ASSET PURCHASE AGREEMENT
BY AND AMONG
RECYCLING INDUSTRIES OF WINSTON-SALEM, INC.
RECYCLING INDUSTRIES, INC.
XXXXXXX COMPANIES, INC.
XXXXX XXXXXXX
XXXXXXX XXXXXXX
AND
THE SHAREHOLDERS OF THE XXXXXXX COMPANIES, INC.
DECEMBER 4, 1997
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE 2
ACQUISITION OF SELLER ASSETS . . . . . . . . . . . . . . . . . . -6-
2.1 PURCHASE AND SALE OF THE SELLER ASSETS . . . . . . . . . -6-
2.2 EXCLUDED ASSETS. . . . . . . . . . . . . . . . . . . . . -8-
2.3 ASSUMED CONTRACTS. . . . . . . . . . . . . . . . . . . . -8-
2.4 ASSUMPTION OF LIABILITIES. . . . . . . . . . . . . . . . -8-
2.5 DEFERRED COMPENSATION. . . . . . . . . . . . . . . . . . -8-
2.6 COLLECTION OF ACCOUNTS RECEIVABLE. . . . . . . . . . . . -9-
ARTICLE 3
PURCHASE PRICE AND CLOSING . . . . . . . . . . . . . . . . . . . -9-
3.1 PURCHASE PRICE FOR SELLER ASSETS . . . . . . . . . . . . -9-
3.2 ADJUSTMENT OF THE PURCHASE PRICE . . . . . . . . . . . . -10-
3.3 ALLOCATION OF THE PURCHASE PRICE . . . . . . . . . . . . -11-
3.4 CLOSING OF THE PURCHASE. . . . . . . . . . . . . . . . . -11-
ARTICLE 4
REPRESENTATIONS OF SELLER AND THE SELLER OFFICERS. . . . . . . . -11-
4.1 DUE ORGANIZATION AND QUALIFICATION . . . . . . . . . . . -11-
4.2 TITLE TO PROPERTY. . . . . . . . . . . . . . . . . . . . -12-
4.3 AUTHORITY OF SELLER; CONSENTS. . . . . . . . . . . . . . -12-
4.4 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . -13-
4.5 OWNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . -13-
4.6 NO TAX LIENS; NO WAIVER. . . . . . . . . . . . . . . . . -13-
4.7 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . -14-
4.8 PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . -14-
4.9 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . -14-
4.10 PRODUCT WARRANTY . . . . . . . . . . . . . . . . . . . . -15-
4.11 PRODUCT LIABILITY. . . . . . . . . . . . . . . . . . . . -15-
4.13 NOTES AND ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . -15-
4.14 TANGIBLE PROPERTY. . . . . . . . . . . . . . . . . . . . -16-
4.15 INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . -16-
(i)
4.16 FABRICATED STEEL INVENTORY . . . . . . . . . . . . . . . -16-
4.17 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . -16-
4.18 REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . -16-
4.19 LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . -17-
4.20 SUPPLIERS AND CUSTOMERS. . . . . . . . . . . . . . . . . -17-
4.21 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . -17-
4.22 CURTAILMENT OF OPERATIONS. . . . . . . . . . . . . . . . -18-
4.23 EMPLOYEE RELATIONS . . . . . . . . . . . . . . . . . . . -18-
4.24 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . -18-
4.25 POWERS OF ATTORNEY . . . . . . . . . . . . . . . . . . . -18-
4.26 RELATIONSHIPS. . . . . . . . . . . . . . . . . . . . . . -19-
4.27 BROKER'S OR FINDER'S FEES. . . . . . . . . . . . . . . . -19-
4.28 EMPLOYEE TRANSITION. . . . . . . . . . . . . . . . . . . -19-
4.29 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . -19-
4.32 DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . -20-
4.33 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 1934 ACT REGISTRATION. . . . . . . . . . . . . . . . . . -22-
5.7 BROKER'S OR FINDER'S FEES. . . . . . . . . . . . . . . . -22-
5.8 DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . -22-
5.9 BEST EFFORTS . . . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE 6
REGULATORY COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . -23-
6.1 BULK SALES COMPLIANCE. . . . . . . . . . . . . . . . . . -23-
6.2 XXXX-XXXXX-XXXXXX ACT. . . . . . . . . . . . . . . . . . -23-
6.3 THE WARN ACT . . . . . . . . . . . . . . . . . . . . . . -23-
6.4 COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . -23-
6.5 OTHER. . . . . . . . . . . . . . . . . . . . . . . . . . -23-
ARTICLE 7
ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . -24-
7.1 ENVIRONMENTAL STUDIES. . . . . . . . . . . . . . . . . . -24-
(ii)
7.2 ON-SITE LIABILITIES. . . . . . . . . . . . . . . . . . . -24-
7.3 OFF-SITE LIABILITIES . . . . . . . . . . . . . . . . . . -25-
ARTICLE 8
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING . . . . . . . . . -26-
8.1 TITLE INSURANCE. . . . . . . . . . . . . . . . . . . . . -26-
8.2 SURVEY.. . . . . . . . . . . . . . . . . . . . . . . . . -27-
8.3 MATERIAL ASSUMED CONTRACTS . . . . . . . . . . . . . . . -27-
8.4 POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . -27-
8.5 CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . -27-
8.6 PRESERVATION OF BUSINESS . . . . . . . . . . . . . . . . -27-
8.7 NOTICE OF EVENTS . . . . . . . . . . . . . . . . . . . . -27-
8.8 EXAMINATIONS AND INVESTIGATIONS. . . . . . . . . . . . . -28-
8.9 NO NEGOTIATION BY SELLER OR THE SELLER OFFICERS. . . . . -28-
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATION
OF RECYCLING TO CLOSE. . . . . . . . . . . . . . . . . . . . . . -29-
9.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS . . . . -29-
9.2 GOVERNMENTAL PERMITS AND APPROVALS . . . . . . . . . . . -29-
9.3 THIRD PARTY CONSENTS . . . . . . . . . . . . . . . . . . -29-
9.4 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . -29-
9.5 REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . -29-
9.6 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . -30-
9.7 TRANSFER DOCUMENTS . . . . . . . . . . . . . . . . . . . -30-
9.8 ACQUISITION OF UNITED METAL RECYCLERS. . . . . . . . . . -31-
9.9 ENVIRONMENTAL ESCROW AGREEMENT . . . . . . . . . . . . . -31-
9.11 POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . -31-
9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL
PERFORMANCE AND APPROVAL . . . . . . . . . . . . . . . . -31-
9.13 SUBSCRIPTION AGREEMENT . . . . . . . . . . . . . . . . . -31-
9.15 LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . -31-
9.16 BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . -31-
9.17 RESOLUTIONS. . . . . . . . . . . . . . . . . . . . . . . -31-
9.18 CERTIFICATES, ETC. OF SELLER OFFICERS AND SELLER . . . . -31-
9.19 PAYMENT OF SALES OR USE TAXES BY SELLER. . . . . . . . . -32-
9.20 PAYMENT OF ACCOUNTS PAYABLE. . . . . . . . . . . . . . . -32-
9.21 APPROVAL OF COUNSEL TO RECYCLING . . . . . . . . . . . . -32-
ARTICLE 10
(iii)
CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER AND THE
SELLER OFFICERS TO CLOSE . . . . . . . . . . . . . . . . . . . . -32-
10.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS . . . . -32-
10.2 ACQUISITION OF UNITED METAL RECYCLERS. . . . . . . . . . -32-
10.4 THIRD PARTY CONSENTS . . . . . . . . . . . . . . . . . . -32-
10.5 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . -33-
10.6 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . -33-
10.7 RESOLUTIONS. . . . . . . . . . . . . . . . . . . . . . . -33-
10.8 DESIGNATIONS OF STOCK CONSIDERATION. . . . . . . . . . . -33-
10.9 LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . -33-
10.10 THE PURCHASE PRICE . . . . . . . . . . . . . . . . . . . -33-
10.12 APPROVAL OF COUNSEL TO SELLER AND THE SELLER OWNERS. . . -33-
ARTICLE 11
ACTIONS TO BE TAKEN AT THE CLOSING . . . . . . . . . . . . . . . -34-
11.1 TRANSFER DOCUMENTS . . . . . . . . . . . . . . . . . . . -34-
11.2 THE PURCHASE PRICE . . . . . . . . . . . . . . . . . . . -34-
11.3 SUBSCRIPTION AGREEMENT . . . . . . . . . . . . . . . . . -34-
11.4 NON-COMPETITION AGREEMENTS . . . . . . . . . . . . . . . -34-
11.6 GENERAL WARRANTY DEED. . . . . . . . . . . . . . . . . . -34-
11.8 CLOSING CERTIFICATE OF SELLER. . . . . . . . . . . . . . -34-
11.9 CLOSING CERTIFICATE OF THE SELLER OFFICERS . . . . . . . -34-
11.11 CERTIFICATE REGARDING RESOLUTIONS OF SELLER. . . . . . . -35-
11.12 CERTIFICATE REGARDING RESOLUTIONS OF RII SUB AND PARENT. -35-
11.13 LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . -35-
11.14 REAL PROPERTY CLOSING. . . . . . . . . . . . . . . . . . -35-
11.15 TITLES TO VEHICLES, MACHINERY AND EQUIPMENT. . . . . . . -35-
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION. . . -36-
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . -36-
12.2 INDEMNITY AGREEMENTS OF SELLER AND THE SELLER OWNERS . . -36-
12.3 INDEMNITY AGREEMENT OF RII SUB AND THE PARENT. . . . . . -37-
12.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS . . . . -38-
12.6 GOOD FAITH EFFORTS TO SETTLE DISPUTES. . . . . . . . . . -39-
12.7 FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . -39-
12.8 LITIGATION SUPPORT . . . . . . . . . . . . . . . . . . . -40-
(iv)
ARTICLE 13
TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . -40-
13.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . -40-
13.2 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . -41-
ARTICLE 14
CERTAIN ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . -41-
14.1 PUBLIC STATEMENTS; CONFIDENTIALITY OF INFORMATION. . . . -41-
14.2 REASSIGNMENT OF SELLER RECEIVABLES . . . . . . . . . . . -42-
14.3 TERMINATION OF PENSION PLAN. . . . . . . . . . . . . . . -42-
14.4 CONTINUATION OF MEDICAL BENEFITS . . . . . . . . . . . . -42-
14.6 WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . -43-
14.7 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . -43-
14.8 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . -44-
14.9 RETENTION OF/ACCESS TO BUSINESS RECORDS. . . . . . . . . -44-
14.10 AUDIT BY RII SUB AND PARENT. . . . . . . . . . . . . . . -44-
14.11 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . -45-
14.12 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . -45-
14.13 RIGHTS OF THIRD PARTIES. . . . . . . . . . . . . . . . . -45-
14.14 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . -45-
14.15 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . -45-
14.16 SUBMISSION TO JURISDICTION; WAIVERS. . . . . . . . . . . -46-
14.17 PARTIES IN INTEREST. . . . . . . . . . . . . . . . . . . -46-
14.18 COUNTERPARTS AND FACSIMILE SIGNATURES. . . . . . . . . . -46-
14.19 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . -46-
14.20 CORPORATE AUTHORITY. . . . . . . . . . . . . . . . . . . -46-
LIST OF EXHIBITS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
LIST OF SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . -50-
(v)
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 4th day of December, 1997, by and among
Recycling Industries of Winston-Salem, Inc., a Colorado corporation ("RII Sub"),
RECYCLING INDUSTRIES, INC., a Colorado corporation ("Parent"), XXXXXXX
COMPANIES, INC., a North Carolina corporation ("Seller"), Xxxxx Xxxxxxx, and an
individual owner of Seller ("FB"), Xxxxxxx Xxxxxxx, and an individual owner of
Seller ("MB") and the Seller Owners, as defined herein. Throughout this
Agreement, RII Sub and the Parent may be collectively referred to as
"Recycling;" and FB and MB may be collectively referred to as the "Seller
Officers." 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, below.
