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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported)May 12, 1998
U.S. PLASTIC LUMBER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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Nevada 3080 87-0404343
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<S> <C> <C>
(State of incorporation (Primary Standard Industrial (I.R.S. Employer
/organization) Classification Code Number) Identification No.)
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2300 W. Glades Road, Suite 440 W, Boca Raton, Florida 33431
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 561-394-3511
Former Name or Former Address if Changed Since Last Report: Not Applicable.
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On May 12, 1998, the Registrant entered into a Plan of Merger Agreement with
Cycle Masters, Inc. ("CMI"). The consideration under the Plan of Merger was
$1,600,000 in cash, 200,000 shares of non-registered common stock, par value
$.0001, of U.S. Plastic Lumber Corporation, and a Promissory Note in the amount
of $250,000 at an interest rate of 8.5%, interest only payments for one year
with the principal being due one year from date of Closing. The Registrant also
executed a Lease to use the building and property upon which the business
operates from the principal shareholder of CMI, James P. Cole, for a term of
five years at an initial monthly rental of $2,000 per month. The building
consists of approximately 15,600 sq. ft. and is located on 7.5 acres.
The amount of consideration was determined by a number of factors, including but
not limited to, an independent appraisal of the business value of CMI utilizing
traditional business valuation formulas, the vertical integration aspects the
Registrant believes will be derived from this merger, the skill and expertise of
the management team being acquired, and the goodwill of the customer base being
acquired. All negotiations relative to all transactions hereunder were
accomplished in an arms length manner.
The shareholders of CMI were James P. Cole and Scott House. Neither individual
had any relationship with the Registrant prior to this merger, other than as a
competitor of the Registrant.
The funding used by the Registrant was derived from cash on hand of the
Registrant plus cash available from the Registrant's credit line facility with
its Bank, PNC Bank of Delaware.
(b) The business of CMI is the manufacture and sale of plastic lumber made from
100% recycled materials. The business is operated in a facility in Sweetser,
Indiana consisting of approximately 15,600 sq. ft. located on approximately 7.5
acres. The business operates with three plastic extrusion lines. The Registrant
intends to continue to devote the assets for the purposes currently used by CMI.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable.
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not Applicable
ITEM 5. OTHER EVENTS
Not Applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The financial statements of Cycle Masters, Inc. are not included in this filing
and shall be submitted no later than 60 days from the date of filing this Form
8K.
ITEM 8. CHANGE IN FISCAL YEAR.
Not Applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not Applicable.
EXHIBITS
2. Plan of Merger Agreement with Cycle Masters, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned hereunto duly authorized.
U.S. Plastic Lumber Corporation
(Registrant)
Date: By: /s/ Bruce C. Rosetto
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Bruce C. Rosetto, Vice President and
General Counsel/Secretary
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Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of May 12, 1998, by and among
U.S. Plastic Lumber Ltd., a Delaware corporation ("Parent"), CMI ACQUISITION
CORPORATION, an Indiana corporation and wholly-owned subsidiary of Parent
("Acquiror"), U.S. Plastic Lumber Corporation, a Nevada corporation
(AGuarantor@) and Cycle Masters, Inc., an Indiana corporation (the "Target")
(Acquiror and Target being hereinafter collectively referred to as the
"Constituent Corporations") and James Cole and Scott House (jointly and
severally "Shareholders").
RECITALS
A. The Boards of Directors of U.S. Plastic Lumber, Ltd. and
Cycle Masters, Inc., have approved the acquisition of Cycle
Masters, Inc., by U.S. Plastic Lumber , Ltd.
B. The Boards of Directors of U.S. Plastic Lumber, Ltd. have
approved the merger of Cycle Masters, Inc., pursuant to the
Articles of Merger set forth in Exhibit Q hereto and the
transactions contemplated hereby ("Merger Agreement"), in
accordance with the applicable provisions of the statutes of
the State of Indiana.
C. For federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization with the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
D. Each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with
the Merger and also to prescribe various conditions.
AGREEMENT
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to the terms and conditions of this Agreement and the Merger
Agreement, Cycle Masters, Inc. shall be merged into CMI ACQUISITION CORPORATION,
and the separate existence of Cycle Masters, Inc. shall thereupon cease, in
accordance with the applicable provisions of the Business Corporation Law of the
State of Indiana (the "IBCL") .
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(b) CMI ACQUISITION CORPORATION will be the surviving corporation in
the Merger (sometimes referred to herein as the "Surviving Corporation") and
will continue to be governed by the laws of the State of Indiana, and the
separate corporate existence of and all of its rights, privileges, immunities
and franchises, public or private, and all its duties and liabilities as a
corporation organized under the IBCL, will continue unaffected by the Merger.
(c) The Merger will have the effects specified by the IBCL.
1.2 Effective Time. As soon as practicable following fulfillment or
waiver of the conditions specified in this Agreement and provided that this
Agreement has not been terminated or abandoned pursuant to Section 12 hereof,
the Constituent Corporations will cause a Articles of Merger (the "Articles of
Merger") to be filed with the office of the Secretary of State of the State of
Indiana as provided in Section 23-1-40-1 et. seq., of the IBCL, and will cause
the Merger Agreement together with a duly executed Articles of Approval of
Merger, certificates of the officers of Parent and the Constituent Corporations
and tax clearance, certificates to be filed with the office of the Secretary of
State of the State of Indiana, as required by the IBCL. Subject to and in
accordance with the laws of the States of Indiana, the Merger will become
effective at the date and time theArticles of Merger is filed with the office of
the Secretary of State of the State of Indiana or such later time or date as may
be specified in the Articles of Merger (the "Effective Time"). Each of the
parties will use its best efforts to cause the Merger to be consummated as soon
as practicable following the fulfillment or waiver of the conditions specified
herein.
2. THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Acquiror as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time.
2.2 By-Laws. The By-Laws of Acquiror as in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation after the
Effective Time.
2.3 Board of Directors. From and after the Effective Time, the Board of
Directors of CMI ACQUISITION CORORATION shall be the Board of Directors of the
Surviving Corporation.
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3. CONVERSION OF SHARES
3.1 Conversion of Target Shares in the Merger. Pursuant to the Merger
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of Cycle Masters, Inc.:
(a) all shares of Common Stock, no par value, of Target., ("Target,
Common Stock") shall be cancelled and shall cease to exist from and after the
Effective Time; and,
(b) each remaining issued and outstanding shares of Target Common
Stock, shall be converted into, and become exchangeable for 200,000 shares of
validly issued, fully paid and non-assessable, non-registered common stock,
$.0001 par value, of U.S. Plastic Lumber Corporation plus other good and
valuable consideration as set forth in Section 5 which sets forth all
consideration being paid hereunder. The consideration referred to in this
Section 3.1, together with all consideration set forth in Section 5, is
hereinafter referred to as the "Merger Consideration."
3.2 Status of Acquiror's Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of any capital stock
of Acquiror. The Common Stock of Acquiror shall continue unchanged and remain
outstanding as a share of common stock of the Surviving Corporation.
3.3 Exchange of Company Capital Stock Certificates. (a) On or prior to
the Closing Date, Parent shall make available to the Target the certificates
representing shares of U. S. Plastic Lumber Corporation the Common Stock
required to effect the exchange referred to in Section 3.3(b). Parent shall also
make available to the Target the cash required to make the cash payments set
forth in Section 5 herein. Shares of U.S. Plastic Lumber Corporation Common
Stock, into which shares of Target Common Stock shall be converted in the
Merger, shall be deemed to have been issued at the Effective Time.
(b) From and after the Effective Time, each holder of a certificate,
which immediately prior to the Effective Time represented outstanding shares of
Target Common Stock are granted by reason of the Merger under the IBCL, shall be
entitled to receive in exchange therefor, upon surrender thereof to the
Acquiror, a certificate or certificates representing the number of whole shares
of U. S. Plastic Lumber Corporation Common Stock into which such holder's shares
of Target Common Stock were converted pursuant to Section 3.1.
3.4 Closing of Transfer Books. From and after the Effective Time, the
stock transfer books of Target shall be closed, and no transfer of shares of
Target Common Stock shall thereafter be made. If, after the Effective Time,
Target Certificates are presented to Parent, they shall be cancelled and
exchanged for the Merger Consideration in accordance with the procedures set
forth in this Section 3.
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4. DEFINITIONS
Unless otherwise defined herein or the context otherwise requires, the terms
defined in this Section 4 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined. Unless otherwise indicated, any reference
herein to a "Section", AArticle", or "Schedule" shall mean the applicable
section, article or schedule of or to this Agreement. All accounting terms used
in this Agreement not defined in this Section 4 shall, except as otherwise
provided for herein, be construed in accordance with generally accepted
accounting principles, consistently applied.
"Action" shall mean any actual or threatened claim, action, suit, arbitration,
hearing, inquiry, proceeding, complaint, charge or investigation by or before
any Governmental Entity or arbitrator and any appeal from any of the forgoing.
"Affiliate" of a Person shall mean any Person that directly or indirectly
controls, is controlled by, or is under common control with the indicated
Person.
"Agreement" shall mean this Securities Purchase Agreement.
"Balance Sheet" and "Balance Sheet Date" shall have the meaning assigned to such
terms in Section 7.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Closing" and "Closing Date" shall have the respective meanings assigned to such
terms in Section 5.3.
"Common Stock" shall mean the Company=s authorized class of common stock, $0.01
par value per share.
"DOL" shall mean the United States Department of Labor.
"Damages" shall mean any and all losses, liabilities, obligations, costs,
expenses, damages or judgments of any kind or nature whatsoever (including
reasonable attorneys', accountants, and expert's fees, disbursements of counsel,
and other costs and expenses incurred pursuing indemnification claims under
Section 13 hereof).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
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"ERISA" Affiliate" shall mean any Person which is (or at any relevant time was)
a member of a controlled group of corporations within the meaning of Code
Section 414 (b), all trades or businesses under common control within the
meaning of Code Section 414(c), and all affiliated service groups within the
meaning of Code Section 414(m), of which the Company is (or any relevant time
was) a member.
"Environmental Laws" shall mean all Legal requirements pertaining to the
protection of the environment, the treatment, emission and discharge of gaseous,
particulate and effluent pollutants and the use, handling storage, treatment,
removal transport, transloading, cleanup decontamination, discharge and disposal
of Hazardous Substances, including, without limitation, those statutes, laws,
rules and regulations set forth below in the definitions of "Hazardous
Material".
"Governmental Entity" shall mean any local, state, federal or foreign (i) court,
(ii) government or (iii) governmental department, commission, instrumentality,
board, agency or authority, including the IRS and other taxing authorities.
"Hazardous Material" shall mean any flammable, ignitable, corrosive, reactive,
radioactive or explosive substance or material, hazardous waste, toxic substance
or related material and any other substance or material defined or designated as
a hazardous or toxic substance, material or waste by any Environmental Law
currently in effect or as amended or promulgated in the future and shall
include, without limitation:
(a) those substances included within the definitions of "hazardous substances",
"hazardous materials", "toxic substances", or "solid waste" in the Comprehensive
Environmental response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sections 9601, et. seq., the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et.seq., and the Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801 et. seq., and in the regulations promulgated pursuant
thereto.
(b) those substances defined as "hazardous substances", "hazardous materials",
"toxic substances", or "solid waste" in the State of Indiana.
(c) those substances listed in the United States Department of Transportation
Table (49CFR 172.101 and amendments thereto) or by the Environmental Protection
Agency (or any successor thereto) as hazardous substances (40CFR Part 302 and
any amendments thereto).
