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) April 29, 1994
PROLER INTERNATIONAL CORP.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5276 74-1051251
-------- ------ ----------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification Number)
incorporation)
4265 San Felipe, Suite 900, Houston, Texas 77027
-------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (713) 627-3737
--------------
Exhibit Index Located on Page 5
Item 2. Disposition of Assets
- - ------- ---------------------
Proler International Corp., (the "Company") disposed of
substantially all of its assets, including real property,
improvements, fixtures, equipment, and inventory, used in
connection with the operation of a scrap metal processing
facility located in Vinton (El Paso), Texas, effective April
29, 1994. The disposition was effected pursuant to an Asset
Sale and Purchase Agreement (the "Agreement") by and between
the Company and Commercial Metals Company (the "Purchaser"),
a Delaware corporation unrelated Company or the officers,
directors or other affiliates of the Company or their
associates. The Agreement is filed as Exhibit 2(a) to
this report and is incorporated herein by reference.
The purchase price for the assets and the agreement not to
compete was determined by negotiation between the parties,
aggregated approximately $2.6 million and was paid to the
Company by wire transfer of immediately available funds.
Item 7. Financial Statements and Exhibits
- - ------- ---------------------------------
(b) Pro Forma Financial Information
-------------------------------
The following pro forma financial statements have been
prepared to give effect to the disposition of assets
described in Item 2 above and to a disposition of similar
assets located in Kansas City, Kansas on February 28, 1994
as previously reported by the Company on Form 8-K, filed
on March 14, 1994. In the prior transaction, Prolerized
Steel Corporation, a wholly owned subsidiary of the Company,
sold assets to Kaw River Shredding, Inc., a Kansas
corporation, for an aggregate purchase price of
approximately $5.1 million. The Pro Forma Condensed Balance
Sheet set forth below gives effect to both transactions as
if they occurred on January 31, 1994. The Pro Forma
Condensed Statement of Operations for the year ended
January 31, 1994 gives effect to the transactions as if
they occurred as of the beginning of the year presented as
more fully explained in notes (a), (b) and (c) thereto.
This pro forma presentation does not purport to represent
what the Company's results of operations or financial
position would actually have been if such transactions had
taken place on such dates or to project the Company's
results of operations or financial position for any
future period or date.
The adjustments for the pro forma presentation are based on
available information and on certain assumptions which
management believes are reasonable. The pro forma condensed
financial statements and the accompanying notes should be
read in conjunction with the Consolidated Financial
Statements included in the Company's Form 10-K for the year
ended January 31, 1994.
<PAGE>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
JANUARY 31, 1994
(in millions)
<TABLE>
<CAPTION>
PRO FORMA PRO FORM
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
Assets
- - ------
Current assets $ 17.7 7.7 (a) $ 24.4
(1.0) (b)
Property, net 18.7 (2.0) (b) 16.7
Other assets 30.2 (1.8) (b) 28.4
--------- ---------- ---------
$ 66.6 $ 2.9 $ 69.5
========= ========== =========
Liabilities and
Stockholders' Equity
- - --------------------
Current liabilities $ 5.4 $ 0.1 (b) $ 5.3
Other liabilities 3.0 - 3.0
Stockholders' equity 58.2 3.0 (c) 61.2
--------- ---------- ---------
$ 66.6 $ 2.9 $ 69.5
========= ========== =========
</TABLE>
__________
(a) To give effect to the receipt of approximately $7.7 million of sales
proceeds.
(b) To remove from the accounts the amounts associated with the the assets
sold, and to recognize the effect on retained earnings of the gain on
sales.
<TABLE>
<CAPTION>
PROLER INTERNATIONAL CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED JANUARY 31, 1994
(in millions except per share data)
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 43.7 $ 29.1 (a) $ 14.6
Cost of sales 42.7 28.5 (a) 14.2
----------- ----------- -----------
Gross profit 1.0 0.6 0.4
Earnings from joint operations 2.8 - 2.8
Selling, general and
administrative expenses (4.5) - (4.5)
------------ ----------- -----------
Operating loss (0.7) 0.6 (1.3)
Other expense (1.1) - (1.1)
------------ ----------- -----------
Loss before income taxes
and accounting change (1.8) 0.6 (2.4)
Provision for income taxes 0.6 - 0.6
------------ ----------- -----------
Loss before cumulative
effect of accounting
change (2.4) 0.6 (3.0)
Cumulative effect of change
in accounting for income taxes 0.1 - 0.1
------------ ----------- -----------
Net loss $ (2.3) $ 0.6 $ (2.9)
============ =========== ===========
Net loss per share $ (.48) $ (.61)
============= ============
__________
(a) To remove from the accounts the sales and cost of sales of the assets
assumed to be sold as of the beginning of the period.
</TABLE>
(c) Exhibit:
2(a) Asset Sale and Purchase Agreement dated as of
April 29, 1994 between the Company and the
Purchaser.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROLER INTERNATIONAL CORP.
Date: May 9, 1994 By /s/ MICHAEL F. LOY
Michael F. Loy
Vice President-Finance and
Chief Financial Officer
<PAGE>
Exhibit Index
-------------
Exhibit numbers are in accordance with the
Exhibit Table in Item 601 of Regulation S-K
-------------------------------------------
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description Page No.
<C> <S> <C>
2(a) Asset Sale and Purchase Agreement dated 6
as of April 29, 1994 between the Company
and the Purchaser
</TABLE>
--------------------------------------------------
ASSET SALE AND PURCHASE AGREEMENT
Dated as of April 29, 1994
Between
PROLER INTERNATIONAL CORP.
and
COMMERCIAL METALS COMPANY
-------------------------------------------------
ASSET SALE AND PURCHASE AGREEMENT
DATED AS OF APRIL 29, 1994
between
PROLER INTERNATIONAL CORP.
and
COMMERCIAL METALS COMPANY
TABLE OF CONTENTS
Page
ASSET SALE AND PURCHASE AGREEMENT............................. 1
1. Certain Definitions..................................... 1
2. Sale and Transfer of Certain Assets..................... 2
(a) Included Assets.................................... 2
(b) Excluded Assets.................................... 3
3. Consideration........................................... 3
4. Payment of Purchase Price; Allocation Agreement......... 4
(a) Purchase Price..................................... 4
(b) Allocation Agreement............................... 4
5. Assumption of Liabilities and Certain Obligations....... 4
(a) Contracts.......................................... 4
(b) Non-Assumption..................................... 4
6. Closing................................................. 5
(a) Time and Place..................................... 5
(b) Risk of Loss....................................... 5
7. Property and Environmental Inspection; Environmental
Indemnity............................................... 5
(a) Right of Inspection................................ 5
(b) Condition of the Property.......................... 7
(c) Transfer of Property............................... 8
8. Inventory............................................... 8
(a) Purchase and Valuation of Unprepared Inventory..... 8
(b) Resolution of Inventory Disputes................... 8
(c) Retained Inventory................................. 9
9. Accounts Receivable..................................... 9
10. Employees............................................... 10
11. Prorations; Taxes....................................... 10
12. [Reserved.]............................................. 10
13. DTPA Waiver............................................. 10
14. Representations and Warranties of Seller................ 10
(a) Corporate.......................................... 11
(b) Condemnation, etc.................................. 11
(c) Title to Tangible Personal Property; Absence of
Liens.............................................. 11
(d) Contracts.......................................... 11
(e) Litigation......................................... 11
(f) Employee Contracts and Benefits.................... 12
(g) Accurate Copies.................................... 12
(h) Brokers............................................ 12
(i) Condition of IFE................................... 12
(j) Scope of Representations and Warranties of Seller.. 12
(k) Knowledge of Seller................................ 12
(l) Prior Use of Property.............................. 13
(m) Environmental Matters.............................. 13
(n) Patents and Licenses............................... 13
15. Representations and Warranties of Purchaser............. 14
(a) Corporate.......................................... 14
(b) Litigation......................................... 14
(c) Brokers............................................ 14
16. Indemnification......................................... 14
(a) Indemnification by Seller.......................... 14
(b) Indemnification by Purchaser....................... 15
(c) Limitation Periods................................. 16
(d) Limitation of Liability............................ 17
17. Further Covenants of Seller............................. 17
(a) Best Effort........................................ 17
(b) Non-Competition Agreement.......................... 17
(c) Conduct of Business Pending Closing................ 18
(d) Access to Information, Premises.................... 18
(e) Title Commitment................................... 19
18. Further Covenants of Purchaser.......................... 19
(a) Best Efforts....................................... 19
(b) Resale Certificates................................ 20
19. Conditions Precedent to Purchaser's Obligations......... 20
20. Conditions Precedent to the Seller's Obligations........ 20
21. Closing Documents....................................... 21
(a) Seller............................................. 21
(b) Purchaser.......................................... 21
