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Exhibit 10.2
ASSET PURCHASE AGREEMENT
AGREEMENT dated the 27th day of February, 1998 by and between U.S. PLASTIC
LUMBER LTD., a Delaware corporation, and CHESAPEAKE PLASTIC LUMBER, INC., a
(hereinafter jointly and severally referred to as "Buyer"), with offices located
at 0000 X. Xxxxxx Xx., Xxxxx 000X, Xxxx Xxxxx, XX 00000 and CHESAPEAKE RECYCLED
LUMBER, INC., a Maryland corporation with offices located at 00000 Xxxxxxxxxxxx
Xx., Xxxxxx, XX 00000 (the "Seller"), and all Shareholders as listed on Exhibit
"A" ( hereinafter jointly and severally referred to as "Shareholders").
BACKGROUND
The Seller is in the business of manufacturing and selling plastic
lumber. Shareholders constitute all of the shareholders and officers of the
Seller.
Buyer desires to acquire substantially all of the assets owned by the
Seller, and to assume none of the liabilities in connection therewith, except as
set forth herein, and the Seller desires to sell such assets to Buyer, all upon
the terms and subject to the conditions set forth in this Agreement.
The Shareholders, with the exception of H. Xxxxxxx Xxxx, although joining in
this Agreement, do not make any representations and warranties as contained in
this Agreement unless the representation and warranty specifically makes
reference to all Shareholders. H. Xxxxxxx Xxxx is the majority owner of the
shares of Seller, and has conducted the operation of the Seller on a day-to-day
basis. The remaining Shareholders are passive investors in Seller.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. TERMS OF PURCHASE AND SALE OF ASSETS.
1.1. PURCHASE OF ASSETS. On the Closing Date (as hereinafter
defined), the Seller will sell, transfer, convey, assign and deliver to Buyer
and Buyer will purchase and acquire from the Seller all right, title and
interest in and to the Seller's assets, whether tangible or intangible,
including but not limited to cash, accounts receivable, equipment, furnishings,
finished goods inventory, raw material inventory, work in progress inventory,
customer lists, all contracts, as set forth on Schedule "1.1" (collectively, the
"Assets").
1.2. ASSUMPTION, PAYMENT, AND RELEASE OF LIABILITIES. On the
Closing Date, Buyer does not assume, does not purchase the Assets subject to,
and shall in no event be liable for any liabilities or obligations or
responsibilities of the Seller, all of which shall remain the
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obligations of the Seller (collectively, the "Retained Obligations"), except as
may be listed on Schedule 1.2. The Seller and the Buyer agree that Schedule 1.2
shall set forth that Buyer shall assume the balance of a $100,000 credit line
with Seller's Bank, all equipment leases with Citicorp and all of the accounts
payable, except, however, that the parties also agree that the accounts payables
shall not exceed the accounts receivables by more than $26,000, but that in the
event the accounts payables do exceed the accounts receivables by more than
$26,000, the Buyer shall receive a credit against the cash portion of the
purchase price to be paid at Closing as set forth in Section 1.3 (i) below to
the extent of any liabilities in excess of $26,000 over the accounts
receivables. The Buyer acknowledges that the principal sum due on the $100,000
credit line with the Seller's Bank is $100,000 and the Buyer agrees to assume
all obligations under that loan, including the payoff of that loan. The Buyer
shall use its best efforts to have the Seller released from any obligations of
said loan and have H. Xxxxxxx Xxxx released from any personal guarantees made in
conjunction therewith. In the event the efforts of the Buyer are not successful
in removing the Seller andH. Xxxxxxx Xxxx, from the obligations of the aforesaid
loan, Buyer will indemnify and hold harmless the Seller and H. Xxxxxxx Xxxx from
any liability or claims asserted against them as a result of the aforesaid
loans. The Seller shall pay and/or perform all of the Retained Obligations.
After the Closing, Buyer shall be entitled to the benefit of any insurance
policies maintained by the Seller which insure assets purchased by Buyer.
1.3. PURCHASE PRICE. In consideration of the sale, transfer,
conveyance, assignment and delivery of the Assets to Buyer and in reliance upon
the representations and warranties made herein by the Seller and Shareholders,
Buyer will, in full payment thereof, subject to the adjustments, if any, pay to
the Seller at time of Closing (collectively, the "Purchase Price") as follows:
(i) Two Hundred Thousand Dollars ($200,000) to be
paid as follows: One Hundred
Thousand Dollars ($100,000) to be paid at time of Closing by good check or wire
transfer, and One Hundred Thousand Dollars ($100,000) to be paid pursuant to a
Promissory Note, in the form attached hereto as Exhibit B, at the rate of 8%
interest due and payable in full six months from the Closing Date hereunder. The
Promissory Note shall be secured with a lien against equipment being acquired
pursuant to this Agreement and inventory to include a UCC Financing Statement
and Security Agreement to be delivered simultaneous with Closing, all in the
form attached hereto as Exhibit B-1.
(ii) Ninety Seven Thousand Five Hundred Shares of
non-registered and non-assessable Common Stock of U.S. Plastic Lumber
Corporation.
1.4. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Assets as set forth on Schedule "1.4." The Seller and Buyer
shall each file all required forms (and any amendments thereto) with the
Internal Revenue Service on a timely basis and neither the Seller nor Buyer
shall take any position on their respective tax returns that is inconsistent
with the amount of consideration which is allocated among the Assets as set
forth on Schedule "1.4".
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1.5. CORPORATE NAME. The Seller shall transfer its rights to
the corporate name "Chesapeake Recycled Lumber, Inc." or any derivative thereof
to Buyer as one of the Assets being transferred hereunder.
1.6 BULK SALE LAWS. Seller shall furnish to Buyer a list of
all of its existing creditors, inclusive of addresses and phone numbers, which
list shall be certified as accurate and notarized by Seller and Shareholders.
See Schedule 1.6. Seller and Buyer subject to Section 13.1 of this Agreement,
waive compliance with all Bulk Sales Laws applicable to the transaction
contemplated by this Agreement.
2. CLOSING DATE. For purposes of this Agreement, the closing
("Closing") of the transactions contemplated hereby shall take place on the
"Closing Date". The term "Closing Date" shall mean five business days from the
date in which all conditions to Closing (other than those requiring the delivery
of a certificate or other action at Closing) have been satisfied or waived, or
such other date as the parties may agree in writing. The Closing shall take
place simultaneously at the offices of Buyer and the general counsel of Seller,
at or about 10:00 a.m., on the Closing Date, or at such other time or place as
may be mutually agreed upon by the parties.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND H. XXXXXXX XXXX.
The Seller and H. Xxxxxxx Xxxx, jointly and severally, represent and warrant to
Buyer as to all sections of this Article 3 as established below. The other
Shareholders only represent and warrant to the extent a representation and
warranty set forth in this Article 3 specifically refers to all Shareholders.
