1
ASSET PURCHASE AGREEMENT
BETWEEN
U.S. RUBBER RECYCLING, INC., A DELAWARE CORPORATION
AND
RECLAMATION RESOURCES, INC., A CALIFORNIA CORPORATION
2
TABLE OF CONTENTS
1. TERMS OF PURCHASE AND SALE............................................... 1
1.1 Transfer of Assets............................................. 1
1.3 Purchase Price................................................. 2
1.4 Closing Adjustment............................................. 3
1.5 Closing; Closing Date.......................................... 4
1.6 Business Name.................................................. 4
1.7 Access......................................................... 4
1.8 Design and Marketing........................................... 5
2. PURCHASER'S ASSUMPTIONS.................................................. 5
2.1 Assumed Debts.................................................. 5
2.2 Other Liabilities.............................................. 6
3. SELLER'S REPRESENTATIONS AND WARRANTIES.................................. 6
3.1 Corporate Existence of Seller, Etc................................ 6
3.2 Capitalization.................................................... 6
3.3 Financial Statements.............................................. 6
3.4 Absence of Undisclosed Liabilities................................ 7
3.5 Consents and Approvals............................................ 7
3.6 Title to Assets................................................... 7
3.7 Insurance......................................................... 7
3.8 Absence of Changes or Events...................................... 7
3.9 Litigation........................................................ 8
3.10 Taxes............................................................. 9
3.11 Licenses and Permits.............................................. 9
3.12 Interest in Competitors, Suppliers, Customers, Etc................ 9
3.13 Accounts Receivable............................................... 9
3.14 Inventory......................................................... 9
3.15 Patents, Trademarks, Service Marks, Corporate
Names, Trade Names and Copyrights................................. 10
3.16 Absence of Defaults............................................... 10
3.17 Compliance with Laws.............................................. 10
3.18 Employee Relations................................................ 10
3.19 Loss Contract..................................................... 11
3.20 Disclosure........................................................ 11
3.21 Hazardous Materials............................................... 11
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES............................... 11
4.1 Organization and Authority........................................ 11
4.2 Authorization and No Conflicts.................................... 11
5. CERTAIN COVENANTS OF SELLER.............................................. 12
5.1 Conduct of Business............................................... 12
5.2 Undertakings...................................................... 13
5.3 Exclusivity....................................................... 13
6. CONDITIONS TO PURCHASER'S OBLIGATIONS................................... 13
6.1 Representations, Warranties and Covenants of Seller............... 13
6.2 Further Action.................................................... 14
6.3 No Governmental or Other Proceeding............................... 14
6.4 Permits and Exclusions............................................ 14
6.5 Assignment of Lease............................................... 14
6.6 Agreement with Richard Snyder..................................... 14
i
3
6.7 Accounts Receivable Aging Report...................................................... 14
6.8 Storage Lot........................................................................... 14
6.9 Goodyear Agreement.................................................................... 15
6.10 Johnson Lift/Hyster Lease............................................................. 15
6.11 Designer Information Services Contract................................................ 15
6.12 Inventory............................................................................. 15
7. CONDITIONS TO SELLER'S OBLIGATIONS.......................................................... 15
7.1 Representations, Warranties and Covenants of
Purchaser........................................................................... 15
7.2 Further Actions....................................................................... 15
7.3 No Governmental or Other Proceeding................................................... 15
7.4 Employment Agreement.................................................................. 16
7.5 Inventory............................................................................. 16
7.6 Release............................................................................... 16
7.7 Delivery of Documents................................................................. 16
8. SURVIVAL AND INDEMNIFICATION................................................................ 16
8.1 Survival.............................................................................. 16
8.2 Indemnification....................................................................... 16
8.3 Notice of Claim....................................................................... 17
8.4 Defense............................................................................... 17
8.5 Set-Off............................................................................... 18
9. TERMINATION PRIOR TO CLOSING................................................................ 19
9.1 Termination of Agreement.............................................................. 19
10. MISCELLANEOUS............................................................................... 19
10.1 Entire Agreement..................................................................... 19
10.2 Successors and Assigns............................................................... 19
10.3 Counterparts......................................................................... 20
10.4 Headings............................................................................. 20
10.5 No Waiver............................................................................ 20
10.6 Expenses............................................................................. 20
10.7 Notices.............................................................................. 20
10.8 Further Assurances................................................................... 21
10.9 Governing Law........................................................................ 21
10.10 Consent to Jurisdiction.............................................................. 21
10.11 Specific Performance................................................................. 21
10.12 Attorneys' Fees...................................................................... 21
10.13 Brokers.............................................................................. 21
Schedule 3.8
Schedule 6.8 - Lease
Exhibit A - Assets
Exhibit B - Liabilities
Exhibit C - Secured Promissory Note
Exhibit D - Security Agreement
ii
4
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 30th day of April, 1996, by and between U.S. Rubber Recycling,
Inc., a Delaware Corporation ) hereinafter referred to as "Seller") and
Reclamation Resources Inc., California corporation (hereinafter referred to as
"Purchaser").
R E C I T A L S
A. WHEREAS, Seller is engaged at those certain facilities located in
Rancho Cucamonga, California, in the business of manufacture of rubber floor
tiles from waste tires (the "Business"); and
B. WHEREAS, Seller desires to sell to Purchaser the assets, properties
and rights held, used in connection with, arising from and relating to the
Business subject to Purchaser's assumption of certain liabilities and
obligations of Seller owed, incurred in connection with, arising from or
relating to the Business and which are described on Exhibit B attached hereto
(the "Liabilities"), and Purchaser and Seller desire to make such sale, purchase
and assumption and to enter into such transactions, all upon the terms and
conditions set forth in this Agreement;
1. TERMS OF PURCHASE AND SALE.
1.1 TRANSFER OF ASSETS. Subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell, convey, transfer, assign, and
deliver to Purchaser, and Purchaser agrees to purchase from Seller, all the
assets, properties, and business of Seller of every kind, character, and
description whether tangible, intangible, real, personal, or mixed, and wherever
located, all of which are sometimes collectively referred to in this Agreement
as "the Assets," including, but not without limitation to, the following:
(a) The asets described on Exhibit A attached hereto;
(b) The name, all telephone numbers, and advertising rights for
"U.S. Rubber Recycling, Inc.";
(c) All other supplies, materials (including all marketing
materials, files, computer programs, design programs and files),
work-in-process, finished goods, equipment, machinery, furniture, fixtures,
motor vehicles, claims and rights under leases, contracts, purchase and sales
orders, copyrights, service marks, trademarks, trade names, trade secrets,
patents, patent
1
5
applications, licenses, royalty rights, deposits, and rights and claims to
refunds and adjustments of any kind.
