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)
February 28, 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 3
EXHIBIT 2(a)
ASSET SALE AND PURCHASE AGREEMENT
Dated as of January 14, 1994
Between
PROLERIZED STEEL CORPORATION
and
KAW RIVER SHREDDING, INC.
<PAGE>
ASSET SALE AND PURCHASE AGREEMENT
DATED AS OF JANUARY 14, 1994
between
PROLERIZED STEEL CORPORATION
and
KAW RIVER SHREDDING, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ASSET SALE AND PURCHASE AGREEMENT. . . . . . . . . . . . . . . 1
1. Certain Definitions . . . . . . . . . . . . . . . . . . . 1
2. Sale and Transfer of Certain Assets . . . . . . . . . . . 2
3. Consideration . . . . . . . . . . . . . . . . . . . . . . 3
4. Deposit; Payment of Purchase Price; Allocation
Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Assumption of Liabilities and Certain Obligations . . . . 4
6. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Property and Environmental Inspection . . . . . . . . . . 6
8. Valuation of Inventory; Inventory Purchase Price. . . . . 8
9. Accounts Receivable . . . . . . . . . . . . . . . . . . . 8
10. Employees . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Prorations; Taxes . . . . . . . . . . . . . . . . . . . . 9
12. Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . . 9
13. DTPA Waiver . . . . . . . . . . . . . . . . . . . . . . . 9
14. Representations and Warranties of Seller. . . . . . . . . 9
15. Representations and Warranties of Purchaser . . . . . . . 12
16. Indemnification . . . . . . . . . . . . . . . . . . . . . 13
17. Further Covenants of Seller . . . . . . . . . . . . . . . 16
18. Further Covenants of Purchaser. . . . . . . . . . . . . . 17
19. Conditions Precedent to Purchaser's Obligations . . . . . 17
20. Conditions Precedent to the Seller's Obligations. . . . . 18
21. Closing Documents . . . . . . . . . . . . . . . . . . . . 18
22. Survival of Representations and Warranties. . . . . . . . 19
23. Termination of Agreement; Remedies on Default . . . . . . 19
24. Assignment. . . . . . . . . . . . . . . . . . . . . . . . 21
25. Further Assurances. . . . . . . . . . . . . . . . . . . . 21
26. Announcements and Press Releases. . . . . . . . . . . . . 21
27. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 22
28. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 22
29. Parties Bound . . . . . . . . . . . . . . . . . . . . . . 22
30. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 22
31. No Waivers. . . . . . . . . . . . . . . . . . . . . . . . 23
32. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 23
33. Severability. . . . . . . . . . . . . . . . . . . . . . . 23
34. Applicable Law. . . . . . . . . . . . . . . . . . . . . . 23
35. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE>
SCHEDULES
A - Improvements, Fixtures and Equipment
B - Contracts and Leases
C - Exceptions to Representations and Warranties
D - Joint Operations of Proler
EXHIBITS
A - Allocation Agreement
B - Escrow Agreement
C - Promissory Note and Security Agreement
<PAGE>
ASSET SALE AND PURCHASE AGREEMENT
This Agreement made as of the 14th day of January 1994, by and
between Kaw River Shredding, Inc., a Kansas corporation
("Purchaser"), and Prolerized Steel Corporation, a Texas
corporation ("Seller"), wholly-owned by Proler International Corp.
("Proler"),
W I T N E S S E T H:
WHEREAS, Seller operates a ferrous scrap business at its
facility in Kansas City, Kansas; 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 (other
than the "Note" defined in Section 1(g), below) 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 at the Site (as defined below);
(c) "Confidentiality Agreement" shall mean that certain
Confidentiality Agreement, dated August 10, 1992, entered into
between Proler and Connell Limited Partnership, as agreed to
and joined in by Purchaser pursuant to that certain letter
agreement dated November 17, 1993;
(d) "Environmental Condition" shall mean any
environmental condition with respect to the Site (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 Site (as defined below) by any person (including,
without limitation, any governmental entity) including,
without limitation, any condition resulting from operations
conducted on the Site or on property adjacent thereto;
(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 at the Site
or used or held for use by Seller in connection with the
Business at the Site, as of the Closing Date, which assets
shall include, but not be limited to, all those listed on
Schedule A delivered pursuant hereto; excluding, however, any
IFE disposed of between the date hereof and the Closing Date
in the ordinary course of the Business and in compliance with
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 at the Site on the
Closing Date;
(g) "Note" shall mean that certain promissory note dated
July 2, 1993 made by Emory Ferguson in favor of Seller,
together with the related Security Agreement of even date
therewith, each of which is attached hereto as Exhibit C; and
(h) "Site" shall mean the Kansas City site (as defined
below).