3.1. POWER AND AUTHORITY. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and is duly qualified as a foreign corporation in each jurisdiction
(such jurisdictions being listed on Schedule "3. 1 ") in which, to the best of
Seller's and H. Xxxxxxx Xxxx'x knowledge, the Seller is required to be so
qualified, except where the failure to be so qualified, would have a material
adverse effect on the Assets. Except as stated on Schedule "3.1-2", the Seller
has the full power and authority to own, lease and operate the Assets and to
carry on its business as and where the business is now conducted subject to
approval by Lessor, and to execute, deliver and perform this Agreement and all
documents, agreements and transactions contemplated hereby. The execution,
delivery and performance and all documents, agreements and transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Seller and all Shareholders. Except as stated on Schedule
"3.1-2", Seller has the full power, authority, and legal capacity to execute,
deliver and perform this Agreement and all documents, agreements, and
transactions contemplated hereby. This Agreement is the valid and legally
binding obligation of the Seller and all Shareholders enforceable against the
Seller and all Shareholders, as may be applicable thereto, in accordance with
its terms, and each document and agreement contemplated by this Agreement, when
executed and delivered in accordance with its terms, will be the valid and
legally binding obligation of the Seller and all Shareholders enforceable
against the Seller and all Shareholders, as may be applicable thereto, in
accordance with their terms. Except as set forth on Schedule "3.1-3", no consent
of, or filing with, any governmental or regulatory authority (federal, state or
local) or any other person or entity is required to be obtained by the Seller
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and/or Shareholder in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3.2 TAX MATTERS. Except as stated on Schedule "3.2", the Seller
has duly and timely filed all Tax Returns (as hereinafter defined) which the
Seller is required to file prior to the date hereof (including Tax Returns for
the jurisdictions set forth on Schedule "3.2 ") , and has paid all Taxes (as
hereinafter defined) , deficiencies or other assessments of Taxes owed or
claimed to be owed by the Seller which are due and payable prior to the date
hereof. There are no deficiencies or other assessments of Taxes owed or claimed
to be owed by the Seller. Shareholders, meaning all Shareholders, know of no
unassessed Tax deficiency proposed or threatened or any basis therefor which may
occur in the future. There is no dispute or claim concerning any Tax liability
of the Seller either (i) claimed or raised by any taxing authority in writing,
or (ii) as to which any or all Shareholders have knowledge based on personal
contact with any agent of such authority.
No Tax Returns are currently the subject of an audit. Except as stated on
Schedule "3.2", no extensions of time on which any Tax Return was or is to be
filed by the Seller are in force, and no waiver or agreement by the Seller is in
force for the extension of time for the assessment or payment of any Tax. No
claim has ever been made by a taxing authority in a jurisdiction where the
Seller does not file a Tax Return that it is, or may be, subject to taxation by
that jurisdiction. The Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party. All Taxes
which are called for by the Tax Returns, or claimed to be owed by a taxing
authority from the Seller, and all other Taxes owed or claimed to be owed by the
Seller which are due and payable prior to the date hereof, and all Taxes upon or
required by the Seller's properties, assets, or income, have properly accrued in
accordance with generally accepted accounting principles. For purposes of this
Agreement, the term "Tax" and the term "Tax Return" shall mean:
(i) "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Internal Revenue Code of 1986, as amended (the "Code")),
customs, duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
(ii) "Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
3.3. COMPLIANCE WITH LAWS. Except as stated on Schedule "3.3",
the Seller has, to the best of its knowledge, complied in all material respects
with all federal, state, county, and local laws, ordinances, rules, regulations,
and orders (collectively, "Laws") relating in any respect to its business or
operations. A list of all permits and licenses of any governmental or regulatory
body (federal, state or local) (collectively the "Permits") held by the Seller
is set forth
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on Schedule "3.3". Except as stated on Schedule "3.3", the Permits are in full
force and effect and the Seller has not received any notice of violation with
respect to the Permits.
3.4. NO BREACH. Except as stated on Schedule "3.4", the
execution, delivery and consummation of this Agreement and the transactions
herein contemplated (i) do not conflict with any term or provision of the
certificate of incorporation or by-laws of the Seller, (ii) do not constitute or
will not constitute a violation of or a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or do not or will
not conflict with, any term or provision of any contract, commitment, indenture,
lease or other agreement, arrangement or understanding to which the Seller or H.
Xxxxxxx Xxxx is a party, (iii) do not constitute a violation of, or conflict
with, any judgment or order known toH. Xxxxxxx Xxxx, or, any Law, and (iv) do
not result in the creation of any lien or other encumbrance on any of the
Seller's assets or give to any person or entity any interest in the Seller.
3.5. FINANCIAL STATEMENTS. Schedule "3.5" contains the
financial statements and notes thereto of the Seller and its Affiliates as at
and for the years ended December 31, 1996, 1995, and 1994 and the most recent
interim period, being October 31, 1997 (the "Financial Statements"). Seller
shall also provide the Buyer with financial statements dated December 31, 1997.
Except for the value of inventory as set forth on interim period financial
statement, the Financial Statements are substantially true and correct, and
fairly present the financial position of the Seller as at such dates and the
results of its operations and a statement of its cash flow for the periods then
ended. Except as relates to inventory, H. Xxxxxxx Xxxx is not aware of any
material modification that should be made to the year-end Financial Statements
in order for them to be in conformity with generally accepted accounting
principles. Also, as to any interim statement provided herewith, it was prepared
in conformity with generally accepted accounting principles, and is based on
recorded transactions and management's best estimates and judgments, except for
the aforementioned inventory valuation. The Seller has also provided Buyer with
a separate inventory valuation which Seller has prepared in accordance with
generally accepted accounting principles and which Seller represents and
warrants is substantially true and correct.
3.6. LIABILITIES. Except as disclosed in the Financial
Statements or on any other Schedule attached hereto, the Seller has no other
liabilities.
3.7. LITIGATION AND JUDGMENTS. Except as disclosed on Schedule
"3.7", the Seller is not a party to, or threatened with, any claim, litigation,
arbitration, proceeding or governmental investigation and the Seller has not
received notice of any claim, litigation, arbitration, proceeding or
governmental investigation. Additionally, except as disclosed on Schedule "3.7",
there are no judgments, orders, writs, decrees, fines, citations, penalties,
injunctions or other legal, administrative or arbitration actions affecting the
Seller.
3.8. AGREEMENTS. Schedule "3.8" sets forth a list of all
contracts, leases, and agreements (whether written or oral) under which the
Seller is bound including, but not limited to, lease agreements (collectively,
the "Contracts"). Except as disclosed in Schedule "3.8", each of the Contracts
is in full force and effect and enforceable in accordance with its terms and no
notice of default, defense, offset, counterclaim termination or acceleration has
been given or received by the Seller with respect to any of the Contracts.
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3.9. ACCOUNTS RECEIVABLE.
(a) The accounts receivable are an asset being included in this sale
transaction. All accounts receivable of the Seller reflected in the Balance
Sheet and all accounts receivable of the Seller that have arisen since the
Balance Sheet Date (except such accounts receivable as have been collected since
such dates) are valid and enforceable claims, and the goods and services sold
and delivered that gave rise to such accounts were sold and delivered in
conformity with all applicable express and implied warranties, purchase orders,
agreements and specifications. Such accounts receivable of the Seller are
subject to no valid defense, offset or counterclaim and are fully collectible to
the best of Seller and H. Xxxxxxx Xxxx'x knowledge, except to the extent of the
allowance for doubtful accounts reflected on the Balance Sheet, except as set
forth on Schedule 3.9 SCHEDULE 3.9 contains a true and complete aging of the
Seller accounts receivable as of the Balance Sheet Date.
3.10. TRADE NAME. To the best of the Seller's knowledge, the
Seller has the valid right to use its corporate name and the name Chesapeake
Plastic Lumber as a trade name, without any known conflict with the rights of
others. The Seller has not conducted business under any other name. The Seller
is not aware of any claim that use of its trade name infringes the rights of any
third party.