(d) such other substances, materials and wastes that are or become regulated
under applicable local, state or federal laws or regulations, or which are or
become classified as hazardous or toxic under any Legal Requirement; and
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(e) any material, waste or substance that is, in whole or in part, (i)
petroleum, asbestos, polychorinated biphenyls, methylene chloride,
trichorothylene, 1, 2- transdichoroethylene, dioxins or dibenzofurans, (ii)
designated as an "extremely hazardous substance" pursuant to Section 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended, or (iii)
designated as a "hazardous substance"@ pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. Sections 1251 et. seq. (U.S.C. Section 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317), or
Section 112 or other sections of the Clean Water Act, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Indebtedness" shall mean, when used with reference to any Person, without
duplication, (i) any liability of such Person created or assumed by such Person,
or any Subsidiary thereof, (A) for borrowed money, (B) evidence by a bond, note,
debenture, or similar instrument (including a purchase money obligation, deed of
trust or mortgage) given in connection with the acquisition of, or exchange for,
any property or assets (other than inventory or similar property acquired and
consumed in the Ordinary Course), including securities and other Indebtedness,
(C) in respect of letters of credit issued for such Person's account and Aswaps@
of interest and currency exchange rate (and other interest and currency exchange
rate hedging agreements) to which such Person is a party or (D) for the payment
of money as lessee under leases that should be, in accordance with generally
accepted accounting principles, recorded as capital leases for financial
reporting purposes; (ii) any liability of others described in the preceding
clause (i) guaranteed as to payment of principal and interest by such Person or
in effect guaranteed by such Person through an agreement, contingent or
otherwise, to purchase, repurchase or pay the related Indebtedness or to acquire
security therefor; (iii) all liabilities or obligations secured by a Lien upon
property owned by such Person and upon liabilities or obligations such Person
customarily pays interest or principal, whether or not such Person has not
assumed or become liable for the payment of such liabilities or obligations; and
(iv) any amendment, renewal, extension, revision or refunding or any such
liability or obligation; provide, however, that Indebtedness shall not include
any liability for compensation of such Person's employees or for inventory or
similar property acquired and consumed in the Ordinary Course or for services.
"Leased Real Property" shall mean all real property, including Structures,
leased by the Company.
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"Legal Requirements" shall mean any statute, law, ordinance, rule, regulation,
permit, order, writ, judgment, injunction, decree or award issued, enacted or
promulgated by any Governmental Entity or any arbitrator.
"Lien" shall mean all liens (including judgment and mechanics liens, regardless
of whether liquidated), mortgages, assessments, security interests, easements,
claims, pledges, trusts (constructive or other), deeds of trust, options or
other charges, encumbrances or restrictions.
"Material Adverse effect" shall mean a material adverse effect on the business,
financial condition, properties, profitability, prospects or operations of the
Company.
"Non-competition Agreement(s)" shall have the meaning assigned to such term in
Section 11.1(g).
"Ordinary Course" shall mean, when used with reference to the Company, the
ordinary course of the Company=s business, consistent with past practices.
"Owned Real Property" shall mean all real property, including Structures, owned
by the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall have the meaning assigned to such term in Section 7.16.
"Permitted Liens" shall mean (a) Liens for ad valorem real or personal property
taxes or assessments not at the time due and (b) Liens in respect of pledges or
deposits under worker's compensation laws or similar legislation, carriers',
warehousemen's, mechanic's, laborers= and materialmen's and similar liens, if
the obligations secured by such Liens are not then delinquent.
"Person" shall mean all natural person's, corporations, business trusts,
associations, limited liability companies, companies partnerships, joint
ventures, Governmental Entities and any other entities.
"Real Property" shall mean the Owned Real Property and the Lease Real Property,
collectively.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share Percentage" with respect to any Shareholder shall mean the percentage
that the number of Shares held by such Shareholder represents of the total
number of Shares, as set forth on Exhibit "A".
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"Shares" shall mean the shares of Common Stock of the Company held by the
shareholders.
"Stock" shall mean shares of common stock issued by the Acquiror to the
Shareholders as payment of the Purchase Price, as contemplated by Section 5
hereof.
"Structure" shall mean any facility, building, plant, factory, office,
warehouse structure or other improvement owned or leased by the Company.
"Subsidiary" of a Person shall mean any corporation, partnership, limited
liability company, association or other business entity at least 50% of the
outstanding voting power of which is at the time owned or controlled directly or
indirectly by such Person or by one or more of such subsidiary entity, or both.
"Tax" shall mean any Federal, state, local or foreign income, gross receipts,
license, payroll, unemployment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including, without limitation, taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), employment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-
on minimum, estimated tax or other tax, assessment or charge of any kind
whatsoever, including, without limitation, any interest, fine, penalty or
addition thereto, whether disputed or not.
"Tax Return" shall mean any return, declaration, report, claim for refund or
information, or statement relating to Taxes, and any exhibit, schedule,
attachment or amendment thereto.
5. PURCHASE AND EXCHANGE OF SECURITIES
5.1 Exchange and Delivery. Each Shareholder agrees to deliver to Acquiror, and
Acquiror agrees to exchange and accept from each Shareholder, free and clear of
all Liens, on the terms and conditions set forth in this Agreement, and for the
exchange price described in Section 5.2 below, good and marketable title to the
number of Shares set forth opposite the name of such Shareholder on Exhibit "A".
The Shares to be exchanged pursuant to this Agreement constitute all of the
outstanding capital stock of the Company.
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5.2 Consideration. The Consideration for all of the Shares shall be as follows:
(a) Fifty Thousand dollars as a deposit, receipt being acknowledged.
(b) One Million Five Hundred and Fifty Thousand dollars to be paid at
time of Closing by good check or wire transfer.
(c) Six Hundred and Fifty Thousand dollars in the form of a Promissory
Note as set forth in Exhibit "M" attached hereto and secured by 125,000 shares
of U.S. Plastic Lumber Corporation stock pursuant to a Security Agreement
attached hereto as Exhibit "O" plus a Corporate Guaranty as set forth in Exhibit
"N" attached hereto and made a part hereof. In the event U. S. Plastic Lumber
Corporation and the Acquiror default on the Promissory Note and the Shareholder
receives Title to the 125,000 shares held as collateral hereunder, the
obligations of U.S. Plastic Lumber Corporation set forth in Section 5.2(d) shall
also be applicable to the same extent for these 125,000 shares.
(d) 200,000 shares of non-registered Common Stock of U. S. Plastic
Lumber Corporation to be eligible to be publicly traded, subject to Rule 144
provisions of the Securities Act of 1933 ("Rule 144"). In the event these shares
are not tradable on a public exchange, subject to Rule 144, one year and ten
days from the date of issuance of the shares, Buyer shall redeem the shares at a
price equal to $5.00 per share. In the event the holding periods of Rule 144 are
changed by the Securities and Exchange Commission from the current regulations
during this one year and ten day period, Buyer shall not redeem the shares.
(e) The Shareholder, James Cole, will be granted an option to buy
20,000 shares of non-registered common stock of U.S. Plastic Lumber Corporation
at an exercise price of $5.00 per share which must be exercised within two (2)
years from the date hereof; provided only in the event that the net tangible
book value of Target increased by a maximum of $123,000.00 on the 3/31/98
Balance Sheet as compared to the 9/20/97 Balance Sheet.
The Consideration shall be allocated among the Shareholders as set forth
opposite their respective names on Exhibit "A". The Stock shall not have been
registered pursuant to the Securities Act, and shall be subject to the
requirements of Rule 144 of the Securities Act.
5.3 Closing. The exchange of the Shares and the consummation of the other
transactions contemplated by this Agreement, (the "Closing") shall occur at
10:00 AM, local time, on or about May 4, 1998, simultaneously at the offices of
the Acquiror at 2300 Glades Road, Suite 440W, Boca Raton, Florida,and at the
office of the general counsel for the Company, F. Pen Cosby, Esq., or at such
other time or on such other date as shall be agreed upon among the Shareholders
and the Acquiror upon fulfillment of all conditions precedent to the Closing,
such hour and date being herein generally referred to as the "Closing Date". At
the Closing:
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(a) Each Shareholder shall deliver or cause to be delivered to
Acquiror, against the delivery by the Acquiror of the Stock, in payment
by Acquiror of the Consideration to such Shareholder:
(i) a certificate or certificates representing the Shares
being exchanged by such Shareholder hereunder duly endorsed
for transfer, or accompanied by duly executed assignments
separate from the certificate, transferring to Acquiror good
and marketable title to such Shares, free and clear of all
Liens;
(ii) all of the documents, certificates, and instruments
required to be delivered, or caused to be delivered, by such
Shareholder pursuant to Section 11.1 hereof; and
(iii) all records, documents, and files of the Company,
including, without limitation, all minute books, stock
records, stock certificate books, and internal accounting
records.
(b) Acquiror shall deliver or cause to be delivered to each
Shareholder, against delivery of the certificate or certificates
representing the Shares:
(i) certificate(s) of Stock of the Acquiror representing the
number of shares allocated to the respective Shareholder as
set forth on Exhibit "A";
(ii) all of the documents, if any, required to be delivered by
Acquiror pursuant to Section 11.2 hereof.
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6. REPRESENTATIONS AND WARRANTIES CONCERNING THE SHAREHOLDERS
Each of the Shareholders hereby jointly and severally represents and warrants
to, and covenants and agree with, Acquiror that:
6.1 Ownership of Shares. Such Shareholder owns of record and beneficially the
number of Shares set forth opposite the name of such Shareholder on Exhibit "A"
hereto, and has, and at all times prior to and as of the Closing such
Shareholder will have, good and marketable title to such Shares free and clear
of all Liens.
6.2 Delivery of Good Title. Upon delivery of the Shares to be sold by such
Shareholder hereunder and delivery of the Stock therefor pursuant to this
Agreement, Acquiror will have good and marketable title to such Shares free and
clear of all Liens.
6.3 Execution and Delivery. All consents, approvals, authorizations and order
necessary for the execution, delivery and performance by such Shareholder of
this Agreement (including, without limitation, the transfer and sale of the
Shares to be sold by such Shareholder to Acquiror) have been duly and lawfully
obtained, and such Shareholder has, and at the Closing will have, full right,
power, authority and capacity to execute, deliver and perform this Agreement.
This Agreement has been duly executed and delivered by such Shareholder and
constitutes a legal, valid and binding agreement of such Shareholder enforceable
against such Shareholder in accordance with its terms.
6.4 No Conflicts. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not conflict with
or result in a breach or violation of any term or provision of, or (with or
without notice or passage of time, or both) constitute a default under, any
indenture, mortgage, deed of trust, trust (constructive and other), loan
agreement or other agreement or instrument to which such Shareholder is a party
or by which such Shareholder or such Shareholder=s Shares are bound, or violate
any Legal Requirement applicable to or binding upon such Shareholder.
6.5 No Brokers. No broker, finder or similar agent has been employed by or on
behalf of such Shareholder in connection with this Agreement or the transactions
contemplated hereby, and such Shareholder has not entered into any agreement or
understanding of any kind with any person or entity for the payment of any
brokerage commission, finder=s fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
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7. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.
The Shareholders hereby jointly and severally represent and warrant to, and
covenant and agree with, Acquiror that:
7.1 Organization and Good Standing.
(a) The Company has been duly organized and is existing as a corporation in good
standing under the laws of the State of Indiana with full power and authority
(corporate and other) to own and lease its properties and to conduct its
business as currently conducted. The Company has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each jurisdiction set forth on Schedule 7.1(a), such
jurisdictions comprising all jurisdictions in which the Company owns or leases
any property, or conducts any business, so as to require such qualifications.
(b) Except as set forth in Schedule 7.1(b), the Company has no Subsidiary nor
owns or controls, or has any other equity investment or other interest in,
directly or indirectly, any corporation, joint venture, partnership, association
or other entity.
7.2 No Conflicts. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not (a) conflict
with or result in a breach or violation of any term or provision of, or
constitute a default under (with or without notice or passage of time, or both),
or otherwise give any Person a basis for accelerated or increased rights or
termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, lease, license or other agreement or instrument of
which the Company is a party or by which the Company is bound or affected or to
which any of the property or assets of the Company is bound or affected
including, without limitation, all arrangements in Schedule 7.19 hereof, (b)
result in the violation of the provisions of the Articles of Incorporation or
Bylaws of the Company or any Legal Requirement applicable to or binding upon it,
(c) result in the creation or imposition of any Lien upon any property or asset
of the Company or (d) otherwise adversely affect the contractual or other legal
rights or privileges of the Company. Schedule 7.2 sets forth a list of all
agreements requiring the consent of any party thereto to any of the transactions
contemplated hereby.