WITNESSETH:
WHEREAS, RII Sub is a wholly-owned subsidiary of the Parent;
WHEREAS, RII Sub desires to acquire certain assets of Seller consisting of
substantially all of the tangible and intangible assets used in the ferrous and
non-ferrous metals recycling business and steel fabrication business conducted
by Seller at its facility located in Winston-Salem, North Carolina, and those
certain administrative office and other assets, as hereinafter identified, used
in connection with the operation of Seller's facility (collectively the "Seller
Assets");
WHEREAS, Seller desires to sell the Seller 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 Stock Consideration referred to herein; and
WHEREAS, the Seller Officers and the Seller Owners, as defined below, 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-
1.1 "Acquisition" means the acquisition of the Seller Assets from
Seller.
1.2 "Assumed Contracts" means those contracts, leases and other
agreements to which Seller 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 Seller.
1.3 "Business" means the metals recycling and steel fabrication business
and business operations as conducted by Seller on October 8, 1997, and
subsequent thereto, as a going concern.
1.4 "Closing" has the meaning set forth in Section 3.4, below.
1.5 "Closing Date" has the meaning set forth in Section 3.4, below.
1.6 "Closing Documents" means the other agreements, documents of title,
certificates, opinions and other documents required to be executed and delivered
under this Agreement as provided in Article 11, hereof.
1.7 "Closing Notification" has the meaning set forth in Section 3.4,
below.
1.8 "Current Assets" means current assets as defined by GAAP, net of any
reserves, excluding cash and cash equivalents, marketable securities,
Fabrication Receivables and Fabrication Retainage.
1.9 "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.
1.10 "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
1.11 "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
1.12 "Environmental Law or Laws" means any and all federal, state, local
or municipal 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,
-2-
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") and the Occupational Safety
and Health Act of 1970 ("OSHA"), all as may have been amended.
1.13 "Environmental Liabilities" means any and all liabilities for the
violation of, or remediation under, any Environmental Laws.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.15 "Fabricated Steel Inventory" means new steel stock, serial drops
(comprised of unused material from work-in-process), supplies, manufactured,
fabricated and purchased parts, work in process, finished steel and finished
fabricated work used and fabricated by Seller as part of its steel fabrication
business. Fabrication Inventory will not include material on construction job
sites.
1.16 "Fabrication Receivables" means any receivables of any nature,
including accounts and notes receivable generated from the metals fabrication
business conducted by Seller.
1.17 "Fabrication Retainage" means the amount withheld by Seller's
customers pursuant to contract for the fabrication of steel products until
completion of the construction project to which the contract relates.
1.18 "GAAP" means generally accepted accounting principles consistently
applied in the United States.
1.19 "Hazardous Materials" means any substance (a) the presence of which
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) requires investigation,
removal or remediation under any Environmental Law or common law, (b) which is
or becomes defined as a "hazardous substance," "hazardous material," "hazardous
waste," "pollutant" or "contaminant" under any Environmental Law, and/or (c)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by
any governmental authority under any Environmental Law, (d) the presence of
which causes or threatens to cause a nuisance or trespass upon real property or
to adjacent properties or poses or threatens to pose 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 or
petroleum products.
-3-
1.20 "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, 15 U.S.C. Sections 18a.
1.21 "Intellectual Property" has the meaning set forth in Section 2.1(e).
1.22 "Inventory Date" has the meaning set forth in Section 3.2.
1.23 "IRC" means the Internal Revenue Code of 1986, as amended.
1.24 "Knowledge" with respect to corporations means knowledge of the
executive officers and directors of the corporation, PROVIDED, HOWEVER, the
knowledge of a particular party shall not be imputed to any other individual
party.
1.25 "Lender" means Recycling's primary lender or equity participant
relating to the Transaction.
1.26 "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 affect the Seller Assets or the Business, including any
liability for Taxes.
1.27 "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 price for the Parent Common Stock as reported on the
Nasdaq SmallCap System.
1.28 "Material Assumed Contracts" means all Assumed Contracts other than
(a) contracts which do not require payment by Seller 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 Seller 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 Seller of $20,000 or more per
year. The Material Assumed Contracts are listed on Schedule 1.28.
1.29 "Ordinary Course of Business" or "Ordinary Course" means the
ordinary course of business consistent with past custom and practice of Seller
(including with respect to quantity and frequency).
1.30 "Owned Facilities" means the real property and associated fixtures
owned by Seller as specifically described on Schedule 2.1(a).
1.31 "Parent Common Stock" means the common stock, $.001 par value per
share, of Recycling Industries, Inc., a Colorado corporation.
-4-
1.32 "Parent Series F Preferred" means the 6 1/2% Redeemable Convertible
Preferred Stock of Parent described in the Designation of Series F 6 1/2%
Redeemable Convertible Preferred Stock attached hereto as EXHIBIT A.
1.33 "Parent Series G Preferred" means the 6 1/2% Redeemable Convertible
Preferred Stock of Parent described in the Designation of Series G 6 1/2%
Redeemable Convertible Preferred Stock attached hereto as EXHIBIT B.
1.34 "Pension Plan" means the Xxxxxxx Companies, Inc. Retirement Plan.
1.35 "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.
1.36 "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.
1.37 "Prepared Inventory" means all ferrous and non-ferrous inventory
that has been processed or at the time of purchase was in a form that
historically was deemed saleable without processing by Seller and as of the
Closing Date is ready for shipment to Seller's customers.
1.38 "Scrap Receivables" mean any receivables of any nature, including
accounts and notes receivable generated from the metals recycling business
conducted by Seller.
1.39 "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.
1.40 "Seller Financial Statements" has the meaning set forth in Section
4.4(b), below.
1.41 "Seller Owners" means the individuals and entities listed on
Schedule 4.5, including, if not listed, the Seller Officers.
1.42 "Seller Payables" has the meaning set forth in Section 9.20, below.
1.43 "Seller Receivables" has the meaning set forth in Section 2.1(b),
below.
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1.44 "Supply Inventory" means all of the parts, equipment, fuel,
lubricants, office supplies or other items consumed by or used in the operations
of the Business or the repair and maintenance of the Seller's vehicles,
machinery and equipment.
1.45 "Tangible Property" shall include the property described in Sections
2.1(a), 2.1(d), 2.1(h), and 2.1(i), below.
1.46 "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 other tax, including any interest,
penalty or addition thereto, whether disputed or not.
1.47 "Transaction" means the transactions contemplated by this Agreement
and the Closing Documents.
1.48 "Unprepared Inventory" means: (i) all scrap ferrous metal
comprised of materials such as obsolete, discarded or abandoned machinery,
appliances, equipment, automobiles, metal manufacturing scrap, casting and
fabricating scrap materials or other consumer and industrial ferrous goods or
by-products to be processed by shearing, torching, baling or otherwise rendered
suitable by Seller for its customers' consumption; and (ii) scrap non-ferrous
metal comprised of various non-magnetic alloys or co-mingled ferrous and
non-ferrous which traditionally would be processed by Seller before shipment.
Unprepared Inventory does not include any non-saleable ferrous or non-ferrous
materials resulting from Seller's operations or contained within dirt or other
non-processable medium within the Owned Facilities.
1.49 "1934 Act" means the Securities Exchange Act of 1934, as amended.
ARTICLE 2
ACQUISITION OF SELLER ASSETS
2.1 PURCHASE AND SALE OF THE SELLER ASSETS. At the Closing and subject
to the terms and conditions stated herein, Seller agrees to sell, assign, convey
and transfer to RII Sub, and RII Sub agrees to purchase from Seller, the Seller
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 defined in Section 2.2. Without limitation, the Seller
Assets shall include all of the items enumerated in subparagraphs (a) through
(n) below (with the exception of the Excluded Assets):
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(a) The Owned Facilities, including all buildings situated
thereon and all real property leasehold improvements and all rights in
easements, driveways and signs, as legally described on Schedule 2.1(a).
(b) All receivables of any nature, including accounts and notes
receivable, but excluding any Scrap Receivables that have been outstanding for
more than 60 days as of the Closing Date, any Fabrication Receivables and any
Fabrication Retainage (the "Seller Receivables");
(c) All Unprepared Inventory, Processed Inventory and Supply
Inventory;
(d) All vehicles, machinery and equipment, tools, furniture,
leasehold improvements, fixtures, vehicles, dies, jigs, and supplies, or any
related capitalized items and other tangible property owned by Seller located at
the Owned Facilities and/or (y) 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(d), provided that dies, jigs,
supplies, tools and spare parts are included in the Seller Assets whether or not
listed on Schedule 2.1(d).
(e) Schedule 2.1(e) sets forth all of the intellectual property,
proprietary and business information of Seller relating to the Business,
including, all of Seller's right, title and interest in and to (collectively the
"Intellectual Property"):
(1) the exclusive use of the name "Xxxxxxx Iron & Metal,"
"Xxxxxxx Steel," and any variations thereof;
(2) all transferrable Permits and telephone and facsimile
numbers used by Seller to the extent the same are transferrable by Seller;
(3) the exclusive right to all inventions, discoveries, trade
secrets, designs, prototypes, formulas and know-how relating to the
Business;
(f) All patents (whether issued or pending), copyrights,
trademarks and tradenames;
(g) All business, financial and tax records relating to the
Business, including all sales data, pricing and cost information, customer and
supplier lists, credit records, sales literature and business and marketing
plans relating to the Business.
(h) 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 Seller Offices in connection with
the operation of the Business.
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(i) All accounting and other computer software relating to the
Business owned by Seller, including information interfaced with those systems,
as maintained by Seller at the Owned Facilities or the Seller Offices, all of
which are listed on Schedule 2.1(i); provided, however, that Seller shall not
make any warranties with respect to any software.
(j) All rights to customer and supplier lists, signs,
advertising, catalogues and brochures relating to the Business.
(k) All goodwill and other general intangibles related to the
Seller Assets.
(l) All claims, deposits, prepayments, refunds, rights of Seller
under the Assumed Contracts, causes of action, choses in action, rights of
recovery, rights of set-off and rights of recoupment related to the Seller
Assets or the Business, except for any income or employment tax refunds.
(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
Seller unless specifically described in Section 2.2 or on Schedule 2.2 as an
Excluded Asset.
Seller's sale, conveyance, assignment and transfer of the Seller Assets
shall be free and clear of all Security Interests, encumbrances, liabilities or
other obligations, except for those that have been insured over in the title
insurance policy to be delivered pursuant to Section 8.1.
