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Exhibit 10.44
ASSET PURCHASE AGREEMENT
AGREEMENT dated the 13th day of January, 2000 by and between U.S.
Plastic Lumber Ltd., a Delaware corporation, any of its affiliates,
subsidiaries, or other entities established for the purposes of this transaction
(hereinafter referred to as "Buyer"), and Baron Enterprises, Inc., a Colorado
corporation (the "Seller"), and Baron Holdings, Inc. and Xxxxxx Xxxxxxxxx
(hereinafter jointly and severally referred to as "Shareholders").
BACKGROUND
The Seller is in the business of manufacturing alternative plastic
shipping platforms. Shareholders constitute 96.53% of the shareholders of the
Seller. The Shareholders who have not been made a party to this Agreement are
Xxxxx Xxxxxx and Xxxx & Company, Inc.
Buyer desires to acquire substantially all of the assets owned by the
Seller, and to assume none of the liabilities in connection therewith, and the
Seller desires to sell such assets to Buyer, all upon the terms and subject to
the conditions set forth in this Agreement.
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, 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 obligations of the
Seller (collectively, the "Retained Obligations"), except for trade accounts
payable and accrued expenses in the normal course of business as listed on
Schedule 1.2. In addition, all contracts, loans and other relationships of any
kind between Seller and FCR, Inc., and all contracts with Coors Brewing Co.,
shall be considered a Retained Obligation. The Seller shall pay and/or perform
all of the Retained Obligations. With respect to any issues between Seller and
FCR, Inc., as stated throughout this Agreement, the resolution of such issues on
terms acceptable to Seller, so long as said terms in no way adversely affects
the title to all Assets being transferred hereunder to Buyer, shall be a
condition precedent to the consummation of this
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transaction. After the Closing, Buyer shall be entitled to the benefit of any
insurance policies maintained by the Seller which cover 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 $12,600,000.00 (collectively, the "Purchase Price"), payable as
follows:
(i) 300,000 shares of non-registered Common stock,
par value $.0001, fully paid and non-assesssable of U.S. Plastic Lumber Corp.,
the parent of Buyer ("Common Stock") equal to a value of $3,000,000 on the
Closing Date at a price equal to $10 per share.
(ii) Assumption and satisfaction of Debt consisting
of capital leases and equipment loans as shown on the November 30, 1999 Balance
Sheet not to exceed $4,600,000.
(iii) Earn Out consideration due and payable post
Closing as follows: For the twelve month period commencing with the Closing
Date, the Seller shall be entitled to earn additional Purchase Consideration
equal to a maximum of $5,000,000. The amount of earn-out consideration to be
earned will be based upon the sales contribution, defined as Net Sales less Raw
Material costs using generally accepted accounting principles, being comprised
of only the following business categories:
o PP Tier Business to the extent it exceeds a sales contribution of
$270,000 in fiscal year 2000;
o New Customer "X", being big PE customer;
o Internal Slip Sheet Growth from existing customer base only. To
the extent there are common customers between Acquirer and Seller,
any increase in the business of said common customers will be pro
rated between Seller and Acquirer in a manner equal to the ratio
of Acquirer's total sales pounds volume with common customers to
the Seller's total sales pounds volume as of the Closing Date
hereunder. To that end, Schedule 1.3 shall represent Buyer's and
Seller's listing of their respective slip sheet customers and
dollar volume of product delivered by each party to their
respective customers for the twelve months ending December 31,
1999 from which a pro rata calculation shall be undertaken.
Notwithstanding anything to the contrary in this paragraph, the
parties acknowledge that any increase in the sales contribution
obtained from Coors Brewing Company resulting from any increase in
the price charged to Coors Brewing Company shall not be included
in the Earn Out Consideration.
For purposes of this transaction, Net Sales shall be defined as Gross Sales less
freight charges, taxes, sales discounts, allowances, customer returns, credits
and rebates to the extent such items are reasonable and customary and provided
in the ordinary course of business. Raw Material shall be defined as all resin
and additives inclusive of yield loss on a delivered basis.
