ASSET PURCHASE AGREEMENT
------------------------
BY AND AMONG
RECYCLING INDUSTRIES, INC.
a Colorado corporation
("Parent")
AND
MONEY POINT LAND HOLDING CORPORATION
a Virginia corporation
("MP Holding")
AND
MONEY POINT DIAMOND CORPORATION
a Virginia corporation
("MP Diamond")
AND
XXXXXX X. XXXXXXXX ("Xxxxxxxx")
AND
XXXX XXXXXXXX REVOCABLE TRUST
a Virginia trust
("FJ Trust")
AND
XXXXXXX X. XXXXXXXX REVOCABLE TRUST
a Virginia trust
("DGJ Trust")
DECEMBER 4, 1997
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
ARTICLE 2
ACQUISITION OF MONEY POINT ASSETS. . . . . . . . . . . . . . . . . . . . . .-6-
2.1 PURCHASE AND SALE OF THE MONEY POINT ASSETS . . . . . . . . . . . . .-6-
2.2 EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . .-8-
2.3 ASSUMED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . .-9-
2.4 ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . .-9-
2.5 COLLECTION OF ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . .-9-
ARTICLE 3
PURCHASE PRICE AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . -10-
3.1 PURCHASE PRICE FOR MONEY POINT ASSETS . . . . . . . . . . . . . . . -10-
3.2 VALUATION OF INVENTORY AND ACCOUNTS RECEIVABLE. . . . . . . . . . . -10-
3.3 ADJUSTMENT OF THE PURCHASE PRICE. . . . . . . . . . . . . . . . . . -11-
3.4 REIMBURSEMENT OF BID DEPOSITS . . . . . . . . . . . . . . . . . . . -11-
3.5 ALLOCATION OF THE PURCHASE PRICE. . . . . . . . . . . . . . . . . . -11-
3.6 CLOSING OF THE PURCHASE . . . . . . . . . . . . . . . . . . . . . . -11-
ARTICLE 4
REPRESENTATIONS OF MONEY POINT AND SHAREHOLDERS. . . . . . . . . . . . . . -12-
4.1 DUE ORGANIZATION AND QUALIFICATION. . . . . . . . . . . . . . . . . -12-
4.2 TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . -12-
4.3 AUTHORITY OF MONEY POINT; CONSENTS. . . . . . . . . . . . . . . . . -12-
4.4 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . -13-
4.5 NO TAX LIENS; NO WAIVER . . . . . . . . . . . . . . . . . . . . . . -14-
4.6 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . -14-
4.7 PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
4.8 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
4.9 CONTRACTS AND OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . -15-
4.10 NOTES AND ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . -16-
4.11 TANGIBLE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . -16-
4.12 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
4.13 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . -16-
4.14 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
4.15 LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
4.16 SUPPLIERS AND CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . -18-
4.17 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . -00-
-x-
0.00 XXXXXXXXXXX OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . -18-
4.19 EMPLOYEE RELATIONS. . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.20 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.21 RELATIONSHIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.22 NO MATERIAL CHANGES PRIOR TO CLOSING DATE . . . . . . . . . . . . . -19-
4.23 BROKER'S OR FINDER'S FEES . . . . . . . . . . . . . . . . . . . . . -19-
4.24 EMPLOYEE TRANSITION . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.25 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . -20-
4.26 COMPLIANCE WITH ADA . . . . . . . . . . . . . . . . . . . . . . . . -20-
4.27 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
4.28 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
ARTICLE 5
REPRESENTATIONS OF RECYCLING . . . . . . . . . . . . . . . . . . . . . . . -21-
5.1 DUE INCORPORATION AND QUALIFICATION OF RII SUB. . . . . . . . . . . -21-
5.2 DUE INCORPORATION AND QUALIFICATION OF THE PARENT . . . . . . . . . -21-
5.3 ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . . . . . . -21-
5.4 AUTHORITY OF RII SUB AND THE PARENT . . . . . . . . . . . . . . . . -21-
5.5 STOCK CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . -22-
5.6 BROKER'S OR FINDER'S FEES . . . . . . . . . . . . . . . . . . . . . -22-
5.7 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
5.8 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
5.9 XXXX-XXXXX-XXXXXX ACT . . . . . . . . . . . . . . . . . . . . . . . -23-
ARTICLE 6
REPRESENTATIONS OF THE PARENT RELATED TO THE
STOCK CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
6.1 STATUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
6.2 1934 ACT REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . -23-
6.3 PUBLIC REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
ARTICLE 7
REGULATORY COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
7.1 BULK SALES COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . -24-
7.2 COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
7.3 OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
ARTICLE 8
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING . . . . . . . . . . . . . . -24-
8.1 ENVIRONMENTAL STUDIES . . . . . . . . . . . . . . . . . . . . . . . -24-
8.2 TITLE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
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8.3 SURVEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.4 ASSUMED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.5 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . -26-
8.6 PRESERVATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . -26-
8.7 NOTICE OF EVENTS. . . . . . . . . . . . . . . . . . . . . . . . . . -26-
8.8 EXAMINATIONS AND INVESTIGATIONS . . . . . . . . . . . . . . . . . . -26-
8.9 NO NEGOTIATION BY MONEY POINT OR THE SHAREHOLDERS . . . . . . . . . -27-
8.10 REMOVAL OF WASTE MATERIALS. . . . . . . . . . . . . . . . . . . . . -28-
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATION
OF RECYCLING TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
9.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. . . . . . . . . . -28-
9.2 GOVERNMENTAL PERMITS AND APPROVALS. . . . . . . . . . . . . . . . . -28-
9.3 THIRD PARTY CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . -28-
9.4 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
9.5 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
9.6 NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . -29-
9.7 SUBSCRIPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . -29-
9.8 TRANSFER DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . -29-
9.9 LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
9.10 ENVIRONMENTAL ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . -29-
9.11 ASSIGNMENT OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . -29-
9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL PERFORMANCE AND APPROVAL -29-
9.13 EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . -30-
9.14 NON-COMPETITION AGREEMENTS. . . . . . . . . . . . . . . . . . . . . -30-
9.15 CERTIFICATES, ETC. OF SHAREHOLDERS AND MONEY POINT. . . . . . . . . -30-
9.16 PAYMENT OF SALES OR USE TAXES BY MONEY POINT. . . . . . . . . . . . -30-
9.17 APPROVAL OF COUNSEL TO RECYCLING. . . . . . . . . . . . . . . . . . -30-
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATION OF MONEY POINT
AND SHAREHOLDERS TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . . . -30-
10.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. . . . . . . . . . -30-
10.2 GOVERNMENTAL PERMITS AND APPROVALS. . . . . . . . . . . . . . . . . -31-
10.3 THIRD PARTY CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . -31-
10.4 NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . -31-
10.5 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
10.6 SATISFACTION WITH DUE DILIGENCE . . . . . . . . . . . . . . . . . . -31-
10.7 DESIGNATION OF STOCK CONSIDERATION. . . . . . . . . . . . . . . . . -31-
10.8 LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
10.9 THE PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . -31-
10.10 ASSUMPTION OF ASSUMED CONTRACTS . . . . . . . . . . . . . . . . . . -31-
-iii-
10.11 ENVIRONMENTAL ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . -32-
10.12 EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . -32-
10.13 APPROVAL OF COUNSEL TO MONEY POINT AND THE SHAREHOLDERS . . . . . . -32-
ARTICLE 11
ACTIONS TO BE TAKEN AT THE CLOSING . . . . . . . . . . . . . . . . . . . . -32-
11.1 TRANSFER DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . -32-
11.2 ASSIGNMENT AND ASSUMPTION AGREEMENT . . . . . . . . . . . . . . . . -32-
11.3 THE PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . -32-
11.4 SUBSCRIPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . -32-
11.5 NON-COMPETITION AGREEMENTS. . . . . . . . . . . . . . . . . . . . . -32-
11.6 EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . -32-
11.7 ENVIRONMENTAL ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . -33-
11.8 CLOSING ON REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . -33-
11.9 CERTIFICATES OF MONEY POINT . . . . . . . . . . . . . . . . . . . . -33-
11.10 CERTIFICATE OF THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . -33-
11.11 CERTIFICATE OF RECYCLING. . . . . . . . . . . . . . . . . . . . . . -33-
11.12 LEGAL OPINION DELIVERED TO RECYCLING. . . . . . . . . . . . . . . . -34-
11.13 LEGAL OPINION DELIVERED TO MONEY POINT AND THE SHAREHOLDERS . . . . -34-
11.14 TITLES TO VEHICLES. . . . . . . . . . . . . . . . . . . . . . . . . -34-
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION. . . . . . . . -34-
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . -34-
12.2 INDEMNITY AGREEMENTS OF MONEY POINT AND THE SHAREHOLDERS. . . . . . -34-
12.3 INDEMNITY AGREEMENT OF RII SUB AND THE PARENT . . . . . . . . . . . -37-
12.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. . . . . . . . . . -38-
12.5 GOOD FAITH EFFORTS TO SETTLE DISPUTES . . . . . . . . . . . . . . . -39-
12.6 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . -39-
12.7 LITIGATION SUPPORT. . . . . . . . . . . . . . . . . . . . . . . . . -39-
12.8 INDEMNIFICATION OBLIGATIONS DEDUCTIBLE. . . . . . . . . . . . . . . -40-
12.9 ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
12.10 EXCLUSIVE REMEDY. . . . . . . . . . . . . . . . . . . . . . . . . . -40-
ARTICLE 13
TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . -40-
13.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
13.2 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
-iv-
ARTICLE 14
CERTAIN ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . -41-
14.1 PUBLIC STATEMENTS; CONFIDENTIALITY OF INFORMATION . . . . . . . . . -41-
14.2 REASSIGNMENT OF MONEY POINT RECEIVABLES . . . . . . . . . . . . . . -42-
14.3 EXPENSES; SALES TAX . . . . . . . . . . . . . . . . . . . . . . . . -42-
14.4 WAIVERS AND CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . -42-
14.5 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
14.6 MONEY POINT 401(K) PLAN; MONEY POINT HEALTH INSURANCE COVERAGE. . . -44-
14.7 CONVERSION OF THE SERIES E PREFERRED STOCK AND ARRANGED SALE. . . . -45-
14.8 COVENANT TO PAY ALL UNASSUMED DEBTS . . . . . . . . . . . . . . . . -45-
14.9 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . -46-
14.10 RETENTION OF/ACCESS TO BUSINESS RECORDS . . . . . . . . . . . . . . -46-
14.11 AUDIT BY RII SUB AND PARENT . . . . . . . . . . . . . . . . . . . . -46-
14.12 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . -46-
14.13 CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
14.14 RIGHTS OF THIRD PARTIES . . . . . . . . . . . . . . . . . . . . . . -47-
14.15 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
14.16 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
14.17 SUBMISSION TO JURISDICTION; WAIVERS . . . . . . . . . . . . . . . . -47-
14.18 PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . . . . . -48-
14.19 COUNTERPARTS AND FACSIMILE SIGNATURES . . . . . . . . . . . . . . . -48-
14.20 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
14.21 CORPORATE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . -48-
LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
LIST OF SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the ___ day of December, 1997, by and among
Recycling Industries of Chesapeake, Inc., a Colorado corporation ("RII Sub"),
RECYCLING INDUSTRIES, INC., a Colorado corporation ("Parent"), MONEY POINT LAND
HOLDING CORPORATION, a Virginia corporation ("MP Holding"), MONEY POINT DIAMOND
CORPORATION, a Virginia corporation ("MP Diamond"), XXXXXX X. XXXXXXXX,
President and an individual shareholder of MP Holding and MP Diamond
("Xxxxxxxx"), the XXXX XXXXXXXX REVOCABLE TRUST, a Virginia trust and
shareholder of MP Holding and MP Diamond (the "FJ Trust"), and the XXXXXXX X.
XXXXXXXX REVOCABLE TRUST, a Virginia trust and shareholder of MP Holding and MP
Diamond (the "DGJ Trust"). Throughout this Agreement, RII Sub and the Parent
may be collectively referred to as "Recycling;" MP Holding and MP Diamond may be
collectively referred to as "Money Point;" and Xxxxxxxx, the FJ Trust and the
DGJ Trust may be collectively referred to as the "Shareholders." There are
numerous other defined terms which are capitalized in this Agreement, all of
which are defined in the substantive provisions of this Agreement or in Article
1.
WITNESSETH:
WHEREAS, RII Sub is a wholly-owned subsidiary of the Parent;
WHEREAS, RII Sub desires to acquire certain assets of Money Point
consisting of substantially all of the tangible and intangible assets used in
the ferrous and non-ferrous metals recycling business conducted by Money Point
at its facility located in Chesapeake, Virginia, and those certain
administrative office and other assets, as hereinafter identified, used in
connection with the operation of Money Point's facility (collectively the "Money
Point Assets");
WHEREAS, Money Point desires to sell the Money Point Assets;
WHEREAS, the Parent has a vested interest in the transactions referred to
herein and is a party to this Agreement, amongst other things, in order to
tender the Consideration Stock referred to herein; and
WHEREAS, the Shareholders have a vested interest in the transactions
referred to herein and are parties to this Agreement in order to make certain
representations and warranties and to accept certain obligations set forth
herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
ARTICLE
1
DEFINITIONS
Unless otherwise defined in the substantive provisions of this Agreement,
the following terms will have the meanings ascribed to them in this Article 1.
1.1 "Acquisition" means the acquisition of the Money Point Assets from
Money Point.
1.2 "Assumed Contracts" means those contracts, leases and other agreements
to which Money Point is a party or beneficiary or which otherwise affect the
Business, including, but not limited to, open orders to purchase raw materials
or services in accordance with the Business' normal operating procedures, leases
of real or personal property relating to the Business, all purchase orders, back
orders, open orders or contracts from customers, including the backlog and parts
manufactured for or assigned to Money Point; PROVIDED, HOWEVER, that RII Sub and
Parent expressly are not assuming the obligations of Money Point, the
Shareholders or others in connection with that certain asset purchase agreement
dated August 23, 1985 with The Union Corporation and settlement agreement dated
March 22, 1994 entered into in connection therewith. SCHEDULE 1.2 lists all
Assumed Contracts other than (a) contracts which do not require payment by Money
Point of $20,000 or more per year and which otherwise are not material to the
Business, (b) contracts in the Ordinary Course of Business which do not require
expenditures by Money Point of $20,000 or more per year, and (c) contracts
terminable upon notice of 60 days or less and which do not require expenditures
by Money Point of $20,000 or more per year (collectively the "Material Assumed
Contracts").