2.2 EXCLUDED ASSETS. On the Closing Date, RII Sub shall not purchase
the Seller's interest in United Metal Recyclers or the other assets of Seller on
the Closing Date as set forth on Schedule 2.2 (the "Excluded Assets").
2.3 ASSUMED CONTRACTS. RII Sub shall assume the obligations of Seller
under the Assumed Contracts.
2.4 ASSUMPTION OF LIABILITIES. Other than as provided in Sections 2.3,
2.5, 7.2 and 7.3, RII Sub shall not assume any Liabilities or Environmental
Liabilities of Seller arising on or before the Closing or with respect to any
action, event or occurrence of any party on or prior to the Closing, provided,
however, that ad-valorem taxes on the Seller Assets not yet due and payable
shall be pro-rated at Closing based on the preceding year's actual ad-valorem
taxes paid and RII Sub shall assume its pro-rata share of such taxes.
2.5 DEFERRED COMPENSATION. RII Sub shall assume the deferred
compensation liabilities of Seller to Xxx Xxxxxxx and Xxxxxxx Xxxxxxx or his
assignee in an aggregate amount not to exceed $1,090,000 pursuant to the written
agreements attached as Schedule 2.5.
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2.6 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) If Seller receives payment on any of the Seller Receivables
included in the Seller Assets, Seller shall forthwith forward the same to RII
Sub. RII Sub shall have the right, during the normal business hours of Seller,
to review records of Seller solely to determine compliance with the provisions
of Section 2.6(a).
(b) If RII Sub receives payment on any Fabrication Receivables
or any Fabrication Retainage, RII Sub shall forthwith forward the same to
Seller. Seller shall have the right, during the normal business hours of RII
Sub, to review records of RII Sub solely to determine compliance with the
provisions of this Section 2.6(b).
(c) The provisions of this Section 2.6 shall survive the
Closing.
ARTICLE 3
PURCHASE PRICE AND CLOSING
3.1 PURCHASE PRICE FOR SELLER ASSETS.
(a) At Closing, RII Sub shall pay the total amount of
$28,090,000, inclusive of the assumption of the deferred compensation liability
of Seller assumed pursuant to Section 2.5 and subject to the adjustments, as
determined in accordance with Section 3.2 below (the "Purchase Price") to Seller
for the purchase of the Seller Assets. The Purchase Price shall be payable as
follows:
(1) $20,000,000, as adjusted in accordance with Section 3.2
below, in immediately available funds (the "Cash Consideration"), of which
$100,000 shall be allocated and paid to Xxxxxxx Xxxxxxx in exchange for his
Non-Competition Agreement described in Section 11.4;
(2) $1,090,000, through the assumption of the deferred
compensation liability as provided in Section 2.5;
(3) $3,500,000 of Parent Series F Preferred delivered at Closing
pursuant to the terms of a customary subscription agreement (the
"Subscription Agreement") containing mandatory registration rights for the
Parent Common Stock issuable upon conversion of the Parent Series F
Preferred. The form of Subscription Agreement is attached hereto as
Exhibit C.
(4) $3,500,000 of Parent Series G Preferred delivered at Closing
pursuant to the terms of the Subscription Agreement containing mandatory
registration rights for the Parent Common Stock issuable upon conversion of
the Parent Series G Preferred.
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Collectively, the Parent Series F Preferred and the Parent Series G
Preferred is referred to as the "Stock Consideration."
3.2 ADJUSTMENT OF THE PURCHASE PRICE.
(a) At Closing, the aggregate value of the Current Assets
included in the Seller Assets shall not be less than $10,000,000 as shown on a
preliminary balance sheet ("Preliminary Closing Balance Sheet") dated as of the
Closing Date and prepared by Seller on a basis consistent with the Seller
Financial Statements, except that Inventory shall be valued as provided in
Sections 3.2(b),(c) and (d) below and various accruals are to be estimated. To
the extent the value of the Current Assets on the Preliminary Closing Balance
Sheet exceeds or is less than $10,000,000, the Purchase Price shall be adjusted
accordingly and the cash portion of the Purchase Price shall be increased or
decreased, as appropriate, to reflect the adjustment. For purposes of this
adjustment, inventory shall be valued based upon a physical inventory taken by
Seller and observed by Recycling and its representatives on a date not more than
fifteen business days preceding the Closing (the "Inventory Date"). The
physical quantities of inventory observed on the Inventory Date shall be valued
as follows:
(b) Unprepared Inventory shall be valued as provided in Schedule
3.2.
(c) Prepared Inventory shall be valued as provided in Schedule
3.2.
(d) Fabricated Steel Inventory shall be valued as provided in
Schedule 3.2.
(e) Within 30 days after the Closing Date, Recycling and Seller
shall mutually prepare a substitute closing balance sheet for the Preliminary
Closing Balance Sheet, prepared on a basis consistent with the Seller Financial
Statements, except for Inventory which shall be valued as provided in Sections
3.2(b), (c) and (d) above, and except that accruals which are estimated on the
Preliminary Closing Balance Sheet shall be determined based on actual experience
to the extent practicable. Such substitute balance sheet (the "Final Closing
Balance Sheet") shall reflect any and all adjustments that should properly have
been reflected in the Preliminary Closing Balance Sheet. The Current Assets as
shown on the Final Closing Balance Sheet shall be determinative for the purpose
of applying Section 3.2(a). If the payment to Seller at Closing (based on the
Preliminary Closing Balance Sheet) shall be greater than the payment to which
Seller is entitled under the Final Closing Balance Sheet, Seller shall refund to
RII Sub the amount of the overpayment, in immediately available funds, within 5
business days following demand therefor. If such payment to Seller at Closing
shall be less than the payment to which Seller is entitled under the Final
Closing Balance Sheet, RII Sub shall pay to Seller the amount of the
underpayment, in immediately available funds, within 5 business days following
demand therefor.
(f) In addition to any adjustment resulting from the preparation
of the Final Closing Balance Sheet, after Closing the value of the Seller
Receivables included in Current Assets at Closing will be adjusted to reflect
Ordinary Course adjustments for shortages, weight variations,
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quality and quantity. Any increase in the value of the Seller Receivables as a
result of the foregoing adjustments shall be paid to Seller by the RII Sub in
immediately available funds. Any decrease in the in the value of the Seller
Receivables as a result of the foregoing adjustments shall be paid to the RII
Sub by Seller in immediately available funds. Any payments required pursuant to
this Section 3.2(f) shall be paid within five days of the determination of the
adjustment amount.
3.3 ALLOCATION OF THE PURCHASE PRICE.
(a) The Purchase Price shall be allocated among the Seller
Assets as set forth on Schedule 3.3.
(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 3.3. RII Sub shall provide to Seller a Treasury Form 8594 within 45
days following the Closing Date.
(c) RII Sub and Seller 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.
3.4 CLOSING OF THE PURCHASE. The closing of the Transaction (the
"Closing") shall take place at the offices of Friedlob Xxxxxxxxx Xxxxxx Xxxxxxx
& Xxxxxxxxxxx, LLC, 1400 Glenarm Place, Third Floor, Denver, Colorado, or at
such other place as selected by the Lender, in its sole and absolute discretion,
on the date and at the time set forth in the Closing Notification, given by RII
Sub in accordance with this section (the "Closing Date"). The Closing Date
shall be no later than December 5, 1997.
ARTICLE 4
REPRESENTATIONS OF SELLER AND THE SELLER OFFICERS
As an inducement to Recycling to enter into this Agreement and to complete
the Transaction, and with the knowledge that Recycling will rely thereon, Seller
and the Seller Officers, 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) Seller is a corporation
duly organized, validly existing and in good standing under the laws of North
Carolina, and has the corporate power and lawful authority to carry on its
business as now being conducted.
(b) Seller 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.
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4.2 TITLE TO PROPERTY. Seller has good, valid and marketable title to
all real and personal property included in the Seller Assets (tangible and
intangible), in each case subject to no Security Interest, option, right of
first refusal, or other restriction of any kind or character, other than those
exceptions acceptable to RII Sub in its reasonable discretion and included as an
exception to the title policy to be delivered pursuant to Section 8.1.
4.3 AUTHORITY OF SELLER; CONSENTS. (a) Seller has full power and
authority to execute and deliver this Agreement and the Closing Documents and to
carry out the Transaction and Seller has taken all requisite corporate,
partnership, or other action to authorize the execution, delivery and
performance of the Closing Documents.
(b) This Agreement and the Closing Documents are valid and
binding agreements of Seller enforceable in accordance with their terms.
(c) Except for compliance with the HSR Act and any necessary
consents to the Material Assumed Contracts, 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 Seller to enter into and perform its
obligations under this Agreement and the Closing Documents, and neither the
execution and delivery of this Agreement and the Closing Documents nor the
consummation of the Transaction by Seller 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;
(2) Cause a default under any mortgage or deed of trust or other
lien, charge or encumbrance to which any of the Seller Assets is subject or
under any contract to which it is a party, or permit the termination of any
such contract by another person;
(3) Result in the creation or imposition of any Security
Interest upon any of the Seller Assets under any agreement or commitment to
which it or the Seller Assets are bound;
(4) Conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality;
(5) Violate any statute, law or regulation of any jurisdiction
as such statute, law or regulation related to the Seller Assets; or
(6) Violate or cause any revocation of, or limitation on, any
Permit.
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4.4 FINANCIAL STATEMENTS.
(a) Seller has furnished, or will furnish, to Recycling the following
financial information, Schedules, and other disclosures:
(1) Audited financial statements for Seller for its fiscal years
ended December 31, 1994, 1995 and 1996, each prepared in accordance with
GAAP (collectively the "Audited Financial Statements"). RII Sub and Parent
acknowledge receipt of the Audited Financial Statements prior to the
execution of this Agreement.
(2) Unaudited financial statements prepared for the period from
January 1, 1997 through September 30, 1997 and within 20 business days
after each month ending following the date of this Agreement, unaudited
financial statements prepared in the same manner which they are currently
prepared (collectively the "Unaudited Financial Statements").
(3) Copies of Seller's tax returns for its tax years ended in
1993, 1994, 1995 and 1996.
(b) The Audited Financial Statements have been prepared in
accordance with GAAP and the Unaudited Financial Statements will be or have been
prepared in the same manner which they are currently prepared and present fairly
the financial condition of Seller as of such dates and the results of operations
of Seller for such periods; PROVIDED, HOWEVER, that the Unaudited Financial
Statements are subject to normal year-end adjustments and lack footnotes and
other presentation items. The Audited Financial Statements and the Unaudited
Financial Statements are collectively referred to as the "Seller Financial
Statements."
(c) Since December 31, 1996, there has been (1) no material
adverse change in the assets or liabilities, or in the business or financial
condition or in the results of operations of the Business, whether as a result
of any legislative or regulatory change, revocation of any Permits, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise; and (2) no change
in the assets or liabilities, or in the Business or condition, financial or
otherwise, or in the results of operations, or any loss of customers or
prospects of Seller, except in the Ordinary Course which have not, in the
aggregate or individually, had a material adverse effect on the Business.
4.5 OWNERSHIP. Schedule 4.5 lists all of the owners of the voting
securities of Seller. This Agreement constitutes the valid and legally binding
obligation of each Seller Owner, enforceable in accordance with its terms and
conditions.
4.6 NO TAX LIENS; NO WAIVER.
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(a) None of the Seller 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 ad-valorem
taxes which are not yet due and payable.