22. Survival of Representations and Warranties.............. 22
23. Termination of Agreement................................ 22
(a) Termination........................................ 22
24. Assignment.............................................. 22
25. Further Assurances...................................... 23
26. Announcements and Press Releases........................ 23
27. Amendments.............................................. 23
28. Counterparts............................................ 23
29. Parties Bound........................................... 23
30. Notices................................................. 23
31. No Waivers.............................................. 24
32. Entire Agreement........................................ 24
33. Severability............................................ 24
34. Applicable Law.......................................... 25
35. Headings................................................ 25
SCHEDULES
A - Certain Included Improvements, Fixtures and Equipment
B - Real Estate Description
C - Contracts and Leases
D - Exceptions to Representations and Warranties
E - Certain Title Exceptions and Encumbrances
F - Permits
EXHIBITS
A - Allocation Agreement
B - Special Warranty Deed
ASSET SALE AND PURCHASE AGREEMENT
---------------------------------
This Agreement made as of the 29th day of April, 1994, by and
between Commercial Metals Company, a Delaware corporation ("Purchaser"),
and Proler International Corp., a Delaware corporation ("Seller"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller operates a ferrous scrap business at its
facility in Vinton (El Paso), Texas; and
WHEREAS, the parties hereto desire to enter into an agreement
whereby Seller will transfer to Purchaser, and Purchaser will
acquire from Seller, certain assets associated with said business;
NOW, THEREFORE, in consideration for the mutual premises and
covenants set forth herein, and intending to be legally bound
hereby, the parties hereto do covenant and agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms shall have the following meanings:
(a) "Accounts Receivable" shall mean any notes or
accounts receivable or other rights to receive payment owing to
Seller on the Closing Date (as defined below) that have arisen from
the Business (as defined below);
(b) "Business" shall mean the ferrous scrap processing
operations conducted on the Property (as defined below);
(c) "Confidentiality Agreement" shall mean that certain
Confidentiality Agreement, dated June 12, 1992, entered into between
Purchaser and Seller;
(d) "Environmental Condition" shall mean any environmental
condition with respect to the Property (as defined below) which could
or does result in any claim, damage, loss, cost, expense or liability
to or against an owner or operator of the Property by any person (including,
without limitation, any governmental entity) including, without limitation,
any condition resulting from operations conducted on the Property;
(e) "Improvements, Fixtures and Equipment" or "IFE"
shall mean all improvements, fixtures, equipment, and other items
of tangible personal property (other than the Inventory as defined
below), including without limitation buildings, furniture,
fixtures, parts, supplies, motor vehicles and equipment, which are
owned by Seller and located on the Property as defined below, or
used or held for use by Seller in connection with the Business on
the Property, as of the date hereof, which assets shall include all
those listed on Schedule A delivered pursuant hereto; and including
any IFE acquired between the date hereof and the Closing Date, and
excluding, any IFE disposed of between the date hereof and the
Closing Date, each in the ordinary course of the Business and in
compliance with Section 17(c) of this Agreement, and excluding any
IFE specifically excluded in Section 2(b);
(f) "Inventory" shall mean all of the scrap material
held for resale by Seller and located on the Property on the
Closing Date;
(g) "Property" shall mean the real estate consisting of
approximately 105 acres and the improvements thereon, including
Seller's facility located off Doniphan Drive, Vinton, Texas, as
more fully described in Schedule B.
(h) "Site Access Agreement" shall mean that certain Site
Access Agreement, dated February 25, 1994, entered into between
Purchaser and Seller.
2. Sale and Transfer of Certain Assets. Subject to the
-----------------------------------
terms and conditions herein set forth, Seller agrees to sell,
convey, assign, transfer and deliver to Purchaser, and Purchaser
agrees to purchase, acquire and accept, the following assets and
properties expressly set forth in this Section 2(a) (the "Assets").
(a) Included Assets. The Assets to be acquired by
---------------
Purchaser shall consist of:
(i) The Property;
(ii) All of the Improvements, Fixtures and
Equipment, except as excluded in Section 2(b);
(iii)The Inventory purchased by Purchaser pursuant
to Section 8(a);
(iv) All of the Seller's right, title and interest
in and to those contracts and leases listed on Schedule C
(the "Contracts"), including Seller's rights and obligations
under leases for rented equipment used in the Business on the
Property as listed on Schedule C which are not rejected by
Purchaser pursuant to Section 5(a);
(v) Seller's customer and supplier lists, including
copies of all purchase and sale summaries by customer or
supplier or other records showing quantities purchased and
buying prices since January 1, 1992;
(vi) Copies of all surveys, drawings or other
renderings showing the proposed or actual location of
improvements, easements, drainage, elevation, landfills or
disposal sites or similar information concerning the
Property; and
(vii)Copies of all engineering or other schematic
drawings concerning or related to the IFE or its installation
on the Property.
The sale, conveyance, assignment, transfer and delivery
of the Assets shall be effected by such special warranty deeds,
bills of sale, endorsements, assignments, drafts, checks or other
instruments in such reasonable or customary form as shall be
requested by the Purchaser and its counsel and are reasonably
satisfactory to Seller and its counsel.
(b) Excluded Assets. Notwithstanding anything to the
---------------
contrary in this Agreement, the Assets shall not include, nor shall
Seller sell, convey, transfer or assign pursuant to this Agreement,
any assets or property not described in Section 2(a) above,
including without limitation the following assets and properties
which are excluded from this Agreement:
(i) Accounts Receivable, cash, securities and
investments;
(ii) All personnel records or files relating to
employees and other records of the Business, provided that during
the sixty (60) days following the Closing Date Purchaser may, at
Purchaser's option and expense, make copies of any personnel and
other business records pertaining to the Business;
(iii)Any and all intellectual property rights,
including without limitation any and all patents, applications for
patents, trademarks, tradenames, service marks, copyrights or
similar rights relating to the Business or owned by Seller; and
(iv) Any IFE, Inventory, Contracts or other assets
not used in the Business.
3. Consideration. Purchaser agrees that, subject to the
-------------
terms and conditions of this Agreement, and in full consideration
for the aforesaid sale, transfer, conveyance, assignment and
delivery of the Assets to Purchaser, Purchaser shall:
(a) pay to Seller a purchase price equal to $2,562,500
(the "Fixed Purchase Price"); and
(b) pay to Seller a purchase price for the Inventory as
determined pursuant to Section 8 hereof (the "Inventory Purchase
Price") (the Fixed Purchase Price and the Inventory Purchase Price
being referred to herein collectively as the "Purchase Price"); and
(c) assume the specific obligations as set out in
Section 5 hereof.
4. Payment of Purchase Price; Allocation Agreement.
-----------------------------------------------
(a) Purchase Price. At the Closing, Purchaser shall
deliver to Seller an amount equal to the Purchase Price by wire
transfer of immediately available funds to an account designated by
Seller.
(b) Allocation Agreement. At or prior to the Closing
--------------------
Date, Purchaser and Seller shall enter into an agreement (the
"Allocation Agreement") substantially in the form of Exhibit A,
specifying the manner in which the Purchase Price shall be
allocated among the Assets and the other rights conferred on
Purchaser pursuant hereto.
Notwithstanding anything to the contrary contained herein, the
execution and delivery of the Allocation Agreement shall not be a
condition of Closing.
5. Assumption of Liabilities and Certain Obligations.
-------------------------------------------------
(a) Contracts. Purchaser agrees to accept, assume and
---------
fully perform Seller's obligations under the Contracts assigned
pursuant to Section 2(a)(iv) and any amendments thereto made in
compliance with Section 19(b) hereof; provided, however, that
Purchaser shall have the right to review complete copies of all
such Contracts, which shall be furnished Purchaser by Seller prior
to the Closing Date (except as provided on Schedule C), and
Purchaser may, upon written notice to Seller prior to the Closing
Date, decline to assume any of the Contracts Purchaser determines
to be economically undesirable in the good faith exercise of its
judgment. In the event Purchase declines to assume any Contract,
the obligations of such rejected Contract shall be retained by
Seller and not assigned to Purchaser; provided, however, that the
performance by Seller under any such rejected Contract shall not be
subject to or deemed to violate the obligation of Seller not to
compete with Purchaser pursuant to Section 17(b). The assumption
of such Contracts shall be effected by instruments of assumption,
agreements or assignments in such form as shall be requested by
Seller and its counsel. Purchaser shall indemnify and hold Seller
harmless against and from any and all such obligations and all
Costs (as defined below) incurred by Seller and arising out of or
attributable to any failure of Purchaser to fulfill the obligations
assumed pursuant to this Section 5(a), all in accordance with
Section 16.
