Exhibit 10.18
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SERVAAS, INC.
AND
USRR ACQUISITION CORP.
DATED: DECEMBER 29, 2000
TABLE OF CONTENTS
I DEFINITIONS
II BASIC TRANSACTION
2.1 Sale and Purchase of Stock ............................................. 3
2.2 Consideration .......................................................... 3
2.3 Transaction at Closing ................................................. 3
III OTHER COVENANTS AND AGREEMENTS
3.1 Due Diligence .......................................................... 4
3.2 Ordinary Course ........................................................ 4
3.3 No Transfer ............................................................ 4
3.4 Liens .................................................................. 4
3.5 No Capital Expenditures ................................................ 4
3.6 Compensation ........................................................... 4
3.7 Dividends .............................................................. 5
3.8 Consents ............................................................... 5
3.9 Preservation of Business ............................................... 5
3.10 Employees ............................................................. 5
3.11 Bank One Indebtedness ................................................. 5
3.12 Noncompetition Agreements ............................................. 5
IV REPRESENTATIONS AND WARRANTIES OF SELLER AND USRR
4.1 Ownership; Corporate Organization; Good Standing ...................... 5
4.2 Authority and Binding Effect .......................................... 6
4.3 No Violation .......................................................... 6
4.4 USRR Stock ............................................................ 6
4.5 Financial Statements .................................................. 6
4.6 No Undisclosed Liabilities ............................................ 7
4.7 Funded Debt ........................................................... 7
4.8 Seller Debt ........................................................... 7
4.9 Personal Property ..................................................... 7
4.10 Real Property and Leaseholds ......................................... 8
4.11 Inventory ............................................................ 9
4.12 Accounts Receivable .................................................. 9
4.13 Intangible Property .................................................. 10
4.14 Contracts ............................................................ 10
4.15 Environmental Matters ................................................ 11
4.16 Insurance ............................................................ 12
4.17 Customers and Suppliers .............................................. 13
4.18 Litigation; Compliance with Law ...................................... 13
4.19 Tax Returns and Liabilities .......................................... 13
4.20 Employee Benefit Plans ............................................... 13
4.21 Labor Relations ...................................................... 15
4.22 Brokers and Finders Fees ............................................. 16
4.23 Confidential Information ............................................. 16
4.24 Certain Transactions ................................................. 16
4.25 Sufficiency of Assets ................................................ 16
4.26 Employee Health and Safety ........................................... 16
4.27 Disclosure ........................................................... 16
V REPRESENTATIONS AND WARRANTIES OF BUYER
5.01 Corporate Organization; Good Standing ................................ 17
5.02 Authority and Binding Effect ......................................... 17
5.03 No Violation ......................................................... 17
5.04 Brokers and Finders Fees ............................................. 17
VI CONDITIONS TO BUYERS OBLIGATIONS
6.01 Representations True; Obligations to Perform ......................... 17
6.02 Litigation ........................................................... 18
6.03 Consents and Approvals ............................................... 18
6.04 Opinion of Counsel ................................................... 18
6.05 Financing ............................................................ 18
6.06 USRR Stock ........................................................... 18
6.07 SerVaas Payable ...................................................... 18
6.08 Bank One ............................................................. 18
6.09 Noncompetition Agreements ............................................ 18
6.10 Releases; Resignations ............................................... 18
6.12 Due Diligence ........................................................ 19
6.11 Real Estate Title .................................................... 19
VII. CONDITIONS TO THE SELLER'S OBLIGATIONS
7.1 Representations and Warranties True; Obligations to Perform ..... 19
7.2 Consideration ................................................... 19
7.3 Litigation ...................................................... 19
7.4 Consent and Approval ............................................ 19
7.5 Opinion of Counsel for Buyer .................................... 19
VIII. INDEMNIFICATION
8.1 Indemnification by Seller and SerVaas ................... 20
8.2 Seller's Tax Indemnification ............................ 20
8.3 Buyer's Indemnification ................................. 21
8.4 Notice and Opportunity to Defend ........................ 21
IX. Miscellaneous
9.1 Entire Agreement ................................... 22
9.2 Modifications and Waivers .......................... 22
9.3 Counterparts ....................................... 22
9.4 Governing Law ...................................... 23
9.5 Headings ........................................... 23
9.6 Exhibits ........................................... 23
9.7 Severability ....................................... 23
9.8 Notices ............................................ 23
9.9 Further Assurances ................................. 24
9.10 Announcements ...................................... 24
9.11 Expenses ........................................... 24
9.12 Survival of Representations ........................ 24
9.13 Specific Performance ............................... 24
9.14 Assignment ......................................... 25
SCHEDULES AND EXHIBITS
Exhibit 3.12 Non-Competition Agreements
Exhibit 2.2(u) Seller Note ($1,750,000)
Schedule 7.5 Opinion of Counsel Schedule 4.1 Good Standing Certificates Schedule
4.3 Violations Schedule 4.5 Financial Statements Schedule 4.6 Undisclosed
Liabilities Schedule 4.9 Personal Property Schedule 4.10 Real Property and
Leaseholds Schedule 4.11 Inventory Schedule 4.12 Accounts Receivable Schedule
4.13 Intangible Property Schedule 4.14 Contracts Schedule 4.15 Environmental
Matters Schedule 4.16 Insurance Schedule 4.17 Customers and Suppliers Schedule
4.18 Litigation Schedule 4.19 Tax Returns and Liabilities Schedule 4.20 Employee
Benefit Plans Schedule 4.21 Labor Relations Schedule 4.23 Confidential
Information Schedule 4.24 Certain Transactions Schedule 4.26 Employee Health and
Safety Schedule 6.4 Opinion of Counsel Schedule 7.5 Opinion of Counsel for Buyer
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement" )is made and entered into
as of the 29th day of December, 2000, by and between SerVaas, Inc. ("Seller"),
and USRR Acquisition Corp. ("Buyer"), and is effective simultaneous with the
Transactions contemplated herein. Beurt SerVaas ("SerVaas") joins this Agreement
for the purposes of Section IX and 3.12 hereof
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the USRR Stock (as defined below) according to the terms and conditions
of this Agreement.
Therefore, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants contained herein, Seller
and Buyer agree as follows:
I. DEFINITIONS. When used in this Agreement, the following terms, in addition
to the other capitalized terms, which are specifically defined in other
sections of this Agreement, have the following meanings:
"Accounts Payable" means all trade accounts payable of USRR determined
in accordance with GAAP and reflected on the books and records of USRR,
but excluding any other accrued liabilities.
"Accounts Receivable" means all accounts receivable of USRR determined
in accordance with GAAP and reflected on the books and records of
USRR.
"Affiliate" of any Person, means any Person directly or indirectly
controlling, controlled by or under common control with such Person,
and includes any Person who is an officer, director or employee of
such Person and any Person that would be deemed to be an "Affiliate"
of such Person, as that term is defined in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
"Bank One" means Bank One, Indiana, National Association.
"Bank One Indebtedness" means bank loans, exclusive of MIBFC loans,
owed by USRR to Bank One in the current principal amount of $200,000.
"Cash Consideration" means the sum of Five Xxxxxxx Xxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (US$5,250,000) in immediately available
funds.
"Closing" means the closing of the transactions contemplated by this
Agreement, which shall occur at 10:00 a.m. local time, on the Closing
Date at the offices of Xxxxxxx Xxxxxxx & Associates, Bank One Tower,
000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx, or at such
other place and time as Seller and Buyer may mutually agree upon.
