ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated as of the 4th day of
December, 1997, is made and entered into among RECYCLING INDUSTRIES, INC. (the
"Parent"), a Colorado corporation, RECYCLING INDUSTRIES OF ATLANTA, INC.
("RIA"), a Colorado corporation, with each such corporation having a business
address at 000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000
(collectively, the "Buyer") on the one hand, and CENTRAL METALS COMPANY, INC., a
Georgia corporation (the "Seller") having a business address at 000 Xxxxxxxx
Xxxxxx, XX, Xxxxxxx, Xxxxxxx 00000, on the other hand.
RECITALS
A. The Seller is engaged in the business (the "Business") of acquiring,
processing and selling recyclable metals and other recyclable materials in the
Atlanta, Georgia area.
B. Each of Parent and RIA is a Colorado corporation. Parent, through its
subsidiaries, engages in the recycling business in various locations throughout
the United States. RIA is a newly-formed and wholly-owned subsidiary of Parent
organized for the purpose of acquiring certain of the Seller's assets and
conducting the Business following the consummation of the transactions
contemplated by this Agreement.
C. The Board of Directors of each of Parent and RIA has approved the
purchase of assets from the Seller pursuant to this Agreement, and the Board of
Directors of Seller and each of Xxxx Xxxxx, Xxxx Xxxxx and Xxxxxx Xxxxx
(collectively, the "Shareholders" and individually a "Shareholder"),
representing all of the shareholders of the Seller, has approved Seller's sale
of certain of its assets to Buyer as contemplated by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the Parties hereto, intending to be legally bound,
hereby agree as follows:
Article I
Definitions
As used herein, the following terms will have the meanings ascribed thereto
in this Article I:
"ACCOUNTS RECEIVABLE" means all of Seller's accounts receivable immediately
prior to Closing representing Obligations due Seller from any sale in the
Ordinary Course of Business, including any amounts so due which may be evidenced
by a promissory note or other instrument.
"ACCOUNTS RECEIVABLE VALUE" has the meaning set forth in Section 3.1.1.
"ACQUIRED ASSETS" has the meaning set forth in Section 2.1.
"ADVERSE ITEMS" has the meaning set forth in Section 11.1.
"AFFILIATE", with respect to any Person, shall mean, (a) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person, and (b) any other Person beneficially owning or
holding 20% or more of any class of voting securities of such Person or any
corporation, partnership, limited liability company or other Person of which
such Person owns or holds, in the aggregate, 20% of more of any class of voting
securities.
"AGREEMENT" has the meaning set forth in the preamble above.
"ASTM" means the American Society for Testing and Materials.
"ASSUMED LIABILITIES" has the meaning set forth Section 2.2.3.
"ASSUMED CONTRACTS" has the meaning set forth in Section 2.1.3.
"AVERAGE PRICE" means the average closing price of Common Stock for the ten
trading days prior to the date on which the value of Common Stock is to be
determined for a purpose as provided hereunder.
"AVERAGE CAPITAL GAIN RATE" means that percentage determined by dividing
(a) the amount of federal Income Taxes paid by the Shareholders with respect to
Seller's sale of assets as contemplated by this Agreement, by (b) the total gain
recognized by the Shareholders pursuant to such asset sale consistent with the
allocation of the Purchase Price among the Acquired Assets in accordance with
the Purchase Price Allocation.
"AVON" shall mean the Real Property owned by Seller and located at 934 and
000 Xxxx Xxxxxx, and that certain .248 acre tract adjoining the west side of the
tract of land known as 000 Xxxx Xxxxxx, and which is all of the land owned by
Seller on Avon Avenue.
"BAD DEBT RESERVE" has the meaning set forth in Section 3.1.1.
"XXXX OF SALE AND ASSIGNMENT" has the meaning set forth in Section 4.3.6.
"BUSINESS" has the meaning set forth in Recital A.
"BUYER" has the meaning set forth in the preamble above, provided that
title to assets shall pass as between Parent and RIA as set forth in Section 2.1
below.
"BUYER DISCLOSURE SCHEDULE" means that "Disclosure Schedule" prepared by
Buyer as provided in Section 6.6.
"BUYER'S KNOWLEDGE" means to the actual knowledge of Xxxxxx X. Xxxxx,
Xxxxxxx XxXxxxxxx, Xxxxx Xxxxxxxxx or Xxxxxxx Xxxxxxxxx, each a senior executive
of, or consultant to, Recycling Industries, Inc.
"CASH CONSIDERATION" has the meaning set forth in Section 2.2.
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"CLOSING" or "CLOSING DATE" has the meaning set forth in Section 2.5.
"COBRA" has the meaning set forth in Section 8.6.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock of Buyer (of which there is a single
class authorized and outstanding), $.001 par value.
"CONFIDENTIAL INFORMATION" means any information pertaining to the
business, operations, marketing, customers, financing, forecasts and plans
concerning any of the Parties, including any Trade Secrets. Information shall
be treated as Confidential Information whether such information has been marked
"confidential" or in a similar manner.
"CONSIDERATION" means, in the aggregate, the Cash Consideration, the Share
Consideration and the Contingent Warrants as set forth in Section 2.1.
"CONTINGENT WARRANTS" has the meaning set forth in Section 2.2.2.
"CURRENT ASSET SCHEDULE" has the meaning set forth in Section 3.1.1.
"CURRENT ASSET VALUE" has the meaning set forth in Section 3.1.1.
"DEEDS" means Limited Warranty Deeds in a form approved by Buyer for
transfer of the Real Property from Seller to RIA.
"DIFFERENTIAL" has the meaning set forth in Section 3.1.2.
"EMPLOYMENT AGREEMENT" has the meaning set forth in Section 4.4.1.
"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.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section
3(1).
"ENCUMBRANCE" means any right, title or interest in property other than the
right, title and interest of the owner thereof who has possession and control
over the property. The term "Encumbrance" includes Liens, contracts of sale,
restrictions on use or transfer, consignments, powers of attorney or
appointment, adverse claims and claims of infringement and defects in title,
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and, with respect to the Real Property, such other matters as may be referenced
in Section 5.1.8(a) hereof.
"ENVIRONMENTAL LAW OR LAWS" means any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, or requirements of any governmental authority regulating, relating to
or imposing liability or standards of conduct concerning environmental
protection, as they may now exist, 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") and the Clean Water Act ("CWA"), all as they may have been
amended.
"ENVIRONMENTAL PROBLEM" has the meaning set forth in Section 10.6.3.
"ENVIRONMENTAL REPRESENTATIONS" means any and all representations and
warranties of the Seller relating to Seller's compliance with Environmental Laws
prior to the Closing.
"ENVIRONMENTAL STUDIES" has the meaning set forth in Section 8.9.1.
"EPA" means the United States Environmental Protection Agency.
"EQUIPMENT LEASE" has the meaning set forth in Section 4.6.
"EQUIPMENT LESSOR" shall mean Xxxxx/Xxxxx Equipment Leasing, LLC, a Georgia
limited liability company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" has the meaning set forth in Section 8.9.8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED CONTRACTS" has the meaning set forth in Section 2.1.3.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.3.2.
"EXCLUDED PERSONAL PROPERTY" has the meaning set forth in Section 2.1.2.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.3.1.
"EXCLUDED REAL PROPERTY" has the meaning set forth in Section 2.3.1.
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"EXCLUDED REAL PROPERTY HOLDERS" shall mean Marietta Real Estate
Properties, LLC, and Jefferson Real Estate Properties, LLC, each a Georgia
limited liability company.
"FMLA" has the meaning set forth in Section 8.6.2.
"FMLA PERSON" has the meaning set forth in Section 8.6.2.
"GAAP" means Generally Accepted Accounting Principles consistently applied,
and as applied in the United States.
"GOVERNMENTAL BODY" means any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof, or any quasi-governmental or private body
exercising any regulatory or taxing authority thereunder.
"HAZARDOUS MATERIALS" means any substance (a) which is defined as a
"hazardous substance," "hazardous material," "hazardous waste", "pollutant" or
"contaminant" under any Environmental Law, (b) which is toxic, explosive,
corrosive, flammable, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is regulated by any governmental authority under any Environmental
Law, (c) poses or threatens to pose a hazard to the health of persons on or
about any real property, and/or (d) which contains urea-formaldehyde,
polychlorinated biphenyls, asbestos or asbestos containing materials, radon,
petroleum, petroleum products, PCB's, pesticides, herbicides, sludge, slag,
acids, metals, solvents, tailings or wastewaters.
"INCOME TAXES" means (a) those Taxes imposed on Seller or the Shareholders
by the Code with respect to income, and (b) those Taxes imposed on Seller or the
Shareholders by any state, county, city or political subdivision thereof on the
basis of income, or on the basis either of income or net worth, whichever yields
the higher Tax under applicable law.
"INCOME TAX LIABILITIES" means any amount due, including interest,
penalties and additions to tax, for Income Taxes to the Internal Revenue Service
or to any applicable state or local taxing authority.
"INTELLECTUAL PROPERTY" means all: (a) foreign and domestic patents,
patent applications, patents pending, patent disclosures, including all
inventions disclosed therein, and improvements, reissues, substitutions,
continuations, continuations-in-part, and divisionals relating to the same, and
all rights under the Paris Convention for the Protection of Industrial Property;
(b) Trademarks, trademark applications, service marks, trade dress, logos, trade
names and corporate names, together with that part of the good-will of the
business associated with the use of and symbolized by each of the foregoing
marks and names, all registrations and applications for registration thereof,
specifically including the name "Central Metals Company" or any derivation
thereof; (c) copyrights and registrations and applications for registration
thereof; (d) mask works and registrations and applications for registration
thereof; (e) operating and application computer software, databases and
documentation; (f) Trade Secrets and confidential business information including
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and
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development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans, and customer and
supplier lists and information; (g) other proprietary rights; and (h) copies and
tangible embodiments thereof (in whatever form or medium).
"INVENTORY" means any and all of the Seller's Processed Inventory,
Unprocessed Inventory and inventory-in-process. Inventory does not include any
Supply Inventory.
"INVENTORY DATE" has the meaning set forth in Section 3.3.
"INVENTORY VALUE" has the meaning set forth in Section 3.3.
"JAMS" has the meaning set forth in Section 12.9.6.
"LEASE AND PURCHASE AND SALE AGREEMENT" has the meaning set forth in
Section 2.1.1.
"LENDER" shall mean Buyer's Primary Lender or equity participant relating
to the transactions contemplated by this Agreement.
"LIEN" means a charge against or an interest in property to secure payment
of a debt or performance of an Obligation, and includes a Security Interest, a
judicial lien obtained by legal or equitable process or litigation, a common law
lien, a statutory lien or any other right of any Person in property granting the
Person an interest of any nature in property to secure the payment of a debt or
performance of an Obligation (including any creditor right existing or
continuing by reason of the failure of the Parties to comply with any applicable
bulk sales law).
"MARIETTA" shall mean the Real Property owned by Seller and located on
Marietta Street, other than the Excluded Real Property.
"MAXIMUM CAPITAL GAIN RATE" shall be 24.5%.
"MAXIMUM RATE" shall be 44.5%.
"MOST RECENT SELLER FISCAL MONTH END" has the meaning set forth in Section
5.2.1(b).
"NON-COMPETITION COVENANT" has the meaning set forth in Section 8.5.1.
"OBLIGATION" means any obligation that a specified Person has to pay money,
transfer any asset or property, render services or perform or refrain from any
act, whether it was created by law, order of any court, administrative agency,
arbitrator or private tribunal, or by contract and whether or not it is legal or
equitable, reduced to judgment, liquidated or unliquidated, contingent or fixed,
matured or unmatured, disputed or undisputed, known or unknown, secured or
unsecured. The term "Obligation" does not include the general obligation that
Persons have to obey the laws of any Governmental Body having jurisdiction over
them, but it does include damages, fines and penalties arising out of violations
of such laws and obligations to pay Taxes, including interest, penalties and
additions to tax thereon.
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"ORDINARY COURSE OF BUSINESS" means the ordinary course of Seller's
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARKING SERVICES AGREEMENT" has the meaning set forth in Section 4.3.3.
"PARTY" means Parent, RIA and Seller and each of the Shareholders to the
extent provided for herein.
"PERMITTED LIENS" means only those Liens or Encumbrances described in
Section 5.1.8(a) which appear on a preliminary title report which Buyer accepts,
or any Lien or Encumbrance attributable to the Assumed Liabilities.
"PERSON" means any individual, corporation, partnership, joint venture,
trust, associated, unincorporated organization, other entity or Governmental
Body.
"POST-CLOSING ADJUSTMENTS" has the meaning set forth in Section 3.2
"PRE-CLOSING QUALIFIED BENEFICIARIES" has the meaning set forth in Section
8.6.2.
"PRIME RATE" means at any date the "prime rate" as stated in the "money
rates" section of the WALL STREET JOURNAL.
"PROCESSED INVENTORY" means all ferrous and non-ferrous Inventory that has
been processed by Seller and is ready for shipment to the Seller's customers.
"PURCHASE PRICE" has the meaning set forth in Section 2.1.
"PURCHASE PRICE ALLOCATION" has the meaning set forth in Section 8.10.
"REAL PROPERTY" means the real property and improvements located at those
locations which are more particularly described in Exhibit 2.1.1.
"REAL PROPERTY ESCROW AGREEMENT" has the meaning set forth in Section
8.7.2.
"REAL PROPERTY HOLD-BACK AMOUNT" has the meaning set forth in Section
2.1.1.
"REAL PROPERTY CLOSING DATE" has the meaning set forth in Section 8.7.2.
"RECIPROCAL" means that percentage determined by subtracting the Maximum
Capital Gain Rate from One, the Reciprocal being 80%.
"REMEDIATION ESCROW" has the meaning set forth in Section 8.9.8.
"REMEDIATION ESCROW AGREEMENT" has the meaning set forth in Section 8.9.8.
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"RESIDUAL REAL PROPERTY OPTION AGREEMENT" has the meaning set forth in
Section 4.5.
"RESTRICTED AREA" has the meaning set forth in Section 8.5.2(a).
"RESTRICTED BUSINESS" has the meaning set forth in Section 8.5.2(b).
"RESTRICTED PERIOD" has the meaning set forth in Section 8.5.2(c).
"REVIEW PERIOD" has the meaning set forth in Section 11.1.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES FILINGS" means all filings made by Buyer as required by the
Exchange Act or the Securities Act.
"SECURITY INTEREST" means any mortgage, pledge, security interest,
encumbrance, charge, claim, or other lien, other than: (a) mechanic's,
materialmen'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 or by operation of
law and not incurred in connection with the borrowing of money.
"SELLER DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.1.
"SELLER FINANCIAL STATEMENTS" has the meaning set forth in Section 5.2.1.