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7.3 Capitalization. The authorized capital stock of the Company consists solely
of One Thousand (1,000) shares of Common Stock having no par value, of which
only the number of Shares listed on Exhibit "A" are, and as of the Closing will
be, issued and outstanding. All of the Shares have been duly authorized and
validly issued and are fully paid, nonassessable and outstanding and are held by
the Shareholders in amounts reflected in Exhibit "A" hereto. Other than as set
forth on Schedule 7.3, (i) there are no existing options, warrants, right, calls
or commitments of any character relating to the shares of Common Stock or any
other capital stock or securities of the Company, (ii) there are no outstanding
securities or other instruments convertible into or exchangeable for shares of
Common Stock or any other capital stock or securities of the Company and no
commitments to issue such securities or instruments and no Person has any right
of first refusal, preemptive right, subscription right or similar right with
respect to any shares of Common Stock or any other capital stock or securities
of the Company. The offer, issuance and sale of the Shares were (i) exempt from
the registration and prospectus delivery requirements of the Securities Act,
(ii) registered or qualified (or exempt from registration or qualification)
under the registration or qualification requirements of all applicable state
securities laws and (iii) accomplished in conformity with all other Legal
Requirements.
7.4 Financial Statements.
(a) Schedule 7.4 hereto contains true and complete copies of (i) the unaudited
balance sheet (the "Balance Sheet") of the Company at March 31, 1998 (the
"Balance Sheet Date"), and the related unaudited statements of income for the
six (6 ) months then ended, (ii) the reviewed balance sheet of the Company at
September 30, 1997 and the related reviewed statements of income, shareholders'
equity and cash flow for the fiscal year then ended (together with the report
thereon of Paul Fouts , independent public accountants)(the financial statements
described in clause (i) and (ii) above are collectively referred to as the
"Financial Statements").
(b) The Financial Statements present fairly the financial condition of the
Company as of the dates indicated therein and the results of operations and
changes in financial position of the Company for the periods specified therein,
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods covered thereby and prior
periods, have been derived from the accounting records of the Company and
represent only actual, bona fide transactions. The Company's Financial
Statements are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state a material fact.
<PAGE> 14
7.5 Title to Property; Encumbrances.
(a) The Company has, and immediately prior to the Closing will have, good, valid
and marketable title in fee simple to all Real Property and all personal
property reflected on the Balance Sheet as owned by the Company and all Real
Property and personal property acquired by the Company since the Balance Sheet
Date, in each case free and clear of all Liens except (i) as set forth on
Schedule 7.5(a), (ii) for sales and other dispositions of inventory in the
Ordinary Course since the Balance Sheet Date which, in the aggregate, have not
been materially different from prior periods, and (iii) Permitted Liens.
(b) Schedule 7.5(b). contains a true and complete list and legal description of
each parcel of Owned Real Property and a general description of each Structure
situated thereon. The Shareholders have heretofore furnished to Acquiror true
and complete copies of all deeds, other instruments of title and policies of
title insurance indicating and describing the Company's ownership of the Owned
Real Property, as well as copies of any surveys or environmental reports
relating to the real property.
(c) Schedule 7.5(c). contains a list of all tangible personal property having a
cost or fair market value in excess of Five Thousand Dollars ($5,000.00) owned
by the Company (other than personal property held by the Company as lessee under
a personal property lease).
(d) Schedule 7.5(d) contains a list of all real property leases, licenses and
personal property leases under which the Company is the lessee or licensee,
together with (i) the location and nature of each of the leased or licensed
properties (including a legal description of all Leased Real Property), (ii) the
termination date of each such lease or license, (iii) the name of the lessor or
licensor and (iv) all rental and other payments made or required to be made for
the fiscal years ending September 30, 1997 and September 30, 1996. All leases
and licenses pursuant to which the Company leases or licenses from others real
or personal property are valid, subsisting in full force and effect in
accordance with their respective terms, and there is not, under any real
property lease, personal property lease or license, any existing default or
event of default (or event that, with notice or passage of time, or both, would
constitute a default, or would constitute a basis of force majeure or other
claim of excusable delay or nonperformance). True and complete copies of all
real property leases, licenses and personal property leases listed on Schedule
7.5(d) have been delivered to Acquiror heretofore, as well as copies of any
title reports, surveys or environmental reports or audits relating to any Leased
Real Property. Except as set forth in Schedule 7.5(d), no such lease or license
will require the consent of the lessor or licensor to or as a result of the
consummation of the transactions contemplated by this Agreement. For the
purposes of this Section 7.5(d), a "lease" shall include a sublease.
<PAGE> 15
(e) All personal property owned by the Company and all personal property held by
the Company pursuant to personal property leases is in good operating condition
and repair, subject only to ordinary wear and tear, has been operated, serviced
and maintained properly within the recommendations and requirements of the
manufacturers thereof (if any) and is suitable and appropriate for the use
thereof made and proposed to be made by the Company in its business and
operations. The Real Property and personal property described in Sections
7.5(a), 7.5(b) and 7.5(c) and the Real Property and personal property held by
the Company pursuant to the leases and licenses described in Schedule 7.5(d)
compromise all of the real property and personal property used in the conduct of
business of the Company.
(f) Except as set forth in Schedule 7.5(f):
(i) The Company is not in violation of, or default under, any Legal Requirement
pertaining to any of the Real Property. No notice of violation of any Legal
Requirement, or of any covenant, condition, restriction or easement affecting
any Real Property or with respect to the use or occupancy thereof, has been
given by any Person;
(ii) All of the Structures (A) are in good operating condition and repair, (B)
are adequate and suitable for the purposes for which they are currently and
proposed to be used, and (C) are supplied with utilities and other services
necessary for the operation of such Structures, and the business conducted by
the Company therein, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are maintained in accordance with
all Legal Requirements and are provided via permanent, irrevocable, appurtenant
easements in favor of the Company;
(iii) No condemnation proceeding is pending or, to the knowledge of the
Shareholders, threatened which would impair the occupancy, use or value of any
Real Property;
(iv) No Structure, nor the operations of the Company therein or thereon, (A) is
located outside of the boundary lines of the described parcel of land on which
it is located, (B) is in violation of applicable setback requirements, zoning
laws, or ordinances, (C) is subject to "permitted non-conforming use" or
Apermitted non-conforming structure@ classifications or (D) encroaches on any
property owned by, or easement granted in favor of, any Person;
(v) There are no (A) leases, subleases, licenses, concessions or other
agreements, written or oral, granting to any other Person the right to acquire,
use or occupy any portion of, any Real Property, (B) outstanding options or
rights of first refusal to purchase all or any portion of Real Property or
interest therein, and (C) Persons (other than the Company) in possession of any
Real Property;
<PAGE> 16
(vi) Each parcel of Owned Real Property (A) is fully and adequately described in
the legal description therefor contained in the deed thereof, (B) abuts a paved
public right-of-way, (C) does not serve any adjoining property for any purpose
inconsistent with the use of the land, and (D) is not located within any flood
plain or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained; and
(vii) With respect to each item of Leased Real Property, (A) to the
Shareholders' knowledge, the owner thereof has good and marketable title
thereto, free and clear of all Liens other than (I) recorded easements,
covenants and restrictions that do not impair the current use, occupancy or
value thereof and (II) the leasehold interest of the Company, (B) there is
adequate ingress and egress (and a continuing right thereto), without the need
for an easement, between paved public rights-of-way and such Leased Real
Property and (C) the Company has not sold, transferred or subjected to a Lien
such Leased Real Property or any interest therein.
7.6 Accounts Receivable All accounts receivable of the Company reflected in
the Balance Sheet and all accounts receivable of the Company that have arisen
since the Balance Sheet Date (except such accounts receivable as have been
collected since such dates) are valid and enforceable claims, and the goods and
services sold and delivered that gave rise to such accounts were sold and
delivered in conformity with all applicable express and implied warranties,
purchase orders, agreements and specifications. Such accounts receivable of the
Company are subject to no valid defense, offset or counterclaim and are fully
collectible, except to the extent of the allowance for doubtful accounts
reflected on the Balance Sheet. Schedule 7.6 contains a true and complete aging
of the Company's accounts receivable as of the Balance Sheet Date.
7.7 Inventories. Except as described in Schedule 7.7, all inventories of
raw materials, work-in-process and finished good set forth or reflected in the
Balance Sheet or acquired by the Company since the Balance Sheet Date, consist
of a quality and quantity usable and saleable in the Ordinary Course, except for
slow-moving, damaged or obsolete items and materials of below standard quality,
all of which have been written down to net realizable market value or in respect
of which adequate reserves have been provided, in each case as reflected in the
Balance Sheet. The value at which inventories are carried on the Balance Sheet
reflect the normal inventory valuation policy of the Company, as applicable, in
accordance with generally accepted accounting principles and on a basis
consistent with that of preceding periods, of stating inventory at the lower of
cost or market value. There is no reason to believe that the Company will
experience in the foreseeable future any difficulty in obtaining, in the desired
quantity and quality, the inventory necessary to conduct its business in the
manner proposed to be conducted, including, without limitation, inventory which
historically has been imported.
<PAGE> 17
7.8 Trademarks, Patents, Etc.
(a) Schedule 7.8(a) contains a true and complete list of all letters patent,
patent applications, trade names, trademarks, service marks, trademark and
service mark registrations and applications, copyrights, copyright registrations
and applications, grants of a license or right to the Company with respect to
the foregoing, both domestic and foreign, claimed by either Company or used or
proposed to be used by the Company in the conduct of its business, whether
registered or not, (collectively herein, "Registered Rights"). The trade name
"Cyclewood" is being conveyed as part of this transaction.
(b) Except as described in Schedule 7.8(b), the Company owns and has the
unrestricted right to use the Registered Rights and every trade secret,
know-how, process, discovery, development, design, technique, customer and
supplier list, promotional idea, marketing and purchasing strategy, invention,
process, confidential data and or other information (collectively herein,
"Proprietary Information") required for or incident of the design, development,
manufacture, operation, sale and use of all products and services sold or
rendered or proposed to be sold or rendered by the Company, free and clear of
any right, equity or claim of others. The Company has taken reasonable security
measures to protect the secrecy, confidentiality and value of all Proprietary
Information.
(c) Schedule 7.8(c) contains a true and complete list and description of all
licenses of or rights to Proprietary Information granted to the Company by
others or to others by the Company. Except as described in Schedule 7.8(c), (i)
the Company has not sold, transferred, assigned, licensed or subjected to any
Lien, any Registered Right or Proprietary Information or any interest therein,
and (ii) the Company is not obligated or under any liability whatever to make
any payments by way of royalties, fees or otherwise to any owner or licensor of,
or other claimant to, any Registered Right or Proprietary Information.
(d) There is no claim or demand of any Person pertaining to, or any Action that
is pending or, to the Shareholders= knowledge, threatened, which challenges the
rights of the Company in respect of any Registered Right or any Proprietary
Information.
<PAGE> 18
7.9 Banking and Insurance.
(a) Schedule 7.9(a) contains a true and complete list of the names and locations
of all financial institutions at which the Company maintains a checking account,
deposit account, securities account, safety deposit box or other deposit or
safekeeping arrangement, the numbers or other identification of all such
accounts and arrangements and the names of all persons authorized to draw
against any funds therein.
(b) Schedule 7.9(b) contains a true and complete list of all insurance policies
and bonds and self insurance arrangements currently in force that cover or
purport to cover risks or losses to or associated with the Company's business,
operations, premises, properties, assets, employees, agents and directors and
sets forth, with respect to each such policy, bond and self insurance
arrangement, a description of the insured loss coverage, the expiration date and
time of coverage, the dollar limitations of coverage, a general description of
each deductible feature and principal exclusion and the premiums paid and to be
paid prior to expiration. The insurance policies, bonds and arrangements
described on Schedule 7.9(b) (the "Policies") provide such coverage against such
risk of loss and in such amounts as are customary for corporations of
established reputation engaged in the same or similar business and similarly
situated. The Company has no obligation, liability or other commitment relating
to any contract of insurance containing a provision for retrospective rating or
adjustment of the Company's premium obligation. To the Shareholders' knowledge,
no facts or circumstances exist that would cause the Company to be unable to
renew its existing insurance coverage as and when the same shall expire upon
terms at least as favorable as those currently in effect, other than possible
increases in premiums that do not result from any act or omission of the Company
or any Shareholder.
