EXHIBIT 2.1
AGREEMENT FOR SALE AND PURCHASE
OF BUSINESS ASSETS
EFFECTIVE DATE: April 1, 1998
PARTIES: Iowa Mat Company,
an Iowa corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 ("Seller")
R-B Rubber Products, Inc.,
an Oregon corporation
000 X. 00xx Xxxxxx
XxXxxxxxxxx, XX 00000 ("Buyer")
RECITALS:
A. Seller is engaged in the business of manufacturing and selling rubber
brick pavers, playground tiles, weight plates, and brick mats ("Business").
B. Seller owns and maintains certain furniture, fixtures, equipment,
supplies, and other assets used in connection with the operation of the
Business.
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, certain of the assets used, useful, or intended to be used in the
operation of the Business, under the terms and conditions set forth herein.
AGREEMENT:
ARTICLE I
SALE OF BUSINESS
1.1 ASSETS SOLD. Seller agrees to sell to Buyer and Buyer agrees
to purchase from Seller, free from all liabilities, claims, and encumbrances,
the following assets owned by Seller and used in connection with the operation
of the Business ("Assets"):
(a) All machinery, equipment, tools, supplies, furniture,
fixtures, and other personal property of Seller used or
useful in the process of manufacturing rubber brick
pavers, playground tiles, and weight plates ("Products"),
including but not limited to the property identified in
Exhibit 1.1(a);
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(b) All patents, know-how, trademarks, and other intellectual
property relating to the Products and Seller's rubber brick
mat product ("Brick Mats") and the processes used or useful
in the manufacture thereof; and
(c) All goodwill (except for Seller's name), manuals, catalogs,
sales literature, files, records, customer lists, and other
intangible personal property of Seller used or useful in
connection with the operation of the Business.
1.2 ASSETS EXCLUDED. Excluded from this sale and purchase are the
following assets of Seller:
(a) Cash on hand;
(b) Business checking, savings, and trust accounts;
(c) Accounts receivable;
(d) Inventories of raw materials and finished goods;
(e) Machinery, equipment, and tools used directly in the
manufacture of Brick Mats;
(f) Advances to employees and prepaid expenses; and
(g) All other tangible assets not specifically identified in
Section 1.1.
1.3 LIABILITIES ASSUMED. Buyer shall assume no obligations or
liabilities of Seller. All such obligations and liabilities shall remain with
and be satisfied by Seller.
1.4 PURCHASE PRICE. The purchase price of the Assets ("Purchase
Price") shall be the sum of $600,000 ("Cash Portion") and unregistered common
stock ("Stock") of Seller worth up to $400,000 ("Stock Portion").
1.5 ALLOCATION OF PURCHASE PRICE. At or prior to the closing,
Seller and Buyer shall cooperate with one another in the preparation of an IRS
Form 8594 or a comparable document reflecting their allocation of the Purchase
Price among the Assets.
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ARTICLE II
PAYMENT OF PURCHASE PRICE
2.1 PAYMENT OF CASH PORTION. The Cash Portion shall be paid as
follows:
(a) The sum of $100,000 shall be paid in cash on the closing date.
(b) Buyer intends to secure financing in order to obtain the
funds required to pay the remainder of the Cash Portion.
Buyer contemplates that such financing shall take the form of
either (i) a loan from a bank or financial institution or
(ii) a sale-leaseback transaction with a bank or other
financial institution. The balance of the Cash Portion shall
be paid in cash within five days after Buyer's receipt of the
proceeds from such financing transaction, but in no event
later than 5 days after the closing.
2.2 PAYMENT OF STOCK PORTION. The Stock Portion shall be paid as
follows:
(a) 66,667 shares of Stock shall be issued to Seller on the
closing date.
(b) In the event that Buyer's revenue from its sale of Products
and New Products (as defined in Section 2.3) equals or
exceeds $5,000,000 during any four consecutive fiscal
quarters of Buyer ending with or before the end of the 42nd
month following the month in which the closing date occurs,
the number of shares of Stock that, when multiplied by the
average quoted closing price of Stock on the final five
trading days of such four fiscal quarter period equals
$100,000, shall be issued to Seller.
