Exhibit 10.AA
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is dated, made and
effective as of May 8, 2003, by and among Parlex Corporation, a duly
organized Massachusetts corporation, having an address at One Parlex Place,
Methuen, Massachusetts, 01844 ("Seller"), and Taurus Methuen LLC, a duly
organized Delaware limited liability company ("Purchaser"), with an address
at c/o Taurus New England Investments Corp., 118 Milk Street, Boston, MA
02109.
1. Property. Seller agrees to sell and Purchaser agrees to buy, subject
to the terms and conditions of this Agreement, the following
described property:
(a) the following parcels of land:
(i) that certain parcel of land located at One Parlex Place,
Methuen, Essex County, Massachusetts as more particularly
described on Exhibit A-1 (hereinafter referred to as the
"Parcel" or the "Premises"); and (ii) all right, title
and interest of Seller in and to all rights, privileges
and easements appurtenant to the Premises, including,
without limitation, all development rights, air rights,
water, water rights, riparian rights and water stock
relating to the Premises and any rights-of-way or other
appurtenances used in connection with the beneficial use
and enjoyment of the Premises and all of Seller's right,
title and interest in and to all roads and alleys
adjoining or servicing the Premises;
(b) the approximately 172,216 square foot building on the Parcel
(the "Building") and all other improvements located on the
Premises (collectively, the "Improvements");
(c) all right, title and interest of Seller in and to all permits,
licenses and approvals with respect to the ownership, use and
occupancy of the Premises and the Improvements any all other
intangible property now or hereafter owned by Seller and used
in the ownership of the Premises; and
(d) all HVAC and boiler systems and other personal property owned
by Seller located on or in or used in connection with the
ownership of the Premises but excluding all furniture, fixtures
and equipment used in Seller's business and not customarily
included in real estate sales.
The right, title and interest specified in subparagraphs (a) - (d) of
this Section 1 are hereinafter sometimes collectively called the
"Property". The right, title and interest specified
in Subparagraphs (a) and (b) of this Section 1 are hereinafter
sometimes collectively called the "Real Property".
2. Purchase Price. The agreed purchase price for the Property is: (i)
Five Million Three Hundred and Fifty Thousand Dollars ($5,350,000)
(the "Minimum/Cash Portion of the Purchase Price"); plus (ii) any
portion of the Earn Out Amount (defined below) that may become due
if, as and when provided for in Section 28 below; plus (iii) Two
Million Six Hundred and Fifty Thousand Dollars ($2,650,000) (the
"Financed Earn Out Amount") which shall be due only if no Special
Default (defined below) occurs at any time on or before the maturity
date of the Note (defined below).
(a) Purchaser shall pay an earnest money deposit of Two Hundred
Thousand Dollars ($200,000) to the Boston office of Stewart
Title Guaranty Insurance Company (the "Title Company") with an
address at 99 Summer Street, 4th Floor, Boston, Massachusetts
02110, Attn: Mr. Terrance Miklas, which deposit shall be
payable in installments as follows:
(i) On the date hereof, Purchaser will deposit One Hundred
Thousand Dollars ($100,000); and
(ii) On or before 5:00 p.m. (Boston time) on the Due Diligence
Expiration Date (as such term is hereinafter defined),
unless this Agreement terminates in accordance with
Section 5(e) below, Purchaser shall deposit an additional
One Hundred Thousand Dollars ($100,000).
As used herein, the term "Deposit" shall mean the amounts
deposited with the Title Company in accordance with the
immediately preceding sentence and all interest and earnings
thereon. The Deposit shall be held by the Title Company, as
escrow agent. The Deposit shall be placed in an interest
bearing money market or similar account reasonably acceptable
to Seller and Purchaser. The Deposit shall be held in escrow
subject to the terms of this Agreement and in a manner
sufficient to identify such as being held in escrow pursuant to
this Agreement. The Deposit, together with all interest
accrued thereon, shall be applied to the Minimum Cash Portion
of the Purchase Price at Closing or paid to Seller or Purchaser
as provided elsewhere in this Agreement. Upon request, each of
Purchaser and Seller shall provide to the Title Company
taxpayer identification numbers and W-9's for the interest on
the Deposit.
If Purchaser shall fail to deposit all or any portion of any
installment of the Deposit to be paid after the date hereof as
and when required under this Section 2(a), and if such failure
continues for more than two (2) business days, then this
Agreement shall thereupon terminate, Purchaser shall comply
with Section 5(f), any portion of the Deposit then made,
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together with all interest accrued thereon, shall be paid to
Seller, and neither party shall have any further liability
hereunder except as provided in Section 18.
(b) Notwithstanding the above definition of "Minimum Cash Portion
of the Purchase Price", and provided that no Special Default
occurs, the Two Million Six Hundred and Fifty Thousand Dollar
($2,650,000) Financed Earn Out Amount shall be paid by
promissory note (the "Note") from Purchaser to Seller on the
following terms and conditions:
(i) The Note shall have a term of three (3) years with a one
year extension option in favor of Purchaser;
(ii) Interest shall accrue on the Note at the rate of five
percent (5%) per annum in the first year, six percent
(6%) per annum in the second year, seven percent (7%) per
annum in the third year, and eight percent (8%) per annum
during the fourth year (if applicable);
(iii) Interest only on the Note shall be payable in arrears on
the tenth (10th) day of each month; provided, however,
that in no event shall amounts due under the Note in any
month ever exceed the amount of rent actually paid by
Seller under the Lease (defined below) and received by
Purchaser in good funds for such month;
(iv) The Note shall be secured by a pledge of 100% of the
ownership interests in Purchaser (the "Security").
Recourse for payment of the Note shall be limited to the
Security and in no event will any direct or indirect
owner, manager, partner, agent, affiliate, officer,
director, or employee of Purchaser have any liability
with respect to the Note or any other loan document;
(v) The Note shall be subordinate to any mortgage on the
Property (including but not limited to the Loan (defined
below)) at any time and from time to time, whether in
existence as of the date of the Note or thereafter
obtained. The foregoing provision shall be self-
operative, but Seller shall execute such documents as the
holder of such first mortgage may require from time to
time to evidence, confirm and/or effectuate such
subordination;
(vi) If the Property or all or substantially all of the
Security is sold or transferred without the Seller's
prior written consent, which consent will
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not be unreasonably withheld or delayed, then all amounts
outstanding under the Note shall become due upon such
sale; and
(vii) The Note shall be prepayable at any time and from time to
time, in whole or in part.
As used herein, the term "Special Default" means: (1) any monetary
default by the Tenant under the Lease: (a) as to which Landlord has given
Tenant written notice (the "First Notice"); (b) that is not cured within
five (5) days from the First Notice; (c) as to which Tenant has been given
a second written notice (the "Second Notice"); and (d) that is not cured
within five (5) days from the Second Notice; and/or (2) any nonmonetary
default by the Tenant under the Lease that (y) is not cured within thirty
(30) days from written notice to the Tenant or (z) is an automatic event of
default under the terms of the Lease without any provision for notice or
cure. Notwithstanding anything to the contrary herein or in the Note, the
payment of the Financed Earn Out Amount is conditioned upon the absence of
any Special Default occurring between the Closing and the maturity date of
the Note and, if any Special Default does occur during such period, then no
further payments or obligations of any kind or nature shall be due under
the Note. If any notice of a Special Default is given, the maturity date
of the Note shall automatically be deemed extended until the date that is
thirty (30) days after the expiration of the applicable cure period as set
forth in this paragraph. The provisions of the paragraph shall survive the
Closing.
(c) At the Closing, Purchaser shall pay to Seller by wire transfer
of immediately available federal funds an amount equal to the
Minimum/Cash Portion of the Purchase Price, increased or
decreased by the amount of any adjustments thereto provided for
herein, less the Deposit as provided in Section 2(a).
(d) Following the Closing, Purchaser shall pay the Earn Out Amount
(defined below) to Seller if, as and when required under
Section 28 below.
3. Closing. The closing of the sale of the Property (the "Closing")
pursuant to this Agreement shall take place at 10:00 a.m. (Boston
time) on May 28, 2003, or upon such earlier date as the parties may
agree upon in writing (the "Closing Date"), at the offices of Kutchin
& Rufo, P.C. at 175 Federal Street, Boston, Massachusetts 02110, or
at such other place and time as the parties may agree upon in
writing; provided, however, that Purchaser shall have the right to
extend the Closing Date for up to two (2) weeks.