1.2 EXCLUDED ASSETS. The Assets shall not include any of the
Seller's cash, cash equivalents and inter-company notes and accounts receivable.
1.3 PURCHASE PRICE. The purchase price (the "Purchase Price") for
the Assets shall be the assumption of the Assumed Liabiltiies (herein defined)
and $500,000 to be payable at the Closing as follows:
(a) Cash in the amount of $200,000 at the Closing.
(b) Buyer's secured promissory note ("Secured Note"), dated as
of the Closing Date, in the principal amount of $300,000, bearing interest
at the rate of seven percent (7%) per annum, with annual payments of
$50,000 as a principal reduction plus interest of seven percent (7%) on the
anniversary date of the Closing. The Secured Note shall be secured by a
first priority security interest in the Purchaser's assets evidenced by a
Security Agreement and UCC-1 Financing Statement. Seller agrees to and
shall subordinate its security interest in the collateral to additional
institutional financing not to exceed $1 million at the request of
Purchaser provided that such financing is used to finance the Purchaser's
existing Business, or crumb rubber business and not to guaranty the
obligations of a third party or finance another type of business. Seller
agrees to sign additional documents as necessary to implement the
subordination. Purchaser shall use the additional financing to provide
working capital to the Business; however, if Purchaser uses the additional
financing to provide working capital to a crumb rubber business owned by
the Purchaser, the net sales from the other business shall be added to the
net sales of the Current Products under subparagraph (c) below for purposes
of calculating the additional payments to be made under the Secured Note.
The Secured Note and Security Agreement shall be in the form of Exhibits C
and D, respectively.
(c) For Contract Years (herein defined) in which net sales from
floor tiles and any other products currently manufactured by Seller
(collectively "Current Products") exceed $1.4 million, an additional
principal reduction shall be made on an annual basis in a sum equal to
twelve and one-half percent (12-1/2%) of the net sales of Current Products
which exceed $1.4 million. A Contract Year shall be each 12-month period
after the Closing Date commencing on the Closing Date or the anniversary of
the Closing Date and ending 12 months thereafter. Net Sales shall be
defined as gross sales less returns, allowances and sales discounts. The
2
6
Purchaser shall cause the Purchaser's regular independent certified public
accountants to make a written determination of the amount of the net sales
based upon an audit of the Purchaser's net sales. The Purchaser shall cause
a copy of such written determination to be furnished to each of the parties
hereto within forty-five (45) days of the end of the Contract Year and such
determination shall be final and binding upon the parties hereto unless the
Seller shall have notified the Purchaser in writing of any objections
thereto within thirty (30) days after the Seller's receipt of such
determination. Any notice of objection shall specify in reasonable detail
the items which are being disputed and shall include a summary of the
reason for such dispute. Any dispute relating to the determination of the
net sales which cannot be resolved by the parties within thirty (30) days
after receipt of any such notice of objections shall be referred for
decision to such internationally recognized firm of independent public
accountants as shall be mutually agreed upon by the Purchaser and the
Seller, or failing such agreement, such other internationally recognized
firm of independent public accountants as shall be selected in accordance
with the rules of the American Arbitration Association (such firm so agreed
upon or selected being referred to as the "Disputes Auditor"). A decision
of the Disputes Auditor with respect to any matter or matters in dispute
shall be final and binding on the parties hereto (absent fraud, bad faith,
undue influence or manifest error). The Disputes Auditor shall be required
to render its decision within thirty (30) days after referral of the
dispute to it for decision pursuant hereto. The fees of the Disputes
Auditor shall be borne by the Purchaser, on the one hand, and the Seller,
on the other hand, in proportion to a separate determination by the
Disputes Auditor of the relative merits of the Purchaser's and Seller's
positions in dispute. The additional payment based upon net sales shall be
made within ten (10) days of the determination of the amount of the net
sales becoming final.
Purchaser shall provide Seller with its year-end financial statements within 90
days of each anniversary of the Closing Date until the Secured Note is paid.
Allocation of the Purchase Price, and Form 8594 shall be prepared by Purchaser
within ninety (90) days of Closing and provided to Seller. It is expressly
understood and agreed that Purchaser shall not be liable for any of the
obligations or liabilities of Seller of any kind and nature other than those
specifically assumed by Purchaser.
1.4 CLOSING ADJUSTMENT. Within sixty (60) days after the Closing,
Purchaser shall prepare a statement which sets forth the net realized value of
the Assets purchased and assumed Liabilities as of the Closing Date. Purchaser
shall receive a cash adjustment from Seller in an aggregate amount equal to
$265,000
3
7
minus the difference between (i) the aggregate amount of the realized value of
the Accounts Receivables (value to be determined on a 60-day aging period),
Inventory, Prepaid Property Taxes, and Security Deposit minus (ii) the amount of
the assumed Accounts Payable. The cash adjustment pursuant to this section shall
bear interest at the rate of one and one-half percent (1-1/2%) per month unless
Seller or Purchaser pays to Purchaser or Seller, as the case may be, the cash
adjustment within 30 days of receipt of the Closing Statement.
1.5 CLOSING; CLOSING DATE. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place on the earlier
of April 30, 1996, or three business days after all conditions set forth in
Sections 6 and 7 hereof have been satisfied at the offices of Robert J. Krup,
1301 Dove Street, Suite 1000, Newport Beach, California 92660, at 4:00 p.m. (the
"Closing Date"), or at such other place or time as Purchaser and Seller may
mutually agree. At the Closing (i) the transfer of the Assets shall be effected
by such bills of sale, assignments, certificates of title (duly endorsed) and
other instruments of transfer and conveyance which are sufficient to convey to
Purchaser all the title of Seller to the Assets, and (ii) the assumption of the
Liabilities shall be effected by such instruments of assumption and undertaking,
if any, as are necessary to cause the Liabilities to be fully and legally
assumed. All of the foregoing instruments and documents shall be in form and
substance consistent with the terms of this Agreement. At the Closing, the
various opinions, certificates and other documents required hereby shall be
delivered to the parties.
1.6 BUSINESS NAME. Immediately upon the Closing, Seller shall take
all actions necessary, including the filing of amended articles of incorporation
with the Secretary of State of California and Delaware, as necessary, to change
its name, and shall thereafter refrain from using "U.S. Rubber Recycling, Inc."
or any similar name as its corporate, trade, business or fictitious name. From
and after the Closing Date, Purchaser shall have the right to use "U.S. Rubber
Recycling, Inc." or any other lawfully permitted name as its corporate, trade,
or business and/or fictitious name.