"SELLER'S EMPLOYEES" has the meaning set forth in Section 8.6.1.
"SELLER'S HEALTH PLAN" has the meaning set forth in Section 8.6.2.
"SELLER'S KNOWLEDGE" means to the actual knowledge of each or any of the
Shareholders or to the actual knowledge of each or any of Xxxxxxx Xxxxxxxxxx,
Xxxxx Xxxxxxx or Xxxx Xxxxx, each of which is a managerial employee of Seller.
"SHAREHOLDERS" has the meaning set forth in Recital C.
"SHARE CONSIDERATION" has the meaning set forth in Section 2.2.
"SHARE PRICE GUARANTY AGREEMENT" has the meaning set forth in Section
2.2.1(c).
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"SUPPLY INVENTORY" means all of the parts, equipment, fuel, lubricants,
office supplies or other items consumed by or used in the operations of Seller
or the repair and maintenance of the Seller's vehicles, machinery and equipment.
"SUPPLY AGREEMENT" has the meaning set forth in Section 4.4.2.
"SURVEY" has the meaning set forth in Section 8.8.
"TAX OR TAXES" 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, or other tax, including any interest, penalty or addition thereto,
whether disputed or not.
"TITLE COMMITMENT" has the meaning set forth in Section 8.7.
"TITLE COMPANY" means Southeastern Land Title Co., Inc.
"TITLE POLICY" has the meaning set forth in Section 8.7.
"TRADE SECRET" means information not generally known about a Party's
business which is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy or confidentiality and from which such
Party derives economic value from the fact that the information is not generally
known to other Persons. Trade Secrets include, but are not limited to,
technical or non-technical data, compilations, programs and methods, techniques,
drawings, processes, financial data, financial plans, product plans, lists of
actual customers and potential customers, customer route books, cards or lists
containing the names, addresses, buying habits and business locations of past,
present and prospective customers of such Party, sales reports, service reports,
price lists, product formulae, computer programs and source codes, merchandising
practices, and methods and procedures relating to products manufactured or sold
by such Party.
"UNPROCESSED INVENTORY" means all scrap ferrous metal comprised of
obsolete, discarded or abandoned machinery, appliances, equipment, automobiles
or other by-products to be processed by Seller for resale and all scrap
non-ferrous metal comprised of non-magnetic alloys of copper, brass, aluminum
and other related metals to be processed by Seller for resale. Unprocessed
Inventory does not include any ferrous or non-ferrous materials contained in the
residual materials resulting from Seller's operations or contained within dirt
or other non-processable medium within the Real Property of Seller.
"WASTE RESIDUE" has the meaning set forth in Section 7.2.
Article II
Purchase and Sale of the Assets
Section 2.1 PURCHASE AND SALE. Upon the terms and subject to the
conditions hereof, Buyer shall purchase from the Seller at the Closing, and
Seller shall sell to the Buyer at the Closing
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as provided below, all of the "Acquired Assets" for the "Purchase Price." The
"Purchase Price" shall consist of the sum of the Cash Consideration, plus the
Share Consideration, plus the three Contingent Warrants, as set forth in Section
2.2, plus the Assumed Liabilities as set forth in Section 2.2.3. Seller shall
convey fee simple title to the Real Property to Buyer by way of a Limited
Warranty Deed in a form reasonably acceptable to Buyer and Buyer's counsel,
which conveyance shall be free and clear of all Liens and Encumbrances except
for Permitted Liens. Seller shall convey good and marketable title to all
tangible and intangible personal property by way of a Xxxx of Sale and
Assignment substantially in the form set forth in Exhibit 4.3.6, which
conveyance shall be free and clear of all Liens and Encumbrances, except, as
applicable, the Permitted Liens. The "Acquired Assets" shall consist of:
2.1.1 REAL PROPERTY. The real property (the "Real Property")
described in Exhibit 2.1.1; provided, however, that until the Title Policy (as
provided in Section 8.7) and the Survey (as provided in Section 8.8) are ready
to be delivered to Buyer, (a) RIA shall lease the Real Property from Seller
under that certain agreement (the "Lease and Purchase and Sale Agreement")
substantially in the form set forth in Exhibit 2.1.1A for the sum of $1 per
year, and (b) Buyer shall withhold that amount of the Cash Consideration equal
to $1,500,000 (the "Real Property Hold-Back Amount") and not deliver such amount
at the Closing but deliver such amount into escrow to be held and delivered
under the provisions of the Real Property Escrow Agreement. Section 8.7.2
provides for the terms and conditions and time of transfer of the Real Property,
the delivery of the Deeds and other documents or instruments relating to the
Real Property and the delivery to Seller of the Real Property Hold-Back Amount
(or portion thereof to which Seller is entitled under this Agreement) under the
Real Property Escrow Agreement;
2.1.2 PERSONAL PROPERTY. All tangible and intangible personal
property owned, leased or licensed by Seller at the time of Closing (including,
without limitation, contractual rights and undertakings of third parties),
except for those assets consisting of personal property (the "Excluded Personal
Property") as set forth on Exhibit 2.1.2 attached. Seller and Buyer shall
mutually execute and deliver the Xxxx of Sale and Assignment evidencing the sale
and conveyance of Seller's personal property (other than the Excluded Personal
Property) to Buyer; and
2.1.3 ASSUMED CONTRACTS. The benefit of those contracts (the
"Assumed Contracts"), including all necessary consents to the assignment of the
Assumed Contracts as obtained by Buyer, to which Seller is a party and which are
(a) listed on Schedule 5.1.11 and/or (b) which are not required to be listed on
Schedule 5.1.11 but which otherwise arise from purchase and sale transactions in
the Ordinary Course of Business; provided, however, that Buyer shall not assume
and is not assuming any contract (the "Excluded Contracts") listed on Exhibit
2.1.3 attached hereto even though such contracts are listed on Schedule 5.1.11.
In consideration of the delivery by Parent of the Share Consideration and the
Contingent Warrants, the Seller shall deliver to Parent, at Parent's direction,
a portion of the Acquired Assets in the nature of good will (and, as necessary,
Intellectual Property) up to a value equal to the value of the Share
Consideration and the Contingent Warrants, which good will or other Intellectual
Property Parent shall promptly assign to RIA. The balance of the Acquired
Assets shall be acquired directly by, and transferred by Seller directly to,
RIA.
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Section 2.2 CONSIDERATION. In consideration of the purchase of the
Acquired Assets from Seller, Buyer shall deliver to the Seller the following:
(a) Twenty Million Dollars ($20,000,000) by wire transfer or other immediately
available funds (the "Cash Consideration"), adjusted as provided in Article III
below; (b) 800,000 shares of Common Stock, subject to adjustment as provided in
Section 2.2.1(b) and Section 2.2.1(c) (the "Share Consideration"); and (c) three
"Contingent Warrants" in the form set forth in Exhibit 2.2.2 permitting the
purchase by the Seller (or its assignees), under certain conditions, of a total
of 200,000 shares of Common Stock at a price of $15.00 a share, as such price
may be adjusted as set forth in the Contingent Warrants; and Buyer shall further
assume the Assumed Liabilities. Buyer consents to Seller's assignment and
transfer of one-third of the Share Consideration (except for the shares of
Common Stock being placed in the Remediation Escrow) and a Contingent Warrant to
each of the Shareholders following the Closing pursuant to a plan of liquidation
adopted or to be adopted by Seller, provided, however, that each of the
Shareholders shall (x) make the representations regarding investment intent and
related matters with respect to the Common Stock and the Contingent Warrants to
be received by such Shareholders as provided herein, and (y) agree in writing to
be bound by the terms of the respective Contingent Warrant.
2.2.1 SHARE CONSIDERATION.
(a) The Share Consideration shall initially consist of
800,000 shares (subject to adjustment as provided in Section 2.2.1(b) and
Section 2.2.1(c)) of Common Stock; [CONFIDENTIAL TREATMENT REQUESTED BY
REGISTRANT]
(b) If the Average Price at the Closing Date is greater
than $12.50 a share, then the Share Consideration shall not be 800,000 shares,
but shall be that number of shares of Common Stock determined by dividing
$10,000,000 by such Average Price, [CONFIDENTIAL TREATMENT REQUESTED BY
REGISTRANT]
(c) Buyer shall guaranty the aggregate market value of all
Common Stock issued as Share Consideration to be $10,000,000 on the second
anniversary date of the Closing (regardless of whether 800,000 shares of Common
Stock are issued or the number of shares issued as Share Consideration is
determined under Section 2.2.1(b)) pursuant to the provisions of that certain
Share Price Guaranty Agreement ("Share Price Guaranty Agreement") in the form
attached as Exhibit 2.2.1(c) which the Parties shall execute and deliver at the
Closing.
(d) In the event of any stock dividend, stock split,
reclassification, recapitalization, combination or exchange of shares with
respect to, or rights issued in respect of, the outstanding Common Stock after
the date hereof but prior to the Closing, the number of shares of Common Stock
to be issued under this Section 2.2.1 shall be adjusted accordingly, as is
appropriate to reflect the intent of this Agreement.
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2.2.2 CONTINGENT WARRANTS. Buyer and Seller shall execute and
mutually deliver at the Closing the Contingent Warrants (the "Contingent
Warrants") in the form attached as Exhibit 2.2.2 pursuant to which Seller shall
be entitled to acquire additional shares of Common Stock if one of the four
contingencies set forth therein is met.
2.2.3 ASSUMED LIABILITIES. Buyer shall assume only those
Obligations (the "Assumed Liabilities") (a) represented by the accounts payable
as set forth in Exhibit 2.2.3 attached, which accounts payable shall in all
events not exceed $300,000, (b) Obligations arising under the Assumed Contracts
which accrue or relate to periods, circumstances and events on and after the
Closing Date, the incurrence or existence of which do not breach any
representation or warranty of Seller or any of the Shareholders contained herein
or in any document delivered pursuant to this Agreement, (c) Obligations arising
in connection with the operation of the Business previously conducted by Seller
in the Ordinary Course of Business accruing and relating to periods,
circumstances and events on and after the Closing Date, the incurrence or
existence of which do not breach any representation or warranty of Seller or any
of the Shareholders contained herein or in any document delivered pursuant to
this Agreement, (d) Obligations under Seller's Health Plan as set forth in
Section 8.6 and (e) Permitted Liens. The Xxxx of Sale and Assignment shall
provide for Buyer's assumption of the Assumed Liabilities.
Section 2.3 EXCLUDED ASSETS AND EXCLUDED LIABILITIES.
2.3.1 EXCLUDED ASSETS. The excluded assets (the "Excluded
Assets") are all assets of Seller other than the Acquired Assets. The Excluded
Assets are comprised of the Excluded Personal Property as set forth on Exhibit
2.1.2, the Excluded Contracts as set forth on Exhibit 2.1.3 and those parcels of
real property (the "Excluded Real Property") as set forth on Exhibit 2.3.1.
2.3.2 EXCLUDED LIABILITIES. Other than the Assumed Liabilities as
set forth in Section 2.2.3, Seller shall retain all, and Buyer shall not assume
any, liabilities and Obligations of Seller of any nature, whether known, or
unknown, fixed or contingent or xxxxxx or inchoate, and whether arising out of
any state of facts, occurrences or circumstances prior to, at or after the
Closing Date (the "Excluded Liabilities"). Excluded Liabilities shall include,
but are not limited to, any liability or Obligation of any nature arising under
any capital lease, operating lease, license Obligations, any oral or written
employment, consulting or similar agreement or arrangement for services or other
contractual Obligation which does not arise under or pursuant to an Assumed
Contract. Buyer is further not continuing or assuming any Employee Benefit Plan
of Seller other than Seller's Health Plan and Excluded Liabilities include,
without limitation, any liabilities or Obligations arising out of or with
respect to any Employee Benefit Plan of Seller (other than liabilities or
Obligations arising out of or with respect to Seller's Health Plan, which Buyer
is assuming).
Section 2.4 ASSISTANCE IN CONSUMMATION OF THE PURCHASE AND SALE. Each
of Buyer, the Shareholders and Seller shall provide all reasonable assistance
to, and shall cooperate with, each other to bring about the consummation of the
purchase and sale as soon as practicable in accordance with the terms and
conditions of this Agreement.
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Section 2.5 CLOSING. The closing (the "Closing") of the transaction
contemplated by this Agreement shall take place at the offices of Xxxxxx, Golden
and Xxxxxxx, LLP at 10:00 A.M. local time on the day which is not more than one
business day after the day on which the last of all conditions set forth in this
Agreement have been fulfilled, or at such other time and place as Buyer and the
Shareholders shall agree in writing (the "Closing Date").
Article III
Adjustments to Consideration
Section 3.1 ADJUSTMENTS TO CASH CONSIDERATION AT CLOSING. The
Consideration to be paid at Closing as set forth in Section 2.2 shall be
adjusted as follows:
3.1.1 DETERMINATION OF VALUE OF CURRENT ASSETS. The Buyer and
Seller shall mutually prepare effective as of the close of business on November
22, 1997, a Schedule (the "Current Asset Schedule") which sets forth an amount
equal to the sum (the "Current Asset Value") of (a) the Inventory Value (such
value to be determined as provided in Section 3.3 and set forth on Exhibit 3.3
attached) and (b) the "Accounts Receivable Value," which amount shall be the
face amount of Seller's accounts receivable as of the close of business on
November 22, 1997, reduced by an applicable reserve for bad debts (the "Bad Debt
Reserve"), which Bad Debt Reserve shall be determined in accordance with GAAP.
A compilation of information and entries (including, without limitation, trial
balances and accrual work papers or similar items), used in the preparation of
the Current Asset Schedule and the book values and other values recorded thereon
shall be made available to Buyer, as Buyer reasonably requests. The Current
Asset Schedule shall be attached as Exhibit 3.1.1.
3.1.2 REDUCTIONS IN CASH CONSIDERATION AT CLOSING, IF ANY. The
Consideration shall be adjusted at Closing by reducing the Cash Consideration by
the sum of (a) the amount by which $5,700,000 exceeds the Current Asset Value,
plus (b) the accounts payable which are part of the Assumed Liabilities as set
forth on Exhibit 2.2.3. If the Current Asset Value exceeds $5,700,00 but the
excess of the Current Asset Value over $5,700,000 (the "Differential") is less
than the Assumed Liabilities referenced in subclause (b) immediately above, then
the Cash Consideration at Closing shall be reduced by the amount determined by
subtracting the Differential from such Assumed Liabilities. An example of these
calculations is set forth in Exhibit 3.1.2.