(b) Non-Assumption. All indebtedness, obligations,
--------------
claims and other liabilities (absolute, contingent or otherwise) of
whatsoever nature of Seller not assumed or released by Purchaser
pursuant to this Agreement shall be and remain the obligation of
Seller. Seller shall indemnify and hold Purchaser harmless from
and against any and all such obligations and Costs (as defined
below) incurred by Purchaser and arising out of or attributable to
any failure of Seller to fulfill the obligations of Seller retained
by Seller pursuant to this Section 5(b), all in accordance with and
subject to the limitations set forth in Section 16.
6. Closing.
-------
(a) Time and Place. The closing ("Closing") of the
transactions contemplated herein shall take place at the offices of
Mayor, Day, Caldwell & Keeton, L.L.P., 700 Louisiana, 19th Floor,
Houston, Texas 77002 at 9:00 a.m. on April 29, 1994; provided,
that if the Closing does not take place on such date it shall take
place on such other date, at such other place, or at such other
time as the parties may mutually agree upon; and provided further,
that neither party shall be obliged to agree to a later date for
the Closing. The date of the Closing determined as provided herein
is referred to as the Closing Date. The parties agree that time is
of the essence with respect to the Closing. The transactions contemplated
by this Agreement shall be effective as of the close of business on the
Closing Date.
(b) Risk of Loss. Title, possession and risk of loss
------------
for destruction or damage to the Assets shall pass to Purchaser as
of the effective time of the Closing; provided, however, that this
Section 6(b) shall not diminish, limit or otherwise impair in any
manner Purchaser's or Seller's rights under the other provisions of
this Agreement that apportion liability among the parties with
respect to events, occurrences or omissions arising or occurring
during specified periods. If, prior to the Closing, all or any
material part of the Assets are (a) materially damaged so as to be
unfit for their intended purpose, (b) destroyed or lost through
fire, flood, vandalism, theft or act of God or (c) Sellers'
possession and use thereof is otherwise interfered with as a result
of expropriation, condemnation or other taking or as a result of
any accident or other casualty, Purchaser shall have the option
either to: (i) accept title to the Assets, including any affected
Assets, without any abatement of the Purchase Price whatsoever, in
which event, on the Closing Date, all of the insurance proceeds and
other monies paid or due Seller from the insurance carrier or
rights arising in connection with such damage shall be assigned by
the Seller to Purchaser and any deductible or self insurance
retention amount maintained by Seller with regard to such insurance
shall be paid by Seller to Purchaser; or (ii) terminate this
Agreement.
7. Property and Environmental Inspection; Environmental
Indemnity.
---------------------------------------------------------
(a) Right of Inspection. (i) Prior to the date hereof,
-------------------
and subject to the Site Access Agreement, Seller has made the
Property available to Purchaser and Purchaser's environmental
consultant (collectively with any other party or parties assisting
Purchaser in its inspection of the Property, the "Consultant") for
inspection. Such inspection has included the right to take soil
and water samples, to inspect the IFE and Inventory and to conduct
appropriate environmental tests relating thereto. For purposes of
this inspection, the Property has been divided into two parcels:
the "Business parcel," on which the IFE are principally located,
and the "agricultural parcel."
(ii) The Consultant has delivered its draft report on the
Business parcel to Purchaser. Purchaser provided a copy thereof to
Seller, and Seller has reviewed such draft report and provided
Purchaser with Seller's comments upon such draft report. Seller
has received splits of certain soil samples for analysis. Seller
and Purchaser will continue to work together in good faith to agree
upon the results and conclusions to be set forth in such
environmental due diligence report prior to the Consultant making
such report final.
(iii)No environmental due diligence report has yet been
prepared or delivered by the Consultant with respect to the
agricultural parcel. Purchaser and Seller agree that such report
will also be first issued in draft form and Seller shall be given
the opportunity to review the draft and to correct factual
inaccuracies therein. Upon Seller's request, splits of any soil or
water samples relating to the agricultural parcel shall be
immediately delivered to Seller. Seller and Purchaser will work
together in good faith to agree upon the results and conclusions to
be set forth in such environmental due diligence report prior to
the Consultant making such report final.
(iv) No subsurface testing or drilling shall be performed
by Purchaser, the Consultant or any other party on behalf of
Purchaser without the prior written consent of Seller. Purchaser
agrees that Seller shall have the right to pre-approve any
subcontractors to be hired by any Consultant, and that the
Consultant and any subcontractor hired by the Consultant shall have
liability insurance coverage of a type and amount acceptable to
Seller and that Purchaser will require any consultant retained to
name Seller as an additional insured on consultant's policies.
(v) Seller agrees to make available to Consultant all
information including results of prior environmental audits,
samples, tests or other data gathered in regard to the Property or
Seller's operations which are in the possession of Seller. Seller
further agrees to permit and assist the Consultant in reviewing
such documents as are in Seller's possession or provided to Seller
by Purchaser, including permits, permit applications and other
books and records as may be necessary to evaluate the Property and
Seller's compliance with environmental laws and regulations.
Seller agrees to permit Purchaser and Purchaser's consultants to
interview, should the same be necessary, Seller's employees
concerning the history of operations as conducted on the Property.
Purchaser shall make all inspections in good faith and with due
diligence, and splits of any further samples taken for analysis
shall be made available to Seller immediately upon Seller's
request.
(vi) If the Consultant determines that any remediation or
clean up action is required by applicable law to be taken with
regard to removal or treatment of any contaminated soil, water, or
other materials found on or in the Property, Purchaser shall notify
Seller of such determination no later than three (3) business days
prior to the Closing Date and request that Seller perform the
necessary remediation or clean up (a "Remediation Request"). In
the event that Purchaser makes such a Remediation Request, Seller
may, if necessary, extend the Closing Date of this Agreement in
order to fulfill such Remediation Request. If Seller's good faith
estimate of the cost to fulfill such Remediation Request exceeds
the difference (the "Difference") of (A) One Hundred Thousand
Dollars ($100,000.00) minus (B) the sum of all amounts spent by
Seller (exclusive of the amount estimated to fulfill such
Remediation Request) subsequent to April 1, 1994 to remediate any
portion of the Property, to fill and plug any abandoned wells on
the Property or to perform at the request of Purchaser any other
clean up or similar actions on the Property (an "Optional
Request"), then Seller shall have the option of fulfilling such
Optional Request or terminating this Agreement. If Seller's good
faith estimate of the cost to fulfill such Remediation Request does
not exceed the Difference (a "Binding Request"), Seller shall be
obligated to fulfill such Binding Request. In the event that
Seller declines to fulfill a Binding Request or an Optional
Request, Purchaser may elect to terminate this Agreement by
delivering written notice of such termination to Seller on or prior
to the Closing Date. Purchaser's failure to deliver written notice
of termination of this Agreement to Seller as provided in Section
7(a)(vi) or Section 7(a)(vii), below, shall constitute Purchaser's
agreement that Purchaser accepts the Property in accordance with
subsection (b) below.
(vii) Notwithstanding the foregoing, prior to making any
Remediation Request pursuant to Section 7(a)(vi), if Purchaser
determines, in good faith and based upon Consultant's environmental
due diligence reports, that the Environmental Condition of the
Property is not satisfactory, Purchaser may terminate this
Agreement by delivering written notice of such termination to
Seller no later than three (3) business days prior to the Closing
Date, which notice shall specify the reason or reasons that
Purchaser believes the Property to be unsatisfactory. Failure to
specify such reason or reasons shall render the notice void and
without effect.
(viii) All inspection fees, appraisal fees, engineering
fees and other expenses of any kind incurred by Purchaser relating
to the inspection of the Property will be solely Purchaser's
responsibility. Seller shall cooperate with Purchaser in all
reasonable respects in making such inspections. Seller hereby
reserves the right to have a representative present at the time of
making any such inspection. Purchaser shall notify Seller not less
than five (5) business days in advance of making any such
inspection and shall inform Seller of the names of the company and
persons who will conduct such inspection. Purchaser agrees (A) to
return the Property to the same condition in which the Property was
prior to Purchaser's making any inspection and (B) to comply with
all applicable laws and regulations regarding installation,
plugging and abandonment of any well or boring. Such obligation
shall survive any termination of this Agreement.
