INVENTORY PURCHASE AGREEMENT
This INVENTORY PURCHASE AGREEMENT (this "Agreement) is entered into this 13th day of January, 2009, by and between INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (the "Buyer"), VENTURE METALS, LLC, a Florida limited liability company (the "Seller"), STEVE JONES, JEFF VALENTINE and CARLOS CORONA, the members of Seller (collectively, the "Members").
The Seller desires to sell or otherwise transfer certain of its assets; and
The Buyer desires to purchase such assets.
In consideration of these preliminary statements and the mutual covenants, representations, warranties and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I PURCHASE AND SALE OF ASSETS
SECTION 1.1 Transfer of Assets .
(a) Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as hereinafter defined) the Seller shall transfer to the Buyer, free and clear of all claims, charges, liens, contracts, rights, options, security interests, mortgages, encumbrances and restrictions whatsoever (collectively, "Claims"), the inventory assets listed on Schedule 1.1(a) ("Transferred Assets").
(b) The Seller shall transfer the Transferred Assets to the Buyer pursuant to one or more Bills of Sale (the "Bill of Sale") in a form reasonably acceptable to Buyer, and such other documents and instruments as the Buyer or its counsel may reasonably request.
(c) At any time and from time to time after the Closing Date, as defined below, at the request of the Buyer and at Buyer's sole cost and expense, the Seller shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to more effectively transfer, convey and assign to the Buyer and to confirm the Buyer's title to the Transferred Assets.
SECTION 1.2 Consideration for the Transferred Assets .
(a) In consideration for the transfer of the Transferred Assets, upon the terms and subject to the conditions set forth in this Agreement, the Buyer shall pay to Seller $8,846,794.00 for the Transferred Assets (the "Purchase Price"). The Purchase Price shall be paid in cash or other form of immediately available funds as follows:
(i) One hundred percent (100%) of the Purchase Price with respect to any portion of the Transferred Assets which has been counted by the Buyer on or before the Closing Date shall be paid to the Seller on the Closing Date;
(ii) Beginning on the first business day of the full calendar week following the Closing Date and on the first business day of each calendar week thereafter until the balance of the Purchase Price shall be paid in full, the Buyer shall pay to Seller the applicable portion of the Purchase Price with respect to any item Transferred Assets which inventory weight was verified by Buyer during the previous calendar week (the "Weight Date"), provided, however, that if the weight of the applicable Inventory Assets on the applicable Weight Date is different than the weight set forth on Schedule 1.1(a)(i), the Purchase Price will be adjusted accordingly.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Seller and Members, jointly and severally, represent and warrant to the Buyer as follows:
SECTION 2.1 Organization and Qualification . The Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida and duly qualified to do business as a foreign limited liability company in the Commonwealth of Kentucky.
SECTION 2.2 Power and Authority . Seller (a) has the power and authority to execute, deliver and perform this Agreement and the other agreements, schedules, documents and instruments contemplated hereby to be executed and delivered by it (collectively, the agreements, schedules, documents and instruments contemplated by this Agreement shall constitute the "Documents") and to consummate the transactions contemplated hereby and thereby, and (b) has taken all necessary company action to authorize and approve the execution, delivery and performance of this Agreement and the Documents to be executed and delivered by it and the consummation of the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by Seller, and the Documents to be executed and delivered by it, when executed, will be duly and validly executed and delivered by Seller and, subject to due execution and delivery by Buyer, do and will and constitute valid and binding obligations of Seller, enforceable against Seller in accordance with their terms.
SECTION 2.3 Validity, Etc. Neither the execution and delivery of this Agreement or the Documents, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement or the other Documents and such other agreements in compliance with the terms and conditions hereof and thereof by the Seller will (i) violate, conflict with or result in any breach of any trust agreement, articles of organization, operating agreement, judgment, decree, order, statute or regulation applicable to the Seller, or (ii) result in the creation of any Claim upon the Transferred Assets. No registration or filing with, or consent or approval of or other action by any federal, state or other governmental agency or instrumentality is or will be necessary for the valid execution, delivery and performance by Seller of this Agreement.
