NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (the "Agreement"),dated to be
effective as of the 15th day of December, 1995, by and between
ALLIED PRODUCTS CORPORATION ("Allied") and ELECTRIC & GAS
TECHNOLOGY, INC. ("ELGT").
INTRODUCTORY PROVISIONS
The following provisions are a part of thisAgreement and
form the basis for this Agreement.
Xxxxxx Manufacturing Corp., a Texas corporation ("Xxxxxx"),
is obligated to Allied under terms and conditions of a Facility
Agreement dated March 16, 1995, a Restated and Amended Facility
Agreement dated September 30, 1995, and a Promissory Note in the
amount of one million dollars dated September 30, 1995 the
("Note").
A. Xxx Xxx ("Xxx"), Xxx Xxxxx ("Xxxxx") and Xxxxx Xxxxx have
executed certain guarantees and stock pledges to secure the
obligations of Xxxxxx under the above Facility Agreement and
Restated and Amended Facility Agreement, the Promissory Note and
related Security Agreement(s).
B. ELGT is desirous of purchasing all of Allied's interest in
and to the Promissory Note and security therefore, including
without limitation the security agreements (exclusive of the
Costa Rican Security Agreement which has never been signed) and
specific guaranties described in paragraph 4(a)-(c) of the
Restated and Amended Facility Agreement (save and except certain
obligations in favor of Allied described below).
Now, therefore, for and in consideration of the foregoing
and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged and confessed, the parties
hereto agree as follows:
I.
Allied assigns to ELGT all of its right, title, and interest
(except as specifically reserved below) in and to the Promissory
Note and all security existing therefor and obligations of Xxxxxx
in connection therewith, including without limitation, security
and obligations under or in connection with that certain Facility
Agreement dated to be effective as of March 16, 1995 executed by
Xxxxxx; the Restated and Amended Facility Agreement dated and
effective as of September 30, 1995 executed by Xxxxxx; the
Promissory Note dated September 30, 1995, in the original
principal amount of one million dollars ($1,000,000.00) executed
by Xxxxxx; the Specific Guaranty executed by Xxx to be effective
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September 30, 1995; the Specific Guaranty executed by Xxxxx and
Xxxxx Xxxxx to be effective September 30, 1995; the Supplemental
Security Agreement executed by Xxx to be effective September 30,
1995; the Supplemental Security Agreement executed by Xxxxx to be
effective September 30, 1995, and the Amended and Restated
Security Agreement executed by Xxxxxx to be effective September
30, 1995 (collectively the "Security Documents"); provided,
however, that nothing contained herein shall be deemed or
construed to waive, release, or in any way impair the "Reserved
Obligations" as defined below.
As used herein, the term "Reserved Obligations" shall mean
and refers to (a) the Obligations (as such term is defined in the
Facility) of Xxxxxx to Allied described in or arising out of
paragraphs 1, 3, and 11 of the Restated and Amended Facility
Agreement and (b) the non-exclusive right of Allied to enforce
the covenants and agreements of Xxxxxx under or pursuant to the
Restated and Amended Facility Agreement (excluding only the
covenant to pay the New Note and provide security therefor under
the Security Documents) in order to ensure performance by Xxxxxx
of the obligations described in clause (a) above. The Reserved
Obligations include, without limitation, Xxxxxx'x obligations to
defend, indemnify and hold harmless Allied with respect to
certain pending litigation described in Schedule 1 hereto.
Allied retains and does not assign to ELGT the Reserved
Obligations. ELGT agrees that neither ELGT nor any of its
affiliates or subsidiaries shall release the guaranties of Xxx
and Xxxxx unless and until the Reserved Obligations shall have
been fully discharged. ELGT acknowledges that all assets
existing to secure the Note are burdened by the Reserved
Obligations and cannot be conveyed, transferred, or assigned free
and clear of the Reserved Obligations. In addition to, but
without limitation of the foregoing, to the extent that any
affiliate or subsidiary of ELGT acquires, directly or indirectly,
and whether by voluntary conveyance, foreclosure, conveyance in
lieu of foreclosure, or any other means, a controlling interest
in Xxxxxx or acquires greater than 50% in value of the assets of
Xxxxxx, ELGT shall cause such affiliate or subsidiary to assume
and agree to be bound by, each and every one of the Reserved
Obligations, as fully and for all purposes as if such party had
originally entered into same; provided, however, that such
assumption shall be nonrecourse except to the extent of the
assets so acquired, which assets shall serve such assumption, and
the Reserved Obligations. ELGT covenants and agrees that it
shall not acquire in its name either a controlling interest in
Xxxxxx or greater than 50% in value of the assets of Xxxxxx. The
obligations of ELGT under and pursuant to this paragraph shall
survive the assignment of the Note and Security Documents from
Allied to ELGT.