The amount of earn out consideration to be paid to Seller shall be equal to the
ratio of total
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aggregate sales contribution from the three business categories set forth above
divided by $3,820,000 as a percentage against $5,000,000 ("Earn Out
Consideration"). For example purposes only, if the total aggregate sales
contribution from the three business categories for twelve month period
subsequent to Closing equals $2,500,000, the earn out consideration to be paid
to Seller shall be as follows: $2,500,000 divided by $3,820,000 = 65.4%.
$5,000,000 times 65.4% = $3,270,000. Attached hereto and made a part hereof is
Exhibit H which sets forth the additional detail regarding the mechanism and
manner in which the Earn Out will apply.
1.3.1 COVENANTS REGARDING EARN OUT CONSIDERATION. Any Earn Out Consideration
earned by Seller, shall be paid to Seller no later than 60 days after the close
of the twelve month period subsequent to Closing. The Earn Out Consideration
shall be payable in the form of Common Stock in an amount equal to$11 per share.
The Common Stock shall be fully paid non-assessable and registered. Seller shall
have the ability to audit the financial results of Acquirer upon reasonable
notice to Acquirer and at Seller's sole expense.
The base production capacity of Baron's Reidsville NC plant is estimated to be
700,000 pounds per month of slip sheet. It is the intent of the Acquirer to have
the option to shut down the Reidsville, NC facility and potentially move the
equipment to another facility. Prior to shutting down Reidsville, NC and losing
the 700,000 pounds per month production capacity on an interim basis the
Acquirer plans to bring on new capacity in Chicago, IL to replace this lost
capacity of 700,000 pounds per month. If in the event, the capacity in
Reidsville is shut down and the Acquirer is unable to replace the capacity in
Chicago or at another location then in such event the Earn Out Period shall be
extended in an amount equal to the total number of days necessary to make up for
the loss in the base production (the "Extended Days") of Reidsville, NC. The
production on the Extended Days shall be added to the production numbers for the
twelve month period in which the Earn Out is applicable to determine the Earn
Out Consideration to be issued.
The Buyer shall utilize its best efforts and exercise reasonable care to deliver
product and balance the needs of all customers, inclusive of the customers to
which the Earn-Out Consideration applies, in a timely manner and in accordance
with the known specifications of the customer, subject to normal variations
within the ordinary course of business. The parties also acknowledge that Buyer
must operate its business, and the assets acquired herein, in a commercially
reasonable manner in accordance with accepted industry practice and to maximize
value for all shareholders of U.S. Plastic Lumber Corp. Therefore, Buyer is not
obligated to pursue any business which negatively impacts or poses unjustifiable
risks to its overall margins or its operations, even if it would otherwise
benefit the Earn Out Consideration being paid to the Shareholders hereunder.
Therefore, to the extent Seller or Shareholders reasonably believe that Buyer,
either intentionally or through negligence, acted or failed to act with
resulting negative impact on the business categories to which the Earn Out
Consideration applies. within the parameters set forth in this Section 1.3.1,
Seller and Shareholders may direct a letter to Buyer within 90 days after their
receipt of the Earn Out Quarterly Report, as defined below, outlining the
alleged conduct or inaction by Buyer and its impact on the Earn-Out
Consideration ("Seller's letter"). If the parties are unable to resolve the
Seller's claims within 60 days of Seller's letter, an independent mediator shall
be appointed, through mutual agreement of the parties, to meet with the parties
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and/or their representatives in an attempt to resolve issues regarding the
Earn-Out Consideration. In the event the parties are unable to mutually agree
upon an independent mediator within ten days of the expiration of the 60 day
period following the Seller's letter, the parties will each pick one attorney
who together will select one independent mediator on behalf of the parties. The
parties acknowledge that in connection with any such mediation time is of the
essence and agree to exercise their best efforts to complete any mediation
within 150 days following Seller's letter. The parties further acknowledge that
each party shall bear its own mediation costs and expenses of whatever kind,
except that the parties shall equally split the mediator's fee. Seller and
Shareholders agree not to invoke the provisions of this paragraph in the absence
of a material event or events with a resulting negative impact on sales in the
business categories included within the Earn Out Consideration of at least
$100,000.
