EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 22nd day of May 1998, by and among
Recycling Industries of Wisconsin, Inc., a Colorado corporation ("RII Sub"),
RECYCLING INDUSTRIES, INC., a Colorado corporation ("Parent"), PRO RECYCLING,
L.L.C., a Wisconsin limited liability company (the "Company"), XXXXXXXX IRON &
METAL, INC., a Wisconsin corporation ("LIM"), RECYCLING WORLD, LTD, a Wisconsin
corporation ("World"), XXXXXX XXXXXXXX, President of the Company ("Xxxxxxxx"),
XXXXXX XXXXXXXX, Secretary of the Company ("Xxxxxxxx"). Throughout this
Agreement, RII Sub and the Parent may be collectively referred to as
"Recycling;" the Company, LIM and World may be collectively referred to as the
"Sellers," and Xxxxxxxx and Xxxxxxxx may be collectively referred to as the
"Members." There are numerous other defined terms which are capitalized in this
Agreement, all of which are defined in the substantive provisions of this
Agreement or in Article 1.
WITNESSETH:
WHEREAS, RII Sub is a wholly-owned subsidiary of the Parent;
WHEREAS, RII Sub desires to acquire certain assets of the Sellers
consisting of substantially all of the tangible and intangible assets used in
the ferrous and non-ferrous metals recycling business conducted by the
Company at its three facilities located in Milwaukee, Wisconsin, and those
certain administrative offices and other assets, as hereinafter identified,
used in connection with the operation of the Company's facilities
(collectively the "Company Assets");
WHEREAS, the Company, LIM and World desire to sell the Company Assets;
WHEREAS, the Parent has a vested interest in the transactions referred
to herein and is a party to this Agreement, amongst other things, in order to
tender the Consideration Stock referred to herein; and
WHEREAS, the Members have a vested interest in the transactions referred
to herein insofar as they are the principals and owners of LIM and World,
respectively, the sole members of the Company, and therefore, are parties to
this Agreement in order to make certain representations and warranties and to
accept certain obligations set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise defined in the substantive provisions of this
Agreement, the following terms will have the meanings ascribed to them in
this Article 1.
1.1 "Acquisition" means the acquisition of the Company Assets from
the Company by RII Sub.
1.2 "Assumed Contracts" means those contracts, operating leases and
other agreements to which the Company, LIM or World is a party or beneficiary
or which otherwise affect the Business, including, but not limited to, open
orders to purchase raw materials or services placed in the Ordinary Course of
Business of the Company, operating leases of real or personal property
relating to the Business, all purchase orders, back orders, open orders or
contracts from customers, including the backlog and parts manufactured for or
assigned to the Company. Schedule 1.2 lists all Assumed Contracts other than
(a) contracts which do not require payment by the Company of $20,000 or more
per year and which otherwise are not material to the Business, (b) contracts
in the Ordinary Course of Business which do not require expenditures by the
Company of $20,000 or more per year, and (c) contracts terminable upon notice
of 60 days or less and which do not require expenditures by the Company of
$20,000 or more per year (collectively the "Material Assumed Contracts").
1.3 "Assumed Liabilities" means the Liabilities of the Company under
the Assumed Contracts.
1.4 "Business" means the purchase, sale, processing, preparing,
marketing, distribution, promotion, brokering and recycling of prepared and
non-prepared ferrous and non-ferrous scrap metal and pig iron as historically
conducted by the Company as a going concern.
1.5 "Closing" has the meaning set forth in Section 3.5.
1.6 "Closing Date" has the meaning set forth in Section 3.5.
1.7 "Employee Benefit Plan" means any: (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan; (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan; or (d) Employee Welfare Benefit Plan or material fringe benefit plan or
program.
1.8 "Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
1.9 "Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
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1.10 "Environmental Claims" has the meaning set forth in Section 12.2(b).
1.11 "Environmental Law or Laws" means any and all federal, state,
local or municipal laws, common laws, rules, orders, regulations, statutes,
treaties, ordinances, codes, decrees, or requirements of any governmental
authority regulating, relating to or imposing liability or standards of
conduct concerning environmental protection, health or safety matters,
including all requirements pertaining to reporting, licensing, permitting,
investigation, removal or remediation of emissions, discharges, releases, or
threatened releases of Hazardous Materials, chemical substances, pollutants
or contaminants or relating to the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials, chemical substances, pollutants or contaminants,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Toxic Substance
Control Act ("TSCA"), the Resource Conservation and Recovery Act ("RCRA"),
the Clean Air Act ("CAA"), the Clean Water Act ("CWA"), the Endangered
Species Act ("ESA"), the Federal Insecticide, Fungicide, Rodenticide Act
("FIFRA") and the Occupational Safety and Health Act of 1970 ("OSHA"), all as
may have been amended.
1.12 "Environmental Liabilities" means any and all liabilities for the
violation of, or required remediation under, any Environmental Laws.
1.13 "ERISA" means Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.14 "Excluded Assets" has the meaning set forth in Section 2.2.
1.15 "GAAP" means generally accepted accounting principles
consistently applied in the United States.
1.16 "Hazardous Materials" means any substance (a) the presence of
which is at, on, over, beneath, in or upon any real or personal property,
building, structure, container of any nature or description, subsurface
strata, ambient air or ambient water (including surface and groundwater) and
requires investigation, removal or remediation under any Environmental Law
or common law, (b) which is defined as a "hazardous substance," "hazardous
material," "hazardous waste," "pollutant" or "contaminant" under any
Environmental Law, (c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and
is regulated by any governmental authority under any Environmental Law, (d)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and the presence of which
causes or threatens to cause a nuisance or trespass upon real property or to
the adjacent properties or poses a hazard to the environment, and/or to the
health or safety of persons on or about any real property, and/or (e) which
contains urea-formaldehyde, polychlorinated biphenyls, asbestos or asbestos
containing materials, radon, petroleum and petroleum products.
1.17 "Identified Environmental Claims" means all claims, demands,
suits, judgments,
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settlements, penalties, liabilities, cleanup costs and expenses, including
reasonable fees of counsel and environmental consultants and engineers,
arising out of or resulting from the presence, removal or migration of
Hazardous Materials or the violation of any Environmental Law which is known
and identified by any of the parties prior to the date of this Agreement and
identified on Schedule 1.17 attached hereto, including the costs of any
further studies to identify the scope and nature of any item identified on
Schedule 1.17.
1.17 "Inventory Date" shall have the meaning set forth in Section 3.2.
1.18 "IRC" means the Internal Revenue Code of 1986, as amended.
1.20 "Knowledge" means actual knowledge without independent
investigation with respect to the Members, and with respect to Recycling,the
Company, LIM and World, actual knowledge without independent investigation of
their respective officers and directors.
1.19 "Lender" means Recycling's primary lender or equity participant
relating to the Transaction.
1.20 "Liability or Liabilities" means any indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, known or
unknown, asserted or unasserted, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or
otherwise which affects or could reasonably be expected to affect the Company
Assets or the Business, including any liability for Taxes.
1.21 "Material Adverse Effect" or "Material Adverse Change" means a
material adverse effect on or change in the business, assets or financial
condition of the Company or Recycling, as applicable.
1.22 "Company Offices" means the administrative offices of the Company
located at 000 X. Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000.
1.23 "Company Receivables" has the meaning set forth in Section 2.5(a).
1.24 "Ordinary Course of Business" or "Ordinary Course" means the
ordinary course of business consistent with past custom and practice of the
Company (including with respect to quantity and frequency).
1.25 "Owned Facilities" means the real property and associated
fixtures owned by the Company, the Members, and/or A&A Investment
Acquisitions, LLC and used in connection with the Business, as specifically
described on Schedule 2.1(a).
1.26 "Parent Common Stock" means the common stock, $.001 par value per
share, of Recycling Industries, Inc., a Colorado corporation.
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1.27 "Parent Series M Preferred Stock" means the Convertible Preferred
Stock of Parent described in the Designation of Series M Redeemable
Convertible Preferred Stock attached hereto as EXHIBIT A.
1.30 "Permits" means all licenses, permits, orders and approvals of
any federal, state or local governmental or regulatory bodies that are
material to or necessary for the conduct of the Business.
1.28 "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or groups of entities, or governmental
body.
1.29 "Prepared Inventory" means all ferrous and non-ferrous Inventory
that has been processed by the Company as of the Closing Date and is ready
for shipment to the Company's customers.
1.30 "Real Estate Purchase Agreements" means, collectively, the
Commercial Contract to Buy and Sell Real Estate to be entered into at
closing, subject to the provision of Section 8.1(c) by and between Xxxxxxxx
and RII Sub and the Commercial Contract to Buy and Sell Real Estate to be
entered into at closing by and between RII Sub and A&A Investment
Acquisitions, LLC, an affiliate of the Company.
1.31 "Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge, claim, or other lien, other than: (a)
mechanic's, materialman's and similar liens; (b) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith
through appropriate proceedings; (c) liens arising under worker's
compensation, unemployment insurance, social security, retirement and similar
legislation; (d) liens arising in connection with sales of foreign
receivables; (e) liens on goods in transit incurred pursuant to documentary
letters of credit; (f) purchase money liens and liens securing rental
payments under capital lease arrangements; and (g) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing
of money.
1.32 "Tangible Property" shall include the property described in
Sections 2.1(b), (f), and (m).
1.33 "Tax" means any federal, state, local or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, alternative minimum,
estimated, net worth, self-employment, Medicaid, or any other tax, including
any interest, penalty or addition thereto, whether disputed or not.
1.34 "Transaction" means the transactions contemplated by this
Agreement and the other
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Transaction Documents.
1.35 "Transaction Documents" means, collectively, (i) this Agreement,
(ii) the Real Estate Purchase Agreements, (iii) any Schedule or Exhibit to
this Agreement, and (iii) any certificate or other document delivered at
Closing.
1.36 "Unprepared Inventory" means: (i) all scrap ferrous metal
comprised of obsolete, discarded or abandoned machinery, appliances,
equipment, automobiles, metal manufacturing, casting and fabricating waste
materials or other consumer and industrial steel goods or by-products to be
processed by the Company for resale; and (ii) scrap non-ferrous metal
comprised of non-magnetic alloys of copper, brass, aluminum, stainless steel,
zinc die-cast, insulated wire (aluminum and copper) and other related metals
to be processed by the Company for resale.
1.37 "1933 Act" means the Securities Act of 1933, as amended.
1.38 "1934 Act" means the Securities Exchange Act of 1934, as amended.
ARTICLE
ACQUISITION OF ASSETS
2.1 PURCHASE AND SALE OF THE COMPANY ASSETS. At the Closing and
subject to the terms and conditions stated herein, the Company agrees to
sell, assign, convey and transfer to RII Sub, and RII Sub agrees to purchase
from the Sellers, the Company Assets together with all of the properties,
rights and goodwill associated therewith of every kind and description,
tangible and intangible, personal or mixed, as hereinafter more particularly
described, with the exception of the Excluded Assets, as hereinafter defined.
Without limitation, the Company Assets shall include all of the items
enumerated in subparagraphs (a) through (o) below:
(a) Pursuant to the Real Estate Purchase Agreements, the
Owned Facilities, including all buildings situated thereon and all leasehold
improvements and all rights in easements, driveways and signs.
(b) All vehicles, machinery and equipment, tools, furniture,
leasehold improvements, fixtures, vehicles, dies, jigs, scales, and supplies,
or any related capitalized items and other tangible property owned or leased
by the Sellers or the Members located at the Owned Facilities and used by the
Business as of the date of this Agreement, whether at the Owned Facilities,
over the road or at any other location, all as described on Schedule 2.1(b),
provided that dies, jigs, supplies, tools and spare parts are included in the
Company Assets whether or not listed on Schedule 2.1(b).