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II.
A. Concurrently with the execution and delivery of this
Agreement by Allied, ELGT will pay to Allied the sum of One
Hundred Thousand and No/100 Dollars ($100,000.00), and, promptly
upon request, ELGT shall reimburse Allied for Allied's attorney's
fees incurred in this transaction, not to exceed $10,000.00.
B. ELGT will issue to Allied ninety thousand shares
(90,000) of a ten dollar ($10.00) par value cumulative,
convertible preferred stock with a dividend of seventy cents
($.70) per share, concurrently with the execution and delivery of
this Agreement by Allied, with rights and obligations as more
particularly described in the form of Resolution Designating and
Specifying Preferences and Rights of Series 1995 Convertible
Preferred Stock (the "Designation") attached hereto and made a
part hereof.
III.
The preferred stock shall be convertible, at Allied's
option, into common stock of ELGT, based on two (2) shares of
common stock for each one (1) share of preferred (which is based
on five dollars ($5.00) per share of the common stock or up to
one hundred eighty thousand (180,000) shares).
IV.
All securities of ELGT including the preferred stock and
converted common stock will at the time of delivery to Allied
have been validly issued and shall be in compliance with all the
Rules and Regulations of the Securities and Exchange Commission
and related federal laws and any other appropriate governmental
agencies and applicable state law. Prior to closing, appropriate
corporate action, including the execution and filing of the
attached form of the Designation shall be taken by ELGT to
authorize and specify the rights of the Preferred Stock issued or
to be issued to Allied pursuant to this Agreement, all in form
and substance acceptable to Allied.
V.
Dividends on the preferred stock will be paid quarterly.
The preferred stock and any common stock received upon conversion
of the preferred will become freely tradeable pursuant to Rule
144 promulgated pursuant to the authority granted in the
Securities Exchange Act of 1934. The parties to this contract
anticipate the two (2) year holding period will apply and that
the tacking provisions of Rule 144 will be available, and on the
issuance of the preferred stock to Allied.
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VI.
ELGT will use its best efforts, at the option of Allied, to
cause the sale of such of the converted (common) stock pursuant
to Rule 144 of the Securities Exchange Act of 1934 for the
benefit of Allied. Should there be any deficiency resulting from
the sale of stock for less than nine hundred thousand dollars
($900,000.00), (which deficiency shall equal $900,000.00 minus
the aggregate proceeds of the sale of the converted stock) or if
public NASDAQ sale of converted (common) stock by Allied is not
lawfully permitted (subject only to compliance with volume
restrictions of Rule 144) so that Allied or ELGT, on behalf of
Allied, may not lawfully sell such converted (common) stock on
the public NASDAQ market, said deficiency will be paid by ELGT on
a payment schedule mutually agreed between ELGT and Allied, not
to exceed a period of nine (9) months after Allied gives notice
to ELGT of the deficiency. The obligation of ELGT to pay such
deficiency shall survive assignment of the Note and Security
Documents by Allied to ELGT and be and remain the binding
obligation of ELGT.
VII.
In the event, prior to the expiration of twenty-four (24)
months from the effective date hereof, ELGT obtains an acceptable
underwriting from an investment broker, a portion of the proceeds
will be used to acquire all (or any remaining portion) of the
preferred stock then held by Allied at par value plus accrued and
unpaid dividends or the value of the common stock into which the
preferred can be converted, whichever is greater.
VIII.
Deliveries at Closing. On even date herewith or at such
time as indicated, Allied will deliver to ELGT acceptable to ELGT
the following:
A. The original Promissory Note dated September 30, 1995
in the amount of one million dollars ($1,000,000.00) executed by
Xxxxxx to Allied duly endorsed to ELGT as follows:
Transferred and assigned to Electric & Gas Technology,
Inc., without recourse or warranty effective as of
December 15, 1995, pursuant to a Note Purchase
Agreement of even date.
ALLIED PRODUCTS CORPORATION
By:
Name:
Title:
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B. The originals of the Facility Agreement, Restated and
Amended Facility Agreement, and each of the Security Documents,
with notation of assignment of ELGT without recourse or warranty
as indicated in A above.
C. Resolutions of the Executive Committee of the Board of
Directors of Allied authorizing the transactions contemplated
hereby.
IX.
Deliveries at closing. On an even date herewith or at such
other time as indicated, ELGT shall deliver to Allied in the form
and content acceptable to Allied the following:
A. A certificate representing ninety thousand (90,000)
shares of ELGT ten dollar ($10.00) per value cumulative,
convertible stock. The dividend of seventy cents ($0.70) per
share.
B. Corporate resolutions for ELGT authorizing all
transactions covered hereby.
C. Cash of $100,000.
D. Evidence of authority, including without limitation the
filed Designation as required pursuant to Paragraph IV hereof,
and in the form attached hereto.