"Closing Date" means December 28, 2000, or such other date as may
hereafter be mutually agreed to by the Buyer and Seller.
"Code" means the Internal Revenue Code of 1986, as amended.
"GAAP" means generally accepted United States accounting principals
applied on a consistent basis.
"Hazardous Substances" means any hazardous or toxic substance or waste,
pollutant, or contaminant, including petroleum products, asbestos, PCBs
and radioactive materials.
"Inventory" means all raw materials through work-in-process to finished
goods determined in accordance with GAAP and reflected on the books and
record of USRR.
"Laws"(whether or not capitalized) means all constitutions, statutes,
rules, regulations, ordinances and similar concepts promulgated by any
governmental authority.
"Letter of Intent" means the letter of intent by and between Obsidian
Capital Company, LLC and SerVaas, Inc., dated August 23, 2000.
"Liens" means (i) in respect of any assets other than a security, any
lien, charge, claim, security interest, conditional sale agreement,
mortgage, security agreement, option or other encumbrance; and (ii) in
respect of any security, any of the foregoing and, in addition, any
adverse claim or restriction on voting.
"MBFC" means the Mississippi Business Finance Corporation.
"MBFC Financing" means indebtedness of USRR to MIBFC pursuant to that
certain Loan Agreement dated November 1, 1991, and related documents
related to a loan in the original principal amount of One Million Five
Hundred Thousand Dollars ($1,500,000) with a current principal loan
balance of $200,000.
"Parties" means collectively Seller, Buyer and USRR.
"Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Seller Note" means the promissory note payable by Buyer to Seller in
the original principal amount of Xxx Xxxxxxx Xxxxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (US$1,750,000) in the form of Exhibit
"2.2(u)" attached hereto. The Seller Note is secured by a pledge of
Buyer's capital stock.
"Shares" means USRR stock and is used interchangeably herein.
"Taxes" means any federal, state, provincial, local and foreign income,
payroll, withholding, excise, sales, use, license, lease, personal and
other property, use and occupancy, business and occupation, mercantile,
real estate, gross receipts, employment, windfall profits, social
security, disability, transfer, registration, value-added, estimated,
capital stock and franchise, goods and services, health, social
services and education taxes; and other tax of any kind whatsoever,
including interest, penalties and fines on any of the foregoing,
whether or not disputed.
"Transaction" means the sale of the Shares by Seller to Buyer and the
execution and delivery of all certificates, covenants, agreements,
indemnifications, representations and warranties related and ancillary
thereto.
"USRR" means U.S. Rubber Reclaiming, Inc., an Indiana corporation.
"USRR Stock" means all of the issued and outstanding capital stock of
USRR together with all rights of any nature whatsoever to acquire
capital stock of USRR.
II. BASIC TRANSACTION.
2.1 Sate and Purchase of Stock. At the Closing, Seller will sell
and convey to Buyer, and Buyer will purchase and accept from
Seller, the USRR Stock.
2.2 Consideration.
(i) Amount. As consideration for the Shares, Buyer will pay
Seller the sum of Seven Million United States Dollars
(US$7,000,000) (the "Purchase Price").
(ii) Deliveries by Buyer. Buyer shall deliver the Purchase
Price by (a) payment of the Cash Consideration in the
sum of Five Million Two Hundred Fifty Thousand Dollars
($5,250,000) and (b) a Seller Note in the principal
amount of One Million Seven Hundred Fifty Thousand
Dollars ($1,750,000), in the form attached hereto as
Exhibit 2.2(u).
2.3 Transactions at Closing. At the Closing, Seller shall sell,
transfer, convey, assign and deliver to Buyer, against payment
of the Purchase Price therefore, a certificate or certificates
representing the Shares free and clear of all liens and
encumbrances, duly endorsed in blank or accompanied by a
proper instrument of assignment duly endorsed in blank, and
shall deliver to Buyer such other documents, instruments,
certificates and endorsements as are required by this
Agreement to be delivered by Seller. Buyer shall deliver to
Seller in addition to the Purchase Price such other documents,
instruments and certificates as are required by this Agreement
to be delivered by Buyer.
III. OTHER COVENANTS AND AGREEMENTS.
From the date of the Letter of Intent to Closing, Seller, USRR and
Buyer have covenanted and agreed whether in writing or otherwise and as of
Closing, they hereby confirm the following:
3.1 Due Diligence. Seller has afforded Buyer and its
representatives reasonable access to USRR's records and
properties and has furnished Buyer and its representatives
such financial and other information with respect to USRR as
was requested. No investigation by Buyer or its
representatives of USRR affects any of the representations and
warranties made by Seller and USRR herein, it being expressly
agreed that Buyer shall have the right to rely solely on the
representations and warranties set forth in this Agreement.
Buyer has kept confidential all information so received and
has used its best efforts to ensure that its agents, lenders,
and representatives keep confidential all such information,
provided that Buyer may disclose any such information to the
extent required by any court, government agency, or authority
of the United States.
3.2 Ordinary Course. Except as disclosed on the Schedules hereto,
Seller has caused USRR to carry on its business diligently in
the ordinary and regular course, and in the same manner as
heretofore conducted, and Seller has not allowed USRR to
engage in any transaction or activity, or enter into any
agreement or make any commitment, except in the ordinary and
regular course of business.
3.3 No Transfer. Except as disclosed on the Schedules hereto, USRR
has not sold or conveyed, or agreed to sell or convey, any
material assets other than the sale of finished goods
inventory and/or excess equipment in the ordinary course of
business.
3.4 Liens. Contemporaneously with the Closing, Seller will cause
to be released all liens on USRR's assets in favor of Bank
One. Further, Buyer is assuming the MBFC Financing and Buyer
shall make provision satisfactory to Bank One's counsel that
the Liens related to the MBFC Financing shall be released at
such time as MIBFC Bond Counsel approves in the alternative
substitute security or a Bond payoff as adequate to protect
its Bond Holders until maturity. In addition, Seller will
cause the release of any other liens of USRR's assets, other
than liens evidencing Capital Leases.
3.5 No Capital Expenditures. Seller has not allowed USRR to commit
to any capital expenditures, nor make any capital
expenditures, except for commitments or expenditures within
existing operating or capital budgets or otherwise disclosed
to Buyer on the Schedules hereto.
3.6 Compensation. Except as disclosed on the Schedules hereto,
Seller has not allowed USRR to make any increase in the
compensation payable by USRR to any officer, employee or
agent, nor has Seller allowed USRR to make any bonus payment
to (except pursuant to existing plans), grant any stock option
to, or enter into any employment or consulting agreement with,
any officer, employee or agent.
3.7 Dividends. USRR has not declared or paid any dividends or made
any distributions with respect to any class of its capital
stock, except for the dividend-in-kind of inventory previously
disclosed to Buyer.
3.8 Consents. Seller has obtained all consents, approvals, and
other agreements, which are required for the due and punctual
consummation of the Transaction contemplated by this
Agreement.
3.9 Preservation of Business. Seller has caused USRR to use its
best efforts to promote, develop, and preserve its
relationships with its vendors, suppliers, employees,
customers, and others having business relations with it.
3.10 Employees. USRR has not terminated any of its key employees
prior to Closing.
3.11 Bank One Indebtedness. At Closing, Seller will cause all
indebtedness of USRR to Bank One to be paid in full from
sources other than the assets of USRR; Seller's Notes Payable
owed to USRR shall be satisfied in full at Closing by the
transfer of Closing Proceeds to USRR by Seller sufficient to
satisfy Seller's Notes Payable and such Closing Proceeds shall
be applied by USRR to the repayment of the Bank One
Indebtedness.