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 Seller's rights and obligations under the
lease (the "Kansas City Lease") by and between Seller and
Kansas City Terminal Railway Company, dated December 31,
1979 and relating to certain real estate located at 1153
South 12th Street, Kansas City, Kansas (the "Kansas City
site"), and the Contract for Industry Track;
(ii) All of the Improvements, Fixtures and
Equipment, except as excluded in Section 2(b);
(iii) The Note;
(iv) The Inventory; and
(v) All of the Seller's right, title and interest
in and to those contracts and leases listed on Schedule
B (the "Contracts").
The sale, conveyance, assignment, transfer and delivery
of the Assets shall be effected by such 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 or
investments.
(ii) All personnel records or files relating to
employees and other records of the Business; provided,
however, that during the two (2) weeks following the
Closing, Purchaser may make such copies of such records
and files as it may reasonably deem necessary, and Seller
shall retain such records and files for a period of two
(2) years following the Closing Date and for such
additional period as Purchaser may reasonably request and
shall make them available to Purchaser as Purchaser may
reasonably request.
(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.
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 $5,000,000
(the "Fixed Purchase Price"); and
(b) pay to Seller a purchase price for the Note equal to
the principal amount outstanding thereon as of the Closing
Date plus any accrued but unpaid interest as of the Closing
Date (the "Note Purchase Price"); and
(c) pay to Seller a purchase price for the Inventory as
determined pursuant to Section 8 hereof (the "Inventory
Purchase Price") (the Fixed Purchase Price, the Note Purchase
Price and the Inventory Purchase Price being referred to
herein collectively as the "Purchase Price"); and
(d) assume the specific obligations as set out in
Section 5 hereof.
4. Deposit; Payment of Purchase Price; Allocation Agreement.
(a) Deposit. Simultaneously upon the execution and
delivery of this Agreement by Seller and Purchaser, Purchaser
shall deliver to Escrow Agent the amount of $500,000 (the
"Deposit") by wire transfer of immediately available funds to
an escrow account pursuant to the Escrow Agreement attached
hereto as Exhibit B, to serve as Purchaser's Deposit for
Purchaser's full and faithful performance of its obligations
under this Agreement. The Deposit shall be paid to Seller at
the Closing (as defined herein) as a part of the Purchase
Price, or if the Closing does not occur the Deposit shall be
otherwise disbursed in accordance with Section 23 of this
Agreement. The interest earned on the Deposit shall be
considered for all purposes as a part of the Deposit and shall
be disbursed to the party who is entitled to receive the
Deposit as provided in Section 23 of this Agreement.
(b) 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.
(c) Allocation Agreement. The Fixed Purchase Price (as
defined in Section 3 of this Agreement) will for all purposes
be allocated, based on fair market value, by Purchaser and
Seller among the various Assets and the other rights conferred
pursuant to this Agreement, including the Non-Competition
Agreement provided for in Section 17(b) of this Agreement, as
specified in Exhibit A to this Agreement. The Parties to this
Agreement will use the allocation set forth in Exhibit A in
all statements and returns filed with any taxing authority and
will promptly notify the other party if any challenge to the
allocation set forth in Exhibit A is made by any taxing
authority.
5. Assumption of Liabilities and Certain Obligations.
(a) Kansas City Lease and Contract for Industry Track.
Purchaser agrees that at the Closing, provided, that the
transactions contemplated by this Agreement are consummated,
it will accept, assume and fully perform the obligations of
Seller relating to the period after the Closing under the
Kansas City Lease and the Contract for Industry Track assigned
to Purchaser pursuant to Section 2(a)(i). 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 hereof.
(b) Contracts. Purchaser agrees to accept, assume and
fully perform Seller's obligations relating to the period
after the Closing under the Contracts assigned pursuant to
Section 2(a)(iv) and any amendments thereto made in compliance
with Section 19(b) hereof. 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(b), all in
accordance with Section 16.
(c) Non-Assumption. All indebtedness, obligations,
claims and other liabilities (absolute, contingent or
otherwise) of whatsoever nature of Seller not assumed by
Purchaser pursuant to this Agreement shall be and remain the
obligation of Seller. Seller shall indemnify and hold
Purchaser harmless against and from any and all such
obligations and all Costs (as defined below) incurred by
Purchaser and arising out of or attributable to any failure of
Seller to fulfill its obligations retained pursuant to this
Section 5(c), all in accordance with 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
or before January 31, 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. 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. Anything herein contained notwithstanding,
if the Closing has not occurred by January 31, 1994, Seller
may at its option extend the Closing Date to any date on or
prior to February 28, 1994 (i) pursuant to Section 6(b) or
(ii) to secure the approvals set forth in Section 20(c). At
the Closing, the parties hereto will deliver such instruments
as are described in Section 21 or elsewhere in this Agreement.