(c) All of the Sellers' right, title and interest in and to
the names "Pro Recycling," "Recycling World," "Xxxxxxxx Iron and Metal" and
any variations thereof.
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(d) All of the Sellers' right, title and interest in and to the
telephone numbers (000) 000-0000 and (000) 000-0000 and the facsimile numbers
(000) 000-0000 and (000) 000-0000, and any other telephone or facsimile numbers
used in the Business.
(e) All business and financial records (exclusive of tax
records) relating to the Business for the past three years, including copies of
all sales data, pricing and cost information, customer and supplier lists,
credit records, sales literature and business and marketing plans relating to
the Business, provided that the Company will not be required to make copies to
the extent copies have been delivered prior to the Closing.
(f) Those specific assets relating to the operation of the
Business and the Company located at the Company Offices and listed on Schedule
2.1(f).
(g) All computer documentation, computer files, computer disks,
computer tapes and all information stored on computer media (whether written,
optical, or magnetic) used in connection with the operation of the Business and
stored at the Owned Facilities or used at the Company Offices in connection with
the operation of the Business.
(h) All of the Company's right, title and/or interest in
accounting and other computer software, including without limitation, the
software for the scales, relating to the Business owned by or licensed to the
Company, including information interfaced with those systems, as maintained by
the Company at the Owned Facilities or the Company Offices, all of which are
listed on Schedule 2.1(h); PROVIDED, HOWEVER, that the Company shall not warrant
title to any software and, to the extent the software is licensed rather than
owned, the interest transferred hereunder shall be the license rights.
(i) All customer and supplier lists, signs, advertising,
catalogues and brochures relating to the Business.
(j) All rights of the Company under the Assumed Contracts.
(k) All goodwill and other general intangibles related to the
Company Assets.
(l) All claims, deposits, prepayments, refunds, causes of
action, cases in action, rights of recovery, rights of set-off and rights of
recoupment related to the Company Assets or the Business.
(m) All Prepared and Unprepared Inventory.
(n) All accounts receivable of the Sellers.
(o) All other assets of any nature useful and/or beneficial to
the Business and located at the Owned Facilities, whether owned or leased by the
Company, unless specifically described
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in Section 2.2 or on Schedule 2.2 as an Excluded Asset.
The Seller's sale, conveyance, assignment and transfer of the Company
Assets shall be free and clear of any Security Interest or Liabilities.
2.2 EXCLUDED ASSETS. On the Closing Date, RII Sub shall not purchase
the following assets owned by the Company, each to the extent described in
more detail on Schedule 2.2 (the "Excluded Assets"):
(a) The corporate charter, qualifications to conduct business
as a foreign limited liability company, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification
numbers, seals, minute books, stock transfer books, stock certificates and
other documents relating to the organization, maintenance and existence of
the Company as a limited liability company; PROVIDED, HOWEVER, that the
Company will not have the right to continue using its current name and
tradenames following the Closing;
(b) Any of the rights of the Company under this Agreement and
any other Transaction Document entered into on or after the date of this
Agreement;
(c) Certain personal assets and other items owned by the
Members as identified on Schedule 2.2(c);
(d) Tax refunds of any nature whatsoever; and
(e) Any other assets of the Sellers set forth on Schedule 2.2.
2.3 ASSUMED CONTRACTS. RII Sub shall assume the obligations of the
Company under the Assumed Contracts.
2.4 ASSUMPTION OF LIABILITIES. Except with respect to the indemnity
obligations of Recycling under Section 12.3, the obligations of Recycling
under the Environmental Escrow Agreement, and the obligations of the Company
under Assumed Contracts, RII Sub shall not assume any Liabilities or
Environmental Liabilities of the Company, the Members or A&A Investment
Acquisitions, LLC arising on or before the Closing or with respect to any
action, event or occurrence of any party on or prior to the Closing. To the
extent that any Company Assets are encumbered prior to closing, such
encumbrances shall be released prior to, or at the Closing and such assets
shall be transferred to RII Sub free and clear of any Security Interest. Any
Company Assets that are the subject of capitalized or financing leases shall
be transferred by the Company to RII Sub, and the Company shall pay the
lessor thereunder any amounts payable pursuant to the terms of such lease to
acquire marketable title to such equipment.
2.5 COLLECTION OF ACCOUNTS RECEIVABLE
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(a) If, after Closing, the Company receives payment on any of
the accounts receivable included in the Company Assets ("the Company
Receivables"), the Company shall forthwith forward the same to RII Sub within
five business days after receipt thereof.
(b) RII Sub shall have the right, upon five business days
prior written notice and during the normal business hours of the Company, to
review records of the Company solely to determine compliance with the
provisions of this Section 2.5.
(c) The provisions of this Section 2.5 shall survive the
Closing.
ARTICLE 3
PURCHASE PRICE AND CLOSING
3.1 PURCHASE PRICE FOR THE COMPANY ASSETS
(a) RII Sub shall pay the total amount of $3,000,000, subject to
the adjustments as determined in accordance with Section 3.3 below (the
"Purchase Price") to the Company for the purchase of the Company Assets. The
Purchase Price shall be payable as follows:
(1) $2,485,000, as adjusted in accordance with Section 3.3
below, in immediately available funds at Closing (the "Cash Consideration"); and
(2) $515,000 stated value of Parent Series M Preferred
Stock (the "Stock Consideration") delivered at Closing pursuant to the terms
of a customary subscription agreement (the "Subscription Agreement"). The
form of Subscription Agreement is attached hereto as EXHIBIT B.
3.2 VALUATION OF INVENTORY AND ACCOUNTS RECEIVABLE. The aggregate
value of the inventory and accounts receivable has been determined jointly by
representatives of the Company and Recycling as of May 18, 1998 (the
"Inventory Date"), and such value is set forth on Schedule 3.2, initialed by
the Company and Recycling. This valuation shall be updated to the Closing
Date by adjusting for all shipments in and out and changes in accounts
receivable which occur through the close of business the date immediately
preceding the Closing Date. For purposes of calculating the value of
inventory, Unprepared Inventory shall be valued at a price equal to the
average price the Company has paid for comparable material received across
its scales in the ten business days immediately preceding the valuation, and
Prepared Inventory shall be valued at market price, less the cost of
shipping.
If the parties are not able to mutually determine the value of the
inventory and receivables, an independent third party shall be jointly selected
by the Company and Recycling to determine such value. The value determination
by such third party shall be binding on the Company and Recycling. The Closing
shall occur as soon as practicable after third party value determination, if
such is required,
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provided all other conditions to Closing are satisfied or waived.
3.3 ADJUSTMENT OF THE PURCHASE PRICE.
(a) PRE-CLOSING ADJUSTMENT. The parties hereby acknowledge that
the Purchase Price was determined based upon the an aggregate value of the
inventory and accounts receivable included in the Company Assets, as
determined in accordance with Section 3.2, of $950,000 on the Closing Date.
If the value of the inventory and accounts receivable exceeds or is less than
this amount, the Purchase Price shall be adjusted accordingly and the Cash
Consideration shall be increased or decreased, as appropriate, to reflect the
adjustment.
(b) POST-CLOSING ADJUSTMENT. If the parties are not able to
complete the adjustments contemplated by Section 3.3(a) immediately prior to
the Closing, within 45 days after the Closing such adjustments shall be
completed and an adjustment payment, in immediately available funds, will be
made by the party who is determined to be responsible therefor no later than
the 60th day after the Closing.
3.4 ALLOCATION OF THE PURCHASE PRICE.
(a) The Purchase Price shall be allocated among the Company
Assets and among the Sellers, the Members, and A&A Investment Acquisitions,
LLC as set forth on Schedule 3.4.
(c) The parties agree that they will not take any tax or
other position inconsistent with any allocation of the Purchase Price set
forth on Schedule 3.4.
(d) RII Sub and the Company each covenant with the other that
it will promptly give written notice to the other of any inquiry or challenge
of such allocation by any federal, state or local tax authority.
3.5 CLOSING OF THE PURCHASE. The closing of the Transaction (the
"Closing") shall take place on May 22, 1998, at the offices of Reinhart,
Boerner, Van Deuren, Xxxxxx & Rieselbach, s.c., or at such other place as
selected by Recycling, in its sole and absolute discretion, on the date
mutually agreed to by the parties (the "Closing Date"). The Closing Date
shall be no later than May , 1998, unless mutually extended by the parties.
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ARTICLE 4
REPRESENTATIONS OF THE COMPANY AND MEMBERS
As an inducement to Recycling to enter into this Agreement and to
complete the Transaction, and with the knowledge that Recycling will rely
thereon, the Company, LIM, World and the Members, jointly and severally,
represent and warrant to Recycling that all of the representations and
warranties in this Article 4 are true, correct and complete as of the date of
this Agreement, and as of the closing. For purposes of the representations
and warranties contained herein, the term the "Company" shall include LIM,
World, and any other predecessor entities to the Company and any other
entities which have been merged into the Company and whose separate existence
has ceased to exist as a result of such merger since November 1, 1995.
4.1 DUE ORGANIZATION AND QUALIFICATION.
(a) The Company is a limited liability company duly organized,
validly existing and in "current" status under the laws of Wisconsin, and has
the limited liability company power and lawful authority to carry on its
business as now being conducted. LIM is a corporation duly organized,
validly existing and in "current" status under the laws of Wisconsin, and has
the corporate power and lawful authority to carry on its business as now
being conducted. World is a corporation duly organized, validly existing and
in "current" status under the laws of Wisconsin, and has the limited
liability company power and lawful authority to carry on its business as now
being conducted.
(b) Each Seller is duly qualified or otherwise authorized to
transact business in each jurisdiction, listed in Schedule 4.1, in which the
nature of the business conducted or the character or location of the
properties owned makes such qualification necessary.
4.2 TITLE TO PERSONAL PROPERTY. Each Seller has good, valid and
marketable title to its personal property included in the Company Assets
(tangible and intangible), in each case subject to no Security Interest,
option, right of first refusal, or other restriction of any kind or character.
4.3 Authority of the Company; Consents.
(a) Each Seller has full power and authority to execute and
deliver this Agreement and the other Transaction Documents to which it is a
party and to carry out the Transaction and the Company has taken all
requisite action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party.
(b) This Agreement and the other Transaction Documents to which
each Seller is a party are valid and binding agreements of such Seller,
enforceable in accordance with their terms.
(c) Except as described in Schedule 4.3, no consent,
authorization or approval of, or declaration, filing or registration with,
any governmental or regulatory authority or any consent,
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authorization or approval of any other third party is required to enable each
Seller to enter into and perform its obligations under this Agreement and the
other Transaction Documents to which it is a party, and neither the execution
and delivery of this Agreement and the other Transaction Documents nor the
consummation of the Transaction by the Sellers will:
(1) Be in violation of its Articles of Organization,
Operating Agreement or any other organizational document, or constitute a
breach of any evidence of indebtedness or agreement to which it is a party,
except where such breach would not have a Material Adverse Effect on either
the Business or the Company Assets;
(2) Cause a default under any mortgage or deed of trust or
other lien, charge or encumbrance to which any of the Company Assets is
subject or under any contract to which it is a party, or permit the
termination of any such contract by another person, except where such default
or termination would not have a Material Adverse Effect on the Business or
the Company Assets;
(3) Result in the creation or imposition of any Security
Interest upon any of the Company Assets under any agreement or commitment to
which it or the Company Assets are bound;
(4) To the Knowledge of the Sellers, conflict with or result
in the breach of any writ, injunction or decree of any court or governmental
instrumentality; or
(5) To the Knowledge of the Sellers, violate any statute, law
or regulation of any jurisdiction as such statute, law or regulation related
to the Company Assets.