(b) Condition of the Property. Except as expressly set
-------------------------
forth herein, it is understood and agreed that with respect to the
physical condition and Environmental Condition of the Property, the
Property is being sold and conveyed hereunder and, unless Purchaser
terminates this Agreement in accordance with the terms of this
Agreement, Purchaser agrees to accept the Property "AS IS," "WHERE
IS" and "WITH ALL FAULTS" and subject to any Environmental
Condition which may exist, without any representation or warranty
by Seller of any kind except as expressly provided in Section 14
(including without limitation any representation or warranty as to
the condition of the Property, the availability of utilities or
other services, the suitability of the Property for purchaser's
use, workmanship and materials used in any improvements, or
otherwise). Purchaser hereby expressly acknowledges and agrees
that (i) Purchaser has or will have, prior to the Closing Date,
thoroughly inspected and examined the Property to the extent deemed
necessary by Purchaser in order to enable Purchaser to evaluate the
purchase of the Property and (ii) Purchaser is relying solely upon
such inspections, examination, and evaluation by Purchaser in
accepting the Property on an "AS IS," "WHERE IS" and "WITH ALL
FAULTS" basis, without representations (other than the limited
representations set forth in Section 14), warranties or covenants,
(other than the indemnity set forth in the letter delivered by
Seller to Purchaser at the Closing (the "Closing Letter")), express
or implied, of any kind of nature. Purchaser hereby assumes the
risk that Environmental Conditions may exist on the Property and
except with respect to the obligations of Seller expressly set
forth in the Closing Letter hereby releases Seller of and from any
and all claims, actions, demands, rights, damages, costs or
expenses which might arise out of or in connection with the
Environmental Condition of the Property.
(c) Transfer of Property. The Property shall be
--------------------
conveyed to Purchaser pursuant to a special warranty deed (the
"Deed") substantially in the form of Exhibit B hereto, which Deed
shall be subject to the permitted exceptions as described in
Section 17(e) below.
8. Inventory.
---------
(a) Purchase and Valuation of Unprepared Inventory.
Seller agrees to sell and Purchaser agrees to buy all unprepared
ferrous Inventory. Prior to the Closing a representative of
Purchaser and Seller shall conduct a joint inspection and appraisal
of the Inventory. Seller shall make available such personnel and
equipment as may be necessary to move and weigh the unprepared
ferrous Inventory in order to assure Purchaser and Seller that an
accurate and complete physical inspection has been taken in order
to properly value the unprepared ferrous Inventory. Following the
joint inspection and appraisal, Purchaser and Seller shall endeavor
to agree upon a mutually acceptable price for the unprepared
ferrous Inventory.
(b) Resolution of Inventory Disputes. In the event the
--------------------------------
parties are unable to agree upon a mutually acceptable price for
all or any part of the unprepared ferrous Inventory prior to the
Closing Date, the parties shall submit the valuation of the
unprepared ferrous Inventory or unprepared ferrous Inventory items
in dispute to a neutral third party familiar with the scrap
processing industry and acceptable to both parties (hereinafter the
"Arbitrator"). In the event the parties are unable to agree on the
Arbitrator, either party may ask the Executive Director of the
Institute of Scrap Recycling Industries to designate the
Arbitrator. The Arbitrator shall, within forty eight hours after
designation, inspect together with a representative of each of
Seller and Purchaser, the unprepared ferrous Inventory. Prior to
the Arbitrator's inspection the representatives of Seller and the
Purchaser shall inform the Arbitrator and each other in writing of
the value placed on the unprepared ferrous Inventory by that party.
Following the inspection the Arbitrator shall select the valuation
of either Seller or Purchaser which, in the sole opinion of the
Arbitrator, most closely approximates the value of the unprepared
ferrous Inventory. The valuation selected by the Arbitrator shall
be the price to be paid by Purchaser and received by Seller for the
unprepared ferrous Inventory at closing. All travel and out of
pocket expenses incurred by the Arbitrator and a fee of Three
Thousand Dollars ($3,000.00) which the parties agree is appropriate
should the services of the Arbitrator be needed, shall be charged
at the Closing to the party whose valuation is not selected by the
Arbitrator. The Closing Date shall be postponed until the receipt
of the Arbitrator's decision which shall be rendered within
twenty-four hours of the inspection.
(c) Retained Inventory. Seller will retain all
------------------
Inventory other than the unprepared ferrous Inventory and will
remove such Inventory from the Property at its expense as soon as
practicable following the Closing Date and no later than close of
business May 9, 1994. Purchaser will load such Inventory at a cost
to Seller of $2.00 per short ton onto rail car or trucks or other
means of transport provided by Seller at Seller's expense.
Purchaser shall provide Seller and its employees and agents with
full access to the Property and reasonable use of its facilities in
connection with removal of such Inventory, including the use of
Purchaser's scales to weigh such Inventory; provided that such
removal will not unreasonably interfere with Purchaser's operations
at the facility; and provided further that such removal shall not
be deemed to violate the non-competition agreement set forth in
Section 17(b). Seller will bear the risk of loss for all such
Inventory after the Closing Date. Any Inventory retained by Seller
which is not removed from the Property by close of business May 9,
1994 shall become the property of Purchaser without additional
payment to Seller.
9. Accounts Receivable. Seller will deliver to Purchaser
-------------------
within fifteen (15) days after the Closing Date a complete listing
of all of the Accounts Receivable and will notify in writing each
customer with an Account Receivable that remittances in payment
thereof should be directed to Seller at a stated address.
Notwithstanding such notice, if after the Closing Date, (i)
Purchaser receives any monies from a customer that are designated
to be applied to an Account Receivable, it will immediately forward
to Seller such monies in the form received and (ii) Purchaser
receives any monies from a customer with an Account Receivable not
designated to an Account Receivable or to payments for scrap
purchased from Purchaser, it shall inquire of the customer how the
customer desires to have the payment applied and immediately
forward to Seller such monies the customer desires to be applied to
Seller's Account Receivable. In the event the amount so forwarded
exceeds the amount of such Account Receivable, Seller shall
promptly remit such excess to Purchaser.
10. Employees. It is understood that Seller's employees
---------
directly involved in the operation of the Assets will be terminated
as of the Closing Date. Seller shall give any notice required
under the Worker Adjustment and Retraining Act of 1988, as amended,
and shall be responsible for payments, if any, to Seller's
employees pursuant to said Act. Purchaser shall have the
opportunity to interview and consider Seller's employees for
employment in connection with its operation of the Assets and
Seller shall make appropriate premises on the Property reasonably
available during times mutually convenient for the parties to
conduct such interviews and Seller shall permit any employee to
attend such an interview during normal working hours. Purchaser
shall not be under any obligation to employ, and Seller shall not
be under any obligation to attempt to cause Purchaser to employ,
those persons who are interviewed by Purchaser. The employees of
Seller shall not be deemed to be third party beneficiaries of the
provisions of this Section and no such employee shall acquire any
right hereunder.
11. Prorations; Taxes. Seller and Purchaser agree that
-----------------
utility expenses in connection with the Assets and ad valorem,
property and other taxes based on the value of the Assets shall be
divided or prorated between Seller and Purchaser based on period of
ownership and occupancy up to and after the Closing Date. All sums
owed under any contract assigned pursuant to this Agreement shall
be prorated to the Closing Date based on services provided or
equipment used thereunder before and after the Closing Date. All
sums owing to a party hereunder shall be paid to such party within
twenty (20) days of delivery of a written accounting of the
prorated items. Purchaser shall pay for the cost of all other
transfer and sales taxes, if any, tax certificates and fees payable
as a result of the sale, transfer, conveyance and assignment of
Assets provided for herein and shall furnish to Seller receipts,
certificates or other evidence of such payment satisfactory to
Seller. Seller shall pay for the owner policy of title insurance
provided for in Section 17(e). Except as otherwise provided
herein, each party shall pay its own attorney's fees and customary
closing expenses.
12. [Reserved.]
