Exhibit 2.4
ASSET PURCHASE AGREEMENT
BY AND AMONG
RECYCLING INDUSTRIES OF SUFFOLK, INC.
a Colorado corporation
AND
RECYCLING INDUSTRIES, INC.
a Colorado corporation
AND
PEANUT CITY IRON & METAL COMPANY, INC.
a Virginia corporation
AND
XXXXXX X. XXXXXXXX
AND
XXXX XXXXXXXX
AND
XXXXX XXXXXXXX
AND
XXXXX XXXXXXXXX
AND
XXXXXX XXXX
May 27, 1998
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
ARTICLE 2 ACQUISITION OF PEANUT CITY ASSETS. . . . . . . . . . . . . . . . . . . .-6-
2.1 PURCHASE AND SALE OF THE PEANUT CITY ASSETS . . . . . . . . . . . . . . .-6-
2.2 EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-8-
2.3 ASSUMED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .-8-
2.4 ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . .-8-
2.5 COLLECTION OF ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . .-9-
ARTICLE 3 PURCHASE PRICE AND CLOSING . . . . . . . . . . . . . . . . . . . . . . .-9-
3.1 PURCHASE PRICE FOR PEANUT CITY ASSETS . . . . . . . . . . . . . . . . . .-9-
3.2 VALUATION OF INVENTORY AND ACCOUNTS RECEIVABLE. . . . . . . . . . . . . .-9-
3.3 ADJUSTMENT OF THE PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . -10-
3.4 ALLOCATION OF THE PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . -10-
3.5 CLOSING OF THE PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . -10-
ARTICLE 4 REPRESENTATIONS OF PEANUT CITY AND SHAREHOLDERS. . . . . . . . . . . . -11-
4.1 DUE ORGANIZATION AND QUALIFICATION. . . . . . . . . . . . . . . . . . . -11-
4.2 TITLE TO PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
4.3 AUTHORITY OF PEANUT CITY; CONSENTS. . . . . . . . . . . . . . . . . . . -11-
4.4 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . -12-
4.5 NO TAX LIENS; NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . -13-
4.6 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . -14-
4.7 PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
4.8 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
4.9 CONTRACTS AND OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . -14-
4.10 NOTES AND ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . -15-
4.11 TANGIBLE PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
4.12 INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
4.13 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . -15-
4.14 REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
4.15 LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
4.16 SUPPLIERS AND CUSTOMERS. . . . . . . . . . . . . . . . . . . . . . . . -17-
4.17 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . -17-
4.18 CURTAILMENT OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . -18-
4.19 EMPLOYEE RELATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
4.20 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
4.21 RELATIONSHIPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
4.22 NO MATERIAL CHANGES PRIOR TO CLOSING DATE. . . . . . . . . . . . . . . -18-
4.23 BROKER'S OR FINDER'S FEES. . . . . . . . . . . . . . . . . . . . . . . -18-
4.24 EMPLOYEE TRANSITION. . . . . . . . . . . . . . . . . . . . . . . . . . -19-
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4.25 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.26 COMPLIANCE WITH ADA. . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.27 XXXX-XXXXX-XXXXXX ACT. . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.28 DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.29 BEST EFFORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
ARTICLE 5 REPRESENTATIONS OF RECYCLING . . . . . . . . . . . . . . . . . . . . . -20-
5.1 DUE INCORPORATION AND QUALIFICATION OF RII SUB. . . . . . . . . . . . . -20-
5.2 DUE INCORPORATION AND QUALIFICATION OF THE PARENT . . . . . . . . . . . -20-
5.3 ARTICLES OF INCORPORATION AND BYLAWS. . . . . . . . . . . . . . . . . . -20-
5.4 AUTHORITY OF RII SUB AND THE PARENT . . . . . . . . . . . . . . . . . . -20-
5.5 STOCK CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
5.6 BROKER'S OR FINDER'S FEES . . . . . . . . . . . . . . . . . . . . . . . -21-
5.7 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
5.8 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE 6 REPRESENTATIONS OF THE PARENT RELATED TO THE STOCK CONSIDERATION . . . -22-
6.1 STATUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
6.2 1934 ACT REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . -22-
6.3 PUBLIC REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE 7 REGULATORY COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.1 BULK SALES COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.2 COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
7.3 OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
ARTICLE 8 COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING . . . . . . . . . . . . -23-
8.1 ENVIRONMENTAL STUDIES . . . . . . . . . . . . . . . . . . . . . . . . . -24-
8.2 TITLE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
8.3 SURVEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
8.4 ASSUMED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.5 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.6 PRESERVATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . -25-
8.7 NOTICE OF EVENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
8.8 EXAMINATIONS AND INVESTIGATIONS . . . . . . . . . . . . . . . . . . . . -26-
8.9 NO NEGOTIATION BY PEANUT CITY OR THE SHAREHOLDERS . . . . . . . . . . . -26-
8.10 REMOVAL OF WASTE MATERIALS . . . . . . . . . . . . . . . . . . . . . . -27-
8.11 SAFETY AUDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
ARTICLE 9 CONDITIONS PRECEDENT TO THE OBLIGATION
OF RECYCLING TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
9.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. . . . . . . . . . . . -27-
9.2 GOVERNMENTAL PERMITS AND APPROVALS. . . . . . . . . . . . . . . . . . . -28-
9.3 THIRD PARTY CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . -28-
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9.4 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
9.5 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
9.6 NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . . -28-
9.7 SUBSCRIPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . -28-
9.8 TRANSFER DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
9.9 LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
9.10 ENVIRONMENTAL ESCROW AGREEMENT . . . . . . . . . . . . . . . . . . . . -29-
9.11 ASSIGNMENT OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . -29-
9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL PERFORMANCE AND
APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
9.13 CERTIFICATES, ETC. OF SHAREHOLDERS AND PEANUT CITY . . . . . . . . . . -29-
9.14 PAYMENT OF SALES OR USE TAXES BY PEANUT CITY . . . . . . . . . . . . . -29-
9.15 APPROVAL OF COUNSEL TO RECYCLING . . . . . . . . . . . . . . . . . . . -29-
ARTICLE 10 CONDITIONS PRECEDENT TO THE OBLIGATION OF PEANUT CITY
AND SHAREHOLDERS TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
10.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS . . . . . . . . . . . -30-
10.2 GOVERNMENTAL PERMITS AND APPROVALS . . . . . . . . . . . . . . . . . . -30-
10.3 THIRD PARTY CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . -30-
10.4 NO MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . -30-
10.5 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
10.6 SATISFACTION WITH DUE DILIGENCE. . . . . . . . . . . . . . . . . . . . -30-
10.7 DESIGNATION OF STOCK CONSIDERATION . . . . . . . . . . . . . . . . . . -30-
10.8 LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
10.9 THE PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
10.10 ASSUMPTION OF ASSUMED CONTRACTS . . . . . . . . . . . . . . . . . . . -31-
10.11 ENVIRONMENTAL ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . . -31-
10.12 APPROVAL OF COUNSEL TO PEANUT CITY AND THE SHAREHOLDERS . . . . . . . -31-
ARTICLE 11 ACTIONS TO BE TAKEN AT THE CLOSING. . . . . . . . . . . . . . . . . . -31-
11.1 TRANSFER DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
11.2 ASSIGNMENT AND ASSUMPTION AGREEMENT. . . . . . . . . . . . . . . . . . -31-
11.3 THE PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
11.4 SUBSCRIPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . -31-
11.5 NON-COMPETITION AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . -31-
11.6 EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . -31-
11.7 ENVIRONMENTAL ESCROW AGREEMENT . . . . . . . . . . . . . . . . . . . . -32-
11.8 CLOSING ON REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . -32-
11.9 CERTIFICATES OF PEANUT CITY. . . . . . . . . . . . . . . . . . . . . . -32-
11.10 CERTIFICATE OF THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . -32-
11.11 CERTIFICATE OF RECYCLING. . . . . . . . . . . . . . . . . . . . . . . -32-
11.12 LEGAL OPINION DELIVERED TO RECYCLING. . . . . . . . . . . . . . . . . -32-
11.13 LEGAL OPINION DELIVERED TO PEANUT CITY AND THE SHAREHOLDERS . . . . . -32-
11.14 TITLES TO VEHICLES. . . . . . . . . . . . . . . . . . . . . . . . . . -33-
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ARTICLE 12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION . . . . . -33-
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . -33-
12.2 INDEMNITY AGREEMENTS OF PEANUT CITY AND THE SHAREHOLDERS . . . . . . . -33-
12.3 INDEMNITY AGREEMENT OF RII SUB AND THE PARENT. . . . . . . . . . . . . -35-
12.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS . . . . . . . . . . . -37-
12.5 GOOD FAITH EFFORTS TO SETTLE DISPUTES. . . . . . . . . . . . . . . . . -38-
12.6 FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
12.7 LITIGATION SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
12.8 INDEMNIFICATION OBLIGATIONS DEDUCTIBLE . . . . . . . . . . . . . . . . -38-
12.9 ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
12.10 EXCLUSIVE REMEDY. . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
ARTICLE 13 TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . -39-
13.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
13.2 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
ARTICLE 14 CERTAIN ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . -40-
14.1 PUBLIC STATEMENTS; CONFIDENTIALITY OF INFORMATION. . . . . . . . . . . -40-
14.2 REASSIGNMENT OF PEANUT CITY RECEIVABLES. . . . . . . . . . . . . . . . -40-
14.3 EXPENSES; SALES TAX. . . . . . . . . . . . . . . . . . . . . . . . . . -41-
14.4 WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . -41-
14.5 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
14.6 PEANUT CITY 401(K) PLAN; PEANUT CITY HEALTH INSURANCE COVERAGE . . . . -43-
14.7 CONVERSION OF THE PARENT SERIES J PREFERRED STOCK AND ARRANGED
SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
14.8 COVENANT TO PAY ALL UNASSUMED DEBTS. . . . . . . . . . . . . . . . . . -44-
14.9 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
14.10 RETENTION OF/ACCESS TO BUSINESS RECORDS . . . . . . . . . . . . . . . -45-
14.11 AUDIT BY RII SUB AND PARENT . . . . . . . . . . . . . . . . . . . . . -45-
14.12 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . -45-
14.13 CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -45-
14.14 RIGHTS OF THIRD PARTIES . . . . . . . . . . . . . . . . . . . . . . . -46-
14.15 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
14.16 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
14.17 SUBMISSION TO JURISDICTION; WAIVERS . . . . . . . . . . . . . . . . . -46-
14.18 PARTIES IN INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . -47-
14.19 COUNTERPARTS AND FACSIMILE SIGNATURES . . . . . . . . . . . . . . . . -47-
14.20 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
14.21 CORPORATE AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . -47-
LIST OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
LIST OF SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 27th day of May, 1998, by and among
RECYCLING INDUSTRIES OF SUFFOLK, INC., a Colorado corporation ("RII Sub"),
RECYCLING INDUSTRIES, INC., a Colorado corporation ("Parent"), PEANUT CITY IRON
& METAL COMPANY, INC., a Virginia corporation ("Peanut City"), XXXXXX X.
XXXXXXXX, President and an individual shareholder of Peanut City ("Xxxxxxxx"),
XXXX XXXXXXXX an individual and shareholder of Peanut City ("FJ"), and XXXXX
XXXXXXXX, an individual and shareholder of Peanut City ("EJ"), XXXXXXX
XXXXXXXXX, an individual shareholder of Peanut City ("KW"), and XXXXXX XXXX, an
individual and shareholder of Peanut City ("SB"). Throughout this Agreement,
RII Sub and the Parent may be collectively referred to as "Recycling;" and
Xxxxxxxx, the FJ Trust, EJ, KW and SB may be collectively referred to as the
"Shareholders." There are numerous other defined terms which are capitalized in
this Agreement, all of which are defined in the substantive provisions of this
Agreement or in Article 1.
WITNESSETH:
WHEREAS, RII Sub is a wholly-owned subsidiary of the Parent;
WHEREAS, RII Sub desires to acquire certain assets of Peanut City
consisting of substantially all of the tangible and intangible assets used in
the ferrous and non-ferrous metals recycling business conducted by Peanut City
at its facility located in Suffolk, Virginia, and those certain administrative
office and other assets, as hereinafter identified, used in connection with the
operation of Peanut City's facility (collectively the "Peanut City Assets");
WHEREAS, Peanut City desires to sell the Peanut City Assets;
WHEREAS, the Parent has a vested interest in the transactions referred to
herein and is a party to this Agreement, amongst other things, in order to
tender the Consideration Stock referred to herein; and
WHEREAS, the Shareholders have a vested interest in the transactions
referred to herein and are parties to this Agreement in order to make certain
representations and warranties and to accept certain obligations set forth
herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise defined in the substantive provisions of this
Agreement, the following terms will have the meanings ascribed to them in
this Article 1.
1.1 "Acquisition" means the acquisition of the Peanut City Assets
from Peanut City.
1.2 "Assumed Contracts" means those contracts, leases and other
agreements to which Peanut City 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 Peanut City.