1.3 "Assumed Liabilities" means the Liabilities of Money Point under the
Assumed Contracts and such other Liabilities as are expressly assumed by RII Sub
hereunder.
1.4 "Business" means the metals recycling business and business operations
as historically conducted by Money Point as a going concern.
1.5 "Closing" has the meaning set forth in Section 3.6.
1.6 "Closing Date" has the meaning set forth in Section 3.6.
1.7 "Employee Benefit Plan" means any: (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan; (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan; or (d)
Employee Welfare Benefit Plan or material fringe benefit plan or program.
-2-
1.8 "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
1.9 "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
1.10 "Environmental Claims" has the meaning set forth in Section 12.2(b).
1.11 "Environmental Law or Laws" means any and all federal, state, local
or municipal laws, common laws, rules, orders, regulations, statutes, treaties,
ordinances, codes, decrees, or requirements of any governmental authority
regulating, relating to or imposing liability or standards of conduct concerning
environmental protection, health or safety matters, including all requirements
pertaining to reporting, licensing, permitting, investigation, removal or
remediation of emissions, discharges, releases, or threatened releases of
Hazardous Materials, chemical substances, pollutants or contaminants or relating
to the manufacture, generation, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous Materials, chemical
substances, pollutants or contaminants, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Toxic Substance Control Act ("TSCA"), the Resource Conservation
and Recovery Act ("RCRA"), the Clean Air Act ("CAA"), the Clean Water Act
("CWA"), the Endangered Species Act ("ESA"), the Federal Insecticide, Fungicide,
Rodenticide Act ("FIFRA") and the Occupational Safety and Health Act of 1970
("OSHA"), all as may have been amended.
1.12 "Environmental Liabilities" means any and all liabilities for the
violation of, or required remediation under, any Environmental Laws.
1.13 "ERISA" means Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.14 "Excluded Assets" has the meaning set forth in Section 2.2.
1.15 "GAAP" means generally accepted accounting principles consistently
applied in the United States.
1.16 "Hazardous Materials" means any substance (a) the presence of which is
at, on, over, beneath, in or upon any real or personal property, building,
structure, container of any nature or description, subsurface strata, ambient
air or ambient water (including surface and groundwater) and requires
investigation, removal or remediation under any Environmental Law or common
law, (b) which is defined as a "hazardous substance," "hazardous material,"
"hazardous waste," "pollutant" or "contaminant" under any Environmental Law,
(c) which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by any
governmental authority under any Environmental Law, (d) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
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mutagenic, or otherwise hazardous and the presence of which causes or threatens
to cause a nuisance or trespass upon real property or to the adjacent properties
or poses a hazard to the environment, and/or to the health or safety of persons
on or about any real property, and/or (e) which contains urea-formaldehyde,
polychlorinated biphenyls, asbestos or asbestos containing materials, radon,
petroleum and petroleum products.
1.17 SECTION INTENTIONALLY DELETED
1.18 "Inventory Date" shall have the meaning set forth in Section 4.12.
1.19 "IRC" means the Internal Revenue Code of 1986, as amended.
1.20 "Knowledge" means actual knowledge without independent investigation
with respect to the Shareholders, and with respect to Recycling and Money Point,
actual knowledge without independent investigation of their respective officers
and directors.
1.21 "Lender" means Recycling's primary lender or equity participant
relating to the Transaction.
1.22 "Liability or Liabilities" means direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, asserted or unasserted, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise
which affects or could reasonably be expected to affect the Money Point Assets
or the Business, including any liability for Taxes.
1.23 "Market Price" when referring to the Parent Common Stock, means the
closing price for the Parent Common Stock if it is listed on a national
securities exchange or the Nasdaq National Market System or the average of the
last reported bid and asked prices for the Parent Common Stock as reported on
the Nasdaq system or on the electronic bulletin board or, if none, the National
Quotation Bureau, Inc.'s "Pink Sheets" or, if such quotations are unavailable,
the value determined by the Parent's Board of Directors in accordance with its
discretion in making a bona fide, good faith determination of fair market value.
1.24 "Material Adverse Effect" means a material adverse effect on the
business, assets or financial condition of Money Point or Recycling, as
applicable.
1.25 "Money Point Offices" means the administrative offices of Money Point
located at 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
1.26 "Money Point Receivables" has the meaning set forth in Section 2.5.
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1.27 "Ordinary Course of Business" or "Ordinary Course" means the ordinary
course of business consistent with past custom and practice of Money Point
(including with respect to quantity and frequency).
1.28 "Owned Facilities" means the real property and associated fixtures
owned by Money Point as specifically described on SCHEDULE 2.1(a).
1.29 "Parent Common Stock" means the common stock, $.001 par value per
share, of Recycling Industries, Inc., a Colorado corporation.
1.30 "Parent Series E Preferred Stock" means the Convertible Preferred
Stock of Parent described in the Designation of Series E Redeemable Convertible
Preferred Stock attached hereto as EXHIBIT A.
1.31 "Permits" means all licenses, permits, orders and approvals of any
federal, state or local governmental or regulatory bodies that are material to
or necessary for the conduct of the Business.
1.32 "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or groups of entities, or governmental body.
1.33 "Prepared Inventory" means all ferrous and non-ferrous Inventory that
has been processed by Money Point as of the Closing Date and is ready for
shipment to Money Point's customers, including, without limitation, saleable
ferrous or non-ferrous materials contained in Shredder Residue determined at a
recovery rate for such materials from the last six significant shipments of
Shredder Residue by Money Point to an unaffiliated third party processor.
1.34 "Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, claim, or other lien, other than: (a) mechanic's,
materialman's and similar liens; (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings; (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation; (d) liens
arising in connection with sales of foreign receivables; (e) liens on goods in
transit incurred pursuant to documentary letters of credit; (f) purchase money
liens and liens securing rental payments under capital lease arrangements; and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
1.35 "Shredder Residue" means the by-product generated from the operation
of a shredder which may or may not contain Hazardous Materials.
1.36 "Tangible Property" shall include the property described in Sections
2.1(a), 2.1(b), 2.1(e), 2.1(f), 2.1(g), 2.1(h) and 2.1(i).
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1.37 "Tax" means any federal, state, local or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, alternative minimum, estimated,
net worth, self-employment, Medicaid, or any other tax, including any interest,
penalty or addition thereto, whether disputed or not.
1.38 "Transaction" means the transactions contemplated by this Agreement
and the other Transaction Documents.
1.39 "Transaction Documents" means, collectively, (i) this Agreement, (ii)
any Schedule or Exhibit to this Agreement, and (iii) any certificate or other
document delivered at Closing.
1.40 "Unprepared Inventory" means: (i) all scrap ferrous metal comprised
of obsolete, discarded or abandoned machinery, appliances, equipment,
automobiles, metal manufacturing, casting and fabricating waste materials or
other consumer and industrial steel goods or by-products to be processed by
Money Point for resale; and (ii) scrap non-ferrous metal comprised of
non-magnetic alloys of copper, brass, aluminum, stainless steel, zinc die-cast,
insulated wire (aluminum and copper) and other related metals to be processed by
Money Point for resale. Unprepared Inventory does not include any non-saleable
ferrous or non-ferrous materials contained in Shredder Residue or the other
non-saleable residual materials resulting from Money Point's operations or
contained within dirt or other non-processable medium within the Owned Facility.
1.41 "1933 Act" means the Securities Act of 1933, as amended.
1.42 "1934 Act" means the Securities Exchange Act of 1934, as amended.
ARTICLE 2
ACQUISITION OF MONEY POINT ASSETS
2.1 PURCHASE AND SALE OF THE MONEY POINT ASSETS. At the Closing and
subject to the terms and conditions stated herein, Money Point agrees to sell,
assign, convey and transfer to RII Sub, and RII Sub agrees to purchase from
Money Point, the Money Point Assets together with all of the properties, rights
and goodwill associated therewith of every kind and description, tangible and
intangible, personal or mixed, as hereinafter more particularly described, with
the exception of the Excluded Assets, as hereinafter defined. Without
limitation, the Money Point Assets shall include all of the items enumerated in
subparagraphs (a) through (m) below:
(a) The Owned Facilities, including all buildings situated thereon
and all leasehold improvements and all rights in easements, driveways and signs,
as legally described on SCHEDULE 2.1(a).
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(b) All vehicles, machinery and equipment, tools, furniture,
leasehold improvements, fixtures, vehicles, dies, jigs, scales (provided that
the software for the scales is licensed and not owned and the license will be
transferred as an Assumed Contract) and supplies, or any related capitalized
items and other tangible property owned by Money Point located at the Owned
Facilities and used by the Business as of the date of this Agreement, whether at
the Owned Facilities, over the road or at any other location, all as described
on SCHEDULE 2.1(b), provided that dies, jigs, supplies, tools and spare parts
are included in the Money Point Assets whether or not listed on SCHEDULE 2.1(b).
(c) All of Money Point's right, title and interest in and to the
names "Money Point Land Holding Corporation," "Money Point Diamond Corporation,"
"Xxxxxxxx Metal Company" and any variations thereof.
(d) All of Money Point's right, title and interest in and to
telephone number (000) 000-0000 and facsimile number (000) 000-0000.
(e) Copies of all business and financial records (exclusive of tax
records) relating to the Business for the past three years, including copies of
all sales data, pricing and cost information, customer and supplier lists,
credit records, sales literature and business and marketing plans relating to
the Business, provided that Money Point will not be required to make copies to
the extent copies have been delivered prior to the Closing.
(f) Those specific assets relating to the operation of the Business
and Money Point located at the Money Point Offices and listed on SCHEDULE
2.1(f).
(g) Copies of all computer documentation, computer files, computer
disks, computer tapes and all information stored on computer media (whether
written, optical, or magnetic) used in connection with the operation of the
Business and stored at the Owned Facilities or used at the Money Point Offices
in connection with the operation of the Business.
(h) All of Money Point's right, title and/or interest in accounting
and other computer software, including without limitation, the software for the
scales, relating to the Business owned by or licensed to Money Point, including
information interfaced with those systems, as maintained by Money Point at the
Owned Facilities or the Money Point Offices, all of which are listed on SCHEDULE
2.1(h); PROVIDED, HOWEVER, that Money Point shall not warrant title to any
software and, to the extent the software is licensed rather than owned, the
interest transferred hereunder shall be the license rights.
(i) All copies of customer and supplier lists, signs, advertising,
catalogues and brochures relating to the Business.
(j) All rights of Money Point under the Assumed Contracts.
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(k) All goodwill and other general intangibles related to the Money
Point Assets.
(l) All claims, deposits, prepayments, refunds, causes of action,
cases in action, rights of recovery, rights of set-off and rights of recoupment
related to the Money Point Assets or the Business.
(m) All other assets of any nature useful and/or beneficial to the
Business and located at the Owned Facilities, whether owned or leased by Money
Point, unless specifically described in Section 2.2 or on SCHEDULE 2.2 as an
Excluded Asset.
Money Point's sale, conveyance, assignment and transfer of the Money Point
Assets shall be free and clear of any Security Interest, liabilities or
obligations other than the Assumed Liabilities.
2.2 EXCLUDED ASSETS. On the Closing Date, RII Sub shall not purchase the
following assets owned by Money Point, each to the extent described in more
detail on SCHEDULE 2.2 (the "Excluded Assets"):
(a) Any cash, marketable securities (including all shares of capital
stock of Trigon Healthcare, Inc.) and cash equivalents of Money Point and
the account receivable to Money Point from National Exchange in the
approximate amount of $375,518.06;
(b) The real property owned by MP Holding, the legal description of
which is set forth in SCHEDULE 2.2, which consists of approximately thirty
acres situated adjacent to the Owned Facilities;
(c) The corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, stock certificates and other documents
relating to the organization, maintenance and existence of Money Point as
corporations; PROVIDED, HOWEVER, that Money Point will not have the right
to continue using its current corporate names following the Closing;
(d) Any of the rights of Money Point under this Agreement and any
other Transaction Document entered into on or after the date of this
Agreement;
(e) Rights to refunds of insurance premiums paid by Money Point on
the insurance policies referenced in Section 4.20 prior to the Closing, as
identified on SCHEDULE 2.2, and the rights to the insurance proceeds from
the damage caused to the crane referenced on SCHEDULE 4.11;
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(f) Certain personal assets and other items owned by the Shareholders
as identified on SCHEDULE 2.2;
(g) Any and all rights of Money Point under the lawsuit styled MONEY
POINT DIAMOND CORPORATION T/A XXXXXXXX METAL CO. X. XXXXX & STANT, P.C., CL
96-675-M, in the Circuit Court of the City of Chesapeake, Virginia;
(h) The following vehicles and all Liabilities associated therewith;
(1) 1997 Chrysler leased by MP Holding pursuant to a lease
agreement dated June 10, 1997;
(2) 1996 Volvo leased by MP Holding pursuant to a lease agreement
dated June 12, 1996; and
(3) 1995 Dodge Caravan leased by MP Holding pursuant to a lease
agreement dated March 15, 1996.
(i) Tax refunds of any nature whatsoever; and
(j) Any other assets of Money Point set forth on SCHEDULE 2.2.
2.3 ASSUMED CONTRACTS. RII Sub shall assume the obligations of Money
Point under the Assumed Contracts.
2.4 ASSUMPTION OF LIABILITIES. Except with respect to the indemnity
obligations of Recycling under Section 12.3 and the obligations of Money Point
under Assumed Contracts, RII Sub shall not assume any Liabilities or
Environmental Liabilities of Money Point arising on or before the Closing or
with respect to any action, event or occurrence of any party on or prior to the
Closing.
2.5 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) If, after Closing, Money Point receives payment on any of the
accounts receivable included in the Money Point Assets other than the receivable
from National Exchange as referenced in Section 2.2(a) ("Money Point
Receivables"), Money Point shall forthwith forward the same to RII Sub within
five business days after receipt thereof.
