ASSET PURCHASE AGREEMENT

 

EXHIBIT 2.1

 

ASSET PURCHASE AGREEMENT

 

 

by

 

RRC ACQUISITION, LLC, a Georgia limited liability company

 

and

 

REGIONAL RECYCLING LLC, an Alabama limited liability company,

METAL ASSET ACQUISITION, LLC, a Georgia limited liability company,

939 FORTRESS INVESTMENTS, LLC, a Georgia limited liability company,

FORTRESS APARTMENTS, LLC, a Georgia limited liability company,

INTEGRITY METALS, LLC, a Georgia limited liability company,

RCC RECYCLING, LLC, an Alabama limited liability company,

ALAN DREHER, an individual resident of the State of Alabama,

GEORGE DREHER, an individual resident of the State of Alabama,

PAUL DREHER, an individual resident of the State of Alabama,

JAMES J. FILLER, an individual resident of the State of Alabama,

TEJA JOUHAL, an individual resident of the State of Alabama, and

HERBERT MILLER, an individual resident of the State of Alabama

 

 

 

September 2, 2005

 

 

 

 

TABLE OF CONTENTS

 

 

 

SCHEDULES AND EXHIBITS

 

	Schedule 2.2	Excluded Assets
	Schedule 2.3	Assumed Liabilities
	Schedule 3.2	Conflicts; Consents
	Schedule 3.3	Subsidiaries
	Schedule 3.6	Title to Properties
	Schedule 3.10	Liabilities
	Schedule 3.11	Taxes
	Schedule 3.13	Employee Benefits
	Schedule 3.14	Legal Requirements
	Schedule 3.15	Litigation; Pending Proceedings
	Schedule 3.16	Changes and Events
	Schedule 3.17(a)	Contracts
	Schedule 3.17(b)	Invalid, Not Binding, Unenforceable Contracts
	Schedule 3.18	Insurance
	Schedule 3.19	Environmental Matters
	Schedule 3.20	Employees
	Schedule 3.21	Labor Relations
	Schedule 3.22	Intellectual Property
	Schedule 3.23	Bank Accounts
	Schedule 3.24	Relationships with Related Persons
	Schedule 3.26	Members’ Percentage Interest
	Schedule 4.2	Conflicts; Consents (Buyer)
	Schedule 7.3	Material Consents
	Exhibit 2.8(a)(iii)	Noncompetition Agreement

 

 

 

 

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (“Agreement”) is made and entered into as of September 2, 2005, by RRC ACQUISITION, LLC, a Georgia limited liability company (“Buyer”), and REGIONAL RECYCLING LLC, an Alabama limited liability company (the “Seller”), METAL ASSET ACQUISITION, LLC, a Georgia limited liability company (“Metal Asset”), 939 FORTRESS INVESTMENTS, LLC, a Georgia limited liability company (“939 Fortress”), and FORTRESS APARTMENTS, LLC, a Georgia limited liability company (“Fortress Apartments” and together with Seller, Metal Asset and 939 Fortress, collectively the “Seller Group Companies” and singularly a “Seller Group Company”), and INTEGRITY METALS, LLC, a Georgia limited liability company (“Integrity”), RCC RECYCLING, LLC, an Alabama limited liability company (“RCC”), ALAN DREHER, an individual resident of the State of Alabama (“A. Dreher’), GEORGE DREHER, an individual resident of the State of Alabama (“G. Dreher”), PAUL DREHER, an individual resident of the State of Alabama (“P. Dreher”), JAMES J. FILLER, an individual resident of the State of Alabama (“Filler”), TEJA JOUHAL, an individual resident of the State of Alabama (“Jouhal”) and HERBERT MILLER, an individual resident of the State of Alabama (“Miller”) (Integrity, RCC, A. Dreher, G. Dreher, P. Dreher, Filler, Jouhal and Miller are sometimes referred to herein individually as a “Member” and collectively as the “Members”).

R E C I T A L S

A.      The Seller Group Companies are engaged in the business of recycling metals and related materials (the “Business”).

B.      The Seller Group Companies desire to sell, and Buyer desires to purchase and acquire from the Seller Group Companies substantially all of the assets, and assume substantially all of the liabilities related to the Business for the consideration and on the terms set forth in this Agreement.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1.      Definitions.

For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1 :

“ Accrued Vacation ” - the vacation earned by employees of the Seller Group Companies prior to the Closing which are (i) accrued as of the Closing in the trial balance of the Company dated as of the Closing Date and delivered within ten (10) business days after the Closing (the “Closing Trial Balance”), (ii) consistent with past conduct of the Business, (iii) earned in the ordinary course of business, and (iv) consistent in character and type with the vacation accrued on the Balance Sheet under the caption “Accrued Interest and Payroll”.

“ Actual Knowledge ” - of Seller or any of the Seller Group Companies means the actual knowledge of Byron Kopman, David Romanoff, Tom Hamil, Alan Dreher, George Dreher, Paul Dreher, James Filler, Teja Jouhal, Herbert Miller and Derek Hayden.

“ Agreement ” - as defined in the first paragraph of this Agreement.

“ Applicable Contracts ” - as defined in Section 3.17(a) .

“ Books and Records ” - as defined in Section 2.1(j) .

“ Business ” - as defined in the Recitals of this Agreement.

“ Buyer ” - as defined in the first paragraph of this Agreement.