SCHEDULE 1.2 lists all Assumed Contracts other than (a) contracts which do
not require payment by Peanut City 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 Peanut City 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 Peanut City of $20,000 or
more per year (collectively the "Material Assumed Contracts").
1.3 "Assumed Liabilities" means the Liabilities of Peanut City under
the Assumed Contracts and such other Liabilities as are expressly assumed by
RII Sub hereunder.
1.4 "Business" means the metals recycling business and business
operations as historically conducted by Peanut City as a going concern.
1.5 "Closing" has the meaning set forth in Section 3.5.
1.6 "Closing Date" has the meaning set forth in Section 3.5.
1.7 "Employee Benefit Plan" means any: (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan; (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan; or (d) Employee Welfare Benefit Plan or material fringe benefit plan or
program.
1.8 "Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
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1.9 "Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
1.10 "Environmental Claims" has the meaning set forth in Section
12.2(b).
1.11 "Environmental Law or Laws" means any and all federal, state,
local or municipal laws, common laws, rules, orders, regulations, statutes,
treaties, ordinances, codes, decrees, or requirements of any governmental
authority regulating, relating to or imposing liability or standards of
conduct concerning environmental protection, health or safety matters,
including all requirements pertaining to reporting, licensing, permitting,
investigation, removal or remediation of emissions, discharges, releases, or
threatened releases of Hazardous Materials, chemical substances, pollutants
or contaminants or relating to the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials, chemical substances, pollutants or contaminants,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Toxic Substance
Control Act ("TSCA"), the Resource Conservation and Recovery Act ("RCRA"),
the Clean Air Act ("CAA"), the Clean Water Act ("CWA"), the Endangered
Species Act ("ESA"), the Federal Insecticide, Fungicide, Rodenticide Act
("FIFRA") and the Occupational Safety and Health Act of 1970 ("OSHA"), all as
may have been amended.
1.12 "Environmental Liabilities" means any and all liabilities for the
violation of, or required remediation under, any Environmental Laws.
1.13 "ERISA" means Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.14 "Excluded Assets" has the meaning set forth in Section 2.2.
1.15 "GAAP" means generally accepted accounting principles
consistently applied in the United States.
1.16 "Hazardous Materials" means any substance (a) the presence of
which is at, on, over, beneath, in or upon any real or personal property,
building, structure, container of any nature or description, subsurface
strata, ambient air or ambient water (including surface and groundwater) and
requires investigation, removal or remediation under any Environmental Law
or common law, (b) which is defined as a "hazardous substance," "hazardous
material," "hazardous waste," "pollutant" or "contaminant" under any
Environmental Law, (c) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and
is regulated by any governmental authority under any Environmental Law, (d)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and the presence of which
causes or threatens to cause a nuisance or trespass
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upon real property or to the adjacent properties or poses a hazard to the
environment, and/or to the health or safety of persons on or about any real
property, and/or (e) which contains urea-formaldehyde, polychlorinated
biphenyls, asbestos or asbestos containing materials, radon, petroleum and
petroleum products.
1.17 "Inventory Date" shall have the meaning set forth in Section 4.12.
1.18 "IRC" means the Internal Revenue Code of 1986, as amended.
1.19 "Knowledge" means actual knowledge without independent
investigation with respect to the Shareholders, and with respect to Recycling
and Peanut City, actual knowledge without independent investigation of their
respective officers and directors.
1.20 "Lender" means Recycling's primary lender or equity participant
relating to the Transaction.
1.21 "Liability or Liabilities" means direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility,
known or unknown, asserted or unasserted, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or
otherwise which affects or could reasonably be expected to affect the Peanut
City Assets or the Business, including any liability for Taxes.
1.22 "Market Price" when referring to the Parent Common Stock, means
the closing price for the Parent Common Stock if it is listed on a national
securities exchange or the Nasdaq National Market System or the average of
the last reported bid and asked prices for the Parent Common Stock as
reported on the Nasdaq system or on the electronic bulletin board or, if
none, the National Quotation Bureau, Inc.'s "Pink Sheets" or, if such
quotations are unavailable, the value determined by the Parent's Board of
Directors in accordance with its discretion in making a bona fide, good faith
determination of fair market value.
1.23 "Material Adverse Effect" means a material adverse effect on the
business, assets or financial condition of Peanut City or Recycling, as
applicable.
1.24 "Peanut City Offices" means the administrative offices of Peanut
City located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
1.25 "Peanut City Receivables" has the meaning set forth in Section
2.5.
1.26 "Ordinary Course of Business" or "Ordinary Course" means the
ordinary course of business consistent with past custom and practice of
Peanut City (including with respect to quantity and frequency).
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1.27 "Owned Facilities" means the real property and associated
fixtures owned by Peanut City as specifically described on SCHEDULE 2.1(a).
1.28 "Parent Common Stock" means the common stock, $.001 par value per
share, of Recycling Industries, Inc., a Colorado corporation.
1.29 "Parent Series J Preferred Stock" means the Convertible Preferred
Stock of Parent described in the Designation of Series J Redeemable
Convertible Preferred Stock attached hereto as EXHIBIT A.
1.30 "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.
1.31 "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.
1.32 "Prepared Inventory" means all ferrous and non-ferrous Inventory
that has been processed by Peanut City as of the Closing Date and is ready
for shipment to Peanut City's customers.
1.33 "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.
1.34 "Tangible Property" shall include the property described in
Sections 2.1(a), 2.1(b), 2.1(e), 2.1(f), 2.1(g), 2.1(h) and 2.1(i).
1.35 "Tax" means any federal, state, local or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, alternative minimum,
estimated, net worth, self-employment, Medicaid, or any other tax, including
any interest, penalty or addition thereto, whether disputed or not.
1.36 "Transaction" means the transactions contemplated by this
Agreement and the other Transaction Documents.
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1.37 "Transaction Documents" means, collectively, (I) this Agreement,
(ii) any Schedule or Exhibit to this Agreement, and (iii) any certificate or
other document delivered at Closing.
1.38 "Unprepared Inventory" means: (I) all scrap ferrous metal
comprised of obsolete, discarded or abandoned machinery, appliances,
equipment, automobiles, metal manufacturing, casting and fabricating waste
materials or other consumer and industrial steel goods or by-products to be
processed by Peanut City for resale; and (ii) scrap non-ferrous metal
comprised of non-magnetic alloys of copper, brass, aluminum, stainless steel,
zinc die-cast, insulated wire (aluminum and copper) and other related metals
to be processed by Peanut City for resale. Unprepared Inventory does not
include any non-saleable ferrous or non-ferrous materials resulting from
Peanut City's operations or contained within dirt or other non-processable
medium within the Owned Facility.
1.39 "1933 Act" means the Securities Act of 1933, as amended.
1.40 "1934 Act" means the Securities Exchange Act of 1934, as amended.
ARTICLE 2
ACQUISITION OF PEANUT CITY ASSETS
2.1 PURCHASE AND SALE OF THE PEANUT CITY ASSETS. At the Closing and
subject to the terms and conditions stated herein, Peanut City agrees to
sell, assign, convey and transfer to RII Sub, and RII Sub agrees to purchase
from Peanut City, the Peanut City Assets together with all of the properties,
rights and goodwill associated therewith of every kind and description,
tangible and intangible, personal or mixed, as hereinafter more particularly
described, with the exception of the Excluded Assets, as hereinafter defined.
Without limitation, the Peanut City Assets shall include all of the items
enumerated in subparagraphs (a) through (m) below:
(a) The Owned Facilities, including all buildings situated
thereon and all leasehold improvements and all rights in easements, driveways
and signs, as legally described on SCHEDULE 2.1(a).
(b) All vehicles, machinery and equipment, tools, furniture,
leasehold improvements, fixtures, vehicles, dies, jigs, scales (provided that
the software for the scales is licensed and not owned and the license will be
transferred as an Assumed Contract) and supplies, or any related capitalized
items and other tangible property owned by Peanut City located at the Owned
Facilities and used by the Business as of the date of this Agreement, whether
at the Owned Facilities, over the road or at any other location, all as
described on SCHEDULE 2.1(b), provided that dies, jigs, supplies, tools and
spare parts are included in the Peanut City Assets whether or not listed on
SCHEDULE 2.1(b).
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(c) All of Peanut City's right, title and interest in and to
the names "Peanut City Iron & Metal Company," any tradenames or trademarks
used in the Business, and any variations of any of the foregoing.
(d) All of Peanut City's right, title and interest in and to
telephone number (000) 000-0000 and facsimile number (000) 000-0000.
(e) Copies of all business and financial records (exclusive
of tax records) relating to the Business for the past three years, including
copies of all sales data, pricing and cost information, customer and supplier
lists, credit records, sales literature and business and marketing plans
relating to the Business, provided that Peanut City will not be required to
make copies to the extent copies have been delivered prior to the Closing.
(f) Those specific assets relating to the operation of the
Business and Peanut City located at the Peanut City Offices and listed on
SCHEDULE 2.1(f).
(g) Copies of all computer documentation, computer files,
computer disks, computer tapes and all information stored on computer media
(whether written, optical, or magnetic) used in connection with the operation
of the Business and stored at the Owned Facilities or used at the Peanut City
Offices in connection with the operation of the Business.
(h) All of Peanut City's right, title and/or interest in
accounting and other computer software, including without limitation, the
software for the scales, relating to the Business owned by or licensed to
Peanut City, including information interfaced with those systems, as
maintained by Peanut City at the Owned Facilities or the Peanut City Offices,
all of which are listed on SCHEDULE 2.1(h); PROVIDED, HOWEVER, that Peanut
City shall not warrant title to any software and, to the extent the software
is licensed rather than owned, the interest transferred hereunder shall be
the license rights.
(i) All copies of customer and supplier lists, signs,
advertising, catalogues and brochures relating to the Business.
(j) All rights of Peanut City under the Assumed Contracts.
(k) All goodwill and other general intangibles related to the
Peanut City Assets.
(l) All claims, deposits, prepayments, refunds, causes of
action, cases in action, rights of recovery, rights of set-off and rights of
recoupment related to the Peanut City Assets or the Business, except as may
be set forth in Excluded Assets in Section 2.2 herein.
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(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 Peanut City, unless specifically described in Section 2.2 or on SCHEDULE 2.2
as an Excluded Asset.
Peanut City's sale, conveyance, assignment and transfer of the Peanut
City Assets shall be free and clear of any Security Interest, liabilities or
obligations other than the Assumed Liabilities.
2.2 EXCLUDED ASSETS. On the Closing Date, RII Sub shall not purchase
the following assets owned by Peanut City, each to the extent described in more
detail on SCHEDULE 2.2 (the "Excluded Assets"):
(a) Any cash, marketable securities and cash equivalents of
Peanut City;
(b) The corporate charter, qualifications to conduct business as
a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, stock certificates and other documents
relating to the organization, maintenance and existence of Peanut City as
corporations; PROVIDED, HOWEVER, that Peanut City will not have the right
to continue using its current corporate names following the Closing;
(c) Any of the rights of Peanut City under this Agreement and
any other Transaction Document entered into on or after the date of this
Agreement;
(d) Rights to refunds of insurance premiums paid by Peanut City
on the insurance policies referenced in Section 4.20 prior to the Closing;
(e) Certain personal assets and other items owned by the
Shareholders as identified on SCHEDULE 2.2;
(f) Tax refunds of any nature whatsoever; and
(g) Any other assets of Peanut City set forth on SCHEDULE 2.2.
2.3 ASSUMED CONTRACTS. RII Sub shall assume the obligations of Peanut
City under the Assumed Contracts.
2.4 ASSUMPTION OF LIABILITIES. Except with respect to the indemnity
obligations of Recycling under Section 12.3 and the obligations of Peanut City
under Assumed Contracts, RII Sub shall not assume any Liabilities or
Environmental Liabilities of Peanut
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City arising on or before the Closing or with respect to any action, event or
occurrence of any party on or prior to the Closing.
2.5 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) If, after Closing, Peanut City receives payment on any of
the accounts receivable included in the Peanut City assets ("Peanut City
Receivables"), Peanut City shall forthwith forward the same to RII Sub within
five business days after receipt thereof.
(b) RII Sub shall have the right, upon five business days prior
written notice and during the normal business hours of Peanut City, to review
records of Peanut City solely to determine compliance with the provisions of
Section 2.5(a).
(c) The provisions of this Section 2.5 shall survive the
Closing.
ARTICLE 3
PURCHASE PRICE AND CLOSING
3.1 PURCHASE PRICE FOR PEANUT CITY ASSETS.
(a) RII Sub shall pay the total amount of $3,400,000, subject to
the adjustments, as determined in accordance with Section 3.3 below (the
"Purchase Price") to Peanut City for the purchase of the Peanut City Assets.
The Purchase Price shall be payable as follows:
(1) $2,897,500, as adjusted in accordance with Section
3.3 below, in immediately available funds at Closing (the "Cash
Consideration");
(2) $502,500 stated value of Parent Series J Preferred
Stock (the "Stock Consideration") delivered at Closing pursuant to the terms
of a customary subscription agreement (the "Subscription Agreement"). The
form of Subscription Agreement is attached hereto as EXHIBIT B.