(b) RII Sub shall have the right, upon five business days prior
written notice and during the normal business hours of Money Point, to review
records of Money Point solely to determine compliance with the provisions of
Section 2.5(a).
(c) The provisions of this Section 2.5 shall survive the Closing.
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ARTICLE 3
PURCHASE PRICE AND CLOSING
3.1 PURCHASE PRICE FOR MONEY POINT ASSETS.
(a) RII Sub shall pay the total amount of $19,100,000, subject to the
adjustments, as determined in accordance with Section 3.3 below (the "Purchase
Price") to Money Point for the purchase of the Money Point Assets. The Purchase
Price shall be payable as follows:
(1) $12,000,000, as adjusted in accordance with Section 3.3
below, in immediately available funds at Closing (the "Cash Consideration");
(2) $3,000,000 stated value of Parent Series E Preferred Stock
(the "Stock Consideration") delivered at Closing pursuant to the terms of a
customary subscription agreement (the "Subscription Agreement"). The form of
Subscription Agreement is attached hereto as EXHIBIT B.
(3) Payment and release of indebtedness not to exceed $4,100,000,
as specifically identified on SCHEDULE 3.1(a)(3); PROVIDED, HOWEVER, that to the
extent that the indebtedness of Money Point paid by RII Sub pursuant to this
Section 3.1(a)(3) is less than $4,100,000, the difference shall be added to the
Cash Consideration payable by RII Sub to Money Point; and, PROVIDED, FURTHER,
that if the indebtedness intended to be released pursuant to this Section
3.1(a)(3) exceeds $4,100,000, the difference shall be paid at the Closing by
Money Point from the Cash Consideration.
3.2 VALUATION OF INVENTORY AND ACCOUNTS RECEIVABLE. The aggregate value
of the inventory and accounts receivable has been determined jointly by
representatives of Money Point and Recycling prior to the Closing Date, and such
value is set forth on SCHEDULE 3.2, initialed by Money Point and Recycling.
This valuation shall be updated to the Closing Date by adjusting for all
shipments in and out and changes in accounts receivable which occur through the
close of business the date immediately preceding the Closing Date. For purposes
of calculating the value of inventory, Unprepared Inventory shall be valued at a
price equal to the average price Money Point has paid for comparable material
received across its scales in the ten business days immediately preceding the
valuation, and Prepared Inventory shall be valued at market price, less the cost
of shipping.
If the parties are not able to mutually determine the value of the
inventory and receivables, an independent third party shall be jointly selected
by Money Point and Recycling to determine such value. The value determination
by such third party shall be binding on Money Point and Recycling. The Closing
shall occur as soon as practicable after third party value
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determination, if such is required, provided all other conditions to Closing are
satisfied or waived.
3.3 ADJUSTMENT OF THE PURCHASE PRICE.
(a) PRE-CLOSING ADJUSTMENT. The aggregate value of the inventory and
accounts receivable included in the Money Point Assets, as determined in
accordance with Section 3.2 shall not be less than $5,470,000 on the Closing
Date. If the value of the inventory and accounts receivable exceeds or is less
than this amount, the Purchase Price shall be adjusted accordingly and the Cash
Consideration shall be increased or decreased, as appropriate, to reflect the
adjustment.
(b) POST-CLOSING ADJUSTMENT. If the parties are not able to complete
the adjustments contemplated by Sections 3.2 and 3.3(a) immediately prior to the
Closing, within 21 days after the Closing such adjustments shall be completed
and an adjustment payment, in immediately available funds, will be made by the
party who is determined to be responsible therefor no later than the 30th day
after the Closing. If there are any remaining costs related to the preparation
of the Environmental Studies which are to be reimbursed 50% to Money Point by
RII Sub, the reimbursement shall be made in connection with the post-closing
adjustment.
3.4 REIMBURSEMENT OF BID DEPOSITS. RII Sub shall reimburse Money Point
for bid deposits totalling $81,776.71 as described on SCHEDULE 3.4. The
reimbursement shall be made in connection with the post-closing adjustment
contemplated in Section 3.3(b) and, if there is no such post-closing adjustment
because all adjustments are able to be made on or before the Closing, RII Sub
shall make the reimbursement payment to Money Point by company check not later
than 30 days after the Closing.
3.5 ALLOCATION OF THE PURCHASE PRICE.
(a) The Purchase Price shall be allocated among the Money Point
Assets as set forth on SCHEDULE 3.5.
(b) The parties agree that they will not take any tax or other
position inconsistent with any allocation of the Purchase Price set forth on
SCHEDULE 3.5.
(c) RII Sub and Money Point each covenant with the other that it will
promptly give written notice to the other of any inquiry or challenge of such
allocation by any federal, state or local tax authority.
3.6 CLOSING OF THE PURCHASE. The closing of the Transaction (the
"Closing") shall take place on December 4, 1997, at the offices of Lawyers Title
Insurance Corporation, Southeastern Virginia Beach Office, Norfolk, Virginia,
tel 000-000-0000/fax 000-000-0000, or at such other place as selected by the
Lender, in its sole and absolute discretion, on the date
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mutually agreed to by the parties (the "Closing Date"). The Closing Date shall
be no later than December 31, 1997, unless mutually extended by the parties.
ARTICLE 4
REPRESENTATIONS OF MONEY POINT AND SHAREHOLDERS
As an inducement to Recycling to enter into this Agreement and to complete
the Transaction, and with the knowledge that Recycling will rely thereon, Money
Point and the Shareholders, jointly and severally, represent and warrant to
Recycling that all of the representations and warranties in this Article 4 are
true, correct and complete as of the date of this Agreement.
4.1 DUE ORGANIZATION AND QUALIFICATION.
(a) MP Holding and MP Diamond each is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia, and has the corporate power and lawful authority to carry on its
business as now being conducted.
(b) MP Holding and MP Diamond each is duly qualified or otherwise
authorized to transact business in each jurisdiction, listed in SCHEDULE 4.1(b),
in which the nature of the business conducted or the character or location of
the properties owned makes such qualification necessary.
4.2 TITLE TO PROPERTY. Except for the exceptions noted in the title
insurance policy to be obtained by RII Sub for the Closing and encumbrances,
covenants, conditions, restrictions, reservations and easements filed of record,
Money Point has good, valid and insurable title to all real property, and except
as set forth SCHEDULE 4.2 Money Point has good, valid and marketable title to
its personal property included in the Money Point Assets (tangible and
intangible), in each case, other than set forth above, subject to no Security
Interest, option, right of first refusal, or other restriction of any kind or
character.
4.3 AUTHORITY OF MONEY POINT; CONSENTS.
(a) MP Holding and MP Diamond each has full power and authority to
execute and deliver this Agreement and the other Transaction Documents and to
carry out the Transaction and MP Holding and MP Diamond each has taken all
requisite corporate or other action to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents.
(b) This Agreement and the other Transaction Documents are valid and
binding agreements of MP Holding and MP Diamond, enforceable in accordance with
their terms.
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(c) Except as described in SCHEDULE 4.3(c), no consent, authorization
or approval of, or declaration, filing or registration with, any governmental or
regulatory authority or any consent, authorization or approval of any other
third party is required to enable either MP Holding or MP Diamond to enter into
and perform its respective obligations under this Agreement and the other
Transaction Documents, and neither the execution and delivery of this Agreement
and the other Transaction Documents nor the consummation of the Transaction by
MP Holding or MP Diamond will:
(1) Be in violation of its respective Articles of Incorporation,
Bylaws or any other organizational document, or constitute a breach of any
evidence of indebtedness or agreement to which it is a party, except where such
breach would not have a Material Adverse Effect on either the Business or the
Money Point Assets;
(2) Cause a default under any mortgage or deed of trust or other
lien, charge or encumbrance to which any of the Money Point Assets is subject or
under any contract to which it is a party, or permit the termination of any such
contract by another person, except where such default or termination would not
have a Material Adverse Effect on the Business or the Money Point Assets;
(3) Result in the creation or imposition of any Security Interest
upon any of the Money Point Assets under any agreement or commitment to which it
or the Money Point Assets are bound;
(4) Conflict with or result in the breach of any writ, injunction
or decree of any court or governmental instrumentality; or
(5) Violate any statute, law or regulation of any jurisdiction as
such statute, law or regulation related to the Money Point Assets.
4.4 FINANCIAL STATEMENTS.
(a) The following financial statements of Money Point are attached
hereto as SCHEDULE 4.4:
(1) A copy of the audited financial statements for Money Point
for its fiscal years ended December 31, 1994, 1995 and 1996, each prepared in
accordance with GAAP (the "Audited Financial Statements").
(2) A copy of its unaudited financial statements prepared
substantially in accordance with GAAP in the same manner which they are
currently prepared for the period from January 1, 1997 through October 31, 1997
(the "Unaudited Financial Statements").
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The Audited Financial Statements and the Unaudited Financial Statements
collectively are referred to herein as the "Money Point Financial Statements."
The Audited Financial Statements have been prepared in accordance with GAAP and
the Unaudited Financial Statements have been prepared substantially in
accordance with GAAP and present fairly the financial condition of Money Point
as of such dates and the results of operations of Money Point for such periods;
PROVIDED, HOWEVER, that the Unaudited Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation items.
(b) Since December 31, 1996, there has been no (1) material adverse
change in the assets or liabilities, or in the business, financial condition or
in the results of operations of the Business or on the Owned Facilities,
whether, to the Knowledge of Money Point and the Shareholders, as a result of
any legislative or regulatory change, or whether as a result of revocation of
any Permits, fire, explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God; and (2) no change in the assets or
liabilities, or in the Business, financial condition, or in the results of
operations, or, to the Knowledge of Money Point and the Shareholders, any loss
of customers of Money Point, except in the Ordinary Course which have not, in
the aggregate or individually, had a Material Adverse Effect on the Business.
4.5 NO TAX LIENS; NO WAIVER.
(a) None of the Money Point Assets are subject to any lien in favor of
the United States pursuant to the IRC for nonpayment of federal taxes, or any
lien in favor of any state under any comparable provision of state law, under
which transferee liability might be imposed upon RII Sub as purchaser under the
IRC or any comparable provision of state or local law, except for real estate
taxes which are not yet due and payable.
(b) Money Point has not waived any statute of limitations with
respect to the assertion of any liability under any federal, state, or local tax
law.
(c) Money Point is not in default under, nor has it failed to pay,
any Tax liability to any federal, state, or local authority, and no audit or
other review by any such authority is pending, or, to the Knowledge of Money
Point and the Shareholders, contemplated.
(d) Copies of Money Point's federal and state income tax returns for
its tax years ended December 31, 1993, 1994, 1995 and 1996 are attached hereto
as SCHEDULE 4.5(d).
4.6 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.6,
(a) Neither Money Point nor any of the Shareholders is in violation of
or has violated since January 1, 1994, any applicable order, judgment,
injunction, award or decree relating to the Money Point Assets, except where
such violation would not have a Material
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Xxxxxxx Xxxxxx. To the Knowledge of Money Point and the Shareholders, except as
otherwise disclosed in the Environmental Studies, neither Money Point nor the
Shareholders is in violation of or has violated since January 1, 1994, any
federal, state, local or foreign law, ordinance or regulation or any other
requirement of any governmental or regulatory body, court or arbitrator
applicable to the Money Point Assets, except where such violation would not have
a Material Adverse Effect.
(b) Except with respect to any encumbrances noted on the title
insurance policy to be obtained by RII Sub and/or covenants, conditions,
restrictions, reservations and easements filed of record, and/or the survey to
be obtained by RII Sub, to the Knowledge of Money Point and the Shareholders,
the buildings included in the Owned Facilities do not encroach on the property
of others, (2) except as otherwise disclosed in the Environmental Studies, to
the Knowledge of Money Point and the Shareholders, there is not pending or
threatened any notification of any governmental authority that Money Point is
not in material compliance with applicable laws and regulations respecting
employment and employment practices, occupational safety and health laws and
regulations, and Environmental Laws, and (3) neither Money Point nor any
Shareholder has received, since January 1, 1994, any such notification of past
violations of such laws or regulations.
4.7 PERMITS. SCHEDULE 4.7 lists all Permits required by any governmental
entity related to the Business or operations of Money Point that are material to
the operation of the Business. Except as described on SCHEDULE 4.7, Money Point
validly holds all Permits that are material to the operation of the Business and
all Permits are in full force and effect and no proceeding to revoke or modify
in a materially detrimental way any of such Permits is pending or, to the
Knowledge of Money Point or any Shareholder, threatened.
4.8 LITIGATION. Except as described in SCHEDULE 4.8, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving the
Money Point Assets or the Business. Except as set forth on SCHEDULE 4.8, there
are no actions, suits or claims against Money Point or any Shareholder, or, to
the Knowledge of Money Point or any Shareholder, investigations (whether or not
the defense thereof or liabilities in respect thereof are covered by insurance)
pending or, to the Knowledge of Money Point or any Shareholder, threatened
against or involving the Money Point Assets or the Business.
4.9 CONTRACTS AND OTHER AGREEMENTS.
(a) Except for the Assumed Contracts or the contracts, leases, and
other agreements which will be completed or cancelled at or prior to the
Closing, and except as otherwise disclosed on SCHEDULE 4.9(a), Money Point is
not a party to any (1) contract for the employment of any officer or individual
employee, (2) contract with any union, (3) bank loan or other credit agreement,
(4) bonus, deferred compensation, profit sharing, pension or
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retirement arrangement, (5) lease for real or personal property, (6) partnership
or joint venture agreement, or (7) other material contract, agreement or
commitment.
(b) All of the Assumed Contracts are valid and binding upon Money
Point in accordance with their terms, and Money Point is not in default nor has
it received any notice of default under, or with respect to any Assumed
Contracts, except for such defaults that would not or do not, individually or in
the aggregate, have a Material Adverse Effect.
(c) Except as otherwise disclosed on SCHEDULE 4.3(c), no approval or
consent of any Person is needed in order that the contracts, leases, and other
agreements which constitute a part of the Assumed Contracts will continue in
full force and effect following the completion of the Transaction. Money Point
is not in the process of negotiating or entering into any contracts, leases, or
other agreements described in this Section 4.9.