3.11. PROPERTY.
(i) TANGIBLE PROPERTY. Schedule "3.11-1" sets forth a
list of all interests owned, used by or leased by or to the Seller in machinery,
equipment, vehicles and other tangible property (collectively the "Tangible
Property"). Except as set forth in Schedule 3.11-1, all Tangible Property being
sold hereunder is structurally sound and has no material defects which are known
to Seller and are in good operating condition, repair, and are adequate for the
uses to which they are being put, ordinary wear and tear excepted.
(ii) REAL PROPERTY.
(a) The Seller owns no real property except
as set forth on Schedule "3.11-2"
(iii) SOFTWARE. Schedule "3.11-3" sets forth a list
of all software and/or software rights (including any computer programs) owned
by or licensed to the Seller (the "Software"). Software is being transferred "as
is, where is".
3.12. LIENS.
(i) Except as set forth on Schedule "3.12", the
Seller owns outright and has good and absolute legal, equitable and marketable
title to all of the Assets, free and clear of any lien, debt, pledge,
obligation, liability, charge, encumbrance, security interest, commitment or
option (any of the foregoing, an "Encumbrance") of any kind, nature or
description, and the Seller has the full power and authority to convey the
Assets to Buyer free
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and clear of any Encumbrance and, upon delivery of and payment for such Assets
as herein provided, Buyer will acquire good, valid and marketable title thereto,
free and clear of any Encumbrance.
(ii) All Shareholders own, both of record and
beneficially, all of the issued and outstanding shares of capital stock of the
Seller. There are no outstanding options, warrants or agreements under which the
Seller or any or all Shareholders would be obligated to issue or sell any stock
of the Seller. The Seller has no subsidiaries (wholly-owned or otherwise).
3.13. EMPLOYEES. Schedule "3.13" is a complete list of the
Seller 's employees, their job titles and their current wages and benefits.
Except as set forth on Schedule "3.13-1", the Seller is not and has not been a
party to any written agreement with any of its employees presently employed by
the Seller, there is no employee whose employment is not terminable at will. The
Seller has no personnel manual or handbook covering any of its employees, except
as disclosed on Schedule "3.13". The Seller has no severance pay policy and, the
Seller has never paid any severance payment to any of its employees. If Buyer
determines to offer employment to any employee of the Seller, the Seller shall
immediately provide copies of such employee's employment records. Except as set
forth on Schedule "3.13-2",: To the best of the Sellers knowledge, the Seller is
in compliance with all Laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; no unfair labor practice complaint against
the Seller is pending before the National Labor Relations Board; there is no
labor strike, dispute, slowdown or stoppage actually pending or threatened
against or involving the Seller; no representation question exists respecting
the employees of the Seller; no grievance which might have an adverse effect
upon the Seller or the conduct of its business exists, no arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
claim therefor has been asserted; no collective bargaining agreement is
currently being negotiated by the Seller and the Seller has not experienced any
material labor difficulty during the last three years. Schedule "3.13-3" sets
forth a true and correct list of all loans made by the Seller to employees of
the Seller. Prior to the Closing, the Seller shall (i) make no such further
loans and (ii) continue to collect such debts in accordance with its current
policy.
3.14. EMPLOYEE BENEFIT PLANS. Schedule "3.14" is a complete list
of the Seller's "Employee Benefit Plans" which term as used herein means (i) any
employee benefit plan, as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or (ii) any other plan, trust
agreement or arrangement for any bonus, severance, hospitalization, vacation,
deferred compensation, pension or profit sharing, retirement, payroll savings,
stock option, group insurance, death benefit, fringe benefit arrangement of any
nature whatsoever, including those benefiting former employees. On or before the
Closing Date, the Seller, if applicable, shall apply to the Internal Revenue
Service for a determination letter requesting approval of the termination of its
Profit Sharing Plan (the "Plan") and shall fully vest all participants in the
Plan and arrange for payment of all amounts held in the Plan for such
participants as soon as practicable after receipt of a favorable letter from the
IRS approving of the termination. Buyer assumes no responsibility for the Plan's
termination or for the payment of any Plan participant's account balances as
described in the preceding sentence. With respect to prior plan years and the
current plan year of the Seller's Health Plan: (i) the Seller has made on
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or prior to the date hereof and will have made on or prior to the Closing Date
all payments (including, without limitation, contributions, premiums, benefit
payments, administrative costs and liabilities) required to be made by it on or
prior to the date hereof and the Closing Date, and has accrued (in accordance
with generally accepted accounting principles consistently applied) as of the
date hereof and will have accrued on or prior to the Closing Date all payments
(including, without limitation, contributions, premiums, benefit payments,
administrative costs and liabilities) due but not yet payable as of the date
hereof and the Closing Date, and (ii) the Seller has operated, currently
operates, and will continue to operate up to Closing such plans in full
compliance with the plan documents and all applicable laws.
3.15. INSURANCE. Schedule "3.15" sets forth all policies of
insurance ("Insurance Policies") held by or on behalf of the Seller specifying
the insurer, the policy number (or covering note number with respect to
binders), the risks covered, the premium, the deductibles and the amount of
coverage provided and describing any pending claim against the Insurance
Policies. A life insurance policy insuring the life of H. Xxxxxxx Xxxx shall be
maintained and owned by Seller, as set forth on Schedule 3.15.
Except as set forth in Schedule "3.15", the Seller has not received a notice of
cancellation, non-renewal or audit of any such Insurance Policy. The Seller
represent and warrants that all insurance policies are in place and existent as
of the Closing Date. Except as set forth in Schedule "3.15", the Shareholder has
no knowledge of any failure to pay premiums when due. Such policies are
sufficient for compliance with all requirements of law and of all agreements to
which either Seller is a party; are valid, outstanding, and enforceable
policies; provide adequate insurance coverage for the assets and operations of
Seller's business; and with respect to the periods prior to Closing will not in
any way be affected by or terminate or lapse by reason of the transactions
contemplated by this Agreement.
3.16. NO BROKER. No broker or similar intermediary has acted
for or on behalf of the Seller or Shareholder in connection with the
transactions contemplated hereby.
3.17. ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
"3.17",: no hazardous wastes, hazardous substances, hazardous materials,
asbestos, infectious wastes, petroleum, petroleum products or pollutants, all as
defined by environmental laws existing as of the date of this Agreement
(collectively, "Hazardous Waste") or solid waste has been discharged, spilled,
released or disposed of by or at the direction of the Seller which would provide
a basis for liability for personal damage, property damage, environmental
cleanup or natural resources damage, except for such occasional emissions,
discharge, spills and releases occurring in and incidental to the regular
operation of the business of the Seller, e.g., oil leaks from vehicles which
would not cause any significant environmental problems ("Ordinary Emissions") ;
and no Ordinary Emission is the subject of any threatened or pending claim,
assessment, administrative proceeding or penalty. In addition, the Seller has
not spilled or discharged or caused to be spilled or discharged any Hazardous
Waste on any of the property it has leased in the past or is currently leasing
("Leased Property") , and has only used these properties as administrative,
manufacturing and office facilities in the normal course of its business. The
Buyer is aware that the leased property does contain certain hazardous waste
deposited thereon, as more specifically set forth in the lease agreement between
Seller and FIL USA, Inc., a copy of which has been
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provided to Buyer prior to Closing Date. The Seller and H. Xxxxxxx Xxxx, shall
have no responsibility to the Buyer as a result of any hazardous waste deposited
on the subject premises, unless Seller and H. Xxxxxxx Xxxx, spilled or
discharged or caused to be spilled or discharged any hazardous waste on the
subject property.