3.2 VALUATION OF INVENTORY AND ACCOUNTS RECEIVABLE. The aggregate value
of the inventory and accounts receivable determined jointly by representatives
of Peanut City and Recycling prior to the Closing Date, and such value is set
forth on SCHEDULE 3.2, initialed by Peanut City and Recycling. This valuation
shall be updated to the Closing Date by adjusting for all shipments in and out
and changes in accounts receivable which occur through the close of business the
date immediately preceding the Closing Date. For purposes of calculating the
value of inventory, Unprepared Inventory shall be valued at a price equal to the
average price Peanut City has paid for comparable material received
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across its scales in the ten business days immediately preceding the
valuation, and Prepared Inventory shall be valued at market price, less the
cost of shipping.
If the parties are not able to mutually determine the value of the
inventory and receivables, an independent third party shall be jointly
selected by Peanut City and Recycling to determine such value. The value
determination by such third party shall be binding on Peanut City and
Recycling. The Closing shall occur as soon as practicable after third party
value determination, if such is required, provided all other conditions to
Closing are satisfied or waived.
3.3 ADJUSTMENT OF THE PURCHASE PRICE.
(a) PRE-CLOSING ADJUSTMENT. The aggregate value of the inventory
and accounts receivable included in the Peanut City Assets, as determined in
accordance with Section 3.2 shall not be less than $675,000 on the Closing
Date. If the value of the inventory and accounts receivable exceeds or is
less than this amount, the Purchase Price shall be adjusted accordingly and
the Cash Consideration shall be increased or decreased, as appropriate, to
reflect the adjustment.
(b) POST-CLOSING ADJUSTMENT. If the parties are not able to
complete the adjustments contemplated by Sections 3.2 and 3.3(a) immediately
prior to the Closing, within 30 days after the Closing such adjustments shall
be completed and an adjustment payment, in immediately available funds, will
be made by the party who is determined to be responsible therefor no later
than the 60th day after the Closing. If there are any remaining costs
related to the preparation of the Environmental Studies which are to be
reimbursed 50% to Peanut City by RII Sub, the reimbursement shall be made in
connection with the post-closing adjustment.
3.4 ALLOCATION OF THE PURCHASE PRICE.
(a) The Purchase Price shall be allocated among the Peanut
City Assets as set forth on SCHEDULE 3.4.
(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 3.4.
(c) RII Sub and Peanut City 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.
3.5 CLOSING OF THE PURCHASE. The closing of the Transaction (the
"Closing") shall take place on May 27, 1998, via facsimile, or at such place
as selected by the Lender, in its sole and absolute discretion, on the date
mutually agreed to by the parties (the
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"Closing Date"). The Closing Date shall be no later than May 31, 1998,
unless mutually extended by the parties.
ARTICLE 4
REPRESENTATIONS OF PEANUT CITY AND SHAREHOLDERS
As an inducement to Recycling to enter into this Agreement and to
complete the Transaction, and with the knowledge that Recycling will rely
thereon, Peanut City and the Shareholders, jointly and severally, represent
and warrant to Recycling that all of the representations and warranties in
this Article 4 are true, correct and complete as of the date of this
Agreement.
4.1 DUE ORGANIZATION AND QUALIFICATION.
(a) Peanut City is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Virginia, and has
the corporate power and lawful authority to carry on its business as now
being conducted.
(b) Peanut City is duly qualified or otherwise authorized to
transact business in each jurisdiction, listed in SCHEDULE 4.1(b), in which
the nature of the business conducted or the character or location of the
properties owned makes such qualification necessary.
4.2 TITLE TO PROPERTY. Except for the exceptions noted in the title
insurance policy to be obtained by RII Sub for the Closing and encumbrances,
covenants, conditions, restrictions, reservations and easements filed of
record, Peanut City has good, valid and insurable title to all real property,
and except as set forth SCHEDULE 4.2 Peanut City has good, valid and
marketable title to its personal property included in the Peanut City Assets
(tangible and intangible), in each case, other than set forth above, subject
to no Security Interest, option, right of first refusal, or other restriction
of any kind or character.
4.3 AUTHORITY OF PEANUT CITY; CONSENTS.
(a) Peanut City has full power and authority to execute and
deliver this Agreement and the other Transaction Documents and to carry out
the Transaction and Peanut City has taken all requisite corporate or other
action to authorize the execution, delivery and performance of this Agreement
and the other Transaction Documents.
(b) This Agreement and the other Transaction Documents are valid
and binding agreements of Peanut City, enforceable in accordance with their
terms.
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(c) Except as described in SCHEDULE 4.3(c), no consent,
authorization or approval of, or declaration, filing or registration with,
any governmental or regulatory authority or any consent, authorization or
approval of any other third party is required to enable Peanut City to enter
into and perform its obligations under this Agreement and the other
Transaction Documents, and neither the execution and delivery of this
Agreement and the other Transaction Documents nor the consummation of the
Transaction by Peanut City will:
(1) Be in violation of its Articles of Incorporation, Bylaws
or any other organizational document, or constitute a breach of any evidence
of indebtedness or agreement to which it is a party, except where such breach
would not have a Material Adverse Effect on either the Business or the Peanut
City Assets;
(2) Cause a default under any mortgage or deed of trust or
other lien, charge or encumbrance to which any of the Peanut City Assets is
subject or under any contract to which it is a party, or permit the
termination of any such contract by another person, except where such default
or termination would not have a Material Adverse Effect on the Business or
the Peanut City Assets;
(3) Result in the creation or imposition of any Security
Interest upon any of the Peanut City Assets under any agreement or commitment
to which it or the Peanut City Assets are bound;
(4) Conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality; or
(5) Violate any statute, law or regulation of any jurisdiction
as such statute, law or regulation related to the Peanut City Assets.
4.4 FINANCIAL STATEMENTS.
(a) The following financial statements of Peanut City are attached
hereto as SCHEDULE 4.4:
(1) A copy of the audited financial statements for Peanut City as
of and for the fiscal year ended December 31, 1997, prepared in accordance with
GAAP (the "Audited Financial Statements").
(2) A copy of the unaudited financial statements for Peanut City
prepared substantially in accordance with GAAP in the same manner which they are
currently prepared as of and for the fiscal years ended December 31, 1995 and
1996 and for the period from January 1, 1998 through the Closing Date (the
"Unaudited Financial Statements").
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The Audited Financial Statements and the Unaudited Financial Statements
collectively are referred to herein as the "Peanut City Financial
Statements." The Audited Financial Statements have been prepared in
accordance with GAAP and the Unaudited Financial Statements have been
prepared substantially in accordance with GAAP and present fairly the
financial condition of Peanut City as of such dates and the results of
operations of Peanut City for such periods; PROVIDED, HOWEVER, that the
Unaudited Financial Statements are subject to normal year-end adjustments and
lack footnotes and other presentation items.
(b) Since December 31, 1997, there has been no (1) material
adverse change in the assets or liabilities, or in the business, financial
condition or in the results of operations of the Business or on the Owned
Facilities, whether, to the Knowledge of Peanut City and the Shareholders, as
a result of any legislative or regulatory change, or whether as a result of
revocation of any Permits, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God; and (2) no
change in the assets or liabilities, or in the Business, financial condition,
or in the results of operations, or, to the Knowledge of Peanut City and the
Shareholders, any loss of customers of Peanut City, except in the Ordinary
Course which have not, in the aggregate or individually, had a Material
Adverse Effect on the Business.
4.5 NO TAX LIENS; NO WAIVER.
(a) None of the Peanut City Assets are subject to any lien in
favor of the United States pursuant to the IRC for nonpayment of federal
taxes, or any lien in favor of any state under any comparable provision of
state law, under which transferee liability might be imposed upon RII Sub as
purchaser under the IRC or any comparable provision of state or local law,
except for real estate taxes which are not yet due and payable.
(b) Peanut City has not waived any statute of limitations
with respect to the assertion of any liability under any federal, state, or
local tax law.
(c) Peanut City 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 Peanut City and the Shareholders, contemplated.
(d) Copies of Peanut City's federal and state income tax
returns for its tax years ended December 31, 1993, 1994, 1995 and 1996 are
attached hereto as SCHEDULE 4.5(d).
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4.6 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.6,
(a) Neither Peanut City nor any of the Shareholders is in
violation of or has violated any applicable order, judgment, injunction,
award or decree relating to the Peanut City Assets, except where such
violation would not have a Material Adverse Effect. To the Knowledge of
Peanut City and the Shareholders, except as otherwise disclosed in the
Environmental Studies, neither Peanut City nor the Shareholders is in
violation of or has violated 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 Peanut City Assets,
except where such violation would not have a Material Adverse Effect.
(b) Except with respect to any encumbrances noted on the title
insurance policy to be obtained by RII Sub and/or covenants, conditions,
restrictions, reservations and easements filed of record, and/or the survey
to be obtained by RII Sub, to the Knowledge of Peanut City and the
Shareholders, the buildings included in the Owned Facilities do not encroach
on the property of others, (2) except as otherwise disclosed in the
Environmental Studies, to the Knowledge of Peanut City and the Shareholders,
there is not pending or threatened any notification of any governmental
authority that Peanut City is not in material compliance with applicable laws
and regulations respecting employment and employment practices, occupational
safety and health laws and regulations, and Environmental Laws, and (3)
neither Peanut City nor any Shareholder has received, since January 1, 1995,
any such notification of past violations of such laws or regulations.
4.7 PERMITS. SCHEDULE 4.7 lists all Permits required by any
governmental entity related to the Business or operations of Peanut City that
are material to the operation of the Business. Except as described on
SCHEDULE 4.7, Peanut City validly holds all Permits that are material to the
operation of the Business and all Permits are in full force and effect and no
proceeding to revoke or modify in a materially detrimental way any of such
Permits is pending or, to the Knowledge of Peanut City or any Shareholder,
threatened.
4.8 LITIGATION. Except as described in SCHEDULE 4.8, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving
the Peanut City Assets or the Business. Except as set forth on SCHEDULE 4.8,
there are no actions, suits or claims against Peanut City or any Shareholder,
or, to the Knowledge of Peanut City or any Shareholder, investigations
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending or, to the Knowledge of Peanut City or any
Shareholder, threatened against or involving the Peanut City Assets or the
Business.
4.9 CONTRACTS AND OTHER AGREEMENTS.
(a) Except for the Assumed Contracts or the contracts, leases, and
other agreements which will be completed or canceled at or prior to the Closing,
and except as
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otherwise disclosed on SCHEDULE 4.9(a), Peanut City 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 Assumed Contracts are valid and binding upon
Peanut City in accordance with their terms, and Peanut City is not in default
nor has it received any notice of default under, or with respect to any
Assumed Contracts, except for such defaults that would not or do not,
individually or in the aggregate, have a Material Adverse Effect.
(c) Except as otherwise disclosed on SCHEDULE 4.3(c), no approval
or consent of any Person is needed in order that the contracts, leases, and
other agreements which constitute a part of the Assumed Contracts will
continue in full force and effect following the completion of the
Transaction. Peanut City is not in the process of negotiating or entering
into any contracts, leases, or other agreements described in this Section 4.9.
4.10 NOTES AND ACCOUNTS RECEIVABLE. The Peanut City Receivables are
reflected properly in the books and records of Peanut City, and were incurred
in the Ordinary Course, are current (not over 60 days old) and are
collectible without setoffs or counterclaims, subject only to the reserve for
bad debts set forth on the balance sheet included in the Unaudited Financial
Statements, as adjusted, for operations and transactions through the Closing
Date in accordance with the past custom and practice of Peanut City. The
Peanut City Receivables not collected within 60 days after the Closing shall
be subject to reassignment to Peanut City in accordance with Section 14.2.
4.11 TANGIBLE PROPERTY. Except as described in SCHEDULE 4.11, all
Tangible Property is in good operating condition and repair in all material
respects, subject only to normal wear and tear. Since January 1, 1994,
neither Peanut City nor any of the Shareholders has received written notice
that any of the Tangible Property is in violation of any existing law or any
building, zoning, health, safety or other ordinance, code or regulation.
4.12 INVENTORY. The piles of Unprepared Inventory observed and
measured on May 17, 1998 (the "Inventory Date") are located on level ground
and are comprised solely, throughout the pile, of the quality and grade of
material visible on the outer surface of the pile.
4.13 INTELLECTUAL PROPERTY.
(a) Peanut City does not own any intellectual property, inventions,
discoveries, trade secrets, designs, prototypes, formulas, or any other
proprietary information related to the Business, other than the rights to the
names "Peanut City Iron & Metal
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Company". Other than as required under shrink wrap software licenses for
computers and/or the scales, Peanut City has never agreed to indemnify any
Person for or against any interference, infringement, misappropriation or
other conflict with respect to any intellectual property.
