliates, successors and assigns, from and
against any and all claims, demands, counterclaims, actions, costs, causes of
action, damages, debts, obligations, and liabilities of whatever nature
(collectively, "EVRM Liabilities"). This Release extends to all EVRM
liabilities, matured or un-matured, foreseeable or unforseeable, to the extent
that EVRM Liabilities result or arise, directly or indirectly, from any
Relationships, or from any act of EVRM on or before the date of this Release
("EVRM ACTS"). EVRM Acts include without limitation those that might give rise
to liability in tort, in contract or by statutory rule.
The foregoing notwithstanding, the foregoing release shall not include and shall
be deemed to expressly exclude any and all claims, demands, counterclaims,
actions, costs, causes of action, damages, debts, obligations and liabilities
arising out of or relating to ZA's sale of Products, as that term is defined in
the Agreement, and the use or misuse of the same by any third parties, including
but not limited to any product liability, negligence and other tort, contract or
statutory claims.
4. Governing Law. The parties agree that this Release will be construed and
governed by the laws of the State of Illinois, without regard to principles of
conflicts of law.
5. Modifications. This Release and other documents referenced herein constitutes
the entire understanding of the parties and supersedes any and previous
agreements, written or otherwise, between the parties, including but not limited
to the Agreement referred to herein. The Parties agree that this Release will
not be rescinded or modified except in writing signed by the parties choosing to
be so bound.
IN WITNESS WHEREOF, the parties hereto have executed this Mutual Settlement and
Release as of the date and year first written above.
Envirometrics Products Company
------------------------------------------------------
By: Walter H. Elliott, III
Its: President
Envirometrics, Inc.
------------------------------------------------------
By: Walter H. Elliott, III
Its: President and CEO
ZELLWEGER ANALYTICS, INC.
------------------------------------------------------
By: Jon McAlear
Its: President and CEO
October 1, 1997
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
Preferred Stock Subscription and Conversion Agreement and Investment
Representations by Zellweger Analytics, Inc.
THIS PREFERRED STOCK SUBSCRIPTION AND CONVERSION AGREEMENT and Investment
Representations by Zellweger Analytics, Inc. (the "Agreement"), made as of
November 14, 1997 by and between Envirometrics, Inc., a Delaware corporation
(the "Company") and Zellweger Analytics, Inc. or its assigns (the "Investor"),
recites and provides as follows:
The Investor agrees to accept Seventy Thousand (70,000) shares of Preferred
Stock (the "Securities") of Envirometrics, Inc., a Delaware corporation (the
"Company") as part of a settlement of a dispute between Envirometrics Products
Company, a South Carolina corporation ("EPC") wholly owned by the Company. The
Investor understands that the Securities are being issued without registration
under the Federal Securities Act of 1933, as amended. Therefore, the Investor
hereby makes the following representations and warranties to the Company and to
each party assisting the Company in the transaction and understands that each
such person or entity is materially relying upon such representations and
warranties:
1. Purchase and Sale of Securities. The Securities are being acquired in
consideration of the reduction by $140,000.00 US of the Prepaid Purchase Deposit
balance owed to the Investor by the Company, as more particularly described in
the Asset Purchase Agreement (the "Agreement"), the Mutual Settlement and
Release (the "Release") dated November 14, 1997 and the Master Distributorship
Agreement dated January 1, 1996, among the Investor, the Company and EPC. The
Securities will have an absolute preference in liquidation of company assets
over all other shareholders of common and preferred stock and unsecured
creditors, and a one for three feature into outstanding Common Stock of the
Company.
2. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before December 31, 2001 (the "Maturity
Date") to convert all or a portion of the Preferred Stock, into shares of
Company's Common Stock, upon ten (10) days prior written notice to Company of
(i) the Investor's intention to so convert, (ii) the amount of Preferred Stock
to be converted, and (iii) the conversion date, which shall be no fewer than ten
(10) days of such notice. At all times up until the Maturity Date, the
conversion ratio shall be one share of Preferred Stock for three shares of
Common Stock. If the Investor elects to convert less than all of the Preferred
Stock owned by it, all remaining shares of Preferred Stock shall be convertible
under the same terms.
3. Put Option. As an alternative to the conversion into Common Stock as set
forth in paragraph 2 above, the Company hereby agrees that for good and
sufficient consideration, the Investor has the right to put the shares of
Preferred Stock issued back to the Company in exchange for a cash payment in
accordance with the following schedule:
End of Year # of Shares Share Price of Put Cash to the Investor
- ------------- ------------- ------------------ --------------------
1999 17,500 $ 2.00 $ 35,000.00
2000 17,500 $ 2.00 $ 35,000.00
2001 17,500 $ 2.00 $ 35,000.00
2002 17,500 $2.00 $ 35,000.00
-------- -----------
70,000 $ 140,000.00
======== ===========
Shares that are not put by the Investor back to the Company in any given year
may be carried forward to the next year at the price stated. (For example, all
70,000 shares of Preferred Stock may be put to the Company at the end of the
year 2002 at a price of $2.00 per share for a total redemption price of $
140,000.
4. Piggyback Registration of Common Stock. In the event that the Company at any
time subsequent to the date the Common Stock is issued to the Investor hereunder
proposes to file a registration statement (other than a registration statement
on a Form S-8 of Form S-14, or forms similar thereto in effect at the time of
such filing) under the Securities Act of 1933 (as then in effect or any similar
statute then in effect), in connection with a proposed public offering of
securities, the Company agrees to immediately notify the Investor in writing, at
least thirty (30) days prior to such proposed filing date of such registration
statement. Within 30 days following delivery of such notice, the Investor may
request that the Company include in such contemplated registration statement any
shares of Common Stock owned (or to be owned on such date pursuant to an
anticipated conversion) by the Investor pursuant to this Stock Subscription and
Conversion Agreement. Upon receipt of such notice, the Company will cause the
shares of Common Stock made the subject of such request to be covered by the
Company.
The Company will pay all expenses reasonable incurred by it and the Investor
(including the Investor's attorney's fees, commissions and fees of underwriters
or brokers with respect to the shares of the stock to be registered and sold by
the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor, such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggy-back" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
5. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
6. Investor Access to Information. During the negotiation of the transaction
contemplated hereby, the Investor and its representatives have been afforded
access to information concerning the Company and the contemplated transaction
and further have been afforded the opportunity to ask such questions of the
officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that it has
been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
7. Investor Performance of Due Diligence. The Investor and its representatives
have been solely responsible for their own "due diligence" investigation of this
investment, for their own analysis of the merits and risks of this investment
and for their own analysis of the fairness and desirability of the terms of this
investment. In taking any action or performing any role relative to the
arranging of the proposed investment, the Investor has acted solely in its own
interest and neither the Investor nor any of the Investor's officers or
employees has acted as an agent of the Company.
8. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
9. Investor Restriction on Stock Transfer. Since the Investor is not acquiring
the Securities with any view to subsequent distribution, the Investor understand
that the stock certificates which will be issued shall bear the following or a
substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and are "restricted shares"
as that term is defined in Rule number 144 of the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an exemption from
registration under the Act, the availability of which is established to the
satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that it may (subject to the other provisions
of this Agreement) transfer all or any portion of the Securities (the "Offered
Interest") to a third party (the "Transferee") only if the Investor first gives
the Company the right of first refusal as herein provided to purchase the
Offered Interest at the price and on terms no less favorable than those offered
to or by such Transferee and only during the period herein set forth. Such right
of first refusal shall be set forth in a written notice containing the terms and
conditions of the proposed transfer to the Transferee (the "Offer Notice") with
a copy of the offer by the Transferee attached thereto. The Company shall have
the option for a period of 30 days after its receipt of the Offer Notice to
purchase upon the terms and conditions contained in the Offer Notice, all but
not less than all of the Offered Interest, by delivering written notice thereof,
(the "Acceptance Notice") to the Investor prior to the expiration of such 30-day
period. If the Company elects to purchase the Offered Interest, settlement shall
be held at the principal office of the Company or at such mutually agreeable
location within 30 days of receipt of the Acceptance Notice. If the Company does
not elect to purchase all of the Offered Interest within 30 days after receipt
of the Offer Notice, the Investor shall have the right to transfer the Offered
Interest to the Transferee upon the terms and conditions contained in the Offer
Notice, provided that prior to any transfer of the Offered Interest, the
Transferee expressly assumes in writing all of the Investor's obligations under
this Agreement and agrees in writing with the Company to be governed by the
provisions of this Agreement, and further provided that settlement occurs within
75 days of delivery of this Offer Notice. The foregoing notwithstanding, the
Investor shall have the right, from time to time, to transfer all or any portion
of the Securities among a parent, subsidiary or affiliated companies without
having to first offer the Securities to the Company or otherwise complying with
the foregoing paragraph.
10. Investor is an Accredited Investor Within the Meaning of Rule 501 of the
Securities Act of 1933. The Investor and its officers represent and warrant (i)
that they have knowledge and experience in business and financial matters to
utilize the information given to them in connection with this investment in
order for the Investor to evaluate the risks of the investment and to make an
informed investment decision, and (ii) that the Investor has the financial
strength to bear the risks of the investment including the possible total loss
of the investment.
11. Investor Agrees to Hold Company Harmless. In consideration of issuance of
the Securities to the Investor, the Investor, for itself and its officers,
hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of and
from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in law
or in equity (other than with respect to material misstatements of fact made to
the Investor by the Company and with respect to material omissions to state a
fact when requested by the Investor), and (ii) any and all manner of suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, controversies, agreements, promises, trespasses, damages, judgments,
executions, claims and demands whatsoever in law or in (other than with respect
to material misstatements of fact made to the Investor by the Company and with
respect to material omissions to state a fact when requested by the Investor),
upon or by reason of any matter, cause or thing whatsoever arising out of or in
connection with the Investor's acquisition or ownership of the Securities, to
the extent that the same arises from or is related to claims under state or
federal securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates, employees,
officers, directors, shareholders, agents or representatives that neither the
Investor nor its successors will ever (i) except as allowed herein, institute
any suit or action at law or otherwise against the Company or its affiliates,
employees, officers, directors, shareholders, agents or representatives, or,
(ii) except as allowed herein, institute, prosecute, or in any way aid in the
institution or prosecution of any claim, demand, action or cause of action for
damages, costs, loss of services, expense or compensation for and on account of
any damages, loss or injury either to person or property, or both, or breach of
any contract or agreement, whether developed or undeveloped, resulting or to
result, known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims under
state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any of
the foregoing; and
12. Availability of Representation by Independent Counsel. The Investor confirms
and acknowledges that it has had full opportunity to be represented by
independent counsel of its choice to review the investment solely from the point
of view of the Investor.
13. Applicable Law. This Agreement shall be construed in accordance with the
laws of the state of Illinois without reference to the choice of law principles
thereof.
14. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their successors, legal
representatives and assigns.
15. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be sufficiently given if delivered in person or
sent by telex, facsimile, telecopy, registered or certified mail with postage
prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
Zellweger Analytics, Inc.
405 Barclay Blvd.
Lincolnshire, Illinois 60069
Attn: Jon McAlear
16. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect any other provisions of this Agreement that can be given
effect without the invalid or unenforceable provision or application and
shall not invalidate or render unenforceable the invalid or unenforceable
provision in any other jurisdiction or under any other circumstance.
17. Entire Agreement. This agreement constitutes the entire agreement by and
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous understandings of the parties.
IN WITNESS WHEREOF, the Investor has hereunto set its Seal as of the November
14, 1997.
BY: _________________________
ZELLWEGER ANALYTICS, INC
Jon McAlear
Its: President and CEO
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of the November 18, 1997.
COMPANY:
ENVIROMETRICS, INC.
BY: ____________________________
Walter H. Elliott, III
Its: President and CEO
October 29, 1997
J. Buck Dowdy
President
Animated Products
3301 Bramer Drive
Raleigh, NC 27604
Dear Buck:
It was good to see you last week and thanks for taking the time to hear me
explain the situation in which we find ourselves. I hope everything goes well
with your shut down of Animated Products.
Per your request, this letter will outline the offer that I verbally
communicated to you when we met.
1. The change in direction that we are taking and the planned debt
mediation that is accompanying that process, requires that we sell the ACT
Monitoring Card.
2. The current royalties due and still unpaid as of 10-16-97 are
computed to be $11,558.16( this will be adjusted according to the closing
date to Zellweger).
3. Using a 10% royalty applied to the $350,000 purchase price by
Zellweger equals an additional $35,000 that would be due.
4. This equates to a total royalty amount due of $47,723.42.
5. Since no cash is available, we will issue you or your company
common stock of Envirometrics, Inc. to payoff the royalty obligation.
6. Using a value of $0.75 per share for the purpose of computing the
number to be issued would equal 63,631 shares.
There will be no further amounts due to you under the original agreement.
If this meets with your approval, please sign at the bottom and fax it to my
attention and we will begin the process to have these shares issued. I will need
to know in what name to issue the certificates. Thanks! Sincerely,
Walter H. "Skip" Elliott, III
President & CEO
Accepted by: Certificates to be issued in the following
name:
_______________________ _____________________________________
COLLATERAL ASSIGNMENT OF PROCEEDS
COLLATERAL ASSIGNMENT OF PROCEEDS (this "Assignment"), dated as of January
I, 1997, by and among ENVIROMETRICS, INC. (Envirometrics, Inc. or any other
person or entity succeeding to the fights of Envirometrics, Inc. with respect to
any of the Collateral, as hereinafter defined, being the "Debtor"), a Delaware
corporation; and SHAKESPEARE PARTNERS, LP ("Shakespeare"), a South Carolina
limited partnership; THE UNITED STATES COMPANY ("USC"), a Virginia corporation;
RICHARD BENNETT ("Bennett"), an individual resident of South Carolina; CHARLES
F. FEIGLEY ("Feigley"), an individual resident of South Carolina; PRECISION
SOUTHEAST, INC. ("PSI"), a South Carolina corporation; TEN STATE STREET, L.L.P.
("10 State"), a South Carolina limited liability partnership; and WALTER H.
ELLIOTT III ("Elliott"), an individual resident of South Carolina. Shakespeare,
USC, Bennett, Feigley, PSI, 10 State and Elliott are hereinafter referred to
collectively as the "Secured Parties" and each individually as a "Secured
Party"; Bennett and Feigley are sometimes hereinafter referred to as the "Lease
Guarantors".
Preliminary Statement
Debtor is indebted to Shakespeare in the principal mount of $200,000,
evidenced by a promissory note or notes duly executed by Debtor and delivered to
Shakespeare (such mount, together with interest thereon at the rate or rates
specified in such note(s) and together with any costs, expenses, fees or other
charges specified in such note(s), being the "Shakespeare Debt").
Debtor is indebted to USC in the principal amount of $186,000, evidenced by
two promissory notes dated December 24, 1996 (such amount, together with
interest thereon at the rate or rates specified in such note and together with
any costs, expenses, fees or other charges specified in such note, being the
"USC Debt").
Debtor has entered into a Lease with James W. Miller, M.D., as landlord
("Miller"), dated the date December 20, 1996 (the "Lease"), of certain real
property in which Debtor's main offices are located. Miller has required as a
condition to his execution of the Lease that' Debtor's performance thereunder be
unconditionally guaranteed by the Lease Guarantors (the "Lease Guaranty"), and
the Lease Guarantors has accordingly executed the required guaranties on the
Lease instrument. Therefore, Debtor now has a contingent liability to Lease
Guarantors in the amount of any payment or payments that such Lease Guarantors
may make in the Future pursuant to the relevant Lease guaranty (such contingent
liability, as further defined in clause (3)(B) below) being in each case a
"Lease Liability"). The total amount of the Lease Liability of the Lease
Guarantors shall not exceed $66271 in the aggregate.
Debtor is indebted to PSI in the aggregate mount of $122,000 (the 'PSI
Debt"), representing part of the unpaid portion of the purchase price of certain
goods sold and delivered by PSI to Debtor.
Debtor is indebted to 10 State in the aggregate amount of $55,000 (the "10
State Debt") representing the unpaid portion of legal fees for legal services
rendered by Ten State Street to the Debtor and its affiliates since 1995. The 10
State Debt is evidenced by a promissory note dated the date hereof, executed by
the Debtor and delivered to 10 State.
Debtor is indebted to Elliott in the principal amount of $15,038.00
evidenced by a promissory note dated December 31, 1996 (such amount together
with interest thereon at the rate or rates specified in such note and together
with any costs, expenses, fees or other charges specified in such note being the
"Elliott Debt").
The Shakespeare Debt, the USC Debt, PSI Debt, 10 State Debt and Elliott
Debt are sometimes hereinafter collectively referred to as the "Secured Debts".
Trico Engineering Consultants, Inc. ("Trico") has executed and delivered to
the Debtor Trico's Promissory Note dated July 26, 1996 (the "Trico Note") in the
principal amount of $600,000. The Trico Note is secured by a Security Agreement
dated July 26, 1996 (the "Trico Mortgage"), and by a Pledge Agreement dated July
26, 1996 (the "Pledge Agreement"), each executed by Trico in favor of the
Debtor. Payment of the Trico Note is also personally guaranteed by Andrew C.
Gillette ("Gillette") under a Pledge Agreement dated July 26, 1996 executed by
Gillette in favor of the Debtor (the "Gillette Guaranty"; the Gillette Guaranty,
the Pledge Agreement and the Trico Mortgage being collectively the "Security
Documents"). The Trico Note provides for monthly payments of principal and
interest in accordance with the schedule set forth in Exhibit A hereto (each
such payment being a "Trico Note Payment").
NOW, THEREFORE, the parties agree as follows:
Section I. Acknowledgment of Other Debt: Effect of Payment. The parties
acknowledge that Debtor is or may be indebted to one or more Secured Parties in
mounts and by instruments not described in this Assignment, and agree that any
such other indebtedness is entirely outside the scope of this Assignment, does
not affect any rights of the parties to this Assignment, and is not secured by
this Assignment.
The receipt of payments of Proceeds (as hereinafter defined) hereunder
shall not affect the right of any Secured Party to timely payment in full of the
debt owed to such Secured Party and secured hereby.
This Assignment shall terminate and become void when all Proceeds have been
received by Debtor (or, as the case may be, by the relevant Secured Parties
directly pursuant to the Escrow Agreement) and paid over in accordance with the
terms hereof; except that the provisions of Section 3 shall survive such
termination.
Section 2. Assignment and Grant of Security Interest. For the purposes of
this Assignment: (a) "Proceeds" shall mean all Trico Note Payments, in whatever
form received, and all payments, in whatever form received, made under any of
the Security Documents; and (b) "Collateral" shall mean (i) all Proceeds, and
(ii) all of Debtor's right, title and interest in and to the Security Documents.
Debtor hereby assigns the Collateral to the several Secured Parties to the
following extent and in the following priorities:
(1) Except as provided in sub-paragraph (2) below, upon the receipt of any
Trico Note Payment, or any part thereof, the Debtor shall pay over first to
Shakespeare the sum of $4,093,43; second to the Lease Guarantor in the amount of
any Lease Liability created in the month preceding the month in which the Trico
Note Payment is received; third to USC an mount equal to the difference between
$2,629.26, the principle mount due under the USC Note, and the mount paid to USC
pursuant to the Promissory Note dated December 24, 1996; fourth to PSI the sum
of $2,000,00; fifth l0 State the sum of $2,500.00; sixth to Elliott.
(2) The Debtor covenants that it will use its best efforts to pay all
monthly installments of the rent due under the Lease ("Rent") from sources of
cash other than Trico Note Payments. If at any time while the Lease Guaranty
remains in force the Debtor becomes aware that it will be unable to pay all or
part of any installment of Rent from sources of cash other than Trico Note
Payments, then the Debtor shall give notice of that prospective inability to the
Lease Guarantor, USC, 10 State and PSI, and shall apply the next following Trico
Note Payment as follows: first to Shakespeare the sum of $4,093.43; second to
the Lease Guarantors in accordance with the Lease Guarantor Agreement executed
on December 20, 1996; third to USC an amount equal to the difference between
$2629.26, the principle mount due under the USC Note, and the amount paid to USC
pursuant to the Promissory Note dated December 24, 1996; fourth to PSI the sum
of $2,000.00; fifth to 10 State the sum of $2,500.00; sixth to Elliott.
(3) (A) Except as provided in clause (3)(B) below, if in any month the
amount received from Trico as a Trico Note Payment is insufficient to allow
payment in full to each Secured Party the mount otherwise due to such Secured
Party under sub-paragraph (1) or (2) above (as applicable), then the Secured
Party or Parties which fail to receive the entire amount due in such month shall
have no claim against the Debtor, the Collateral, or any other Secured Party in
respect of such deficiency. Instead, the amount of such deficiency shall merely
continue to constitute part of such Secured Party's Secured Debt.
(B) Notwithstanding clause (3)(A) above, if the provisions of sub-paragraph
(2) above are applied in any month in order to permit the Debtor to pay Rent,
and if the Rent for such month is nevertheless not paid in full, and if as a
result of such nonpayment (or inability to pay) the Lease Guarantor makes a
payment of Rent, then the amount of such payment by the Lease Guarantor shall
constitute a Lease Liability, which shall be satisfied in successive months as
provided in subsections (1) and (2) above.
(4) All Collateral other than Trico Note Payments shall be paid over as
received to the respective Secured Parties as follows: first to Shakespeare to
the extent of the Shakespeare Debt; second to the 'Lease Guarantor to the extent
of any then unsatisfied amount of Lease Liability; third to USC to the extent of
the USC Debt; fourth to PSI to the extent of the PSI Debt; fifth to I0 State to
the extent of the 10 State Debt; and sixth to Elliott to the extent of the
Elliott Debt. All Collateral remaining undistributed after payment in full of
all the Debts shall remain the sole property of the Debtor.
All Proceeds paid over to a Secured Party hereunder shall be deemed applied
first to interest on the debt owed to such Secured Party, then to accrued
interest thereon, and finally to fees, charges and costs owed by Debtor in
connection therewith.
Section 3. Debtor's Warranties; Disclaimers. Debtor' warrants to each
Secured Party that (1) Debtor is the sole owner of the Collateral, free from any
adverse claim, security interest, lien or other encumbrance whatever; and (2)
Debtor has full legal authority to enter into this Assignment and make
assignment of Collateral effected hereby. Debtor has made no investigation and
accordingly makes no representation or warranty whatever as to the quality or
condition of the 'Collateral, such quality including, without limitation, the
creditworthiness of Trico and Gillette, the existence or priority of any lien
created by the Security Documents, and any representation or warranty made by
Trico or Gillette in any Security Document or the Collateral Note, Each Secured
party acknowledges familiarity with their terms and conditions of the Collateral
Note, the Security Documents and the Subordination Agreement.
Section 4. Third Party Bailee to Hold Collateral; Perfection and Notice
Fillings. The Secured Parties hereby authorize the law firm of Vincent & Bostic,
LLP (the "Escrow Agent") to hold the Collateral Note and the Security Documents,
under an Escrow Agreement to be executed and delivered by the Escrow Agent and
all parties hereto. Notwithstanding the bailment of the Collateral Note and the
Security Documents, the Debtor shall continue to receive and apply all Proceeds
as provided herein unless and until an Even of Default (as defined in Section 6
hereof) occurs. Debtor shall not transfer, sell or otherwise alienate or allow
any transfer of the Collateral Note or any Collateral or any interest therein.
Debtor warrants that it will not, without the prior written approval of' the
Secured articles, release, terminate, cancel, modify or amend the Collateral
Note or the Security Documents in any material respect, it being Understood that
such approval will not be unreasonably withheld by any Secured Party, and any
such action by Debtor without such approval by all Secured Parties shall be
invalid and without legal operation or effect.
As soon as practicable after the execution and delivery of this Assignment,
Debtor shall execute and deliver to the designated agent of the Secured Parties
for filing or recording all such financing statements and memoranda of
assignment as the Secured Parties or any of them may reasonably request by any
Secured Party in order to confirm, protect or continue the security interest or
assignments effected hereby or any rights of any Secured Party hereunder.
Section 5. Liability of Secured Parties with Respect to Assigned Note.
Neither this Assignment nor anything contained herein shall be construed to
impose any liability or obligation on any Secured Party on or with respect to
the Collateral Note or the Security Documents. Debtor shall indemnify and hold
each Secured Party harmless against all costs, claims and other liabilities that
such Secured Party may incur to the extent that such costs, claims or other
liabilities are the result of such Secured Party's being a party to this
Assignment.
Section 6. Events of Default.
(a) Under this Assignment. If:
(1) the Debtor fails to make any payment to any Secured Party within 30
calendar days after the date of which Debtor receives a Trico Note Payment, or
(2) during any 6-month period Debtor fails to make any payment to one or
more Secured Parties of moneys received from Trico Note Payments within 15
calendar days after the date of which Debtor receives a Trico Note Payment, or
(3) if the Debtor should file any petition for protection from creditors
under the provisions of any bankruptcy, insolvency, moratorium or other similar
state or federal law affecting creditors' rights generally (or if any such
petition should be filed against Debtor and remain undischarged for more than 30
calendar days after being filed), or should Debtor enter into any assignment or
composition for the benefit of creditors, then, upon the occurrence of such
event, an Event of Default shall be deemed to exist under this Assignment.