3.18. FULL DISCLOSURE. To the best of Seller's and H. Xxxxxxx
Xxxx'x knowledge, the information furnished by or on behalf of the Seller or H.
Xxxxxxx Xxxx to Buyer in connection with this Agreement and the transactions
contemplated hereby does not and will not contain any untrue statement of a
material fact and does not and will not omit to state any material fact
necessary to make the statements made, in the context in which made, not false
or misleading. There is no fact known to the Seller or H. Xxxxxxx Xxxx which
materially and adversely affects the business, prospects or financial condition
of the Seller, which has not been set forth in this Agreement or the Schedules
or certificates and/or any other documents provided to Buyer prior to Closing
furnished in connection with the transactions contemplated by this Agreement.
3.19. NO UNDISCLOSED LIABILITIES. Except to the extent set forth
or provided for in the Schedules attached to this Agreement, the Seller has no
liabilities, whether accrued, absolute, contingent or otherwise, whether due or
to become due and whether the amounts thereof are readily ascertainable or not,
or any unrealized or anticipated losses from any commitments of a contractual
nature, including Taxes with respect to or based upon the events or transactions
occurring at or prior to the Closing.
3.20. PROCEEDS. The proceeds to be received by the Seller in
connection with the transactions contemplated by this Agreement are sufficient
for, and will be used by, the Seller to meet all of its current financial and
administrative requirements, including without limitation, legal expenses and
any items set forth in any of the Schedules attached hereto.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Shareholders and the Seller as follows:
4.1. AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has the full corporate power and authority to
execute, deliver and perform this Agreement, the Promissory Note and the
transactions contemplated hereby. This Agreement and the Promissory Note have
been duly executed and delivered by, and are the valid and legally binding
obligation of, Buyer enforceable in accordance with its terms, and each document
contemplated by this Agreement, when executed and delivered in accordance with
the provisions hereof, shall be valid and legally binding upon Buyer in
accordance with its terms. Except as set forth on Schedule "4. 1 ", no consent
of any governmental or regulatory authority (federal, state or local) or any
other person or entity is required to be obtained by Buyer in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.1.1 CORPORATE GUARANTY. U.S. Plastic Lumber
Corporation, a Nevada corporation, being the parent of Buyer, does hereby
represent and warrant that it is a corporation
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duly organized, validly existing and in good standing under the laws of Nevada
and that it has received approval from its Board of Directors authorizing Buyer
to Close this transaction. Furthermore, U.S. Plastic Lumber Corporation hereby
represents and warrants that it will become a Maker of the Promissory Note to be
delivered pursuant to Section 1.3 hereof, issue all shares of non-assessable and
non-registered Common Stock as set forth in this Agreement at the time or times
required hereunder, that such shares will be validly issued upon issuance
thereof, and it agrees that this representation and warranty shall survive the
Closing of this transaction.
4.2. NO BROKER. No broker or similar intermediary has acted
for or on behalf of Buyer in connection with the transactions contemplated
hereby.
4.3. FULL DISCLOSURE. To the best of Buyer's knowledge, the
information furnished by or on behalf of Buyer to Shareholders or the Seller in
connection with this Agreement and the transactions contemplated hereby does not
and will not contain any untrue statement of a material fact and does not and
will not omit to state any material fact necessary to make the statements made,
in the context in which made, not false or misleading. The Buyer and U.S.Plastic
Lumber Corporation, to the best of their knowledge, are not aware of any event,
whether existent, threatened or contemplated, and whether involving the
government or agency thereof are not, that would have a material adverse affect
on the financial condition of the Buyer and U.S. Plastic Lumber Corporation.
4.4 Buyer shall use its best efforts to assume (i) the lease
with FIL [USA], Inc. for the premises from which the business of Seller is
conducted; (ii) the lease with Citicorp Leasing, Inc., for the equipment used in
the conduct of Seller's business; and (iii) the loan from Sterling Bank to
Seller and Buyer shall remove H. Xxxxxxx Xxxx as a Guarantor thereof.
5. OBLIGATIONS OF THE SELLER AND H. XXXXXXX XXXX, FROM THE DATE OF
THIS AGREEMENT UNTIL THE CLOSING Date. From the date hereof until the Closing
Date, the Seller will, and H. Xxxxxxx Xxxx will cause the Seller to, as
applicable:
5.1. Allow, during normal business hours and on reasonable
notice to, and preapproval by, H. Xxxxxxx Xxxx, which approval shall not be
unreasonably withheld; and provided that the Seller's business is not
unreasonably interrupted: (i) the employees, attorneys, accountants, engineers,
inspectors and any other representatives of Buyer free and full access to the
assets, the books and records of the Seller; and (ii) the employees of Buyer to
interview and meet with the employees of the Seller; such contact to be limited
to the employees listed in Schedule "5. 1" attached hereto. Seller and
Shareholder shall fully cooperate with Buyer in the Buyer's review of the
business of the Seller. Notwithstanding anything to the contrary, Buyer agrees
that any lists or documents containing the identity of customers and vendors or
from which the identity of customers or vendors can be discerned shall be
provided at Closing, except that Seller shall make any such lists or documents
available to Buyer prior to Closing with the identities of customers or vendors
stricken therefrom.
5.2. Use its reasonable efforts to: (i) preserve the Seller's
business organizations intact and to conduct its business in the Ordinary Course
and otherwise conduct its business after the signing of this Agreement in the
same manner as it conducted its business prior
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to the execution of this Agreement; (ii) to the extent requested by Buyer, keep
available the Seller's present employees; (iii) preserve the present
relationships with the Seller's customers and others having business
relationships with the Seller; and (iv) perform all obligations under contracts
and other agreements.
5.3. Use its best efforts to cause all of the conditions
precedent to Closing to be satisfied as soon as practicable after the date
hereof.
5.4. Observe all applicable Laws in the conduct of the
Seller's business, duly and timely file all reports, registrations and returns
to be filed with any governmental entity, and promptly pay all Taxes, fees and
other charges when due and keep full and accurate records of all transactions
entered into and conducted.
5.5. Promptly, by written notice, keep Buyer fully informed of
all material events and occurrences relevant to the Seller's business and
operations.
5.6. Cooperate fully with Buyer in making application for any
necessary approvals, including application for assignments of assignable
Contracts and Permits as determined and requested by Buyer; provided, however,
that until Closing, no action shall be taken which might identify to Buyer the
customers of Seller.
5.7. Hold in confidence and cause all Shareholders' and the
Seller's Representatives (as defined below) to hold in confidence all
Confidential Information (as defined below) and not disclose the same to any
third person without the prior consent of Buyer, except (i.) Pursuant to
lawfully issued subpoena, in which event Seller shall provide notice thereof to
Buyer upon receipt by Seller and (ii) all Shareholder's and the Seller's
Representatives who need such information for the purpose of evaluating the
transactions contemplated by this Agreement (such person shall be informed by
all Shareholders or the Seller of the confidential nature of the material and
shall be subject to all the terms of this Agreement; all Shareholders and the
Seller shall be responsible for any breach of such terms by any such
Representatives). If this Agreement is terminated or dissolved for any reason,
all Shareholders and the Seller will promptly return to Buyer all Confidential
Information furnished by Buyer and held by Shareholders or the Seller, including
all copies and summaries thereof and will not make use of or disclose to any
person such Confidential Information. As used herein, "Confidential Information"
means all information concerning Buyer and its business obtained by
Shareholders, the Seller, or their directors, officers, employees, attorneys,
agents or other representatives (collectively, "Representatives") from Buyer in
connection with the transactions contemplated by this Agreement except
information which (i) was available to the public prior to the time of such
disclosure, (ii) becomes available to the public through no act or omission of
the Shareholders or the Seller or their Representatives, or (iii) has been given
to the Shareholders or the Seller prior to such disclosure, or is given to the
Shareholders or the Seller thereafter, in either case by a third party not known
by the Shareholders or the Seller to be under any obligation of confidentiality
to the Buyer with respect thereto. "Confidential Information" includes this
Agreement.