(b) Neither Peanut City nor any of the Shareholders has
Knowledge of any patent, invention, trade secret, trademark, service xxxx,
trade name or copyright of any other Person that is infringed by Peanut City,
nor do they have notice of any infringement claim of any other Person
relating to any intellectual property or any process or confidential
information of Peanut City.
4.14 REAL PROPERTY. The Owned Facilities include all real property
included in the Peanut City Assets. To the Knowledge of Peanut City and the
Shareholders, with respect to each parcel of owned real property included
within the Owned Facilities:
(a) Except as otherwise disclosed on SCHEDULE 4.7 or in the
Environmental Studies, since January 1, 1994, Peanut City has possessed all
approvals of governmental authorities (including licenses and permits )
required which are material to the ownership or operation of the Business.
Since January 1, 1994, the Owned Facilities have been operated and
maintained, in all material respects, in accordance with applicable laws,
rules and regulations.
(b) Except as otherwise disclosed on SCHEDULE 4.14(b), there are
no leases, subleases, licenses, easements, concessions, or other agreements,
written or oral, granting to any party or parties the right of use or
occupancy of any portion of the Owned Facilities.
(c) There are no outstanding options or rights of first refusal
to purchase the Owned Facilities or any portion thereof or interest therein.
(d) There are no parties other than Peanut City in possession of
the Owned Facilities or any portion thereof.
(e) The Owned Facilities are supplied with utilities and other
services necessary for their present operation, including electricity, water,
telephone, and sewage disposal, all of which services are adequate in
accordance with all applicable laws, ordinances, rules, and regulations and
are provided ingress and egress via public roads or via permanent,
irrevocable, appurtenant easements benefiting the Owned Facilities.
4.15 LIABILITIES. Except as set forth in SCHEDULE 4.15 or otherwise
in this Agreement or any other Schedule hereto, to the Knowledge of Peanut
City and the Shareholders, the Business has no Liabilities other than (a)
Liabilities fully and adequately reflected or reserved against in the
Financial Statements, (b) Liabilities under Assumed
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Contracts, (c) Liabilities incurred since December 31, 1997 in the Ordinary
Course, and (d) Liabilities which do not, individually or in the aggregate,
have a Material Adverse Effect on the Business.
4.16 SUPPLIERS AND CUSTOMERS. SCHEDULE 4.16 sets forth a list of (1)
all suppliers from whom Peanut City has purchased $5,000 or more in the
fiscal year ended December 31, 1997 and (2) all customer whose annual
purchases from the Business exceeded $5,000 in the fiscal year ended December
31, 1997. There are no agreements or understandings, either written or oral,
with any customers of the vendors to Peanut City as to adjustments in pricing
or cost which would reduce the profit margin of any existing or contemplated
contract or other relationship.
4.17 EMPLOYEE BENEFIT PLANS. SCHEDULE 4.17 lists all Employee Benefit
Plans maintained by Peanut City or to which it contributes for the benefit of
any of its current or former employees.
(a) To the Knowledge of Peanut City and the Shareholders, each
Employee Benefit Plan (and each related trust or insurance contract) complies
in all material respects in form and in operation in all respects with the
applicable requirements of ERISA and the IRC;
(b) All contributions (including all employer contributions and
employees salary reduction contributions) which are due have been paid to
each Employee Benefit Plan and all such plans are adequately funded;
(c) No material unsatisfied liability has been incurred by Peanut
City or any ERISA affiliate of Peanut City and there is no material risk that
such liability will be incurred;
(d) To the Knowledge of Peanut City and the Shareholders, no
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
or demand with respect to the administration or the investment of the assets
of any Employee Benefit Plan (other than routine claims for benefits) is
pending;
(e) Peanut City does not provide any medical or other similar
benefits to employees beyond retirement, other than group health care
continuation required by COBRA; and
(f) Peanut City 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.
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4.18 CURTAILMENT OF OPERATIONS. No labor disputes or work stoppages
involving the Business are pending or, to the Knowledge of Peanut City and
the Shareholders, threatened which, either singly or in the aggregate, might
have a Material Adverse Effect on the Business. To the Knowledge of Peanut
City and the Shareholders, no material customer of or supplier to the
Business is involved in, or affected by, any dispute, arbitration, lawsuit,
or administrative proceedings which might have a Material Adverse Effect on
the Business.
4.19 EMPLOYEE RELATIONS. Peanut City is not a party to a collective
bargaining agreement and, to its and the Shareholders' Knowledge, Peanut City
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 Peanut City has not and is not
engaged in any unfair labor practice. To the Knowledge of Peanut City and
the Shareholders, there have been no organization efforts by any trade unions
within the last five years.
4.20 INSURANCE. SCHEDULE 4.20 lists all insurance policies maintained
by Peanut City relating to the Business or the Owned Facilities, copies of
which have been provided to RII Sub, which cover the Peanut City Assets or
the Business, the nature of such policies, the amount and types of coverage,
and the name of the insurers and expiration dates. Peanut City has paid all
premiums and other amounts due on such policies and will not cancel any
insurance or permit any insurance to lapse or terminate prior to the Closing.
4.21 RELATIONSHIPS. Except as described on SCHEDULE 4.21, no officer
or director of Peanut City possesses, directly or indirectly, any financial
interest in, or is a director, officer, stockholder or employee of, any
corporation, firm, association or business organization which is a
manufacturer for, or client, supplier, customer, lessor, lessee, or
competitor or potential competitor of, the Business. The Business is not
indebted to any officer, director, partner, or employee of Peanut City except
with respect to accrued but unpaid compensation and other Ordinary Course
employment benefits or except as described on SCHEDULE 4.21 (which are not
being assumed by RII Sub hereunder), to any entity in which any such Person
has a financial interest.
4.22 NO MATERIAL CHANGES PRIOR TO CLOSING DATE. Up until the Closing
Date, the Business will be operated in the Ordinary Course of Business.
4.23 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm
acting on behalf of Peanut City or the Shareholders is, or will be, entitled
to any commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by or under common control
with any of the parties hereto, in connection with the Transaction.
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4.24 EMPLOYEE TRANSITION. SCHEDULE 4.24 lists all employees of Peanut
City who work or are customarily stationed at the Owned Facilities, their
term of employment, compensation history (including bonus, if any), benefits
and accrued vacation and other amounts payable to each employee. On or
before the first day subsequent to the Closing Date, Peanut City will
terminate all employees of the Business who will not be hired by RII Sub and
will pay all compensation due such employees on or before the first day
subsequent to the Closing. RII Sub will not assume or otherwise be
responsible for any salaried or hourly health and life insurance obligations
incurred prior to the Closing for any employee not hired by the RII Sub, nor
for payment of claims to insureds, or payment of any premiums for coverage
prior to the Closing Date; PROVIDED, HOWEVER, that, following the Closing
Date, RII Sub has agreed to assume the obligation to provide group health
care insurance continuation coverage as required by COBRA to qualified former
employees of Peanut City and/or their family members, with the premiums being
covered by such former employees of Peanut City and/or their family members.
Except as provided in the foregoing sentence, RII Sub will not assume any
liabilities either to former Peanut City employees or the employees of Peanut
City who are hired by RII Sub after the Closing. Peanut City agrees that all
liabilities of the Business to terminated employees will be retained by
Peanut City, including those accruing by reason of termination by Peanut
City. RII Sub shall have the right, in its sole discretion, to determine
which of Peanut City's employees it will hire following the Closing.
4.25 ENVIRONMENTAL MATTERS. Except as may be provided in the
Environmental Studies to be performed as contemplated by Section 8.1 of this
Agreement, copies of which will be delivered to RII Sub prior to the Closing
as provided in Section 8.1, or disclosed on SCHEDULE 4.25, Peanut City and
the Shareholders have no Knowledge of any Environmental Liabilities, actual
or expected, relating to the Business or the Owned Facilities, or of any
environmental conditions on any other real property that could reasonably be
expected to result in an Environmental Liability to the Business.
4.26 COMPLIANCE WITH ADA. Peanut City has complied with the Americans
with Disabilities Act of 1991, 42 U.S.C. Sections 12111, 12112 and 12209, as
amended, and any similar applicable state regulations, except where the
failure to so comply would not have a Material Adverse Effect.
4.27 XXXX-XXXXX-XXXXXX ACT. Neither the total assets or annual net
sales of Peanut City as and for the year ended December 31, 1997 are greater
than $10,000,000, nor do any interim regularly prepared financial statements
of Peanut City show total assets or annual net sales in excess of $10,000,000.
4.28 DISCLOSURE. None of the Transaction Documents issued by Peanut
City or the Shareholders and furnished or to be furnished to Recycling, to
the Knowledge of Peanut City and the Shareholders, contains or will contain
any untrue statement of a material fact
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or omits any statement of a material fact necessary in order to make the
statements contained therein not misleading.
4.29 BEST EFFORTS. Peanut City and the Shareholders will use their
best efforts to timely apply for and obtain all permits, consents and
approvals, to complete any due diligence deemed necessary by Peanut City and
the Peanut City Shareholders and take such other actions in order to complete
the Transaction by the Closing Date. Peanut City and the Shareholders 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.
ARTICLE 5
REPRESENTATIONS OF RECYCLING
As an inducement to Peanut City and the Shareholders to enter into this
Agreement and to complete the Transaction and with the knowledge that Peanut
City and the Shareholders will rely thereon, RII Sub and the Parent jointly and
severally represent and warrant to Peanut City and the Shareholders that all of
the representations and warranties in this Article 5 are true, correct and
complete as of the date of this Agreement.
5.1 DUE INCORPORATION AND QUALIFICATION OF RII SUB. RII Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado, and has the corporate power and lawful authority to
carry on its business as now being conducted. On or before the Closing Date,
RII Sub will be duly qualified or otherwise authorized as a foreign corporation
to transact business and will be in good standing in the Commonwealth of
Virginia.
5.2 DUE INCORPORATION AND QUALIFICATION OF THE PARENT. The Parent is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado, and has the corporate power and lawful authority
to carry on its business as now being conducted.
5.3 ARTICLES OF INCORPORATION AND BYLAWS. On or before the Closing
Date, RII Sub and the Parent will deliver to Peanut City true and complete
copies of their respective Articles of Incorporation and Bylaws, each as
certified by the Parent's corporate secretary, as then in effect.
5.4 AUTHORITY OF RII SUB AND THE PARENT. RII Sub and the Parent have
full power and authority to execute and deliver this Agreement and the other
Transaction Documents and to carry out the Transaction and Recycling has
taken all requisite corporate action to authorize the execution, delivery and
performance of this Agreement and the other
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Transaction Documents. This Agreement and the other Transaction Documents
are valid and binding agreements of RII Sub and the Parent, enforceable in
accordance with their terms. No consent, authorization or approval of, or
declaration, filing or registration with, any governmental or regulatory
authority or any consent, authorization or approval of any other third party
is necessary in order to enable RII Sub or the Parent to enter into and
perform its obligations under this Agreement and the other Transaction
Documents, and neither the execution and delivery of this Agreement and the
other Transaction Documents nor the completion of the Transaction will, with
respect to RII Sub and the Parent, individually:
(a) Be in violation of its Articles of Incorporation or Bylaws or
any other organizational document, or constitute a breach of any evidence of
indebtedness or agreement to which it is a party, except where such breach would
not have a Material Adverse Effect;
(b) Cause a default under any mortgage or deed of trust or other
lien, charge or encumbrance to which any of its property is subject or under any
contract to which it is a party, or permit the termination of any such contract
by another Person, except where such default or termination would not have a
Material Adverse Effect;
(c) Result in the creation or imposition of any Security Interest
upon any of its property or assets under any agreement or commitment to which it
is bound;
(d) Accelerate, or constitute an event entitling, or which would
upon notice or lapse of time or both, entitle the holder of any indebtedness to
accelerate the maturity of any such indebtedness;
(e) Conflict with or result in the breach of any writ, injunction or
decree of any court or governmental instrumentality;
(f) Violate any statute, law or regulation of any jurisdiction as
such statute, law or regulation relates to it; or
(g) Violate or cause any revocation of or limitation on any Permit.
5.5 STOCK CONSIDERATION. The Stock Consideration when issued, and the
Parent Common Stock issuable upon conversion of the Stock Consideration, will be
duly authorized, fully paid and non-assessable and not subject to any preemptive
rights.
5.6 BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm acting
on behalf of RII Sub or the Parent is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with the Transaction.
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5.7 DISCLOSURE. None of the Transaction Documents issued by RII Sub or
the Parent and furnished or to be furnished to Peanut City and the Shareholders,
to the Knowledge of RII Sub or the Parent, contains or will contain any untrue
statement of a material fact or omits any statement of a material fact necessary
in order to make the statements contained therein not misleading.
5.8 BEST EFFORTS. RII Sub and the Parent will use their best efforts to
timely apply for and obtain all permits, consents and approvals, to complete any
due diligence deemed necessary by RII Sub and the Parent, and to take such other
actions in order to 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.
