EXHIBIT 99.1
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
THIS AGREEMENT FOR SALE AND PURCHASE OF ASSETS ("Agreement") is made
and entered into as of December 6, 1996, by and among XXXX, INC., a
Colorado corporation (the "Seller") and RENTECH, INC., a Colorado
corporation (the "Buyer").
Recitals
A. Seller conducts a business of producing and selling water
repellant sealers and stains for wood, concrete and masonry (the
"Business").
B. Seller is desirous of selling the Business and certain of the
assets used in the Business. Buyer desires to purchase and acquire the
Business and certain of the assets used in the Business and to assume
only specific liabilities as herein provided.
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
SALE AND PURCHASE
1.1 Sale of Assets. Subject to the terms and conditions set
forth in this Agreement (and except for the assets excluded as provided
in Section 1.2 hereof), Seller shall sell, convey, transfer, assign and
deliver to Buyer, and Buyer shall purchase all of Seller's right, title
and interest in and to the Business and the assets (the "Purchased
Assets") used in the Business as a going concern including, but not
limited to, the following:
(a) All tangible personal property of all kinds used in
the Business (the "Personal Property") including all of the furniture,
fixtures and equipment listed on Schedule 1.1(a) attached hereto;
(b) The product formulations, copyrights, trademarks,
trade names (including "Xxxx"), logos, patterns, designs and other
intellectual property rights used in the business (the "Intellectual
Property"), including the Intellectual Property listed on Schedule 1.1(b)
attached hereto;
(c) All packaging and other supplies and expendables on
order or on hand (the "Supplies");
(d) All contracts, commitments, purchase orders and sales
orders described in Schedule 3.14 as updated through the Closing Date
pursuant to Section 4.9 hereof (the "Assigned Contracts");
(e) All of the customer lists, trade secrets, know how,
and proprietary rights used in the Business;
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(f) All of Seller's goodwill, franchises, licenses,
registrations, files, papers, books of account, sales and marketing
records, personnel files and all other books and records and files of any
kind or description relating to the Business; and
(g) Seller's finished goods and work in process inventory
(the "Purchased Inventory").
The Purchased Assets shall include all of the above-described assets of
the Seller reflected in Seller's Reports (as defined in Section 3.3) and
also including any such assets acquired thereafter and prior to the
Closing (as hereinafter defined) except for those assets transferred or
disposed of in the ordinary course of business after the dates of the
Reports.
1.2 Excluded Assets. The following assets of Seller (the
"Excluded Assets") shall be excluded from the Purchased Assets:
(a) Seller's cash and cash equivalents as of the
Effective Time (as defined below);
(b) Seller's accounts receivable as of the Effective
Time; and
(c) Two (2) four-door Volvo sedans used by Xxxx Xxxxxx
and Xxxxx Xxxxxxxxxx.
1.3 Purchase Price. Consideration for the purchase (the
"Purchase Price") shall be $1,300,000.00 to be allocated as described on
Schedule 1.3 attached hereto.
1.4 Liabilities Assumed by Buyer. At the Closing Buyer shall
assume those liabilities of Seller under the Assigned Contracts (the
"Assumed Liabilities").
1.5 Liabilities Not Assumed by Buyer. No liabilities of
Seller relating to the Business or its operation prior to the Closing
Date except Assumed Liabilities shall be assumed by Buyer including, but
not limited to, any disclosed or undisclosed liabilities of any nature,
any payments due suppliers under any contracts or commitments not
included as Assigned Contracts, taxes of any kind, accounts payable of
any nature, environmental liabilities, pension or any other liability to
any employees of Seller, and, except as provided in paragraph 11.4
hereof, liabilities resulting from any products sold by Seller prior to
the Closing Date.
ARTICLE II.
THE CLOSING
2.1 Place and Time. The closing (the "Closing") under this
Agreement shall take place on January 24, 1997 (the "Closing Date") at
the offices of Xxxxx, Johnson, Robinson, Xxxx & Xxxxxxxxx, P.C., 000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000. At Buyer's
option, Buyer may extend the Closing Date to March 14, 1997, upon payment
to Seller on or before January 24, 1996, of $50,000.00 by cashier's
check. This extension payment shall not be refundable to Buyer and shall
not be applied in part payment of the Purchase Price. The Closing shall
be effective as of 12:01 a.m. Mountain Standard Time on the Closing Date
(the "Effective Time").