7.10 Indebtedness.
(a) The Company has no liability or obligation for Indebtedness other than as
set forth on Schedule 7.10(a), and true and complete copies of all instruments
and documents evidencing, creating, securing or otherwise relating to such
Indebtedness have been delivered to Acquiror heretofore. Except as described in
Schedule 7.10(a), no event has occurred and no condition has become known to the
Company or any Shareholder (including the transactions contemplated hereby) that
constitutes or, with notice or passage of time, or both, would constitute a
default or a basis of force majeure or other claim of accelerated or increased
rights, termination, excusable delay or nonperformance by the Company or any
other Person under any instrument or document relating to or evidencing
Indebtedness that would entitle any person to require the Company to pay any
portion of the principal amount of such Indebtedness prior to the scheduled
maturity thereof. Except as set forth in Schedule 7.10(a), no instrument or
document evidencing, creating, securing or otherwise relating to Indebtedness
will require the consent of any person to or as a result of the consummation of
the transactions contemplated by this Agreement.
<PAGE> 19
(b) Schedule 7.10(b) contains a list and brief description of all agreements or
instruments pursuant to which any of the Company's directors, employees or
shareholders have guaranteed by Indebtedness of the Company (the "Guaranties").
True and complete copies of all Guaranties have been delivered to Acquiror.
7.11 Judgments; Litigation. Except as set forth on Schedule 7.11:
(a) There is no (i) outstanding judgment, order, decree, award stipulation or
injunction of any Governmental Entity or arbitrator against or affecting the
Company or its properties, assets or business or (ii) Action pending against or
affecting the Company or its properties, assets or business.
(b) There is no (i) outstanding judgment, order, decree, award, stipulation,
injunction of any Governmental Entity or arbitrator against or affecting any
officer, director or employee of the Company relating to the Company or its
business, (ii) Action threatened against or affecting the Company or its
properties, assets or business, (iii) Action pending or threatened against the
Company's officers, directors or employees relating to the Company or its
business or (iv) basis for the institution of any Action against the Company or
any of its officers, directors, employees, properties or assets which, if
decided adversely, would have a Material Adverse Effect.
7.12 Income and Other Taxes. Except as set forth on Schedule 7.12:
(a) All Tax Returns required to be filed through and including the date hereof
in connection with the operations of the Company are true, complete and correct
in all respects and have been properly and timely filed. The Company has not
requested any extension of time within which to file any Tax Return, which Tax
Return has not since been filed. Acquiror has heretofore been furnished by the
Company with true, correct and complete copies of each Tax Return of the Company
with respect to the past three (3) taxable years, and of all reports of, and
communications from, any Governmental Entities relating to such period. The
Company has disclosed on its Federal Income Tax Returns all positions taken
therein that could give rise to a substantial understatement of income Taxes for
federal income tax purposes within the meaning of Code Section 6662.
(b) All Taxes required to be paid or withheld and deposited through and
including the date hereof in connection with the operations of the Company have
been duly and timely paid or deposited by the Company. The Company has properly
withheld or collected all amounts required by law for income Taxes and
employment Taxes relating to its employees, creditors, independent contractors
and other third parties, and for sales Taxes on sales, and has properly and
timely remitted such withheld or collected amounts to the appropriate
Governmental Entity. The Company has no liabilities for any Taxes for any
taxable period ending prior to or coincident with the Closing Date.
<PAGE> 20
(c) The Company has made adequate provision on its book of account for all Taxes
with respect to its business, properties and operations through the Balance
Sheet Date, and the accruals for Taxes in the Balance Sheet are adequate to
cover all liabilities for Taxes of the Company for all periods ending on or
before the Closing Date.
(d) The Company has never (i) had a tax deficiency proposed, asserted or
assessed against it (ii) executed any waiver of any statute of limitations on
the assessment or collection of any Taxes, or (iii) been delinquent in the
payment of any Taxes.
(e) No Tax Return of the Company has been audited or the subject of other Action
by any Governmental Entity. The Company has not received any notice from any
Governmental Entity of any pending examination or any proposed deficiency,
addition, assessment, demand for payment or adjustment relating to or affecting
the Company or its assets or properties and no Shareholder has reason to believe
that any Governmental Entity may assess (or threaten to assess) any Taxes for
any periods ending on or prior to the Closing Date.
(f) The Company (i) has not filed any consent or agreement pursuant to Code
Section 341(f), and no such consent or agreement will be filed at any time on or
before the Closing Date; (ii) has not made any payments, is not obligated to
make any payments and is not a party to any agreement that under certain
circumstances could obligate the Company to make any payments that will not be
deductible under Code Section 280G, (iii) is not a United States real property
holding corporation within the meaning of Code Section 897(c)(2); (iv) is not a
party to a tax allocation or sharing agreement; (v) has never been (or does not
have any liability for unpaid Taxes because it was) a member of an affiliated
group with the meaning of Code Section 1504(a); (vi) has never applied for a tax
ruling from a Governmental Entity and (vii) has never filed or been the subject
of an election under Code Section 338(g) or Code Section 338(h)(10) or caused or
been the subject of a deemed election under Code Section 338(e).
<PAGE> 21
7.13 Questionable Payments. Neither the Company nor, to the Shareholders'
knowledge, any of its directors, officers, agents, employees or other Person
associated with or acting on behalf of the Company has (a) used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (b) made any direct or indirect
unlawful payments to government officials or employees, or foreign government
officials or employees, from corporate funds, (c) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets, (d) made any
false or fictitious entries on the books of account of the Company, (e) made or
received any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment, or (f) made any other payment, favor or gift not fully
deductible for federal income tax purposes.
7.14 Employee Benefit Matters.
(a) Schedule 7.14 contains a complete list of all Plans. For purposes of this
Section 7.14, the term APlan@ shall mean any plan maintained by the Company
which is either an "employee benefit plan" as defined in Section 3(3) of ERISA
or a Afringe benefit plan@ as defined in Section 6039D of the Code. True and
complete copies of each of the following documents (and any amendments thereto),
where applicable, have been delivered previously to Acquiror: (i) the Plan
documents; (ii) a written description of any Plan which is not in writing; (iii)
if the Plan is funded through a trust or any third-party funding vehicle, the
trust or other funding agreement; (iv) the Plan's most recent financial
statements; (v) the two most recent annual reports (including all schedules and
attachments thereto) required by ERISA; (vi) the most recent actuarial report
and valuation; (vii) the most recent determination letter received from the IRS
with respect to each Plan that is intended to be qualified under Code Section
401 or to be recognized as tax-exempt under Code Section 501(c); (viii) the most
recent summary plan description and each summary of material modifications
required by ERISA; (ix) any agreement providing for the provision of
administrative or investment management services with respect to the Plan; and
(x) all documents and correspondence received from or provided to the DOL, IRS
and PBGC during the past two years.
(b) Each Plan and related trust, annuity, or other funding agreement complies
and has been maintained in compliance with all applicable Legal Requirements. No
non-exempt prohibited transaction (as defined in Code Section 4975 and ERISA
Sections 406 and 408) has occurred and no Afiduciary@ (as defined in ERISA
Section 3(21)) has committed any breach of duty which could subject the Company,
any ERISA Affiliate, or any director, officer, or employee thereof to liability
under Title I of ERISA or to tax under Code Section 4975. All material
obligations required to be performed by the Company and other Person under the
terms of each Plan and applicable Legal Requirement have been performed.
<PAGE> 22
(c) All required reports and descriptions, including, without limitation, annual
reports (Form 5500), summary annual reports, and summary plan descriptions, have
been filed and distributed timely. With respect to each Plan which is a welfare
plan (as defined in ERISA Section 3(1)), the requirements of Party 6 of Subtitle
B of Title I of ERISA and of Code Sections 162(k) and 4980B have been satisfied.
(d) All contributions, premiums, and other payments, including, without
limitation, employer contributions and employee salary reduction contributions,
have been paid when due or accrued in accordance with the past custom and
practice of Target and any ERISA Affiliate. No Plan that is subject to Part 3 of
Subtitle B of Title I of ERISA or to Code Section 412 has incurred any
accumulated funding deficiency, whether or not waived, and no other actual or
contingent liability for any other expenses or obligations of any Plan exists.
(e) There are no pending or, to the Shareholders' knowledge, threatened Actions
(other than routine claims for benefits) asserted or instituted against any Plan
or the assets of any Plan, or against the Company, or any ERISA Affiliate,
trustee, administrator, or fiduciary of such Plan, and the Shareholders have no
knowledge of any facts that could form the basis of any such Action. There is no
pending or, to the Shareholders' knowledge, threatened or contemplated Action by
any Governmental Entity with respect to any Plan, and the Shareholders have no
knowledge of any facts that could reasonably be expected to cause or trigger
such an Action.
(f) The Company (or, if applicable, an ERISA Affiliate,) may terminate, suspend,
or amend each Plan at any time, except to the extent otherwise required by Code
Section 4980B, without the consent of the participants or employees covered by
such Plan. Neither the Company nor any ERISA Affiliate has announced any
intention, made any amendment or binding commitment, or given any written or
oral notice providing that the Company or an ERISA Affiliate (i) will create
additional Plans covering employees of the Company or any ERISA Affiliate, (ii)
will increase benefits promised or provided pursuant to any Plan, or (iii) will
not exercise after the Closing Date any right or power it may have to terminate,
suspend, or amend any Plan.
(g) Neither the Company nor any ERISA Affiliate maintains or has maintained any
time, or contributes to or has contributed to or is or was required to
contribute to, any (i) Plan subject to Title IV or ERISA, including, without
limitation, any multi-employer plan (as defined in ERISA Section 3(37)), within
the past five years, or (ii) funded or unfunded medical, health, accident, or
life insurance plan or arrangement for current or future retirees or terminated
employees or their spouses or dependents (except to the extent required by Code
Sections 162(k) or 4980B).
<PAGE> 23
(h) Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will constitute a termination of employment
or other event entitling any Person to any additional or other benefits, or that
would otherwise modify benefits or the vesting of benefits, provided under any
Plan.
(i) No event has occurred which could subject the Company of any ERISA Affiliate
to any material liability (i) under any Legal Requirement relating to any Plan,
or (ii) resulting from any obligation of Target or an ERISA Affiliate to
indemnify any Person against liability incurred with respect to or in connection
with any Plan.
(j) Each Plan which is intended to be qualified under Code Section 401 has
received, within the last five years, a favorable determination letter from the
IRS. No event has occurred and no facts or circumstances exist which may cause
or result in the loss or revocation of such determination.
7.15 No Undisclosed Liabilities. Except (i) to the extent set forth or provided
for in the Balance Sheet or the notes thereto, (ii) as set forth on Schedule
7.15 or (iii) for non-material current liabilities incurred since the Balance
Sheet Date in the Ordinary Course, as of the date hereof the Company has no
liabilities, whether accrued, absolute, contingent or otherwise, whether due or
to become due and whether the amounts thereof are readily ascertainable or not,
or any unrealized or anticipated losses from any commitments of a contractual
nature, including Taxes with respect to or based upon the transactions or events
occurring at or prior to the Closing.
7.16 Permits, Licenses, Etc. The Company possesses, and is operating in
compliance with, all franchises, licenses, permits, certificates,
authorizations, rights and other approvals of Governmental Entities necessary to
(i) occupy, maintain, operate and use the Real Property as it is currently used
and proposed to be used, (ii) conduct its business as currently conducted and as
proposed to be conducted, and (iii) maintain and operate its Permits (the
"Permits"). Schedule 7.16 contains a true and complete list of all Permits. Each
Permit has been lawfully and validly issued, and no proceeding is pending or, to
the Shareholders' knowledge, threatened looking toward the revocation,
suspension or limitation of any Permit. The consummation of the transactions
contemplated by this Agreement will not result in the revocation, suspension or
limitation of any Permit and, except as set forth in Schedule 7.16, no Permit
will require the consent of its issuing authority to or as a result of the
consummation of the transaction contemplated hereby.