“ Buyer Closing Documents ” - as defined in Section 4.2(a) .

“ Buyer Indemnified Parties ” - as defined in Section 10.1 .

“ Buyer’s Advisors ” - as defined in Section 5.1 .

“ Cap ” - as defined in Section 10.6(b) .

“ Cap Reduction Date ” - as defined in Section 10.6(b) .

“ Cash Portion ” - as defined in Section 2.6 .

“ Closing ” - as defined in Section 2.7 .

“ Closing Date ” - the date and time as of which the Closing actually takes place.

“ Closing Trial Balance ” - the trial balance of the Seller Group Companies dated as of the Closing Date and prepared in accordance with GAAP on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 were prepared.

“ Code ” - the Internal Revenue Code of 1986, as amended.

“ Consent ” - any approval, consent, ratification, waiver or other authorization (including any Governmental Authorization).

“ Contamination ” - the presence of Hazardous Materials in soil, groundwater, or surface water in amounts or levels above applicable screening values established by the   EPA (i.e., EPA Region IX Preliminary Remediation Goals), the Georgia Department of Natural Resources, Environmental Protection Division or the Alabama Department of Environmental Management, as appropriate.

“ Contemplated Transactions ” - all of the transactions contemplated by this Agreement, including: (a) the sale of the Acquired Assets by the Seller Group Companies to Buyer; (b) the performance by Buyer, the Members and the Seller Group Companies of their respective covenants and obligations under this Agreement; and (c) Buyer’s acquisition and ownership of the Business and exercise of control over the Acquired Assets.

“ Contract ” - any agreement, contract, obligation, promise or undertaking (whether written or oral and whether express or implied) that is legally binding.

“ Current Assets ” - the book value of the accounts receivable, other receivables, scrap metal inventories, supply inventories and prepaid expenses (each as reflected on the Closing Trial Balance) and the cash acquired pursuant to Section 2.1(a) . The Current Assets shall be calculated in accordance with GAAP, on a basis consistent with the basis on which the Balance Sheet and the other financial statements in Section 3.4 were prepared.

“ Eligible Losses ” - as defined in Section 10.6(a) .

“ Employee Benefit Plan ” - as defined in Section 3.13(a) .

“ Employment Agreements ” - as defined in Section 2.8(a)(ii) .

“ Encumbrance ” - any charge, claim, condition, encumbrance, lien, pledge, charge or adverse claim affecting title or resulting in a charge against real or personal property, or security interest of any kind.

“ Environment ” - soil, land, surface water, ground water and ambient air.

“ Environmental Law ” - any federal, state or local statute, ordinance, or regulation pertaining to the protection of human health or the environment.

“ Environmental Liability ” - any cost, damages, expense, liability, obligation or other responsibility arising under any Environmental Law (a) for investigation, removal or remedial action, or for response costs for such actions, in response to Contamination at the Facilities or for natural resource damages recoverable under section 107 of the Comprehensive Environmental Response, Compensation and Liability Act or a similar state Environmental Law, or (b) for correcting noncompliance with any Environmental Law. Environmental Liability does not include any liability for personal injury, property damage or other torts or common law claims.

“ Environmental Liability Claim ” - a claim arising from an Environmental Liability.

“ EPA ” - United States Environmental Protection Agency.

“ Equipment ” - as defined in Section 2.1(f) .

“ ERISA ” - the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“ Escrow Agent ” - shall mean a national banking association or a state or federally chartered trust company, mutually agreed to by each of the Buyer and the Member Representative.

“ Excluded Assets ” - as defined in Section 2.2 .

“ Excluded Liabilities ” - as defined in Section 2.4 .

“ Excluded Records ” - as defined in Section 2.2(c) .

“ Facilities ” - any real property, leasehold or other interest in real property currently owned or operated by any Seller Group Company and any buildings, plants, structures or equipment currently owned or operated by any Seller Group Company at the respective locations of such real property. Notwithstanding the foregoing, “Facilities” shall mean any real property, leasehold or other interest in real property currently owned or operated by any Seller Group Company, including the tangible personal property used or operated by any Seller Group Company at the respective locations of the real property, but shall specifically exclude the Excluded Assets.

“ Furniture and Fixtures ” - as defined in Section 2.1(l) .

“ GAAP ” - United States generally accepted accounting principles, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 were prepared.

“ Governmental Authority ” - any domestic or foreign government or political subdivision thereof, whether on a federal, state or local level and whether executive, legislative or judicial in nature, including any agency, authority, board, bureau, commission, court, department or other instrumentality thereof.

“ Governmental Authorization ” - any approval, consent, license, permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Legal Requirement.

“ Hazardous Activity ” - the use, storage, or release of Hazardous Material in, on, under, about or from any of the Facilities in material violation of Environmental Law or which requires a hazardous waste treatment, storage or disposal facility permit under 40 CFR Part 270 or any similar state statute or regulation.

“ Hazardous Material ” - any substance, material or waste the use, storage or release of which is regulated by Environmental Law.

“ HSR Act ” - the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“ Indemnification Claim ” - as defined in Section 10.3(a) .

“ Indemnification Escrow Agreement ” - as defined in Section 7.4(b) .

“ Indemnification Escrow Amount ” - Five Million Dollars ($5,000,000) to be deposited by Buyer with the Escrow Agent and to be held and disbursed by Escrow Agent in accordance with the terms and provisions of this Agreement and the Indemnification Escrow Agreement provided that the Indemnification Escrow Agreement shall provide that such Indemnification Escrow Amount shall be reduced to Two Million Dollars ($2,000,000) one (1) year after the Closing and shall be released two (2) years after the Closing, subject in each case to any outstanding claims.