4.10 NOTES AND ACCOUNTS RECEIVABLE. The Money Point Receivables are
reflected properly in the books and records of Money Point, and were incurred in
the Ordinary Course, are current (not over 60 days old) and are collectible
without setoffs or counterclaims, subject only to the reserve for bad debts set
forth on the balance sheet included in the Unaudited Financial Statements, as
adjusted, for operations and transactions through the Closing Date in accordance
with the past custom and practice of Money Point. The Money Point Receivables
not collected within 60 days after the Closing shall be subject to reassignment
to Money Point in accordance with Section 14.2.
4.11 TANGIBLE PROPERTY. Except as described in SCHEDULE 4.11, all Tangible
Property is in good operating condition and repair in all material respects,
subject only to normal wear and tear. With respect to the crane referenced in
SCHEDULE 4.11, Money Point has ordered the part necessary for repair and, at
Money Point's expense, will restore the crane to good operating condition within
a reasonable period of time following receipt of the part. Since January 1,
1994 neither Money Point nor any of the Shareholders has received written notice
that any of the Tangible Property is in violation of any existing law or any
building, zoning, health, safety or other ordinance, code or regulation.
4.12 INVENTORY. The piles of Unprepared Inventory observed and measured on
November 21, 1997 (the "Inventory Date") are located on level ground and are
comprised solely, throughout the pile, of the quality and grade of material
visible on the outer surface of the pile.
4.13 INTELLECTUAL PROPERTY.
(a) Money Point does not own any intellectual property, inventions,
discoveries, trade secrets, designs, prototypes, formulas, or any other
proprietary information related to the Business, other than the rights to the
names "Money Point Land Holding Corporation," "Money Point Diamond Corporation"
and "Xxxxxxxx Metal Company." Other
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than as required under shrink wrap software licenses for computers and/or the
scales, Money Point has never agreed to indemnify any Person for or against any
interference, infringement, misappropriation or other conflict with respect to
any intellectual property.
(b) Neither Money Point nor any of the Shareholders has Knowledge of
any patent, invention, trade secret, trademark, service xxxx, trade name or
copyright of any other Person that is infringed by Money Point, nor do they have
notice of any infringement claim of any other Person relating to any
intellectual property or any process or confidential information of Money Point.
4.14 REAL PROPERTY. The Owned Facilities include all real property
included in the Money Point Assets. To the Knowledge of Money Point and the
Shareholders, with respect to each parcel of owned real property included within
the Owned Facilities:
(a) Except as otherwise disclosed on SCHEDULE 4.7 or in the
Environmental Studies, since January 1, 1994, Money Point has possessed all
approvals of governmental authorities (including licenses and permits ) required
which are material to the ownership or operation of the Business. The Owned
Facilities, since January 1, 1994, have been operated and maintained, in all
material respects, in accordance with applicable laws, rules and regulations.
(b) Except as otherwise disclosed on SCHEDULE 4.14(b), there are no
leases, subleases, licenses, easements, concessions, or other agreements,
written or oral, granting to any party or parties the right of use or occupancy
of any portion of the Owned Facilities.
(c) There are no outstanding options or rights of first refusal to
purchase the Owned Facilities or any portion thereof or interest therein.
(d) There are no parties other than Money Point in possession of the
Owned Facilities or any portion thereof.
(e) The Owned Facilities are supplied with utilities and other
services necessary for their present operation, including electricity, water,
telephone, and sewage disposal, all of which services are adequate in accordance
with all applicable laws, ordinances, rules, and regulations and are provided
ingress and egress via public roads or via permanent, irrevocable, appurtenant
easements benefiting the Owned Facilities.
4.15 LIABILITIES. Except as set forth in SCHEDULE 4.15 or otherwise in
this Agreement or any other Schedule hereto, to the Knowledge of Money Point and
the Shareholders, the Business has no Liabilities other than (a) Liabilities
fully and adequately reflected or reserved against in the Financial Statements,
(b) Liabilities under Assumed Contracts, (c) Liabilities incurred since December
31, 1996 in the Ordinary Course, and (d) Liabilities which do not, individually
or in the aggregate, have a Material Adverse Effect on the Business.
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4.16 SUPPLIERS AND CUSTOMERS. SCHEDULE 4.16 sets forth a list of (1) all
suppliers from whom Money Point has purchased $25,000 or more in the fiscal year
ended December 31, 1996 and/or during the period from January 1, 1997 through
the date of this Agreement, and (2) all customer whose annual purchases from the
Business exceeded $25,000 in the fiscal year ended December 31, 1996 and/or
during the period from January 1, 1997 through the date of this Agreement.
There are no agreements or understandings, either written or oral, with any
customers of the vendors to Money Point as to adjustments in pricing or cost
which would reduce the profit margin of any existing or contemplated contract or
other relationship.
4.17 EMPLOYEE BENEFIT PLANS. SCHEDULE 4.17 lists all Employee Benefit
Plans maintained by Money Point or to which it contributes for the benefit of
any of its current or former employees.
(a) To the Knowledge of Money Point and the Shareholders, each
Employee Benefit Plan (and each related trust or insurance contract) complies in
all material respects in form and in operation in all respects with the
applicable requirements of ERISA and the IRC;
(b) All contributions (including all employer contributions and
employees salary reduction contributions) which are due have been paid to each
Employee Benefit Plan and all such plans are adequately funded;
(c) No material unsatisfied liability has been incurred by Money Point
or any ERISA affiliate of Money Point and there is no material risk that such
liability will be incurred;
(d) To the Knowledge of Money Point and the Shareholders, no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
with respect to the administration or the investment of the assets of any
Employee Benefit Plan (other than routine claims for benefits) is pending;
(e) Money Point does not provide any medical or other similar benefits
to employees beyond retirement, other than group health care continuation
required by COBRA; and
(f) Money Point has delivered to RII Sub and Parent correct and
complete copies of the plan documents and summary plan descriptions, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each Employee Benefit
Plan.
4.18 CURTAILMENT OF OPERATIONS. No labor disputes or work stoppages
involving the Business are pending or, to the Knowledge of Money Point and the
Shareholders, threatened which, either singly or in the aggregate, might have a
Material Adverse Effect
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on the Business. To the Knowledge of Money Point and the Shareholders, no
material customer of or supplier to the Business is involved in, or affected by,
any dispute, arbitration, lawsuit, or administrative proceedings which might
have a Material Adverse Effect on the Business.
4.19 EMPLOYEE RELATIONS. Money Point is not a party to a collective
bargaining agreement and, to its and the Shareholders' Knowledge, Money Point is
in compliance with all federal, state or other applicable laws, domestic or
foreign, respecting employment and employment practices, terms and conditions of
employment (including issues related to independent contractor status of
personnel) and wages and hours, and Money Point has not and is not engaged in
any unfair labor practice. To the Knowledge of Money Point and the
Shareholders, there have been no organization efforts by any trade unions within
the last five years.
4.20 INSURANCE. SCHEDULE 4.20 lists all insurance policies maintained by
Money Point relating to the Business or the Owned Facilities, copies of which
have been provided to RII Sub, which cover the Money Point Assets or the
Business, the nature of such policies, the amount and types of coverage, and the
name of the insurers and expiration dates. Money Point has paid all premiums
and other amounts due on such policies and will not cancel any insurance or
permit any insurance to lapse or terminate prior to the Closing.
4.21 RELATIONSHIPS. Except as described on SCHEDULE 4.21, no officer or
director of Money Point possesses, directly or indirectly, any financial
interest in, or is a director, officer, stockholder or employee of, any
corporation, firm, association or business organization which is a manufacturer
for, or client, supplier, customer, lessor, lessee, or competitor or potential
competitor of, the Business. The Business is not indebted to any officer,
director, partner, or employee of Money Point except with respect to accrued but
unpaid compensation and other Ordinary Course employment benefits or except as
described on SCHEDULE 4.21 (which are not being assumed by RII Sub hereunder),
to any entity in which any such Person has a financial interest.
4.22 NO MATERIAL CHANGES PRIOR TO CLOSING DATE. Up until the Closing Date,
the Business will be operated in the Ordinary Course of Business.
4.23 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting on
behalf of Money Point or the Shareholders is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by or under common control with any of the
parties hereto, in connection with the Transaction.
4.24 EMPLOYEE TRANSITION. SCHEDULE 4.24 lists all employees of Money Point
who work or are customarily stationed at the Owned Facilities, their term of
employment, compensation history (including bonus, if any), benefits and accrued
vacation and other
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amounts payable to each employee. On or before the first day subsequent to the
Closing Date, Money Point will terminate all employees of the Business who will
not be hired by RII Sub and will pay all compensation due such employees on or
before the first day subsequent to the Closing. RII Sub will not assume or
otherwise be responsible for any salaried or hourly health and life insurance
obligations incurred prior to the Closing for any employee not hired by the RII
Sub, nor for payment of claims to insureds, or payment of any premiums for
coverage prior to the Closing Date; PROVIDED, HOWEVER, that, following the
Closing Date, RII Sub has agreed to assume the obligation to provide group
health care insurance continuation coverage as required by COBRA to qualified
former employees of Money Point and/or their family members, with the premiums
being covered by such former employees of Money Point and/or their family
members. Except as provided in the foregoing sentence, RII Sub will not assume
any liabilities either to former Money Point employees or the employees of Money
Point who are hired by RII Sub after the Closing. Money Point agrees that all
liabilities of the Business to terminated employees will be retained by Money
Point, including those accruing by reason of termination by Money Point. RII
Sub shall have the right, in its sole discretion, to determine which of Money
Point's employees it will hire following the Closing.
4.25 ENVIRONMENTAL MATTERS. Except as may be provided in the Environmental
Studies to be performed as contemplated by Section 8.1 of this Agreement, copies
of which will be delivered to RII Sub prior to the Closing as provided in
Section 8.1, or disclosed on SCHEDULE 4.25, Money Point and the Shareholders
have no Knowledge of any Environmental Liabilities, actual or expected, relating
to the Business or the Owned Facilities, or of any environmental conditions on
any other real property that could reasonably be expected to result in an
Environmental Liability to the Business.
4.26 COMPLIANCE WITH ADA. Money Point has complied with the Americans with
Disabilities Act of 1991, 42 U.S.C. Sections 12111, 12112 and 12209, as amended,
and any similar applicable state regulations, except where the failure to so
comply would not have a Material Adverse Effect.
4.27 DISCLOSURE. None of the Transaction Documents issued by Money Point
or the Shareholders and furnished or to be furnished to Recycling, to the
Knowledge of Money Point and the Shareholders, contains or will contain any
untrue statement of a material fact or omits any statement of a material fact
necessary in order to make the statements contained therein not misleading.
4.28 BEST EFFORTS. Money Point and the Shareholders will use their best
efforts to timely apply for and obtain all permits, consents and approvals, to
complete any due diligence deemed necessary by Money Point and the Money Point
Shareholders and take such other actions in order to complete the Transaction by
the Closing Date. Money Point and the Shareholders will execute and deliver
such instruments and take such other action
-20-
as may be reasonable or appropriate to carry out the Acquisition and the
intentions of this Agreement.
ARTICLE 5
REPRESENTATIONS OF RECYCLING
As an inducement to Money Point and the Shareholders to enter into this
Agreement and to complete the Transaction and with the knowledge that Money
Point and the Shareholders will rely thereon, RII Sub and the Parent jointly and
severally represent and warrant to Money Point and the Shareholders that all of
the representations and warranties in this Article 5 are true, correct and
complete as of the date of this Agreement.
5.1 DUE INCORPORATION AND QUALIFICATION OF RII SUB. RII Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado, and has the corporate power and lawful authority to
carry on its business as now being conducted. On or before the Closing Date,
RII Sub will be duly qualified or otherwise authorized as a foreign corporation
to transact business and will be in good standing in the Commonwealth of
Virginia.
5.2 DUE INCORPORATION AND QUALIFICATION OF THE PARENT. The Parent is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado, and has the corporate power and lawful authority
to carry on its business as now being conducted.
5.3 ARTICLES OF INCORPORATION AND BYLAWS. On or before the Closing Date,
RII Sub and the Parent will deliver to Money Point true and complete copies of
their respective Articles of Incorporation and Bylaws, each as certified by the
Parent's corporate secretary, as then in effect.
5.4 AUTHORITY OF RII SUB AND THE PARENT. RII Sub and the Parent have full
power and authority to execute and deliver this Agreement and the other
Transaction Documents and to carry out the Transaction and Recycling has taken
all requisite corporate action to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents. This
Agreement and the other Transaction Documents are valid and binding agreements
of RII Sub and the Parent, enforceable in accordance with their terms. No
consent, authorization or approval of, or declaration, filing or registration
with, any governmental or regulatory authority or any consent, authorization or
approval of any other third party is necessary in order to enable RII Sub or the
Parent to enter into and perform its obligations under this Agreement and the
other Transaction Documents, and neither the execution and delivery of this
Agreement and the other Transaction Documents nor the completion of the
Transaction will, with respect to RII Sub and the Parent, individually:
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(a) Be in violation of its Articles of Incorporation or Bylaws or any
other organizational document, or constitute a breach of any evidence of
indebtedness or agreement to which it is a party, except where such breach would
not have a Material Adverse Effect;
(b) Cause a default under any mortgage or deed of trust or other lien,
charge or encumbrance to which any of its property is subject or under any
contract to which it is a party, or permit the termination of any such contract
by another Person, except where such default or termination would not have a
Material Adverse Effect;
(c) Result in the creation or imposition of any Security Interest upon
any of its property or assets under any agreement or commitment to which it is
bound;
(d) Accelerate, or constitute an event entitling, or which would upon
notice or lapse of time or both, entitle the holder of any indebtedness to
accelerate the maturity of any such indebtedness;
(e) Conflict with or result in the breach of any writ, injunction or
decree of any court or governmental instrumentality;
(f) Violate any statute, law or regulation of any jurisdiction as such
statute, law or regulation relates to it; or
(g) Violate or cause any revocation of or limitation on any Permit.
5.5 STOCK CONSIDERATION. The Stock Consideration when issued, and the
Parent Common Stock issuable upon conversion of the Stock Consideration, will be
duly authorized, fully paid and non-assessable and not subject to any preemptive
rights.
5.6 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting on
behalf of RII Sub or the Parent is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with the Transaction.