ARTICLE 6
REPRESENTATIONS OF THE PARENT RELATED TO THE
STOCK CONSIDERATION
As an inducement to Peanut City and the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, and with the
knowledge that Peanut City and the Shareholders will rely thereon, the Parent
represents and warrants the following to Peanut City and the Shareholders:
6.1 STATUS. The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado. The
Parent is authorized to issue preferred stock and common stock. The Parent has
taken all necessary corporate action to create the Parent Series J Preferred
Stock and to reserve a sufficient number of shares of common stock which may be
issued upon conversion thereof. The preferred stock, when issued in accordance
with the provisions of this Agreement will be lawfully issued as fully paid,
nonassessable preferred shares of the Parent, and the common stock issuable upon
conversion of the Parent Series J Preferred Stock, when issued in accordance
with the conversion terms of said preferred stock, will be lawfully issued as
fully paid, nonassessable common shares of the Parent.
6.2 1934 ACT REGISTRATION. The common stock of the Parent is registered
under Section 12(g) of the 1934 Act, and in accordance therewith the Parent
files periodic reports, proxy statements, and other informational reports
required under the 1934 Act. The Parent has filed with the SEC all reports it
is required to file under the 1934 Act. The Parent's common stock is traded
publicly in the over-the-counter market and quoted on the Nasdaq National Market
under the symbol "RECY."
6.3 PUBLIC REPORTS. The Parent has made all filings with the SEC that
it has been required to make under the 1933 Act and 1934 Act (collectively, the
"Public Reports").
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Each of the Public Reports was complete and accurate when filed and complied
in all material respects with the requirements of the 1933 Act or 1934 Act,
as applicable. At the time each Public Report was filed, it did not contain
any untrue statement of a material fact or omit to state any material fact
necessary, in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 7
REGULATORY COMPLIANCE
7.1 BULK SALES COMPLIANCE. Recycling hereby waives compliance by
Peanut City of the provisions of the bulk sales or bulk transfer law of the
Commonwealth of Virginia, subject to the indemnification provided in Section
12.2(a)(5).
7.2 COBRA. Peanut City has complied in all material respects with
the provisions of COBRA, Pub. L. No. 99-272, 99th Cong., 2d Sess. (1987), and
any similar state statute, relating to continuation of health benefits to its
former employees who became eligible for COBRA coverage on or before the
Closing Date and, under the provisions of COBRA, elected to continue to pay
premiums for insurance coverage under Peanut City's health insurance plan.
Subject to the indemnification provided in Section 12.2(a)(9), RII Sub or the
Parent will assume Peanut City's obligations related to the provision of
COBRA coverage, in the sole discretion of RII Sub and the Parent either
through coverage under Peanut City's health insurance plan as in effect on
the Closing Date or under the Parent's health insurance plan; PROVIDED, THAT,
the premiums are timely paid by the former employees of Peanut City.
Notwithstanding anything in this Agreement or any of the other
Transaction Documents to the contrary, neither RII Sub nor the Parent will
assume any liabilities related to COBRA benefits administered or COBRA claims
paid or arose on or prior to the Closing Date.
7.3 OTHER. The parties shall prepare and promptly file all reports,
documents or notices with appropriate regulatory or other governmental
authorities, as may be required of them.
ARTICLE 8
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING
The parties hereto covenant and agree that between the date hereof and the
Closing Date:
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8.1 ENVIRONMENTAL STUDIES.
(a) Prior to the Closing Date, Peanut City will deliver to
Recycling updated and current Phase I and Phase II Environmental Site
Assessments and Transaction Screen Process of the Owned Facilities and the
Business prepared by a mutually agreed upon environmental engineering firm,
which shall be attached hereto as SCHEDULE 8.1 (the "Environmental Studies").
The costs of the Environmental Studies will be paid by Peanut City;
PROVIDED, HOWEVER, that Recycling shall reimburse Peanut City for one-half of
the costs if the Transaction is completed.
(b) If the Environmental Studies indicate that remediation is
required to ensure that the business, real property, facilities and
operations of Peanut City meet and comply with all applicable environmental
laws and regulations, Peanut City shall provide Recycling an estimate of the
cost of such remediation ("Remediation Estimate"). If the estimated cost of
remediation set forth in the Remediation Estimate exceeds
[CONFIDENTIAL TREATMENT REQUESTED], either party may: (i) terminate this
Agreement without liability to any party or (ii) elect to proceed with the
Closing with [CONFIDENTIAL TREATMENT REQUESTED].
8.2 TITLE INSURANCE. Peanut City has delivered to Recycling its most
recent title policy with respect to the Owned Facilities. Peanut City will
cooperate with Recycling as necessary to allow it to obtain a title insurance
commitment, at RII Sub's expense in accordance with custom in the
Commonwealth of Virginia, including obligations to issue endorsements as may
be required by RII Sub, with respect to the Owned Facilities, using a current
Commonwealth of Virginia standard form of American Land Title Association
Owner's Title Insurance Commitment issued by a title insurer satisfactory to
RII Sub in the amount allocated by the parties on SCHEDULE 3.4 to the Owned
Facilities, insuring title to the Owned Facilities to be in RII Sub as of the
Closing Date, subject only to encumbrances, covenants, conditions,
restrictions, reservations and easements filed of record and such exceptions
and exclusions as provided in this Agreement as are acceptable to RII Sub.
Such title commitment is to contain a complete copy of each easement,
restriction, limitation, or condition of title which is referred to therein
that burdens or benefits said real property and shall insure against all
possible contractors', suppliers' and mechanics' lien claims. The costs and
premium for the owner's policy of title insurance, including the cost of any
endorsements to the owner's policy of title insurance which may be requested
by Recycling and the cost of the mortgagee's policy of title insurance shall
be paid by RII Sub or the Parent.
8.3 SURVEY. Peanut City has delivered to Recycling its most recent
survey with respect to the Owned Facilities. Peanut City will cooperate with
Recycling to the extent necessary to allow Recycling to obtain an updated
survey of the Owned Facilities, at RII Sub's expense in accordance with
custom in the Commonwealth of Virginia, certified to RII Sub, any mortgagee
of RII Sub, and the title insurer issuing title insurance in the
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Transaction as provided in Section 8.2, prepared by a licensed surveyor and
conforming to Minimum Technical Standards adopted by the Virginia Society of
Professional Surveyors, disclosing the location of all improvements,
easements, party walls, sidewalks, roadways, utility lines, setback
requirements, and other matters customarily shown on such surveys, and
showing access affirmatively to public streets and roads.
8.4 ASSUMED CONTRACTS. Peanut City will use its best efforts obtain
the written consent to the assumption by RII Sub of each of the Assumed
Contracts which require such consent.
8.5 CONDUCT OF BUSINESS. After execution of this Agreement and
continuing up to the Closing, Peanut City will:
(a) operate the Business only in the Ordinary Course and without
consent of RII Sub (which consent will not be unreasonably withheld or
delayed), will not (I) make any capital expenditures which individually are
greater than $5,000 or which in total aggregate more than $10,000 or (ii)
enter into any contract which is not terminable upon less than 60 days notice;
(b) provide prompt notice to RII Sub of any material change,
including but not limited to the institution of legal proceedings by or
against Peanut City; and
(c) provide Recycling with such additional financing and other
information as may be reasonably requested by Recycling and available to
Peanut City without undue expense.
8.6 PRESERVATION OF BUSINESS. Peanut City shall exert reasonable
efforts in the Ordinary Course to preserve the Business, keep available the
services of its present employees, consultants and agents, maintain its
present suppliers and customers and preserve its goodwill. Peanut City will
provide to RII Sub a mailing list of all customers whose annual purchases
from the Business were $5,000 or more either in the year ended December 31,
1996 or during 1997 to date, and a listing of their accounts on the Closing
Date to permit RII Sub to send announcements to the customers after the
Closing Date.
8.7 NOTICE OF EVENTS. Peanut City and the Shareholders shall
promptly notify RII Sub and Parent with reasonable specificity of: (1) any
event, condition or circumstance occurring from the date hereof through the
Closing Date that would constitute a material violation or breach of this
Agreement; or (2) any event, occurrence, transaction or other item which
would have been required to have been disclosed on any Schedule, Exhibit or
statement delivered hereunder, had such event, occurrence, transaction or
item existed on the date hereof, other than items arising in the Ordinary
Course of Business which would not render any of the representations,
warranties or other agreements of Peanut City or the Shareholders materially
misleading.
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8.8 EXAMINATIONS AND INVESTIGATIONS.
(a) Prior to the Closing Date, during normal business hours between
8:00 a.m. and 5:00 p.m., Eastern Time, Monday through Friday, or such other
hours as to which the parties mutually agree, Recycling shall be entitled, upon
prior reasonable written notice to Peanut City, 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
representations, warranties, covenants or agreements of Peanut City and the
Shareholders under this Agreement.
(b) Recycling will treat and hold any information or documents
obtained from Peanut City concerning the Business or the Peanut City Assets as
confidential and will not use any of such confidential information except in
connection with this Agreement. If this Agreement is terminated for any reason
whatsoever, Recycling will return to Peanut City all tangible embodiments (and
all copies) of such confidential information which are in its possession. In
the event Recycling is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigation, demand, or similar process), to disclose any such confidential
information, Recycling will notify Peanut City promptly of the request so that
Peanut City may seek an appropriate protective order or waive compliance with
the provisions of this Section 8.8(b). If, in the absence of a protective order
or the receipt of a waiver hereunder, Recycling is, on the advice of counsel,
compelled to disclose any confidential information to any tribunal or else stand
liable for contempt, Recycling may disclose such information to the tribunal;
PROVIDED, HOWEVER, that Recycling shall use its best efforts to obtain, at the
reasonable request of Peanut City, an order or other assurance that confidential
treatment will be accorded to such portion of such information required to be
disclosed as Peanut City shall designate. For purposes of this Section 8.8(b),
the term "confidential information" shall not include information and
documentation that (i) was already known to Recycling or its representatives or
available to Recycling on a non-confidential basis when received, (ii) hereafter
becomes lawfully obtainable from other sources, or (iii) is disclosed by Peanut
City or the Shareholders in any document filed with a government agency or
authority and available for public inspection.
8.9 NO NEGOTIATION BY PEANUT CITY OR THE SHAREHOLDERS. Between the date
hereof and the earlier of (1) the Closing Date; and (2) the date of termination
of this Agreement, neither the Shareholders nor Peanut City shall, directly or
indirectly:
(a) Solicit, initiate or encourage the submission of inquiries,
proposals or offers from any Person (other than Recycling) relating to any
acquisition or purchase of assets (other than sales of Inventory in the Ordinary
Course) of, or any equity interest in, the Peanut City Assets or any exchange
offer, merger, consolidation, purchase of assets,
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liquidation, dissolution or similar transaction involving the Peanut City
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 Peanut City 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.
Peanut City and the Shareholders will notify Recycling immediately if any
such Acquisition Proposal is received or if any such discussions, negotiations
or other events occur or are sought to be initiated, and such notice will set
forth in detail the terms or other particulars thereof.
8.10 REMOVAL OF WASTE MATERIALS. Peanut City shall remove, at its cost,
all trash, fluff (other than that which constitutes or is included in the
Unprepared Inventory), tires and any other similar waste materials from the
Owned Facilities prior to the Closing.
8.11 SAFETY AUDITS. If requested by Recycling, Peanut City will have
safety audits of its facility performed by a consulting firm mutually accepted
to parties to ensure compliance with OSHA and any other applicable safety
standards. The costs related to these audits will be paid by Peanut City and,
if the transaction is completed, Recycling shall reimburse Peanut City 50% of
these costs.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATION
OF RECYCLING TO CLOSE
The obligation of Recycling to enter into and to complete the Transaction
is subject to the fulfillment on or prior to the Closing Date (or such earlier
date as is set forth in this Agreement) of the following conditions, any one or
more of which may be waived by Recycling only in writing:
9.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Peanut City and the
Shareholders contained in this Agreement shall be true, correct and complete in
all material respects on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date. Peanut City and the
Shareholders shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or
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complied with by them on or prior to the Closing Date. Peanut City and the
Shareholders shall have delivered to Recycling certificates, dated the
Closing Date, to such effect.
9.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transaction shall have been obtained and all shall have been transferred to the
name of RII Sub.
9.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in connection
with the performance by the parties of their respective obligations under this
Agreement or the continuance of any Assumed Contracts or other agreements
without material modification after the Closing Date shall have been obtained.
9.4 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the Transaction or to seek damages or a discovery
order in connection with the Transaction, or that has or could reasonably be
expected to have a Material Adverse Effect on the Peanut City Assets or the
Business.
9.5 REAL PROPERTY. RII Sub shall receive good and insurable title by
special warranty deed for the Owned Facilities in proper form for recording in
the Commonwealth of Virginia and the Owned Facilities shall be free and clear of
any Security Interest, but subject to (i) installments of special assessments
not yet delinquent, (ii) covenants, conditions, restrictions, reservations and
easements filed of record, (iii) matters shown by the survey and title policy
contemplated by Sections 8.3 and 8.2, and (iv) other restrictions which do not
impair the current use or occupancy, or the marketability of title, of the
property subject thereto.