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5.8. Promptly, by written notice, advise Buyer of any
information that indicates that any representation or warranty of Buyer
contained in this Agreement is not true and correct or that Buyer has breached
any of its obligations under this Agreement.
5.9. Promptly, by written notice, advise Buyer of any event,
condition or circumstance (an "Event") occurring after the date hereof through
the Closing Date which causes any of the representations and warranties of the
Seller or Shareholders not to be true and correct in all material respects as of
the date hereof or as of the date such Event occurred (as if such representation
or warranty were made on the date such Event occurred). Buyer's closing under
this Agreement after its receipt of information furnished by the Seller or
Shareholders pursuant hereto shall not operate as a waiver of any of Buyer's
rights for any misrepresentation or breach of any representation or warranty
which is disclosed by such information.
6. OBLIGATIONS OF BUYER FROM THE DATE OF THIS AGREEMENT. From the date
hereof until the Closing Date, Buyer will:
6.1. Cooperate fully with H. Xxxxxxx Xxxx and the Seller in
making application for any necessary approvals, if applicable,
6.2. Hold in confidence and cause its Representatives (as
defined below) to hold in confidence all Confidential information (as defined
below) and not disclose the same to any third person without the prior consent
of Shareholders, except to Buyer's Representatives who need such information for
the purpose of evaluating the transactions contemplated by this Agreement (such
person shall be informed by Buyer of the confidential nature of the material and
shall be subject to all the terms of this Agreement; Buyer shall be responsible
for any breach of such terms by any of the Buyer's Representatives). If this
Agreement is terminated or dissolved for any reason, Buyer will promptly return
to all Shareholders all Confidential Information furnished by all Shareholders
or the Seller including all copies and summaries thereof and will not make use
of or disclose to any person such Confidential Information. As used herein,
"Confidential Information" means all information concerning the Seller obtained
by Buyer or its directors, officers, employees, attorneys, agents or other
representatives (collectively, "Representatives") from Shareholders or the
Seller in connection with the transactions contemplated by this Agreement except
information which (i) was available to the public prior to the time of such
disclosure, (ii) becomes available to the public through no act or omission of
Buyer or Buyer's Representatives, or (iii) has been given to Buyer prior to such
disclosure, or is given to Buyer thereafter, in either case by a third party not
known by Buyer to be under any obligation of confidentiality to the Seller or
all Shareholders with respect thereto. "Confidential Information" includes this
Agreement.
6.3. Promptly, by written notice, advise all Shareholders and
the Seller of any information that indicates that any representation or warranty
of Shareholders or the Seller contained in this Agreement is not true and
correct or that all Shareholders, any one or more of them or the Seller has
breached any of its obligations under this Agreement together with reasonable
detail so as to apprise them of such conduct.
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6.4. Promptly, by written notice, advise all Shareholders and
the Seller of any event, condition or circumstance (an "Event") occurring after
the date hereof through the Closing Date which causes any of the representations
and warranties of Buyer not to be true and correct in all material respects as
of the date hereof or as of the date such Event occurred (as if Buyer had made
such representation or warranty on the date such Event occurred). The Seller's
and all Shareholders' closing under this Agreement after their receipt of
information furnished by Buyer pursuant hereto shall not operate as a waiver of
any of the Seller 's or Shareholders' rights for any misrepresentation or breach
of any representation or warranty which is disclosed by such information.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The obligations of
Buyer to be performed by it at the Closing are subject to the satisfaction, at
or prior to the Closing of each of the following conditions, each of which may
be waived in whole or part by Buyer:
7.1. The representations and warranties made in Sections 3.1,
3.11 and 3.12 of this Agreement shall each be true and correct in all material
respects on the Closing Date with the same force and effect as though they had
been made on the Closing Date (the truth and correctness of the remaining
representations and warranties in Section 3 of this Agreement on the Closing
Date with the same force and effect as if made on the Closing Date not being
conditions precedent to the obligations of Buyer to be performed at Closing),
and Shareholders and the Seller shall have performed in all material respects
their obligations under this Agreement which are to be performed or complied
with prior to or on the Closing Date, as the case may be in the form attached
hereto as Exhibit F.
7.2. Buyer shall have received a certificate, dated the
Closing Date, from the Seller, H. Xxxxxxx Xxxx and any applicable Shareholders
certifying to the fulfillment of the conditions set forth in Section 7. 1.
7.3 Buyer shall have received the opinion of counsel to the
Seller and Shareholders, dated the Closing Date and addressed to Buyer
substantially in the form of Exhibit "D" attached hereto.
7.4 At least three days prior to Closing, the Seller shall
deliver to Buyer Uniform Commercial Code certified searches and searches with
respect to the Seller for liens, encumbrances, judgments and federal tax liens
in (collectively, "Searches"), all such Searches to be dated no earlier than ten
business days prior to the Closing Date.
7.5. On the Closing Date, the Seller shall have delivered to
Buyer the following:
(i) a fully executed Non-Competition Agreement in the form
attached hereto as Exhibit C,
(ii) documents and instruments of transfer for the Assets
substantially in the forms attached as Exhibit "E" including, without
limitation, Articles of Transfer, bills of sale for tangible property, transfers
of certificates of title for all Assets where applicable, all keys for
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vehicles and the Real Property, and, to the extent assignable by the Seller,
assignments of Contracts and Permits; (ii) to the extent available, the original
invoices, if available, together with the manufacturer's or dealer's guarantees
and/or warranties covering the Assets; (iii) to the extent available, copies or
originals of all files, papers, books and records, Permits, applications,
correspondence and other documents relative to the Assets (including a full
customer list); (iv) a certificate, dated no earlier than ten business days
prior to the Closing Date, from the Maryland Secretary of State that the Seller
is in good standing which Seller and Shareholders represent does not get issued
by the State of Maryland unless there are no liens for corporate taxes of any
kind, including but not limited to payroll taxes, against the Seller; (vi) if
applicable, any termination statements terminating the liens or pay-off letters
with respect to the liens set forth on Schedule "7.5"; (vii) copies of the Board
of Directors' and Shareholders' unanimous written consents authorizing the
execution, delivery and performance of this Agreement with the Seller; and (vii)
receipts acknowledging Buyer's payment to the Seller of the Purchase Price.
Buyer shall pay any sales tax to the State of Maryland which may be due as a
result of the assets being transferred hereunder.
7.6. There shall not be any governmental suit or proceeding
pending before any court or other governmental agency in which the government
seeks to prevent the consummation of this Agreement or the transactions
contemplated hereby. There shall not be any order or judgment issued by any
court of competent jurisdiction or other governmental agency which prohibits the
consummation of this Agreement or the transactions contemplated hereby.