5.7 DISCLOSURE. None of the Transaction Documents issued by RII Sub or
the Parent and furnished or to be furnished to Money Point and the Shareholders,
to the Knowledge of RII Sub or the Parent, contains or will contain any untrue
statement of a material fact or omits any statement of a material fact necessary
in order to make the statements contained therein not misleading.
5.8 BEST EFFORTS. RII Sub and the Parent will use their best efforts to
timely apply for and obtain all permits, consents and approvals, to complete any
due diligence deemed necessary by RII Sub and the Parent, and to take such other
actions in order to
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complete the Transaction by the Closing Date. RII Sub and the Parent will
execute and deliver such instruments and take such other action as may be
reasonable or appropriate to carry out the Acquisition and the intentions of
this Agreement.
5.9 XXXX-XXXXX-XXXXXX ACT. The total assets and annual net sales of
Recycling are such that the provisions of the Xxxx-Xxxxx-Xxxxxx Act, 15 U.S.C.
Sections 18a and any similar state statute, are inapplicable to the
Transaction.
ARTICLE 6
REPRESENTATIONS OF THE PARENT RELATED TO THE
STOCK CONSIDERATION
As an inducement to Money Point and the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, and with the
knowledge that Money Point and the Shareholders will rely thereon, the Parent
represents and warrants the following to Money Point and the Shareholders:
6.1 STATUS. The Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado. The Parent is
authorized to issue preferred stock and common stock. The Parent has taken all
necessary corporate action to create the Parent Series E Preferred Stock and to
reserve a sufficient number of shares of common stock which may be issued upon
conversion thereof. The preferred stock, when issued in accordance with the
provisions of this Agreement will be lawfully issued as fully paid,
nonassessable preferred shares of the Parent, and the common stock issuable upon
conversion of the Parent Series E Preferred Stock, when issued in accordance
with the conversion terms of said preferred stock, will be lawfully issued as
fully paid, nonassessable common shares of the Parent.
6.2 1934 ACT REGISTRATION. The common stock of the Parent is registered
under Section 12(g) of the 1934 Act, and in accordance therewith the Parent
files periodic reports, proxy statements, and other informational reports
required under the 1934 Act. The Parent has filed with the SEC all reports it
is required to file under the 1934 Act. The Parent's common stock is traded
publicly in the over-the-counter market and quoted on the Nasdaq National Market
under the symbol "RECY."
6.3 PUBLIC REPORTS. The Parent has made all filings with the SEC that it
has been required to make under the 1933 Act and 1934 Act (collectively, the
"Public Reports"). Each of the Public Reports was complete and accurate when
filed and complied in all material respects with the requirements of the 1933
Act or 1934 Act, as applicable. At the time each Public Report was filed, it
did not contain any untrue statement of a material fact or omit to state any
material fact necessary, in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
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ARTICLE 7
REGULATORY COMPLIANCE
7.1 BULK SALES COMPLIANCE. Recycling hereby waives compliance by Money
Point of the provisions of the bulk sales or bulk transfer law of the
Commonwealth of Virginia, subject to the indemnification provided in Section
12.2(a)(5).
7.2 COBRA. Money Point has complied in all material respects with the
provisions of COBRA, Pub. L. No. 99-272, 99th Cong., 2d Sess. (1987), and any
similar state statute, relating to continuation of health benefits to its former
employees who became eligible for COBRA coverage on or before the Closing Date
and, under the provisions of COBRA, elected to continue to pay premiums for
insurance coverage under Money Point's health insurance plan. Subject to the
indemnification provided in Section 12.2(a)(9), RII Sub or the Parent will
assume Money Point's obligations related to the provision of COBRA coverage, in
the sole discretion of RII Sub and the Parent either through coverage under
Money Point's health insurance plan as in effect on the Closing Date or under
the Parent's health insurance plan; PROVIDED, THAT, the premiums are timely paid
by the former employees of Money Point.
Notwithstanding anything in this Agreement or any of the other
Transaction Documents to the contrary, neither RII Sub nor the Parent will
assume any liabilities related to COBRA benefits administered or COBRA claims
paid or arose on or prior to the Closing Date.
7.3 OTHER. The parties shall prepare and promptly file all reports,
documents or notices with appropriate regulatory or other governmental
authorities, as may be required of them.
ARTICLE 8
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING
The parties hereto covenant and agree that between the date hereof and the
Closing Date:
8.1 ENVIRONMENTAL STUDIES.
(a) Prior to the Closing Date, Money Point will deliver to Recycling
updated and current Phase I and Phase II Environmental Site Assessments and
Transaction Screen Process of the Owned Facilities and the Business prepared by
a mutually agreed upon environmental engineering firm, which shall be attached
hereto as SCHEDULE 8.1
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(the "Environmental Studies"). The costs of the Environmental Studies will be
paid by Money Point; PROVIDED, HOWEVER, that Recycling shall reimburse Money
Point for one-half of the costs if the Transaction is completed.
(b) The parties shall enter into a Environmental Escrow Agreement
substantially in the form attached as EXHIBIT C hereto. The Environmental
Escrow shall be funded solely with the Stock Consideration.
8.2 TITLE INSURANCE. Money Point has delivered to Recycling its most
recent title policy with respect to the Owned Facilities. Money Point will
cooperate with Recycling as necessary to allow it to obtain a title insurance
commitment, at RII Sub's expense in accordance with custom in the Commonwealth
of Virginia, including obligations to issue endorsements as may be required by
RII Sub, with respect to the Owned Facilities, using a current Commonwealth of
Virginia standard form of American Land Title Association Owner's Title
Insurance Commitment issued by a title insurer satisfactory to RII Sub in the
amount allocated by the parties on SCHEDULE 3.5 to the Owned Facilities,
insuring title to the Owned Facilities to be in RII Sub as of the Closing Date,
subject only to encumbrances, covenants, conditions, restrictions, reservations
and easements filed of record and such exceptions and exclusions as provided in
this Agreement as are acceptable to RII Sub. Such title commitment is to
contain a complete copy of each easement, restriction, limitation, or condition
of title which is referred to therein that burdens or benefits said real
property and shall insure against all possible contractors', suppliers' and
mechanics' lien claims. The costs and premium for the owner's policy of title
insurance, including the cost of any endorsements to the owner's policy of title
insurance which may be requested by Recycling and the cost of the mortgagee's
policy of title insurance shall be paid by RII Sub or the Parent.
8.3 SURVEY. Money Point has delivered to Recycling its most recent survey
with respect to the Owned Facilities. Money Point will cooperate with Recycling
to the extent necessary to allow Recycling to obtain an updated survey of the
Owned Facilities, at RII Sub's expense in accordance with custom in the
Commonwealth of Virginia, certified to RII Sub, any mortgagee of RII Sub, and
the title insurer issuing title insurance in the Transaction as provided in
Section 8.2, prepared by a licensed surveyor and conforming to Minimum Technical
Standards adopted by the Virginia Society of Professional Surveyors, disclosing
the location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, setback requirements, and other matters customarily shown on such
surveys, and showing access affirmatively to public streets and roads.
8.4 ASSUMED CONTRACTS. Money Point will use its best efforts obtain the
written consent to the assumption by RII Sub of each of the Assumed Contracts
which require such consent.
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8.5 CONDUCT OF BUSINESS. After execution of this Agreement and continuing
up to the Closing, Money Point will:
(a) operate the Business only in the Ordinary Course and without
consent of RII Sub (which consent will not be unreasonably withheld or delayed),
will not (i) make any capital expenditures which individually are greater than
$25,000 or which in total aggregate more than $50,000 or (ii) enter into any
contract which is not terminable upon less than 60 days notice;
(b) provide prompt notice to RII Sub of any material change, including
but not limited to the institution of legal proceedings by or against Money
Point; and
(c) provide Recycling with such additional financing and other
information as may be reasonably requested by Recycling and available to Money
Point without undue expense.
8.6 PRESERVATION OF BUSINESS. Money Point shall exert reasonable efforts
in the Ordinary Course to preserve the Business, keep available the services of
its present employees, consultants and agents, maintain its present suppliers
and customers and preserve its goodwill. Money Point will provide to RII Sub a
mailing list of all customers whose annual purchases from the Business were
$25,000 or more either in the year ended December 31, 1996 or during 1997 to
date, and a listing of their accounts on the Closing Date to permit RII Sub to
send announcements to the customers after the Closing Date.
8.7 NOTICE OF EVENTS. Money Point and the Shareholders shall promptly
notify RII Sub and Parent with reasonable specificity of: (1) any event,
condition or circumstance occurring from the date hereof through the Closing
Date that would constitute a material violation or breach of this Agreement; or
(2) any event, occurrence, transaction or other item which would have been
required to have been disclosed on any Schedule, Exhibit or statement delivered
hereunder, had such event, occurrence, transaction or item existed on the date
hereof, other than items arising in the Ordinary Course of Business which would
not render any of the representations, warranties or other agreements of Money
Point or the Shareholders materially misleading.
8.8 EXAMINATIONS AND INVESTIGATIONS.
(a) Prior to the Closing Date, during normal business hours between
8:00 a.m. and 5:00 p.m., Eastern Time, Monday through Friday, or such other
hours as to which the parties mutually agree, Recycling shall be entitled, upon
prior reasonable written notice to Money Point, through its employees and
representatives, including counsel, lenders, appraisers and accountants, to make
such investigation of the assets, properties, business and operations of the
Business, and such examination and copies of the books, records and financial
condition of the Business as Recycling deems necessary. No review, examination
-26-
or investigation by Recycling shall diminish or obviate any of the
representations, warranties, covenants or agreements of Money Point and the
Shareholders under this Agreement.
(b) Recycling will treat and hold any information or documents
obtained from Money Point concerning the Business or the Money Point Assets as
confidential and will not use any of such confidential information except in
connection with this Agreement. If this Agreement is terminated for any reason
whatsoever, Recycling will return to Money Point all tangible embodiments (and
all copies) of such confidential information which are in its possession. In
the event Recycling is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigation, demand, or similar process), to disclose any such confidential
information, Recycling will notify Money Point promptly of the request so that
Money Point may seek an appropriate protective order or waive compliance with
the provisions of this Section 8.8(b). If, in the absence of a protective order
or the receipt of a waiver hereunder, Recycling is, on the advice of counsel,
compelled to disclose any confidential information to any tribunal or else stand
liable for contempt, Recycling may disclose such information to the tribunal;
provided, however, that Recycling shall use its best efforts to obtain, at the
reasonable request of Money Point, an order or other assurance that confidential
treatment will be accorded to such portion of such information required to be
disclosed as Money Point shall designate. For purposes of this Section 8.8(b),
the term "confidential information" shall not include information and
documentation that (i) was already known to Recycling or its representatives or
available to Recycling on a non-confidential basis when received, (ii) hereafter
becomes lawfully obtainable from other sources, or (iii) is disclosed by Money
Point or the Shareholders in any document filed with a government agency or
authority and available for public inspection.
8.9 NO NEGOTIATION BY MONEY POINT OR THE SHAREHOLDERS. Between the date
hereof and the earlier of (1) the Closing Date; and (2) the date of termination
of this Agreement, neither the Shareholders nor Money Point shall, directly or
indirectly:
(a) Solicit, initiate or encourage the submission of inquiries,
proposals or offers from any Person (other than Recycling) relating to any
acquisition or purchase of assets (other than sales of Inventory in the Ordinary
Course) of, or any equity interest in, the Money Point Assets or any exchange
offer, merger, consolidation, purchase of assets, liquidation, dissolution or
similar transaction involving the Money Point Assets (each, an "Acquisition
Proposal");
(b) Enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Person (other than Recycling
and its representatives) any information with respect to the Money Point Assets,
other than in the Ordinary Course of Business; or
-27-
(c) Otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any Person (other than
Recycling) to do or seek any of the foregoing.
Money Point and the Shareholders will notify Recycling immediately if any
such Acquisition Proposal is received or if any such discussions, negotiations
or other events occur or are sought to be initiated, and such notice will set
forth in detail the terms or other particulars thereof.
8.10 REMOVAL OF WASTE MATERIALS. Money Point shall remove, at its cost,
all trash, fluff (other than that which constitutes or is included in the
Unprepared Inventory), tires and any other similar waste materials from the
Owned Facilities prior to the Closing.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATION
OF RECYCLING TO CLOSE
The obligation of Recycling to enter into and to complete the Transaction
is subject to the fulfillment on or prior to the Closing Date (or such earlier
date as is set forth in this Agreement) of the following conditions, any one or
more of which may be waived by Recycling only in writing:
9.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Money Point and the
Shareholders contained in this Agreement shall be true, correct and complete in
all material respects on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date. Money Point and the
Shareholders shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by them on or prior to the Closing Date. Money Point and the Shareholders
shall have delivered to Recycling certificates, dated the Closing Date, to such
effect.
9.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transaction shall have been obtained and all shall have been transferred to the
name of RII Sub.
9.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in connection
with the performance by the parties of their respective obligations under this
Agreement or the continuance of any Assumed Contracts or other agreements
without material modification after the Closing Date shall have been obtained.
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9.4 LITIGATION. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the Transaction or to seek damages or a discovery order in
connection with the Transaction, or that has or could reasonably be expected to
have a Material Adverse Effect on the Money Point Assets or the Business.
9.5 REAL PROPERTY. RII Sub shall receive good and insurable title by
special warranty deed for the Owned Facilities in proper form for recording in
the Commonwealth of Virginia and the Owned Facilities shall be free and clear of
any Security Interest (other than those to be discharged at Closing pursuant to
Section 3.1(a)(3)), but subject to (i) installments of special assessments not
yet delinquent, (ii) covenants, conditions, restrictions, reservations and
easements filed of record, (iii) matters shown by the survey and title policy
contemplated by Sections 8.3 and 8.2, and (iv) other restrictions which do not
impair the current use or occupancy, or the marketability of title, of the
property subject thereto.
9.6 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse change
in the business, financial condition or results of operations of Money Point.
9.7 SUBSCRIPTION AGREEMENT. The Parent shall have received from Money
Point the Subscription Agreement for the Consideration Stock in the form
attached hereto as EXHIBIT B.