(b) Seller has not waived any statute of limitations with
respect to the assertion of any liability under any federal, state, or local tax
law.
(c) Except as provided on Schedule 4.6(c), Seller 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 Seller and the Seller Officers, contemplated.
4.7 COMPLIANCE WITH LAWS. Except as set forth on Schedule 4.7:
(a) Neither Seller nor any of the Seller Officers is in
violation or has violated any applicable order, judgment, injunction, award or
decree relating to the Seller Assets. To the Knowledge of Seller and the Seller
Officers, except as disclosed on Schedule 4.29 or otherwise disclosed in the
Environmental Studies, neither Seller nor the Seller Officers has violated or is
in violation of 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 Seller Assets.
(b) Without limiting the generality of the foregoing (1) the
buildings included in the Owned Facilities do not encroach on the property of
others, (2) except as otherwise disclosed on Schedule 4.29 or in the
Environmental Studies or other documents provided to Recycling's agent, X.X.
Xxxxxxxxxxx and Associates ("Xxxxxxxxxxx"), there is not pending or threatened
any notification of any governmental authority that Seller is not in compliance
with applicable laws and regulations respecting employment and employment
practices, occupational safety and health laws and regulations, and
Environmental Laws, and neither Seller nor any Seller Officer has Knowledge of
any basis therefor, and (3) except as disclosed on Schedule 4.29, neither Seller
nor any Seller Officer has received any such notification of past violations of
such laws or regulations which have not been resolved.
4.8 PERMITS. Schedule 4.8 lists all Permits required by any
governmental entity related to the Business or operations of Seller. Except as
described on Schedule 4.8 or in the Environmental Studies delivered pursuant to
Section 7.1, Seller validly holds all Permits and all Permits are in full force
and effect and no proceeding to revoke or limit any of such Permits is pending
or, to the Knowledge of Seller or any Seller Officer, threatened.
4.9 LITIGATION. Except as set forth on Schedule 4.9, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or
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arbitration tribunal against or involving the Seller Assets or the Business.
There are no actions, suits or claims against Seller or any Seller Officer, or,
to the Knowledge of Seller or any Seller Officer, investigations (whether or not
the defense thereof or liabilities in respect thereof are covered by insurance)
pending or, to the Knowledge of Seller or any Seller Officer, threatened against
or involving the Seller Assets or the Business, nor to the Knowledge of Seller
or any Seller Officer, is there any basis therefor. Other than as provided in
Article VII, responsibility for any litigation involving the Seller Assets or
the Business pending or arising from acts that occurred prior to the Closing and
the satisfaction of judgments (including related costs and fees) shall remain
with Seller and the Seller Officers.
4.10 PRODUCT WARRANTY. Each product fabricated by Xxxxxxx Steel has been
in conformity with all contractual commitments and specifications and all
express and implied warranties, and Seller has no Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against Seller giving rise to
any Liability) for replacement or repair thereof or other damages in connection
therewith.
4.11 PRODUCT LIABILITY. Seller has no Liability (and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand against Seller giving rise to any Liability)
arising out of any injury to individuals or property as a result of the
ownership, use, possession or incorporation into any structure of any product
fabricated or sold by Seller.
4.12 CONTRACTS AND OTHER AGREEMENTS.
(a) Except for the contracts and agreements listed on Schedule
4.12(a), the Assumed Contracts or the contracts, leases, and other agreements
which will be completed or canceled at or prior to the Closing, Seller 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 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 contracts, leases and other agreements which
constitute a part of the Assumed Contracts are valid and binding upon Seller in
accordance with their terms, and Seller is not in default nor has it received
any notice of default under, or with respect to, any such contracts, leases, or
other agreements.
(c) No approval or consent of any Person is needed in order that
the contracts, leases, and other agreements which are listed on Schedule 1.28
will continue in full force and effect following the completion of the
Transaction. Seller is not in the process of negotiating or entering into any
contracts, leases, or other agreements described in this Section 4.12.
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4.13 NOTES AND ACCOUNTS RECEIVABLE. The Seller Receivables are reflected
properly in the books and records of Seller, are valid receivables subject to no
setoffs or counterclaims, are current, not over 90 days old with respect to
Scrap Receivables, and are collectible and will be collected within 90 days
after the Closing with respect to Scrap Receivables, subject only to the reserve
for bad debts set forth on the face of the Seller Financial Statements. Seller
Receivables not timely collected as provided herein shall be subject to
reassignment to Seller in accordance with Section 14.2.
4.14 TANGIBLE PROPERTY. All Tangible Property being used in the Business
at the date hereof is in good operating condition and repair, subject only to
normal wear and tear. Neither Seller nor any of the Seller Officers has
received 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.
4.15 INVENTORY. The piles of Unprepared and Prepared Inventory included
in the Seller Assets 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.
4.16 FABRICATED STEEL INVENTORY. The Fabricated Steel Inventory consists
of new steel stock, serial drops, supplies, manufactured, fabricated and
purchased parts, work in process, finished steel and finished fabricated work,
all of which is merchantable, fit for the purpose for which it was procured,
manufactured or fabricated and meeting the specifications required by the
contract for its fabrication, and none of which is slow-moving, obsolete,
damaged, unusable or defective, subject only to the reserve for inventory
writedown set forth on the face of the Seller Financial Statements.
4.17 INTELLECTUAL PROPERTY.
(a) All Intellectual Property is owned outright by Seller, free and
clear of any Security Interest and there exist no obligations with respect to
any Intellectual Property requiring Seller to make any payment in respect of its
use or otherwise. Seller has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other conflict with
respect to the Intellectual Property.
(b) Neither Seller nor any of the Seller Officers is aware of
any patent, invention, trade secret, trademark, service xxxx, trade name or
copyright of any other Person that is infringed by Seller, nor do they have
notice of any infringement claim of any other Person relating to any of the
Intellectual Property or any process or confidential information of Seller, and
neither Seller nor the Seller Officers know of any basis for any such charge or
claim.
4.18 REAL PROPERTY. The Owned Facilities include all real property
included in the Seller Assets. To the Knowledge of Seller and the Seller
Officers, with respect to each parcel of owned real property included within the
Owned Facilities:
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(a) Except as otherwise disclosed herein or in the Environmental
Studies or documents provided to Xxxxxxxxxxx, the Owned Facilities have received
all approvals of governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof and have been
operated and maintained in accordance with applicable laws, rules and
regulations.
(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,
other than those which do not materially affect RII Sub's right to full
enjoyment of the Owned Facilities, and except as reflected in the survey
described in Section 8.2.
(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 Seller in possession of the
Owned Facilities or any portion thereof.
(e) The Owned Facilities are supplied with utilities and other
services necessary for their 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
benefitting the Owned Facilities.
4.19 LIABILITIES. Except as otherwise set forth in this Agreement or any
Schedule hereto, to the Knowledge of Seller and the Seller Officers, the
Business has no Liabilities other than (a) Liabilities fully and adequately
reflected or reserved against in the Seller Financial Statements and (b)
Liabilities incurred since December 31, 1996, in the Ordinary Course of
Business.
4.20 SUPPLIERS AND CUSTOMERS. Schedule 4.20 lists the 20 largest
suppliers and 20 largest customers of the Business. All purchase orders and
customer contracts were issued by Seller in the Ordinary Course of Business.
Other than Ordinary Course adjustments for shortages, weight variations, quality
and quantity, there are no agreements or understandings with any customers of
the vendors to Seller as to adjustments in pricing or cost which would reduce
the profit margin of any existing or contemplated contract or other
relationship.
4.21 EMPLOYEE BENEFIT PLANS. Schedule 4.21 lists all Employee Benefit
Plans maintained by Seller or to which it contributes for the benefit of any of
its current or former employees.
(a) To the Knowledge of Seller and the Seller Officers, each
Employee Benefit Plan (and each related trust or insurance contract)
complies in form and in operation in all respects with the applicable
requirements of ERISA and the IRC;
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(b) All contributions (including all employer contributions and
employees salary reduction contributions) which are due have been paid to
each Employee Benefit Plan;
(c) No unsatisfied liability has been incurred by Seller or any
ERISA affiliate of Seller and there is no material risk that such liability
will be incurred;
(d) To the Knowledge of Seller and the Seller Officers, 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) Except as provided on Schedule 4.21(e), Seller does not
provide any medical or other similar benefits to employees beyond
retirement; and
(f) Seller 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.
4.22 CURTAILMENT OF OPERATIONS. No labor disputes or work stoppages
involving the Business are pending or threatened which, either singly or in the
aggregate, might have an adverse effect on the Business. To the Knowledge of
Seller and the Seller Officers, no material customer of or supplier to the
Business is involved in, or affected by, any dispute, arbitration, lawsuit, or
administrative proceedings which might materially adversely affect the Business,
operations, properties, assets or condition, financial or otherwise, of the
Business.
4.23 EMPLOYEE RELATIONS. Seller is not a party to a collective
bargaining agreement and, to its and the Seller Officers' Knowledge, Seller 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 Seller has not and is not engaged in any
unfair labor practice. There have been no organization efforts by any trade
unions within the last five years.
4.24 INSURANCE. Schedule 4.24 lists all insurance policies maintained by
Seller relating to the Business or the Owned Facilities, copies of which have
been provided to RII Sub, which cover the Seller Assets or the Business, the
nature of such policies, the amount and types of coverage, and the name of the
insurers and expiration dates. Seller 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.
4.25 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of Seller, except in connection with Employee Benefit Plans.
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4.26 RELATIONSHIPS. Except as described on Schedule 4.26, no officer or
director of Seller 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 of the Business. The Business
is not indebted to any officer, director, partner, or employee of Seller or to
any entity in which any such Person has a financial interest.
4.27 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting
on behalf of Seller or the Seller Owners 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.
4.28 EMPLOYEE TRANSITION. Schedule 4.28 lists all employees of Seller
who work or are customarily stationed at the Owned Facilities, their current
employment compensation (including 1996 bonus, if any), and other amounts if any
payable to each employee. On or before the first day subsequent to the Closing
Date, Seller will terminate Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxx (the "Terminated
Employees") and RII Sub will hire all other employees of the Business upon
consummation of the Closing but is not obligated to employ such persons for any
specified length of time (except to the extent RII Sub shall agree contractually
to do so). Seller will pay all compensation due the Terminated Employees, other
than the Deferred Compensation Liability assumed by RII Sub pursuant to Section
2.5, on or before the first day subsequent to the Closing. RII Sub will not be
responsible for any salaried or hourly health and life insurance obligations
incurred prior to the Closing for any Terminated Employees, nor for payment of
claims to insureds, or payment of any premiums for coverage prior to the Closing
Date. All liabilities of the Business to Terminated Employees other than the
Deferred Compensation Liability assumed by RII Sub pursuant to Section 2.5, will
be retained by Seller, including those accruing by reason of termination by
Seller. All employees of Seller hired by RII Sub will receive credit for their
employment period with Seller for purposes of determining vesting and
eligibility under the terms of RII Sub's or the Parent's Employee Benefit Plans,
to the extent allowable under applicable law, and will be entitled to take
vacation time in accordance with the policies of Seller (including credit for
time employed by Seller).