4.4 FINANCIAL STATEMENTS.
(a) The following financial statements of each of the Sellers
(to the extent such Seller was in existence during such periods) are attached
hereto as Schedule 4.4:
(1) A copy of its unaudited financial statements prepared
substantially in accordance with GAAP for its fiscal years ended December 31,
1995, December 31, 1996, and December 31, 1997 (the "Financial Statements").
(2) A copy of its unaudited financial statements prepared
substantially in accordance with GAAP for the period from January 1, 1998
through the Closing (the "Unaudited Financial Statements").
The Financial Statements and the Unaudited Financial Statements
collectively are referred to herein as the "the Company Financial
Statements." The Financial Statements and Unaudited Financial Statements have
been prepared substantially in accordance with GAAP and present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods; PROVIDED, HOWEVER, that the
Unaudited Financial Statements are subject to normal year-end
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adjustments and lack footnotes and other presentation items.
(b) Since December 31, 1997, there has been no (1) Material
Adverse Change in the assets or liabilities, or in the business, financial
condition or in the results of operations of the Business or on the Owned
Facilities, whether as a result of any legislative or regulatory change, or
whether as a result of revocation of any Permits, fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation or act of
God; and (2) change in the assets or liabilities, or in the Business,
financial condition, or in the results of operations, or, any loss of
customers of the Company, except in the Ordinary Course which have not, in
the aggregate or individually, had a Material Adverse Effect on the Business.
(c) Within 30 days of the Closing, the Company shall deliver
to Parent audited financial statements for the year ended December 31, 1997
prepared in accordance with GAAP. The cost of such audited fincial
statements shall be borne equally by the Sellers, on the one hand, and
Recycling, on the other hand; provided, however, that the amount payable by
the Sellers hereunder shall in no event exceed $3,000.
4.5 NO TAX LIENS; NO WAIVER.
(a) None of the Company Assets are subject to any lien in favor
of the United States pursuant to the IRC for nonpayment of federal taxes, or
any lien in favor of any state under any comparable provision of state law,
under which transferee liability might be imposed upon RII Sub as purchaser
under the IRC or any comparable provision of state or local law, except for
real estate taxes which are not yet due and payable.
(b) None of the Sellers has waived any statute of limitations
with respect to the assertion of any liability under any federal, state, or
local tax law.
(c) None of the Sellers is in default under, nor has it
failed to pay, any Tax liability to any federal, state, or local authority,
and no audit or other review by any such authority is pending, or, to the
Knowledge of the Sellers and the Members, contemplated.
(d) Copies of the Sellers' federal and state income tax
returns (to the extent such documents exist and are reasonably available) for
the tax years ended December 31, 1994, 1995, 1996 and 1997 are attached
hereto as Schedule 4.5.
4.6 COMPLIANCE WITH LAWS. Except as set forth on Schedule 4.6,
(a) None of the Sellers nor any of the Members is in violation of
or has violated any applicable order, judgment, injunction, award or decree
relating to the Company Assets, except where such violation would not have a
Material Adverse Effect. To the Knowledge of the Sellers and the Members,
except as otherwise set forth in the Environmental Studies (which have not been
delivered to the Sellers), none of the Sellers nor the Members is in violation
of or has violated any federal, state,
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local or foreign law, ordinance or regulation or any other requirement of any
governmental or regulatory body, court or arbitrator applicable to the
Company Assets, except where such violation would not have a Material Adverse
Effect.
(b) Except with respect to any encumbrances noted on the title
insurance policy to be obtained by RII Sub and/or covenants, conditions,
restrictions, reservations and easements filed of record, and/or the survey
to be obtained by RII Sub, the buildings included in the Owned Facilities do
not encroach on the property of others, and (2) except as otherwise set forth
in the Environmental Studies (which have not been delivered to the Sellers),
there is not pending or threatened any notification of any governmental
authority that the Sellers are not in material compliance with applicable
laws and regulations respecting employment and employment practices,
occupational safety and health laws and regulations, and Environmental Laws.
4.7 PERMITS. Schedule 4.7 lists all Permits required by any
governmental entity related to the Business or operations of the Company that
are material to the operation of the Business. Except as described on
Schedule 4.7, the Company validly holds all Permits that are material to the
operation of the Business and all Permits are in full force and effect and no
proceeding to revoke or modify in a materially detrimental way any of such
Permits is pending or, to the Knowledge of the Company or any Member,
threatened.
4.8 LITIGATION. Except as described in Schedule 4.8, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving
the Company Assets or the Business. Except as set forth on Schedule 4.8,
there are no actions, suits or claims against the Sellers or any Member, or,
to the Knowledge of the Company or any Member, investigations (whether or not
the defense thereof or liabilities in respect thereof are covered by
insurance) pending or, to the Knowledge of the Company or any Member,
threatened against or involving the Company Assets or the Business.
4.9 CONTRACTS AND OTHER AGREEMENTS.
(a) Except for the Assumed Contracts or the contracts, leases,
and other agreements which will be completed or canceled at or prior to the
Closing, and except as otherwise disclosed on Schedule 4.9, the Sellers are
not a party to any (1) contract for the employment of any officer or
individual employee, (2) contract with any union, (3) bank loan or other
credit agreement, (4) bonus, deferred compensation, profit sharing, pension
or retirement arrangement, (5) lease for real or personal property, (6)
partnership or joint venture agreement, or (7) other material contract,
agreement or commitment.
(b) All of the Assumed Contracts are valid and binding upon the
Company in accordance with their terms, and the Company is not in default nor
has it received any notice of default under, or with respect to any Assumed
Contracts, except for such defaults that would not or do not, individually or
in the aggregate, have a Material Adverse Effect.
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(c) Except as otherwise disclosed on Schedule 4.9, no approval
or consent of any Person is needed in order that the contracts, leases, and
other agreements which constitute a part of the Assumed Contracts will
continue in full force and effect following the completion of the
Transaction. The Company is not in the process of negotiating or entering
into any contracts, leases, or other agreements described in this Section 4.9.
4.10 NOTES AND ACCOUNTS RECEIVABLE. The Company Receivables are
reflected properly in the books and records of the Company, and were incurred
in the Ordinary Course, are current (not over 60 days delinquent) and are
collectible without setoffs or counterclaims, subject only to the reserve for
bad debts set forth on the balance sheet included in the Unaudited Financial
Statements, as adjusted, for operations and transactions through the Closing
Date in accordance with the past custom and practice of the Company. The
Company Receivables not collected within 90 days after the Closing shall be
subject to reassignment to the Company in accordance with Section 14.2.
4.11 TANGIBLE PROPERTY. Except as described in Schedule 4.11, all
Tangible Property is in good operating condition and repair in all material
respects, subject only to normal wear and tear. Neither the Company nor any
of the Members has received written notice that any of the Tangible Property
is in violation of any existing law or any building, zoning, health, safety
or other ordinance, code or regulation.
4.12 INVENTORY.
(a) The piles of Unprepared Inventory observed and measured
on the Inventory Date" are located on level ground and are comprised solely,
throughout the pile, of the quality and grade of material visible on the
outer surface of the pile.
(b) The Company does not have any non-saleable residual
material resulting from the operations of the Business or contained within
dirt or other non-processable medium within the Owned Facilities.
4.13 INTELLECTUAL PROPERTY.
(a) The Company does not own any intellectual property,
inventions, discoveries, trade secrets, designs, prototypes, formulas, or any
other proprietary information related to the Business, other than the rights
to the names "Pro Recycling," "Xxxxxxxx Iron and Metal" and "Recycling
World." Other than as required under shrink wrap software licenses for
computers and/or the scales, the Company has never agreed to indemnify any
Person for or against any interference, infringement, misappropriation or
other conflict with respect to any intellectual property.
(b) Neither the Company nor any of the Members has Knowledge
of any patent, invention, trade secret, trademark, service xxxx, trade name
or copyright of any other Person that is infringed by the Company, nor do
they have notice of any infringement claim of any other Person relating to
any intellectual property or any process or confidential information of the
Company.
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4.14 REAL PROPERTY. The Owned Facilities include all real property
included in the Company Assets or used in connection with the Business. To
the Knowledge of the Company and the Members, with respect to each parcel of
owned real property included within the Owned Facilities:
(a) Except as otherwise disclosed on Schedule 4.14 or in the
Environmental Studies, the Company has possessed all approvals of
governmental authorities (including licenses and permits) required which are
material to the ownership or operation of the Business. The Owned Facilities
have been operated and maintained, in all material respects, in accordance
with applicable laws, rules and regulations.
(b) Except as otherwise disclosed on Schedule 4.14, there are no
leases, subleases, licenses, easements, concessions, or other agreements,
written or oral, granting to any third party or parties the right of use or
occupancy of any portion of the Owned Facilities.
(c) There are no outstanding options or rights of first refusal
to purchase the Owned Facilities or any portion thereof or interest therein.
(d) There are no parties other than the Company in possession of
the Owned Facilities or any portion thereof.
(e) The Owned Facilities are supplied with utilities and other
services necessary for their present operation, including electricity, water,
telephone, and sewage disposal, all of which services are adequate in
accordance with all applicable laws, ordinances, rules, and regulations and
are provided ingress and egress via public roads or via permanent,
irrevocable, appurtenant easements benefiting the Owned Facilities.
4.15 LIABILITIES. Except as set forth in Schedule 4.15 or otherwise
in this Agreement or any other Schedule hereto, the Business has no
Liabilities other than (a) Liabilities fully and adequately reflected or
reserved against in the Financial Statements, (b) Liabilities under Assumed
Contracts, (c) Liabilities incurred since December 31, 1997 in the Ordinary
Course, and (d) Liabilities which do not, individually or in the aggregate,
have a Material Adverse Effect on the Business. Except for the Liabilities
under Assumed Contracts, all Liabilities will be extinguished prior to, or at
the Closing.
4.16 SUPPLIERS AND CUSTOMERS. Schedule 4.16 sets forth a list of (1)
all suppliers from whom the Company has purchased $25,000 or more in the 12
month period ending May 31, 1998, and (2) all customers whose annual
purchases from the Business exceeded $25,000 in the 12 month period ending
May 31, 1998. There are no agreements or understandings, either written or
oral, with any customers of the vendors to the Company as to adjustments in
pricing or cost which would reduce the profit margin of any existing or
contemplated contract or other relationship.
4.17 EMPLOYEE BENEFIT PLANS
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(a) Schedule 4.17 contains an accurate and complete list of
all Employee Benefit Plans (also referred to as "Plan"), as defined below,
contributed to, maintained or sponsored by any Seller, to which a Seller is
obligated to contribute or with respect to which a Seller has any liability
or potential liability, whether direct or indirect. For purposes of this
Agreement, the term "Employee Benefit Plan" shall mean a plan, arrangement,
agreement or program which is: (A) an employee benefit plan as described in
Section 3(3) of ERISA, whether or not funded and whether or not terminated,
(B) an employment agreement, or (C) a personnel policy or fringe benefit
plan, policy, program or arrangement, whether or not subject to ERISA,
whether or not funded, and whether or not terminated, including without
limitation, any stock bonus, deferred compensation, pension, severance,
bonus, vacation, travel, incentive, health, disability or other pension or
welfare plan.