4. Title. The title to the Real Property shall be free from all
encumbrances, except:
(a) provisions of existing building and zoning laws;
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(b) the matters set forth in that certain Commitment for Title
Insurance dated February 12, 2003 issued by the Title Company
(Commitment No. C-99122429295); provided, however, that (i)
notwithstanding anything herein to the contrary, and as agreed
to by Seller and Purchaser before the date hereof, the legal
description of the Property shall reflect the consolidation of
the three parcels comprising the Property into one lot, as
shown on that certain approval not required plan entitled,
"Plan of Land for Parlex Corp. in Methuen, Mass" prepared by
R.J. Pica Engineering, Co., October 9, 1997, recorded with the
Essex County Registry of Deeds as Plan Number 13210; (ii) as
agreed to by Seller and Purchaser before the date hereof, any
UCC Financing Statements filed at the Essex County Registry of
Deeds, the Massachusetts Secretary of State and/or the City of
Methuen that relate to Monetary Liens shall be discharged and
removed of record as of the Closing; and (iii) the standard
exceptions as are found in an ALTA Owner's Policy of Title
Insurance modified so as to exclude from exceptions to coverage
(a) real estate taxes and assessments, water and sewer charges
due and payable on or before the Closing Date, (b) mechanics'
and materialmen's liens, (c) rights of tenants or persons in
possession other than the Seller in accordance with the Lease
(defined below), (d) creditors' rights, and (v) survey matters
other than matters disclosed on the Plan (defined below);
(c) real estate taxes and water and sewer charges assessed against
the Real Property for the current year as are not due and
payable on or before the Closing Date;
(d) any liens for municipal betterments or special assessments
assessed after the date of this Agreement;
(e) such other matters affecting title to the Real Property as: (i)
are disclosed on the ALTA survey entitled "Parlex Corporation
145 Milk Street, Methuen, Massachusetts" dated March 13, 2003
by Vanasse Hangen Brustlin, Inc. (project number 08477) (the
"Survey"); (ii) exist as of record as of the date of the
Commitment for Title Insurance referred to in Subsection (b)
above; and (iii) existed as of the date of the Survey and were
observable as of the date of the Survey based on an inspection
of the Property; and
(f) any exceptions caused by Purchaser or Purchaser's
Representatives (hereinafter defined).
The encumbrances referenced in clauses (a) through (f) above, other
than any Monetary Liens (hereinafter defined), shall be collectively
referred to herein as the "Permitted Title Exceptions". As used
herein, the term "Monetary Liens" shall mean any mortgage, deed of
trust, financing statement, mechanics' or materialmens' lien or other
lien securing the payment of money. The amount of any past due
unpaid taxes, assessments, business improvement district charges,
public assembly charges, water charges and sewer charges which Seller
is obligated to pay and discharge, with the interest and penalties
thereon to the Closing, may at the option of Seller be
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paid to Purchaser out of the balance of the Purchase Price, provided
official bills therefor with interest and penalties thereon figured
to said date are furnished by Seller at the Closing. The existence of
any such taxes or charges shall not be deemed objections to title if
Seller shall comply with the foregoing requirements.
Simultaneous with or prior to the execution and delivery hereof,
Seller has provided Purchaser with copies of the following title
policy and plans with respect to the Premises: that certain
Lender's Policy of Title Insurance, Policy Number G47-1277078, issued
by the Lawyer's Title Insurance Corporation (the "Title Policy"), and
that certain As Built Site Plan dated June 7, 1999 by R.J. Pica
Engineering Co., Inc. (the "Plan").
Notwithstanding anything to the contrary in this Agreement, Seller
shall be obligated, on or before the Closing, to discharge and remove
of record any Monetary Liens.
If the Closing occurs, Seller may use the Minimum/Cash Portion of the
Purchase Price to remove Monetary Liens.
5. Limited Contingencies for Due Diligence Investigations.
(a) Purchaser's Independent Investigation. Purchaser shall have the
right to conduct or cause to be conducted with reputable
companies, at Purchaser's sole cost and expense, such audits,
assessments, reviews, investigations, inspections, tests and
studies of the Property including all buildings, systems,
fixtures and equipment, the environmental condition of the
Premises and Improvements, the title to the Premises and
Improvements, a survey of the Premises and Improvements, the
compliance of the Property with applicable laws and such other
engineering, legal, the financial condition of the Seller and
other matters relating to or affecting the Property and/or the
Seller as Purchaser deems necessary or desirable in its
absolute discretion in connection with its purchase of the
Property and lease back of the same to the Seller
("Investigations"). Subject to Section 5(b) below, Seller
shall make available for Purchaser's review, at reasonable
times after reasonable prior notice, all documents and files
owned by Seller in the Seller's possession or control
concerning the maintenance, management and operation of the
Property, including, without limitation, all books and records,
plans, specifications, Contracts, engineering and environmental
reports, roof and other warranties and guarantees relating to
the Improvements, certificates of occupancy and other permits
and approvals relating to the Property, calculations of tax and
operating reimbursements and utility bills, but specifically
excluding the following (collectively, "Confidential Property
Information"): internal minutes or deliberations of Seller or
any governing body, committee, board or council thereof,
internal memoranda prepared by or for the benefit of Seller,
appraisals, financial projections, legally privileged
correspondence and similar proprietary and archival
information. Purchaser shall continue
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to have access to the Real Property subsequent to the Due
Diligence Expiration Date to conduct additional Investigations
in accordance with the terms hereof.
(b) Conduct of Investigations. All Investigations under Section
5(a) which are to be conducted at the Property shall be done
after at least one business day prior notice (which may be
oral) to Seller. Purchaser, its agents, employees,
contractors, consultants, other representatives and anyone else
acting by or on behalf of Purchaser (collectively, "Purchaser's
Representatives") will at Seller's request allow a
representative of Seller to be present during any
Investigations. Purchaser shall take all reasonable
precautions to minimize the impact to the Property of any
Investigations. Purchaser agrees to discontinue any
Investigations promptly upon notice from Seller in the event
such Investigations present a danger to the life, health or
safety of the public or would otherwise adversely impact the
Property. With respect to any intrusive environmental site
testing, Purchaser agrees to provide Seller at least two
business days' prior notice thereof, which notice shall set
forth the scope of any proposed activities relating to
investigation of soil or groundwater quality or for the
subsurface investigation or invasive testing of the Premises
and the Improvements for Seller's prior approval, and to permit
Seller's representatives to be present during any such
activities. Purchaser understands that it may only conduct a
so-called Phase I environmental site assessment and that it may
not undertake any invasive soil or groundwater testing for
contaminants or any subsurface investigation or other invasive
testing of the Property without Seller's prior written
approval, which consent will not be unreasonably withheld,
condition or delayed and shall be deemed given unless, within
two (2) business days from Purchaser's approval request, Seller
provides Purchaser with a written notice of disapproval that
sets forth the reasons for such disapproval in reasonable
detail. If Purchaser or Purchaser's Representatives take any
samples from the Property in connection with any environmental
testing, then upon Seller's request, Purchaser shall provide to
Seller a portion of such sample being tested to allow Seller,
if it so chooses, to perform its own testing. Seller agrees to
use commercially reasonable efforts (but at no cost or expense
to Seller) to cooperate with Purchaser in the conduct of its
Investigations.
(c) Restoration, Liability, Indemnity and Insurance. Purchaser
shall, immediately after any entry upon or the conduct of any
Investigation of the Property, restore the Property, at
Purchaser's sole risk, cost and expense, to the condition which
existed immediately prior thereto. Purchaser assumes all risks
associated with Purchaser's and Purchaser's Representatives'
entry and Investigations of the Property and agrees to protect,
defend (with counsel reasonably satisfactory to Seller),
indemnify and hold harmless Seller and Seller's members,
partners, attorneys, agents, employees, contractors and
representatives from and against any and all costs, losses,
claims, damages, liabilities, expenses and other obligations
(including, without limitation, attorneys' fees) on account of
any loss, damage or injury to
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any person or property (including without limitation the
Property) by reason of any act, omission or negligence of
Purchaser or any of Purchaser's Representatives arising from or
out of the entry or activities of Purchaser or Purchaser's
Representatives on, at or with respect to the Property.
Purchaser shall, prior to any such entry, obtain and maintain,
and shall cause each of its contractors and agents to maintain
(and shall deliver to Seller evidence thereof), at Purchaser's
sole cost and expense, insurance providing coverage against any
claim for personal liability or property damage caused by
Purchaser or its agents, employees or contractors in connection
with such inspections or tests (including liability insurance
and worker's compensation insurance) with such insurance
companies, as are reasonably satisfactory to Seller, and naming
Seller as an additional insured, covering all activities to be
conducted by Purchaser and Purchaser's Representatives. Such
insurance coverages may not be materially changed or terminated
without at least thirty (30) days prior written notice to
Seller. Notwithstanding the foregoing, the above indemnity
shall not include any costs or damages caused by (1) the acts
of the Seller or its agents or representatives, (2) any claims
of diminution in the value of the Property as a consequence of
the results revealed by such tests and inspections or (3) any
pre-existing condition of the Property. The foregoing
indemnification obligation shall survive the Closing or
termination of this Agreement for a period of six (6) months
and no claim shall be valid unless asserted in writing within
that time.
(d) Confidentiality. All information obtained by Purchaser or
Purchaser's Representatives with respect to the Property,
whether from Seller or independently (and whether directly or
through outside consultants) shall be held in confidence by
Purchaser and Purchaser's Representatives and not disclosed to
third parties except as necessary in connection with obtaining
financing to acquire the Property. Notwithstanding the
foregoing, (a) Purchaser may disclose the such information to
its owners, legal counsel, accountants, lenders, potential
investors, and similar third parties that need to review the
same in connection with Purchaser's purchase of the Property in
accordance with the terms of this Agreement, and (b) Purchaser
may disclose such information to the extent that such
disclosure is required by law or court order or by discovery
rules in any legal proceeding, provided that Purchaser first
shall provide written notice thereof to Seller. Prior to or
following the Closing, (1) none of Purchaser, its members,
partners, directors, officers, principals or employees, or any
direct or indirect beneficial owner of Purchaser shall issue or
make any public statement (written or oral) or any press
release regarding the subject matter hereof without the prior
written consent (including as to the content and manner of such
public statement or press release) of Seller, which consent
shall not be unreasonably withheld or delayed, and (2) none of
Seller, its directors, officers, principals or employees, shall
issue or make any public statement (written or oral) or any
press release regarding the subject matter hereof without the
prior written consent (including as to the content and manner
of such
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public statement or press release) of Purchaser, which
consent shall not be unreasonably withheld or delayed.