1.7 ACCESS. Prior to the Closing Date, Seller shall provide
Purchaser and its employees, accountants, attorneys, advisors and other
representatives with full access to the properties, personnel and books and
records of the Business in order that Purchaser may make such investigation
during normal business hours as it shall reasonably require. From and after the
date hereof, Seller will permit such access to any other third party only after
notification of and an opportunity to consult with Purchaser. To the extent that
Seller permits any such third-party access, Seller will provide Purchaser with
copies of all written information or documentation supplied to such third party.
Unless and until the acquisition contemplated herein has been
consummated, the Purchaser shall hold in confidence all information obtained
pursuant to this Agreement and prior to the date hereof from the Seller during
the conducting of its due diligence and, if
4
8
such acquisition is not consummated, the Purchaser shall return to the Seller
all documents and other materials received by it hereunder and from the Seller
during the conducting of its due diligence. If the acquisition contemplated
herein is consummated, the Purchaser covenants and agrees that it shall preserve
and keep the records of the Seller for a period of three years from the Closing
Date and shall make such records available to the Seller or its authorized
representatives as reasonably required by the Seller in connection with any
legal proceedings against, or governmental investigations of, the Seller or in
connection with any tax examination of the Seller.
1.8 DESIGN AND MARKETING. Seller shall provide, at no additional
cost to Purchaser, the services of Michael Dewhurst for 15 hours of Michael
Dewhurst's time at times that are mutually agreed upon by the Seller and
Purchaser. Any utilization of Mr. Dewhurst's time above the 15 hours shall be in
the discretion of the Seller and shall be paid at the rate of $75.00 per hour.
In consideration these design and marketing services, Purchaser shall allow
Seller utilization of the current storage room located in the offices of U.S.
Rubber Recycling, Inc. for a period of 90 days.
2. PURCHASER'S ASSUMPTIONS. Except for the Assumed Liabilities, and as
a further inducement to the Purchaser to purchase the above, Seller agrees and
promises to pay all accounts payable, all indebtedness to creditors accruing
from the above-described business, and to do all things necessary to relieve the
property and stock-in-trade of the premises from any security, lien, or
encumbrance in the name of the Seller, for loans or credit extended to same.
More specifically, except for the Assumed Liabilities, Seller shall
bring current as of the Closing Date all debts to creditors, payroll, payroll
taxes, business income taxes, sales taxes, franchise taxes, property taxes,
state disability taxes, insurance premiums, utilities, union dues, rent,
judgments, penalties, and all other similar debts, taxes, and liabilities,
accruing to the business. Seller shall bring current as of the Closing Date all
bonuses, performance incentives and benefits pursuant to the employment contract
with Richard Snyder.
2.1 ASSUMED DEBTS. Subject to the performance by the parties hereto
of their respective obligations hereunder, on the Closing Date, simultaneously
with the transfer, conveyance and assignment by the Seller to the Purchaser of
the Assets, the Purchaser shall assume and shall perform and pay or cause to be
paid or otherwise discharged when due, subject to the limitations contained
herein, all of the Seller's obligations under the agreements set forth on
Exhibit B hereto and the other liabilities of the Seller set forth on Exhibit B
hereto (hereinafter referred to as the "Assumed Liabilities."). The assumption
by the Purchaser of the Assumed Liabilities shall be effected by such instrument
or instruments of assumption delivered to the Seller on the Closing Date as
shall be reasonably requested by the Seller. The Purchaser shall, at any time
and from time to time after the Closing Date,
5
9
execute and deliver such further instruments of assumption and do all such
further acts as may be reasonably requested by the Seller to implement the
assumption of each such liability and obligation. As of the Closing Date,
Purchaser shall be deemed to have assumed the Assumed Liabilities.
2.2 OTHER LIABILITIES. Except for the Assumed Liabilities, Purchaser
is not assuming, and shall not be deemed to have assumed or incurred any
liability (contingent or otherwise) with respect to, any other liabilities or
obligations of Seller or which arise out of or relate to the Business.
3. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller hereby represents and warrants to Purchaser:
3.1 CORPORATE EXISTENCE OF SELLER, ETC. The Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as presently
conducted. This Agreement has been duly executed and delivered on behalf of the
Seller and constitutes the valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, subject to the
general equitable principles and except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws of general application relating to creditors' rights.
3.2 CAPITALIZATION. The authorized capital stock of the Seller
consists of 50 million shares of Common Stock, all of one class. All outstanding
Shares have been duly authorized and validly issued, are fully paid and
non-assessable and were not issued in violation of any preemptive rights. There
is outstanding no security, option, warrant, right, call, subscription,
agreement, commitment or understanding of any nature whatsoever, fixed or
contingent, that directly or indirectly (i) calls for the issuance, sale, pledge
or other disposition of any Shares or of any other capital stock of the Seller
or any securities convertible into, or other rights to acquire, any such Share
or other capital stock of the Seller or (ii) obligates the Seller to grant,
offer or enter into any of the foregoing or (iii) relates to the voting or
control of such Shares, capital stock, securities or rights. No person has any
right to require the Seller to register any of its securities under the
Securities Act of 1933 (the "1933 Act").
3.3 FINANCIAL STATEMENTS. Except as noted therein, the Seller's
financial statements for the year ended March 31, 1995 and the eleven-month
period ended February 29, 1996 (collectively the "Financial Statements"), fairly
and accurately present the financial position of Seller on the dates specified
and the results of its operations for the periods indicated in conformity with
generally accepted accounting principles consistently applied for such period.
6
10
3.4 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
(a) reflected or reserved against in the Financial Statements, (b) disclosed in
this Agreement, or (c) trade payables incurred in the ordinary course of
business of Seller, as appropriate, since February 29, 1996 (the "Financial
Date"), Seller has no material liabilities, commitments, indebtedness or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due, is not in breach or default with respect to
any terms or conditions of any liabilities, commitments, indebtedness or
obligations, and Seller does not know or have reasonable grounds to know of any
basis for the assertion against Seller of any other claim or liability.
3.5 CONSENTS AND APPROVALS. Except as set forth in Section 6 hereof,
there is no authorization, consent order or approval of, or notice to or filing
with, any governmental authority required to be obtained or given or waiting
period required to expire as a condition to the lawful consummation by the
Seller of the sale of the Assets pursuant to this Agreement.
