EXHIBIT 10.16
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement") is dated as of February
___, 2004 (the "Effective Date") and is by and among XRG, INC., a Delaware
corporation ("XRG"), XRG ACQUISITION SUB II, INC., an ________ corporation and a
wholly-owned subsidiary of XRG ("Merger Sub"), RSV, INC., a Tennessee
corporation ("RSV"), and XXXXXXX XXXXXXX, an individual residing in Kingsport,
Tennessee, ________(hereinafter "Xx. Xxxxxxx" or "Shareholder" or "Seller"), and
XXXXX X. XXXXXX, an individual residing in Kingsport, Tennessee (hereinafter
referred to as "Xx. Xxxxxx", "Shareholder" or "Seller"). XRG, RSV and the Seller
are referred to herein individually as "Party" and collectively as "Parties."
W I T N E S S E T H:
WHEREAS, the Shareholders are the owners of all of the issued and
outstanding capital stock of RSV; and
WHEREAS, RSV is principally engaged in the freight hauling business; and
WHEREAS, the parties desire that XRG acquire RSV on the terms and subject
to the conditions set forth in this Agreement; and
WHEREAS, to effectuate such acquisition, the respective Boards of
Directors of XRG, Merger Sub and RSV (XRG acting as the sole shareholder of
Merger Sub and the Shareholders acting as the only shareholders of RSV) have
approved the merger of Merger Sub with and into RSV as set forth in Article 1 of
this Agreement (the "Merger"), upon the terms and subject to the conditions set
forth herein, whereby the issued and outstanding shares of Common Stock, $1.00
par value, of RSV ("RSV Common Stock") owned by the Shareholders shall be
converted into the right to receive shares of the Common Stock of XRG, par value
$.001 (the "XRG Common Stock"); and
WHEREAS, XRG, Merger Sub, RSV and the Shareholders desire to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties herein contained, the parties to this Agreement
agree as follows:
"Closing" has the meaning set forth in Section 2(e) below.
"Closing Date" has the meaning set forth in Section 2(e) below.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Liability" or "Liabilities" or "liability" or "liabilities" means any
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
taxes.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest.
1. THE MERGER.
Section 1.01 The Merger. Subject to the terms and conditions of this
Agreement, XRG shall cause Merger Sub to be merged with and into RSV in
accordance with the applicable provisions of the Tennessee Business Corporation
Act of 1983 ("TBCA") as provided in this Article 1.
Section 1.02 Effects of the Merger. At the Effective Time of the
Merger (as defined in Section 1.03):
(a) The separate existence of Merger Sub shall cease and Merger
Sub shall be merged with and into RSV and RSV shall be the
surviving corporation as a wholly-owned subsidiary of XRG
(Merger Sub and RSV are sometimes hereinafter referred to as
the "Constituent Corporations" and RSV, as in existence after
the Effective Time of the Merger, is sometimes hereinafter
referred to as the "Surviving Corporation");
(b) The Articles of Incorporation of RSV as in effect immediately
prior to the Effective Time of the Merger shall be the
Articles of Incorporation of the Surviving Corporation with
the amendments noted thereto in the Articles of Merger (as
defined in Section 1.03), until amended in accordance with the
provisions of IBCA;
(c) The Bylaws of RSV as in effect immediately prior to the
Effective Time of the Merger shall be the Bylaws of the
Surviving Corporation, and thereafter may be amended in
accordance with
their terms and as provided by the Articles of Incorporation
of the Surviving Corporation and the IBCA;
(d) The Board of Directors of the Surviving Corporation shall
consist of the following persons:
___________________________
Xxxxx X. Xxxxxxx
(e) The officers of the Surviving Corporation shall be as follows:
Offices Holder
Chairman, President and ____________
Chief Executive Officer
Secretary X. X. Xxxxxxx
Vice President
From and after the Effective Time of the Merger, the Merger shall have all other
effects provided by applicable law.
Section 1.03 Effective Time of the Merger. On the Closing Date, and
subject to the provisions of this Agreement and the TBCA, articles of merger
(the "Articles of Merger") shall be duly executed and acknowledged by Merger Sub
and RSV and shall thereafter be delivered to the Secretary of State of the State
of Tennessee for filing as provided in the TBCA. The Merger shall become
effective upon the later of the filing of the Articles of Merger or the time set
forth in the Articles of Merger as the effective time of the Merger, if any.
(The time at which the Merger becomes effective as provided in the preceding
sentence is referred to herein as the "Effective Time of the Merger".) The
Surviving Corporation shall thereafter cause a copy of the Articles of Merger,
certified by the Secretary of State of the State of Tennessee; to be filed in
such other offices as may be required by applicable law.
Section 1.04 Effect on Capital Stock of the Constituent
Corporations. At the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of any holder of any shares of capital stock:
(a) Capital Stock of Merger Sub. Each issued and outstanding share
of the capital stock of Merger Sub shall be converted into and
become one fully paid and nonassessable share of Common Stock,
par value $.001, of the Surviving Corporation;
(b) Conversion of RSV Common Stock. All of the issued and
outstanding shares of RSV Common Stock shall, collectively, be
converted into the right to receive 1,000,000 shares of XRG
Common Stock to be issued in the Merger, subject to
adjustment, as set forth in Section 2 below. No fractional
shares of XRG Common Stock will be issued as a result of the
Merger. In lieu of the issuance of fractional shares, shares
of XRG Common Stock will be rounded to the nearest whole
number.