3.1.3 INCREASE OF CASH CONSIDERATION AT CLOSING, IF ANY. If the
Current Asset Value at Closing exceeds $5,700,000 by an amount greater than the
accounts payable which are part of the Assumed Liabilities as set forth on
Exhibit 2.2.3, then the Consideration at Closing shall be increased by an amount
equal to (I) the excess of the Current Asset Value over $5,700,000, reduced by
(II) such Assumed Liabilities. An example of these calculations is set forth in
Exhibit 3.1.3.
Section 3.2 POST-CLOSING ADJUSTMENTS TO CONSIDERATION. The
Consideration delivered at Closing, as adjusted pursuant to Section 3.1, shall
be further adjusted after the Closing by those payments provided for in this
Section 3.2 (the "Post-Closing Adjustments"):
3.2.1 EXCESS COLLECTIONS OF ACCOUNTS RECEIVABLE. If within 60
days of Closing Buyer collects from the Accounts Receivable which Seller assigns
to Buyer pursuant to this
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Agreement an amount which exceeds the Accounts Receivable Value as set forth on
the Current Asset Schedule, then Buyer shall promptly pay to Seller the excess
of the amounts so collected over the Accounts Receivable Value (including,
without limitations, proceeds of such excess collections of Accounts Receivables
as collected after such 60 day period). The provisions of this Section 3.2.1
shall not be subject to the basket and cap amounts provided in Section 10.5.
3.2.2 DEFICIENT COLLECTIONS. If within 60 days of Closing Buyer
has not collected from the Accounts Receivable which Seller assigns to Buyer
pursuant to this Agreement an amount which equals or exceeds the Accounts
Receivable Value as set forth on the Current Asset Schedule, then Seller shall
promptly pay to Buyer an amount equal to the difference between such Accounts
Receivable Value and the amounts so collected. Upon Buyer's receipt of Seller's
payment, Buyer shall assign to Seller all of its right, title and interest in
and to all remaining uncollected accounts receivable which Seller assigned to
Buyer at the Closing. The provisions of this Section 3.2.2 shall not be subject
to the basket and cap amounts provided in Section 10.3.1.
Section 3.3 VALUATION OF INVENTORY. For purposes of the adjustments to
the consideration provided for in this Article III, Inventory shall be valued
(the "Inventory Value") as follows effective as of the close of business on
November 22, 1997: (a) Processed Inventory shall be valued by grade at the
market value of such inventory as of the Closing Date less $9.35 per ton for
ferrous materials, and $.016 per pound for non-ferrous materials; and (b) the
value of the Unprocessed Inventory shall be agreed upon by the parties as of the
close of business November 22, 1997, based upon a physical inventory taken as of
such date (the "Inventory Date") and the weighted average purchase price for the
Unprocessed Inventory for the ten business day period immediately preceding the
Inventory Date. The value so determined shall be set forth on Exhibit 3.3
hereto. Not later than 60 days following the Closing, the Inventory Value shall
be (i) increased by any purchases of inventory after the Inventory Date but on
or before the Closing Date; and (ii) decreased by any sales of inventory after
the Inventory Date but on or before the Closing Date, and the net difference
between the Inventory Value as determined as of the Inventory Date, and the
Inventory Value after taking into account the adjustments set forth above, shall
be promptly paid from Buyer to Seller, if such amount is positive, and shall be
promptly paid from Seller to Buyer, if such amount is negative. Such purchases
and sales of inventory shall be valued in the fashion as set forth in this
Section 3.3.
Article IV
Deliveries at Closing
Section 4.1 SELLER DELIVERIES TO BUYER. At the Closing Seller shall
deliver the following to Buyer:
4.1.1 DISCLOSURE SCHEDULE. The Updated Disclosure Schedule and
related certificate as required by Section 9.1.2;
4.1.2 CERTIFICATE CONCERNING REPRESENTATIONS. The Certificate
concerning representations as required by Section 9.1.1;
4.1.3 CERTIFICATE CONCERNING COVENANTS. The Certificate
concerning covenants as required by Section 9.1.3;
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4.1.4 OPINION. The Opinion of Counsel for Seller and the
Shareholders as set forth in Section 9.1.7;
4.1.5 CORPORATE DOCUMENTS. The corporate documents for Seller as
required in the Disclosure Schedule; and
4.1.6 FIRPTA CERTIFICATE. The Certificate required under Section
897 of the Code certifying that Seller is not a foreign person.
Section 4.2 BUYER DELIVERIES. At the Closing, Parent and RIA shall
deliver the following to Seller:
4.2.1 CASH CONSIDERATION. RIA shall deliver the Cash
Consideration, adjusted as provided in Section 3.1.2 or Section 3.1.3, as the
case may be;
4.2.2 SHARE CONSIDERATION. Parent shall deliver the stock
certificates representing the shares of Common Stock comprising the Share
Consideration as set forth in Section 2.2.1(a), or, if applicable, Section
2.2.1(b);
4.2.3 RESOLUTIONS. The Resolutions of Buyer approving and
ratifying this transaction as set forth in Section 9.2.5; and
4.2.4 OPINION. The Opinion of Counsel for Buyer as set forth in
Section 9.2.4.
Section 4.3 MUTUAL DELIVERIES OF PARENT AND/OR RIA AND SELLER. At the
Closing Parent and/or RIA, as the case may be, and Seller shall mutually execute
and deliver the following:
4.3.1 CONTINGENT WARRANTS. The Contingent Warrants in the form
set forth in Exhibit 2.2.2;
4.3.2 SHARE PRICE GUARANTY AGREEMENT. The Share Price Guaranty
Agreement in the form set forth in Exhibit 2.2.1(c);
4.3.3 PARKING SERVICES AGREEMENT. The Parking Services Agreement
in the form set forth in Exhibit 4.3.3;
4.3.4 LEASE AND PURCHASE AND SALE AGREEMENT. The Lease and
Purchase and Sale Agreement in the form set forth in Exhibit 2.1.1A;
4.3.5 REMEDIATION ESCROW AGREEMENT. The Remediation Escrow
Agreement in the form set forth in Exhibit 8.9.8; and
4.3.6 XXXX OF SALE AND ASSIGNMENT. The Xxxx of Sale and
Assignment substantially in the form of Exhibit 4.3.6.
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Section 4.4 MUTUAL DELIVERIES OF RIA AND SHAREHOLDERS. At the Closing
RIA and the Shareholders shall mutually execute and deliver the following:
4.4.1 EMPLOYMENT AGREEMENTS. Employment agreements (the
"Employment Agreements" or, in the singular, the "Employment Agreement") for
each Shareholder in the form set forth in Exhibit 4.4.1; and
4.4.2 SUPPLY AGREEMENT. The Supply Agreement between RIA, the
Shareholders and Pull-A-Part, Inc. in the form set forth in Exhibit 4.4.2.
Section 4.5 MUTUAL DELIVERIES OF THE EXCLUDED REAL PROPERTY HOLDERS AND
RIA. At the Closing, each of the Excluded Real Property Holders and RIA shall
mutually execute and deliver a "Residual Real Property Option Agreement" in the
form set forth in Exhibit 4.5.
Section 4.6 MUTUAL DELIVERIES OF THE EQUIPMENT LESSOR AND RIA. At the
Closing, the Equipment Lessor and RIA shall mutually execute and deliver the
"Equipment Lease" in the form set forth in Exhibit 4.6.
Section 4.7 DELIVERIES INTO ESCROW.
4.7.1 SELLER DELIVERIES TO TITLE COMPANY. Seller shall deliver
the Deeds to the Title Company to be held in escrow pursuant to the terms of the
Real Property Escrow Agreement;
4.7.2 BUYER DELIVERIES TO TITLE COMPANY. Buyer shall deliver to
the Title Company the Real Property Hold-Back Amount, which amount the Title
Company shall place in an interest bearing account acceptable to Seller to be
held in escrow pursuant to the terms of the Real Property Escrow Agreement; and
Section 8.7.2; and
4.7.3 BUYER DELIVERIES TO REMEDIATION ESCROW. [CONFIDENTIAL
TREATMENT REQUESTED BY REGISTRANT] to the Escrow Agent subject to the terms
of the Remediation Escrow as provided in Section 8.9.8.
Article V
Representations of Seller
Section 5.1 REPRESENTATIONS OF SELLER - IN GENERAL. Seller represents
to Buyer that the statements contained in this Section 5.1 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date was
substituted for the date of this Agreement throughout this Section 5.1).
Attached to this Agreement as Exhibit V shall be "Seller's Disclosure Schedule"
which shall set forth those items as described below in this Article V. Matters
pertaining to Hazardous Materials and compliance of the Real Property with the
Environmental Laws are dealt with exclusively in Section 5.1.19 and Section 8.9
and are excluded from any Section of this Article V other than Section 5.1.19.
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5.1.1 AUTHORIZATION OF TRANSACTIONS. Seller has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement, to execute, deliver and perform all agreements which Seller is
to execute and deliver at Closing as set forth in Section 4.3 and to perform all
of its Obligations hereunder and under any agreement executed and delivered in
connection with this Agreement. This Agreement, and all agreements to which
Seller is a party referred to in this Agreement, constitute the valid and
legally binding Obligation of Seller, enforceable in accordance with its terms
and conditions. Each Affiliate of Seller which is executing and delivering any
agreement or other instrument pursuant to this Agreement has full power and
authority (including full corporate or limited liability company power and
authority, as the case may be) to execute and deliver such collateral
agreements, contracts and instruments and to perform all of the Obligations of
any such Affiliate under any such agreement or instrument executed and delivered
in connection with this Agreement. All agreements which are executed and
delivered in connection with this Agreement by any such Affiliate of Seller
constitute the valid and legally binding Obligations of any such Affiliate,
enforceable in accordance with its terms and conditions.
5.1.2 [ INTENTIONALLY DELETED ].
5.1.3 [ INTENTIONALLY DELETED ].
5.1.4 BROKERS' FEES. Seller has no liability or Obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Seller or Buyer could
become liable or obligated.
5.1.5 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Seller is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction in
which the nature of its businesses or the ownership or leasing of its properties
requires such qualification, except where the lack of such qualification would
not have a material adverse effect on the financial condition of Seller. Seller
has full corporate power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it.
5.1.6 NONCONTRAVENTION. Except as set forth in the Seller's
Disclosure Schedule, neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby, by Seller will:
(a) Violate any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge or other restriction of any government,
governmental agency or court to which Seller is subject or any provision of the
charter or bylaws of Seller which, if violated, either singly or collectively
would have a material adverse effect on the financial condition of Seller; or
(b) To Seller's Knowledge, conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any Person the right to accelerate, terminate, modify or cancel, or require any
notice under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which Seller is a party
or by which it is
17
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
material adverse effect on the financial condition of Seller or on the ability
of the Parties to consummate the transactions contemplated by this Agreement.
To Seller's Knowledge, Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
5.1.7 TITLE TO ASSETS. Seller has good and marketable title to,
or a valid leasehold interest or license interest in, and is conveying and
assigning good and marketable title to, or a valid leasehold interest or license
interest in, all of the Acquired Assets pursuant to the Deeds and Xxxx of Sale
and Assignment free and clear of any Lien or Encumbrance or any other
restriction or limitation other than Permitted Liens. Except as set forth in
Section 5.1.7 of the Disclosure Schedule, there are no contracts, agreements or
arrangements to which any of the Acquired Assets are subject or to which they
are bound which, either singly or taken collectively, will have a material
adverse impact on (a) Buyer or the conduct of the Business in the Ordinary
Course of Business after the Closing, or (b) Buyer's title to or its interest as
the lessee or licensee in the assets owned, leased or licensed which are
conveyed to Buyer by Seller pursuant to this Agreement.
5.1.8 REAL PROPERTY. Exhibit 2.1.1 lists the Real Property. With
respect to the Real Property:
(a) Seller has good and marketable fee title to the Real
Property, free and clear of all Liens and Encumbrances or other restriction,
except for: (I) installments of general property taxes and special assessments
not yet delinquent and other statutory liens (if any); (II) recorded easements
(including utility easements), covenants, zoning restrictions and other
restrictions of record; and (III) any matters shown on the Survey to be
delivered in accordance with this Agreement;
(b) The Real Property has access to public roads and is
supplied with utilities and other services necessary and adequate for the
conduct of Seller's business as now conducted or as presently proposed to be
conducted, including electricity, potable water, telephone, and sewage; and the
parcels of Real Property located on the west side of Marietta Street, and at
Avon Avenue, have direct access to an operational railroad spur and to Seller's
Knowledge, there is no upcoming change with respect to such matters;
(c) To Seller's Knowledge, Seller is not in violation of
any applicable zoning ordinance or other law, regulation or requirement relating
to the operation of any of the Real Property, and neither any Shareholder nor
Seller has received any notice of any such violation or the existence of any
condemnation proceeding with respect to any of the Real Property;
(d) There are no leases, subleases, licenses, contracts,
rights of first approval, concessions or other agreements granting to any Person
or Persons the right of use, occupancy, or possession of any of the Real
Property;
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(e) There are no outstanding options or rights of first
refusal to purchase the Real Property, or any portion thereof or interest
therein;
(f) To the Seller's Knowledge there are no improvements
made or contemplated to be made by any public or private authority, the costs of
which are to be assessed as special taxes or assessments against any of the Real
Property and there are no present assessments; and
(g) No Lien, Encumbrance or other restriction which is not
disclosed in the preliminary title report delivered by the Title Company but
which is by the Survey upon its completion shall have a material adverse impact
on the Buyer's conduct of the Business in the Ordinary Course of Business after
the Closing, and to Seller's Knowledge there are no Liens or Encumbrances with
respect to the Real Property except as disclosed in the Preliminary Title Report
or as set forth in Section 5.1.8(a)(I) or (II).
5.1.9 BUILDINGS, MACHINERY AND EQUIPMENT. Section 5.1.9 of the
Disclosure Schedule lists all of the material buildings, machinery and equipment
owned or leased by Seller which are necessary to Seller's conduct of its
Business in the Ordinary Course of Business. Seller's ownership of all other
machinery and equipment which it owns but is not listed in Section 5.1.9 of the
Disclosure Schedule has been reflected in the books and records of Seller in
accordance with Seller's past practices consistently applied. Except as set
forth in Section 5.1.9 of the Disclosure Schedule, with respect to all items of
buildings, machinery and equipment owned or leased by Seller:
(a) All of the buildings, machinery and equipment and other
tangible assets owned and leased and used in Seller's Business (I) are in good
working order and condition (with respect to machinery, equipment and other
tangible assets), ordinary wear and tear excepted; (II) are being used for their
intended purpose and, to Seller's Knowledge, within their designed capacity; and
(III) to the Seller's Knowledge there are no material defects in such assets or
other conditions, including any delayed maintenance, which adversely effects the
operation or value of such equipment; and
(b) The leases for the machinery, equipment and other
tangible assets, if any, are in full force and effect and Seller holds a valid
and existing leasehold interest under each of the leases. Seller has delivered
to Buyer complete and accurate copies of each of the leases described under this
Section, and none of such leases has been modified in any respect, except to the
extent that such modifications are disclosed by the copies delivered to Buyer.