3.6 TITLE TO ASSETS. The Seller has good and marketable title to all
of the Assets, free and clear, except for liens for current taxes not yet due
and payable or for taxes the validity of which is being contested in good faith
by appropriate proceedings.
3.7 INSURANCE. All insurance policies with respect to the
properties, assets, operations and business of the Seller (the "Insurance
Policies") are in full force and effect. Except as set forth in Exhibit E, there
are no pending claims against the Insurance Policies by the Seller as to which
the insurers have denied liability and with respect to which there is a
reasonable likelihood of a settlement or determination adverse the Seller. There
are no circumstances existing which would enable the insurers to avoid liability
under the Insurance Policies or no other parties having an interest under the
Insurance Policies.
3.8 ABSENCE OF CHANGES OR EVENTS. Except as set forth on Schedule
3.8, since the Financial Date, Seller has conducted its business only in the
ordinary course and has not:
(a) suffered any material adverse change in its assets,
businesses or prospects;
(b) incurred any obligation or liability affecting its
operations or business except in the ordinary course of business and consistent
with prior practices;
(c) purchased, sold, assigned, transferred, mortgaged, or
pledged any of its assets or subjected any of its assets to any lien, charge,
security interest or any other encumbrance or restriction, except for purchases
or sales of inventory in the ordinary course of business;
7
11
(d) suffered any labor trouble, or any damage, destruction or
loss which has materially adversely affected any of its assets or businesses;
(e) made or obligated itself in any way to make any increase in
the compensation payable to any officer or director, or, except in accordance
with its normal business policies, made or obligated itself in any way to make
any increase in the compensation payable to any employee, or, except in
accordance with its normal business policies, incurred any further employment
obligations or commitments to any current or prospective employee;
(f) suffered any material adverse change in the financial
condition or results of operations or incurred a net operating loss for the
period commencing on the Financial Date and terminating on the date hereof;
(g) entered into any transaction, contract or commitment in
connection with its businesses other than in the ordinary course of business;
(h) declared or paid any dividend or declared or made any
distribution of assets, in respect of its stock, or authorized the creation or
issuance of, or issued or otherwise caused any reclassification or
reorganization of, any securities of any class which would affect consummation
of the transactions contemplated hereby, or directly or indirectly redeemed,
purchased or otherwise acquired any outstanding securities, or agreed to take
any such action;
(i) loaned any monies to any person other than in the ordinary
course of business;
(j) incurred any indebtedness for borrowed money or issued or
sold any debt securities;
(k) forgiven or cancelled any debts or claims, or waived any
rights except in the ordinary course of business;
(l) repaid any loans to or entered into any other transactions,
agreements or understandings with any of its shareholders, officers or
directors, other than those regarding employee compensation and benefits entered
into in the ordinary course of business; or
(m) agreed to do any of the above.
3.9 LITIGATION. There is no action, proceeding or investigation in
any court or before any governmental or regulatory authority pending or
threatened in writing or orally (a) against the Seller or against its
shareholders or officers, in connection with the conduct of the businesses of
the Seller, (b) which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby. The actions or proceedings
described in clauses (a) and (b) are collectively referred to as
8
12
"Litigation." The Seller is not subject to any outstanding order,
writ, judgment or decree.
3.10 TAXES.
(i) All federal, state, local and material foreign income,
franchise, excise, sales and use tax ("Taxes") returns required to be filed with
respect to the Seller have been filed in a timely manner (taking into account
all extensions of due dates);
(ii) the Seller has paid, or has made sufficient provision for,
or has set up adequate reserves for the payment of, all Taxes shown as due on
such returns;
(iii) no election under Section 341(f) or Section 338(g) of the
Internal Revenue Code of 1986 (the "Code") has been or will be filed by or on
behalf of the Seller;
(iv) the Seller has not executed any presently effective waiver
or extension of any statute of limitations against assessment and collection of
Taxes with respect to the Seller; and
(v) the proper amounts have been withheld by the Seller from
employees with respect to all cash compensation paid to employees for all
periods in compliance in all material respects with the tax and other
withholding provisions of all applicable laws.
3.11 LICENSES AND PERMITS. The Seller has all governmental licenses
and permits and other governmental authorizations and approvals required for the
conduct of the Business as presently conducted ("Material Permits"), including
but not limited to the manufacturing facility and all tire-storage sites.
3.12 INTEREST IN COMPETITORS, SUPPLIERS, CUSTOMERS, ETC. The Seller
does not have any ownership interest in any competitor, supplier or customer of
the Seller accounting for not less than 1 percent of the Seller's purchases from
Suppliers in the most recently ended fiscal year or any property used in the
operation of the business of the Seller.
3.13 ACCOUNTS RECEIVABLE. All accounts receivable reflected on the
Financial Statements represent sales actually made or services actually rendered
in the ordinary course of business; all accounts receivable of the Seller as of
the Closing Date will represent sales actually made or services actually
rendered in the ordinary course of business on or prior to the Closing Date.
3.14 INVENTORY. All of the inventory reflected on the Financial
Statements and all such inventory acquired or produced through the Closing Date
is and has been valued at the lower of cost or market. All of the inventory is
free of defect, usable in the ordinary course of business.
9
13
3.15 PATENTS, TRADEMARKS, SERVICE MARKS, CORPORATE NAMES, TRADE
NAMES AND COPYRIGHTS.
(a) Seller owns the trademark/trade name "Sure-Step,"
"Sure-Bond." These trademarks are not registered.
(b) Seller has neither received notice nor is aware of any
alleged or possible claim of a violation of the rights of any third party in any
corporate name, trade name, trademark, service mark, trade secret or other
proprietary right utilized by Seller and there are no proceedings pending
relating to such a violation.
(c) Seller has the right, without the payment of any royalty,
license or similar fees and without violating the proprietary rights of any
third party, to conduct its current business, to sell its products and to use
its corporate name, trade names and its trademarks and service marks throughout
the entire United States.
3.16 ABSENCE OF DEFAULTS. Seller is not in default under or in
breach or violation of the terms of its Articles of Incorporation or Bylaws or
any judgment, order or decree. Seller is not in default under or in breach or
violation of the material terms of any mortgage, contract, agreement, lease,
deed of trust, indenture or other instrument to which it is a party or by which
it is bound or to which its property is subject, or any federal, state or local
statute or regulation applicable to such company.