4.29 ENVIRONMENTAL MATTERS. Except as may be provided in the
Environmental Studies to be performed as contemplated by Section 7.1 of this
Agreement, or in documents provided to Xxxxxxxxxxx, copies of which have been
delivered to RII Sub, or disclosed on Schedules 4.8 or 4.29, to the Knowledge of
Seller and the Seller Officers:
(1) No Hazardous Material has been disposed of on, released
to or from, threatened to be released to or from or is presently at, on,
beneath, in or upon any of the Owned Facilities or upon adjacent parcels of
real estate in amounts or concentrations which constitute or constituted a
violation of, or which could reasonably be expected to give rise to
liability under, any Environmental Law.
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(2) There has been no generation, production, refining,
processing, manufacturing, use, storage, disposal, treatment, shipment or
receipt of a Hazardous Material at or from the Owned Facilities or relating
to the operation of Seller in violation of or in a manner that could give
rise to liability under Environmental Laws.
(3) The operations of Seller are in compliance and have
been in compliance with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the Owned Facilities
which could interfere with continued operation Seller's business or impair
its fair saleable value.
(4) Neither Seller nor the Seller Officers have received
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to the Owned Facilities from any Person, nor
does Seller or any of the Seller Officers have Knowledge or reason to
believe that any such notice will be received from or is being threatened
by any Person.
(5) No judicial proceedings, governmental administrative
actions, investigations or internal or non-public agency proceedings are
pending or threatened, under any Environmental Law, to which Seller is or
will be named as a party, nor are there any consent decrees, or other
decrees, consent orders, agreements, administrative orders or other orders,
judicial or administrative requirements outstanding under any Environmental
Law with respect to Seller.
4.30 COMPLIANCE WITH ADA. Seller has substantially 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.
4.31 GUARANTEES. Seller is not a guarantor or otherwise is liable for
any liability or obligation of any other person, except as described in Schedule
4.29.
4.32 DISCLOSURE. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of Seller or the
Seller Officers in connection with the Transaction, contains any untrue
statement of a material fact or omits any statement of a material fact necessary
in order to make the statements contained herein or therein not misleading.
4.33 BEST EFFORTS. Seller will use its best efforts to obtain all
permits, consents and approvals and take such other actions in order to complete
the Transaction by the Closing Date. Seller 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.
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ARTICLE 5
REPRESENTATIONS OF RECYCLING
As an inducement to Seller and the Seller Officers to enter into this
Agreement and to complete the Transaction and with the knowledge that Seller and
the Seller Officers will rely thereon, RII Sub and the Parent jointly and
severally represent and warrant to Seller and the Seller Officers the following
(both as of the date hereof and as of the Closing Date):
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 State of North
Carolina.
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 Seller true and complete copies of
their respective Articles of Incorporation (certified by the Secretary of State
of Colorado) and Bylaws (certified by its 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 Closing
Documents and to carry out the Transaction. The Closing 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 the
Closing Documents, and neither the execution and delivery of the Closing
Documents nor the completion of the Transaction will, with respect to RII Sub
and the Parent, individually:
(a) Be in violation of its Articles of Incorporation or Bylaws
or constitute a breach of any evidence of indebtedness or agreement to which it
is a party;
(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;
(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;
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(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, and free and clear of any Security Interests or other
encumbrances, except for transfer restrictions required under federal and state
securities laws.
5.6 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 made all filings with the
Securities and Exchange Commission that it has been required to make under the
1934 Act (collectively, the "Public Reports"). The Public Reports were complete
and accurate when filed and no material events have occurred subsequent to the
filing of the Public Reports which would require additional filings or other
disclosure, other than a press release or similar announcement which has been
made when required.
5.7 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.
5.8 DISCLOSURE. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of RII Sub or the
Parent in connection with the Transaction, contains any untrue statement of a
material fact, or omits any statement of a material fact necessary in order to
make the statements contained herein or therein not misleading.
5.9 BEST EFFORTS. RII Sub and the Parent will use their best efforts to
timely apply for and obtain all permits, consents and approvals and to complete
any due diligence deemed necessary by RII Sub and the Parent in order to
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.
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ARTICLE 6
REGULATORY COMPLIANCE
6.1 BULK SALES COMPLIANCE. RII Sub and Parent hereby waive compliance
by Seller with the provisions of the bulk sales or bulk transfer law of the
State of North Carolina and Seller and the Seller Owners agree to indemnify and
hold RII Sub and Parent harmless from any liability incurred as a result of the
failure to so comply.
6.2 XXXX-XXXXX-XXXXXX ACT. As soon as practicable, but in no event
later than five days after the date hereof, each party shall make any and all
filings required to be made under the HSR Act. Each of the parties will assist
the other as may be reasonably requested in connection with the preparation of
the Notification and Report Forms and related materials that it may be required
to file pursuant to the HSR Act and will use its best efforts to obtain an early
termination of the applicable waiting period and will make any further filings
that may be necessary, proper or advisable in connection therewith. Recycling
will pay all costs of preparing and making each initial filing and any
additional filings under the HSR Act, other than the costs and expenses of
Seller and its personnel and legal fees incurred by Seller in connection with
such filings.
6.3 THE WARN ACT. Seller will comply with the provisions of the WARN
Act, 29 U.S.C. Sections 2101, ET SEQ., and any similar state statute, relating
to notice to employees, if such provisions apply to the transaction contemplated
hereunder.
6.4 COBRA. Seller has complied 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 employees terminated prior to the Closing.
Recycling shall offer COBRA benefits to all persons who became eligible for
COBRA due to a qualifying event that occurred under Seller's medical benefit
plans prior to the Closing Date, and who elected to receive COBRA benefits prior
to the Closing Date (and are eligible to continue to receive such benefits
following the Closing Date) or who were notified in timely manner of their COBRA
rights (or were not so notified but the notice period has not expired prior to
the Closing Date) and did not so elect but remain eligible to elect to receive
such benefits following the Closing Date. Other than as provided in the
immediately preceding sentence, any liabilities for any COBRA claims arising out
of transactions occurring prior to the Closing Date shall be the sole
responsibility of Seller.
6.5 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 7
ENVIRONMENTAL MATTERS
With respect to matters governed by Environmental Laws, the Parties hereby
agree as follows:
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7.1 ENVIRONMENTAL STUDIES. Xxxxxxxxxxx has commenced preparation of
ASTM Phase I and Phase II Environmental Site Assessments and Transaction Screen
Process (the "Environmental Studies"). Upon completion, the Environmental
Studies shall be delivered to Recycling and attached hereto as Schedule 7.1.
Recycling shall pay for the costs of the Environmental Studies, except that
Recycling shall be reimbursed by Seller, out of assets other than the Seller
Assets, for the cost of the initial visual reconnaissance performed by
Xxxxxxxxxxx.
7.2 ON-SITE LIABILITIES
(a) The Parties will work together in good faith and will seek
to achieve consensus regarding how to respond to any "Environmental Claims" (as
defined below), and will mutually agree on the timing of any cleanup. Recycling
will have the right to incur response costs up to $5,000 per occurrence, limited
to no more than three occurrences per year, without approval by Seller or the
Seller Officers. Any other response costs must be approved by Seller or will be
resolved by arbitration, with each party paying one-half of the arbitration
costs (neither party's share of the arbitration costs will be from the
"Environmental Escrow Account," as defined below).
(b) Seller and the Seller Owners, jointly and severally, will
indemnify, defend, and hold harmless RII Sub, Parent, and their respective
officers, directors, successors and assigns, from and against any and all
claims, demands, suits, judgments, settlements, penalties, liabilities, cleanup
costs and expenses, including reasonable fees of counsel and environmental
consultants ("Environmental Claims"), arising out of or resulting from on-site
events or occurrences at the Owned Facilities on or before the Closing Date or
any migration of contamination onto or under the Owned Facilities prior to the
Closing Date (collectively, "On-Site Liabilities"). Seller and the Seller
Owners will have no liability or indemnification obligations, however, if they
do not receive notice of an Environmental Claim within four years after the
Closing Date. Notwithstanding the foregoing, Seller and the Seller Owners'
liability and indemnity obligation for all On-Site Liabilities shall not exceed
[CONFIDENTIAL TREATMENT REQUESTED BY REGISTRANT] in the aggregate. At Closing,
the Parties will create an escrow account, funded by [CONFIDENTIAL TREATMENT
REQUESTED BY REGISTRANT] (the "Environmental Escrow Account") (all of which
amounts will be contributed to the Environmental Escrow Account by Seller at the
Closing). The Environmental Escrow Account will be administered as provided in
the Environmental Escrow Agreement in the form attached hereto as Exhibit D.
Recycling will look solely to the Environmental Escrow Account to satisfy Seller
and the Seller Owners' indemnification obligations for On-Site Liabilities as
provided in this Section 7.2.
(c) RII Sub and Recycling will indemnify, defend, and hold
harmless Seller, the Seller Owners and their respective officers, directors,
successors and assigns, from and against any and all Environmental Claims
arising out of or resulting from: (i) on-site events or occurrences at the Owned
Facilities after the Closing Date, and (ii) On-Site Liabilities arising from
events or occurrences before the Closing Date if Seller and the Seller Owners'
indemnification obligations pursuant to Section 7.2(b), above, have expired.
7.3 OFF-SITE LIABILITIES
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(a) Subject to the following conditions, RII Sub and Parent will
indemnify, defend and hold harmless Seller, the Seller Owners, and their
respective officers, directors, successors and assigns, from and against any and
all Environmental Claims pertaining to any non-owned disposal sites (i.e. waste
disposal sites that neither Seller nor any controlled party of Seller had any
ownership interest in or control over)(referred to herein as "NODS"). The
aggregate indemnification obligation of RII Sub and Parent shall be limited to
[CONFIDENTIAL TREATMENT REQUESTED BY REGISTRANT] for all NODS, subject to a
maximum liability for any individual NODS of [CONFIDENTIAL TREATMENT REQUESTED
BY REGISTRANT], up to a maximum of eight NODS which must be identified by Seller
to Recycling on or before the Closing. For the foregoing indemnification to be
available for a NODS, that NODS must meet the following conditions on the
Closing Date, to the Knowledge of Seller and the Seller Officers:
(1) The NODS are not included on the National Priorities List or
subject to any ongoing investigation by the United States Environmental
Protection Agency (the "EPA") or equivalent state agencies;
(2) the NODS are in material compliance with currently
applicable EPA regulations; and
(3) The NODS has any Pollution Legal Liability Insurance if
currently required by law.
(b) RII Sub and Parent will have 45 days after the Closing to
investigate each facility identified in subsection (a) above by Seller. If RII
Sub and parent conclude that any listed facility fails to meet any of the three
conditions listed in subsection (a) (irrespective of whether or not Seller or
the Seller Officers had knowledge of such failure), it may notify Seller within
the 45-day period of its intention to remove that facility from the list.
Within 45 days after receipt of such notice, Seller will take either of the
following actions:
(1) It may identify a replacement facility for each facility
removed by RII Sub and Parent. In that event, RII Sub and Parent
will have an additional 45 days to investigate each replacement
facility in the same manner as if each such facility had been
designated at the Closing.