The Buyer shall provide to each Shareholder within 30 days after the close of
each fiscal quarter a quarterly report in a format substantially similar to
Exhibit J outlining the sales contributions, and its components as defined
previously, in the specific business categories falling within the Earn-Out
Consideration ("Earn Out Quarterly Report"). In the event the Buyer has actual
knowledge of any events during the quarter that might materially impact the
ultimate Earn-Out Consideration, Buyer shall utilize reasonable efforts to
provide notice of such material adverse event to Shareholders.
In the event the parties cannot resolve Seller's claims regarding Earn-Out
Consideration through mediation, either party may commence an arbitration
proceeding against the other within 12 months of the expiration of the Earn-Out
Period in accordance with the arbitration provisions set forth herein.
If a dispute arises out of or relates to this contract, or the breach thereof,
and if said dispute cannot be settled through direct discussions, the parties
agree to first endeavor to settle the dispute in an amicable manner by mediation
under the Commercial Mediation Rules of the Judicial Arbitration Mediation
Service (JAMS) before resorting to arbitration. Thereafter any end result
controversy or claim arising out of or relating to this contract, or breach
thereof, shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of JAMS, and judgment upon the award rendered by a single
arbitrator may be entered in any court having jurisdiction thereof.
To the extent the subject matter of the arbitration relates to certain shares of
USPL stock, pending the outcome of the arbitration USPL shall place in escrow
with Blank Rome Xxxxxxx & XxXxxxxx, as escrow agent, the shares of stock in
dispute. The escrow agent shall be entitled to release such shares as directed
by the arbitrator in the award, unless the parties agree otherwise in writing.
The arbitration shall be held in Chicago, IL or such other place as may be
selected by mutual agreement.
The parties acknowledge that Shareholders shall have the right to enforce any
provisions of this Section 1.3.1 and to seek their legal remedies through the
mediation and arbitration provisions contained within this Agreement as may be
appropriate in the event Buyer breaches or
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Shareholders believe that Buyer has breached any of the covenants contained
within this Section 1.3.1.
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".
1.5. CORPORATE Name. The Seller shall transfer its rights to
the corporate name "Baron Enterprises, Inc." or any derivative thereof to Buyer
as one of the Assets being transferred hereunder.
1.6 BULK SALE LAWS. Buyer and Seller agree to waive compliance
of any applicable provisions of the Bulk Sales Act. In consideration of such
waiver, each party hereto hereby agrees to indemnify the other for any and all
cost and expense associated therewith.
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, but in no event shall it be
later than January 30, 2000. 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 THE SHAREHOLDERS.
The Seller and Shareholders, jointly and severally as between the Shareholders
only, represent and warrant to Buyer as to all sections of this Article 3 as
established below. Notwithstanding anything to the contrary herein, Buyer
acknowledges that all representations and warranties made by the Shareholders
herein are made to the best of their actual knowledge.
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
Colorado and is duly qualified as a foreign corporation in each jurisdiction
(such jurisdictions being listed on Schedule "3. 1 ") in which the Seller is
required to be so qualified, except where the failure to be so qualified, would
not 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, and to execute, deliver and perform this Agreement and all documents,
agreements and transactions contemplated hereby. The execution, delivery and
performance of all documents, agreements and transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the Seller
and Shareholders. Except as stated on Schedule "3.1-2", Shareholders have 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
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and Shareholders enforceable against the Seller and Shareholders 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 Shareholders enforceable against
the Seller and Shareholders 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 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 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 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
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3.3. COMPLIANCE WITH LAWS. Except as stated on Schedule "3.3",
the Seller has 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 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
Shareholders are a party, (iii) do not constitute a violation of, or conflict
with, any judgment or order known to Shareholders, 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 as at and for the years
ended December 31, 1998, and 1997, and the interim period as of November 30,
1999 (the "Financial Statements"). 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. Shareholders are 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. During the
period December 1, 1999 through the Closing Date, the Seller and the
Shareholders will not pay off any debt to affiliates, distribute any profits in
the form of dividends, bonuses, management fees, or other forms of proceeds,
other than in the ordinary course of business.