Section 1.05 Exchange of Certificates. At the Effective Time of the
Merger, the Shareholder shall surrender all certificates held of record by him
that immediately prior to the Effective Time of the Merger represented
outstanding shares of RSV Common Stock ("Old Certificates") and XRG shall issue
in exchange for the Old Certificates one or more certificates ("New
Certificates") representing the shares of XRG Common Stock into which the shares
of RSV Common Stock theretofore represented by such Old Certificates shall have
been converted. The Shares of XRG Common Stock issuable upon the surrender of
shares of RSV Common Stock shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of RSV Common Stock, other
than the right to receive additional shares of XRG Common Stock pursuant to the
adjustment provision set forth in Section 2 below.
Section 1.06 Director/Stockholder Approval. The Boards of Directors
of RSV, XRG and Merger Sub, the Shareholders of RSV, and XRG as the sole
shareholder of Merger Sub have all adopted and approved this Agreement, the
Merger and any related matters.
2. MERGER CONSIDERATION.
(a) Consideration - XRG Common Stock. At the Closing, XRG issue to
or for the account of the Shareholder a total of 1,000,000 shares of XRG Common
Stock ("XRGC Shares").
(b) Adjustment of XRGC Shares. XRG guarantees to the Shareholder the
per-share value for the XRGC Shares set forth below during the 12-month period
following the Closing Date. The number of XRGC Shares is subject to adjustment
twelve months after the Closing Date ("Adjustment Date") based on the then
market price of the XRGC Shares. For purposes of this Section 2(b), "market
value" shall be the average of the closing prices for XRG Common Stock on the 20
trading days immediately preceding the Adjustment Date, as reported by the
principal stock exchange or other automated quotation system on which XRG Common
Stock is then traded, or if it is not then traded, as reported by the OTC
Bulletin Board or other reporting agency.
(i) On the Adjustment Date, in the event the XRGC Shares held
by the Seller do not have a market value equal to or greater than $1.00 per
share, then XRG shall be obligated to issue to the Seller such number of
additional shares of XRG Common Stock that are sufficient to result in the total
market value of the XRGC
Shares initially issued to the Seller on the Closing Date plus the market value
of such additional shares to equal $1,000,000. In the event XRG would have to
issue more than 1,000,000 additional shares of XRG Common Stock in order to
reach the required total market value, then the Seller may, at his option,
invoke the terms of the stock pledge and security agreement described in Section
2(c) below.
(ii) Notwithstanding the above, no adjustment shall be made if
as of the Adjustment Date the Seller has sold all XRGC Shares initially issued
to him on the Closing Date. If, as of the Adjustment Date, the Seller has sold a
portion of the XRGC Shares issued to him on the Closing Date, the number of
shares issuable to the Seller on the Adjustment Date shall be adjusted pro rata
based on the number of initial XRGC Shares still held by the Seller.
(iii) In addition, neither the Seller nor XRG or XRG's
officers, directors or any affiliates may purchase or sell shares of XRG's
Common Stock during the twenty (20) business days prior to the Adjustment Date.
If the Seller shall sell shares of XRG Common Stock during such period, no
adjustment shall be made with respect to the XRGC Shares on the Adjustment Date.
If any officer, director or affiliate of XRG shall purchase shares of XRG Common
Stock, the market value shall be determined for purposes of this Section 2(b)
based on the average of the closing prices for the XRG Common Stock on the 20
trading days immediately prior to the first date such purchase occurs. If the
Seller shall purchase XRG common stock or any officer, director or affiliate of
XRG shall sell XRG Common Stock during such period, no change shall be made in
the adjustment provisions set forth herein.
(c) Consideration - Assumption of RSV liabilities. At the Closing,
XRG expressly acknowledges that RSV and XRG shall be responsible for the
pre-Closing obligations, including without limitation, RSV's and Xx. Xxxxxxx'x
obligations under Exhibit A; which XRG agrees to pay off or refinance as soon as
practical following the Closing. Until such time as the notes that Xx. Xxxxxxx
personally guarantees are refinanced, or his guarantee is removed, RSV will
continue to operate under its Landstar contract.
(d) Security. At the Closing, XRG will pledge, pursuant to the terms
of a separate stock pledge and security agreement, 100% of the stock of RSV
acquired by XRG hereunder to the Seller Xx. Xxxxxxx. The stock pledge and
security agreement shall provide that, among other things, the pledge and
security interest provided for therein secure the right of the Seller to rescind
the transactions contemplated hereby upon the terms set forth in that agreement.
The stock pledge and security agreement will also grant to the Seller a first
position security interest on the tangible assets (that is, excluding accounts
receivable, bank deposits, etc.) of RSV. Should XRG default in the performance
of any if its obligations hereunder as described in the stock pledge and
security agreement, Seller will have the right to foreclose on the shares of RSV
then held by XRG and foreclose on the said tangible assets. If the Seller elects
to enforce the terms of the stock pledge and security agreement and foreclose on
the RSV Shares held by XRG, the Seller will promptly transfer back to XRG all
XRGC Shares then held by him
together with a payment of cash equal to the total per share purchase price
actually received by Seller for any XRGC Shares previously sold by Seller, and
the Parties shall thereafter have no further obligations or liabilities under
this Agreement.