2.2 Payment and Delivery by Buyer. At the Closing, and
subject to the terms and conditions as set forth herein, Buyer shall:
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(a) pay the Purchase Price as follows:
(i) $50,000.00 by application of the non-refundable
consideration paid by Buyer to Seller upon execution hereof, the receipt
of which is acknowledged;
(ii) $950,000.00 in the form of bank cashier's
check or by wire transfer of funds to an account designated by Seller;
and
(iii) $300,000.00 by Buyer's execution and delivery
to Seller of Buyer's promissory note in the form attached hereto as
Exhibit A (the "Promissory Note") together with a security agreement in
the form attached hereto as Exhibit B granting Seller a first priority
security interest in the Business and all of the assets used therein then
owned or thereafter acquired (including the Purchased Assets) as
collateral for payment of the Promissory Note; and
(b) execute and deliver the certificate required by
Section 8.1 hereof.
2.3 Delivery by Seller. At the Closing, and subject to the
terms and conditions as set forth herein, Seller shall:
(a) execute and deliver a General Assignment and
Conveyance conveying all of the Purchased Assets to Buyer;
(b) execute and deliver such other bills of sale,
endorsements, assignments, certificates of title, and other instruments
of transfer and conveyance as are reasonably requested by Buyer;
(c) deliver fully executed releases of all filed or
recorded liens affecting the Purchased Assets;
(d) execute and deliver an Amendment to Seller's Articles
of Organization changing its name to a name that does not include "Xxxx";
and
(e) execute and deliver the certificate required by
Section 7.1 hereof.
Seller will from time to time after the Closing Date, at Buyer's request,
execute such further instruments as Buyer reasonably deems necessary to
carry out the sale of the Purchased Assets pursuant to this Agreement.
2.4 Other Deliveries. At the Closing: (a) Buyer and Xxxxx
Xxxxxxxxxx shall enter into the employment agreement attached hereto as
Exhibit C; (b) Buyer and Xxxx and Xxx Xxxxxx (or an entity formed by
them) shall enter into the lease attached hereto as Exhibit D; and (c)
each of Seller and Xxxx Xxxxxx shall enter into a noncompetition
agreement with Buyer in the form attached hereto as Exhibit E.
2.5 Possession. Buyer shall be entitled to take possession of
and Seller shall deliver to Buyer the Purchased Assets as of the Closing
Date.
2.6 Prorations. Personal property taxes, equipment leases,
prepaid expenses and other customary items shall be prorated between
Seller and Buyer as of the Effective Time.
ARTICLE III.
REPRESENTATIONS OF SELLER
The Seller represents, promises and warrants to the Buyer as
follows:
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3.1 Organization. The Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Colorado and has all power and authority to own its property and carry on
its business as now conducted and has all necessary licenses, permits and
government approvals.
3.2 Authorization. The execution, delivery and performance of
this Agreement and any other documents or instruments contemplated hereby
have been duly authorized by all necessary action of the Seller, and this
Agreement has been executed and delivered by the Seller and constitutes a
legal, valid and binding obligation of the Seller enforceable in
accordance with its terms.
3.3 Financial Reports. There is attached hereto as Schedule
3.3 true and correct copies of the financial statement (including a
balance sheet and statement of income) of Seller for the year ended
December 31, 1995, and for the nine-month period ended September 30, 1996
(collectively, the "Reports"). Until Closing Seller shall deliver to
Buyer no later than the 15th day of each month a true and correct copy of
the financial statements including a balance sheet and statement of
income of Seller as of the last day of each preceding month prepared from
the books of Seller without audit (the "Interim Reports") (collectively,
the Reports and the Interim Reports shall be referred to as the
"Financial Reports"). All such Financial Reports are in accordance with
the books and records of Seller, have been prepared consistently
throughout the periods indicated, reflect all material assets and, to
Seller's knowledge, material liabilities of Seller, and present fairly
and completely, in all material respects, the financial condition of
Seller and the Business at such dates and results of its operations for
the periods then ended, subject only, in the case of the Interim Reports,
to normal year end adjustments.
3.4 Absence of Certain Changes. Except as reflected in
Financial Reports, or as contemplated by this Agreement, since the dates
of the Financial Reports, Seller has not:
(a) Suffered any material adverse change in its financial
condition; experienced any labor difficulty; or suffered any material
casualty loss (whether or not insured);
(b) Incurred any obligations or liabilities (whether
absolute, accrued, contingent, or otherwise and whether due or to become
due), except current liabilities in the ordinary course of business and
consistent with past practice;
(c) Written down or written up the value of any of its
inventory, or written off as uncollectible any of its notes or accounts
receivable or any portion thereof, except for write downs and write-offs
in the ordinary course of business, consistent with past practice;
(d) Canceled any other debts or claims, or waived any
rights of substantial value, or sold or transferred any of its properties
or assets, real, personal, or mixed, tangible or intangible, except in
the ordinary course of business and consistent with past practice;
(e) Disposed of or permitted to lapse any trademark or
copyright, or any trademark or copyright application or license, or
disposed of or disclosed to any person any trade secret, formula,
process, or know-how;
(f) Granted any increase in compensation or rate of
compensation or commission payable or to become payable to any of its
employees or agents except merit increases made in the usual course of
business; or
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(g) Made any change in any method of accounting or
accounting practice.