Seller is not in default, and no circumstances exist which, if unremedied, would
either with or without notice or the passage of time or both, result in such
default under any of such leases, nor, to the Seller's Knowledge, is any other
party to any of such leases in default.
5.1.10 INTELLECTUAL PROPERTY. Except as set forth on Section
5.1.10 of the Disclosure Schedule, all of the Intellectual Property is
assignable, and to the Seller's Knowledge, Seller owns or has the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for the operation of its Businesses as presently conducted
and Seller has not granted any license or sublicense under or with respect to
any Intellectual Property.
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5.1.11 CONTRACTS. Section 5.1.11 of the Disclosure Schedule is
comprised of a complete and accurate list in all material respects of all
written or oral contracts, understandings, agreements and other arrangements
(except for those oral arrangements arising in the Ordinary Course of Business)
executed by an officer or duly authorized employee of Seller or to which Seller
is a party either:
(a) Involving more than $25,000, exclusive of normal and
ordinary purchase orders or sale agreements;
(b) In the nature of a collective bargaining agreement,
employment agreement, or severance agreement with any of its directors, officers
and employees; or
(c) Involving more than $5,000 and with respect to which
Seller or any of the Shareholders has received notice that there is a dispute or
complaint regarding any amount due or owing under any such Agreement. The
Shareholders have delivered or made available to Buyer a copy of each contract,
agreement, and other written arrangement listed in Section 5.1.11 of the
Disclosure Schedule and a brief description of each oral agreement listed
thereon. Except as disclosed in Section 5.1.11 of the Disclosure Schedule,
there are no disputes or complaints with respect to, nor has any Shareholder or
Seller received any notices (whether oral or in writing) that any other party to
such agreements is terminating, intends to terminate or is considering
terminating, any of the contracts, agreements or understandings listed or
required to be listed in Section 5.1.11 of the Disclosure Schedule.
5.1.12 INVENTORY. The Inventory and Supply Inventory which Seller
is selling to Buyer consists of Processed and Unprocessed Inventory,
manufactured and purchased parts and supplies, substantially all of which is
merchantable and fit for the purpose for which it was procured or manufactured,
subject to only the reserve for inventory writedown set forth in the Seller
Financial Statements, as adjusted for the passage of time through the Closing
Date in accordance with past custom and practice of Seller. The piles of
Unprocessed and Processed Inventory observed and measured on the Inventory Date
are primarily located on level ground and are comprised substantially,
throughout the pile, of the quality and grade of material visible on the outer
surface of the pile.
5.1.13 ACCOUNTS RECEIVABLE. The Accounts Receivable have arisen in
the Ordinary Course of Business and represent valid Obligations due to Seller.
To the Seller's Knowledge, the Accounts Receivable (net of any Bad Debt Reserve)
are collectible in accordance with their terms, in the Ordinary Course of
Business and in the aggregate recorded amounts thereof. To the Seller's
Knowledge, such Accounts Receivable are not subject to any material set-offs or
material counterclaims.
5.1.14 LITIGATION. To the Seller's Knowledge, Section 5.1.14 of
the Disclosure Schedule sets forth each instance in which any of the Acquired
Assets:
(a) is subject to any unsatisfied judgment, order, decree,
stipulation, injunction of any court or Governmental Body; or
20
(b) is the subject of any charge, complaint, action, suit,
proceeding or hearing of or in any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction.
5.1.15 INSURANCE. Section 5.1.15 of the Disclosure Schedule is
comprised of a complete description or copies of all policies of insurance of
any kind or nature, including, but not limited to, fire, liability, workmen's
compensation and other forms of insurance owned or held by or covering Seller or
all or any portion of its property and assets.
5.16 LABOR RELATIONS. Section 5.1.16 of the Disclosure Schedule
lists all employees of Seller, including their current positions and
compensation, and lists any sums presently owing to or accrued for and on behalf
of any employee for, benefits, vacation, sick leave, bonuses or other similar
items. Seller is not a party to any collective bargaining or similar agreement.
To the Seller's Knowledge, there are no strikes, work stoppages, unfair labor
practice charges or grievances pending or threatened against Seller by any
employee of Seller or any other person or entity.
5.1.17 LEGAL COMPLIANCE. To the Seller's Knowledge, Seller is in
material compliance with all laws (including rules and regulations thereunder)
of any Governmental Bodies having jurisdiction over Seller, including any
requirements relating to antitrust, consumer protection, currency exchange,
equal opportunity, health, occupational safety, pension and securities matters.
5.1.18 PERMITS. Section 5.1.18 of the Disclosure Schedule is
comprised of a listing of all licenses, permits, orders or approvals held by
Seller from Governmental Bodies required for the conduct of Seller's business
other than such incidental licenses, permits and other authorizations which
would be readily obtainable by any qualified applicant without undue burden
other than such licenses, permits and authorizations which, if not obtained,
would not have a material adverse effect, individually and collectively, upon
the financial condition of Seller. To Seller's Knowledge, Seller has all
licenses, permits, orders or approvals from Governmental Bodies required for the
conduct of its business as presently conducted other than such licenses, permits
and authorizations which, if not obtained, would not have a material adverse
effect on the financial condition of Seller, and Seller is not in material
violation of any such license, permit, order or approval. To Seller's
Knowledge:
(a) All such licenses, permits, orders and approvals are in
full force and effect; and
(b) No suspension or cancellation thereof has been
threatened.
5.1.19 ENVIRONMENTAL LAWS. Seller represents that, except as set
forth in Section 5.1.19 of the Disclosure Schedule or as may be disclosed in the
Environmental Studies:
(a) Seller is in compliance with all applicable
Environmental Laws regarding any disposal, or with respect to arranging with a
transporter for disposal, of any Hazardous Material owned or possessed by
Seller(i) at any facility which is owned or operated by another party or entity
(other than Seller, the Shareholders or any Affiliates of Seller) or (ii) from
the Real Property to the Excluded Real Property or to any other facility owned
or operated by the Shareholders or any Affiliates of Seller, and no judicial
proceedings, governmental administrative
21
actions, investigations or internal or non-public agency proceedings are pending
or threatened against Seller with respect to such compliance (or lack thereof)
as set forth above in this Section 5.1.19(a), nor are there any consent decrees,
or other decrees, consent orders, or administrative orders outstanding to which
Seller is a party relating to any such disposal; and
(b) Seller has incurred no liability under any
Environmental Law, including under 42 U.S.C. Section 9607(a)(3), as a result of
arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Materials owned or possessed
by Seller at any facility which is either (i) owned or operated by another party
or entity (other than the Seller, the Shareholders or any Affiliates of the
Seller), or (ii) which involves the disposal or transport from the Real Property
to the Excluded Real Property or to any other facility owned or operated by the
Shareholders or any Affiliates of the Seller.
Matters pertaining to the environmental status of or remediation of the Real
Property are not dealt with in this Section 5.1.19. Procedures relating to any
environmental remediation with respect to the Real Property are set forth in
Section 8.9, which Section 8.9 is the exclusive provision of this Agreement
dealing with the application of the Environmental Laws to the Real Property and
the remediation of environmental problems regarding the Real Property.
5.1.20 EMPLOYEE BENEFITS. Section 5.1.20 of the Disclosure
Schedule lists all Employee Benefit Plans maintained by Seller or to which it
contributes for the benefit of any of their current or former employees.
(a) To Seller's Knowledge each Employee Benefit Plan (and
each related trust or insurance contract) complies in form and in operation in
all material respects with the applicable requirements of ERISA and the Code;
(b) All contributions (including all employer contributions
and employees salary reduction contributions) which are due have been paid to
each Employee Benefit Plan and all such plans are adequately funded;
(c) To Seller's Knowledge, no unsatisfied liability has
been incurred by CMC or any ERISA affiliate and there is no material risk that
such liability will be incurred;
(d) To Seller's Knowledge, no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand with respect to the
administration or the investment of the assets of any Employee Benefit Plan
(other than routine claims for benefits) is pending;
(e) Seller does not provide any medical or other similar
benefits to employees beyond retirement;
(f) Seller has delivered to Buyer copies of the plan
documents and summary plan descriptions, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and other funding
agreements which implement each Employee Benefit Plan; and
22
(g) Seller has complied with all COBRA requirements for all
persons who were participants in the Seller Health Plan prior to the Closing
Date or who became eligible for COBRA due to a qualifying event that occurred
under the Seller Health Plan prior to the Closing Date.
5.1.21 CONTRACTS. Except as otherwise disclosed in Section 5.1.21
of the Disclosure Schedule, each Assumed Contract: (a) is in full force and
effect and is the enforceable Obligation of the parties thereto, and (b) to
Seller's Knowledge does not require the consent of any Person to be assigned to
Buyer.
5.1.22 AFFILIATE TRANSACTIONS. Except as disclosed in Section
5.1.22 of the Disclosure Schedule, no Shareholder, and no other officer,
director, or employee of Seller or any member of the immediate family of any
such Shareholder, officer, director or employee, or any entity in which any of
such persons owns any beneficial interest (other than any publicly-held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than one percent of the stock of which is
beneficially owned by any of such persons), has any agreement with Seller or any
interest in any of their property of any nature, used in or pertaining to the
business of Seller (other than the ownership of capital stock of Seller and the
ownership of the equipment which is the subject of the Equipment Lease). None
of the foregoing Persons has any direct or indirect interest in any competitor,
supplier or customer of Seller or in any Person from whom or to whom Seller
leases any property or transacts business of any nature (other than as disclosed
in Section 5.1.22 of the Disclosure Schedule and/or any Person or Persons who
own the equipment which is the subject of the Equipment Lease).
5.1.23 CUSTOMERS AND SUPPLIERS. Section 5.1.23 of the Disclosure
Schedule lists the 10 largest customers and suppliers of Seller in terms of
dollar volume of business (without identification by name) for the fiscal year
ended December 31, 1996, including the amount and percentage of net sales or
purchases by Seller attributable to such customer or supplier for the period
indicated. Since the most recent Seller Fiscal Month End, no customer or
supplier listed on Section 5.1.23 of the Disclosure Schedule has indicated in
writing or orally to Seller or the Shareholders that it will stop or decrease
the rate of purchases or sales from or to Seller.
Section 5.2 REPRESENTATIONS OF SELLER WITH RESPECT TO FINANCIAL
STATEMENTS AND RECENT EVENTS. Seller represents to Buyer that the statements
contained in this Section 5.2 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date was substituted for the date of this
Agreement throughout this Section 5.2).
5.2.1 SELLER FINANCIAL STATEMENTS. Section 5.2.1 of the
Disclosure Schedule is comprised of the following financial statements
(collectively, the "Seller Financial Statements"):
(a) Unaudited balance sheets and statements of income,
changes in stockholders' equity and cash flow as of and for each of the years
ended December 31, 1996, 1995 and 1994, for Seller; and
23
(b) Unaudited balance sheets and statements of income,
changes in stockholders' equity and cash flow as of and for the month ended
October 31, 1997 (the "Most Recent Seller Fiscal Month End") for Seller.
The Seller Financial Statements present fairly the financial condition of Seller
as of such dates and the results of operations of Seller for such periods in all
material respects, accurately record the assets and transactions of Seller in
all material respects, reflect the use of consistent accounting practices for
all periods and are consistent with the books and records of Seller (which books
and records are correct and complete in all material respects).
5.2.2 EVENTS SUBSEQUENT TO MOST RECENT SELLER FISCAL MONTH END.
Since the Most Recent Seller Fiscal Month End, and except as disclosed on
Section 5.2.2 of the Disclosure Schedule or as otherwise contemplated by this
Agreement, there has not been, occurred or arisen, with respect to Seller:
(a) Any material damage, destruction or loss of any of its
properties or assets (whether or not covered by insurance), except in the
Ordinary Course of Business;
(b) Any sale, lease, transfer, or assignment of any of its
assets, tangible or intangible, other than (i) sales of Inventory in the
Ordinary Course of Business, (ii) other distributions permitted by this
Agreement or any related agreement for a fair consideration in the Ordinary
Course of Business (with the parties stipulating that the Equipment Lease is a
lease in the Ordinary Course of Business for fair consideration);
(c) Any acceleration, termination, modification, or
cancellation of any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $25,000 to
which it is a party or by which it is bound;
(e) Any grant of any license or sublicense of any rights
under or with respect to any Intellectual Property;
(f) Any sale, assignment or transfer (including transfers
to any employees, affiliates or shareholders) of any Intellectual Property;
(g) Any delay or postponement of the payment of accounts
payable or other liabilities, other than those being contested in good faith as
set forth in Section 5.2.2 of the Disclosure Schedule or as otherwise permitted
under this Agreement;
(i) Any spill of any Hazardous Materials other than in a DE
MINIMIS amount;
(j) Any material change in the Seller Financial Statements
or accounting principles not fully reflected on the Seller Financial Statements
and explained in the notes thereto;
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(k) Any taking of other action or entrance into any other
transaction other than in the Ordinary Course of Business, or entrance into any
transaction with any insider of Seller, except as disclosed or contemplated in
this Agreement and the Disclosure Schedule except with the advance consent of
Buyer;
(aa) Any other material adverse change in the business,
properties, assets, financial condition or results of operations of Seller
(whether or not similar to any of the foregoing); or
(bb) Any agreement or commitment, whether in writing or
otherwise, to do any of the foregoing.
Section 5.3 DISCLOSURE. The representations and warranties of the
Seller contained in this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained herein not misleading.
Section 5.4 INVESTMENT REPRESENTATION.
5.4.1 SELLER REPRESENTATIONS. Seller represents and understands
(a) that the shares of Common Stock comprising the Share Consideration, the
Contingent Warrants and any shares of Common Stock to be issued upon the
exercise of the Contingent Warrants have not been, and will not be, registered
under the Securities Act, or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering; (b) that it is acquiring shares of Common
Stock, the Contingent Warrants and any shares of Common Stock to be issued upon
the exercise of the Contingent Warrants for its own account for investment
purposes and not with a view to the distribution thereof, provided that Seller
intends to transfer the Share Consideration and the Contingent Warrants to the
Shareholders pursuant to a plan of liquidation adopted or to be adopted by
Seller (and not as part of a plan to effect the distribution of such securities)
who are Accredited Investors and who agree to make the same representations as
set forth in this Section 5.4.1 as a condition to their receipt of such Common
Stock and Contingent Warrants from Seller; (c) that it is an "Accredited
Investor" within the meaning of Rule 501(a) promulgated under the Securities
Act; (d) that it has received certain information concerning Buyer and has had
the opportunity to ask questions and to obtain additional information as desired
in order to evaluate the merits and risks inherent in holding shares of the
Common Stock; and (e) that it acknowledges that any information concerning Buyer
is based on historical data and any projections were made as good faith
estimates.