(e) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Johnson, Pope,
Xxxxx, Xxxxxx & Xxxxx, P.A., 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 on
or before February 25, 2004, or on such other date as agreed to by the Parties
following the satisfaction or waiver of all pre-closing conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
("Closing Date").
(f) Deliveries at the Closing. At the Closing (i) XRG will deliver
to the Escrow Agent (as hereinafter defined) certificates representing the
shares of RSV to be held by XRG following the Merger, with the stock transfers
duly executed; (ii) RSV and/or the Seller will deliver the various instruments
and documents referred to in Section 6(a) below; (iii) XRG will issue and
deliver to the Seller a check for the cash consideration and certificates for
the XRGC Shares and will deliver the various instruments and documents referred
to in Section 6(b) below; (iv) RSV will execute and deliver to XRG such other
instruments of transfer, conveyance, and assignment as XRG and its counsel
reasonably may request; (v) XRG will execute and deliver to RSV such instruments
of assumption as RSV and its counsel reasonably may request; and (vi) RSV will
deliver to XRG keys to all locks on the business premises or for any items
transferred to XRG requiring keys and the codes and passwords to all security
and password systems on the business premises or for any items transferred to
XRG.
3. REPRESENTATIONS AND WARRANTIES OF RSV AND THE SELLER. RSV and the
Seller, jointly and severally, represent and warrant to XRG that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date except as set
forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section 3. The Parties
acknowledge that the Disclosure Schedule will be delivered prior to or
contemporaneous with the execution of this Agreement and will be attached hereto
and made a part hereof.
(a) Organization of RSV. RSV is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Tennessee.
RSV is duly qualified to do business as a foreign corporation and in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification.
(b) Authorization of Transaction. RSV has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of RSV and RSV's
stockholders have duly authorized the execution, delivery, and performance of
this Agreement by RSV. This Agreement constitutes the
valid and legally binding obligation of RSV and the Seller, enforceable in
accordance with its terms and conditions.
(c) Noncontravention. Except as set forth on Schedule 3(c), neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which RSV or the Seller is
subject or any provision of the charter or bylaws of RSV or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which RSV or the Seller is a party or by which it or he
is bound or to which any of its or his assets are subject (or result in the
imposition of any Security Interest upon any of its or his assets). Except as
set forth on Schedule 3(c), RSV and the Seller do not need to give 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.
(d) Brokers' Fees. RSV and the Seller have 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 XRG could
become liable or obligated.
(e) Title to Assets. Except as shown on the Financial Statements (as
defined below) and except as set forth on Schedule 3(e), RSV has title, free and
clear of any Security Interest or restriction on transfer, to all of the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that are used by RSV in the operation of its business or are
reflected as owned in the books and records of RSV, including all of the
properties and assets reflected in the Financial Statements (as defined below).
All properties and assets utilized by RSV are in AS-IS condition. All buildings,
plans and other structures owned, leased or utilized by RSV are in AS-IS
condition.
(f) Legal Compliance. To the best of the knowledge of either RSV or
the Seller, RSV and the Seller have complied with all material applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against them alleging any failure so to comply. The Seller
does not have knowledge any proposed change in any such laws, rules or
regulations that could materially adversely affect the business of RSV.
(g) Environment, Health, and Safety.
(i) As used herein, "Environmental, Health, and Safety
Requirements" shall mean all federal, state, local and foreign statutes,
regulations,
ordinances and other provisions having the force or effect of law, all judicial
and administrative orders and determinations, all contractual obligations and
all common law concerning public health and safety, worker health and safety,
and pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
(ii) To the best of the knowledge of either RSV or Sellers,
RSV and its predecessors have materially complied and are in material compliance
with all Environmental, Health, and Safety Requirements.
(iii) Without limiting the generality of the foregoing, to the
best of the knowledge of either RSV or Sellers, RSV has obtained and complied
with, and is in compliance with, all material permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of its
business.
(iv) Neither RSV nor its predecessors, has received any
written notice, report or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
relating to either of them or their facilities arising under Environmental,
Health, and Safety Requirements.
(h) Financial Statements. Except as disclosed on Schedule 3(h), the
respective annual financial statements of RSV dated as of December 31, 2002,
December 31, 2003, all of which are included in the Disclosure Schedule, (the
"Financial Statements"):
a. are in accordance with the books and records of RSV;
b. fairly set forth the financial condition and results of
the operations of RSV in all material respects as of the
relevant dates thereof and for the periods covered
thereby;
c. contain and reflect all necessary and material
adjustments for a fair representation of the results of
operations and financial condition for the periods
covered by the statements;
d. do not contain any items of special or nonrecurring
income or any other income not earned or otherwise
realized in the ordinary course of business;
e. include all material adjustments, which consist of only
normal accruals, necessary for such fair presentation;
and
f. do not contain any untrue statement of material fact.
RSV maintains a system of internal accounting control sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial and to maintain
accountability for assets, (iii) access is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. RSV
does not use any derivative financial instruments.
(i) Capitalization. The authorized capital stock of RSV consists of
1000 shares of common stock, par value $1.00 per share, of which 1000 shares are
issued and outstanding. The Sellers are, and will be on the Closing Date, the
record and beneficial owners and holders of the RSV Shares, which constitute all
of the issued and outstanding capital stock of RSV, free and clear of all liens,
claims or encumbrances of any kind. No legend or other reference to any
purported encumbrance appears upon any certificate representing the RSV Shares.