3.5 Title to Purchased Assets. Except for the Excluded Assets
or as disclosed in the Financial Reports or on Schedule 3.5, the
Purchased Assets constitute all of the assets used in the Business and
Seller owns, and has the right to transfer to Buyer, the Purchased
Assets, free and clear of any liens or encumbrances, whether by mortgage,
pledge, lien, conditional sale agreement, encumbrance, charge, or
otherwise other than liens for taxes not yet due. At the Closing all of
the liens and encumbrances or other matters described on Schedule 3.5
will be paid or discharged in full.
3.6 Personal Property. Schedule 1.1(a) contains a complete
and accurate list of all of the Personal Property used by Seller in the
Business other than the two Volvo automobiles that are Excluded Assets.
Except as otherwise disclosed on Schedule 3.6, the Personal Property is
in possession of Seller and located at Seller's principal place of
business and is in good and useable condition and repair.
3.7 Purchased Inventory. Except as disclosed on Schedule 3.7,
the Purchased Inventory is in good condition and consists of a quality
and type useable and saleable in the ordinary course of business.
3.8 Compliance With Other Instruments. The Seller has
complete and unrestricted power to undertake and perform all of the
obligations contained in this Agreement. Except as disclosed on Schedule
3.8, neither the execution and delivery, nor the consummation of the
transactions provided for in this Agreement, will violate the Articles of
Incorporation of Seller or any material agreement, mortgage, indenture,
license, franchise, permit, judgment, decree, order, law or regulation by
which the Seller is bound.
3.9 Litigation. There is no action, suit, litigation or
proceeding pending, or, to the best knowledge of the Seller, threatened
against or relating to the Seller or the Business.
3.10 Tax Returns. Seller has duly filed all tax reports and
returns required to be filed by it and has duly paid all taxes and other
charges due as shown thereon or claimed to be due from it by written
notice from any federal, state, or local taxing authorities, including,
without limitation, those due in respect of its properties, income,
franchise, licenses, sales, and payrolls; there are no tax liens upon any
of the Purchased Assets (other than liens for current taxes not yet due);
there are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any tax or deficiency
against the Purchased Assets or Seller nor are there any actions, suits,
proceedings, investigations or claims now pending against Seller or
relating to the Business; and, there are no pending discussions or
questions relating to, or claims asserted for taxes or assessments
against the Seller.
3.11 Leases. Schedule 3.11 hereto contains an accurate and
complete description of the terms of all leases pursuant to which Seller
leases real or personal property from or to others. True, correct and
complete copies of all leases have been provided to Buyer. To the best
of Seller's knowledge, all such leases are valid, binding, and
enforceable in accordance with their terms, and are in full force and
effect with no default thereunder.
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3.12 Intellectual Property. Schedule 3.12 hereto contains an
accurate and complete description of all Intellectual Property owned or
held by Seller and used in the Business, as well as all pending
applications for registration of any rights in Intellectual Property. To
the best of Seller's knowledge, no products sold, nor any patents,
formulae, processes, designs, patterns, know-how, trade secrets,
trademarks, trade names, assumed names, copyrights, or designations used
in
its business are included in any interference proceeding or infringe on
any proprietary rights of any person. No licenses, sublicenses or
covenants have been granted or entered into by Seller in respect of any
Intellectual Property.
3.13 Employee Matters. Schedule 3.13 hereto contains an
accurate and complete (i) list of all employees showing their
compensation, accrued vacation and sick leave as of the Closing Date, and
(ii) a description of, and the annual amount payable pursuant to, each
fringe-benefit plan or arrangement payable to employees (including each
bonus, deferred compensation, pension, profit-sharing, or retirement plan
or arrangement, whether legally binding or not). There are no contracts
of employment with any employees. To the best of its knowledge, Seller
has complied with all applicable laws relative to employee benefits,
including COBRA and ERISA, and there are no unfunded liabilities relating
to any pension or welfare benefit plan for which Seller could be liable.
Seller is not a party to any collective bargaining agreement.
3.14 Contracts and Commitments. Schedule 3.14 hereto is a
list of all of the following contracts, agreements, plans, arrangements,
or commitments for the benefit of or relating to the Business:
(a) All contracts, agreements, or commitments with
respect to the sale of products;
(b) All contracts and commitments for the purchase of,
supplies, materials equipment or other products;
(c) All sales agency and distributor agreements or
franchises; and
(d) All leases of Personal Property.
Except as specified in Schedule 3.14, to the best of Seller's
knowledge, all of such contracts, agreements, and commitments, are valid,
binding, and in full force and effect and there is no existing default
thereunder.