9.8 TRANSFER DOCUMENTS. RII Sub shall have received assignments and such
other instruments of sale, transfer, conveyance and assignment transferring all
of the Money Point Assets from Money Point to RII Sub, each in proper legal form
to transfer the Money Point assets under applicable law.
9.9 LEGAL OPINION. Recycling shall have received from legal counsel to
Money Point in the form attached hereto as EXHIBIT D.
9.10 ENVIRONMENTAL ESCROW AGREEMENT. RII Sub shall have received from
Money Point the Environmental Escrow Agreement in the form attached hereto as
EXHIBIT C.
9.11 ASSIGNMENT OF CONTRACTS. Money Point shall have delivered to RII Sub
written consents to the assignment or assumption of each of the Assumed
Contracts as provided by Section 8.4 to the extent such consents are required by
the terms of the Assumed Contracts.
9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL PERFORMANCE AND APPROVAL.
Recycling shall be satisfied, in its reasonable discretion, with (a) the results
of its legal, accounting and financial due diligence investigation of Money
Point and its operations,
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including, without limitation, the results of the Environmental Studies, and (b)
Money Point's financial performance up to the Closing Date. Further, the terms
and conditions of this Agreement shall have been approved by Recycling's senior
management, its Board of Directors, and the Lender, each in their sole
discretion.
9.13 EMPLOYMENT AGREEMENTS. In order to allow for a smooth transition in
ownership of business, RII Sub or Parent shall have entered into employment or
consulting agreements with Xxxxxxxx and Xxxxxxx X. Talreaja in the forms
attached as EXHIBIT E.
9.14 NON-COMPETITION AGREEMENTS. Recycling shall have received from Xxxxxx
Xxxxxxxx and Xxxxxxx Xxxx, executed Non-Competition Agreements in the forms
attached as EXHIBIT F.
9.15 CERTIFICATES, ETC. OF SHAREHOLDERS AND MONEY POINT. The Shareholders
and Money Point shall have delivered all certified resolutions, certificates,
documents or instruments with respect to Money Point's authority and such other
matters as RII Sub's and the Parent's counsel may have reasonably requested
prior to the Closing Date.
9.16 PAYMENT OF SALES OR USE TAXES BY MONEY POINT. Money Point shall have
paid all sales or use taxes, payable under the laws of the Commonwealth of
Virginia, as a result of the completion of the Transaction.
9.17 APPROVAL OF COUNSEL TO RECYCLING. All actions and proceedings
hereunder and all documents or other papers required to be delivered by Money
Point hereunder or in connection with the completion of the Transaction, and all
other related matters shall have been approved by Friedlob Xxxxxxxxx Xxxxxx
Xxxxxxx & Xxxxxxxxxxx, LLC, counsel to Recycling, as to their form, which
approval shall not be unreasonably withheld or delayed.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATION OF MONEY POINT
AND SHAREHOLDERS TO CLOSE
The obligations of Money Point and the Shareholders to enter into and to
complete the Transaction is subject to the fulfillment on or prior to the
Closing Date (except for a sooner date, if so provided) of the following
conditions, any one or more of which may be waived by Money Point and the
Shareholders only in writing:
10.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Recycling contained in this
Agreement shall be true, correct and complete in all material respects on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date. Recycling shall have
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performed and complied, in all material respects, with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date. Recycling shall have delivered to Money Point
certificates, dated the Closing Date, to such effect.
10.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transaction shall have been obtained.
10.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in connection
with the performance by the parties of their respective obligations under this
Agreement or the continuance of any Assumed Contracts without material
modification after the Closing Date shall have been obtained.
10.4 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse change
in the business, financial condition or results of operations of RII Sub or the
Parent on a consolidated basis.
10.5 LITIGATION. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the Transaction, or to seek damages or a discovery order in
connection with the Transaction, or that has or could reasonably be expected to
have a Material Adverse Effect on the assets, properties, businesses, operations
or financial condition of RII Sub or the Parent.
10.6 SATISFACTION WITH DUE DILIGENCE. Money Point shall be satisfied, in
its reasonable discretion with the results of its due diligence investigation of
Recycling.
10.7 DESIGNATION OF STOCK CONSIDERATION. There shall have been delivered
to Money Point and the Shareholders a certified copy of the Certificate of
Designations, Rights and Preferences of the Parent Series E Preferred Stock.
10.8 LEGAL OPINION. Money Point shall receive an opinion from counsel to
the Parent in the form attached hereto as EXHIBIT G.
10.9 THE PURCHASE PRICE. RII Sub and the Parent shall have paid to Money
Point the full Purchase Price for the Money Point Assets and executed and
delivered all documents related thereto.
10.10 ASSUMPTION OF ASSUMED CONTRACTS. Money Point shall have received
RII Sub's signed Assignment and Assumption Agreement related to the Assumed
Contracts.
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10.11 ENVIRONMENTAL ESCROW AGREEMENT. Money Point and the Shareholders
shall have received from RII Sub the Environmental Escrow Agreement in the form
attached hereto as EXHIBIT C.
10.12 EMPLOYMENT AGREEMENTS. RII Sub or Parent shall have entered into
employment agreements with Xxxxxx Xxxxxxxx and Xxxxxxx X. Talreaja in the forms
attached as EXHIBIT E.
10.13 APPROVAL OF COUNSEL TO MONEY POINT AND THE SHAREHOLDERS. All
actions and proceedings hereunder and all documents or other papers required to
be delivered by RII Sub and the Parent hereunder or in connection with the
completion of the Transaction, and all other related matters shall have been
approved by Xxxxxxx & Xxxxxxx, P.C., counsel to Money Point and the Shareholders
as to their form, which approval shall not be unreasonably withheld or delayed.
ARTICLE 11
ACTIONS TO BE TAKEN AT THE CLOSING
The following actions shall be taken at the Closing, each of which shall be
conditioned on completion of all the others and all of which shall be deemed to
have taken place simultaneously:
11.1 TRANSFER DOCUMENTS. Money Point shall deliver duly executed transfer
documents and/or instruments of assignment, including without limitation a Xxxx
of Sale.
11.2 ASSIGNMENT AND ASSUMPTION AGREEMENT. Money Point shall deliver any
required written consents to the assumption by RII Sub of the Assumed Contracts
and Money Point and Recycling will enter into an assignment and assumption
agreement with respect to such Assumed Contracts.
11.3 THE PURCHASE PRICE. RII Sub shall deliver to Money Point the Purchase
Price.
11.4 SUBSCRIPTION AGREEMENT. Money Point shall deliver to the Parent the
Subscription Agreement.
11.5 NON-COMPETITION AGREEMENTS. Xxxxxx Xxxxxxxx and Xxxxxxx Xxxx shall
deliver to RII Sub and the Parent their duly executed Non-Competition
Agreements.
11.6 EMPLOYMENT AGREEMENTS. RII Sub and Xxxxxxxx and RII Sub and Xxxxxxx
X. Talreaja shall enter into employment agreements for continuation of
employment of Xxxxxxxx and Xxxxxxx X. Talreaja following the Closing.
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11.7 ENVIRONMENTAL ESCROW AGREEMENT. RII Sub, Money Point and the
Shareholders shall enter into the Environmental Escrow Agreement with a third
party escrow agent and the Stock Consideration shall be delivered into the
Environmental Escrow created thereby.
11.8 CLOSING ON REAL PROPERTY. Immediately prior to the Closing, the
documents set forth below in subsections (a) through (d) shall have been duly
executed and delivered to Lawyer's Title and Lawyer's Title shall conduct the
Closing as it relates to the purchase of the Owned Facilities and shall deliver
to the appropriate parties the executed documents related thereto. All of the
documents delivered in connection with the sale and conveyance of the Owned
Facilities shall be deemed to be part of the "Transaction Documents" as defined
in Section 1.39.
(a) The Exchange Agreement, the Assignment, Acceptance and Notice -
Purchase Agreement and the Reassignment and Assumption Agreement and related
letters of instruction which are being entered into for the purpose of the FJ
Trust and the DJG Trust entering into a tax-deferred exchange as recognized
under IRC Section 1031.
(b) The special warranty deed for the Owned Facilities in proper form
for recording in the Commonwealth of Virginia, conveying the Owned Facilities to
RII Sub.
(c) The owner's Title Insurance Policy Commitment provided by Lawyer's
Title, including the list of endorsements to be issued in connection therewith.
(d) A funds flow statement (the "Funds Flow Statement") prepared
jointly by the attorneys for Recycling and Money Point at least one business day
prior to the Closing which shall detail the gross proceeds and all adjustments
related to allocation of expenses to the parties at the Closing.
11.9 CERTIFICATES OF MONEY POINT. Money Point shall deliver to RII Sub a
closing certificate dated the Closing Date, in a form reasonably satisfactory to
RII Sub, as contemplated by Section 9.1. Such certificate shall be signed on
behalf of Money Point by Xxxxxxxx as President of Money Point.
11.10 CERTIFICATE OF THE SHAREHOLDERS. The Shareholders shall deliver
to RII Sub a closing certificate dated the Closing Date, in a form reasonably
satisfactory to RII Sub, as contemplated by Section 9.1.
11.11 CERTIFICATE OF RECYCLING. Recycling shall deliver to Money Point
certificates dated the Closing Date, in a form reasonably satisfactory to Money
Point, as contemplated by Section 10.1. Said certificate shall be signed on
behalf of Recycling by an executive officer of Recycling.
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11.12 LEGAL OPINION DELIVERED TO RECYCLING. Recycling shall have
received from Xxxxxxx & Xxxxxxx, P.C., legal counsel to Money Point and the
Shareholders, the legal opinion required by Section 9.9.
11.13 LEGAL OPINION DELIVERED TO MONEY POINT AND THE SHAREHOLDERS.
Money Point and the Shareholders shall have received from Friedlob Xxxxxxxxx
Xxxxxx Xxxxxxx & Xxxxxxxxxxx, LLC, counsel to RII Sub and the Parent, the legal
opinion required by Section 10.8.
11.14 TITLES TO VEHICLES. Money Point shall deliver to RII Sub duly
executed assignments of titles to all vehicles included in the Money Point
Assets free and clear of any Security Interests, other than vehicles leased
pursuant to Assumed Contracts.
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing for a period of three years after the Closing Date with the
exception of the representations and warranties contained in Sections 4.5 and
5.9, which shall survive for a period of time which is equal to the statute of
limitations period applicable to the respective Tax liability or liability under
the Xxxx-Xxxxx-Xxxxxx Act or similar state law being asserted.
12.2 INDEMNITY AGREEMENTS OF MONEY POINT AND THE SHAREHOLDERS.
(a) Money Point and the Shareholders, jointly and severally, shall
indemnify, defend, reimburse and hold harmless RII Sub and the Parent from and
against any and all claims, demands, penalties, fines, liabilities, obligations,
losses, settlements, damages, costs and expenses resulting from:
(1) any inaccuracy in, or breach of, any representation or
warranty or nonfulfillment of any covenant on the part of Money Point or the
Shareholders contained in this Agreement;
(2) any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of Money Point or the Shareholders contained in any
Transaction Document furnished to RII Sub or the Parent by Money Point or the
Shareholders;
(3) all federal, state, county, local, foreign and other taxes,
including income taxes, excise taxes, sales taxes, use taxes, gross receipts
taxes, franchise
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taxes, employment and payroll related taxes, property taxes and import duties,
and any penalties or interest, whether or not measured in whole or in part by
net income required to be paid by Money Point or the Shareholders relating to
the Business through the Closing Date which are not paid by either Money Point
or the Shareholders and which RII Sub or the Parent pays;
(4) any and all negligence claims relating to the Business or the
Money Point Assets arising out of occurrences and events prior to the Closing
Date;
(5) the failure of Money Point or the Shareholders to comply with
the bulk sales or bulk transfer laws of the Commonwealth of Virginia;
(6) any liability of Money Point not expressly assumed by RII
Sub;
(7) any infringement claim related to any patent, invention,
trade secret, trademark, service xxxx, trade name or copyright where the
infringement alleged is related to products designed by Money Point prior to the
Closing Date unless subsequently modified by RII Sub in a manner which renders
the product to be infringing;
(8) any liabilities to employees of the Business that arise as a
result of actions of Money Point prior to the Closing Date;
(9) any liabilities which RII Sub or Parent or the insurer of the
Parent's medical insurance plan incurs on or after the Closing as a result of
Money Point's administration of Money Point's COBRA obligations prior to the
Closing, as contemplated under Section 7.2;
(10) any liabilities, including any costs, taxes or penalties
incurred by Recycling as a result of RII Sub or Parent adopting and continuing
Money Point's 401(k) Plan as provided in Section 14.6(a), to the full extent
that such liabilities are attributable to the operation or documentation of
Money Point's 401(k) Plan prior to RII Sub or Parent's adoption of such plan;
and
(11) reasonable fees and disbursements of counsel incident to any
of the foregoing.
Notwithstanding anything in this Section 12.2(a) to the contrary, no
indemnification claim which could have been asserted by Recycling under Sections
12.2(a)(1) or 12.2(a)(2), but for materiality or Knowledge qualifiers may be
asserted under Sections 12.2(a)(3) through 12.2(a)(8).
(b) ENVIRONMENTAL INDEMNITY. Money Point and the Shareholders,
jointly and severally, shall indemnify, defend, reimburse and hold harmless
Recycling from and
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against any and all claims, demand, penalties, fines, liabilities, obligations,
losses, settlements, damages, costs and expenses actually incurred by Recycling
that are the result of (i) the violation by Money Point or the Shareholders of
any Environmental Laws or any orders, requirements, or demands of any
governmental authorities related thereto or (ii) any Environmental Liabilities
arising under Environmental Laws, in each case related to events or
circumstances of, involving, relating or affecting in any manner whatsoever
Money Point, the Business, the Money Point Assets, the Shareholders or other
parties from whom Money Point or the Shareholders assumed or are otherwise
responsible for their liabilities (including The Union Corporation and Xxxxxx X.