3.17 COMPLIANCE WITH LAWS. Seller has and is operating its business
and owns its assets in compliance with all laws, regulations and orders,
including, but not limited to, statutes, rules, restrictions, laws, regulations,
orders, judgment or decrees respecting (i) employment and employment practices,
terms and conditions of employment, wages and hours, labor-management relations,
discrimination, work place safety, employee benefits, unemployment and workers'
compensation laws, the violation of which would have a material adverse impact
on its assets, business or operations,, and (ii) the removal, containment,
storage and disposal of scrap tires, hazardous and toxic waste materials and
substances, and other contaminants and pollutants. Seller has obtained all
governmental permits, authorizations, franchises or licenses, if any, required
for the operation of its business at the manufacturing facility in Rancho
Cucamonga and the tire-storage site in Fontana, and the ownership of its assets,
and Seller has not received any notice or warning from any governmental
authority with respect to any failure or alleged failure by it to comply with
any law, regulation or order.
3.18 EMPLOYEE RELATIONS. There are no pending material
controversies, disputes, grievances or proceedings or, to the best knowledge of
Seller, threatened against Seller or existing between Seller and its employees
(singularly or collectively). None of Seller's employees is represented by any
labor union or other collective bargaining agent, and to the best knowledge of
Seller,
10
14
there has been no attempt to organize (or any organizing activity among) any of
such employees or any unit pursuant to any state or federal law such as, but not
limited to, the National Labor Relations Act.
3.19 LOSS CONTRACT. Seller is not a party to any contract, bid or
other offer to sell products or to provide services to third parties after the
Closing which is to be performed at a price which would result in a loss to
Seller.
3.20 DISCLOSURE. Neither this Agreement nor any written instrument,
list, exhibit, schedule or certificate furnished or to be furnished to Purchaser
pursuant hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order to make the
statements made not misleading.
3.21 HAZARDOUS MATERIALS.
(a) There are no tanks on or below the surface of the real
property owned or leased by Seller or in any improvements thereon ("the subject
property");
(b) There are no asbestos or asbestos-related products in, on or
about the subject property; and
(c) There is no other hazardous or toxic waste material or
substance or other contaminant or pollutant (as these terms are defined under
California law, including but not limited to the California Health and Safety
Code, Division 20, at Section 25100, et seq., and the California Code of
Regulations (formerly known as the California Administrative Code, Title 22,
Chapter 30, at Sections 66680-66746) as of the Closing in existence on or below
the surface of the subject property, including, without limitation, in the soil,
sub-soil, ground water or surface water or which has been or is presently being
released into the environment which constitutes a violation of any law,
ordinance, rule or regulation of any governmental entity having jurisdiction
thereof, or which subjects Seller to liability to any of said governmental
entities or to any third parties.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Purchaser hereby represents and warrants to Seller:
4.1 ORGANIZATION AND AUTHORITY. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.
4.2 AUTHORIZATION AND NO CONFLICTS. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby
11
15
have been duly authorized by all necessary corporate action on the part of
Purchaser, and do not and will not result in any conflict with, or breach or
violation of, or default under, the Articles of Incorporation or Bylaws of
Purchaser or violate, conflict with or result in the breach or material
modification of any provision of, or constitute (or with the giving of notice or
the lapse of time or both constitute) a default under, or give any other
contracting party the right to accelerate any obligation under or terminate, any
agreement, mortgage, lease, lien, judgment, decree or other instrument to which
Purchaser is a party or by which it may be bound or any statute or regulation
applicable to Purchaser. No consent or approval of any governmental or
regulatory body or any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which Purchaser is a party, or to which
any of the properties or assets of Purchaser are subject to otherwise affected,
is required for the execution, delivery or performance of this Agreement. This
Agreement constitutes the legal, valid and binding obligation of Purchaser,
enforceable in accordance with its terms.
5. CERTAIN COVENANTS OF SELLER.
Seller hereby covenants to and agrees as follows:
5.1 CONDUCT OF BUSINESS. Except as may be otherwise contemplated by
this Agreement or except as Purchaser may otherwise consent to in writing (which
consent shall not be unreasonably withheld), between the date hereof and the
Closing Date:
(a) Seller will (i) operate its business only in the ordinary
course; (ii) use its best efforts to preserve the business organization of the
company as a whole intact; (iii) maintain its properties, machinery and
equipment in sufficient operating condition and repair to enable the Seller to
operate its business in the manner in which it was operated immediately prior to
the date hereof, except for maintenance required by reason of fire, flood or
other acts of God (except that any insurance proceeds paid by reason of any such
casualty after the date hereof shall be applied towards such maintenance); (iv)
continue all of the Insurance Policies (or comparable insurance) in full force
and effect; (v) use its best efforts to keep available until the Closing Date
the services of its present officers and key employees; (vi) pay its accounts
payable and all other obligations in the ordinary course of business; and (vii)
use its best efforts to preserve its relationships with its material lenders,
suppliers, customers, licensors and licensees and others having material
business dealings with it such that the business will not be impaired; and
(b) Seller will not (i) make any change in its Certificate of
Incorporation, Bylaws or similar charter documents; (ii) make any change in its
issued or outstanding capital stock, or issue any warrant, option or other right
to purchase shares of its capital stock or any security convertible into shares
of its capital stock, or declare any dividends or make any other
12
16
distribution in respect of its capital stock; (iii) voluntarily incur or assume,
whether directly or by way of guarantee or otherwise, any material obligation or
liability, except obligations and liabilities incurred in the ordinary course of
business; (iv) mortgage, pledge or encumber any material part of its properties
or assets, tangible or intangible; (v) sell or transfer any material part of its
assets, property or rights, or cancel any material debts or claims; (vi) amend
or terminate any contracts or any Material Permit to which it is a party, except
in the ordinary course of business pursuant to the terms of such Agreement;
(vii) make any changes in the accounting methods, principles or practices
employed by it, except as required by generally accepted accounting principles;
(viii) make any capital expenditure or enter into any commitment therefor; (ix)
incur any debt or make any borrowings, or enter into any commitment therefor; or
(x) enter into any other agreement, course of action or transaction material to
Seller except in the ordinary course of business.
5.2 UNDERTAKINGS. Seller will use its best efforts and will
cooperate to secure all necessary consents, approvals, authorizations and
exemptions from governmental agencies and other third parties, as shall be
required in order to enable Seller and Purchaser to effect the transactions
contemplated hereby in accordance with the terms and conditions hereof.
5.3 EXCLUSIVITY. Purchaser shall have the exclusive right through
the close of business on April 30, 1996 (or such later date as the term of this
Agreement may be extended by the parties hereto in writing) to consummate the
transactions contemplated herein, and during such exclusive period, neither
Seller nor any of its authorized representatives will solicit or accept any
other offer to purchase any of the capital stock or all or any significant part
of the assets of Seller or any similar transaction nor hold discussions or
negotiations with, or provide any information to, any other individual or
corporation, partnership or other entity concerning such purchase (other than
such discussions which are in furtherance of the transactions contemplated
herein).
