PURCHASE AGREEMENT (this "Agreement") is made and entered effective the
24th day of March, 1997 by and between Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxx,
Xxxx Xxxxxxx and Xxxx Xxxxxxxx and (each hereafter a "Seller" and
collectively the "Sellers") and Steel Technologies Inc., a Kentucky
corporation (the "Buyer").
PRELIMINARY STATEMENTS
Sellers desire to sell, and Buyer desires to purchase, all and not less
than all of the issued and outstanding shares of common stock (the
"Common Stock") of Atlantic Coil Processing, Inc., a North Carolina
corporation (the "Company"), for the consideration and on the terms set
forth in this Agreement.
The Company is engaged in the business of steel processing and providing
steel processing services (the "Business").
The parties, intending to be legally bound, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
SECTION 1.1 Sale of Stock. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers will sell and transfer the Common
Stock to Buyer, and Buyer will purchase the Common Stock from Sellers.
SECTION 1.2 Purchase Price. The purchase price (the "Purchase Price")
for the Common Stock shall be $7,250,000.
SECTION 1.3 Payment of Purchase Price. The Purchase Price shall be paid
as follows:
(a) the aggregate amount of $3,625,000 delivered at Closing by bank
cashier's or certified check payable to the order of (or by wire
transfer to accounts specified by) Richmond, Barwick, Xxxxxxx and
Xxxxxxxx, respectively: $1,956,250 to Richmond; $556,250 to Xxxxxxx;
$556,250 to Xxxxxxx; and $556,250 to Xxxxxxxx.
(b) the aggregate amount of $3,625,000 delivered at Closing by Buyer's
promissory note in the form of Exhibit A (the "Promissory Note") payable
to the agent for Richmond, Barwick, Xxxxxxx and Xxxxxxxx named therein.
(c) Buyer, as a method of payment for the Promissory Note has the
option of making payments on the due dates in the form of cash or common
stock of Steel Technologies Inc. at its discretion. Specifically, Buyer
reserves the right to exercise its option for payment to the Sellers in
either form of cash or stock equivalent. Buyer covenants and agrees
that it will give Sellers reasonable advance notice of its intention to
make any payment of the Promissory Note in common stock and will deliver
such common stock to the respective Sellers as directed by Sellers. The
Sellers acknowledge and agree that all shares, if any, of Steel
Technologies common stock issued as payment (or partial payment) for the
Promissory Note will not, on the date of delivery thereof, have been
registered under the Securities Act of 1993, as amended (the "Securities
Act"), or any state securities laws, and will constitute "restricted
securities" within the meaning of Rule 144 under the Act. The Sellers
further acknowledge and agree that each certificate evidencing such
shares shall bear a legend referring to the restrictions on resale
imposed by the applicable federal securities laws.
(i) Buyer covenants and agrees that it will file, immediately
following each delivery, if any, of shares of common stock in payment
for the Promissory Note, and use its best efforts to obtain the prompt
effectiveness of, a registration statement under the Securities Act to
register for public resale all of such shares, so that such shares may
be offered and sold by or for the account of the respective Sellers,
from time to time as market conditions permit, on the Nasdaq Stock
Market or otherwise, at prices and on terms then prevailing or in
negotiated transactions. Buyer will give Sellers Notice and opinion of
counsel when and that the shares may be traded. Buyer will maintain the
effectiveness of such registration statements, if any, until such time
as the Steel Technologies common stock may be sold by the Sellers
pursuant to the terms and conditions of Rule 144 under the Securities
Act.
(ii) If during the time Buyer is required to maintain the effectiveness
of a registration statement under this Section, Buyer shall be engaged
in a transaction with respect to which disclosure would be required in
such registration statement, but for which financial or other
information necessary for such required disclosure is not then available
to Buyer, or with respect to which Buyer's Board of Directors shall have
determined that disclosure at such time could have an adverse effect on
the Buyer or its business or prospects, then Buyer shall be entitled to
notify the Sellers that no sales may be made pursuant to the
registration statement for up to 90 days.
(iii) Buyer shall pay all expenses incurred by it in complying with this
Section, including without limitation, all registration and filing fees,
printing expenses, and fees and disbursements of counsel and independent
public accountants for Buyer.
(iv) Buyer unconditionally guarantees to Sellers the return upon sale
of all or part of any shares delivered pursuant to this Section and
traded with a "discount" broker and in accordance with this Section
within three (3) business days of Sellers receipt of the notice(s)
required by 1.3(c)(i) above of a net amount equal to the value of the
shares at delivery (being the value of the shares on the NASDAQ stock
marker on the trading day before the stock is delivered to Sellers).
Sellers shall provide Buyer with all appropriate documentation of
trade(s) to support any request for Buyer to satisfy its guarantee
obligations under this Section. Buyer shall pay Sellers any funds due
under this Section within ten (10) days of receipt of notice and
supporting documentation from Sellers.
(v) Notwithstanding any provision to the contrary, if, by May 30
immediately following any delivery of the shares, Buyer has not obtained
registration allowing the shares to be traded or has not provided
Sellers with the notice and opinion required by 1.3(c)(i), the Buyer
shall, within ten (10) days, pay Sellers in available funds (and as
provided in the Promissory Note) an amount equal to the value of the
shares at delivery plus interest on such amount at 7% per annum through
the date of payment.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Sellers, jointly
and severally, unless specifically noted, represent and warrant to the
Buyer as follows:
SECTION 2.1 Ownership of Stock. Each Seller individually represents and
warrants as to himself that, conditioned upon the consummation of the
transactions contemplated hereunder, he owns the shares of Common Stock
listed opposite his name on Schedule 2.1 hereto, free and clear of all
pledges, security interests, liens, charges, encumbrances, equities,
claims, options or limitations of every kind ("Claims"), and that the
delivery to the Buyer at Closing of the Common Stock owned by such
Seller pursuant to the provisions of this Agreement will transfer to the
Buyer valid title thereto, free and clear of all Claims.
SECTION 2.2 Authority Relative to this Agreement. Each Seller
individually represents and warrants as to himself and, conditioned upon
the consummation of the transactions contemplated hereunder, (a) that
such Seller has full legal power, capacity and authority to execute,
deliver and perform this Agreement, and, to the extent applicable to
such Seller, the Exhibits and Schedules hereto and the other documents
and instruments contemplated hereby (collectively, this Agreement, the
Exhibits and Schedules hereto, and the other documents and instruments
contemplated hereby shall constitute the "Documents") and to consummate
the transactions contemplated hereby and thereby, and (b) that, to the
extent applicable to such Seller and when duly and validly executed and
delivered by all parties, the Documents will be enforceable against such
Seller in accordance with their terms, subject to bankruptcy,
reorganization, insolvency and other similar laws affecting the
enforcement of creditors' rights in general.
SECTION 2.3 Foreign Person. Each Seller individually represents and
warrants as to himself that he is not a foreign person as that term is
defined in Section 1445(f)(3) of the Code and applicable regulations.
SECTION 2.4 Organization, Qualification and Corporate Power. The
Company is a corporation duly organized and validly existing under the
laws of the State of North Carolina. The Company is not qualified to do
business as a foreign corporation in any other state. The nature of the
Business does not require Company to be qualified in any other
jurisdiction where the failure to be so qualified would have a material
adverse effect on the business or properties of the Company. Sellers
have made available to the Buyer complete and correct copies of the
Articles of Incorporation and Bylaws of the Company as currently in
effect. The Company has the corporate power and authority to own,
lease, operate and hold its properties and to carry on its business as
now conducted.
SECTION 2.5 Capitalization. The Company has authorized capital
consisting of 100,000 shares of common stock, with a par value of one
dollar ($1) per share, of which 100,000 shares are issued and
outstanding and no shares are held as treasury stock. All of the
outstanding shares of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. None of the outstanding
shares of the Company have been issued in violation of any preemptive
right. There are, conditioned upon the consummation of the transactions
contemplated hereunder, no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale
of any shares of capital stock of the Company, other than as
contemplated by this Agreement.
SECTION 2.6 Subsidiaries and Investments. The Company has no
subsidiaries and does not own, directly or indirectly, any capital stock
or other equity or ownership or proprietary interest in any other
corporation, partnership, association, trust, joint venture or other
entity.
SECTION 2.7 Books and Records. The minute books of the Company, which
have been made available to the Buyer and its representatives, contain
alone, or in conjunction with other corporate books and records which
have been made available to Buyer, records accurate in all material
respects of all meetings of and corporate actions or written consents by
the shareholders and Board of Directors of the Company. The Company does
not have any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company and/or its
attorneys, accountants and professional advisors.
SECTION 2.8 Financial Statements. Sellers have previously furnished to
the Buyer, and attached hereto as Schedule 2.8 are the Company's
Financial Statements for Years Ended December 31, 1995 and 1994 with
Independent Auditor's Report and Financial Statements for Years Ended
December 31, 1996 and 1995 with Independent Auditor's Report
(collectively the "Financial Statements"). The Financial Statements
have been prepared in accordance with generally accepted accounting
principles consistently applied and were prepared from the books and
records of the Company. Such books and records are complete and correct
in all material respects, accurately reflect all material transactions
of the Business and have been made available to the Buyer for
examination. Since the Balance Sheet Date, except as permitted under
this Agreement and except for changes in the ordinary course of business
consistent with past practice (i) there has been no materially adverse
change in the assets, liabilities or financial conditions of the Company
from that reflected in the 1996 Financial Statement; and (ii) none of
the business, prospects, financial condition, operations or property of
the Company have been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured
against. The Sellers have made available to Buyer all material facts
relating to the preparation of the Financial Statements.
SECTION 2.9 Labor and Employee Relations. The Company is not a party to
or bound by any collective bargaining agreement with any labor
organization, group or association covering any of its employees, and,
to the knowledge of Sellers, there is not any current attempt to
organize the Company's employees by any Person, unit or group seeking to
act as their bargaining agent. Except as set forth on Schedule 2.9, to
the knowledge of Sellers, (i) there are no pending or threatened charges
(by employees, their representatives or governmental authorities) of
unfair labor practices or of employment discrimination or of any other
wrongful action with respect to any aspect of employment of any person
employed or formerly employed by the Company; (ii) no union
representation election relating to employees of the Company has been
scheduled by any governmental agency or authority, no organizational
effort is being made with respect to any of such employees, and there is
no investigation of the Company's employment policies or practices by
any governmental agency or authority pending or threatened; and (iii)
the Company is not currently involved in labor negotiations with any
unit or group seeking to become the bargaining unit for any employees of
the Company. The Company has not experienced any work stoppages, and,
to the knowledge of Sellers, no work stoppage is planned.
SECTION 2.10 Real Property. The Company owns no real property.
SECTION 2.11 Powers of Attorney; Absence of Limitations on
Competition; Guarantees.
Except as set forth in Schedule 2.11, (i) no power of attorney or
similar authorization given by the Company presently is in effect or
outstanding; (ii) no contract or agreement to which the Company is a
party or is bound or to which the Company's properties or assets is
subject limits the freedom of the Company to compete in any line of
business or with any Person; and (iii) the Company is not a party to or
bound by any guarantee of any debt or obligation of any other Person.
SECTION 2.12 Significant Customers. Set forth on Schedule 2.12 is
a true and correct list of the Company's ten largest customers for the
most recent 12-month period ending December 31, 1996, together with the
amount of services attributable to such customers expressed in dollars
and as a percentage of Company's total sales and services for such
period. None of the customers identified on Schedule 2.12 has
terminated, materially reduced or, to the knowledge of Sellers,
threatened to terminate or materially reduce its request for services of
the Company during the period covered by such schedule. All contracts
with customers identified on Schedule 2.12 are profitable contracts.
SECTION 2.13 Governmental Approvals. Except as to applicability of
the Xxxx, Xxxxx Xxxxxx Act (the determination of the applicability of
which is the responsibility of Buyer ) and except as set forth on
Schedule 2.13, no registration or filing with, or consent or approval of
or other action by, any Federal, state or other governmental agency or
instrumentality is or will be necessary for the valid execution,
delivery and performance by Sellers of this Agreement.
SECTION 2.14 Validity, Etc. Except as to applicability of the
Xxxx, Xxxxx Xxxxxx Act (the determination of the applicability of which
is the responsibility of Buyer ) and except as set forth on Schedule
2.14, neither the execution and delivery of this Agreement or the other
Documents, the consummation of the transactions contemplated hereby or
thereby, nor the performance of this Agreement or the other Documents in
compliance with the terms and conditions hereof and thereof by the
Sellers will (i) violate, conflict with or result in any breach of any
trust agreement, Articles of Incorporation, bylaw, judgment, decree,
order, statute or regulation applicable to the Company, (ii) violate,
conflict with or result in a breach, default or termination or give rise
to any right of termination, cancellation or acceleration of the
maturity of any payment date of any of the obligations of the Company or
increase or otherwise materially affect the obligations of the Company
under any law, rule, regulation or any judgment, decree, order,
governmental permit, license or order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation related to the Company's ability to consummate
and perform the transactions contemplated hereby or thereby, except for
such defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained in writing
and provided to the Buyer or will be obtained in writing and provided to
Buyer at or prior to Closing or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company.
SECTION 2.15 Absence of Adverse Change; Conduct of Business.
During the period from the Balance Sheet Date to and including the date
of this Agreement, except as set forth on Schedule 2.15, or except as
permitted and contemplated under this Agreement, the Company has not (i)
except for previously existing bank lines of credit borrowed or agreed
to borrow any material amount of funds or incurred any liability or
obligation of any nature (whether accrued, absolute, contingent or
otherwise), (ii) guaranteed or agreed to guarantee any obligations of
others, (iii) canceled any indebtedness owing to it or any claims that
it might have possessed, waived any material rights of substantial value
or except as to sale of goods in the ordinary course of business, sold,
leased, encumbered, transferred or otherwise disposed of, or agreed to
sell, lease, encumber, or otherwise dispose of its assets or permitted
any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, (iv)
made any capital expenditure over $10,000 or commitment therefor, (v)
declared or paid any dividend (other than the 17.5% pre-tax profit
shareholder bonus for the quarter ending 4/1/97) or made any
distribution on any shares of its capital stock, or redeemed, purchased
or otherwise acquired any shares of its capital stock or any option,
warrant or other right to purchase or acquire any such shares, (vi)
except for previously existing bank lines of credit increased its
indebtedness for borrowed money, or made any loan to any Person, (vii)
written off as uncollectible any notes or accounts receivable, except
write-offs in the ordinary course of business, (viii) made any material
change in any method of accounting or auditing practice, (ix) otherwise
conducted its business or entered into any transaction, except in the
usual and ordinary manner, or (x) agreed, whether or not in writing, to
do any of the foregoing.
SECTION 2.16 Certain Practices. Each Seller individually
represents and warrants as to himself; each Seller individually
represents and warrants, to his knowledge, as to the other Sellers; and
the Sellers represent, jointly and severally, to the knowledge of
Sellers as to the directors, officers and employees of the Company other
than Sellers that, that neither such Seller, the other Sellers nor the
Company's directors, officers or employees other than Sellers have,
directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating
to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; established or
maintained any unlawful or unrecorded fund of corporate monies or other
assets; made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment; or made any bribe, kickback, or other payment of
a similar or comparable nature, whether lawful or not, to any person or
entity, private or public, regardless of form, whether in money or
business, to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already
obtained.
SECTION 2.17 Compliance with Law; Licenses and Permits. Except as
set forth on Schedule 2.17, the Company has, since January 1, 1993,
complied in all material respects with all laws, ordinances, legal
requirements, rules, regulations and orders applicable to it, its
operations, properties, assets, products and services. There are no
facts or circumstances which may result in institution of any
discrimination action, suit, claim or legal or administrative proceeding
or investigation against the Company based upon race, color, religion,
gender, disability or national origin. Except as set forth on Schedule
2.17, there is no existing law, rule, regulation or order, nor, to
Seller's knowledge, any proposed law, rule, regulation or order, whether
Federal, state or local, directly applicable to it which would prohibit
or materially restrict the Buyer from, or otherwise materially adversely
affect the Buyer in, conducting the Business in the manner heretofore
conducted by the Company in any jurisdiction in which the Business is
now conducted. The Company possesses all franchises, permits, licenses,
certificates and consents required from any governmental or regulatory
authority in order for the Company to carry on its business as currently
conducted and to own and operate its properties and assets as now owned
and operated where the failure to possess any such franchise, permit,
license, certificate or consent would have an adverse affect on the
business or properties of the Company. All of such licenses and permits
are set forth on Schedule 2.17.
SECTION 2.18 Employee Benefits.
(a) Set forth on Schedule 2.18 is a list of all pension, profit sharing,
retirement, deferred compensation, stock purchase, stock option,
incentive, bonus, vacation, severance, disability, hospitalization,
medical insurance, life insurance, fringe benefit, welfare and other
employee benefit plans, programs or arrangements pursuant to which the
Company or its ERISA Affiliates provides (directly or indirectly,
individually or jointly through others) benefits or compensation to or
on behalf of employees or former employees of the Company or its ERISA
Affiliates, whether formal or informal, whether or not written
("Employee Plan"). The Sellers have furnished a copy of each Employee
Plan and a copy of any related materials. The Company will maintain the
benefits listed on Schedule 2.18 in full force and effect through the
Effective Date and maintain such benefits so as to allow Buyer at
Buyer's option, to continue such benefits beyond the Effective Date.
Except as set forth on Schedule 2.18, the Buyer shall not have any
obligation or liability of any kind or nature for any compensation or
benefits of any kind or nature to the employees or consultants of the
Company for services rendered prior to the Effective Date.
(b) Each Employee Plan covering any present or former employee of the
Company which is subject to the continuation health coverage
requirements of Section 4980B of the Code or Section 601 of ERISA or any
applicable state law has complied with all such requirements for
continuation coverage.
(c) There are no actions, suits or claims pending (other than routine
claims for benefits) or to the knowledge of Sellers threatened against
or with respect to any Employee Plan or the assets of any Employee Plan.
(d) Each Employee Plan (and the related trust or funding vehicle, if
any) has been administered and maintained in accordance with its terms
and with applicable law. Except as set forth on Schedule 2.18(d), each
Employee Plan which is intended to be qualified under Section 401 of the
Code and each amendment to such plan is subject to a favorable
determination letter from the Internal Revenue Service and each such
plan has at all times been maintained, by its terms and in operation, in
accordance with Section 401 of the Code. The assets of each Employee
Plan which is not funded through the general assets of the Company are
at least equal to the liabilities under such Employee Plan, and all
assets of each Employee Plan are shown on the books and records of such
Employee Plan at fair market value. No Employee Plan has unfunded
liabilities that are not accurately and fully reflected on the Company's
Financial Statement.
(e) Neither the Company nor any of its ERISA Affiliates is or has been
a participant in, or is or has been obligated to maintain or to make
contributions to, a multi-employer plan (within the meaning of ERISA
Section 3(37) and ERISA Section 4001(a)(3)) or an Employee Plan which is
subject to Title IV of ERISA. Neither the Company nor any ERISA
Affiliate has sponsored, contributed to or been obligated under Title I
or IV of ERISA to contribute to a "defined benefit plan" (as defined in
ERISA Section 3(35)). Except as set forth on Schedule 2.18(e), the
Company is not obligated to provide post-retirement medical benefits or
any other unfunded post-retirement welfare benefits to or on behalf of
any persons whatsoever (except the benefits pursuant to the continuation
health coverage requirements under Section 4980B of the Code, ERISA
Section 601, or applicable state law).
(f) Neither the Company nor its ERISA Affiliates is subject to and, to
the knowledge of Sellers, no facts exist which could subject the Company
or any of its ERISA Affiliates to, any liability whatsoever which is
directly or indirectly related to any Employee Plan, including, but not
limited to, liability for benefit payments or related claims, any
liability for any tax or related penalty under the Code, or liability
for any damages or penalties arising under Title I or Title IV of ERISA.
No reportable event under Section 4043 of ERISA has occurred.
(g) Termination of or withdrawal from any Employee Plan immediately
after the Closing would not subject the Buyer to any liability, tax or
penalty whatsoever.
(h) The execution or performance of the transactions contemplated by
this Agreement will not create, accelerate or increase any obligations
under the Employee Plans, including any obligation to make any payment
which would not be deductible as an excess golden parachute payment
under Section 280G of the Code.
(i) All contributions to or under each Employee Plan and all expenses
of each Employee Plan are fully deductible for income tax purposes for
the taxable year for which such contributions are made or such expenses
are paid. All contributions to or under each Employee Plan have been
made when due under the terms of such Employee Plan in accordance with
applicable law.