Xxxxxxxx and others, if any, as disclosed in SCHEDULE 4.15) occurring on or
before the Closing Date (collectively, "Environmental Claims"), subject to the
following limitations and conditions:
(1) REPRESENTATIONS AND WARRANTIES. For those Environmental
Claims resulting from an inaccuracy in or breach by Money Point or the
Shareholders of any representation or warranty contained in this Agreement, or
from a breach by Money Point or the Shareholders of any covenant contained in
this Agreement if such inaccuracy or breach relates to Environmental Laws or
Environmental Liabilities, Money Point and the Shareholders shall indemnify
Recycling for such Environmental Claims; PROVIDED, HOWEVER, that the
indemnification obligations pursuant to this subsection shall terminate three
years after the Closing Date except with respect to claims under this subsection
(1) which have been asserted, whether or not resolved.
(2) DISCLOSED/ON-SITE. For those Environmental Claims identified
in the Environmental Studies, or which have otherwise been disclosed to
Recycling in writing in this Agreement or the Exhibits or Schedules hereto, and
which involve matters or conditions at or about the Owned Facilities, the sole
and exclusive remedy of Recycling shall be as provided in the Environmental
Escrow Agreement; PROVIDED, HOWEVER, that Recycling's sole and exclusive remedy
under this subsection (2) shall be the Stock Consideration; and, PROVIDED
FURTHER, THAT the indemnification obligations pursuant to this subsection (2)
shall terminate three years after the Closing Date except with respect to claims
under this subsection which have been asserted, whether or not resolved.
(3) DISCLOSED/OFF-SITE. For those Environmental Claims
identified in the Environmental Studies or which are otherwise identified on
SCHEDULE 12.2(b)(3) have otherwise been disclosed in writing to Recycling in
this Agreement or the Exhibits or Schedules thereto, and which involve matters
or conditions off-site from the Owned Facilities, Money Point and the
Shareholders shall indemnify Recycling for such Environmental Claims.
(4) UNKNOWN/ON-SITE. For those Environmental Claims involving
matters or conditions on or about the Owned Facilities of which Money Point and
the Shareholders had no Knowledge on the Closing Date, Money Point and the
Shareholders shall indemnify Recycling for 50% of such Environmental Claims;
PROVIDED, HOWEVER, that
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Recycling's sole and exclusive remedy under this subsection (4) shall be the
Stock Consideration; and, PROVIDED FURTHER, THAT the indemnification obligations
pursuant to this subsection (4) shall terminate three years after the Closing
Date except with respect to claims under this subsection which have been
asserted, whether or not resolved.
(5) UNKNOWN/OFF-SITE. For those Environmental Claims involving
matters or conditions off-site from the Owned Facilities of which Money Point
and the Shareholders had no Knowledge on the Closing Date, Money Point and the
Shareholders shall indemnify Recycling for such Environmental Claims; PROVIDED,
HOWEVER, that Recycling's sole and exclusive remedy under this subsection (5)
shall be the Stock Consideration; and, PROVIDED FURTHER, THAT the
indemnification obligations pursuant to this subsection (5) shall terminate
three years after the Closing Date except with respect to claims under this
subsection which have been asserted, whether or not resolved.
Recycling acknowledges and agrees that its sole and exclusive remedy with
respect to the Environmental Claims shall be as set forth in this Section
12.2(b) and the terms and conditions of Section 12.2(a) shall not apply with
respect to any Environmental Claim.
12.3 INDEMNITY AGREEMENT OF RII SUB AND THE PARENT. RII Sub and the Parent
shall jointly and severally indemnify, defend, reimburse and hold harmless Money
Point and the Shareholders from and against:
(a) any and all claims, demands, penalties, fines, liabilities,
obligations, losses, settlements, damages, costs and expenses pertaining to the
Money Point Assets and Business which arise from any event occurring on or after
the Closing resulting from:
(1) any inaccuracy in, or breach of, any representation and
warranty or nonfulfillment of any covenant on the part of RII Sub or the Parent
contained in this Agreement;
(2) any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of RII Sub or the Parent contained in any
Transaction Document furnished or to be furnished to Money Point by RII Sub or
the Parent pursuant to this Agreement;
(3) any Liability of Money Point arising out of the Assumed
Contracts;
(4) any Environmental Claim in excess of the amount or beyond the
time limitations for which Recycling is entitled to indemnification pursuant to
Sections 12.2(b)(2), 12.2(b)(4) and 12.2(b)(5), and any Environmental Claims
which are the result of events, actions, occurrences or the operation of the
Business after the Closing Date other than those Environmental Claims
encompassed by Section 12.2(b)(3);
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(5) any infringement claim related to any patent, invention,
trade secret, trademark, service xxxx, trade name or copyright where the
infringement alleged is related to products designed by Recycling after the
Closing Date;
(6) any liabilities to employees of the Business that arise as a
result of actions of RII Sub or the Parent after the Closing Date;
(7) any and all Liabilities relating to the Business or the Money
Point Assets arising out of occurrences and events after the Closing Date;
(8) all federal, state, county, local, foreign and other taxes,
including income taxes, excise taxes, sales taxes, use taxes, gross receipts
taxes, franchise taxes, employment and payroll related taxes, property taxes and
import duties, and any penalties or interest, whether or not measured in whole
or in part by net income required to be paid by RII Sub relating to the Business
after the Closing Date which are not paid RII Sub or the Parent and which Money
Point or the Shareholders pay;
(9) any and all negligence claims relating to the Business or the
Money Point Assets arising out of occurrences and events after the Closing Date;
and
(10) reasonable fees and disbursement of counsel incident to any
of the foregoing.
Notwithstanding anything in this Section 12.3 to the contrary, no
indemnification claim which could have been asserted by Money Point or the
Shareholders under Sections 12.3(a)(1) or 12.3(a)(2), but for materiality or
Knowledge qualifiers may be asserted under Sections 12.3(a)(3) through
12.3(a)(9).
12.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS.
(a) NOTICE OF CLAIM AND DEFENSE.
(1) The party seeking indemnification under this Article 12 shall
give the party from whom indemnification is sought prompt written notice of the
assertion of any third party claim of which said party has knowledge which is
covered by the indemnity agreements set forth in Section 12.2 or Section 12.3,
and the party obligated to indemnify will undertake the defense thereof by
representatives chosen by the party obligated to indemnify but reasonably
acceptable to the party seeking indemnification.
(b) If the party obligated to indemnify, within a reasonable period of
time after notice of any such claim fails to defend, the party seeking
indemnification will have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of the party
obligated to indemnify, subject to the right of the party
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obligated to indemnify to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof.
(1) PAYMENT OF SUMS DUE. After any final, non-appealable
judgment or award shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction, or a settlement shall have been
completed, or the parties shall have arrived at a mutually binding agreement,
with respect to each separate third party claim indemnified by the party
obligated to indemnify, the party seeking indemnification shall forward to the
party obligated to indemnify notice of any sums due and owing (and the times
when due) by the party seeking indemnification with respect to such claim and
the party obligated to indemnify shall pay such sums to the party seeking
indemnification in cash, within 30 days after the date of such notice or, if any
such sums are due more than 90 days after the date of such notice, ten days
prior to the date each such sums are due.
(2) In no event will the party seeking indemnification consent
to the entry of any judgment or enter into any settlement with respect to any
third party claim without the prior written consent of the party obligated to
indemnify, which consent shall not be unreasonably withheld or delayed.
12.5 GOOD FAITH EFFORTS TO SETTLE DISPUTES. Each of the parties agrees
that, prior to commencing any litigation against the other concerning any matter
with respect to which such party intends to claim a right of indemnification in
such proceeding, such parties shall meet in a timely manner and attempt in good
faith to negotiate a settlement of such dispute during which time such parties
shall disclose to the others all relevant information relating to such dispute.
12.6 FEES AND EXPENSES. Notwithstanding any other provision in this
Article 12, but subject to the limitations on indemnification obligations
provided in Section 12.2(b) and Section 12.8, in the event of any dispute or
controversy between any of the parties to this Agreement, the prevailing party
in such dispute shall, in addition to any other remedies the prevailing party
may obtain in such dispute, be entitled to recover from the other party all of
its reasonable legal fees and out-of-pocket costs incurred by such party in
enforcing or defending its rights hereunder, excluding any costs incurred under
Section 12.5.
12.7 LITIGATION SUPPORT. If, and for so long as, any party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (1) any
transaction contemplated hereunder, or (2) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Business, the other party will cooperate with the contesting or defending
party and its counsel in the contest or defense, make available its personnel
and provide such testimony and access to its books and records as shall be
necessary in connection with the contest or
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defense, all at the sole cost and expense of the contesting or defending party,
unless the contesting or defending party is entitled to indemnification therefor
under this Article 12.
12.8 INDEMNIFICATION OBLIGATIONS DEDUCTIBLE. With respect to
indemnification claims other than for Environmental Claims, notwithstanding
anything in this Article 12 to the contrary, Money Point shall not have the
obligation to indemnify Recycling, and Recycling shall not have the obligation
to indemnify Money Point: (i) until the indemnified party has suffered claims,
demands, penalties, fines, liabilities, obligations, losses, settlements,
damages, costs and expenses in excess of a $75,000 aggregate deductible (after
which point the indemnifying party will only have indemnification obligations in
excess of such deductible).
12.9 ADJUSTMENTS. The parties shall make appropriate adjustments for tax
benefits and insurance coverage, to the extent actually received, in determining
the extent to which a party is obligated to indemnify under this Article 12.
12.10 EXCLUSIVE REMEDY. The parties acknowledge and agree that the
foregoing indemnification provisions in this Article 12 shall be the exclusive
remedy of the parties with respect to each other and the Transaction.
ARTICLE 13
TERMINATION OF AGREEMENT
13.1 TERMINATION. This Agreement may be terminated prior to or on the
Closing Date as follows:
(a) At the election of RII Sub or the Parent at any time prior to
Closing if:
(1) if any one or more of the material conditions precedent to
the obligation of Recycling to close has not been fulfilled as of the Closing
Date or such earlier date as provided in the applicable provision; or, if Money
Point or the Shareholders has breached any material representation or warranty,
or failed to perform any material covenant or agreement contained in this
Agreement PROVIDED, HOWEVER, Money Point and the Shareholders shall have, at the
election of Money Point and the Shareholders, at least 15 days' notice to cure
any such breach and the Closing Date shall be extended by each day of such cure
period.
(b) At the election of Money Point or the Shareholders at any time
prior to Closing if:
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(1) any one or more of the material conditions precedent to the
obligation of Money Point and the Shareholders to close has not been fulfilled
as of the Closing Date;
(2) Money Point is unable to obtain any required consent to the
assignment of any of the Assumed Contracts and such failure would constitute a
breach of the Assumed Contract; or
(3) RII Sub or the Parent has breached any material
representation or warranty, or failed to perform any material covenant or
agreement contained in this Agreement; provided, however, RII Sub and the Parent
shall have at least 15 days' notice to cure any such breach, except that in no
event shall Closing Date be extended by virtue thereof.
(c) At the election of any party to this Agreement, if any legal
proceeding is commenced or threatened by any governmental or regulatory body or
other Person directed against the completion of the Transaction and any of the
parties, as the case may be, reasonably and in good xxxxx xxxx it impractical or
inadvisable to proceed in view of such legal proceeding or threat thereof.
(d) At any time on or prior to the Closing Date, by mutual written
consent of the parties.
(e) At any time after December 31, 1997, time being of the essence,
unless extended pursuant to Section 3.6, at the election of Money Point or
Recycling.
13.2 SURVIVAL. If this Agreement is terminated pursuant to Section 13.1,
this Agreement shall become void and of no further force and effect, and none of
the parties hereto shall have any liability in respect of such termination,
except that any party shall be liable to the extent that failure to satisfy the
conditions contained herein results from the intentional or willful violation of
the representations, warranties, covenants or agreement of such party under this
Agreement.
ARTICLE 14
CERTAIN ADDITIONAL AGREEMENTS
14.1 PUBLIC STATEMENTS; CONFIDENTIALITY OF INFORMATION.
(a) No party will make any public disclosure (including, without
limitation, disclosure to Money Point's employees or customers) of this
Agreement, the Acquisition, the Purchase Price or the other terms and conditions
of the Transaction without the prior
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written consent of the other parties hereto, which consent shall not be
unreasonably withheld, provided that the foregoing shall not preclude any party
from making any disclosure which, in the opinion of its or his counsel, is
required to be made under applicable federal and state securities laws. In no
event shall any disclosure be made without giving the other party an opportunity
to comment on the proposed disclosure.
(b) Subject to the Parent's obligation as a public company to issue
appropriate public announcements of material events, and subject to this Section
14.1 hereof, each party will maintain the confidentiality of all non-public
information obtained from any other party.
(c) Notwithstanding anything in this Agreement to the contrary, the
Environmental Studies and Remediation Estimate described in this Agreement under
Section 8.1 above, shall remain confidential and Recycling shall not make any
disclosures of these studies or estimates to any Person (other than its legal
counsel, independent accountants and lenders) without the prior written approval
of Money Point.
14.2 REASSIGNMENT OF MONEY POINT RECEIVABLES. On the 65th day after the
Closing Date, RII Sub shall have the right to reassign to Money Point any or all
of the Money Point Receivables which have not been collected within 60 days of
the Closing as provided in Section 4.10. Such reassignment shall only occur
upon delivery of documentation reasonably acceptable to Money Point which
transfers all right, title and interest in the Money Point Receivables to Money
Point. RII Sub agrees not to compromise any Money Point Receivable and to use
commercially reasonable efforts to collect the Money Point Receivables during
the 60 day period, but shall not be required to engage a collection agent or
commence arbitration or litigation to collect. Within 15 days after
reassignment of any of Money Point Receivables under this provision, Money Point
shall reimburse RII Sub dollar-for-dollar for the Money Point Receivables so
reassigned with such payment being made in immediately available funds.
14.3 EXPENSES; SALES TAX. Each party shall pay its own costs and expenses,
including the fees and disbursements of its respective counsel, in connection
with the negotiation, preparation and execution of this Agreement and completion
of the Transaction whether or not the Transaction is completed. Money Point
shall pay all sales or use taxes, payable under the laws of the Commonwealth of
Virginia, as a result of the Transaction; PROVIDED, HOWEVER, that Recycling
shall pay all sales, retitling or other taxes assessable by the Virginia
Department of Motor Vehicles with respect to the Transaction.