(b) Except as disclosed in Schedule 4.17, Seller do not
contribute to, have an obligation to contribute to or otherwise have any
liability or potential liability with respect to (A) any Multiemployer Plan
(as such term is defined in Section 3(37) of ERISA), (B) any Plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the IRC
(and regulations promulgated thereunder), or (C) any plan which provides
health, life insurance, accident or other "welfare-type" benefits to current
or future retirees or current former employees, their spouses or dependents,
other than in accordance with Section 4980B of the IRC or applicable state
continuation coverage law.
(c) Except as disclosed in Schedule 4.17 none of the Employee
Benefit Plans obligates any Seller to pay separation, severance, termination
or similar-type benefits solely as a result of any transaction contemplated
by this Agreement or solely as a result of a "change in control," as such
term is used in Section 280G of the IRC (and regulations promulgated
thereunder).
(d) Each Plan and all related trusts, insurance contracts,
and funds have been maintained, funded and administered in compliance in all
respects with all applicable laws and regulations, including but not limited
to ERISA and the IRC. None of Sellers, any trustee or administrator of any
Plan, or any other Person has engaged in any transaction with respect to any
Plan which could subject Sellers, or any trustee or administrator of any
Plan, or any party dealing with any Plan, or Recycling to any tax or penalty
imposed by ERISA or the IRC. No actions, suits, claims, complaints, charges,
proceedings, hearings, investigations, or demands with respect to the
Employee Benefit Plans (other than routine claims for benefits) are pending
or, to the Knowledge of Sellers, threatened, and Sellers have no Knowledge of
any facts which could reasonably be expected to give rise to any actions,
suits, complaints, charges, proceedings, hearings, investigations, or
demands. No Plan that is subject to the funding requirements of Section 412
of the IRC or Section 302 of ERISA has incurred any accumulated funding
deficiency as such term is defined in such Sections of ERISA and the IRC,
whether or not waived. No liability to the Pension Benefit Guaranty
Corporation (PBGC) (except for routine payment of premiums) has been or is
expected to be incurred with respect to any Plan that is subject to Title
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IV of ERISA, no reportable event (as such term is defined in Section 4043 of
ERISA) has occurred with respect to any such Plan, and the PBGC has not
commenced or, to Sellers' Knowledge, threatened the termination of any Plan.
None of the Company Assets are the subject of any Lien arising under Section
302(f) of ERISA or Section 412(n) of the IRC, Sellers have not been required
to post any security pursuant to Section 307 of ERISA or Section 401(a)(29)
of the IRC, and neither Sellers, nor any officers or directors of Sellers,
has Knowledge of any facts which could reasonably be expected to give rise to
such lien or such posting of security.
(e) Each Plan that is intended to be qualified under Section
401(a) of the IRC, and each trust (if any) forming a part thereof, has
received a favorable determination letter from the Internal Revenue Service
as to the qualification under the IRC of such Plan and the tax exempt status
of such related trust, and nothing has occurred since the date of such
determination letter that could adversely affect the qualification of such
Plan or the tax exempt status of such related trust.
(f) No underfunded defined benefit plan (as such term is
defined in Section 3(35) of ERISA) has been, during the five years preceding
the Closing Date, transferred out of the controlled group of companies
(within the meaning of Sections 414(b), (c),(m) and (o) of the IRC) of which
Sellers are a member or were members during such five-year period.
(g) As of the Closing Date, the fair market value of the
assets of each Plan that is a defined benefit pension plan equals or exceeds
the present value of all vested and non-vested liabilities thereunder
determined in accordance with applicable PBGC methods, factors and
assumptions applicable to a defined benefit pension plan terminating on such
date. With respect to each Plan that is subject to the funding requirements
of Section 412 of the IRC and Section 302 of ERISA, all required or
recommended contributions for all periods ending prior to or as of the
Closing Date (including periods from the first day of the then-current plan
year to the Closing Date, and including all quarterly contributions required
in accordance with Section 412(m) of the IRC) shall have been made. With
respect to each other Plan, all required or recommended payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to or
as of the Closing Date shall have been made. No Plan has any unfunded
liabilities.
(h) The Managers and Board of Directors of Sellers, as the
case may be, (or committees or officers authorized by such Board) has
authority to amend or terminate the Employee Benefit Plans at any time
without limitation (subject to the requirements of ERISA), and neither the
consideration or implementation of the transactions contemplated under this
Agreement nor the amendment or termination of any or all of the Employee
Benefit Plans on or after the date of this Agreement will increase (A) the
obligation of Sellers to make contributions or any other payments to fund
benefits accrued under the Employee Benefit Plans as of the date of this
Agreement or (B) the benefits accrued or payable with respect to any
participant under the Employee Benefit Plans.
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(i) With respect to each Plan, Sellers have provided Recycling
with true, complete and correct copies, to the extent applicable, or (A) all
documents pursuant to which the Employee Benefit Plans are maintained, funded
and administered, (B) the two most recent annual reports (Form 5500 series)
filed with the Internal Revenue Service (with attachments), (C) the two most
recent actuarial reports, (D) the two most recent financial statements, and (E)
all governmental rulings, determinations, and opinions (and pending requests for
governmental rulings, determinations, and opinions).
(j) Except as provided on Schedule 4.17(j), Sellers do not
provide any post-retirement or post-employment health, life insurance, accident
or other welfare-type benefits. Schedule 4.17 (j) includes the recent valuation
(but in any case at least one that has been completed within the last calendar
year) of the present and future obligations with respect to Employee Benefit
Plans and benefits listed thereon, if any.
4.18 CURTAILMENT OF OPERATIONS. No labor disputes or work stoppages
involving the Business are pending or, to the Knowledge of the Company and
the Members, threatened which, either singly or in the aggregate, might have
a Material Adverse Effect on the Business. To the Knowledge of the Company
and the Members, no material customer of or supplier to the Business is
involved in, or affected by, any dispute, arbitration, lawsuit, or
administrative proceedings which might have a Material Adverse Effect on the
Business.
4.19 EMPLOYEE RELATIONS. The Company is not a party to a collective
bargaining agreement and the Company is in compliance with all federal, state or
other applicable laws, domestic or foreign, respecting employment and employment
practices, terms and conditions of employment (including issues related to
independent contractor status of personnel) and wages and hours, and the Company
has not and is not engaged in any unfair labor practice. To the Knowledge of
the Company and the Members, there have been no organization efforts by any
trade unions within the last five years.
4.20 INSURANCE. Schedule 4.20 lists all insurance policies maintained
by the Company relating to the Business or the Owned Facilities, copies of which
have been provided to RII Sub, which cover the Company Assets or the Business,
the nature of such policies, the amount and types of coverage, and the name of
the insurers and expiration dates. The Company has paid all premiums and other
amounts due on such policies and will not cancel any insurance or permit any
insurance to lapse or terminate prior to the Closing.
4.21 RELATIONSHIPS. Except as described on Schedule 4.21, no officer or
director of the Company possesses, directly or indirectly, any financial
interest in, or is a director, officer, stockholder or employee of, any
corporation, firm, association or business organization which is a manufacturer
for, or client, supplier, customer, lessor, lessee, or competitor or potential
competitor of, the Business. The Business is not indebted to any officer,
director, partner, or employee of the Company except with respect to accrued but
unpaid compensation and other Ordinary Course employment benefits or except as
described on Schedule 4.21(which are not being assumed by RII Sub hereunder), to
any entity in which any such Person has a financial interest.
-19-
4.22 NO MATERIAL CHANGES PRIOR TO CLOSING DATE. Up until the Closing
Date, the Business will be operated in the Ordinary Course of Business.
4.23 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting
on behalf of the Company or the Members is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by or under common control with any of the
parties hereto, in connection with the Transaction.
4.24 EMPLOYEE TRANSITION. Schedule 4.24 lists all employees of the
Sellers who work or are customarily stationed at the Owned Facilities, their
term of employment, compensation history (including bonus, if any), benefits and
accrued vacation and other amounts payable to each employee. On or before the
first day subsequent to the Closing Date, the Sellers will terminate all
employees of the Business and will pay all compensation due such employees on or
before the first day subsequent to the Closing. RII Sub will not assume or
otherwise be responsible for any salaried or hourly health and life insurance
obligations incurred prior to the Closing for any employee, nor for payment of
claims to insureds, or payment of any premiums for coverage prior to the Closing
Date; RII Sub will not assume any liabilities either to former employees or the
employees of the Sellers who are hired by RII Sub after the Closing. The
Sellers agree that all liabilities of the Business to employees will be retained
by the Sellers, including those accruing by reason of termination by the
Sellers. RII Sub shall have the right, in its sole discretion, to determine
which of the Sellers' employees it will hire following the Closing.
4.25 ENVIRONMENTAL MATTERS. Except as may be provided in the
Environmental Studies to be performed as contemplated by Section 8.1 of this
Agreement, copies of which will be delivered to RII Sub prior to the Closing as
provided in Section 8.1, or disclosed on Schedule 4.25, the Company and the
Members have no Knowledge of any Environmental Liabilities, actual or expected,
relating to the Business or the Owned Facilities, or of any environmental
conditions on any other real property that could reasonably be expected to
result in an Environmental Liability to the Business.
4.26 COMPLIANCE WITH ADA. To the Knowledge of the Company and the
Members, the Company has not received any notice, order, summons or other
document alleging or asserting noncompliance with the Americans with
Disabilities Act of 1991, 42 U.S.C. Sections 12111, 12112 and 12209, as amended,
or any similar applicable state regulations.
4.27 DISCLOSURE. None of the Transaction Documents issued by the
Company or the Members and furnished or to be furnished to Recycling contains or
will contain any untrue statement of a material fact or omits any statement of a
material fact necessary in order to make the statements contained therein not
misleading.
4.28 BEST EFFORTS. The Company and the Members will use their best
efforts to timely apply for and obtain all permits, consents and approvals, to
complete any due diligence deemed necessary by the Company and the Members and
take such other actions in order to complete the Transaction by the Closing
Date. The Company and the Members will execute and deliver such instruments and
take such
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other action as may be reasonable or appropriate to carry out the Acquisition
and the intentions of this Agreement.
ARTICLE 5
REPRESENTATIONS OF RECYCLING
As an inducement to the Company and the Members to enter into this
Agreement and to complete the Transaction and with the knowledge that the
Company and the Members will rely thereon, RII Sub and the Parent jointly and
severally represent and warrant to the Company and the Members that all of the
representations and warranties in this Article 5 are true, correct and complete
as of the date of this Agreement, and as of the Closing.
5.1 DUE INCORPORATION AND QUALIFICATION OF RII SUB. RII Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado, and has the corporate power and lawful authority to
carry on its business as now being conducted. RII Sub is duly qualified as a
foreign corporation to transact business in Wisconsin.
5.2 ARTICLES OF INCORPORATION AND BYLAWS. On or before the Closing
Date, RII Sub and the Parent will deliver to the Company true and complete
copies of their respective Articles of Incorporation and Bylaws, each as
certified by the Parent's corporate secretary, as then in effect.
5.3 AUTHORITY OF RII SUB AND THE PARENT. RII Sub and the Parent have
full power and authority to execute and deliver this Agreement and the other
Transaction Documents and to carry out the Transaction and each has taken all
requisite corporate action to authorize the execution, delivery and performance
of this Agreement and the other Transaction Documents. This Agreement and the
other Transaction Documents are valid and binding agreements of RII Sub and the
Parent, enforceable in accordance with their terms. No consent, authorization
or approval of, or declaration, filing or registration with, any governmental or
regulatory authority or any consent, authorization or approval of any other
third party is required in order to enable RII Sub or the Parent to enter into
and perform its obligations under this Agreement and the other Transaction
Documents, and neither the execution and delivery of this Agreement and the
other Transaction Documents nor the completion of the Transaction will, with
respect to RII Sub and the Parent, individually:
(a) Violate its Articles of Incorporation or Bylaws or any other
organizational document, or constitute a breach of any evidence of indebtedness
or agreement to which it is a party, except where such breach would not have a
Material Adverse Effect;
(b) Conflict with or result in the breach of any writ, injunction or
decree of any court or governmental instrumentality; or
(c) Violate any statute, law or regulation of any jurisdiction as
such statute, law or regulation relates to it.