6. CONDITIONS TO PURCHASER'S OBLIGATIONS.
The obligations of Purchaser to consummate the transactions
contemplated hereby shall be subject to the satisfaction on or prior to the
Closing Date of all of the following conditions, except such conditions as
Purchaser may waive:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller
shall have complied in all material respects with all of its agreements and
covenants contained herein required to be complied with at or prior to the
Closing Date, and all the representations and warranties of Seller contained
herein shall be true in all material respects on and as of the Closing Date with
the same effect as though made on and as of the Closing Date, except as
13
17
otherwise contemplated hereby, and except to the extent that such
representations and warranties expressly make reference to a specified date and
as to such representations and warranties the same shall continue on the Closing
Date to have been true as of the specified date.
6.2 FURTHER ACTION. All action (including notifications and filings)
that shall be required to be taken by Seller in order to consummate the
transactions contemplated hereby shall have been taken and all consents,
approvals, authorizations and exemptions from third parties that shall be
required in order to enable Seller to consummate the transactions contemplated
hereby shall have been duly obtained (except for such actions, consents,
approvals, authorizations and exemptions, the absence of which would not
prohibit consummation of such transactions or render such consummation illegal),
and, as of the Closing Date, the transactions contemplated hereby shall not
violate any applicable law or governmental regulation.
6.3 NO GOVERNMENTAL OR OTHER PROCEEDING. No order of any court or
governmental or regulatory authority body which restrains or prohibits the
transactions contemplated hereby shall be in effect on the Closing Date and no
suit or investigation by any governmental agency to enjoin the transactions
contemplated hereby or seek damages or other relief as a result thereof shall be
pending or threatened as of the Closing Date.
6.4 PERMITS AND EXCLUSIONS. Approval of this transaction, and the
continued approval of the qualification for exclusion by the California
Integrated Waste Management Board, or its successor, pursuant to the following
provisions of Title 14 of the California of Regulations 18420(a)(4) and 18420(c)
for all facility and tire storage sites.
6.5 ASSIGNMENT OF LEASE. Approval and assignment of Standard
Industrial/Commercial Single Tenant Lease dated February 14, 1992 by and between
Rancho Cucamonga Business Park, a limited partnership, and U.S. Rubber
Recycling, Inc., a Delaware corporation.
6.6 AGREEMENT WITH RICHARD SNYDER. Approval by Richard Snyder of the
assignment of Richard Snyder's employment agreement to the Purchaser with
exception to Paragraphs 1 (regarding Chief Operating Officer and Director) 3b
(regarding stock option plans and pension plans), 3c (entirety), 4a (regarding
Stock Purchase Agreement), and 5c (entirety).
6.7 ACCOUNTS RECEIVABLE AGING REPORT. Seller shall provide to
Purchaser Seller's Accounts Receivable aging report complete through March 29,
1996.
6.8 STORAGE LOT. Seller shall obtain all necessary leases, permits
or exclusions for a tire storage site on terms agreeable to Purchaser. The
Purchaser hereby agrees to a lease containing the terms set forth on Schedule
6.8 hereof. Seller
14
18
shall pay all costs and expenses for permits, and moving of tires from existing
storage lots to new tire storage sites.
6.9 GOODYEAR AGREEMENT. Assignment to Purchaser of the Scrap Tire
Transportation and Disposal Agreement with Goodyear Tire dated May 17, 1993 with
or without Goodyear's consent thereto.
6.10 JOHNSON LIFT/HYSTER LEASE. Approval of and assignment to
Purchaser of Johnson Lift/Hyster Lease dated September 12, 1994 (UCC Filing
94187252).
6.11 DESIGNER INFORMATION SERVICES CONTRACT. Verification of the
termination of the agreement for Southern California Architectural Marketing
with Designer Information Services dated October 27, 1995.
6.12 INVENTORY. The Seller and the Purchaser shall agree on the
value of the Inventory for purposes of Section 1.4 hereof.
7. CONDITIONS TO SELLER'S OBLIGATIONS.
The obligations of Seller to consummate the transactions
contemplated hereby shall be subject to the satisfaction on or prior to the
Closing Date of all of the following conditions, except such conditions as
Seller may waive:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser shall have complied in all material respects with all of its
agreements and covenants contained herein required to be complied with at or
prior to the Closing Date, and all of the representations and warranties of
Purchaser contained herein shall be true in all material respects on and as of
the Closing Date with the same effect as though made on and as of the Closing
Date, except as otherwise contemplated hereby, and except to the extent that
such representations and warranties expressly make reference to a specified date
and as to such representations and warranties the same shall continue on the
Closing Date to have been true as of the specified date.
7.2 FURTHER ACTIONS. All action (including notifications and
filings) that shall be required to be taken by Purchaser in order to consummate
the transactions contemplated hereby shall have been taken and all consents,
approvals, authorizations and exemptions from third parties that shall be
required in order to enable Seller to consummate the transactions contemplated
hereby shall have been duly obtained (except for such actions, consents,
approvals, authorizations and exemptions, the absence of which would not
prohibit consummation of such transactions or render such consummation illegal),
and, as of the Closing Date, the transactions contemplated hereby shall not
violate any applicable or governmental regulation.
7.3 NO GOVERNMENTAL OR OTHER PROCEEDING. No order of any court
or governmental or regulatory or body which restrains or prohibits the
transactions contemplated hereby shall be in effect
15
19
on the Closing Date and no suit or investigation by any government agency to
enjoin the transactions contemplated hereby or seek damages or other relief as a
result thereof shall be pending or threatened in writing as of the Closing Date.
7.4 EMPLOYMENT AGREEMENT. All employment agreements and options to
extend have been terminated. All employees are "at-will."
7.5 INVENTORY. The Seller and the Purchaser shall agree on the value
of the Inventory for purposes of Section 1.4 hereof.
7.6 RELEASE. The release of the Seller by the parties to the
contracts that are being assigned to the Purchaser by the Seller as described in
Sections 6.6, and 6.10.
7.7 DELIVERY OF DOCUMENTS. The delivery to the Seller of the Secured
Note, Assumption Agreement, Security Agreement, UCC-1 Financing Statements,
resolutions and other closing documents.