(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. Notwithstanding anything to the contrary in the
Uniform Vendor and Purchaser Risk Act or any other statute or
regulation, if any improvements on the Site are materially
damaged or destroyed prior to the Closing Date, this Agreement
shall not terminate or otherwise be affected; rather, the
Seller shall have the option to repair or replace such
improvements, and, if necessary, to extend the Closing Date as
provided in Section 6(a), in which case the Purchase Price
shall not be reduced, and Seller shall have no liability,
other than to replace or repair such improvement(s), to
Purchaser because of any such damage or destruction. If
Seller elects not to replace any destroyed improvements or
repair any material damage to the improvements, either Seller
or Purchaser may terminate this Agreement and Purchaser will
be entitled to the return of its Deposit as provided in
Section 23(b).
7. Property and Environmental Inspection.
(a) Right of Inspection. Prior to the date hereof,
Purchaser conducted a physical inspection of the Site to the
extent desired by Purchaser, which inspection was subject to
the following understanding: "Such inspection right shall
include the right during the Inspection Period to have a
nationally recognized independent environmental consultant
acceptable to Seller conduct an environmental inspection or
assessment of the Site. The scope of any environmental
inspection to be conducted by Purchaser's environmental
consultant shall be subject to the prior approval of Seller.
Nothing herein shall authorize any subsurface testing or
drilling on the Site by Purchaser or its environmental
consultant unless specifically provided for in a scope of work
which has been approved by Seller. Purchaser shall make all
inspections in good faith and with due diligence and will make
all reports, tests, splits of all samples taken for analysis
and other results of the inspections available to Seller
immediately upon Seller's request. Any reports issued shall
first be generated in draft form. No environmental report
will be made final until Seller shall have had reasonable
opportunity to review the draft and to correct factual
inaccuracies therein. All inspection fees, appraisal fees,
engineering fees and other expenses of any kind incurred by
Purchaser relating to the inspection of the Site 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 one
(1) business day in advance of making any such inspection and
shall inform Seller of the names of the company and persons
who will conduct such inspection. In making any inspection
hereunder, Purchaser will treat, and will cause any
representative of Purchaser to treat, all information obtained
by Purchaser pursuant to the inspection as strictly
confidential "Information" under the Confidentiality Agreement
and will not disclose the results of any environmental
inspection or audit without the prior written consent of
Seller. Purchaser agrees to indemnify and hold Seller, its
tenants, contractors and employees harmless from any and all
injuries, losses, liens, claims, judgments, liabilities,
costs, expenses or damages (including reasonable attorneys'
fees and court costs) sustained by or threatened against
Seller which result from or arise out of any inspections by
Purchaser or its representatives, contractors, or
subcontractors pursuant to this Section other than findings
made in the final report relating to any inspection, except to
the extent such findings result from the negligence of the
consultant performing the inspection. Such indemnification
shall survive any termination of this Agreement and is in
addition to and not in lieu of any other indemnification
provided for in this Agreement. Purchaser agrees to return
the Site to the same condition in which the Site was prior to
Purchaser's making any inspection and such obligation shall
survive any termination of this Agreement."
(b) Purchaser or its representatives has reviewed the
data from such inspection, but has not yet received the final
report thereon. The report is expected to be received by
Purchaser during the week commencing January 16, 1994 and, in
any event, will be received prior to the Closing. In the
event that prior to the Closing Date the final report
identifies conditions on the Site that are in violation of
federal or state environmental laws or regulations with
respect to which Seller is legally required to undertake
remedial action pursuant to such laws or regulations,
Purchaser may request Seller, by written notice to Seller
actually received by Seller at least two (2) days prior to the
Closing Date, to perform such remedial action (a "Remediation
Request"). If the required remediation can be completed prior
to the Closing Date, Seller agrees to perform or cause to be
performed the remedial actions necessary to cure the
identified violation(s), and Purchaser agrees to bear one-half
(1/2) of the cost of such remedial actions as such cost is
incurred. If Purchaser shall fail to pay to Seller
Purchaser's full portion of such cost prior to the Closing
Date, Seller may terminate this Agreement and Seller shall be
entitled to receive the Deposit. If Purchaser pays its full
portion of such cost, however, the Agreement shall continue in
effect. If the required remediation can not be completed
prior to the Closing Date, the Closing shall nevertheless be
effected and Purchaser agrees then to perform or cause to be
performed the remedial actions necessary to cure the
identified violation(s) and Seller agrees to bear one-half
(1/2) of the cost of such remedial actions as such cost is
incurred. Purchaser's failure to deliver written notice of a
Remediation Request to Seller as provided in this subsection
(b) shall constitute Purchaser's agreement that Purchaser
accepts the Property in accordance with subsection (c) below.