Debtor shall give immediate written notice of the occurrence of any Event of
Default to each Secured Party and to the Escrow Agent, but Debtor's failure to
give such notice shall not affect the rights of any Secured Party. Upon the
occurrence and continuance of any Event of Default, any Secured Party may give
written instructions to the Escrow Agent and to Trico and Gillette, that all
further Trico Note Payments must be made directly to the Escrow Agent and not to
Debtor. If the Event of Default is later cured, Debtor may, with the written
consent of all Secured Parties (which may be withheld in the sole discretion of
any Secured Party for any reason or no reason), instruct the Escrow Agent, Trico
and Gillette that all further Trico Note Payments must be made directly to
Debtor and no longer to the Escrow Agent.
(b) Under the Security Documents. If any even of default should occur under
the Trico Note or any Security Document, Debtor shall immediately notify each
Secured Party of such default and shall immediately take all such remedial
actions in respect of such event(s) of default ("Remedial Actions") as it may
deem reasonable in the circumstances, and shall pursue such actions to the
maximum extent feasible to protect the interests of the Secured Parties. A
two-thirds majority in interest of the Secured Parties (on the basis of dollar
amount of then outstanding debt held) shall have the right to direct Debtor to
pursue such Remedial Actions as such Secured Parties require, and may pursue
such Remedial Actions, by actions at law or in equity, or by extra-judicial
action, in the name and on behalf of the Debtor, for the benefit of all Secured
Parties, equalIy and ratably. In such even, Debtor shall cooperate fully with
such Secured Parties as requested by them from time to time.
Section 7. Miscellaneous. (a) This Assignment represents the entire
agreement of the parties with respect to the subject matter hereof, and no
written or oral representation or statement of any kind, made by any person for
any purpose, is part of the agreement represented hereby unless set forth
herein; (b) no modification of the terms of this Assignment, nor any consent to
any departure from the terms hereof, shall be valid for any purpose unless in
writing and signed by the party or parties against whom enforcement is sought;
(c) this Assignment shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns; and (d) this Assignment shall be
governed by the law of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the
date first above written
ENVIROMETRICS, INC.,
By:
Walter H. Elliott, III, President
SHAKESPEARE PARTNERS, L.P.
By:
H.E. Igoe Jr., General Partner
THE UNITED STATES COMPANY
By:
Richard H. Guilford, President
TEN STATE STREET, LLP
By:
Jonathan Staebler, Partner
PRECISION SOUTHEAST, INC.
By:
Title:
CHARLES F. FEIGLEY
RICHARD D BENNETT
PROMISSORY NOTE
$275,958.27 US January 23, 1997
FOR VALUE RECEIVED, the undersigned, ENVIROMETRICS, INC., a corporation
organized and existing under the laws of the State of Delaware (hereinafter
referred to as "Payor"), promises to pay to PRECISION SOUTHEAST, INC., a
corporation existing under the laws of the State of South Carolina (hereinafter
referred to as 'Payee"), at such place as Payee may from time to time designate,
the aggregate principal amount of Two Hundred Seventy-Five Thousand Nine Hundred
Fifty Eight Dollars and twenty seven cents ($275,958.27 US) (the "Principal") as
provided below.
Principal and interest due hereunder shall be due and payable as follows:
Subject to the provisions of paragraph 3 below, Forty Thousand Dollars
($40,000.00 US) of the Principal balance hereof outstanding shall be paid upon
receipt of the proceeds of the Miller Note Receivable, in the Principal amount
of Two Hundred Thirty Thousand Dollars ($230,000.00), held by Payor, with
interest paid monthly on the Forty Thousand Dollars Principal portion, and One
Hundred Twenty-Two Thousand Dollars ($122,000.00 US) of the Principal balance
hereof outstanding shall be paid over a three year period based on a four year
amortization including accrued interest thereon, commencing January 21, 1997 and
on each 21st of the following month until all Remaining Principal due under this
Note is paid in full; provided, in any event that all sums clue hereunder shall
be due and payable on December 21, 2000 (the "Maturity Date"). Seventy-Eight
Thousand Dollars ($78,000.00) of the principal balance hereof outstanding shall
be converted to equity upon execution of a stock subscription agreement..
Any unpaid principal on this Note shall be due and payable in full with accrued
interest thereon on the settlement date of any sale by the Payor, public or
private, of its securities of any character, if the net proceeds to the Payor
from such sale, after the payment of fees and expenses incurred in connection
with the sale, equal or exceed the sum of $1,000,000.00 US..
The principal due under this Note, or the sums paid pursuant to Paragraph 2
above, shall bear interest at the rate of Twelve Percent (12%) per annum on the
Principal outstanding hereunder from time to time on all invoices secured under
this note agreement over sixty (60) days from date of invoice.
This Note may be prepaid in whole or in part by Payor at any time without
penalty. Payments shall be applied first to accrued interest and then to
Principal. All payments due hereunder are payable in lawful money of the United
States of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment.
In the event of (a) the making of any payment payable hereunder more than (20)
days after each such payment is due hereunder, or (b) any default in the
performance of any other covenant or agreement contained in this Note within
(60) days after such performance is due, or (c) the filing of a petition by or
against Payor under the provisions of any state insolvency law or under the
provisions of the Federal Bankruptcy Code, or such a filing against Payor, which
is not dismissed within sixty (60) days thereafter, or (d) any assignment by
Payor for the benefit of creditors, or (e) the transfer by Payor of a
substantial portion of assets, except for transfers in the ordinary course of
business or for fair consideration or pursuant to a potential merger
contemplated by execution of a letter of understanding of Payor or an affiliate
of Payor, or (f) if any representation or warranty made by Payor herein shall
prove to have been false or materially misleading when made, then an Event of
Default shall be deemed to exist hereunder. Upon the occurrence and at any time
during the continuance of an Event of Default, at the option of Payee, the whole
of the Principal, all accrued interest thereon and any other sums due hereunder
shall immediately become due an payable upon written notice by Payee to Payor.
From and after the Maturity Date of this Note, as the result of a declaration
of maturity or otherwise, and including any period subsequent to obtaining a
judgment by Payee, until paid in full, the entire Principal balance and other
amounts remaining due and unpaid hereunder shall bear interest at the rate of
Fourteen Percent (14%) per annum, compounded annually. Failure to exercise any
right which Payee may be entitled to by virtue of an Event of Default, shall not
constitute a waiver of any other rights in respect of any subsequent Event of
Default, whether of the same or different nature.
Payor shall pay Payee on demand all reasonable costs and expenses incurred by
Payee in the enforcement of the provisions of the Note, including but not
limited to reasonable attorneys' fees and legal expenses. All such costs and
expenses shall constitute a part of the sums due under this Note.
Payor waives presentment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this Note.
This Note shall be governed as to validity, interpretation, construction, effect
and in all other respects by the laws of the State of South Carolina, without
regard being given to its conflicts of law principles. Further, the parties
agree by execution of this note hereinbelow that the exclusive forum for all
collection activities shall be in the State of South Carolina.
If any term or provision of this Note or the application thereof shall to any
extent be invalid or unenforceable, the remainder of this instrument or the
application of such terms to persons or circumstances other than those to which
any provision is held invalid or unenforceable shall not be affected thereby,
This Note may not be modified orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any such modification is
sought. The remedies set forth herein in all instances are not exclusive but are
cumulative and in addition to all other remedies which may exist.
Dated as of the date first stated above.
ENVIROMETRICS, INC.
Walter H. Elliott, III.
SECURITY AGREEMENT
SECTION ONE
CREATION OF SECURITY INTEREST
ENVIROMETRICS, INC. (the "Debtor"), a Delaware corporation, has an
outstanding balance of trade amounts of $275,958.27 (the "Indebtedness") has
executed and delivered its promissory note dated the date hereof in the
principal amount of Two Hundred Seventy-Five Thousand Nine Hundred Fifty Eight
Dollars and twenty seven cents ($275,958.27 US) (such note, as it may be
amended, renewed or extended from time to time) to PRECISION SOUTHEAST, INC.
(the "Secured Party"), a South Carolina Corporation. The Note provides for the
repayment of principal and the payment of interest thereon and of other fees and
charges set forth therein. Such principal, interest, fees and other charges are
referred to collectively herein as the "Note Indebtedness".
In order to secure the payment of the Indebtedness in accordance with the
terms of the Note, the Debtor hereby sells, assigns, transfers and grants to the
Secured Party a security interest in all of the Debtor's right, tire and
interest in and to that certain Promissory Note by and between Dr. James Miller,
MD and Envirometrics, Inc., dated December 19, 1996, in tile amount of Two
Hundred Thirty Thousand Dollars ($230,000 US), a copy of which is attached
hereto as Attachment A and that certain promissory Note by and between Trico
Envirometrics, Inc. and Envirometrics, Inc., dated as of July 26, 1996, in the
amount of Six Hundred Thousand Dollars ($600,000 US), a copy of which is
attached hereto as Attachment B and expressly incorporated herein by reference
(the "Trico Note") and (2) any proceeds of the Trico Note or the Gillette Pledge
Agreement. In addition, a security interest is assigned and granted to all
tools, mold and other equipment owned by the Debtor and located on the premises
of tile Secured Party (all the items described in clauses (1) and (2) being
collectively referred to as the "Collateral").
SECTION TWO
RIGHTS OF DEBTOR IN COLLATERAL
Debtor warrants (1) that it is the owner of the Collateral free from any
adverse lien, security interest, or encumbrance, except for the security
interest granted hereby that the Debtor has committed through an assignment of
collateral proceeds executed December 20, 1996, and that the Debtor has
committed through an assignment of collateral proceeds executed January 21, 1997
(2) that it has the right and authority to enter into this Agreement, and (3)
that it will defend the Collateral against all claims and demands of any and all
persons claiming the Collateral or any interest therein, subject to the Debtor's
Security Interest. The Debtor hereby declares tile Debtor's Security Interest to
be subordinate in priority to the security interest granted hereby, and agrees
to file an appropriate notice of such subordination in nil offices where the
Financing Statement(s) (as defined below) is/are filed, concurrently with the
execution and delivery of this Agreement.
SECTION THREE FINANCING STATEMENTS
The Debtor has filed financing statement(s) (the "Financing Statements"),
with respect to the Debtor's Security Interest in the office(s) of the Secretary
of State of South Carolina (and the Charleston county Register of Mesne
Conveyances), Debtor warrants that other than the Financing Statements,
additional financing statements related to Shakespeare Partners Limited and The
United States Company covering any of the Collateral or any proceeds thereof are
also on file in any public office. At the request of Secured Party, Debtor shall
join with the Secured Party in executing on or more financing statements
pursuant to the Uniform Commercial Code of South Carolina in a form satisfactory
to Secured Party. Debtor shall pay the cost of filing such financing statement
or statements, or filing or this Agreement, in all public offices where filing
or recording is deemed by Secured Party to be necessary or desirable.
SECTION FOUR
SALE OR ASSIGNMENT
Debtor shall not sell or offer to sell or otherwise transfer Collateral or
any interest therein without the written consent of Secured Party.
SECTION FIVE DEFAULT
"Default" under this Agreement shall mean the occurrence of an Event of
Default under and as defined in the Note.
SECTION SIX REMEDIES
On Default hereunder and at any time during the continuance of such
Default, Secured Party shall have the remedies of a Secured Party under the
Uniform Commercial Code of the State of South Carolina. Upon Default, Debtor
agrees to assemble and make available to the Secured Party the collateral at a
place and time convenient to both parties together with all documents or
instruments reasonable necessary to assign or otherwise transfer Debtor's
interest in the Collateral to the Secured Party as has been agreed to by the
Secured Party through an assignment of collateral proceeds executed December 20,
1996, and through an assignment of collateral proceeds executed January 21,
1997.
SECTION SEVEN WAIVER
Any waiver by Secured Party of any Default hereunder shall not be deemed a
waiver of any other Default or of the same Default on a future occasion.
SECTION EIGHT
EFFECT OF AGREEMENT
All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns, and all obligations of Debtor shall bind the successors
and assigns of Debtor.
This Agreement shall become effective when signed by Debtor,
IN WITNESS WHEREOF, the parties have executed this agreement as of the 23rd
of January, 1997.
DEBTOR: ENVIROMETRICS, INC.
By: Walter H. Elliott III Its: President
SECURED PARTY: PRECISION SOUTHEAST, INC
By: S. Richard Averette
Its: President
PROMISSORY NOTE AND SECURITY AGREEMENT
May 29,1997
FOR VALUE RECEIVED, the undersigned, Envirometrics, Inc., a corporation
existing under the laws of the State of Delaware (hereinafter referred to
"Maker"), promises to pay to Shakespeare Partners, L.P., a South Carolina
limited partnership (hereinafter referred to as "Holder"), at such place as
Holder may from time to time designate, the aggregate principal amount of Fifty
Thousand Dollars ($50,000.00) (such sum, or such lesser amount as may in fact
have been advanced hereunder (as reflected in the table of advances attached
hereto as Exhibit 1), being the "Principal"), with interest, as provided below.
This Note shall bear interest at the rate of Ten Percent (I0%) per annum on
the Principal outstanding hereunder from time to time and computed on the basis
of a 360-day year of twelve 30-day months for actual days elapsed. All Principal
and interest due hereunder shall be due and payable in one balloon payment on
June 1, 1998 (the "Maturity Date").
This Note may be prepaid in whole or in part by the Maker at any time
without penalty. Payment shall be applied first to interest and then to
Principal. All payments due hereunder are payable in lawful money of the United
States of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment.
In the event of(a) any default in the making of the payment payable on the
Maturity Date or within twenty (20) days after such date, or (b) any default in
the performance of any covenant or agreement contained in this Note, or (c) the
filing of a petition by the Maker under the provisions of any state insolvency
law or under the provisions of the Federal Bankruptcy Code or such a filing
against the Maker which is not dismissed within sixty (60) days thereafter, or
(d) any assignment by the Maker for the benefit of creditors, or (e) the
transfer by the Maker of a substantial portion of its assets, except for
transfers in the ordinary course of business or for fair consideration, then, or
at any time thereafter at the option of Holder, the whole of the Principal, all
accrued interest thereon and any other sums due hereunder shall immediately
become due and payable upon written notice by the Holder to the Maker.
From and after the Maturity Date of this Note, as the result of a
declaration of maturity or otherwise, and including any period subsequent to
obtaining a judgment by Holder, until paid in full, the entire Principal balance
and other amounts remaining due and unpaid hereunder shall bear interest at the
rate of Fifteen Percent (15%) per annum, compounded annually, or the highest
applicable non-usurious rate, whichever is the lesser. Failure to exercise such
option or any other rights which Holder may in the event of a default be
entitled to, shall not constitute a waiver of the right to exercise such option
or any other rights in the event of any subsequent default, whether of the same
or different nature.
The sums due under this Note represent indebtedness incurred in respect of
Maker's receipt of the proceeds of a loan or loans made by Holder to Maker.
TO SECURE THE PAYMENT OF ALL SUMS DUE UNDER THIS NOTE, and any other sums
due from Maker to Holder from time to time after the date of this Note, Maker
agrees that this Note shall enjoy all benefits of the security granted in that
certain Collateral Assignment of Proceeds among Holder, Maker and others,
equally and ratably with all other parties secured thereby but subject to the
same priority of payment as is now set forth therein for the Shakespeare Debt
(as defined in such Collateral Assignment).
Maker waives presentment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this Note, and consents to any and all renewals and
extensions of the time of payment hereof, and agrees, further, that at any time
and from time to time without notice, the terms of payment herein may be
modified, changed or exchanged by agreement between the Holder and the Maker
without in any way affecting the liability of either party to this instrument.
This Note shall be governed as to validity, interpretation, construction,
effect and in all other respects by the laws and decisions of the State of South
Carolina, without regard being given to its conflicts of law principles.
If any term or provision of this Note or the application thereof shall to
any extent be invalid or unenforceable, the remainder of this instrument or the
application of such terms to persons or circumstances other than those to which
any provision is held invalid or unenforceable shall not be affected thereby.
This Note may not be modified orally, but only by an agreement in writing
signed by the party against whom enforcement of any such modification is sought.
The remedies set forth herein in all instances are not exclusive but are
cumulative and in addition to all other remedies which may exist.
Dated: May 29, 1997
MAKER:
ENVIROMETRICS
Walter H. Elliott, III, President
EXHIBIT I
Table of Advances
Date of Advance
May 29, I997
Amount of Advance
$25,000.00
Maker's Initials
ALLONGE
Promissory Note and Security Agreement Modification Agreement
This Agreement is made this 19th day of September 1997 by and between
Shakespeare Partners, LP ("Holder") and Envirometrics, Inc. ("Maker") and is
intended only to modify and extend the security provided to Holder under that
certain Promissory Note and Security Agreement between Holder and Maker, dated
May 29, 1997 (the "Original Agreement").
Now, therefore, in consideration of the sum of ten dollars and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the panics hereto hereby agree as follows:
1. The Original Agreement is amended to include, as collateral for the
repayment of the sums to be paid by the Maker thereunder, the following:
Twenty-Five Thousand Dollars ($25,000) of the principal amount due under
this Promissory Note and Security Agreement shall be secured by any and all
proceeds, whether in cash or in kind, received by Maker or its wholly-owned
subsidiary, Azimuth, Inc. ("Azimuth"), from any sale or exchange of all or
substantially all, of the capital stock or assets of Azimuth, and Maker agrees
to pay $25,000 of the principal due hereunder to Holder at the closing of any
such sale of stock or assets.
2. Maker hereby agrees to file any and all documents reasonably required by
Holder to perfect the additional security interest granted hereby, including,
without limitation, UCC-1 Financing Statements.
This Agreement is an Allonge and modification to the Original Agreement,
and is not a novation of the same; in all other respects, the Original Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
or partners to execute this Agreement on the date set forth above.
ENVIROMETRICS, INC.
By:
Walter H. Elliott, III, President
SHAKESPEARE PARTNERS, LP
By:_
H.E. Igoe, Jr., General Partner
December 2, 1999
Mark Hufnagel
Reservoir Capital
100 Painters Mill Rd.
Owings Mill, MD 21117
Dear Mark:
Thank you for taking my call today. In referencing your letter of February
26, 1998 in which there was a balance due of $1,131.00, after we had made a
payment of $100.00 on May 15, 1998 (check # 15578), we agreed to bring closure
to this matter by remitting to Reservoir Capital a final payment of $600.00. I
am sorry that it has taken this long, but I greatly appreciate your Christmas
spirit.
As discuss please sign the bottom of this letter and fax it back to my
attention at 843.569.8792. Also, I have included the UCC 3 that needs to be
signed and sent back to our attorney at the address shown on the form.
Thank you for your assistance.
Sincerely,
Walter H. "Skip" Elliott, III
President & CEO
Accepted and Agreed:
By:_________________________________
Mark Hufnagel or other Authorized Signatory.
LECLAIR RYAN
A Professional Corporation
Attorneys At Law
INNSBROOK OFFICE
ELEVENTH FLOOR, 707 EAST MAIN STREET
RICHMOND VIRGINIA 23219
Direct Dial (804) 343-4081
Telephone (804) 270-0070 FILE NUMBER
4037.002
FACSIMILE (804) 270-4715
emad @ lecwrryan.com
TELEPHONE: (804) 783-2003
FACSIMILE: (804) 783-2294
April 7, 1998
Envirometrics, Inc. Walter H. Elliott. III. CEO 9229 University Boulevard
Charleston, SC 29406 LeClair Ryan Fee Claim Dear Skip: To confirm our telephone
conversation this morning, we have agreed that Envirometrics will issue 12,600
shares of its common stock to complete the settlement of the amount of our
outstanding fees and disbursements, i.e., $31,901.00.
It is understood that the issuance of the 12,600 shares is in addition to
and not in lieu of the cash settlement in the amount of $6,699.00 proposed in
the letter received by our firm from Packard & Associates, Inc., dated Monday,
March 30, 1998.
1 hope that the proposed transaction with which Envirometrics is engaged
comes to fruition and that we have a chance to work again in the near future.
Regards,
Michael P. Drzal
MPD/pm
LECLAIR RYAN
A Professional Corporation
Attorneys At Law
INNSBROOK OFFICE
ELEVENTH FLOOR, 707 EAST MAIN STREET
RICHMOND VIRGINIA 23219
Direct Dial (804) 343-4081
Telephone (804) 270-0070 FILE NUMBER
4037.002
FACSIMILE (804) 270-4715
emad @ lecwrryan.com
TELEPHONE: (804) 783-2003
FACSIMILE: (804) 783-2294
April 7, 1998
Packard & Associates, Inc.
334 East Bay Street, Suite 197
Charleston, SC 29401
LeClair Ryan v. Envirometrics
To Whom It May Concern: We are in receipt of your letter dated March 30,
1998 proposing a settlement of our claim for $31,901.00 as follows: $6,699.00
(.21/dollar) to be paid as follows: $3,190.00 on or before April 30, 1998;
$3,590.00 on or before June 30, 1998. Per your fax, we confirm that so long as
the settlement amounts reach our office as set forth above, no further action
will be taken against Envirometrics and any action already taken will be
dismissed or satisfied when the terms of the settlement are completed.
It is also understood that if the settlement is not paid as set forth
above, the entire remaining balance, less any payments made, plus interest, will
become due and payable if any default is not cured within 10 days after written
notice is received by Packard & Associates, Inc. It is also understood that we
are accepting the offer with the express proviso that our claim will revert to
the full amount claimed plus interest in the event that Envirometrics files a
bankruptcy petition within 90 days of the date on which the last settlement
check is honored.
Sincerely,
LeClair Ryan, A
Professional Corporation
By: Michael P. Drzal, Vice President
cc: Walter H. Elliott. III
12/15/99
MUTUAL SETTLEMENT AND RELEASE
This Mutual Settlement and Release ("Release") is entered into and delivered as
of this ___day of April, 1998 by and among ENVIROMETRICS DEVELOPMENT COMPANY, a
corporation organized and existing under the laws of the State of South Carolina
("EDC") and ENVIROMETRICS, INC., a corporation organized and exiting under the
laws of the State of Delaware ("EV"), (each with their principal offices in
Charleston, SC and hereinafter collectively known as "EVRM"), and COMPUTER
CONTROL CORPORATION ("CCC") a corporation organized and existing under the laws
of the State of New Jersey, with its principal office located in Pompton Plains,
New Jersey.
WITNESSETH:
WHEREAS, EDC and CCC entered into an Agreement, dated as of March 26, 1992 and
amended June 18, 1996 ("the Agreement"), to develop an Electronic Reader for
utilization with a line of passive monitors developed by EDC, wherein both
parties had certain rights, duties and obligations, and
WHEREAS, EV was a guarantor of EDC's obligation under the Agreement, and
WHEREAS, CCC sent notice to EDC on July 17, 1997 alleging that EDC was in breach
of the Agreement because it owed accrued royalties and accounts receivable to
CCC, and on August 25, 1997, CCC notified EDC of its termination of the
Agreement, and
WHEREAS, EVRM and CCC wish to resolve their remaining obligations under the
Agreement in an amicable and mutually acceptable manner;
NOW, THEREFORE, in consideration of the Recitals, which are incorporated herein
by this reference, and the mutual promises and undertakings contained in this
Mutual Settlement and Release and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, EVRM and CCC agree as
follows:
1. Stock Issuance. On or before June 30, 1998, EVRM will instruct its
transfer agent, Continental Stock, to issue - and CCC agrees to accept in
lieu of any outstanding amounts which may be due to it from EVRM (or either
of them) - 31,713 shares of unregistered common stock of Envirometrics,
Inc., and such issuance (the "Issuance") shall be in full satisfaction of
all obligations of EVRM (or either of them) to CCC. Registration of these
shares will occur at such time as EV does its next Secondary Offering, and
such securities may bear a time and quantity restriction for the sell-off
of the registered shares.
2. CCC Release. CCC hereby and forever releases, holds harmless and
discharges EV and EDC, their past, present and future shareholders,
directors, officers, employees, agents, representatives, subsidiaries,
affiliates, successors and assigns, from and against any and all claims,
demands, counterclaims, actions, costs, causes of action, damages, debts,
obligations, and liabilities of whatever nature (collectively, the "EVRM
Liabilities"). This Release extends to all EVRM Liabilities known or
unknown, now existing or existing only in the future, matured or
un-matured, foreseeable or unforeseeable, to the extent that EVRM
Liabilities result or arise, directly or indirectly, from any
relationship(s) of EVRM (or either of them) with CCC through the date of
this Release ("Relationships"), or from any act of EVRM (or either of them)
on or before the date of this Release ("EVRM Acts"). Relationships include,
but are not limited to, obligations stated in the Agreement (and/or any
other agreements between EVRM and CCC whether oral or written, express or
implied) and performance and defaults thereunder under or actions taken
pursuant thereto. EVRM Acts include without limitation those that might
give rise to liability in tort, in contract or by statutory rule.