-----------
13. DTPA Waiver. Purchaser hereby waives and relinquishes,
-----------
to the fullest extent permitted by law, all provisions of the Texas
Deceptive Trade Practices-Consumer Protection Act (Chapter 17,
Subchapter E, of the Texas Business and Commerce Code) and any and
all rights, remedies and benefits thereunder in connection with the
sales transaction contemplated by this Agreement. Purchaser
represents and warrants to Seller that: (a) Purchaser is not in a
significantly disparate bargaining position; (b) Purchaser is
represented by legal counsel in connection with the sale
contemplated by this Agreement; (c) Purchaser has assets in excess
of $5,000,000 according to the most recent financial statements of
Purchaser prepared in accordance with generally accepted accounting
principles; and (d) Purchaser is knowledgeable and experienced in
financial and business matters, including, without limitation, the
purchase, operation, ownership, and sale of real estate, and is
fully able to evaluate the merits and risks of this transaction.
14. Representations and Warranties of Seller. Except as
----------------------------------------
disclosed on Schedule D attached hereto, Seller represents,
warrants, and agrees as follows:
(a) Corporate. Seller is a corporation duly organized,
---------
validly existing and in good standing under the laws of the State
of Delaware, with corporate power to carry on its business as now
conducted, and is qualified to do business in the State of Texas.
Seller has the corporate power to enter into and perform its
obligations under this Agreement. All necessary corporate action
required to be taken to authorize the execution, delivery and
performance of this Agreement by Seller has been duly and validly
taken. The execution, delivery and performance of this Agreement
by Seller will not violate its certificate of incorporation or
by-laws or the terms of any material agreement to which it is a
party or by which it or its properties are bound or any statute,
regulation, judgment, order, writ, decree or injunction applicable
to it or its properties and assets. No consent of third parties
which has not or will not be received by the Closing, other than
consents which may be necessary in connection with the assignment
of the Contracts, is required to permit Seller to validly
consummate the transactions contemplated hereunder. Copies of the
articles of incorporation and by-laws of Seller have previously
been delivered to Purchaser and are true and correct as of the date
of this Agreement.
(b) Condemnation, etc. To Seller's knowledge, Seller
-----------------
has received no notice from any governmental authority having
jurisdiction over the Property that the Property is presently the
subject of any condemnation, special assessment or similar
proceeding or charge, and to Seller's knowledge, no such
condemnation, special assessment or similar proceeding or charge is
currently threatened.
(c) Title to Tangible Personal Property; Absence of
----------------------------------------------
Liens. Seller is the owner of and has good and marketable title to
the IFE, the Inventory, and the other tangible Assets (other than
the Property) to be transferred hereunder, free and clear of all
liens, pledges, mortgages, security interests, conditional sales
agreements, charges, prior leases and encumbrances of any kind,
except (i) for liens for current taxes not yet delinquent, (ii)
for liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen,
laborers, materialmen, and the like, or (iii) for minor defects in
title, none of which, individually or in the aggregate, materially
interferes with the use of such Assets. Seller will convey, sell,
assign, transfer and deliver such Assets free and clear of any
liens, pledges, mortgages, security interests, charges or
encumbrances of any kind, subject to the foregoing exceptions.
(d) Contracts. All of the Contracts to be transferred
---------
pursuant to Section 2(a)(iv) are valid and enforceable and in full
force and effect, and there is no material default by Seller, or to
Seller's knowledge, any other parties thereto. If services are to
be provided to Seller under any of such Contracts, such services
have been and are being performed satisfactorily and timely,
substantially in accordance with the terms of contract.
(e) Litigation. To the knowledge of Seller, there is no
----------
action, suit, proceeding or investigation pending or threatened
against or affecting Seller which would (i) affect the title of
Seller to the Assets, (ii) affect Seller's right to convey the
Assets or (iii) question the validity of any action to be taken
pursuant to or in connection with this Agreement.
(f) Employee Contracts and Benefits. Seller is not a
-------------------------------
party to, and there is not in effect, any union contract,
collective bargaining agreement, pension or profit sharing plan or
other fringe benefit plan or other similar agreement with its
employees which Purchaser would be required to assume by law or
under the terms of any such plan or agreement.
(g) Accurate Copies. All copies of deeds, leases,
---------------
financial statements, schedules and any other document or
instrument required to be delivered to Purchaser by Seller pursuant
to the terms of this Agreement are and will be true, correct and
complete copies of the document or instrument represented thereby.
(h) Brokers. With the exception of its agreement with
-------
McKenna & Company, Seller has not agreed to pay any party a
commission, finder's fee or similar payment in regard to this
Agreement or any matter related hereto and has not taken any action
on which a claim for any such payment could be based. Seller shall
pay and discharge its obligations to McKenna & Company and
indemnify and hold Purchaser harmless from any claim by McKenna &
Company arising from or related to the Agreement and the sale and
purchase of the Business.
(i) Condition of IFE. The Improvements, Fixtures and
----------------
Equipment are being transferred to Purchaser hereunder AS IS -
WHERE IS - and Seller makes no representation or warranty with
respect to such Improvements, Fixtures and Equipment, including any
representation of fitness for a particular purpose. Purchaser
shall have the right to inspect during normal operation by Seller
all the assets listed on Schedule A within five (5) days of the
Closing Date.
(j) Scope of Representations and Warranties of Seller.
-------------------------------------------------
Except as and to the extent set forth in this Agreement, Seller
makes no representations or warranties whatsoever, and disclaims
all liability and responsibility for any other representation,
warranty, statement or information made or communicated (orally or
in writing) to Purchaser (including any opinion, information or
advice that may have been provided to Purchaser by any officer,
director, stockholder, employee agent, consultant or representative
of Seller). Purchaser acknowledges and affirms that it has made
its own independent investigation, analysis and evaluation of the
Assets.
(k) Knowledge of Seller. Whenever the term "to the
-------------------
knowledge of Seller", "to Seller's best knowledge" or the like is
used herein such term means the actual knowledge of any officer of
Seller or John Everett.
(l) Prior Use of Property. To the knowledge of Seller,
---------------------
the only use made of the Property prior to Seller's purchase of the
Property on or about the 15th day of March, 1972 was agricultural
and since Seller has owned the Property the only uses have been
agricultural and for the operation of a facility for metals
recycling, detinning and surface activation of precipitation iron.
(m) Environmental Matters. To the knowledge of Seller,
---------------------
Seller has made all reports to any agency or department of the
federal government of the State of Texas responsible for enforcing
laws or regulations pertaining to the environment required to be
made by Seller arising from any event or condition that occurred or
existed with regard to the Property during the period of use of
ownership of the Property by Seller. To the knowledge of the
Seller, Seller is in compliance with all laws relating to the
handling of hazardous materials or hazardous wastes located on the
Property. For purposes of this Agreement, "hazardous materials"
and "hazardous wastes" include, without limitation, any flammable
materials, explosives, radioactive materials, hazardous waste or
hazardous or toxic materials defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sec. 9601 et seq.), the Hazardous Material
Transportation Act, as amended (49 U.S.C. 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. 1609
et seq.) and in the regulations adopted and publications
promulgated pursuant thereto or any other federal, state or local
environmental law, ordinance, rule or regulation.
(n) Patents and Licenses. Seller owns no patents or
--------------------
licenses applicable to any equipment being sold to Purchaser and,
to the knowledge of Seller, Purchaser shall be free to use the
equipment without violation of any patent rights or legally
required consent of any person or entity.
(o) Permits. To the knowledge of Seller, Seller has
-------
obtained and currently holds all permits, licenses, approvals,
consents, authorizations, rights and privileges of any nature by or
from any governmental administrative or regulatory authority
(hereinafter called "Permits") that are required and material for
conducting the Business as currently conducted on the Property.
Schedule F attached hereto is an accurate, current and complete
list and description of all such Permits held by Seller. Except as
disclosed on Schedule F, all such Permits are currently in full
force and effect, no violations are or have been recorded with
respect thereto, and, to the knowledge of Seller, no proceeding,
claim, action or investigation of any nature is pending or
threatened to revoke, terminate or limit any Permit, nor has Seller
received any notice of any claim or default or any other notice
with respect to any such Permit.
(p) Absence of Labor Difficulties. Seller represents
-----------------------------
and warrants that (i) to its knowledge, it is in compliance in all
material respects with all federal, state and local statutes, laws,
ordinances, rules, regulations, orders and directives with respect
to employment and employment practices, terms and conditions of
employment and wages and hours (including, without limitation,
ERISA) and is not engaged in any unfair labor practice; (ii) there
is no unfair labor practice complaint against Seller pending before
the National Labor Relations Board; (iii) there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the knowledge
of Seller, threatened against Seller; (iv) no representation
question exists respecting the employees of Seller; (v) no
collective bargaining or other similar employee agreement exists or
is pending; and (vi) Seller has not experienced any work stoppage
or other labor difficulty which has had an adverse effect on its
operations.