(c) Condition of the Property. Notwithstanding anything
to the contrary contained in this Agreement, it is understood
and agreed that with respect to the physical condition and
Environmental Condition of the Site, the Seller's rights and
obligations with respect to the Site under the Kansas City
Lease are being assigned hereunder and, unless purchaser
terminates this Agreement in accordance with the terms of this
Agreement, Purchaser agrees to accept the Site "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 (including without limitation
any representation or warranty as to the condition of the
Site, the availability of utilities or other services, the
suitability of the Site for purchaser's use, workmanship and
materials used in any improvements, or otherwise) except as
expressly set forth herein. Purchaser hereby expressly
acknowledges and agrees that (i) Purchaser has or will have,
prior to the end of the inspection period, thoroughly
inspected and examined the Site to the extent deemed necessary
by Purchaser in order to enable Purchaser to evaluate the
condition of the Site and (ii) Purchaser is relying solely
upon such inspections, examination, and evaluation of the Site
by Purchaser in accepting the Site 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, express or implied, of any kind of
nature. Purchaser hereby assumes the risk that Environmental
Conditions may exist on the Site and 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 Site.
8. Valuation of Inventory; Inventory Purchase Price.
(a) Prior to the Closing Date, a physical count of the
Inventory shall be made jointly by Seller and Purchaser. Each
party will bear its own expenses in connection with such
physical Inventory count. All aspects of the valuation of the
Inventory (the "Valuation") and its preparation shall, to the
extent they affect the setting of the Inventory Purchase Price
provided for herein, be reasonably satisfactory to both
Purchaser and Seller. For purposes of the Valuation, (i)
Inventory that is unprepared shall be valued at an amount
determined by using actual costs (by grade), including the
costs of purchase and transportation, over the thirty (30)
days prior to the Closing Date multiplied by the quantities of
such Inventory present on the Closing Date as determined by
the parties and (ii) any Inventory that is prepared for
delivery to customers shall be valued at an amount equal to
the Seller's average FOB selling price (by grade) for open
orders over the thirty (30) days prior to the Closing Date,
less an amount equal to Purchaser's estimated costs for
loading and shipping such Inventory after the Closing Date,
which estimated costs shall not exceed $5.00 per ton. In the
event the parties disagree as to the quantities of Inventory
present on the Closing Date, the parties shall select a
mutually agreeable third party to estimate the quantity of the
Inventory that is in dispute. The quantity (believed by
either Seller or Purchaser to be present) that is closest to
the quantity estimated by such third party shall be the
quantity used in making the determination under this Section
8(a) and shall be binding upon the parties.
(b) If Seller and Purchaser cannot reasonably agree on
the Valuation, Seller shall retain such Inventory and
Purchaser agrees to (i) process any remaining unprocessed
Inventory and (ii) load such Inventory, and other Inventory
which is already processed, for shipment at Seller's expense
by truck or by rail to such destinations as Seller may
indicate. Seller agrees to reimburse Purchaser for
Purchaser's direct costs incurred in processing such
unprocessed Inventory, including its out-of-pocket expenses
incurred in processing non-shreddable Inventory.
9. Accounts Receivable. Seller will deliver to Purchaser
within fifteen (15) days of the Closing Date a complete listing of
all of the Accounts Receivable and will notify 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 Purchaser receives any monies
from a customer that are payable to Seller or designated to be
applied to an Account Receivable, it will immediately forward to
Seller such monies in the form received properly endorsed, if
necessary, to Seller.
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. 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 Site premises 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
Asset provided for herein and shall furnish to Seller receipts,
certificates or other evidence of such payment satisfactory to
Seller.
12. Bulk Sales. The parties hereto agree to waive compliance
with the Bulk Sales Act(s) of Kansas in connection with this
transaction, and Seller covenants and agrees to pay and discharge
when due all claims of creditors that could be asserted against
Purchaser by reason of such non-compliance, unless such claims
result from any failure by Purchaser to satisfy its obligations
under any liabilities assumed under this Agreement.
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; and (c) 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. This waiver shall not in any manner whatsoever
constitute a waiver, relinquishment, modification or limitation of
any other right or remedy that Purchaser may have.
14. Representations and Warranties of Seller. Except as
disclosed on Schedule C 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 Texas, and is qualified to do business in the State
of Kansas. 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 articles of incorporation or by-laws or any
material provision 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 Site that the Site 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 or contemplated.
(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
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 for liens for current taxes not yet delinquent.