3. EVRM Release. EVRM hereby and forever releases, holds harmless and
discharges CCC, its past, present and future shareholders, directors,
officers, employees, agents, representatives, subsidiaries, affiliates,
successors and assigns, from and against any and all claims, demands,
counterclaims, actions, costs, causes of action, damages, debts,
obligations, and liabilities of whatever nature (collectively, the "CCC
Liabilities"). This Release extends to all CCC Liabilities known or
unknown, now existing or existing only in the future, matured or
un-matured, foreseeable or unforeseeable, to the extent that CCC
Liabilities result or arise, directly or indirectly, from any
relationship(s) of CCC with EVRM through the date of this Release
("Relationships"), or from any act of CCC on or before the date of this
Release ("CCC Acts"). Relationships include, but are not limited to,
obligations stated in the Agreement (and/or any other agreements between
EVRM and CCC whether oral or written, express or implied) and performance
and defaults thereunder under or actions taken pursuant thereto. CCC Acts
include without limitation those that might give rise to liability in tort,
in contract or by statutory rule.
4. Governing Law. The parties agree that this Mutual Settlement and Release
will be governed and enforced in all respects by the laws of the State of
South Carolina, without regard to principles of conflicts of law.
5. Modifications. This Mutual Settlement and Release constitutes the entire
understanding of the parties and supersedes any and previous agreements,
written or otherwise, between the parties, including but not limited to the
Agreement referred to herein. The Parties agree that this Mutual Settlement
and Release will not be rescinded or modified except in writing signed by
the parties choosing to be so bound.
THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have executed this Mutual Settlement
and Release as of the date and year first written above.
ENVIROMETRICS DEVELOPMENT COMPANY
By:_______________________________________
Walter H. Elliott III, President
ENVIROMETRICS, INC.
By:_______________________________________
Walter H. Elliott III, President, a corporation
COMPUTER CONTROL CORPORATION
By:_______________________________________
Harvey Padden
President & CEO
AGREEMENT
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, "Company"), a Delaware corporation with its
principal office in Charleston, South Carolina and TEN STATE STREET, L.L.P. a
South Carolina limited liability partnership (hereinafter, "Investor");
Recitals
On January 1, 1997 the Parties and others entered into an agreement
(hereinafter the "Assignment"), a copy of which is attached hereto as Exhibit
"A") under which Investor accepted (a) as a mode of payment for certain
obligations of Company to it (the "Indebtedness") an assignment to it of
proceeds due to Company under a promissory note dated July 26, 1996 from Trico
Engineering Consultants, Inc. (the "Trico Note"); and, (b) as security for such
payment, the assignment to it of a portion of a Security Agreement, Pledge
Agreement and Guaranty Agreement, (collectively the "Security Documents") which
collateralize the Trico Note; and,
As of April 30, 1998 the Indebtedness, together with accrued interest and
any other amounts owing from Company to Investor, had an outstanding balance of
$35,534.00; and,
Company's financial circumstances are such that the elimination of the
Indebtedness by its conversion to equity as provided below and the termination
by Investor of its interest in the Assignment, together with concessions by
other secured creditors, will enable it to significantly improve its overall
financial situation, including the mediation of its unsecured debt; and,
Investor is willing to cancel the Indebtedness and relinquish any rights
which it may have under the Assignment in exchange for certain preferred stock
and other obligations of Company as expressed herein.
NOW, THEREFORE, for and in consideration of the mutual obligations
expressed herein and other valuable consideration, the parties agree as follows:
1. Purchase and Sale of Securities. As soon as practicable after the
execution hereof, the Company agrees to issue to Investor, and Investor agrees
to accept, Seventeen Thousand Seven Hundred Sixty-Seven (17,767) shares of
Preferred Stock of the Company described below (the "Securities") in exchange
for the consideration provided for below.
2. Release and Termination. The Parties hereby terminate the Assignment as
it pertains to any rights and obligations between them and further agree that
the Assignment is, as of this day, canceled, void and of no further effect to
the extent of any such rights and obligations, and Investor hereby releases and
relinquishes any claims and rights of whatever nature which it may have to the
"Collateral", as defined by Section 2 of the Assignment, and any other rights
thereunder. Contemporaneously with its execution hereof, Investor is executing
such UCC termination statements as may be necessary to effectively terminate, as
a matter of record, any of its rights under, or interest in, the Assignment. All
prior indebtedness of the Company to the Investor and all instruments evidencing
same are hereby canceled and declared void and of no effect, and Investor hereby
and forever releases and discharges the Company from all prior indebtedness to
Investor, including without limitation a promissory note from Company to
Investor dated January 20, 1997 in the original principal amount of $55,000.00
(the "Note"). As soon as practicable following the execution hereof, the
Investor shall deliver to Company the original copy of the Note marked
"Satisfied" and executed by an authorized signatory of Investor.
3. Consent. Investor hereby consents to and ratifies the modification,
release, cancellation and/or termination of the Trico Note, the Security
Documents and/or the Assignment, between Company and any of the other Parties
thereto.
4. Preference, Par Value, Preemptive and Voting Rights. The Securities,
together with the other outstanding preferred stock of the Company except for
the preferred stock originally issued to Zellweger Analytics, Inc., will have an
absolute preference in liquidation of company assets over all shareholders of
Common Stock of the Company and unsecured creditors. The preferred stock issued
to Zellweger Analytics, Inc. shall have a prior claim in any liquidation unless
same has been converted to Common Stock of the Company. The Securities will be
without nominal or par value, and, except as may otherwise be required by law,
shall not entitle the holder to any preemptive rights to subscribe to any class
of shares issued or which may be issued nor to vote at Stockholders' meetings of
the Company, nor to participate in profits beyond their fixed, annual
preferential dividend rate.
5. Dividend. The Securities shall bear and pay a preferred dividend rate of
Fourteen Cents ($0.14) per share, per annum, payable to the holder at the end of
each calendar quarter, commencing on June 15, 1999. This amount shall accrue for
the first year (6/15/98 - 6/16/99) and be divided equally among and added to the
quarterly payments of the second year (6/15/99 - 6/16/00).
6. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before June 15, 2009 (the "Maturity
Date") to convert all or a portion of the Securities into shares of Company's
Common Stock, upon Sixty (60) days prior notice to Company of (i) the Investor's
intention to so convert, and (ii) the amount of the Securities to be converted.
At all times up until the Maturity Date: (a) the conversion ratio shall be one
share of the Securities for five shares of Common Stock of the Company; and (b)
the Investor may, from time to time, elect to convert less than all of the
Securities owned by it without impairment of its right to convert other portions
of the balance thereof.
7. Put Option. As an alternative to the conversion into Common Stock as set
forth above, the Investor is hereby granted the right to put the Securities back
to the Company, upon Sixty (60) days prior notice to Company, in exchange for a
cash payment in accordance with the following schedule:
Date # of Shares Per Share Price Cash to Investor
---- ----------- --------------- ----------------
6/15/04-6/14/05 3,553 $2.36 $8,385.08
6/15/05-6/14/06 3,553 $2.42 $8,598.26
6/15/06-6/14/07 3,553 $2.48 $8,811.44
6/15/07-6/14/08 3,553 $2.54 $9,024.62
6/15/08-6/14/09 3,555 $2.60 $9,243.00
17,767 $44,062.40
Shares not put to the Company in any given year may be carried forward to
following years (until 6/14/09) and put to the Company at the Per Share Price
stated above for the period in which the put is exercised for such Securities.
(For example, all of the Securities may be put to the Company on 6/15/08 at a
price of $2.60 per share for a total redemption price of $46,194.20). Any put
options hereunder not exercised by June 14, 2009 shall expire on that date.
8. Call Option. The Company shall have the right to redeem all or any
portion of the Securities not yet converted or put to the Company upon Sixty
(60) days prior notice to the holder according to the following schedule:
Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
6/15/03-6/15/04 $2.30
6/15/04-6/14/05 $2.36
6/15/05-6/14/06 $2.42
6/15/06-6/14/07 $2.48
6/15/07-6/14/08 $2.54
After 6/14/08 $2.60
Any Securities so called and not tendered back to the Company by the date
so specified in such notice of call will be entitled thereafter only to the
scheduled redemption price of such Securities as of the date of the call, any
dividend, conversion or other rights with respect thereto having been eliminated
as of the notice of call.
9. Piggyback Registration of Common Stock. In the event that the Company at
any time subsequent to the date any Common Stock is issued to the Investor
hereunder proposes to file a registration statement (other than a registration
statement on a Form S-8 of Form S-14, or forms similar thereto in effect at the
time of such filing) under the Securities Act of 1933 (as then in effect or any
similar statute then in effect), in connection with a proposed public offering
of securities, the Company agrees to immediately notify the Investor in writing,
at least thirty (30) days prior to such proposed filing date of such
registration statement. Within 30 days following delivery of such notice, the
Investor may request that the Company include in such contemplated registration
statement any shares of Common Stock owned (or to be owned on such date pursuant
to an anticipated conversion) by the Investor pursuant to this Stock
Subscription and Conversion Agreement. Upon receipt of such notice, the Company
will cause the shares of Common Stock made the subject of such request to be
covered by the Company.
The Company will pay all expenses reasonably incurred by it and the
Investor (including the Investor's attorney's fees, commissions and fees of
underwriters or brokers with respect to the shares of the stock to be registered
and sold by the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggyback" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
10. Limitation on Sale of Securities. The Investor agrees to limit the
number of registered shares it may sell following registration to no more than
25,000 shares during any calendar quarter for the first Two years following
registration.
11. Investor's Representations and Warranties. The Investor understands
that the Securities are being issued without registration under the Federal
Securities Act of 1933, as amended. Therefore, the Investor hereby makes the
representations and warranties set forth herein to the Company and to each party
assisting the Company in the transaction and understands that each such person
or entity is materially relying upon such representations and warranties.
12. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
13. Investor Access to Information. During the negotiation of the
transaction contemplated hereby, the Investor and its representatives have been
afforded access to information concerning the Company and the contemplated
transaction and further have been afforded the opportunity to ask such questions
of the officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that it has
been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
14. Investor Performance of Due Diligence. The Investor and its
representatives have been solely responsible for their own "due diligence"
investigation of this investment, for their own analysis of the merits and risks
of this investment and for their own analysis of the fairness and desirability
of the terms of this investment. In taking any action or performing any role
relative to the arranging of the proposed investment, the Investor has acted
solely in its own interest and neither the Investor nor any of the Investor's
officers or employees has acted as an agent of the Company.
15. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
16. Investor Restrictions on Stock Transfer. Since the Investor is not
acquiring the Securities with any view to subsequent distribution, the Investor
understands that the stock certificates which will be issued shall bear the
following or a substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are "restricted
shares" as that term is defined in Rule number 144 of the Act. The shares may
not be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to an exemption from
registration under the Act, the availability of which is established to the
satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that it may (subject to the other
provisions of this Agreement) transfer all or any portion of the Securities (the
"Offered Interest") to a third party (the "Transferee") only if the Investor
first gives the Company the right of first refusal as herein provided to
purchase the Offered Interest at the price and on terms no less favorable than
those offered to or by such Transferee and only during the period herein set
forth. Such right of first refusal shall be set forth in a written notice
containing the terms and conditions of the proposed transfer to the Transferee
(the "Offer Notice") with a copy of the offer by the Transferee attached
thereto. The Company shall have the option for a period of 30 days after its
receipt of the Offer Notice to purchase upon the terms and conditions contained
in the Offer Notice, all but not less than all of the Offered Interest, by
delivering written notice thereof, (the "Acceptance Notice") to the Investor
prior to the expiration of such 30-day period. If the Company elects to purchase
the Offered Interest, settlement shall be held at the principal office of the
Company or at such mutually agreeable location within 30 days of receipt of the
Acceptance Notice. If the Company does not elect to purchase all of the Offered
Interest within 30 days after receipt of the Offer Notice, the Investor shall
have the right to transfer the Offered Interest to the Transferee upon the terms
and conditions contained in the Offer Notice, provided that prior to any
transfer of the Offered Interest, the Transferee expressly assumes in writing
all of the Investor's obligations under this Agreement and agrees in writing
with the Company to be governed by the provisions of this Agreement, and further
provided that settlement occurs within 75 days of delivery of this Offer Notice.
The foregoing notwithstanding, the Investor shall have the right, from time to
time, to transfer all or any portion of the Securities among a parent,
subsidiary or affiliated companies without having to first offer the Securities
to the Company or otherwise complying with the foregoing paragraph.
17. Investor is an Accredited Investor Within the Meaning of Rule 501 of
the Securities Act of 1933. The Investor and its officers represent and warrant
(i) that they have knowledge and experience in business and financial matters to
utilize the information given to them in connection with this investment in
order for the Investor to evaluate the risks of the investment and to make an
informed investment decision, and (ii) that the Investor has the financial
strength to bear the risks of the investment including the possible total loss
of the investment.
18. Investor Agrees to Hold Company Harmless. In consideration of issuance
of the Securities to the Investor, the Investor, for itself and its officers,
hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of and
from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in law
or in equity (other than with respect to material misstatements of fact made to
the Investor by the Company and with respect to material omissions to state a
fact when requested by the Investor), and (ii) any and all manner of suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, controversies, agreements, promises, trespasses, damages, judgments,
executions, claims and demands whatsoever in law or in (other than with respect
to material misstatements of fact made to the Investor by the Company and with
respect to material omissions to state a fact when requested by the Investor),
upon or by reason of any matter, cause or thing whatsoever arising out of or in
connection with the Investor's acquisition or ownership of the Securities, to
the extent that the same arises from or is related to claims under state or
federal securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates, employees,
officers, directors, shareholders, agents or representatives that neither the
Investor nor its successors will ever (i) except as allowed herein, institute
any suit or action at law or otherwise against the Company or its affiliates,
employees, officers, directors, shareholders, agents or representatives, or,
(ii) except as allowed herein, institute, prosecute, or in any way aid in the
institution or prosecution of any claim, demand, action or cause of action for
damages, costs, loss of services, expense or compensation for and on account of
any damages, loss or injury either to person or property, or both, or breach of
any contract or agreement, whether developed or undeveloped, resulting or to
result, known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims under
state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any of
the foregoing; and
(b) without limiting the indemnification provisions contained in the
Promissory Note or related Security Agreement, agrees to indemnify and hold free
and harmless the Company from and against all costs, expense, claims, damages
and liabilities (to the extent the Investor has benefited financially by the
action resulting in such costs, expenses, claims, damages or liabilities),
whether accrued, absolute, contingent or otherwise arising out of or in
connection with the acquisition of the Securities, to the extent that such
arises from or is related to claims under state or federal securities laws, or
resulting from any action, suit, proceeding, demand, assessment, judgment, cost
or expenses incident to any of the foregoing, and the Investor agrees to pay
upon request all fees and expenses including but not limited to, reasonable
attorney's fees, associated with any of the above.
19. Availability of Representation by Independent Counsel. The Investor
confirms and acknowledges that it has had full opportunity to be represented by
independent counsel of its choice to review the investment solely from the point
of view of the Investor.
20. Applicable Law. This Agreement shall be governed in all respects by the
laws of the state of South Carolina without reference to the choice of law
principles thereof, and the Parties hereto submit to exclusively to the in
personam jurisdiction of the courts in Charleston, South Carolina for the
resolution of any disputes which may arise herefrom.
21. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Parties and their
successors, legal representatives and assigns.
22. Notice. Any notice or other communication required or permitted
hereunder shall be in writing and shall be sufficiently given if delivered in
person or sent by telex, facsimile, telecopy, registered or certified mail with
postage prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
Ten State Street, L.L.P.
10 State Street
Charleston, SC 29401
Attn: Timothy Scrantom, Esq.
23. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions of this Agreement that can be given effect without
the invalid or unenforceable provision or application and shall not invalidate
or render unenforceable the invalid or unenforceable provision in any other
jurisdiction or under any other circumstance.
24. Entire Agreement. This agreement constitutes the entire agreement by
and between the Parties pertaining to the subject matter hereof and supersedes
all prior and contemporaneous understandings of the Parties.
IN WITNESS WHEREOF, the Investor has hereunto caused its authorized officer
to execute this instrument and affix its seal as of this 30th day of June, 1998.
TEN STATE STREET, L.L.P. ("Investor")
By:____________________________________
Timothy Scrantom, Authorized Signatory
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of this 30th day of June, 1998.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
Agreement
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, the "Company"), a Delaware corporation with
its principal office in Charleston, South Carolina and THE UNITED STATES
COMPANY, a Virginia corporation (hereinafter, the "Investor");
Recitals
On January 1, 1997 the Parties and others entered into an agreement
(hereinafter the "Trico Assignment," a copy of which is attached hereto as
Exhibit "A") under which Investor accepted (a) as a mode of payment, or partial
payment, for certain obligations of Company to it an assignment to it of
proceeds due to Company under a promissory note dated July 26, 1996 from Trico
Engineering Consultants, Inc. (the "Trico Note"); and, (b) as security for such
payment, the assignment to it of a portion of a Security Agreement, Pledge
Agreement and Guaranty Agreement, (collectively the "Trico Security Documents")
which collateralize the Trico Note; and,
In December, 1996 the Parties and others entered into an agreement which
was amended on May 1, 1998 (hereinafter, as amended, the "Miller Assignment", a
copy of which, together with its amendment, is attached hereto as Exhibit "B")
under which each assignee thereunder accepted: (a) as a mode of partial payment
for certain obligations of Company to it an assignment to it of proceeds due to
Company under a promissory note dated December 19, 1996 from James W. Miller of
Richmond, VA (the "Miller Note"); and, (b) as security for such payment, the
assignment to it of a mortgage, lease assignment and security agreement
(collectively, the "Miller Security Documents") which collateralize the Miller
Note. The Trico Assignment and the Miller Assignment are referred to below
collectively as the "Assignments", and the "Trico Security Documents" and the
"Miller Security Documents" are referred to below collectively as the "Security
Documents;" and,
On May 1, 1998, the Parties, Azimuth, Inc. and others entered into an
Assignment of Proceeds and Security Agreement (hereinafter the "Azimuth
Agreement", a copy of which is attached hereto as Exhibit "C") under which each
secured party thereunder accepted as partial security for the aforesaid
obligations a security interest in the outstanding stock and the assets of
Azimuth, Inc.; and,
The Assignments and the Azimuth Agreement were intended by the Parties to
pay (or partially pay) and collateralize certain amounts due from Company to
Investor, which amounts, together with accrued interest and any other amounts
owing from Company to Investor had an outstanding balance as of April 30, 1998
of $223,295.00; and,
Company's financial circumstances are such that the elimination of the
Company's indebtedness to Investor by its conversion to equity as provided
below, the termination by Investor of its interest in the Assignments and the
Azimuth Agreement, together with concessions by other secured creditors, will
enable Company to significantly improve its overall financial situation,
including the mediation of its unsecured debt; and,
Investor is willing to cancel the Company's indebtedness to it and
relinquish its rights as aforesaid in exchange for certain preferred stock and
other obligations of Company as expressed herein.
NOW, THEREFORE, for and in consideration of the mutual obligations
expressed herein and other valuable consideration, the Parties agree as follows:
1. Payment to Investor. Company will pay to Investor the sum of Sixteen
Thousand and 00/100 Dollars ($16,000.00) as follows:
(a) Company will pay to Investor Eight Thousand and 00/100 Dollars
($8,000.00) at such time as either the Miller Note or the Trico Note or both of
them are refinanced by Company, which is anticipated by the Company to occur not
more than sixty (60) days from the execution hereof;
(b) Company will pay to Investor an additional Eight Thousand and 00/100
Dollars ($8,000.00) on the ninetieth day following the execution hereof, or upon
the closing of the transaction contemplated by the letter of intent dated June
26, 1998 (a specimen copy, deleting the name of the signatory, of which is
attached hereto as Exhibit "D"), whichever is sooner;
2. Purchase and Sale of Securities. As soon as practicable after the
execution hereof, the Company agrees to issue to Investor, and Investor agrees
to accept, One Hundred Eleven Thousand Six Hundred Forty-eight (111,648) shares
of Preferred Stock of the Company described below (the "Securities") in exchange
for the consideration provided for below.
3. Release and Termination. The Parties hereby terminate the Assignments
and the Azimuth Agreement as they pertain to any rights and obligations between
them and further agree that the Assignments and the Azimuth Agreement are, as of
this day, canceled, void and of no further effect to the extent of any such
rights and obligations, and Investor hereby releases and relinquishes any claims
and rights of whatever nature which it may have to the "Collateral", as defined
by Section 2 of each Assignment, and to the "Pledged Securities" and the
"Secured Assets" as defined by the Azimuth Agreement, and any other rights
thereunder. Contemporaneously with its execution hereof, Investor is executing
such UCC termination statements as may be necessary to effectively terminate, as
a matter of record, any of its rights under, or interest in, the Assignments and
the Azimuth Agreement. All prior indebtedness of the Company to the Investor and
all instruments evidencing same are hereby canceled and declared void and of no
effect, and Investor hereby and forever releases and discharges the Company from
all prior indebtedness to Investor, including but not limited to all Promissory
Notes from Company to Investor, the original copy(ies) of which Investor shall
deliver to Company, as soon as practicable following the execution hereof,
marked "Satisfied" and executed by an authorized signatory of Investor.
4. Consent. Investor hereby consents to and ratifies the modification,
release, cancellation and/or termination of the Trico Note; the Miller Note; the
Security Documents; the Azimuth Agreement and/or either or both of the
Assignments, between Company and any of the other Parties thereto.
5. Preference, Par Value, Preemptive and Voting Rights. The Securities,
together with the other outstanding preferred stock of the Company except for
the preferred stock originally issued to Zellweger Analytics, Inc., will have an
absolute preference in liquidation of company assets over all shareholders of
Common Stock of the Company and unsecured creditors. The preferred stock issued
to Zellweger Analytics, Inc. shall have a prior claim in any liquidation unless
same has been converted to Common Stock of the Company. The Securities will be
without nominal or par value, and, except as may otherwise be required by law,
shall not entitle the holder to any preemptive rights to subscribe to any class
of shares issued or which may be issued nor to vote at Stockholders' meetings of
the Company, nor to participate in profits beyond their fixed, annual
preferential dividend rate.
5. Dividend. The Securities shall bear and pay a preferred dividend rate of
Fourteen Cents ($0.14) per share, per annum, payable to the holder at the end of
each calendar quarter, commencing on June 15, 1999. This amount shall accrue for
the first year (6/15/98 - 6/14/99) and be divided equally among and added to the
quarterly payments of the second year (6/15/99 - 6/14/00).
6. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before June 14, 2009 (the "Maturity
Date") to convert all or a portion of the Securities into shares of Company's
Common Stock, upon Sixty (60) days prior notice to Company of (i) the Investor's
intention to so convert, and (ii) the amount of the Securities to be converted.
At all times up until the Maturity Date: (a) the conversion ratio shall be one
share of the Securities for five shares of Common Stock of the Company; and (b)
the Investor may, from time to time, elect to convert less than all of the
Securities owned by it without impairment of its right to convert other portions
of the balance thereof.
8. Put Option. As an alternative to the conversion into Common Stock as set
forth above, the Investor is hereby granted the right to put the Securities back
to the Company, upon Sixty (60) days prior notice to Company, in exchange for a
cash payment in accordance with the following schedule:
Date # of Shares Per Share Price Cash to Investor
6/15/04-6/14/05 22,329 $2.36 $52,696.44
6/15/05-6/14/06 22,329 $2.42 $54,036.18
6/15/06-6/14/07 22,329 $2.48 $55,375.92
6/15/07-6/14/08 22,329 $2.54 $56,715.66
6/15/08-6/14/09 22,332 $2.60 $58,063.20
111,648 $276,887.40
Shares not put to the Company in any given year may be carried forward to
following years (until 6/14/09) and put to the Company at the Per Share Price
stated above for the period in which the put is exercised for such Securities.
(For example, all of the Securities may be put to the Company on 6/14/08 at a
price of $2.60 per share for a total redemption price of $290,284.80). Any put
options hereunder not exercised by June 14, 2009 shall expire on that date.
9. Call Option. The Company shall have the right to redeem all or any
portion of the Securities not yet converted or put to the Company upon Sixty
(60) days prior notice to the holder according to the following schedule:
Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
6/15/03-6/15/04 $2.30
6/15/04-6/14/05 $2.36
6/15/05-6/14/06 $2.42
6/15/06-6/14/07 $2.48
6/15/07-6/14/08 $2.54
6/15/08-6/14/09 $2.60
Any Securities not (a) converted to common stock or put to the Company by
the Maturity Date, or (b) not tendered back to the Company in response to a call
by the date so specified in such notice of call will not be entitled thereafter
to any dividend, conversion or other rights.