3.15 Compliance with Law. Seller has not received any notice
of any violation of and, to the best of Seller's knowledge, has complied
in all material respects with all laws, regulations, and orders
applicable to the Business including all rules and regulations of the
Occupational Health and Safety Administration, and all federal, state and
local environmental laws, rules and regulations.
3.16 Licenses and Permits. Schedule 3.16 hereto is a list of
all licenses and permits which, to the best of Seller's knowledge, are
required for Seller's operation of the Business, all of which are in full
force and effect. Seller makes no representation regarding the
assignability of such licenses and permits.
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3.17 Disclosure. No material representation or warranty by
Seller contained in this Agreement and no statement contained in any
exhibit, schedule certificate, list, or other writing furnished to the
Buyer pursuant to the provision hereof, to the best knowledge of Seller,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein not
materially misleading.
ARTICLE IV.
CONDUCT OF BUSINESS PRIOR TO CLOSING
Seller covenants and agrees that prior to the Closing, except as
Buyer shall have consented in writing:
4.1 Operation in Ordinary Course. The business will be
conducted only in the ordinary course.
4.2 Operation of the Business. Seller shall use its best
efforts to keep the Business intact and to preserve the goodwill of
suppliers, customers and others having business relations with the
Seller.
4.3 Employees. Seller shall pay all salaries, wages, payroll
taxes, benefits, vacation pay, all other fringe benefit costs, and all
other costs of every nature whatsoever due or accrued at or prior to the
Closing to or for the benefit of its employees or agents, Buyer assuming
no responsibility for any of the above. Notwithstanding the foregoing,
at Buyer's election, accrued vacation pay may be prorated at the Closing
for any of Seller's employees hired by Buyer pursuant to Section 10.3
hereof, in which event Buyer shall be responsible for accrued vacation.
Effective as of the close of business on the day prior to the Closing
Date, Seller shall terminate the employment of all of Seller's employees
and Buyer shall hire such employees as contemplated by Section 11.3
hereof.
4.4 Payment of Liabilities. Seller shall pay as the same
become due all of its liabilities other than the Assumed Liabilities.
4.5 Payment of Taxes. Seller shall promptly file all tax
returns and pay all federal, state and local tax assessments and
governmental charges which are or may be lawfully levied or assessed
against Seller, the Business or the Purchased Assets for periods ending
on or prior to the Closing Date, including, but not limited to, ad
valorem, sales, use, excise, franchise, and personal property taxes.
4.6 Insurance. Seller will maintain in effect through the
Closing Date all existing insurance coverage covering the Purchased
Assets.
4.7 Maintenance of Properties, etc. Through the Closing Date,
the Seller will maintain all the properties in customary repair, order
and condition, reasonable wear and use and damage by fire or other
casualty excepted. Seller shall be responsible for all risk of loss
prior to the Closing Date.
4.8 Maintenance of Books, etc. Through the Closing Date, the
Seller will maintain the books, accounts and records in the usual manner
on a basis consistent with prior periods. The Seller will duly comply in
all material respects with all laws and decrees applicable to it.
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4.9 Update Schedules; Assigned Contracts. Seller shall advise
Buyer of any changes in the information provided in the schedules
attached hereto. On the Closing Date, Seller shall provide an updated
list of the Assigned Contracts.
ARTICLE V.
PRE-CLOSING COVENANTS OF SELLER AND BUYER
5.1 Environmental Survey. Seller and Buyer shall cooperate in
obtaining, at Buyer's expense, a Phase I environmental survey of the real
property on which the Business is operated. The Phase I survey shall be
ordered from an environmental consultant reasonably acceptable to Buyer
no later than ten (10) days after the date hereof and shall be completed
as promptly as possible. If a Phase II environmental survey is required
by the environmental consultant preparing the Phase I survey, Seller
shall pay up to $2,500.00 for the Phase II survey.
5.2 Cooperation. Each of Seller and Buyer shall use its best
efforts to cause the sale contemplated by this Agreement to be
consummated, and, without limiting the generality of the foregoing, to
obtain all consents and authorizations of third parties and to make all
filings with and give notices to third parties which may be necessary or
reasonably required in order to effect the transactions contemplated
hereby.
5.3 Access to Premises. Between the date hereof and the
Closing Date, the Seller will afford to the officers and authorized
representatives of Buyer access during normal business hours (with the
participation of Xxxx Xxxxxx or Xxxxx Xxxxxxxxxx) to the premises,
properties, books and records of Seller in order that Buyer shall have
the opportunity to make such investigations as it shall desire and to
permit Seller to review such financial and operating data and other
information regarding the Business as Buyer shall from time to time
reasonably request. Buyer shall not contact or meet with Seller's
customers or suppliers without the participation of Xxxx Xxxxxx or Xxxxx
Xxxxxxxxxx. The confidentiality agreement executed by Buyer dated
, 1996 shall remain in full force and effect. Neither party
shall make public disclosure of this Agreement prior to the Closing
except as required by Buyer in connection with its compliance with
applicable securities laws.