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 exception.
(d) Kansas City Lease. Seller has provided Purchaser
with a true and correct copy of the Kansas City Lease and all
amendments or modifications thereto as of the date hereof and
all agreements ("related agreements") to which Seller is a
party or by which it is bound and which define any rights or
obligations pertaining to or affecting the operation or use of
the property subject to such lease. The Kansas City Lease is
valid and enforceable (except as enforcement may be limited by
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights) and is in full force and effect, all rent
and other payments due thereunder prior to the Closing Date
shall have been paid prior to the Closing Date, and, to
Seller's knowledge, there are no outstanding claims of the
lessor relating thereto which affect the status of the Kansas
City Lease. There is no outstanding event of default under
the Kansas City Lease or any related agreement by Seller or to
Seller's knowledge, by any other party thereto, nor has Seller
taken any action or failed to take any action which, with the
passage of time, would constitute such an event of default,
nor does Seller have any knowledge of any event or condition
which, with the passage of time, would constitute such an
event of default. Subject to obtaining the lessor's consent
where required there will be no default or basis for
acceleration under the Kansas City Lease as a result of the
transactions provided for in this Agreement. Seller is the
lessee under the Kansas City Lease, has not assigned,
surrendered or sublet (except pursuant to this Agreement) such
lease, and has full power to assign such lease to Purchaser,
free and clear of any liens, encumbrances or charges, subject
only to the terms and conditions of such lease and to
obtaining the lessor's consent where required.
(e) Contracts. All of the Contracts to be transferred
pursuant to Section 2(a)(v) 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. To Seller's knowledge, none of such
Contracts requires any consent to Seller's assignment thereof
to Purchaser.
(f) Litigation. To the knowledge of Seller, there is no
litigation, proceeding or investigation pending or threatened
against 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.
(g) 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.
(h) 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.
(i) 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 be solely responsible for paying any amounts owed
to McKenna & Company.
(j) 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.
(k) 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.
(l) 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.
(m) Note. To the knowledge of Seller, both the
promissory note and the Security Agreement which constitute
the Note to be transferred hereunder are valid and enforceable
and in full force and effect. Seller has not assigned or
otherwise transferred the promissory note or any interest
therein and is currently (and as of Closing will be) the sole
holder thereof and entitled to all of its rights and benefits
as set forth in the promissory note and the Security
Agreement. The amount to be paid to Seller pursuant to
Section 3(b) hereof will be no greater than the actual amount
owed on the Note at the time of the Closing. To the knowledge
of Seller, there has been no default by the party or parties
obligated under the Note and those parties have no setoffs or
other rights which would justify their failure to make all of
the payments and satisfy their other obligations thereunder,
and the lien on the collateral described in the Security
Agreement is a validly perfected and enforceable first lien
thereon.
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 the State of Kansas, 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 of this Agreement by
Purchaser will not violate the articles 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. All consents,
approvals, orders, authorizations or filings with any federal
or state governmental authority or filings with any federal or
state governmental authority on the part of Purchaser required
in connection with the consummation of the transactions
contemplated hereby shall have been obtained prior to and be
effective as of the Closing Date. 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, or will be
on the Closing Date, duly qualified to do business in the
State of Kansas, to the extent required to enable it to
lawfully perform the transactions contemplated hereby.
(b) Litigation. To the knowledge of Purchaser there is
no litigation, proceeding or investigation pending or
threatened against Purchaser which 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.
(d) Scope of Representations and Warranties of
Purchaser. Except as and to the extent set forth in this
Agreement, Purchaser 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 Seller
(including any opinion, information or advice that may have
been provided to Seller by any officer, director, stockholder,
employee agent, consultant or representative of Purchaser).
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 and 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
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
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 two (2) years 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) Notwithstanding any other provision of this
Section 16, 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 $50,000.
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, Proler and Seller agree
and warrant that for a period of five (5) years from and after
the Closing Date, neither Proler, Seller nor any wholly or
partially owned subsidiary corporation, or any other entity
(except as set forth below) of which either of them is a
partner, joint venturer, limited liability company member or
other affiliate shall conduct, directly or indirectly, a
ferrous scrap processing business similar to and which would
be competitive with the Business, as operated on the Closing
Date, anywhere within a two hundred fifty (250) mile radius of
the Site; provided, that this provision shall not be
interpreted to prevent Seller, Proler or any such affiliate
from processing automobile shredder residue or other materials
with Proler's thermal conversion technology and selling any
scrap produced from that process; and provided further that
this Section 17(b) shall not apply to any of Proler's joint
operations as set forth on Schedule D, except that neither
Seller nor Proler shall recommend to, or encourage, any of the
operations listed on said Schedule D to conduct such a ferrous
scrap processing business in said non-competition area or to
any person or entity engaged in such joint operations, other
than Proler. Should any court of competent jurisdiction
determine that, consistent with the established precedent of
the forum state, the public policy of such state requires a
more limited restriction in the territory, duration, nature of
restricted activity, or any combination thereof, it would be
in furtherance of the intentions of the parties hereto for the
court to so interpret and construe the terms to this Section
to apply to only such more limited restriction to an
appropriate degree.