5.4.2 LEGENDS ON SHARES AND CONTINGENT WARRANTS ISSUED TO SELLERS.
Seller further acknowledges and understands that any certificates evidencing the
ownership of any shares of Common Stock received as Share Consideration, any
certificate or agreement evidencing the ownership of the Contingent Warrants and
any shares of Common Stock received upon exercise of the Contingent Warrants
shall bear the legend contained below, or in the Contingent Warrants in the form
attached as Exhibit 2.2.2, as the case may be:
THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933,
25
AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR FOR RESALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. NO SALE OR
OTHER DISPOSITION OF THESE SHARES MAY BE MADE WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
5.4.3 SHAREHOLDER REPRESENTATIONS. Each Shareholder represents
and understands (a) that the shares of Common Stock comprising the Share
Consideration, the Contingent Warrants and any shares of Common Stock to be
issued upon the exercise of the Contingent Warrants have not been, and will not
be, registered under the Securities Act, or under any state securities laws, and
are being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering; (b) that he is acquiring shares
of Common Stock, the Contingent Warrants and any shares of Common Stock to be
issued upon the exercise of the Contingent Warrants for his own account for
investment purposes and not with a view to the distribution thereof, such
receipt by the Shareholder occurring solely as a result of liquidating
distributions made or to be made pursuant to a plan of liquidation adopted or to
be adopted by Seller as a consequence of which the form of each Shareholder's
investment is to be changed such that the Shareholder shall hold his investment
in Buyer directly rather than indirectly through Seller; (c) that he is an
"Accredited Investor" within the meaning of Rule 501(a) promulgated under the
Securities Act; (d) that he has received certain information concerning Buyer
and has had the opportunity to ask questions and to obtain additional
information as desired in order to evaluate the merits and risks inherent in
holding shares of the Common Stock; (e) that he acknowledges that any
information concerning Buyer is based on historical data and any projections
were made as good faith estimates, and (f) that he agrees, as a condition to
Buyer's consent to the transfer of the shares of Common Stock comprising the
Share Consideration and a Contingent Warrant to the Shareholder pursuant to a
plan of liquidation adopted or to be adopted by Seller, to be bound with respect
to the Share Consideration, the Contingent Warrants and any shares of Common
Stock issued upon the exercise of the Contingent Warrants in the same manner and
to the same extent as Seller under this Agreement or any other Agreement
executed and delivered in connection with this Agreement.
5.4.4 LEGENDS ON SHARES AND CONTINGENT WARRANTS ISSUED TO
SHAREHOLDERS PURSUANT TO SELLER'S PLAN OF LIQUIDATION. Each of the Shareholders
further acknowledges and understands that any certificates evidencing the
ownership of any shares of Common Stock received as Share Consideration shall
also bear the legend as set forth above in Section 5.4.2 and that the Contingent
Warrants, and any certificates evidencing the ownership of any shares of Common
Stock received upon the exercise of the Contingent Warrants shall also bear the
legend as set forth in Section 5.4.2.
Article VI
Representations of Buyer
Each of Parent and RIA jointly and severally represent to Seller that the
statements contained in this Article VI are correct and complete as of the date
of this Agreement, and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date was substituted for the date of
this Agreement throughout this Article VI).
26
Section 6.1 ORGANIZATION. RIA is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Parent is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization. Each of
Parent and RIA is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the lack of such qualification would not have a material adverse effect on the
financial condition of Parent or RIA. Each of Parent and RIA has full corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it.
Section 6.2 AUTHORIZATION OF TRANSACTION. Each of RIA and Parent has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its Obligations hereunder.
This Agreement constitutes the valid and legally binding Obligation of each of
RIA and Parent, enforceable in accordance with its terms and conditions.
Neither RIA nor Parent needs to give any notice to, make any filing with or
obtain any authorization, consent or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement
except for such notice filings as may be required under federal or applicable
state securities laws and except for any filings pursuant to the Securities Act,
which may be required in connection with Parent's financing of the transactions
contemplated by this Agreement or in connection with the issuance to the
Shareholders of the Share Consideration or the Contingent Warrants.
Section 6.3 NONCONTRAVENTION. Neither the execution and delivery of
this Agreement, nor consummation of the transactions contemplated hereby, will
(a) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency
or court to which either RIA or Parent is subject or any provision of its
charter or bylaws; or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which either RIA or Parent is a party or by
which either is bound or to which any of the assets of either is subject.
Section 6.4 BROKERS' FEES. Neither RIA nor Parent has any Obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Shareholders could
become liable or obligated.
Section 6.5 SHARES TO BE DELIVERED. The Share Consideration (including,
without limitation, any shares to be issued pursuant to the Share Price Guaranty
Agreement) and the Contingent Warrants (together with the shares of Common Stock
to be issued upon the exercise thereof), will be duly authorized, validly
issued, fully paid and non-assessable securities of Parent, and the Shareholders
will be the sole registered and beneficial owners thereof.
Section 6.6 BUYER DISCLOSURE SCHEDULE. Except as set forth in Exhibit
6.6 ("Buyer's Disclosure Schedule") there is no litigation or claim made against
Buyer which would be required to
27
be disclosed on Form 10-K if such Form 10-K were required to be filed
immediately before the execution and delivery of this Agreement. Seller
acknowledges that Seller has received from Parent certain information relating
to other pending acquisitions of Parent and its subsidiaries, and the terms of
Parent's financing for such acquisitions. Except to the extent that Parent or
RIA may be contractually bound or subject to any other legal requirement not to
disclose information, all information contained in the Buyer Disclosure Schedule
and all other information delivered to Seller by Parent regarding its pending
acquisition and financing transactions is true, correct and complete.
Article VII
Pre-Closing Covenants
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
Section 7.1 GENERAL. Each of the Parties will use his or its
commercially reasonable efforts to take all action and to do all things
necessary, proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Article IX).
Section 7.2 WASTE RESIDUE. Seller shall, at Seller's sole cost and
expense and prior to or within a reasonable time following the Closing Date (not
to exceed 15 days after Closing), have all non-recyclable waste material
resulting from Seller's operation of its shredder (the "Waste Residue"), which
material consists of all material commonly referred to as "shredder fluff" and
all drums and barrels containing oils and other contaminants resulting from
Seller's operation of the shredder.
Section 7.3 OPERATION OF BUSINESS. Seller shall not cause or permit
Seller to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of Business.
Section 7.4 FULL ACCESS. During the Review Period, Seller will permit
representatives of Buyer, including counsel, lenders, appraisers and
accountants, to have full access, during normal business hours and in a manner
so as not to interfere with the normal business operations of Seller, to all
premises, properties, books, records, contracts, tax records and documents of or
pertaining to Seller. Except as otherwise expressly set forth in this
Agreement, no review, examination or investigation by Buyer shall diminish or
obviate any of the representations, warranties, covenants or agreements of
Seller or the Shareholders under this Agreement.
Section 7.5 CONFIDENTIALITY. Buyer will treat and hold confidential any
Confidential Information of Seller or the Shareholders it receives from Seller
or the Shareholders, will not use any of such Confidential Information except in
connection with this Agreement, and, if this Agreement is terminated for any
reason whatsoever, will return to Seller and the Shareholders all tangible
embodiments (and all copies) of such Confidential Information which are in its
possession and will thereafter continue to hold confidential any such
Confidential Information received; PROVIDED, HOWEVER, that this sentence shall
not apply to any information which, at the time of disclosure, is available
publicly; which, after disclosure, becomes available publicly through no failure
of Buyer;
28
which Buyer knew or to which Buyer had access prior to disclosure; and further
provided that in the event that Buyer is requested or required (by oral question
or request for information or documents in any legal proceeding) to disclose any
such Confidential Information, Buyer will notify Seller promptly of the request
or requirement so that Seller may seek an appropriate protective order or waive
compliance with the provisions of this Section 7.5, and if in the absence of a
protective order or the receipt of a waiver hereunder, Buyer is, on the advice
of counsel, compelled to disclose any such Confidential Information to any
tribunal or else stand liable for contempt, Buyer may disclose such Confidential
Information to the tribunal, provided that Buyer shall use its reasonable
efforts to obtain, at the reasonable request and expense of Seller, an order or
other assurance that confidential treatment will be accorded to such portion of
such Confidential Information required to be disclosed as Seller shall
designate.
Section 7.6 NOTICE OF EVENTS. Seller shall within two days thereafter
notify Buyer of any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
this Agreement, or any event, occurrence, transaction or other item which would
have been required to have been disclosed on any Schedule or Exhibit attached
hereto 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 adversely alter any of the representations, warranties or other agreements
of Seller or the Shareholders.
Section 7.7 NO NEGOTIATION. Until the earlier of the Closing Date or
the date of termination of this Agreement, neither Seller nor the Shareholders
shall, directly or indirectly through any officer, director, employee or agent:
7.7.1 Solicit, initiate or encourage the submission of inquiries,
proposals or offers from any person relating to any acquisition or purchase of
substantially all the assets of, or any equity interest in, Seller or any
exchange offer, purchase and sale, consolidation, liquidation, dissolution or
similar transaction involving Seller;
7.7.2 Enter into or participate in any discussions or negotiations
regarding any of the foregoing, or with the intent to facilitate any of the
foregoing, furnish to any person (other than Buyer, its representatives) any
information with respect to Seller; or
7.7.3 Otherwise cooperate in any way with any Person, other than
Buyer, to do or seek any of the foregoing.
Seller will notify Buyer within 24 hours if any such communication with respect
to any of the foregoing 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.
Article VIII
Post-Closing Covenants
The Parties (or each of them, as applicable) agree as follows with respect
to the period following the Closing:
29
Section 8.1 GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will use commercially reasonable efforts to take such
further action (including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request, all at the sole cost
and expense of the requesting Party.
Section 8.2 TRANSITION. The Shareholders will take no action that is
primarily designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier or other business associate of Seller from
maintaining the same business relationships with Seller after the Closing as it
maintained with Seller prior to the Closing.
Section 8.3 ACCESS TO BOOKS AND RECORDS. For a period of two years
after the Closing Date, Seller and the Shareholders shall have access to the
Seller's books and records for the purpose of preparing the Shareholders'
individual income Tax returns and to file an appropriate Subchapter S corporate
return. Thereafter, the Shareholders shall have commercially reasonable access
to such books and records (to the extent they are available) for the purpose of
addressing any dispute with or inquiry by any Governmental Body; PROVIDED,
HOWEVER, that such access does not require Buyer to retain any of Seller's books
and records for a period of greater than four years. Buyer and Seller
acknowledge that Buyer is acquiring the originals of all such books and records
and that Seller is retaining a copy (and not the original) of all such books
and records.
Section 8.4 CONFIDENTIALITY. Seller and the Shareholders will treat and
hold confidential any Confidential Information of Buyer that they receive from
Buyer and will not use any such Confidential Information except in connection
with this Agreement, and, if this Agreement is terminated for any reason
whatsoever, will return to Buyer all tangible embodiments (and all copies) of
such Confidential Information which are in their possession and will thereafter
continue to hold confidential any such Confidential Information received;
PROVIDED, HOWEVER, that this sentence shall not apply to any information which,
at the time of disclosure, is available publicly; which, after disclosure,
becomes available publicly through no failure of Seller or the Shareholders;
which Seller or the Shareholders knew or to which they had access prior to
disclosure; and further provided that in the event that Seller or any
Shareholders is requested or required (by oral question or request for
information or documents in any legal proceeding) to disclose any such
Confidential Information, Seller or the Shareholders will notify Buyer promptly
of the request or requirement so that Buyer may seek an appropriate protective
order or waive compliance with the provisions of this Section 8.4, and if in the
absence of a protective order or the receipt of a waiver hereunder, Sellers or
the Shareholders are, on the advice of counsel, compelled to disclose any such
Confidential Information to any tribunal or else stand liable for contempt,
Seller or the Shareholders may disclose such Confidential Information to the
tribunal, provided that Seller or the Shareholders shall use its reasonable
efforts to obtain, at the reasonable request and expense of Buyer, an order or
other assurance that confidential treatment will be accorded to such portion of
such Confidential Information required to be disclosed as Buyer shall designate.
Section 8.5 COVENANT NOT TO COMPETE.
8.5.1 COVENANT NOT TO COMPETE. Each of Seller and the
Shareholders hereby covenants and agrees (the "Non-Competition Covenant"), on
behalf of itself or himself and its or his
30
Affiliates, that during the Restricted Period neither it, he nor any Affiliate
shall, directly or indirectly, unless acting with the prior written consent of
Buyer:
(a) Engage or participate within the Restricted Area in any
business that comprises a Restricted Business;
(b) Without limitation of the provisions of Section
8.5.1(a), serve as an officer, director, agent, or employee of, or as a
consultant to or investor in (directly or indirectly including, without
limitation, through one or more Affiliates), or otherwise be or become entitled
to receive compensation in respect of, any Person which directly or indirectly,
engages in or competes with the Restricted Business within the Restricted Area;
provided, however, that nothing contained in this Section 8.5 shall restrict any
of the Shareholders from being an investor in any corporation or other business
entity which engages in a Restricted Business within the Restricted Area so long
as (a) such corporation or other business entity has at least 500 shareholders
or other equity holders and its equity securities are traded on the NASDAQ
market or a recognized securities exchange, and (b) a Shareholder does not own
more than 1% by vote or value of the outstanding equity securities of such
corporation or other business entity;
(c) For himself, or on behalf of or in conjunction with any
other Person, hire or endeavor to recruit or hire, as an employee, consultant,
agent or representative, any Person who is now or hereafter becomes an employee
of Seller, Buyer or any Affiliate of Buyer, PROVIDED, HOWEVER, that nothing in
this provision shall apply to the recruitment or hiring of any Person more than
one year after such Person ceases to be employed by any of Seller, Buyer or any
Affiliate of Buyer; and
(d) Discourage or otherwise attempt to prevent any Person
from doing business with Seller, Buyer or any Affiliate of Buyer, or any
successor to any of the foregoing.
8.5.2 DEFINITIONS APPLICABLE TO NON-COMPETITION COVENANT. For
purposes of this Section 8.5:
(a) "Restricted Area" means that area within a 200 mile
radius of the Marietta Property.
(b) "Restricted Business" means any business substantially
similar to and competitive with any business conducted by Seller at any time
within the three year period prior to the Closing Date.
(c) "Restricted Period" means a period of five years from
the Closing Date.