10. Piggyback Registration of Common Stock. In the event that the Company
at any time subsequent to the date any Common Stock is issued to the Investor
hereunder proposes to file a registration statement (other than a registration
statement on a Form S-8 of Form S-14, or forms similar thereto in effect at the
time of such filing) under the Securities Act of 1933 (as then in effect or any
similar statute then in effect), in connection with a proposed public offering
of securities, the Company agrees to immediately notify the Investor in writing,
at least thirty (30) days prior to such proposed filing date of such
registration statement. Within 30 days following delivery of such notice, the
Investor may request that the Company include in such contemplated registration
statement any shares of Common Stock owned (or to be owned on such date pursuant
to an anticipated conversion) by the Investor pursuant to this Stock
Subscription and Conversion Agreement. Upon receipt of such notice, the Company
will cause the shares of Common Stock made the subject of such request to be
covered by the Company.
The Company will pay all expenses reasonably incurred by it and the
Investor (including the Investor's attorney's fees, commissions and fees of
underwriters or brokers with respect to the shares of the stock to be registered
and sold by the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggyback" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
11. Limitation on Sale of Securities. The Investor agrees to limit the
number of registered shares it may sell following registration to no more than
25,000 shares during any calendar quarter for the first Two years following
registration.
12. Investor's Representations and Warranties. The Investor understands
that the Securities are being issued without registration under the Federal
Securities Act of 1933, as amended. Therefore, the Investor hereby makes the
representations and warranties set forth herein to the Company and to each party
assisting the Company in the transaction and understands that each such person
or entity is materially relying upon such representations and warranties.
13. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
14. Investor Access to Information. During the negotiation of the
transaction contemplated hereby, the Investor and its representatives have been
afforded access to information concerning the Company and the contemplated
transaction and further have been afforded the opportunity to ask such questions
of the officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that it has
been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
15. Investor Performance of Due Diligence. The Investor and its
representatives have been solely responsible for their own "due diligence"
investigation of this investment, for their own analysis of the merits and risks
of this investment and for their own analysis of the fairness and desirability
of the terms of this investment. In taking any action or performing any role
relative to the arranging of the proposed investment, the Investor has acted
solely in its own interest and neither the Investor nor any of the Investor's
officers or employees has acted as an agent of the Company.
16. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
17. Investor Restrictions on Stock Transfer. Since the Investor is not
acquiring the Securities with any view to subsequent distribution, the Investor
understands that the stock certificates which will be issued shall bear the
following or a substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are "restricted
shares" as that term is defined in Rule number 144 of the Act. The shares may
not be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to an exemption from
registration under the Act, the availability of which is established to the
satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that it may (subject to the other
provisions of this Agreement) transfer all or any portion of the Securities (the
"Offered Interest") to a third party (the "Transferee") only if the Investor
first gives the Company the right of first refusal as herein provided to
purchase the Offered Interest at the price and on terms no less favorable than
those offered to or by such Transferee and only during the period herein set
forth. Such right of first refusal shall be set forth in a written notice
containing the terms and conditions of the proposed transfer to the Transferee
(the "Offer Notice") with a copy of the offer by the Transferee attached
thereto. The Company shall have the option for a period of 30 days after its
receipt of the Offer Notice to purchase upon the terms and conditions contained
in the Offer Notice, all but not less than all of the Offered Interest, by
delivering written notice thereof, (the "Acceptance Notice") to the Investor
prior to the expiration of such 30-day period. If the Company elects to purchase
the Offered Interest, settlement shall be held at the principal office of the
Company or at such mutually agreeable location within 30 days of receipt of the
Acceptance Notice. If the Company does not elect to purchase all of the Offered
Interest within 30 days after receipt of the Offer Notice, the Investor shall
have the right to transfer the Offered Interest to the Transferee upon the terms
and conditions contained in the Offer Notice, provided that prior to any
transfer of the Offered Interest, the Transferee expressly assumes in writing
all of the Investor's obligations under this Agreement and agrees in writing
with the Company to be governed by the provisions of this Agreement, and further
provided that settlement occurs within 75 days of delivery of this Offer Notice.
The foregoing notwithstanding, the Investor shall have the right, from time to
time, to transfer all or any portion of the Securities among a parent,
subsidiary or affiliated companies without having to first offer the Securities
to the Company or otherwise complying with the foregoing paragraph.
18. Investor is an Accredited Investor Within the Meaning of Rule 501 of
the Securities Act of 1933. The Investor and its officers represent and warrant
(i) that they have knowledge and experience in business and financial matters to
utilize the information given to them in connection with this investment in
order for the Investor to evaluate the risks of the investment and to make an
informed investment decision, and (ii) that the Investor has the financial
strength to bear the risks of the investment including the possible total loss
of the investment.
19. Investor Agrees to Hold Company Harmless. In consideration of issuance
of the Securities to the Investor, the Investor, for itself and its officers,
hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of and
from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in law
or in equity (other than with respect to material misstatements of fact made to
the Investor by the Company and with respect to material omissions to state a
fact when requested by the Investor), and (ii) any and all manner of suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, controversies, agreements, promises, trespasses, damages, judgments,
executions, claims and demands whatsoever in law or in (other than with respect
to material misstatements of fact made to the Investor by the Company and with
respect to material omissions to state a fact when requested by the Investor),
upon or by reason of any matter, cause or thing whatsoever arising out of or in
connection with the Investor's acquisition or ownership of the Securities, to
the extent that the same arises from or is related to claims under state or
federal securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates, employees,
officers, directors, shareholders, agents or representatives that neither the
Investor nor its successors will ever (i) except as allowed herein, institute
any suit or action at law or otherwise against the Company or its affiliates,
employees, officers, directors, shareholders, agents or representatives, or,
(ii) except as allowed herein, institute, prosecute, or in any way aid in the
institution or prosecution of any claim, demand, action or cause of action for
damages, costs, loss of services, expense or compensation for and on account of
any damages, loss or injury either to person or property, or both, or breach of
any contract or agreement, whether developed or undeveloped, resulting or to
result, known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims under
state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any of
the foregoing; and
(b) without limiting the indemnification provisions contained in the
Promissory Note or related Security Agreement, agrees to indemnify and hold free
and harmless the Company from and against all costs, expense, claims, damages
and liabilities (to the extent the Investor has benefited financially by the
action resulting in such costs, expenses, claims, damages or liabilities),
whether accrued, absolute, contingent or otherwise arising out of or in
connection with the acquisition of the Securities, to the extent that such
arises from or is related to claims under state or federal securities laws, or
resulting from any action, suit, proceeding, demand, assessment, judgment, cost
or expenses incident to any of the foregoing, and the Investor agrees to pay
upon request all fees and expenses including but not limited to, reasonable
attorney's fees, associated with any of the above.
20. Availability of Representation by Independent Counsel. The Investor
confirms and acknowledges that it has had full opportunity to be represented by
independent counsel of its choice to review the investment solely from the point
of view of the Investor.
21. Applicable Law. This Agreement shall be governed in all respects by the
laws of the state of South Carolina without reference to the choice of law
principles thereof, and the Parties hereto submit to exclusively to the in
personam jurisdiction of the courts in Charleston, South Carolina for the
resolution of any disputes which may arise herefrom.
22. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Parties and their
successors, legal representatives and assigns.
23. Notice. Any notice or other communication required or permitted
hereunder shall be in writing and shall be sufficiently given if delivered in
person or sent by telex, facsimile, telecopy, registered or certified mail with
postage prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
The United States Company
707 E. Main Street, Suite 1050
Richmond, VA 23219
Attn: Mr. Richard H. Guilford, President
24. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions of this Agreement that can be given effect without
the invalid or unenforceable provision or application and shall not invalidate
or render unenforceable the invalid or unenforceable provision in any other
jurisdiction or under any other circumstance.
25. Entire Agreement. This agreement constitutes the entire agreement by
and between the Parties pertaining to the subject matter hereof and supersedes
all prior and contemporaneous understandings of the Parties.
IN WITNESS WHEREOF, the Investor has hereunto caused its authorized officer
to execute this instrument and affix its seal as of this 30th day of June, 1998.
THE UNITED STATES COMPANY ("Investor")
By:____________________________________
Richard H. Guilford, President
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of this 30th day of June, 1998.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
Agreement
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, "Company"), a Delaware corporation with its
principal office in Charleston, South Carolina and PRECISION SOUTHEAST, INC., a
South Carolina corporation (hereinafter, "Investor"); Recitals
On January 1, 1997 the Parties and others entered into an agreement
(hereinafter the "Trico Assignment", a copy of which is attached hereto as
Exhibit "A") under which Investor accepted (a) as a mode of payment, or partial
payment, for certain obligations of Company to it an assignment to it of
proceeds due to Company under a promissory note dated July 26, 1996 from Trico
Engineering Consultants, Inc. (the "Trico Note"); and, (b) as security for such
payment, the assignment to it of a portion of a Security Agreement, Pledge
Agreement and Guaranty Agreement, (collectively the "Trico Security Documents")
which collateralize the Trico Note; and,
In December, 1996 the Parties and others entered into an agreement which
was amended on May 1, 1998 (hereinafter, as amended, the "Miller Assignment", a
copy of which, together with its amendment, is attached hereto as Exhibit "B")
under which each assignee thereunder accepted: (a) as a mode of partial payment
for certain obligations of Company to it an assignment to it of proceeds due to
Company under a promissory note dated December 19, 1996 from James W. Miller of
Richmond, VA (the "Miller Note"); and, (b) as security for such payment, the
assignment to it of a mortgage, lease assignment and security agreement
(collectively, the "Miller Security Documents") which collateralize the Miller
Note. The Trico Assignment and the Miller Assignment are referred to below
collectively as the "Assignments"; and the "Trico Security Documents" and the
"Miller Security Documents" are referred to below collectively as the "Security
Documents;" and,
On May 1, 1998, the Parties, Azimuth, Inc. and others entered into an
Assignment of Proceeds and Security Agreement (hereinafter the "Azimuth
Agreement", a copy of which is attached hereto as Exhibit "C") under which each
secured party thereunder accepted as partial security for the aforesaid
obligations a security interest in the outstanding stock and the assets of
Azimuth, Inc; and,
The Assignments and the Azimuth Agreement were intended by the Parties to
pay (or partially pay) and collateralize certain amounts due from Company to
Investor, which amounts, together with accrued interest and any other amounts
owing from Company to Investor had an outstanding balance as of April 30, 1998
of $124,378; and,
Company's financial circumstances are such that the elimination of the
Company's indebtedness to Investor by its conversion to equity as provided
below, the termination by Investor of its interest in the Assignments and the
Azimuth Agreement, together with concessions by other secured creditors, will
enable Company to significantly improve its overall financial situation,
including the mediation of its unsecured debt; and,
Investor is willing to cancel Company's indebtedness to it and relinquish
its rights as aforesaid in exchange for certain preferred stock and other
obligations of Company as expressed herein.
NOW, THEREFORE, for and in consideration of the mutual obligations
expressed herein and other valuable consideration, the Parties agree as follows:
1. Purchase and Sale of Securities. As soon as practicable after the execution
hereof, the Company agrees to issue to Investor, and Investor agrees to accept,
Sixty-two Thousand One Hundred Eighty-nine (62,189) shares of Preferred Stock of
the Company described below (the "Securities") in exchange for the consideration
provided for below.
2. Release and Termination. The Parties hereby terminate the Assignments and the
Azimuth Agreement as they pertain to any rights and obligations between them and
further agree that the Assignments and the Azimuth Agreement are, as of this
day, canceled, void and of no further effect to the extent of any such rights
and obligations, and Investor hereby releases and relinquishes any claims and
rights of whatever nature which it may have to the "Collateral", as defined by
Section 2 of each Assignment, and to the "Pledged Securities" and the "Secured
Assets" as defined by the Azimuth Agreement, and any other rights thereunder.
Contemporaneously with its execution hereof, Investor is executing such UCC
termination statements as may be necessary to effectively terminate, as a matter
of record, any of its rights under, or interest in, the Assignments and the
Azimuth Agreement. All prior indebtedness of the Company to the Investor and all
instruments evidencing same are hereby canceled and declared void and of no
effect, and Investor hereby and forever releases and discharges the Company from
all prior indebtedness to Investor, including but not limited to all Promissory
Notes from Company to Investor, if any, the original copy(ies) of which Investor
shall deliver to Company, as soon as practicable following the execution hereof,
marked "Satisfied" and executed by an authorized signatory of Investor.
3. Consent. Investor hereby consents to and ratifies the modification, release,
cancellation and/or termination of the Trico Note; the Miller Note; the Security
Documents; the Azimuth Agreement and/or either or both of the Assignments,
between Company and any of the other Parties thereto.
4. Preference, Par Value, Preemptive and Voting Rights. The Securities, together
with the other outstanding preferred stock of the Company except for the
preferred stock originally issued to Zellweger Analytics, Inc., will have an
absolute preference in liquidation of company assets over all shareholders of
Common Stock of the Company and unsecured creditors. The preferred stock issued
to Zellweger Analytics, Inc. shall have a prior claim in any liquidation unless
same has been converted to Common Stock of the Company. The Securities will be
without nominal or par value, and, except as may otherwise be required by law,
shall not entitle the holder to any preemptive rights to subscribe to any class
of shares issued or which may be issued nor to vote at Stockholders' meetings of
the Company, nor to participate in profits beyond their fixed, annual
preferential dividend rate.
5. Dividend. The Securities shall bear and pay a preferred dividend rate of
Fourteen Cents ($0.14) per share, per annum, payable to the holder at the end of
each calendar quarter, commencing on June 15, 1999. This amount shall accrue for
the first year (6/15/98 - 6/14/99) and be divided equally among and added to the
quarterly payments of the second year (6/15/99 - 6/14/00).
6. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before June 14, 2009 (the "Maturity
Date") to convert all or a portion of the Securities into shares of Company's
Common Stock, upon Sixty (60) days prior notice to Company of (i) the Investor's
intention to so convert, and (ii) the amount of the Securities to be converted.
At all times up until the Maturity Date: (a) the conversion ratio shall be one
share of the Securities for five shares of Common Stock of the Company; and (b)
the Investor may, from time to time, elect to convert less than all of the
Securities owned by it without impairment of its right to convert other portions
of the balance thereof.
7. Put Option. As an alternative to the conversion into Common Stock as set
forth above, the Investor is hereby granted the right to put the Securities back
to the Company, upon Sixty (60) days prior notice to Company, in exchange for a
cash payment in accordance with the following schedule:
Date # of Shares Per Share Price Cash to Investor
6/15/04-6/14/05 12,438 $2.36 $29,353.68
6/15/05-6/14/06 12,438 $2.42 $30,099.96
6/15/06-6/14/07 12,438 $2.48 $30,846.24
6/15/07-6/14/08 12,438 $2.54 $31,592.52
6/15/08-6/14/09 12,437 $2.60 $32,336.20
62,189 $154,228.60
Shares not put to the Company in any given year may be carried forward to
following years (until 6/14/09) and put to the Company at the Per Share Price
stated above for the period in which the put is exercised for such Securities.
(For example, all of the Securities may be put to the Company on 6/14/08 at a
price of $2.60 per share for a total redemption price of $161,691.40). Any put
options hereunder not exercised by June 14, 2009 shall expire on that date.
8. Call Option. The Company shall have the right to redeem all or any portion of
the Securities not yet converted or put to the Company upon Sixty (60) days
prior notice to the holder according to the following schedule:
Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
6/15/03-6/15/04 $2.30
6/15/04-6/14/05 $2.36
6/15/05-6/14/06 $2.42
6/15/06-6/14/07 $2.48
6/15/07-6/14/08 $2.54
6/15/08-6/14/09 $2.60
Any Securities not (a) converted to common stock or put to the Company by the
Maturity Date, or (b) not tendered back to the Company in response to a call by
the date so specified in such notice of call will not be entitled thereafter to
any dividend, conversion or other rights.
9. Piggyback Registration of Common Stock. In the event that the Company at any
time subsequent to the date any Common Stock is issued to the Investor hereunder
proposes to file a registration statement (other than a registration statement
on a Form S-8 of Form S-14, or forms similar thereto in effect at the time of
such filing) under the Securities Act of 1933 (as then in effect or any similar
statute then in effect), in connection with a proposed public offering of
securities, the Company agrees to immediately notify the Investor in writing, at
least thirty (30) days prior to such proposed filing date of such registration
statement. Within 30 days following delivery of such notice, the Investor may
request that the Company include in such contemplated registration statement any
shares of Common Stock owned (or to be owned on such date pursuant to an
anticipated conversion) by the Investor pursuant to this Stock Subscription and
Conversion Agreement. Upon receipt of such notice, the Company will cause the
shares of Common Stock made the subject of such request to be covered by the
Company.
The Company will pay all expenses reasonably incurred by it and the Investor
(including the Investor's attorney's fees, commissions and fees of underwriters
or brokers with respect to the shares of the stock to be registered and sold by
the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggyback" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
10. Limitation on Sale of Securities. The Investor agrees to limit the number of
registered shares it may sell following registration to no more than 25,000
shares during any calendar quarter for the first Two years following
registration.
11. Investor's Representations and Warranties. The Investor understands that the
Securities are being issued without registration under the Federal Securities
Act of 1933, as amended. Therefore, the Investor hereby makes the
representations and warranties set forth herein to the Company and to each party
assisting the Company in the transaction and understands that each such person
or entity is materially relying upon such representations and warranties.
12. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
13. Investor Access to Information. During the negotiation of the transaction
contemplated hereby, the Investor and its representatives have been afforded
access to information concerning the Company and the contemplated transaction
and further have been afforded the opportunity to ask such questions of the
officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that it has
been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
14. Investor Performance of Due Diligence. The Investor and its representatives
have been solely responsible for their own "due diligence" investigation of this
investment, for their own analysis of the merits and risks of this investment
and for their own analysis of the fairness and desirability of the terms of this
investment. In taking any action or performing any role relative to the
arranging of the proposed investment, the Investor has acted solely in its own
interest and neither the Investor nor any of the Investor's officers or
employees has acted as an agent of the Company.
15. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
16. Investor Restrictions on Stock Transfer. Since the Investor is not acquiring
the Securities with any view to subsequent distribution, the Investor
understands that the stock certificates which will be issued shall bear the
following or a substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are
"restricted shares" as that term is defined in Rule number 144 of the Act.
The shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the availability
of which is established to the satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that it may (subject to the other provisions
of this Agreement) transfer all or any portion of the Securities (the "Offered
Interest") to a third party (the "Transferee") only if the Investor first gives
the Company the right of first refusal as herein provided to purchase the
Offered Interest at the price and on terms no less favorable than those offered
to or by such Transferee and only during the period herein set forth. Such right
of first refusal shall be set forth in a written notice containing the terms and
conditions of the proposed transfer to the Transferee (the "Offer Notice") with
a copy of the offer by the Transferee attached thereto. The Company shall have
the option for a period of 30 days after its receipt of the Offer Notice to
purchase upon the terms and conditions contained in the Offer Notice, all but
not less than all of the Offered Interest, by delivering written notice thereof,
(the "Acceptance Notice") to the Investor prior to the expiration of such 30-day
period. If the Company elects to purchase the Offered Interest, settlement shall
be held at the principal office of the Company or at such mutually agreeable
location within 30 days of receipt of the Acceptance Notice. If the Company does
not elect to purchase all of the Offered Interest within 30 days after receipt
of the Offer Notice, the Investor shall have the right to transfer the Offered
Interest to the Transferee upon the terms and conditions contained in the Offer
Notice, provided that prior to any transfer of the Offered Interest, the
Transferee expressly assumes in writing all of the Investor's obligations under
this Agreement and agrees in writing with the Company to be governed by the
provisions of this Agreement, and further provided that settlement occurs within
75 days of delivery of this Offer Notice. The foregoing notwithstanding, the
Investor shall have the right, from time to time, to transfer all or any portion
of the Securities among a parent, subsidiary or affiliated companies without
having to first offer the Securities to the Company or otherwise complying with
the foregoing paragraph.
17. Investor is an Accredited Investor Within the Meaning of Rule 501 of the
Securities Act of 1933. The Investor and its officers represent and warrant (i)
that they have knowledge and experience in business and financial matters to
utilize the information given to them in connection with this investment in
order for the Investor to evaluate the risks of the investment and to make an
informed investment decision, and (ii) that the Investor has the financial
strength to bear the risks of the investment including the possible total loss
of the investment.
18. Investor Agrees to Hold Company Harmless. In consideration of issuance of
the Securities to the Investor, the Investor, for itself and its officers,
hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of
and from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in
law or in equity (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), and (ii) any and all
manner of suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, controversies, agreements, promises,
trespasses, damages, judgments, executions, claims and demands whatsoever
in law or in (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), upon or by reason of any
matter, cause or thing whatsoever arising out of or in connection with the
Investor's acquisition or ownership of the Securities, to the extent that
the same arises from or is related to claims under state or federal
securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives
that neither the Investor nor its successors will ever (i) except as
allowed herein, institute any suit or action at law or otherwise against
the Company or its affiliates, employees, officers, directors,
shareholders, agents or representatives, or, (ii) except as allowed herein,
institute, prosecute, or in any way aid in the institution or prosecution
of any claim, demand, action or cause of action for damages, costs, loss of
services, expense or compensation for and on account of any damages, loss
or injury either to person or property, or both, or breach of any contract
or agreement, whether developed or undeveloped, resulting or to result,
known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims
under state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any
of the foregoing; and
(b) without limiting the indemnification provisions contained in the
Promissory Note or related Security Agreement, agrees to indemnify and hold
free and harmless the Company from and against all costs, expense, claims,
damages and liabilities (to the extent the Investor has benefited
financially by the action resulting in such costs, expenses, claims,
damages or liabilities), whether accrued, absolute, contingent or otherwise
arising out of or in connection with the acquisition of the Securities, to
the extent that such arises from or is related to claims under state or
federal securities laws, or resulting from any action, suit, proceeding,
demand, assessment, judgment, cost or expenses incident to any of the
foregoing, and the Investor agrees to pay upon request all fees and
expenses including but not limited to, reasonable attorney's fees,
associated with any of the above.
19. Availability of Representation by Independent Counsel. The Investor confirms
and acknowledges that it has had full opportunity to be represented by
independent counsel of its choice to review the investment solely from the point
of view of the Investor.
20. Applicable Law. This Agreement shall be governed in all respects by the laws
of the state of South Carolina without reference to the choice of law principles
thereof, and the Parties hereto submit to exclusively to the in personam
jurisdiction of the courts in Charleston, South Carolina for the resolution of
any disputes which may arise herefrom.
21. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Parties and their successors, legal
representatives and assigns.
22. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be sufficiently given if delivered in person or
sent by telex, facsimile, telecopy, registered or certified mail with postage
prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
Precision Southeast, Inc.
P.O. Box 1405
Myrtle Beach, SC 29578-1405
Attn.: S. Richard Averette, President
23. Severability. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions of this Agreement that can be given effect without the invalid
or unenforceable provision or application and shall not invalidate or render
unenforceable the invalid or unenforceable provision in any other jurisdiction
or under any other circumstance.
24. Entire Agreement. This agreement constitutes the entire agreement by and
between the Parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous understandings of the Parties.
IN WITNESS WHEREOF, the Investor has hereunto caused its authorized officer to
execute this instrument and affix its seal as of this 30th day of June, 1998.