ARTICLE VI.
REPRESENTATIONS BY THE BUYER
The Buyer represents, promises and warrants to the Seller as
follows:
6.1 Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Colorado, and has all corporate power and authority to own its property
and carry on its business as now conducted.
6.2 Authorization. The execution, delivery and performance of
this Agreement and any other documents or instruments contemplated hereby
has been duly authorized by all necessary corporate actions of the Buyer,
and this Agreement has been executed and will be delivered by the Buyer
and will constitute a legal, valid and binding obligation of the Buyer
enforceable in accordance with their terms.
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6.3 Compliance With Other Instruments. The Buyer has complete
and unrestricted power to undertake and perform all of the obligations
contained in this Agreement. Neither the execution and delivery, nor the
consummation of the transactions provided for in this Agreement, will
violate the Articles of Incorporation or the Bylaws of the Buyer or any
material agreement, mortgage, indenture, license, franchise, permit,
lease or other instrument, judgment, decree, order, law or regulation by
which the Buyer is bound.
6.4 Litigation. There is no action, suit, litigation or
proceeding pending, or, to the best knowledge of the Buyer, threatened
against or relating to the Buyer which could adversely affect the ability
of Buyer to perform the transactions contemplated by this Agreement.
ARTICLE VII.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate the transactions contemplated
by this Agreement is subject to the fulfillment to its satisfaction of
the following conditions prior to or at the Closing (unless expressly
waived in writing by Buyer).
7.1 Representations, Warranties and Covenants. The
representations and warranties made by Seller shall be true and correct
in all material respects at and as of the Closing Date; and Seller shall
have performed and complied in all material respects with all covenants,
agreements and conditions contained in this Agreement required to be
performed or complied with by them prior to the Closing and Seller shall
provide to Buyer at the Closing a certificate to such effect executed by
Seller.
7.2 Litigation. There shall be no litigation pending or
threatened against Seller with respect to the consummation of this
Agreement or which could adversely affect the ability of Seller to convey
the Purchased Assets to Buyer.
7.3 Environmental Inspection. Buyer shall have received a
reasonably satisfactory environmental report regarding the real property
on which the business is located. This condition precedent shall expire
ten (10) days after delivery of the environmental survey described in
Section 5.1.
ARTICLE VIII.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated
by this Agreement is subject to the fulfillment to its satisfaction of
the following conditions prior to at the Closing (unless expressly waived
in writing by Seller):
8.1 Representations, Warranties and Covenants. The
representations and warranties made by Buyer shall be true and correct in
all material respects at and as of the Closing Date and Buyer shall have
performed and complied in all material respects with all covenants,
agreements and conditions contained in this Agreement required to be
performed or complied with by it prior to the Closing and Buyer shall
provide to Seller at the Closing a certificate to such effect executed by
an officer of Buyer.
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8.2 Litigation. There shall be no litigation pending or
threatened against Buyer with respect to the consummation of this
Agreement.
ARTICLE IX.
FAILURE OF CONDITIONS; REMEDIES
9.1 Failure of Conditions Precedent - No Breach. In the event
any condition precedent to the obligations of either party are not
satisfied on the Closing Date and the failure to satisfy the condition
precedent is not due to a breach of this Agreement by the other party,
the party whose conditions precedent have not been satisfied shall have
the option of terminating this Agreement or waiving the unsatisfied
condition precedent and closing hereunder (and, in either event, waiving
any claim for damages or indemnity relating thereto).
9.2 Failure of Conditions Precedent - Breach. In the event
any condition precedent to the obligations of either party are not
satisfied on the Closing Date and the failure to satisfy the condition
precedent is due to a breach of this Agreement by the other party, the
party who is not in breach of this Agreement shall have the following
rights:
(a) If Seller is in breach, Buyer shall have the option
of terminating this Agreement and receiving a refund of the $50,000.00
referred to in Section 2.2(a)(i) hereof and, if applicable, the
$50,000.00 paid by Buyer under Section 2.1 hereof or closing hereunder
without, in either event, waiving its claim for damages or indemnity
resulting from the breach; and
(b) If Buyer is in breach, Seller shall have the right
to terminate this Agreement and retain the consideration described in
Section 2.2(a)(i) and, if applicable, the $50,000.00 paid by Buyer under
Section 2.1 hereof as liquidated damages as its sole and exclusive
remedy.
ARTICLE X.
INDEMNIFICATION
10.1 Survival of Representations, Warranties and Covenants.
All of the representations, covenants and warranties contained herein and
in any documents delivered pursuant to this Agreement (except those
waived pursuant to Section 9.1) shall survive the Closing hereunder;
provided that the representation and warranties shall only remain in full
force and effect for a period of twenty-four (24) months following the
Closing Date).