Notwithstanding any provision in this Agreement to the contrary
and except with respect to making necessary standard inquires
of the Massachusetts Department of Environmental Protection and
other relevant governmental agencies and officials in
connection with Purchaser's Investigations, Purchaser shall not
contact any governmental official or representative regarding
Hazardous Materials (hereinafter defined) on, or the
environmental condition of, the Real Property without Seller's
prior written consent thereto, which consent shall not be
unreasonably withheld. Said consent shall be deemed given if
not received by Purchaser within two (2) business days of said
request. In addition, if Seller's consent is required and
obtained by Purchaser, Seller shall (x) be entitled to review,
modify and approve any written communication to such official
or representative and (y) receive at least two (2) business
days prior written notice of any intended contact and to have a
representative present when Purchaser has any such contact with
any governmental official or representative. Provided Purchaser
has given Seller prior written notice required by this Section
of the date, time and place of any such meeting Purchaser
intends to have with governmental officials or representatives,
Purchaser may hold such meeting(s) if Seller's representative
fails to attend.
(e) Purchaser's Option to Terminate. Purchaser's obligations under
this Agreement are conditioned on the satisfaction of the
following conditions (collectively, the "Contingencies") no
later than 6:00 p.m. (Boston time) on May 23, 2003 (the "Due
Diligence Expiration Date"):
(i) Purchaser shall have obtained a firm written commitment
for a nonrecourse loan for the acquisition of the
Property of not less than Four Million Eight Hundred and
Eighteen Thousand Dollars ($4,818,000.00) from a third
party lender (the "Lender") on terms and conditions
satisfactory to Purchaser in its sole and unreviewable
discretion (the "Loan");
(ii) Purchaser shall have received a written certification
from Seller stating that: (a) the Improvements as
constructed conform in all material respects to those
improvements approved in the 1998 Variance, the 1998
Special Permit and the 1998 Site Plan Approval; and (b)
duly issued certificates of occupancy are in effect for
all portions of the Property; and
(iii) Purchaser shall be satisfied in its sole and unreviewable
discretion with the environmental condition of the
Property and all operations relating thereto.
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If any of the Contingencies are not satisfied, Purchaser may,
in its absolute and unreviewable discretion, elect not to
proceed with the transactions provided for by this Agreement
and terminate this Agreement by giving Seller written notice
(the "Termination Notice") of Purchaser's election to terminate
on or before the Due Diligence Expiration Date, in which case
this Agreement shall terminate, the Deposit, together with any
interest accrued thereon, shall be paid to Purchaser and
neither party shall have any further liability hereunder except
as provided in Section 21. In addition, and without limiting
Purchaser's right to terminate this Agreement in accordance
with the immediately preceding sentence, this Agreement shall
automatically terminate unless, before the Due Diligence
Expiration Date, Purchaser gives Seller written notice (the
"Notice to Proceed") that the Contingencies are satisfied. In
the event that either: (a) Purchaser gives a Termination Notice
before the Due Diligence Expiration Date, or (b) Purchaser does
not give a Termination Notice but fails to give the Notice to
Proceed before the end of the Due Diligence Expiration Date,
this Agreement shall automatically terminate, the Deposit (and
all interest thereon) promptly shall be returned to Purchaser,
and Seller and Purchaser shall have no further obligations or
liabilities to each other hereunder. If Purchaser gives the
Notice to Proceed on or before the Due Diligence Expiration
Date, then Purchaser shall be deemed to have waived
conclusively Purchaser's right to terminate this Agreement
pursuant to this Section 5(e).
(f) Return of Due Diligence Information. If for any reason other
than a default by Seller a Closing does not occur with respect
to the Property, Purchaser shall (i) return to Seller all
materials and other information regarding the Property that
Seller has provided to Purchaser and all copies or photocopies
thereof; (ii) deliver immediately to Seller copies of all
written reports resulting from physical Investigations of the
Property conducted by Purchaser's Representatives and not
previously delivered to Seller, but only upon payment to
Purchaser of the costs incurred by it with respect thereto and
in all events without any representations or warranties; and
(iii) return to Seller or destroy any remaining such materials
and information in its possession. This Section 5(f) shall
survive the termination of this Agreement.
(g) Investigations Resulting in Required Disclosure. Purchaser
agrees that in the event the need arises under applicable law
to notify any governmental authority of any condition at any of
the Property, as a result of any findings in any environmental
assessment or any other Investigation done by or at the
direction of Purchaser or Purchaser's Representatives,
Purchaser shall immediately notify Seller and Seller, not
Purchaser or Purchaser's Representatives or anyone acting in
favor or on behalf of Purchaser or Purchaser's Representatives,
shall make such disclosure as Seller deems appropriate unless
otherwise required by applicable law.
6. Condition of Premises.
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(a) No Reliance. Except as expressly provided in this Agreement or
the Lease, the Property is to be sold pursuant to this
Agreement AS IS, WHERE IS. Except as expressly provided in
this Agreement or the Lease, no guarantees, representations or
warranties express or implied are made by Seller with respect
to the Property. Except as expressly provided herein, or in
the Lease, Purchaser expressly acknowledges and agrees that it
is not relying on any representations or warranties of any kind
whatsoever, express or implied, from Seller, its attorneys,
agents, representatives or any party purportedly acting on
behalf of Seller as to any matters concerning the Property.
Except as expressly provided herein or in the Lease Purchaser
hereby further acknowledges that any information Seller or
Cushman & Wakefield of MA, Inc. ("Broker"), or the trustees,
officers, members, partners, directors, employees, agents or
contractors of any of them has provided to Purchaser,
including, without limitation, the Title Policy and the Plan
has been provided to Purchaser solely for informational
purposes without any recourse, representation or warranty and
that Seller does not represent, warrant or guarantee the
contents or opinions contained in or the accuracy or
completeness of, or the methodology of preparation used to
produce, any such information.
By consummating the Closing, except as otherwise expressly
provided in this Agreement or the Lease, Purchaser shall be
deemed to have assumed the risk that adverse matters, including
but not limited to, construction defects and adverse physical
and environmental conditions, may not have been revealed by
Purchaser's Investigations, and Purchaser, upon Closing, shall,
except as otherwise expressly provided in this Agreement or
the, be deemed to have waived, relinquished and released
Seller, Seller's affiliates (and Seller's and Seller's
affiliates members, representatives, officers, directors, and
employees) from and against any and all claims, demands, causes
of action (including causes of action in tort), losses,
damages, liabilities, costs and expenses (including attorneys'
fees and court costs) of any and every kind or character, known
or unknown, which Purchaser might have asserted or alleged
against Seller, Seller's affiliates (and Seller's and Seller's
affiliates members, representatives, officers, directors, and
employees) at any time by reason of or arising out of any
latent or patent construction defects or physical conditions,
violations of any applicable law (including, without
limitation, any environmental laws) and any and all other acts,
omissions, events, circumstances or matters regarding the
Property. Notwithstanding the foregoing provisions, (i)
nothing set forth in this Section 6(a) shall be interpreted or
construed as limiting, restricting, extinguishing or otherwise
affecting Seller's representations, warranties and covenants
made in this Agreement or the Lease or the survivability
thereof for the time limitation herein provided; and (ii)
Seller acknowledges and agrees that, following the Closing, it
will remain responsible for the physical and environmental
condition of the Property in accordance with the terms of the
Lease.
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This Section 6(a) shall survive the Closing.
(b) Adequate Diligence. Purchaser acknowledges that this Agreement
provides for free, full and complete access to the Property and
full opportunity to fully inspect and review the Premises and
the Improvements, including all buildings, systems, fixtures
and equipment and including as to environmental matters.
Purchaser further acknowledges that this Agreement provides for
free, full and complete access to fully inspect and review (i)
the environmental condition of the Property subject to the
restrictions imposed by Section 5(b), (ii) the title to the
Property, (iii) the compliance of the Property with applicable
laws and (iv) such other engineering, legal, and other matters
relating to or affecting the Property as Purchaser may find
appropriate to satisfy itself as to all such matters. Except
as otherwise provided herein, or in the Lease, Purchaser's
decision with respect to the ultimate purchase of the Property
will be based solely upon its own Investigations and the
representations made herein. It is understood that Purchaser
has the capability to conduct due diligence investigations
sufficient for its purposes within the time periods given to
Purchaser under this Agreement.
7. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows as of the date hereof and as of the
Closing:
(a) Seller is a Massachusetts corporation duly organized and
validly existing under the laws of Massachusetts.
(b) Seller has all requisite and necessary power and authority to
execute and deliver this Agreement and to perform its
obligations hereunder.
(c) The execution and delivery of this Agreement and the
performance by Seller of its obligations hereunder has been
approved as required by the terms of its formation documents.
(d) This Agreement is the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its
terms, subject to general principles of equity, bankruptcy,
reorganization and other similar laws affecting the enforcement
of contracts generally.