3.12 Noncompetition Agreements. Seller and SerVaas, will enter
into Noncompetition Agreements with USRR in form attached
hereto as Exhibit "3.12."
IV. REPRESENTATIONS AND WARRANTIES OF SELLER and USRR.
Seller and USRR hereby, jointly and severally represent and warrant to
Buyer as follows:
4.1 Ownership: Corporate Or2anization: Good Standin2. Except as
set forth on Schedule 4.1, Seller (i) is the sole beneficial
and record owner of the Shares and such Shares are free and
clear of any Lien or encumbrance; and (ii) has full legal
right, power, capacity and authority to enter into this
Agreement and to sell the Shares to Buyer, without the need
for the consent of any other Person; and (iii) Seller is a
corporation duly organized, validly existing, and in good
standing under the laws of Indiana and has the corporate power
to enter into this Agreement and to carry out the transactions
contemplated hereby. USRR is a corporation duly organized,
validly existing, and in good standing under the laws of
Indiana and USRR is duly qualified to do business and is in
good standing as a foreign corporation in the State of
Mississippi and in each jurisdiction in which the properties
owned or leased or the nature of the business conducted by it
makes such qualification necessary. USRR has not received
notice or other communication from any governmental body or
agency where it is not qualified to do business to the effect
that it should be so qualified to do business; and (iv) an
Officer's Certificate with true and complete copies of the
Articles of Incorporation, By-Laws and Good Standing
Certificates of each of Seller and USRR are attached hereto as
Schedule 4.1.
4.2 Authority and Binding Effect. The execution, delivery and
performance of this Agreement and all documents contemplated
hereby by Seller and USRR have been duly authorized by all
requisite corporate and shareholder actions of Seller and
USRR; and this Agreement and all documents and instruments
contemplated to be hereby executed by Seller and USRR
constitute and will constitute the legal, valid and binding
obligations of each of Seller and USRR enforceable against
Seller and USRR in accordance with their respective terms.
4.3 No Violation. Except as set forth on Schedule 4.3, neither the
execution and delivery of this Agreement nor the consummation
by the Seller of the Transactions contemplated hereby will (i)
cause any default in or contravene any provision of the
Articles of Incorporation or Bylaws of the Seller or USRR or
any indenture, lease or other material contract to which the
Seller or USRR is bound, and none of such actions will result
in acceleration, or any similar right of any party, under any
material agreement to which Seller or USRR is a party, (ii)
result in the creation of any liens or encumbrances upon the
Shares or any assets of USRR, or (iii) result in the loss of
any rights of or creation of any obligations of USRR. (iv)
Neither the execution nor delivery of this Agreement nor the
consummation by Seller of the transactions contemplated hereby
will constitute a violation of any judgment, decree, order,
regulation or rule of any court or governmental authority or
any statute or law. (v) No consent, approval or authorization
of any third party is required in connection with the
execution, delivery and performance of this Agreement by the
Seller that will not have been obtained by the Closing.
4.4 USRR Stock. The authorized equity securities of USRR consist
of One Thousand (1,000) shares of common stock, no par value,
of which One Thousand (1,000) shares are issued and
outstanding and constitute the Shares. Seller is and will be
on the Closing Date the record and beneficial owner and holder
of 100% of the USRR Stock. The Shares have been duly
authorized and validly issued and are fully paid and
nonassessable. USRR has not authorized or issued any other
share of any class of its capital stock or any securities
exchangeable for or convertible into any such shares or any
options, rights, or other agreements giving a person the right
to acquire any such shares. Seller will transfer and convey to
Buyer title to the Shares free and clear of all liens and
encumbrances, and as of Closing these will be no restrictions
on Seller's right to transfer the Shares to Buyer as set forth
in this Agreement.
4.5 Financial Statements. Except as specifically set forth on
Schedule 4.5, the books of account and related records of USRR
fairly reflect in reasonable detail its assets, liabilities
and transactions in accordance with GAAP. Schedule 4.5
attached hereto consists of copies of the following financial
statements (including the notes thereto) of USRR, (such
financial statements and the notes thereto being hereinafter
referred as the "Financial Statements"): The Balance Sheet,
Statements of Income and Retained Earnings, and Cash Flow
Statements for the year ended December 31, 1999, as audited by
May & Company; and the unaudited Balance Sheet, Cash Flow
Statement, Statement of Earnings and schedules of trucking
expenses, variable costs, GS&A and fixed factory costs for the
period ending November 30, 2000 prepared by USRR (the
"November Balance Sheet").
The Financial Statements: (i) are substantially correct and
complete and in accordance with the books and records of USRR;
(ii) fairly present the financial condition, assets and
liabilities of USRR as of their respective dates and the
results of USRR operations and changes in financial position
for the periods covered thereby; (iii) have been prepared in
accordance with GAAP. All referenced in this Agreement to the
"1999 Balance Sheet" shall mean the Balance Sheet of USRR as
of December 31, 1999 included in the Financial Statements. All
references in this Agreement to the "November Balance Sheet"
shall mean the Balance Sheet of USRR as of November 30, 2000
included in the Financial Statements.
4.6 No Undisclosed Liabilities. Except as disclosed on Schedule
4.6, USRR has no liability or obligation of any nature,
whether due or to become due, absolute, contingent or
otherwise, except (1) to the extent fully reflected as a
liability on the November Balance Sheet; (ii) liabilities
incurred in the ordinary course of business since the November
Balance Sheet date that are consistent in character and amount
with those incurred in the past, and that are fully reflected
as liabilities on the USRR books of account; (iii) contractual
obligations arising under materials contracts and (iv)
liabilities which have otherwise specifically disclosed on the
Schedules to this Agreement.
4.7 Funded Debt. As of the date hereof, the aggregate principal
amount owed by USRR to Bank One Indianapolis is $3,546,972.03
(the "Bank One Indebtedness"), and the aggregate principal
amount owed to MBFC pursuant to the MBFC Financing is
$200,000. USRR has no other debt except for trade payables
arising in the ordinary course of business consistent with
past experience. The principal amount owed to Bank One and
MBFC on the Closing Date shall not exceed the amounts set
forth in the first sentence of this subsection.
4.8 Seller Debt. As of the date hereof, the aggregate principal
amount owed by Seller to USRR is $2,868,576.55. The principal
amount owed to USRR by Seller on the Closing Date shall not
exceed the amount set forth in the first sentence of this
subsection.
4.9 Personal Property. Schedule 4.9 contains a list of all
tangible property of USRR, except as disclosed on Schedule 4.9
hereto, USRR has good and valid title to all of its tangible
personal property and assets reflected on the November Balance
Sheet (except those disposed of in the ordinary course of
business since the November Balance Sheet date) and all
tangible personal property and assets acquired since the
November Balance Sheet date, free and clear of any lien,
except (i) minor imperfections of title, none of which,
individually or in the aggregate, materially detracts from the
value or impairs the use of the affected properties or impairs
the operations of USRR; and (ii) liens for current Taxes not
yet due and payable. All tangible personal property and assets
which are consigned or leased to USRR and are used in the
operations of the business are listed on Schedule 4.9 hereto.
Except as disclosed on Schedule 4.9 hereto, USRR owns and has
in its possession all tangible personal property used or which
has been used within the twelve months preceding the date
hereof in the conduct of its business, except for inventory
and other assets disposed of in the ordinary course of
business consistent with past practice. Except as specifically
noted in Schedule 4.9 hereto, the machinery and equipment of
USRR is in good operable order.