(c) In the event that Buyer's revenue from its sale of Products
and New Products (as defined in Section 2.3) equals or
exceeds $7,500,000 during any four consecutive fiscal
quarters of Buyer ending with or before the end of the 42nd
month following the month in which the closing date occurs,
the number of shares of Stock that, when multiplied by the
average quoted closing price of Stock on the final five
trading days of such four fiscal quarter period equals
$100,000, shall be issued to Seller.
2.3 NEW PRODUCTS. For purposes of this Agreement, the term "New
Products" shall mean all compression molded products developed by Xxxxxxx Xxxxx
("Leech") pursuant to the Research and Development Agreement referred to in
Section 5.1(e) and manufactured by Buyer primarily from recycled rubber.
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ARTICLE III
SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
3.1 REPRESENTATIONS AND WARRANTIES. Seller makes the following
representations and warranties:
(a) Seller is now and on the closing date will be a corporation
duly organized and validly existing under the laws of the
State of Iowa. Seller has all requisite corporate power and
authority to own and operate the Assets and to carry on the
Business as now being conducted.
(b) The execution, delivery, and performance of this Agreement
have been duly authorized and approved by the Board of
Directors and shareholders of Seller, and this Agreement
constitutes a valid and binding agreement of Seller in
accordance with its terms.
(c) Seller holds good and marketable title to the Assets, free
and clear of restrictions on or conditions to transfer or
assignment and free and clear of liens, pledges, charges, or
encumbrances.
(d) Seller is not aware of any labor dispute or labor trouble
involving employees of Seller and represents that there has
not been any such dispute or trouble during the three years
preceding the effective date of this Agreement.
(e) Seller has no knowledge of any claim, litigation, proceeding,
investigation, or governmental action pending or threatened
against Seller which might result in any material change in
the Business or the condition of the Assets.
(f) On the closing date, there will be no material leases,
employment contracts, contracts for services or maintenance,
or other similar contracts relating to or connected with the
Assets.
(g) Seller acknowledges and understands that the Stock which will
be issued to Seller pursuant to Section 2.2 represents a
minority interest in Buyer and that Seller will not be in a
position to exercise voting control over the business and
affairs of Buyer.
(h) The Products, and the processes used in the manufacture
thereof, do not violate or infringe upon any person's patent,
trademark, copyright, or other claim to or right in
intellectual property.
(i) Seller knows of no fact which has resulted or which, in the
reasonable judgment of Seller, will result in a material
change in the Assets or in the
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marketability of the Products other than material changes
resulting from this Agreement and the consummation of the
transaction contemplated thereby.
(j) The execution and delivery of this Agreement by Seller and
the consummation of the transaction contemplated hereunder
will not result in the creation or imposition of any valid
lien, charge, or encumbrance on any of the Assets except as
contemplated by this Agreement and will not require the
authorization, consent, or approval of any third party.
(k) Seller has not employed any broker or finder in connection
with the transaction contemplated by this Agreement or taken
any action that would give rise to a valid claim against any
party for a brokerage commission, finder's fee, or other
similar payment.
(l) None of the representations or warranties of Seller contain
any untrue statement of a material fact or omit or misstate a
material fact necessary in order to make the statements
contained therein not misleading.
(m) All representations and warranties made by Seller shall
survive the closing date.