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5.4 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting
on behalf of RII Sub or the Parent is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with the Transaction.
5.5 BEST EFFORTS. RII Sub and the Parent will use their best efforts
to timely apply for and obtain all permits, consents and approvals, to complete
any due diligence deemed necessary by RII Sub and the Parent, and to take such
other actions in order to complete the Transaction by the Closing Date. RII Sub
and the Parent will execute and deliver such instruments and take such other
action as may be reasonable or appropriate to carry out the Acquisition and the
intentions of this Agreement.
ARTICLE 6
REPRESENTATIONS OF THE PARENT RELATED TO THE
STOCK CONSIDERATION
As an inducement to the Sellers and the Members to enter into this
Agreement and to complete the Transaction and with the knowledge that the
Sellers and the Members will rely thereon, the Parent represents and warrants to
the Sellers and the Members that all of the representations and warranties in
this Article 6 are true, correct and complete as of the date of this Agreement,
and as of the Closing.
6.1 STATUS. The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. The
Parent is authorized to issue preferred stock and common stock. The Parent has
taken all necessary corporate action to create the Parent Series M Preferred
Stock and to reserve a sufficient number of shares of common stock which may be
issued upon conversion thereof. The preferred stock, when issued in accordance
with the provisions of this Agreement will be lawfully issued as fully paid,
nonassessable preferred shares of the Parent, and the common stock issuable upon
conversion of the Parent Series M Preferred Stock, when issued in accordance
with the conversion terms of said preferred stock, will be lawfully issued as
fully paid, nonassessable common shares of the Parent.
6.2 1934 ACT REPORTING. The Parent is registered under Section 12(g)
of the 1934 Act, and in accordance therewith the Parent files periodic reports,
proxy statements, and other informational reports required under the 1934 Act.
The Parent has filed with the SEC all reports it is required to file under the
1934 Act. The Parent's common stock is traded publicly in the over-the-counter
market and quoted on the Nasdaq National Market under the symbol "RECY."
ARTICLE 7
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REGULATORY COMPLIANCE
7.1 BULK SALES COMPLIANCE. Recycling hereby waives compliance by the
Company of the provisions of the bulk sales or bulk transfer law of the State of
Wisconsin, subject to the indemnification provided in Section 12.2.
7.2 COBRA. The Company has complied with the provisions of COBRA, Pub.
L. No. 99-272, 99th Cong., 2d Sess. (1987), and any similar statute, relating to
continuation of health benefits to employees as they apply to the transaction
contemplated hereby. The Company has complied with all COBRA requirements for
all persons who were participants in the Company's medical benefit plans prior
to the Closing Date or who became eligible for COBRA due to qualifying events
that occurred under the Company's medical benefit plans prior to the Closing
Date. Any liabilities for COBRA claims or COBRA administration that relate to
the Company's medical benefit plans as in existence on or prior to the Closing
Date shall be the responsibility of the Company, the Sellers and Members. The
Sellers and the Members will reimburse Recycling for the amount of any COBRA
benefit claims that Recycling's medical plan pays to persons who become eligible
for COBRA due to a qualifying event that occurred under the Company's medical
benefit plan on or prior to the Closing date.
7.3 OTHER. The parties shall prepare and promptly file all reports,
documents or notices with appropriate regulatory or other governmental
authorities, as may be required of them.
ARTICLE 8
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING
The parties hereto covenant and agree that between the date hereof and the
Closing Date:
8.1 ENVIRONMENTAL STUDIES.
(a) The Company has delivered to Parent the most recent ASTM E
1527-97 Phase I Environmental Site Assessments and a completed ASTM Transaction
Screen Process for the Owned Facilities and RII Sub has engaged an environmental
auditing firm ("EAF") to update the Environmental Studies and to take soil
samples for each parcel of real property (the Phase I and the studies and
reports prepared by the EAF are collectively referred to as the Environmental
Studies"). [CONFIDENTIAL TREATMENT REQUESTED]
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8.2 TITLE INSURANCE. The Company will deliver to Recycling its most
recent title policy with respect to the Owned Facilities. The Company will
cooperate with Recycling as necessary to allow it to obtain a title insurance
commitment for an owner's and lender's title policy, at Recycling's expense,
including obligations to issue endorsements as may be required by RII Sub, with
respect to the Owned Facilities, using a current State of Wisconsin standard
form of American Land Title Association Owner's Title Insurance Commitment
issued by a title insurer satisfactory to RII Sub in the amount allocated by the
parties on Schedule 3.4 to the Owned Facilities, insuring title to the Owned
Facilities to be in RII Sub as of the Closing Date, subject only to
encumbrances, covenants, conditions, restrictions, reservations and easements
filed of record and such exceptions and exclusions as provided in this Agreement
as are reasonably acceptable to RII Sub. Such title commitment is to contain a
complete copy of each easement, restriction, limitation, or condition of title
which is referred to therein that burdens or benefits said real property and
shall insure against all possible contractors', suppliers' and mechanics' lien
claims. The costs and premium for the owner's policy of title insurance,
including the cost of any endorsements to the owner's policy of title insurance
which may be requested by Recycling and the cost of the mortgagee's policy of
title insurance shall be paid by Recycling.
8.3 SURVEY. The Company will cooperate with Recycling to the extent
necessary to allow Recycling to obtain a survey of each of the Owned Facilities,
at Recycling's expense, certified to RII Sub, any mortgagee of RII Sub, and the
title insurer issuing title insurance in the Transaction as provided in Section
8.2, prepared by a licensed surveyor and conforming to Minimum Technical
Standards adopted by the Wisconsin Society of Professional Surveyors, disclosing
the location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, setback requirements, and other matters customarily shown on such
surveys, and showing access affirmatively to public streets and roads.
8.4 ASSUMED CONTRACTS. The Company will use its best efforts to obtain
the written consent to the assumption by RII Sub of each of the Assumed
Contracts which require such consent.
8.5 CONDUCT OF BUSINESS. After execution of this Agreement and
continuing up to the Closing, the Company will:
(a) operate the Business only in the Ordinary Course and without
consent of RII Sub (which consent will not be unreasonably withheld or delayed),
will not (i) make any capital expenditures which individually are greater than
$25,000 or which in total aggregate more than $50,000 or (ii) enter into any
contract which is not terminable upon less than 60 days notice;
(b) provide prompt notice to RII Sub of any material change,
including but not limited to the institution of legal proceedings by or against
the Company; and
(c) provide Recycling with such additional financing and other
information as may be reasonably requested by Recycling and available to the
Company without undue expense.
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8.6 PRESERVATION OF BUSINESS. The Company shall exert reasonable
efforts in the Ordinary Course to preserve the Business, keep available the
services of its present employees, consultants and agents, maintain its present
suppliers and customers and preserve its goodwill. The Company will provide to
RII Sub a mailing list of all customers whose annual purchases from the Business
were $25,000 or more in the 12 month period ended May 1, 1998, and a listing of
their accounts on the Closing Date to permit RII Sub to send announcements to
the customers after the Closing Date.
8.7 NOTICE OF EVENTS. The Company and the Members shall promptly
notify RII Sub and Parent with reasonable specificity of: (1) any event,
condition or circumstance occurring from the date hereof through the Closing
Date that would constitute a material violation or breach of this Agreement; or
(2) any event, occurrence, transaction or other item which would have been
required to have been disclosed on any Schedule, Exhibit or statement delivered
hereunder, had such event, occurrence, transaction or item existed on the date
hereof, other than items arising in the Ordinary Course of Business which would
not render any of the representations, warranties or other agreements of the
Company or the Members materially misleading.
8.8 EXAMINATIONS AND INVESTIGATIONS.
(a) Prior to the Closing Date, during normal business hours
between 8:00 a.m. and 5:00 p.m., Central Daylight Time,
Monday through Friday, or such other hours as to which the
parties mutually agree, Recycling shall be entitled, upon
prior reasonable written notice to the Company, through
its employees and representatives, including counsel,
lenders, appraisers and accountants, to make such
investigation of the assets, properties, business and
operations of the Business, and such examination and
copies of the books, records and financial condition of
the Business as Recycling deems necessary; provided,
however, that such investigation and examination shall not
interfere with the operation of the Business. No review,
examination or investigation by Recycling shall diminish
or obviate any of the representations, warranties,
covenants or agreements of the Company and the Members
under this Agreement.
(b) Recycling will treat and hold any information or documents
obtained from the Company concerning the Business or the
Company Assets as confidential and will not use any of
such Confidential Information except in connection with
this Agreement. If this Agreement is terminated for any
reason whatsoever, Recycling will return to the Company
all tangible embodiments (and all copies) of such
confidential information which are in its possession and
Recycling agrees that it shall not use any Confidential
Information to its own advantage for any purpose
whatsoever. In the event Recycling is requested or
required (by oral question or request for information or
documents in any legal proceeding, interrogatory,
subpoena, civil investigation, demand, or similar
process), to disclose any such confidential information,
Recycling will
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notify the Company promptly of the request so that the
Company may seek an appropriate protective order or waive
compliance with the provisions of this Section 8.8. If, in
the absence of a protective order or the receipt of a
waiver hereunder, Recycling is, on the advice of counsel,
compelled to disclose any confidential information to any
tribunal or else stand liable for contempt, Recycling may
disclose such information to the tribunal; provided,
however, that Recycling shall use its best efforts to
obtain, at the reasonable request of the Company, an order
or other assurance that confidential treatment will be
accorded to such portion of such information required to
be disclosed as the Company shall designate. For purposes
of this Section 8.8(b), the term "Confidential
Information" shall mean information which is used in the
business of the Company, whether or not designated by the
Company as confidential, and (a) is proprietary to, about
or created by the Company, or (b) gives the Company a
competitive business advantage or the opportunity of
obtaining such advantage or the disclosure of which would
be detrimental to the interests of the Company.
Confidential Information does not include information used
in the business of the Company that (a) becomes generally
available to the public other than as a result of the
disclosure by Recycling, or (b) was available or becomes
available to Recycling on a non-confidential basis prior
to its disclosure to Recycling by the Company. Such
Confidential Information includes, without limitation, the
following types of information and other information of a
similar nature (whether or not reduced to writing or
designated as confidential): (c) Internal personnel and
financial information of the Company, purchasing and
internal cost information, internal service and
operational manuals and the manner and methods of
conducting the business of the Company (d) Marketing and
development plans, price and cost data, price and fee
amounts, pricing and billing policies, quoting procedures,
marketing techniques, forecasts and forecast assumptions
and volumes, and future plans and potential strategies
(including, without limitation, all information relating
to any acquisition prospect and the identity of any key
contact within the organization of any acquisition
prospect) of the Company or its subsidiaries which have
been or are being discussed; (e) Customer services and the
type, quantity, specifications and content of products and
services purchased, leased, licensed or received by
customers of the Company; and (f) Confidential and
proprietary information provided to the Company by any
past, present or potential customer (an individual or
entity that is being actively solicited by the Company for
business), government agency or other third party
(including businesses, consultants and other entities and
individuals).