9.6 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change in the business, financial condition or results of operations of Peanut
City.
9.7 SUBSCRIPTION AGREEMENT. The Parent shall have received from Peanut
City the Subscription Agreement for the Consideration Stock in the form attached
hereto as EXHIBIT B.
9.8 TRANSFER DOCUMENTS. RII Sub shall have received assignments and
such other instruments of sale, transfer, conveyance and assignment transferring
all of the Peanut City Assets from Peanut City to RII Sub, each in proper legal
form to transfer the Peanut City assets under applicable law.
9.9 LEGAL OPINION. Recycling shall have received from legal counsel to
Peanut City in the form attached hereto as EXHIBIT D.
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9.10 ENVIRONMENTAL ESCROW AGREEMENT. If required under Section 8.1(b),
RII Sub shall have received from Peanut City the Environmental Escrow Agreement
in the form attached hereto as EXHIBIT C.
9.11 ASSIGNMENT OF CONTRACTS. Peanut City shall have delivered to RII
Sub written consents to the assignment or assumption of each of the Assumed
Contracts as provided by Section 8.4 to the extent such consents are required by
the terms of the Assumed Contracts.
9.12 SATISFACTION WITH DUE DILIGENCE, FINANCIAL PERFORMANCE AND APPROVAL.
Recycling shall be satisfied, in its reasonable discretion, with (a) the results
of its legal, accounting and financial due diligence investigation of Peanut
City and its operations, including, without limitation, the results of the
Environmental Studies, and (b) Peanut City'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 CERTIFICATES, ETC. OF SHAREHOLDERS AND PEANUT CITY. The
Shareholders and Peanut City shall have delivered all certified resolutions,
certificates, documents or instruments with respect to Peanut City's authority
and such other matters as RII Sub's and the Parent's counsel may have reasonably
requested prior to the Closing Date.
9.14 PAYMENT OF SALES OR USE TAXES BY PEANUT CITY. Peanut City shall
have paid all sales or use taxes, payable under the laws of the Commonwealth of
Virginia, as a result of the completion of the Transaction.
9.15 APPROVAL OF COUNSEL TO RECYCLING. All actions and proceedings
hereunder and all documents or other papers required to be delivered by Peanut
City 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 PEANUT CITY
AND SHAREHOLDERS TO CLOSE
The obligations of Peanut City and the Shareholders to enter into and to
complete the Transaction is subject to the fulfillment on or prior to the
Closing Date (except for a sooner date, if so provided) of the following
conditions, any one or more of which may be waived by Peanut City and the
Shareholders only in writing:
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10.1 REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Recycling contained in this
Agreement shall be true, correct and complete in all material respects on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date. Recycling shall have performed and complied, in all material
respects, with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. Recycling
shall have delivered to Peanut City certificates, dated the Closing Date, to
such effect.
10.2 GOVERNMENTAL PERMITS AND APPROVALS. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transaction shall have been obtained.
10.3 THIRD PARTY CONSENTS. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in connection
with the performance by the parties of their respective obligations under this
Agreement or the continuance of any Assumed Contracts without material
modification after the Closing Date shall have been obtained.
10.4 NO MATERIAL ADVERSE CHANGE. There shall be no material adverse
change in the business, financial condition or results of operations of RII Sub
or the Parent on a consolidated basis.
10.5 LITIGATION. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the Transaction, or to seek damages or a discovery
order in connection with the Transaction, or that has or could reasonably be
expected to have a Material Adverse Effect on the assets, properties,
businesses, operations or financial condition of RII Sub or the Parent.
10.6 SATISFACTION WITH DUE DILIGENCE. Peanut City shall be satisfied, in
its reasonable discretion with the results of its due diligence investigation of
Recycling.
10.7 DESIGNATION OF STOCK CONSIDERATION. There shall have been delivered
to Peanut City and the Shareholders a certified copy of the Certificate of
Designations, Rights and Preferences of the Parent Series J Preferred Stock.
10.8 LEGAL OPINION. Peanut City shall receive an opinion from counsel to
the Parent in the form attached hereto as EXHIBIT G.
10.9 THE PURCHASE PRICE. RII Sub and the Parent shall have paid to
Peanut City the full Purchase Price for the Peanut City Assets and executed and
delivered all documents related thereto.
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10.10 ASSUMPTION OF ASSUMED CONTRACTS. Peanut City shall have received
RII Sub's signed Assignment and Assumption Agreement related to the Assumed
Contracts.
10.11 ENVIRONMENTAL ESCROW AGREEMENT. If required under Section 8.1(b),
Peanut City and the Shareholders shall have received from RII Sub the
Environmental Escrow Agreement in the form attached hereto as EXHIBIT C.
10.12 APPROVAL OF COUNSEL TO PEANUT CITY AND THE SHAREHOLDERS. All
actions and proceedings hereunder and all documents or other papers required to
be delivered by RII Sub and the Parent hereunder or in connection with the
completion of the Transaction, and all other related matters shall have been
approved by Xxxxxxx & Xxxxxxx, P.C., counsel to Peanut City and the Shareholders
as to their form, which approval shall not be unreasonably withheld or delayed.
ARTICLE 11
ACTIONS TO BE TAKEN AT THE CLOSING
The following actions shall be taken at the Closing, each of which shall be
conditioned on completion of all the others and all of which shall be deemed to
have taken place simultaneously:
11.1 TRANSFER DOCUMENTS. Peanut City shall deliver duly executed
transfer documents and/or instruments of assignment, including without
limitation a Xxxx of Sale.
11.2 ASSIGNMENT AND ASSUMPTION AGREEMENT. Peanut City shall deliver any
required written consents to the assumption by RII Sub of the Assumed Contracts
and Peanut City and Recycling will enter into an assignment and assumption
agreement with respect to such Assumed Contracts.
11.3 THE PURCHASE PRICE. RII Sub shall deliver to Peanut City the
Purchase Price.
11.4 SUBSCRIPTION AGREEMENT. Peanut City shall deliver to the Parent the
Subscription Agreement.
11.5 NON-COMPETITION AGREEMENTS. KW, RII Sub and the Parent shall enter
into a Non-Competition Agreement in the form attached as Exhibit F.
11.6 EMPLOYMENT AGREEMENTS. RII Sub and KW shall enter into employment
agreements for continuation of employment of KW following the Closing in the
form attached as Exhibit E.
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11.7 ENVIRONMENTAL ESCROW AGREEMENT. If required by Section 8.1(b), RII
Sub, Peanut City and the Shareholders shall enter into the Environmental Escrow
Agreement with a third party escrow agent and [CONFIDENTIAL TREATMENT
REQUESTED].
11.8 CLOSING ON REAL PROPERTY. Immediately prior to the Closing, the
documents set forth below in subsections (a) through (d) shall have been duly
executed and delivered to Lawyer's Title and Lawyer's Title shall conduct the
Closing as it relates to the purchase of the Owned Facilities and shall deliver
to the appropriate parties the executed documents related thereto. All of the
documents delivered in connection with the sale and conveyance of the Owned
Facilities shall be deemed to be part of the "Transaction Documents" as defined
in Section 1.37.
(a) The special warranty deed for the Owned Facilities in proper
form for recording in the Commonwealth of Virginia, conveying the Owned
Facilities to RII Sub.
(b) The owner's Title Insurance Policy Commitment provided by
Lawyer's Title, including the list of endorsements to be issued in connection
therewith.
(c) A funds flow statement (the "Funds Flow Statement") prepared
jointly by the attorneys for Recycling and Peanut City at least one business day
prior to the Closing which shall detail the gross proceeds and all adjustments
related to allocation of expenses to the parties at the Closing.
11.9 CERTIFICATES OF PEANUT CITY. Peanut City shall deliver to RII Sub a
closing certificate dated the Closing Date, in a form reasonably satisfactory to
RII Sub, as contemplated by Section 9.1. Such certificate shall be signed on
behalf of Peanut City by Ginsburg as President of Peanut City.
11.10 CERTIFICATE OF THE SHAREHOLDERS. The Shareholders shall deliver to
RII Sub a closing certificate dated the Closing Date, in a form reasonably
satisfactory to RII Sub, as contemplated by Section 9.1.
11.11 CERTIFICATE OF RECYCLING. Recycling shall deliver to Peanut City
certificates dated the Closing Date, in a form reasonably satisfactory to Peanut
City, as contemplated by Section 10.1. Said certificate shall be signed on
behalf of Recycling by an executive officer of Recycling.
11.12 LEGAL OPINION DELIVERED TO RECYCLING. Recycling shall have received
from Xxxxxxx & Xxxxxxx, P.C., legal counsel to Peanut City and the Shareholders,
the legal opinion required by Section 9.9.
11.13 LEGAL OPINION DELIVERED TO PEANUT CITY AND THE SHAREHOLDERS. Peanut
City and the Shareholders shall have received from Friedlob Xxxxxxxxx Xxxxxx
Xxxxxxx &
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Xxxxxxxxxxx, LLC, counsel to RII Sub and the Parent, the legal opinion
required by Section 10.8.
11.14 TITLES TO VEHICLES. Peanut City shall deliver to RII Sub duly
executed assignments of titles to all vehicles included in the Peanut City
Assets free and clear of any Security Interests, other than vehicles leased
pursuant to Assumed Contracts.
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement
shall survive the Closing for a period of three years after the Closing Date
with the exception of the representations and warranties contained in
Sections 4.5 and 4.27, which shall survive for a period of time which is
equal to the statute of limitations period applicable to the respective Tax
liability or liability under the Xxxx-Xxxxx-Xxxxxx Act or similar state law
being asserted.
12.2 INDEMNITY AGREEMENTS OF PEANUT CITY AND THE SHAREHOLDERS.
(a) Peanut City and the Shareholders, jointly and severally,
shall indemnify, defend, reimburse and hold harmless RII Sub and the Parent
from and against any and all claims, demands, penalties, fines, liabilities,
obligations, losses, settlements, damages, costs and expenses resulting from:
(1) any inaccuracy in, or breach of, any representation or
warranty or nonfulfillment of any covenant on the part of Peanut City or the
Shareholders contained in this Agreement;
(2) any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of Peanut City or the Shareholders
contained in any Transaction Document furnished to RII Sub or the Parent by
Peanut City or the Shareholders;
(3) all federal, state, county, local, foreign and other
taxes, including income taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise 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 Peanut
City or the Shareholders relating to the Business through the Closing Date
which are not paid by either Peanut City or the Shareholders and which RII
Sub or the Parent pays;
(4) any and all negligence claims relating to the Business or
the Peanut City Assets arising out of occurrences and events prior to the
Closing Date;
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(5) the failure of Peanut City or the Shareholders to comply
with the bulk sales or bulk transfer laws of the Commonwealth of Virginia;
(6) any liability of Peanut City not expressly assumed by RII
Sub;
(7) any infringement claim related to any patent, invention,
trade secret, trademark, service xxxx, trade name or copyright where the
infringement alleged is related to products designed by Peanut City prior to
the Closing Date unless subsequently modified by RII Sub in a manner which
renders the product to be infringing;
(8) any liabilities to employees of the Business that arise as
a result of actions of Peanut City prior to the Closing Date;
(9) any liabilities which RII Sub or Parent or the insurer of
the Parent's medical insurance plan incurs on or after the Closing as a
result of Peanut City's administration of Peanut City's COBRA obligations
prior to the Closing, as contemplated under Section 7.2;
(10) any liabilities, including any costs, taxes or penalties
incurred by Recycling as a result of RII Sub or Parent adopting and
continuing Peanut City's 401(k) Plan as provided in Section 14.6(a), to the
full extent that such liabilities are attributable to the operation or
documentation of Peanut City's 401(k) Plan prior to RII Sub or Parent's
adoption of such plan; and
(11) reasonable fees and disbursements of counsel incident to
any of the foregoing.
Notwithstanding anything in this Section 12.2(a) to the contrary,
no indemnification claim which could have been asserted by Recycling under
Sections 12.2(a)(1) or 12.2(a)(2), but for materiality or Knowledge
qualifiers may be asserted under Sections 12.2(a)(3) through 12.2(a)(8).
(b) ENVIRONMENTAL INDEMNITY. Peanut City and the Shareholders,
jointly and severally, shall indemnify, defend, reimburse and hold harmless
Recycling from and against any and all claims, demand, penalties, fines,
liabilities, obligations, losses, settlements, damages, costs and expenses
actually incurred by Recycling that are the result of (i) the violation by
Peanut City or the Shareholders of any Environmental Laws or any orders,
requirements, or demands of any governmental authorities related thereto or
(ii) any Environmental Liabilities arising under Environmental Laws, in each
case related to events or circumstances of, involving, relating or affecting
in any manner whatsoever Peanut City, the Business, the Peanut City Assets,
the Shareholders or other parties from whom Peanut City or the Shareholders
assumed or are otherwise responsible for their liabilities occurring
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on or before the Closing Date (collectively, "Environmental Claims"), subject
to the following limitations and conditions:
(1) REPRESENTATIONS AND WARRANTIES. For those Environmental
Claims resulting from an inaccuracy in or breach by Peanut City or the
Shareholders of any representation or warranty contained in this Agreement,
or from a breach by Peanut City or the Shareholders of any covenant contained
in this Agreement if such inaccuracy or breach relates to Environmental Laws
or Environmental Liabilities, Peanut City and the Shareholders shall
indemnify Recycling for such Environmental Claims; PROVIDED, HOWEVER, that
the indemnification obligations pursuant to this subsection shall terminate
three years after the Closing Date except with respect to claims under this
subsection (1) which have been asserted, whether or not resolved.