3.2 GENERAL COVENANTS OF SELLER. Between the effective date of
this Agreement and the closing date, Seller will:
(a) Operate the Business in the usual and ordinary course and in
substantial conformity with the Interim Agreement between the
parties dated March 5, 1998 ("Interim Agreement") and all
applicable laws, ordinances, regulations, rules, and orders
and use its best efforts to preserve the Business and the
continued operation thereof with Seller's customers,
suppliers, and others having relations with Seller;
(b) Not assign, sell, lease, or otherwise transfer or dispose of
any of the Assets, whether now owned or hereafter acquired,
except in the normal and ordinary course of business and in
connection with the normal operation of the Business;
(c) Maintain the Assets in their present condition, reasonable
wear and tear and ordinary usage excepted;
(d) Not distribute cash or other property to its shareholders;
(e) Not pay a bonus to or increase the compensation of any
employee;
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(f) Provide Buyer and its representatives with reasonable access during
business hours to the Assets and the records of the Business and
furnish such additional information concerning the Business as Buyer
from time to time may reasonably request;
(g) Comply with all applicable requirements of the Worker Adjustment
Retraining Notification Act, 29 USC Section 2101, et seq; and
(h) Exercise its best efforts to effect to consummate the transaction
contemplated by this Agreement and satisfy all of Seller's obligations
under this Agreement.
3.3 COVENANT TO COOPERATE. The parties intend to cooperate with one
another with respect to the collection of Seller's accounts receivable in order
to avoid duplication of effort and preserve valuable customer relationships.
Towards that end, Seller will comply with all reasonable requests made by Buyer
as to all aspects of the collection of such accounts receivable.
3.4 COVENANT NOT TO COMPETE. For a period of three years following the
closing date, Seller will not, within the continent of North America, directly
or indirectly (i) own, as a partner, stockholder, or otherwise, an interest in
or (ii) participate in the management, operation, or control of or (iii) perform
services or act in the capacity of an independent contractor, consultant, or
agent of any enterprise directly or indirectly engaged in the manufacture or
sale of any product manufactured or sold by Buyer, including but not limited to
Products and New Products, or other goods or products competitive with any such
product. Further, for a period of three years following the expiration of the
License (as defined in Section 6.1), Seller will not, within the continent of
North America, directly or indirectly (i) own, as a partner, stockholder, or
otherwise, an interest in or (ii) participate in the management, operation, or
control of or (iii) perform services or act in the capacity of an independent
contractor, consultant, or agent of any enterprise directly or indirectly
engaged in the manufacture or sale of Brick Mats, or other goods or products
competitive with Brick Mats. Finally, Seller will not, for a period of three
years following the closing date, directly or indirectly suggest, request, or
encourage any prior suppliers or customers of Seller to curtail, reduce, or
cancel their business done with Buyer. Seller agrees that it would be impossible
to measure the damage to Buyer resulting from a breach of any covenant set forth
in this Section 3.4 by Seller and that monetary damages would be an inadequate
remedy for any such breach. Accordingly, Seller agrees that, if Seller breaches
such a covenant, Buyer shall be entitled, in addition to all other remedies it
may have at law or in equity, to an injunction or other appropriate order
restraining any such breach, without showing or proving any actual damage
sustained by Buyer. In the event that a covenant set forth in this Section 3.4
is determined by any court of competent jurisdiction to be unenforceable by
reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to which it
may be enforceable and/or to the maximum extent in all other respects as to
which it may be enforceable, all as determined by such court in such action.
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3.5 COVENANT TO EXTEND INTERIM AGREEMENT. At Buyer's request, Seller will
extend the term of the Interim Agreement for a period of no more than 180 days
following the closing date.
3.6 TAX MATTERS COVENANT. Seller will maintain income tax reporting
positions consistent with the IRS Form 8594 or other document described in
Section 1.5.
ARTICLE IV
BUYER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
4.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents
and warrants as follows:
(a) Buyer is a corporation duly organized and validly existing under the
laws of the State of Oregon. Buyer has all requisite corporate power
and authority to enter into this Agreement and perform its
obligations hereunder.
(b) The execution, delivery, and performance of this Agreement have been
duly authorized and approved by the Board of Directors of Buyer and
this Agreement constitutes a valid and binding agreement of Buyer in
accordance with its terms.
(c) Upon the issuance to Seller of the Stock described in Section 2.2,
Seller shall receive from Buyer good title thereto, free and clear
of all liens, charges, demands, or adverse claims, or other
restrictions upon the exercise of any of the attributes of
ownership, and Seller shall have full voting power with respect to
such Stock.