3.6. LIABILITIES. Except as disclosed in the Financial
Statements or on any other Schedule attached hereto, the Seller has no other
liabilities. The Seller and Shareholders acknowledge that the Buyer is not
assuming any liabilities set forth on the Balance Sheet except as has been set
forth on Schedule 1.2. Seller specifically acknowledges that Buyer shall not
assume any liabilities or claims of any kind arising from any relationship
between Seller and FCR, Inc., including, but not limited to, equipment, raw
material and lease contracts. Moreover, as part of this Agreement, Buyer shall
not assume the Coors Brewing Company contract.
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
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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
material 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. Seller further represents and warrants that it will terminate all of
its contract relationships with FCR, Inc. prior to the Closing Date.
3.9. ACCOUNTS RECEIVABLE.
(a) The accounts receivable are an asset being included in this sale
transaction. All accounts receivable of the Company reflected in the Balance
Sheet and all accounts receivable of the Company 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, 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 Company's
accounts receivable as of the Balance Sheet Date.
3.10. TRADE NAME. The Seller has the valid right to use its
corporate name as a trade name, without any known conflict with the rights of
others. The Seller has not conducted business under any other name.
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". Seller has good and marketable title to any
real estate being transferred hereunder and shall convey good and marketable
title to any real estate free and clear of any liens, encumbrances, security
interests, liabilities, assessments, mortgages or other claims.
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(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 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 set forth on
Schedule 3.12. Seller represents and warrants that on or before the Closing Date
it will pay off any and all loans, settle any disputes on any claims or other
unresolved issues or disputed amounts between itself and FCR, Inc. upon terms
and conditions that in no way adversely affects the title to all assets being
delivered to Buyer pursuant to this Agreement.
(ii) Shareholders own, both of record and
beneficially, 96.53% 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 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 formal severance pay policy.
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", 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.
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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 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 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.
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. Except as set
forth in Schedule "3.15", the Shareholders have 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" and to the knowledge of the Seller and Shareholders and only in
connection with the time frame the Seller operated on the premises, no hazardous
wastes, hazardous substances, hazardous materials, asbestos, infectious wastes,
petroleum, petroleum products or pollutants, all as defined
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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 and office facilities in the normal
course of its business. USPL acknowledges it has the right to conduct a Phase I
environmental study on any real estate upon which the Seller's business is
currently being operated.
3.18. FULL DISCLOSURE. The information furnished by or on behalf
of the Seller or Shareholders 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 Shareholders 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 furnished in connection with the transactions contemplated by
this Agreement.
3.19. PROCEEDS. The proceeds to be received by each Seller in
connection with the transactions contemplated by this Agreement are sufficient
for, and will be used by, such 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 and is duly qualified as a foreign corporation in each
jurisdiction in which the Buyer is required to be so qualified, except where the
failure to be so qualified, would not have a material adverse effect on the
Assets. Except as stated on Schedule 4.1, the Buyer has the full corporate power
and authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by, and is 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. The
execution, delivery and performance of all documents, agreements and
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of the Buyer and its parent. Except as stated on Schedule
"4.1", Buyer has the full power, authority, and legal capacity to execute,
deliver and perform this Agreement and all documents, agreements, and
transactions contemplated hereby. Except as set forth on Schedule "4. 1 ", no
consent of any
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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.
4.2. NO BROKER. No broker or similar intermediary has acted
for or on behalf of Buyer in connection with the transactions contemplated
hereby.