PRECISION SOUTHEAST, INC ("Investor")
By:____________________________________
S. Richard Averette, President
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of this 30th day of June, 1998.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
Agreement
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, the "Company"), a Delaware corporation with
its principal office in Charleston, South Carolina and SHAKESPEARE PARTNERS,
L.P., a South Carolina limited partnership (hereinafter, the "Investo");
Recitals
On January 1, 1997 the Parties and others entered into an agreement
(hereinafter the "Trico Assignment", a copy of which is attached hereto as
Exhibit "A") under which Investor accepted (a) as a mode of payment, or partial
payment, for certain obligations of Company to it an assignment to it of
proceeds due to Company under a promissory note dated July 26, 1996 from Trico
Engineering Consultants, Inc. (the "Trico Note"); and, (b) as security for such
payment, the assignment to it of a portion of a Security Agreement, Pledge
Agreement and Guaranty Agreement, (collectively the "Trico Security Documents")
which collateralize the Trico Note; and,
In December, 1996 the Parties and others entered into an agreement which
was amended on May 1, 1998 (hereinafter, as amended, the "Miller Assignment", a
copy of which, together with its amendment, is attached hereto as Exhibit "B")
under which each assignee thereunder accepted: (a) as a mode of partial payment
for certain obligations of Company to it an assignment to it of proceeds due to
Company under a promissory note dated December 19, 1996 from James W. Miller of
Richmond, VA (the "Miller Note"); and, (b) as security for such payment, the
assignment to it of a mortgage, lease assignment and security agreement
(collectively, the "Miller Security Documents") which collateralize the Miller
Note. The Trico Assignment and the Miller Assignment are referred to below
collectively as the "Assignments", and the "Trico Security Documents" and the
"Miller Security Documents" are referred to below collectively as the "Security
Documents;" and,
On May 1, 1998, the Parties, Azimuth, Inc. and others entered into an
Assignment of Proceeds and Security Agreement (hereinafter the "Azimuth
Agreement", a copy of which is attached hereto as Exhibit "C") under which each
secured party thereunder accepted as partial security for the aforesaid
obligations a security interest in the outstanding stock and the assets of
Azimuth, Inc; and,
The Assignments and the Azimuth Agreement were intended by the Parties to
pay (or partially pay) and collateralize certain amounts due from Company to
Investor, which amounts, together with accrued interest and any other amounts
owing from Company to Investor had an outstanding balance as of May 1, 1998 of
$349,756.00; and,
Company's financial circumstances are such that the conversion of a portion
of the Company's indebtedness to it to equity as provided below and the
termination by Investor of its interest in the Assignments and a termination of
the Azimuth Agreement, together with concessions by other secured creditors,
will enable it to significantly improve its overall financial situation,
including the mediation of its unsecured debt; and,
Investor is willing to cancel the Company's indebtedness to it and
relinquish its rights as aforesaid in exchange for certain preferred stock and
the payment by the Company to it as set forth below.
NOW, THEREFORE, for and in consideration of the mutual obligations
expressed herein and other valuable consideration, the Parties agree as follows:
1. Payment to Investor. At such time as either the refinancing of the Miller
Note or the Trico Note or both of them are closed by Company (the "Closing"),
which is anticipated by the Company to occur not more than sixty (60) days from
the execution hereof, Company will pay to Investor the sum of Two Hundred
Thousand and 00/100 Dollars ($200,000.00).
2. Purchase and Sale of Securities. As soon as practicable after Closing, the
Company agrees to issue to Investor, and Investor agrees to accept, Seventy-four
Thousand Eight Hundred Seventy-eight (74,878) shares of Preferred Stock of the
Company described below (the "Securities") in exchange for the consideration
provided for below.
3. Release and Termination. At Closing the Parties will terminate the
Assignments and the Azimuth Agreement as they pertain to any rights and
obligations between them and the Assignments and the Azimuth Agreement will
thereby be canceled, void and of no further effect to the extent of any such
rights and obligations, and Investor will release and relinquish any claims and
rights of whatever nature which it may have to the "Collateral", as defined by
Section 2 of each Assignment, and to the "Pledged Securities" and the "Secured
Assets" as defined by the Azimuth Agreement, and any other rights thereunder. At
Closing, Investor will execute such UCC termination statements as may be
necessary to effectively terminate, as a matter of record, any of its rights
under, or interest in, the Assignments and the Azimuth Agreement. All prior
indebtedness of the Company to the Investor and all instruments evidencing same
will thereby be canceled and declared void and of no effect, and Investor will
thereby and forever release and discharge the Company from all prior
indebtedness to Investor, including but not limited to all Promissory Notes from
Company to Investor, the original copy(ies) of which Investor shall deliver to
Company at Closing marked "Satisfied" and executed by an authorized signatory of
Investor.
4. Consent. Investor hereby consents to and ratifies the modification, release,
cancellation and/or termination of the Trico Note; the Miller Note; the Security
Documents; the Azimuth Agreement and/or either or both of the Assignments,
between Company and any of the other Parties thereto, and Company represents to
Investor that it has effected such modifications, releases, cancellations and/or
terminations as may be necessary to give validity to this Agreement.
5. Description of Securities and Investor Representations. All of the
representations and covenants contained in Paragraphs 5 - 20 below, which
provisions relate to the Securities and the purchase and sale thereof, shall be
true, effective and binding upon the Parties as of the issuance of the
Securities
6. Preference, Par Value, Preemptive and Voting Rights. The Securities, together
with the other outstanding preferred stock of the Company except for the
preferred stock originally issued to Zellweger Analytics, Inc., will have an
absolute preference in liquidation of company assets over all shareholders of
Common Stock of the Company and unsecured creditors. The preferred stock issued
to Zellweger Analytics, Inc. shall have a prior claim in any liquidation unless
same has been converted to Common Stock of the Company. The Securities will be
without nominal or par value, and, except as may otherwise be required by law,
shall not entitle the holder to any preemptive rights to subscribe to any class
of shares issued or which may be issued nor to vote at Stockholders' meetings of
the Company, nor to participate in profits beyond their fixed, annual
preferential dividend rate.
7. Dividend. The Securities shall bear and pay a preferred dividend rate of
Fourteen Cents ($0.14) per share, per annum, payable to the holder at the end of
each calendar quarter, commencing on June 15, 1999. This amount shall accrue for
the first year (6/15/98 - 6/14/99) and be divided equally among and added to the
quarterly payments of the second year (6/15/99 - 6/14/00).
8. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before June 14, 2003 (the "Maturity
Date") to convert all or a portion of the Securities into shares of Company's
Common Stock, upon Sixty (60) days prior notice to Company of (i) the Investor's
intention to so convert, and (ii) the amount of the Securities to be converted.
At all times up until the Maturity Date: (a) the conversion ratio shall be one
share of the Securities for five shares of Common Stock of the Company; and (b)
the Investor may, from time to time, elect to convert less than all of the
Securities owned by it without impairment of its right to convert other portions
of the balance thereof.
9. Put Option. As an alternative to the conversion into Common Stock as set
forth above, the Investor is hereby granted the right to put the Securities back
to the Company, upon Sixty (60) days prior notice to Company, in exchange for a
cash payment in accordance with the following schedule:
Date # of Shares Per Share Price Cash to Investor
6/15/00-6/14/01 24,959 $2.12 $52,913.08
6/15/01-6/14/02 24,959 $2.18 $53,410.62
6/15/02-6/14/03 24,960 $2.24 $55,910.40
74,878 $163,234.10
Shares not put to the Company in any given year may be carried forward to
following years (until 6/14/03) and put to the Company at the Per Share Price
stated above for the period in which the put is exercised for such Securities.
(For example, all of the Securities may be put to the Company on 6/14/03 at a
price of $2.24 per share for a total redemption price of $167,726.72). Any put
options hereunder not exercised by June 14, 2003 shall expire on that date.
10. Call Option. The Company shall have the right to redeem all or any portion
of the Securities not yet converted or put to the Company upon Sixty (60) days
prior notice to the holder according to the following schedule:
Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
Any Securities not (a) converted to common stock or put to the Company by the
Maturity Date, or (b) not tendered back to the Company in response to a call by
the date so specified in such notice of call will not be entitled thereafter to
any dividend, conversion or other rights.
11. Piggyback Registration of Common Stock. In the event that the Company at any
time subsequent to the date any Common Stock is issued to the Investor hereunder
proposes to file a registration statement (other than a registration statement
on a Form S-8 of Form S-14, or forms similar thereto in effect at the time of
such filing) under the Securities Act of 1933 (as then in effect or any similar
statute then in effect), in connection with a proposed public offering of
securities, the Company agrees to immediately notify the Investor in writing, at
least thirty (30) days prior to such proposed filing date of such registration
statement. Within 30 days following delivery of such notice, the Investor may
request that the Company include in such contemplated registration statement any
shares of Common Stock owned (or to be owned on such date pursuant to an
anticipated conversion) by the Investor pursuant to this Stock Subscription and
Conversion Agreement. Upon receipt of such notice, the Company will cause the
shares of Common Stock to be made the subject of such request to be covered by
the Company.
The Company will pay all expenses reasonably incurred by it and the Investor
(including the Investor's attorney's fees, commissions and fees of underwriters
or brokers with respect to the shares of the stock to be registered and sold by
the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggyback" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
12. Limitation on Sale of Securities. The Investor agrees to limit the number of
registered shares it may sell following registration to no more than 25,000
shares during any calendar quarter for the first Two years following
registration.
13. Investor's Representations and Warranties. The Investor understands that the
Securities are being issued without registration under the Federal Securities
Act of 1933, as amended. Therefore, the Investor hereby makes the
representations and warranties set forth herein to the Company and to each party
assisting the Company in the transaction and understands that each such person
or entity is materially relying upon such representations and warranties.
14. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
15. Investor Access to Information. During the negotiation of the transaction
contemplated hereby, the Investor and its representatives have been afforded
access to information concerning the Company and the contemplated transaction
and further have been afforded the opportunity to ask such questions of the
officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that it has
been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
16. Investor Performance of Due Diligence. The Investor and its representatives
have been solely responsible for their own "due diligence" investigation of this
investment, for their own analysis of the merits and risks of this investment
and for their own analysis of the fairness and desirability of the terms of this
investment. In taking any action or performing any role relative to the
arranging of the proposed investment, the Investor has acted solely in its own
interest and neither the Investor nor any of the Investor's officers or
employees has acted as an agent of the Company.
17. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
18. Investor Restrictions on Stock Transfer. Since the Investor is not acquiring
the Securities with any view to subsequent distribution, the Investor
understands that the stock certificates which will be issued shall bear the
following or a substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are
"restricted shares" as that term is defined in Rule number 144 of the Act.
The shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the availability
of which is established to the satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that it may (subject to the other provisions
of this Agreement) transfer all or any portion of the Securities (the "Offered
Interest") to a third party (the "Transferee") only if the Investor first gives
the Company the right of first refusal as herein provided to purchase the
Offered Interest at the price and on terms no less favorable than those offered
to or by such Transferee and only during the period herein set forth. Such right
of first refusal shall be set forth in a written notice containing the terms and
conditions of the proposed transfer to the Transferee (the "Offer Notice") with
a copy of the offer by the Transferee attached thereto. The Company shall have
the option for a period of 30 days after its receipt of the Offer Notice to
purchase upon the terms and conditions contained in the Offer Notice, all but
not less than all of the Offered Interest, by delivering written notice thereof,
(the "Acceptance Notice") to the Investor prior to the expiration of such 30-day
period. If the Company elects to purchase the Offered Interest, settlement shall
be held at the principal office of the Company or at such mutually agreeable
location within 30 days of receipt of the Acceptance Notice. If the Company does
not elect to purchase all of the Offered Interest within 30 days after receipt
of the Offer Notice, the Investor shall have the right to transfer the Offered
Interest to the Transferee upon the terms and conditions contained in the Offer
Notice, provided that prior to any transfer of the Offered Interest, the
Transferee expressly assumes in writing all of the Investor's obligations under
this Agreement and agrees in writing with the Company to be governed by the
provisions of this Agreement, and further provided that settlement occurs within
75 days of delivery of this Offer Notice. The foregoing notwithstanding, the
Investor shall have the right, from time to time, to transfer all or any portion
of the Securities among a parent, subsidiary or affiliated companies without
having to first offer the Securities to the Company or otherwise complying with
the foregoing paragraph.
19. Investor is an Accredited Investor Within the Meaning of Rule 501 of the
Securities Act of 1933. The Investor and its officers represent and warrant (i)
that they have knowledge and experience in business and financial matters to
utilize the information given to them in connection with this investment in
order for the Investor to evaluate the risks of the investment and to make an
informed investment decision, and (ii) that the Investor has the financial
strength to bear the risks of the investment including the possible total loss
of the investment.
20. Investor Agrees to Hold Company Harmless. In consideration of issuance of
the Securities to the Investor, the Investor, for itself and its officers,
hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of
and from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in
law or in equity (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), and (ii) any and all
manner of suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, controversies, agreements, promises,
trespasses, damages, judgments, executions, claims and demands whatsoever
in law or in (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), upon or by reason of any
matter, cause or thing whatsoever arising out of or in connection with the
Investor's acquisition or ownership of the Securities, to the extent that
the same arises from or is related to claims under state or federal
securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives
that neither the Investor nor its successors will ever (i) except as
allowed herein, institute any suit or action at law or otherwise against
the Company or its affiliates, employees, officers, directors,
shareholders, agents or representatives, or, (ii) except as allowed herein,
institute, prosecute, or in any way aid in the institution or prosecution
of any claim, demand, action or cause of action for damages, costs, loss of
services, expense or compensation for and on account of any damages, loss
or injury either to person or property, or both, or breach of any contract
or agreement, whether developed or undeveloped, resulting or to result,
known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims
under state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any
of the foregoing; and
(b) Agrees to indemnify and hold free and harmless the Company from and
against all costs, expense, claims, damages and liabilities (to the extent
the Investor has benefited financially by the action resulting in such
costs, expenses, claims, damages or liabilities), whether accrued,
absolute, contingent or otherwise arising out of or in connection with the
acquisition of the Securities, to the extent that such arises from or is
related to claims under state or federal securities laws, or resulting from
any action, suit, proceeding, demand, assessment, judgment, cost or
expenses incident to any of the foregoing, and the Investor agrees to pay
upon request all fees and expenses including but not limited to, reasonable
attorney's fees, associated with any of the above.
21. Availability of Representation by Independent Counsel. The Investor confirms
and acknowledges that it has had full opportunity to be represented by
independent counsel of its choice to review the investment solely from the point
of view of the Investor.
22. Applicable Law. This Agreement shall be governed in all respects by the laws
of the state of South Carolina without reference to the choice of law principles
thereof, and the Parties hereto submit to exclusively to the in personam
jurisdiction of the courts in Charleston, South Carolina for the resolution of
any disputes which may arise herefrom.
23. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Parties and their successors, legal
representatives and assigns.
24. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be sufficiently given if delivered in person or
sent by telex, facsimile, telecopy, registered or certified mail with postage
prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
Shakespeare Partners, L.P.
21 Legare Street
Charleston, SC 29401
25. Severability. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions of this Agreement that can be given effect without the invalid
or unenforceable provision or application and shall not invalidate or render
unenforceable the invalid or unenforceable provision in any other jurisdiction
or under any other circumstance.
26. Entire Agreement. This agreement constitutes the entire agreement by and
between the Parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous understandings of the Parties.
IN WITNESS WHEREOF, the Investor has hereunto caused its authorized officer to
execute this instrument and affix its seal as of this 30th day of June, 1998.
SHAKESPEARE PARTNERS, L.P. ("Investor")
By:____________________________________
General Partner
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of this 30th day of June, 1998.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
AGREEMENT
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, "Company"), a Delaware corporation with its
principal office in Charleston, South Carolina and WALTER H. ELLIOTT III of
Summerville, South Carolina (hereinafter, "Investor");
Recitals
On January 1, 1997 the Parties and others entered into an agreement (hereinafter
the "Assignment"), a copy of which is attached hereto as Exhibit "A") under
which Investor accepted (a) as a mode of payment for certain obligations of
Company to him (the "Indebtedness") an assignment to him of proceeds due to
Company under a promissory note dated July 26, 1996 from Trico Engineering
Consultants, Inc. (the "Trico Note"); and, (b) as security for such payment, the
assignment to him of a portion of a Security Agreement, Pledge Agreement and
Guaranty Agreement, (collectively the "Security Documents") which collateralize
the Trico Note; and,
As of April 30, 1998 the Indebtedness, together with accrued interest and any
other amounts owing from Company to Investor, had an outstanding balance of
$17,449.00; and,
Company's financial circumstances are such that the elimination of the
Indebtedness by its conversion to equity as provided below and the termination
by Investor of his interest in the Assignment, together with concessions by
other secured creditors, will enable it to significantly improve its overall
financial situation, including the mediation of its unsecured debt; and,
Investor is willing to cancel the Indebtedness and relinquish any rights which
he may have under the Assignment in exchange for certain preferred stock and
other obligations of Company as expressed herein.
NOW, THEREFORE, for and in consideration of the mutual obligations expressed
herein and other valuable consideration, the parties agree as follows:
1. Purchase and Sale of Securities. As soon as practicable after the execution
hereof, the Company agrees to issue to Investor, and Investor agrees to accept,
Eight Thousand Seven Hundred Twenty-Five (8.725) shares of Preferred Stock of
the Company described below (the "Securities") in exchange for the consideration
provided for below.
2. Release and Termination. The Parties hereby terminate the Assignment as it
pertains to any rights and obligations between them and further agree that the
Assignment is, as of this day, canceled, void and of no further effect to the
extent of any such rights and obligations, and Investor hereby releases and
relinquishes any claims and rights of whatever nature which he may have to the
"Collateral," as defined by Section 2 of the Assignment, and any other rights
thereunder. Contemporaneously with his execution hereof, Investor is executing
such UCC termination statements as may be necessary to effectively terminate, as
a matter of record, any of his rights under, or interest in, the Assignment. All
prior indebtedness of the Company to the Investor and all instruments evidencing
same are hereby canceled and declared void and of no effect, and Investor hereby
and forever releases and discharges the Company from all prior indebtedness to
Investor, including but not limited to all Promissory Notes from Company to
Investor, if any, the original copy(ies) of which Investor shall deliver to
Company, as soon as practicable following the execution hereof, marked
"Satisfied" and executed by an authorized signatory of Investor..
3. Consent. Investor hereby consents to and ratifies the modification, release,
cancellation and/or termination of the Trico Note, the Security Documents and/or
the Assignment, between Company and any of the other Parties thereto.
4. Preference, Par Value, Preemptive and Voting Rights. The Securities, together
with the other outstanding preferred stock of the Company except for the
preferred stock originally issued to Zellweger Analytics, Inc., will have an
absolute preference in liquidation of company assets over all shareholders of
Common Stock of the Company and unsecured creditors. The preferred stock issued
to Zellweger Analytics, Inc. shall have a prior claim in any liquidation unless
same has been converted to Common Stock of the Company. The Securities will be
without nominal or par value, and, except as may otherwise be required by law,
shall not entitle the holder to any preemptive rights to subscribe to any class
of shares issued or which may be issued nor to vote at Stockholders' meetings of
the Company, nor to participate in profits beyond their fixed, annual
preferential dividend rate.
5. Dividend. The Securities shall bear and pay a preferred dividend rate of
Fourteen Cents ($0.14) per share, per annum, payable to the holder at the end of
each calendar quarter, commencing on June 15, 1999. This amount shall accrue for
the first year (6/15/98 - 6/14/99) and be divided equally among and added to the
quarterly payments of the second year (6/15/99 - 6/14/00).
6. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before June 14, 2009 (the "Maturity
Date") to convert all or a portion of the Securities into shares of Company's
Common Stock, upon Sixty (60) days prior notice to Company of (i) the Investor's
intention to so convert, and (ii) the amount of the Securities to be converted.
At all times up until the Maturity Date: (a) the conversion ratio shall be one
share of the Securities for five shares of Common Stock of the Company; and (b)
the Investor may, from time to time, elect to convert less than all of the
Securities owned by him without impairment of his right to convert other
portions of the balance thereof.
7. Put Option. As an alternative to the conversion into Common Stock as set
forth above, the Investor is hereby granted the right to put the Securities back
to the Company, upon Sixty (60) days prior notice to Company, in exchange for a
cash payment in accordance with the following schedule:
Date # of Shares Per Share Price Cash to Investor
6/15/04-6/14/05 1,725 $2.36 $4,118.20
6/15/05-6/14/06 1,725 $2.42 $4,222.90
6/15/06-6/14/07 1,725 $2.48 $4,327.60
6/15/07-6/14/08 1,725 $2.54 $4,432.30
6/15/08-6/14/09 1,725 $2.60 $4,537.00
8,725 $21,638.00
Shares not put to the Company in any given year may be carried forward to
following years (until 6/14/09) and put to the Company at the Per Share Price
stated above for the period in which the put is exercised for such Securities.
(For example, all of the Securities may be put to the Company on 6/15/08 at a
price of $2.60 per share for a total redemption price of $22,685.00). Any put
options hereunder not exercised by June 14, 2009 shall expire on that date.
8. Call Option. The Company shall have the right to redeem all or any portion of
the Securities not yet converted or put to the Company upon Sixty (60) days
prior notice to the holder according to the following schedule:
Date Per Share Price
6/15/98-6/14/99 $2.00
6/15/99-6/14/00 $2.06
6/15/00-6/14/01 $2.12
6/15/01-6/14/02 $2.18
6/15/02-6/14/03 $2.24
6/15/03-6/15/04 $2.30
6/15/04-6/14/05 $2.36
6/15/05-6/14/06 $2.42
6/15/06-6/14/07 $2.48
6/15/07-6/14/08 $2.54
6/15/08-6/14/09 $2.60
Any Securities not (a) converted to common stock or put to the Company by the
Maturity Date, or (b) not tendered back to the Company in response to a call by
the date so specified in such notice of call will not be entitled thereafter to
any dividend, conversion or other rights.
9. Piggyback Registration of Common Stock. In the event that the Company at any
time subsequent to the date any Common Stock is issued to the Investor hereunder
proposes to file a registration statement (other than a registration statement
on a Form S-8 of Form S-14, or forms similar thereto in effect at the time of
such filing) under the Securities Act of 1933 (as then in effect or any similar
statute then in effect), in connection with a proposed public offering of
securities, the Company agrees to immediately notify the Investor in writing, at
least thirty (30) days prior to such proposed filing date of such registration
statement. Within 30 days following delivery of such notice, the Investor may
request that the Company include in such contemplated registration statement any
shares of Common Stock owned (or to be owned on such date pursuant to an
anticipated conversion) by the Investor pursuant to this Stock Subscription and
Conversion Agreement. Upon receipt of such notice, the Company will cause the
shares of Common Stock made the subject of such request to be covered by the
Company.
The Company will pay all expenses reasonably incurred by it and the Investor
(including the Investor's attorney's fees, commissions and fees of underwriters
or brokers with respect to the shares of the stock to be registered and sold by
the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggyback" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
10. Limitation on Sale of Securities. The Investor agrees to limit the number of
registered shares he may sell following registration to no more than 25,000
shares during any calendar quarter for the first Two years following
registration.
11. Investor's Representations and Warranties. The Investor understands that the
Securities are being issued without registration under the Federal Securities
Act of 1933, as amended. Therefore, the Investor hereby makes the
representations and warranties set forth herein to the Company and to each party
assisting the Company in the transaction and understands that each such person
or entity is materially relying upon such representations and warranties.
12. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
13. Investor Access to Information. During the negotiation of the transaction
contemplated hereby, the Investor and his representatives have been afforded
access to information concerning the Company and the contemplated transaction
and further have been afforded the opportunity to ask such questions of the
officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that he has
been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
14. Investor Performance of Due Diligence. The Investor and his representatives
have been solely responsible for their own "due diligence" investigation of this
investment, for their own analysis of the merits and risks of this investment
and for their own analysis of the fairness and desirability of the terms of this
investment. In taking any action or performing any role relative to the
arranging of the proposed investment, the Investor has acted solely in his own
interest and neither the Investor nor any of the Investor's officers or
employees has acted as an agent of the Company.
15. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
16. Investor Restrictions on Stock Transfer. Since the Investor is not acquiring
the Securities with any view to subsequent distribution, the Investor
understands that the stock certificates which will be issued shall bear the
following or a substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are
"restricted shares" as that term is defined in Rule number 144 of the Act.
The shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the availability
of which is established to the satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that he may (subject to the other provisions
of this Agreement) transfer all or any portion of the Securities (the "Offered
Interest") to a third party (the "Transferee") only if the Investor first gives
the Company the right of first refusal as herein provided to purchase the
Offered Interest at the price and on terms no less favorable than those offered
to or by such Transferee and only during the period herein set forth. Such right
of first refusal shall be set forth in a written notice containing the terms and
conditions of the proposed transfer to the Transferee (the "Offer Notice") with
a copy of the offer by the Transferee attached thereto. The Company shall have
the option for a period of 30 days after its receipt of the Offer Notice to
purchase upon the terms and conditions contained in the Offer Notice, all but
not less than all of the Offered Interest, by delivering written notice thereof,
(the "Acceptance Notice") to the Investor prior to the expiration of such 30-day
period. If the Company elects to purchase the Offered Interest, settlement shall
be held at the principal office of the Company or at such mutually agreeable
location within 30 days of receipt of the Acceptance Notice. If the Company does
not elect to purchase all of the Offered Interest within 30 days after receipt
of the Offer Notice, the Investor shall have the right to transfer the Offered
Interest to the Transferee upon the terms and conditions contained in the Offer
Notice, provided that prior to any transfer of the Offered Interest, the
Transferee expressly assumes in writing all of the Investor's obligations under
this Agreement and agrees in writing with the Company to be governed by the
provisions of this Agreement, and further provided that settlement occurs within
75 days of delivery of this Offer Notice. The foregoing notwithstanding, the
Investor shall have the right, from time to time, to transfer all or any portion
of the Securities among a parent, subsidiary or affiliated companies without
having to first offer the Securities to the Company or otherwise complying with
the foregoing paragraph.