(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 capital addition to the IFE
without the consent of Purchaser and (iv) 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 and to all of Seller's books, records and
files that relate to purchases, sales, tonnage, prices and
cost of operations, which books records and files shall not
include general corporate information. Pending the Closing,
(i) 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, and (ii) Purchaser may have a representative
at the Site during normal business hours to observe
operations.
(e) Seller shall in good faith cooperate with Purchaser
in seeking (i) to have the term of the Kansas City Lease
extended as of the Closing Date until 1999 on terms reasonably
acceptable to Purchaser and providing for the full release
thereunder of Seller, and on terms similar to those currently
in effect, and (ii) to have granted to Purchaser as of the
Closing Date the option to further extend such lease until
2025, in each case at Purchaser's sole expense.
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. As promptly as possible after
the execution of this Agreement, Purchaser shall 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 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 to perform pursuant to
Section 7(a) 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, or C 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) Purchaser shall have agreed to accept the Site as
provided in Section 7.
(e) 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.
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 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) Instruments of sale, transfer, assignment and
conveyance covering the 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 and
Proler's corporate existence, their respective authority
to enter into this Agreement and consummate the
transactions contemplated hereby, the enforceability
(subject to customary exceptions) of the Agreement
against Seller and Proler and such other matters as may
be reasonably requested by Purchaser; 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, its authority to enter into this
Agreement and consummate the transactions contemplated
hereby, the enforceability (subject to customary
exceptions) of the Agreement against Purchaser and such
other matters as may be reasonably requested by Seller;
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; Remedies on Default.
(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;
(ii) by Purchaser, as provided in Section 6; or
(iii) by Seller as provided in Section 7.
In the event of the termination of this Agreement pursuant to
this Section 23(a), Section 6 or Section 7, 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, except to the extent provided in
Section 23(b).
(b) Remedies on Default.
(i) In the event that Seller fails to complete this
sale in accordance with the terms and provisions of this
Agreement for any other reason except Purchaser's
default, and the Purchaser is not in default in any
material respect under this Agreement, Purchaser shall
have, as Purchaser's only remedy against Seller, the
option of (a) terminating this Agreement by giving
written notice to Seller at or prior to the Closing
whereupon the Deposit shall be returned to Purchaser by
the Escrow Agent and Purchaser and Seller shall have no
other or further liability or obligation to each other,
except with respect to those provisions which by their
express terms survive the termination of this Agreement,
or (b) enforcing this Agreement, after waiving any
defaults constituting Seller's breach of this Agreement
and taking such title to and possession of the Assets as
Seller is then able to transfer and convey against
receipt from Purchaser of the full Purchase Price
therefor, and Purchaser's performance of all of its other
obligations hereunder, with no diminution as a result of
any default of Seller hereunder.
(ii) In the event Purchaser fails to complete this
sale in accordance with the terms and provisions of this
Agreement for any reason except Seller's default and
Seller is not in default in any material respect under
this Agreement, Seller shall have, as Seller's only
remedy against Purchaser, the right to terminate this
Agreement by giving notice to Purchaser whereupon the
Escrow Agent shall deliver the Deposit to Seller as
consideration for the right given to Purchaser in this
Agreement to purchase the Assets and as liquidated
damages (it being agreed that it would be extremely
difficult, if not impossible, to calculate the actual
damages to Seller), and Purchaser and Seller shall have
no other or further liability or obligation to each other
hereunder except with respect to those provisions which
by their express terms survive the termination of this
Agreement, and this Agreement shall be deemed to have
been terminated on the date Seller notifies Purchaser of
Seller's election of this right to terminate this
Agreement.
(iii) In the event either party terminates this
Agreement pursuant to Section 23(a)(i) hereof, and both
parties are at the time of such termination in default
and neither such default has been waived by the other
party, this Agreement shall terminate, the Deposit shall
be returned to Purchaser by the Escrow Agent and
Purchaser and Seller shall have no other or further
liability or obligation to each other, except with
respect to those provisions which by their express terms
survive the termination of this Agreement.