(j) Neither the Company nor its ERISA Affiliates have entered into any
contract, agreement or arrangement (whether oral or written) under which
the Company or its ERISA Affiliates have assumed any liability relating
to their clients' retirement plans, nor have the Company and/or its
ERISA Affiliates made any verbal representations that the use of any
employees of the Company or its ERISA Affiliates would have no adverse
consequence on such client retirement plans.
(k) For purposes of this Section 2.18, the term "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended, and the
term "ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company is treated as a single
employer under Section 414(b), (c), (m), (o) or (t) of the Code.
SECTION 2.19 Fixed Assets. Schedule 2.19 contains a list of all of
Company's fixed assets, which list is true and complete as to all fixed
assets valued over $5,000 (and, to the extent such list contains items
valued under $5,000, no representation or warranty is made) whether
owned or leased, as of the date reflected in Schedule 2.19. Except as
shown on Schedule 2.19 the Company has good title to all of its fixed
assets, free and clear of all claims, liens, mortgages, charges and
encumbrances. All of the Company's fixed assets, whether owned or
leased, are reasonably adequate and usable for the purposes for which
they are currently used and, ordinary wear and tear excepted, are in
good operating condition and repair and have been properly maintained.
SECTION 2.20 Insurance. The Company is, and will be through the
Effective Date, insured with insurers in respect of its properties,
assets and businesses as set forth on the attached Schedule 2.20.
Schedule 2.20 lists the insurance coverage carried by the Company, which
insurance will remain in full force and effect with respect to all
events occurring prior to the Effective Date. Except as set forth on
Schedule 2.20, the Company (i) has not failed to give any notice or
present any claim under any such policy or binder in due and timely
fashion, (ii) has not received notice of cancellation or non-renewal of
any such policy or binder, (iii) has not received notice of any
threatened or proposed cancellation or non-renewal of any such policy or
binder, and (iv) has not received notice of any insurance premiums which
will be materially increased in the future. There are no outstanding
claims under any such policy as to which the insurer has disclaimed
liability.
SECTION 2.21 Accounts Receivable.
(a) The accounts receivable of the Company shown on the 1996 Financial
Statement or as shall be shown on the Closing Balance Sheet
(collectively the "Accounts Receivable") represent or will represent
genuine accounts arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the
Effective Date, the Accounts Receivable are or will be as of the
Effective Date fully collectable and not subject to counterclaim or set-
off (except to the extent that collectablity thereof may be subject to
or affected by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the
rights of credits generally) within 120 days of the Effective Date
without resort to litigation in an aggregate amount not less than the
aggregate amount at which they are carried on the Closing Balance Sheet,
net of aggregate reserves therefore and net of credits not reflected on
the Closing Balance Sheet, if any, for returns or adjustments thereafter
arising in the ordinary course of business and consistent with past
practice.
(b) Buyer shall cause Company to use all commercially reasonable
efforts consistent with Company's past practices to collect the Accounts
Receivable (which shall not be deemed to require instituting litigation
or using a collection agency). After the Effective Date, the Company
shall be creating new accounts receivable with customers of Company
("New Receivables"). Collections of receivables after the Effective
Date shall be credited first to the Accounts Receivable and then to the
New Receivables in the order that the receivables from such customer
were created unless a customer, to Buyer and Company's knowledge, acting
in good faith, expressly disputes a prior receivable, unless a payment
expressly identifies a specific invoice or unless it is apparent from
the circumstances that the payment is being made against a particular
invoice or invoices.
(c) In the event Buyer asserts an indemnification claim with respect
to a breach of Seller's representations and warranties as to Accounts
Receivable and such claim is agreed to by Sellers or otherwise approved
under the procedures set forth in this Agreement, then Buyer shall cause
Company to assign such receivable to Sellers when and in such amounts
actually paid to Buyer by Sellers or offset from the Deferred Purchase
Price for any indemnification claim under the Documents. In the event
an indemnification claim is asserted with respect to the Accounts
Receivable and such claim is not immediately paid by Sellers (whether
because of the "indemnity basket" or otherwise), then Buyer shall
continue to use all commercially reasonable efforts to collect the
subject Accounts Receivable and any amounts so collected shall be
credited to the prior claim or otherwise accounted for as circumstances
then require and as the parties agree.
SECTION 2.22 Outstanding Contracts. Schedule 2.22 sets forth as of
the date hereof a reasonable summary description of all contracts,
agreements, commitments, licenses and franchises, which involve
obligations or commitments by the Company of $10,000 or more and are not
cancelable by the Company without penalty within 30 days and not
otherwise scheduled in a more specific schedule of this Agreement
(collectively "Contracts"), whether written or oral, relating to the
Company. Sellers have delivered or made available to the Buyer true,
correct and complete copies of all of the Contracts specified on
Schedule 2.22 which are in writing, and such schedule sets forth a
reasonable summary description of all Contracts which are not in
writing. All of the Contracts are in full force and effect and
enforceable in accordance with their terms, except to the extent that
the enforceability thereof may be subject to or affected by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of
creditors generally. Except as set forth on Schedule 2.22 as of the
date hereof, the Company and, to the knowledge of Sellers, each other
party thereto has materially performed all the obligations required to
be performed by it, has received no notice of default and is not in
default (with due notice or lapse of time or both) under any of the
Contracts. The Company has no present expectation or intention of not
fully performing all its obligations under each of the Contracts, and
Sellers have no knowledge of any breach or anticipated breach by the
other party to any of the Contracts to which the Company is a party.
Except as set forth on Schedule 2.22, none of the Contracts has been
terminated; no notice has been given by any party thereto of any alleged
default by any party thereunder; and Sellers have received no notice of
any intention or right of any party to declare another party to any of
the Contracts to be in default and, to the knowledge of Sellers, no
party intends to declare another party to the Contracts in default.
Except as set forth on Schedule 2.22, there exists no actual or, to the
knowledge of Sellers, threatened termination or cancellation or material
limitation of the business relationship of the Company by any party to
any of the Contracts.
SECTION 2.23 Outstanding Leases. Schedule 2.23 sets forth a
description of each agreement by which the Company leases each parcel of
real property (the "Leased Parcels") used in connection with the
Business (collectively, the "Leases"). Sellers have delivered or made
available to the Buyer true, correct and complete copies of all of the
Leases specified on Schedule 2.23. All rents due under the Leases have
been paid. All of the Leases are in full force and effect and
enforceable in accordance with their terms, except to the extent that
the enforceability thereof may be subject to or affected by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws relating to or affecting the rights of
creditors generally. Except as set forth on Schedule 2.23, the Company
and to the knowledge of Sellers, each other party thereto has performed
all the material obligations required to be performed by it, has
received no notice of default and is not in default (with due notice or
lapse of time or both) under any of the Leases.
SECTION 2.24 Intellectual Properties. Schedule 2.24 contains an
accurate and complete list of all domestic and foreign letters patent,
patents, patent applications, patent licenses, software licenses and
know-how licenses, trade names, trademarks, copyrights, unpatented
inventions, service marks, trademark registrations and applications,
service xxxx registrations and applications and copyright registrations
and applications, trade secrets or other confidential proprietary
information owned or used by the Company in the operation of the
Business (collectively the "Intellectual Property"). Except as set
forth on Schedule 2.24 and except for commercial software licensed for
use on personal computers, the Company owns the entire right, title and
interest in and to the Intellectual Property, trade secrets and
technology used in the operation of its business and each item
constituting part of the Intellectual Property and trade secrets and
technology which is owned by the Company has been, to the extent
indicated in Schedule 2.24, duly registered with, filed in or issued by,
as the case may be, the United States Patent and Trademark office or
such other government entities, domestic or foreign as are indicated in
Schedule 2.24 and such registrations, filings and issuances remain in
full force and effect. There have been and are no pending or, to the
knowledge of Sellers, threatened proceedings or litigation or other
adverse claims with respect to the Intellectual Property. Except as
otherwise set forth in Schedule 2.24, there is, to the knowledge of
Sellers, no reasonable basis upon which a claim may be asserted against
the Company for infringement of any domestic or foreign letters patent,
patents, patent applications, patent licenses and know-how licenses,
trade names, trademark registrations and applications, common law
trademarks, service marks, service xxxx registrations or applications
copyrights, copyright registrations or applications, trade secrets or
other confidential proprietary information. To the knowledge of
Sellers, no Person is infringing the Intellectual Property.
SECTION 2.25 Proprietary Information of Third Parties. Except as
disclosed on Schedule 2.25, no third party has claimed or, to the
knowledge of Sellers, has reason to claim that any Person employed by or
consulting with the Company ("Related Person") has (i) violated or may
be violating any of the terms or conditions of such person's employment,
non-competition or non-disclosure agreement with such third party, (ii)
disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party,
or (iii) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. No
third party has requested information from the Company which reasonably
suggests that such a claim might be contemplated. Except as disclosed
on Schedule 2.25, to the knowledge of Sellers, no Related Person has
employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer and, no Related Person
has violated any confidential relationship which such person may have
had with any third party in connection with the development, or sale of
any service of the Company.
SECTION 2.26 Transactions With Affiliates. Except as set forth on
Schedule 2.26, to the knowledge of Sellers, no director, officer or
shareholder of the Company, or member of the family of any such person,
or any corporation, partnership, trust or other entity in which any such
person, or any member of the family of any such person, has a beneficial
interest greater than 5% or is an officer, director, trustee, partner or
holder of any equity interest greater than 5%, is a party to any
transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by,
rental of real or personal property from or otherwise requiring payments
or involving other obligations to any such person or firm.
SECTION 2.27 Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts specifically reflected
or reserved against in the 1996 Financial Statement, or except as set
forth on Schedule 2.27, the Company has no liabilities or obligations of
any nature whatsoever due or to become due, accrued, absolute,
contingent or otherwise of the type required to be reflected in
financial statements in accordance with GAAP, except for liabilities and
obligations incurred since the date thereof in the ordinary course of
business and consistent with past practice and liabilities and
obligations permitted and contemplated under this Agreement. To the
knowledge of Sellers and subject to the exceptions set forth in the
prior sentence, there is no reasonable basis for the assertion against
the Company of any liability or obligation of the type required to be
reflected in Financial Statements in accordance with GAAP, not fully
reflected or reserved against in the Financial Statements.
(b) The Company is not bound by any agreement, or, subject to any
charter or other corporate restriction or any legal requirement which
has a material adverse effect on the business of the Company.
SECTION 2.28 Taxes. Except as set forth on Schedule 2.28, all
federal, state, local and foreign tax returns and tax reports required
to be filed by the Company on or before the date hereof have been timely
filed with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed and all amounts
shown as owing thereon have been paid or accrued in the financial
records of the Company. All taxes (including, without limitation,
income, accumulated earnings, property, sales, use, franchise, value
added, fuel, employees' income withholding and social security taxes)
which have become due or payable or are required to be collected by the
Company or are otherwise attributable to any periods ending on or before
the Effective Date and all interest and penalties thereon, whether
disputed or not, have been paid or will be paid in full or adequately
reflected on the Closing Balance Sheet or the Company's books and
records in accordance with generally accepted accounting principles on,
or prior to or as of the Effective Date. Except as set forth on
Schedule 2.28, all deposits required by law to be made by the Company
with respect to employees' withholding taxes have been duly made, and as
of the Effective Date all such deposits due will have been made in
accordance with past practices. The Company has delivered to the Buyer
true and complete copies of all of Company's state and federal income
tax returns for the fiscal periods ended December 31, 1994 and 1995 and
all reports and results of income tax audits, if any, related thereto.
Except as set forth on Schedule 2.28, no examination of any tax return
of the Company is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of limitations
applicable to any such tax return.
SECTION 2.29 Litigation. Except as set forth on Schedule 2.29,
there is no (i) action, suit, claim, proceeding or investigation pending
or, to the knowledge of Sellers, threatened against the Company (whether
or not such Company is a party or prospective party thereto), at law or
in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding
pending against the Company or (iii) governmental inquiry pending or, to
the knowledge of Sellers, threatened against the Company. The Company
has not received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to
any liability or disadvantage which may be material to the business,
financial condition, operations or property of the Company. There are
no outstanding orders, writs, judgments, injunctions or decrees served
upon the Company by any court, governmental agency or arbitration
tribunal against the Company. To the knowledge of Sellers, there are no
facts or circumstances which may result in institution of any action,
suit, claim or legal, administrative or arbitration proceeding or
investigation against the Company or the transactions contemplated
hereby. The Company is not in default with respect to any order, writ,
injunction or decree known to and applicable to it or served upon it
from any court or of any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign. Except as disclosed on Schedule 2.29, there is no
action or suit by the Company pending or threatened against others.
SECTION 2.30 Environmental Matters.
(a) Compliance. The Company and all Leased Parcels are in compliance
with all applicable laws, rules, regulations, orders, ordinances,
judgments and decrees of all governmental authorities with respect to
all environmental statutes, rules and regulations the absence of
compliance with respect to which would have an adverse affect on
Company. Except as set forth on Schedule 2.30, the Company has not
received notice of, nor do Sellers have knowledge of, any past, present
or future events, conditions, circumstances, activities, practices,
incidents or actions of the Company or the Company's predecessors,
either collectively, individually or severally, which may interfere with
or prevent continued compliance with, or which may give rise to any
common law or legal liability or otherwise form the basis of any claim,
action, suit, proceeding, hearing, or investigation, based on or related
to the disposal, storage, handling, manufacture, processing,
distribution, use, treatment or transport, or the emission, discharge,
release or threatened release into the environment, of any Substance.
As used in this Section 2.30, the term "Substance" or "Substances" shall
mean any pollutant, contaminant, hazardous substance, hazardous
material, hazardous waste or toxic waste, as defined in any presently
enacted federal, state or local statute or any regulation that has been
promulgated pursuant thereto. No part of any of the Leased Parcels has
been listed or proposed for listing on the National Priorities List
established by the United States Environmental Protection Agency, or any
other corresponding list by any state or local authorities.
(b) Environmental Substance Liability. Except as set forth on
Schedule 2.30, no event has occurred or condition exists or operating
practice has been or is being employed that could give rise to liability
on the part of the Company, either at the present time or in the future,
for any losses, liabilities, damages (whether consequential or
otherwise), settlements, penalties, interest, including any such
liability on account of the right of any governmental or private entity
or person, and including closure expenses, costs of assessment,
containment, removal, or response (other than monitoring or
transportation or disposal of materials required to be transported or
disposed of in the ordinary course of business consistent with past
practice) arising under any rule or federal, state, or local statute, or
any regulation that has been promulgated pursuant thereto, or common law
(as all of the same presently exist and are presently construed) as a
result of or in connection with the following (collectively the
"Hazardous Activities"):
(A) the handling, storage, use, transportation or disposal of any
Substances in or near or from the Leased Parcels;
(B) the handling, storage, use, transportation or disposal of any
Substances by the Company or its predecessors which Substances were a
product, by-product or otherwise resulted from the operations conducted
by or on behalf of the Company or its predecessors;
(C) any intentional or unintentional emission, discharge or release of
any Substances in or near or from facilities into or upon the air,
surface water, ground water or land or any disposal, handling,
manufacturing, processing, distribution, use, treatment, or transport of
such Substances in or near or from facilities by or on behalf of the
Company or its predecessors; or
(D) the presence of any toxic or hazardous building materials
(including but not limited to friable asbestos or similar substances) in
any facilities of the Company, including but not limited to the
inclusion of such materials in the exterior and interior walls, floors,
ceilings, tile, insulation or any other portion of building structures.
(c) Environmental Permits. The Company has obtained and holds all
registrations, permits, licenses, and approvals issued by or on behalf
of any federal, state or local governmental body or agency if any
("Environmental Permits") that are required in connection with the
operation by the Company of the Leased Parcels, the discharge or
emission of Substances by the Company from the Leased Parcels or the
generation, treatment, storage, transportation, or disposal of any such
Substances by the Company. Such Environmental Permits, which are
described on Schedule 2.30, are currently effective and reasonably
sufficient for the operation of the Leased Parcels and the business of
the Company as currently conducted and intended by the Company to be
conducted. The Company is in compliance with all terms and conditions
of the Environmental Permits, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in those
laws or provisions or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated
or approved thereunder and applicable to the Company the absence of
compliance therewith would have an adverse effect on the Company.
(d) Deliveries. Seller has delivered to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Seller pertaining to Substances or
Hazardous Activities in, on, or under the Leases Parcels or concerning
compliance by Seller or any other Person for whose conduct they are or
may be held responsible under environmental statutes, rules and
regulations.
SECTION 2.31 Broker's or Finder's Fees. Except as set forth on
Schedule 2.31, no agent, broker, person or firm acting on behalf of
Sellers or the Company is, or will be, entitled to any commission or
broker's or finder's fees from the Sellers or the Company, or from any
person controlling, controlled by or under common control with the
Sellers or the Company, in connection with any of the transactions
contemplated herein.
SECTION 2.32 Inventories. All of the Company's inventory reflected
on the 1996 Financial Statement or thereafter acquired prior to the date
hereof (and not subsequently sold in the ordinary course of business)
consists of items of a quality and quantity saleable in the ordinary
course of the Company's Business (excepting customary waste, scrap and
returns consistent with past practices) as quality goods at prices
having a value at least equal to the amount reflected on the 1996
Financial Statement, except as to obsolete and below standard quality
inventory, the value of which has been written down on the 1996
Financial Statement and on the Company's books of account to realizable
market value. All items of inventory are valued on the 1996 Financial
Statement at the lower of cost or estimated realizable market value, in
accordance with generally accepted accounting principles. The
inventories and supplies for the Business are at reasonably adequate
levels for the continuation of the Business in the ordinary course.
SECTION 2.33 Disclosure. All Documents delivered or to be
delivered by or on behalf of the Sellers in connection with this
Agreement and the transactions contemplated hereby are true, complete
and correct. Neither this Agreement, nor any of the other Documents
contains any untrue statement of a material fact or omits a material
fact necessary to make the statements made by Sellers herein or therein,
in light of the circumstances in which made, not misleading. There is
no fact known to the Sellers which has specific application to the
Company and materially and adversely affects the business or financial
condition of the Company or its properties or assets, which has not been
set forth in the Documents.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As an inducement to the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents
and warrants to the Sellers as follows:
SECTION 3.1 Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Kentucky and is duly qualified to transact business as a
foreign corporation in each jurisdiction in which the failure to so
qualify would have a material adverse impact on the Buyer's ability to
purchase the Common Stock pursuant to the Documents and perform its
obligations under the Documents.
SECTION 3.2 Corporate Power and Authority. The Buyer has the absolute
and unrestricted right and authority to execute, deliver and perform the
Documents. The execution, delivery and performance of the Documents
contemplated hereby and the consummation and performance of the
transactions contemplated hereby and thereby have been duly authorized
and approved by all necessary corporate action of the Buyer. Upon the
Buyer's execution and delivery of the Documents, the Documents will
constitute the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with their terms, subject to
bankruptcy, reorganization, insolvency and other similar laws affecting
the enforcement of creditor's rights in general.
SECTION 3.3 No Conflict. Neither the execution and delivery by the
Buyer the Documents, the consummation by the Buyer of the transactions
contemplated hereby or thereby, nor the performance by the Buyer of the
Documents in compliance with the terms and conditions hereof and thereof
will not (i) violate, conflict with or result in any breach of any trust
agreement, articles of incorporation, bylaw, judgment, decree, order,
statute or regulation applicable to the Buyer, (ii) violate, conflict
with or result in a breach of or default (or give rise to any right of
termination, cancellation or acceleration) under any law, rule or
regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument to which the
Buyer is a party, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer.
SECTION 3.4 Acquisition of Stock for Investment. The Buyer is acquiring
the shares of Common Stock for investment and not with a view toward, or
for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling such shares of Common
Stock. The Buyer agrees that such shares of Common Stock may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act of 1933, as
amended, except pursuant to an exemption from registration available
under such Act. Buyer will not sell, offer to sell or solicit offers to
buy any of the shares of Common Stock in violation of the Securities Act
of 1933 or the securities law of any state. Buyer understands that the
shares of Common Stock have not been registered under federal or any
state's securities laws.
SECTION 3.5 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Buyer is, or will be, entitled to any commission
or broker's or finder's fees from the Buyer, or from any person
controlling, controlled by or under common control with the Buyer, in
connection with any of the transactions contemplated herein.
SECTION 3.6 Governmental Approvals. No registration or filing with, or
consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the
valid execution, delivery and performance by Buyer of this Agreement.
SECTION 3.7 Financial Statements. Buyer has delivered to Sellers true
and complete copies of Buyer's consolidated financial statement for
years ended September 30, 1996 with independent auditor's report. Such
Financial Statements have been prepared in accordance with generally
accepted accounting principles consistently applied and were prepared
from the books and records of Buyer. Such books and records are
complete and correct in all material respects, accurately reflect all
material transactions of Buyer, and have been made available to the
Sellers for examination. Since September 30, 1996, (i) there has been
no material change in the assets, liabilities or financial condition of
Buyer from that reflected in such Financial Statement except for changes
in the ordinary course of business consistent with past practice and
which have not been materially adverse, and (ii) none of the business,
financial conditions, operations or property of Buyer has been
materially adversely affected by any occurrence, individually or in the
aggregate, whether or not insured against.