4.10 Real Property and Leaseholds.
(i) Except as disclosed on Schedule 4.10 hereto, USRR owns
no fee interest, leasehold interest or other right,
title or interest whatsoever in any real property.
Schedule 4.10 hereto contains a true, correct and
complete list of all real estate properties owned,
leased, subleased, licensed or otherwise occupied by
USRR and separately indicates the nature of USRR's
interest therein. Except as set forth on Schedule 4.10
hereto, no other person has any oral or written right,
agreement or option to acquire, lease, sublease or
otherwise occupy all or any portion of such real
property. USRR has received no written or oral notice
of assessment for public improvements against any of
the real properties, which remains unpaid, and, to the
best of USRR and Seller's knowledge, no such assessment
has been proposed. There is no pending condemnation,
expropriation, imminent domain, or similar proceeding
affecting all or any portion of any of the real
properties and to the best knowledge of USRR and
Seller, no such proceeding is contemplated.
(ii) Except as disclosed on Schedule 4.10 hereto, (a) USRR
has good marketable and insurable legal and equitable
fee simple title to the real property owned by USRR and
(b) leasehold title to the property leased pursuant to
the leases (the "Leased Real Property") in all cases
free and clear of any and all liens, exceptions, items,
encumbrances, easements, restrictions and other matter,
either of record or not of record, which could prohibit
or adversely interfere with Buyer's use of such
property, (c) no material default or breach exists
under any of the covenants, conditions, restrictions,
rights of way or easements, if any, affecting all or
any portion of the real property, (d) the current
zoning or other administrative permission for the USRR
facility permits the operator of such property to
utilize the property for the reclaim of butyl rubber.
Neither Seller nor USRR has made any application for a
rezoning of any of the real properties, has any
knowledge of any proposed or pending change to any
zoning affecting and of the real properties, or has any
knowledge of any expropriation or condemnation or
similar proceeding pending or threatened against any of
the real properties or any part of the real properties.
(iii)All utilities, including without limitation, potable
water sewer ,gas, electric, telephone, and other public
utilities and all storm water drainage required by law
or necessary for the operation of the real properties,
(a) either enter the real property through open public
streets adjoining the real properties, or if they pass
through adjoining private land, do so in accordance
with valid public or private easements or rights of
way, which will enure to the benefit of Buyer, (b) are
installed, connected and operating in good condition,
and in compliance with all applicable laws, including,
without limitation, the permanent right to discharge
sanitary waste into the collector system of the
appropriate sewer authority, and (c) are adequate to
service the real property for its intended use in the
business as presently conducted thereon.
(iv) Except as set forth on Schedule 4.10, to the best of
USRR's knowledge, there are no material defects in,
mechanical failure of or damage to the improvements
located on the real property, including the roof,
structure, soil, walls, heating, air conditioning,
ventilation, plumbing, electrical, drainage, fire
alarm, communications, security and exhaust systems and
their component parts, or other improvements on or
forming a part of the real properties, all of which
have been constructed in good and workmanlike manner.
4.11 Inventory. Except as disclosed on Schedule 4.11 hereto:
(i) All of the items included in Inventory of USRR,
including the Inventories reflected on the November
Balance Sheet, and all similar items acquired since the
Balance Sheet Date, are valued at cost; and
(ii) All of the items included in the Inventory of USRR
consist of items of a quality and quantity usable in
the ordinary course of USRR's business within a
reasonable period of time and at normal profit margins,
and all of the raw materials and work in process
Inventory of USRR can reasonably be expected to be
consumed in the ordinary course of business within a
reasonable period of time; and
(iii)USRR has provided for adequate reserves in accordance
with GAAP with respect to excess Inventory of USRR; and
(iv) As of Closing Date, 6,400,000 pounds of raw material
inventory will be owned by Seller, consigned to Buyer
and be subject to a Supply Agreement executed
simultaneously herewith.
4.12 Accounts Receivable. All of the Accounts Receivable of USRR
reflected on the November Balance Sheet and all Accounts
Receivable arising or existing after the Balance Sheet Date
represent amounts receivable for merchandise actually
delivered or services actually provided, have arisen in the
ordinary course of business, are not subject to any
counterclaims or offsets and have been billed and, except as
set forth on Schedule 4.12 hereto, are generally due within
sixty (60) days after such billing. All such receivables are
fully collectible in the normal and ordinary course of
business, except to the extent of a reserve in an amount not
in excess of the reserve for doubtful accounts reflected on
the November Balance Sheet. Schedule 4.12 hereto sets forth
(i) the total amount of Accounts Receivable of USRR
outstanding as of the November Balance Sheet Date and (ii) the
agings of such receivables based on the following schedule:
0-30 days; 31-60 days, 6 1-90 days, from the date of the
invoice therefore.
4.13 Intangible Property. Schedule 4.13 attached hereto lists and
describes all intangible property utilized by USRR including
customer lists, patents, trademarks, trade names, trade
secrets, and copyrights. USRR owns, or has the sole and
exclusive right to use, all such intangible property, and the
consummation of the transactions contemplated hereby will not
alter or impair the use of any such rights by Buyer. No claims
have been asserted during the past five (5) years by any
person against the use by USRR of, or challenging or
questioning the validity or effectiveness of, any such
intangible property, and Seller does not know of any valid
basis for any such claim. The use of such intangible property
by USRR is not in violation of, and does not infringe any
patent, trademark, trade name, copyright, technology, know-how
or process, or other proprietary or trade rights of any third
party.
4.14. Contracts. Schedule 4.14 attached hereto lists and describes
all contracts to which USRR is a party that cannot be
terminated by USRR without penalty or liability on ninety (90)
days or less notice (the "Material Contracts"). Neither USRR
nor the other party thereto is in default under any such
contract. True and complete copies of the Material Contracts
or summaries of material oral agreements have been delivered
to Buyer prior to the date hereof Correct and complete copies
of all standard form sales orders, sales invoices and purchase
orders used by USRR have been delivered or made available to
Buyer prior to the date hereof
All Material Contracts to which USRR is a party or by which it
is bound are in full force and effect; and USRR has complied
with the provisions thereof and is not in default under any of
the terms thereof and no event has occurred that with passage
of time or the giving of notice, or both would constitute such
a default. Neither USRR nor Seller has received any written
claim from any other party to any material contract that USRR
has breached any obligations to be performed by it thereunder
to date, or is otherwise in default or delinquent of
performance thereunder, where the consequence of such breach
or default could reasonably be expected to have a material
adverse effect on the financial condition, business,
properties or prospects of USRR taken as a whole.
4.15. Environmental Matters. Schedule 4.15 includes a list of all
environmental studies, site assessments and tests conducted at
USRR's facility within the last 5 years. Except as disclosed
on Schedule 4.15 hereto, and based upon knowledge from
reasonable investigation and inquiry,
(i) USRR is not in violation of any Federal, state,
regional or local statutory or common law, regulation,
rule, order, ordinance, guideline, direction, policy or
notice, relating to the environment, including those
relating to Hazardous Substances (" Environmental
Laws").
(ii) USRR holds and is in compliance with all environmental
permits, certificates, consent or other settlement
agreements, licenses, approvals, registrations and
authorization required under all Environmental Laws
("Environmental Permits"), and all such Environmental
Permits are valid and in full force and effect. All
such Environmental Permits are listed on Schedule 4.15
hereto and any that are not transferable are so
designated.