7.7. Shareholders and the Seller shall have executed all this
Agreement and all Agreements required to be executed by this transaction.
7.8 Buyer's review of the representations and warranties
contained herein and the Schedules which are a part of this Agreement and a
determination that the information contained in the representations and
warranties and the Schedules is substantially true and correct in all material
respects determined as of the date of this Agreement.
7.9 Fil (US), the landlord of the premises occupied by Seller,
shall agree to assign the Lease on the aforesaid premises to Buyer. Seller and
Shareholder shall utilize their best efforts to assist Buyer in the
re-negotiation of certain provisions of the Lease, including but not limited to
maintaining the existing rental of $6,000 per month through the termination of
the Lease on May 1, 2003, and such other changes as Buyer may reasonably
request. Buyer acknowledges that Seller and Shareholder shall have no obligation
pursuant to this paragraph to expend any monies, except minimal costs relative
to administrative support such as phone bills, letter writing, postage, etc.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER AND
SHAREHOLDERS TO EFFECT THE CLOSING. The obligations of the Seller and
Shareholders to be performed by them at the Closing are subject to the
satisfaction, at or prior to the Closing, of the following conditions, each of
which may be waived in whole or in part by the Seller and Shareholders:
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8.1. The agreements, representations and warranties made by
Buyer and U.S. Plastic Lumber Corporation in Sections 4.1, 4.2 and 4.3 of this
Agreement shall each be true and correct in all material respects on the Closing
Date with the same force and effect as though they had been made on the Closing
Date, and Buyer shall have performed all of its obligations under this Agreement
which are to be performed or complied with by it prior to or on the Closing
Date, as the case may be. Buyer and U.S. Plastic Lumber Corporation shall also
represent and warrant as of the Closing Date that their are currently no facts
known to it which will materially affect the financial condition of either
company now or in the foreseeable future.
8.2. Shareholders and the Seller shall have received a
certificate, dated the Closing Date, from the Buyer certifying to the
fulfillment of the conditions specified in Section 8.1 and Certificates of Good
standing issued within five days of Closing on behalf of Buyer and U. S. Plastic
Lumber Corporation.
8.3. Shareholders and the Seller shall have received a
certificate, dated the Closing Date, from the Secretary of Buyer certifying to
the minutes of the meetings of the Board of Directors of Buyer authorizing the
execution, delivery and performance of this Agreement by Buyer and the
transactions contemplated hereby.
8.4. Buyer shall have executed this Agreement and all Related
Agreements, including the Promissory Note UCC Financing Statement, and Security
Agreement attached hereto and incorporated by reference herein as Exhibit B,
contemplated by this transaction.
8.5. There shall not be in effect any order issued by a court
of competent jurisdiction which restricts the payment of the Purchase Price to
the Seller or the distribution of the Purchase Price by the Seller.
8.6. The Closings under the Related Agreements shall have
occurred simultaneously with the Closing under this Agreement.
9. TERMINATION AND EFFECT OF TERMINATION.
9.1. Termination. This Agreement may be terminated:
(i) at any time on or prior to the Closing Date, by
the mutual consent in writing of the parties hereto;
(ii) at any time on or prior to the Closing Date, by
either Buyer, or Shareholders and the Seller, as the case may be, if the other
party has breached, in any material respect, any representation or warranty
contained in Sections 3.1, 3.11 or 3.12 (as to the Seller and the Shareholders
which have agreed to be bound by such representations and warranties), or any
representation or warranty in Section 4.1, 4.2 and 4.3 (as to Buyer), or any
covenant or undertaking contained herein, and any such breach has not been cured
by the close of business on the 10th day after the date on which notice of such
breach is given to the party committing such breach, unless the party in breach
has notified the other party, in writing, that the breach cannot be cured within
the ten day period and the party in breach is diligently and in good faith
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working to cure the breach, in which case the cure period may be extended by the
breaching party as necessary to cure the breach;
(iii) by Buyer at any time after the date on which
the Seller shall no longer be in operation as an on-going business or if the due
diligence of Buyer, in the sole discretion of Buyer, manifests the transaction
is not feasible or suitable to Buyer's business.
9.2. EFFECT OF TERMINATION.
(i) Upon termination of this Agreement as provided in
Section 9. 1 (i), this Agreement shall forthwith become void and there shall be
no liability or obligation on the part of any party hereto or their respective
directors, officers, employees, agents or other representatives.
(ii) In the event of termination of this Agreement as
provided in Section 9.1 (ii) or (iii) hereof, such termination shall be without
prejudice to any rights that the terminating party or parties may have against
the breaching party or parties or any other person under the terms of this
Agreement or otherwise.
10. DAMAGE TO TANGIBLE PROPERTY. If, between the date of this Agreement
and the Closing Date, any of the Seller 's assets are damaged, the transactions
contemplated by this Agreement shall proceed, provided that, at Buyer's option
either (A) the amount of Cash being issued hereunder shall be decreased by the
fair market value of the affected Property (herein, the "Affected Property") or
(B) the proceeds from the Insurance Policies (together with a reimbursement to
Buyer of the amount of any deductible thereon), shall be assigned and/or paid to
Buyer. Buyer shall have the right to participate in the negotiation and
settlement of any insurance claim or condemnation award, as the case may be. If
the parties are unable in good faith to agree upon the fair market value of the
Affected Property, the Closing Date shall be extended to the fifth business day
after the date the appraisal procedure set forth in this Section 10 shall be
completed. Within 10 days after such damage or condemnation, the parties shall
attempt to agree upon the selection of a disinterested independent qualified
appraiser to determine the fair market value of the Affected Property. If the
parties are able to agree upon an appraiser, such appraiser shall be instructed
to furnish a written appraisal within 30 days of its or his selection. If the
parties are unable to agree upon the selection of an appraiser within such
10-day period, the Seller and Buyer shall, within five days thereafter, each
select an appraiser to determine the fair market value of the Affected Property.
Each appraiser so selected shall furnish the parties with a written appraisal
within 30 days of its or his selection. If the two appraisals are within 10% of
each other, the fair market value of the Affected Property shall be the average
of the two appraisals. If the two appraisals are not within 10% of each other,
the appraisers shall, within 10 days after the issuance of their respective
reports, select a third appraiser to determine the fair market value of the
Affected Property. The third appraiser shall issue a written appraisal within 30
days of its or his selection. The third appraisal shall be averaged with the
other two and the appraisal furthest from the average of all three appraisals
shall be disregarded. The average of the remaining two appraisals shall be the
fair market value of the Affected Property. The Seller and Buyer shall each pay
50% of the total cost of the appraisal(s). The determination of the fair market
value of the Affected Property pursuant to the
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appraisal procedure set forth in this Section 10 shall be final, conclusive and
binding upon the parties, absent a showing of fraud. If, subsequent to the
Closing Date, all or a portion of the Affected Property that is the subject of a
pending condemnation procedure is not ultimately taken, the fair market value of
such Property shall promptly upon settlement or final resolution of such
proceeding, be paid to the Seller.
11. LITIGATION COSTS. In any action, proceeding or arbitration between
the parties arising out of or relating to this Agreement, all litigation costs
and reasonable attorney's fees should be borne by the non-prevailing party,
regardless of whether it's litigation or arbitration.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants and agreements shall survive the execution and delivery
hereof and the Closing Date for a period of two years from date of Closing;
provided, however, that any claim for breach of the warranty as it relates to
the condition of the equipment shall be made within twelve months from the date
of Closing.