(d) The financial statements of Buyer attached to its quarterly report
on SEC Form 10-QSB for the period ended September 30, 1997
("Financial Statements") (i) are true and correct, (ii) have been
prepared in conformity with generally accepted accounting principals
(except as noted otherwise therein), subject to normal recurring
year-end adjustments (the effect of which will not, individually or
in the aggregate, be material) and the absence of notes, and (iii)
present fairly in all material respects the financial condition of
Buyer and the results of operations and changes in cashflow of Buyer
for the periods to which the Financial Statements relate.
(e) Buyer does not have any liabilities or obligations of any nature
with respect to its business that would be required by generally
accepted accounting principals to be reflected in the Financial
Statements (subject to normal year-end audit adjustments) except (i)
such liabilities and obligations that are reflected in the Financial
Statements, (ii) such liabilities or obligations that were incurred
in the ordinary course of business for normal trade or business
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obligations, and (iii) such liabilities or obligations that are not
individually or in the aggregate material to the business and
operations of Buyer.
(f) Buyer has, to the best of its knowledge, complied in all respects
with all laws of applicable governmental authorities, except as
individually or in the aggregate would not have a material adverse
effect.
(g) Since September 30, 1997, Buyer has operated its business in the
ordinary course, consistent with past practices, and there has not
been, except as disclosed in this Agreement, (i) any material
adverse effect with respect to Buyer or its business, (ii) any
material changes in the accounting methods or practices followed by
Buyer, (iii) any agreements or commitments to merge or consolidate
with any other corporation, association, firm, or other business
organization or division thereof, (iv) any other material
transaction other than in the ordinary course of the business of
Buyer and consistent with past practice, or (v) any agreements or
understandings, whether in writing or otherwise, for Buyer to take
any of the actions described in subparagraphs (i) through (iv).
(h) Buyer has not employed any broker or finder in connection with the
transactions contemplated by this Agreement or taken any action that
would give rise to a valid claim against any party for a brokerage
commission, finder's fee, or other similar payment.
(i) None of the representations or warranties of Buyer contain any
untrue statement of a material fact or omit or misstate a material
fact necessary in order to make the statements contained therein not
misleading.
(j) All representations and warranties made by Buyer shall survive the
closing date.
4.2 GENERAL COVENANT OF BUYER. Between the effective date of this
Agreement and the closing date, Buyer will use its best efforts to consummate
the transaction contemplated by this Agreement and satisfy all of Buyer's
obligations under this Agreement.
4.3 TAX MATTERS COVENANT. Buyer will maintain income tax reporting
positions consistent with the IRS Form 8594 or other document described in
Section 1.5.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES
5.1 BUYER'S CONDITIONS PRECEDENT. The obligation of Buyer to consummate
the transaction contemplated by this Agreement is subject to the fulfillment,
before or on the
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closing date, of each of the following conditions, any one or a portion of
which may be waived in writing by Buyer:
(a) All representations and warranties made in this Agreement by Seller
shall be true as of the closing date as fully as though such
representations and warranties had been made on and as of the
closing date, and Seller shall not have violated or failed to
perform in accordance with any covenant set forth in Section 3.2.
(b) Buyer shall have entered into contracts for the sale of Products
with Xxxxxx Equipment and Landscape Structures and any other
customer of Seller with respect to which Buyer desires to do
business, which contracts shall, in the sole discretion of Buyer and
its legal counsel, be acceptable in form and substance.
(c) Seller shall have provided to Buyer documents which shall, in the
sole discretion of Buyer and its legal counsel, be acceptable in
form and substance and which evidence the release of all liens
against the Assets possessed by Seller's bank.
(d) Seller shall have provided to Buyer documents and/or information
satisfactory to Buyer and its legal counsel, in their sole
discretion, evidencing that the Assets, and the use thereof by Buyer
in the manufacture and sale of Products, will not infringe upon the
patent, trademark, copyright, or other intellectual property claim
or right of any person.
(e) Buyer and Leech shall have entered into a Research and Development
Agreement ("R&D Agreement") identical in form to that attached as
Exhibit 5.1(e).
(f) The parties shall have prepared the IRS Form 8594 or other document
described in Section 1.5.