“ Indemnitee ” - as defined in Section 10.3(a) .

“ Initial Basket ” - as defined in Section 10.6(a) .

“ Insurance Policies ” - as defined in Section 3.18 .

“ Intellectual Property Rights ” - as defined in Section 3.22(a) .

“ Interest ” - any membership interest of a limited liability company.

“ Interim Balance Sheet ” - as defined in Section 3.4 .

“ Inventory ” - as defined in Section 2.1(b) .

“ IRS ” - as defined in Section 3.13(b) .

“ Knowledge ” - (a) of Seller or any of the Seller Group Companies means (i) the Actual Knowledge of Seller, and (ii) with respect to Byron Kopman and David Romanoff, the knowledge of any fact or matter that a prudent individual could reasonably be expected to discover or otherwise become aware of in the course of conducting a reasonably comprehensive investigation regarding the accuracy of any representation or warranty contained in this Agreement; and (b) of Buyer means the actual knowledge of John D. Carter, Gary S. Schnitzer and Kelly E. Lang.

“ Leased Real Property ” - all interests leased pursuant to real property leases, subleases, licenses and occupancy agreements pursuant to which any Seller Group Company is the lessee, sublessee, licensee or occupant.

“ Legal Requirement ” - with respect to any Person, any federal, state, local, municipal or other administrative order, constitution, law, ordinance, regulation, statute or rule of

 

 

any Governmental Authority applicable to such Person or any of its assets or property or to which such Person or any of its assets or property is subject.

“ Losses ” - as defined in Section 10.1 .

“ Manager Termination Fee ” - as defined in Section 13 .

“ Material Adverse Effect ” - a material adverse effect on the Business of the Seller Group Companies prior to the Closing and of the Buyer after the Closing using the Acquired Assets, as applicable, the Acquired Assets, financial results or results of operations, including, but not limited to, a material adverse effect on the net assets or net income, of the Seller Group Companies in excess of Two Million Dollars ($2,000,000), but excluding any adverse effect resulting from events, changes or market conditions generally affecting businesses or industries similar or related to the Business.

“ New Selma Location ” - as defined in Section 12 .

“ Noncompetition Agreements ” - as defined in Section 2.8(a)(iii) .

“ Occupational Safety and Health Law ” - any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, including the Occupational Safety and Health Act, and any program, whether governmental or private (such as those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions.

“ Old Selma Location ” - as defined in Section 12 .

“ Order ” - any award, decision, injunction, judgment, order, ruling or verdict entered, issued, made or rendered by any court, administrative agency or other Governmental Authority or by any arbitrator.

“ Organizational Documents ” -

(a)      the articles or certificate of incorporation and the bylaws of a corporation;

(b)      the articles or certificate of organization and the operating agreement of a limited liability company;

(c)      the partnership agreement and any statement of partnership of a general partnership;

(d)      the limited partnership agreement and the certificate of limited partnership of a limited partnership;

(e)      any charter or similar document adopted or filed in connection with the creation, formation or organization of a Person; and

(f)      any amendment to any of the foregoing.

“ Owned Real Property” - the real property owned by the Seller Group Companies, together with all other structures, facilities, improvements, fixtures, systems, equipment and items of property presently or hereafter located thereon attached or appurtenant thereto or owned by the Seller Group Companies and located on Leased Real Property and all easements, licenses, rights and appurtenances relating to the foregoing.

“ Payables Adjustment” - as defined in Section 2.3(b) .

“ Payables Threshold” - as defined in Section 2.3(b) .

“ Permits ” - as defined in Section 2.1(k) .

“ Permitted Encumbrances ” means (a) Encumbrances for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which there are adequate reserves on the books, and (b) those items identified on Schedule 3.6 .

“ Person ” - any individual, corporation, general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union or other entity or Governmental Authority.

“ Pro Rata Share ” - as defined in Section 10.1 .

“ Proceeding ” - any action, arbitration, hearing, investigation, litigation or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

“ Purchase Price ” - as defined in Section 2.6 .

“ Release ” - any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, disposal, discharge, dispersal, leaching or migration of Hazardous Material into the Environment.

“ Schedules ” - shall mean those schedules referred to in this Agreement which have been attached to, and delivered concurrently with the execution of, this Agreement and which are hereby incorporated herein and made a part hereof.

“ Seller ” - as defined in the first paragraph of this Agreement.

“ Seller Closing Documents ” - as defined in Section 3.2(a) .

“ Seller Indemnified Parties ” - as defined in Section 10.2 .

“ Seller Group Company ” or “ Seller Group Companies ” - as defined in the first paragraph of this Agreement.

“ Seller Party ” or “ Seller Parties ” - as defined in Section 10.11(b) .

“ Selma Business ” - as defined in Section 12 .

“ Subsidiary ” - with respect to any Person (the “Owner”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the Owner or one or more of its Subsidiaries; when used without reference to a particular Person, “Subsidiary” means a Subsidiary of Seller.

“ Tax ” - any tax(including any income tax, capital gains tax, sales tax, property tax, gift tax or estate tax), levy, assessment, tariff, duty (including customs duty), deficiency or other fee, and any related charge or amount (including any fine, penalty, interest or addition to tax), imposed, assessed or collected by or under the authority of any Governmental Authority.