4.3 SECURITIES REPRESENTATION. The parent of Buyer, U.S.
Plastic Lumber Corp. ("USPL") is subject to the reporting requirements of
Section 13 of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and has delivered to Shareholders copies of all reports, registration
statements, and other filings filed by USPL with the Securities and Exchange
Commission (the "SEC") since December 31, 1998 under the 1934 Act and any
filings with the SEC under the Securities Act of 1933, as amended (the "1933
Act"), including, but not limited to, the USPL's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998; USPL's 1998 Annual Report to
Shareholders; and USPL's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999, and September 30, 1999 (herein collectively
called the "SEC Reports"). As of the date of this Agreement, USPL has filed all
regular and periodic reports and proxy statements required to be filed by it
with the SEC. The SEC Reports taken together in the order filed correctly
describe, among other things, the business, operations, and principal properties
of USPL and its subsidiaries in accordance with the requirements of the
respective applicable report form. As of their respective dates of filing, none
of the SEC Reports contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated financial statements included in the SEC Reports were
prepared in accordance with generally accepted accounting principles (as in
effect from time to time) applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and fairly present, as
of the dates thereof, the results of USPL's and its consolidated subsidiaries'
operations and changes in financial position for the periods specified, subject,
in the case of the unaudited interim financial statements, to normal year-end
audited adjustments and any other adjustments described therein or in the notes
and schedules thereto.
4.4. 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.
5. OBLIGATIONS OF THE SELLER AND SHAREHOLDERS FROM THE DATE OF THIS
AGREEMENT UNTIL THE CLOSING DATE. From the date hereof until the Closing Date,
the Seller will, and the Shareholders will cause the Seller to, as applicable:
5.1. Allow, during normal business hours and on reasonable
notice to, and pre-approval by, Shareholders, 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
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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. Shareholders shall fully
cooperate with Buyer in the Buyer's review of the business of the Seller.
5.2. Use its best efforts to: (i) preserve the Seller's
business organizations intact and to conduct its business in the Ordinary
Course; (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 in
connection therewith, Shareholder will allow the Buyer to have access to, and
meet 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.
5.7. Hold in confidence and cause the 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 to the 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 the Shareholders or the Seller of the confidential nature of the
material and shall be subject to all the terms of this Agreement; the
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, 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 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
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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.
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 Shareholders and
the Seller had made such representation or warranty 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 Shareholders 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 Shareholders all Confidential Information furnished by Shareholders or the
Seller including all copies and summaries thereof and will not make use of 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 Shareholders with
respect thereto. "Confidential Information" includes this Agreement.
6.3. Promptly, by written notice, advise Shareholders and the
Seller of any information that indicates that any representation or warranty of
Shareholders or the Seller
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contained in this Agreement is not true and correct or that Shareholders or the
Seller has breached any of its obligations under this Agreement.
6.4. Promptly, by written notice, advise 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
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 by the Seller and
Shareholders in Sections 3.1, 3.11 and 3.12 of this Agreement, to the extent
made, 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.
7.2. Buyer shall have received a certificate, dated the
Closing Date, from the Seller and 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 "E" 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 Colorado and North Carolina (collectively, "Searches"), all such Searches to
be dated no earlier than ten business days prior to the Closing Date and
attached hereto as Exhibit B. Buyer shall remit directly to Seller's counsel all
such costs associated with the generation and transmission of such searches.
7.5. On the Closing Date, the Seller shall have delivered to
Buyer the following:
(i) documents and instruments of transfer for the Assets
substantially in the forms attached as Exhibit "F" including, without
limitation, bills of sale for tangible property, transfers
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of certificates of title for all Assets where applicable, all keys for 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 Colorado and North Carolina Secretary of
State that the Seller is in good standing and a certificate also dated no
earlier than ten business days prior to the Closing Date from the Colorado and
North Carolina Department of Revenue showing there are no liens for corporate
taxes against the Seller; (v) a certificate, dated no earlier than ten business
days prior to the Closing Date, from the State of Colorado and North Carolina
that the Seller is in good standing and a certificate from the Colorado and
North Carolina Department of Revenue showing that there are no liens or claims
for taxes against the Seller; (vi) 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' unanimous written consents authorizing the
execution, delivery and performance of this Agreement with the Seller, and if
obtainable prior to Closing, unanimous written consent of all Shareholders; and
(vii) receipts acknowledging Buyer's payment to the Seller of the Purchase
Price.