8. SURVIVAL AND INDEMNIFICATION.
8.1 SURVIVAL. The representations, warranties, covenants and
agreements contained herein to be performed or complied with before or after the
Closing shall survive without limitation for three (3) years, or until the end
of the term of the Secured Note, whichever is longer, unless the covenant or
agreement specified a term, in which case such covenant or agreement shall
survive until the expiration of such specified term. After three (3) years, the
exclusive remedy for any claims under this Agreement relating to or arising
under a breach of a representation, warranty, covenant or agreement, including a
claim for indemnification under this Section 8, shall be an offset against the
balance due on the Secured Note. A claim for indemnification by a party against
the other under this Article 8 for inaccuracy in a representation or warranty or
breach of any covenants and agreements contained herein must be asserted in
writing and in accordance with Section 8.3 prior to the expiration of the
applicable time period referenced above, following which the same shall be
barred for all purposes. If written notice of a claim for indemnification is
given in accordance with Section 8.3 prior to the expiration of the applicable
time period referenced above, then the representation, warranty, covenant, or
agreement applicable to such claim shall survive until, but only for purposes
of, resolution of such claim for indemnification.
8.2 INDEMNIFICATION. Subject to the provisions of Section 8.1, from
and after the Closing, the Seller shall indemnify and hold Purchaser harmless
from and against any and all claims, losses, liabilities and damages, including,
without limitation, amounts paid in settlement, reasonable costs of
investigation and reasonable fees and disbursements of counsel, arising out of
or resulting from the operation, products, transportation and/or disposal of
tires or services of Seller's business prior to the Closing Date, or from the
inaccuracy of any representation or
16
20
warranty, or the breach of any covenant or agreement, contained herein or in any
instrument or certificate delivered pursuant hereto, by the party against whom
indemnification is sought by the Seller. This indemnification shall include, but
is not limited to, indemnifying Purchaser from the following: (i) Hazardous
materials cleanup relating to the period prior to the Closing date; (ii) product
liability claims, and/or claims of damages arising therefrom relating to the
period prior to the Closing Date; (iii) workers' compensation claims relating to
the period prior to the Closing date; (iv) wrongful termination or discharge
claims relating to the period prior to the Closing date; (v) claims arising out
of the Asset Purchase Agreement between U.S. Alcohol Testing of America, Inc.
and Warren Montalto and Floyd Staggs, dated October 13, 1992; (vi) claims of
commissions or damages, or both by David Bingham relating to the period prior to
the Closing date; (vii) claims for money, benefits or other consideration or
compensation arising from agreements outside the parameters of the written
agreement with Richard Snyder relating to the period prior to the Closing date;
(viii) transportation and/or disposal of scrap tires prior to the Closing Date;
(ix) any claims of Designer Services Inc; (x) claims for damages or clean-up
costs at all tire storage sites (Ontario, Rancho Cucamonga or Fontana).
The Purchaser shall defend and promptly indemnify the Seller and U.S.
Alchohol Testing of America, Inc. and save the Seller harmless from, against,
for and in respect of, and shall pay all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses, including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to, any action, investigation, claim or proceeding (all hereinafter
collectively referred to as "Losses" suffered, sustained, incurred or required
to be paid by the Seller by reason of (a) the Assumed Liabilities or (b) any
breach or failure of observance or performance of any representation, warranty,
covenant, agreement or commitment made by the Purchaser hereunder or relating
hereto or as a result of any such representation, warranty, covenant, agreement
or commitment being untrue or incorrect in any respect or (c) the conduct of the
Business after the Closing Date.
8.3 NOTICE OF CLAIM. The party seeking indemnification (the
"Indemnified Party") shall promptly notify the party entitled to indemnification
(the "Indemnifying Party") in writing of any claim for indemnification,
specifying in detail the basis of such claim, the facts pertaining thereto and,
if known, the amount, or an estimate of the amount, of the liability arising
therefrom. The Indemnified Party shall provide to the Indemnifying Party as
promptly as practicable thereafter all information and documentation necessary
to support and verify the claim asserted and the Indemnifying Party shall be
given reasonable access to all books and records in the possession or control of
the Indemnified party or its parent company which the Indemnifying Party
reasonably determines to be related to such claim.
8.4 DEFENSE. If the facts giving rise to a right to indemnification
arise out of the claim of any third party, the
17
21
Indemnifying Party may assume the defense thereof, including the employment of
counsel, at its cost and expense. The Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnifying Party in any
such action and to participate therein, but the fees and expenses of such
counsel employed by the Indemnified Party shall be at its expense. The
Indemnifying Party shall not be liable for any settlement of any such claim
effected without its prior written consent. Whether or not the Indemnifying
Party does choose to so defend such claim, all the parties hereto shall
cooperate in the defense thereof and shall furnish such records, information and
testimony, and attend at such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith. The
Indemnifying Party shall be subrogated to all rights and remedies of the
Indemnified Party to the extent of any indemnifications provided hereunder.
8.5 SET-OFF. In addition to any rights and remedies available to
Purchaser under this agreement or under applicable law, and not by way of
limitation of any such rights, in the event Seller is obligated to indemnify,
defend and hold Purchaser harmless, Purchaser is hereby irrevocably authorized
by Seller, at any time and from time to time, after 30 days written notice to
Seller, to set off and apply against Purchaser's obligation to make payments to
Seller under the terms of the Secured Note any amount owing to Purchaser in
connection with Seller's obligation to indemnify and hold harmless, and the
exercise of such right by Purchaser shall in no event affect, and each of Seller
and Purchaser shall not be excused from honoring or performing their respective
obligations under this agreement. Purchaser is not entitled to exercise its
right of setoff if Seller is fulfilling its obligation to defend the Seller from
a third-party claim.
Notwithstanding any to the contrary contained in Section 8.2, the
Indemnified Party shall not have any liability under Section 8.2 unless the
aggregate amount of damages under such Section exceeds $10,000 (in which event
the Indemnifying Party shall have liability, subject to clause (ii) below, for
the total amount of damages thereunder, including the first $10,000) and (ii)
the Indemnifying Party's aggregate liability under Section 8.2 shall not exceed
the Purchase Price paid to the Sellers or which would have been payable to the
Seller had (a) the Indemnifying Party not breached or failed to fulfill in any
material respect any covenant, agreement, or other obligation of the
Indemnifying Party under this Agreement or (B) there not been any inaccuracy in
any material respect in any representation of breach in any material respect of
any warranty of the Indemnifying Party; provided, however; in the event that,
after the Closing, the amount of the Seller's liability under Section 8.2
exceeds the sum of the Purchase Price actually paid to the Seller at the time
such liability is determined, the amount of such excess may only be collected
from the Seller by the Purchaser's set off of such excess amount against future
payments of the Purchase Price. The $10,000 limitation on liability under
Section 8.2 shall not apply to the Purchaser's breach of the payment of the
Secured Note, the
18
22
Purchaser's failure to pay an Assumed Liability or the Seller's failure to pay a
liability that was not an Assumed Liability.