SECTION 3.8 Buyer's Public Documents. Buyer has delivered to the
Sellers true and complete copies of (i) Buyer's annual report on form
10-K for the year ended September 30, 1996; (ii) Buyer's quarterly
report on form 10-Q for the quarter ended December 31, 1996; (iii)
Buyer's 1996 annual report to shareholders; (iv) Buyer's definitive
proxy statement relating to its 1997 annual shareholders meeting; and
(v) all other filings made by Buyer with the Securities and Exchange
Commissions ("SEC") between February 18, 1997 and the date hereof
(collectively, the SEC Documents).
SECTION 3.9 Absence of the Undisclosed Liabilities.
(a) Except as set forth in the Financial Statements referenced in
Section 3.7 or the SEC Documents, Buyer has no liabilities or
obligations of any nature whatsoever due or to become due, accrued,
absolute, contingent or otherwise of the type required to be reflected
in financial statements in accordance with GAAP, except for liabilities
and obligations incurred since the date thereof in the ordinary course
of business and consistent with past practice and liabilities and
obligations permitted and contemplated under this Agreement which may
have a material adverse effect on the performance by Buyer under the
Documents. To the knowledge of Buyer and subject to the exceptions set
forth in the prior sentence, there is no reasonable basis for the
assertion against Buyer of any liability or obligation of the type
required to be reflected in financial statements in accordance with GAAP
not fully reflected or reserved against in the referenced Financial
Statements or the SEC Documents which may have a material adverse effect
on the performance by Buyer under the Documents..
(b) Buyer is not bound by any agreement, or subject to any charter or
corporate restriction or any legal requirement applicable to it, which
has a material adverse effect on the business of Buyer or which may have
a material adverse effect on the performance by Buyer under the
Documents..
SECTION 3.10 Litigation. There is not (i) action, suit, claim,
proceeding or investigation pending or, to the knowledge or Buyer,
threatened against Buyer (whether or not Buyer is a party or prospective
party thereto), at law or in equity, or before or by any Federal, State,
Municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (ii) arbitration
proceeding pending against Buyer or (iii) governmental inquiry pending
or, to the knowledge of Buyer, threatened against Buyer which may have a
material adverse effect on the performance by Buyer of its obligations
under the Documents. Buyer has not received any opinion or memorandum
or legal advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any liability or disadvantage which may be
material to the business, financial condition, operations or property of
Buyer or performance by Buyer of its obligations under the Documents.
To the knowledge of Buyer, there are no facts or circumstances which may
result in institution of any action, suit, claim or legal,
administrative or arbitration proceeding or investigation against, Buyer
or the transactions contemplated hereby which would materially affect
the valid execution, delivery and performance by Buyer of the Documents.
SECTION 3.11 Disclosure. All Documents delivered or to be delivered by
or on behalf of the Buyer in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct in every
material respect. Neither this Agreement, nor any of the other
Documents contains any untrue statement of a material fact or omits a
material fact necessary to make the statements made by Buyer herein or
therein, in light of the circumstances in which made, not misleading.
There is no fact known to the Buyer which has specific application to
Buyer and may have a material adverse affect on the Buyer's ability to
perform its obligations under the Documents, which has not been set
forth in the Documents.
ARTICLE 4.
COVENANTS AND AGREEMENTS
SECTION 4.1 Cooperation. Each of the parties hereto shall use their
best efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder to the end that
the transactions contemplated hereby will be fully and timely
consummated.
SECTION 4.2 Best Efforts. Sellers and Buyer shall each use their best
efforts to procure upon reasonable terms and conditions all consents and
approvals, completion of all filings, all registrations and
certificates, and satisfaction of all other requirements prescribed by
law which are necessary for the consummation of the transactions
contemplated by this Agreement and the Buyer's ownership and operation
of the Company's Business after the Effective Date. Prior to the
Closing Date, the Sellers will use their best efforts to preserve
Company's relationships with its employees, customers and others having
business relationships with the Company.
SECTION 4.3 Tax Returns. The Company shall cause to be prepared and
timely filed, at its sole expense, all of Company's required tax returns
for all periods ending on or prior to the Effective Date.
SECTION 4.4 Investigations. Sellers shall give Buyer and its employees,
accountants, attorneys and other authorized representatives full access
during all reasonable times to all the premises, properties, books and
records, and furnish Buyer with such financial and operating data,
analyses and other information of any kind respecting Company's business
and properties as Buyer shall from time to time request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with business operations.
SECTION 4.5 Conduct of Business in the Ordinary Course. Sellers shall
cause the Company to conduct its business only in the ordinary course
from the date thereof through Closing. By way of amplification and not
limitation, except as otherwise provided herein, Sellers shall cause the
Company, without the prior written consent of Buyer, not to do any of
the following except as permitted and contemplated by this Agreement:
(i) borrow or agree to borrow any material amount of funds or incur any
liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise), or guarantee or agree to guarantee any
obligations of others, (ii) cancel any indebtedness owing to it or any
claims that it might possess, waive any material rights of substantial
value or sell, lease, encumber, transfer or otherwise dispose of, or
agree to sell, lease, encumber, or otherwise dispose of its assets or
permit any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, (iii)
make any capital expenditure or commitment therefor, (iv) declare or pay
any dividend or make any distribution on any shares of its capital stock
(except as to the 17.5 % per-tax profit bonus for the quarter ending
4/1/97) or redeem, purchase or otherwise acquire any shares of its
capital stock or any option, warrant or other right to purchase or
acquire any such shares, (v) increase its indebtedness for borrowed
money or make any loan to any Person, (vi) write off as uncollectible
any notes or accounts receivable, except write-offs in the ordinary
course of business charged to applicable reserves, (vii) make any
material change in any method of accounting or auditing practice, (viii)
otherwise conduct its business or enter into any transaction, except in
the usual and ordinary manner, or (ix) agree, whether or not in writing,
to do any of the foregoing.
SECTION 4.6 Preservation of Business. Sellers shall cause the Company
to use its best efforts to preserve the possession and control of all of
its assets and Business, to preserve the goodwill of its customers and
others with whom it has business relations, and to do nothing to impair
its ability to keep and preserve its Business as it exists on the date
of this Agreement.
SECTION 4.7 Seller's Notification of Material Changes and Litigation.
Sellers shall provide Buyer with prompt written notice, accompanied by a
reasonably detailed description and analysis, (a) of any material
adverse, or to the knowledge of Sellers, potentially material adverse
change in the condition, earnings or business of Company, (b) of any
event or condition of any character (whether actual or, to the knowledge
of Sellers, threatened) pertaining to the financial condition, business
or, to the knowledge of Sellers, assets of Company that has materially
and adversely affected, or has a substantial possibility of materially
and adversely affecting any of such financial condition, business or
assets, or causing any of such business to be carried on materially less
profitably than prior to the date of this Agreement, and (c) of all
claims, regulatory proceedings and litigation (whether actual or, to the
knowledge of Sellers, threatened and whether or not material) against or
involving Company or (where such actual or threatened claims, regulatory
proceedings or litigation arise in connection with actions taken or
alleged to be taken by any officer, employer or director of Company in
any capacity as an officer, employee or director of Company). Such
adverse or potentially adverse material changes or such claims,
proceedings or litigation shall include, without limitation, any adverse
or potentially adverse material change in or any litigation arising in
connection with any item or matter reported on any schedule, exhibit or
document delivered by Sellers to Buyer in connection with this
Agreement.
SECTION 4.8 Buyer's Notification of Material Changes and Litigation.
Buyer shall provide Sellers with prompt written notice, accompanied by
a reasonably detailed description and analysis, (a) of any material
adverse, or to the knowledge of Buyer, potentially material adverse
change in the condition, earnings or business of Company, (b) of any
event or condition of any character (whether actual or, to the knowledge
of Buyer, threatened) pertaining to the financial condition, business or
assets of Buyer, and (c) of all claims, regulatory proceedings and
litigation (whether actual or, to the knowledge of Buyer, threatened)
against or involving Buyer or (where such actual or threatened claims,
regulatory proceedings or litigation arise in connection with actions
taken or alleged to be taken by any officer, employer or director of
Buyer in any capacity as an officer, employee or director of Buyer), all
in the case that such event has a substantial possibility of materially
and adversely affecting the ability of Buyer to perform its obligations
under the Documents.
SECTION 4.9 Release of any Shareholder Liability for Company Debt.
Schedule 4.9 lists any endorsements, guarantees, or other liability of
any of the Sellers or, as applicable, their wives for debts and
obligations of the Company. From and after the date hereof and
notwithstanding any waiver by Sellers of the condition to Closing
relating to this covenant, the Buyer shall exercise its best efforts to
cause the release of the Sellers and, as applicable, their wives from
any endorsement, guarantee, or other liability (including, without
limitation release of collateral) for the debts and obligations of the
Company and Buyer will be substituted as endorser or guarantor of any
such liability or obligation if and as necessary to achieve such
release. All such releases shall be effective on or prior to Closing.
SECTION 4.10 Access to Information. Until the final maturity date of
the Promissory Notes, Buyer shall furnish the Sellers with copies of all
reports, proxy statements and other communications distributed to its
security holders generally, as well as copies of all other documents
filed with the SEC and copies of all Financial Statements. Buyer agrees
to create an operating committee to meet every 3 months consisting of
Xxxxx Xxxxxxxx, the President of the Company, and other persons
designated by the President of the Company. The President of the
Company will designate the date and location of the meetings. The
membership of Xxxxx Xxxxxxxx on the committee will be for a minimum of
two years and all reasonable expenses of Xx. Xxxxxxxx associated with
attendance at the meeting will be reimbursed by the Company.
ARTICLE 5.
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Sellers pursuant
to Section 1.3 hereof and to consummate the other transactions
contemplated hereby is subject to the satisfaction, on or before the
Closing Date, of the following conditions each of which may be waived by
the Buyer in its sole discretion:
SECTION 5.1 Intra-Company Debt. All indebtedness of the Company and
Sellers to the other and all indebtedness of other directors, officers
and employees of the Company to the Company shall have been repaid in
full and the Sellers shall have delivered to the Buyer a certificate,
dated the Closing Date, to such effect.
SECTION 5.2 Representations, Warranties and Covenants. The
representations and warranties of Sellers herein contained shall be true
in all respects as stated herein, both when made and with the same
effect as though made again as of the Closing Date except to the extent
of changes permitted by the terms of this Agreement or where
specifically applicable to the date as to which made. Sellers shall
have performed all obligations and complied with all covenants required
by this Agreement to be performed or complied with by Sellers prior to
the Closing Date. In addition, Sellers shall have delivered to Buyer
their certificate dated as of the Closing Date, to the effect that,
except as disclosed in the certificate, they do not know of any breach
of any representation or warranty made by Sellers in this Agreement or
any failure to perform any covenant made by the Seller of Sellers where
made jointly and severally herein.
SECTION 5.3 Consents. Except as set forth on Schedule 5.3, all
requisite governmental approvals and consents of third parties
identified on such schedule or otherwise identified by the Sellers as
required to be received to prevent any material license, permit or
agreement relating to the Business from terminating prior to its
scheduled termination, as a result of the consummation of the
transactions contemplated hereby, shall have been obtained.
SECTION 5.4 Employment Agreement. Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx and
Xxxx Xxxxxxx shall each have entered into separate Employment Agreements
with the Company and Buyer in substantially the form attached hereto as
Exhibit B(1) (the "Employment Agreements").
SECTION 5.4.1 Employment Agreement. Xxxxx Xxxxxxxx has entered into an
Employment Agreement with the Company and Buyer in substantially the
form attached hereto as Exhibit B(2)(the "Employment Agreements").
SECTION 5.5 Noncompetition Agreement. Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx,
and Xxxx Xxxxxxx shall each have entered into separate Noncompetition
Agreements with Buyer in substantially the form attached hereto as
Exhibit C(1) (the "Noncompetition Agreements").
SECTION 5.5.1 Noncompetition Agreement. Xxxxx Xxxxxxxx has entered
into a Noncompetition Agreement with Buyer in substantially the form
attached hereto as Exhibit C(2) (the "Noncompetition Agreements").
SECTION 5.5.2 Lease and Contract Termination. Atlantic Properties and
Atlantic Coil Processing, Inc. have terminated the Lease and Contract
entered into on the 20th day of December, 1996.
SECTION 5.5.3 Operating Lease. Atlantic Properties have entered into
an Operating Lease with Company and Buyer in substantially the form
attached hereto as Exhibit D (the "Operating Lease").
SECTION 5.6 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person,
corporation, governmental agency or other entity shall be pending or, to
the knowledge of the Sellers, threatened, before any court or
governmental body (i) to restrain, prohibit, restrict or delay, or to
obtain damages or a discovery order in respect of this Agreement or the
consummation of the transactions contemplated hereby, or (ii) which has
had or may have a materially adverse effect on the condition, financial
or otherwise, or prospects of the Company. No order, decree or judgment
of any court or governmental body shall have been issued restraining,
prohibiting, restricting or delaying, the consummation of the
transactions contemplated by this Agreement. No insolvency proceeding
of any character including without limitation, bankruptcy, receivership,
reorganization, dissolution or arrangement with creditors, voluntary or
involuntary, affecting the Company shall be pending, and the Company
shall not have taken any action in contemplation of, or which would
constitute the basis for, the institution of any such proceedings and
the Sellers shall have delivered to the Buyer a certificate, dated the
Closing Date, to such effect.
SECTION 5.7 Opinion of Counsel to the Seller. The Buyer shall have
received from Xxxxxxx X. Xxxxx, Xx., counsel to Sellers ("Counsel to
Sellers"), an opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyer, and to the following effect:
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of North Carolina. The Company is not
qualified to do business as a foreign corporation in any other state.
To the knowledge of Counsel to Sellers, the nature of the Company's
business does not require Company to be licensed or qualified in any
other jurisdiction where the failure to be so qualified would have a
material adverse affect on the business or properties of the Company.
The Company has the corporate power and authority to own, lease, operate
and hold its properties and to carry on its business as now conducted;
(b) To the knowledge of Counsel to Sellers, (i) each Seller has full
legal power, capacity and authority to execute and deliver the Documents
and to consummate the transactions contemplated thereby; and (ii) the
Documents have been duly and validly executed and delivered by each
Seller and constitute the legal, valid and binding obligation of each
such Seller, enforceable against such Seller in accordance with their
terms subject to bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditor's rights in general
and to general principals of equity (regardless of whether considered in
a proceeding in equity or an action at law);
(c) The Company has authorized capital consisting of 100,000 shares of
common stock, with a par value of one dollar ($1) per share, of which
100,000 shares are issued and outstanding and no shares are held as
treasury stock. All of the outstanding shares of the Company have been
duly authorized and validly issued and are fully paid and nonassessable.
None of the outstanding shares of the Company have been issued in
violation of any preemptive right. To the knowledge of Counsel to
Sellers, there are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale
of any shares of capital stock of the Company, other than as
contemplated by this Agreement;
(d) To the knowledge of Counsel to Sellers, the Company has no
subsidiaries and does not own, directly or indirectly, any capital stock
or other equity or ownership or proprietary interest in any other
corporation, partnership, association, trust, joint venture or other
entity;
(e) Except for the possible application of the Xxxx, Xxxxx Xxxxxx Act,
as to which no opinion will be expressed, no registration or filing
with, or consent or approval of or other action by, any Federal, state
or other governmental agency or instrumentality is or will be necessary
for the valid execution, delivery and performance by Sellers of this
Agreement;
(f) To the knowledge of Counsel to Sellers, except as disclosed on the
Schedules hereto, there is no (i) action, suit, claim, proceeding or
investigation pending or threatened against or affecting the Company
(whether or not such Company is a party or prospective party thereto),
at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding
pending relating to the Company or (iii) governmental inquiry pending or
threatened against or involving the Company, and there is no basis for
any of the foregoing. To the knowledge of Counsel to Sellers, the
Company has not received any opinion or memorandum or legal advice from
legal counsel to the effect that it is exposed, from a legal standpoint,
to any liability or disadvantage which may be material to the business,
prospects, financial condition, operations, property or affairs of the
Company. To the knowledge of Counsel to Sellers, there are no
outstanding orders, writs, judgments, injunctions or decrees served upon
the Company by any court, governmental agency or arbitration tribunal
against the Company. To the knowledge of Counsel to Sellers, there are
no facts or circumstances which may result in institution of any action,
suit, claim or legal, administrative or arbitration proceeding or
investigation against, involving or affecting the Company or the
transactions contemplated hereby. To the knowledge of Counsel to
Sellers, except as disclosed on the Schedules hereto, the Company is not
in default with respect to any order, writ, injunction or decree known
to or served upon it from any court or of any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. To the knowledge of Counsel to
Sellers, except as disclosed on the Schedules hereto, there is no action
or suit by the Company pending or threatened against others;
(g) The Employment Agreements have been duly executed and delivered
by, and constitute the legal, valid and binding obligation of each
Employee thereunder, enforceable against him in accordance with its
terms subject to bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditor's rights in general
and to general principals of equity (regardless of whether considered in
a proceeding in equity or an action at law);
(h) The Noncompetition Agreements have been duly executed and
delivered by, and constitute the legal, valid and binding obligation of
each Seller thereunder, enforceable against him in accordance with its
terms subject to bankruptcy, reorganization, insolvency and other
similar laws affecting the enforcement of creditor's rights in general
and to general principals of equity (regardless of whether considered in
a proceeding in equity or an action at law); and
(i) The Lease and Contract Termination and the Operating Lease have
been duly executed and delivered by, and constitute the legal valid and
binding obligation of Atlantic Properties, enforceable in accordance
with its terms, subject to bankruptcy, reorganization, insolvency and
other similar laws affecting the enforcement of creditor's rights in
general and to general principals of equity (regardless of whether
considered in a proceeding in equity or an action at law); and
(j) The execution and delivery of the Documents, the consummation of
the transactions contemplated hereby and thereby, and the performance of
the Documents in compliance with the terms and conditions hereof and
thereof by the Sellers will not, to the knowledge of Counsel to Sellers,
(i) violate, conflict with or result in any breach of any trust
agreement, articles of incorporation, bylaw, judgment, decree, order,
statute or regulation applicable to the Company, (ii) violate, conflict
with or result in a breach, default or termination or give rise to any
right of termination, cancellation or acceleration of the maturity of
any payment date of any of the obligations of the Company or increase or
otherwise affect the obligations of the Company under any law, rule,
regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument or obligation
related to the Company or to the Seller's ability to consummate the
transactions contemplated hereby or thereby, except for such defaults
(or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained in writing and provided
to the Buyer, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company.
SECTION 5.8 Investigation Satisfactory. The Buyer shall be satisfied
in all respects with the results of its investigation of the properties,
customers, prospects and affairs of the Sellers and the Company.
SECTION 5.9 Closing Documents. The Sellers shall have delivered all
of the resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 5.10 Approval of the Buyer and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be
delivered by, or at the behest or direction of, the Sellers hereunder or
incident to their performance hereunder, and all other related matters,
shall be reasonably satisfactory as to form and substance to the Buyer
and its counsel.
SECTION 5.11 Release of Claims. The Claims set forth on Schedule 2.1
shall have been released in full to Buyer's satisfaction.
ARTICLE 6.
CONDITIONS TO THE SELLERS' OBLIGATIONS
The obligation of the Sellers to transfer the Common Stock to the Buyer
and to consummate the other transactions contemplated hereby is subject
to the satisfaction, on or before the Closing Date, of the following
conditions, each of which may be waived by the Sellers in their sole
discretion:
SECTION 6.1 Representations, Warranties and Covenants. The
representations and warranties of Buyer herein contained shall be true
in all respects as stated herein, both when made and with the same
effect as though made again as of the Closing Date except to the extent
of changes permitted by the terms of this Agreement or except for
breaches of representations and warranties which would not have a
material adverse effect on the Buyer's ability to pay its obligations
under this Agreement. Buyer shall have performed all obligations and
complied with all covenants required by this Agreement to be performed
or complied with by Buyer prior to the Closing Date. In addition, Buyer
shall have delivered to Sellers its certificate dated as of the Closing
Date and signed by one of its officers, to the effect that, except as
disclosed in the certificate, he does not know of any breach of any
representation or warranty made by Buyer in this Agreement, or of any
failure to perform any covenant made by Buyer herein or to satisfy any
condition to Buyer's obligations to effect the transactions contemplated
by this Agreement which would have a material adverse effect on the
Buyer's ability to pay its obligations under this Agreement.