All of the RSV Shares have been duly authorized and validly issued and are fully
paid and nonassessable. There are no contracts relating to the issuance, sale,
or transfer of the RSV Shares, other than this Agreement. None of the RSV Shares
were issued in violation of applicable securities statutes and regulations or
any other legal requirement.
(j) Books and Records. The minute books, stock record books, and
other records of RSV, all of which have been made available to XRG, are complete
and correct and have been maintained in accordance with sound business
practices. The minute books of RSV contain accurate and complete records of all
meetings held, and corporate action taken, by the stockholders, the boards of
directors and committees of the boards of directors, and no meeting of any such
stockholders, board of directors or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
(k) Accounts Receivable. All accounts receivable of RSV that are
reflected in the Financial Statements or the accounting records of RSV as of the
Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. There is no contest,
claim, or right of set-off, other than in the Ordinary Course of Business, under
any contract with any obligor of an Accounts Receivable relating to the amount
or validity of such Accounts Receivable. Part 3(k) of
the Disclosure Schedule contains a complete and accurate list of all Accounts
Receivable as of the Closing Date, which list sets forth the aging of such
Accounts Receivable.
(l) Undisclosed Liabilities. To the knowledge of Seller and RSV,
except as set forth in Part 3(l) of the Disclosure Schedule, RSV has no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise), except for liabilities or
obligations reflected or reserved against in the Financial Statements and
current liabilities incurred in the ordinary course of business since the
respective dates thereof. None of RSV's employees will, by the passage of time,
become entitled to receive any deferred compensation, vacation time, vacation
pay or severance pay attributable to services rendered prior to the Closing
Date, except as disclosed in Part 3(l) of the Disclosure Schedule or the
Financial Statements on Schedule 3(h). RSV has not guaranteed the payment or
performance of any person, firm or corporation, agreed to indemnify any person
or act as surety, or otherwise agreed to be contingently or secondarily liable
for the obligations of any person. RSV has not given any power of attorney,
which is currently in effect, to any person, firm or corporation for any purpose
whatsoever.
(m) Taxes.
(i) Other than the tax returns due for RSV's year ending
December 31, 2003 for which RSV has filed for an extension, RSV has filed or
caused to be filed all tax returns that are or were required to be filed by or
with respect to it, either separately or as a member of a group of corporations,
pursuant to applicable laws and regulations. The Seller has delivered or made
available to XRG copies of all such tax returns relating to income taxes filed
since 2000. RSV has paid, or made provision for the payment of, all taxes that
have or may have become due pursuant to those tax returns or otherwise, or
pursuant to any assessment received by either of them, except such taxes, if
any, as are listed in Part 3(m)(i) of the Disclosure Schedule and are being
contested in good faith.
(ii) All taxes that RSV is or was required by applicable laws
or regulations to withhold or collect, including, without limitation, social
security and other payroll and employee-related taxes, have been duly withheld
or collected and, to the extent required, have been paid to the proper
governmental entity.
(iii) All tax returns filed by (or that include on a
consolidated basis) RSV are true, correct, and complete in all material
respects.
(iv) None of the assets of RSV are property, which is required
to be treated as owned by any other person pursuant to so-called "Safe Harbor
Lease" provisions of Section 168(f)(8) of the Internal Revenue Code.
(n) No Material Adverse Change. Since the date of the latest
Financial Statement, there has not been any material adverse change in the
business, operations, properties, prospects, assets, or condition of RSV, and to
the knowledge of
Seller and RSV, no event has occurred or circumstance exists that may result in
such a material adverse change. Except as disclosed, in Part 3(n) of the
Disclosure Schedule, RSV has conducted and operated its business in a consistent
and normal fashion since the date of the last Financial Statements.
(o) Employees. To the knowledge of Sellers and RSV, except for Xxxxx
X. Xxxxxx, no executive, key employee, or group of employees has any plans to
terminate employment with RSV, although Xx. Xxxxxxx does not intend to be
employed by RSV after the merger. RSV is not a party to or bound by any
collective bargaining agreement, nor has RSV experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. RSV has not committed any unfair labor practice that has not been
resolved. The Seller has no knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of RSV.
(p) Employee Benefits.
"Employee Benefit Plan" means any "employee benefit plan" (as such term is
defined in ERISA Section 3(3)) and any other employee benefit plan, program or
arrangement of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(i) Schedule 3(p) of the Disclosure Schedule lists each
Employee Benefit Plan that RSV maintains or to which RSV contributes.
(ii) Other than contributions for the fiscal year ending July
31, 2003 and more recently, all contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of RSV.
(iii) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan" under Code
Sec. 401(a). None of the RSV Employee Benefit Plans or any of the trusts created
thereunder, nor any trustee, administrator or other fiduciary thereof, has
engaged in a "prohibited transaction", as such term is defined in Section 4975
of the Internal Revenue Code or Section 406 of ERISA. RSV has complied in all
material respects with the reporting and disclosure requirements of ERISA and
the Internal Revenue Code as applicable to Employee Benefit Plans.
(iv) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan equals or exceeds the
present value of all vested and nonvested liabilities thereunder determined in
accordance with methods, factors, and assumptions applicable to an Employee
Pension Benefit Plan.
(q) Legal Proceedings.
(A) Except as set forth in Part 3(q) of the Disclosure
Schedule, there is no pending legal proceeding:
(i) that has been commenced by or against RSV or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, RSV; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
contemplated transactions under this Agreement.