“ Tax Return ” - any return (including any information return), report, statement, schedule, notice, form or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.

“ Third Party Claim ” - as defined in Section 10.4 .

“ Trade Payables ” - the trade accounts payable relating to the Inventory and other trade accounts payable relating to the conduct of the Business which are (i) accrued as of the Closing in the Closing Trial Balance, (ii) consistent with past purchases of Inventory, past conduct of the Business and normal payment practices of the Seller Group Companies, (iii) incurred in the ordinary course of business, and (iv) consistent in character and type with the accounts payable accrued on the Balance Sheet under the caption “Accounts Payable.”

“ Vehicles ” - as defined in Section 2.1(h) .

“ Vendor Receivables ” - as defined in Section 2.1(d) .

“ WARN Act ” - as defined in Section 11.3(a) .

“ Welfare Plan ” - as defined in Section 3.13(f) .

“ Working Capital Adjustment ” - as defined in Section 2.11 .

2.      Purchase and Sale of Assets; Assumption of Liabilities; Closing.

2.1      Purchase and Sale of Assets. Subject to the terms and conditions set forth in this Agreement, as of the Closing, the Seller Group Companies shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from the Seller Group Companies, all of the right, title and interest of the Seller Group Companies in and to all of the assets (other than the Excluded Assets, as defined in Section 2.2), properties and rights of the Seller Group Companies, of whatever type or description, whether tangible or intangible, and wherever used or held for use by the Seller Group Companies as of the Closing Date (collectively, the “Acquired Assets”). Except to the extent included in the Excluded Assets, the Acquired Assets shall include, without limitation:

(a)      Cash in the amount of Four Hundred Fifty Thousand Dollars ($450,000) and notes receivable and accrued interest arising therefrom;

 

(b)      All inventory, raw materials, work-in-process and finished goods held by the Seller Group Companies for resale and supplies wherever located (the “Inventory”), together with all rights of the Seller Group Companies against suppliers of the Inventory, including, without limitation, the Seller Group Companies’ rights to receive refunds or rebates in connection with their purchase of such Inventory;

 

(c)      All Accounts Receivable;

 

(d)      All vendor receivables in the Business from the Seller Group Companies’ vendors that are classified as rebates, credits, manufacturer charge-backs or receivables on any of the Seller Group Companies’ books and records (the “Vendor Receivables”);

 

(e)      All of the Seller Group Companies’ rights in, to and under Leased Real Property and Owned Real Property;

 

(f)      All machinery, equipment, tools, computers, terminals, computer equipment, office equipment, business machines, telephones and telephone systems, parts, accessories, warehouse equipment and the like owned or held by the Seller Group Companies, wherever located, and any and all assignable warranties of third parties with respect thereto (the “Equipment”);

 

(g)      All of the Seller Group Companies’ right, title and interest in and under Contracts;

 

(h)      All motor vehicles, trucks, forklifts and other vehicles owned or held by the Seller Group Companies, and all assignable warranties of third parties related thereto (the “Vehicles”);

 

(i)      All Intellectual Property Rights of the Seller Group Companies;

 

(j)      All existing data, data bases, websites, books, records, correspondence, business plans and projections, records of sales, customer and vendor lists, advertising materials,

 

 

catalogs, price lists, sales and promotional materials, files, papers, and, to the extent permitted under applicable law or regulation, copies of historical personnel payroll (subject to applicable confidentiality requirements) and medical records, if any, of each of the employees of the Seller Group Companies in the possession of any Seller Group Company, including, without limitation, employment applications, corrective action reports, disciplinary reports, notices of transfer, notices of rate changes, other similar documents, and any summaries of such documents regularly prepared by the Seller Group Companies; all reported medical claims made for each employee of the Seller Group Companies; and all manuals and printed instructions of the Seller Group Companies relating to the Acquired Assets and to the operation of the Business (the “Books and Records”);

 

(k)      All licenses, permits, certificates and Governmental Authorizations of the Seller Group Companies which pertain to or relate to the Business or the Facilities, including, without limitation, those which are required in order to operate the Business at each of the Facilities (the “Permits”), provided , however , such Permits shall be included within the Acquired Assets only to the extent they are lawfully transferable to Buyer;

 

(l)      All furniture, fixtures and leasehold improvements, wherever located, owned by the Seller Group Companies or in which a Seller Group Company has an interest, and any and all assignable warranties covering such furniture, fixtures and leasehold improvements (“Furniture and Fixtures”);

 

(m)      All prepaid expenses of the Seller Group Companies; all security deposits and utility deposits of the Seller Group Companies;

(n)      All rights to claims, refunds, causes of action, choses in actions, Proceedings against third parties (including all warranty and other contractual claims (express, implied or otherwise)), rights of recovery, rights of set-off and similar rights of the Seller Group Companies which relate to or arise out of the period after the Closing and relate to the Acquired Assets (unless and only to the extent any such rights are specifically attributable to the Excluded Assets or the Excluded Liabilities, and then less such amount specifically attributable); and

 

(o)      All telephone and facsimile numbers, listings and advertisements, e-mail addresses and all names under which the Seller Group Companies have conducted their business operations, including, without limitation, the name "Regional Recycling LLC", and all of the Seller Group Companies’ goodwill, rights and benefits associated therewith and the Business.