SECTION 6.2 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person,
corporation, governmental agency or other entity shall be pending or, to
the knowledge of the parties to this Agreement, threatened, before any
court or governmental body to restrain, prohibit, restrict or delay, or
to obtain damages or a discovery order in respect of this Agreement or
the consummation of the transactions contemplated hereby. No order,
decree or judgment of any court or governmental body shall have been
issued restraining, prohibiting, restricting or delaying, the
consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation,
bankruptcy, receivership, reorganization, dissolution or arrangement
with creditors, voluntary or involuntary, affecting the Buyer shall be
pending, and the Buyer shall not have taken any action in contemplation
of, or which would constitute the basis for, the institution of any such
proceedings and Buyer shall have delivered to Sellers a certificate,
dated Closing Date, to such effect.
SECTION 6.3 Closing Payments. Buyer shall have delivered the closing
payments required by Section 1.3(a).
SECTION 6.4 Promissory Note. Buyer shall have duly executed and
delivered the Promissory Note in the form set forth in Exhibit A.
SECTION 6.5 Employment Agreements. The Company and Buyer shall have
entered into the Employment Agreements with Xxxxxx Xxxxxxx, Xxxx
Xxxxxxxx and Xxxx Xxxxxxx in the form set forth in Exhibit B(1).
SECTION 6.6 Employment Agreements. Company and Buyer shall have
entered into the Employment Agreement with Xxxxx Xxxxxxxx in the form
attached hereto as Exhibit B(2).
SECTION 6.7 Noncompetition Agreements. Buyer shall have entered into the
Noncompetition Agreement with Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxx
Xxxxxxx in substantially the form attached hereto as Exhibit C(1).
SECTION 6.8 Noncompetition Agreements. Buyer shall have entered into
the Noncompetition Agreement with Xxxxx Xxxxxxxx in substantially the
form attached hereto as Exhibit C(2).
SECTION 6.9 Operating Lease. The Company and Buyer shall have entered
into the Operating Lease with Atlantic Properties in substantially the
form attached hereto as Exhibit D.
SECTION 6.10 Release of Sellers from Guarantee of Company Debt. Buyer
shall have obtained the release of Sellers from guarantee of Company
debt as required by Section 4.9.
SECTION 6.11 Opinion of Counsel to Buyer. The Sellers shall have
received from Xxxx Xxxxxxx, counsel to Buyer, an opinion dated as of the
Closing Date, in form and substance reasonably satisfactory to Sellers,
and to the following effect:
(a) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Kentucky and is duly
qualified to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material
adverse impact on the Buyer's ability to pay its obligations under this
Agreement;
(b) The Buyer has the corporate power and authority to execute,
deliver and perform the Agreement and the other Documents. The
execution, delivery and performance of the Agreement and the other
Documents and the consummation of the transactions contemplated hereby
and thereby have been duly and validly executed and delivered by Buyer
and constitute the legal, valid and binding obligations of Buyer
enforceable against Buyer in accordance with their terms subject to
bankruptcy, reorganization, insolvency and other similar laws affecting
the enforcement of creditor's rights in general and to general
principals of equity (regardless of whether considered in a proceeding
in equity or an action at law); and
(c) The execution and delivery of the Agreement and the other
Documents, the consummation of the transactions contemplated hereby and
thereby, and the performance of the Agreement and such other agreements
in compliance with the terms and conditions hereof and thereof by the
Buyer will not (i) violate, conflict with or result in any breach of any
trust agreement, articles of incorporation, bylaw, judgment, decree,
order, statute or regulation applicable to the Buyer, (ii) violate,
conflict with or result in a breach of or default (or give rise to any
right of termination, cancellation or acceleration) under any law, rule
or regulation or any judgment, decree, order, governmental permit,
license or order or any of the terms, conditions or provisions of any
mortgage, indenture, note, license, agreement or other instrument to
which the Buyer is a party, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer.
(d) No registration or filing with, or consent or approval or other
action by, any Federal, State or other governmental agency or
instrumentally is or will be necessary for the valid execution, delivery
and performance by Buyer of the Documents.
SECTION 6.12 Closing Documents. The Buyer shall have delivered all of
the resolutions, certificates, documents and instruments required by
this Agreement.
SECTION 6.13 Approval of the Sellers and Their Counsel. All actions,
proceedings, consents, instruments and documents required to be
delivered by, or at the behest or direction of, the Buyer hereunder or
incident to its performance hereunder, and all other related matters,
shall be reasonably satisfactory as to form and substance to the Sellers
and their counsel.
ARTICLE 7
THE CLOSING AND CERTAIN CLOSING DELIVERIES
SECTION 7.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction or waiver of the conditions contained in this
Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx X.
Xxxxx, Xx., on April 1, 1997 or on such other date and time as may be
mutually agreed upon by the parties prior to April 1, 1997 (the "Closing
Date"). The transactions contemplated by this Agreement shall be
effective as of the commencement of business (the "Effective Time") on
April 1, 1997 (the "Effective Date").
SECTION 7.2 Deliveries by the Sellers. At the Closing, the Sellers will
deliver or cause the Company to deliver to the Buyer the following:
(a) Stock certificates representing all of the issued and outstanding
shares of Common Stock owned by the Sellers duly endorsed in blank or
duly executed instruments of transfer and any other documents that are
necessary to transfer to the Buyer good and title to all issued and
outstanding shares of Common Stock;
(b) The stock books, stock ledgers, minute books, and other corporate
records of the Company;
(c) Resignations dated the Closing Date of all of the directors and
officers of the Company as designated by the Buyer;
(d) All required consents of third parties to the sale conveyance,
transfer, assignment and delivery of the Common Stock of the Company
hereunder;
(e) A certificate of the Secretary of the Company certifying as of the
Closing Date (i) a true, correct, and complete copy of the Articles of
Incorporation of the Company and all amendments thereto as in effect on
the Closing Date; (ii) a true, correct, and complete copy of the bylaws
of the Company and all amendments thereto as in effect on the Closing
Date; and (iii) Certificate of Existence from the North Carolina
Secretary of State;
(f) The certificate of the Sellers required by Sections 5.2 and 5.6;
(g) The affidavit of each Seller certifying as to his non-foreign
status in accordance with Section 1445(b)(2) of the Code;
(h) The Employment Agreements required by Section 5.4 and 5.4.1 above;
(i) The Noncompetition Agreements required by Section 5.5 and 5.5.1
above;
(j) The Lease and Contract Termination required by Section 5.5.2
above;
(k) The Operating Lease required by Section 5.5.3 above;
(l) The Opinion of Sellers' Counsel required by Section 5.7 above;
(m) A Release from each Seller which releases the Company from any and
all claims, known or unknown, contingent or direct, which he may have
against the Company as of the Closing Date, other than claims arising
under this Agreement and the other Documents and the transactions
contemplated hereby;
(n) A certificate to the effect that the Lease and Contract entered
into the 20th day of December 1996 between Atlantic Properties, a North
Carolina partnership, and Atlantic Coil Processing, Inc., a North
Carolina Corporation, has been terminated by mutual agreement effective
4/1/97.
(o) All other documents, instruments and writings required to be
delivered by the Sellers at or prior to the Closing Date pursuant to
this Agreement or the other Documents or otherwise required in
connection herewith.
SECTION 7.3 Deliveries by the Buyer. At the Closing, the Buyer will
deliver the following to or for the account of Sellers:
(a) The Closing Payments required by Section 1.3(a) above;
(b) The Promissory Note required by Section 1.3(b);
(c) The Employment Agreements required by Section 5.4 and 5.4.1;
the Noncompetition Agreements required by Section 5.5 and 5.5.1 above;
(e) The Operating Lease required by Section 5.5.3;
(f) The Release of Sellers from guarantee of Company Debt as required
by Section 4.9;
(g) The Opinion of Buyer's Counsel required by Section 5.7 above;
(h) A certificate of an officer of the Buyer certifying as of the
Closing Date (i) a true, correct, and complete copy of the Articles of
Incorporation of the Buyer and all amendments thereto as in effect on
the Closing Date; (ii) a true, correct, and complete copy of the bylaws
of the Buyer and all amendments thereto as in effect on the Closing
Date; (iii) a true, correct, and complete copy of the resolutions
approved and adopted by the Board of Directors of the Buyer authorizing
the transactions contemplated herein; (iv) Certificate of Existence from
the Kentucky Secretary of State; (v) the incumbency of the duly
authorized officers of the Buyer; and (vi) the certifications required
by Sections 6.1 and 6.2;
(i) All other documents, instruments and writings required to be
delivered by the Buyer at or prior to the Closing Date pursuant to this
Agreement or the other Documents or otherwise required in connection
herewith.
ARTICLE 8
TERMINATION
This Agreement may be terminated at any time before the Closing Date:
SECTION 8.1 Date Certain. By Buyer or Sellers, if for any reason the
transactions contemplated by this Agreement have not been consummated by
not later than May 8, 1997.
SECTION 8.2 Mutual Consent. By Buyer and Sellers, if for any reason
consummation of the transactions contemplated by this Agreement is
inadvisable in the opinions of both Buyer and Sellers.
SECTION 8.3 Breaches. Buyer may, in addition to other remedies which
may be available, upon prior written notice, terminate this Agreement in
the event either Seller materially breaches any representation, warranty
or covenant in this Agreement or upon the failure and nonwaiver of any
condition precedent set out in Article 5 unless within ten (10) days
after the written notice from the Buyer, such Seller shall have cured
such breach or failure to the reasonable satisfaction of Buyer. Sellers
may, in addition to other remedies which may be available, upon prior
written notice, terminate this Agreement in the event Buyer materially
breaches any representation, warranty or covenant in this Agreement or
upon the failure and nonwaiver of any condition precedent set out in
Article 6 unless within ten (10) days after the written notice from
Sellers, Buyer shall have cured such breach or failure to the reasonable
satisfaction of Sellers. Additionally, Buyer shall be in default and
breach of this Agreement upon default or breach by Buyer or Company, as
the context permits, under the terms of the Promissory Note dated April
1, 1997 by Buyer as Maker to Sellers; the Employment Agreements dated
effective April 1, 1997 between Company, Buyer and the respective
Sellers; the Noncompetition Agreements dated effective April 1, 1997 by
and between Buyer and the respective Sellers or the Operating Lease
dated effective April 1, 1997 by and between Company, Buyer and the
Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein or, in the absence of a cure period therein, within
thirty (30) days after written notice to Buyer and Company.
ARTICLE 9
SURVIVAL; INDEMNIFICATION AND OFFSET
SECTION 9.1 Survival. All representations and warranties in this
Agreement and the other Documents shall survive the Closing of the
purchase of the Common Stock contemplated hereby for a period of two
years and all such representations and warranties shall expire on the
second anniversary of the Closing Date, except that (a) claims, if any,
asserted in writing prior to such second anniversary identified as a
claim for indemnification pursuant to this Article shall survive until
finally resolved and satisfied in full, and (b) tax or environmental
claims arising from a breach of Sections 2.28 and 2.30, respectively,
shall survive for the full period of the applicable statute of
limitations, and until finally resolved and satisfied in full if
asserted on or prior to the expiration of any such period.
SECTION 9.2 Indemnification by the Sellers. Subject to the terms
herein, the Sellers shall indemnify, defend, and hold the Company and
the Buyer and their successors and assigns (the "Sellers' Indemnitees")
harmless (which indemnification shall be several with regard to
individual representations and warranties and joint and several with
regard to joint and several representations and warranties) from,
against and with respect to any claim, liability, obligation, loss,
damage, assessment, judgment, cost and expense of any kind or character
(the "Damages"), arising out of or attributable to:
(a) Any breach of any representation or warranty of the Sellers
contained in this Agreement;
(b) Any failure by the Sellers to perform or observe, or to have
performed or observed, in full, any agreement to be performed or
observed by any of them under this Agreement;
(c) Any additional tax liability for examinations of any tax returns
of the Company in progress as of the Effective Date.
(d) Any taxes due or assessed against the Company for periods ending
on or prior to the Effective Date.
Provided, however, Seller's Indemnities shall not be entitled to
indemnification hereunder until Damages in total exceed the Basket
Amount and then only to the extent of aggregate damages in excess of
such Basket Amount.
Any obligation of any Seller to indemnify Seller's Indemnitees shall in
no event exceed the amount of the Purchase Price paid to such Seller.
In determining the existence and amount of any indemnification liability
under this Agreement by the Sellers, the amount of any allowable
deductions, credits or other tax benefits, whether allowable in the year
in which such damages incurred or some prior or subsequent year (not
closed by Agreement or by operation of law) resulting from such
liability and/or the amount of any insurance applicable to any such
liability, shall be taken into account or offset against the amount of
such liability (after deducting the costs and expenses involved).
SECTION 9.3 Notice to Sellers, Etc. If any of the matters as to which
the Sellers' Indemnitees are entitled to receive indemnification under
Section 9.2 should entail litigation with or claims asserted by parties
other than the Sellers, the Sellers shall be given prompt notice thereof
and shall have the right, at their expense, to control such claim or
litigation upon prompt notice to Buyer of their election to do so. To
the extent requested by the Sellers, the Buyer, at its expense, shall
cooperate with and assist the Sellers, in connection with such claim or
litigation. Buyer shall have the right to appoint single counsel to
consult with and remain advised by the Sellers in connection with such
claim or litigation. The Sellers shall have final authority to
determine all matters in connection with such claim or litigation;
provided, however, that the Sellers shall not settle any third party
claim without the consent of the Buyer, which shall not be unreasonably
denied or delayed.
SECTION 9.4 Indemnification by the Buyer. The Buyer shall indemnify,
defend, and hold the Sellers and their heirs, executors, and legal
representatives (the "Buyer's Indemnitees") harmless from, against and
with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost and expense of any kind or character (the
"Damages"), arising out of or attributable to:
(a) Any breach of any representation or warranty of the Buyer
contained in this Agreement;
(b) Any failure by the Buyer to perform or observe, or to have
performed or observed, in full, any agreement or condition to be
performed or observed by it under any of the Documents;
(c) Seller's and, as applicable Seller's wives', personal guarantees
of Company debt.
(d) The operation of the Business subsequent to the Closing Date.
Provided, however, Buyer's Indemnitees shall not be entitled to
indemnification hereunder until Damages in total exceed $10,000 and then
only to the extent of aggregate damages in excess of $10,000.
SECTION 9.5 Notice to the Buyer, Etc. If any of the matters as to which
the Buyer's Indemnitees are entitled to receive indemnification under
Section 9.4 should entail litigation with or claims asserted by parties
other than the Buyer, the Buyer shall be given prompt notice thereof and
shall have the right, at its expense, to control such claim or
litigation upon prompt notice to Sellers of its election to do so. To
the extent requested by the Buyer, the Sellers, at their expense, shall
cooperate with and assist the Buyer, in connection with such claim or
litigation. Sellers shall have the right to appoint single counsel to
consult with and remain advised by the Buyer in connection with such
claim or litigation. The Buyer shall have final authority to determine
all matters in connection with such claim or litigation; provided,
however, that the Buyer shall not settle any third party claim without
the consent of the Sellers, which shall not be unreasonably denied or
delayed.
SECTION 9.6 Survival of Indemnification. The obligations to indemnify
and hold harmless pursuant to this Article 9 shall survive the Closing
of the purchase of the Common Stock contemplated hereby for a period of
two years, notwithstanding any investigation at any time made by or on
behalf of any party, except that (a) claims, if any, asserted in writing
prior to such second anniversary identified as a claim for
indemnification pursuant to this Article 9 shall survive until finally
resolved and satisfied in full, and (b) tax or environmental claims
arising from a breach of Sections 2.28 and 2.30, respectively, shall
survive for the full period of the applicable statute of limitations,
and until finally resolved and satisfied in full if asserted on or prior
to the expiration of any such period.
SECTION 9.7 Offset and Indemnity "Basket".. Each Seller acknowledges
and agrees that the Buyer shall be entitled to offset any indemnity
claim under Section 9.2 against any payment due to such Seller under
Section 1.3 hereof, at Buyer's sole option, to the extent and under the
following conditions:
(a) As soon as practicable but within thirty (30) days after the
Closing Date, Company shall cause Xxxxx & Xxxxxxx, LLP, an independent
accounting firm, to prepare a balance sheet of the Company immediately
prior to the Effective Time (the "Closing Balance Sheet") setting forth
the Net Shareholders' Equity of the Company using accrual accounting and
in conformance with generally accepted accounting principles (the "Net
Shareholders' Equity") to be completed within 30 days of engagement. A
copy of the Closing Balance Sheet shall be promptly furnished to Buyer
and Sellers within 60 days of the Closing Date. For purposes of this
Section , "Net Shareholders' Equity" shall mean the net shareholder
equity at the Closing Date determined in accordance with generally
accepted accounting principles applied on a consistent basis.
(b) Buyer shall have the right to offset up to $500,000 of the
Deferred Purchase Price against claims which may accrue to Buyer under
the terms of this Agreement which, in the aggregate, exceed the amount
equal to (i) $50,000 plus (ii) an amount, if any, up to $100,000 by
which Net Shareholders' Equity exceeds $1,200,000 as of the Closing Date
("Basket Amount"), with Buyer entitled to recover for any such claims
only for and to the extent exceeding such amount.
(c) For indemnity claims which in the cumulative do not exceed Basket
Amount, Buyer shall be required to provide a certification executed by
an officer of the Buyer certifying that (1) the indemnity claim is
valid, (2) the Buyer can substantiate the indemnity claim, and (3) said
substantiation has been provided to the Sellers at least 10 days prior
to the certification.
(d) Upon the occurrence of an indemnity claim being presented which,
after adding it to all prior certified Section 9.7(c) indemnity claims,
would exceed the Basket Amount, in order to have such indemnity claim
offset from the Deferred Purchase Price, Buyer must (A) provide a
certification executed by an officer of the Buyer certifying that (1)
the indemnity claim is valid, (2) the Buyer can substantiate the
indemnity claim, and (3) said substantiation has been provided to the
Sellers under Section 10.7 at least 10 days prior to the certification
and (B) unless the Sellers agree to the indemnity claim in writing,
utilize the Section 10.12 arbitration procedure and obtain a decision in
Buyer's favor from the arbitrator.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Knowledge of Sellers. Where any representation or
warranty contained in this Agreement is expressly qualified by reference
to the knowledge of Sellers, each Seller confirms that the
representation or warranty is correct to his best knowledge and that he
has made due and diligent inquiry of the Company's President, Vice
President and Treasurer as to the matters that are the subject of such
representations and warranties.
SECTION 10.2 Knowledge of Buyer. Where any representation or
warranty contained in this Agreement is expressly qualified by reference
to the knowledge of Buyer, Buyer confirms that it has made due and
diligent inquiry of its President as to the matters that are the subject
of such representations and warranties.
SECTION 10.3 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or
agency thereof.
SECTION 10.4 "Balance Sheet Date" Defined. "Balance Sheet Date"
shall mean December 31, 1996.
SECTION 10.5 "1996 Financial Statement" Defined. "1996 Financial
Statement" shall mean the Company's Financial Statement for Years Ended
December 31, 1996 and 1995 with Independent Auditor's Report.
SECTION 10.6 Knowledge of Sellers' Counsel. Where any opinion of
Sellers' counsel contained in this Agreement is stated to be based upon
knowledge, the following definition shall apply: the term "to knowledge
of Seller's counsel" means counsel reasonably believes that opinion,
representation or warranty to be true, has no actual knowledge or notice
that such opinion, representation or warranty is inaccurate or
incomplete, has made inquiry of Sellers as to the accuracy and
completeness of such opinion, representation or warranty and has relied
upon Sellers' assurance of accuracy and completeness of such opinion,
representation or warranty, but has no knowledge of any facts or
circumstances which would render reliance thereon unjustified without
further inquiry.
SECTION 10.7 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Buyer:
Xxxx Xxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax No: (000) 000-0000
With a copy to:
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX l 40245
Attn: Xxxx Xxxxxxx
Fax No: (000) 000-0000
If to Sellers:
Xxxx Xxxxxxx
Xxxx Xxxxxxxx
X. Xxxxxx Xxxxxxx, III
c/o Atlantic Coil Processing, Inc.
Personal & Confidential
X.X. Xxx 0000
Xxxxxxx, XX 00000
Fax No: (000) 000-0000
Xxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
With a copy to:
Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 00000
Xxxxxxx, XX 00000
Fax No: (000) 000-0000
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time that receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent. The address of any party
herein may be changed at any time by written notice to the parties.
SECTION 10.7 Entire Agreement. This Agreement and the other
Documents embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede
all prior oral or written agreements and understandings relating to the
subject matter hereof. No statement, representation, warranty, covenant
or agreement of any kind not expressly set forth in the other Documents
shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.