(2) If more than two facilities have already been removed from
the list, and if Seller disagrees with RII Sub's and parent's
conclusion that a particular facility does not meet one or more of
the three conditions in subsection (a) above, Seller may notify RII
Sub and Parent of its disagreement. In that event, the parties will
submit the issue to expedited, binding arbitration before a single
arbitrator, in accordance with the commercial arbitration rules and
procedures of the American Arbitration Association. If the
arbitrator concludes that the proposed facility does not meet any of
the three conditions listed in subsection (a) above, Seller will
have 45 days after receipt of the arbitrator's decision to identify
a replacement facility. The parties will follow the same procedure
set forth in this subsection (b) for review of the replacement
facility.
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By using the procedure outlined in this subsection (b), the parties will
reach agreement as to the eight facilities to which RII Sub's and Parent's
indemnification and defense obligations under this Section will apply.
(c) Except as provided in this Section 7.3, with respect to NODS
RII Sub and Parent do not assume any liability for off-site Environmental Claims
whether known or unknown, arising from Seller's operations on or before the
Closing Date.
(d) Subject to subsection (a) of this Section 7.3, Seller and
the Seller Owners, jointly and severally, will indemnify, defend, and hold
harmless RII Sub, Parent, and their respective officers, directors, successors
and assigns, from and against any and all off-site Environmental Claims arising
out of the operations of Seller on or before the Closing Date.
(e) RII Sub and Parent, jointly and severally, will indemnify,
defend, and hold harmless Seller and the Seller Owners from and against any and
all off-site Environmental Claims arising out of the operations of RII Sub or
Parent after the Closing Date.
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 TITLE INSURANCE. Prior to the Closing, Seller will obtain a title
insurance commitment, including obligations to issue endorsements as may be
required by RII Sub, with respect to the Owned Facilities, using a current North
Carolina standard form of American Land Title Association Owner's Title
Insurance Commitment issued by a title insurer satisfactory to RII Sub in the
amount specifically allocated by the parties on Schedule 3.3 to the Owned
Facilities, insuring title to the Owned Facilities to be in RII Sub as of the
Closing Date, subject only to such exceptions and exclusions as provided in this
Agreement or set forth on Schedule 8.1, or are acceptable to RII Sub and
insuring against all possible contractors', suppliers' and mechanics' lien
claims. 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. At the Closing, the costs and premium
for the owner's policy of title insurance shall be paid by Seller. RII Sub
shall pay the cost of any endorsements to the owner's policy of title insurance
which may be requested by it and the cost of the mortgagee's policy of title
insurance. When delivered, the title commitment shall be attached as Schedule
8.1.
8.2 SURVEY. Seller, at its expense, will deliver to RII Sub an updated
survey of the Owned Facilities, certified to RII Sub, any mortgagee of RII Sub,
and the title insurer issuing title insurance in the Transaction as provided in
Section 8.1, prepared by a licensed surveyor and conforming to Minimum Technical
Standards adopted by the North Carolina Society of Professional
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Surveyors, or equivalent professional body or licensing agency, 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.
8.3 MATERIAL ASSUMED CONTRACTS. Seller will use its best efforts obtain
the written consent to the assumption by RII Sub of each of the Material Assumed
Contracts listed on Schedule 1.28 which require such consent.
8.4 POWER OF ATTORNEY. The Seller Officers shall obtain a power of
attorney from each of the Seller Owners authorizing either of the Seller
Officers to execute this Agreement on behalf of each of the Seller Owners.
8.5 CONDUCT OF BUSINESS. Seller will not engage in any practice, take
any action, incur any Liabilities, dispose of any assets or enter into any
transaction outside the Ordinary Course of Business and shall conduct the
Business in the Ordinary Course and in such a manner so that the representations
and warranties contained herein shall continue to be true, correct and complete
on and as of the Closing Date.
8.6 PRESERVATION OF BUSINESS. Seller will keep the Business and the
Seller Assets substantially intact, including its present operations, physical
facilities and working conditions, and will use its best efforts to maintain
relationships with lessors, licensors, suppliers, customers, and employees.
Seller will provide to RII Sub a mailing list of all customers and a listing of
their accounts within ten business days (or the earliest possible date) prior to
the Closing Date to permit RII Sub to send announcements to the customers on or
after the Closing Date.
8.7 NOTICE OF EVENTS. Seller and the Seller Officers 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 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 Seller or
the Seller Officers 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, 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
or investigation by Recycling shall diminish or obviate any of the
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representations, warranties, covenants or agreements of Seller and the Seller
Officers under this Agreement.
(b) If this Agreement terminates: (1) RII Sub shall keep
confidential and shall not use in any manner any information or documents
obtained from Seller concerning the Business or the Seller Assets, unless
readily ascertainable from public or published information, or trade sources, or
subsequently developed by RII Sub independent of any investigation of the
Business, or received from a third party not under an obligation to Seller to
keep such information confidential, and (2) any documents obtained from Seller
shall be promptly returned to it.
8.9 NO NEGOTIATION BY SELLER OR THE SELLER OFFICERS. Between the date
hereof and the earlier of (1) the Closing Date; and (2) the date of termination
of this Agreement, neither the Seller Officers nor Seller 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 Prepared Inventory) of, or any
equity interest in, the Seller Assets or any exchange offer, merger,
consolidation, purchase of assets, liquidation, dissolution or similar
transaction involving the Seller 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 Seller Assets,
other than in the Ordinary Course of Business; or
(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.
Seller and the Seller Officers 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 SAFETY AUDITS. If requested by Recycling, Seller shall have safety
audits at each of its facility sites performed by a consulting firm mutually
acceptable to the parties to ensure compliance with OSHA and any other
applicable safety standards. All costs related to these audits shall be borne
by Recycling.
8.11 REMOVAL OF WASTE MATERIALS. Seller shall remove, at its cost, all
waste materials from the Owned Facilities and Business (E.G. trash, fluff) prior
to the Closing.
8.12 EMPLOYMENT AGREEMENTS. Parent and RII Sub shall use their
reasonable best efforts to enter into Employment Agreements with the Seller
Officers and certain employees of Seller, substantially in the form attached as
Exhibit E.
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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 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 Seller and the Seller
Officers 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. Seller and the Seller Officers
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. Seller and the Seller Officers 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, including early termination of the waiting period under the HSR
Act, shall have been obtained and all shall have been transferred to the name of
RII Sub to the extent such permits are transferrable.
9.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any Material Assumed Contracts that may be required in connection
with the performance by Seller of its obligations under this Agreement or the
continuance of such contracts or other agreements without material modification
after the Closing Date shall have been obtained.
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 such transactions, or that has or could reasonably be
expected to have, in the opinion of RII Sub or the Parent a materially adverse
effect on the Seller Assets or the Business.
9.5 REAL PROPERTY. Except as set forth on Schedules 2.1(a) and 8.1,
with respect to the Owned Facilities:
(a) RII Sub shall receive good and marketable title by general
warranty deed for the Owned Facilities in proper form for recording in the State
of North Carolina;
(b) The Owned Facilities shall be free and clear of any Security
Interest, easement, covenant, or other restriction, except for installments of
special assessments not yet
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delinquent and recorded easements, covenants, matters shown by the Survey
attached as Schedule 8.2 and other restrictions which do not impair the current
use or occupancy, or the marketability of title, of the property subject
thereto;
(c) There shall not be pending or threatened condemnation
proceedings, lawsuits, or administrative actions of any type relating to the
Owned Facilities, or other matters affecting adversely the current use, or
occupancy thereof, including unpaid tap fees, contemplated special assessments
or zoning changes;
(d) The legal description for the Owned Facilities contained in
the deed therefor shall describe the real property forming a part of the Owned
Facilities fully and adequately. The building and improvements located within
the boundary lines of the described parcel of land (1) shall not be in violation
of applicable setback requirements, zoning laws, and ordinances, (2) shall not
encroach on any easement which may burden the land, and described parcel of land
not serve any adjoining property for any purpose inconsistent with the use of
the land, and (3) shall not be located within any flood plain or be included in
any wetlands or be subject to any similar type restriction for which any permits
or licenses necessary to the use thereof shall have not been obtained; and
(e) The Owned Facilities shall abut and have direct vehicular
access to a public road, direct access to an operational railroad spur, or have
vehicular access to a public road via a permanent, irrevocable, appurtenant
easement benefitting the Owned Facilities.
9.6 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change in the Business or the Seller Assets taken as a whole, financial or
otherwise, or, to either Seller's or the Seller Officers' Knowledge, Seller's
customers, regardless of reason, including those changes that are as a result of
any legislative or regulatory change, revocation of any Permits, licenses or
rights to do business, failure to obtain any Permit at the normal time or in the
manner applied for by Seller, fire, explosion, accident, casualty, labor
trouble, flood, riot, storm, condemnation or act of God or otherwise, and Seller
shall have delivered to Recycling a certificate, dated the Closing Date, to such
effect.
9.7 TRANSFER DOCUMENTS. RII Sub shall have received assignments and
such other instruments of sale, transfer, conveyance and assignment transferring
all of the Seller Assets from Seller to RII Sub, each in proper legal form to
transfer the Seller assets under applicable law.
9.8 ACQUISITION OF UNITED METAL RECYCLERS. Parent or an entity
controlled by Parent shall have acquired or be simultaneously acquiring the
assets and business of United Metal Recyclers, a North Carolina general
partnership.
9.9 ENVIRONMENTAL ESCROW AGREEMENT. RII Sub shall have received from
Seller the Environmental Escrow Agreement in the form attached hereto as Exhibit
D.
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9.10 ASSIGNMENT OF CONTRACTS. Seller shall have delivered to RII Sub
written consents to the assignment or assumption of each of the Material Assumed
Contracts as provided by Section 8.3.
9.11 POWER OF ATTORNEY. The Seller Officers shall have delivered to RII
Sub the power of attorney executed by each of the Seller Owners as provided by
Section 8.4.
9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL PERFORMANCE AND APPROVAL.
Recycling shall be satisfied, in its sole discretion, with (a) the results of
its legal, accounting and financial due diligence investigation of Seller and
its operations, including, without limitation, the results of the Environmental
Studies and any Safety Audits, and (b) Seller'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 SUBSCRIPTION AGREEMENT. The Parent shall have received from Seller
the Subscription Agreement for the Stock Consideration in the form attached
hereto as Exhibit C.
9.14 NON-COMPETITION AGREEMENT. Recycling shall have received from
Seller, Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx, executed Non-Competition Agreements
in the form attached hereto as Exhibit F.
9.15 LEGAL OPINION. Recycling shall receive an opinion from counsel to
the Seller and the Seller Officers in the Form attached hereto as Exhibit G.
9.16 BOOKS AND RECORDS. RII Sub shall have received the books, books of
account, papers, records, correspondence and instruments of, or relating to, the
Seller Assets and/or Business including, but not limited to, the information set
forth in Section 4.4(a) above.
9.17 RESOLUTIONS. There shall have been delivered to RII Sub and the
Parent a copy of the resolutions duly adopted by the board of directors and
Owners of Seller, authorizing and approving the execution and delivery by Seller
of this Agreement, and the completion by Seller of the Transaction, certified by
the secretary of Seller, dated as of the Closing Date.
9.18 CERTIFICATES, ETC. OF SELLER OFFICERS AND SELLER. The Seller
Officers and Seller shall have delivered all certified resolutions,
certificates, documents or instruments with respect to Seller's authority and
such other matters as RII Sub's and the Parent's counsel may have reasonably
requested prior to the Closing Date.