SECTION 2.4 Compliance with Law; Licenses and Permits . Seller is in full compliance with all laws, ordinances, legal requirements, rules, regulations and orders (collectively, "Legal Requirements") applicable to it, its operations, properties, assets, products and services. Seller has not received any notice or other communication (whether oral or written) from any governmental body or any other Person regarding (i) any actual, alleged, possible or potential violation of, or failure to comply with any Legal Requirement, or (ii) any actual, alleged, possible or potential obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. Seller possesses all franchises, permits, licenses, certificates and consents required from any governmental or regulatory authority in order for Seller to carry on its business as currently conducted and to own and operate its properties and assets as now owned and operated.
SECTION 2.5 Financial Statements and Absence of Undisclosed Liabilities .
(a) Attached hereto as Schedule 2.5 are, the audited balance sheet of Seller (the "Balance Sheet") as at December 31, 2007 (the "Balance Sheet Date") and the related audited income statement for the fiscal year then ended. All such financial statements (the "Financial Statements") were prepared from the books and records of Seller in accordance with generally accepted accounting principles, consistently applied ("GAAP"). The Financial Statements fairly present the financial position and results of operations, changes in members' equity and cash flows of Seller as of the respective dates of and for the periods referred to in such Financial Statements all in accordance with GAAP.
(b) Seller has no liabilities or obligations of any nature whether absolute, accrued, contingent or otherwise in relation to the Transferred Assets and there is no basis for the assertion against Buyer of any liability or obligation of Seller.
SECTION 2.6 Assets . Seller has good and marketable title to all of the Transferred Assets, free and clear of all Claims. All Transferred Assets consist of items which are good and merchantable within normal trade practice, and are of a quality and quantity presently usable or salable in the ordinary course of business consistent with past practice. All Transferred Assets were purchased in the ordinary course of business at a cost not exceeding market prices prevailing at the time of purchase.
SECTION 2.7 Insurance . Seller is, and will be through the Closing, insured with insurers in respect of its properties, assets and businesses, including all Transferred Assets. All insurance policies held by Seller are (i) valid, outstanding and enforceable, (ii) are issued by an insurer that is financially sound and reputable; and (iii) taken together, provide adequate insurance coverage of the Transferred Assets for all risks normally insured against by a person carrying on the same business or businesses as Seller in the same location. Such insurance shall remain in full force and effect with respect to all events occurring prior to the Effective Time. Seller (i) has not failed to give any notice or present any claim under any such policy or binder in due and timely fashion, (ii) has not received notice of cancellation or non-renewal of any such policy or binder, (iii) is not aware of any threatened or proposed cancellation or non-renewal of any such policy or binder, and (iv) has not received notice of any insurance premium which will be materially increased in the future. There are no outstanding claims under any such policy which have gone unpaid for more than 45 days, or as to which the insurer has disclaimed liability.
SECTION 2.8 Taxes . All state and local property tax returns and tax reports required to be filed by the Seller on or before the Closing have been or will be timely filed with the appropriate governmental agencies in all jurisdictions in which such returns and reports are required to be filed and all amounts shown as owing thereon have been paid. There are no Claims on any of the Transferred Assets that arose in connection with any failure (or alleged failure) to pay any tax, and there is no basis for assertion of any claims attributable to taxes, which, if adversely determined, would result in any such Claim.
SECTION 2.9 Litigation . There is no (i) action, suit, claim, proceeding or investigation pending or threatened against or affecting the Seller (whether or not such Seller is a party or prospective party thereto), at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) arbitration proceeding pending relating to the Seller or (iii) governmental inquiry pending or threatened against or involving Seller's business.
SECTION 2.10 Environmental Matters . Seller has at all times been in full compliance with, and has not been and is not in violation of or liable under any environmental law. There are no past, present, or future events, conditions, circumstances, activities, practices, incidents, actions, or plans of Seller or Seller's predecessors which may interfere with or prevent continued compliance with environmental laws. Seller has previously provided Buyer with true, accurate and complete copies of all reports or investigations conducted by or on behalf of Seller or any of the Members with respect to environmental conditions at any real property owned or used by the Seller in connection with its business.
SECTION 2.11 Broker's or Finder's Fee . No agent, broker, person or firm acting on behalf of Seller is, or will be, entitled to any commission or broker's or finder's fees from Seller, or from any person controlling, controlled by or under common control with Seller, in connection with any of the transactions contemplated herein.
SECTION 2.12 Disclosure . No representation or warranty or other statement made by Seller in this Agreement (including the schedules hereto) contains any untrue statement of material fact or omits to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein not misleading. No notice given by Seller in this Agreement (including the schedules hereto) will contain any untrue statement or omit to