SECTION 10.8 Modifications and Amendments. The terms and
provisions of this Agreement may be modified or amended only by written
agreement executed by all parties hereto.
SECTION 10.9 Assignment/Binding Effect. Neither this Agreement,
nor any right hereunder, may be assigned by any of the parties hereto
without the prior written consent of the other parties. This Agreement
shall be binding upon, and inure to the benefit of, the parties hereto
and their respective heirs, personal representatives, successors and
permitted assigns.
SECTION 10.10 Parties in Interest. Nothing in this Agreement,
express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Nothing in this Agreement shall be construed to create any
rights or obligations except among the parties hereto, and no person or
entity shall be regarded as a third-party beneficiary of this Agreement.
SECTION 10.11 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance
with and governed by the internal laws of the State of North Carolina
without giving effect to the conflict of law principles thereof.
SECTION 10.12 Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be
finally settled by arbitration in accordance with the Commercial Rules
of the American Arbitration Association by a qualified arbitrator. The
Sellers, jointly, and the Buyer shall each choose and pay for an
American Arbitration arbitrator who will thereupon agree upon a
qualified arbitrator to decide the dispute. If either the Sellers or
the Buyer fails to choose an arbitrator within 30 days after notice of
commencement of arbitration or if the two arbitrators fail to choose a
third arbitrator within 30 days after their appointment, the American
Arbitration Association shall, upon the request of any party to the
dispute or difference, appoint the arbitrator or arbitrators to
constitute or complete the panel as the case may be. Arbitration
proceedings hereunder may be initiated by either the Seller, jointly, or
the Buyer making a written request to the American Arbitration
Association, together with any appropriate filing fee, at the office of
the American Arbitration Association in Charlotte, North Carolina. All
arbitration proceedings shall be held in Raleigh, North Carolina. Any
order or determination of the arbitral tribunal shall be final and
binding upon the parties to the arbitration and may be entered in any
court having jurisdiction.
SECTION 10.13 Severability. In the event that any arbitral tribunal
of competent jurisdiction shall finally determine that any provision, or
any portion thereof, contained in this Agreement shall be void or
unenforceable in any respect, then such provision shall be deemed
limited to the extent that such arbitral tribunal determines it
enforceable, and as so limited shall remain in full force and effect.
In the event that such arbitral tribunal shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining
provisions of this Agreement shall nevertheless remain in full force and
effect.
SECTION 10.14 Interpretation. The parties hereto acknowledge and
agree that: (i) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement, and (ii) the terms and
provisions of this Agreement shall be construed fairly as to all parties
hereto and not in favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.
SECTION 10.15 Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of
reference only and shall in no way modify, or affect, or be considered
in construing or interpreting the meaning or construction of any of the
terms or provisions hereof.
SECTION 10.16 Exhibits and Schedules. All Exhibits and Schedules
attached hereto and/or referenced herein are incorporated herein. All
disclosures on any Schedules are deemed disclosures for purposes of all
Schedules notwithstanding the absence of express reference language or,
at times, the inclusion of express reference language.
SECTION 10.17 Reliance. The parties hereto agree that,
notwithstanding any right of any party to this Agreement to investigate
the affairs of any other party to this Agreement, the party having such
right to investigate shall have the right to rely fully upon the
representations and warranties of the other party expressly contained
herein.
SECTION 10.18 Expenses. Except as otherwise set forth hereinafter,
each party shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party)
incurred in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby
are consummated. Notwithstanding the foregoing, Company shall pay up to
$25,000 of Sellers' legal, accounting and professional expenses
attributable to the transactions contemplated hereunder for services
rendered or expenses incurred on or after February 8, 1997; the Sellers
shall be responsible for any amount of such costs and expenses in excess
of $25,000; and, without limitation, the parties hereto acknowledge that
Company's customary audit fees and costs (including those relating to
the 1996 Financial Statements and the Closing Balance Sheet) shall not
be included in the calculation of the referenced $25,000 and shall be
paid by Company.
SECTION 10.19 Gender. All pronouns and any variation thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or
plural as the identity of the person or entity or the context may
require.
SECTION 10.20 Publicity. Except by the mutual agreement between the
Sellers and Buyer, no party shall issue any press release or otherwise
make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement except as may be required
by law.
SECTION 10.21 Counterparts. This Agreement may be executed in one
or more counterparts, and by different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[Remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the Buyer has caused this Agreement to be executed
by its duly authorized officer and each Seller has executed this
Agreement all as of the day and year first above written.
BUYER:
STEEL TECHNOLOGIES INC.
By: ______________________________
Xxxx Xxx
Title: President
SELLERS:
___________________________________
Xxxxx Xxxxxxxx
Xxxxxx Xxxxxxx, III
___________________________________
Xxxx Xxxxxxxx
___________________________________
Xxxx Xxxxxxx
EXHIBIT A
NONNEGOTIABLE PROMISSORY NOTE
$3,625,000 April 1, 1997
FOR VALUE RECEIVED, Steel Technologies Inc., a Kentucky corporation
("Maker"), hereby promises to pay the total principal sum of Three
Million Six Hundred Twenty-Five Thousand DOLLARS ($3,625,000.00) to
Xxxxxxx X. Xxxxx, Xx., Attorney at Law 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx Xxxxxxxx 00000 (or such other agent and/or such other
place as the legal holders hereof may designate in writing) as agent for
Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxx Xxxxxxx,
("Payees"). Principal and interest are payable in lawful money of the
United States by wire transfer, certified checks or common stock of
Steel Technologies Inc. (hereinafter "Stock") subject to the below
stated terms and provisions.
Principal of $1,812,500 and all accrued interest, or the equivalent sum
in Stock (subject to the below stated terms and provisions)or any
combination thereof, shall be due and payable on April 1, 1998. The
remaining owed principal of $1,812,500 and all accrued interest, or the
equivalent sum in Stock (subject to the below stated terms and
provisions)or any combination thereof, shall be due and payable in full
on April 1, 1999. The unpaid principal amount of this Note shall bear
interest at 7% per annum (the "Interest Rate").
Stock which may be substituted for all or a portion of any due and
payable principal and accrued interest shall be valued at the closing
price of Steel Technologies Inc. common stock, STTX on the NASDAQ stock
market on the trading day before the Stock is provided to Payees. Maker,
as a method of payment for the Promissory Note has the option of making
payments on the due dates in the form of cash or common stock of Steel
Technologies Inc. at its discretion. Specifically,. Maker reserves the
right to exercise its option for payment to the Payees in either form of
cash or stock equivalent. Maker covenants and agrees that it will give
Payees reasonable advance notice of its intention to make any payment of
the Promissory Note in common stock and will deliver such common stock
to the respective Payees as directed by Payees. The Payees acknowledge
and agree that all shares, if any, of Steel Technologies common stock
issued as payment (or partial payment) for the Promissory Note will not,
on the date of delivery thereof, have been registered under the
Securities Act of 1993, as amended (the "Securities Act"), or any state
securities laws, and will constitute "restricted securities" within the
meaning of Rule 144 under the Act. The Payees further acknowledge and
agree that each certificate evidencing such shares shall bear a legend
referring to the restrictions on resale imposed by the applicable
federal securities laws.
Maker covenants and agrees that it will file, immediately
following each delivery, if any, of shares of common stock in payment
for the Promissory Note, and use its best efforts to obtain the prompt
effectiveness of, a registration statement under the Securities Act to
register for public resale all of such shares, so that such shares may
be offered and sold by or for the account of the respective Payees, from
time to time as market conditions permit, on the Nasdaq Stock Market or
otherwise, at prices and on terms then prevailing or in negotiated
transactions. Maker will give Payees Notice and opinion of counsel when
and that the shares may be traded. Maker will maintain the
effectiveness of such registration statements, if any, until such time
as the Steel Technologies common stock may be sold by the Payees
pursuant to the terms and conditions of Rule 144 under the Securities
Act.
If during the time Maker is required to maintain the effectiveness of a
registration statement under this Section, Maker shall be engaged in a
transaction with respect to which disclosure would be required in such
registration statement, but for which financial or other information
necessary for such required disclosure is not then available to Maker,
or with respect to which Maker's Board of Directors shall have
determined that disclosure at such time could have an adverse effect on
the Maker or its business or prospects, then Maker shall be entitled to
notify the Payees that no sales may be made pursuant to the registration
statement for up to 90 days.
Maker shall pay all expenses incurred by it in complying with the
provisions hereof, including without limitation, all registration and
filing fees, printing expenses, and fees and disbursements of counsel
and independent public accountants for Maker.
Maker unconditionally guarantees to Payees the return upon sale of all
or part of any shares delivered pursuant hereto and traded with a
"discount" broker and in accordance herewith within three (3) business
days of Payees receipt of the notice(s) required above of a net amount
equal to the value of the shares at delivery (being the value of the
shares on the NASDAQ stock marker ion the trading day before the stock
is delivered to Payees). Payees shall provide Maker with all
appropriate documentation of trade(s) to support any request for Maker
to satisfy it guarantee obligations hereunder. Maker shall pay Payees
any funds due hereunder within ten (10) days of receipt of notice and
supporting documentation from Payees.
Notwithstanding any provision to the contrary, if, by May 30 immediately
following any delivery of the shares, Maker has not obtained
registration allowing the shares to be traded or has not provided Payees
with the notice and opinion required hereunder, the Maker shall, within
ten (10) days, pay Payees in available funds an amount equal to the
value of the shares at delivery plus interest on such amount at 7% per
annum through the date of payment.
Time is hereby declared to be of the essence. This Note may be prepaid
in full or in part at any time without penalty or premium. Partial
prepayments shall be applied to installments due in reverse order of
their maturity.
In the event of (a) default in payment of any installment of principal
or interest hereof as the same becomes due and such default is not cured
within ten (10) days from the due date or (b) default or breach by Maker
or Atlantic Coil under the terms of the Stock Purchase Agreement dated
effective as of April 1, 1997 (the "Stock Agreement") by and between
Maker, Payee and others, involving the purchase of all of the
outstanding capital stock of Atlantic Coil Processing, Inc., a North
Carolina corporation ("Atlantic Coil"); the Employment Agreements dated
effective April 1, 1997 between Atlantic Coil, Maker and the respective
Payees; the Non Competition Agreements dated effective April 1, 1997 by
and between Maker and the respective Payees or the Operating Lease
dated effective April 1, 1997 by and between Atlantic Coil, Maker, and
the Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein, or in the absence of a cure period therein then within
thirty (30) days after written notice to Maker, then in either event,
the holders may without further notice, declare the remainder of the
principal sum, together with all interest accrued thereon at once due
and payable. Failure to exercise this option shall not constitute a
waiver of the right to exercise the same at any other time. The unpaid
principal of this Note and any part thereof, accrued interest and all
other sums due under this Note and the Documents shall bear interest at
the rate of nine percent (9%) per annum after default until paid.
All parties to this Note, including Maker waive protests, presentment,
notice of dishonor, and notice of acceleration of maturity and agree to
continue to remain bound for the payment of principal, interest and all
other sums due under this Note and the Closing Documents,
notwithstanding any change or changes by way of release, surrender,
exchange, modification or other accommodation under this Note or the
Closing Documents or by way of any extension or extensions of time for
the payment of principal and interest; and all such parties waive all
and every kind of notice of such change or changes and agree that the
same may be made without notice or consent of any of them.
Upon default the holders of this Note may employ an attorney to enforce
the holders' rights and remedies and the Maker of this Note hereby
agrees to pay to the holder reasonable attorneys fees plus all other
reasonable expenses incurred by the holders in exercising any of the
holders' rights and remedies upon default not exceeding a sum equal to
ten percent (10%) outstanding balance owing on said Note. The rights
and remedies of the holders as provided in this Note and any instrument
securing this Note shall be cumulative and may be pursued singly,
successively, or together or against any other funds, property or
security held by the holders for payment or security, in the sole
discretion of the holders. The failure to exercise any such right or
remedy shall not be a waiver or release of such rights or remedies or
the right to exercise any of them at another time.
This Note is to be governed and construed in accordance with the laws of
the State of North Carolina. All references in this Note to Payees
shall include the holders hereof and this Note shall inure to the
benefit of any holders, their successors and assigns. Anything herein
to the contrary notwithstanding, the obligations of Maker under this
Note and any security documents executed in connection herewith shall be
subject to the limitation that payments of interest shall not be
required to the extent that receipt of any such payment by the Payees
would be contrary to provisions of law applicable to the Payees limiting
the maximum rate of interest that may be charged to or collected by the
Payees. If any provision of this Note shall be held to be prohibited by
or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibitions or invalidity, without
invalidating the remainder of such provision or any remaining provisions
of this Note.
This Note has been delivered pursuant to a Stock Purchase Agreement
dated April 1, 1997 (the "Stock Agreement") by and between Maker, Payees
and others, involving the purchase of all of the outstanding capital
stock of Atlantic Coil Processing, Inc., a North Carolina corporation.
All terms not defined herein have the meanings set forth in the Stock
Agreement.
PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS EXPRESSLY SUBJECT TO
MAKER'S RIGHTS OF OFFSET SET FORTH IN SECTION 9.7 OF THE STOCK
AGREEMENT.
IN TESTIMONY WHEREOF, Steel Technologies Inc., a Kentucky corporation
has caused this instrument to be executed in its corporate name by its
duly authorized officers and its corporate seal to be affixed as of the
day and year first above written.
STEEL TECHNOLOGIES INC.
____________________ By:
(CORPORATE SEAL)
Witness Xxxx Xxx
Title: President
EXHIBIT B(1) PRIVATE
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997, and effective as of the commencement of business on April 1, 1997
(the "Effective Date") by and between Xxxxxx Xxxxxxx/Xxxx Xxxxxxxx/Xxxx
Xxxxxxx ("Employee"), and ATLANTIC COIL PROCESSING, INC., a North
Carolina corporation (hereinafter referred to as the "Company") and
STEEL TECHNOLOGIES INC., a Kentucky corporation, which has joined this
Agreement for the purpose of guaranteeing the obligations of Company as
set forth herein.
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Technologies Inc., a Kentucky
corporation ("Steel Tech"), has acquired all of the outstanding shares
of capital stock of the Company pursuant to a certain Stock Purchase
Agreement (the "Purchase Agreement"), between Steel Tech, Employee and
the other shareholders of the Company.
Prior to the Effective Date, the Employee, in addition to
being a shareholder of the Company, was a director, officer and employee
of the Company and desires to continue to be employed by the Company.
The Company has agreed to employ Employee on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Employment. Subject to the terms hereof, the Company
hereby agrees to employ Employee, and Employee hereby accepts such
employment. Employee shall serve as a management employee of the
Company during the Term (as defined in Section 2.1) of this Agreement,
subject to the direction of the Boards of Directors of the Company and
Steel Tech. Employee shall devote substantially all of his business
time and best efforts to rendering services on behalf of the Company.
Section 2. Term.
2.1. The term of Employee's employment hereunder shall be from
April 1, 1997 through and including March 31, 2000, (the "Term") unless
terminated prior thereto upon the occurrence of any of the following:
(i) The death or total disability of Employee. As
used herein, "total disability" means any physical or mental condition
rendering the Employee unable, for a total of three (3) months during
any twelve month period, to perform the duties and bear the
responsibilities incident to the position referred to in Section 1
hereof as determined by a physician acceptable to Employee and the
Company; or
(ii) The Company's termination of Employee's
employment hereunder, upon prior written notice to Employee, for "good
cause." For the purposes of this Agreement, "good cause" for
termination of Employee's employment shall exist only if (a) Employee is
convicted of, pleads guilty to, or confesses to any act of fraud,
misappropriation or embezzlement or to any felony, (b) Employee has
engaged in a dishonest, disloyal or insubordinate act against and to the
material damage or prejudice of the Company or in conduct or activities
materially damaging to the property, business or reputation of the
Company, or (c) Employee otherwise fails to comply with the material
terms of this Agreement and fails to cure such noncompliance within
thirty (30) days of receipt from Company of notice of the specific
failure of compliance; or
(iii) By the Employee at any time during the Term without
any event of default; or
(iv) By Employee upon an "event of default". An "event of
default" shall mean (i) the failure by Company to pay Employee any sum
due hereunder within ten (10) days after Employee shall have delivered
to Company written notice that such payment has become due, or (ii) the
failure by Company to observe or perform any other material provision
hereof for thirty (30) days after Employee shall have delivered to
Company written notice of such failure; or (iii) default or breach by
Steel Technologies Inc. ("Steel Tech") or Company, as the context
permits, under the terms of the Stock Purchase Agreement dated effective
as of April 1, 1997 (the "Stock Agreement") by and between Steel Tech,
Employee and others, involving the purchase of all of the outstanding
capital stock of Atlantic Coil Processing, Inc., a North Carolina
corporation; the Promissory Note dated April 1, 1997 by Steel Tech as
Maker to Employee and others; the Employment Agreements dated effective
April 1, 1997 between Company, Steel Tech and the respective Sellers;
the Non Competition Agreements dated effective April 1, 1997 by and
between Steel Tech and the respective Sellers or the Operating Lease
dated effective April 1, 1997 by and between Company, Steel Tech, and
the Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein, or in the absence of a cure period therein, within
thirty (30) days after written notice to Steel Tech and Company.
2.2. If Employee's employment herein is terminated pursuant to
Section 2.1 (i), (ii) or (iii) above prior to the end of the Term,
Employee's salary and bonus shall be prorated for such portion of the
Term as he was employed by the Company. If Employee's employment is
terminated for any reason other than pursuant to Section 2.1 (i), (ii)
or (iii) above, the Company shall pay to Employee his salary, vacation
and other benefits hereunder as if Employee had been employed by the
Company for the entire Term.
The Term may be renewed for an additional year upon the expiration of
the initial Term, by the agreement of the parties.
Section 3. Compensation and Benefits.
3.1. Salary. Employee shall be paid an annual salary of
$100,000. Payment of salary shall be payable in installments at such
times as the Company customarily pays its other employees.
3.2 Other Benefits. Employee shall receive the fringe benefits,
perquisites, and other benefits of employment set forth herein, in the
Company's employee handbook and such other or additional fringe
benefits, prerequisites and other benefits of employment as may be
provided by Company to its management employees from time to time shall
continue during the Term of employment as set forth in Section 2.1
hereof. In the event Employee's employment is terminated early pursuant
to Section 2.1(i), (ii) or (iii) hereof, benefits will likewise
terminate prospectively (subject to applicable law). These benefits may
be adjusted from time to time as determined by the Company's Board of
Directors so long as coverages of a substantially similar nature are
maintained at substantially the same cost to Employee.
3.3 Employee shall be entitled to the same, or substantially the
same health care, 401(k), life insurance, automobile, and club dues as
currently provided to them, with the exception of a bonus compensation
plan. Buyer shall establish a bonus compensation plan specifically for
Employee which will provide for awarding incentives specifically
relating to the future performance of ACP with a guaranteed minimum of
$25,000 per year for this three year period.
Section 4. Guaranty. Steel Tech has joined in the execution of
this Agreement for the purpose of absolutely and unconditionally
guaranteeing the due and punctual performance of all of the obligations
of Company under this Agreement as and when the same become due to be
performed in accordance with the terms and provisions of this Agreement,
including any assignment modification, amendment or extension hereof .
The obligation on the part of Steel Tech is a primary and not a
secondary liability and obligation and Steel Tech will pay or perform
the same immediately upon demand, without any requirement of recourse
first being had against Company or any other person, firm or
corporation.
Section 5. Miscellaneous.
5.1. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon Employee and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns; provided, however, that Employee
shall not be entitled to assign or delegate any of his rights or
obligations hereunder without the prior written consent of the Company.
5.2. Governing Law. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and
governed by and in accordance with, the laws of the State of North
Carolina, without regard to conflicts of laws principles.
5.3. Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be
finally settled by arbitration in accordance with the Commercial Rules
of the American Arbitration Association by a one qualified arbitrator
("Designated Arbitrator"). Each party shall choose an arbitrator and
the Designated Arbitrator shall be chosen by the two so chosen. If
either party to the dispute or difference fails to choose an arbitrator
within 30 days after notice of commencement of arbitration or if the two
arbitrators fail to choose the Designated Arbitrator within 30 days
after their appointment, the American Arbitration Association shall,
upon the request of any party to the dispute or difference, administer
the selection of the Designated Arbitrator. Arbitration proceedings
hereunder may be initiated by any party making a written request to the
American Arbitration Association, together with any appropriate filing
fee, at the office of the American Arbitration Association in Charlotte,
North Carolina. All arbitration proceedings shall be held in Raleigh,
North Carolina. Any order or determination of the arbitral tribunal
shall be final and binding upon the parties to the arbitration and may
be entered in any court having jurisdiction.