(2) DISCLOSED/ON-SITE. For those Environmental Claims
identified in the Environmental Studies, or which have otherwise been
disclosed to Recycling in writing in this Agreement or the Exhibits or
Schedules hereto, and which involve matters or conditions at or about the
Owned Facilities, [CONFIDENTIAL TREATMENT REQUESTED].
(3) DISCLOSED/OFF-SITE. For those Environmental Claims
identified in the Environmental Studies or which are otherwise identified on
SCHEDULE 12.2(b)(3) have otherwise been disclosed in writing to Recycling in
this Agreement or the Exhibits or Schedules thereto, and which involve
matters or conditions off-site from the Owned Facilities, Peanut City and the
Shareholders shall indemnify Recycling for such Environmental Claims.
(4) UNKNOWN/ON-SITE. For those Environmental Claims involving
matters or conditions on or about the Owned Facilities of which Peanut City
and the Shareholders had no Knowledge on the Closing Date,
[CONFIDENTIAL TREATMENT REQUESTED].
(5) UNKNOWN/OFF-SITE. For those Environmental Claims
involving matters or conditions off-site from the Owned Facilities of which
Peanut City and the Shareholders had no Knowledge on the Closing Date, Peanut
City and the Shareholders shall indemnify Recycling for such Environmental
Claims; [CONFIDENTIAL TREATMENT REQUESTED].
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 Peanut City and the Shareholders from and against:
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(a) any and all claims, demands, penalties, fines, liabilities,
obligations, losses, settlements, damages, costs and expenses pertaining to
the Peanut City Assets and Business which arise from any event occurring on
or after the Closing resulting from:
(1) any inaccuracy in, or breach of, any representation and
warranty or nonfulfillment of any covenant on the part of RII Sub or the
Parent contained in this Agreement;
(2) any misrepresentation in or omission from or
nonfulfillment of any covenant on the part of RII Sub or the Parent contained
in any Transaction Document furnished or to be furnished to Peanut City by
RII Sub or the Parent pursuant to this Agreement;
(3) any Liability of Peanut City arising out of the Assumed
Contracts;
(4) any Environmental Claim in excess of the amount or beyond
the time limitations for which Recycling is entitled to indemnification
pursuant to Sections 12.2(b)(2), 12.2(b)(4) and 12.2(b)(5), and any
Environmental Claims which are the result of events, actions, occurrences or
the operation of the Business after the Closing Date other than those
Environmental Claims encompassed by Section 12.2(b)(3);
(5) any infringement claim related to any patent, invention,
trade secret, trademark, service xxxx, trade name or copyright where the
infringement alleged is related to products designed by Recycling after the
Closing Date;
(6) any liabilities to employees of the Business that arise
as a result of actions of RII Sub or the Parent after the Closing Date;
(7) any and all Liabilities relating to the Business or the
Peanut City Assets arising out of occurrences and events after the Closing
Date;
(8) all federal, state, county, local, foreign and other
taxes, including income taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, employment and payroll related taxes,
property taxes and import duties, and any penalties or interest, whether or
not measured in whole or in part by net income required to be paid by RII Sub
relating to the Business after the Closing Date which are not paid RII Sub or
the Parent and which Peanut City or the Shareholders pay;
(9) any and all negligence claims relating to the Business or
the Peanut City Assets arising out of occurrences and events after the
Closing Date; and
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(10) reasonable fees and disbursement of counsel incident to
any of the foregoing.
Notwithstanding anything in this Section 12.3 to the contrary, no
indemnification claim which could have been asserted by Peanut City or the
Shareholders under Sections 12.3(a)(1) or 12.3(a)(2), but for materiality or
Knowledge qualifiers may be asserted under Sections 12.3(a)(3) through
12.3(a)(9).
12.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS.
(a) NOTICE OF CLAIM AND DEFENSE.
(1) The party seeking indemnification under this Article 12
shall give the party from whom indemnification is sought prompt written
notice of the assertion of any third party claim of which said party has
knowledge which is covered by the indemnity agreements set forth in Section
12.2 or Section 12.3, and the party obligated to indemnify will undertake the
defense thereof by representatives chosen by the party obligated to indemnify
but reasonably acceptable to the party seeking indemnification.
(b) If the party obligated to indemnify, within a reasonable
period of time after notice of any such claim fails to defend, the party
seeking indemnification will have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and
risk of the party obligated to indemnify, subject to the right of the party
obligated to indemnify to assume the defense of such claim at any time prior
to settlement, compromise or final determination thereof.
(1) PAYMENT OF SUMS DUE. After any final, non-appealable
judgment or award shall have been rendered by a court, arbitration board or
administrative agency of competent jurisdiction, or a settlement shall have
been completed, or the parties shall have arrived at a mutually binding
agreement, with respect to each separate third party claim indemnified by the
party obligated to indemnify, the party seeking indemnification shall forward
to the party obligated to indemnify notice of any sums due and owing (and the
times when due) by the party seeking indemnification with respect to such
claim and the party obligated to indemnify shall pay such sums to the party
seeking indemnification in cash, within 30 days after the date of such notice
or, if any such sums are due more than 90 days after the date of such notice,
ten days prior to the date each such sums are due.
(2) In no event will the party seeking indemnification
consent to the entry of any judgment or enter into any settlement with
respect to any third party claim without the prior written consent of the
party obligated to indemnify, which consent shall not be unreasonably
withheld or delayed.
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12.5 GOOD FAITH EFFORTS TO SETTLE DISPUTES. Each of the parties
agrees that, prior to commencing any litigation against the other concerning
any matter with respect to which such party intends to claim a right of
indemnification in such proceeding, such parties shall meet in a timely
manner and attempt in good faith to negotiate a settlement of such dispute
during which time such parties shall disclose to the others all relevant
information relating to such dispute.
12.6 FEES AND EXPENSES. Notwithstanding any other provision in this
Article 12, but subject to the limitations on indemnification obligations
provided in Section 12.2(b) and Section 12.8, in the event of any dispute or
controversy between any of the parties to this Agreement, the prevailing
party in such dispute shall, in addition to any other remedies the prevailing
party may obtain in such dispute, be entitled to recover from the other party
all of its reasonable legal fees and out-of-pocket costs incurred by such
party in enforcing or defending its rights hereunder, excluding any costs
incurred under Section 12.5.
12.7 LITIGATION SUPPORT. If, and for so long as, any party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (1)
any transaction contemplated hereunder, or (2) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing
Date involving the Business, the other party will cooperate with the
contesting or defending party and its counsel in the contest or defense, make
available its personnel and provide such testimony and access to its books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending party, unless
the contesting or defending party is entitled to indemnification therefor
under this Article 12.
12.8 INDEMNIFICATION OBLIGATIONS DEDUCTIBLE. With respect to
indemnification claims other than for Environmental Claims, notwithstanding
anything in this Article 12 to the contrary, Peanut City shall not have the
obligation to indemnify Recycling, and Recycling shall not have the
obligation to indemnify Peanut City: (I) until the indemnified party has
suffered claims, demands, penalties, fines, liabilities, obligations, losses,
settlements, damages, costs and expenses in excess of a $75,000 aggregate
deductible (after which point the indemnifying party will only have
indemnification obligations in excess of such deductible).
12.9 ADJUSTMENTS. The parties shall make appropriate adjustments for
tax benefits and insurance coverage, to the extent actually received, in
determining the extent to which a party is obligated to indemnify under this
Article 12.
12.10 EXCLUSIVE REMEDY. The parties acknowledge and agree that the
foregoing indemnification provisions in this Article 12 shall be the
exclusive remedy of the parties with respect to each other and the
Transaction.
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ARTICLE 13
TERMINATION OF AGREEMENT
13.1 TERMINATION. This Agreement may be terminated prior to or on the
Closing Date as follows:
(a) At the election of RII Sub or the Parent at any time prior
to Closing if:
(1) if any one or more of the material conditions precedent to
the obligation of Recycling to close has not been fulfilled as of the Closing
Date or such earlier date as provided in the applicable provision; or, if Peanut
City or the Shareholders has breached any material representation or warranty,
or failed to perform any material covenant or agreement contained in this
Agreement PROVIDED, HOWEVER, Peanut City and the Shareholders shall have, at the
election of Peanut City and the Shareholders, at least 15 days' notice to cure
any such breach and the Closing Date shall be extended by each day of such cure
period.
(b) At the election of Peanut City or the Shareholders at any time
prior to Closing if:
(1) any one or more of the material conditions precedent to the
obligation of Peanut City and the Shareholders to close has not been fulfilled
as of the Closing Date;
(2) Peanut City is unable to obtain any required consent to the
assignment of any of the Assumed Contracts and such failure would constitute a
breach of the Assumed Contract; or
(3) RII Sub or the Parent has breached any material
representation or warranty, or failed to perform any material covenant or
agreement contained in this Agreement; PROVIDED, HOWEVER, RII Sub and the Parent
shall have at least 15 days' notice to cure any such breach, except that in no
event shall Closing Date be extended by virtue thereof.
(c) At the election of any party to this Agreement if (1) 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 or (2)
as provided in Section 8.1(b) if the cost of remediation as stated on the
Remediation Estimate exceeds $200,000.
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(d) At any time on or prior to the Closing Date, by mutual written
consent of the parties.
(e) At any time after June 15, 1998, time being of the essence,
unless extended pursuant to Section 3.5, at the election of Peanut City and
Recycling.
13.2 SURVIVAL. If this Agreement is terminated pursuant to Section 13.1,
this Agreement shall become void and of no further force and effect, and none of
the parties hereto shall have any liability in respect of such termination,
except that any party shall be liable to the extent that failure to satisfy the
conditions contained herein results from the intentional or willful violation of
the representations, warranties, covenants or agreement of such party under this
Agreement.
ARTICLE 14
CERTAIN ADDITIONAL AGREEMENTS
14.1 PUBLIC STATEMENTS; CONFIDENTIALITY OF INFORMATION.
(a) No party will make any public disclosure (including, without
limitation, disclosure to Peanut City'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 and Remediation Estimate described in this Agreement under
Section 8.1 above, shall remain confidential and Recycling shall not make any
disclosures of these studies or estimates to any Person (other than its legal
counsel, independent accountants and lenders) without the prior written approval
of Peanut City.
14.2 REASSIGNMENT OF PEANUT CITY RECEIVABLES. On the 65th day after the
Closing Date, RII Sub shall have the right to reassign to Peanut City any or all
of the Peanut City Receivables which have not been collected within 60 days of
the Closing as
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provided in Section 4.10. Such reassignment shall only occur upon delivery
of documentation reasonably acceptable to Peanut City which transfers all
right, title and interest in the Peanut City Receivables to Peanut City. RII
Sub agrees not to compromise any Peanut City Receivable and to use
commercially reasonable efforts to collect the Peanut City Receivables during
the 60 day period, but shall not be required to engage a collection agent or
commence arbitration or litigation to collect. Within 15 days after
reassignment of any of Peanut City Receivables under this provision, Peanut
City shall reimburse RII Sub dollar-for-dollar for the Peanut City
Receivables so reassigned with such payment being made in immediately
available funds.
14.3 EXPENSES; SALES TAX. Each party shall pay its own costs and
expenses, including the fees and disbursements of its respective counsel, in
connection with the negotiation, preparation and execution of this Agreement and
completion of the Transaction whether or not the Transaction is completed.
Peanut City shall pay all sales or use taxes, payable under the laws of the
Commonwealth of Virginia, as a result of the Transaction; PROVIDED, HOWEVER,
that Recycling shall pay all sales, retitling or other taxes assessable by the
Virginia Department of Motor Vehicles with respect to the Transaction.
14.4 WAIVERS AND CONSENTS. All waivers and consents given hereunder
shall be in writing. No waiver by any party hereto of any breach or anticipated
breach of any provision hereof by any other party shall be deemed a waiver of
any other contemporaneous, preceding or succeeding breach or anticipated breach,
whether or not similar, on the part of the same or any other party.
14.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given only if and when: (1) personally
delivered; or (2) three business days after mailing, postage prepaid, by
certified mail; or (3) when delivered (and receipted for) by an overnight
delivery service; or (4) when delivered by facsimile transmission for which
automatic confirmation has been received, addressed in each case as follows:
IF TO RII SUB OR THE PARENT:
Xxxxxx X. Xxxxx, Chairman and CEO
Recycling Industries, Inc.
Recycling Industries of Virginia, Inc.
000 Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
telephone: 000-000-0000
facsimile: 000-000-0000
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WITH A COPY TO:
Xxxxxx Xxxxxx, Esq.