(iv) The requirements imposed upon Seller in this
Agreement are for the Purchaser's benefit, and those
requirements or other provisions for the Purchaser's
benefit may be waived in writing by Purchaser. Likewise,
the requirements imposed on Purchaser in this Agreement
are for the Seller's benefit, and those requirements or
other provisions for the Seller's benefit may be waived
in writing by Seller.
(v) Notwithstanding anything to the contrary
contained in this Agreement, in the event this Agreement
is terminated and the Deposit is returned to Purchaser
pursuant to the terms of this Agreement, an amount equal
to $1,000 of such Deposit shall be retained by Seller in
further consideration for the agreements contained
herein.
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, provided that upon making such
assignment, any such assignee-subsidiary shall assume and become
bound by all of Purchaser's agreements and covenants contained
herein and 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
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 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 when delivered by hand or telecopy, or when received through
registered or certified mail with postage prepaid:
(a) If to Seller:
Prolerized Steel Corporation
4265 San Felipe, Suite 900
Houston, Texas 77027
Attention: Herman Proler, Chairman
Telecopy: (713) 627-2737
with a copy to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attention: Richard B. Mayor
Telecopy: (713) 225-7047
(b) If to Purchaser:
Kaw River Shredding, Inc.
3005 Manchester
Kansas City, Missouri 64129
Attention: President
Telecopy: (816) 861-7670
with a copy to:
Beckett, Lolli, Bartunek & Beckett
922 Walnut Street
1400 Commerce Trust Bldg.
Kansas City, Missouri 64106
Attention: Robert R. Bartunek
Telecopy: (816) 474-9899
Either party, by written notice to the other party, may change the
address or telecopy number to which notices are to be given.
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 and the Confidentiality
Agreement, which Purchaser hereby joins and by which Purchaser
agrees to be bound, 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 or
unenforceability, 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.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
PROLERIZED STEEL CORPORATION
By
Herman Proler, Chairman and
Chief Executive Officer
KAW RIVER SHREDDING, INC.
By
Richard I. Galamba, President
<PAGE>
The undersigned Proler International Corp., for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agrees to and accepts its obligations under
Section 17(b) of the foregoing Agreement and unconditionally
guarantees the full, prompt and faithful performance and discharge
by Seller of all the terms, warranties, conditions and provisions
of this Agreement applicable to Seller (including without
limitation any modifications, amendments or supplements thereto).
Without limiting the generality of the foregoing, Proler
International Corp. further specifically represents, warrants and
agrees that it is the sole shareholder of Seller, that, as a
result, significant and substantial benefits will accrue to it
because of this Agreement, and that Purchaser is substantially and
detrimentally relying on this guaranty when Purchaser enters this
Agreement and performs its obligations hereunder.
PROLER INTERNATIONAL CORP.
By
Herman Proler, Chairman and
Chief Executive Officer
The undersigned legal counsel for the Purchaser signs this
Agreement not as a party to it, but solely for the purpose of
complying with the provisions of Section 17.42 of the Texas
Deceptive Trade Practices-Consumer Protection Act described in
Section 13.
BECKETT, LOLLI, BARTUNEK & BECKETT
By
Robert R. Bartunek
EXHIBIT 2(b)
FIRST AMENDMENT
TO
ASSET SALE AND PURCHASE AGREEMENT
This First Amendment (this "Amendment") is made as of the 1st
day of February, 1994, by and between Kaw River Shredding, Inc., a
Kansas corporation ("Purchaser"), and Prolerized Steel Corporation,
a Texas corporation ("Seller"), wholly-owned by Proler
International Corp. ("Proler"). Capitalized terms not otherwise
defined herein shall have the meanings assigned
thereto in the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, Purchaser and Seller entered into that certain Asset
Sale and Purchase Agreement dated as of January 14, 1994 (the
"Agreement");
WHEREAS, the Closing Date under the Agreement was January 31,
1994, Seller was not in default under the Agreement and was
prepared to consummate the transactions under the Agreement no
later than January 31, 1994, and Purchaser has requested that
Seller agree to extend such Closing Date;
WHEREAS, Seller is entitled to receive the Deposit as
contemplated in Section 23(b) of the Agreement if it terminates the
Agreement, but is willing to extend the Closing Date at Purchaser's
request for the consideration and subject to the terms and
conditions hereof and the modifications to the Agreement set forth
herein;
NOW, THEREFORE, in consideration of the premises and covenants
set forth herein, and intending to be legally bound hereby, the
parties hereto hereby amend the Agreement and covenant and agree as
follows:
1. Disbursement of Deposit. Purchaser agrees to execute the
notice to the Escrow Agent attached hereto as Exhibit 1 at the time
it executes this Amendment, and immediately thereafter to deliver
or cause to be delivered to the Escrow Agent such executed notice,
together with Purchaser's check, dated the date hereof and made
payable to Escrow Agent, in the amount of $250.00 in payment of
Purchaser's portion of the fee called for by Section 5(c) of the
EscrowAgreement. Pursuant to the terms of the notice, the Deposit
will be paid to Seller and, subjectonly to Section 23(b)(i) of the
Agreement, thereafter Purchaser shall have no interest in the
Deposit. The interest earned on the Deposit shall be considered
for all purposes as a part of theDeposit and shall also be
disbursed to Seller.