<PAGE> 24
7.17 Regulatory Filings. The Company has made all required registrations and
filings with and submissions to all applicable Governmental Entities relating to
the operations of the Company as currently conducted and as proposed to be
conducted, including, without limitation, all such applicable Governmental
Entities having jurisdiction over any matters pertaining to conservation or
protection of the environment, and the treatment, discharge, use, handling,
storage or production, or disposal of Hazardous Materials. All such
registrations, filings and submissions were in compliance with all Legal
Requirements (including all Environmental Laws) and other requirements when
filed, no material deficiencies have been asserted by any such applicable
Governmental Entities with respect to such registrations, filings or submissions
and, to the Shareholders= knowledge, no facts or circumstances exist which would
indicate that a material deficiency may be asserted by any such authority with
respect to any such registration, filing or submission.
7.18 Consents. All consents, authorizations and approvals of any Person to or as
a result of the consummation of the transactions contemplated hereby, that are
necessary or advisable in connection with the operations and business of the
Company as currently conducted and as proposed to be conducted, or for which the
failure to obtain the same might have, individually or in the aggregate, a
Material Adverse Effect, have been lawfully and validly obtained by the Company,
except as described in Schedules 7.5(c), 7.10 and 7.16 hereto. All consents,
authorizations and approvals described in Schedules 7.5(c), 7.10 and 7.16 will
have been lawfully and validly obtained prior to the Closing.
7.19 Material Contracts; No Defaults.
(a) Schedule 7.19(a) contains a true and complete list and description of the
outstanding sales order and sales contract backlog of the Company having an
indicated gross value in excess of Five Thousand Dollars ($5,000.00) or having a
term of duration in excess of six months. All outstanding sales orders and sales
contracts of the Company have been entered into in the Ordinary Course. Except
as described in Schedule 7.19(a), the Company has not received any advance,
progress payment or deposit in respect of any sales order or sales contract, and
the Company has no sales order or sales contract that will result, upon
completion or performance thereof, in gross margins materially lower than those
normally experienced by the Company for the services or products covered by such
sales order or sales contract.
(b) Schedule 7.19(b) contains a true and complete list and description of all
outstanding purchase orders and purchase commitments of the Company having a
gross indicated value in excess of Ten Thousand Dollars ($10,000.00) in the
aggregate from any single supplier or other vendor. All outstanding purchase
orders and purchase commitments of the Company have been incurred in the
Ordinary Course, and no purchase order or purchase commitment of the Company is
in excess of the normal, ordinary and usual requirements of the business of the
Company or at an excessive price. The principal raw materials used and inventory
sold by the Company are available from several sources at competitive prices and
upon competitive terms and no interruption in production or Material Adverse
Effect will result from the loss of any one of such sources.
<PAGE> 25
(c) Schedule 7.19(c) contains a true and complete list of all sales agency,
sales representative, distributor, wholesaler, dealer and similar contracts or
agreements of the Company, and true and complete copies of the same have been
delivered to Acquiror heretofore. Except as described in Schedule 7.19(c), all
of such contracts and agreements are terminable at any time by the applicable
Company without penalty (including, without limitation, any obligation to
repurchase inventories on hand) upon not more than thirty (30) days' notice.
(d) Schedule 7.19(d) contains a true and complete list and description of all
noncompetition agreements and covenants under which the Company or any of their
respective officers, directors or employees or any Shareholder is obligated, and
true and complete copies of the same have been delivered to Acquiror heretofore.
Except as described in Schedule 7.19(d), the Company is not restricted by any
agreement from carrying on its business or engaging in any other activity
anywhere in the world (including relocating, closing, or terminating any of its
operations or facilities), and no such officer, director, key employee or
Shareholder is a party to or otherwise bound or affected by any agreement,
covenant or other arrangement or understanding that would restrict or impair his
ability to perform diligently his other duties to the Company. Schedule 7.19(d)
also contains a true and complete list and description of all noncompetition
agreements or covenants in favor of the Company, and true and complete copies of
the same have been delivered to Acquiror heretofore.
(e) Schedule 7.19(e) contains a true and complete list and description of all
contracts, agreements, understandings, arrangements and commitments, written or
oral, of the Company with any officer, director, consultant, employee or
Affiliate of the Company or with any associate, Affiliate or employee of any
Affiliate of the Company, other than those disclosed in Schedule 7.21(a) hereto;
in each case a true and complete copy of such written contract, agreement,
understanding, arrangement or commitment or a true and complete summary of such
oral contract, agreement, understanding, arrangement or commitment has been
delivered to Acquiror heretofore.
<PAGE> 26
(f) Schedule 7.19(f) contains a true and complete list and description of all
other material contracts, agreements, understandings, arrangements and
commitments, written or oral, of the Company by which it or its properties,
rights or assets are bound that are not otherwise disclosed in this Agreement or
the Schedule hereto. True and complete copies of such written contracts,
agreements, understandings, arrangements and commitments and true and complete
summaries of such oral contracts, agreements, understandings, arrangements and
commitments have been delivered to Acquiror heretofore. For the purposes of this
subsection (f), Amaterial@ means any contract, agreement, understanding,
arrangement or commitment that (i) involves performance by any party more than
ninety (90) days from the date hereof, (ii) involves payments or receipts by the
Company in excess of Five Thousand Dollars ($5,000.00), (iii) involves capital
expenditures in excess of Five Thousand Dollars ($5,000.00) or (iv) otherwise
materially affects the Company.
(g) Except as described in Schedule 7.19(g):
(i) each agreement, contract, arrangement or commitment described above
in this Section 7.19 is, and after the Closing on identical terms will
be, legal, valid, binding, enforceable and in full force and effect;
(ii) no event or condition has occurred or become known to the Company
or any Shareholder or is alleged to have occurred that constitutes or,
with notice or the passage of time, or both, would constitute a default
or a basis of force majeure or other claim of excusable delay,
termination, nonperformance or accelerated or increased rights by the
Company or any other Person under any contract, agreement, arrangement,
commitment or other understanding, written or oral, described above in
this Section 7.19, or described or otherwise disclosed pursuant to this
Agreement; and
(iii) no person with whom the Company has such a contract, agreement,
arrangement, commitment or other understanding is in default thereunder
or has failed to perform fully thereunder by reason of force majeure or
other claim of excusable delay, termination or nonperformance
thereunder, the delay, termination or nonperformance of which, or a
default under which, has had or may have a Material Adverse Effect.
<PAGE> 27
7.20 Absence of Certain Changes. Since March 31, 1998, except as disclosed in
Schedule 7.20, the Company has not: (i) incurred any debts, obligations or
liabilities (absolute, accrued, contingent or otherwise), other than current
liabilities incurred in the Ordinary Course which, individually or in the
aggregate, are not material; (ii) subjected to or permitted a Lien (other than a
Permitted Lien) upon or otherwise encumbered any of its assets, tangible or
intangible; (iii) sold, transferred, licensed or leased any of its assets or
properties except in the Ordinary Course; (iv) discharged or satisfied any Lien
other than a Lien securing, or paid any obligation or liability other than,
current liabilities shown on the Balance Sheet and current liabilities incurred
since the Balance Sheet Date, in each case in the Ordinary Course; (v) canceled
or compromised any debt owed to or by or claim of or against it, or waived or
released any right of material value other than in the Ordinary Course; (vi)
suffered any physical damage, destruction or loss (whether or not covered by
insurance) causing a Material Adverse Effect; (vii) entered into any material
transaction or otherwise committed or obligated itself to any capital
expenditure other than in the Ordinary Course; (viii) made or suffered any
change in, or condition affecting, its condition (financial or otherwise),
properties, profitability, prospects or operations other than changes, events or
conditions in the Ordinary Course, none of which (individually or in the
aggregate) has had or may have a Material Adverse Effect; (ix) made any change
in the accounting principles, methods, records or practices followed by it or
depreciation or amortization policies or rates theretofore adopted; (x) other
than in the Ordinary Course, made or suffered any amendment or termination of
any material contract, agreement, lease or license to which it is a party; (xi)
paid, or made any accrual or arrangement for payment of, any severance or
termination pay to, or entered into any employment or loan or loan guarantee
agreement with, any current or former officer, director or employee or
consultant; (xii) paid, or made any accrual or arrangement for payment of, any
increase in compensation, bonuses or special compensation of any kind to any
employee other than pursuant to an agreement disclosed on Schedule 7.21(a) or
Schedule 7.21(b) or other than in the Ordinary Course, or paid, or made any
accrual or arrangement for payment of, any increase in compensation, bonuses or
special compensation of any kind to any officer or director of the Company or
any consultant to the Company; (xiii) made or agreed to make any charitable
contributions or incurred any nonbusiness expenses; (xiv) changed or suffered
change in any benefit plan or labor agreement affecting any employee of the
Company otherwise than to conform to Legal Requirements; or (xv) entered into
any agreement or otherwise obligated itself to do any of the foregoing.
7.21 Employees and Labor Matters.
(a) Schedule 7.21(a) contains a true and complete list of all contracts,
agreements, plans, arrangements, commitments and understandings (formal and
informal) pertaining to terms of employment, compensation, bonuses, profit
sharing, stock purchases, stock repurchases, stock options, commissions,
incentives, loans or loan guarantees, severance pay or benefits, use of the
Company's property and related matters of the Company with any current or former
officer, director, employee or consultant, and true and complete copies of all
such contracts, agreements, plans, arrangements and understandings have been
delivered to Acquiror heretofore. Attached to Schedule 7.21(a) is the most
current copy of the employee handbook utilized by the Company and distributed to
each of its employees.
<PAGE> 28
(b) Schedule 7.21(b) contains a true and complete list of all labor, collective
bargaining, union and similar agreements under or by which the Company is
obligated, and true and complete copies of all such agreements have been
delivered to Acquiror heretofore.
(c) Except as set forth on Schedules 7.21(a) and 7.21(b), neither Acquiror nor
the Company will have any responsibility for continuing any person in the employ
(or retaining any person as a consultant) of the Company from and after the
Closing or have any liability for any severance payments to or similar
arrangements with any such Person who shall cease to be an employee of the
Company at or prior to the Closing.
(d) There is not occurring or, to the Shareholders' knowledge, threatened, any
strike, slow down, picket, work stoppage or other concerted action by any union
or other group of employees or other persons against either Company or its
premises or products. Except for activities by the unions that are parties to
any of the agreements listed on Schedule 7.21(b) with respect to the existing
members of such unions, to the Shareholders' knowledge, no union or other labor
organization has attempted to organize any of the employees of the Company.
(e) The Company has complied with all Legal Requirements relating to employment
and labor, and, to the Shareholders= knowledge, no facts or circumstances exist
that could provide a reasonable basis for a claim of wrongful termination by any
current or former employee of the Company against the Company.
7.22 Affiliation. Except as disclosed on Schedule 7.22, none of the
Shareholders, any officer, director or key employee of the Company or any
associate or Affiliate of the Company or any of such Persons has, directly or
indirectly, (i) an interest in any Person that (A) furnishes or sells, or
proposes to furnish or sell, services or products that are furnished or sold by
the Company or (B) purchases from or sells or furnishes to, or proposes to
purchase from or sell or furnish to, the Company any goods or services or (ii) a
beneficial interest in any contract or agreement to which the Company is a party
or by which the Company or any of the assets of the Company are bound or
affected.
<PAGE> 29
7.23 Principal Customers and Suppliers.
(a) Schedule 7.23(a) contains a true and complete list of the name and address
of each customer that purchased in excess of five percent (5%) of the Company=s
sales of goods or services during the twelve months ended on the Balance Sheet
Date, and since that date no such customer has terminated its relationship with
or adversely curtailed its purchases from the Company or indicated (for any
reason) its intention so to terminate its relationship or curtail its purchases.
(b) Schedule 7.23(b) contains a true and complete list of each supplier from
whom the Company purchased in excess of five percent (5%) of the Company's
purchases of goods or services during the twelve months ended on the balance
Sheet Date, and since that date no such supplier has terminated its relationship
with or adversely curtailed its accommodations, sales or services to the Company
or indicated (for any reason) its intention to terminate such relationship or
curtail its accommodations, sales or services.