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 PEANUT CITY OR THE SHAREHOLDERS:
Xxxxxx X. Xxxxxxxx, President
Peanut City Iron & Metal Company, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
telephone: 000-000-0000
facsimile: 000-000-0000
and
Xxxxxxx Xxxxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
telephone:
facsimile:
Xxxxx Xxxxxxxx
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
telephone:
facsimile:
Xxxxxx Xxxx
0000 Xxxx Xxxx Xxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
telephone:
facsimile:
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Xxxx Xxxxxxxx
x/x Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000
telephone: 000-000-0000
facsimile: x/x Xxxxx X. Xxxxxxx, Xxx., Xxxxxxx & Xxxxxxx, X.X.
757-624-3169
WITH A COPY TO:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx & Xxxxxxx, P.C.
X.X. Xxx 0000
Xxxxxxx, XX 00000
telephone: 000-000-0000
facsimile: 757-624-3169
Any party may change its address by giving notice to every other party.
14.6 PEANUT CITY 401(k) PLAN; PEANUT CITY HEALTH INSURANCE COVERAGE. RII
Sub or Parent hereby agrees and covenants as follows.
(a)401(k) PLAN. Subject to the indemnification provided in
Section 12.2(a)(10), RII Sub or Parent shall assume sponsorship of Peanut
City's 401(k) Plan on the Closing Date and shall continue sponsorship of such
plan, and to maintain the tax qualification of such plan, through the earlier
of December 31, 1999 or the date on which RII Sub or Parent has in place a
401(k) plan in which the former Peanut City employees hired by RII Sub
following the Closing are eligible to participate. Neither RII Sub nor the
Parent shall assume or otherwise be responsible for liabilities resulting
from any actions, mistakes or claims of any nature related to Peanut City's
or its agent's establishment or maintenance of the Peanut City 401(k) Plan
prior to the Closing Date. Peanut City will reimburse RII Sub or Parent the
full amount of any "top-heavy minimum contribution" (as defined in IRC
Section 416) that RII Sub or Parent is required to make to Peanut City's
401(k) Plan for the 1997 Plan year, with reimbursement being made within ten
business days after RII Sub or Parent provides Peanut City with documentation
of the amount it was required to pay as a "top-heavy minimum contribution,"
if any.
(b) PEANUT CITY MEDICAL INSURANCE PLAN. Subject to the
Termination Provisions of the Peanut City Medical Insurance Plan, the former
Peanut City employees hired by RII Sub shall have continuing and
uninterrupted medical insurance coverage provided by the Parent's medical
insurance carrier without regard to any eligibility, waiting
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periods or any other requirements and without any exclusion or limitation for
preexisting conditions, other than those permitted under applicable law and
regulation.
14.7 CONVERSION OF THE PARENT SERIES J PREFERRED STOCK AND ARRANGED
SALE. At least 30 days prior to the third year anniversary of the Closing
Date, Peanut City and the Shareholders shall notify the Parent if they elect
to retain the shares of Parent Common Stock issuable upon automatic
conversion of the Parent Series J Preferred Stock (the "Conversion Shares").
If Peanut City and the Shareholders elect to receive the Conversion Shares,
upon delivery of the Conversion Shares to them, the Parent will have no
further obligation to Peanut City or the Shareholders with respect to the
Conversion Shares other than piggy back registration rights as provided for
in the Subscription Agreement, which may continue if the Conversion Shares
are not eligible for resale under Rule 144(k) of the rules and regulations
under the 1933 Act.
If no such notice is given to the Parent in accordance with Section
14.5, the Parent shall use its best efforts to assist Peanut City and the
Shareholders in selling the Conversion Shares within 30 days after the date of
conversion. If the assisted sale is completed within 30 days of the date of
conversion, the Parent will not be required to pay any interest. If the
assisted sale is not accomplished within 30 days after the date of conversion,
the Parent shall pay Peanut City and the Shareholders interest from the date of
conversion, at the prime lending rate of its principal lender, payable monthly
within five days after the end of each month, with the first interest payment
being due within thirty five days after the date of conversion. Further, if the
arranged sale has not been accomplished by the 90th day after the date of
conversion, the interest rate shall be increased to one percent above the prime
lending rate of the Parent's primary lender commencing on the 91st day and
continuing at that rate until the assisted sale is accomplished. If the
assisted sale of the Conversion Shares does not yield proceeds of $502,500
[CONFIDENTIAL TREATMENT REQUESTED], the Parent shall pay to Peanut City and the
Shareholders, as applicable, the shortage within ten business days after receipt
by the Parent of the notice of shortage. If the shortage is not paid within ten
business days after receipt by the Parent of the notice of shortage, the amount
of the shortage shall accrue interest at one percent above the prime lending
rate of the Parent's primary lender commencing on the 11th business day and
continuing at that rate until the shortage and all interest thereon is paid.
14.8 COVENANT TO PAY ALL UNASSUMED DEBTS. To the extent Peanut City owes
debts to any third parties after the Closing other than the Assumed Liabilities,
which could affect the Peanut City Assets, Peanut City and the Shareholders
hereby covenant to pay such debts timely as they become due.
14.9 FURTHER ASSURANCES. From and after the date of this Agreement, each
of the parties hereto will cooperate with each other and will use their best
efforts without undue cost to obtain all necessary waivers and consents from
third parties and to implement the transactions contemplated under this
Agreement and the other Transaction Documents.
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Peanut City and the Shareholders, at any time and from time to time on and
after the Closing, upon request by RII Sub or the Parent and without further
consideration, shall take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such transfers, conveyances and assurances as may be reasonably requested by
RII Sub or the Parent for the better conveying, transferring, assigning,
delivering, assuring and confirming the Peanut City Assets to RII Sub.
14.10 RETENTION OF/ACCESS TO BUSINESS RECORDS. For at least six years
following the Closing Date, Peanut City shall retain all business records,
including tax records, related to the Peanut City Assets or the Business
which are not delivered to RII Sub. During this period, from time to time on
and after the Closing, upon reasonable prior written request by RII Sub or
the Parent and without further consideration, Peanut City shall provide RII
Sub or the Parent access to or copies of said business records. Likewise,
for at least six years following the Closing Date, RII Sub shall retain all
business records related to the Peanut City Assets or the Business and,
during this period, from time to time on and after the Closing, upon
reasonable prior written request by Peanut City or the Shareholders and
without further consideration, RII Sub shall provide Peanut City or the
Shareholders access to or copies of said business records.
14.11 AUDIT BY RII SUB AND PARENT. For a period of five years after
the Closing, Peanut City and the Shareholders shall give Parent and RII Sub's
independent certified public accountants full access to the financial books
and records and shall fully cooperate with such accountants in conducting and
completing any audits necessary to enable the Parent to meet the disclosure
and financial reporting requirements of the 1934 Act and the rules and
regulations promulgated thereunder.
14.12 ENTIRE AGREEMENT. This Agreement, including all Schedules and
Exhibits hereto, and the other Transaction Documents constitute the entire
agreement of the parties with respect to the subject matter hereof and may
not be modified, amended or terminated except by a written instrument
specifically referring to this Agreement signed by each of the parties hereto
or as otherwise provided in this Agreement. Any and all previous agreements,
representations and understandings between or among the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement. Each of the Schedules and Exhibits to this Agreement are
incorporated herein by this reference and expressly made a part hereof.
14.13 CONSTRUCTION. In the event of an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" means including without limitation. Where appropriate to avoid
any ambiguity
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and to encompass the broadest meaning, the word "and" shall mean "and/or,"
and the word "or" shall mean "and/or." The parties intend that the each
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter,
regardless of the relative levels of specificity, which the party has not
breached shall not detract from or mitigate the fact that the party is in
breach of the first representation, warranty or covenant.
14.14 RIGHTS OF THIRD PARTIES. All conditions of the obligations of
the parties hereto, and all undertakings herein, except as otherwise provided
by a written consent, are solely and exclusively for the benefit of the
parties hereto and their successors and assigns, and no other Person or
entity shall have standing to require satisfaction of such conditions or to
enforce such undertakings in accordance with their terms or be entitled to
assume that any party hereto will refuse to complete the Transaction
contemplated hereby in the absence of strict compliance with any or all
thereof, and no other Person or entity shall, under any circumstances, be
deemed a beneficiary of such conditions or undertakings, any or all of which
may be freely waived in whole or in part, by mutual consent of the parties
hereto at any time, if in their sole discretion they deem it desirable to do
so.
14.15 HEADINGS. The Table of Contents and Article and Section headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
14.16 GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the Commonwealth of Virginia, without regard to principles of
conflicts or choice of law, except that Colorado law shall govern the terms
of the Stock Consideration.
14.17 SUBMISSION TO JURISDICTION; WAIVERS. The parties each hereby
irrevocably and unconditionally: (1) agree that any action or proceeding
related to this Agreement shall be brought in, and hereby submits itself and
its property to the jurisdiction of, the courts of the Commonwealth of
Virginia located in Norfolk, Virginia, the courts of the United States of
America for the Eastern District of Virginia, Norfolk Division, and the
appellate courts from any thereof; (2) consent to the venue of any such
action or proceeding in any of said courts and waives any objection that it
may have, now or hereafter, that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; and (3) agree
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the party against whom the action
or proceeding is brought at its address set forth in Section 14.5.
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14.18 PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by
operation of law, by assignment to the Lender, or with the consent of the
other parties. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
14.19 COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be
executed in two or more counterparts, all of which taken together shall
constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a Party shall
constitute a valid and binding execution and delivery of this Agreement by
such Party. Such facsimile copies shall constitute enforceable original
documents.
14.20 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
14.21 CORPORATE AUTHORITY. The undersigned have executed this
Agreement with all requisite corporate authority.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
"RII SUB"
RECYCLING INDUSTRIES OF SUFFOLK, INC.
Dated: May 27, 1998 By /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx, Chief Financial Officer
"PARENT"
RECYCLING INDUSTRIES, INC.
Dated: May 27, 1998 By /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx, Chief Financial Officer
"PEANUT CITY"
PEANUT CITY IRON & METAL COMPANY, INC.
Dated: May 27, 1998 By /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx, President
"XXXXXXXX"
Dated: May 27, 1998 /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxx
"FJ"
Dated: May 27, 1998 /s/ Xxxx Xxxxxxxx
------------------------------------------
Xxxx Xxxxxxxx by Xxxxxxx X. Xxxxxxxx,
his Attorney-in-Fact
"EJ"
Dated: May 27, 1998 /s/ Xxxxxx Xxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx
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"KW"
Dated: May 27, 1998 /s/ Xxxxx Xxxxxxxxx
------------------------------------------
Xxxxx Xxxxxxxxx
"SB"
Dated: May 27, 1998 /s/ Xxxxxx Xxxx
------------------------------------------
Xxxxxx Xxxx
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LIST OF EXHIBITS
Exhibit A Certificate of Designations, Rights and Preferences of the Series J
Redeemable Convertible Preferred Stock of Recycling Industries, Inc.
Exhibit B Form of Subscription Agreement
Exhibit C Environmental Escrow Agreement
Exhibit D Legal Opinion from Counsel to Peanut City and the Shareholders
Exhibit E Employment Agreements
Exhibit F Non-Competition Agreements
Exhibit G Legal Opinion from Counsel for RII Sub and Parent
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LIST OF SCHEDULES
SCHEDULE 1.2 Material Assumed Contracts
SCHEDULE 2.1(a) Owned Facilities - Legal Description
SCHEDULE 2.1(b) Equipment
SCHEDULE 2.1(f) Office Assets
SCHEDULE 2.1(h) Software for Computers and Scales
SCHEDULE 2.2 Excluded Assets under Subsections (b), (f) and (j)
SCHEDULE 3.2 Accounts Receivable and Inventory Valuations
SCHEDULE 3.4 Allocation of Purchase Price
SCHEDULE 4.1(b) Jurisdictions in which Peanut City is qualified to
transact business
SCHEDULE 4.2 Property Title Exceptions
SCHEDULE 4.3(c) Consents and Approvals
SCHEDULE 4.4 Peanut City Financial Statements
SCHEDULE 4.5(d) Peanut City State and Federal Income Tax Returns
SCHEDULE 4.6 Compliance with Laws
SCHEDULE 4.7 Permits
SCHEDULE 4.8 Litigation
SCHEDULE 4.9(a) Contracts and Other Agreements
SCHEDULE 4.11 Damage to Tangible Property
SCHEDULE 4.14(b) Leases, Etc. of Owned Facilities
SCHEDULE 4.15 Liabilities
SCHEDULE 4.16 Suppliers and Customers
SCHEDULE 4.17 Employee Benefit Plans
SCHEDULE 4.20 Insurance Policies
SCHEDULE 4.21 Certain Relationships
SCHEDULE 4.24 Employee Information
SCHEDULE 4.25 Environmental Matters
SCHEDULE 8.1 Environmental Studies
SCHEDULE 12.2(b)(3) Disclosed/Off-Site Environmental Claims
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