17. Investor is an Accredited Investor Within the Meaning of Rule 501 of the
Securities Act of 1933. The Investor represents and warrants (i) that he has
knowledge and experience in business and financial matters to utilize the
information given to him in connection with this investment in order for the
Investor to evaluate the risks of the investment and to make an informed
investment decision, and (ii) that the Investor has the financial strength to
bear the risks of the investment including the possible total loss of the
investment.
18. Investor Agrees to Hold Company Harmless. In consideration of issuance of
the Securities to the Investor, the Investor hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of
and from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in
law or in equity (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), and (ii) any and all
manner of suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, controversies, agreements, promises,
trespasses, damages, judgments, executions, claims and demands whatsoever
in law or in (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), upon or by reason of any
matter, cause or thing whatsoever arising out of or in connection with the
Investor's acquisition or ownership of the Securities, to the extent that
the same arises from or is related to claims under state or federal
securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives
that neither the Investor nor his successors will ever (i) except as
allowed herein, institute any suit or action at law or otherwise against
the Company or its affiliates, employees, officers, directors,
shareholders, agents or representatives, or, (ii) except as allowed herein,
institute, prosecute, or in any way aid in the institution or prosecution
of any claim, demand, action or cause of action for damages, costs, loss of
services, expense or compensation for and on account of any damages, loss
or injury either to person or property, or both, or breach of any contract
or agreement, whether developed or undeveloped, resulting or to result,
known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims
under state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any
of the foregoing; and
(b) without limiting the indemnification provisions contained in the
Promissory Note or related Security Agreement, agrees to indemnify and hold
free and harmless the Company from and against all costs, expense, claims,
damages and liabilities (to the extent the Investor has benefited
financially by the action resulting in such costs, expenses, claims,
damages or liabilities), whether accrued, absolute, contingent or otherwise
arising out of or in connection with the acquisition of the Securities, to
the extent that such arises from or is related to claims under state or
federal securities laws, or resulting from any action, suit, proceeding,
demand, assessment, judgment, cost or expenses incident to any of the
foregoing, and the Investor agrees to pay upon request all fees and
expenses including but not limited to, reasonable attorney's fees,
associated with any of the above.
19. Availability of Representation by Independent Counsel. The Investor confirms
and acknowledges that he has had full opportunity to be represented by
independent counsel of his choice to review the investment solely from the point
of view of the Investor.
20. Applicable Law. This Agreement shall be governed in all respects by the laws
of the state of South Carolina without reference to the choice of law principles
thereof, and the Parties hereto submit to exclusively to the in personam
jurisdiction of the courts in Charleston, South Carolina for the resolution of
any disputes which may arise herefrom.
21. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Parties and their successors, legal
representatives and assigns.
22. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be sufficiently given if delivered in person or
sent by telex, facsimile, telecopy, registered or certified mail with postage
prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
Walter H. Elliott III
205 Walnut Hill Drive
Summerville, SC 29485
23. Severability. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions of this Agreement that can be given effect without the invalid
or unenforceable provision or application and shall not invalidate or render
unenforceable the invalid or unenforceable provision in any other jurisdiction
or under any other circumstance.
24. Entire Agreement. This agreement constitutes the entire agreement by and
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous understandings of the parties.
IN WITNESS WHEREOF, the Investor has hereunto executed this instrument this 30th
day of June, 1998.
By:____________________________________
Walter H. Elliott, III ("Investor")
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of this 30th day of June, 1998.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
October 28, 1998
Michael R. Hallman
Credit Manager
Gast Manufacturing, Inc.
PO Box 97
Benton Harbor, Michigan 49023-0097
Dear Mike:
It was good to speak with you today. Again let me thank you for your willingness
to work with me through what has been a very difficult time. We are not out of
the woods yet, however I believe that we are making headway.
The settlement that was negotiated and confirmed by your signature on April 7,
1998 included the balance owed to Gast Manufacturing, Inc. to be satisfied in
the issuance of common stock of Envirometrics. The amount owed equaled $27,666
and the cash pay-out was $5,810. This left a remaining balance of $21,856. We
valued the stock for this transaction at $2.00 per share which would equate to
10,928 shares to be issued to Gast Manufacturing, Inc.
The shares would be unregistered shares of common stock which I anticipate would
be registered by the company at the time of a secondary offering. The actual
certificates will be issued once I have completed the debt mediation process and
turn the total shares to be issued to the different parties over to our stock
transfer agent. The shares have been allocated to Gast Manufacturing, Inc. and
appear in the total outstanding shares that are reported on our balance sheet.
Per your instruction, the certificates will bear the name of Gast Manufacturing,
Inc. and will be sent to your attention.
I will keep you posted on developments as they become available. With warm
personal regards, I remain
Sincerely yours,
Walter H. "Skip" Elliott, III
President & CEO
AGREEMENT
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, "Company"), a Delaware corporation with its
principal office in Charleston, South Carolina and ELSIE L. ROSE of Ashland, VA
(hereinafter, "Investor");
Background
As of December 31,1998, the Company owed the Investor the sum of Four
Thousand and 00/100 Dollars ($4,500.00) (the "Indebtedness"); and,
Company's financial circumstances are such that the elimination of the
Indebtedness by its conversion to equity as provided below will enable it to
significantly improve its overall financial situation, including the mediation
of its unsecured debt; and,
Investor is willing to cancel the Indebtedness and relinquish any rights
which she may have in respect thereto in exchange for certain preferred stock
and other obligations of Company as expressed herein.
NOW, THEREFORE, for and in consideration of the mutual obligations
expressed herein and other valuable consideration, the parties agree as follows:
1. Purchase and Sale of Securities. As soon as practicable after the execution
hereof, the Company agrees to issue to Investor, and Investor agrees to accept,
Two Thousand Two Hundred Fifty (2,250) shares of Preferred Stock of the Company
described below (the "Securities") in exchange for the consideration provided
for below.
2. Release and Termination. All prior indebtedness of the Company to the
Investor and all instruments evidencing same are hereby canceled and declared
void and of no effect, and Investor hereby and forever releases and discharges
the Company from all prior indebtedness to Investor, including but not limited
to all Promissory Notes from Company to Investor, if any, the original copy(ies)
of which Investor shall deliver to Company, as soon as practicable following the
execution hereof, marked "Satisfied" and executed by an authorized signatory of
Investor..
3. Preference, Par Value, Preemptive and Voting Rights. The Securities, together
with the other outstanding preferred stock of the Company except for the
preferred stock originally issued to Zellweger Analytics, Inc., will have an
absolute preference in liquidation of company assets over all shareholders of
Common Stock of the Company and unsecured creditors. The preferred stock issued
to Zellweger Analytics, Inc. shall have a prior claim in any liquidation unless
same has been converted to Common Stock of the Company. The Securities will be
without nominal or par value, and, except as may otherwise be required by law,
shall not entitle the holder to any preemptive rights to subscribe to any class
of shares issued or which may be issued nor to vote at Stockholders' meetings of
the Company, nor to participate in profits beyond their fixed, annual
preferential dividend rate.
5. Dividend. The Securities shall bear and pay a preferred dividend rate of
Fourteen Cents ($0.14) per share, per annum, payable to the holder at the end of
each calendar quarter, commencing on June 15, 1999. This amount shall accrue
through 6/14/99 and be divided equally among and added to the quarterly payments
of the second year (6/15/99 - 6/14/00).
6. Conversion to Common Stock. The Investor shall have the right, which the
Investor may exercise at any time on or before June 14, 2009 (the "Maturity
Date") to convert all or a portion of the Securities into shares of Company's
Common Stock, upon Sixty (60) days prior notice to Company of (i) the Investor's
intention to so convert, and (ii) the amount of the Securities to be converted.
At all times up until the Maturity Date: (a) the conversion ratio shall be one
share of the Securities for five shares of Common Stock of the Company; and (b)
the Investor may, from time to time, elect to convert less than all of the
Securities owned by him without impairment of her right to convert other
portions of the balance thereof.
7. Put Option. As an alternative to the conversion into Common Stock as set
forth above, the Investor is hereby granted the right to put the Securities back
to the Company, upon Sixty (60) days prior notice to Company, in exchange for a
cash payment in accordance with the following schedule:
Date # of Shares Per Share Price Cash to Investor
6/15/04-6/14/05 450 $2.33 $1,048.50
6/15/05-6/14/06 450 $2.39 $1,075.50
6/15/06-6/14/07 450 $2.45 $1,102.50
6/15/07-6/14/08 450 $2.51 $1,129.50
6/15/08-6/14/09 450 $2.57 $1,156.50
2,250 $5,512.50
Shares not put to the Company in any given year may be carried forward to
following years (until 6/14/09) and put to the Company at the Per Share Price
stated above for the period in which the put is exercised for such Securities.
(For example, all of the Securities may be put to the Company on 6/15/08 at a
price of $2.57 per share for a total redemption price of $5,782.50). Any put
options hereunder not exercised by June 14, 2009 shall expire on that date.
8. Call Option. The Company shall have the right to redeem all or any portion of
the Securities not yet converted or put to the Company upon Sixty (60) days
prior notice to the holder according to the following schedule:
Date Per Share Price
1/01/99-6/14/99 $2.00
6/15/99-6/14/00 $2.03
6/15/00-6/14/01 $2.09
6/15/01-6/14/02 $2.15
6/15/02-6/14/03 $2.21
6/15/03-6/15/04 $2.27
6/15/04-6/14/05 $2.33
6/15/05-6/14/06 $2.39
6/15/06-6/14/07 $2.45
6/15/07-6/14/08 $2.51
6/15/08-6/14/09 $2.57
Any Securities not (a) converted to common stock or put to the Company by the
Maturity Date, or (b) not tendered back to the Company in response to a call by
the date so specified in such notice of call will not be entitled thereafter to
any dividend, conversion or other rights.
9. Piggyback Registration of Common Stock. In the event that the Company at any
time subsequent to the date any Common Stock is issued to the Investor hereunder
proposes to file a registration statement (other than a registration statement
on a Form S-8 of Form S-14, or forms similar thereto in effect at the time of
such filing) under the Securities Act of 1933 (as then in effect or any similar
statute then in effect), in connection with a proposed public offering of
securities, the Company agrees to immediately notify the Investor in writing, at
least thirty (30) days prior to such proposed filing date of such registration
statement. Within 30 days following delivery of such notice, the Investor may
request that the Company include in such contemplated registration statement any
shares of Common Stock owned (or to be owned on such date pursuant to an
anticipated conversion) by the Investor pursuant to this Stock Subscription and
Conversion Agreement. Upon receipt of such notice, the Company will cause the
shares of Common Stock made the subject of such request to be covered by the
Company.
The Company will pay all expenses reasonably incurred by it and the Investor
(including the Investor's attorney's fees, commissions and fees of underwriters
or brokers with respect to the shares of the stock to be registered and sold by
the Investor) in connection with the registration statement and any
post-effective amendment thereto and in connection with qualifying the
securities covered by the registration statement under the Blue Sky or other
state securities' laws.
The Investor shall furnish the Company and the Company shall furnish the
Investor such documents, including selling notices and opinions of counsel, as
are typically and reasonable requested and delivered by an issuer and selling
shareholder in a "piggyback" registration transaction of the type outlined
above. The Investor and the Company, respectively, agree to provide such
documentation and information on a timely basis to permit the registration
statement covering the common shares of stock owned by the Investor to become
effective on a prompt and orderly basis.
10. Limitation on Sale of Securities. The Investor agrees to limit the number of
registered shares she may sell following registration to no more than 25,000
shares during any calendar quarter for the first Two years following
registration.
11. Investor's Representations and Warranties. The Investor understands that the
Securities are being issued without registration under the Federal Securities
Act of 1933, as amended. Therefore, the Investor hereby makes the
representations and warranties set forth herein to the Company and to each party
assisting the Company in the transaction and understands that each such person
or entity is materially relying upon such representations and warranties.
12. Investor Representation of Risk Understanding. The Securities are being
acquired for the Investor's own account, for investment, and not with the view
to, or for resale in connection with any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended, or the securities
or blue-sky laws of any state. Without limiting the effect or validity of
certain "piggyback" registration rights, the Investor understands that there is
no public market for the Securities and that none is likely to develop in the
foreseeable future. The Investor understands that these substantial restrictions
on transferability mean that the Investor must bear the economic risk of this
investment for an indefinite period of time because, among other reasons, the
Securities have not been registered under the 1933 Act, or the securities laws
of any state, and therefore can not be sold, pledged, assigned or otherwise
disposed of unless they are subsequently registered under the Act and applicable
state securities laws or an exemption from such registration is available. In
the event that the Investor requests the opinion of counsel concerning the
transferability of the Securities, the Investor shall pay all costs, including,
without limitation, reasonable attorney's fees, related to such opinion.
13. Investor Access to Information. During the negotiation of the transaction
contemplated hereby, the Investor and her representatives have been afforded
access to information concerning the Company and the contemplated transaction
and further have been afforded the opportunity to ask such questions of the
officers of the Company concerning the business, operations, financial
condition, assets, liabilities, and prospects and other relevant matters as they
have deemed necessary or desirable, and the Investor hereby confirms that she
has been given information in order to evaluate the merits and risks of the
prospective investment contemplated hereby.
14. Investor Performance of Due Diligence. The Investor and her representatives
have been solely responsible for their own "due diligence" investigation of this
investment, for their own analysis of the merits and risks of this investment
and for their own analysis of the fairness and desirability of the terms of this
investment. In taking any action or performing any role relative to the
arranging of the proposed investment, the Investor has acted solely in her own
interest and neither the Investor nor any of the Investor's officers or
employees has acted as an agent of the Company.
15. Investor Recognition of Income Tax Consequences. The Investor further
recognizes that provisions of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, may be changed by legislative and/or
administrative action or interpreted by courts of law in a manner to deprive the
Investor of any contemplated tax benefits of the investment contemplated hereby.
16. Investor Restrictions on Stock Transfer. Since the Investor is not acquiring
the Securities with any view to subsequent distribution, the Investor
understands that the stock certificates which will be issued shall bear the
following or a substantially similar legend restricting the transfer:
"The Securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are
"restricted shares" as that term is defined in Rule number 144 of the Act.
The shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act or
pursuant to an exemption from registration under the Act, the availability
of which is established to the satisfaction of the Company."
When issued, the Securities will be free and clear of any liens, security
interests encumbrances, claims and rights of others of any kind and nature.
The Investor understands and agrees that she may (subject to the other
provisions of this Agreement) transfer all or any portion of the Securities (the
"Offered Interest") to a third party (the "Transferee") only if the Investor
first gives the Company the right of first refusal as herein provided to
purchase the Offered Interest at the price and on terms no less favorable than
those offered to or by such Transferee and only during the period herein set
forth. Such right of first refusal shall be set forth in a written notice
containing the terms and conditions of the proposed transfer to the Transferee
(the "Offer Notice") with a copy of the offer by the Transferee attached
thereto. The Company shall have the option for a period of 30 days after its
receipt of the Offer Notice to purchase upon the terms and conditions contained
in the Offer Notice, all but not less than all of the Offered Interest, by
delivering written notice thereof, (the "Acceptance Notice") to the Investor
prior to the expiration of such 30-day period. If the Company elects to purchase
the Offered Interest, settlement shall be held at the principal office of the
Company or at such mutually agreeable location within 30 days of receipt of the
Acceptance Notice. If the Company does not elect to purchase all of the Offered
Interest within 30 days after receipt of the Offer Notice, the Investor shall
have the right to transfer the Offered Interest to the Transferee upon the terms
and conditions contained in the Offer Notice, provided that prior to any
transfer of the Offered Interest, the Transferee expressly assumes in writing
all of the Investor's obligations under this Agreement and agrees in writing
with the Company to be governed by the provisions of this Agreement, and further
provided that settlement occurs within 75 days of delivery of this Offer Notice.
The foregoing notwithstanding, the Investor shall have the right, from time to
time, to transfer all or any portion of the Securities among a parent,
subsidiary or affiliated companies without having to first offer the Securities
to the Company or otherwise complying with the foregoing paragraph.
17. Investor is an Accredited Investor Within the Meaning of Rule 501 of the
Securities Act of 1933. The Investor represents and warrants (i) that she has
knowledge and experience in business and financial matters to utilize the
information given to him in connection with this investment in order for the
Investor to evaluate the risks of the investment and to make an informed
investment decision, and (ii) that the Investor has the financial strength to
bear the risks of the investment including the possible total loss of the
investment.
18. Investor Agrees to Hold Company Harmless. In consideration of issuance of
the Securities to the Investor, the Investor hereby:
(a) releases and forever discharges the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives, of
and from (i) any and all actions and causes of actions, claims and demands
whatsoever, whether known or unknown and whether or not founded in fact, in
law or in equity (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), and (ii) any and all
manner of suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, controversies, agreements, promises,
trespasses, damages, judgments, executions, claims and demands whatsoever
in law or in (other than with respect to material misstatements of fact
made to the Investor by the Company and with respect to material omissions
to state a fact when requested by the Investor), upon or by reason of any
matter, cause or thing whatsoever arising out of or in connection with the
Investor's acquisition or ownership of the Securities, to the extent that
the same arises from or is related to claims under state or federal
securities laws or resulting from any action, suit, proceeding, demand,
assessment, judgment, cost or expense incident to any of the foregoing, and
covenants and agrees with the Company and each of its affiliates,
employees, officers, directors, shareholders, agents or representatives
that neither the Investor nor her successors will ever (i) except as
allowed herein, institute any suit or action at law or otherwise against
the Company or its affiliates, employees, officers, directors,
shareholders, agents or representatives, or, (ii) except as allowed herein,
institute, prosecute, or in any way aid in the institution or prosecution
of any claim, demand, action or cause of action for damages, costs, loss of
services, expense or compensation for and on account of any damages, loss
or injury either to person or property, or both, or breach of any contract
or agreement, whether developed or undeveloped, resulting or to result,
known or unknown, or by reason of any matter, cause or thing whatsoever
arising out of or in connection with the Investor's acquisition of the
Securities, to the extent that such arises from or is related to claims
under state or federal securities laws, or resulting from any action, suit,
proceeding, demand, assessment, judgment, cost or expenses incident to any
of the foregoing; and
(b) without limiting the indemnification provisions contained in the
Promissory Note or related Security Agreement, agrees to indemnify and hold
free and harmless the Company from and against all costs, expense, claims,
damages and liabilities (to the extent the Investor has benefited
financially by the action resulting in such costs, expenses, claims,
damages or liabilities), whether accrued, absolute, contingent or otherwise
arising out of or in connection with the acquisition of the Securities, to
the extent that such arises from or is related to claims under state or
federal securities laws, or resulting from any action, suit, proceeding,
demand, assessment, judgment, cost or expenses incident to any of the
foregoing, and the Investor agrees to pay upon request all fees and
expenses including but not limited to, reasonable attorney's fees,
associated with any of the above.
19. Availability of Representation by Independent Counsel. The Investor confirms
and acknowledges that she has had full opportunity to be represented by
independent counsel of her choice to review the investment solely from the point
of view of the Investor.
20. Applicable Law. This Agreement shall be governed in all respects by the laws
of the state of South Carolina without reference to the choice of law principles
thereof, and the Parties hereto submit to exclusively to the in personam
jurisdiction of the courts in Charleston, South Carolina for the resolution of
any disputes which may arise herefrom.
21. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Parties and their successors, legal
representatives and assigns.
22. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be sufficiently given if delivered in person or
sent by telex, facsimile, telecopy, registered or certified mail with postage
prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the Investor:
Elsie L. Rose
12645 Mt. Hermon Rd.
Ashland, VA 23005
23. Severability. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions of this Agreement that can be given effect without the invalid
or unenforceable provision or application and shall not invalidate or render
unenforceable the invalid or unenforceable provision in any other jurisdiction
or under any other circumstance.
24. Entire Agreement. This agreement constitutes the entire agreement by and
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous understandings of the parties.
IN WITNESS WHEREOF, the Investor has hereunto executed this instrument as of
this 1st day of January, 1999.
____________________________________
Elsie L. Rose ("Investor")
The provisions of the foregoing subscription agreement are accepted and
consented to by us as of this 1st Day of January, 1999.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
PROMISSORY NOTE
May 1, 1998
FOR VALUE RECEIVED, the undersigned, Envirometrics, Inc., a corporation
existing under the laws of the State of Delaware (hereinafter referred to as
"Maker"), promises to pay to Shakespeare Partners. L.P., a South Carolina
Limited Partnership (hereinafter referred to as "Holder"), at such place as
Holder may from time to time designate, the aggregate principal amount of Twenty
Thousand Dollars ($20,000.00), the "Principal", with interest, as provided
below.
This Note shall bear interest at the rate of Ten Per Cent (10O/O) per annum on
the Principal outstanding hereunder from time to time and computed on the basis
of a 360-day year of twelve 30-day months for actual days elapsed. All Principal
and interest due hereunder shall be due and payable in one balloon payment upon
the occurrence of any of the following events, whichever is the earliest to
occur:
(1) The Fifth day after Maker receives any proceeds subject to the
Assignment and Security Agreement of May 1, 1998 between Maker and Holder
regarding a sale or hypothecation of any assets or stock of its
wholly-owned subsidiary, Azimuth, Inc., whether such proceeds be in cash,
in kind or otherwise; or,
(2) The Fifth day after Maker receives any proceeds subject to the
Collateral Assignment of December, 1996 between Maker, Holder and other
parties, as amended on May 1, 1996 in respect to the promissory note of
James W. Miller; or,
(3) December 31, 1998. The day of occurrence of the above event which first
occurs shall be defined herein as the "Maturity Date").
This Note may be prepaid in whole or in part by the Maker at any time
without penalty. Payment shall be applied first to interest and then to
Principal. All payments due hereunder are payable in lawful money of the
United States of America, which shall be legal tender in payment of all
debts and dues, public and private, at the time of payment.
In the event of (a) Maker's default in the making of the payment payable on the
Maturity Date or within five (5) days after such date, or (b) Maker's default in
the performance of any covenant or agreement contained in this Note or in any
documents which secure the indebtedness hereof, or (c) the filing of a petition
by the Maker under the provisions of any state insolvency law or under the
provisions of the Federal Bankruptcy Code or such a filing against the Maker
which is not dismissed within sixty (60) days thereafter, or (d) any assignment
by the Maker for the benefit of creditors, or (e) the transfer by the Maker of a
substantial portion of its assets, except for transfers in the ordinary course
of business or for fair consideration or pursuant to Sub-paragraph (2) above,
then, or at any time thereafter at the option of Holder, the whole of the
Principal, all accrued interest thereon and any other sums due hereunder shall
immediately become due and payable upon written notice by the Holder to the
Maker.
From and after the Maturity Date of this Note, as the result of a declaration of
maturity or otherwise, and including any period subsequent to obtaining a
judgment by Holder, until paid in full, the entire Principal balance and other
amounts remaining due and unpaid hereunder shall bear interest at the rate of
Fifteen Per Cent (15 %) per annum compounded annually, or the highest
applicable non-usurious rate, whichever is the lesser. Failure to exercise such
option or any other rights which Holder may in the event of a default be
entitled to shall not constitute a waiver of the right to exercise such option
or any other rights in the event of any subsequent default, whether of the same
or different nature.
The sums due under this Note represent indebtedness incurred in respect of
Maker's receipt of the proceeds of a loan or loans made by Holder to Maker.
All sums now or hereafter due hereunder are secured by Holder's interest in the
agreements referred to in Sub-paragraphs 1 and 2 above and Holder shall be
entitled to the benefits of such agreements.
Maker waives presentment, protest and demand, notice of protest, demand and
dishonor and nonpayment of this Note, and consents to any and all renewals and
extensions of the time of payment hereof, and agrees, further, that at any time
and from time to time without notice, the terms of payment herein may be
modified by written agreement between the Holder and the Maker without in any
way affecting the liability of either party to this instrument.
This Note shall be governed as to validity, interpretation, construction, effect
and in all other respects by the laws and decisions of the State of South
Carolina, without regard being given to its conflicts of law principles.
If this Note is placed in the hands of an attorney for collection after the same
shall for any reason become due, or if collected by legal proceedings or through
the probate or bankrupt courts, then all costs of collection, including a
reasonable sum for attorneys fees shall be added hereto as attorneys fees
secured and collectible as the Principal hereof
If any term or provision of this Note or the application thereof shall to any
extent be invalid or unenforceable, the remainder of this instrument or the
application of such terms to persons or circumstances other than those to which
any provision is held invalid or unenforceable shall not be affected thereby.
This Note may not be modified orally, but only by an agreement in writing signed
by the party against whom enforcement of any such modification is sought. The
remedies set forth herein in all instances are not exclusive but are cumulative
and in addition to all other remedies which may exist.
MAKER:
ENVIROMETRICS, INC.