10.2 Indemnity by Seller. Seller shall indemnify, save, and
hold harmless Buyer from any "damages" as hereinafter defined.
"Damages," as used herein, shall mean and include any loss, cost,
expense, or other liability, including counsel fees, which Buyer may
incur or suffer (a) by reason of the inaccuracy of any of Seller's
representations contained in this Agreement or breach or default in
performance by the Seller of the covenants which it is to perform
hereunder; or (b) except for the Assumed Liabilities, liabilities not
assumed by Buyer arising out of or relating to Seller's ownership and
operation of the Business and the Purchased Assets prior to the Closing
Date, including Seller's failure to comply with federal and state
environmental laws.
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10.3 Indemnity by Buyer. Buyer shall indemnify, save, and
hold harmless Seller from any "damages" as hereinafter defined.
"Damages," as used herein, shall mean and include any loss, cost,
expense, or other liability, including counsel fees, which Seller may
incur or suffer: (a) by reason of the inaccuracy of any representation
of the Buyer contained in this Agreement, or breach or default in
performance by the Buyer, of the covenants which it is to perform
hereunder; or as a result of (b) Buyer's ownership and operation of the
Business and the Purchased Assets from and after the Closing Date,
including the Assumed Liabilities and Damages resulting from Buyer's
failure to comply with federal and state environmental laws from and
after the Closing Date.
10.4 Procedures for Indemnification. The party entitled to
indemnification ("Indemnitee") shall, as promptly as is reasonably
practicable after it become aware thereof, notify the other party
("Indemnitor") of the existence of any claim, demand or other matter to
which Indemnitor's indemnification obligations apply and shall give
Indemnitor a reasonable opportunity to defend the same at its own expense
and with counsel of its own selection reasonably acceptable to
Indemnitee; provided, that Indemnitee shall at all times, also have the
right to fully participate in the defense at its own expense. Indemnitor
may, at its own discretion, settle any dispute, demand or claim defended
by it hereunder; provided, any such settlement shall be solely for
Indemnitor's account and Indemnitee shall not be liable for any amounts
whatsoever payable in connection with any such settlement. If Indemnitor
shall, within a reasonable time after notice to it, fail to so defend,
Indemnitee shall have the right, but not the obligation, to undertake the
defense of, and to compromise or settle (exercising reasonable business
judgment), the claim or other matter on behalf, and at the risk of,
Indemnitor.
ARTICLE XI.
POST-CLOSING RIGHTS AND OBLIGATIONS
11.1 Collection of Accounts. Subsequent to the Closing, Buyer
shall use its reasonable and customary efforts to collect all of Seller's
accounts receivable as of the Closing Date, but Buyer shall not be
required to initiate any legal action or turn over any account to a
collection agency. Any payment received by Buyer from a customer will be
applied to the invoice reflected on the payment or which matches the
payment in amount. Any payment that cannot be matched to an invoice will
be applied to the oldest invoice. All payments of Seller's accounts
receivable received by Buyer shall be held in trust for Seller. No later
than Monday of each week, Buyer shall deliver to Seller all payments
received during the preceding week by Buyer of Seller's accounts
receivable.
11.2 Cooperation. Seller and Buyer shall cooperate with each
other as reasonably required to complete a smooth transition of the
ownership of the Business from Seller to Buyer.
11.3 Employees. Buyer shall offer employment to all of
Seller's employees following the Closing on substantially the same terms
as they were employed by Seller prior to the Closing.
11.4 Product Replacement; Warranty Claims. Seller shall be
responsible for replacement of and warranty claims relating to any
defective product sold and delivered by Seller to any customer prior to
the Closing Date. Notwithstanding the foregoing, Buyer shall cooperate
with Seller in resolving such claims and shall permit its employees to
PAGE 14
assist in resolving such claims without cost to Seller. In addition,
Buyer shall provide Seller with up to $500.00 (at Buyer's cost) of
replacement product without charge to Seller for Seller to utilize in
satisfying warranty claims for which Seller is responsible.
11.5 Preservation of Records. At the Closing, Seller shall
deliver to Buyer all of the books, records, and other documents or
information relating to the Business but shall not be required to deliver
any records, documents or other information regarding Seller. Buyer
shall maintain, preserve and, upon reasonable notice, provide Seller or
its representatives access during normal business hours to, and the right
to make copies of, all financial books and records, marketing and sales
records, files, data, projections, reports, correspondence, lists, record
and reports concerning customers, employees, and suppliers, or any
dealings with federal, state and local government bodies and regulatory
agencies or otherwise relating to or used in connection with the
Purchased Assets that relate to periods prior to the Closing Date. Buyer
shall provide Seller or its representatives prior written notice of
Buyer's intent to destroy or otherwise dispose of any such books,
records, correspondence, documents or files held pursuant to this
Agreement and, upon request of Seller or its representatives, shall
deliver to Seller such books, records, correspondence, documents or files
with respect to periods prior to the Closing as requested by Seller or
its representatives.