9.19 PAYMENT OF SALES OR USE TAXES BY SELLER. Seller shall have paid all
sales, use or personal property taxes or other similar taxes payable as a result
of the completion of the Transaction.
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9.20 PAYMENT OF ACCOUNTS PAYABLE. Within 60 days of the Closing Date,
Seller shall have paid in full all of its outstanding accounts payable as of the
Closing Date, other than amounts which are the subject of a bona fide dispute
(the "Seller Payables").
9.21 APPROVAL OF COUNSEL TO RECYCLING. All actions and proceedings
hereunder and all documents or other papers required to be delivered by Seller
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 SELLER AND THE
SELLER OFFICERS TO CLOSE
The obligations of Seller and the Seller Officers 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 Seller and the Seller
Officers 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 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
performed and complied 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 Seller certificates, dated the Closing
Date, to such effect.
10.2 ACQUISITION OF UNITED METAL RECYCLERS. Parent or an entity
controlled by Parent shall have acquired or be simultaneously acquiring the
assets and business of United Metal Recyclers, a North Carolina general
partnership.
10.3 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transaction, including early termination of the waiting period under the HSR
Act, shall have been obtained.
10.4 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any Material Assumed Contracts that may be required in connection
with the performance by Seller of its obligations under this Agreement or the
continuance of such contracts or other agreements without material modification
after the Closing Date shall have been obtained.
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
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discovery order in connection with such Transactions, or that has or could
reasonably be expected to have, in the opinion of Seller, a materially adverse
effect on the assets, properties, businesses, operations or financial condition
of RII Sub or the Parent.
10.6 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change in the business or operations of RII Sub or Parent taken as a whole,
financial or otherwise, regardless of reason, including those changes that are
as a result of any legislative or regulatory change, and RII Sub and Parent
shall have delivered to Seller a certificate, dated the Closing Date, to such
effect.
10.7 RESOLUTIONS. There shall have been delivered to Seller a copy of
the resolutions duly adopted by the respective boards of directors of RII Sub
and Parent, authorizing and approving the execution and delivery by RII Sub and
Parent of this Agreement, and the completion by RII Sub and Parent of the
Transaction, certified by the secretary of RII Sub and Parent, dated as of the
Closing Date.
10.8 DESIGNATIONS OF STOCK CONSIDERATION. There shall have been
delivered to Seller and the Seller Officers a certified copy of the Certificates
of Designations, Rights and Preferences of the Parent Series F Preferred and the
parent Series G Preferred.
10.9 LEGAL OPINION. Seller shall receive an opinion from counsel to
Parent and RII Sub in the Form attached hereto as Exhibit H.
10.10 THE PURCHASE PRICE. RII Sub and the Parent shall have paid to
Seller the full Purchase Price for the Seller Assets and executed and delivered
all documents related thereto.
10.11 ENVIRONMENTAL ESCROW AGREEMENT. Seller and the Seller Officers
shall have received from RII Sub the Environmental Escrow Agreement in the form
attached hereto as Exhibit D.
10.12 APPROVAL OF COUNSEL TO SELLER AND THE SELLER OWNERS. 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 Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC, counsel to Seller and the
Seller Owners 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:
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11.1 TRANSFER DOCUMENTS. Seller shall deliver duly executed transfer
documents and/or instruments of assignment.
11.2 THE PURCHASE PRICE.
(a) RII Sub shall deliver to Seller the Cash Consideration; and
(b) Parent shall deliver to Seller the Stock Consideration.
11.3 SUBSCRIPTION AGREEMENT. Seller shall deliver to the Parent the
Subscription Agreement.
11.4 NON-COMPETITION AGREEMENTS. Seller, Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx shall deliver to RII Sub and the Parent their duly executed
Non-Competition Agreements.
11.5 ENVIRONMENTAL ESCROW AGREEMENT. Seller and the Seller Officers
shall deliver to RII Sub and RII Sub shall deliver to Seller and the Seller
Officers the Environmental Escrow Agreement, duly executed by the parties
thereto.
11.6 GENERAL WARRANTY DEED. Seller shall deliver a general warranty deed
for the Owned Facilities in proper form for recording in the State of North
Carolina.
11.7 CONTRACT ASSUMPTIONS. Seller shall deliver the written consents to
the assumption by RII Sub of the Material Assumed Contracts.
11.8 CLOSING CERTIFICATE OF SELLER. Seller shall deliver to RII Sub a
closing certificate dated the Closing Date, in a form satisfactory to RII Sub.
Such certificate shall be signed on behalf of Seller by an executive officer of
Seller.
11.9 CLOSING CERTIFICATE OF THE SELLER OFFICERS. The Seller Officers
shall deliver to RII Sub a closing certificate dated the Closing Date, in a form
satisfactory to RII Sub.
11.10 CLOSING CERTIFICATE OF PARENT AND RII SUB. Parent and RII Sub shall
deliver to Seller a closing certificate dated the Closing Date, in a form
satisfactory to Seller. Said certificate shall be signed on behalf of RII Sub
by an executive officer of RII Sub.
11.11 CERTIFICATE REGARDING RESOLUTIONS OF SELLER. Seller shall deliver
to Recycling copies of resolutions certified as required by Section 9.17.
11.12 CERTIFICATE REGARDING RESOLUTIONS OF RII SUB AND PARENT. RII Sub
and Parent shall deliver to Seller copies of resolutions certified as required
by Section 10.7.
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11.13 LEGAL OPINIONS. Counsel to the Parent and to Seller and the Seller
Owners shall deliver their respective legal opinions as required by Sections
9.15 and 10.9.
11.14 REAL PROPERTY CLOSING. As part of the Closing it is acknowledged
that a settlement statement shall be separately prepared relating to the Owned
Facilities, which settlement statement shall be prepared by the attorney for
Seller at least one business day prior to the Closing. Normal closing
adjustments shall be charged to the parties as follows:
(a) ADJUSTMENTS CHARGED TO SELLER. Seller shall be charged with
the following expenses, which shall be reflected on the closing statement and
shall be withheld from the Cash Consideration and be disbursed to the Person to
which each such expense is payable:
(1) Any amount necessary to satisfy and discharge of record any
lien or encumbrance that is not an Assumed Liability, including the cost of
recording or filing any necessary release or termination document;
(2) Any and all real property taxes due and payable, it being
agreed that all real property taxes and personal property taxes shall be
prorated as of the expiration of the day immediately preceding Closing;
(3) Any and all utility charges through the expiration of the
day immediately preceding Closing Date;
(4) The cost of the Survey;
(5) The cost of the title insurance policy for the Owned
Facilities; and
(6) Fees for documentary stamps due upon the recordation of the
deeds from Seller to RII Sub and the closing costs associated for the
Owned Facilities which shall be paid by the RII Sub and Seller in
accordance with local custom for commercial real estate transactions.
11.15 TITLES TO VEHICLES, MACHINERY AND EQUIPMENT. Seller shall deliver
to RII Sub duly executed titles to all vehicles, machinery and equipment
included in the Seller Assets free and clear of any Security Interests.
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 and continue until Recycling's independent public
accountants shall have completed their first audit of the RII Sub
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subsequent to the Closing (but in no event later than the 90th day after the
close of the first fiscal year of Parent following the Closing), except as
follows:
(a) the representations and warranties contained in Section 4.6,
which shall survive for a period of time which is equal to the statute of
limitations period applicable to the respective Tax liability being asserted;
and
(b) the representations and warranties with respect to on-site
liabilities contained in Section 4.29 and Section 7.2, which shall survive for
a period of four years after the Closing Date.
12.2 INDEMNITY AGREEMENTS OF SELLER AND THE SELLER OWNERS.
(a) Seller and the Seller Owners, 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 Seller or the
Seller Officers contained in this Agreement;
(2) any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of Seller or the Seller Officers contained in
any other agreement, certificate or other instrument furnished or to be
furnished to RII Sub or the Parent by Seller or the Seller Officers
pursuant to Article 11 of this Agreement;
(3) 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
Seller or the Seller Owners relating to the Business through the Closing
Date which are not paid by either Seller or the Seller Owners and which RII
Sub or the Parent pays;
(4) any and all negligence claims arising out of occurrences and
events prior to the Closing Date, except for environmental matters as
provided in Sections 7.2 and 7.3;
(5) any and all product liability and warranty claims for
products manufactured, fabricated (in whole or in part) or sold prior to
the Closing Date;
(6) for Environmental Claims limited to the extent provided in
Sections 7.2 and 7.3;
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(7) the failure of Seller to comply with the bulk sales or bulk
transfer law of the State of North Carolina;
(8) any liability of Seller not assumed by RII Sub;
(9) 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 prior to the Closing
Date unless subsequently modified by RII Sub in a manner which renders the
product to be infringing, to the extent that RII Sub and Parent are not
otherwise entitled to indemnification from another party;
(10) any liabilities to employees of the Business terminated in
accordance herewith and any future related actions; and
(11) reasonable fees and disbursements of counsel incident to any
of the foregoing.
(b) Notwithstanding the foregoing, Seller and the Seller Owners
shall not be required to indemnify RII Sub and Parent until the amount of
indemnification for any individual matter equals or exceeds $15,000 and the
aggregate amount of indemnification for all matters equals or exceeds $100,000,
at which xxxx Xxxxxx and the Seller Owners shall indemnify and reimburse RII Sub
and the Parent for all such amounts incurred for each matter in excess of
$15,000, up to an aggregate liability for all such claims of $3,500,000,
PROVIDED, HOWEVER, that the foregoing limitations shall not apply to any
Environmental Claims pursuant to Sections 7.2 and 7.3, claims arising out of the
Pension Plan as provided in Section 14.3, any obligation of Seller and Seller
Owners under Section 14.21, the reassignment of any Seller Receivables as
provided in Section 14.2, or the failure of Seller to comply with the bulk sales
or bulk transfer law of the State of North Carolina.
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 Seller and the Seller Owners from and against:
(a) any and all claims, demands, penalties, fines, liabilities,
obligations, losses, settlements, damages, costs and expenses pertaining to the
Seller 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 other
agreement, certificate
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or other instrument furnished or to be furnished to Seller by RII Sub or
the Parent pursuant to Article 11 of this Agreement;
(3) any liability of Seller arising out of the Assumed
Contracts, unless such liability is due to the actions of Seller, or other
action, events and occurrences prior to the Closing Date;
(4) for Environmental Claims limited to the extent provided in
Sections 7.2 and 7.3;
(5) any liability for tort claims which are the result of
actions, events, occurrences or the operation of the business by RII Sub on
or after the Closing Date; and
(6) reasonable fees and disbursement of counsel incident to any
of the foregoing.
(b) Notwithstanding the foregoing, RII Sub and Parent shall not
be required to indemnify Seller and the Seller Owners until the amount of
indemnification for any individual matter equals or exceeds $15,000 and the
aggregate amount of indemnification for all matters equals or exceeds $100,000,
at which time RII Sub and Parent shall indemnify and reimburse Seller and the
Seller Owners for all such amounts incurred for each matter in excess of
$15,000, up to an aggregate liability for all such claims of $3,500,000,
PROVIDED, HOWEVER, that the foregoing limitations shall not apply to any
Environmental Claims pursuant to Sections 7.2 and 7.3, to any claims for breach
of the Assumed Contracts, any failure by RII Sub to pay the deferred
compensation amount assumed pursuant to Section 2.5, or the failure of RII Sub
or Parent to deliver the Purchase Price as and when required herein.