14.4 WAIVERS AND CONSENTS. All waivers and consents given hereunder shall
be in writing. No waiver by any party hereto of any breach or anticipated
breach of any provision hereof by any other party shall be deemed a waiver of
any other contemporaneous, preceding or succeeding breach or anticipated breach,
whether or not similar, on the part of the same or any other party.
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14.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given only if and when: (1) personally
delivered; or (2) three business days after mailing, postage prepaid, by
certified mail; or (3) when delivered (and receipted for) by an overnight
delivery service; or (4) when delivered by facsimile transmission for which
automatic confirmation has been received, addressed in each case as follows:
IF TO RII SUB OR THE PARENT:
Xxxxxx X. Xxxxx, Chairman and CEO
Recycling Industries, Inc.
Recycling Industries of Virginia, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
telephone: 000-000-0000
facsimile: 000-000-0000
WITH A COPY TO:
Xxxxxx Xxxxxx, Esq.
Xxxx X. Xxxxxxxxxx, Esq.
Friedlob Xxxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxxxxxx, LLC
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
telephone: 000-000-0000
facsimile: 000-000-0000
IF TO MONEY POINT OR THE SHAREHOLDERS:
Xxxxxx X. Xxxxxxxx, President
Money Point Diamond Corporation
Money Point Land Holding Corporation
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
telephone: 000-000-0000
facsimile: 000-000-0000
and
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Xxxxxxx X. Xxxxxxxx, Trustee of
the FJ and DGJ Trusts
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000
telephone: 000-000-0000
facsimile: x/x Xxxxx X. Xxxxxxx, Xxx., Xxxxxxx & Xxxxxxx, X.X.
757-624-3169
WITH A COPY TO:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx & Xxxxxxx, P.C.
X.X. Xxx 0000
Xxxxxxx, XX 00000
telephone: 000-000-0000
facsimile: 757-624-3169
Any party may change its address by giving notice to every other party.
14.6 MONEY POINT 401(k) PLAN; MONEY POINT HEALTH INSURANCE COVERAGE. RII
Sub or Parent hereby agrees and covenants as follows.
(a) 401(k) PLAN. Subject to the indemnification provided in Section
12.2(a)(10), RII Sub or Parent shall assume sponsorship of Money Point's 401(k)
Plan on the Closing Date and shall continue sponsorship of such plan, and to
maintain the tax qualification of such plan, through the earlier of December 31,
1998 or the date on which RII Sub or Parent has in place a 401(k) plan in which
the former Money Point employees hired by RII Sub following the Closing are
eligible to participate. Neither RII Sub nor the Parent shall assume or
otherwise be responsible for liabilities resulting from any actions, mistakes or
claims of any nature related to Money Point's or its agent's establishment or
maintenance of the Money Point 401(k) Plan prior to the Closing Date. Money
Point will reimburse RII Sub or Parent the full amount of any "top-heavy minimum
contribution" (as defined in IRC Section 416) that RII Sub or Parent is required
to make to Money Point's 401(k) Plan for the 1997 Plan year, with reimbursement
being made within ten business days after RII Sub or Parent provides Money Point
with documentation of the amount it was required to pay as a "top-heavy minimum
contribution," if any.
(b) MONEY POINT MEDICAL INSURANCE PLAN. RII Sub shall continue Money
Point's Medical Insurance Plan, with Blue Cross Blue Shield, through December
31, 1997, for the former Money Point employees hired by RII Sub after the
Closing and RII shall pay the premiums for such continuing coverage to the same
extent Money Point paid such premiums prior to the Closing. Commencing at 12:01
a.m. on January 1, 1998, the former
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Xxxxx Xxxxx employees hired by RII Sub shall have continuing and uninterrupted
medical insurance coverage provided by the Parent's medical insurance carrier
without regard to any eligibility, waiting periods or any other requirements and
without any exclusion or limitation for preexisting conditions.
14.7 CONVERSION OF THE SERIES E PREFERRED STOCK AND ARRANGED SALE. At
least 30 days prior to the third year anniversary of the Closing Date, Money
Point and the Shareholders shall notify the Parent if they elect to retain the
shares of Parent Common Stock issuable upon automatic conversion of the Series E
Preferred Stock (the "Conversion Shares"). If Money Point and the Shareholders
elect to receive the Conversion Shares, upon delivery of the Conversion Shares
to them, the Parent will have no further obligation to Money Point or the
Shareholders with respect to the Conversion Shares other than piggy back
registration rights as provided for in the Subscription Agreement, which may
continue if the Conversion Shares are not eligible for resale under Rule 144(k)
of the rules and regulations under the 1933 Act.
If no such notice is given to the Parent in accordance with Section
14.5, the Parent shall use its best efforts to assist Money Point and the
Shareholders in selling the Conversion Shares within 30 days after the date of
conversion. If the assisted sale is completed within 30 days of the date of
conversion, the Parent will not be required to pay any interest. If the
assisted sale is not accomplished within 30 days after the date of conversion,
the Parent shall pay Money Point and the Shareholders interest from the date of
conversion, at the prime lending rate of its principal lender, payable monthly
within five days after the end of each month, with the first interest payment
being due within thirty five days after the date of conversion. Further, if the
arranged sale has not been accomplished by the 90th day after the date of
conversion, the interest rate shall be increased to one percent above the prime
lending rate of the Parent's primary lender commencing on the 91st day and
continuing at that rate until the assisted sale is accomplished. If the
assisted sale of the Conversion Shares does not yield proceeds of $3,000,000
(after adjustment for any Series E Preferred Shares disposed of under the
Environmental Escrow Agreement), the Parent shall pay to Money Point and the
Shareholders, as applicable, the shortage within ten business days after receipt
by the Parent of the notice of shortage. If the shortage is not paid within ten
business days after receipt by the Parent of the notice of shortage, the amount
of the shortage shall accrue interest at one percent above the prime lending
rate of the Parent's primary lender commencing on the 11th business day and
continuing at that rate until the shortage and all interest thereon is paid.
14.8 COVENANT TO PAY ALL UNASSUMED DEBTS. To the extent Money Point owes
debts to any third parties after the Closing other than the Assumed Liabilities,
which could affect the Money Point Assets, Money Point and the Shareholders
hereby covenant to pay such debts timely as they become due.
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14.9 FURTHER ASSURANCES. From and after the date of this Agreement, each
of the parties hereto will cooperate with each other and will use their best
efforts without undue cost to obtain all necessary waivers and consents from
third parties and to implement the transactions contemplated under this
Agreement and the other Transaction Documents. Money Point and the
Shareholders, at any time and from time to time on and after the Closing, upon
request by RII Sub or the Parent and without further consideration, shall take
or cause to be taken such actions and execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such transfers, conveyances and
assurances as may be reasonably requested by RII Sub or the Parent for the
better conveying, transferring, assigning, delivering, assuring and confirming
the Money Point Assets to RII Sub.
14.10 RETENTION OF/ACCESS TO BUSINESS RECORDS. For at least six years
following the Closing Date, Money Point shall retain all business records,
including tax records, related to the Money Point Assets or the Business which
are not delivered to RII Sub. During this period, from time to time on and
after the Closing, upon reasonable prior written request by RII Sub or the
Parent and without further consideration, Money Point shall provide RII Sub or
the Parent access to or copies of said business records. Likewise, for at least
six years following the Closing Date, RII Sub shall retain all business records
related to the Money Point Assets or the Business and, during this period, from
time to time on and after the Closing, upon reasonable prior written request by
Money Point or the Shareholders and without further consideration, RII Sub shall
provide Money Point or the Shareholders access to or copies of said business
records.
14.11 AUDIT BY RII SUB AND PARENT. For a period of five years after
the Closing, Money Point and the Shareholders shall give Parent and RII Sub's
independent certified public accountants full access to the financial books and
records and shall fully cooperate with such accountants in conducting and
completing any audits necessary to enable the Parent to meet the disclosure and
financial reporting requirements of the 1934 Act and the rules and regulations
promulgated thereunder.
14.12 ENTIRE AGREEMENT. This Agreement, including all Schedules and
Exhibits hereto, and the other Transaction Documents constitute the entire
agreement of the parties with respect to the subject matter hereof and may not
be modified, amended or terminated except by a written instrument specifically
referring to this Agreement signed by each of the parties hereto or as otherwise
provided in this Agreement. Any and all previous agreements, representations
and understandings between or among the parties regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement. Each of the
Schedules and Exhibits to this Agreement are incorporated herein by this
reference and expressly made a part hereof.
14.13 CONSTRUCTION. In the event of an ambiguity or a 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
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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. The word "including" means including without limitation.
Where appropriate to avoid any ambiguity and to encompass the broadest meaning,
the word "and" shall mean "and/or," and the word "or" shall mean "and/or." The
parties intend that the each representation, warranty and covenant contained
herein shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter, regardless of the relative levels of specificity, which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
14.14 RIGHTS OF THIRD PARTIES. All conditions of the obligations of
the parties hereto, and all undertakings herein, except as otherwise provided by
a written consent, are solely and exclusively for the benefit of the parties
hereto and their successors and assigns, and no other Person or entity shall
have standing to require satisfaction of such conditions or to enforce such
undertakings in accordance with their terms or be entitled to assume that any
party hereto will refuse to complete the Transaction contemplated hereby in the
absence of strict compliance with any or all thereof, and no other Person or
entity shall, under any circumstances, be deemed a beneficiary of such
conditions or undertakings, any or all of which may be freely waived in whole or
in part, by mutual consent of the parties hereto at any time, if in their sole
discretion they deem it desirable to do so.
14.15 HEADINGS. The Table of Contents and Article and Section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
14.16 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the Commonwealth of Virginia, without regard to principles of conflicts
or choice of law, except that Colorado law shall govern the terms of the Stock
Consideration.
14.17 SUBMISSION TO JURISDICTION; WAIVERS. The parties each hereby
irrevocably and unconditionally: (1) agree that any action or proceeding related
to this Agreement shall be brought in, and hereby submits itself and its
property to the jurisdiction of, the courts of the Commonwealth of Virginia
located in Norfolk, Virginia, the courts of the United States of America for the
Eastern District of Virginia, Norfolk Division, and the appellate courts from
any thereof; (2) consent to the venue of any such action or proceeding in any of
said courts and waives any objection that it may have, now or hereafter, that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same; and (3) agree that service of process in any such
action or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of
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mail), postage prepaid, to the party against whom the action or proceeding is
brought at its address set forth in Section 14.5.
14.18 PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law, by assignment to the Lender, or with the consent of the other parties.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
14.19 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in two or more counterparts, all of which taken together shall
constitute one instrument. Execution and delivery of this Agreement by exchange
of facsimile copies bearing the facsimile signature of a Party shall constitute
a valid and binding execution and delivery of this Agreement by such Party.
Such facsimile copies shall constitute enforceable original documents.
14.20 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
14.21 CORPORATE AUTHORITY. The undersigned have executed this
Agreement with all requisite corporate authority.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
"RII SUB"
RECYCLING INDUSTRIES OF CHESAPEAKE, INC.
Dated: December 4, 1997 By /S/ XXXX X. XXXXXX
--------------------------------------
Xxxx X. Xxxxxx, Vice Chairman
"PARENT"
RECYCLING INDUSTRIES, INC.
Dated: December 4, 1997 By /S/ XXXX X. XXXXXX
--------------------------------------
Xxxx X. Xxxxxx, Vice Chairman
"MP HOLDING"
MONEY POINT LAND HOLDING CORPORATION
Dated: December 4, 1997 By /S/ XXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxxx, President
"MP DIAMOND"
MONEY POINT DIAMOND CORPORATION
Dated: December 4, 1997 By /S/ XXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxxx, President
"XXXXXXXX"
Dated: December 4, 1997 /S/ XXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxx
"FJ TRUST"
Dated: December 4, 1997 By /S/ XXXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee of the
Xxxx Xxxxxxxx Revocable Trust
"DGJ TRUST"
Dated: December 4, 1997 By /S/ XXXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxx, Trustee of the
Xxxxxxx X. Xxxxxxxx Revocable Trust
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LIST OF EXHIBITS
Exhibit A Certificate of Designations, Rights and Preferences of
the Series E Redeemable Convertible Preferred Stock of
Recycling Industries, Inc.
Exhibit B Form of Subscription Agreement
Exhibit C Environmental Escrow Agreement
Exhibit D Legal Opinion from Counsel to Money Point and the
Shareholders
Exhibit E Employment Agreements
Exhibit F Non-Competition Agreements
Exhibit G Legal Opinion from Counsel for RII Sub and Parent
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LIST OF SCHEDULES
SCHEDULE 1.2 Material Assumed Contracts
SCHEDULE 2.1(a) Owned Facilities - Legal Description
SCHEDULE 2.1(b) Equipment
SCHEDULE 2.1(f) Office Assets
SCHEDULE 2.1(h) Software for Computers and Scales
SCHEDULE 2.2 Excluded Assets under Subsections (b), (f) and (j)
SCHEDULE 3.1(a)(3) Payment and Release of Indebtedness
SCHEDULE 3.2 Accounts Receivable and Inventory Valuations
SCHEDULE 3.4 Bid Deposits
SCHEDULE 3.5 Allocation of Purchase Price
SCHEDULE 4.1(b) Jurisdictions in which MP Holding and MP Diamond are
qualified to transact business
SCHEDULE 4.2 Property Title Exceptions
SCHEDULE 4.3(c) Consents and Approvals
SCHEDULE 4.4 Money Point Financial Statements
SCHEDULE 4.5(d) Money Point State and Federal Income Tax Returns
SCHEDULE 4.6 Compliance with Laws
SCHEDULE 4.7 Permits
SCHEDULE 4.8 Litigation
SCHEDULE 4.9(a) Contracts and Other Agreements
SCHEDULE 4.11 Damage to Tangible Property
SCHEDULE 4.14(b) Leases, Etc. of Owned Facilities
SCHEDULE 4.15 Liabilities
SCHEDULE 4.16 Suppliers and Customers
SCHEDULE 4.17 Employee Benefit Plans
SCHEDULE 4.20 Insurance Policies
SCHEDULE 4.21 Certain Relationships
SCHEDULE 4.24 Employee Information
SCHEDULE 4.25 Environmental Matters
SCHEDULE 8.1 Environmental Studies
SCHEDULE 12.2(b)(3) Disclosed/Off-Site Environmental Claims
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