 

2.2      Excluded Assets. Notwithstanding anything contained herein to the contrary, the Seller Group Companies shall not sell and Buyer shall not purchase or acquire and the Acquired Assets shall not include the following assets (collectively, the “Excluded Assets”):

(a)      real property located at 1536 N. Beal Extension, Ft. Walton Beach, FL 32548;

(b)      real property located at 1122-28 Union Street, Selma, Alabama 36701, including all real property constituting the Old Selma Location as described in Section 12.1 ;

 

(c)      the Seller Group Companies’ membership interest record books, limited liability company record books containing minutes of meetings of managers and members, tax returns and records and such other records having to do with the Seller Group Companies’ organization or capitalization (collectively, the “Excluded Records”);

(d)      all issued and outstanding Interests of any Subsidiary of the Seller Group Companies;

(e)      Employee Benefit Plans of the Seller Group Companies;

(f)      except as set forth in Section 2.1(a) , cash and cash equivalents and marketable securities held by the Seller Group Companies as of the Closing;

(g)      all insurance claims (and related policies) and all rights under any insurance policy, insurance reserves and accruals, insurance deposits, including reserves, deposits, dividends, refunds or premium adjustments relating to worker’s compensation, insurance prepayments and all rights thereunder with respect to claims arising prior to the Closing, except and only to the extent such rights are specifically attributable to the Acquired Assets or such policy insures for occurrences that are included in the Assumed Liabilities;

(h)      all of the Seller Group Companies’ rights arising under this Agreement;

(i)      all rights to claims, refunds, causes of action, choses in actions, rights of recovery, rights of set-off and similar rights in favor of the Seller Group Companies of any kind (including, without limitation, with respect to Taxes) relating to or arising out of any period occurring on or prior to the Closing, or relating to the Excluded Assets or Excluded Liabilities (unless and only to the extent any such rights are specifically attributable to the Acquired Assets or the Assumed Liabilities, and then less such amount specifically attributable); and

(j)      those items identified on Schedule 2.2 .

2.3      Assumption of Liabilities . Subject to Section 2.4 hereof, as of the Closing, Buyer shall assume and pay, discharge and perform, as and when due the following liabilities and obligations (collectively, the “Assumed Liabilities”):

(a)      all of the executory obligations and liabilities of the Seller Group Companies arising from and after the Closing Date pursuant to the terms of the Contracts and the Permits that are included in the Acquired Assets;

(b)      the Trade Payables; provided that the Trade Payables do not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) in the aggregate (the “Payables Threshold”) and to the extent such Trade Payables exceed the Payables Threshold, there shall be a dollar-for-dollar reduction to the Purchase Price for the amount that the Trade Payables exceed the Payables Threshold (if any, the “Payables Adjustment”);

(c)      liabilities to the Assumed Employees arising after the Closing Date for which Buyer will be responsible under Section 11 , including, without limitation, the Accrued Vacation;

(d)      subject to Section 10 , all past, current, and future Environmental Liabilities of the Seller Group Companies with respect to the Facilities arising under any Environmental Law or due to the release of Hazardous Materials or due to the environmental condition of the Facilities ;

(e)      those liabilities identified on Schedule 2.3 ; and

(f)      any and all liabilities not otherwise enumerated in Section 2.3 which in any way, and to the extent that they, arise out of or are related to or associated with the ownership, possession, use or operation of the Business, the Acquired Assets or any business conducted therewith or therefrom after the Closing, except to the extent the Buyer would have the right to indemnification under Section 10 .

2.4      Excluded Liabilities . Buyer shall not assume or become liable for any liability or obligation of any nature whatsoever other than the Assumed Liabilities. The liabilities not being assumed by Buyer pursuant to this Section 2.4 are collectively referred to as the “Excluded Liabilities”. Without limiting the foregoing, the Excluded Liabilities expressly include (a) the outstanding indebtedness for borrowed funds, including indebtedness under lines of credit and long-term debt, of any Seller Group Company, (b) any liability relating to the employment of any person by any Seller Group Company prior to the Closing and (c) any Environmental Liability for facilities not included in the Acquired Assets, including without limitation the Excluded Assets and all other facilities previously owned, leased or operated by any Seller Group Company and all facilities to which a Seller Group Company has sent Hazardous Materials.

2.5      Consent of Third Parties. Notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute an agreement to assign or transfer any interest in any Governmental Authorization, instrument, Contract, lease, Permit or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom if an assignment or transfer or an attempt to make such an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or affect adversely the rights of Buyer or Seller thereunder; and any transfer or assignment to Buyer of any interest under any such instrument, contract, lease, permit or other agreement or arrangement that requires the consent of a third party shall be made subject to such consent or approval being obtained.

2.6      Purchase Price . In consideration of the transfer of the Acquired Assets and the other undertakings of the Seller Group Companies hereunder, Buyer (a) shall pay to the Seller Group Companies Sixty Five Million Five Hundred Thousand Dollars ($65,500,000), less the amount of the Payables Adjustment, if any (the “Cash Portion”), and (b) shall assume the Assumed Liabilities (collectively, the “Purchase Price”).

2.7      Closing . The closing of the purchase and sale (the “Closing”) provided for in this Agreement will take place at the offices of Greenberg Traurig, LLP at 3290 Northside Parkway, Suite 400, Atlanta, Georgia 30327, at 10:00 a.m. (local time) on the later of (i) September 30, 2005 or (ii) the date that is five business days following the termination of the applicable waiting period under the HSR Act, or at such other time and place as the parties may

 

 

agree. Subject to the provisions of Section 9 , failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section 2.7 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement.