(e) Other than actions or proceedings with respect to real estate
taxes assessed against the Property or any pending litigation
or insurance claims all of which matters are listed on Schedule
2, to Seller's knowledge, there are no actions or proceedings
or pending insurance claims before any court, administrative
agency or arbitrator by or against Seller concerning the
Property and, to Seller's knowledge, no such actions or
proceedings are threatened.
12
(f) To Seller's knowledge, Seller has received no written notice
from any governmental authority of any violation of any law
pertaining to the Property which violation is still outstanding
or of any pending or contemplated condemnation or landmark
proceedings with respect to the Property.
(g) Except as set forth on Schedule 3 or in the materials, reports,
documents or other instruments listed thereon, and with the
exception of materials used in Seller's business, in compliance
with all applicable laws and regulations to Seller's knowledge,
(i) no Hazardous Materials are or have been generated, stored,
released, located, discharged or disposed of, used or handled
from, at or upon the Property and (ii) no Hazardous Materials
are or have been located on the Property. As used in this
Agreement, "Hazardous Materials" means any substance, chemical,
waste or material that is or becomes regulated by any federal,
state or local government or governmental agency or authority
because of its toxicity, infectiousness, radioactivity,
explosiveness, ignitability, corrosiveness or reactivity,
including, without limitation, asbestos or any substance
containing more than 0.1 percent asbestos, the group of
compounds known as polychlorinated biphenyls, flammable
explosives, petroleum or any refined petroleum product.
(h) The operating statements, financial statements, and fiscal 2003
annual operating plan furnished by Seller to Purchaser are true
and correct in all material respects, and fairly reflect the
financial condition, the financial results or other subject
matter referenced in this subsection (h) as of the dates
thereof, and there have been no material adverse changes since
the date of such statements.
(i) Seller has delivered or made available to Purchaser (without
representation or warranty, express or implied, as to the
contents thereof) true and complete copies of all third party
reports, recommendations and related materials in its
possession or control pertaining to the physical conditions
affecting and/or hazardous materials located on, in or at the
Property.
(j) Seller has delivered or made available to Purchaser all plans
and specifications in Seller's possession or control and
relating to the Property (the "Plans").
(k) Seller has delivered or made available to Purchaser true and
complete copies of all permits, licenses and approvals in
Seller's possession or control and relating to the ownership
and operation of the Property (the "Permits"). To the best of
Seller's knowledge, the Permits are in full force and effect
and free from material default. Seller has received no written
notice that any license, permit or approval, other than the
Permits, is required in connection with the current ownership
or use and occupancy of the Property.
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(l) Seller has received no written notice of any violation of the
Occupational Safety and Health Act and to Seller's knowledge,
no such violations exist at the Property.
(m) There are no leases, licenses, or other occupancy agreements
pertaining to the Property currently, nor shall there be any
(other than the Lease) at the Closing.
(n) Schedule 5 sets forth a complete and accurate list of all
service, management, leasing, brokerage, and other contracts
affecting the Property or operation thereof (the "Contracts").
Seller has given Purchaser true and complete copies of: (1):
the Contracts; and (2) all guarantees and warranties in
Seller's possession or control and relating to the Property,
including but not limited to all roof warranties. To the best
of Seller's knowledge, the Contracts and such guarantees and
warranties are in full force and effect and free from material
default. None of the Contracts shall be assigned to Purchaser
at Closing.
(o) The Property is not all or substantially all of the assets of
the Seller in Massachusetts. As used herein, the phrase "to
Seller's knowledge" shall mean the actual knowledge of Jonathan
Kosheff, Seller's CFO, and Anthony Caraco, Seller's facilities
manager for the Property (collectively, Seller's "Designated
Representatives") without independent investigation and shall
not be construed to refer to the knowledge of any other
officer, agent, or employee of Seller, or any affiliate of
Seller, or to impose or have imposed upon Seller's Designated
Representatives any duty to investigate the matters to which
such knowledge, or the absence thereof, pertains, including,
but not limited to, the contents of the files, documents and
materials made available to or disclosed to Purchaser or the
contents of files maintained by Seller's Designated
Representatives, the Seller, or the affiliates of any of them.
There shall be no personal liability on the part of the
foregoing persons arising out of any the foregoing
representations or warranties. Seller represents to Purchaser
that Seller's Designated Representatives are the officers of
Seller most knowledgeable about the subject matters covered by
Seller's representations and warranties in this Agreement.
To the extent that Purchaser knows or is deemed to know prior
or subsequent to the execution of this Agreement, but prior to
the Due Diligence Expiration Date, that Seller's
representations and warranties are inaccurate, untrue or
incorrect in any material way, such representations and
warranties shall be deemed modified to reflect Purchaser's
knowledge or deemed knowledge, as the case may be. For
purposes of this Agreement, Purchaser shall be "deemed to know'
that a representation or warranty was untrue, inaccurate or
incorrect only to the extent that, before the Due Diligence
Expiration Date, Ben Butcher or Scott Tully received written
notice that such representation or warranty was untrue,
inaccurate or incorrect.
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8. Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
(a) Purchaser is a duly organized limited liability company validly
existing and in good standing under the laws of Delaware.
(b) Purchaser has all requisite and necessary power and authority
to execute and deliver this Agreement and to perform
Purchaser's obligations hereunder.
(c) The execution and delivery of this Agreement and the
performance by Purchaser of its obligations hereunder have been
duly authorized by all requisite corporate action and does not
conflict with or result in the breach of any of the terms of
the organizational or governing documents of Purchaser.
(d) This Agreement is the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms, subject to general principles of equity, bankruptcy,
reorganization and other similar laws affecting the enforcement
of contracts generally.
9. Covenants.
(a) Maintenance of the Property and Insurance; Leases and
Contracts. Until the Closing, Seller shall (i) maintain in
full force and effect the existing policies of insurance
relating to the Property (which shall not be less that 100% of
replacement cost), (ii) continue to operate the Property in
substantially the same manner as it is now being operated;
provided, however, that Seller does not intend and shall not be
obligated to repair, replace or improve the Property in any
material way, (iii) not enter into any lease or other occupancy
agreement with respect to any portion of the Property, (iv) not
make any material alterations or additions to the Property,
except as may be required by law or as may reasonably be
required for the prudent repair and maintenance of the
Property, (v) not change or attempt to change (or consent to
any change in) the zoning or other legal requirements
applicable to the Property, (vi) not cancel, amend or modify in
any material respect any certificate, license, approval or
permit held by or on behalf of Seller with respect to the
Property, and (vii) not sell or encumber all or any portion of
the Property or enter into any agreement with respect thereto.
After the date hereof, no contract for maintenance will be
terminated, modified or amended without the consent of
Purchaser in accordance with the following procedure, such
consent not to be unreasonably withheld, conditioned or delayed
based on Purchaser's currently contemplated plan of
improvements to the Property. If after the date hereof Seller
decides (a) to enter into any contract related to the
management, or operation of the Property, the term of which, in
either case, would continue after the Closing Date, or (b)
modify, amend or terminate any contract, Seller shall
15
first submit an unsigned draft of such contract, amendment
thereto or termination thereof to Purchaser for its prior
review and approval. If Purchaser does not object to such
draft or fails to respond to Seller with respect thereto within
three (3) business days of the delivery thereof to Purchaser,
Purchaser shall be deemed to have consented to such contract,
contract amendment or contract termination for all purposes
hereunder. Any such contract, contract amendment or contract
termination entered into by Seller after the date hereof as
aforesaid shall thereupon be and become a contract, as
applicable. Seller shall promptly give Purchaser a reasonably
detailed written notice of: (i) any fire, flood or other
material adverse change with respect to the Property of which
Seller obtains actual knowledge; (ii) any actual or proposed
condemnation (or proceeding in lieu thereof) of which Seller
obtains actual knowledge; (iii) any written notice received by
Seller claiming that the Property or the use and operation
thereof fails to comply with applicable legal requirements;
(iv) any written notice received by Seller claiming that Seller
is default under any permit or approval with respect to the
Property; and (v) any written notice received by Seller
concerning any pending or threatened litigation or
administrative proceeding affecting the Property or Seller. If
Seller becomes aware during the term of this Agreement of any
matters that render any of its representations or warranties
untrue, Seller shall promptly disclose such matters to
Purchaser in writing. Seller shall obtain, at its sole cost and
expense, all necessary consents and approvals for the transfer
of all warranties ad guaranties affecting the Property,
including but not limited to all roof warranties, to Purchaser,
in form and substance reasonably acceptable to Purchaser to the
extent assignable.
(b) Certain Schedules and Information. To the extent any Schedule
hereto or any information to be set forth thereon has not been
attached or provided on the date hereof, Seller shall provide
such Schedule or information to Purchaser as soon as reasonably
practicable after the date hereof but in any event within five
(5) business days of the date hereof.
(c) Access to Property Information. Seller shall be allowed to
retain a copy of all property information to be delivered to
Purchaser under Section 10(a)(x). For the year following the
Closing, Purchaser shall permit Seller to have access to,
inspect and make copies of all such property information during
Purchaser's or Purchaser's property manager's normal business
hours upon reasonable prior notice, at Seller's sole expense.