9. TERMINATION PRIOR TO CLOSING.
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at
any time prior to the Closing:
(a) By the mutual written consent of Purchaser and the Seller;
or
(b) By Purchaser or Seller in writing for any reason if the
Closing shall not have occurred on or before April 30, 1996, or such other date
to which the Agreement has been extended; or
(c) By any party, against any other, if one or any other, as the
case may be, shall fail to perform in any material respect its agreements
contained herein required to be performed prior to the Closing Date, or
materially breach any of its representations, warranties, covenants or
agreements contained herein, which failure or breach is not cured within 5 days
after the party seeking to terminate has notified the other party of its intent
to terminate this Agreement pursuant to this clause; or
(d) The failure of any conditions remaining unsatisfied at time
of Closing.
10. MISCELLANEOUS.
10.1 ENTIRE AGREEMENT. This Agreement constitutes the sole
understanding of the parties with respect to the subject matter hereof. No
amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly executed
by the parties hereto.
10.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors of the parties hereto; provided, however, that this Agreement may not
be assigned by any party without the prior written consent of the other parties
hereto, except that the Purchaser or Seller may, at its election and without the
prior written consent of the other, assign this Agreement (but not delegate its
duties) to any direct or indirect wholly-owned subsidiary, parent company or any
other affiliate of Purchaser or Seller so long as the representations and
warranties of Purchaser made herein are equally true of such assignee. If this
Agreement is assigned with such consent or pursuant to such exceptions, the
terms and conditions hereof shall be binding upon and shall inure to the benefit
of the parties hereto and their respective assigns; provided, however, that no
assignment of this Agreement of any of the rights or obligations hereof shall
relieve any part of its obligations under this Agreement. With the exception of
the parties to this Agreement, there shall exist no right of any person
19
23
to claim a beneficial interest in this Agreement or any rights occurring by
virtue of this Agreement.
10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.4 HEADINGS. The headings of the sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
10.5 NO WAIVER. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, will be deemed
to constitute a waiver by the party taking any action of compliance with any
representation, warranty or agreement contained herein. The waiver by any party
hereto of any condition or of a breach of any other provision of this Agreement
will not operate or be construed as a waiver of any other condition or
subsequent breach. The waiver by any part of any of the conditions precedent to
its obligations under the Agreement will not preclude it from seeking redress
for beach of this Agreement other than with respect to the condition so waived.
10.6 EXPENSES. Seller and Purchaser shall each pay all costs and
expenses incurred by it or on its behalf in connection with this Agreement and
the transactions contemplated hereby, including, without limiting the generality
of the foregoing, fees and expenses of its own financial consultants,
accountants and counsel.
10.7 NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party hereto to any other party hereto shall be in
writing and delivered personally or sent by first-class mail, postage prepaid,
or by Federal Express:
If to Purchaser to: Reclamation Resources, Inc.
c/o Mr. David T. Starr
George and Starr
1450 North Tustin Avenue, Suite 223
Santa Ana, California 92701
With a copy to: Robert J. Krup
Attorney at Law
1301 Dove Street, Suite 1000
Newport Beach, California 92660
If to Seller: U.S. Rubber Recycling, Inc.
10410 Trademark Street
Rancho Cucamonga, California 91730
Attention: Mr. James Witham
20
24
With a copy to: Scott Lesser
Gold & Wachtel
110 East 59th Street, 27th Floor
New York, New York 10022
Any such notice shall be deemed effective upon delivery, if
personally delivered, three (3) business days after deposit with the United
States Post Office, if mailed, or one (1) business day after deposition with the
overnight courier service.
10.8 FURTHER ASSURANCES. From and after the Closing Date, any party,
at the request of another of the parties and at the requesting party's expense,
will each take all such action and deliver all such documents as shall be
reasonably necessary or appropriate to confirm and vest title to the Assets in
Purchaser and otherwise enable Purchaser and Seller to enjoy the respective
benefits contemplated by this Agreement.
10.9 GOVERNING LAW. The validity, performance and enforcement of
this Agreement and any agreement entered into pursuant hereto will be governed
by the Laws of California, without giving effect to the principles of conflicts
of law thereof.
10.10 CONSENT TO JURISDICTION. Both Purchaser and Seller consent and
submit to the jurisdiction of the Courts of California and of the Courts of the
United States for a judicial district within the territorial limits of
California for all purposes of this Agreement and any Ancillary Documents to
which either of them is a party, including without limitation, any action or
proceeding instituted for the enforcement of any right, remedy, obligation or
liability arising under or by reason hereof and thereof.
10.11 SPECIFIC PERFORMANCE. Seller and Purchaser each acknowledge
that the other will be irreparably harmed and that there will be no adequate
remedy at law in the event of a violation by it of any of its covenants or
agreements which are contained in this Agreement. It is accordingly agreed that,
in addition to any other remedies which may be available upon the breach of such
covenants and agreements, Seller or Purchaser, as the case may be, shall have
the right to obtain injunctive relief to restrain any breach or threatened
breach of, or otherwise to obtain specific performance of, the other's covenants
or agreements contained in this Agreement.
10.12 ATTORNEYS' FEES. In the event that any action or proceeding is
commenced by any party to interpret, define or enforce any provision of this
Agreement, the prevailing party shall be entitled to recover all costs and
expenses in connection therewith, including, without limitation, reasonable
attorneys' fees and court costs.
10.13 BROKERS. The Seller and the Purchaser covenant and represent
to each other that it had no dealings with any broker or finder in connection
with this Agreement or the transactions
21
25
contemplated hereby and no broker, finder or other person is entitled to receive
any broker's commission or finder's fee or similar compensation in connection
with any such transaction. Each of the parties agrees to defend, indemnify and
hold harmless the other form, against, for and in respect of any and all losses
sustained by the other as a result of any liability or obligation to any broker
or finder on the basis of any arrangement, agreement or acts made by or on
behalf of such other party with any person or persons whatsoever.
IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to
be executed on its behalf as the date first above written.
SELLER
U.S. RUBBER RECYCLING, INC., a
Delaware corporation
By:______________________________________
PURCHASER
RECLAMATION RESOURCES, INC.,
California corporation
By:______________________________________
22