(B) To the knowledge of the Sellers and RSV, (1) no such legal
proceeding has been threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such proceeding.
(r) Insurance. RSV maintains the policies listed on Part 3(r) of the
Disclosure Schedule for fire, casualty, liability, bonding use and occupancy and
other insurance covering its properties and assets. Such policies or like
policies are, as of the date of this Agreement, and will be on the Closing Date,
outstanding and duly in force. True and complete copies of all such policies
have been made available to XRG for inspection. No notice of cancellation or
termination has been received by RSV with respect to any such policy, and
neither RSV nor the Shareholders have knowledge of any act or omission, which
could result in the cancellation of any such policy prior to its scheduled
expiration date. There is no claim pending under any such policy as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies, and none of RSV or the Shareholders knows of any basis for denial or
any claim under any such policy. No notices have been received from or on behalf
of any insurance carrier issuing any such policy that insurance rates thereof
would be substantially increased or that there will be a cancellation or an
increase in the deductible or non-renewal of any such policy. Such policies are
sufficient in all materials respects for compliance with all material
requirements of all laws and with the requirements of all contracts and leases
to which RSV is a party. There are no outstanding incidents or accidents that
have not been reported to or settled by insurance carriers.
(s) No Interest in Competitors and Others. Except as set forth on
Part 3(s) of the Disclosure Schedule, neither RSV nor any officer or director of
RSV owns, directly or indirectly, any interest in (except for the ownership of
marketable securities of publicly owned corporations representing in no case
more than five percent of the outstanding shares of such class of securities) or
controls or is an employee, officer,
director or partner of, participant in or consultant to any corporation,
association, partnership, limited partnership, joint venture or other business
organization, which is a competitor, supplier, customer, or landlord of RSV.
(t) Contracts. RSV has furnished to XRG copies of, or summarized as
Part 3(t) of the Disclosure Schedules, all agreements, contracts and commitments
of the following types, to which RSV is a party or by which they or any of their
properties are bound as of the date hereof: (a) mortgages, indentures, notes,
letters of credit, security agreements and other agreements and instruments
relating to the borrowing of money by or extension of credit to RSV other than
in the Ordinary Course of Business; (b) employment and consulting agreements;
(c) employee benefit, profit-sharing and retirement plans; (d) collective
bargaining agreements; (e) agreements under which gross revenues will or are
expected to exceed $10,000 during RSV's fiscal year ending in 2003; (f) all
joint venture or partnership agreements to which RSV is a party; (g) licenses of
software and any material patent, trademark and other industrial property
rights; (h) agreements or commitments for capital expenditures in excess of
$50,000; (i) brokerage or finder's agreements; (j) all agreements, whether
written or oral with independent contractors, including owner-operators of
semi-trucks and other freight hauling vehicles, and (k) agreements, contracts,
leases and commitments of a type other than those described in the foregoing
clauses (a) through (i) which, in any case, involve aggregate payments or
receipts of more than $25,000 per annum. RSV has made available to XRG complete
and correct copies of all written agreements, contracts and commitments,
together with all amendments thereto, and accurate descriptions of all oral
agreements. All such agreements, contracts and commitments are in full force and
effect and, to the best of their knowledge, all parties thereto have performed
all material obligations required to be performed by them to date, are not in
default in any material respect thereunder, and have not violated any
representation or warranty, explicit or implied, contained therein.
(u) Intellectual Property. Part 3(u) of the Disclosure Schedule
lists or describes (a) all trademarks, service marks, logos, trade names, and
company names, and all applications, registrations, and renewals in connection
therewith, used or owned by RSV; and (b) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith owned by RSV.
(v) Certain Payments. Neither the Seller, RSV or a director,
officer, agent, or employee of RSV, or, to the Sellers' knowledge, any other
person associated with or acting for or on behalf of RSV, has directly or
indirectly made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public, regardless
of form, whether in money, property, or services in violation of any applicable
law or regulation, including without limitation, the Foreign Corrupt Practices
Act.
(w) Broker Fee. RSV has no liability or obligations to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which RSV could become liable or obligated.
(x) Disclosure. The representations and warranties contained in this
Section 3 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 in this Section 3, in light of the circumstances under
which they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF XRG. XRG represents and warrants to
the Shareholders that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.
(a) Organization of XRG. XRG is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and has all requisite power and authority to own its properties and assets and
to conduct its businesses as now conducted.
(b) Authorization of Transaction. XRG has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
Without limiting the generality of the foregoing, the board of directors of XRG
has duly authorized the execution, delivery and performance of this Agreement to
the extent required by law. This Agreement constitutes the valid and legally
binding obligation of XRG, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution, delivery and
performance by XRG of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which XRG is subject or any
provision of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which XRG is a party or by which it is bound or to which any of its assets is
subject. XRG 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.
(d) Brokers Fees. XRG 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 XRG could become liable or obligated.