10. Documents to be Delivered at the Closing.
(a) At the Closing, Seller shall deliver to Purchaser the following
documents each fully executed and, if required, acknowledged by
Seller:
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(i) a good and sufficient quitclaim deed (the "Deed")
conveying good and clear, record and marketable title to
the Premises to Purchaser subject only to the Permitted
Title Exceptions;
(ii) an assignment and assumption of permits (the "Blanket
Assignment") assigning all permits, licenses and
approvals with respect to Premises and to Purchaser;
(iii) a bill of sale conveying without representation, warranty
or recourse all of the right, title and interest of
Seller in and to the personal property used in connection
with the Premises;
(iv) an affidavit and indemnity as to mechanics' liens and
persons in possession in a customary form reasonably
acceptable to Purchaser's title insurance company;
(v) an affidavit stating that Seller is not a foreign person
or entity within the meaning of Section 1445 of the
Internal Revenue Code, and complying with the Internal
Revenue Service Regulations promulgated pursuant to said
Section 1445;
(vi) a designation agreement designating the party responsible
for any Form 1099 filings as may be required by the
Internal Revenue Service's regulations;
(vii) a closing statement;
(viii) an officer's certificate of Seller dated the Closing
Date as to satisfaction of the conditions set forth in
Section 12(b), attaching appropriate evidence of
requisite corporate action with respect thereto,
including, but not limited to, votes of the governing
bodies of Seller;
(ix) to the extent they are then in Seller's possession and
have not been delivered to Purchaser: (A) any plans and
specifications for the Premises; (B) all unexpired
warranties and guarantees which Seller has received in
connection with any work or services performed with
respect to, or equipment installed in, the Premises; (C)
all keys for the Premises; (D) originals of all contracts
and all correspondence relating thereto and to the
operation and maintenance of the Property; and (e) all
other books, records, files, plans and other written
information including computerized records relating to
the development, construction, maintenance, use,
operation, title or value of all or any portion of the
Property owned by Seller in the possession or control of
Seller but specifically excluding any Confidential
Property Information;
17
(x) Four originals of the Lease;
(xi) Intentionally Deleted;
(xii) (1) written confirmation that the Broker has been paid in
full all amounts then due in connection with the
transactions contemplated by this Agreement; and (2) such
other instruments, certificates and documents as are
reasonably required in order to fully effectuate the
terms of this Agreement; and
(xiii) a certificate of an executive officer of Seller dated
the Closing Date certifying that the representations and
warranties of Seller contained in this Agreement are true
and correct on and as of the Closing Date as if made on
the Closing Date and attaching appropriate evidence of
requisite corporate action with respect thereto,
including, but not limited to, votes/resolutions or
consents of governing bodies of Seller;
(b) At the Closing, Purchaser shall deliver to Seller the following
documents each fully executed by Purchaser:
(i) the Blanket Assignment assuming the permits, licenses and
approvals with respect to the Premises and the
Improvements;
(ii) a designation agreement designating the party responsible
for any Form 1099 filings as may be required by the
Internal Revenue Service's regulations;
(iii) a closing statement;
(iv) a manager's certificate of Purchaser dated the Closing
Date certifying that the representations and warranties
of Purchaser contained in this Agreement are true and
correct on and as of the Closing Date as if made on the
Closing Date and attaching appropriate evidence of
requisite corporate action with respect thereto,
including, but not limited to, votes/resolutions or
consents of governing bodies of Purchaser;
(v) such other instruments, certificates and documents as are
reasonably required in order to fully effectuate the
terms of this Agreement;
(vi) Lease as provided for in Section 27; and
(vii) The Note and Pledge as provided for in Section 2(b)
above.
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11. Conditions to Seller's Performance.
(a) In addition to the performance or satisfaction in all material
respects of all the other provisions of this Agreement by
Purchaser, the Closing and the obligation of Seller to sell the
Property under this Agreement shall be conditioned expressly on
the satisfaction of the following conditions at the Closing
Date:
(i) the representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all
material respects as of the Closing Date as if made on
the Closing Date; and
(ii) the payment of the Purchase Price as provided herein.
(b) Seller may waive any of the foregoing conditions in this
Section 11 and any such waiver shall not be deemed a waiver or
modification of any other conditions.
12. Conditions to Purchaser's Performance.
(a) In addition to the performance or satisfaction in all material
respects of all the other provisions of this Agreement by
Seller, the Closing and the obligation of Purchaser to buy the
Property under this Agreement shall be conditioned expressly on
the satisfaction of the following conditions at the Closing
Date:
(i) As used in this Agreement, the term "Material Casualty"
means any damage or destruction to the Premises: (i) as to
require expenditures in the aggregate of greater than
$250,000 ("Restoration Cost") are required to repair and
restore the Improvements to their condition existing prior
to such destruction or damage; (ii) that materially and
adversely affects access to or parking at the Premises;
(iii) that causes the Premises to fail to comply in any
material respect with applicable legal requirements; or
(iv) as to which the Tenant is not entitled to repair and
restore the Improvements to their condition existing prior
to such destruction or damage with obtaining a variance,
special permit or other similar discretionary permit or
approval. If there is a Material Casualty, Purchaser may
elect to terminate this Agreement and receive a return of
the Deposit or to proceed with the purchase of the
Property in accordance with this Agreement. In the event
of a fire or other casualty that is not a Material
Casualty, and in connection with any Material Casualty as
to which Purchaser elects to proceed to proceed with the
purchase of the Property in accordance with this
Agreement, (A) Purchaser shall purchase the Property in
accordance with the terms hereof without reduction in the
Purchase Price (except that at the Closing Purchaser will
receive a credit for any applicable
19
deductible) and (B) Seller shall assign to Purchaser at
Closing all property insurance proceeds paid or payable on
account of such damage, (and the amount of any deductible
shall be credited against the Purchase Price). If the
Closing Date would otherwise occur sooner, it shall
automatically be extended to the date which is mutually
agreeable to the parties but which is at a minimum of ten
(10) Business Days after written notice to Purchaser of
the casualty. If any insurance proceeds paid or payable on
account of a fire or other casualty are to be assigned to
Purchaser in accordance with the provisions of this
Agreement, Seller shall cooperate as reasonably requested
by Purchaser to effectuate such assignment (including, if
necessary, prosecuting claims in Purchaser's name or for
Purchaser's benefit), and Seller's obligation to so
cooperate shall survive the Closing.
(ii) If, at any time before completion of the Closing, a taking
or condemnation (or proceeding in lieu thereof) is
commenced or threatened in writing: (i) of all or
substantially all of the Property; or (ii) of less than
all or substantially all of the Property that: (1) causes
the Property to fail to comply with legal requirements;
(2) materially impairs access to or egress from the
Property; (3) causes the loss of any parking that benefits
the Property; or (4) otherwise, in Purchaser's reasonable
business judgment, results in a loss of value in excess of
$250,000 (any of the foregoing, a "Material Taking"),
Purchaser may, at Purchaser's sole option, elect either
to:
(x) terminate this Agreement and receive back the
Deposit; or
(y) purchase the Property subject to and in accordance
with this Agreement.
In the event of condemnation or taking that does not constitute
a Material Taking, or if there is a Material Taking but
Purchaser elects to proceed under 12(a)(ii)(y), (1) Purchaser
shall purchase the Property in accordance with the terms hereof
(without reduction in the Purchase Price), (2) Seller shall
assign to Purchaser at Closing all condemnation proceeds except
for any separate award relating to Seller's business and paid
or payable as a result of such condemnation, (3) Purchaser
shall have the right to be present with Seller at any hearings
or negotiations with respect thereto, and (4) Seller shall not
settle or compromise any such matter without Purchaser's prior
written consent which consent shall not be unreasonably
withheld. If the Closing Date would otherwise occur sooner, it
shall automatically be extended to the date that is ten (10)
Business Days after written notice to Purchaser of the Material
Taking.
(b) the representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as
of Closing Date as if made on the Closing Date;
20
(c) Seller shall have removed and discharged the Monetary Liens
from the title to the Property and Purchaser shall receive
good, clear, record and marketable title to the Property free
and clear of all liens and encumbrances other than the
Permitted Title Exceptions;
(d) Simultaneously with the Closing under this Agreement, Seller
shall close a new operating line loan from Silicon Valley Bank
in the amount of $8,000,000.00 with availability of
$3,000,000.00 as of the Closing Date and shall provide
Purchaser with a written statement from the bank confirming the
same. At the Closing, Seller shall provide Purchaser with
evidence that all net proceeds of the sale are used at the
Closing to retire outstanding debt with Fleet Bank;
(e) Since the date of the most recent financial statements of
Seller provided by Seller to Purchaser, there shall have been
no material adverse change in the financial condition or
business operations of Seller;
(f) Since the Due Diligence Expiration Date, there shall have been
no material adverse change in the condition of the Property
(exclusive of any insured casualty, which shall be governed by
Section 12(a) above, or any condemnation, which shall be
governed by Section 12(a) above).
(g) Possession of the Property shall be delivered to Purchaser by
Seller at the Closing free and clear of (a) all leases, tenants
and other occupants other than Seller under the Lease and (b)
any management, leasing, service, maintenance or other
contracts or agreements other than the Lease and the Permitted
Title Exceptions;
(h) There shall be no judicial or administrative proceeding pending
or threatened concerning the Property that was not disclosed in
writing to Purchaser before the Due Diligence Expiration Date,
and the Property and the use and operation thereof shall comply
in all material respects with all applicable legal
requirements;
(i) Should Purchaser choose or be obligated in the event of any
casualty or any taking of any portion of the Property, to
proceed to a Closing, then all unexpended insurance and taking
proceeds and all rights to insurance proceeds and taking
proceeds, as applicable, shall be assigned and paid over by
Seller to Purchaser.