X.
The following representations and warranties of Allied are
the sole and exclusive representations and warranties of Allied
in this transaction:
A. To the best of Allied's actual knowledge, there are no
actions, suits or proceedings pending against or affecting Allied
involving the validity or enforceability of the Promissory Note
or documents securing same, or otherwise involving Allied and its
relationship with Xxxxxx, except as set forth on Schedule 1
attached hereto.
B. As of the date hereof, the outstanding principal
balance on the Note is $1,000,000.00, and to the best of Allied's
actual knowledge, the Note represents the valid and subsisting
obligation of Xxxxxx Manufacturing Corp., and the guaranties
represent the valid and subsisting obligations of the respective
guarantors.
C. Allied has not heretofore transferred or conveyed its
interest in the Note or Security Documents.
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XI.
Until the Promissory Note has been paid in full and the
Reserved Obligations discharged or released, ELGT will give
Allied prompt notice of (i) any actions, suit or proceeding by or
against either Poe, Brown, Xxxxx Xxxxx, Xxxxxx and ELGT or
against either of them at law or equity before any governmental
authority or any of the same that may be threatened and (ii) the
occurrence of any event of default under this agreement or any of
the Security Documents or the occurrence of an event which with
the giving of notice of the passage of time or both will become
an event of default hereunder or under the Security Documents,
which notice shall describe such event and the period of time of
its existence and any action taken with respect thereto.
XII.
This agreement and the documents executed in connection
herewith, including the Promissory Note, the security documents,
the Facility Agreement, and the Restated and Amended Facility
Agreement represented the final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
XIII.
ELGT shall not be obligated to obtain Allied's consent to
the exercise of any remedies that may be available to ELGT under
or pursuant to the Note or any of the Security Documents.
XIV.
This agreement shall be binding upon the parties hereto and
their respective permitted successors and assigns, and the terms
and provisions hereof shall survive the transactions contemplated
hereby and shall be and remain binding upon the parties hereto.
Executed as of the date first hereinabove written.
/s/ Xxxxxxx X. Light /s/ S. Xxxx Xxxxxxxxx
Allied Products Corporation Electric and Gas
Technology, Inc.
By: Xxxxxxx X. Light By: S. Xxxx Xxxxxxxxx
Title: Executive Vice President Title: President
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Schedule 1 to Note Purchase Agreement
Allied Products Corporation
Summary of Current Litigation re Xxxxxx Manufacturing Corporation
Note: Neither Allied nor its counsel makes any representation,
express or implied, regarding the likelihood of an adverse result
in any of the following described litigation, or of the amount of
recovery in the event of such result. References to the "base
claim" amount below are provided for information only and do not
include attorneys fees, costs, etc.
1. Xxxxxxx Sales and Service, Inc. v. Allied Products
Corporation and Xxxxxx Manufacturing Corporation, Cause No.
_________ in the Northwest Judicial District, Xxxxxxxx
County, North Dakota. Suit for commissions, related to a
sale of two rigs which occurred after the sale of the Xxxxxx
Division by Allied. Plaintiff claims services were
performed at the "joint request" of Allied and Xxxxxx.
Amount claimed: $27,166.14.
2. Xxxxxxx & Xxxxxxxxx, Inc. v. Allied Products Corporation and
Xxxxxx Manufacturing Corporation, Cause No. D-97,641, In the
358th Judicial District Court, Ector County, Texas. Suit on
sworn account on charges incurred by Xxxxxx after sale of
the Xxxxxx Division by Allied. Plaintiff alleging
partnership/joint venture in attempt to bring Allied within
joint and several liability. Base claim is $78,191.15.
3. Linden Air Freight, Inc. x. Xxxxxx Manufacturing Corporation
and Allied Products Corporation, Cause No. 139-95, In the
198th Judicial District Court, XxXxxxxxx County, Texas.
Suit on sworn account on charges incurred after sale of the
Xxxxxx Division. Plaintiff's counsel was unaware of the
corporate hierarchy and is considering non-suiting Allied
Products but may proceed with same approach as plaintiff in
Xxxxxxx & Xxxxxxxxx above. Base claim is $51,088.36.
4. Clemtex, Inc. v. Allied Products Corporation aka and dba
Allied Products Corp., Loadcraft - Xxxxxx Manufacturing
Corporation and Loadcraft-Xxxxxx, Cause No. 646,347, In the
County Xxxxx Xxxxx xx Xxx Xx. 0, Xxxxxx Xxxxxx, Xxxxx. Suit
on sworn account on charges incurred after sale of the
Xxxxxx Division. Plaintiff's counsel was unaware of Allied's
sale to Xxxxxx Manufacturing and will non-suit Allied
Products. Base claim is $6,870.00.
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