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 the Stock
Sale Restriction Agreement, Non-Compete Agreements, all instruments necessary to
transfer title to all assets, and any and all other documents as may be required
under this Agreement.
7.8. Buyer shall have received a certificate, dated the
Closing Date, from the Secretary of Seller certifying to the minutes of the
meetings of the Board of Directors of Seller authorizing the execution, delivery
and performance of this Agreement by Seller and the transactions contemplated
hereby in the form of Exhibit I attached hereto.
7.9 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.
7.10 Seller shall provide Buyer with evidence of release of
all liens and encumbrances of any kind, other than those disclosed on Schedule
3.12, on all assets being purchased pursuant to this Agreement, including but
not limited to equipment with liens from FCR, Inc., upon terms and conditions
that in no way adversely affects the title to all assets being delivered to
Buyer pursuant to this Agreement.
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7.11 Seller shall pay off any and all loans, settle any
disputes on any claims or other unresolved issues or disputed amounts between
itself and FCR, Inc. upon terms and conditions that adversely affects the title
to all assets being delivered to Buyer pursuant to this Agreement. Buyer must
also accept any timing issues associated with the resolution of the FCR, Inc.
issues as described throughout this Agreement.
7.12 Shareholders shall execute a Stock Escrow Agreement in
the form attached hereto as Exhibit D.
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:
8.1. The agreements, representations and warranties made by
Buyer in Section 4.1 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.
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 in the form attached as
Exhibit I hereto.
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 any and all other documents as
may be required under this Agreement.
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 CIT shall release a Certificate of Deposit of Xxxxxx
Xxxxxxxxx in the amount of $1,300,000 upon terms and conditions that are
acceptable to Acquirer and Xxxxxx Xxxxxxxxx.
8.7 Seller shall pay off any and all loans, settle any
disputes on any claims or other unresolved issues or disputed amounts between
itself and FCR, Inc. upon terms and conditions that in no way adversely affects
the title to all assets being delivered to Buyer pursuant to this Agreement.
Buyer must also accept any timing issues associated with the resolution of the
FCR, Inc. issues as described throughout this Agreement.
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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 Shareholders and the Seller), or
any representation or warranty in Section 4.1 (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 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 Seller
files a petition in bankruptcy.
(iv) by either party in the event, in the sole
discretion of the respective parties, the party determines during its due
diligence that the transaction is not acceptable to it.
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 Xxxxxxx
00
00
00 xxxxx xx 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 Shareholders 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
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. ARBITRATION. In any dispute arising out of this Agreement or the
transaction contemplated herein, the parties agree that all such disputes,
except as may otherwise be specifically provided for in Section 1.3 in Section
1.3 relative to mediating any disputes regarding Earn Out Consideration, shall
be resolved through binding arbitration pursuant to the terms set forth in
Section 1.3. In any arbitration matter between the parties arising out of or
relating to this Agreement, the costs of investigation, interest, and reasonable
attorney's fees shall be paid as ordered by the arbitrator.
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 13 months from the Closing Date. Any
action or claim brought against any party based upon an alleged breach of any
representation or warranty herein must be brought within 18 months from the
Closing Date.
13. INDEMNIFICATION.
13.1. INDEMNIFICATION.
(i) The Seller and the Shareholders, jointly and
severally as between the Shareholders only, covenant and agree to defend,
indemnify and hold harmless Buyer from and against any Damages arising out of or
resulting from: (i) any inaccuracy in or breach of any representation or
warranty, to the extent 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
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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, agreement or provision to be performed by the Seller or such
Shareholder pursuant to this Agreement or any of the Related Agreements required
to be executed pursuant to the terms of this Agreement and not otherwise waived
by Buyer; (iii) any claims arising out of any relationships between Seller and
FCR, Inc.; or (iv) any claims made by minority shareholders of Seller regarding
this transaction.