5.4. Headings. The section and paragraph heading contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
5.5. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Company Xxxx Xxx
or Steel Tech: Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to: Xxxx Xxxxxxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to the Employee: X. Xxxxxx Xxxxxxx, III
Xxxx Xxxxxxx
Xxxx Xxxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
With a copy to: Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 00000
Xxxxxxx, XX 00000
Fax: 000-000-0000
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
4.6 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company and Steel Tech have each caused
its duly authorized officer to execute this Agreement and the Employee
has executed this Agreement as of the date first above written.
EMPLOYEE:
("Employee")
ATLANTIC COIL PROCESSING INC.
By: ____________________________________
Xxxx Xxxxxxx
Title: Corporate Counsel
STEEL TECHNOLOGIES INC.
By:______________________________
Title:___________________________
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997, and effective as of the commencement of business on April 1, 1997
(the "Effective Date") by and between Xxxxx Xxxxxxxx ("Employee"), and
ATLANTIC COIL PROCESSING, INC., a North Carolina corporation
(hereinafter referred to as the "Company") and STEEL TECHNOLOGIES INC.,
a Kentucky corporation, which has joined this Agreement for the purpose
of guaranteeing the obligations of Company as set forth herein.
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Technologies Inc., a Kentucky
corporation ("Steel Tech"), has acquired all of the outstanding shares
of capital stock of the Company pursuant to a certain Stock Purchase
Agreement (the "Purchase Agreement"), between Steel Tech, Employee and
the other shareholders of the Company.
Prior to the Effective Date, the Employee, in addition to
being a shareholder of the Company, was a director, and employee of the
Company and desires to continue to be employed by the Company.
The Company has agreed to employ Employee on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Employment. Subject to the terms hereof, the Company
hereby agrees to employ Employee, and Employee hereby accepts such
employment. Employee shall serve as an employee of the Company during
the Term (as defined in Section 2.1) of this Agreement, subject to the
direction of the Boards of Directors of the Company and Steel Tech.
Notwithstanding the foregoing, employee shall devote only such business
time and efforts to rendering services on behalf of the Company
consistent with his current duties and responsibilities and without
obligation to account for his time except as currently required.
Section 2. Term.
2.1. The term of Employee's employment hereunder shall be from
April 1, 1997 through and including March 31, 1998, (the "Term") unless
terminated prior thereto upon the occurrence of any of the following:
The Company's termination of Employee's employment hereunder, upon prior
written notice to Employee, for "good cause." For the purposes of this
Agreement, "good cause" for termination of Employee's employment shall
exist only if (a) Employee is convicted of, pleads guilty to, or
confesses to any act of fraud against the Company, misappropriation or
embezzlement against the Company or to any felony against the Company,
(b) Employee has engaged in a dishonest or disloyal act against and to
the material damage or prejudice of the Company, or (c) Employee
otherwise fails to comply with the material terms of this Agreement and
fails to cure such noncompliance within thirty (30) days of receipt from
Company of notice of the specific failure of compliance; or
(ii) By the Employee at any time during the Term without
any event of default.
(iii) By Employee upon an "event of default". An "event of
default" shall mean (i) the failure by Company to pay Employee any sum
due hereunder within ten (10) days after Employee shall have delivered
to Company written notice that such payment has become due, or (ii) the
failure by Company to observe or perform any other material provision
hereof for thirty (30) days after Employee shall have delivered to
Company written notice of such failure; or (iii) default or breach by
Steel Technologies Inc. ("Steel Tech") or Company, as the context
permits, under the terms of the Stock Purchase Agreement dated effective
as of April 1, 1997 (the "Stock Agreement") by and between Steel Tech,
Employee and others, involving the purchase of all of the outstanding
capital stock of Atlantic Coil Processing, Inc., a North Carolina
corporation; the Promissory Note dated April 1, 1997 by Steel Tech as
Maker to Employee and others; the Employment Agreements dated effective
April 1, 1997 between Company, Steel Tech and the respective Sellers;
the Non Competition Agreements dated effective April 1, 1997 by and
between Steel Tech and the respective Sellers or the Operating Lease
dated effective April 1, 1997 by and between Company, Steel Tech, and
the Landlord named therein (collectively "Closing Documents") and such
default or breach is not cured within the earlier of the cure period
provided therein, or in the absence of a cure period therein, within
thirty (30) days after written notice to Steel Tech and Company.
2.2. If Employee's employment herein is terminated pursuant to
Section 2.1(i) or (ii) above prior to the end of the Term, Employee's
salary shall be prorated for such portion of the Term as he was employed
by the Company. If Employee's employment is terminated for any reason
other than pursuant to Section 2.1(i) or (ii) above, the Company shall
pay to Employee his salary, vacation and other benefits hereunder as if
Employee had been employed by the Company for the entire Term.
2.3. The Term shall not renew.
Section 3. Compensation and Benefits.
3.1. Salary. Employee shall be paid an annual salary of $125,000.
Payment of salary shall be payable in installments at such times as the
Company customarily pays its other employees.
3.2 Other Benefits. Employee will receive the same, or
substantially the same health care currently provided to him. Upon
separation from employment, Company shall be responsible for and timely
pay Employee's first twelve months of COBRA payments and all related
administrative expenses. Employee shall be entitled to the same or
substantially the same automobile as currently provided to him from
April 1, 1997 until March 1, 1999. In the event Employee's employment
is terminated early pursuant to Section 2.1(i) or (ii) hereof, benefits
will likewise terminate prospectively (subject to applicable law).
These benefits may be adjusted from time to time as determined by the
Company's Board of Directors so long as coverages of a substantially
similar nature are maintained at substantially the same cost to
Employee.
Section 4. Guaranty. Steel Tech has joined in the execution of
this Agreement for the purpose of absolutely and unconditionally
guaranteeing the due and punctual performance of all of the obligations
of Company under this Agreement as and when the same become due to be
performed in accordance with the terms and provisions of this Agreement,
including any assignment modification, amendment or extension hereof .
The obligation on the part of Steel Tech is a primary and not a
secondary liability and obligation and Steel Tech will pay or perform
the same immediately upon demand, without any requirement of recourse
first being had against Company or any other person, firm or
corporation.
Section 5. Miscellaneous.
5.1. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon Employee and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns; provided, however, that Employee
shall not be entitled to assign or delegate any of his rights or
obligations hereunder without the prior written consent of the Company.
5.2. Governing Law. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and
governed by and in accordance with, the laws of the State of North
Carolina, without regard to conflicts of laws principles.
5.3. Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be
finally settled by arbitration in accordance with the Commercial Rules
of the American Arbitration Association by a one qualified arbitrator
("Designated Arbitrator"). Each party shall choose an arbitrator and
the Designated Arbitrator shall be chosen by the two so chosen. If
either party to the dispute or difference fails to choose an arbitrator
within 30 days after notice of commencement of arbitration or if the two
arbitrators fail to choose the Designated Arbitrator within 30 days
after their appointment, the American Arbitration Association shall,
upon the request of any party to the dispute or difference, administer
the selection of the Designated Arbitrator. Arbitration proceedings
hereunder may be initiated by any party making a written request to the
American Arbitration Association, together with any appropriate filing
fee, at the office of the American Arbitration Association in Charlotte,
North Carolina. All arbitration proceedings shall be held in Raleigh,
North Carolina. Any order or determination of the arbitral tribunal
shall be final and binding upon the parties to the arbitration and may
be entered in any court having jurisdiction.
5.4. Headings. The section and paragraph heading contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
5.5. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to the Company Xxxx Xxx
or Steel Tech: Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to: Xxxx Xxxxxxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to the Employee: Xxxxx Xxxxxxxx
195 Magnolia Dive
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
With a copy to: Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 00000
Xxxxxxx, XX 00000
Fax: 000-000-0000
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
4.6 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
EMPLOYEE:
_________________________________________
Xxxxx X. Xxxxxxxx
ATLANTIC COIL PROCESSING INC.
By: ___________________________________ Xxxx Xxxxxxx
Title: Corporate Counsel
STEEL TECHNOLOGIES INC.
By:___________________________________
Title:__________________
EXHIBIT C(1) PRIVATE
NONCOMPETITION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997 and effective as of the commencement of business on April 1, 1997
(the "Effective Date"), by and between Xxxxxx Xxxxxxx/ Xxxx
Xxxxxxxx/Xxxx Xxxxxxx (the "Shareholder"), and Steel Technologies Inc.,
a Kentucky corporation ("Steel Tech").
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Tech has acquired all of the
outstanding shares of capital stock of Atlantic Coil Processing, Inc., a
North Carolina corporation, (the "Company") pursuant to a certain Stock
Purchase Agreement (the "Purchase Agreement"), between Steel Tech, the
Shareholder and the other shareholders of the Company.
Prior to the Effective Date, the Shareholder, in addition to
being a shareholder of the Company was a director, officer and employee
of the Company and desires to enter into this Agreement to further
induce Steel Tech to enter into the Purchase Agreement.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Confidential Information and Non-Competition
Covenant.
1.1. Confidential Information and Trade Secrets. In consideration
of the rights granted to the Shareholder under the Purchase Agreement,
the Shareholder hereby agrees that he shall hold in confidence all
temporary help lists, customer lists, supplier lists, price lists,
financial information, operating manual and forms, plans, notes,
computer programs, systems and software (including, without limitation,
documentation and related source and object codes), and all other
knowledge or information of a confidential or proprietary nature with
respect to the business of the Company (the "Proprietary Information"),
and the Shareholder will not disclose, publish or make use of such
knowledge or information.
1.2. Non-Competition. The Company is engaged in steel processing
and providing steel processing throughout the geographic area within a
250-mile radius of the office locations set forth on Schedule 1.2 hereto
(such geographic area being hereinafter referred to as the "Territory").
The Shareholder acknowledges that the goodwill of the Company and
marketing and support of services and products of the Company extends
throughout the Territory. If following the expiration of his three
year employment contract, Shareholder is, for any reason, no longer an
employee of Steel Tech or a Related Company, Steel Tech or a Related
Company shall pay to Shareholder $50,000 a year for the two years
immediately following separation from employment or if, following the
expiration of a fourth year of employment with Steel Tech or a Related
Company, Shareholder is for any reason no longer an employee of Steel
Tech or a Related Company, Steel Tech or a Related Company shall pay to
Shareholder $50,000 a year for the year immediately following their
separation from employment; and in consideration of the payment(s)
required above and expressly conditioned upon such payment, the
Shareholder hereby agrees that for the respective two or one year
periods specified above and, as applicable (the "Noncompete Period"),
the Shareholder shall not (without the prior written consent of the
Company), in any manner, directly or indirectly,
(i) engage in, have any equity or profit interest in, make
any loan to or for the benefit of, guaranty the repayment of any funds
by, or render services of any executive, advertising, marketing, sales,
administrative, supervisory, engineering, computer program or system
development, maintenance or consulting nature to any business conducting
operations in the Territory which are competitive with the business
activities being directly engaged in by the Company as of the date of
this Agreement; or
(ii) solicit to employ, on his own behalf or on behalf of
any other person, firm or corporation, any person who was employed by
the Company or a Related Company as of the Effective Date hereof and who
has not thereafter ceased to be employed by the Company or a Related
Company for a period of at least one year.
As used in this Section 1, the term "Related Company" shall mean
Steel Tech, any subsidiary of Steel Tech or any other corporation
(including Atlantic Coil Processing, Inc.), twenty percent of whose
stock is owned by Steel Tech, and any other corporation owning at least
20 percent of the capital stock of Steel Tech, any subsidiary thereof,
and any successor to any of them.
Notwithstanding anything contained herein to the contrary, the
Shareholder shall not be prohibited from owning, directly or indirectly,
up to 5% of the outstanding equity interest of any company, which is in
competition with Steel Tech and the stock of which is publicly traded.
1.3. Severability. If a judicial determination is made that any
of the provisions of this Section 1 constitutes an unreasonable or
otherwise unenforceable restriction against the Shareholder, the
provisions of this Section 1 shall be rendered void only to the extent
that such judicial determination finds such provisions to be
unreasonable or otherwise unenforceable. In this regard, the parties
hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory or
any prohibited business activity from the coverage of this Section 1,
and to reduce the duration of the Noncompete Period and to apply the
provisions of this Section 1 to the remaining portion of the Territory
or the remaining business activities not to be severed by such judicial
authority and to the duration of the Noncompete Period as reduced by
judicial determination.
1.4. Injunctive Relief. The Shareholder hereby agrees that any
breach or threatened breach by the Shareholder of Sections 1.1 or 1.2 of
this Agreement will irreparably injure the Company and that any remedy
at law for any breach or threatened breach by the Shareholder of the
provisions contained in Sections 1.1 and 1.2 hereof shall be inadequate,
and that the Company shall be entitled to injunctive relief in addition
to any other remedy it might have under this Agreement or at law or in
equity. The Shareholder further agrees that the grant of such
injunctive relief and the enforcement of the terms of this Agreement
shall not deprive him of his ability to earn a living.
1.5 Cross Default. Steel Tech shall be in default and breach
of this Agreement upon default or breach by Steel Tech or Company, as
the context permits, under the terms of the Stock Purchase Agreement
dated effective as of April 1, 1997 (the "Stock Agreement") by and
between Steel Tech, Shareholder and others, involving the purchase of
all of the outstanding capital stock of Atlantic Coil Processing, Inc.,
a North Carolina corporation; the Promissory Note dated April 1, 1997 by
Steel Tech as Maker to Shareholders and others; the Employment
Agreements dated effective April 1, 1997 between Company, Steel Tech and
the respective Sellers; the Non Competition Agreements dated effective
April 1, 1997 by and between Steel Tech and the respective Sellers or
the Operating Lease dated effective April 1, 1997 by and between
Company, Steel Tech, and the Landlord named therein (collectively
"Closing Documents") and such default or breach is not cured within the
earlier of the cure period provided therein, or in the absence of a cure
period provided therein, within thirty (30) days after written notice to
Steel Tech and Company.
Section 2. Miscellaneous.
2.1. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Shareholder and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns. The Company is a third party
beneficiary of this Agreement.
2.2. Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of North Carolina, without
regard to conflicts of laws principles.
2.3. Headings. The section and paragraph heading contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
2.4. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to Steel Tech or Company:
Xxxx Xxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxx Xxxxxxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to the Shareholder:
X. Xxxxxx Xxxxxxx, III
Xxxx Xxxxxxx
Xxxx Xxxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
With a Copy to:
Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 00000
Xxxxxxx, XX 00000
Fax: 000-000-0000
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
2.5. Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
IN WITNESS WHEREOF, Steel Tech has caused its duly authorized
officer to execute this Agreement and the Shareholder has executed this
Agreement as of the date first above written.
SHAREHOLDER:
________________________________
("Shareholder")
STEEL TECHNOLOGIES INC.
By: _______________________________
Title:
EXHIBIT C(2)
NONCOMPETITION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into April 1,
1997 and effective as of the commencement of business on April 1, 1997
(the "Effective Date"), by and between Xxxxx Xxxxxxxx (the
"Shareholder"), and Steel Technologies Inc., a Kentucky corporation
("Steel Tech").
PRELIMINARY STATEMENTS
As of the Effective Date, Steel Tech has acquired all of the
outstanding shares of capital stock of Atlantic Coil Processing, Inc., a
North Carolina corporation, (the "Company") pursuant to a certain Stock
Purchase Agreement (the "Purchase Agreement"), between Steel Tech, the
Shareholder and the other shareholders of the Company.
Prior to the Effective Date, the Shareholder, in addition to
being a shareholder of the Company was a director, officer and employee
of the Company and desires to enter into this Agreement to further
induce Steel Tech to enter into the Purchase Agreement.
NOW THEREFORE, in consideration of the premises and mutual
promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
Section 1. Confidential Information and Non-Competition
Covenant.
1.1. Confidential Information and Trade Secrets. In
consideration of the rights granted to the Shareholder under the
Purchase Agreement, the Shareholder hereby agrees that he shall hold in
confidence all temporary help lists, customer lists, supplier lists,
price lists, financial information, operating manual and forms, plans,
notes, computer programs, systems and software (including, without
limitation, documentation and related source and object codes), and all
other knowledge or information of a confidential or proprietary nature
with respect to the business of the Company (the "Proprietary
Information"), and the Shareholder will not disclose, publish or make
use of such knowledge or information.
1.2. Non-Competition. The Company is engaged in providing
steel processing throughout the geographic area within a 250-mile radius
of the office locations set forth on Schedule 1.2 hereto (such
geographic area being hereinafter referred to as the "Territory"). The
Shareholder acknowledges that the goodwill of the Company and marketing
and support of services and products of the Company extends throughout
the Territory. In consideration of the rights granted to the
Shareholder under the Purchase Agreement, the Shareholder hereby agrees
that for the period commencing on April 1, 1997 and extending for two
years from such date (the "Noncompete Period"), the Shareholder shall
not (without the prior written consent of the Company), in any manner,
directly or indirectly,
(i) engage in, have any equity or profit interest in, make
any loan to or for the benefit of, guaranty the repayment of any funds
by, or render services of any executive, advertising, marketing, sales,
administrative, supervisory, engineering, computer program or system
development, maintenance or consulting nature to any business conducting
operations in the Territory which are competitive with the business
activities being directly engaged in by the Company as of the date of
this Agreement; or
(ii) solicit to employ, on his own behalf or on
behalf of any other person, firm or corporation, any person who was
employed by the Company or a Related Company as of the Effective Date
hereof and who has not thereafter ceased to be employed by the Company
or a Related Company for a period of at least one year.
As used in this Section 1, the term "Related Company" shall mean
Steel Tech, any subsidiary of Steel Tech or any other corporation
(including Atlantic Coil Processing, Inc.), twenty percent of whose
stock is owned by Steel Tech, and any other corporation owning at least
20 percent of the capital stock of Steel Tech, any subsidiary thereof,
and any successor to any of them.
Notwithstanding anything contained herein to the contrary, the
Shareholder shall not be prohibited from owning, directly or indirectly,
up to 5% of the outstanding equity interest of any company, which is in
competition with Steel Tech and the stock of which is publicly traded.
The parties agree and acknowledge that Shareholder is an owner and
is otherwise actively involved in Forma-Fab Metals, Inc. with its
principal office in Mebane, North Carolina and which carries on the
business of a sheet metal job shop and the parties further agree and
acknowledge that, notwithstanding anything herein to the contrary,
Shareholder's ownership, service as a director, officer and/or employee
and other activities for and on behalf of Forma-Fab Metals, Inc. or its
successors are not prohibited by this Agreement, Forma-Fab Metals, Inc.
being expressly excepted from the application of this Agreement.
1.3. Severability. If a judicial determination is made that
any of the provisions of this Section 1 constitutes an unreasonable or
otherwise unenforceable restriction against the Shareholder, the
provisions of this Section 1 shall be rendered void only to the extent
that such judicial determination finds such provisions to be
unreasonable or otherwise unenforceable. In this regard, the parties
hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory or
any prohibited business activity from the coverage of this Section 1,
and to reduce the duration of the Noncompete Period and to apply the
provisions of this Section 1 to the remaining portion of the Territory
or the remaining business activities not to be severed by such judicial
authority and to the duration of the Noncompete Period as reduced by
judicial determination.
1.4. Injunctive Relief. The Shareholder hereby agrees that
any breach or threatened breach by the Shareholder of Sections 1.1 or
1.2 of this Agreement will irreparably injure the Company and that any
remedy at law for any breach or threatened breach by the Shareholder of
the provisions contained in Sections 1.1 and 1.2 hereof shall be
inadequate, and that the Company shall be entitled to injunctive relief
in addition to any other remedy it might have under this Agreement or at
law or in equity. The Shareholder further agrees that the grant of
such injunctive relief and the enforcement of the terms of this
Agreement shall not deprive him of his ability to earn a living.
1.5 Cross Default. Steel Tech shall be in default and breach
of this Agreement upon default or breach by Steel Tech or Company, as
the context permits, under the terms of the Stock Purchase Agreement
dated effective as of April 1, 1997 (the "Stock Agreement") by and
between Steel Tech, Shareholder and others, involving the purchase of
all of the outstanding capital stock of Atlantic Coil Processing, Inc.,
a North Carolina corporation; the Promissory Note dated April 1, 1997 by
Steel Tech as Maker to Shareholders and others; the Employment
Agreements dated effective April 1, 1997 between Company, Steel Tech and
the respective Sellers; the Non Competition Agreements dated effective
April 1, 1997 by and between Steel Tech and the respective Sellers or
the Operating Lease dated effective April 1, 1997 by and between
Company, Steel Tech, and the Landlord named therein (collectively
"Closing Documents") and such default or breach is not cured within the
earlier of the cure period provided therein, or in the absence of a cure
period provided therein, within thirty (30) days after written notice to
Steel Tech and Company.