15. Representations and Warranties of Purchaser. Purchaser
-------------------------------------------
represents and warrants as follows:
(a) Corporate. Purchaser is a corporation duly
---------
organized, validly existing and in good standing under the laws of
Delaware, with the corporate power to carry on its business as now
conducted. Purchaser has the corporate power to enter into and
perform its obligations under this Agreement. All necessary
corporate action required to be taken to authorize the execution,
delivery and performance of this Agreement by Purchaser has been
duly and validly taken. The execution, delivery and performance by
Purchaser of this Agreement will not violate the certificate of
incorporation or by-laws of Purchaser or the terms of any material
agreement to which Purchaser is a party or by which it or its
properties are bound or any statute, regulation, judgment, order,
writ, decree or injunction applicable to Purchaser. No consent of
third parties which has not or will not be received by the Closing
is required to permit Purchaser to validly consummate the
transactions contemplated hereunder. Purchaser is duly qualified
to do business in the State of Texas.
(b) Litigation. To the knowledge of Purchaser, there is
----------
no action, suit, proceeding or investigation pending or threatened
against or affecting Purchaser that would question the validity of
any action to be taken pursuant to or in connection with this
Agreement.
(c) Brokers. Neither Purchaser nor any party acting on
-------
its behalf has agreed to pay any party a commission, finder's fee
or other similar payment in regard to this Agreement or any matter
related hereto or taken any action on which a claim for any such
payment could be based.
16. Indemnification. The liability of either party in
---------------
respect of a breach of a representation, warranty, covenant,
indemnity or agreement contained in or arising in connection with
this Agreement shall be governed by the terms of this Section.
(a) Indemnification by Seller. Seller agrees to
-------------------------
indemnify and hold Purchaser harmless against and from any all
taxes, claims, liabilities, damages, losses, costs and expenses,
including, without limitation, reasonable attorneys' fees and other
expenses of defending any actions or claims, amounts of judgments
and amounts paid in settlement (collectively, all of the foregoing
being called "Costs"), incurred by Purchaser and arising out of or
attributable to (i) any breach of any representation, warranty or
covenant made by Seller herein or in any certificate or writing
furnished by Seller pursuant hereto, (ii) any nonfulfillment of any
agreement hereunder or entered into in connection herewith by
Seller, (iii) Seller's performance or non-performance prior to the
Closing of or under any contract or lease assigned to Purchaser
hereunder, or (iv) any claim, known or unknown, arising out of, or
by virtue of, or based upon Seller's business and operations prior
to the Closing, in each case other than to the extent expressly
assumed by Purchaser or released pursuant to Sections 5 and 7
hereof. Purchaser shall, within ten (10) days after the service of
process in a lawsuit, or promptly after it receives notice from any
third party that such party intends to assert a claim which could
result in indemnification hereunder, give Seller written notice of
such claim and provide Seller with a copy of such process or claim.
"Promptly" for purposes of this Section 16(a) shall mean giving
notice within thirty (30) days. Seller shall have the right to
assume the defense of any such claim or lawsuit asserted against
Purchaser by a third party, with counsel reasonably satisfactory to
Purchaser, and in such event, Seller will not be liable to
Purchaser for any further legal or other expenses incurred by
Purchaser in connection with the defense thereof, other than the
reasonable cost of investigation or assistance required by
Purchaser. Purchaser may, however, participate actively, at its
sole expense, in any such lawsuit. If Seller so assumes the
defense of any such claim or lawsuit all costs of the defense
thereof shall thereafter be borne by Seller and it shall have the
authority to compromise and settle such claim or lawsuit or to
appeal (or cause Purchaser to appeal) any adverse judgment or
ruling with the cost of such appeal to be paid by Seller; provided,
however, that if any such compromise or settlement would divest
Purchaser of any Asset transferred pursuant to this Agreement or if
Purchaser may have any unindemnified liability arising out of such
claim or lawsuit, Seller shall have the authority to compromise or
settle such claim or lawsuit only with the written consent of
Purchaser, which consent shall not be unreasonably withheld.
Seller shall have the right to approve any out of court settlement
(which approval shall not be unreasonably withheld) of any claim or
lawsuit for which it does not assume the defense, if Seller is to
be liable to Purchaser hereunder for indemnification with respect
thereto. Purchaser and Seller will cooperate fully with each other
with respect to discovery, inquiries or investigations in
connection with any claim or lawsuit for which indemnity is sought
hereunder. Purchaser shall not have the right to offset any sums
due Purchaser under this provision against any payments of whatever
kind due to Seller from Purchaser.
(b) Indemnification by Purchaser. Purchaser agrees to
----------------------------
indemnify and hold Seller harmless against any and all Costs, as
defined in Section 16(a), incurred by Seller and arising out of or
attributable to (i) any breach of any representation, warranty or
covenant made by Purchaser herein or in any certificate or writing
furnished by Purchaser pursuant hereto, (ii) any nonfulfillment of
any agreement hereunder or entered into in connection herewith by
Purchaser; (iii) the failure of Purchaser to fulfill the
obligations specifically assumed by it pursuant to this Agreement
or (iv) any claim arising out of or by virtue of or based upon any
act of Purchaser in connection with Purchaser's hiring of any of
Seller's current employees or Purchaser's operation of the Assets
or conduct of any of its businesses after the Closing Date. Seller
shall, within ten (10) days after the service of process in a
lawsuit, or promptly after it receives notice from any third party
that such party intends to assert a claim which could result in
indemnification hereunder, give Purchaser written notice of such
claim and provide Purchaser with a copy of such process or claim.
"Promptly" for purposes of this Section 16(b) shall mean giving
notice within thirty (30) days. Purchaser shall have the right to
assume the defense of any such claim or lawsuit asserted against
Seller by a third party, with counsel reasonably satisfactory to
Purchaser, and in such event, Purchaser will not be liable to
Seller for any further legal or other expenses incurred by
Purchaser in connection with the defense thereof, other than the
reasonable cost of investigation or assistance required by Seller.
Seller may, however, participate actively, at its sole expense, in
any such lawsuit. If Purchaser assumes the defense of any such
claim or lawsuit, all costs of the defense thereof shall thereafter
be borne by Purchaser and it shall have the authority to compromise
and settle such claim or lawsuit or to appeal (or cause Seller to
appeal) any adverse judgment or ruling with the cost of such appeal
to be paid by Purchaser; provided, however, that if Seller may have
any unindemnified liability arising out of such claim or lawsuit,
Purchaser shall have the authority to compromise or settle such
claim or lawsuit only with the written consent of Seller, which
consent shall not be unreasonably withheld. Purchaser shall have
the right to approve any out of court settlement (which approval
shall not be unreasonably withheld) of any claim or lawsuit for
which it does not assume the defense, if Purchaser is to be liable
to Seller for indemnification hereunder with respect thereto.
Seller and Purchaser will cooperate fully with each other with
respect to discovery, inquiries or investigations in connection
with any claim or lawsuit for which indemnity is sought hereunder.
Seller shall not have the right to offset any sums due Seller under
this provision against any payments of whatever kind due to
Purchaser from Seller.
(c) Limitation Periods. The rights of Purchaser and
------------------
Seller to make claims for indemnification under this Section shall
be limited as follows:
(i) With respect to any claims for breaches of the
representations and warranties of Seller and Purchaser set forth in
Sections 14 and 15, such claims shall be limited to those of which
Seller or Purchaser, as the case may be, is notified pursuant to
this Agreement within eighteen (18) months after the Closing Date;
provided, that there shall be no contractual limitation period with
respect to any breach of any such representation or warranty
arising out of an intentional misstatement or an intentional
failure to disclose a material fact and the only limitation on when
such claims may be asserted shall be that imposed by any applicable
statutes of limitation.
(ii) With respect to a breach of the non-competition
covenant set forth in Section 17(b) or claims relating to taxes
payable by either party, or leases, contracts or agreements which
either party is or will be obligated to perform or discharge
pursuant to this Agreement, there shall be no contractual
limitation period and the only limitation on when such claims may
be asserted shall be that imposed by any applicable statutes of
limitation; and
(iii)With respect to Costs incurred as a result of
claims by third parties, there shall be no contractual limitation
period and the only limitation on when such claims may be asserted
shall be that imposed by any applicable statutes of limitation.