(ii) Buyer covenants and agrees to defend, indemnify
and hold harmless the 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; or (iii) any claims arising from Coors Brewing
Company resulting from Buyer's failure to assume that contract as part of this
Agreement.
13.2. THIRD PARTY CLAIMS.
(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 vigorously 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;
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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 the 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 successfully, would adversely
affect the business, properties or prospects of the Seller.
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.
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, including any earn out shares due
Shareholders pursuant to the terms of the Stock Escrow Agreement. Buyer's rights
under this paragraph are not unilateral. To invoke the provisions of this
paragraph, Buyer must initiate an arbitration proceeding seeking a determination
of Seller or Shareholders indemnity liability hereunder. 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. The remedies hereunder shall survive the Closing of this
transaction.
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. FURTHER ASSURANCES AFTER THE CLOSING DATE. 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. 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. MISCELLANEOUS.
16.1. 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, as follows:
(i) If to Shareholder and/or the Seller, to:
Xxxxxx Xxxxxxxxx
c/o Eaglestone Capital Services, Inc.
000 Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Telecopy: 000-000-0000
(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
Telecopy: 000-000-0000
or to such other address as any party may designate to the others by notice as
set forth above.
16.2. 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.
16.3. 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.
16.4. 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.
16.5. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made, delivered and to be performed entirely therein.
16.6. 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 Company,
assign some or all its rights to a subsidiary or
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subsidiaries or an affiliate or affiliates. Any such assignment shall not
relieve Buyer 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.
16.7. 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.
16.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Except
for the binding arbitration process described in Section 1.3.1, 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 Delaware 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.
16.9. 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.
16.10. 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.
16.11. 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.
16.12. 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,
16.13. 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: BUYER:
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx, Vice President
And General Counsel
SELLER:
/s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx, President
SHAREHOLDERS:
Baron Holdings, Inc.
/s/ Xxxxxx Xxxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxx, President
/s/ Xxxxxx Xxxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxx
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LIST OF EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
A List of Shareholders
B UCC/Tax Searches
C Non-Compete Agreement for Xxxxxx Xxxxxxxxx, Xxxxx Holdings,
Inc. and Baron Enterprises, Inc.
D Stock Escrow Agreement
E Opinion of Counsel of Seller/Shareholder
F Stock Sale Restriction Agreement of each Shareholder
G Instruments for Transfer of Assets/Xxxx of Sale
H Earn Out Schedule
I Certificates of Buyer and Seller
J Earn Out Quarterly Report form
TAB SCHEDULE DESCRIPTION
--- -------- -----------
1 1.1 List of Assets
2 1.2 List of Assumption of Liabilities and Debts
3 1.3 1999 Slip Sheet Sales Analysis
4 3.1 Organization and Good Standing
5 3.1-2 Limits on Authority
6 3.1-3 Consents
7 3.2 Tax Matters
8 3.3 Compliance; Permits
9 3.4 No Breach
10 3.5 Financial Statements
11 3.7 Litigation and Judgments
12 3.8 Contracts
13 3.9 Accounts Receivable
14 3.11 Tangible Property
15 3.11-2 Real Property
16 3.11-3 Software
17 3.12 Liens
18 3.13 List of Employees
19 3.13-1 Employment Agreements
20 3.13-2 Employment Compliance Matters
21 3.13-3 Loans made to Company Employees
22 3.14 Employee Benefit Plans
23 3.15 Insurance Policies
24 3.17 Environmental Matters
25 4.1 Consents of Buyer
26 5.1 Certain Employees
27 7.5 Liens to be Terminated
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EXHIBIT A
List of Shareholders of Baron Enterprises, Inc.
Baron Holdings, Inc. 80.12%
Xxxxxx Xxxxxxxxx 16.41%
Xxxx & Company, Inc. 3.37%
Xxxxx Xxxxxx .10%
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