Section 2. Miscellaneous.
2.1. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the Shareholder and his executor,
administrator, heirs, personal representative and assigns, and the
Company and its successors and assigns. The Company is a third party
beneficiary of this Agreement.
2.2. Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by
and in accordance with, the laws of the State of North Carolina, without
regard to conflicts of laws principles.
2.3. Headings. The section and paragraph heading contained
in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
2.4. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made
by telecopy or facsimile transmission, or (iv) sent by registered or
certified mail, return receipt requested, postage prepaid.
If to Steel Tech or Company:
Xxxx Xxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxx Xxxxxxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
If to the Shareholder:
Xxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxx Xxxxx, XX 00000
With a copy to:
Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
X.X. Xxx 00000
Xxxxxxx, XX 00000
Fax: 000-000-0000
All notices, requests, consents and other communications hereunder shall
be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth
above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, (iii)
if made by telecopy or facsimile transmission, at the time the receipt
thereof has been acknowledged by electronic confirmation or otherwise,
or (iv) if sent by registered or certified mail, on the fifth business
day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon
written notice delivered pursuant to this Section.
2.5 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the
terms thereof notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may be
modified only by a written instrument signed by each of the parties
hereto.
[Signature page follows]
IN WITNESS WHEREOF, Steel Tech has caused its duly authorized
officer to execute this Agreement and the Shareholder has executed this
Agreement as of the date first above written.
SHAREHOLDER:
_______________________________________
Xxxxx X. Xxxxxxxx
STEEL TECHNOLOGIES INC.
By:
Title: ____________________________________
EXHIBIT D
OPERATING LEASE
THIS OPERATING LEASE ("Lease") is entered effective April 1, 1997,
between Atlantic Properties, a North Carolina general partnership
("Landlord") and Atlantic Coil Processing, Inc., a North Carolina
corporation ("Tenant"). Steel Technologies, Inc., a Kentucky
corporation has joined in the execution of this Lease for the purpose of
guaranteeing the obligations of Tenant.
W I T N E S S E T H:
In consideration of the mutual covenants hereinafter contained, and each
act performed hereunder by the parties, Landlord and Tenant agree as
follows:
ARTICLE 1
EXHIBITS ATTACHED AND MEMORANDUM OF LEASE
Section 1.01. Exhibits. The following exhibits are attached to and
made a part of this Lease:
(1) Exhibit A. Legal Description of the Demised Premises.
(2) Exhibit B. Specimen Memorandum of Lease.
Section 1.02. Memorandum of Lease. Landlord and Tenant agree not to
place this Lease of record, but to execute, acknowledge and record a
memorandum of lease containing the names of Landlord and Tenant, the
specific legal description of the Demised Premises, the Term, and the
purchase option. Such memorandum of lease shall be substantially in the
form of Exhibit B attached hereto and by reference made a part hereof.
Landlord shall have the memorandum of lease recorded and supply the
recorded copy to Tenant. Upon the expiration of the Term or the earlier
termination of the Lease, in either case without Tenant's exercise of
its purchase option, Tenant agrees to execute and deliver to Landlord
for filing such cancellation of Memorandum of Lease as Landlord may
reasonably request.
ARTICLE 2
DEMISED PREMISES
Section 2.01. Demised Premises. Landlord hereby lets and demises to
Tenant, and Tenant hereby leases from Landlord the premises described in
Exhibit A attached hereto and by reference made a part hereof, such
premises and the improvements thereon being hereafter referred to as the
"Demised Premises."
ARTICLE 3
TERM
Section 3.01. Term. The "Term" of this Lease shall be for a period of
six (6) years beginning on April 1, 1997 and ending on March 31, 2003.
ARTICLE 4
RENT
Section 4.01. Rental. Tenant shall pay to Landlord throughout the
Demised Term rental in the annual amount of $480,000 paid in equal
monthly installments in advance on or before the first day of each
calendar month during the Term of the Lease. All rent payable by Tenant
shall be without previous demand, setoff or deduction. All rent shall
be paid to Landlord at the address to which notices to Landlord are
given as set forth in the paragraph entitled "Notices" hereunder. In
addition to such remedies as may be provided under the default
provisions of this Lease or otherwise, herein, at law or in equity,
Landlord shall be entitled to a late charge of two percent (2%) of the
amount of the monthly rent if not received within 3 days of when due,
and a charge of two percent (2%) of the monthly rent for any check
given by Tenant not paid when first presented by Landlord.
Section 4.02 Additional Rent. Tenant shall pay Landlord as
"Additional Rent", as the same shall become due, taxes and insurance for
the Demised Premises and all other amounts, liabilities and obligations
which Tenant assumes or agrees to pay or discharge pursuant to this
Lease, together with all fines, penalties, interest and costs which may
be added for non-payment or late payment thereof.
ARTICLE 5
TAXES
Section 5.01. Real Estate Taxes.
(A) As "Additional Rent", Tenant shall directly pay and discharge as
they become due, all taxes (including, without limitation, all real and
personal property taxes and sales and use taxes), assessments (including
assessments for benefits from public works or improvements, whether or
not to be completed within the Term), levies, fees, water and sewer
rents and charges, an all other governmental charges which are, at any
time during the Term, imposed or levied upon or assessed against the
Demised Premises or any part thereof or which arise in respect of the
operation, possession, occupancy or use thereof. Tenant agrees to
furnish to Landlord, within thirty (30) days after written demand
therefore, proof of the payment of all such taxes, assessments, levies,
fees and similar charges.
(B) Tenant shall have the right at its own expense to challenge any
tax or assessment; such challenge will not, however, relieve Tenant's
obligation to pay such taxes promptly when due. If such challenge
results in a reduction of taxes or assessments, Tenant shall be entitled
to a refund of such reduction.
(C) If this Lease expires or terminates before a tax or assessment
xxxx is rendered for the year in which such expiration or termination
occurs, Tenant shall pay to Landlord on January 1 of such year of
expiration or termination the proportionate amount of the anticipated
tax for the entire calendar year. The said proportional amount shall be
computed as a fraction the numerator of which shall be the number of
months of the lease Term within the last calendar year and denominator
of which shall be twelve (12).
ARTICLE 6
USE OF DEMISED PREMISES
Section 6.01. Use. The Demised Premises may be used by Tenant for any
lawful purpose. Tenant shall not use the Demised Premises in any manner
that would constitute waste, nuisance, unreasonable annoyance to owners
or occupants of adjacent properties or in any manner in material
violation of any law, regulation, rule or ordinance of any public or
private authority or any covenant, term or condition of any presently
existing document which is recorded in the land records of the county
and state in which the Demised Premises are located and which affect the
Demised Premises or the use thereof nor in any manner which might
invalidate insurance carried by either Landlord or Tenant.
ARTICLE 7
TENANT'S ACCEPTANCE
Upon its occupancy of the Demised Premises, Tenant represents to
Landlord that Tenant has examined and inspected the same, finds the
Demised Premises to be substantially as represented by Landlord and
reasonably satisfactory for Tenant's intended use and evidences Tenant's
acceptance of the Demised Premises.
ARTICLE 8
UTILITY AND OTHER SERVICES
Section 8.01. Payment by Tenant. Payment for all water, gas, light,
heat, telephone, electricity, power, other utility and communication
services, waste disposal services and all other services rendered or
used upon or in connection with the Demised Premises shall be made by
Tenant. The parties acknowledge Landlord will not provide any services
to the Demised Premises.
ARTICLE 9
MAINTENANCE/ REPAIR
Section 9.01. Tenant's Obligation. Tenant shall, at its sole expense,
keep and maintain in good condition and repair and make all repair and
replacements, structural and nonstructural, to the interior and
exterior of the Demised Premises. Tenant shall comply with the
directions of proper public officers as to the maintenance of the
Demised Premises and shall comply with all health and police regulations
applicable to or affecting the Demised Premises. Nothing in this
provision defining the duty of maintenance and repair hall be construed
as limiting any right given elsewhere in this Lease to alter, modify,
demolish, remove or replace any improvement.
ARTICLE 10
CONSTRUCTION
Section 10.01. Construction by Tenant. With the written consent of
Landlord and upon submission of plans, specifications and other
documentary submittals appropriate to the scope of work proposed by
Tenant, at any time and from time to time during the Term, Tenant may,
but is not obligated to, construct or otherwise make new improvements on
any part or all of the Demised Premises and to demolish, remove,
replace, alter, relocate, reconstruct, or add to any existing
improvements in whole or in part, and to modify or change the contour or
grade, or both, of the land, provided Tenant is not then in default
under any condition or provision of this Lease and provided further that
such new improvements or other construction activities are completed in
a good and workmanlike manner, in compliance with all local code, law
and regulation and in a lien-free condition. All such buildings and
improvements constructed by Tenant shall be Landlord's property and
shall remain Landlord's property upon the termination of this Lease.
Tenant shall furnish evidence to Landlord that all claims for labor and
materials furnished for such remodeling, alteration or addition have
been paid or provided for. Should Tenant fail to pay for such labor or
materials or should any lien be filed against the Demised Premises and
Tenant fail to secure the discharge of the lien within 30 days (whether
by bond or otherwise) Landlord may pay such amount and add the cost
thereof to the Additional Rent provided for herein.
ARTICLE 11
ALTERATIONS
Section 11.01. Alterations by Tenant. Tenant shall have the right, at
its sole expense, to make interior alterations to the Demised Premises
of a non-structural nature without Landlord's consent provided Tenant
performs the alterations in a good and xxxxxxx like manner, in
compliance with applicable laws, ordinances, orders, rules, regulations
and requirements and in a lien-free condition. Tenant shall furnish
evidence to Landlord that all claims for labor and materials furnished
for such alterations have been paid or provided for. Should Tenant fail
to pay for such labor or materials or should any lien be filed against
the Demised Premises and Tenant failed to secure the discharge of the
lien within 30 days (whether by bond or otherwise), Landlord may pay
such amount and add the costs thereof to the Additional Rent provided
for herein.
Section 11.02 Tenant's Trade Fixtures. Tenant may, at its sole
expense, install, assemble or place upon the Demised Premises any
machinery, fixtures, furnishings and equipment used or useful in
Tenant's business, and in each case upon compliance with Section 11.01.
Such machinery, fixtures, furnishings and equipment shall be and remain
the property of Tenant. Tenant may remove the same from the Demised
Premises at any time during the Term hereof or upon termination of the
Lease and surrender of the Demised Premises provided, however, that
Tenant shall promptly repair any damage to the Demised Premises
resulting from such removal. Landlord shall execute and shall use its
best efforts to cause any mortgagee of Landlord to execute such waivers
as Tenant may reasonably request as to liens and/or security interest
against such trade fixtures, equipment and other personal property of
Tenant.
ARTICLE 12
LIENS
Tenant will not, directly or indirectly, create or permit to be created
or to remain, and will discharge, within 30 dats, by bond or otherwise
at Tenant's sole expense, any lien, encumbrance or other charge with
respect to the Demised Premises or any part thereof or Tenant's interest
therein. Nothing contained in this Lease shall be construed as
constituting the consent or request of Landlord, expressed or implied to
or for the performance of any labor or services or the furnishing of any
materials for any construction, alteration, addition, repair, or
demolition of or to the Demised Premises or any part thereof by any
contractor, subcontractor, laborer, materialman or vendor. Notice is
hereby given that Landlord will not be liable for any labor, services or
materials furnished or to be furnished to or through Tenant and that no
mechanics, materialmen or other liens for any such labor, services or
materials shall attach to or affect the interest of Landlord in and to
the Demised Premises.
ARTICLE 13
INDEMNIFICATION
Tenant agrees to pay, and to protect, indemnify and save Landlord
harmless from and against any and all liabilities, losses, damages,
costs, expenses (including reasonable attorney's fees and expenses)
causes of action, suits, claims, demands or judgments of any nature
whatsoever rising from (i) any injury to, or the death of, any person,
or any damage to property on the Demised Premises or upon adjoining
sidewalks, streets, or ways, or in any manner growing out of or
connected with the use , non use, condition or occupancy of the Demised
Premises or any part thereof, or resulting from the condition thereof or
of adjoining sidewalks, streets, or ways; (ii) violation by Tenant of
any restriction, statute, law, ordinance, or regulation in each case
affecting the Demised Premises or any part thereof, or the ownership,
occupancy or use thereof, or (iii) any negligence or tortuous act on the
part of Tenant or any of its agents, contractors, licensees or invitees.
In case any action, suit or proceeding is brought against Landlord by
reason of any occurrence herein described, Tenant will, at its own
expense, defend such action, suit, or proceeding with counsel reasonably
acceptable to Landlord.
ARTICLE 14
INSURANCE
Section 14.01. Fire and Extended Coverage.
(A) Throughout the Term, Tenant will maintain, at its sole expense,
insurance on the Demised Premises of the following character:
(i) Insurance against loss or damage by fire, lightning, wind-storms,
hail, explosion, aircraft, smoke damage, vehicle damage, and other risks
from time to time included under extended coverage policies and such
other risks as are or shall customarily be insured against with respect
to property that is similar to the Demised Premises, but, in any event,
in amounts not less than the full insurable value of the Demised
Premises. The term "full insurable value," as used herein, means actual
replacement value.
(ii) General public liability insurance against claims for bodily
injury, death, or property damage occurring on, in, or about the Demised
Premises and the adjoining streets, sidewalks, and passageways, such
insurance to afford protection to Landlord of not less than Two Million
Dollars ($2,000,000.00) per occurrence. All such insurance may be
maintained under general contractual liability policies, which policies
shall cover the obligations of Tenant under the indemnification
provisions hereof.
(iii) Such other insurance on the Demised Premises in such amounts
and against such other insurable hazards which at the time are commonly
obtained in the case of property similar to the Demised Premises.
(B) The insurance referred to in this Section shall be written by
companies of recognized financial standing which are authorized to do an
insurance business in the state in which the Demised Premises are
located, and such insurance shall name as the insured parties thereunder
Landlord and Tenant, as their interests may appear. Landlord shall not
be required to prosecute any claim against, or to contest any settlement
proposed by, any insurer, provided that Tenant may, at its expense,
prosecute any such claim or contest any such settlement. In such event,
Tenant may bring such prosecution or contest in the name of Landlord,
Tenant, or both, and Landlord will join therein at Tenant's written
request upon the receipt by Landlord of an indemnity from Tenant against
all costs, liabilities, and expenses, including reasonable attorneys'
fees, in connection with such prosecution or contest.
(C) At the request of Landlord, every insurance policy referred
to in clauses (i) through (iii) of this Section shall bear a first
mortgagee endorsement in favor of the Landlord's lender. Every such
policy shall contain, to the extent obtainable, an agreement by the
insurer that it will not cancel such policy except after 30 days' prior
written notice to Landlord and Landlord's lender, and that any loss
otherwise payable thereunder shall be payable notwithstanding any act or
negligence of Landlord or Tenant which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) the occupancy or use of the Demised Premises for
purposes more hazardous than permitted by the terms of such policy, or
(ii) any change in title or ownership of the Demised Premises, including
foreclosure or other action or proceeding taken by a secured lender.
(D) Upon Landlord's request therefore, Tenant shall promptly deliver
to Landlord sufficient proof of the insurance required to be carried by
Tenant hereunder. If Tenant fails to effect, maintain, or renew any
insurance provided for in this Section or pay the premium therefor or
deliver to Landlord any such proof of insurance, then, and in any of
said events, Landlord, at its option, but without obligation so to do,
may, upon ten (10) days' notice to Tenant, procure such insurance. Any
reasonable sums expended by Landlord to procure such insurance shall be
Additional Rent hereunder and shall be repaid by Tenant within ten (10)
days following the date on which such expenditure shall be made by
Landlord.
ARTICLE 15
CASUALTY
If, during the term hereof, the Demised Premises or any part thereof
shall be damaged or destroyed by fire or other casualty, and if the
estimated cost of rebuilding, replacing, and repairing the same shall
exceed the amount of insurance proceeds payable pursuant to this
paragraph Tenant shall promptly notify Landlord thereof; and (whether or
not such estimated cost shall exceed said amount) Tenant shall, with
reasonable promptness and diligence, rebuild, replace, and repair any
damage or destruction to the Demised Premises, at its expense, in
conformity with this paragraph , in such manner as to restore the same
to an economic unit having a fair market value not less than the fair
market value of the Demised Premises immediately prior to such damage or
destruction.
ARTICLE 16
DEFAULT AND REMEDIES
Section 16.01. Default.
(a) Any of the following occurrences or acts shall constitute an event
of default under this Lease:
(i) Any failure of Tenant to pay any Rent or Addition Rent due
hereunder or to perform any other of the terms or conditions of this
Lease to be observed or performed by Tenant;
(ii) If Tenant or any guarantor of this Lease shall become bankrupt or
insolvent or file any debtor proceedings to take or have taken against
Tenant in any court pursuant to any statute either of the United States
or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or
a portion of Tenant's or any such guarantor's property, or if Tenant or
any such guarantor makes an assignment for the benefit of creditors or
petitions or enters into an arrangement, or composition for the benefit
of creditors; or
(iii) The Demised Premises shall have been abandoned;
(iv) default or breach by Steel Technologies Inc. or Tenant, as the
context permits, under the terms of the Stock Purchase Agreement dated
effective as of April 1, 1997 (the "Stock Agreement") by and between
Steel Technologies Inc. and the Sellers named therein, involving the
purchase of all of the outstanding capital stock of Atlantic Coil
Processing, Inc., a North Carolina corporation; the Promissory Note
dated April 1, 1997 by Steel Technologies Inc. as Maker to the Payees
named therein; the Employment Agreements dated effective April 1, 1997
between Company, Steel Technologies Inc. and the respective Employees
named therein; the Non Competition Agreements dated effective April 1,
1997 by and between Steel Technologies Inc. and the respective
Shareholders named therein or this Operating Lease dated effective April
1, 1997 by and between Company, Steel Technologies Inc., and the
Landlord named herein (collectively "Closing Documents").
(v) PROVIDED, HOWEVER, Tenant shall not be in default hereunder until
the earlier of the cure period, if any, specified in the closing
documents or, in the absence of such cure period therein, until thirty
(30) days after Landlord shall have delivered to Tenant and Steel
Technologies Inc. written notice of any such event of default and Tenant
shall fail to cure such default within the applicable cure period and
provided further that, if any default referred to in this Lease (but
excluding defaults under the other Closing Documents) can not be
reasonably be cured within such thirty (30) day period, Tenant shall not
be in default if Tenant commences to cure the failure within such thirty
(30) day period and thereafter diligently pursues the cure to
completion.
(b) If an event of default shall have happened and be continuing,
Landlord shall have the right, at its election, then, or at any time
thereafter while such event of default shall continue, to give Tenant
written notice of Landlord's intention to terminate the term of this
Lease on a date specified in such notice. Upon the giving of such
notice, the Term hereof and the estate hereby granted shall expire and
terminate on such date as fully and completely and with the same effect
as if such date were the date herein before fixed for the expiration of
the Term hereof, and all rights of Tenant hereunder shall expire and
terminate and Tenant shall surrender possession and vacate the Demised
Premises but Tenant shall remain liable as hereinafter provided.
(c) If an event of default shall have happened and be continuing,
Landlord shall have the immediate right, whether or not the Term hereof
shall have been terminated pursuant to this paragraph , to re-enter and
repossess the Demised Premises with or without process of law, and
remove all persons and property therefrom, without any liability to
Tenant arising therefrom and store the same in a public warehouse at the
cost and for the account of Tenant. No such re-entry or taking of
possession of the Demised Premises by Landlord shall be construed as an
election on Landlord's part to terminate the Term hereof, unless a
written notice of such intention be given to Tenant pursuant to this
paragraph, or unless the termination hereof be decreed by a court of
competent jurisdiction.
(d) At any time or from time to time after the repossession of the
Demised Premises or any part thereof pursuant to this paragraph, whether
or not the Term hereof shall have been terminated pursuant to this
paragraph), Landlord may relet the Demised Premises for such term or
terms (which may be greater than the Term of this Lease) and on such
conditions and for such uses as Landlord reasonably deems advisable.
(e) No expiration or termination of the Term hereof pursuant to this
paragraph, by operation of law or otherwise, and no repossession of the
Demised Premises or any part thereof pursuant to this paragraph or
otherwise, and no reletting of the Demised Premises or any part thereof
pursuant to this paragraph, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such expiration,
termination, repossession, or reletting.