7.24 Compliance with Law. Through and including the date hereof, the Company (i)
has not violated or conducted its business or operations in violation of, and
has not used or occupied its properties or assets in violation of, any Legal
Requirement, (ii) to the Shareholders= knowledge, has not been alleged to be in
violation of any Legal Requirement, and (iii) has not received any notice of any
alleged violation of, or any citation for noncompliance with, any Legal
Requirement.
7.25 Product Returns. Schedule 7.25 contains a true and complete description of
the product return experience of the Company for the immediately preceding
twelve (12) months. The Company has not experienced any product returns which
have had or may have a Material Adverse Effect.
7.26 Product Liability and Product Warranty. Schedule 7.26 hereto contains a
true and complete description of (i) all warranties granted or made with respect
to products sold, or services rendered, by the Company and (ii) the Company's
product liability and product warranty experience for the last three years. The
Company has not suffered any product liability or product warranty claims which
have had or may have a Material Adverse Effect.
7.27 Corporate Records. The copies or originals of the Articles of
Incorporation, Bylaws, minute books and stock records of the Company previously
delivered to, or made available for inspection by, Acquiror are true, complete
and correct.
<PAGE> 30
7.28 Hazardous Materials. Except as set forth on Schedule 7.28:
(a) No Hazardous Material (i) has been released, placed, stored, generated,
used, manufactured, treated, deposited, spilled, discharged, released or
disposed or on or under any real property currently or previously owned or
leased by the Company or is presently located on or under any Real Property (or,
to the Shareholders' knowledge, any property adjoining any Real Property), (ii)
is presently maintained, used, generated, or permitted to remain in place by the
Company in violation of any Environmental Law, (iii) is required by any
Environmental Law to be eliminated, removed, treated or mitigated by the
company, given the nature of its present condition, location, nature, material
or maintenance, or (iv) is of a type, location, material, nature or condition
which requires special notification to third parties by the Company under
Environmental Law or common law.
(b) No notice, citation, summons or order has been received by the Company or
any Shareholder, no notice has been given by the Company and no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or threatened by any Governmental Entity, with respect to (i) any
alleged violation by the Company of any Environmental Law of (ii) any alleged
failure by the Company to have any environmental permit, certificate, license,
approval, registration or authorization required in connection with its business
or properties, or (iii) any use, possession, generation, treatment, storage,
recycling, transportation, release or disposal by or on behalf of the Company of
any Hazardous Material.
(c) The Company has not received any request for information, notice of claim,
demand or notification that it is or that indicates that it may be a
"potentially responsible party" with respect to any investigation or remediation
of any threatened or actual release of any Hazardous Material.
(d) No above-ground or underground storage tanks, whether or not in use, are or
have ever been located at any property currently owned or leased by the Company.
(e) No notice has been received by the Company with respect to the listing or
proposed listing of any property currently or previously owned, operated or
leased by the Company on the National Priorities List promulgated pursuant to
CERCLA, CERCLIS or any similar state list of sites requiring investigation or
cleanup.
(f) There have been no environmental inspections, investigations, studies,
tests, review or other analyses conducted in relation to any Real Property.
<PAGE> 31
(g) The Company has not yet released, transported, or arranged for the
transportation of any Hazardous Material from any property currently or
previously owned, operated or leased by the Company.
7.29 Brokers' Fees. No broker, finder or similar agent has been employed by or
on behalf of the Company in connection with this Agreement or the transactions
contemplated hereby, and the Company has not entered into any agreement or
understanding of any kind with any person or entity for the payment of any
brokerage commission, finder's fee or any similar compensation in connection
with this Agreement or the transactions contemplated hereby.
7.30 Disclosure.
(a) No representation or warranty of any Shareholder in this Agreement and no
information contained in any Schedule or other writing delivered pursuant to
this Agreement or at the Closing contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to
make the statements herein or therein not misleading. There is no fact that the
Shareholders have not disclosed to Acquiror in writing that has had or, insofar
as any Shareholder can now foresee, may have a Material Adverse Effect on the
ability of any Shareholder to perform fully this Agreement.
(b) To the extent that any representation or warranty in this Article 4 is
qualified to the Shareholders' "knowledge," the Shareholders represent and
warrant that they have made a reasonable investigation sufficient to express an
informed view concerning the matters to which such representation or warranty
relates, including diligent inquiries of the Company's officers, directors and
employees.
8. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to, and covenants and agrees with, each
of the Shareholders that:
8.1 Organization and Good Standing. Acquiror has been duly organized and is
existing as a corporation in good standing under the laws of the State of
Indiana with full corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby.
8.2 Execution and Delivery. This Agreement has been duly authorized by all
necessary corporate action on the part of Acquiror, has been duly executed and
delivered by Acquiror and constitutes the legal, valid and binding agreement of
Acquiror enforceable against Acquiror in accordance with its terms.
<PAGE> 32
8.3 No Conflicts. The execution, delivery and performance of this Agreement by
Acquiror and the consummation by Acquiror of the transactions contemplated
hereby will not conflict with or result in the violation of the provisions of
the Articles of Incorporation or Bylaws of Acquiror.
9. CONDUCT OF BUSINESS PENDING CLOSING
During the period commencing on the date hereof and continuing through the
Closing Date, the Shareholders jointly and severally covenant and agree (except
as expressly contemplated by this Agreement or to the extent that Acquiror shall
otherwise expressly consent in writing) that:
9.1 Qualification. The Company shall maintain all qualifications to transact
business and remain in good standing in its jurisdiction of incorporation and in
the foreign jurisdictions set forth on Schedule 7.1(a).
9.2 Ordinary Course. The Company shall conduct its business in, and only in, the
Ordinary Course and, to the extent consistent with such business, shall preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and going business value shall be unimpaired at the Closing Date. The
Company shall maintain its properties and assets in good condition and repair.
9.3 Corporate Changes. The Company shall not (a) amend its Articles of
Incorporation or Bylaws (or equivalent documents), (b) acquire by merging or
consolidating with, or agreeing to merge or consolidate with, or purchase
substantially all of the stock or assets of, or otherwise acquire, any business
or any corporation, partnership, association or other business organization or
division thereof, (c) enter into any partnership or joint venture, (d) declare,
set aside, make or pay any dividend or other distribution in respect of its
capital stock or purchase or redeem, directly or indirectly, any shares of its
capital stock, (e) issue or sell any shares of its capital stock of any class or
any options, warrants, conversion or other rights to purchase any such shares or
any securities convertible into or exchangeable for such shares, or (f)
liquidate or dissolve or obligate itself to do.
9.4 Indebtedness. The Company shall not incur any Indebtedness, sell any debt
securities or lend money to or guarantee the Indebtedness of any Person. The
Company shall not restructure or refinance its existing Indebtedness.
<PAGE> 33
9.5 Accounting. The Company shall not make any change in the accounting
principles, methods, records or practices followed by it or depreciation or
amortization policies or rates heretofore adopted by it. The Company shall
maintain its books, records and accounts in accordance with generally accepted
accounting principles applied on a basis consistent with that of prior periods.
9.6 Compliance with Legal Requirements. The Company shall comply promptly with
all requirements that applicable law may impose upon it and its operations and
with respect to the transactions contemplated by this Agreement, and shall
cooperate promptly with, and furnish information to, Acquiror in connection with
any such requirements imposed upon Acquiror, or upon any of its affiliates, in
connection therewith or herewith.
9.7 Disposition of Assets. The Company shall not sell, transfer, license, lease
or otherwise dispose of, or suffer or cause the encumbrance by any Lien upon any
of its properties or assets, tangible or intangible, or any interest therein,
except for sales of inventory in the Ordinary Course.
9.8 Compensation. The Company shall not (a) adopt or amend in any material
respect any collective bargaining, bonus, profit-sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other plan,
agreement, trust, fund or arrangement for the benefit of employees (whether or
not legally binding) other than to comply with any Legal Requirement or (b) pay,
or make any accrual or arrangement for payment of, any increase in compensation,
bonuses or special compensation of any kind, or any severance or termination pay
to, or enter into any employment or loan or loan guarantee agreement with, any
current or former officer, director, employee or consultant of the Company,
except for such bonuses as may be required to offset the individual income tax
liability of each Shareholder relating to the Company.
9.9 Modification or Breach of Agreement; New Agreements. The Company shall not
terminate or modify, or commit or cause or suffer to be committed any act that
will result in breach or violation of any term of or (with or without notice or
passage of time, or both) constitute a default under or otherwise give any
person a basis for non-performance under, any indenture, mortgage, deed of
trust, loan or credit agreement, lease, license or other agreement, instrument,
arrangement or understanding, written or oral, disclosed in this Agreement or
the Schedules hereto. The Company shall refrain from becoming a party to any
contract or commitment other than in the Ordinary Course. The Company shall meet
all of its contractual obligations in accordance with their respective terms.
<PAGE> 34
9.10 Capital Expenditures. Except for capital expenditures or commitments
necessary to maintain its properties and assets in good condition and repair
(the amount of which shall not exceed Five Thousand Dollars ($5,000.00) in the
aggregate), the Company shall not purchase or enter into any contract to
purchase any capital assets.
9.11 Consents. The Company shall use its best efforts to obtain any consent,
authorization or approval of, or exemption by, any Person required to be
obtained or made by any party hereto in connection with the transactions
contemplated hereby or the taking of any action in connection with the
consummation thereof.
9.12 Maintain Insurance. The Company shall maintain its Policies in full force
and effect and shall not do, permit or willingly allow to be done any act by
which any of the Policies may be suspended, impaired or canceled.
9.13 Discharge. The Company shall not cancel, compromise, release or discharge
any claim of the Company upon or against any person or waive any right of the
Company of material value, and not discharge any Lien (other than Permitted
Liens) upon any asset of the Company or compromise any debt or other obligation
of the Company to any person other than Liens, debts or obligations with respect
to current liabilities of the Company.
9.14 Actions. The Company shall not institute, settle or agree to settle any
Action before any Governmental Entity.
9.15 Permits. The Company shall maintain in full force and effect, and comply
with, all Permits.
9.16 Tax Assessments and Audits. The Company shall furnish promptly to Acquiror
a copy of all notices of proposed assessment or similar notices or reports that
are received from any taxing authority and which relate to the Company's
operations for periods ending on or prior to the Closing Date. The Shareholders
shall cause the Company to promptly inform Acquiror, and permit the
participation in and control by Acquiror, of any investigation, audit or other
proceeding by a Governmental Entity in connection with any Taxes, assessment,
governmental charge or duty and shall not consent to any settlement or final
determination in any proceeding without the prior written consent of Acquiror.
10. ADDITIONAL COVENANTS
10.1 Covenants of the Shareholders. During the period from the date hereof
through the Closing Date, each Shareholder agrees to:
<PAGE> 35
(a) comply promptly with all requirements that applicable Legal Requirements may
impose upon it with respect to the transactions contemplated by the Agreement,
and shall cooperate promptly with, and furnish information to, Purchase in
connection with any requirements imposed upon Acquiror or upon any of its
affiliates in connection therewith or herewith;
(b) use its reasonable best efforts to obtain (and to cooperate with Acquiror in
obtaining) any consent, authorization or approval of, or exemption by, any
Person required to be obtained or made by such Shareholder in connection with
the transactions contemplated by this Agreement;
(c) use its reasonable best efforts to bring about the satisfaction of the
conditions precedent to Closing set forth in Section 11.1 of this Agreement;
(d) promptly advise Purchase orally and, within three (3) business days
thereafter, in writing of any change in such Company's business or condition
that has had or may have a Material Adverse Effect; and
(e) deliver to Acquiror prior to the Closing a written statement disclosing any
untrue statement in this Agreement or any Schedule hereto (or supplement
thereto) or document furnished pursuant hereto, or any omission to state any
material fact required to make the statements herein or therein contained
complete and not misleading, promptly upon the discovery of such untrue
statement or omission, accompanied by a written supplement to any Schedule to
this Agreement that may be affected thereby; provided, however, that the
disclosure of such untrue statement or omission shall not prevent Acquiror from
terminating this Agreement pursuant to Section 12.1(c) hereof at any time at or
prior to the Closing in respect of any original untrue or misleading statement.