(j) Seller has, at its sole cost and expense, obtained all
necessary consents and approvals for the transfer of all
warranties and guaranties affecting the Property and
improvements thereon, including but not limited to all roof
warranties, to Purchaser, in form and substance reasonably
acceptable to Purchaser to the extent possible;
21
(k) Seller shall have entered into a written agreement satisfactory
in scope and substance to Purchaser and the Lender with LFR
Levine Fricke under which LFR Levine Fricke shall, at Seller's
expense, conduct a Phase II environmental report for the
Property (the "Phase II Report") and deliver the same in final
form (including, without limitation, with a full set of testing
results and all related information) to Seller and Purchaser
within ninety (90) days following the Closing. Seller shall
promptly undertake and complete in accordance with all
applicable laws all requirements set forth in the Phase II
Report and shall complete the same within ninety (90) days from
the delivery of the Phase II Report to Seller (or within such
longer or shorter period of time as may specifically be set
forth in the Phase II Report, in each case subject to any delay
caused by acts of God) (which obligation shall survive the
Closing and shall also be set forth in the Lease);
(l) Purchaser shall have obtained $5 million of environmental
insurance for the benefit of Purchaser and its first mortgage
lender for a term of not less than five years and otherwise in
form and substance, and from an insurance company, acceptable
to Purchaser and its first mortgage lender, in their sole and
unreviewable discretion. At Closing, Seller shall pay $89,000
toward the cost of the premium for such policy, which payment
shall be made by a credit in favor of Purchaser against the
Minimum/Cash Portion of the Purchase Price;
(m) Simultaneously with the Closing hereunder, (i) the closing
shall occur under that certain Purchase and Sale Agreement
dated as of the date hereof between Purchaser or its affiliate
and Poly-Flex Circuits, Inc. concerning certain property
located at 28 Kenney Drive, Cranston, Rhode Island; and (ii)
the closing under the Loan shall occur; and
(n) Purchaser may waive any of the foregoing conditions in this
Section 12 and any such waiver shall not be deemed a waiver or
modification of any other conditions.
13. Failure of Conditions; Defaults.
13.1 Termination without Default. If the sale of the Property is
not consummated because of the failure of any condition
precedent to Purchaser's obligations expressly set forth in
this Agreement or for any other reason except a default by
Purchaser in its obligation to purchase the Property in
accordance with the provisions of this Agreement ("Failure of
Condition"), the time of the Closing shall be extended for a
period of up to 30 days, during which time Seller shall use
reasonable efforts to cure such Failure of Condition. Such
efforts of Seller to cure such Failure of Condition shall not
require Seller to expend more than $25,000 in costs and
expenses in such efforts; provided, however, if any such
Failure of Condition relating to the condition of title to the
Property is a result of a voluntary consensual action by Seller
to so encumber the title to the Property such dollar limit to
Seller's efforts shall not apply. If the time of the Closing
is extended and if at the end of such extension period Seller
shall have failed so to cure such Failure of
22
Condition, as herein provided, and if Purchaser, at its
election, does not waive any such Failure of Condition, then
Purchaser may elect, as its sole and exclusive remedy, (x) to
terminate this Agreement by notice thereof to Seller in which
case the Deposit and all interest accrued thereon shall be
forthwith refunded to Purchaser and all other obligations of
the parties hereto shall cease and this Agreement shall be null
and void and the parties hereto shall have no further
obligation or liability arising hereunder or (y) to proceed
with the Closing in accordance with Section 14 hereof. Seller
and Purchaser agree that, if the transactions contemplated
hereby do not close on account of a default by Seller, then
Section 13.3 below, rather than this Section 13.1, shall apply.
13.2 Purchaser's Default. If the sale contemplated hereby is not
consummated because of a default by Purchaser in its obligation
to purchase the Property in accordance with the terms of this
Agreement, and if such default is not cured within ten (10)
days from written notice thereof from Seller to Purchaser,
then: (a) this Agreement shall terminate; (b) the Deposit shall
be paid to and retained by Seller as liquidated damages; and
(c) Seller and Purchaser shall have no further obligations to
each other. PURCHASER AND SELLER ACKNOWLEDGE THAT THE DAMAGES
TO SELLER IN THE EVENT OF A BREACH OF THIS AGREEMENT BY
PURCHASER WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT
THE AMOUNT OF THE DEPOSIT REPRESENTS THE PARTIES' BEST AND MOST
ACCURATE ESTIMATE OF THE DAMAGES THAT WOULD BE SUFFERED BY
SELLER IF THE TRANSACTION SHOULD FAIL TO CLOSE AND THAT SUCH
ESTIMATE IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING AS OF
THE DATE OF THIS AGREEMENT AND UNDER THE CIRCUMSTANCES THAT
SELLER AND PURCHASER REASONABLY ANTICIPATE WOULD EXIST AT THE
TIME OF SUCH BREACH. PURCHASER AND SELLER AGREE THAT SELLER'S
RIGHT TO RETAIN THE DEPOSIT SHALL BE SELLER'S SOLE REMEDY, AT
LAW AND IN EQUITY, FOR PURCHASER'S FAILURE TO PURCHASE THE
PROPERTY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
13.3 Seller's Default. If Seller defaults in its obligation to sell
and/or lease the Property in accordance with the terms of this
Agreement, and if such default is not cured within ten (10)
days from written notice thereof from Purchaser to Seller, then
Purchaser may, as its sole and exclusive remedy at law or in
equity: (a) terminate this Agreement by giving written notice
thereof to Seller, in which event the Deposit will promptly be
returned to Purchaser, Seller promptly shall reimburse
Purchaser for the third party costs which shall be defined as
legal, engineering, survey, environmental and title fees as
evidenced by copies of all bills relating to expenses incurred
that Purchaser has incurred in connection with this Agreement
and the transactions contemplated hereby, and the parties shall
have no further obligation to each other; (b) waive such
default and consummate the transactions contemplated hereby in
accordance with the terms of this Agreement; or (c)
specifically enforce this Agreement. Purchaser hereby
irrevocably waives any other right or remedy for such default;
provided, however, that if, in
23
breach of this Agreement, Seller sells the Property (or any
portion thereof) to someone other than Purchaser or otherwise
takes action that renders the remedy of specific performance
impossible or impractical to obtain, Seller shall be liable for
any damages suffered by Purchaser as a result of such breach.
If Purchaser brings an action for specific performance, the
Deposit shall be returned to Purchaser pending the outcome of
such action.
As a condition precedent to Purchaser exercising any right it
may have to bring an action for specific performance hereunder,
Purchaser must commence such an action within ninety (90) days
after the Closing Date (as the same may be extended in
accordance with the terms hereof). Purchaser agrees that its
failure to timely commence such an action for specific
performance within such ninety (90) day period shall be deemed
a waiver by it of its right to commence an action for specific
performance as well as a waiver by it of any right it may have
to file or record a notice of lis pendens or notice of pendency
of action or similar notice against all or any portion of the
Property.
14. Purchaser's Election to Accept Title. Purchaser shall have the
additional election, at either the original or any earlier or
extended time for performance, to accept such title as Seller can
deliver to the Property in its then condition and to pay therefor the
Purchase Price without deduction (but subject to adjustment as
provided in Section 16), in which case Seller shall convey such
title.
15. Application of Purchase Money to Liens. If on the Closing Date there
are any other liens or encumbrances on the Real Property other than
those to which Purchaser's title is to be subject hereunder, Seller
may use any portion of the balance of the Purchase Price to satisfy
the same, provided Seller shall simultaneously either (a) deliver to
Purchaser at the Closing instruments in recordable form and
sufficient to satisfy such liens and encumbrances of record, together
with the cost of recording or filing said instruments, or (b) with
respect to any first mortgage lien held by an institutional lender,
and provided that Seller has made arrangements with the title company
employed by Purchaser in advance of Closing, deposit with said title
company sufficient monies, acceptable to and required by it, to
assure the obtaining and the recording of such satisfactions and the
issuance of title insurance to Purchaser free of any such liens and
encumbrances. The existence of any such other liens and encumbrances
shall not be deemed objections to title if Seller shall comply with
the foregoing requirements.
16. Apportionments and Costs.
(a) In light of the fact that, pursuant to the Lease, Seller (as
Tenant) shall be responsible for all real estate taxes, water,
sewer and other utility charges, fuel and any fees or other
amounts payable under any contracts for maintenance, and all
other costs associated with the Property, no adjustment shall
be made therefor at Closing and, as of 11:59 p.m. (Boston time)
on the day before the Closing Date, Seller shall assume
responsibility
24
therefor under the Lease. At the Closing, Seller shall make a
pro rated payment of the base and additional rent due under the
Lease for the period from and including the Closing to and
including the last day of the month in which the Closing
occurs.
(b) Any real estate tax abatements in respect of any tax year prior
to the tax year commencing July 1, 2002, together with any
interest earned thereon, shall belong to Seller. Purchaser
agrees that, should it receive any amounts from the City of
Methuen or any other taxing authority for tax abatements that
are attributable to such prior tax years, Purchaser shall pay
such amounts over to Seller. Any real estate tax abatements in
respect of any tax year commencing on or after July 1, 2002,
together with any interest earned thereon, shall be apportioned
pro rata amongst Seller and Purchaser based upon their
respective periods of ownership. Seller agrees that, should
it receive any amounts from the City of Methuen or any other
taxing authority for tax abatements that are attributable to
the timeframe when it did not own the Property, Seller shall
pay such amounts over to Purchaser.