8.9 NO NEGOTIATION BY THE COMPANY OR THE MEMBERS. Between the date
hereof and the earlier of (1) the Closing Date; and (2) the date of termination
of this Agreement, neither the Members
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nor the Company shall, directly or indirectly:
(a) Solicit, initiate or encourage the submission of inquiries,
proposals or offers from any Person (other than Recycling) relating to any
acquisition or purchase of assets (other than sales of Inventory in the Ordinary
Course) of, or any equity interest in, the Company Assets or any exchange offer,
merger, consolidation, purchase of assets, liquidation, dissolution or similar
transaction involving the Company Assets (each, an "Acquisition Proposal");
(b) Enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Person (other than Recycling
and its representatives) any information with respect to the Company Assets,
other than in the Ordinary Course of Business; or
(c) Otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any Person (other than
Recycling) to do or seek any of the foregoing.
The Company and the Members will notify Recycling immediately if any such
Acquisition Proposal is received or if any such discussions, negotiations or
other events occur or are sought to be initiated, and such notice will set forth
in detail the terms or other particulars thereof.
8.10 REMOVAL OF WASTE MATERIALS. Except as specifically set forth in the
Environmental Studies, the Company shall remove, at its cost, all trash, waste
oil, tires and any other similar waste materials, hazardous materials, or other
materials or substances which are currently regulated by or currently form the
basis of liability under any environmental laws from the Owned Facilities prior
to the Closing.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATION
OF RECYCLING TO CLOSE
The obligation of Recycling to enter into and to complete the Transaction
is subject to the fulfillment on or prior to the Closing Date (or such earlier
date as is set forth in this Agreement) of the following conditions, any one or
more of which may be waived by Recycling only in writing:
9.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of the Company and the
Members contained in this Agreement shall be true, correct and complete in
all material respects on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date. The Company and the
Members shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or
complied with by them on or prior to the Closing Date. The Company and the
Members shall have delivered to Recycling certificates, dated the Closing
Date, to such effect.
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9.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transaction shall have been obtained and all shall have been transferred to the
name of RII Sub.
9.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in connection
with the performance by the parties of their respective obligations under this
Agreement or the continuance of any Assumed Contracts or other agreements
without material modification after the Closing Date shall have been obtained.
9.4 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the Transaction or to seek damages or a discovery
order in connection with the Transaction, or that has or could reasonably be
expected to have a Material Adverse Effect on the Company Assets or the
Business.
9.5 REAL PROPERTY. RII Sub shall receive good and insurable title by
special warranty deed for the Owned Facilities in proper form for recording in
the State of Wisconsin and the Owned Facilities shall be free and clear of any
Security Interest (other than those to be discharged at Closing), but subject to
(i) installments of special assessments not yet delinquent, (ii) covenants,
conditions, restrictions, reservations, encroachments, and easements filed of
record, (iii) matters shown by the survey and title policy contemplated by
Sections 8.2 and 8.3, and (iv) other restrictions which do not impair the
current use or occupancy, or the marketability of title, of the property subject
thereto.
9.6 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change in the business, financial condition or results of operations of the
Company.
9.7 SUBSCRIPTION AGREEMENT. The Parent shall have received from the
Company, the Sellers and/or the Members the Subscription Agreement for the
Consideration Stock in the form attached hereto as EXHIBIT B.
9.8 TRANSFER DOCUMENTS. RII Sub shall have received assignments and
such other instruments of sale, transfer, conveyance and assignment transferring
all of the Company Assets from the Company to RII Sub, each in proper legal form
to transfer the Company assets under applicable law.
9.9 LEGAL OPINION. Recycling shall have received from legal counsel to
the Company in the form attached hereto as EXHIBIT D.
9.10 Environmental Escrow Agreement. RII Sub shall have received from
the Company the Environmental Escrow Agreement in the form attached hereto as
EXHIBIT C.
9.11 Intentionally Omitted
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9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL PERFORMANCE AND
APPROVAL. Recycling shall be satisfied, in its reasonable discretion, with
(a) the results of its legal, accounting and financial due diligence
investigation of the Company and its operations, including, without
limitation, the results of the Environmental Studies, and (b) the Company's
financial performance up to the Closing Date. Further, the terms and
conditions of this Agreement shall have been approved by Recycling's senior
management, its Board of Directors, and the Lender, each in their sole
discretion.
9.13 EMPLOYMENT AND CONSULTING AGREEMENTS. In order to allow for a
smooth transition in ownership of business, RII Sub or Parent shall have entered
into employment or consulting agreements with the individuals listed on Schedule
9.13 in the forms attached as EXHIBIT E.
9.14 NON-COMPETITION AGREEMENTS. Recycling shall have received from the
Members, executed Non-Competition Agreements in the forms attached as EXHIBIT F.
9.15 CERTIFICATES, ETC. OF MEMBERS AND THE COMPANY. The Members and the
Company shall have delivered all certified resolutions, certificates, documents
or instruments with respect to the Company's authority and such other matters as
RII Sub's and the Parent's counsel may have reasonably requested prior to the
Closing Date.
9.16 PAYMENT OF SALES OR USE TAXES BY THE COMPANY. The Company shall
have paid all sales or use taxes, payable under the laws of the State of
Wisconsin, as a result of the completion of the Transaction.
9.17 APPROVAL OF COUNSEL TO RECYCLING. All actions and proceedings
hereunder and all documents or other papers required to be delivered by the
Company hereunder or in connection with the completion of the Transaction, and
all other related matters shall have been approved by legal counsel to
Recycling, as to their form, which approval shall not be unreasonably withheld
or delayed.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
AND MEMBERS TO CLOSE
The obligations of the Company and the Members to enter into and to
complete the Transaction is subject to the fulfillment on or prior to the
Closing Date (except for a sooner date, if so provided) of the following
conditions, any one or more of which may be waived by the Company and the
Members only in writing:
10.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Recycling contained in this
Agreement shall be true, correct and complete in all material respects on and as
of the Closing Date with the same force and effect as though made on
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and as of the Closing Date. Recycling shall have performed and complied, in
all material respects, with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date. Recycling shall have delivered to the Company certificates, dated the
Closing Date, to such effect.
10.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals
from any governmental or regulatory body required for the lawful completion
of the Transaction shall have been obtained.
10.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in
connection with the performance by the parties of their respective
obligations under this Agreement or the continuance of any Assumed Contracts
without material modification after the Closing Date shall have been obtained.
10.4 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change in the business, financial condition or results of operations of RII
Sub or the Parent on a consolidated basis.
10.5 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted
or threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the Transaction, or to seek damages or a
discovery order in connection with the Transaction, or that has or could
reasonably be expected to have a Material Adverse Effect on the assets,
properties, businesses, operations or financial condition of RII Sub or the
Parent.
10.6 SATISFACTION WITH DUE DILIGENCE. The Company shall be satisfied,
in its reasonable discretion with the results of its due diligence
investigation of Recycling.
10.7 DESIGNATION OF STOCK CONSIDERATION. There shall have been
delivered to the Company and the Members a certified copy of the Certificate
of Designations, Rights and Preferences of the Parent Series M Preferred
Stock.
10.8 LEGAL OPINION. The Company shall receive an opinion from counsel
to the Parent in the form attached hereto as EXHIBIT G.
10.9 THE PURCHASE PRICE. RII Sub and the Parent shall have paid to
the Company the full Purchase Price for the Company Assets (less any amounts
to be placed in the Environmental Escrow Account) and executed and delivered
all documents related thereto.
10.10 ASSUMPTION OF ASSUMED CONTRACTS. The Company shall have received
RII Sub's signed Assignment and Assumption Agreement related to the Assumed
Contracts.
10.11 ENVIRONMENTAL ESCROW AGREEMENT. The Company and the Members
shall have received from RII Sub and Parent the Environmental Escrow
Agreement in the form attached hereto as
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EXHIBIT C.
10.12 EMPLOYMENT AGREEMENTS. RII Sub or Parent shall have entered into
employment agreements with the Members in the forms attached as EXHIBIT E.
10.13 APPROVAL OF COUNSEL TO THE COMPANY AND THE MEMBERS. All actions
and proceedings hereunder and all documents or other papers required to be
delivered by RII Sub and the Parent hereunder or in connection with the
completion of the Transaction, and all other related matters shall have been
approved by legal counsel to the Company and the Members as to their form,
which approval shall not be unreasonably withheld or delayed.
ARTICLE 11
ACTIONS TO BE TAKEN AT THE CLOSING
The following actions shall be taken at the Closing, each of which shall
be conditioned on completion of all the others and all of which shall be
deemed to have taken place simultaneously:
11.1 TRANSFER DOCUMENTS. The Company shall deliver duly executed
transfer documents and/or instruments of assignment, including without
limitation a Xxxx of Sale.
11.2 ASSIGNMENT AND ASSUMPTION AGREEMENT. The Company shall deliver
any required written consents to the assumption by RII Sub of the Assumed
Contracts and the Company and Recycling will enter into an assignment and
assumption agreement with respect to such Assumed Contracts.
11.3 THE PURCHASE PRICE. RII Sub shall deliver to the Company the
Purchase Price.
11.4 SUBSCRIPTION AGREEMENT. The Company shall deliver to the Parent
the Subscription Agreement.
11.5 NON-COMPETITION AGREEMENTS. The Members shall deliver to RII Sub
and the Parent their duly executed Non-Competition Agreements.
11.6 EMPLOYMENT AND CONSULTING AGREEMENTS. RII Sub and the
individuals listed on Schedule 9.13 shall enter into employment agreements.
11.7 ENVIRONMENTAL ESCROW AGREEMENT. RII Sub, Parent, the Sellers and
the Members shall enter into the Environmental Escrow Agreement with a third
party escrow agent and $585,000 shall be delivered into the Environmental
Escrow Account created thereby.
11.8 CLOSING ON REAL PROPERTY. Immediately prior to the Closing, the
documents set forth below in subsections (a) through (d) shall have been duly
executed and delivered to Lawyer's Title
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(title company) and Lawyer's Title shall conduct the Closing as it relates to
the purchase of the Owned Facilities and shall deliver to the appropriate
parties the executed documents related thereto. All of the documents
delivered in connection with the sale and conveyance of the Owned Facilities
shall be deemed to be part of the "Transaction Documents" as defined in
Section 1.38.
(a) The special warranty deed for the Owned Facilities in proper
form for recording in the State of Wisconsin, conveying the Owned Facilities
from Xxxxxxxx to RII Sub.
(b) The special warranty deed for the Owned Facilities in proper
form for recording in the State of Wisconsin, conveying the Owned Facilities
from A&A Investment Acquisitions, LLC to RII Sub.
(c) The owner's Title Insurance Policy Commitment provided by
Lawyer's Title, including the list of endorsements to be issued in connection
therewith.
(d) A funds flow statement (the "Funds Flow Statement") prepared
jointly by the attorneys for Recycling and the Company (and the Sellers) at
least one business day prior to the Closing which shall detail the gross
proceeds and all adjustments related to allocation of expenses to the parties
at the Closing.
11.9 CERTIFICATES OF THE COMPANY. The Company shall deliver to RII
Sub a closing certificate dated the Closing Date, in a form reasonably
satisfactory to RII Sub, as contemplated by Section 9.1. Such certificate
shall be signed on behalf of the Company by Xxxxxx Xxxxxxxx as President of
the Company.
11.10 CERTIFICATE OF THE MEMBERS. The Members shall deliver to RII Sub
a closing certificate dated the Closing Date, in a form reasonably
satisfactory to RII Sub, as contemplated by Section 9.1.
11.11 CERTIFICATE OF RECYCLING. Recycling shall deliver to the Company
certificates dated the Closing Date, in a form reasonably satisfactory to the
Company, as contemplated by Section 10.1. Said certificate shall be signed
on behalf of Recycling by an executive officer of Recycling.