8.5.3 NO SEPARATE CONSIDERATION. Each of the Shareholders is
entering into the Non-Competition Covenant as part of the inducement to, and as
part of the consideration for, Buyer's agreement to enter into this Agreement
and to deliver to the Shareholders the Consideration, and there is no separately
bargained for consideration requested by the Shareholders, or any of them,
31
for the Non-Competition Covenant and Buyer has not bargained for nor paid any
separate consideration therefor.
8.5.4 REFORMATION. In the event that the provisions of the
Non-Competition Agreement set forth in this Section 8.5 should ever be deemed to
exceed the time or geographic limitations permitted by applicable law, then such
provisions shall be deemed reformed to the maximum time or geographic
limitations permitted by applicable law.
8.5.5 INJUNCTIVE RELIEF. Each of the Shareholders specifically
acknowledges and agrees that the remedy at law for any breach of the provisions
of the Non-Competition Covenant contained in this Section 8.5.5 will be
inadequate and that Buyer, in addition to any other remedy or relief available
to it in law or at equity, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damage.
Section 8.6 CERTAIN EMPLOYEE MATTERS; EMPLOYEE BENEFIT PLANS.
8.6.1 EMPLOYEES. As of the Closing Date, RIA will offer
employment to all of Seller's employees (the "Seller's Employees") for wages and
salaries substantially the same as may have been paid by Seller to such
employees prior to Closing. Except with respect to Seller's Health Plan as set
forth in Section 8.6.2 below, neither RIA nor Parent is assuming any Obligation
under any Employee Benefit Plan or any Obligations under any employment
contract, consulting agreement or other arrangement for services to which Seller
is a party. RIA's offer of employment to any of Seller's Employees shall be for
"at will" employment, except as otherwise may be provided in any written
employment contract entered into between RIA and an employee, and no inference
shall be made from any such offer of employment as described above that any of
Seller's Employees shall have any continued right to employment by RIA after the
Closing Date.
8.6.2 SELLER'S HEALTH PLAN; COBRA. RIA shall assume and continue
Seller's existing plans or agreements relating to medical insurance and medical
benefits (the "Seller's Health Plan") and shall maintain the benefits thereof
for a reasonable period after the Closing. From and after the Closing Date RIA
shall provide "Continuation Coverage" within the meaning of Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA (such statutory provisions are
referred to herein collectively as "COBRA") to all current or former Seller
employees (and their eligible dependents) who either (a) have experienced a
"qualifying event" (within the meaning of COBRA) prior to the Closing Date and
for whom the period of Continuation Coverage required by COBRA has not, as of
the Closing Date, expired (such persons are hereinafter referred to as
"Pre-Closing Qualified Beneficiaries"), and (b) are employees of Seller as of
the Closing Date but do not become employees of RIA as of the Closing Date or do
not otherwise receive group health coverage from RIA as of the Closing Date.
In addition, RIA shall provide group health coverage to employees of Seller (and
their eligible dependents)who are, as of the Closing Date, on a leave of absence
governed by the Family Medical Leave Act of 1993, as amended ("FMLA"); such
Persons being hereinafter referred to as "FMLA Persons"), in accordance with the
requirements of FMLA and COBRA. Exhibit 8.6.2 contains the name of each
Pre-Closing Qualified Beneficiary and each FMLA Person.
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8.6.3 TERMINATION COSTS. Neither Parent nor RIA is assuming any
Employee Benefit Plan or Employee Welfare Plan of Seller other than Seller's
Health Plan (and, in connection with the assumption of Seller's Health Plan, the
assumption of certain related COBRA and FMLA Obligations as provided in Section
8.6.2). Buyer shall, however, contribute to Seller up to Seven Thousand Five
Hundred Dollars ($7,500) in the aggregate such time as may be requested by
Seller, to cover the costs of terminating such Employee Benefit Plans or
Employee Welfare Plans of Seller as Seller may determine.
Section 8.7 Certain Real Property Matters.
8.7.1 TITLE INSURANCE. Seller will cooperate with Buyer in
obtaining a title insurance commitment (the "Title Commitment") with respect to
the Real Property in such amount as Buyer may reasonably determine to be the
fair market value of such real property, including all improvements located
thereon, insuring title to such real property to be in Seller as of the Real
Property Closing Date, subject only to such exceptions and exclusions as
provided in this Agreement and/or are otherwise acceptable to "Buyer. At the
closing of the transactions with respect to the Real Property, as provided in
the Real Property Escrow Agreement, Buyer shall be issued an Owner's Title
Insurance Policy and any one or more of the lenders of Buyer who are obtaining
any mortgage interest in the Real Property shall be issued a Mortgage Title
Insurance Policy (such policies hereinafter collectively being referred to as
the "Title Policy") consistent with the Title Commitment and subject only to
exceptions and exclusions approved by Buyer. The delivery of the Title Policy
to Buyer shall occur at the closing of the transactions with respect to the Real
Property, as provided in the Real Property Escrow Agreement, and Buyer shall pay
the costs and premium for the Title Policy.
8.7.2 REAL PROPERTY ESCROW. The Real Property Hold-Back Amount,
along with all Deeds and other instruments relating to the conveyance of the
Real Property to RIA, shall be placed in escrow with the Title Company, to be
held pursuant to the terms and conditions of that certain Real Property Escrow
Agreement in the form attached as Exhibit 8.7.2 (the "Real Property Escrow
Agreement"). Such escrow shall terminate, and the Real Property Hold-Back
Amount (or applicable portion thereof) shall be delivered to Seller and the
Deeds and related instruments shall be delivered to Buyer, upon such terms and
at the time set forth in the Real Property Escrow Agreement (the "Real Property
Closing Date").
Section 8.8 SURVEY. Seller will cooperate with Buyer in obtaining a
current survey of the Real Property certified to Buyer, any mortgagee of Buyer,
and the title insurer issuing the Title Policy prepared by a licensed surveyor
and conforming to the minimum ALTA standards, 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 (the "Survey"). Buyer
shall pay the cost of the Survey.
Section 8.9 ENVIRONMENTAL STUDIES; REMEDIATION.
8.9.1 PERFORMANCE OF ENVIRONMENTAL STUDIES. Buyer has prepared
for its own information and at its expense updated and current ASTM Phase I and
Phase II Environmental Site Assessments and Transaction Screen Process of the
Real Property and operations of Seller prepared
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by an environmental engineering firm mutually acceptable to Shareholders and
Buyer (the "Environmental Studies"). The cost of the Environmental Studies
shall be paid by Buyer. Buyer shall not disclose to Seller or the Shareholders
the Environmental Studies or the results of the environmental investigation
unless Seller so requests in writing prior to Closing. Immediately following
the Closing, Buyer shall cause its environmental consultant(s) to deliver to
Seller the Environmental Studies, including all sampling and analytical data,
boring logs and other pertinent technical information.
8.9.2 FURTHER GROUNDWATER SAMPLING. Promptly following the
Closing, Buyer shall cause its environmental consultant, at Buyer's expense, to
conduct whatever further studies are reasonably necessary with regard to the
presence of metals in the groundwater at Marietta to determine if, in fact,
metals are present in the groundwater at levels that exceed the
naturally-occurring background concentration. Buyer shall deliver the results
of this supplemental sampling and analysis to Seller.
8.9.3 HSRA NOTIFICATION; PROCEDURES. If there exists at either or
both of Marietta or Avon any releases or levels of substances requiring
notification to the Georgia Department of Natural Resources, Environmental
Protection Division ("EPD"), pursuant to Ga. Comp. R. & Regs. r. 391-3-19-.04,
Buyer shall provide such notice(s) within the time provided for by law. Buyer
shall work in good faith with Seller and its counsel to complete any required
notification forms and collect the necessary information, and Seller shall have
the right to approve of such notice(s) prior to its(their) submittal. Buyer
shall promptly inform Seller of any communication from EPD regarding the
above-described notices.
8.9.4 DETERMINATION BY EPD NOT TO PLACE EITHER MARIETTA OR AVON ON
THE HSI. If EPD determines, pursuant to Ga. Comp. R. & Regs. r. 391-3-19-.05,
that the reported release(s) do(es) not exceed a reportable quantity, and
therefore does not place either Marietta or Avon on the Georgia Hazardous Site
Inventory ("HSI"), Seller shall have no liability to Buyer, and Buyer waives all
rights it has or may have against Seller arising out of the environmental
conditions of Marietta and Avon, or relating to the presence of or release of
Hazardous Substances at Marietta or Avon.
8.9.5 DETERMINATION BY EPD TO PLACE AVON OR MARIETTA ON THE HSI.
If EPD determines, pursuant to Ga. Comp. R. & Regs. r. 391-3-19-.05, that the
reported releases do exceed a reportable quantity at Avon and/or Marietta, and
therefore places either or both of Avon or Marietta on the HSI, then the funds
set forth in the Remediation Escrow shall become available for assessment,
remediation, and similar, required tasks including the cost of further
environmental testing (collectively "Remediation"). Seller shall have the
right, (but not the duty), to assume responsibility for completing any and all
actions that may be required as a result of the placement of Avon and/or
Marietta on the HSI, and shall use the funds set aside in the Remediation Escrow
to accomplish and pay for said tasks. Seller's funding of the Remediation
Escrow shall be its sole responsibility, legally and financially, to address or
respond to any Obligations or costs arising out of, or related to, the placement
of Avon and/or Marietta on the HSI, and Buyer agrees to indemnify, defend and
hold harmless Seller for any costs, liabilities or expenses that exceed the
amounts set forth in 8.9.5(a) through (d).
(a) If EPD determines, pursuant to Ga. Comp. R. & Regs. r.
391-3-19-.05, that the reported releases do exceed a reportable quantity at Avon
or Marietta, but not both properties, and places one, but not both of the
properties on the HSI, [CONFIDENTIAL TREATMENT REQUESTED BY XXXXXXXXXX]
00
(b) The contents of the Remediation Escrow shall be
available as follows: (i) If EPD lists Avon on the HSI, and if, as a
result, EPD requires Remediation of the soils at Avon, up to [CONFIDENTIAL
TREATMENT REQUESTED BY REGISTRANT] of the Remediation Escrow may be used to
pay such costs. If these Avon soil Remediation costs exceed [CONFIDENTIAL
TREATMENT REQUESTED BY REGISTRANT], all such excess costs shall be borne
solely by Buyer and Seller shall have no liability for such further costs.
(c) If EPD lists Avon on the HSI, and if, as a result, EPD
requires Remediation of the groundwater at Avon, up to [CONFIDENTIAL TREATMENT
REQUESTED BY REGISTRANT] of the Remediation Escrow may be used to pay such
costs. If these Avon groundwater Remediation costs exceed [CONFIDENTIAL
TREATMENT REQUESTED BY REGISTRANT], all such excess costs shall be borne
solely by Buyer, and Seller shall have no liability for such further costs.
(d) If EPD lists Marietta on the HSI, and if, as a
result, EPD requires Remediation of either the soils or groundwater at
Marietta, up to [CONFIDENTIAL TREATMENT REQUESTED BY REGISTRANT] of the
Remediation Escrow may be used to pay such costs. If these Marietta soil and
groundwater Remediation costs exceed [CONFIDENTIAL TREATMENT REQUESTED BY
REGISTRANT], all such excess costs shall be borne solely by Purchaser, and
Seller shall have no liability for such further costs.
8.9.6 REMEDIATION ESCROW NOT AVAILABLE FOR LEGAL FEES. Although
Seller shall have the right, (but not the duty), to challenge, either
administratively or in the courts, any actions required by EPD under HSRA, the
legal fees incurred to carry out such challenge(s) shall not be paid out of the
Remediation Escrow but shall be borne solely by Seller, nor shall any legal fees
which Seller elects to incur in connection with the preparation of any notice to
the EPD be paid out of the Remediation Escrow.
8.9.7 TERMINATION OF THE REMEDIATION ESCROW. If, and when, Avon
or Marietta (or both properties, if both were listed) is(are) removed from the
HSI, whether pursuant to Ga. Comp. R. & Regs. r. 391-3-19-.06, r. 391-3-19-.07,
or otherwise, or EPD otherwise communicates, in writing, that no further
Remediation need occur at the listed property(ies), then the Remediation Escrow
shall terminate as follows:
(a) If Avon and Marietta are both on the HSI, and either
Avon or Marietta, but not both, are removed from the HSI (the "Released
Property"), [CONFIDENTIAL TREATMENT REQUESTED BY REGISTRANT] LESS any amounts
expended with respect to the Released Property in accordance with the provisions
of Section 8.9.5(a)-(d), to Seller.
(b) If Avon and Marietta are both on the HSI, and both Avon
and Marietta are removed from the HSI, then the Remediation Escrow shall
terminate, and the Escrow Agent shall deliver the remaining contents thereof to
Seller.
8.9.8 REMEDIATION ESCROW. Buyer and Seller have mutually agreed
[CONFIDENTIAL TREATMENT REQUESTED BY REGISTRANT] shall be placed by Buyer in
escrow (the "Remediation Escrow") and not delivered to Seller at the Closing
pending the completion of any and all Remediation. The Remediation Escrow
shall have co-Escrow Agents (collectively, the "Escrow Agent") and all actions
of the Escrow Agent shall require the approval of both co-Escrow Agents. The
co-Escrow Agents shall be Xxxxx X. Xxxxxxx and Xxxxx X. Xxxx. The terms and
35
conditions of the Remediation Escrow shall be as set forth in an escrow
agreement (the "Remediation Escrow Agreement") in the form set forth in Exhibit
8.9.8. Buyer and Seller agree to be subject to all of the terms and conditions
as set forth in the Remediation Escrow Agreement. Seller, or the Shareholders
as successors to Seller, shall be treated as the beneficial and record owners of
the shares held in the Remediation Escrow. Until such time as such shares or
sold or transferred to Buyer, Seller (or the Shareholders if Seller has
transferred any of these shares to its Shareholders) shall be entitled to vote
such shares and to receive any dividends or distributions made with respect
thereto as the record owner of such shares. The Seller shall have all of the
rights relating to the Remediation as set forth in Section 3 of the Remediation
Escrow Agreement. The Remediation Escrow shall terminate in the manner provided
in Section 8.9.7 above.
Section 8.10 PURCHASE PRICE ALLOCATION; TAX REPORTING COVENANT. The
Purchase Price shall be allocated among the Acquired Assets for federal and
state income tax reporting purposes in accordance with the purchase price
allocation (the "Purchase Price Allocation") as set forth in Exhibit 8.10. Each
of Seller, the Shareholders and Buyer agrees to determine his or its respective
federal taxable income, and, as applicable, his or its respective state taxable
income for any state income or franchise tax purpose, strictly and fully in
accordance with the Purchase Price Allocation and to prepare and file all
applicable Tax returns, information returns, forms, and other Tax reports and
documents (and attachments thereto) in a manner wholly consistent with the
Purchase Price Allocation including, without limitation, any reports or returns
required under Section 1060 of the Code and the accompanying regulations
thereunder.