2.8      Closing Obligations. At the Closing:

(i)      such bills of sale, deeds, motor vehicle titles, assignments, endorsements and other good and sufficient instruments and documents of conveyance and transfer as shall be necessary and effective to transfer and assign to, vest in and purchase all of the Seller Group Companies’ right, title and interests in and to the Acquired Assets being sold and conveyed by the Seller Group Companies, including, without limitation, good and valid title in and to all of the Acquired Assets owned by the Seller Group Companies, good and valid leasehold interests in and to all of the Acquired Assets leased by the Seller Group Companies as lessee, and, except as set forth in Section 2.5 , all of the Seller Group Companies’ rights under all Contracts;

(iii)      noncompetition agreements, in the form of Exhibit 2.8(a)(iii), executed by A. Dreher, G. Dreher, P. Dreher, Filler and Miller, and noncompetition agreements, in form and substance mutually satisfactory to the parties thereto, executed by Integrity, RCC and Jouhal (collectively, the “Noncompetition Agreements”);

(iv)      the Indemnification Escrow Agreement executed by the Seller Group Companies and the Member Representative;

(v)      a certificate executed by the Members and the Seller Group Companies regarding the accuracy of the Members’ and the Seller Group Companies’ representations and warranties contained herein as contemplated in Section 7.1 and the performance by the Members and the Seller Group Companies of their covenants and obligations contained herein as contemplated in Section 7.2 ;

(vi)      any Consents of third parties under Contracts or otherwise that are necessary for the consummation of the Contemplated Transactions listed on Schedule 7.3 , each in form, scope and substance reasonably satisfactory to Buyer; and

(vii)      any Consents of Governmental Authorities that are necessary for the consummation of the Contemplated Transactions, each in form, scope and substance reasonably satisfactory to Buyer.

(i)      by wire transfer of immediately available funds to the Seller Group Companies, to the account(s) specified by the Seller Group Companies, the Cash Portion of the Purchase Price, less the Indemnification Escrow Amount, and Buyer shall deliver the Indemnification Escrow Amount by wire transfer of immediately available funds to the Escrow Agent;

(ii)      a certificate executed by Buyer regarding the accuracy of Buyer’s representations and warranties contained herein as contemplated in Section 8.1 and the performance by Buyer of its covenants and obligations contained herein as contemplated in Section 8.2 ;

(iv)      the Indemnification Escrow Agreement, executed by Buyer.

2.9      Proration. Other than pursuant to Section 2.3(b) , all of the services and period payables for the Business (including rental charges, utility charges and the like) and all personal or real property taxes (and any other Taxes charged based on the ownership of the Acquired Assets and not operation, activities, receipts or other income of the Business) and similar ad valorem obligations levied with respect to any of the Acquired Assets shall, except as otherwise expressly provided herein, be adjusted and allocated between the Seller Group Companies, on one hand, and Buyer, on the other hand, to reflect the principle that all expenses arising from the operation of the Business before the Closing Date shall be for the account of the Seller Group Companies, and all expenses arising from the operation of the Business from and after the Closing Date shall be for the account of Buyer. Net settlement of the adjustments contemplated under this Section 2.9 shall be made at the Closing to the extent feasible. For items not readily subject to ascertainment at the Closing, settlement of the adjustments contemplated under this Section 2.9 shall be made as soon as practicable after the Closing Date and Buyer, on the one hand, or the Seller Group Companies, on the other hand, may from time to time after the Closing Date prepare and submit to the other one or more post-closing statements. Any such amounts owed and set forth on an accurate post-closing statement shall be offset and such post-closing statement shall show the net amount credited to or charged against the account of Buyer (the “Adjustment Amount”). If the Adjustment Amount is a credit to the account of Buyer, the Seller Group Companies shall pay such amount to Buyer. If the Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such amount to the Seller Group Companies.

2.10      IRS Form 8594 Asset Acquisition Statement . Buyer agrees to obtain, at Buyer’s sole expense, a third-party appraisal for purposes of IRS Form 8594 Asset Acquisition Statement Under Section 1060. Each of the Seller Group Companies and the Members agrees to use this appraisal in completing IRS Form 8594 Asset Acquisition Statement Under Section 1060.

2.11      Working Capital Adjustment . If the Closing Date occurs after September 30, 2005, Buyer, Members and the Seller Group Companies agree that there shall be a working capital adjustment to the Purchase Price (the “Working Capital Adjustment”), calculated pursuant to this Section 2.11 . The Working Capital Adjustment shall increase the Purchase Price

 

 

to the extent the Current Assets as of the Closing Date exceed the sum of the Trade Payables as of the Closing Date and Twenty One Million Five Hundred Thousand Dollars ($21,500,000). The Working Capital Adjustment shall decrease the Purchase Price to the extent the sum of the Trade Payables as of the Closing Date and Twenty One Million Five Hundred Thousand Dollars ($21,500,000) exceeds the Current Assets as of the Closing Date. Seller Group Companies shall deliver the Closing Trial Balance to Buyer within ten (10) business days after the Closing. Within ten (10) business days following (i) the expiration of the ten (10) business day period for giving the Dispute Notice (as defined below), if no such Dispute Notice is given, or (ii) the resolution of any disputes pursuant to this Section 2.11 , the parties shall make any payment required under this Section 2.11 . Past-due amounts owing under this Section 2.11 shall bear interest at a rate of ten percent (10%) per annum from the date payment is due until the date of payment.