(e) SEC Reports. XRG has filed all required reports, schedules,
forms, statements, and other documents with the Securities and Exchange
Commission (the "SEC"). In particular, but without limitation of the generality
of the foregoing, XRG has filed with the SEC, and has heretofore made available
to the Sellers, true and complete copies of XRG's most recent annual report on
Form 10-KSB, most recent
quarterly report on Form 10-QSB, and most recent Form 8-K. These reports, at the
time filed, (a) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (b) complied in all material respects with the
applicable requirements of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as applicable, and the applicable rules and regulations of
the SEC thereunder. No independent auditors' report included with the audited
financial statements of XRG included in the SEC reports referenced above (the
"Audited Financial Statements") has been revoked or qualified in any manner
since its date. XRG has not, since March 31, 2003, made any material change in
the accounting practices or policies applied in the preparation of the Audited
Financial Statements. The books and records of XRG have been, and are being,
maintained in all material respects in accordance with GAAP. The management of
XRG has (i) designed disclosure controls and procedures to ensure that material
information relating to XRG, including its consolidated subsidiaries, is made
known to the management of XRG by others within XRG and (ii) has disclosed,
based on its most recent evaluation, to XRG's auditors and the audit committee
of the Board (A) all significant deficiencies in the design or operation of
internal controls which could adversely affect XRG's ability to record, process,
summarize and report financial data and have identified for XRG's auditors any
material weaknesses in internal controls and (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in XRG's internal controls.
(f) Financial Statements and Financing. Except as set forth in
Schedule 4(f), the Audited Financial Statements of XRG fairly present the
financial position of XRG as of the dates thereof and were prepared in
accordance with GAAP. The Audited Financial Statements including the schedules
and notes thereto (a) were prepared from and in accordance with the books and
records of XRG in accordance with GAAP consistently applied (except as indicated
in the notes thereto), (b) present fairly the financial condition of XRG as of
such date, (c) are complete and correct in all material respects and in
accordance with the books of account and records of XRG, (d) can be legitimately
reconciled with the financial statements and the financial records maintained
and the accounting methods applied by XRG for federal income tax purposes and
(e) reflect accurately all accrued costs and expenses of XRG in all material
respects. XRG is solvent and has the funds (or has current and available
commitments from creditworthy financial institutions or other creditworthy
sources to provide the funds) required to consummate the transactions
contemplated by this Agreement.
(g) Compliance with Law; Licenses. XRG is in compliance with all
material laws, regulations, orders and other requirements of all courts and
other governmental or regulatory authorities having jurisdiction over XRG and
any of its assets, properties and operations, the non-compliance of which would
have a material adverse effect on XRG's ability to consummate the transactions
contemplated by this Agreement. XRG does not have knowledge of any proposed
change in any such laws, rules or regulations that could adversely affect XRG's
ability to consummate the transactions contemplated by this Agreement.
(h) Litigation. There are no claims, actions, suits, proceedings, or
investigations pending or, to the knowledge of XRG, threatened, before any
federal, state or local court or governmental or regulatory authority, domestic
or foreign, or before any arbitrator of any nature, brought by or against XRG
or, to the knowledge of XRG, any of its officers, directors, employees, agents
or Affiliates that could have a material adverse effect on XRG's ability to
consummate the transactions contemplated by or referenced in this Agreement, nor
is any basis known to XRG, any of their directors or officers for any such
action, suit, proceeding or investigation. Neither XRG nor any of its properties
or assets are subject to any order, writ, judgment, award, injunction or decree
of any national, state or local court or governmental or regulatory authority or
arbitrator, domestic or foreign that could have a material adverse effect on
XRG's ability to consummate the transactions contemplated by or referenced in
this Agreement.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement.
(b) Operation of Business. RSV will not engage in any practice, take
any action, or enter into any transaction outside the ordinary course of
business except that Xx. Xxxxxxx may engage in the transactions set forth on
Schedule 5(b) of the Disclosure Schedule by which seven tractors are to be
transferred to RSV and certain assets are to be transferred by RSV to Xx.
Xxxxxxx.
(c) Preservation of Business. RSV will maintain and continue to
promote and conduct its business, its business operations, and its business
relationships, and will maintain its property, including its present operations,
physical facilities, working conditions, and relationships with its suppliers,
customers, independent contractors and employees.
(d) Full Access, Cooperation and Authorization by RSV. RSV will
permit representatives of XRG to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of RSV,
to all premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to RSV. RSV and its officers and
employees will cooperate with XRG and facilitate XRG's due diligence
investigation of RSV. RSV's execution of this Agreement constitutes
authorization to RSV's accountants, attorneys, bankers, lenders and other
professional advisors and consultants to meet with representatives of XRG and
disclose to XRG any and all information in their possession regarding RSV.
(e) Notice of Developments. Each Party will give prompt written
notice to the other Party of any material adverse development causing a breach
of any of its own representations and warranties in Section 3 and Section 4
above. No disclosure
by any Party pursuant to this Section 5(e), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(f) Exclusivity. RSV will revoke any current listing of its business
for sale. RSV and the Seller will not (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to the acquisition
of any of the stock or assets of RSV (including any acquisition structured as a
merger, consolidation, or share exchange) or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek the foregoing. RSV and the Seller will notify XRG
immediately if any person makes any proposal, offer, inquiry, or contact with
respect to the foregoing.
(g) Full Access, Cooperation and Authorization by XRG. XRG agrees to
grant Seller full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of XRG, to books, records
(including tax records), contracts, and documents of or pertaining to XRG. XRG
and its officers and employees will cooperate with Seller and facilitate
Seller's due diligence investigation of XRG. XRG's execution of this Agreement
constitutes authorization to XRG's accountants, attorneys, bankers, lenders and
other professional advisors and consultants to meet with representatives of
Seller and disclose to them any and all information in their possession
regarding XRG.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of XRG. The obligation of XRG to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions at or prior to Closing:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) RSV and the Seller shall have performed and complied with
all of their covenants hereunder in all material respects through the Closing;
(iii) RSV and the Seller shall have procured any required
third party consents;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of XRG to own the RSV
Shares;
(v) all actions to be taken by RSV and the 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 will be reasonably satisfactory in form and
substance to XRG; and
(vi) all of the following shall have been accomplished to the
reasonable satisfaction of XRG:
(A) execution of an non-compete agreement by Xx.