(iii)No consent, approval or authorization of, or
registration or filing with any Person, including any
environmental governmental authority or regulatory
agency is, required in connection with the execution
and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(iv) No notice, citation, summons or order is currently
issued or outstanding, no complaint is currently filed,
and no investigation or review is pending or threatened
by any governmental or other entity: (a) with respect
to any alleged violation by USRR of any Environmental
Law; or (b) with respect to any alleged failure by USRR
to have any Environmental Permit; or (c) with respect
to any use, possession, generation, treatment, storage,
recycling, transportation or disposal (collectively
"Management") of any Hazardous Substances by or on
behalf of USRR.
(v) Neither Seller nor USRR have received any request for
information, notice of claim, demand, order or
notification that it or they are or may be potentially
responsible with respect to any investigation or
clean-up of any threatened or actual Release of any
Hazardous Substance.
(vi) USRR has not used, generated, treated, stored for more
than 90 days, recycled or disposed of any Hazardous
Substances on any property now or previously owned,
operated or leased by USRR, nor has anyone else
treated, stored for more than 90 days, recycled or
disposed of any Hazardous Substances on any property
now or previously owned, operated or leased by USRR.
(vii)No polychlorinated biphenyls or asbestos-containing
materials are or have been present at any property now
owned, operated or leased by USRR, nor are there any
underground storage tanks, active or abandoned, at any
property now owned, operated or leased by USRR.
(viii) Within the last 120 days, no Hazardous Substances
generated by USRR has been recycled, treated, stored,
disposed of or transported by any entity other than
those listed on Schedule 4.15 hereto.
(ix) No Hazardous Substances managed by USRR has come to be
located at any site which is listed or proposed for
listing under CERCLA, CERCLIS or on any similar state
list, or at any site which is subject of Federal, State
or local enforcement actions or other investigations
which may lead to claims against USRR or Buyer for
clean-up costs, remedial work, damages to natural
resources or for personal injury claims, including, but
not limited to, claims under CERCLA.
(x) No Hazardous Substance has been Released at, on, about
or under or is present in any property now owned,
operated or leased by USRR.
(xi) No oral or written notification of a Release or threat
of Release of a Hazardous Substance has been filed by
or on behalf of USRR or in relation to any property now
owned, operated or leased by USRR. No such property is
listed or proposed for listing on the National Priority
List promulgated pursuant to CERCLA, or on CERCLIS.
(xii)There are no environmental Liens on any properties
owned or leased by USRR and no government actions have
been taken or are in process or pending which could
subject any of such properties to such Liens.
(xiii) No deed or other instrument of conveyance of real
property to USRR with respect to real property owned,
operated or leased by USRR contains a notice or
restriction relating to the actual or suspected
presence of Hazardous Substances.
(xiv)Sellers know of no facts or circumstances related to
environmental matters concerning real property owned,
operated or leased by USRR that could reasonably be
expected to lead to any future environmental claims,
against USRR or Buyer under current law.
(xv) There have been no environmental inspections,
investigations, studies, audits, tests, reviews or
other analyses conducted in relation to any property or
business now owned, operated or leased by USRR which
have not been provided to Buyer prior to the date
hereof.
4.16 Insurance. All policies of fire, liability, workers
compensation, life and all other forms of insurance owned or
held by USRR are set forth and fully disclosed on Schedule
4.16 hereto. All such polices are outstanding and in full
force and effect. The coverages provided by such policies are
reasonable in both scope and amount in light of the risks
attendant to the business of USRR, and are comparable to
companies in similar lines of business, and such insurance is
sufficient in the aggregate to cover all reasonably
foreseeable damage to and liabilities or contingencies related
to the conduct by USRR of its business. Except as set forth on
Schedule 4.16, there are no outstanding claims under such
policies and there are no outstanding unpaid and overdue
premiums under such policies.
4.17 Customers and Suppliers. Except as described on Schedule 4.17,
there has not been any material adverse change in the business
relationship of USRR with any of its five (5) largest
customers or suppliers (in terms of sales or purchases) within
the last two (2) years.
4.18 Litigation: Compliance with Law. Except as set forth in
Schedule 4.18 hereto, (i) USRR is not engaged in nor a party
to, or threatened with, any claim, controversy, legal action
or other proceeding, whether before a court, administrative
agency, or arbitral body; (ii) USRR has no claim, obligation,
liability, loss, damage or expense, of whatever kind or
nature, contingent or otherwise, incurred or imposed or based
upon any provision of federal, state or local law or
regulation or common law, pertaining to health, safety or
environmental protection and arising out of any act or
omission by USRR, its employees, agents or representatives;
(iii) no product liability claims are pending or threatened
against USRR; and (iv) Seller does not know of any valid basis
for any of the foregoing.
4.19 Tax Returns and Liabilities. Except as disclosed on Schedule
4.19, USRR has (i) duly and timely filed in proper form all
tax returns for all taxes required to be filed with all
appropriate governmental authorities. (ii) All taxes due and
payable by USRR (or claimed to be due and payable) have been
paid (regardless whether tax returns relating to such taxes
have been duly and timely filed or if filed, regardless
whether such tax returns are deficient), except such amounts
as are being contested diligently and in good faith and are
not in the aggregate material and for which USRR has
adequately reserved in its Financial Statements. (iii) There
are no pending tax audits, claims or proceedings relating to
USRR. (iv) USRR has not agreed to any waiver or extension of
any statute of limitations relating to any tax. (v) All taxes
that USRR are required by law to withhold or collect have been
duly withheld or collected and have been timely paid over to
the appropriate Tax Authority.
4.20 Employee Benefit Plans. Except as set forth on Schedule 4.20
hereto, USRR has not established or maintained or is obligated
to make contributions to or under or otherwise participate in
(i) any bonus or other type of incentive compensation or
expense reimbursement plan, program, contract or arrangement
or (ii) any employee benefit plan, fund or program described
in ss. 3.3 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). USRR has made available to Buyer
true and complete copies of the documents for each plan,
program, contract, arrangement and fund disclosed on Schedule
4.20.
(iii)Neither USRR nor any other employee (an "ERISA"
Affiliate") that is, or at any relevant time was,
together with USRR, treated as a "single employer"
under section 414(b), 414(c) or 414(m) of the Code,
has, at any time on or after January 1, 1998 (a)
maintained or contributed to any defined benefit
pension plan, as defined by Section 3(35) of ERISA,
that is or was subject to Title IV of ERISA, (b) been
required to contribute to, or incurred any withdrawal
liability, within the meaning of Section 4201 of ERISA
to any multi-employer pension plan, within the meaning
of Section 3(3 7) of ERISA or (c) maintained any stock
purchase, stock ownership or stock option plan.
(iv) USRR and each of the Benefit Plans, are in compliance
in all material respects with the applicable provisions
of ERISA, and those provisions of the Code applicable
to the Benefit Plans. Each Benefit Plan has been timely
amended to properly reflect the applicable provisions
of ERJSA and the Code and, as appropriate, such
amendments have been adopted so that they can be given
retroactive effect to any relevant effective date under
the Tax Reform Act of 1986.
(v) Except as may be disclosed on Schedule 4.20 hereto, all
contributions to, and payments from, the Benefit Plans
which may have been required to be made in accordance
with the Benefit Plans have been timely made. All such
contributions to the Benefits Plans, and all payments
under the Benefit Plans, except those to be made from a
trust qualified under Section 40 1(a) of the Code, for
any period ending before the Closing Date that are not
yet, but will be, required to be made are properly
accrued and reflected on the November Balance Sheet or
are disclosed on Schedule 4.20 hereto.