11.12 LEGAL OPINION DELIVERED TO RECYCLING. Recycling shall have
received from legal counsel to the Company and the Members, the legal opinion
required by Section 9.9, which shall be addressed to Recycling and the Lender.
11.13 LEGAL OPINION DELIVERED TO THE COMPANY AND THE MEMBERS. The
Company and the Members shall have received from legal counsel to RII Sub and
the Parent, the legal opinion required by Section 10.8.
11.14 TITLES TO VEHICLES. The Company shall deliver to RII Sub duly
executed assignments of titles to all vehicles included in the Company Assets
free and clear of any Security Interests, other than vehicles leased pursuant
to Assumed Contracts.
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ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement
shall survive the Closing for a period of five years after the Closing Date
with the exception of the representations and warranties contained in
Sections 4.5, which shall survive for a period of time which is equal to the
statute of limitations period applicable to the respective Tax liability or
liability under the Xxxx-Xxxxx-Xxxxxx Act or similar state law being asserted.
12.2 INDEMNITY AGREEMENTS OF THE COMPANY AND THE MEMBERS.
(a) The Company, the Sellers and the Members, jointly and
severally, shall indemnify, defend, reimburse and hold harmless RII Sub and
the Parent, and their respective directors, officers and agents, from and
against any and all Liabilities costs and expenses resulting from:
(1) any inaccuracy in, or breach of, any representation or
warranty or nonfulfillment of any covenant on the part of the Sellers or the
Members contained in this Agreement;
(2) any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of the Sellers or the Members
contained in any Transaction Document furnished to RII Sub or the Parent by
the Company or the Members;
(3) all federal, state, county, local, foreign and other
taxes, including income taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, employment and payroll related taxes,
property taxes and import duties, and any penalties or interest, whether or
not measured in whole or in part by net income required to be paid by the
Company or the Members relating to the Business through the Closing Date
which are not paid by either the Company or the Members and which RII Sub or
the Parent pays other than those being contested in good faith as set forth
in the Disclosure Schedules or as otherwise permitted under this Agreement;
(4) any and all negligence claims relating to the Business or
the Company Assets arising out of occurrences and events prior to the Closing
Date;
(5) any liability of the Company not expressly assumed by RII
Sub;
(6) any infringement claim related to any patent, invention,
trade secret, trademark, service xxxx, trade name or copyright where the
infringement alleged is related to products designed by the Company prior to
the Closing Date unless subsequently modified by RII Sub in a manner which
renders the product to be infringing;
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(7) any liabilities to employees of the Business that arise
as a result of actions of the Company prior to the Closing Date;
(8) the failure of the Company or the Sellers to comply with
the bulk sales or bulk transfer laws of the State of Wisconsin;
(9) reasonable fees and disbursements of counsel incident to
any of the foregoing.
(b) ENVIRONMENTAL INDEMNITY. The Sellers and the Members,
jointly and severally, shall indemnify, defend, reimburse and hold harmless
Recycling from and against any and all claims, demand, penalties, fines,
liabilities, obligations, losses, settlements, damages, costs and expenses
actually incurred by Recycling that are the result of (i) the violation by
the Company or the Members of any Environmental Laws or any orders,
requirements, or demands of any governmental authorities related thereto or
(ii) any Environmental Liabilities arising under Environmental Laws, in each
case related to events or circumstances of, involving, relating or affecting
in any manner whatsoever the Company, the Business, the Company Assets, the
Members or other parties from whom the Company or the Members assumed or are
otherwise responsible for their liabilities occurring on or before the
Closing Date (collectively, "Environmental Claims"), provided, however, that
such indemnification obligation shall only exist if the Environmental Claims
result from an inaccuracy in or breach by the Sellers or the Members of any
representation or warranty contained in this Agreement, or from a breach by
the Sellers or the Members of any covenant contained in this Agreement if
such inaccuracy or breach relates to Environmental Laws or Environmental
Liabilities.
(c) [CONFIDENTIAL TREATMENT REQUESTED]
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12.3 INDEMNITY AGREEMENT OF RII SUB AND THE PARENT. RII Sub and the
Parent shall jointly and severally indemnify, defend, reimburse and hold
harmless the Company and the Members from and against:
(a) any and all claims, demands, penalties, fines, liabilities,
obligations, losses, settlements, damages, costs and expenses pertaining to
the Company Assets and Business which arise from any event occurring on or
after the Closing resulting from:
(1) any inaccuracy in, or breach of, any representation and
warranty or nonfulfillment of any covenant on the part of RII Sub or the
Parent contained in this Agreement;
(2) any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of RII Sub or the Parent contained
in any Transaction Document furnished or to be furnished to the Company by
RII Sub or the Parent pursuant to this Agreement;
(3) any Liability of the Company arising out of the Assumed
Contracts;
(4) any infringement claim related to any patent,
invention, trade secret, trademark, service xxxx, trade name or copyright
where the infringement alleged is related to products designed by Recycling
after the Closing Date;
(5) any liabilities to employees of the Business that
arise as a result of actions of RII Sub or the Parent after the Closing Date;
(6) any and all Liabilities relating to the Business or the
Company Assets arising out of occurrences and events after the Closing Date;
(7) all federal, state, county, local, foreign and other
taxes, including income taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, employment and payroll related taxes,
property taxes and import duties, and any penalties or interest, whether or
not measured in whole or in part by net income required to be paid by RII Sub
relating to the Business after the Closing Date which are not paid RII Sub or
the Parent and which the Company or the Members pay;
(8) any and all negligence claims relating to the Business
or the Company Assets arising out of occurrences and events after the Closing
Date; and
(9) reasonable fees and disbursement of counsel incident to
any of the foregoing.
(b) Notwithstanding the foregoing, Recycling's liability
pursuant to this
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section 12.3 will be subject to the following limitations:
(i) Recycling shall not be liable for any Losses described above
unless and until the aggregate amount of all such Losses (exclusive of any
liabilities for Environmental Remedial Activities) described in such section
exceeds $25,000, after which point the indemnifying party will be obligated,
to the extent required by this section, to indemnify the indemnified parties
for all such amounts incurred in excess of such amount.
(ii) The maximum amount of indemnification payable by Recycling in no
event shall exceed $3,000,000.
12.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS
(a) NOTICE OF CLAIM AND DEFENSE.
(1) The party seeking indemnification under this Article 12
shall give the party from whom indemnification is sought prompt written
notice of the assertion of any third party claim of which said party has
knowledge which is covered by the indemnity agreements set forth in Section
12.2 or Section 12.3, and the party obligated to indemnify will undertake the
defense thereof by representatives chosen by the party obligated to indemnify
but reasonably acceptable to the party seeking indemnification.
(b) If the party obligated to indemnify, within a reasonable period
of time after notice of any such claim fails to defend, the party seeking
indemnification will have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of the party
obligated to indemnify, subject to the right of the party obligated to indemnify
to assume the defense of such claim at any time prior to settlement, compromise
or final determination thereof.
(1) PAYMENT OF SUMS DUE. After any final, non-appealable
judgment or award shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction, or a settlement shall have
been completed, or the parties shall have arrived at a mutually binding
agreement, with respect to each separate third party claim indemnified by the
party obligated to indemnify, the party seeking indemnification shall forward
to the party obligated to indemnify notice of any sums due and owing (and the
times when due) by the party seeking indemnification with respect to such
claim and the party obligated to indemnify shall pay such sums to the party
seeking indemnification in cash, within 30 days after the date of such notice
or, if any such sums are due more than 90 days after the date of such notice,
ten days prior to the date each such sums are due.
(2) In no event will the party seeking indemnification
consent to the entry of any judgment or enter into any settlement with
respect to any third party claim without the prior written consent of the
party obligated to indemnify, which consent shall not be unreasonably
withheld or delayed.
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12.5 GOOD FAITH EFFORTS TO SETTLE DISPUTES. Each of the parties agrees
that, prior to commencing any litigation against the other concerning any matter
with respect to which such party intends to claim a right of indemnification in
such proceeding, such parties shall meet in a timely manner and attempt in good
faith to negotiate a settlement of such dispute during which time such parties
shall disclose to the others all relevant information relating to such dispute.
12.6 FEES AND EXPENSES. Notwithstanding any other provision in this
Article 12, in the event of any dispute or controversy between any of the
parties to this Agreement, the prevailing party in such dispute shall, in
addition to any other remedies the prevailing party may obtain in such dispute,
be entitled to recover from the other party all of its reasonable legal fees and
out-of-pocket costs incurred by such party in enforcing or defending its rights
hereunder.
12.7 LITIGATION SUPPORT. If, and for so long as, any party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (1)
any transaction contemplated hereunder, or (2) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing
Date involving the Business, the other party will cooperate with the
contesting or defending party and its counsel in the contest or defense, make
available its personnel and provide such testimony and access to its books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending party, unless
the contesting or defending party is entitled to indemnification therefor
under this Article 12.
12.8 ADJUSTMENTS. The parties shall make appropriate adjustments for
tax benefits and insurance coverage, to the extent actually received, in
determining the extent to which a party is obligated to indemnify under this
Article 12.
12.9 EXCLUSIVE REMEDY. Except with respect to Environmental Claims, the
parties acknowledge and agree that the foregoing indemnification provisions in
this Article 12 shall be the exclusive remedy of the parties with respect to
each other and the Transaction.
ARTICLE 13
TERMINATION OF AGREEMENT
13.1 TERMINATION. This Agreement may be terminated prior to or on the
Closing Date as follows:
(a) At the election of RII Sub or the Parent at any time prior
to Closing if:
(1) if any one or more of the material conditions precedent to
the
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obligation of Recycling to close has not been fulfilled as of the Closing
Date or such earlier date as provided in the applicable provision; or, if the
Company or the Members has breached any material representation or warranty, or
failed to perform any material covenant or agreement contained in this
Agreement, provided, however, the defaulting party shall have at least 15 days'
notice to cure any such breach, except that in no event shall Closing Date be
extended by virtue thereof.
(b) At the election of the Company or the Members at any time
prior to Closing if:
(1) any one or more of the material conditions precedent to the
obligation of the Company and the Members to close has not been fulfilled as of
the Closing Date; or
(2) RII Sub or the Parent has breached any material
representation or warranty, or failed to perform any material covenant or
agreement contained in this Agreement; provided, however, RII Sub and the Parent
shall have at least 15 days' notice to cure any such breach, except that in no
event shall Closing Date be extended by virtue thereof.
(c) At the election of any party to this Agreement, if any legal
proceeding is commenced or threatened by any governmental or regulatory body or
other Person directed against the completion of the Transaction and any of the
parties, as the case may be, reasonably and in good xxxxx xxxx it impractical or
inadvisable to proceed in view of such legal proceeding or threat thereof.
(d) At any time on or prior to the Closing Date, by mutual
written consent of the parties.
(e) At any time after May 31, 1998, time being of the essence,
unless extended pursuant to Section 3.5, by the election of the Company or
Recycling.
13.2 SURVIVAL. If this Agreement is terminated pursuant to Section
13.1, this Agreement shall become void and of no further force and effect, and
none of the parties hereto shall have any liability in respect of such
termination, except that (i) any party shall be liable to the extent that
failure to satisfy the conditions contained herein results from the intentional
or willful violation of the representations, warranties, covenants or agreement
of such party under this Agreement and (ii) the provisions of Section 14.1 and
Section 8.8 relating to Confidential Information shall survive the termination
of this Agreement for a period of one year.