11.6 Sales and Use Tax. Buyer shall be responsible for the
payment of all sales, use or other transfer taxes resulting from the sale
of the Purchased Assets to Buyer pursuant to this Agreement.
11.7 Closing Date Financial Statement. No later than thirty
(30) days following the Closing Date, Seller shall deliver to Buyer a
copy of Seller's financial statements for the period ending on the
Closing Date.
ARTICLE XII.
GENERAL
12.1 Notice. All notices, requests, demands and other
communications hereunder shall be furnished to the other party at its
address listed below (or such other address as notified in writing),
shall be in writing, and shall be deemed to have been duly given if
delivered personally or mailed, by certified or registered mail, return
receipt requested and postage prepaid.
(a) If to Seller, to:
Xxxx, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx, President
With a copy to:
Xxxxx, Johnson, Robinson, Xxxx &
Ragonetti, P.C.
000 Xxxxxxxxxxx Xx., Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
(b) If to Buyer, to:
Rentech, Inc.
0000 Xxxxxxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Vice President
PAGE 15
12.2 Amendment. This Agreement may be amended or modified
only by a written instrument executed by the party hereto against which
it is to be enforced.
12.3 Expense of Parties. Except as otherwise specifically
provided herein, each party to this Agreement shall pay its own expenses
(including, without limitation, the fees and expenses of their respective
agents, representatives, counsel and accountants) incidental to the
preparation and carrying out of this Agreement. In the event a party
commences legal action against another party to enforce its rights under
this Agreement, the prevailing party in such action shall be entitled to
recover all of its costs and expenses in connection therewith, including
reasonable attorneys' fees and costs.
12.4 Brokers. Except for IBG Business Services Incorporated,
whose commission shall be paid by Seller, no broker or third party has
been instrumental in bringing the parties hereto together. Seller agrees
to indemnify Buyer, and Buyer agrees to indemnify Seller, against any
claim by any third person for any commission, brokerage, finder's fee or
other payment based upon any alleged agreement or understanding between
such party and such third person, whether expressed or implied from the
actions of such party.
12.5 Governing Law. This Agreement is being delivered in and
shall be construed in accordance with and governed by the laws of the
State of Colorado.
12.6 Headings. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
12.7 Prior Agreements; Counterparts. This Agreement, with its
Exhibits and Schedules, merges and integrates all prior agreements and
representations respecting this transaction, whether written or oral, and
constitutes the sole agreement of the parties in connection therewith.
This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.8 Assignment. This Agreement shall not be assignable by
Seller or Buyer, except that the Buyer may assign this Agreement to a
corporation of which the Buyer is the sole shareholder provided Buyer
remains fully liable to Seller hereunder. Subject to the foregoing, this
Agreement shall be binding upon, and inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of the
Seller and the Buyer. Nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies under or
by reason of this Agreement.
12.9 Waiver. The failure of any party to enforce any right
arising under this Agreement on one or more occasions shall not operate
as a waiver of that or any other right on that or any other occasion.
PAGE 16
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
SELLER:
XXXX, INC., a Colorado corporation
(signature)
By: -----------------------------------
Xxxx Xxxxxx, President
BUYER:
RENTECH, INC., a Colorado corporation
(signature)
By: -----------------------------------
Xxxxxx X. Xxxxxxxx, President
PAGE 17
SCHEDULES
1.1(a) Personal Property
1.1(b) Intellectual Property
1.3 Purchase Price Allocation
3.3 Financial Reports
3.5 Disclosure Regarding Purchased Assets
3.6 Disclosure Regarding Personal Property
3.7 Disclosure Regarding Purchased Inventory
3.8 Disclosure Regarding Compliance
3.11 Leases
3.12 Intellectual Property