By: _________________________________
Walter H. Elliott III, President
Agreement
THIS AGREEMENT is made as of the last date written below, by and between
Envirometrics, Inc. (hereinafter, the "Company"), a Delaware corporation with
its principal office in Charleston, South Carolina and the Solomon Smith Barney
Simplified Employment Pension Plan of Harold E. Igoe (hereinafter "HEI IRA");
Recitals
The Company is the payee of a promissory note (the "Trico Note") dated July
26, 1996 from Trico Engineering Consultants, Inc. ("Trico") which is secured by
a Security Agreement; a Personal Guaranty and a Pledge Agreement (collectively,
the "Security Documents"). The Trico Note and Security Documents are attached
hereto collectively as Exhibit "A"; and,
The Trico Note currently has a balance outstanding of Three Hundred
Sixty-Four Thousand Four Hundred Twenty-Seven and 17/100 Dollars ($364,427.17)
(the "Indebtedness"), which amount represents the existing balance after the
December, 1998 payment of Ten Thousand Nine Hundred Seventy-Nine and 09/100
Dollars ($10,979.09); and,
The Company wishes to assign the Trico Note and the Security Documents to
HEI IRA in exchange for the sum of Two Hundred Sixty Thousand and 00/100 Dollars
($260,000.00), an amount the Company knows to be competitive and fair to
Company. Company's financial circumstances are such that this transaction will
enable it to significantly improve its overall financial situation, including
the mediation of its unsecured debt.
NOW, THEREFORE, for and in consideration of the mutual obligations
expressed herein and other valuable consideration, the Parties agree as follows:
1. Assignment of Trico Note and Payments to Company.
(a) Contemporaneously with the execution hereof: (i) HEI IRA is paying
to Company the sum of Sixty Thousand Dollars ($60,000.00) as a down
payment, the receipt of which is hereby acknowledged by the Company; (ii)
Company hereby transfers and assigns the Trico Note and the Security
Documents to HEI IRA, and Company is delivering to HEI IRA the original
Trico Note, endorsed in blank on its reverse side, and the Security
Documents. (iii) Company is giving notice and instructions to Trico of the
assignment in the form attached hereto as Exhibit "B;"
(b) On or before January 31, 1999, HEI IRA shall pay to Company the
sum of Two Hundred Thousand Dollars ($200,000.00).
2. Warranties. The Company hereby warrants to HEI IRA, which warranties will be
true as of that:
(a) It knows of no defenses in law or in fact which may be raised by
Trico to excuse any payment by it under the Trico Note;
(b) All payments under the Trico Note are current and there are no
existing delinquencies or defaults thereunder or under either the note or
the Security Documents, except for the default to Liberty Property Trust
under a lease, which default is being cured by the Company and Trico;
(c) All rights set forth in the Security Documents are valid and in
full force and effect;
(d) It is the sole owner of the Trico Note, the Security Documents and
all rights thereunder are free from any adverse claims or encumbrances of
any nature whatever;
(e) It has full legal authority to enter into this Agreement.
4. Applicable Law. This Agreement shall be governed in all respects by the laws
of the state of South Carolina without reference to the choice of law principles
thereof, and the Parties hereto submit to exclusively to the in personam
jurisdiction of the courts in Charleston, South Carolina for the resolution of
any disputes which may arise herefrom.
5. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Parties and their successors, legal
representatives and assigns.
6. Notice. Any notice or other communication required or permitted hereunder
shall be in writing and shall be sufficiently given if delivered in person or
sent by telex, facsimile, telecopy, registered or certified mail with postage
prepaid, Federal Express or Express Mail, addressed as follows:
If to the Company:
Envirometrics, Inc.
9229 University Boulevard
Charleston, South Carolina 29406
If to the HEI IRA:
SSB SEP of Harold E. Igoe
21 Legare Street
Charleston, SC 29401
7. Severability. If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions of this Agreement that can be given effect without the invalid
or unenforceable provision or application and shall not invalidate or render
unenforceable the invalid or unenforceable provision in any other jurisdiction
or under any other circumstance.
8. Entire Agreement. This agreement constitutes the entire agreement by and
between the Parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous understandings of the Parties.
IN WITNESS WHEREOF, the Company has hereunto caused its authorized officer to
execute this instrument and affix its seal as of this ___ day of December, 1998.
ENVIROMETRICS, INC. ("Company")
By: ____________________________
Walter H. Elliott, III, President and CEO
The provisions of the foregoing Agreement are accepted and consented to by us as
of this ___ day of December, 1998.
Solomon Smith Barney Simplified Employment Pension Plan of Harold E. Igoe
By: _____________________________
Harold E. Igoe, Nominee
STATE OF SOUTH CAROLINA
COUNTY OF LEXINGTON
AGREEMENT
WHEREAS, Azimuth, Inc. (hereinafter referred to as "Azimuth") is engaged in the
business of providing industrial hygiene and environmental health and safety
services, and;
WHEREAS, through its business activities in the health care industry in South
Carolina, PHT Services, Ltd. (hereinafter referred to as "PHTS") has established
itself as a leader in providing products and services in many areas; and
WHEREAS, Azimuth and PHTS are desirous of establishing a strategic alliance and
exclusive marketing relationship for their mutual benefits as well as for the
benefits of their clients;
NOW THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that for and in consideration of
the mutual covenants and benefits contained herein and the future benefits to be
derived by each, the parties hereunto agree as follows:
1. NATURE OF AGREEMENT
Effective September 4, 1998, Azimuth hereby appoints PHTS as its marketing agent
for its services subject to the following terms and conditions:
2. SCOPE OF TERRITORY
PHTS shall market the services to health care providers and other employers with
which PHTS has relationships. PHTS shall have the right to market services to
any provider that is a part of a system whose parent is located outside the
state of South Carolina, provided, however, that this right shall not be
exclusive.
3. STATUS OF PHTS
(a) In accordance with the terms set forth in Section 2 and elsewhere in this
Agreement, Azimuth hereby authorizes PHTS to arrange for solicitation and
procurement of contracts (hereinafter referred to as "Contracts").
(b) PHTS is an independent contractor and no provision hereof nor any role or
regulation of Azimuth shall be construed to breach this right or create a
relationship of master and servant or of employer and employee.
(c) This Agreement shall constitute the entire agreement and it supersedes all
previous agreements, whether oral or written, between Azimuth and PHTS.
AGREEMENT
PHT SERVICES, LTD. AND AZIMUTH
4. RESPONSIBILITY OF PHTS
(a) PHTS agrees to follow and be governed by the terms and conditions of the
Agreement and such rules and regulations for the conduct of its business as
Azimuth has established or may establish in the future and which are
communicated in writing to PHTS.
(b) PHTS agrees to be responsible to Azimuth for all business done by or
entrusted to PHTS, its agents or employees. All records connected with the
business transactions covered by this Agreement shall be open to inspection by
Azimuth. The accounts of Azimuth shall be competent and conclusive evidence of
the state of accounts between parties. PHTS agrees to be responsible for
identifying client opportunities, arranging meetings with prospective clients
and delivering proposals with representatives of Azimuth.
(c) PHTS agrees to conform at all times to the laws and regulations of the state
of South Carolina and shall maintain all licenses and/or other regulatory
approval necessary to execute the duties hereunder. PHTS shall immediately
notify Azimuth of the loss, suspension or revocation of any such license or
authority, in which case this Agreement shall immediately terminate.
(d) PHTS agrees to assist in the conservation and renewal of all Contracts
entered into by Azimuth, and to perform such other duties to aid the purpose of
this Agreement as may be requested by Azimuth.
(e) PHTS is not authorized to collect any fees for Azimuth. Should PHTS accept
any payment of fees, PHTS shall immediately pay over to Azimuth the amounts due
which have been accepted. Fee payments will be handled on a direct bill basis
from Azimuth to the client, and PHTS is not responsible for unpaid or delinquent
fee payments.
(f) PHTS agrees to pay all expenses incurred by PHTS in the performance of this
Agreement.
(g) PHTS agrees to be responsible and to assume liability for and shall
indemnify and defend Azimuth for the acts of it, its employees, agents and
sub-agents as if such acts had been performed by PHTS.
5. RESPONSIBILITY OF AZIMUTH
(a) Azimuth agrees to follow and be governed by the terms and conditions of the
Agreement and such rules and regulations for the conduct of its business as PHTS
has established or may establish in the future and which are communicated in
writing to Azimuth.
(b) Azimuth agrees to assist PHTS in arranging for the solicitation and
procurement of Contracts.
AGREEMENT
PHT SERVICES, LTD. AND AZIMUTH
(c) Azimuth shall make reasonable efforts to assist in the conservation and
renewal of all Contracts and to perform such other duties to aid the purpose of
this Agreement as may be reasonably requested by PHTS.
(d) Azimuth acknowledges that the relationships which PHTS has established with
its clients are a valuable and continuing asset. Azimuth agrees to make good
faith efforts to ensure the protection of such relationships and the continued
satisfaction of PHTS clients.
(e) Azimuth agrees to pay all expenses incurred by Azimuth in the performance of
this Agreement.
(f) Azimuth agrees to be responsible and to assume liability for and shall
indemnify and defend PHTS for the acts of it, its employees, agents and
sub-agents as if such acts had been performed by Azimuth.
6. LIMIT OF AUTHORITY
(a) The authority of PHTS shall extend no further than stated herein.
(b) PHTS shall not bind, make, alter, or discharge any Contract, or extend the
time of payment of any fees, or waive payment in cash, or contract debts in the
name of Azimuth, or receive any money due or to become due to Azimuth, except as
authorized herein or by written directive of Azimuth.
(c) PHTS shall have the right to review all Contracts entered into by Azimuth,
pursuant to the terms of this Agreement before such Contracts are delivered to
the client.
(d) Azimuth will furnish sales promotion material regarding this Agreement to
PHTS. Azimuth shall not issue or circulate any written or printed advertising
materials pertaining to PHTS or its business without first obtaining written
approval from PHTS. PHTS shall not issue or circulate any written or printed
advertising materials pertaining to Azimuth or its business without first
obtaining written approval from Azimuth.
7. COMPENSATION
Azimuth will pay a fee to PHTS in an amount equal to ten percent (10%) of the
monthly receipts realized by Azimuth resulting from industrial hygiene, and
environmental, health and safety services provided to health care providers,
organizations, and other employers with which PHTS has relationships. This
agreement does not include the annual industrial hygiene agreement which
currently exists and which may be renewed between Azimuth and Palmetto Hospital
Trust,
AGREEMENT
PHT SERVICES, LTD. AND
AZIMUTH
In the event that Azimuth enters into any similar arrangement as is established
by this Agreement with any of PHTS's other strategic allies or business
partners, either current or future, Azimuth will pay a fee to PHTS an amount
equal to two percent (2%) of any monthly receipts realized by Azimuth from
business generated under such arrangement.
In the event that Azimuth provides PHTS assistance in obtaining additional
business in its core area of providing workers' compensation administrative
services, PHTS will pay a fee to Azimuth in the amount of two percent (2%) of
any annual contract amount between PHTS and said client.
8. LIMITED AGREEMENT NOT TO COMPETE
During the term of this Agreement and for a period of twenty-four (24) months
after its termination for any cause, except as may be expressly otherwise
authorized by Azimuth or provided herein, PHTS agrees that it will not offer,
directly or indirectly, products or services which compete with products or
services which PHTS is authorized to solicit for Azimuth pursuant to this
Agreement, to any health care provider in South Carolina.
9. TERM OF AGREEMENT
(a) The term of this Agreement shall be for an initial period beginning on the
commencement date mentioned above and terminating on December 31, 1998.
Thereafter, this Agreement will automatically renew for successive one year
periods unless written notice of intent to non-renew is given by either party
sent at least thirty (30) days prior to the end of the term or any renewal
thereof or unless terminated by either party as permitted below.
(b) This Agreement shall terminate upon the happening of any of the following
events:
(i) immediately upon either PHTS or Azimuth ceasing to do business or
becoming bankrupt; or
(ii) A material breach on the part of any party which remains uncorrected
after giving of fifteen (15) days written notice by one party to the other;
or
(iii) By mutual consent; or
(iv) At any time upon sixty (60) days notice by any party; or
(v) Immediately upon the revocation of authority of PHTS or Azimuth to
transact business in South Carolina; or
AGREEMENT
PHT SERVICES, LTD. AND AZIMUTH
l0. ASSIGNABILITY
This Agreement is not transferable, or assignable by either party without the
express written consent of the other party, and such consent to not be
unreasonably withheld.
11. INDEMNIFICATION
PHTS shall indemnify and save Azimuth harmless from any loss or expense on
account of any negligent or willful act or omission by PHTS, its agents or
employees; and Azimuth shall indemnify and save PHTS harmless from any loss or
expense on account of any negligent or willful act or omission by Azimuth, its
agents or employees.
12. WAIVER
Failure of PHTS or Azimuth to insist upon strict compliance with any of the
provisions of this Agreement or the rules or regulations of PHTS or Azimuth
shall not be construed as a waiver of any of the provisions or rules or
regulations, but said provisions, rules and regulations shall continue to be in
full force and effect.
13. CONFIDENTIALITY
PHTS acknowledges that during the course of its providing services under this
Agreement, PHTS and its employees, agents and representatives will be exposed to
certain proprietary and confidential information related to specific and general
business operations of Azimuth (e.g. sales, costs, profits, pricing, methods,
organization, customer lists, processes, equipment, etc.). PHTS further
acknowledges that this information is confidential and of great value to
Azimuth. Except to the extent necessary to carry out its obligations under this
agreement, PHTS hereby agrees that neither it, its employees, agents, or
representatives shall divulge such proprietary and/or confidential information
to anyone during or after the term of this Agreement. Further, without Azimuth's
written consent, PHTS shall not disclose, advertise or publish the existence or
terms of or transactions under this Agreement.
14. RIGHTS UPON TERMINATION
In the event of termination of this Agreement, so long as PHTS is subject to the
restrictions contained in paragraph 8 hereof, PHTS shall be entitled to
compensation for revenues earned by Azimuth on business produced by PHTS while
this Agreement was in effect, or any renewals of any such business. At the end
of the term designated in the limited agreement not to compete designated in
paragraph 8, Azimuth shall have the right to renew all accounts solicited by
PHTS, without compensation to PHTS. PHTS shall thereafter have the right to
solicit those accounts for other competing companies.
AGREEMENT PHT
SERVICES, LTD AND AZIMUTH
IN WITNESS WHEREOF, the parties hereto affix their respective hands and seals
this day of December 10, 1998.
Azimuth
By:
Its:
Date:
PHT Services. Ltd.
By
Its:
Date
ATTEST: (SEAL)
By:
Its:
AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT (this "Amendment"), dated as of January
18, l999, by and among James W. Miller, M.D. (the "Landlord") and
Envirometrics,Inc, Envirometrics Products Company, and Azimuth Incorporated,
jointly and severally (collectively the "Tenant") provides as follows:
RECITALS
Landlord and Tenant entered into that certain Lease Agreement (the "Lease")
dated as of December 17,1996, for the lease of that certain Premises located at
9229 University Boulevard Unit F-2, North Charleston, South Carolina The Lease
provides that so long as Tenant is not in default under the terms of the Lease,
Tenant shall have an option to extend the term of the tease for an additional
five (5) year term subsequent to the Initial term (the "Extended Term"). Tenant
has given Landlord notice it wishes to exercise its option to extend the lease
term. Landlord and Tenant desire to confirm that such notice has been given and
received and to confirm and document certain understandings and agreements
regarding the Extended Term, and the escrowed deposit required by the Lease, as
well as certain renovations requested by Tenant, and to that end have entered
into this Amendment,
AMENDMENT
NOW, THEREFORE for and in consideration of the mutual and reciprocal
promises herein contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:
1. Lease Governs. Except as set forth in this Amendment, the
provisions of the Lease shall govern. Capitalized terms used herein, unless
otherwise defined in this Amendment, shall have the same meanings as those
given in the Lease.
2. Notices. Landlord confirms and acknowledges receipt of notice from
Tenant regarding its intent to exercise its option to extend the term of
the Lease for an additional five (5) years.
3. Extended term. The Extended Term of the Lease shall be five (5)
years from the expiration of the Initial Term. This Amendment is the
extension contemplated in the Lease of the Initial Term, and the Lease
shall not be subject to additional extension without the agreement of the
parties.
4. Rent. The first lease year during the Extended Term is the first
twelve full months of the Extended Term. Each succeeding twelve-month
period shall also constitute a lease year. For each lease year beginning
with the first lease year of the Extended Term, the Rent shall increase by
an amount equal to the Rent for the preceding lease year multiplied by
three percent (3%). Landlord shall notify Tenant in writing, giving
calculations of the increase in the Rent, which increase shall become part
of the Rent and shall be payable at the same time as and in the same manner
as provided herein. Landlord and Tenant agree that this formulation
constitutes a fair rental rate for the Premises during the Extended Term.
5. Deposit. The provisions in Section 7 of the Lease requiring the
Tenant to Deposit in Landlord's Segregated Account certain sums as a
security deposit against Tenant's timely payment of Rent are hereby
modified and amended to reduce the amount held in escrow by Landlord from
Thirty Three Thousand One Hundred Thirty flight and 00/100 Dollars
($33,138.00), an amount equal to six (6) months Rent, to Eleven Thousand
Forty-Six and 00/100 Dollars ($11,046.00), an amount equal to two months
Rent. To the extent not expressly modified in this Section 5, all other
provisions or section 7 of the Lease remain unchanged and in full force and
effect.
6. Renovations. Landlord, for Tenant's benefit and at Tenant's
request, agrees to make certain renovations of the Premises (the
"Renovations") which shall be constructed and completed according to the
Renovations Schedule to be delivered by Tenant to Landlord no later than
seven months before the expiration of the initial Term under which the cost
of the Renovations shall not exceed One Hundred Thousand Dollars
($100,000.00). Landlord's obligation to make the Renovations is expressly
contingent upon Landlord obtaining financing in the approximate amount of
the total cost of the Renovations at terms reasonably satisfactory to
Landlord no later than six months before the end of the Initial Term;
provided, Landlord shall make his commercially reasonable efforts to
procure such financing at the lowest available interest rate. The parties
hereby agree that Landlord will obtain and submit to Tenant one (1) bid for
the cost of the Renovations and Tenant will obtain and submit to Landlord
two (2) bids for the cost of the Renovations. Any bid shall only be from a
qualified contractor with the experience and financial capability to
complete the Renovations in a timely and satisfactory manner. Landlord
agrees to contract with the issuer of the lowest bid to complete the
Renovations, provided that such bid is based upon the specifications set
forth in the Renovations Schedule. Construction or the Renovations shall be
prorated at the direction of Landlord, and the cost thereof paid by
Landlord, Landlord will retain ownership of the improvements. Any default
of Tenant after Landlord has incurred costs of Renovations but before the
end of the Extended Term resulting in termination of the lease shall cause
the remaining non-amortized cost to be immediately due and payable from the
Tenant to Landlord. Notwithstanding anything to the contrary to this
Amendment: (a) Tenant may, by written notification to Landlord, elect, at
any time before Landlord's application for financing, undertake the cost
and completion of the Renovations without the participation of Landlord: or
(b) if Landlord is not able to obtain financing as provided above, Tenant
shall have the right, upon notification to Landlord no later than Ninety
(90) days before the expiration or the Initial term, to terminate this
lease as of the expiration of the Initial Term.
7. Affirmation of Lease. To the extent not expressly modified hereby,
all of the terms and conditions of the Lease shall remain unchanged and in
full force and effect, and the parties hereby ratify and confirm the same.
SIGNATURE PAGE TO FIRST AMENDMENT
TO OFFICE LEASE
IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to be
executed under seal as of the date first above written pursuant to due authority
LANDLORD: TENANT:
Envirometrics, Inc.
________________________________
James W. Miller, M.D.
By: /s/ WALTER H. ELLIOTT III
Its President and CEO
Date: 1/18/99
Date: 1/19/99
Envirometrics Products Company
By: /s/ WALTER H. ELLIOTT III
Its President and CEO
Date: 1/19/99
Azimuth, Incorporated
By: /s/ WALTER H. ELLIOTT III
Its CEO
Date: 1/19/99
Envirometrics, Inc
9229 University Blvd.
Charleston, SC 29406
843-553-9554
843-569-8792 Fax
January 18,1999
Greg Pearce, Esq.
Pratt-Thomas, Pearce, Epting and Walker PA
16 Charlotte Street
Charleston, SC. 29401
Re: Payoff on Note and Mortgage dated 12/19/96 from Dr. James W.
Miller to Envirometrics, Inc.
Dear Mr. Pearce:
We wish to advise you that the amount required to satisfy the above note and
mortgage in full as of January 20, 1999 will be Two Hundred Eighteen Thousand
One Hundred Seventy-three and 93/100 Dollars ($218,173.93). Upon receipt of this
amount (and the per diem, if any), we shall execute a satisfaction of the
mortgage.
The per diem interest for each day following 1/20/99 will be $60.22.
This letter shall be valid through January 31, 1999.
Sincerely yours,
Elsie L. Rose
Secretary-Treasurer
TABLE OF CONTENTS
CONSULTING AGREEMENT 2
EXHIBIT A.1 6
Fee Schedule
EXHIBIT B.1 7
Laboratory Services
EXHIBIT B.2 9
Consulting Services
EXHIBIT C.1 10
List of Equipment
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into this 28th
day of May, 1998, by and between AZIMUTH Incorporated, a corporation organized
and existing under the laws of the state of South Carolina ("AZIMUTH"), and
PATRICK H. COOPER ("PATRICK H. COOPER").
WITNESSETH:
WHEREAS, AZIMUTH is in the business of providing industrial hygiene/safety and
health consulting services to industry, property owners and hospitals; and
WHEREAS, PATRICK H. COOPER desires to sell his services for asbestos analysis
and consulting to AZIMUTH
WHEREAS, AZIMUTH desires to engage PATRICK H. COOPER in connection with his
asbestos and consulting services; and
WHEREAS, PATRICK H. COOPER and AZIMUTH desire to enter into this agreement on
the terms and conditions hereof;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings ascribed to them in this Section.
(a) "Services" means those services to be rendered by PATRICK H. COOPER to
AZIMUTH pursuant to this Agreement as described more particularly in Exhibit B.1
and B.2 attached hereto and expressly made a part hereof.
2. Engagement. AZIMUTH hereby engages PATRICK H. COOPER to render the services
described below subject to the terms hereof, and PATRICK H. COOPER accepts such
engagement subject to the terms and conditions hereof:
(a) Other Consulting Services. PATRICK H. COOPER shall render consulting and
other industrial hygiene services to AZIMUTH as requested.
(b) Rate Schedule. The rates shown in Exhibit A.1 are the agreed upon fee for
service and may not be changed during the term of this agreement unless made in
writing and mutually agreed by both parties.
3. Termination.
(a) The Services to be rendered by PATRICK H. COOPER and pursuant to Section 2
hereof shall be rendered for one year from May 28th, 1998 (the "Initial Term");
provided, however, at the expiration of such Initial Term, this Agreement may be
renewed for separate and successive one-year terms.
(b) Termination. This Agreement may be terminated in the following manner:
(i) By either party upon no fewer than thirty (30) days prior written notice to
the other party.
4. Covenants and Duties of PATRICK H. COOPER. During the Term of this Agreement,
PATRICK H. COOPER shall perform and observe the following duties and
obligations:
(a) Rendering of Services. PATRICK H. COOPER shall perform the services in
accordance with terms hereof. PATRICK H. COOPER shall comply fully with the
specifications set forth in Exhibit B.1 and B.2 hereto.
(b) Authority and Consent. PATRICK H. COOPER represents and warrants that he has
all necessary authority and power to enter into this Agreement and to perform
its obligations hereunder.
(c) Materials. Any and all materials and equipment used by PATRICK H. COOPER in
performing the Services shall be of a quality that is standard in the industry
of which PATRICK H. COOPER is a part and shall be provided by PATRICK H. COOPER
at his sole cost and expense except for those listed in Exhibit C.1 and unless
otherwise agreed herein or between the parties. The equipment listed in Exhibit
C.1, shall, at all times, remain the sole and exclusive property of AZIMUTH.
Upon termination of this agreement by either party PATRICK H. COOPER must return
all equipment listed in Exhibit C.1.
5. Covenants and Duties of AZIMUTH. During the term of this Agreement, AZIMUTH
shall perform and observe the following duties and obligations:
(a) Payment. AZIMUTH shall pay to PATRICK H. COOPER for services rendered
according to Exhibit B.1and B.2 and at the rates shown in Exhibit A.1.
(b) Authority and Consent. AZIMUTH represents and warrants that it has all
necessary power and authority to execute and enter into this Agreement and to
perform its obligations hereunder. No further authorizations or consents are
necessary to the effectiveness of this Agreement.