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 seeking
indemnification but acceptable to the party obligated to indemnify.
(2) 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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seeking indemnification to assume the defense of such claim at any time
prior to settlement, compromise or final determination thereof.
(3) If the claim for which indemnification is being sought is
the result of a breach of this Agreement by the party obligated to
indemnify, such party shall have a period of 45 days to cure such breach.
If the obligated party does not cure the breach within 45 days, the party
seeking indemnification may proceed with all remedies available under this
agreement.
(b) PAYMENT OF SUMS DUE. After any final 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 after such 30 day
period, ten days prior to the date each such sums are due.
12.5 LIMIT ON OBLIGATIONS. In no event shall either party have any
indemnification obligation under this Section 12 unless the party from whom
indemnification is sought receives a notice of a claim for indemnification
within the survival period described in Section 12.1.
12.6 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.
12.7 FEES AND EXPENSES. Notwithstanding any other provision in this
Article 12, in the event of any dispute or controversy between any of the
parties to this Agreement, each party shall pay its own legal fees and
out-of-pocket costs incurred by such party in enforcing or defending its rights
hereunder.
12.8 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 defense, all at the sole cost and
expense of the contesting
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or defending party, unless the contesting or defending party is entitled to
indemnification therefor under this Article 12, exclusive of per diem or hourly
rates of any personnel of the other party.
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 if Seller or the Seller Officers has breached any material
representation or warranty, or failed to perform any covenant or agreement
contained in this Agreement PROVIDED, HOWEVER, Seller and the Seller
Officers shall have, at the election of Seller and the Seller Officers, at
least 15 days' notice to cure any such breach and the Closing Date shall be
extended by each day of such cure period;
(2) within 15 days after the receipt of the Environmental
Studies as provided in Section 7.1;
(3) RII Sub and Parent are unable to satisfy themselves that any
Adverse Item will not have a material adverse effect on the operations of
the Business; or
(4) Prior to the Closing, RII Sub and the Parent are unable to
complete due diligence in a manner satisfactory to a company obligated to
file reports under the 1934 Act or if they discover discrepancies in the
books and records of Seller or any other matters unacceptable to them, in
their sole discretion.
(b) At the election of Seller or the Seller Officers at any time
prior to Closing if:
(1) any one or more of the material conditions precedent to the
obligation of Seller to close has not been fulfilled as of the Closing
Date;
(2) Seller is unable to obtain any required consent to the
assignment of any of the Material Assumed Contracts and such failure would
constitute a breach of the Material Assumed Contract;
(3) RII Sub or the Parent has breached any material
representation or warranty, or failed to perform any covenant or agreement
contained in this Agreement;
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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; or
(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 January 1, 1998 unless extended pursuant
to Section 3.4, at the election of any party so long as such party is not in
default under the terms of this Agreement.
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, except for
the provisions of Sections 8.8(b) and 14.4, 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
Seller's employees or customers) of this Agreement, the Acquisition, the
Purchase Price or the other terms and conditions of the Transaction without the
prior 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 described in this Agreement under Section 7.1 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 Seller.
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14.2 REASSIGNMENT OF SELLER RECEIVABLES. For 180 days following the
Closing Date, RII Sub shall have the right to reassign to Seller any or all of
the Scrap Receivables which have not been collected within 90 days of the
Closing, as provided in Section 4.13. Prior to the reassignment of any Seller
Receivable, RII Sub agrees to use commercially reasonable efforts to collect any
past due amount, but shall not be required to engage a collection agent or
commence arbitration or litigation to collect. Within 15 days after any
reassignment of any Seller Receivables, to the extent not paid Seller and/or the
Seller Officers shall reimburse RII Sub dollar-for-dollar for the Seller
Receivables so reassigned with such payment being made in immediately available
funds.
14.3 TERMINATION OF PENSION PLAN. Seller shall discharge its obligations
under the Pension Plan, whether arising before, on or after the Closing Date,
and terminate the Pension Plan within 120 days after Closing. Seller and the
Seller Officers represent and warrant to RII Sub and Parent that the accrual of
benefits under such plan has been frozen. Seller and the Seller Owners shall
indemnify and hold harmless RII Sub and Parent against any and all claims and
liabilities of any nature arising out of the Pension Plan. At all times after
the Closing, Buyer and Parent shall
(a) cooperate with Seller regarding the handling of such
obligations of Seller and to make all books, records and documents relating to
such claims in their possession available to Seller, or its representatives,
upon request, for inspection and copying, and
(b) with reasonable promptness, provide Seller with copies of
any correspondence or documents that RII Sub or Parent receives regarding
the Pension Plan.
14.4 CONTINUATION OF MEDICAL BENEFITS. RII Sub agrees to continue the
medical benefits for the retired employees of Seller listed on Schedule 4.21(e),
on the same terms as such benefits have been provided by Seller, until each such
employee reaches age 65 and for the disabled employee listed on Schedule 4.21(e)
until the earlier of (i) one year after the Closing Date or (ii) the date the
disabled employee becomes eligible for Social Security retirement benefits.
14.5 EXPENSES. 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.
14.6 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.
14.7 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
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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 Winston-Salem, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
telephone: (000) 000-0000
facsimile: (000) 000-0000
WITH A COPY TO:
Xxxx X. Xxxxxxx, 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 SELLER OR THE SELLER OFFICERS:
Xxxxxxx Xxxxxxx, President
Xxxxxxx Companies, Inc.
Xxxxxxx Iron & Metal Co.
Xxxxxxx Steel
0000 Xxxxx Xxxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
telephone: (000) 000-0000
facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxxx X. Xxxxx XX
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
telephone: (000) 000-0000
facsimile: (000) 000-0000
Any party may change its address by giving notice to every other party.
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14.8 FURTHER ASSURANCES. From and after the date of this Agreement, each
of the parties hereto will cooperate with each other and will use its or his
best efforts to obtain all necessary waivers and consents from third parties.
Seller and the Seller Officers, 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 Seller Assets to RII Sub.
14.9 RETENTION OF/ACCESS TO BUSINESS RECORDS. For at least three years
following the Closing Date, RII Sub shall retain all business records related to
the Seller Assets or the Business. Following such three-year retention period,
and until six years following the Closing Date, records shall be destroyed in
accordance with the policies mutually agreed upon by Seller or the Seller
Officers and RII Sub. Following such six-year period, such records shall be
destroyed in accordance with the policies of RII Sub. During the six-year
period following the Closing Date, upon reasonable request by Seller or the
Seller Officers from time to time, and without further consideration, RII Sub
shall provide Seller or the Seller Officers access to or copies of said business
records which have not been previously destroyed.
14.10 AUDIT BY RII SUB AND PARENT. For a period of five years after the
Closing, Seller and the Seller Officers 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.
14.11 ENTIRE AGREEMENT. This Agreement, including all Schedules and
Exhibits hereto, and the other Closing 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.
14.12 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 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. The parties intend that
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.
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14.13 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.
14.14 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.
14.15 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of North Carolina, without regard to principles of conflicts
or choice of law.
14.16 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 State of North Carolina
located in Winston-Salem, North Carolina, the courts of the United States of
America for the District of North Carolina, 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 mail), postage prepaid, to
the party against whom the action or proceeding is brought at its address set
forth in Section 14.7.
14.17 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.
14.18 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.
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14.19 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.
14.20 CORPORATE AUTHORITY. The undersigned have executed this Agreement
with all requisite corporate authority.
14.21 ADOPTION OF SELLER'S 401(k) PLAN. RII Sub agrees to adopt and
continue to maintain Seller's 401(k) Plan until the earlier of (i) the adoption
of a new plan by RII Sub or Parent, or (ii) December 31, 1998. Seller and
Seller Owners agree to indemnify Parent and RII Sub for any costs, taxes,
liabilities or penalties Parent and RII Sub incur as a result of RII Sub
adopting Seller's 401(k) retirement plan, to the extent that such costs, taxes,
liabilities or penalties are attributable to the operation or documentation of
Seller's 401(k) retirement plan prior to the Closing Date. Seller or the Seller
Owners will reimburse RII Sub for the amount of any "top-heavy minimum
contribution" RII Sub may be required to make to Seller's 401(k) retirement plan
for the 1997 plan year, including any resulting penalties.
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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 WINSTON-SALEM, INC.
Dated December 4, 1997 By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------------
Xxxxxx X. Xxxxx, Chairman and Chief Executive
Officer
"PARENT"
RECYCLING INDUSTRIES, INC.
Dated December 4, 1997 By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------------
Xxxxxx X. Xxxxx, Chairman and Chief Executive
Officer
"SELLER"
XXXXXXX COMPANIES, INC.
Dated December 4, 1997 By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------------------
PRESIDENT
---------------------------------------------------
"FB"
Dated December 4, 1997 /s/ Xxxxx Xxxxxxx
---------------------------------------------------
Xxxxx Xxxxxxx
"MB"
Dated December 4, 1997 /s/ Xxxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxxx Xxxxxxx
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"Seller Owners," with respect to their indemnification
obligations under Sections 7.2, 7.3, 12.2 and 14.3
Dated December 4, 1997 By: /s/ Xxxxxxx Xxxxxxx as Attorney-in-Fact
---------------------------------------------------
Xxxxxxx Xxxxxxx, as Attorney-in-Fact
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LIST OF EXHIBITS
Exhibit A Certificate of Designations, Rights and
Preferences of the Series F 6 1/2% Redeemable
Convertible Preferred Stock of Recycling
Industries, Inc.
Exhibit B Certificate of Designations, Rights and
Preferences of the Series G 6 1/2% Redeemable
Convertible Preferred Stock of Recycling
Industries, Inc.
Exhibit C Form of Subscription Agreement
Exhibit D Environmental Escrow Agreement
Exhibit F Non-Competition Agreement
Exhibit G Form of Legal Opinion from Counsel for
Seller, the Seller Officers and the Seller
Owners
Exhibit H Form of Legal Opinion from Counsel for RII
Sub and Parent
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LIST OF SCHEDULES
Schedule 1.28 Material Assumed Contracts
Schedule 2.1(a) Owned Facilities - Legal Description
Schedule 2.1(d) Equipment
Schedule 2.1(e) Intellectual Property
Schedule 2.1(i) Computer Software
Schedule 2.2 Excluded Assets
Schedule 2.5 Deferred Compensation
Schedule 3.2 Inventory Valuation
Schedule 3.3 Allocation of Purchase Price
Schedule 4.1(b) Jurisdictions of Seller
Schedule 4.5 Seller Owners
Schedule 4.6(c) Tax Matters
Schedule 4.7 Legal Compliance
Schedule 4.8 Permits
Schedule 4.9 Litigation
Schedule 4.12(a) Other Contracts and Agreements
Schedule 4.20 Suppliers and Customers
Schedule 4.21 Employee Benefit Plans
Schedule 4.21(e) Post-Retirement Benefits
Schedule 4.24 Insurance Policies
Schedule 4.26 Relationships
Schedule 4.28 Employee Information
Schedule 4.29 Environmental Matters
Schedule 7.1 Environmental Studies
Schedule 8.1 Title Commitment
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