If the Closing Date occurs on or before September 30, 2005, there shall be no Working Capital Adjustment.

In the event that Buyer, in good faith, disputes the Closing Trial Balance or the Working Capital Adjustment, Buyer shall notify the Member Representative in a writing setting forth in detail the items, amount, nature and basis of such dispute (a “Dispute Notice”), within ten (10) business days after receipt of the Closing Trial Balance. In the event of such dispute, Member Representative and Buyer shall first use their diligent good-faith efforts to resolve such dispute between themselves. If Member Representative and Buyer are unable to resolve any items in dispute within twenty (20) business days after delivery of the Dispute Notice, then such unresolved items in dispute shall be submitted to an independent nationally recognized accounting firm with no material relationship to any party hereto (such accounting firm shall be referred to as the “Arbitrator”). Within thirty (30) business days, the Arbitrator shall determine the remaining disputed items and report to Member Representative and Buyer in writing with respect to such items. The Arbitrator’s decision shall be in writing and shall be final, conclusive and binding on all parties. A judgment on the determination made by the Arbitrator pursuant to this Section 2.11 may be entered into and enforced by any court of appropriate jurisdiction. The fees and expenses of the Arbitrator in connection with the resolution of disputes pursuant to this Section 2.11 shall be borne by Buyer if the Arbitrator concludes that the actual Working Capital Adjustment results in a Purchase Price which is equal to or higher than what the Seller Group Companies initially submitted to the Buyer, and otherwise by the Seller Group Companies.

3.      Representations And Warranties Of The Seller Group Companies and Members . Each of the Members, severally, and not jointly, as to itself, and not as to any other Member, and the Seller Group Companies, jointly and severally, represent and warrant to Buyer as follows:

3.1      Organization And Good Standing . Each of the Seller Group Companies is a limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full power and authority to conduct its business as it is now being conducted and to own or use the properties and assets that it purports to own or use. Each of the Seller Group Companies is duly qualified to do business as a foreign limited liability company and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it,

 

3.2      Authority; No Conflict .

(a)      This Agreement constitutes the legal, valid and binding obligation of each of the Seller Group Companies and each of the Members, enforceable against each of the Seller Group Companies and the Members in accordance with its terms, and upon the execution and delivery by each of the Seller Group Companies and Members of the closing documents contemplated hereunder to which any or all of the Seller Group Companies and the Members are a party (collectively, the “Seller Closing Documents”), the Seller Closing Documents will constitute the legal, valid and binding obligations of such of the Seller Group Companies and Members, enforceable against each of them in accordance with their respective terms, subject, in each case, to bankruptcy, insolvency, reorganization, moratorium and similar laws of general application relating to or affecting creditors’ rights and to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing.  The Seller Group Companies and Members have the right, power, authority and capacity to execute and deliver this Agreement and the Seller Closing Documents and to perform their obligations under this Agreement and the Seller Closing Documents.

(b)      Except as set forth in Schedule 3.2 , neither the execution and delivery of this Agreement by the Seller Group Companies and Members nor the consummation or performance of any of the Contemplated Transactions by the Seller Group Companies and Members will, directly or indirectly (with or without notice or lapse of time):

(i)      contravene, conflict with or result in a violation of the Organizational Documents of any Seller Group Company;

(ii)      contravene, conflict with or result in a violation of, or give any Governmental Authority or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which any Seller Group Company, or any of the assets owned or used by any Seller Group Company, may be subject;

(iii)      contravene, conflict with or result in a violation of any of the terms or requirements of or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by any Seller Group Company or that otherwise relates to the business of, or any of the assets owned or used by, any Seller Group Company;

(iv)      contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Applicable Contract; or

(v)      result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by any Seller Group Company.

Except as set forth in Schedule 3.2 , no Seller Group Company and no Member is or will be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

3.3      Subsidiaries. Schedule 3.3 sets forth a list of all Subsidiaries and their respective jurisdictions of organization. All of the issued and outstanding equity interests of each Subsidiary are owned by Seller.

3.4      Financial Statements . Seller has delivered to Buyer: (a) a consolidated balance sheet of the Seller Group Companies as at December 31, 2004 (including the notes thereto, the “Balance Sheet”), and the related consolidated statements of income and cash flow for the fiscal year then ended, together with the report thereon of Dixon Hughes, independent certified public accountants, (b) an audited consolidated balance sheet of the Seller Group Companies as at December 31, 2003, and the unaudited related consolidated statements of income and cash flow for the fiscal year then ended, (c) an unaudited consolidated balance sheet of the Seller Group Companies as at December 31, 2002, and the related consolidated statements of income and cash flow for the fiscal year then ended, and (d) an unaudited consolidated balance sheet of the Seller Group Companies as at March 31, 2005 (the “Interim Balance Sheet”) and the related unaudited consolidated statements of income and cash flow for the three (3) months then ended. Such financial statements fairly present the financial condition and the results of operations and cash flow of the Seller Group Companies as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP, subject, in the case of interim financial statements, to normal recurring year-end adjustments and the absence of notes that may be required by GAAP; the financial statements referred to in this Section 3.4 reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements. The reserves, if any, reflected on the Balance Sheet are in accordance with GAAP and prepared on a basis consistent with all periods described in (b), (c) and (d) above. No financial statements of any Person other than the Seller Group Companies are required by GAAP to be included in the consolidated financial statements of the Seller Group Companies.