Xxxxxxx by which Xx. Xxxxxxx will receive $50,000
in consideration payable over the twelve month
period for which he will not compete with RSV or
XRG for that period following the merger;
(B) execution of employment agreements by such other
persons as may be required by XRG; provided,
however, that Xx. Xxxxxxx shall not be required to
enter into an Employment Agreement;
(C) execution and delivery of a Stock Escrow Agreement
authorizing an independent third party mutually
agreeable by the Parties (the "Escrow Agent") to
hold the RSV Shares in escrow during the term of
the stock pledge and security agreement;
XRG may waive any condition specified in this Section 6(a) if
it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of RSV and the Seller. The obligation
of RSV and the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in Section
4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) XRG shall have performed and complied with all of its
covenants hereunder in all material respects through the
Closing,
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an
unfavorable
injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause
any of the transactions contemplated by this Agreement
to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) XRG shall have delivered to Seller a duly executed Stock
Pledge and Security Agreement, and other ancillary
agreements, which are exhibits to this Agreement.
(v) All actions to be taken by XRG in connection with
consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to RSV and the Shareholders.
(vi) XRG has delivered or instructed its transfer agent to
deliver the XRGC Shares to the Seller.
RSV or the Sellers may waive any condition specified in this
Section 6(b) if it/they execute(s) a writing so stating at or prior to the
Closing.
7. INVESTMENT REPRESENTATIONS.
(a) The XRGC Shares to be received by Seller pursuant to this
Agreement will be held by Seller for his own account for the purpose of
investment and not with a present view for sale in connection with any
distribution thereof.
(b) Seller's financial position is such that he can afford to bear
the economic risk of holding the XRGC Shares he receives pursuant to this
Agreement for an indefinite period of time, and Seller can afford to suffer the
complete loss of his investment in the XRGC Shares.
(c) Seller has been provided an opportunity to ask questions of, and
has received answers satisfactory to Seller from, XRG and its representatives
regarding the business and affairs of XRG and such other information as he
desired in order to evaluate an investment in the XRGC Shares.
(d) Seller understands that the XRGC Shares comprising the
consideration to be received by him/her pursuant to this Agreement have not been
registered under the federal securities laws or applicable state securities laws
in reliance upon specific exemptions from registration thereunder. Seller agrees
that the XRGC
Shares to be received by him pursuant to this Agreement may not be sold, offered
for sale, exchanged, transferred, pledged or otherwise disposed of except
pursuant to a registration statement under the Securities Act of 1933 or
pursuant to an exemption from the registration requirements of the Securities
Act of 1933 and in compliance with state securities laws, and the certificates
for the XRGC Shares will bear a legend to such effect. Upon registration, if
any, there can be no assurance that a public market for the XRGC Shares will
exist or that trading of such shares can commence, or if commenced can be
maintained. As a result, a holder of XRGC Shares may find it difficult to
dispose of, or to obtain accurate quotations as to the price of, the shares. In
addition, XRG securities may be subject to "xxxxx stock" rules that impose sales
practice and market making requirements on broker-dealers who sell and/or make a
market in such securities. This could affect the ability or willingness of
broker-dealers to sell and/or make a market in XRG securities and the ability of
holders of XRG securities to sell their stock in the secondary market.
(e) Seller is not a foreign person subject to withholding under
Section 1445 of the Code and the regulations promulgated thereunder.
(f) PIGGYBACK REGISTRATION RIGHTS. If at any time prior to the
removal of restrictive legends pursuant to Rule 144(k) (i.e. two (2) years
holding period), (i) the Company proposes to register shares of Common Stock
under the Securities Act, other than on Forms S-8 , S-4 or any successor forms,
in connection with a public offering of such shares for cash (a "Proposed
Registration") and (ii) a Registration Statement covering the resale of all of
the shares ("Registrable Securities") is not then effective and available for
sales thereof by the Investors, the Company shall, at such time, promptly give
each Shareholder written notice of such Proposed Registration. Each Shareholder
shall have ten (10) Business Days from its receipt of such notice to deliver to
the Company a written request specifying the amount of Registrable Securities
that such Shareholder intends to sell and such Shareholder's intended method of
distribution. Upon receipt of such request, the Company shall use its best
efforts to cause all Registrable Securities which the Company has been requested
to register to be registered under the Securities Act to the extent necessary
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Investor; provided, however,
that the Company shall have the right to postpone or withdraw any Proposed
Registration without obligation to the Shareholder. If, in connection with any
underwritten public offering for the account of the Company or for stockholders
of the Company that have contractual rights to require the Company to register
shares of Common Stock, the managing underwriter(s) thereof shall impose a
limitation on the number of shares of Common Stock which may be included in a
Proposed Registration because, in the judgment of such underwriter(s), marketing
or other factors dictate such limitation is necessary to facilitate such
offering, then the Company shall be obligated to include in such Proposed
Registration only such limited portion of the Registrable Securities with
respect to which each Shareholder has requested inclusion hereunder as such
underwriter(s) shall permit. Any exclusion of Registrable Securities shall be
made pro rate among the Shareholders seeking to include Registrable Securities
in a Proposed Registration, in proportion to the number of Registrable
Securities sought to be included
by such Shareholders; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of such
securities in such Proposed Registration or are not entitled to pro rata
inclusion with the Registrable Securities; and provided, further, that, after
giving effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right to include such securities in the Proposed Registration.