5.2 SELLER'S CONDITIONS PRECEDENT. The obligation of Seller to consummate
the transaction contemplated by this Agreement is subject to the fulfillment,
before or on the closing date, of each of the following conditions, any one or a
portion of which may be waived in writing by Seller:
(a) All representations and warranties made in this Agreement by Buyer
shall be true as of the closing date as fully as though such
representations and warranties had been made on and as of the
closing date, and Buyer shall not have violated or failed to perform
in accordance with the covenant set forth in Section 4.2.
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(b) Buyer and Xxxxxxx Xxxxx shall have entered into the R&D Agreement.
ARTICLE VI
BRICK MATS
6.1 LICENSE. Effective as of the date of the consummation of the
transaction contemplated by this Agreement and for a period of three years
following such date, Buyer grants to Seller a non-exclusive license ("License")
to use all patents, know-how, trademarks, manufacturing processes, and other
intellectual property relating to the manufacture of Brick Mats ("Licensed
Property").
6.2 USE OF LICENSED PROPERTY. During the term of the License,
Seller may use the Licensed Property solely for the purpose of manufacturing and
selling Brick Mats. Notwithstanding anything to the contrary set forth in this
Agreement, however, Seller shall not, during any period of twelve consecutive
months, manufacture or sell Brick Mats in a quantity greater than the number of
Brick Mats which, when multiplied by Seller's regular selling price of Brick
Mats, equals $1,000,000.
6.3 PURCHASE OF BRICK MATS ASSETS. Upon the expiration of the
License, the Buyer shall purchase from Seller and Seller shall sell to Buyer the
tangible assets described in Exhibit 6.3 attached hereto ("Brick Mats Assets").
Between the date of this Agreement and the expiration of the License, Seller
shall not sell, assign or transfer any of the Brick Mat Assets to any third
party, except in the ordinary course of business. If the parties, within ten
days after the expiration of the License, are unable to agree upon the amount
and manner of payment of the purchase price of the Brick Mats Assets, the fair
market value thereof shall be determined by a qualified appraiser mutually
selected by the parties, and such determined value shall be the purchase price
of the Brick Mats Assets. Such appraiser's fee for determining the fair market
value of the Brick Mats Assets shall be paid in equal portions by the parties.
The purchase price of the Brick Mats Assets shall, at the sole option of Buyer,
be:
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(a) Paid in cash in immediately available funds, by certified or bank
cashier's check or electronic wire transfer to an account designated
by Seller, at the closing of the transaction; or
(b) Paid, together with interest at 8% per annum, in three equal
installments, commencing at the closing of the transaction and
continuing thereafter on the following two anniversaries thereof.
ARTICLE VII
INDEMNIFICATION AND SURVIVAL
7.1 INDEMNIFICATION BY SELLER. Seller hereby agrees to indemnify
and hold Buyer and its successors and assigns harmless from and against any and
all claims, liabilities, and obligations of every kind and description,
contingent or otherwise, arising out of or related to the operation of the
Business prior to the consummation of the transaction described in this
Agreement and any and all damage or deficiency resulting from any
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of Seller under this Agreement. Seller further agrees to
permit Buyer to offset any amount owed by Seller to Buyer pursuant to this
Section 7.1 against the amount of any obligation owed by Buyer to Seller under
Section 2.1(b), Section 2.2(b), or Section 2.2(c).
7.2 PERSONAL GUARANTEE OF LEECH. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Leech absolutely and unconditionally guarantees to Buyer and its successors and
assigns the performance by Seller of Seller's indemnification described in
Section 7.1.
7.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
Seller harmless from and against any and all claims, liabilities, and
obligations of every kind and description arising out of or related to the
operation of the Assets following the consummation of the transaction described
in this Agreement and any and all damage or deficiency resulting from any
misrepresentation, breach of warranty or covenant, or nonfulfillment of any
agreement on the part of Buyer under this Agreement.