Section 8.11 TRANSFER TAXES. Buyer shall be solely responsible for, and
shall indemnify and hold Seller and the Shareholders harmless from and against,
any and all liability for any sales or use Taxes, if any, arising by reason of
Seller's transfer to Buyer of the Acquired Assets and imposed upon, or by
reference to, the value of some or any of the Acquired Assets so transferred.
Section 8.12 FURTHER ASSURANCES. Each of Seller and Buyer shall further
execute and deliver, as the other Party may from time to time reasonably
request, such additional assignments, documents, instruments, agreements or
other items which are necessary or desirable to accomplish the transfer of the
Acquired Assets as provided herein, or are otherwise necessary or desirable to
consummate the transactions contemplated by this Agreement.
Section 8.13 SURVIVAL. All of the covenants contained in Article VIII of
this Agreement or in any certificate, agreement or other document delivered in
connection herewith shall survive the execution, delivery and performance of
this Agreement and the consummation of the transactions to be performed under
this Agreement for either (a) the period for which the covenant is to be
performed if such a period is specified, or (b) for an indefinite period if no
specific period is set forth.
Article IX
Conditions to Obligation to Close
Section 9.1 CONDITIONS TO OBLIGATION OF BUYER. The Obligation of Buyer
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions, any of which may
be waived by Buyer only in writing:
36
9.1.1 REPRESENTATIONS. The representations and warranties of
Seller set forth in Article V above shall be true and correct in all material
respects at and as of the Closing Date and Buyer shall have received a
certificate from Seller to that effect;
9.1.2 CERTIFICATE REGARDING DISCLOSURE SCHEDULE. The Shareholders
and Seller shall have delivered all updates or supplements to the Disclosure
Schedule to make the information contained therein not misleading and Buyer
shall have received a certificate from Seller to that effect;
9.1.3 CERTIFICATE REGARDING COVENANTS. Seller and each
Shareholder shall have performed and complied with all of the covenants made by
it or him hereunder in all material respects through the Closing Date and Buyer
shall have received a certificate from Seller that such covenants shall have
been performed and complied with through the Closing Date;
9.1.4 EMPLOYMENT AGREEMENTS. Each Shareholder shall have entered
into an employment agreement with RIA in the form attached as Exhibit 4.4.1.
9.1.5 RATIFICATION. The Board of Directors of Seller shall have
approved, and the Shareholders shall unanimously have approved, ratified and
confirmed the transactions contemplated hereby in all material respects;
9.1.6 FINANCING. Buyer shall have obtained financing from the
Lender for all or a portion of Cash Consideration on terms reasonably
satisfactory to Buyer in its sole discretion;
9.1.7 OPINION. At the Closing, Buyer shall have received from
counsel to Seller an opinion in form and content substantially similar to
Exhibit 9.1.7 addressed to Buyer and dated as of the Closing Date;
9.1.8 NO MATERIAL ADVERSE CHANGE. There shall be no material
adverse change in the business of Seller taken as a whole, financial or
otherwise, or, to Seller' Knowledge, its customers, regardless of reason,
including those changes that are as a result of any legislative or regulatory
change, revocation of any permits, licenses or rights to do business, failure to
obtain any permit at the normal time or in the manner applied for by Seller,
fire, explosion, accident, casualty, labor trouble, flood, riot, storm,
condemnation or act of God or otherwise, and Seller shall have delivered to
Buyer a certificate, dated the Closing Date, to such effect;
9.1.9 ACTIONS SATISFACTORY. All actions to be taken by Seller in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to Buyer;
9.1.10 NO INJUNCTION. As of the Closing, there shall not be any
injunction, order or decree in effect preventing the consummation of the
transactions contemplated by this Agreement;
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9.1.11 CORPORATE DOCUMENTS. At or prior to the Closing, Seller
shall have delivered to Buyer the originals of the corporate documents included
in Section 9.1.11 of the Disclosure Schedule; and
9.1.12 SHARE PRICE GUARANTY AGREEMENT. At or prior to the Closing,
Seller shall have executed and delivered the Share Price Guaranty Agreement.
Section 9.2 CONDITIONS TO OBLIGATION OF SELLER. The Obligation of
Seller to consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions any of which
may be waived by Seller only in writing:
9.2.1 REPRESENTATIONS. The representations set forth in Article
VI shall be true and correct in all material respects at and as of the Closing
Date and Seller shall have received a certificate from the appropriate officer
or officers of Buyer to such effect;
9.2.2 CERTIFICATE REGARDING COVENANTS. Buyer shall have performed
and complied with all of its covenants hereunder in all material respects
through the Closing Date and Seller shall have received a certificate from the
appropriate officer or officers of Buyer to such effect;
9.2.3 EMPLOYMENT AGREEMENTS. RIA shall have entered into
employment agreements with each Shareholder in the form attached as Exhibit
4.4.1.
9.2.4 OPINION. Seller shall have received from counsel to Buyer
an opinion in form and content substantially similar to Exhibit 9.2.4, addressed
to Seller and dated as of the Closing Date;
9.2.5 RATIFICATION. The Board of Directors of Buyer shall have
approved, ratified and confirmed the transactions contemplated hereby in all
material respects;
9.2.6 NO INJUNCTION. As of the Closing, there shall not be any
injunction, order or decree in effect preventing the consummation of the
transactions contemplated by this Agreement;
9.2.7 SHARE PRICE GUARANTY AGREEMENT. At or prior to Closing,
Parent shall have executed and delivered the Share Price Guaranty Agreement; and
9.2.8 CONTINGENT WARRANT. At or prior to Closing, Parent shall
have executed and delivered the Contingent Warrants.
Article X
Remedies
Section 10.1 SURVIVAL. All of the representations and warranties of the
Parties contained in this Agreement, and all covenants contained in this
Agreement (other than covenants contained in Article VIII which shall survive
for the period set forth in Section 8.13), shall survive and continue in full
force and effect for a period of two years from the Closing Date, except all
covenants of
38
Buyer with respect to Tax matters, which shall survive for a period of time
which is equal to the statute of limitations with respect to any Tax liability
which may be, or is being, asserted and may be covered by any indemnity
hereunder. Such survival shall include the survival and enforceability of such
representations, warranties and covenants regardless of whether an applicable
statute of limitations has expired relating to such item (including, without
limitation, the existence of any statute of limitations arising by reason of the
statutory liquidation of Seller).
Section 10.2 INDEMNIFICATION PROVISIONS BY SELLER FOR BENEFIT OF THE
BUYER. Subject to the terms of this Section 10.2 and Section 10.3, Seller and
each of the Shareholders hereby agree, jointly and severally, to indemnify,
defend, reimburse and hold harmless Buyer from and against any and all claims,
demands, penalties, fines, liabilities, Obligations, losses, settlements,
damages, costs and expenses resulting from:
10.2.1 Any breach of any representation and warranty or
nonfulfillment of any covenant on the part of Seller contained in this Agreement
other than any breach of a representation or warranty, or a failure to fulfill
any covenant or condition other than (a) such breaches which to Buyer's
Knowledge exist at or before the Closing and which Buyer has not disclosed to
Seller at or before the Closing, or (b) which Buyer has waived in writing at or
before the Closing;
10.2.2 Any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of Seller contained in any other agreement,
certificate or other instrument furnished by Seller pursuant to this Agreement
other than any breach of a representation or warranty, or a failure to fulfill
any covenant or condition, which to Buyer's Knowledge existed at or before the
Closing or which Buyer has waived in writing on or before the Closing; and
10.2.3 Reasonable fees and disbursements of counsel incident to any
of the foregoing.
If Seller (or any of the Shareholders) is required to pay any indemnity
Obligation under this Section 10.2, then, at the option of Seller (or the
applicable Shareholder), up to one-half of any liability or Obligation required
by this Section 10.2 (or elsewhere in this Agreement) may be met by the delivery
of shares of Common Stock held by Seller (or the applicable Shareholder), such
shares to be valued at the greater of $12.50 per share or the Average Price on
the date delivered in satisfaction of an indemnity Obligation hereunder. At
least one-half of the indemnity Obligation of each Shareholder as required by
this Section 10.2 shall be paid by the delivery of immediately available funds.
Section 10.3 LIMITS ON SELLER AND SHAREHOLDERS' INDEMNITY.
10.3.1 BASKET AND CAP. Notwithstanding any other provision of this
Agreement to the contrary, (a) Seller and the Shareholders shall not be required
to indemnify Buyer under Section 10.2 unless the aggregate of all amounts for
which indemnity would otherwise be due under Section 10.2 from Seller and the
Shareholders exceeds $350,000, in which case Seller shall be responsible only
for such indemnifiable amounts in excess of $350,000, and (b) the aggregate
amount for which Seller shall be liable under Section 10.2 shall not exceed
$2,500,000.
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10.3.2 ENVIRONMENTAL REMEDIATION UNDER SECTION 8.9.
Notwithstanding any other provision of this Agreement to the contrary, Seller's
responsibility for indemnity and contribution with respect to any Remediation
relating to the Real Property shall be exclusively dealt with under the
provisions of Section 8.9 and, except as provided therein, Seller shall have no
liability with respect to the subject matter of that Section. The provisions of
Section 10.3.1 shall further not apply to any amounts expended for Remediation
pursuant to Section 8.9. Nothing contained in this Section 10.3.2 shall limit
any liability which Seller may have with respect to any breach of an
Environmental Representation under the provisions of Section 5.1.19 and any
breach of the representations set forth in said Section shall be subject to the
other provisions of this Article X, including, without limitation, Section
10.3.1, relating to indemnity.
Section 10.4 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. Subject
to the terms of this Section 10.4 and Section 10.5, Buyer shall indemnify,
defend, reimburse and hold harmless Seller and the Shareholders from and against
any and all claims, demands, penalties, fines, liabilities, Obligations, losses,
settlements, damages, costs and expenses resulting from:
10.4.1 Any breach of any representation and warranty or
nonfulfillment of any covenant on the part of Buyer contained in this Agreement
other than any breach of a representation or warranty, or a failure to fulfill
any covenant or condition other than (a) such breaches which to Seller's
Knowledge exist at or before the Closing and which Seller has not disclosed to
Buyer at or before the Closing, or (b) which Seller has waived in writing at or
before the Closing;
10.4.2 Any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of Buyer contained in any other agreement,
certificate or other instrument furnished by Buyer pursuant to this Agreement
other than any breach of a representation or warranty, or a failure to fulfill
any covenant or condition, which to Seller's Knowledge existed at or before the
Closing or which Seller has waived in writing on or before the Closing;
10.4.3 The operation of the business of Buyer and any successor or
assign thereof after the Closing Date; and
10.4.5 Reasonable fees and disbursements of counsel incident to any
of the foregoing.
The indemnification of Seller provided by this Section 10.4 shall be in addition
to the indemnification for the benefit of Seller set forth in Section 10.6.
Section 10.5 LIMITS ON BUYER'S INDEMNITY. Notwithstanding any other
provision of this Agreement to the contrary, (a) Buyer shall not be required to
indemnify Seller or the Shareholders under Section 10.4 unless the aggregate of
all amounts for which indemnity would otherwise be due under Section 10.4
exceeds $350,000, in which case Buyer shall be responsible only for such
indemnifiable amounts in excess of $350,000, and (b) the aggregate amount for
which Buyer shall be liable under Section 10.4 shall not exceed $2,500,000.
Notwithstanding the foregoing, in no event shall Buyer's or Parent's liability
for any breach of its Obligations under the Contingent Warrants, the Share Price
Guaranty Agreement or the Executive Employment Agreements (including
40
the Obligations of the Parent to issue options thereunder) be limited in any
fashion by the provisions of this Section 10.5 or any other provision of this
Article X.
Section 10.6 INDEMNITY FOR SELLER WITH RESPECT TO CERTAIN TAX MATTERS.
10.6.1 INDEMNITY IF BUYER BREACHES TAX REPORTING COVENANT. If (a)
Buyer breaches the covenant as to Tax reporting as set forth in Section 8.10,
(b) as a result of any federal or state Income Tax audit the allocation of the
Consideration to the assets of Seller shall, upon a final determination by the
appropriate taxing authority or any court having final jurisdiction over such
matter, be made in a manner different than the Purchase Price Allocation, and
(c) as a result of such reallocation Seller, or any of them, are required to
recognize any portion of the Consideration paid for the Seller Common Stock by
reason of the Election as or any corresponding state income tax law, then Buyer
shall indemnify and hold each Shareholder harmless from the consequences of such
reallocation as follows. Buyer shall pay to each Shareholder whose Income Taxes
are increased by reason of a reallocation of the Purchase Price under the
circumstances described in this Section 10.6.1 an amount equal to difference
between (a) the total Income Taxes with respect to the receipt of the sum of (x)
the Consideration, plus (y) the payments made to such Shareholder under this
Section 10.6.1, and (b) the total Income Taxes which the Shareholder would have
paid with respect to the receipt of the Consideration if the Purchase Price
Allocation had been respected by the applicable Taxing authority.
10.6.2 INDEMNITY IF BUYER DOES NOT BREACH TAX REPORTING COVENANT.
If (a) Buyer is in compliance with its covenant in Section 8.10 as to Tax
reporting in a manner consistent with the Purchase Price Allocation, (b) upon
any federal or state Income Tax audit the allocation of the Consideration to the
assets of Seller shall, upon a final determination by the appropriate taxing
authority or any court having jurisdiction over such matter, be made in a manner
different than the Purchase Price Allocation, and (c) as a result of such
reallocation Seller, or any of them, recognize any portion of the Consideration
paid as ordinary income rather than capital gain, then Buyer shall indemnify
and hold Seller harmless from the consequences of such reallocation as follows:
(a) So long as the total increase in the allocation of
Purchase Price to assets the gain from which is recognized as ordinary income to
a Shareholder does not exceed $667,000, Buyer shall pay to each Shareholder
whose Income Taxes are increased by reason of the Shareholder's recognition of
ordinary income resulting from an increase in the allocation of the
Consideration to assets which result in ordinary income and a decrease in the
allocation of the Consideration to assets which result in capital gain an amount
determined as follows:
(I) An amount shall first be determined by multiplying
the ordinary income so allocated to a Shareholder (up to a limit of
$667,000) by that percentage which is the difference between the Maximum
Rate and the Average Capital Gain Rate;
(II) An amount shall next be determined by (x) dividing
the amount determined in the immediately preceding subparagraph (I) by the
Reciprocal (i.e., 80%), and (y) subtracting from the amount so determined
the amount determined in the immediately preceding subparagraph (I).
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Buyer shall then pay to each Shareholder the sum of (i) the amount determined in
the immediately preceding subparagraph (I), and (ii) the amount determined in
the immediately preceding subparagraph (II).