(c) All municipal assessments or betterments assessed shall be the
responsibility of Seller.
(d) Seller shall pay at the Closing all Deed Stamp Excise Taxes
payable in connection with the conveyance of the Property
pursuant to this Agreement and any discharges of any Monetary
Liens. Purchaser shall pay the costs of recording the Deed.
(e) Each of the parties hereto shall pay the costs of their own
respective counsel and any costs or expenses incurred by such
party in connection with this transaction. Purchaser
shall pay all costs of its Investigations including of title
and survey matters and of obtaining any financing or title
insurance in connection with acquiring the Property. Purchaser
shall receive a credit of $89,000 against the Minimum/Cash
Portion of the Purchase Price as provided for in Section 12(l)
above.
(f) The net amount of such apportionments if due to Seller shall be
added to the amount payable under Section 2, and if due to
Purchaser shall be subtracted from such amount. To the extent
that such apportionments may not reasonably be determined on
the Closing Date, they shall be determined and paid as soon as
practicable after the Closing.
(g) To the extent that any apportionments to be made under this
Section 16 may not reasonably be determined on the Closing
Date, they shall be determined and paid as soon as practicable
after the Closing. All apportionments to be made under this
Section 16 shall be made as of 11:59 p.m. (Boston time) on the
day before the Closing Date.
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17. Brokers. Each of Seller and Purchaser represents and warrants that
it has dealt only with Broker, as a broker or finder with respect to
this transaction and with respect to the Property. Upon, and only
upon, the Closing and consummation of this transaction, Seller shall
pay Broker per a separate agreement a commission for acting as broker
to the sale and lease transactions contemplated by this Agreement.
Each of Purchaser and Seller agrees to indemnify and hold harmless
the other party from and against all claims for brokerage or
commission or finder's fees on account of this sale and/or lease
arising out of dealings with the party from whom indemnification is
sought; provided, however, that Seller shall in all events be solely
responsible for, and shall defend and indemnity Purchaser against,
any claims by Broker with respect to the sale and/or lease
transactions contemplated by this Agreement. This Section 17 shall
survive the Closing or any termination of this Agreement.
18. Escrow of Deposit. The Deposit and interest accrued thereon shall be
held in escrow by the Title Company as escrow agent subject to the
terms of this Agreement, and shall be duly accounted for in
accordance with this Agreement.
The escrow agent shall not be liable for any action or failure to act
taken or made in good faith in connection with the performance of its
duties hereunder, but shall be liable only for its own willful
default or misconduct. Purchaser and Seller agree to indemnify and
hold harmless the escrow agent from any loss, damage, liability, cost
or expense (including reasonable attorneys' fees and expenses)
arising out of any act or action taken by it in good faith in
connection with the performance of its duties hereunder, provided
that Purchaser and Seller shall not indemnify the escrow agent
against any loss, damage, liability, cost or expense arising out of
willful misconduct, gross negligence, fraud or any violation of the
terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary with respect to the obligations of the
escrow agent, should any dispute arise with respect to the delivery
and/or ownership or right to possession of such amount, the escrow
agent shall have no liability to any party hereto for retaining
dominion and control over such amount until such dispute shall have
been settled:
(a) by mutual agreement between the parties; or
(b) by final order, decree or judgment by a court of competent
jurisdiction in the United States of America (and no such
order, decree or judgment shall be deemed to be "final" unless
and until the time of appeal has expired and no appeal has been
made);
and the escrow agent shall make payment of such amount as the parties
may have mutually agreed or in accordance with such final order,
decree or judgment. In no event shall the escrow agent be under any
duty whatsoever to institute or defend any such proceeding.
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The Title Company may resign as escrow agent hereunder, in its sole
discretion, by giving twenty-four (24) hours' written notice to
Purchaser and Seller. If Purchaser and Seller are unable to agree on
a substitute escrow agent within forty-eight (48) hours after such
notice, the Title Company may transfer the Deposit, subject to the
terms of this Agreement, to any bank with offices in Boston,
Massachusetts having capital of not less than $50,000,000.00 or, the
Title Company may transfer the Deposit to any Court with jurisdiction
over the matter.
Notwithstanding anything to the contrary in this Agreement, at
Purchaser's written request made any time before the Due Diligence
Expiration Date, and without the need for any confirmation or
direction from Seller and without regard to any contrary instructions
that may be given by or on behalf of Seller, the Title Company shall
promptly return the Deposit (and all interest thereon) to Purchaser.
19. Damages; Limitations on Recovery. If Purchaser shall default in the
performance of its obligations to purchase the Property subject to
and in accordance with the terms of this Agreement and provided that
Seller shall not be in default hereunder, then the Deposit and
interest accrued thereon shall be paid to Seller in full payment of
Seller's damages resulting from Purchaser's default as liquidated
damages and not as a penalty as Seller's sole and exclusive remedy at
law or in equity as provided for in Section 13 above.
Notwithstanding the foregoing, if following the termination of this
Agreement and return of the Deposit to Purchaser, Purchaser fails to
indemnify and restore as provided in Section 5(c) or violates Section
25 (each a "Violation"), Seller shall be entitled to recover all
damages and any costs and expenses incurred by Seller, together with
attorneys' fees and costs associated with recovering and collecting
the amount of any such damages, related to such Violation, provided
that such recovery shall not be limited to the amount of the Deposit
and interest accrued thereon. In the event of any Violation, Seller
may elect any appropriate action available in equity or at law, such
rights and remedies being cumulative and the exercise of one or more
such right or remedy by Seller shall not be construed to be a waiver
of any of the others.
Purchaser hereby acknowledges and agrees that any right, remedy,
recourse or recovery Purchaser may have against or from Seller
hereunder or with respect hereto (including any documents delivered
in connection herewith) shall be limited to (i) Seller's interest in
the Property or (ii) the net proceeds received by Seller from the
sale of the Property (for these purposes, any portion of the net sale
proceeds used to pay obligations of the Seller shall be deemed to
have been received by the Seller). Notwithstanding the foregoing,
Purchaser agrees that Seller shall have no liability to Purchaser for
any breach of Seller's covenants, agreements, representations or
warranties hereunder or under any other agreement, document,
certificate or instrument delivered by Seller to Purchaser unless the
valid claims for all such breaches collectively aggregate more than
$25,000, in which event the full amount of such valid claims from the
first dollar shall be actionable, up to the cap set forth in the
following sentence. Following the Closing, the
27
maximum aggregate liability of Seller, and the maximum aggregate
amount which may be awarded to and collected by Purchaser, in
connection with this Agreement (exclusive of the Lease), the sale of
the Property under this Agreement (including, without limitation, in
connection with the breach of any representations and warranties
contained herein) and any and all documents executed pursuant hereto
or in connection herewith(exclusive of the Lease) for which a claim
is timely made by Purchaser shall not exceed $500,000. The foregoing
shall not be deemed to limit Purchaser's right to recover the full
Deposit if Purchaser is entitled thereto pursuant to this Agreement,
nor to limit any right of Purchaser to seek specific performance of
this Agreement or to enforce its other remedies under Section 13.
Notwithstanding the foregoing, in no event will the limitations on
Purchaser's remedies set forth in this Section or in Section 21 below
(the time limit) apply to (x) any claims under the Lease, or (y) any
claims relating to fraud by Seller.
In no event shall any trustee, member, employee agent or other
representative of Seller ever be personally liable hereunder or
otherwise for or with respect to the acts, omissions or obligations
of Seller. In no event shall any trustee, member, manager, employee,
agent or other representative of Purchaser ever be personally liable
hereunder or otherwise for or with respect to the acts, omissions or
obligations of Purchaser.
This Section 19 shall survive the Closing.
20. Assignments. Subject to the provisions of this Section 20, the terms
and provisions of this Agreement shall apply to and bind the
permitted successors and assigns of the parties hereto. Except as
expressly provided herein, Purchaser shall not be permitted to assign
its rights under this Agreement without Seller's prior written
consent, which consent may be withheld in Seller's sole and absolute
discretion. Notwithstanding the foregoing, Purchaser shall be
permitted to assign its rights under this Agreement to an affiliate
of Purchaser as long as Ben Butcher or Scott Tully manages the day to
day operations; provided, however, that at least two business days
prior to making any such assignment of its right, title or interest
under this Agreement to such affiliate, Purchaser shall notify Seller
in writing and supply all material details regarding such arrangement
including information regarding the makeup of the assignee.
Purchaser's proposed assignee shall expressly assume Purchaser's
obligations under this Agreement. Any assignment by Purchaser of its
right, title or interest under this Agreement in violation of this
Section 20 shall be null and void, and shall allow Seller, at its
option, to deem Purchaser in default of its obligations hereunder.
Seller may not assign any of its right, title and interest under this
Agreement, and any purported assignment by Seller of its right,
title or interest under this Agreement shall be null and void, and
shall allow Purchaser, at its option, to deem Seller in default of
its obligations hereunder. Subject to the above provisions, this
Agreement shall inure solely to the benefit of Seller and its
successors and assigns and Purchaser and its permitted successors and
assigns. No
28
person or entity other than Seller and its permitted successors and
assigns and Purchaser and its permitted successors and assigns shall
have any right to enforce or rely upon this Agreement.