(d) Limitation of Liability. Except with respect to
-----------------------
Costs incurred as a result of claims by third parties (as to which
there shall be no limit on liability) the aggregate amount of the
liability of Seller hereunder shall not exceed an amount equal to
one-half the Purchase Price. Notwithstanding anything to the
contrary contained herein, no party shall be entitled to make
claims for indemnification under this Section until the aggregate
amount of such claims made shall exceed $30,000.
17. Further Covenants of Seller. Seller hereby covenants and
---------------------------
agrees as follows:
(a) Best Efforts. Seller will use its best efforts, as
------------
applicable, to cause to be fulfilled the conditions to Closing set
out in Sections 19 and 20.
(b) Non-Competition Agreement. As a material inducement
-------------------------
to Purchaser to purchase the Assets, Seller agrees that for a
period of five (5) years from and after the Closing Date, neither
Seller nor any affiliate of Seller (which term for purposes of this
clause (b) shall mean any corporation, partnership or other entity
controlled directly or indirectly by Seller) will directly or
indirectly:
(i) own, manage, operate, control or participate in
the ownership, management, operation or control of, or otherwise
engage in the business of processing, recycling or salvaging
automobiles or household appliances (each a "Restricted Metal") at
a yard, plant, or office located within a distance of 250 miles of
El Paso County, Texas; or
(ii) engage in the business of processing, recycling
or salvaging a Restricted Metal at Seller's facility located near
Randolph, Arizona;
(iii)buy, either as a principal or as a broker, any
Restricted Metal located at a yard, plant or office located within
250 miles of El Paso County, Texas; or
(iv) sell, either as a principal or as a broker, any
ferrous scrap processed from a Restricted Metal for delivery to a
yard, plant or office located within 250 miles of El Paso County,
Texas;
provided, however, that clauses (ii) and (iii) of this
Section 17(b) shall not, and shall not be interpreted to, apply to
any of the joint ventures or partnerships in which Seller or an
affiliate of Seller is a joint venturer or partner as of the date
hereof, but Seller will not recommend to, or encourage, any such
joint venture, partnership or any party engaged therein to effect
the types of transactions restricted by said clauses (i) and (ii)
within the area there specified; and provided further that this
Section 17(b) shall not, and shall not be interpreted to, prevent
Seller or any affiliate of Seller from (i) purchasing, shredding
or otherwise processing tin cans, tin-coated steel, tin-free
thin-gauge steel, light-gauge iron or other materials not expressly
restricted by the foregoing provisions or (ii) purchasing or
processing automobile shredder residue or other materials in
connection with Proler's thermal conversion technology and (iii)
selling any scrap so purchased or any products produced from any
such process. The parties agree that in the case of a breach by
Seller of any of the foregoing covenants, damages would be
difficult, if not impossible, to prove, and Purchaser shall be
entitled to injunctive relief as its primary but not exclusive
remedy against Seller. If Seller is found to have violated any of
the foregoing covenants, the parties agree that the duration of the
non-competition period set forth above shall be automatically
extended by the same period of time that Seller is determined to be
in violation of the foregoing covenants. The parties hereby
further agree that the restrictions and obligations herein set
forth are reasonably necessary for the protection of the value of
the substantial assets Purchaser is acquiring from Seller pursuant
to this Agreement. If any of the foregoing restrictions should be
finally determined by any court to be unenforceable in any
particular area or jurisdiction or enforceable in such area or
jurisdiction only if modified in duration or scope, then the
parties agree that this Agreement shall be amended and modified so
as to eliminate therefrom the particular area or jurisdiction as to
which such restriction is so held to be unenforceable or deemed
amended or modified in duration or scope to comply with such court
order; and as to all other areas and jurisdictions, the terms and
provisions hereof shall remain in full force and effect as
originally written. The provisions of this Section and the rights
and remedies to enforce such provisions shall be assignable in
favor of any successor of Purchaser.
(c) Conduct of Business Pending Closing. Seller agrees
-----------------------------------
that pending the Closing and except as otherwise consented to or
approved by Purchaser in writing: Seller (i) shall carry on the
Business in the normal course and substantially in the same manner
as heretofore, (ii) will continue all normal repairs, servicing,
replacement, maintenance and upkeep of the IFE and the Inventory in
substantially the same manner as heretofore, (iii) will not make
any sale or gift of any IFE without the prior written consent of
Purchaser; (iv) will not make any capital addition to the IFE
without the prior written consent of Purchaser and (v) will
maintain all insurance now in force covering the Assets.
(d) Access to Information, Premises. Pending the
-------------------------------
Closing, Seller shall give to Purchaser, its counsel, accountants,
employees, and other representatives, reasonable access, after
reasonable notice, during normal business hours, to all of Seller's
properties, contracts, and commitments which relate to the Assets.
Pending the Closing, Seller shall cause its employees and counsel,
after reasonable notice, to be reasonably available to assist
Purchaser with respect to the transactions contemplated by this
Agreement.
(e) Title Commitment. Seller has delivered to Purchaser
----------------
a title commitment ("Title Commitment") issued by Partners Title
Company (the "Title Company"), along with copies of the title
exceptions affecting the Property and which are referred to in the
Title Commitment. Seller, at its cost, has delivered to Purchaser
a current, on-the-ground survey of the Property (the "Survey")
prepared by a licensed professional surveyor which includes field
notes with metes and bounds description showing (i) the actual
dimension of the area within the Property, (ii) the outside
boundary lines of all improvements, (iii) the location of any
easements, set back lines, encroachments, overlaps, roadways or
waterways, and (iv) all easements or other matters referred to in
the Title Commitment. If the Survey or the Title Commitment makes
reference to any title exceptions or encumbrances other than those
listed on Schedule E, then Purchaser may give notice to Seller and
the Title Company which describes in detail its objection to any of
such exceptions or encumbrances (the "objectionable exceptions" )
not later than three (3) business days prior to the Closing Date.
If notice of objection is not given to Seller and the Title Company
within such period, then any objection to the exceptions or
encumbrances shall be deemed to have been waived by Purchaser, and
all such exceptions or encumbrances shall be permitted exceptions.
Seller shall have the right (including without limitation the right
to use all or any part of the Purchase Price for this purpose), but
not the obligation, up to the Closing to cure or remove any
objectionable exceptions, so that the owner policy of title
insurance can be issued to Purchaser at the Closing, without making
exception to the objectionable exceptions; provided, further, that
Purchaser shall be deemed to have waived any such objectionable
exceptions and Seller will be deemed to have satisfied the
requirements of this Section 17(e), if despite the failure by
Seller to cure or remove those objectionable exceptions, the Title
Company is willing to issue an owner policy of title insurance
without making exception to the objectionable exceptions. If at or
prior to the Closing Seller notifies Purchaser that Seller is
unable or unwilling to cure or remove any such objectionable
exceptions, then Purchaser shall have the option of giving notice
to Seller within ten (10) days after receipt of Seller's notice or
on the date of the Closing, whichever date first occurs, either to
terminate this Agreement or to waive any such objections, in which
case the objectionable exceptions shall be permitted exceptions;
and if no such notice is given by Purchaser, then Purchaser will be
deemed to have elected to waive any such objections.
18. Further Covenants of Purchaser. Purchaser hereby
------------------------------
covenants and agrees as follows:
(a) Best Efforts. Purchaser will use its best efforts,
------------
as applicable, to cause to be fulfilled the conditions to the
Closing set out in Sections 19 and 20.
(b) Resale Certificates. Purchaser shall promptly
-------------------
furnish to Seller a resale certificate(s) with respect to
Purchaser's exemption from sales tax in connection with the sale of
the Inventory.
19. Conditions Precedent to Purchaser's Obligations. All
-----------------------------------------------
obligations of Purchaser under this Agreement are subject to the
fulfillment of each of the following conditions unless waived in
writing by Purchaser:
(a) Seller's representations and warranties contained in
this Agreement shall be true and correct in all material respects
at the time of Closing; all obligations and agreements required by
this Agreement to be performed by Seller and all Remediation
Requests which Seller shall have agreed or is required to perform
pursuant to Section 7(a)(vi) shall have been performed, and Seller
shall have delivered to Purchaser an appropriate certificate to
such effect.
(b) No amendment or modification shall have been made to
Schedules A, B, C, D, E or F except with the express written
consent of Purchaser, which consent shall not be unreasonably
withheld.
(c) None of the parties hereto shall be a party to or
shall have received notice of any suit or threatened suit to enjoin
or restrain any or all of the transactions contemplated herein or
to nullify or render ineffective all or any part of such
transactions if accomplished or alleging damages in connection
therewith.