ARTICLE 14
CERTAIN ADDITIONAL AGREEMENTS
14.1 PUBLIC STATEMENTS; CONFIDENTIALITY OF INFORMATION.
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(a) No party will make any public disclosure (including,
without limitation, disclosure to the Company's employees or customers) of
this Agreement, the Acquisition, the Purchase Price or the other terms and
conditions of the Transaction without the prior written consent of the other
parties hereto, which consent shall not be unreasonably withheld, provided
that the foregoing shall not preclude any party from making any disclosure
which, in the opinion of its or his counsel, is required to be made under
applicable federal and state securities laws. In no event shall any
disclosure be made without giving the other party an opportunity to comment
on the proposed disclosure. Notwithstanding the above, Recycling may issue a
press release announcing the transactions contemplated hereby at any time
prior to or after the execution hereof without such action constituting a
breach of this agreement.
(b) Subject to the Parent's obligation as a public company to
issue appropriate public announcements of material events, and subject to
this Section 14.1 hereof, each party will maintain the confidentiality of all
non-public information obtained from any other party.
(c) Notwithstanding anything in this Agreement to the contrary,
the Environmental Studies and Remediation Estimate described in this
Agreement under Section 8.1 above, shall remain confidential and Recycling
shall not make any disclosures of these studies or estimates to any Person
(other than its legal counsel, independent accountants and lenders) without
the prior written approval of the Company.
14.2 REASSIGNMENT OF THE COMPANY RECEIVABLES. On the 95th day after
the Closing Date, RII Sub shall have the right to reassign to the Company any
or all of the Company Receivables which have not been collected within 90
days of the Closing as provided in Section 2.5. Such reassignment shall only
occur upon delivery of documentation reasonably acceptable to the Company
which transfers all right, title and interest in the Company Receivables to
the Company. RII Sub agrees not to compromise any Company Receivable and to
use commercially reasonable efforts to collect the Company Receivables during
the 90 day period, but shall not be required to engage a collection agent or
commence arbitration or litigation to collect. Within 15 days after
reassignment of any of the Company Receivables under this provision, the
Company shall reimburse RII Sub dollar-for-dollar for the Company Receivables
so reassigned with such payment being made in immediately available funds.
14.3 EXPENSES; SALES TAX. Each party shall pay its own costs and
expenses, including the fees and disbursements of its respective counsel, in
connection with the negotiation, preparation and execution of this Agreement
and completion of the Transaction whether or not the Transaction is
completed. the Company shall pay all sales or use taxes, payable under the
laws of the State of Wisconsin.
14.4 WAIVERS AND CONSENTS. All waivers and consents given hereunder
shall be in writing. No waiver by any party hereto of any breach or
anticipated breach of any provision hereof by any other party shall be deemed
a waiver of any other contemporaneous, preceding or succeeding breach or
anticipated breach, whether or not similar, on the part of the same or any
other party.
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14.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given only if and when: (1)
personally delivered; or (2) three business days after mailing, postage
prepaid, by certified mail; or (3) when delivered (and receipted for) by an
overnight delivery service; or (4) when delivered by facsimile transmission
for which automatic confirmation has been received, addressed in each case as
follows:
IF TO RII SUB OR THE PARENT:
Xxxxxx X. Xxxxx, Chairman and CEO
Recycling Industries, Inc.
Recycling Industries of Wisconsin, Inc.
0000 X. Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
telephone: 000-000-0000
facsimile: 000-000-0000
WITH A COPY TO:
Xxxxxxx X. Xxxxxxxx.
Reinhart, Boerner, Van Deuren, Xxxxxx & Rieselbach, P.C.
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
telephone: 000-000-0000
facsimile: 000-000-0000
IF TO THE COMPANY OR THE MEMBERS:
Xxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx
Pro Recycling, L.L.C.
000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
telephone: 000-000-0000
facsimile: 000-000-0000
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WITH A COPY TO:
Xxxxxxxx Xxxxx, Esq.
Chernov, Xxxxx & Xxxxxxx, S.C.
Xxx Xxxxx Xxxx, Xxxxx 0000
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
telephone: 000-000-0000
facsimile: 000-000-0000
Any party may change its address by giving notice to every other party.
14.6 THE COMPANY 401(K) PLAN. RII Sub or Parent hereby agrees and
covenants as follows.
(a) 401(K) PLAN. Subject to the indemnification provided in
Section 12.2, RII Sub or Parent shall assume sponsorship of the Company's
401(k) Plan on the Closing Date and shall continue sponsorship of such plan,
and to maintain the tax qualification of such plan, through the earlier of
December 31, 1998 or the date on which RII Sub or Parent has in place a
401(k) plan in which the former the Company employees hired by RII Sub
following the Closing are eligible to participate. Neither RII Sub nor the
Parent shall assume or otherwise be responsible for liabilities resulting
from any actions, mistakes or claims of any nature related to the Company's
or its agent's establishment or maintenance of the Company 401(k) Plan prior
to the Closing Date. The Company will reimburse RII Sub or Parent the full
amount of any "top-heavy minimum contribution" (as defined in IRC Section
416) that RII Sub or Parent is required to make to the Company's 401(k) Plan
for the 1998 Plan year, with reimbursement being made within ten business
days after RII Sub or Parent provides the Company with documentation of the
amount it was required to pay as a "top-heavy minimum contribution," if any.
14.7 COVENANT TO PAY ALL UNASSUMED DEBTS. To the extent the Company
owes debts to any third parties after the Closing other than the Assumed
Liabilities, which could affect the Company Assets, the Company and the
Members hereby covenant to pay any such Liabilities and debts immediately
after Closing; provided, however, that with respect to trade payables
incurred in the Ordinary Course of Business, the Company may pay such
Liabilities as they become due.
14.8 FURTHER ASSURANCES. From and after the date of this Agreement,
each of the parties hereto will cooperate with each other and will use their
best efforts without undue cost to obtain all necessary waivers and consents
from third parties, transfer permits and licenses, make any filings,
including without limitation any environmental filings required by the
Department of Natural Resources or similar agency, and to implement the
transactions contemplated under this Agreement and the other Transaction
Documents. The Company and the Members, at any time and from time to time on
and after the Closing, upon request by RII Sub or the Parent and without
further consideration, shall take or cause to be taken such actions and
execute, acknowledge and deliver, or cause to be executed,
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acknowledged and delivered, such transfers, conveyances and assurances as may
be reasonably requested by RII Sub or the Parent for the better conveying,
transferring, assigning, delivering, assuring and confirming the Company
Assets to RII Sub.
14.9 RETENTION OF/ACCESS TO BUSINESS RECORDS. For at least six years
following the Closing Date, Recycling shall retain all business records,
including tax records, related to the Company Assets or the Business which
are delivered to RII Sub. During this period, from time to time on and after
the Closing, upon reasonable prior written request by the Company or the
Members and without further consideration, Recycling shall provide the
Company or the Members access to or copies of said business records.
Likewise, for at least six years following the Closing Date, the Sellers and
the Members shall retain all business records related to the Company Assets
or the Business retained by them, and, during this period, from time to time
on and after the Closing, upon reasonable prior written request by Recycling
and without further consideration, such party shall provide Recycling access
to or copies of said business records.
14.10 AUDIT BY RII SUB AND PARENT. For a period of five years after
the Closing, the Company and the Members shall give Parent and RII Sub's
independent certified public accountants full access to the financial books
and records and shall fully cooperate with such accountants in conducting and
completing any audits necessary to enable the Parent to meet the disclosure
and financial reporting requirements of the 1934 Act and the rules and
regulations promulgated thereunder.
14.11 ENTIRE AGREEMENT. This Agreement, including all Schedules and
Exhibits hereto, and the other Transaction Documents constitute the entire
agreement of the parties with respect to the subject matter hereof and may
not be modified, amended or terminated except by a written instrument
specifically referring to this Agreement signed by each of the parties hereto
or as otherwise provided in this Agreement. Any and all previous agreements,
representations and understandings between or among the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement. Each of the Schedules and Exhibits to this Agreement are
incorporated herein by this reference and expressly made a part hereof.
14.12 CONSTRUCTION. In the event of an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
The word "including" means including without limitation. Where appropriate
to avoid any ambiguity and to encompass the broadest meaning, the word "and"
shall mean "and/or," and the word "or" shall mean "and/or." The parties
intend that the each representation, warranty and covenant contained herein
shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating
to the same subject matter, regardless of the relative levels of specificity,
which the party has not breached shall not detract from or mitigate the fact
that the party is in breach of the first representation, warranty or covenant.
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14.13 RIGHTS OF THIRD PARTIES. All conditions of the obligations of
the parties hereto, and all undertakings herein, except as otherwise provided
by a written consent, are solely and exclusively for the benefit of the
parties hereto and their successors and assigns, and no other Person or
entity shall have standing to require satisfaction of such conditions or to
enforce such undertakings in accordance with their terms or be entitled to
assume that any party hereto will refuse to complete the Transaction
contemplated hereby in the absence of strict compliance with any or all
thereof, and no other Person or entity shall, under any circumstances, be
deemed a beneficiary of such conditions or undertakings, any or all of which
may be freely waived in whole or in part, by mutual consent of the parties
hereto at any time, if in their sole discretion they deem it desirable to do
so.
14.14 HEADINGS. The Table of Contents and Article and Section headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
14.15 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of Wisconsin, without regard to principles of conflicts or
choice of law, except that Colorado law shall govern the terms of the Stock
Consideration.
14.16 SUBMISSION TO JURISDICTION; WAIVERS. The parties each hereby
irrevocably and unconditionally: (1) agree that any action or proceeding
related to this Agreement shall be brought in, and hereby submits itself and
its property to the jurisdiction of, the courts of the State of Wisconsin
located in Milwaukee, Wisconsin, the courts of the United States of America
for the Eastern District of Wisconsin, and the appellate courts from any
thereof; (2) consent to the venue of any such action or proceeding in any of
said courts and waive any objection that it may have, now or hereafter, that
such action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same; and (3) agree that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage
prepaid, to the party against whom the action or proceeding is brought at its
address set forth in Section 14.5.
14.17 PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto without the prior
consent of the other parties, except that Recycling may assign its rights
hereunder to the Lender without notice to the Company or the Members. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
14.18 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in two or more counterparts, all of which taken together shall
constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a Party shall
constitute a valid and binding execution and delivery of this Agreement by
such Party. Such facsimile copies shall constitute enforceable original
documents.
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14.19 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
14.20 CORPORATE AUTHORITY. The undersigned have executed this
Agreement with all requisite corporate authority.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
"RII SUB"
RECYCLING INDUSTRIES OF WISCONSIN, INC.
Dated: May 21, 1998
By /s/ Xxxxxxx X. McClosney
-------------------------------------------
Xxxxxxx X. McClosney, Vice President
"PARENT"
RECYCLING INDUSTRIES, INC.
Dated: May 21, 1998 By /s/ Xxxxxxx X. McClosney
-------------------------------------------
Xxxxxxx X. McClosney, Senior Vice
President of Acquisitions
"THE COMPANY"
PRO RECYCLING, L.L.C.
Dated: May 22, 1998 By /s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxx, President
XXXXXXXX IRON & METAL, INC.
Dated: May 22, 1998 By /s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxx, President
RECYCLING WORLD, LTD.
Dated: May 22, 1998 By /s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxx, President
Dated: May 22, 1998 /s/ Xxxxxx Xxxxxxxx
----------------------------------------------
Xxxxxx Xxxxxxxx
Dated: May 22, 1998 /s/ Xxxxxx Xxxxxxxx
----------------------------------------------
Xxxxxx Xxxxxxxx
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