3.5      Books And Records . The Books and Records of the Seller Group Companies are complete and correct in all material respects, represent bona fide transactions and have been maintained in accordance with sound business practices and, to the extent the Books and Records are financial statements, GAAP (subject, in the case of interim financial statements, to normal recurring year-end adjustments and the absence of notes that may be required by GAAP).

3.6      Title To Properties; Encumbrances . Schedule 3.6 contains a complete and accurate list of all real property, including all leaseholds or other interests therein, owned by the Seller Group Companies. The Seller Group Companies own (with good and marketable title in the case of real property, subject only to the matters permitted by the following sentence) all the properties and assets (whether real, personal or mixed and whether tangible or intangible) reflected as owned in the books and records of the Seller Group Companies, including all of the properties and assets reflected in the Balance Sheet and the Interim Balance Sheet (except for assets held under capitalized leases disclosed on Schedule 3.6 and personal property sold since

 

 

the date of the Balance Sheet and the Interim Balance Sheet, as the case may be, in the ordinary course of business), and all of the properties and assets purchased or otherwise acquired by the Seller Group Companies since the date of the Balance Sheet (except for properties and assets acquired and sold since the date of the Balance Sheet in the ordinary course of business and consistent with past practice). The Acquired Assets (whether real, personal or mixed and whether tangible or intangible) are free and clear of Encumbrances except for Permitted Encumbrances.

3.7      Condition And Sufficiency Of Assets. The buildings, plants, structures and equipment of the Seller Group Companies are in good operating condition and repair, ordinary wear and tear excepted, and are adequate for the uses to which they are being put. The Acquired Assets are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing.

3.8      Accounts Receivable . All accounts receivable of the Seller Group Companies that are reflected on the Balance Sheet or the Interim Balance Sheet or on the accounting records of the Seller Group Companies as of the date hereof (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business in accordance with applicable orders, Contracts or customer requirements. Except to the extent paid prior to the Closing Date, such Accounts Receivable are or will be as of the Closing Date current and collectible net of the respective reserves shown on the Balance Sheet or the Interim Balance Sheet (which reserves are adequate and calculated consistent with past practice). Subject to such reserves, each of such Accounts Receivable either has been or will be collected in full, without any setoff other than those taken in the ordinary course of business for weight and grade adjustments, within ninety (90) days after the day on which it first becomes due and payable. To the Knowledge of Seller, no contest, claim or right of set-off, other than returns in the ordinary course of business, has been asserted by any obligor of an Account Receivable relating to the amount or validity of such Account Receivable.

3.9      Inventory . All Inventory of the Seller Group Companies, whether or not reflected in the Balance Sheet or the Interim Balance Sheet, consists of a quality and quantity usable and salable in the ordinary course of business, except to the extent written down or reserved against on the Balance Sheet or the Interim Balance Sheet or on the accounting records of the Seller Group Companies as of the Closing Date. The Seller Group Companies are not in possession of any inventory not owned by the Seller Group Companies, including goods already sold. All of the Inventories have been valued at the lower of cost or market value on a consistent last-in-first-out basis. Inventories now on hand that were purchased after the date of the Balance Sheet or the Interim Balance Sheet were purchased in the ordinary course of business of the Seller Group Companies at a cost not exceeding market prices prevailing at the time of purchase. The quantities of each item of Inventories (whether raw materials, work-in-process or finished goods) are not excessive but are reasonable in the present circumstances of the Seller Group Companies.

3.10      No Undisclosed Liabilities . Except as set forth in Schedule 3.10 , the Seller Group Companies do not have any liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent or otherwise) that are greater than

 

 

$25,000 individually or $100,000 in the aggregate, except for liabilities or obligations reflected or reserved against in the Balance Sheet or the Interim Balance Sheet and current liabilities incurred in the ordinary course of business since the respective dates thereof.

3.11      Taxes.

(a)      The Seller Group Companies have filed or caused to be filed all Tax Returns that are or were required to have been filed by or with respect to them, either separately or as a member of a group, pursuant to applicable Legal Requirements. The Seller Group Companies have paid, or made provision for the payment of, all Taxes that have become due pursuant to such Tax Returns, or pursuant to any assessment received by any Seller Group Company, except such Taxes, if any, as are listed in Schedule 3.11 and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Balance Sheet and Interim Balance Sheet. Since December 31, 2001, the Seller Group Companies have not received written notice from any Governmental Authority in a jurisdiction where the Seller Group Companies do not file Tax returns that it is or may be subject to taxation by that jurisdiction. There are no Encumbrances on any of the Acquired Assets that arose in connection with any failure (or alleged failure) to pay any Tax, except for liens for Taxes not yet due or Taxes that are being contested in good faith. Since December 31, 2001, except as set forth on Schedule 3.11 , the federal and state income Tax Returns of the Seller Group Companies have not been audited by any applicable taxing authority and the Seller Group Companies have not received any notice of audit from any such taxing authority.

(b)      Except as described in Schedule 3.11 , no Seller Group Company has given or been requested to give waivers or extensions of any statute of limitations relating to the payment of Taxes of the Seller Group Companies or f