ARTICLE VIII
CLOSING
8.1 CLOSING DATE. The transaction described in this Agreement
shall be closed at the offices of Xxxxx Xxxxxx Xxxxxxxx, 0000 XX Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000 at 10:00 a.m., on April 1, 1998, or at such
other time as the parties may agree in writing.
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8.2 OBLIGATIONS OF SELLER AT CLOSING. At the closing, and
coincidentally with the performance by Buyer of its obligations described in
Section 8.3, Seller shall execute and deliver to Buyer the following:
(a) An Assignment and Xxxx of Sale substantially identical to
the form attached as Exhibit 8.2(a); and
(b) Such other certificates and documents as may be required by
the provisions of this Agreement.
8.3 OBLIGATIONS OF BUYER AT CLOSING. At the closing, and
coincidentally with the performance by Seller of its obligations described in
Section 8.2, Buyer shall deliver or, as appropriate, execute and deliver to
Seller the following:
(a) Payment of the portion of the Cash Portion described in
Section 2.1(a) in immediately available funds by certified or
bank cashier's check or electronic wire transfer to an
account designated by Seller;
(b) One or more certificates evidencing Seller's ownership of the
shares of Stock described in Section 2.2(a); and
(c) Such other certificates and documents as may be required by
the provisions of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 RISK OF LOSS. The risk of loss, damage, or destruction to any
of the Assets shall borne by Seller to the time of the consummation of the
transaction contemplated by this Agreement, and thereafter by Buyer.
9.2 NOTICES. Any notice required by this Agreement shall be sent
by certified mail, return receipt requested, to the parties at the addresses
listed on Page 1 of this Agreement. Unless written notice of a change of
address is received, notice shall be deemed to have been received five days
after mailing.
9.3 INCORPORATION OF COLLATERAL DOCUMENTS. All exhibits attached
to this Agreement or delivered pursuant to this Agreement shall be deemed a part
of this Agreement and incorporated herein, where applicable, as if fully set
forth herein.
9.4 SEVERABILITY. Any provision of this Agreement that is deemed
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, without rendering invalid or unenforceable the remaining
provisions of this Agreement.
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9.5 WAIVER. No provision of this Agreement shall be waived unless
the waiver is in writing and signed by the waiving party. The failure by any
party to insist upon the strict performance of any provision of this Agreement
or to exercise any right or remedy consequent upon a breach thereof shall not
constitute a waiver of any such breach, of such provision, or of any other
provision. No waiver of any provision of this Agreement shall be deemed a
waiver of any other provision of the Agreement or a waiver of such provision
with respect to any subsequent breach, unless expressly provided in writing.
9.6 ATTORNEY'S FEES. In the event of any dispute or litigation
between the parties to declare or enforce any provision of this Agreement, the
prevailing party shall be entitled to recover from the losing party, in addition
to any other recovery and costs, reasonable attorney's fees incurred with
respect to such dispute or in such litigation, in both the trial and in all
appellate courts and in any bankruptcy proceeding.
9.7 MERGER. This Agreement embodies the entire agreement of the
parties hereto. There are no promises, terms, conditions, or obligations other
than those contained herein. This Agreement supersedes all prior
communications, representations, and agreements, verbal or written, between the
parties hereto and shall not be amended except in writing subscribed to by the
parties hereto.
9.8 ASSIGNMENT. This Agreement may not be assigned or transferred
by any party without the prior written consent of the other party.
9.9 SUCCESSORS. This Agreement shall inure to the benefit of the
successors and assigns of the respective parties hereto.
9.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.11 GOVERNING LAW AND VENUE. This Agreement shall be governed by
and construed according to Oregon law, without regard to conflict of law
principles thereunder. The parties agree that all disputes relating to this
Agreement shall be tried before the courts of Oregon, with venue in Yamhill
County, Oregon, to the exclusion of all other courts that might have
jurisdiction except for this provision.
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Dated and agreed to as of the date first set forth above.
SELLER: BUYER:
Iowa Mat Company R-B Rubber Products, Inc.
By: By:
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Its: Its:
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AGREED UPON AS TO SECTION 7.2:
--------------------------------
Xxxxxxx Xxxxx
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