6. Confidentiality. Any and all trade secrets, confidential information or
proprietary information of AZIMUTH which is learned by or disclosed to PATRICK
H. COOPER during the term of this Agreement shall be kept confidential by
PATRICK H. COOPER at all times and shall not be disclosed to any third party or
used to PATRICK H. COOPER's advantage or the advantage of any of its affiliates
without the prior written consent of AZIMUTH to such use or disclosure. The
parties agree that the contents of Exhibit B.1and B.2, shall be kept
confidential at all times.
7. Warranty. PATRICK H. COOPER warrants only that the Services shall be
performed according to the terms of this Agreement, as may be modified in
writing between the parties from time to time.
9. Indemnification.
(a) PATRICK H. COOPER shall hold free and harmless and indemnify AZIMUTH and its
associates, servants and employees from and against any loss, liability,
penalty, damage, expense, and cost, including reasonable attorney's fees, only
to the extent the same is caused by the negligent, intentional or willful
misconduct of PATRICK H. COOPER, arising out of or in connection with the
performance of, or the failure to perform, the Services pursuant to the express
terms of this Agreement. With respect to the foregoing, AZIMUTH shall have the
right to participate in the defense of, or at its option, to assume the defense
of, any action, suit, proceeding, demand, assessment of judgment brought by any
party against AZIMUTH. In the event AZIMUTH assumes the defense, PATRICK H.
COOPER shall have the right to participate in the defense.
(b) AZIMUTH shall hold free and harmless and indemnify PATRICK H. COOPER from
and against any loss, liability, penalty, damage, expense, and cost, including
reasonable attorney's fees, only to the extent the same is caused by negligent,
intentional or willful misconduct of AZIMUTH, its officers, directors,
employees, or servants arising out of or in connection with the performance of,
or the failure to perform, the Covenants and Duties pursuant to the express
terms of this Agreement. With respect to the foregoing, PATRICK H. COOPER shall
have the right to participate in the defense of, or at his option, to assume the
defense of, any action, suit, proceeding, demand, assessment of judgment brought
by any party against PATRICK H. COOPER. In the event PATRICK H. COOPER assumes
the defense, AZIMUTH shall have the right to participate in the defense.
10. Partial Invalidity. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall to any extent, be
invalid or unenforceable, the remainder of this Agreement, if the application of
such term or provision to persons whose circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
11. Applicable Laws. This Agreement shall be governed by and construed under the
laws of the State of South Carolina.
12. Entire Agreement. This Agreement represents the entire agreement among the
parties hereto, and neither AZIMUTH nor PATRICK H. COOPER or any agent
representing either of them, has made any statement, promise or agreement,
verbally or otherwise, in addition to or in conflict with the terms of this
Agreement. This agreement supercedes any other agreement written or oral
existing between Azimuth or its parent, Envirometics, Incorporated and PATRICK
H. COOPER.
13. Captions. The paragraph captions used in this Agreement have been inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope or intent of this Agreement.
14. Modifications. This Agreement may not be modified orally, but only by an
agreement in writing and signed by the party against whom enforcement or any
waiver, change, modification or discharge is sought.
15. Successors and Assigns. This Agreement is binding between the parties hereto
and their respective heirs, personal representatives, successors and assigns.
16. Independent Contractor. PATRICK H. COOPER is an independent contractor of
AZIMUTH hereunder, and nothing contained herein shall be construed to imply that
PATRICK H. COOPER is an employee of, or a joint venturer or partner with,
AZIMUTH. Accordingly, no taxes, FICA or FUTA shall be withheld from sums payable
to PATRICK H. COOPER hereunder.
17. Notices. All notices and other communications which are required or
permitted hereunder shall be in writing and shall be sufficient if delivered by
hand or mailed by first-class mail, postage prepaid, to the addresses set forth
below or to such other address as the parties shall specify by notice in writing
to the other party. All such notices and communications made by mail shall be
deemed to have been received on the date of actual delivery or on the fifth
(5th) business day after the mailing thereof, whichever is earlier:
AZIMUTH:
AZIMUTH Inc.
9229 University Boulevard
Charleston, SC 29406
Attn: Richard D. Bennett
PATRICK H. COOPER:
4961 Edge Avenue
North Charleston, SC 29405
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
AZIMUTH Incorporated
By:
Witness: Its:
PATRICK H. COOPER
By:
Witness: Its:
Exhibit A.1
Fee Schedule
Laboratory
Invoices from PATRICK H. COOPER to Azimuth Laboratories must be turned in to the
laboratory manager for approval.
Fees paid to PATRICK H. COOPER for asbestos analysis (PLM and PCM) are as
follows:
Sample Analysis Turnaround Time: Rate:
Weekend Sample Analysis 50 for the first sample and 50% of Azimuth's
price to the customer for subsequent samples
Emergency Sample 50% of Azimuth's price to the customer
Same Day 50% of Azimuth's price to the customer
24 Hour 50% of Azimuth's price to the customers
48 Hour $3.50
Routine $3.50
QA/QC samples no charge
Consulting
Invoices to Azimuth, Inc. from PATRICK H. COOPER must be turned in to the
marketing manager for approval.
PATRICK H. COOPER will be paid a fee that is equal to 50% of the portion of the
consulting invoice that includes his professional rate for the job, , travel
time and expenses, and report time, provided that he writes the report. Other
consulting fees including other professional rates, administrative time,
equipment fees, sample analysis, CIH and IH review and report writing will be
wholly paid to Azimuth, Incorporated.
Terms and Conditions of Payment
Payments will be made to PATRICK H. COOPER 45 days after receipt of invoice for
laboratory services only, and fifteen days after payment by the AZIMUTH client
for consulting services and laboratory services which were a part of the
consulting invoice.
Exhibit B.1
Laboratory Services
Azimuth, Laboratories will provide PATRICK H. COOPER with a pager in order to
contact him regarding sample expedition. PATRICK H. COOPER will submit an
availability schedule to Azimuth's laboratory manager on Monday morning of each
week.
All asbestos samples received by Azimuth Incorporated will be logged in and
PATRICK H. COOPER will be notified daily that samples are requiring analysis. If
there are no samples on a given day then Azimuth's lab manager will be
responsible for calling PATRICK H. COOPER and informing him of this. All samples
turned over to PATRICK H. COOPER will include appropriately labeled and signed
Chain of Custody forms as well as Azimuth Laboratories job number, COMPLETED
Bulk Asbestos Analysis Form and/or PCM Air Sample Analysis Report, and signature
pages. Asbestos samples and results submitted to PATRICK H. COOPER shall be
returned to Azimuth Laboratories based upon turnaround times. Requirements are
as follows:
Emergency and Weekend Sample Analysis- PATRICK H. COOPER will be notified by
phone and page within one hour of receipt of samples to Azimuth Laboratories.
Samples, results, and Chain of Custodies must be returned to Azimuth
Laboratories by PATRICK H. COOPER directly upon completion of the analysis for
emergency samples and results will be called in verbally or returned to Azimuth
Laboratories on Monday morning by 8:15 a.m., depending on the customer's
request, for weekend sample analysis
Same Day - PATRICK H. COOPER will be notified by phone or page within one hour
of receipt of samples to Azimuth Laboratories. Samples, results, and Chain of
Custodies must be returned to Azimuth Laboratories by PATRICK H. COOPER no later
than three hours before results are due back to the client.
24 Hour - PATRICK H. COOPER will be notified via phone or page by 2:00 p.m. on
the day of receipt of samples to Azimuth Laboratories. Samples, results, and
Chain of Custodies must be returned to Azimuth Laboratories by PATRICK H. COOPER
no later than three hours before results are due back to the client.
48 Hour and Routine - PATRICK H. COOPER will be notified via phone or page on
the day of receipt of the samples. Samples, results, and Chain of Custodies must
be returned to Azimuth Laboratories by PATRICK H. COOPER no later than three
hours before results are due back to the client.
Samples must be returned with appropriately labeled Chain of Custody and
Asbestos and Fiber Analysis description sheet signed and dated by PATRICK H.
COOPER. See the end of this section for examples of the PLM and PCM analysis
sheets.
Archives - Samples must be returned to Azimuth Laboratories upon completion of
analysis. No samples may be stored off of Azimuth, Incorporated's premises.
QC Requirements - Azimuth's QA/QC Manager will pull 10 % of the monthly air and
bulk asbestos samples and resubmit to PATRICK H. COOPER as blind samples.
Additionally, proficiency will be tested by the AIHA PAT program for air sample
analysis, by participation in a round robin laboratory program for bulk sample
analysis, and by random submittal of samples to an independent lab for analysis.
EXHIBIT B.2
Consulting Services
Azimuth, Inc. consulting services will contract PATRICK H. COOPER for assistance
on various asbestos and industrial hygiene projects. When PATRICK H. COOPER is
used by Azimuth, Inc. for consulting, PATRICK H. COOPER will be responsible for
notifying Azimuth Laboratories' lab manager verbally and by the availability
schedule that he must turn into the laboratory on Monday mornings. PATRICK H.
COOPER is also responsible for responding to pages sent by the consulting
department. See ExihibitA.1 for the fee schedule. .
Exhibit C.1
List of Equipment
- -------------------------------------------------- -------------------
Inventory: Number:
- -------------------------------------------------- -------------------
Laboratory Hood 1
Blower & Filter 1
OLY Microscope #10001 1
Light 1
TLZ
BH-# 221814 1
CH2-# 100882 1
3-Stage Counter 1
Slides/Coverslip Misc.
Quick Fix 1
Desk Lamp (green) 1
STATE OF SOUTH CAROLINA
)
CITY OF CHARLESTON )
MUTUAL RELEASE
THIS MUTUAL RELEASE is entered into and delivered as of this 24th day of
December, 1996, by and among ENWIROMETRtCS, INC., a corporation organized and
existing under the laws of the State of Delaware (the "Company"'), THE UNITED
STATES COMPANY, a corporation organized and existing under the laws of the
Commonwealth of Vixginia ("USC"), RICHARD H. GUILFORD, an individual resident of
the Commonwealth of Virginia ("Gui[ford"), MAUt~ITIO F. GIABBAI, an individual
resident of the State of Georgia CGiabbai'), and ELSIE L. ROSE, and individual
resident of the Commonwealth of Virginia ("Rose") (USC, Guilford, Giabbai and
Rose being collectively referred to hereinafter as the "USC Group", and anyone
of them individually as a "USC Member").
WITNESSETH:
WHEREAS, the parties hereto have entered into an Agreement, dated as of the
date hereof (the '"Agreement"), whereby certain claims of the USC Group against
the Company, its subsidiaries and affiliates, and certain other claims of the
Company against the USC Group and/or certain USC Members, have been finally
settled; and
WHEREAS, thc Company and the USC Group, in consideration of the benefits
and payments under the Agreement, lmve agreed to completely release each other
from claims, actions, causes of action and damages accruing prior to the date of
the Agreement, all as more particularly provided hereinbelow.
NOW, THEREFORE, for valuable consideration whose receipt and sufficiency
are hereby acknowledged, the parties agree as follows:
1. Release by the Company. The Company hereby and forever releases, holds
harmless and discharges the USC Group and each USC Member (individually and
collectively), together with each of their personal representatives, heirs,
successors and assigns (as applicable), from and against any and all claims,
demands, counterclaims, actions, costs, causes of action, damages, debts,
obligations, and liabilities of whatever nature (collectively, "USC
Liabilities"). This Release extends to ali USC Liabilities, known or unknown,
now existing or existing mdy in the future, matured or utunatured, foreseeable
or urfforeseeable, lo the extent that USC Liabilities result or arise, directly
or indirectly, frozn any relationship(s) of the USC Group or any' USC Member
with the Company through the date of this Release ("Relationships"), or froth
any act of the USC Group or any USC Member on or before the date of this Rel~se
("USC Acts"), as it relates to that certain Agreement dated July 11, 1995.
Relationships include, but are not limited to, ownership of shares, options
and/or warrants of the Company, services rendered under that certain Agreement
dated July 11, 1995, by and between the Comprely and USC, and service rendered
under any' and all other agreements between the USC Group or any USC Member and
the Company, whether oral or written, express or implied. USC Acts include
without limitation those that might give rise to liability in tort, in contract
or by statutory role.
2. Release by the USC Group. The USC Group and each USC Member, jointly and
severally, hereby and forever release, hold harmless and discharge the Company,
its past and present directors, officers, employees, agents, representative,
subsidiaries, '~liates, successors and assigns, from and against any all claims,
demands, counterclaims, actions, costs, causes of action, damages, debts,
obligations, and liabilities of whatever nature (collectively, "Company
Liabilities"). This Release extends to all matured or unmatured, foreseeable or
unforeseeable, to the extent that Company LiabiliQes result or arise, directly
or indirectly, from an>' Relationships, or from any act of the Company or any
agent, representative, subsidiary, affiliate, successor or assign of the Company
on or before the date of this Release ("Company Acts"), as it relates to that
certain Agreement dated July 11, 1995. Company Acts include without limitation
those that might give rise to liability in tort, in eontract or by statutory
rule.
IN WITNESS WHREOF, the parties hereto have executed this Mutual Release as
of the date and year first written above.
ENVIROMETRIC, S, INC.
By: Walter H. Elliott, III
Its'. President
THE UNITED STATES COMPANY
RICHARD H. GUILFORD
MAURIZIO F. GIABBAI
Individually
ELSIE L. ROSE
Individually
STATE OF SOUTH CAROLINA COUNTY OF CHARLESTON
MEMORANDUM OF AGREEMENT
THIS AGREEMENT is made as of this 24th day of December, 1996, by and among
ENVIROMETRICS, INC, a corporation organized and existing under the laws of the
State of Delaware, THE UNITED STATES COMPANY, a corporation organized and
existing under the laws of the Commonwealth of Virginia (USC), RICHARD H.
GUILFORD, an individual resident of the Commonwealth of Virginia ("Guilford"),
MAURIZIO F. GIABBAI, an individual resident of the State Of Georgia,
("Giabbai"), and ELSIE L. ROSE, an individual resident of the Commonwealth of
Virginia ("Rose") (Guilford, Giabbai, and Rose being referred to sometimes
herein as a "USC Principal" and collectively as the "USC Principals"), with
respect to all costs, fees, expenses or other compensation owed to USC or any
USC Principal by ENVIROMETRICS, INC. and/or any of its affiliates or
subsidiaries (the "Company").
The parties to this Agreement agree as follows:
1. No fees, expenses, or compensation whether in the form of cash, warrants
equity or other value, shall be due from this date forward by the Company to USC
or any USC Principal except (i) as expressly provided in this Agreement. (ii) as
previously agreed between the Company and USC as to compensation and expenses to
be paid to Rose for her activities as an employee of the Company, and (iii)
reasonable expenses incurred after the date of this Agreement to be reimbursed
by the Company to USC or any USC Principal provided, however, such expenses must
be agreed upon in advance between or among the Company and USC and/or the USC
Principals prior to the time such expenses are incurred by USC or any USC
Principal.
2. The parties hereto agree that those two (2) certain Company promissory notes
made payable to USC and dated on or about February 27, 1996, and August 12, I996
(collectively, the "First Notes"), on which the Company, on or about October 5,
1996, made a partial payment of One Hundred Twenty-Five Thousand Dollars
($125,000.00), are as of the date hereof fully paid and the collateral (as
defined therein) securing the First Notes fully released, and that no other sums
shall be due or payable on account of the First Notes or the documents executed
in connection therewith. Further, USC and the USC Principals agree to
immediately return all executed originals, proxies and/or instruments pertaining
to the First Notes and the collateral securing the First Notes to the Company
for cancellation and/or destruction by the Company, and to cooperate with all
reasonable requests of the Company, including but not limited to delivery and
execution of all necessary documents to cancel the First Notes and to release
the collateral.
3. The parties hereto agree that the sum of the remaining note payable and all
remaining expenses and compensation of any kind whatsoever owed by the Company
to USC or any USC Principal is One Hundred Seventy-one Thousand Dollars
($171,000.00US). The Company hereby agrees to pay to USC the said amount
pursuant to the promissory notes dated the date hereof, copies of which are
attached as Attachments B and C and expressly incorporated herein by reference,
in the amount of One Hundred Seventy-One Thousand Dollars ($171,000.00 US) (the,
"New Notes"). The sums due under the New Notes shall be payable as follows:
Principal of Thirty-Five Thousand Dollars ($35,000,00 US) shall be due and
payable at the time the Payor shall have received the cash proceeds from the Two
Hundred Fifty-Five Thousand Dollars ($255,000.00 US) second mortgage note held
by Envirometrics, Inc., that resulted from the sale of those certain real
properties described in Attachment A to this Note and expressly incorporated
herein by reference. Payor will pay interest monthly at the rate Payee is
charged by Regency Bank (the "Bank"). (Current rate charged by the Bank is
8.75%.)
Principal of One Hundred Thirty-Six Thousand Dollars ($136,000.00 US) shall be
due and payable in 60 equal monthly installments of $2,629.26 US including
accrued interest thereon, commeneing on January 15, 1997 and on each 15m day of
each month following until all Remaining Principal due under this Note is paid
in full; provided, in any event that all sums due hereunder shall be due and
payable on December 15, 2001 (the "Maturity Date"). The principal due under this
Note, shall bear interest at the rate of Six Percent (6%) per annum on the
Principal outstanding hereunder from time to time. This note shall be paid to
the Payee directly from the second mortgage note interest payments from James
Miller M.D,, executed with the company on December 19, 1996. if such payment is
not received by the Company from James Miller, M.D., or if James Miller, M.D.
then interest only shall be due and payable under this note.
Any unpaid principal on the Notes above shall be due and payable in full with
accrued interest thereon on the settlement date of any sale by the Payor, public
or private, of its securities of any character, if the net proceeds to the Payor
from such sate, after the payment of fees and expenses incurred in connection
wkh the sale, equal or exceed the sum of $1,000,000.00 US.
To secure the repayment of all sums due under the New Notes, the Company hereby
grants to USC, pursuant to a security agreement dated as of the date hereof, a
copy of which is attached as Attachment D and expressly incorporated herein by
reference (the "Security Agreement"), a security interest in the Company's
right, title and interest in and to (i) that certain Promissory Note from Trico
Engineering Consultants, inc., formerly Trico Envirometrics, Inc., to
Envirometrics, Inc. dated as of July 26, 1996, as amended from time to time
thereafter in the amount of Six Hundred Thousand ($600,000.00 US), a copy of
which is atittached as Attachment E E_ and expressly incorporated herein by
reference (the "Trico Note"), and (1) that certain Pledge Agreement by and
between Envkometrics, Inc. and Andrew C. Gillette dated as of July 26, 1996, as
amended from time to time thereafter, pursuant to which Gillette pledges to the
Company all of his interest in shares of Trico Envirometrics, Inc. stock and in
options to purchase shares of Company common stock, a copy of which is attached
as Attachment F and expressly incorporated herein by reference (the "Gillette
Pledge Agreement").
5. The Company shall within a reasonable time following execution of this
Agreement, issue or cause to be issued to USC, pursuant to the reasonable
written instructions of USC actually received by the Company prior to issuance,
one hundred twenty-five thousand (125,000) shares of validly authorized and
previously unissued $. 001 par value Common Stock of the Company (the "USC
Shares"), which stock shall not on the date of issuance to USC be registered
under the, Securities Act of 1933 'or under any state securities or other "blue
sky" laws, but which shall have the Registration Rights in Paragraph 9 hereof.
The Company shall, in its sole discretion,determine its tax, securities,
accounting and other reporting treatment of this transfer of shares, whether as
(a) a conversion of a liability from USC and any USC Principal, (b) an exchange
of warrants, options, or other rights held or exercisable by or otherwise
belonging to USC or any USC Principal to Purchase or receive, shares of Company
stock or warrants therefor, or (c) any combination of (a) and (b), or any other
treatment acceptable to the Company's accountants (the "Treatment").
6. Except as expressly provided in this Agreement, and notwithstanding the
Treatment chosen by the Company pursuant to Paragraph 5 hereof, as of this date
hereof, any and all outstanding or unissued options, warrants or other rights
held or exercisable by or otherwise belonging to USC or any USC Principal to
purchase or receive shares or warrants of Company stock shall be null and 'void,
and any documents, proxies, or legal instruments providing for such rights shall
be immediately returned to the Company.
7'. In connection with the closing of the matters agreed herein, the Company,
USC and the USC Principals shall deliver to each other an executed mutual
release in the form attached as Attachment G expressly incorporated herein by
reference.
8. Nothing in this Agreement shall affect the employer/employee relationship
previously entered into by and between the Company and Rose. Rose agrees to
remain employed by the Company under the present terms and conditions of her
employment. The Company agrees to pay on a timely basis all of Rose's fees and
expenses reasonably relating to the business of the Company which are approved
by the Company prior to being incurred.
9. In the event that the Company at any time subsequent to the date the Exchange
Shares are issued to USC hereunder proposes to file a registration statement
(other than a registration statement on a Form S-8 of Form S-14, or forms
similar thereto in effect at the time of such filing) under the Securities Act
of 1933 (as then in effect or any similar statute then in effect), in connection
with a proposed public offering of securities, the Company agrees to immediately
notify USC in writing, at least thirty (30) days prior to such proposed filing
date of such registration statement. Within 30 days following delivery of such
notice, USC may request that the Company include in such contemplated
registration statement any shares of stock owned by USC (whether such ownership
is by virtue of issuance pursuant to this agreement or pursuant to the exercise
of USers rights under the New Note and related documents). Upon receipt of such
notice, the Company will cause the shares of stock made the subject of such
request to be covered by the Company.
In addition, and without limiting the foregoing, the Company agrees to register
at least Fifty Thousand (50,000) Exchange Shares of the Company stock owned by
USC or its designee, prior to June 30, 1997 (if so requested by USC), and to
register any remainder of the Exchange Shares so owned by USC on demand, at any
time after December 31, 1997, the registration to be effective within sixty (60)
days following such written demand.
The Company will pay all expenses reasonably incurred by it and USC (including
USC's attorney's fees, commissions and fees of underwriters or brokers with
respect to the shares of the stock to be registered and sold by USC) in
connection with the registration statement and any post-effective amendment
thereto and in connection with qualifying the securities covered by the
registration statement under the Blue Sky or other state securities' laws. USC
shall furnish the Company and the Company shall furnish USC, such documents,
including selling notices and opinions of counsel, as are typically and
reasonable requested and delivered by an issuer and selling shareholder in a
"piggy-back" or demand registration transaction of the type outlined above. USC
and the Company, respectively, agree to provide such documentation and
information on a timely basis to permit the registration statement covering the
Exchange Shares and other shares of stock owned by USC to become effective on a
prompt and orderly basis.
USC agrees to limit the number of registered shares it may sell following
registration to no more than Twelve Thousand Five Hundred (12,500) shares during
any calendar month for the first two (2) years following registration.
10. This Agreement shall bind and inure to the benefit of the parties hereto and
to their respective personal representatives, heirs, successors or assigns.
11. If any term or provision of this Agreement shall to any extent be held by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
this Agreement, or the application of such invalid term or provision to other
persons or circumstances, shall not be affected thereby.
12. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of South Carolina. Any disputes under this Agreement shall be
settled only and exclusively in the Courts of the State of South Carolina and
each of the parties hereto consent to the exclusive jurisdiction and venue of
such Courts.
13. This Agreement may be modified only by an agreement in writing and signed
by the party against whom enforcement of any waiver, charge, modification, or
discharge is sought.
14. All representations and warranties, covenants and amendments contained in
this Agreement and in all documents and agreements incorporated herein shall
survive the execution of this Agreement.
15. The individuals actually executing this Agreement personally represent and
warrant that they have the necessary power and authority to execute this
Agreement in behalf of thc party they represent, and that their signatures are
sufficient to make this Agreement the binding and enforceable obligation of such
party.
16. This document may be executed in any number of counterparts with the same
effect as if the signatures hereto and thereto are upon the same instrument,
17. This Agreement has been negotiated by the Parties hereto. The Parties
represent and warrant to one another that each has actively participated in the
finalization of this Agreement, have been represented by and consulted with
counsel of their choice, and, in the event of a dispute concerning the
interpretation of this Agreement, each Party hereby waives the doctrine that an
ambiguity should be interpreted against the Party which has drafted the
document.
18. This Agreement contains the entire agreement between the Parties hereto and
supersedes and emilnates any and all prior agreements and understandings, oral
or written, between the Parties hereto with respect to the matters set forth
herein.
19. The Parties hereto understand and agree that that certain contract between
Envirometrics, Inc..and The United States Company, dated as of July 11, 1995, as
the same may have been amended from time to time thereafter (the "Contract") is
null and void, and that this Agreement supersedes and replaces the Contract in
every respect.
IN WITNESS WHEREOF, the Parties hereto have executed, or caused their duly
authorized agents to execute, this Agreement the day and year first written
above.
COMPANY: ENVIROMETRICS, INC.
Walter H. Elliott, III President
USC: THE UNITED STATES COMPANY
President
GUILFORD: RICHARD
GIABBAI: MAURIZIO F. GIABBAI
Individually ROSE: ELSIE L. ROSE Individually
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