3.13 Employees and Benefit Plans
3.14 Contracts and Commitments
3.16 Licenses and Permits
EXHIBITS
A Form of Promissory Note
B Form of Security Agreement
C Form of Employment Agreement
D Form of Lease
E Form of Noncompetition Agreement
PAGE 18
Schedule 1.1(a)
Personal Property
1. Machines and equipment
2. Furniture and fixtures
3. Mechanical equipment
4. Automatic equipment
5. Building improvements
PAGE 19
Schedule 1.1(b)
Intellectual Property
1. Product formulations
a. HG Emulsion (55-gallon batch size)
x. Xxxx W-1 (55-gallon batch size)
x. Xxxx W-1 Concentrate (55-gallon batch size)
x. Xxxx W-2 (55-gallon batch size)
x. Xxxx W-2 (2,000-gallon batch size)
x. Xxxx W-2 Concentrate (55-gallon batch size)
x. Xxxx Block Plugger (300-gallon batch size)
x. Xxxx TCS Additive (55-gallon batch size)
x. Xxxx Waterproofing Sealer (55-gallon batch size)
x. Xxxx Seal & Finish (55-gallon batch size)
x. Xxxx Seal & Finish High Gloss (150-gallon batch size)
x. Xxxx Seal & Finish High Gloss/Hoddcomm Stain (150-gallon
batch size)
m. Neutralized EPS 6211 Plus Drier (for Xxxx Deck Stain &
Natural Choice) (300-gallon batch size)
x. Xxxx Natural Choice with Pigment (Redwood or Cedar)
(55-gallon batch size)
x. Xxxx Natural Choice with Pigment (Fir/Pine) (55-gallon
batch size)
x. Xxxx Deck Stain (55-gallon batch size)
q. Neutralized EPS 6211 (for Xxxx Weather Pro) (300-gallon
batch size)
x. Xxxx Weather Pro (55-gallon batch size)
s. Weather Pro Concentrate (55-gallon batch size)
t. Weather Pro Concentrate (2,000-gallon batch size)
x. Xxxx Xxxx Cleaner (40-gallon batch size)
x. Xxxx Seal & Finish High Gloss (250-gallon batch size)
w. OK-AG Masonry Cleaner (125-pound batch size)
x. Xxxx Adhesive 201 (55-gallon batch size)
x. Xxxx Head Cement & Color Preservative (55-gallon batch
size)
2. Trademark registration for "Xxxx"
3. Trademark registration for "Weather Pro"
4. Trademark registration for "Xxxx Natural Choice"
PAGE 20
Schedule 1.3
Purchase Price Allocation
PAGE 21
Schedule 3.3
Financial Reports
December 1995 Year to Date Balance Sheet & Income Statements
September 1996 Year to Date Balance Sheet & Income Statements
PAGE 22
Schedule 3.5
Disclosure Regarding Purchased Assets
PAGE 23
Schedule 3.6
Disclosure Regarding Personal Property
None
PAGE 24
Schedule 3.7
Disclosure Regarding Purchased Inventory
1. 93 - 5 gallon pails of Xxxx Block Plugger will be sold at the
Xxxx W-2 price and therefore should be adjusted down on the
inventory using W-2 costs (465 gallon total).
PAGE 25
Schedule 3.8
Disclosure Regarding Compliance
None
PAGE 26
Schedule 3.11
Leases
1. GMAC Lease Agreement - 1995 Chevrolet Lumina 4-door
2. 0000 Xxxx 00xx Xxxxxx, Xxxxxxxx, Xxxxxxxx lease (to be
terminated
at Closing)
PAGE 27
Schedule 3.12
Intellectual Property
See Schedule 1.1(b)
PAGE 28
Schedule 3.13
Employees and Benefit Plans
1. Pension and Profit Sharing Plans including Participants
2. 1995 Pension and Profit Sharing Contributions
3. Company Benefit Policies
4. Employees Compensation and Health Insurance Premiums
a. Xxxxx X. Xxxxxxxxxx salary and bonus schedules
b. Xxxxxxxx X. Xxxxxx salary and bonus schedules
c. Xxxxxxx X. Xxxxx salary and bonus schedules
5. Vacation Benefit Schedule
PAGE 29
Schedule 3.14
Contracts and Commitments
1. A. Xxxx Xxxx - East Coast Warehouse Contract
2. Sweet's Group/XxXxxx-Xxxx, Inc. Contracts 1996 and 1997
Note: 1996 Contract is paid up
1997 Contract is due in 1997
3. Mid South Associates, Inc. - Buying Group Agreement
4. ALLPRO Corporation - Buying Group Agreement
5. Pitney Xxxxx Credit Corp. - Service Agreement
6. U S West Direct - Directory Advertising Agreement
7. Selectronics, Inc. - Typewriter Service Agreement
8. F A C Associates & American Photocopy - A B Dick Service
Agreement
9. Xxxx Sales Representative Agreements and Rates as of 10/96
Seller also has sales and purchase orders entered into in the
ordinary course of business. A current list (to be included in the
Assigned Contracts) will be provided to Buyer at Closing.
PAGE 30
Schedule 3.16
Licenses and Permits
1. Colorado Sales Tax License
2. City of Lakewood Sales Tax License
PAGE 31
EXHIBIT A
Form of Promissory Note
PAGE 32
EXHIBIT B
Form of Security Agreement
PAGE 33
EXHIBIT C
Form of Employment Agreement
PAGE 34
EXHIBIT D
Form of Lease
PAGE 35
EXHIBIT E
Form of Noncompetition Agreement