(d) All authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities
required to be obtained in order to permit consummation of the
transactions contemplated by this Agreement shall have been
obtained and shall continue in effect on the Closing Date.
(e) Purchaser shall have reached an understanding with
El Paso Electric Company that is reasonably acceptable to Purchaser
relating to the future purchase of electricity for use on the
Property; provided, however, that in the event Purchaser fails to
consummate its obligations under this Agreement due to the failure
of the condition set forth in this Section 19(e), Purchaser agrees
promptly to pay all Seller's documented legal, consulting and other
fees and expenses relating to this Agreement and the transactions
contemplated hereby and incurred after February 15, 1994.
20. Conditions Precedent to the Seller's Obligations. All
------------------------------------------------
obligations of Seller under this Agreement are subject to the
fulfillment prior to Closing of each of the following conditions
unless waived in writing by Seller:
(a) All representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all
material respects as of the Closing; all obligations and agreements
required by this Agreement to be performed by Purchaser shall have
been performed, and Purchaser shall have delivered to Seller an
appropriate certificate to such effect.
(b) None of the parties hereto shall be a party to or
shall have received notice of any suit or threatened suit to enjoin
or restrain any or all of the transactions contemplated herein or
to nullify or render ineffective such transactions if accomplished
or alleging any damages in connection therewith.
(c) All authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities
required to be obtained in order to permit consummation of the
transactions contemplated by this Agreement shall have been
obtained and shall continue in effect on the Closing Date.
21. Closing Documents.
-----------------
(a) Seller. At the Closing, Seller shall deliver to
------
Purchaser:
(i) The Deed and other instruments of sale,
transfer, assignment and conveyance covering the other Assets as
shall, in the reasonable opinion of Purchaser's counsel, be
necessary to vest in Purchaser good and marketable title to such
Assets as provided in this Agreement. Such instruments shall be in
form and substance reasonably satisfactory to Purchaser and its
counsel;
(ii) The certificate required by Section 19(a);
(iii)An opinion of counsel to Seller in form and
substance satisfactory to Purchaser as to Seller's corporate
existence and its authority to enter into this Agreement and
consummate the transactions contemplated hereby; and
(iv) Such certificates and other instruments as may
be necessary to consummate the transactions herein contemplated or
fulfill the conditions to Closing as herein described.
(b) Purchaser: At the Closing, Purchaser shall deliver
---------
to Seller:
(i) The Purchase Price as provided in Section 4;
(ii) Instruments of assumption of each of the
contracts, leases and obligations to be assumed by Purchaser. Such
instruments shall be in form and substance reasonably satisfactory
to Seller and its counsel;
(iii)The certificate required by Section 20(a);
(iv) An opinion of counsel to Purchaser in form and
substance satisfactory to Seller as to Purchaser's corporate
existence and its authority to enter into this Agreement and
consummate the transactions contemplated hereby; and
(v) Such certificates and other instruments as may
be necessary to consummate the transactions contemplated herein or
to fulfill the conditions to Closing as herein described.
22. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties contained herein shall survive the
Closing only as provided for in Section 16(c) hereof and any
liability in respect of a breach thereof by either party shall be
governed by Section 16 hereof.
23. Termination of Agreement.
------------------------
(a) Termination. This Agreement may be terminated, by
-----------
written notice from the terminating party to the other, as follows:
(i) by either party, if the conditions precedent to
such party's obligations to close as set forth in Sections 19 or
20, as the case may be, shall not have been satisfied or waived by
the Closing Date; or
(ii) by Purchaser, as provided in Section 7(a)(vi),
Section 7(a)(vii) or Section 17(e); or
(iii)by Seller, as provided in Section 7(a)(vi).
In the event of the termination of this Agreement pursuant to
this Section 23(a), Section 7(a)(vi), Section 7(a)(vii) or Section
17(e), the Confidentiality Agreement and the Site Access Agreement
shall continue in full force and effect, and this Agreement with
the exception of any provision which by its terms shall survive the
termination of this Agreement, shall become void and be of no
further force and effect, without any liability on the part of any
party.
24. Assignment. This Agreement shall not be assigned by
----------
Seller or Purchaser directly or indirectly without the written
consent of the other; provided, that this Agreement may be assigned
in writing by Purchaser without such consent to one or more
wholly-owned subsidiaries of Purchaser, and provided further that
upon making such assignment, any such assignee-subsidiary shall
assume and become bound by all of Purchaser's agreements and
covenants contained herein or in the Confidentiality Agreement,
that such assignee-subsidiary shall be deemed to have made for
itself all of the representations and warranties of Purchaser in
this Agreement, and that such assignment shall not relieve
Purchaser of any of its agreements, obligations, covenants,
representations and warranties to Seller under this Agreement or
the Confidentiality Agreement or in connection with any transaction
entered into by Purchaser or such assignee-subsidiary pursuant to
the terms of this Agreement. Purchaser shall give written notice
of any such assignment to Seller not less than ten (10) days prior
to the Closing Date, together with an executed copy of such
Assignment.
25. Further Assurances. From time to time hereafter and
------------------
without further consideration, Seller shall execute and deliver
such additional or further instruments of conveyance, assignment
and transfer and take such actions as Purchaser may reasonably
request in order to more effectively convey and transfer to
Purchaser the Assets sold to Purchaser hereunder or as shall be
reasonably necessary or appropriate in connection with the carrying
out of Seller's obligations hereunder or the purposes of this
Agreement. From time to time hereafter and without further
consideration, Purchaser shall execute and deliver such additional
or further instruments of assumption and take such actions as
Seller may reasonably request in order to more effectively
consummate the assumption of the obligations of Purchaser specified
herein or as shall be reasonably necessary or appropriate in
connection with the carrying out of Purchaser's obligations
hereunder or the purposes of this Agreement.
26. Announcements and Press Releases. Any press releases or
--------------------------------
any other public announcements concerning this Agreement or the
transactions contemplated hereby shall be approved by both Seller
and Purchaser; provided, that if either party reasonably believes,
after consultation with its outside legal counsel, that it has a
legal obligation to make a press release or any other announcement
or communication concerning this Agreement or the transactions
contemplated hereby and the consent of the other party cannot be
obtained, than the release may be made without such approval.
27. Amendments. This Agreement may be amended or modified,
----------
only by a written instrument executed by Purchaser and Seller
acting through their respective duly authorized officers.
28. Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which when taken together shall
constitute one and the same instrument.
29. Parties Bound. This Agreement shall inure to the benefit
-------------
of and be binding upon Seller and Purchaser and their respective
successors and permitted assigns.
30. Notices. All notices, requests and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand or mailed, certified mail with postage
prepaid:
(a) If to Seller:
Proler International Corp.
4265 San Felipe, Suite 900
Houston, Texas 77027
Attention: Herman Proler
with a copy to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attention: Richard B. Mayor
(b) If to Purchaser:
Commercial Metals Company
7800 Stemmons Freeway
Dallas, Texas 75247
Attention: Harry J. Heinkele
with a copy to:
Commercial Metals Company
7800 Stemmons Freeway
Dallas, Texas 75247
Attention: David M. Sudbury
31. No Waivers. Investigations or examinations made by
----------
either party, its counsel, accountants, employees or
representatives and information obtained as a result thereof shall
not constitute a waiver of any representation, warranty,
obligations, covenant or agreement of the other party.
32. Entire Agreement. This Agreement, including the
----------------
Schedules and Exhibits attached hereto, the Confidentiality
Agreement and the Site Access Agreement, sets forth the entire
understanding of the parties with respect to the subject matter
hereof. Any previous agreements or understandings between the
parties regarding the subject matter hereof are merged into and
superseded by this Agreement.
33. Severability. In the event that any of the terms or
------------
provisions of this Agreement are determined to be unenforceable by
any court of competent jurisdiction, such terms or provisions shall
be deemed amended or modified so as to eliminate such invalidity
orunenforceability, and all other terms and provisions shall remain
in full force and effect.
34. Applicable Law. This Agreement and the rights and
--------------
obligations of the parties hereunder shall be governed by, and
construed and interpreted in accordance with, the laws of the State
of Texas, without regard to its choice of laws provisions.
35. Headings. The headings to the sections of this Agreement
--------
are inserted for convenience only and shall not affect the meaning
or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
PROLER INTERNATIONAL CORP.
By
Herman Proler
Chairman and Chief Executive
Officer
COMMERCIAL METALS COMPANY
By
Harry J. Heinkele
President, Secondary Metals
Processing Division