(b) In addition to the indemnity to be paid as provided in
Section 10.6.2(a), Buyer shall pay to each Shareholder whose Income Taxes are
increased by reason of the Shareholder's recognition of ordinary income
resulting from an increase in the allocation of the Purchase Price to assets the
gain from which is recognized as ordinary income to the Shareholder in excess of
$1,333,000 and a corresponding decrease in the allocation of the Consideration
to assets which result in capital gain an amount determined as follows:
(I) An amount shall first be determined by multiplying
the ordinary income allocated to each Shareholder in excess of $1,333,000
by that percentage which is the difference between the Maximum Rate and the
Average Capital Gain Rate;
(II) An amount shall next be determined by (x) dividing
the amount determined in the immediately preceding subparagraph (I) by the
Reciprocal (i.e., 80%), and (y) subtracting from the amount so determined
the amount determined in the immediately preceding subparagraph (I).
Buyer shall then pay to each Shareholder (in addition to any amounts due under
Section 10.6.2(a)) the sum of (i) the amount determined in the immediately
preceding subparagraph (I), and (ii) the amount determined in the immediately
preceding subparagraph (II).
(c) Buyer shall be responsible for and assume the defense
and control all aspects of any such inquiry, investigation or audit, and any
related litigation, involving the attempt by any Governmental Body to allocate
the Purchase Price in a manner other than as agreed by the Parties as set forth
in the Purchase Price Allocation, and shall be responsible for all costs and
expenses in connection therewith. Seller shall cooperate with Buyer in
connection with any such inquiry, investigation or audit, and any related
litigation. To the extent necessary, Buyer shall engage legal counsel with
respect to such issues that is reasonably acceptable to Seller. Buyer shall
keep Seller reasonably informed of the status of any such investigation, inquiry
or audit, including any settlement, appeal, payment of sums due or other
agreement arising out of such investigation, inquiry or audit, or any related
litigation.
Except as set forth above in this Section 10.6 or as otherwise specifically
provided for in this Agreement, Tax liabilities subject to indemnification under
this Agreement shall be governed by the general procedures for indemnification
set forth in this Article X.
10.6.3 BUYER INDEMNITY WITH RESPECT TO CERTAIN ENVIRONMENTAL
MATTERS. Subject to the provisions of Section 8.9 and the application of
amounts placed in the Remediation Escrow as provided therein, and excepting any
breach of Seller's representations and warranties set forth in Section 5.1.19,
Buyer agrees that it will defend, indemnify, reimburse and hold harmless the
Seller for any all (a) damages, losses, liabilities, litigations, penalties,
claims, sums paid in settlement of claims, demands, defenses, judgments, suits,
proceedings, costs, disbursements, fines, encumbrances, liens, and expenses of
any kind or of any nature whatsoever; and (b) any cost or expense incurred by
Seller to contain, remove,
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remediate, treat, cleanup or xxxxx any release of Hazardous Materials that may
at any time be imposed upon, incurred by, or asserted or awarded against, Seller
or any such officers, directors, shareholders, employees, or agents of Seller
and that arise directly or indirectly from or out of any Environmental Problem
(defined below), regardless of whether or not that Environmental Problem is or
was the fault of the Seller, and regardless of whether or not the Environmental
Problem was disclosed to Buyer. For the purposes of this paragraph, the term
"Environmental Problem" shall mean any of the following: (i) the presence,
suspected presence, or alleged presence of any Hazardous Materials on, in, or
under all or any portion of the Real Property; (ii) the release, threatened
release, or migration of any Hazardous Materials from the Real Property as a
result of the conduct of activities at the Real Property; (iii) the violation,
or alleged violation of any Environmental Law with respect to the Real Property,
or (iv) the failure or alleged failure to obtain or to abide by the terms or
conditions of any permit or approval required under any Environmental Law with
respect to the Real Property or Seller. The indemnity herein shall not be
subject to the limitation on the time limit of Buyer's indemnity set forth in
Section 10.1, or the limitations as set forth in Section 10.5.
Section 10.7 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. The Party
seeking indemnification 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
this Article X. If the Party obligated to indemnify wishes to defend such claim
for which such Party is or may be liable, then such Party may, at its own
expense, defend such claim; PROVIDED, HOWEVER, that the indemnitee or
indemnitees may retain counsel (at the indemnitee's expense) to monitor the
defense of such claim. 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, subject to the right of the indemnifying Party to
assume the defense of such claim at any time prior to settlement, compromise or
final determination thereof.
Section 10.8 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 sum is due.
Section 10.9 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.
Section 10.10 FEES AND EXPENSES. In the event of any dispute or
controversy, 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.
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Section 10.11 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
any transaction contemplated hereunder, or 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 of Seller, 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 Section
10.11.
Section 10.12 SOLE REMEDY. The parties hereby agree that the rights and
remedies set forth in this Article X shall constitute each Party's sole remedy
against each of the other Parties after the Closing for the breach of any
representation, warranty or covenant herein made by such other party including,
without limitation, each Party's sole remedy with respect to any violation or
breach of any Environmental Laws and each Party waives any rights which he or it
may have for cost recovery or contribution from the other Parties under the
Environmental Laws.
Article XI
Review Period and Termination
Section 11.1 REVIEW PERIOD. For a period ending on the earlier of (i) 15
business days after receipt by Buyer of notice from Seller that the last
schedule, documents and/or exhibit required to be delivered with and included as
part of the Disclosure Schedule has been provided by Seller hereunder, or (ii)
the Closing Date (the "Review Period"), Buyer shall have the right to review
such schedules, documents and/or exhibits and request additional documentation
as needed to clarify, investigate or determine the nature of any item disclosed
which, in the opinion of Buyer, its counsel or accountants could have a material
adverse affect on the operations of Buyer and/or Seller ("Adverse Items"). The
Review Period shall be extended for a period of the lesser of (i) ten business
days, or (ii) until the Closing Date after the receipt of any additional
schedule or document requested. If, in its sole and absolute discretion, Buyer
is unable to satisfy itself that any Adverse Item will not have a material
adverse effect on the operations of Buyer and/or Seller, Buyer shall have the
right to either terminate this Agreement; or request a reduction in the purchase
and sale Consideration sufficient cover the estimated liability for any Adverse
Item.
Section 11.2 TERMINATION OF AGREEMENT. In addition to termination during
the Review Period, the Parties may terminate this Agreement prior to Closing by
the mutual written consent of Buyer and Seller.
Section 11.3 EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to this Article XI, all rights and Obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
except for the Obligations of the Parties under Sections 7.5 and 8.4 and shall
survive any such termination and except that this Section 11.3 shall not relieve
any Party or liability hereunder as a result of a breach of this Agreement by
such Party.
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Article XII
Miscellaneous
Section 12.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any
press release or public announcement relating to the subject matter of this
Agreement until after the Closing without the prior written approval of the
other Party; PROVIDED, HOWEVER, that any Party may make any public disclosure in
a filing with the Securities and Exchange Commission or any state securities
commission that it believes in good faith is required by law or regulation (in
which case the disclosing Party will advise the other Party prior to making the
disclosure). The terms of this Section 12.1 shall not prevent Seller from
communicating with the employees and lenders of Seller regarding the content of
this Agreement.
Section 12.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
Section 12.3 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein including without limitation the Contingent Warrant, the
Share Price Guaranty Agreement and the Employment Agreements) constitutes the
entire agreement between the Parties and supersedes any prior understandings,
agreements or representations by or between the Parties, written or oral, that
may have related in any way to the subject matter hereof.
Section 12.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or Obligations hereunder without the prior written
approval of Buyer and Seller except as provided herein or by operation of law.
Notwithstanding the foregoing, Buyer may assign its rights and Obligations under
this Agreement for the benefit of its Lender, provided that Buyer shall remain
liable for its Obligations set forth in this Agreement as if such assignment had
not occurred hereunder and Buyer may assign its rights hereunder to a
wholly-owned subsidiary of Buyer, provided that Buyer shall remain liable for
its Obligations set forth in this Agreement as if such assignment had not
occurred hereunder.
Section 12.5 COUNTERPARTS. This Agreement may be executed and delivered
in one or more counterparts, each of which shall be deemed an original, but all
of which together will constitute one and the same instrument.
Section 12.6 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 12.7 NOTICES. Any and all notices required or permitted
hereunder shall be deemed to be received when (i) personally delivered to the
recipient, (ii) upon receipt if delivered by means of a nationally-recognized
overnight delivery service; or (iii) five (5) business days after mailing by
certified or registered mail with proper first class postage affixed thereto to
the Parties hereto, as follows:
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If to Seller:
Messrs. Xxxx and Xxxx Xxxxx
and Xxxxxx Xxxxx
000 Xxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxx, Golden & Xxxxxxx, L.L.P.
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: S. Xxxxxx Xxxxxxx, Esq.
If to Buyer:
Xx. Xxxxxx X. Xxxxx, Chairman and Chief Executive Officer
Recycling Industries, Inc.
Recycling Industries of Atlanta, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Fabian & Xxxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx
Any notice required to be made within a stated period of time shall be
considered timely mailed if deposited before midnight of the last day of the
stated period. Any Party may change the address to which notices, requests,
demands, claims or other communications hereunder are to be delivered by giving
the other Party notice in the manner set forth herein.
Section 12.8 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the internal laws (and not the law
of conflicts) of the State of Colorado.
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Section 12.9 DISPUTE RESOLUTION, CONSENT TO JURISDICTION AND VENUE. Any
dispute among the Parties either with respect to the application of any
provision of this Agreement or with respect to the performance by any party of
his, its, or their respective duties, Obligations, and responsibilities
hereunder shall be resolved in the following manner:
12.9.1 Upon the written request of a Party, each of the Parties
will appoint a designated representative who has not devoted substantial time to
the subject in dispute whose task it will be to meet for the purpose of
endeavoring to resolve such dispute.
12.9.2 The designated representatives shall meet as often as the
parties reasonably deem necessary in order to gather and furnish to the other
all information with respect to the matter in issue which the parties believe to
be appropriate and germane in connection with its resolution.
12.9.3 Such representatives shall discuss the problem and negotiate
in good faith in an effort to resolve the dispute without the necessity of any
formal proceeding relating thereto.
12.9.4 During the course of such negotiation, all reasonable
requests made by one party to the other for non-privileged information
reasonably related to the subject in dispute will be honored in order that each
of the Parties may be fully advised of the other's position.
12.9.5 The specific format for such discussions will be left to the
discretion of the designated representatives but may include the preparation of
agreed upon statements of fact or written statements of position furnished to
the other Party.
12.9.6 If the designated representatives cannot resolve the dispute
within thirty (30) days after the initial request to negotiate such dispute,
then either Party may refer the dispute to the Judicial Arbitration & Mediation
Service, Inc. ("JAMS"), Atlanta, Georgia, for a voluntary settlement conference
and the other Party will be deemed to have consented to such conference. The
Parties may alternatively request non-binding mediation or a binding settlement
conference, but nothing contained herein and no course of dealing of the Parties
shall require either Party to consent to any binding settlement conference or
other binding arbitration. In the absence of agreement the procedure shall be
non-binding mediation. If JAMS does not maintain an office in Xxxxxx County at
such time, then either party may request the American Arbitration Association to
be substituted for JAMS.
12.9.7 If the procedure set forth in subparagraph 12.19.6 above
utilized by the Parties is a nonbinding procedure, then a Party who is not
satisfied with the proposed resolution of the dispute may, after the expiration
of not less than thirty (30) days from the date of the conclusion of the
proceeding, initiate formal proceedings in the Superior Court of Xxxxxx County,
Georgia, or the United States District Court for the Northern District of
Georgia for a judicial resolution of such dispute. Notwithstanding the
foregoing, a Party may proceed to initiate formal proceedings in the Superior
Court of Xxxxxx County, Georgia, if there are less than thirty (30) days before
the statute of limitations governing any cause of action relating to such
dispute would expire.
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12.9.8 Except where clearly prevented by the subject in dispute,
the Parties agree to continue performing their respective Obligations under this
Agreement while the dispute is being resolved.
12.9.9 Seller and the Shareholders on the one hand, and Buyer each
represent and warrant to the other that it or they is/are not entitled, to
immunity from judicial proceedings and agree that, should any party bring any
judicial proceedings to enforce any Obligation or liability of the other under
this Agreement, no immunity from such proceedings will be claimed by or on
behalf of such other party or with respect to their assets or property. The
parties agree that any suit, action or proceeding arising out of or relating to
this Agreement may be instituted only in the Superior Court, Xxxxxx County,
Georgia or the Federal District Court for the Northern District of Georgia,
they waive any objection which a party may have nor or hereafter to the laying
of venue of any such suit, action or proceeding, and irrevocably consent and
submit to the jurisdiction of such court in any such suit, action or proceeding.
12.9.10 If any action or proceeding relating to this Agreement or
the enforcement of any provision of this Agreement is brought against any Party
hereto, the prevailing Party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing Party may be entitled).
Section 12.10 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any Party of any default, misrepresentation or
breach hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation or breach hereunder or in any way
affect any rights arising by virtue of any prior or subsequent such occurrence.
Section 12.11 SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of time
within which the judgment may be appealed.
Section 12.12 EXPENSES. Each of the Parties will bear his, her or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
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Section 12.13 CONSTRUCTION. Time is of the essence of this Agreement.
The language used herein will be deemed to be the language chosen by the Parties
to express their mutual intent, and no rule of strict construction shall be
applied against any Party. 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.
Section 12.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
Section 12.15 LITIGATION. In the event of litigation arising of or
connected with the transactions contemplated by this Agreement, the prevailing
Party in any such action shall be entitled to recover of the other Party all
costs of court, including attorneys' fees and court costs.
Section 12.16 SHAREHOLDERS AS PARTIES. A number of the provisions of this
Agreement consist of agreements, representations, warranties and covenants of
the Shareholders. Each Shareholder is, and shall be considered, for all
purposes of this Agreement as a Party to this Agreement and each Shareholder, by
the execution and delivery of this Agreement, agrees to be bound by the terms
and conditions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement
as of the date first above written.
RECYCLING INDUSTRIES, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
-----------------------------------------
Xxxxxxx X. XxXxxxxxx, Vice President
RECYCLING INDUSTRIES OF ATLANTA, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
-----------------------------------------
Xxxxxxx X. XxXxxxxxx, Vice President
CENTRAL METALS COMPANY, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Xxxxxx Xxxxx, Chairman
Each of the Shareholders hereby acknowledges that he is a party to this
Asset Purchase Agreement and agrees to be bound by the terms hereof as provided
in Section 12.16.
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx
/s/ Xxxxxx Xxxxx
--------------------------------------------
Xxxxxx Xxxxx
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EXHIBITS
51