(f) In the event of any expiration or termination of this Lease or
repossession of the Demised Premises by reason of the occurrence of an
event of default, Tenant will pay to Landlord the Rent, Additional Rent
and other sums required to be paid by Tenant to and including the date
of such expiration, termination, or repossession; and, thereafter,
Tenant shall, until the end of what would have been the Term hereof in
the absence of such expiration, termination, or repossession, and
whether or not the Demised Premises shall have been relet, be liable to
Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages: (i) the Rent, Additional Rent and other sums which
would be payable hereunder by Tenant in the absence of such expiration,
termination, or repossession, less (ii) the proceeds, if any, of any
reletting pursuant to this paragraph, after deducting from such proceeds
all of Landlord's expenses in connection with such reletting (including,
without limitation, reasonable attorneys' fees). Tenant will pay such
current damages on the days on which the Rent would have been payable
hereunder in the absence of such expiration, termination, or
repossession, and Landlord shall be entitled to recover the same from
Tenant on each such day.
(g) The words "enter," "re-enter," or "re-entry," as used in this
paragraph, are not restricted to their technical meaning.
Section 16.02 Additional Rights of Landlord. No right or remedy
herein conferred upon or reserved to Landlord is intended to be
exclusive of any other right or remedy, and each and every right and
remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing at law or in equity or by
statute. The failure of Landlord to insist at any time upon the strict
performance of any covenant or agreement, or to exercise any option,
right, power, or remedy contained herein shall not be construed as a
waiver or a relinquishment thereof for the future. A receipt by
Landlord of any Rent or any other sum payable hereunder with knowledge
of the breach of any covenant or agreement contained herein shall not be
deemed a waiver of such breach, and no waiver by Landlord of any
provision hereof shall be deemed to have been made unless expressed in
writing and signed by Landlord. In addition to other remedies provided
herein, Landlord shall be entitled, to the extent permitted by law, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions, or
provisions of this Lease, or to a decree compelling performance of any
of the covenants, agreements, conditions, or provisions of this Lease,
or to any other remedy allowed to Landlord at law or in equity.
Section 16.03. Default in Performance of Landlord's Covenants. In the
event Landlord shall be in default on any of its covenants contained
herein and such default continues for thirty (30) days after Tenant's
service of written notice to Landlord pursuant to the notice section
hereof of the existence of such default and Landlord is not diligently
pursuing the cure of such default at the end of said thirty (30) day
period, Tenant may perform any covenant of Landlord as to which Landlord
is in default, and Tenant shall have the right to deduct from the rental
provided for herein its costs and expenses paid out and expended.
ARTICLE 17
GUARANTEE
Section 17.01 Guaranty. As an inducement to Landlord to execute
this Lease, Steel Technologies does hereby absolutely and
unconditionally guarantee the full performance and observance of all of
the covenants, conditions and agreements provided to be performed and
observed by Tenant hereunder, including, without limitation, the prompt
payment of the Rent and Additional Rent and any and all other amounts
provided in the Lease to be paid by Tenant. Steel Technologies Inc.
hereby waives notice of non payment, non performance or non observance
and all other notices and all proof or demands. Further, Steel
Technologies Inc. expressly agrees and acknowledges that its obligations
hereunder shall in no way be terminated, effected or impaired by reason
of the granting by Landlord of any indulgences to Tenant or by reason of
the assertion against Tenant of any of the rights or remedies reserved
to Landlord pursuant to the provisions of this Lease, or by the relief
of the Tenant from any of Tenant's obligations under the Lease by
operation of law or otherwise, the undersigned hereby waiving all
suretyship defenses. The undersigned further covenants and agrees that
this guarantee obligation shall remain and continue in full force and
effect and to any renewal, modification or extension of the Lease,
whether or not Steel Technologies Inc. shall have received any notice of
or consented to such renewal, modification or extension. Steel
Technologies Inc. Further agrees that its liability hereunder shall be
primary, and that in any right of action which shall accrue to Landlord
under the Lease, Landlord may, at its option, proceed against Steel
Technologies Inc. and Tenant, jointly or severally, and may proceed
against Steel Technologies Inc. without having commenced any action
against or having obtained any judgment against Tenant.
ARTICLE 18
PURCHASE OPTION
Section 18.01 Purchase Option Amount Tenant has the option, but not
the obligation, to purchase from Landlord the Demised Premises and all
improvements including without limit 11, 12, 16 during the Term of the
lease according to the following schedule: no option during the first
lease year, no option during the second lease year, no option during the
third lease year, $2,400,000 during the fourth lease year, $2,300,000
during the fifth lease year and $3,000,000 during the sixth lease year.
Section 18.02 Payment of Purchase Option Amount In the event that
Tenant exercises its option to purchase from Landlord the Demised
Premises by written notice within the option period: (a) the required
payment shall be delivered to the Landlord by certified check, wire
transfer, or other means of immediately available funds; and (b) the
conveyance shall be by General Warranty Deed free and clear of all liens
and encumbrances, and (c) Closing shall be held within sixty (60) days
of notice of exercise or such other period of time as the parties may
agree.
ARTICLE 19
ENVIRONMENTAL MATTERS
(LANDLORD)
Section 19.01. Environmental Laws and Hazardous Substances. For
purposes herein, the term "Environmental Law(s) shall mean any federal,
state or local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards of
conduct concerning any Hazardous Substance, as now or at any time
hereinafter in effect. For purposes herein, the term "Hazardous
Substance(s)" shall have the meaning ascribed in any Environmental Law
to any hazardous, toxic or dangerous waste, substance, pollutant or
material.
Section 19.02. Compliance with Environmental Laws. Landlord certifies
that (i) Landlord will not violate, in connection with the use,
ownership, maintenance or operation of the Demised Premises, any
Environmental Law; (ii) Landlord, its agents, employees, and independent
contractors will not receive, handle, use, store, treat, transport and
dispose of any Hazardous Substances on Demised Premises.
Section 19.03. Absence of Hazardous Substances. Landlord certifies,
based upon reasonable investigation, that neither Landlord nor any other
person with Landlord's knowledge and/or control, including any previous
owners or Landlords of the Demised Premises, has ever caused or
permitted any Hazardous Substance to be placed, held, located or
disposed of on, under or at the Demised Premises or any part thereof and
neither the Demised Premises nor any part thereof has ever been used by
Landlord or by any other person as a dump site or storage site, whether
permanent or temporary, for any Hazardous Substance.
Section 19.04. Absence of Litigation. Landlord certifies, with respect
to the Demised Premises, that it is not a party to any litigation or
administrative proceeding, nor so far as is known by Landlord is any
litigation or administrative proceeding threatened against it, which in
either case asserts or alleges that (i) Landlord or any other person
violated any Environmental Law, (ii) Landlord or any other person is
required to clean up or take other response action due to the release or
threatened release or transportation of any Hazardous Substance, or
(iii) Landlord or any other person is required to pay all or a portion
of the cost of any past, present or future cleanup or other response
action which arises out of or is related to the release or threatened
release or transportation of any Hazardous Substance.
Section 19.05. Tanks. There are not now, nor to Landlord's knowledge
after reasonable investigation have there ever been, tanks or other
facilities on, under, or at the Demised Premises which contained
materials which, if known to be present in soils or groundwater, would
require cleanup or other response action. If there are no such tanks or
other facilities, Landlord represents after reasonable investigation
that nothing contained therein has ever been spilled, leaked or released
into the environment, soil or groundwater and that such tanks or other
facilities are in compliance with all Environmental Laws.
Section 19.06. Notices or Other Information. If Landlord acquires any
knowledge of or receives any notice or other information regarding (i)
the happening of any event involving any Hazardous Substance or (ii) any
noncompliance with regard to any environmental, health or safety matter
affecting the Demised Premises, Landlord shall immediately notify Tenant
orally and in writing and provide Tenant with copies of any written
notice or information.
Section 19.07. Right of Mitigation. Tenant shall have the right but
not the obligation and without limitation of Tenant's rights under this
Lease to take such actions as it deems necessary or advisable to clean
up or otherwise deal with any Hazardous Substance or following receipt
of any notice or information which, in the sole opinion of Tenant, could
result in action against Landlord or Tenant.
Section 19.08. Indemnification. Landlord hereby agrees to indemnify
Tenant and Steel Tech and hold Tenant and Steel Tech harmless from and
against any and all losses, liabilities, including strict liability,
damages, injuries, expenses, including reasonable attorneys' fees,
claims for damage to the environment, claims for fines or civil
penalties, costs of any settlement or judgment and claims of any and
every kind whatsoever paid, incurred or suffered by, or asserted
against, Tenant or Steel Tech by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the
presence on or under the Demised Premises of, or the release or
threatened release or transportation of, any Hazardous Substance or
arising under any Environmental Law, regardless of whether or not caused
by or within the control of Landlord and associated with Atlantic Coil
Processing, Inc. and Landlord operation of the properties prior to the
Lease Term.
Section 19.09. Agreement to Update. Landlord certifies that Landlord
shall advise Tenant in writing as soon as Landlord becomes aware of any
condition or circumstance which makes the environmental warranties,
representations or certifications contained in this Section incomplete
or inaccurate.
ARTICLE 20
ENVIRONMENTAL MATTERS
(TENANT)
Section 20.01. Environmental Laws and Hazardous Substances. For
purposes herein, the term "Environmental Law(s) shall mean any federal,
state or local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to, or imposing liability or standards of
conduct concerning any Hazardous Substance, as now or at any time
hereinafter in effect. For purposes herein, the term "Hazardous
Substance(s)" shall have the meaning ascribed in any Environmental Law
to any hazardous, toxic or dangerous waste, substance, pollutant or
material.
Section 20.02. Compliance with Environmental Laws. Tenant certifies
that (i) Tenant will not violate, in connection with the use,
maintenance or operation of the Demised Premises, any Environmental Law;
(ii) Tenant, its agents, employees, and independent contractors will not
receive, handle, use, store, treat, transport and dispose of any
Hazardous Substances on Demised Premises.
Section 20.03. Notices or Other Information. If Tenant acquires any
knowledge of or receives any notice or other information regarding (i)
the happening of any event involving any Hazardous Substance or (ii) any
noncompliance with regard to any environmental, health or safety matter
affecting the Demised Premises, Tenant shall immediately notify landlord
orally and in writing and provide Landlord with copies of any written
notice or information.
Section 20.04. Right of Mitigation. Landlord shall have the right
but not the obligation and without limitation of Landlord's rights under
this Lease to take such actions as it deems necessary or advisable to
clean up or otherwise deal with any Hazardous Substance or following
receipt of any notice or information which, in the sole opinion of
Landlord, could result in action against Tenant or Landlord.
Section 20.05. Indemnification. Tenant hereby agrees to indemnify
Landlord and hold Landlord harmless from and against any and all losses,
liabilities, including strict liability, damages, injuries, expenses,
including reasonable attorneys' fees, claims for damage to the
environment, claims for fines or civil penalties, costs of any
settlement or judgment and claims of any and every kind whatsoever paid,
incurred or suffered by, or asserted against, Landlord by any person or
entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under the Demised Premises of, or
the release or threatened release or transportation of, any Hazardous
Substance or arising under any Environmental Law, regardless of whether
or not caused by or within the control of Tenant and associated with
Tenant's operation of the properties during the Lease Term.
ARTICLE 21
CONDEMNATION, ASSIGNMENT, SUBLEASE OR LICENSE
Section 21.01. The Taking. If the Demised Premises, or any part
thereof, should be taken or condemned for public or quasipublic use
under any statute or by the right of eminent domain, or in lieu thereof,
if the Demised Premises are sold to a public body under threat or
proposal of condemnation, or if the grade of any street or highway
adjoining or abutting the Demised Premises is changed or access to such
street or highway is limited by governmental decree or order so as to
limit free ingress and egress to and from the Demised Premises or
otherwise to affect materially and adversely the use of the Demised
Premises, then Tenant, at its option, may terminate this Lease (except
for purposes of pursuing its claims for damages as provided herein) and
cease to pay rent as of the date possession is taken, and any award or
settlement for damages or sale proceeds shall be distributed to the
parties in proportion to the value of their respective interests in the
Demised Premises. In such taking, condemnation, change of grade,
limitation of access or like proceeding, the parties thereto shall
represent their own interests and shall present and prosecute their own
claims for damages and neither party shall be liable to the other for
any recovery obtained.
Section 21.02. Tenant's Option. In the event Tenant does not exercise
its option to terminate as aforesaid, Tenant shall be entitled to a
reduction of rental payments in proportion to the amount by which the
gross area of the Demised Premises is reduced by such taking or loss and
such reduction shall be retroactive to the date when Tenant was deprived
of the full and complete use of all the Demised Premises.
Section 21.03. More Than One Taking. If more than one taking or
condemnation occurs during the Demised Term, the rights of the parties,
as provided in this Article, shall be determined as if all such takings
or condemnations had all occurred at the time of the last taking, and
the effect of all such takings or condemnations shall be considered
cumulatively.
Section 21.04. Assignment, Sublease or License. Tenant may assign or
sublease the Demised Premises, or any right or privilege connected
therewith, or allow any other person to occupy the premises or any part
thereof without first obtaining the written consent of Landlord,
provided, however, that such assignment or sublease shall not affect
Tenant's or Steel Tech'sliability hereunder.
ARTICLE 22
ESTOPPEL CERTIFICATE
Section 22.01 Tenant Estoppel Certificate. Within thirty (30) days
after written request from Landlord, Tenant shall execute, acknowledge,
and deliver to Landlord an estoppel certificate certifying: (a) that
this Lease is unmodified and in full effect (or, if there have been
modifications, that this Lease is in full effect as modified, and
setting forth such modifications); (b) the dates to which the Rent and
other sums payable hereunder have been paid; (c) either stating that to
the knowledge of the signer of such certificate, no default exists
hereunder, or specifying each such default of which the signer may have
knowledge; and (d) such other matters as may reasonably be requested by
the other party, its lender, assignee or purchaser. Any such estoppel
certificate may be relied upon by any such lender, purchaser or assignee
for estoppel purposes only.
ARTICLE 23
TRANSFER OF LANDLORD'S INTEREST
Section 23.01 Transfer of Landlord's Interest. In the event of
the sale, assignment or transfer by Landlord of its interest in the
Leased Premises or in this Lease (other than a collateral assignment to
secure a debt of Landlord) to an unrelated third party, Landlord shall
thereupon be released or discharged from all of its covenants and
obligations hereunder, except such obligations as shall have occurred
prior to any such sale, assignment or transfer upon the written
assumption of this Lease by such successor in interest; and Tenant
agrees to look solely to such successor in interest of Landlord for
performance of such obligations Landlord shall thereby be discharged of
any further obligations relating thereto. Landlord's assignment of the
Lease, or of any or all of its rights herein, shall in no matter affect
Tenant's obligations hereunder. Tenant shall thereafter attorn and look
to such assignee, as Landlord, provided Tenant has first received
written notice of such assignment of Landlord's interest.
ARTICLE 24
SUBORDINATION
Section 24.01. Subordination. Tenant agrees that this Lease shall,
at all times, be subject and subordinate to the lien of any mortgagee
(which terms shall include all security instruments) that may be placed
on the Demised Premises by Landlord and Tenant agrees, upon demand,
without cost, to execute any instrument that may be required to
effectuate such subordination and will attorn to such mortgagee,
provided however, such mortgagee agrees that, so long as Tenant shall
not be in default under the terms of this Lease, said Lease shall not be
terminated prior to the end of the Term nor shall any of Tenant's rights
and obligations under this Lease be disturbed by any steps or
proceedings taken by any mortgagee, lessor or other holder of a right of
record effecting the real property in the exercise of any of its rights
under the instrument wherein the right is authorized.
ARTICLE 25
SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES
Section 25.01 Surrender of Premises; Removal of Trade Fixtures.
(a) Tenant will deliver up the Demised Premises at the end of the term
or any holdover period in good order and condition.
(b) If no default or event of default hereunder has happened and is
continuing, Tenant may, at any time during the term hereof, remove from
the Demised Premises any trade fixtures, furnishings, machinery, or
equipment belonging to Tenant or third parties, provided that Tenant
shall promptly repair any damage to the Demised Premises caused by such
removal.
ARTICLE 26
HOLDING OVER
Section 26.01 Holding Over. In the event that Tenant remains in
possession of the Demised Premises after the expiration or earlier
termination of the term hereof, Tenant shall occupy the Demised Premises
under a month to month tenancy subject to all of the conditions of this
Lease insofar as the same are consistent with such tenancy, except that
Tenant shall pay 125% of the Rent, plus any other sums payable
hereunder.
ARTICLE 27
TENANT RIGHT TO TERMINATE
Section 27.01. Tenant Right to Terminate. Tenant shall have the right
to terminate this Lease at any time within thirty (30) days of the date
hereof by delivery of a written termination statement to Landlord,
should Tenant be unable to obtain all governmental permits and/or
approvals necessary for the operation of its business on the Demised
Premises. In the event of such termination, neither Landlord nor Tenant
shall have further responsibility to the other.
ARTICLE 28
MISCELLANEOUS
Section 28.01. Covenant of Title. Landlord covenants, represents and
warrants that it has full right and power to execute and perform its
obligations under this Lease and to grant the estate demised herein and
that Tenant, on payment of the rent herein reserved and performance of
the covenants and agreements herein contained, shall peaceably and
quietly have, hold and enjoy the Demised Premises during the Term
without molestation or hindrance by any person, and, if at any time
during the Term, the title of Landlord shall fail or it shall be
discovered that its title does not enable Landlord to grant the term
hereby demised, Tenant shall have the option at Landlord's expense to
correct or contest such defect or action, or to annul and void this
Lease with full reservation of its rights to damages, if any, against
Landlord.
Section 28.02. Compliance with Law. Upon receipt of notice from any
duly constituted public authorities, Tenant shall comply with their
lawful requirements and save Landlord harmless from penalties, fines,
costs or damages resulting from Tenant's occupancy and use of the
Demised Premises, provided such penalties, fines, costs or damages
result from an act or omission of Tenant. Landlord warrants to Tenant
that the Demised Premises are in full compliance with all laws and
regulations of governmental authorities at the inception of the Lease
and will hold Tenant harmless for any violation not caused by Tenant and
will proceed with reasonable diligence at its cost to correct any
violation not caused by Tenant as provided above.
Section 28.03. Relationship of Parties. Nothing herein contained shall
be deemed or construed by the parties hereto, nor by any third party, as
creating the relationship of principal and agent, or of partnership, or
of joint venture, between the parties hereto, if being agreed that
neither the method of computation of rents nor any other provisions
named herein, nor any acts of the parties herein, shall be deemed to
create any relationship between the parties hereto other than the
relationship of Landlord and Tenant.
Section 28.04. Environmental Studies. Tenant has caused appropriate
environmental studies to be performed on the Demised Premises so as to
determine the current environmental status of the properties.
Section 28.05. Waiver. No waiver of any condition or covenant of this
Lease by either party shall be deemed to imply or constitute a further
waiver of the same or any other condition or covenant of this Lease.
Section 28.06. Successors. This Lease shall inure to the benefit of
and be binding upon the parties hereto, their respective heirs, personal
representatives, successors and assigns.
Section 28.07. Entirety, Severability and Law. This Lease shall
constitute the entire agreement between the parties and shall not be
modified in any manner except by written instrument executed by the
parties. The invalidity or unperformability of any provision hereof
shall not affect or impair any other provision hereof. Each term and
provision hereof shall be performed and enforced to the fullest extent
permitted by and in accordance with North Carolina law.
Section 28.08 Force Majeure. Landlord and Tenant shall
be excused for the period of any delay in performance of any obligations
hereunder when prevented from doing so by the wrongful or negligent acts
or omissions of the other party or by causes beyond either party's
reasonable control.
Section 28.09. Entire Agreement. This Lease Agreement shall be
considered to be the only agreement between the parties hereto
pertaining to the Demised Premises. All negotiations and oral
agreements acceptable to both parties are included herein.
Section 28.10. Law of North Carolina. This Lease shall be governed by
the laws of the State of North Carolina.
Section 28.11. Notices. All notices, requests, consents, and other
communications shall be in writing and shall be addressed to the
receiving party's address by first-class mail, return receipt requested
and by facsimile.
If to Landlord: :
Xxxxx Xxxxxxxx
Managing Partner
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
With a copy to :
Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxxx Xxxxx,Xxxxx 206
XX Xxx 00000
Xxxxxxx, XX 00000
Fax No: 000-000-0000
If to Tenant:
Xxxx Xxx
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax No: (000) 000-0000
With a copy to:
Steel Technologies Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX l 40245
Attn: Xxxx Xxxxxxx
Fax No: (000) 000-0000
To indicate their understanding of and consent and agreement to the
foregoing terms, the parties have executed this Lease on the date first
above written.
LANDLORD:
By: _______________________________
Title: ____________________________
TENANT:
By: _______________________________
Title: ____________________________
STEEL TECHNOLOGIES INC.
By:________________________________
Title:_______________________________