10.2 Covenants of Acquiror. During the period from the date hereof to the
Closing Date, Acquiror shall:
(a) comply promptly with all requirements that applicable Legal Requirements may
impose upon it with respect to the transactions contemplated by this Agreement,
and shall cooperate promptly with, and furnish information to, the Shareholders
in connection with any such requirements imposed upon the Shareholders or the
Company or upon any of the Company's affiliates in connection therewith or
herewith;
(b) use its reasonable best efforts to obtain any consent, authorization or
approval of, or exemption by, any Person required to be obtained or made by
Acquiror in connection with the transactions contemplated by this Agreement; and
<PAGE> 36
(c) use its reasonable best efforts to bring about the satisfaction of the
condition precedent to Closing set forth in Section 11.2 of this Agreement.
10.3 Access and Information
(a) During the period commencing on the date hereof and continuing through the
Closing Date, the Shareholders shall continue to cause the Company to afford to
Acquiror and to Acquiror's accountants, counsel, investment bankers and other
representatives, reasonable access to all of its properties, books, contracts,
commitments, records and personnel and, during such period, to continue to cause
the Company to furnish promptly to Acquiror all information concerning its
business, properties and personnel as Acquiror may reasonably request.
(b) Except to the extent permitted by the provisions of Section 10.6 hereof,
Acquiror shall hold in confidence, and shall use reasonable efforts to ensure
that its employees and representatives hold in confidence, all such information
supplied to it by the Shareholders or the Company concerning the Company and
shall not disclose such information to any third party except as may be required
by any Legal Requirement and except for information that (i) is or becomes
generally available to the public other than as a result of disclosure by
Acquiror or its representatives, (ii) becomes available to Acquiror or its
representatives from a third party other than the Shareholders or the Company,
and Acquiror or its representatives have no reason to believe that such third
party is not entitled to disclose such information, (iii) is known to Acquiror
or its representatives on a non-confidential basis prior to is disclosure by any
Shareholder or the Company or (iv) is made available by any Shareholder or the
Company to any other Person on a non-restricted basis. Acquiror's obligations
under the foregoing sentence shall expire on the Closing Date or, if the Closing
does not occur, two (2) years after the date hereof.
10.4 Expenses. All costs and expenses (including, without limitation, all legal
fees and expenses and fees and expenses of any brokers, finders or similar
agents) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring the same.
10.5 Certain Notifications. At all times from the date hereof to the Closing
Date, each party shall promptly notify the others in writing of the occurrence
of any event that will or may result in the failure to satisfy any of the
conditions specified in Article 8 hereof.
<PAGE> 37
10.6 Publicity; Employee Communications. At all times prior to the Closing Date,
each party shall obtain the consent of all other parties hereto prior to
issuing, or permitting any of its directors, officers, employees or agents to
issue, any press release or other information to the press, employees of the
Company or any third party with respect to this Agreement or the transactions
contemplated hereby; provided, however, that no party shall be prohibited from
supplying any information to any of its representatives, agents, attorneys,
advisors, financing sources and others to the extent necessary to complete the
transactions contemplated hereby so long as such representatives, agents,
attorneys, advisors, financing sources and others are made aware of the terms of
this Section 10.6. Nothing contained in this Agreement shall prevent any party
to this Agreement at any time from furnishing any required information to any
Governmental Entity or authority pursuant to a Legal Requirement or from
complying with its legal or contractual obligations.
10.7 Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Legal Requirements, to consummate and make effective
the transactions contemplated by this Agreement.
(b) If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, the Shareholders and the
property officers or directors of Acquiror, as the case may be, shall take or
cause to be taken all such necessary or convenient action and execute, and
deliver and file, or cause to be executed, delivered and filed, all necessary or
convenient documentation.
(c) Subsequent to Closing and during the term of any Indemnification,
Acquiror agrees to maintain insurance, including a particular products liability
insurance, in commercially reasonable amounts as long as such is commercially
available at reasonable rates.
10.8 Competing Offers; Merger or Liquidation. The Shareholders agree that they
will not, and will cause the Company not to, directly or indirectly, through any
officer, director, agent, or otherwise, solicit, initiate or encourage the
submissions of bids, offers or proposals by, any Person with respect to an
acquisition of the Company or its assets or capital stock or a merger or similar
transaction, and the Shareholders will not, and will not permit the Company to,
engage any broker, financial adviser or consultant with an incentive to initiate
or encourage proposals or offers from other parties. Furthermore, the
Shareholders shall not, and shall not permit the Company to, directly or
indirectly, through any officer, director, agent or otherwise, engage in
negotiations concerning any such transaction with, or provide information to,
any Person other than Acquiror and its representatives with a view to engaging,
or preparing to engage, that Person with respect to any matters in this Section.
The Shareholders shall ensure that the Company shall not commence any proceeding
to merge, consolidate or liquidate or dissolve or obligate itself to do so. In
the event Shareholders breach this provision, they agree that Acquiror, among
other remedies which may be available to it, shall be entitled to an injunctive
relief.
<PAGE> 38
10.9 Inconsistent Action. The Shareholders shall not take or suffer to be taken,
and shall not permit the Company to take or cause or suffer to be taken, any
action that would cause any of the representations or warranties of any of the
Shareholders in this Agreement to be untrue, incorrect, incomplete or
misleading.
10.10 Post-Termination Employment. Except for the employment agreement to be
executed by Scott House, each Shareholder acknowledges and agrees that after the
Closing (a) neither Acquiror nor the Company shall be required to employ or
retain any employee of the Company or any other Person, and (b) Acquiror, in its
sole and absolute discretion, may cause the Company to retain all, some, or none
of such employees.
11. CONDITIONS PRECEDENT TO CLOSING
11.1 Conditions of Acquiror. Notwithstanding any other provision of this
Agreement, the obligations of Acquiror to consummate the transactions
contemplated hereby shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions:
(a) There shall not be instituted and pending or threatened any Action before
any Governmental Entity (i) challenging the acquisition of the Shares by
Acquiror or otherwise seeking to restrain or prohibit the consummation of the
transactions contemplated hereby or (ii) seeking to prohibit the direct or
indirect ownership or operation by Acquiror of all or a material portion of the
business or assets of the Company, or to compel Acquiror or the Company to
dispose of or hold separate all or a material portion of the business or assets
of the Company or Acquiror;
(b) The representations and warranties of each of the Shareholders in this
Agreement shall be true and correct in all respects on and as of the Closing
Date with the same effect as if made on the Closing Date and each of the
Shareholders shall have complied with all covenants and agreements and satisfied
all conditions on such Shareholder' part to be performed or satisfied on or
prior to the Closing Date;
<PAGE> 39
(c) Acquiror shall have received from F. Pen Cosby, Esq., counsel for the
Shareholders and the Company, a written opinion dated the Closing date and
addressed to Acquiror, in substantially the form attached as Exhibit B hereto;
(d) Acquiror shall have received from the President of the Company a certificate
dated the Closing Date in substantially the form attached as Exhibit C hereto;
(e) Acquiror shall have received from each Shareholder a certificate dated the
Closing Date in substantially the form attached as Exhibit D hereto;
(f) Acquiror shall have received a copy of the Resolution of the Board of
Directors of the Company approving this transaction, said Resolution being
substantially in the form attached as Exhibit E hereto;
(g) Each Shareholder shall have entered into a Noncompetition Agreement with
Acquiror and the Company in substantially the form attached as Exhibit F hereto,
(collectively, the "Noncompetition Agreements");
(h) The shareholders shall cause the Employment Agreement with Scott House to be
executed substantially in the form attached hereto as Exhibit G;
(i) Acquiror shall have concluded (through its representatives, accountants,
counsel and other experts) an investigation of the business, condition
(financial and other), properties, assets, prospects, operations and affairs of
the Company and shall be satisfied, in its sole discretion, with the results
thereof;
(j) All corporate and other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates, opinions, agreements,
instruments, releases and documents referenced herein or incident to the
transactions contemplated hereby shall be in form and substance satisfactory to
Acquiror and its counsel;
(k) Acquiror shall have received UCC searches, tax searches, and judgement
searches which are satisfactory to it, in its sole discretion, the results of
which will be attached hereto as Exhibit H;
(l) Acquiror shall have received reasonable assurances from those employees, if
any, of the Company that may be identified by Acquiror in its discretion that
they will remain in the employ of the Company for a reasonable period of time
after the consummation of the transactions contemplated hereby.;
<PAGE> 40
(m) All consents from third parties, including from any Governmental Entity,
landlord or other Person, necessary for the consummation of the transactions
contemplated hereby shall have been obtained;
(n) All officers and directors of the Company shall have resigned as such,
effective of the Closing and such resignations shall be attached hereto as
Exhibit I;
(o) No act, event or condition shall have occurred after the date hereof which
Acquiror determines has had or could have had a Material Adverse Effect;
(p) All agreements and documents necessary to convey absolute fee simple title
to all Real Property conveyed hereunder free and clear of all liens, claims,
encumbrances, rights and interests of third parties of any kind or nature
whatsoever, which shall be attached hereto as Exhibit J; and
(q) Each Shareholder shall execute and deliver an agreement that specifically
provides that the Shareholders shall not, in the aggregate, transfer, sell or
otherwise dispose of more than One Hundred Thousand (100,000) shares of the
Stock in any month substantially in the form of Agreement attached hereto as
Exhibit K.
11.2 Conditions of the Shareholders. Notwithstanding any other provision of this
Agreement, and except as set forth below, the obligations of the Shareholders to
consummate the transactions contemplated hereby shall be subject to the
satisfaction, at or prior to the Closing, of:
(a) the condition set forth in subsection (a) of Section 11.1, and the
condition that the representations and warranties of Acquiror in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date and Acquiror shall have
complied with all covenants and agreements and satisfied all conditions on its
part to be performed or satisfied on or prior to the Closing Date substantially
in the form of Exhibit L attached hereto.
(b) the execution of a Promissory Note substantially in the form of Exhibit
M attached hereto;
(c) the execution of a corporate guaranty of U.S. Plastic Lumber
Corporation, a Nevada corporation, substantially in the form of Exhibit N
attached hereto;
<PAGE> 41
(d) the execution of a Security Agreement substantially in the form of
Exhibit O;
(e) the execution of an Employment Agreement with Scott House attached as
Exhibit G.
(f) a Certificate of the Secretary of the Acquiror in the form of Exhibit P
attesting to Board approval.
12. TERMINATION, AMENDMENT AND WAIVER
12.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual consent of the Acquiror and the Shareholders;
(b) by Acquiror if (i) there has been a material misrepresentation, breach of
warranty or breach of covenant by any Shareholder under this Agreement or (ii)
any of the conditions precedent to Closing set forth in Section 11.1 have not
been met on the Closing Date, and, in each case, Acquiror is not then in
material default of its obligations hereunder; or
(c) by the Shareholders acting together if (i) there has been a material
misrepresentation, breach of warranty or breach of covenant by Acquiror under
this Agreement or (ii) any of the conditions precedent to Closing set forth in
Section 11.2 have not been met on the Closing Date, and, in each case, no
Shareholder is then in material default of his obligations hereunder.
(d) by Acquiror, in its sole discretion, if it determines during its due
diligence that the transaction is not acceptable to Acquiror;
(e) by Acquiror at any time after the date on which the Target shall no longer
be in operation as an on-going business or if Target files a petition in
bankruptcy, rather voluntary or involuntary.
12.2 Effect of Termination.
(a) In the case of any termination of this Agreement, the provisions of Section
10.3 and 10.4 shall remain in full force and effect.
(b) Upon termination of this Agreement as provided in Section 12.1 (a), (b), (d)
or (e), the Acquiror shall receive the return of its $50,000 deposit. Upon
termination as provided in Section 12.1 (c), or (d), the $50,000 deposit shall
be released to Target.