21. Survival Provisions; Acceptance of Deed. On the termination hereof,
all of the terms and provisions of this Agreement shall be void and
of no further force and effect and neither Purchaser nor Seller shall
have rights, obligations or liabilities hereunder except that the
rights, obligations and liabilities of the parties under this Section
21 and Sections 5(c), 5(f), 17, 19 and 25 shall survive such
termination and continue in effect in accordance with their terms
without limit as to time. The acceptance of the Deed, by Purchaser
or Purchaser's permitted assignee, as the case may be, shall be
deemed to be full performance and discharge of every agreement and
obligation of Seller herein contained or expressed except (i)
obligations of Seller under the Lease (all of which shall survive the
Closing and shall not be subject to any of the limitations on
Seller's liability set forth in this Agreement), (ii) the
representations and warranties of Seller made in this Agreement or
any document delivered in connection with Section 10(a) (other than
the Lease) which shall survive until the date which is one year after
the Closing Date, (iii) any adjustments pursuant to Section 16 that
cannot be finally determined after the Closing which shall survive
the Closing until finally adjusted, and (iv) any terms and conditions
hereof which expressly survive the Closing.
22. Further Assurances. The parties agree to execute any and all
additional instruments and documents as may be reasonably required to
fully effectuate the terms of this Agreement.
23. Notices.
All notices or other communications required or provided to be sent
by either party shall be in writing and shall be sent by: (i) by
United States Postal Service, certified mail, return receipt
requested, (ii) by any nationally known overnight delivery service
for next day delivery, (iii) delivered in person or (iv) sent by
telecopier or facsimile machine which automatically generates a
transmission report that states the date and time of the
transmission, the length of the document transmitted and the
telephone number of the recipient's telecopier or facsimile machine
(with a copy thereof sent in accordance with clause (i), (ii) or
(iii) above). All notices shall be deemed to have been given upon
receipt. All notices shall be addressed to the parties at
the addresses below:
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To Seller: at the address set forth in the first
paragraph of this Agreement
with a copy to: Edward D. Kutchin, Esq.
Kutchin & Rufo, P.C.
175 Federal Street
Boston, MA 02110
To Purchaser: at the address set forth in the first
paragraph of this Agreement
and with a copy to: Piper Rudnick LLP
One International Place
Boston, Massachusetts 02110-2600
Attention: John L. Sullivan, Esq.
Fax No. (617) 406-6100
Any address or name specified above may be changed by notice given to
the addressee by the other party in accordance with this Section.
The inability to deliver notice because of a changed address of which
no notice was given as provided above, or because of rejection or
other refusal to accept any notice, shall be deemed to be the receipt
of the notice as of the date of such inability to deliver or
rejection or refusal to accept. Any notice to be given by any party
hereto may be given by the counsel for such party.
24. Time. Time is of the essence in this Agreement. If any date for
providing a notice or obtaining consent or approval should fall on
any day which is not a business day in Massachusetts then such date
shall be extended to the next following business day.
25. No Recording. Provided that Seller is not in default under this
Agreement, Purchaser agrees not to record this Agreement or any
notice hereof in the Essex County Registry of Deeds or the Essex
Registry District of the Land Court. If Purchaser nonetheless
records this Agreement or a notice thereof when Seller is not in
default under the Agreement, Seller, at its option, may declare
30
Seller's obligations hereunder to be null and void and may deem
Purchaser in default of its obligations hereunder, whereupon this
Agreement shall terminate except as provided in Section 21 and any
recorded copy of this Agreement or notice thereof shall for all
purposes be considered null and void between the parties hereto and
shall not be a notice to or binding in any way on third parties.
26. Miscellaneous. This instrument may be executed in one or more
counterparts which together shall constitute one instrument. The
invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or
provision hereof. The captions to the paragraphs hereof are for
convenience of reference only and are not intended to affect the
meaning of the provisions of this Agreement. Unless otherwise
provided herein, references in this Agreement to (i) any "Section"
shall mean the sections and subsections of this Agreement, as
applicable and (ii) any "Schedule" or "Exhibit" are references to the
schedules and exhibits attached hereto which are incorporated into
this Agreement by this reference. This Agreement is to be construed
as a Massachusetts contract, is to take effect as a sealed
instrument, sets forth the entire contract and understanding between
the parties superseding any prior oral or written agreements, and may
be canceled, modified or amended only by a written instrument
executed by both Seller and Purchaser.
27. Lease Execution. At the Closing, Seller and Purchaser shall execute
and deliver the lease attached hereto as Schedule 6 (the "Lease").
28. Earn-Out Provisions. As provided in Section 2(d), as of June 30,
2004, and on each June 30th thereafter through and including June 30,
2009, the Purchase Price shall be increased by Two Hundred Thousand
Dollars ($200,000) (up to a maximum aggregate increase of $1,000,000)
if and only for the immediately preceding twelve month period Seller
has met the Financial Milestones (defined below) and other conditions
set forth below. Subject to the provisions of this Section, any
amounts due to Seller under this Section 28 (the "Earn Out Amount")
shall be contingent upon Seller's full and faithful performance of
its obligations under the Lease. In the event that the Seller does
not meet the Financial Milestones as of the end of a particular
fiscal year, then the $200,000.00 installment of the Earn Out Amount
that would have been due if such conditions were met shall be
deferred without interest until the end of the next fiscal year, at
which time such deferred amount shall be earned if, but only if, the
Financial Milestones and other conditions of this Section 28 are
satisfied at such time and provided further that, if the Financial
Milestones and other conditions of this Section 28 are not satisfied
by June 30, 2009, then Purchaser's obligation to pay any and all
unpaid portions of the Earn Out Amount shall permanently terminate
and this Section 28 shall be of no further force or effect.
Notwithstanding anything contained herein to the contrary, in no
event shall the total aggregate Earn Out Amount exceed One Million
Dollars ($1,000,000). Subject to the provisions of this Section,
each installment of the Earn Out Amount shall be due thirty (30) days
after Purchaser receives audited
31
financial statements prepared by Seller's outside independent
auditors and written evidence in form and substance reasonably
acceptable to Purchaser from Seller's outside independent auditors
demonstrating that the financial tests set forth below are satisfied;
provided, however, that Purchaser shall have the option of paying any
such installment by having it added to the balance of the Note.
Without limiting the other conditions to payment of the Earn Out
Amount set forth herein, Purchaser shall not be obligated to pay any
installment of the Earn Out Amount if, at the time such installment
would otherwise be due:
(i) the leasehold created by the Lease shall be taken on execution,
or by other process of law, or if any assignment shall be made
by Seller for the benefit of creditors, or a receiver, trustee
in bankruptcy or similar officer shall be appointed by a court
of competent jurisdiction to take charge of all or any part of
property of Seller or if a petition including, without
limitation, a petition for reorganization or arrangement is
filed by Seller under any bankruptcy law or is filed against
Seller; or
(ii) Seller is under default under the Lease; provided, however,
that if the default is cured within any applicable notice and
cure period and the Financial Milestones and other conditions
to payment set forth in this Section 28 are satisfied, then
such installment of the Earn Out Amount shall be paid as
provided for herein within thirty (30) days from the date on
which the default is cured and all such conditions are
satisfied; provided further that in no event shall any portion
of the Earn Out Amount be due unless the conditions to payment
set forth in this Section 28 are satisfied by September 1,
2009.
In addition, in the event of a default by Tenant under the Lease and
its failure to cure said default beyond any applicable cure periods,
then any balance of the Earn Out Amount then unpaid shall
automatically be extinguished in full and the obligation of Purchaser
to pay the same shall be null and void.
The "Financial Milestones" for the purposes of this Section 28 are as
set forth below and shall be calculated in accordance with Generally
Accepted Accounting Principles and certified by Seller's outside
independent auditors:
1. Seller shall have gross revenues for each fiscal year beginning
in fiscal year 2003 on a consolidated basis of at least $100
million and Seller's earnings before taxes for each such fiscal
year shall not be less than $1.00.
2. The current ratio of Seller's current assets to its current
liabilities, determined on a consolidated basis, shall be not
less than 1.05 to 1;
32
3. Seller's current debt to equity ratio shall not be greater than
0.5 to 1.0; and
4. No material defaults shall exist under Seller's then current
loan agreements with its lending institutions and Seller shall
certify the same to Purchaser.
Seller hereby represents and warrants to Purchaser that Seller's
current debt to equity ratio is not greater than 0.5 to 1.0.
The terms of this Section 28 shall survive the Closing.
29. Attorney's Fees. In the event legal proceedings through the courts
are commenced to enforce the parties' respective rights and
obligations herein, the prevailing party shall be entitled to
reimbursement for all costs and expenses, including reasonable legal
fees, incurred with respect to said legal proceedings.
[The remainder of this page is intentionally left blank]
33
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties hereto, under seal, as of the day and year first written above.
PURCHASER:
Taurus Methuen, LLC
By: /s/ Scott R. Tully
-------------------------------
Scott R. Tully
Manager
SELLER:
Parlex Corporation
By: /s/ Jonathan R. Kosheff
-------------------------------
Jonathan R. Kosheff
Chief Financial Officer
ESCROW AGENT:
Stewart Title Guaranty Insurance Company
By: /s/ Marie L. Franco
-------------------------------
National Underwriting Counsel
35