(vi) Except as indicated on Schedule 4.20 hereto, all
material reports, returns and similar documents with
respect to the Benefit Plans required to be filed with
any government agency or distributed to any Benefit
Plan participant have been duly and timely filed or
distributed.
(vii)USRR has compiled with the notice and continuation
coverage requirements of Section 4980B of the Code and
the regulations thereunder with respect to each Benefit
Plan that is, or was during any taxable year of USRR
for which the statute of limitations on the assessment
of federal income taxes remains open, by consent or
otherwise, a group health plan within the meaning of
Section 5000(b)(1) of the Code.
(viii) Except as indicated on Schedule 4.20 hereto, all of
the Benefit Plans which are pension benefit plans have
received determination letters from the Internal
Revenue Service to the effect that such plans are
qualified and exempt from federal income taxes under
Section 40 1(a) and 50 1(a), respectively, of the Code,
as amended to comply with the applicable provisions of
the Tax Reform Act of 1986, as amended, and the
regulations promulgated thereunder; and no
determination letter with respect to any Benefit Plan
has been revoked nor, to the best of Sellers' and
USRR's Company's knowledge, has revocation been
threatened, nor has any Benefit Plan been amended since
the date of its most recent determination letter in any
respect which would adversely affect its qualification
or materially increase its cost.
(ix) Each of the Benefit Plans has been administered at all
times, and in all material respects, in accordance with
its terms.
(x) Except as indicated on Schedule 4.20 hereto, there are
no pending investigations by any governmental agency
involving the Benefit Plans and no threatened or
pending claims (except for claims for benefits payable
in the normal operations of the Benefit Plans), suits
or proceedings against any Benefit Plan or asserting
any rights or claims to benefits under any Benefit Plan
which could give rise to any material liability, nor,
to the best of each Seller's and USRR's knowledge are
there any facts which could give rise to any material
liability in the event of any such investigation,
claim, suit or proceeding.
(xi) Neither the Benefit Plans, any ERISA Affiliate, Seller,
not any employee of the foregoing, nor any trusts
created thereunder, nor any trustee, administrator or
other fiduciary thereof, has engaged in a "prohibited
transaction" (as such term is defined in Section 4975
of the Code or Section 406 of ERJSA) which could
subject any thereof to the tax or penalty on prohibited
transactions imposed by such Section 4975 or the
sanctions imposed under Title I of ERISA.
(xii)Neither USRR nor any ERISA Affiliate has incurred or
is reasonably likely to incur any liability with
respect to any plan or arrangement that would be
included within the definition of "Benefit Plan"
hereunder but for the date of this Agreement.
(xiii) Except as listed in Schedule 4.20 hereto, no payment
which is or may be made by USRR or any ERISA Affiliate,
or from any Benefit Plan, to any employee, formed
employee, director or agent of USRR or any ERISA
Affiliate under the terms of any Benefit Plan, either
alone or in conjunction with any other payment, will or
could be characterized as an excess parachute payment
under Section 280G of the Code.
(xiv)Neither USRR nor any ERISA Affiliate maintains,
contributes to or either has or is likely to have an
material liability with respect to, any material
pension, welfare, bonus, stock purchase, stock
ownership, stock option, deferred compensation,
incentive, severance, termination or other compensation
plan or arrangement, or other material employee fringe
benefit plan which would be described in (i) above.
4.21 Labor Relations. Except as set forth on Schedule 4.21, (i)
USRR is in compliance with all federal and state laws
respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and is not
engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against USRR pending before the
National Labor Relations Board; (iii) there is no labor
strike, dispute, slowdown, stoppage or other labor difficulty
actually pending or threatened against or involving or
affecting USRR; (iv) no union represents and no question
exists respecting whether any union represents the employees
of USRR; (v) no grievance or any arbitration proceeding is
pending and no claim therefore exists respecting the employees
of USRR; (vi) there is no collective bargaining agreement
which is binding on USRR; and (vii) USRR has not experienced
any labor stoppage, concerted activity or other labor
difficulty during the past five (5) years.
4.22 Brokers and Finders Fees. Neither Seller nor USRR nor anyone
acting on their behalf has done anything to cause or incur any
liability to any party for any brokers or finders fees or the
like in connection with this Agreement or the transactions
contemplated hereby for which USRR or Buyer would have any
liability.
4.23 Confidential Information. Except as set forth on Schedule
4.23, neither Seller nor USRR has disclosed to any third
party any information of a confidential nature with
respect to USRR's business.
4.24 Certain Transactions. Except as set forth on Schedule 4.24,
since November 30, 2000, USRR has not (i) paid any dividends
or made any other distributions to its shareholders, (ii) made
any sales or transfers of any material assets outside the
ordinary course of business, or (iii) otherwise conducted its
business outside the ordinary course.
4.25 Sufficiency of Assets. USRR owns or otherwise has the right to
use all assets required for the continued conduct of its
business after the Closing in substantially the same manner as
conducted prior to the Closing.
4.26 Employee Health and Safety. Except as disclosed on Schedule
4.26 hereto, and based upon reasonable investigation and
inquiry, to the best of Seller's knowledge, USRR has complied
with and is not in violation of any federal, state or local or
statutory common law, regulation, rule, ordinance or guideline
relating to employee health and safety.
4.27 Disclosure. No representation or warranty by Seller and/or
USRR contained in this Agreement, and no statement,
certificate, schedule, list, exhibit, instrument or other
writing furnished or to be furnished by Seller and/or USRR
pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains or will contain any
untrue statement of a material fact or omit or will omit to
state a material fact necessary in order to make the
statements contained herein or therein, in light of the
circumstances in which they were made, not misleading or
necessary to provide Buyer with adequate and complete
information as to USRR and its affairs.
V. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Seller as follows:
5.1 Corporate Organization: Good Standing. Buyer is a corporation
duly organized, validly existing, and in good standing under the
laws of Indiana and has qualified as a foreign corporation to
conduct business in the State of Mississippi; and Buyer has the
corporate power to enter into this Agreement and to carry out the
transactions contemplated hereby.
5.2 Authority and Binding Effect. The execution, delivery and
performance of this Agreement and the other documents
contemplated hereby to be executed by Buyer have been duly
authorized by all necessary corporate action on the part of
Buyer. This Agreement has been, and other documents to be
executed by Buyer pursuant hereto will be, duly and validly
executed and delivered by Buyer and constitute and will
constitute, as the case may be, the valid and binding obligation
of Buyer, enforceable against Buyer in accordance with their
respective terms.
5.3. No Violation. Neither the execution and delivery of this
Agreement nor the consummation by Buyer of the transactions
contemplated hereby will (i) cause any default in or breach of
any provision of the Articles of Incorporation or Bylaws of
Buyer, or any indenture, lease or other material contract to
which Buyer is bound, and none of such actions will result in
acceleration, or any similar right of any party, under any loan
or other agreement to which Buyer is a party, or (ii) result in
the creation of any encumbrances upon any of the properties or
assets of Buyer. Neither the execution nor delivery of this
Agreement nor the consummation by Buyer of the transactions
contemplated hereby will constitute a violation of any judgment,
decree, order, regulation or rule of any court or governmental
authority or any statute or law. No consent, approval or
authorization of any third party is required in connection with
the execution, delivery and performance of this Agreement by
Buyer.
5.4 Brokers and Finder Fees. Neither Buyer nor anyone acting on its
behalf has done anything to cause or incur any liability to any
party including Seller and/or USRR for any brokers or finders
fees or the like in connection with this Agreement or the
transactions contemplated hereby.