13. INDEMNIFICATION.
13.1. INDEMNIFICATION.
(i) The Seller, Shareholder, H. Xxxxxxx Xxxx, and the
other Shareholders (only to the extent any other such Shareholder has agreed to
be bound by a particular representation and warranty that the Buyer claims has
been breached), jointly and severally, covenant and agree to defend, indemnify
and hold harmless Buyer and each Person who controls Buyer within the meaning of
the Securities Act from and against any Damages arising out of or resulting
from: (i) any material inaccuracy in or material breach of any representation or
warranty made by the Seller or any Shareholder in this Agreement or in any
writing delivered pursuant to this Agreement or at the closing [unless and
except that such inaccuracy or breach is a direct result of changes made by the
Buyer in accounting methods or estimates utilized in financial reporting of the
Seller]; (ii) the failure of the Seller or any Shareholder to perform or observe
fully any covenant (including post closing covenants), agreement or provision to
be performed or observed by the Seller or such Shareholder pursuant to this
Agreement or any of the Related Agreements; or (iii) the failure of Seller to
comply with any bulk sales laws applicable to the transactions contemplated by
this Agreement.
(ii) Buyer covenants and agrees to defend, indemnify
and hold harmless the Seller and Shareholders from and against any Damages
arising out of or resulting from: (i) any inaccuracy in or breach of any
representation or warranty made by Buyer in this Agreement or in any writing
delivered pursuant to this Agreement or at the Closing; (ii) the failure by
Buyer to perform or observe any covenant, agreement or condition to be performed
or observed by it pursuant to this Agreement; (iii) the failure of Buyer to
remove Seller or H. Xxxxxxx Xxxx as an obligor or guarantor of any debt assumed
by, or as assigned to Buyer hereunder or (iv) the failure of Buyer to remove
Seller or H. Xxxxxxx Xxxx from any obligations it or he may have under any lease
with Citicorp Leasing, Inc., or FIL[USA], Inc.
13.2. THIRD PARTY CLAIMS.
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(i) If any party entitled to be indemnified pursuant
to Section 13.1 (an "INDEMNIFIED PARTY") receives notice of the assertion by any
third party of any claim or of the commencement by any such third person of any
Action (any such claim or Action being referred to herein as an " INDEMNIFABLE
Claim") with respect to which another party hereto (an "INDEMNIFYING PARTY") is
or may be obligated to provide indemnification, the Indemnified Party shall
promptly notify the Indemnifying Party in writing (the "CLAIM NOTICE") of the
Indemnifiable Claim; PROVIDED, that the failure to provide such notice shall not
relieve or otherwise affect the obligation of the Indemnifying Party to provide
indemnification hereunder, except to the extent that any Damages directly
resulted or were caused by such failure.
(ii) The Indemnifying Party shall have thirty (30)
days after receipt of the Claim Notice to undertake, conduct and control,
through counsel of its own choosing, and at its expense, the settlement or
defense thereof, and the Indemnified Party shall cooperate with the Indemnifying
Party in connection therewith, PROVIDED, that (i) the Indemnifying Party shall
permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by the Indemnified Party (subject to the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld), provided
that the fees and expenses of such counsel shall not be borne by the
Indemnifying Party, and (ii) the Indemnifying Party shall not settle any
Indemnifiable Claim without the Indemnified Party Shareholder consent. So long
as the Indemnifying Party is contesting any such Indemnifiable Claim in good
faith, the Indemnified Party shall not pay or settle such claim without the
Indemnifying Party's consent, which consent shall not be unreasonably withheld.
(iii) If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days after receipt of the Claim Notice that
it elects to undertake the defense of the Indemnifiable Claim described therein,
the Indemnified Party shall have the right to contest, settle or compromise the
Indemnifiable Claim in the exercise of its reasonable discretion; PROVIDED, that
the Indemnified Party shall notify the Indemnifying Party of any compromise or
settlement of any such Indemnifiable Claim.
(iv) Anything contained in this Section 13.2 to the
contrary notwithstanding, the Seller and any applicable Shareholders shall not
be entitled to assume the defense for any Indemnifiable Claim (and shall be
liable for the reasonable fees and expenses incurred by the Indemnified Party in
defending such claim) If the Indemnifiable Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against Buyer or
the Seller which Buyer determines, after conferring with its counsel, cannot be
separated from any related claim for money damages and which, if successful,
would adversely affect the business, properties or prospects of the Seller,
Seller and applicable shareholders shall be entitled to assume the defense of
such Indemnifiable Claims; provided, however, that the Counsel chosen by Seller
and applicable shareholders shall be reasonably acceptable to Buyer.
13.3. INDEMNIFICATION NON-EXCLUSIVE. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common-law remedy any party may have for breach of representation,
warranty, covenant or agreement.
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13.4. SET-OFF. Notwithstanding any provision of this Agreement or of
any other agreement, instrument or undertaking, it is understood and agreed that
Buyer shall have the right to set-off the amount of any indemnity under Sections
13.1 or 13.2 hereof to the extent the Seller or any of the Shareholders shall be
liable therefor against any sums of money or any shares of the Buyer at any time
payable or deliverable to the Shareholders. The remedies provided in this
Article shall be cumulative and shall not preclude the assertion by any party of
any other rights or the seeking of any other remedies by it against any other
party.
14. EXPENSES. Except as otherwise provided in this Agreement, whether
or not the transactions contemplated by this Agreement shall be consummated,
each party shall pay its or their own expenses incident to preparing for,
entering into and carrying into effect this Agreement and the transactions
contemplated hereby.
15. POST CLOSING COVENANTS. (i) H.Xxxxxxx Xxxx, a Shareholder, shall
remain a full time employee and Xxxxx Xxxx a part time employee for a period of
six months subsequent to the Closing Date, subject only to the death or
incapacity of either. Xxxxx Xxxx'x employment shall not exceed 10 hours per week
during the six month time frame. The total compensation to be paid by Buyer for
the employment of Xxxxxxx Xxxx and Xxxxx Xxxx for the six month period shall be
$40,000. Their employment duties shall consist of performing general operations
and administration functions to assure a smooth transition in plant management
and administration. Xxxxxxx Xxxx shall also assist in the installation of any
additional equipment lines, if necessary. (ii) At any time and from time to time
after the Closing Date, at Buyer's request and without further consideration,
Shareholders and the Seller will promptly execute and deliver all such further
documents or perform such acts as Buyer may reasonably request in order to more
fully consummate the transactions contemplated herein. (iii) After the Closing
Date, Shareholders and the Seller shall promptly deliver to Buyer all notices,
correspondence and other items relating to the Assets which are from time to
time received by it or are in its possession. Buyer shall retain any documents
and records delivered to it by Shareholders or the Seller for all periods
required by any Laws.
16. DILUTION PROTECTION. The Common Stock provided as part of the
purchase price consideration as set forth in Section 1.3 (ii) herein, shall be
protected against dilution from any stock splits or stock dividends until such
time as U.S. Plastic Lumber Corporation becomes a full public reporting company
under the regulations of the Securities and Exchange Commission ("SEC") which
shall mean the date upon which the SEC grants a registration statement filed by
U.S. Plastic Lumber Corporation to be effective or the date which U.S. Plastic
Lumber Corporation files a 10K report to the SEC, whichever event happens
earlier. Notwithstanding anything to the contrary, Shareholders understand that
stock will be issued by U.S. Plastic Lumber Corp. for purposes of acquisitions,
financings, and other such transactions related to its growth and stability, and
stock dividends relative to a previous Series A Preferred Stock offering
completed by U.S. Plastic Lumber Corp. and that such transactions shall not be
subject to any dilution protection whatsoever.