<PAGE> 42
(c) Upon termination of this Agreement as provided in Section 12.1(a), except as
stated in subsection (a) above, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of any party hereto or
their respective directors, officers, employees, agents or other
representatives.
(d) In the event of termination of this Agreement as provided in Section
12.1(b), (c), (d) or (e) hereof, such termination shall be without prejudice to
any rights that the terminating party or parties may have against the breaching
party or parties or any other person under the terms of this Agreement or
otherwise.
12.3 Amendment. This Agreement may be amended at any time by a written
instrument executed by Acquiror and the Shareholders. Any amendment effected
pursuant to this Section 12.3 shall be binding upon all parties hereto.
12.4 Waiver. Any term or provision of this Agreement may be waived in writing at
any time by the party or parties entitled to the benefits thereof. Any waiver
effected pursuant to this Section 12.4 shall be binding upon all parties hereto.
No failure to exercise and no delay in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any other right, power or privilege. No waiver of any breach of any covenant or
agreement hereunder shall be deemed a waiver of any preceding or subsequent
breach of the same or any other covenant or agreement. The rights and remedies
of each party under this Agreement are in addition to all other rights and
remedies, at law or in equity, that such party may have against the other
parties.
13. INDEMNFICATION
13.1 Survival of Representations and Warranties. The representations and
warranties of the parties hereto contained in this Agreement or in any writing
delivered pursuant hereto or at the Closing shall survive the Closing and the
consummation of the transactions contemplated hereby (and any examination or
investigation by or on behalf of any party hereto) until the fourth anniversary
of the Closing Date; provided, that the representations and warranties contained
in Section 7.12 and Section 7.14 shall not terminate until the expiration of any
applicable statute of limitations; provided, further, that representations and
warranties contained in Article 6, Section 7.17, Section 7.24 and Section 7.28
shall not terminate but shall continue indefinitely, subject to Acquiror
reviewing a Phase II Environmental Study Report to be supplied by Target. If the
Phase II Environmental Study Report, in the sole discretion of Acquiror, is
satisfactory, the representation and warranties shall terminate ten (10) years
from the date of this Agreement.
<PAGE> 43
13.2 Indemnification.
(a) The Shareholders, jointly and severally, covenant and agree to defend,
indemnify and hold harmless Acquiror and the Company and each Person who
controls Acquiror or the Company within the meaning of the Securities Act from
and against any Damages arising out of or resulting from: (i) any inaccuracy in
or breach of any representation or warranty made by any Shareholder in this
Agreement or in any writing delivered pursuant to this Agreement or at the
closing [unless and except that such inaccuracy or breach is a direct result of
changes made by the Acquiror in accounting methods or estimates utilized in
financial reporting of the Company]; or (ii) the failure of any Shareholder to
perform or observe fully any covenant, agreement or provision to be performed or
observed by such Shareholder pursuant to this Agreement or the Non-competition
Agreements.
(b) Acquiror covenants and agrees to defend, indemnify and hold harmless the
Shareholders from and against any Damages arising out of or resulting from: (i)
any inaccuracy in or breach of any representation or warranty made by Acquiror
in this Agreement or in any writing delivered pursuant to this Agreement or at
the Closing; (ii) the failure by Acquiror to perform or observe any covenant,
agreement or condition to be performed or observed by it pursuant to this
Agreement; or (iii) the Shareholders' liability under the Guaranties.
13.3 Third Party Claims.
(a) If any party entitled to be indemnified pursuant to Section 13.2 (an
"Indemnified Party") receives notice of the assertion by any third party of any
claim or of the commencement by any such third person of any Action (any such
claim or Action being referred to herein as an "AIndemnifiable Claim") with
respect to which another party hereto (an "AIndemnifying Party") is or may be
obligated to provide indemnification, the Indemnified Party shall promptly
notify the Indemnifying Party in writing (the "Claim Notice") of the
Indemnifiable Claim; provided, that the failure to provide such notice shall not
relieve or otherwise affect the obligation of the Indemnifying Party to provide
indemnification hereunder, except to the extent that any Damages directly
resulted or were caused by such failure.
<PAGE> 44
(b) The Indemnifying Party shall have thirty (30) days after receipt of the
Claim Notice to undertake, conduct and control, through counsel of its own
choosing, and at its expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided, that (i) the Indemnifying Party shall permit the
Indemnified Party to participate in such settlement or defense through counsel
chosen by the Indemnified Party (subject to the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld), provided that the fees
and expenses of such counsel shall not be borne by the Indemnifying Party, and
(ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the
Indemnified Party's consent. So long as the Indemnifying Party is vigorously
contesting any such Indemnifiable Claim in good faith, the Indemnified Party
shall not pay or settle such claim without the Indemnifying Party=s consent,
which consent shall not be unreasonably withheld.
(c) If the Indemnifying Party does not notify the Indemnified Party within
thirty (30) days after receipt of the Claim Notice that it elects to undertake
the defense of the Indemnifiable Claim described therein, the Indemnified Party
shall have the right to contest, settle or compromise the Indemnifiable Claim in
the exercise of its reasonable discretion; provided, that the Indemnified Party
shall notify the Indemnifying Party of any compromise or settlement of any such
Indemnifiable Claim.
(d) Anything contained in this Section 13.3 to the contrary notwithstanding, the
Shareholders shall not be entitled to assume the defense for any Indemnifiable
Claim (and shall be liable for the reasonable fees and expenses incurred by the
Indemnified Party in defending such claim) if the Indemnifiable Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against Acquiror or the Company which Acquiror determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages and which, if successfully, would adversely affect the business,
properties or prospects of the Company.
13.4 Indemnification Non-Exclusive. The foregoing indemnification provisions are
in addition to, and not in derogation of, any statutory, equitable or common-law
remedy any party may have for breach of representation, warranty, covenant or
agreement.
13.5 Set-off. Notwithstanding any provision of this Agreement or of any other
agreement, instrument or undertaking, it is understood and agreed that Acquiror
shall have the right to set-off the amount of any indemnity under Sections 13.2
or 13.3 hereof to the extent any of the Shareholder shall be liable therefor
against any sums of money or any shares of the Acquiror at any time payable or
deliverable to the Shareholders, and including but not limited to the Promissory
Note. The remedies provided in this Article shall be cumulative and shall not
preclude the assertion by any party of any other rights or the seeking of any
other remedies by it against any other party.
<PAGE> 45
Acquiror agrees that prior to exercising its right of set-off hereunder,
Acquiror shall provide written Notice to Shareholders of its intent to exercise
its rights of set-off, setting forth the amount to be set-off and the reasons
therefore. Shareholders shall have fifteeen (15) days from the date of the
written Notice to cure the events which caused the Acquiror to provide Notice of
its right to set-off. If, at the expiration of the fiftteen (15) day period,
Shareholders have failed to cure said event, Acquiror shall have the absolute
right to exercise its right to set-off with no further defense being available
to Shareholders.
14. GENERAL PROVISIONS
14.1 Notices. All notices and other communications under or in connection with
this Agreement shall be in writing and shall be deemed given (a) if delivered
personally (including by overnight express or messenger), upon delivery, (b) if
delivered by registered or certified mail (return receipt requested), upon the
earlier of actual delivery or three (3) days after being mailed, or (c) if given
by telecopy, upon confirmation of transmission by telecopy, in each case to the
parties at the following addresses:
(a) If to the Acquiror, addressed to:
U. S. Plastic Lumber Corporation
2300 W. Glades Road
Suite 440W
Boca Raton, Florida 33431
Attention: Bruce C. Rosetto, Vice President and General Counsel
Telecopy: (561)394-5335
(b) If to any Shareholder:
James Cole
P.O. Box 246
Hillside, CO 81232
Telefax: 719-783-9522
With a copy to:
F. Pen Cosby, Esq.
Bowman, Cosby & Bowman
11 South Meridian St. Suite 525
Indianapolis, IN 46204
Telefax: 317-632-4619
<PAGE> 46
14.2 Severability. If any term or provision of this Agreement or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable such term or provision in any other
jurisdiction, the remaining terms and provisions of this Agreement or the
application of such terms and provisions to circumstances other than those as to
which it is held invalid or enforceable.
14.3 Entire Agreement. This Agreement, including the annexes and schedules
attached hereto and other documents referred to herein, contains the entire
understanding of the parties hereto in respect of its subject matter and
supersedes all prior and contemporaneous agreements and understandings, oral and
written, between the parties with respect to such subject matter.
14.4 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Acquiror and the Shareholders and their respective successors,
heirs and assigns; provided, however, that no Shareholder shall directly or
indirectly transfer or assign any of such Shareholder=s respective rights
hereunder in whole or in part without the prior written consent of Acquiror, and
any such transfer or assignment without said consent shall be void, ab initio.
Subject to the immediately preceding sentence, and except as set forth in
Article 13, this Agreement is not intended to benefit, and shall not run to the
benefit of or be enforceable by, any other person or entity other than the
parties hereto and their permitted successors and assigns.
14.5 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all such counterparts together
shall constitute but one and the same Agreement.
14.6 Recitals, Schedules and Annexes. The recitals, schedules and annexes to
this Agreement are incorporated herein and, by this reference, made a part
hereof as if fully set forth at length herein.
14.7 Construction.
(a) The article, section and subsection headings used herein are inserted for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(b) As used in this Agreement, the masculine, feminine or neuter gender, and the
singular or plural, shall be deemed to include the others whenever and wherever
the context so requires.
(c) For the purposes of this Agreement, unless the context clearly requires,
"or" is not exclusive.
14.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Florida.
<PAGE> 47
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or
has caused this Agreement to be executed on its behalf by a representative duly
authorized, all as of the date first above set forth.
"ACQUIROR"
United States Plastic Lumber, Ltd.
By:
--------------------------------------
Bruce C. Rosetto, Secretary
"GUARANTOR"
United States Plastic Lumber Corporation
By:
--------------------------------------
Bruce C. Rosetto, Secretary
SHAREHOLDERS:
------------------------
James Cole
-------------------------
Scott House
<PAGE> 48
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
- --------
Exhibit A List of Shareholders
Exhibit B Opinion of Counsel
Exhibit C Certificate of President of Target
Exhibit D Certificate of Shareholders of Target
Exhibit E Board of Directors Resolution of Target approving transaction
Exhibit F Non-Competition Agreements
Exhibit G Employment Agreement of Scott House
Exhibit H UCC Searches
Exhibit I Resignation of Officers of Target
Exhibit J Real Property Conveyance documents
Exhibit K Stock Restriction Agreement
Exhibit L Certificate of Acquiror
Exhibit M Promissory Note
Exhibit N Corporate Guaranty
Exhibit O Security Agreement
Exhibit P Certificate of Secretary of Acquiror
Exhibit Q Articles of Merger
Exhibit R Escrow
SCHEDULES
- ---------
6.3 Consents
6.4 Conflicts
7.1(a) Foreign Corp status
7.1(b) Subsidiaries
7.2 No Conflicts
7.3 Capitalization
7.4 Financial Statements
7.5(a) Liens
7.5(b) List of Real Property
7.5(c) List of Tangible Property
7.5(d) List of Leases
7.5(f) Realty representations
7.6 List of Accounts Receivable
7.7 Inventories
7.8(a) List of Patents and Trademarks
7.8(b) Registered Rights
7.8(c) Licenses
7.9(a) List of Banks
7.9(b) Insurance Policies
7.10(a) Indebtedness
<PAGE> 49
7.10(b) Guaranties
7.11 Judgments
7.12 Income Taxes
7.13 Questionable Payments
7.14 Employee Benefit Plans
7.15 Undisclosed Liabilities
7.16 Permits
7.17 Regulatory Filings
7.18 Consents
7.19(a) Sales Orders
7.19(b) Purchase Orders
7.19(c) Sales Reps
7.19(d) Non-Compete Agreements
7.19(e) Contracts (inside)
7.19(f) Contracts (outside)
7.19(g) Legality
7.20 Absence of Changes
7.21(a) List of Employees
7.21(b) Labor Agreements
7.22 Affiliation
7.23(a) Customer Lists
7.23(b) Supplier Lists
7.24 Compliance with Law
7.25 Product Return
7.26 Warranties
7.28 Hazardous Materials