VI. CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to consummate
the transactions contemplated by this Agreement and to purchase the USRR
Stock are subject to the satisfaction, on or prior to the Closing Date, of
the following conditions, any and all of which may be waived in whole or in
part by Buyer:
6.1 Representations True: Obligations to Perform. (i) The
representations and warranties of the Seller and USRR contained
in this Agreement shall be true and correct at and as of the time
of the Closing, except for representations and warranties
specifically relating to a time or times other than the time of
the Closing (which shall be true and correct at such other time
or times) and except for changes permitted by this Agreement,
with the same force and effect as if made at and as of the time
of Closing; (ii) Seller and USRR shall have performed and
complied with all agreements and covenants required by this
Agreement to be performed by Seller and USRR at or prior to the
Closing; and (iii) Seller and USRR shall have delivered to Buyer
a certificate, signed by the Presidents of Seller and USRR,
respectively, and dated the Closing Date, to all of such effects.
6.2 Litigation. No suit, investigation, action or other proceeding
shall be pending or threatened against USRR, Seller, or Buyer
before any court or governmental agency that, in the opinion of
counsel for Buyer, could result in the restraint, prohibition or
the obtaining of damages or other relief against Buyer in
connection with this Agreement or the consummation of the
transactions contemplated hereby.
6.3 Consents and Approvals. All consents and approvals required by
private parties or governmental authorities with respect to the
transactions contemplated by this Agreement shall have been
obtained.
6.4 Opinion of Counsel. Buyer shall have received a satisfactory
opinion from Xxxxx Xxxx, counsel to Seller and USRR, dated the
date of the Closing, addressing the matters set forth in Schedule
6.4 hereto.
6.5 Financing. Buyer shall have completed arrangements for the
financing of the Transactions contemplated hereby satisfactory to
Buyer and Buyer shall have received the proceeds thereof
6.6 USRR Stock. Seller shall have delivered to Buyer certificates
representing the USRR Stock, duly endorsed in blank or with stock
transfer powers attached, in form proper for transfer.
6.7 SerVaas Payable. Seller shall have paid in full to USRR the
indebtedness owed by Seller to USRR.
6.8 Bank One. The Bank One Indebtedness shall have been paid in full
and Bank One shall have released all liens on USRR's assets
except for liens related to the MBFC Financing.
6.9 Noncompetition Agreements. Seller and SerVaas shall have executed
Noncompetition Agreements in favor of USRR in the form of Exhibit
3.12 and the sum of $5,000 of the Purchase Price shall have been
allocated to each of Seller and SerVaas as consideration for the
execution and delivery of the Non-Competition Agreements.
6.10 Releases: Resignations. The releases and resignations of officers
and directors of USRR, as requested shall have been delivered in
form satisfactory to Buyer.
6.11 Real Estate Title. Seller shall have delivered to Buyer, in a
form satisfactory to Buyer, title insurance for USRR's Real
Estate in an amount not less than the appraised value of Real
Estate and Improvements thereof.
6.12 Due Diligence. Buyer shall be satisfied with the results of its
financial, business, environmental and legal due diligence review
of USRR and its assets.
VII. CONDITIONS TO THE SELLER'S OBLIGATIONS. The obligations of the Seller to
consummate the transactions contemplated by this Agreement and to sell the
USR.R Stock to Buyer are subject to satisfaction, on or prior to the
Closing Date, of the following conditions, any and all of which may be
waived by Seller:
7.1 Representations and Warranties True: Obligations to Perform. (i)
The representations and warranties of Buyer contained in this
Agreement shall be true and correct at and as of the time of
Closing, except for representations and warranties specifically
relating to a time or times other than the time of Closing (which
shall be true and correct at such other time or times) and except
for changes permitted by this Agreement, with the same force and
effect as if made at and as of the time of the Closing; (ii)
Buyer shall have performed or complied with all agreements and
covenants required by this Agreement to be performed by Buyer at
or prior to the Closing; and (iii) Buyer shall have delivered to
the Seller a certificate, signed by the Secretary of Buyer and
dated the day of Closing, to all of such effects.
7.2. Consideration. Buyer shall have furnished the consideration for
the USRR Stock in accordance with Section 2.2 hereof; and Seller
have received from Bank One a release of(i) the Pledged USRR
Stock and (ii) the SerVaas, Inc. guaranties of the Bank One
Indebtedness.
7.3. Litigation. No suit, investigation, action or other proceeding
shall be threatened or pending against USRR, Seller, or Buyer
before any court or governmental agency that, in the opinion of
counsel for Seller, could result in the restraint, prohibition or
the obtaining of damages or other relief against Seller in
connection with this Agreement or the consummation of the
transactions contemplated hereto.
7.4. Consents and Approval. All consents and approvals required by
private parties or governmental authorities with respect to the
transactions contemplated by this Agreement shall have been
obtained.
7.5. Opinion of Counsel for Buyer. Seller shall have received a
satisfactory opinion of Xxxxxxx Xxxxxxx & Associates, counsel to
Buyer, dated the Closing Date, addressing the matters set forth
in Schedule 7.5 hereto.
VIII. INDEMNIFICATION.
8.1 Indemnification by Seller and SerVaas.
(i) General. Seller and SerVaas, jointly and severally, hereby
indemnify and agree to hold Buyer harmless from, against and
in respect of, and shall on demand reimburse Buyer for:
(a) Any and all losses, liabilities and damages suffered or
incurred by Buyer resulting from any untrue
representation, breach of material warranty or
nonfulfillment of any material covenant or agreement by
Seller contained herein or in any certificate, document
or instrument delivered to Buyer pursuant hereto or in
connection herewith;
(b) Any and all losses, liabilities and damages suffered or
incurred by Buyer or USRR arising out of events that
occurred or conditions that existed prior to the
Closing Date and not disclosed in this Agreement;
(c) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses,
including, without limitation, legal fees and expenses,
incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this
indemnity.
(ii) General Indemnification Deductible. Seller and SerVaas shall
not be obligated to indemnify Buyer pursuant to Section
8.1(i) for any Damages from any breaches of Representations
and Warranties in this Agreement (which breaches and
resulting damages shall be determined, solely for the
purposes of this Section 8.1 as though any materiality or
knowledge, limitations in such Representations and
Warranties did not exists), unless the aggregate of all such
damages incurred by Buyer exceeds $50,000 (the "Threshold")
in which event Seller and SerVaas shall be liable for all
damages in excess of the Threshold; provided, however, that
damages recoverable by Buyer for beaches of the
Representation and Warranties contained in Section 4.1, 4.2,
4.3, and 4.4 shall not be subject to the Threshold and shall
be paid by Seller and/or SerVaas in their entirety.
Notwithstanding the foregoing, the Threshold shall not be
available for (and Seller and SerVaas shall be responsible
for all damages arising out of) any willful breach of any
Representation or Warranty in this Agreement.
8.2 Seller's Tax Indemnification. In addition to any indemnification
provided in Section 8.1 hereto, after the Closing Date, Seller
shall indemnify, hold harmless and defend Buyer and USRR from and
against any liability with respect to (i) Seller's Taxes
(including, but not limited to, those Taxes arising on account of
the sale of the Shares hereunder); (ii) USRR's Taxes attributed
to or appointed to any period on or before the Closing Date to
the extent the liability therefore exceeds the liability for
USRR's accrued Taxes reflected in USRR's books of account as of
the November Balance Sheet , as may be specifically identified in
a schedule of such Taxes to be delivered by Seller to Buyer on
the Closing Date, and (iii) any liability resulting from USRR
being liable for any Taxes of Seller or of any consolidated group
of which USRR was a member prior to the Closing Date pursuant to
Treasury Regulations ss. 1.1502-6 or any analogous state or local
tax provision. Seller shall pay such amounts as it is obligated
to pay to Buyer under the preceding sentence within five business
days after payment of any applicable Tax liability by Buyer or
USRR.