17. MISCELLANEOUS.
17.1. Notices. Any notice or other communication required or
which
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may be given hereunder shall be in writing and either delivered personally or
mailed, certified, registered or express mail, or courier service, postage
prepaid, and shall be deemed given when so delivered personally or if by
certified or registered mail, four days after the date of mailing or if express
mailed or sent by courier service, two days after the date of mailing or sending
subject to an obligation imposed upon the person sending the notice to obtain a
receipt, as follows:
(i) If to Shareholder and/or the Seller, to:
with a required copy to:
Astrachan Xxxxx Xxxxxxx & Xxxxxx, P.C.
Attn: Xxxxx X. Xxxxxxxxx
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
(ii) If to Buyer, to:
U.S. Plastic Lumber Corp.
0000 X. Xxxxxx Xx. Xxxxx 000X
Xxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Vice President
and General Counsel
or to such other address as any party may designate to the others by
notice as set forth above.
17.2. ENTIRE AGREEMENT. This Agreement (including the menu of
Exhibits and Schedules hereto) contains the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.
17.3. WAIVERS AND AMENDMENTS. This Agreement may be amended or
modified only by a written instrument signed by all the parties. No delay on the
part of any party in exercising any right hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right hereunder,
or any single or partial exercise of any right hereunder, preclude any other or
further exercise thereof or the exercise of any other right hereunder.
17.4. BINDING AGREEMENT. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by each of the parties hereto and
their respective legal representatives, successors and assigns.
17.5. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Maryland applicable to
agreements made, delivered and to be performed entirely therein.
17.6. ASSIGNMENT. This Agreement may not be assigned by any
party, except with the written consent of the other party hereto provided that,
at Closing, Buyer may, without the consent of Shareholders or the Seller, assign
some or all its rights to a subsidiary or subsidiaries or an affiliate or
affiliates. Any such assignment shall not relieve Buyer or U.S.
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Plastic Lumber Corporation of any obligations under this Agreement. Nothing in
this Agreement is intended to confer upon any person or entity, other than the
parties hereto and their legal representatives, successors and permitted
assigns, any rights under this Agreement.
17.7. VARIATIONS IN PRONOUNS. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
17.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Except
for the binding arbitration process described below, any action arising out of
this Agreement or the transactions contemplated hereby may be instituted in any
state or federal court located in the State of Maryland and each party waives
any objection which such party may have to the laying of the venue of any such
action, and irrevocably submits to the jurisdiction of any such court in any
such action. Any controversy between the parties arising out of or relating to
this Agreement or the transactions contemplated hereby where the amount in
controversy is less than $75,000.00 shall be settled by binding arbitration
within the State of Maryland in accordance with the Commercial Arbitration Rules
of the American Arbitration Association before one arbitrator, and judgment upon
the award rendered by the arbitrator(s) shall be entered in any court having
jurisdiction thereof; provided, however, that if any party shall seek equitable
relief or enforcement of the Security Agreement, the Courts of Maryland shall be
availed of for that purpose, after which the parties shall again be compelled to
arbitrate any issue required to be arbitrate hereunder.
17.9. INTERPRETATION. Notwithstanding any right of Buyer to
investigate fully the affairs of Shareholders and the Seller (and vice versa)
and notwithstanding any knowledge of facts determined or determinable by Buyer
pursuant to such investigation or right of investigation (and vice versa) ,
Buyer and Shareholders and the Seller have the right to rely fully upon the
representations, warranties, covenants and agreements contained in this
Agreement.
17.10. SEVERABILITY . If any provision of this Agreement is
construed to be invalid or unenforceable, such determination shall not affect
the remaining provisions of this Agreement, all of which shall remain in full
force and effect, unless the absence of the invalid, illegal or unenforceable
provision or provisions materially reduces the value to be given or received by
any party at the Closing or materially alters the obligations and liabilities of
any party after the Closing. To the extent permitted by law, each party waives
any provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable.
17.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17.12. EXHIBITS AND SCHEDULES. The Exhibits and Schedules to
this Agreement are part of this Agreement as if set forth in full herein, and
any information disclosed on any Schedule shall be deemed to have been disclosed
on all applicable Schedules,
17.13. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST/WITNESS: BUYER:
U.S. Plastic Lumber Ltd.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxx
---------------------------------- --------------------------------
Xxxxx X. Xxxxxxx, Secretary Xxxxxxx X. Xxxx, President
Chesapeake Plastic Lumber Inc.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxx
---------------------------------- --------------------------------
Xxxxx X. Xxxxxxx, Secretary Xxxxxxx X. Xxxx, Chairman
SELLER:
Chesapeake Recycled Lumber, Inc.
/s/ H. Xxxxxxx Xxxx
---------------------------------- --------------------------------
H. Xxxxxxx Xxxx, President
SHAREHOLDERS:
/s/ H. Xxxxxxx Xxxx
---------------------------------- --------------------------------
H. Xxxxxxx Xxxx
/s/ Xxxx X. Xxxxxx
---------------------------------- --------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
---------------------------------- --------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxx
---------------------------------- --------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------- --------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
---------------------------------- --------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
---------------------------------- --------------------------------
Xxxxxxx X. Xxxxxx
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/s/ Xxxx X. Xxxxxxxx
---------------------------------- --------------------------------
Xxxx X. Xxxxxxxx
U.S. Plastic Lumber Corporation enters into this Agreement for the sole purpose
of binding itself to Sections 4.1.1 and 4.1.3 hereof.
ATTEST: U.S. Plastic Lumber Corporation
/s/ Xxxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxxxxx
---------------------------------- --------------------------------
Xxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxxxx, President
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LIST OF EXHIBITS
----------------
EXHIBIT DESCRIPTION
------- -----------
A List of Shareholders
B Promissory Note
B-1 UCC Financing Statement and Security Agreement
C Non-Compete Agreements
D Opinion of Counsel of Seller/Shareholder
E Articles of Transfer/Xxxx of Sale
F Certificate of President of Chesapeake Recycled Lumber, Inc.
G Consent of Shareholders of Chesapeake Recycled Lumber, Inc.
H Consent of Directors of Chesapeake Recycled Lumber, Inc.
I Assumption of FIL (US), Inc. Building Lease
EXHIBIT DESCRIPTION
------- -----------
1.1 List of Assets
1.2 List of Assumption of Liabilities and Debts
1.4 Allocation of Purchase Price
1.6 Deferred Payment Customer List
1.7 Bulk Sale - List of Creditors
3.1 Organization and Good Standing
3.1-2 Limits on Authority
3.1-3 Consents of Shareholder/Seller
3.2 Tax Matters
3.3 Compliance; Permits
3.4 No Breach
3.5 Financial Statements
3.7 Litigation and Judgments
3.8 Contracts
3.9 Accounts Receivable
3.11 Tangible Property
3.11-2 Real Property
3.11-3 Software
3.12 Liens
3.13 List of Employees
3.13-1 Employment Agreements
3.13-2 Employment Compliance Matters
3.13-3 Loans made to Company Employees
3.14 Employee Benefit Plans
3.15 Insurance Policies
3.17 Environmental Matters
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4.1 Consents of Buyer
5.1 Certain Employees
7.5 Liens to be Terminated
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