8. TERMINATION.
(a) Termination of Agreement. This Agreement may be terminated as
provided below:
(i) XRG, the Seller and RSV may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) XRG may terminate this Agreement by giving written
notice to the Sellers and RSV at any time prior to the
Closing (A) in the event RSV or the Sellers have
breached any material representation, warranty, or
covenant contained in this Agreement in any material
respect, XRG has notified RSV or the Sellers, as
applicable, of the breach, and the breach has continued
without cure for a period of thirty (30) days after the
notice of breach, or (B) if the Closing shall not have
occurred on or before April 25, 2004, by reason of the
failure of any condition precedent under Section 6(a)
hereof (unless the failure results primarily from XRG
itself breaching any representation, warranty, or
covenant contained in this Agreement);
(iii) Sellers may terminate this Agreement by giving written
notice to XRG at any time prior to the Closing (A) in
the event XRG has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, Sellers have notified XRG of the
breach, and the breach has continued without cure for a
period of thirty (30) days after the notice of breach,
or (B) if the Closing shall not have occurred on or
before February 25, 2004, by reason of the failure of
any condition precedent under Section 6(b) hereof
(unless the failure results primarily from Sellers or
RSV itself breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach).
9. INDEMNIFICATION.
(a) The Sellers shall indemnify, defend and hold harmless XRG and
RSV and their respective directors, officers, employees and controlled and
controlling persons (hereinafter "XRG Related Persons") from and against all
Claims asserted against, resulting to, imposed upon, or incurred by XRG, RSV or
any XRG Related Person, directly or indirectly, by reason of, arising out of or
resulting from:
(i) the material inaccuracy or material breach of any
representation or warranty of RSV or the Sellers contained in or made pursuant
to this Agreement or any of the ancillary instruments combined in the exhibits;
(ii) the material breach of any covenant or agreement of RSV
or the Sellers contained in this Agreement or any of the ancillary instruments
contained in the exhibits;
(iii) the demand or attempted demand by the Sellers relating
to dissenters' right or rights, if any, for appraisal arising out of the Merger
in accordance with the IBCA;
(iv) any claim by any person or entity, whether or not
identified in this Agreement, that such person has or had any rights to the RSV
Shares, or payment of any distribution with respect thereto of RSV, or any
present or former subsidiary or affiliate of RSV, including as a result of any
such person having a lien on any assets of the Seller.
As used in this Article 8, the term "Claim" shall include:
(i) all debts, liabilities and obligations;
(ii) all losses, damages (including, without limitation,
consequential damages with respect to third-party claims but not with respect to
independent claims of XRG on the one hand, or the Shareholders, on the other
hand), judgments, awards, settlements, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys fees and expenses (including
those incurred to enforce rights under this Section 9); and
(iii) all demands, claims, suits, actions, costs of
investigation, causes of action, proceedings and assessments, whether or not
ultimately determined to be valid.
(b) XRG hereby agrees to indemnify, defend and hold the Sellers
harmless from and against all Claims asserted against, resulting to, imposed
upon or incurred by the Sellers, directly or indirectly, by reason of, arising
out of, or resulting from (a) the inaccuracy or breach of any representation or
warranty of XRG contained in or made pursuant to this Agreement, or (b) the
breach of any covenant or agreement of XRG contained in this Agreement.
(c) The obligations of the Sellers and XRG to indemnify for Claims
under this Section 9 shall accrue only if the aggregate of all such Claims for
which indemnification must be provided by a Party exceeds $50,000.
10. MISCELLANEOUS.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder for a period of twelve (12) months.
(b) 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.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, letters of intent, or
representations by or between the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
(d) 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 the other Party or Parties.
(e) Counterparts. This Agreement may be executed 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.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) upon actual
receipt thereof, or (ii) if (and then five business days after) it is sent by
registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Shareholder:
If to RSV:
ATTN: Xx. Xxxxxxx Xxxxxxx
If to XRG:
XRG, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, XX 00000
ATTN: Xxxxx X. Xxxxxxx
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, or ordinary mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Tennessee without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Tennessee or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Tennessee.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) 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.
(k) Expenses. Each of XRG, RSV and the Seller will bear its or his
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance.
(m) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction to prevent any breach of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the State
of Tennessee, in addition to any other remedy to which it may be entitled, at
law or in equity.
(n) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of the courts of the State of Tennessee in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be required
of any other Party with respect thereto. Any Party may make service on the other
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in Section
10(g) above. Nothing in this Section 10(n), however, shall affect the right of
any Party to serve legal process in any other manner permitted by law or in
equity. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or in
equity
[Signatures on next page]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first indicated above.
XRG, INC.
By: ____________________________________
Title: _________________________________
RSV, INC.
By: ____________________________________
Title: _________________________________
________________________________________
XXXXXXX XXXXXXX
________________________________________
XXXXX X. XXXXXX
Exhibit A: List of RSV, Inc. Notes Payable