Buyer and Seller agree that any indemnification payments made
pursuant to this Section 8.2 shall be treated for tax purposes as
an adjustment to Purchase Price, unless otherwise required by
applicable law.
8.3 Buyer's Indemnification. Buyer hereby agrees to indemnify and
hold Seller harmless from, against and in respect of, and shall
on demand reimburse Seller for:
(i) Any and all losses, liabilities and damages suffered or
incurred by Seller resulting from any untrue representation,
breach of warranty or nonfulfillment of any covenant or
agreement by Buyer contained herein or in any certificate,
document or instrument delivered to Seller pursuant hereto
or in connection herewith;
(ii) Any and all losses, liabilities and damages suffered or
incurred by Seller by reason of the operation of USRR's
business by the Buyer following the Closing; and
(iii)Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including,
without limitation, legal fees and expenses, incident to any
of the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
8.4 Notice and Opportunity to Defend.
(i) Notice of Asserted Liability. Promptly after receipt by any
party hereto (the "Indemnitee") of notice of any demand,
claim or circumstances which, with the lapse of time, would
or might give rise to a claim or a commencement (or
threatened commencement) to any action, proceeding or
investigation (an "Asserted Liability"), that may result in
a loss, the Indemnitee shall give notice thereof (the
"Claims Notice") to the party obligated to provide
indemnification pursuant to Sections 8.1, 8.2 or 8.3 (the
"Indemnifying Party"). The Claims Notice shall describe the
Asserted Liability in reasonable detail and shall indicate
the amount (estimated if necessary and to the extent
feasible) of the loss that has been or may be suffered by
the Indemnitee.
(ii) Opportunity to Defend. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own
counsel, any Asserted Liability and to prosecute by way of
counterclaim or third party complaint any claims arising out
of or relating to any Asserted Liability. If the
Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within thirty (30) days (or
sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and Indemnitee
shall cooperate, at the expense of Indemnifying Party, in
the compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to
compromise or defend the Asserted Liability or fails to
notify the Indemnitee of its election as herein provided,
the Indemnitee may pay, compromise or defend such Asserted
Liability at the expense of the Indemnifying Party. If the
Indemnifying Party elects to defend an Asserted Liability
but contests its obligation to indemnify against such
Asserted Liability, the Indemnifying Party shall carry on
such defense in good faith. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle
or compromise any claim over the objection of the other;
provided, however, that consent to settlement or compromise
shall not be unreasonably withheld; and provided further
that if the Indemnifying Party contests its obligation to
indemnify against an Asserted Liability, consent to
settlement or compromise shall be withheld in the absolute
discretion of the Indemnitee. In any event, the Indemnitee
and the Indemnifying Party may participate, at their own
expense, in the defense of such Asserted Liability. If the
Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control
that are necessary or appropriate for such defense.
IX. MISCELLANEOUS.
9.1 Entire Agreement. This Agreement (including the exhibits and
schedules) contains all the terms and conditions agreed upon by
the parties with respect to the subject matter hereof, and no
other representations, promises, agreements or understandings,
written or oral, made prior hereto or contemporaneously herewith,
regarding the subject matter of this Agreement, shall be of any
force or effect.
9.2 Modifications and Waivers. No change, modification or waiver of
any provision of this Agreement shall be valid or binding unless
it is in writing, dated subsequent to the date hereof, and signed
by the party intended to be bound. No waiver of any breach, term
or condition of this Agreement by either party shall constitute a
subsequent waiver of the same or any other breach, term or
condition.
9.3 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.
9.4. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Indiana applicable to
agreements made and to be performed entirely within such state.
9.5 Headings. The headings used in this Agreement are for convenience
only, shall not be deemed to constitute a part hereof, and shall
not be deemed to limit, characterize or in any way affect the
provisions of this paragraph.
9.6 Exhibits. The exhibits an7d schedules are part of this Agreement
as if fully set forth herein.
9.7 Severability. If any provision of this Agreement is invalid,
those portions of this Agreement that are not invalid shall
nevertheless be enforced, unless such enforcement would
materially alter the relative rights and obligations of the
parties.
9.8 Notices. All notices, requests, demands or other communications
required or permitted by this Agreement shall be in writing, and
delivery shall be deemed to be sufficient if delivered personally
or by fax, followed by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Buyer:
USRR Acquisition Corp.
Attention: Xxxxx Xxxxxx
Bank One Tower
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx & Associates
Bank One Tower
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Seller:
SerVaas, Inc.
Attention: Xxxxx Xxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
and
Beurt SerVaas
SerVaas, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Either party may change its address pursuant to notice given by such
party in accordance with the provisions of this section.
9.9 Further Assurances. Each party agrees, at any time and from time
to time, without further consideration, to take all such actions
and execute and deliver all such documents as may be necessary to
effectuate the purposes of this Agreement. Each party further
agrees to cooperate in connection with any Internal Revenue
Service audit relating to the transactions contemplated hereby.
9.10 Announcements. Neither Seller nor Buyer, without the express
written consent of the other, which shall not be unreasonably
withheld, will make any public announcement or issue any press
release, or make any recording in any public record, in respect
of this Agreement or the transactions contemplated hereby until
following the Closing.
9.11 Expenses. Except as otherwise provided herein, Buyer and Seller
shall each pay the fees and expenses of its respective counsel,
accountants and other experts incident to the negotiation and
preparation of this Agreement and consummation of the
transactions contemplated hereby. Other than expenses paid to
Xxxxxxx Xxxxx, Seller will cause USRR not to incur any
out-of-pocket expenses in connection with the transactions
contemplated by this Agreement.
9.12 Survival of Representations, Warranties and Covenants. Each of
the representations, warranties, obligations, covenants and
agreements of the parties included or provided for herein or in
any schedule, certificate or other document delivered pursuant to
this Agreement shall remain in full force and effect and shall
survive the Closing for a period of five years following the
Closing Date and thereafter neither Seller nor Buyer shall have
any liability whatsoever with respect to any such representation
or warranties, except for claims then pending or theretofore
asserted in writing by any party in accordance with the terms and
conditions of this Agreement.
9.13.Specific Performance. Each party hereto agrees that any remedy
at law for any breach of the provisions contained in this
Agreement shall be inadequate and that the other parties hereto
shall be entitled to specific performance and any other
appropriate injunctive relief in addition to any other remedies
such party might have under this Agreement or at law or in
equity.
9.14 Assignment. Neither Buyer nor Seller may assign this Agreement,
in whole or in part, without the prior written consent of the
other, which shall not be unreasonably withheld. This Agreement
and all of the provisions hereof shall be binding upon, and inure
to the benefit of, Buyer and its respective successors and
permitted assigns and Seller and its respective successors and
permitted assigns.
[Remainder of page intentionally left blank]
SELLER: BUYER:
SerVaas, Inc. USRR Acquisition Corp.
By: _________________________ By: _________________________
Beurt X. XxxXxxx, President Xxxxxxxxxxx Xxxxxx, Secretary
----------------------------
Beurt SerVaas, an Individual
USRR:
U.S. Rubber Reclaiming, Inc.
By: _________________________
Xxxx X. XxXxxxx, President
Signature Page-USRR Stock Purchase Agreement-12/28/00