2. Additions to Schedule B. Purchaser and Seller hereby
agree that Purchaser willassume any scrap sales contracts entered
into by Seller in the ordinary course of business andrelating to
the Site by adding such contracts to Schedule B prior to the
Closing. Withoutlimiting the foregoing, Purchaser and Seller
specifically agree to amend Schedule B to theAgreement by adding
thereto certain contracts and do hereby agree that the following
sectionis added to Schedule B:
<TABLE>
<CAPTION>
"FEBRUARY SCRAP SALES
Contracting Purchase
Item Party Order Price/G.T.
<S><C> <C> <C> <C>
1. 3125 Gross David J. Joseph Not $151.00
Tons Co. (for C.F.& I. Available Shipping
Steel Co.--Pueblo, Point
CO)
2. 425 Gross Tons Green Pipe 2-3191 $147.00--
Products Co. Shipping
(Council Bluffs, Point
IA)
3. 10,000 Gross GST Steel Co. K02-2236 $154.00
Tons (Kansas City, Delivered"
MO)
</TABLE>
In addition, Item 5 on Schedule B is hereby amended to read in its
entirety as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
"5. T4500 Check Standard 1/1/94 to Renewal Pending
Printer Register 12/31/94 (Approximately
$300)"
</TABLE>
3. Amendment of Section 4(a). Section 4(a) of the Agreement
is hereby amended to read in its entirety as follows:
"(a) Deposit. If the Closing is consummated, at the
Closing the sum of (i) the amount of the Deposit actually paid
by the Escrow Agent to Seller and (ii) $250.00 (representing
the Seller's portion of the Escrow Agent's fee) will be
credited against the Purchase Price. If the Closing is not
consummated, then Seller shall retain the Deposit and
Purchaser shall have no interest therein unless Purchaser is
specifically entitled to return of the Deposit pursuant to
Section 23(b)(i) of this Agreement."
4. Amendment of Section 6.
(a) Section 6(a) of the Agreement is hereby amended to
read in its entirety as follows:
"(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
the business day following forty-eight (48) hours' notice,
given on a business day, from Purchaser to Seller that
Purchaser is prepared to consummate the transactions under the
Agreement, but in no event later than February 28, 1994. 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. At the Closing, the
parties hereto will deliver such instruments as are described
in Section 21 or elsewhere in this Agreement."
(b) Section 6(b) of the Agreement is hereby amended to
read in its entirety as follows:
"(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.
Notwithstanding anything to the contrary in the Uniform
Vendor and Purchaser Risk Act or any other statute or
regulation, if any improvements on the Site are
materially damaged or destroyed prior to the Closing
Date, this Agreement shall not terminate or otherwise be
affected, the Purchase Price shall not be reduced, and
Seller shall have no obligation or liability to Purchaser
because of any such damage or destruction. However, in
the event the Closing is consummated, Purchaser shall be
entitled to receive, and Seller shall assign to
Purchaser, all insurance proceeds, if any, payable to
Seller as a result of any such damage or destruction."
(c) There is hereby added to Section 6 of the
Agreement the following sub-section:
"(c) Purchaser agrees to pay to Seller at the Closing,
by wire transfer of immediately available funds to an
account designated by Seller, as additional consideration
for Seller agreeing to execute this Amendment and extend
the Closing Date the amount of
(i) $1,000.00 per day for the period commencing on
February 1, 1994 and ending on February 15, 1994, or
such earlier date as the Closing actually occurs;
and
(ii) $2,500.00 per day for the period commencing on
February 16, 1994 and ending on February 28, 1994,
or such earlier date as the Closing actually
occurs."
5. Amendment of Section 7.
(a) Section 7(b) of the Agreement is hereby amended to
read in its entirety as follows:
"(b) Purchaser and its representatives have reviewed the
final report of such inspection and determined, and
Purchaser hereby agrees, that Seller is not obligated to
perform or pay for any remediation at the Site. If
Purchaser elects to conduct any remediation at the Site,
Purchaser shall conduct or cause to be conducted such
remediation only after the Closing and shall be solely
responsible for paying for such remediation."
(b) There is hereby added to Section 7 of the Agreement
the following sub-sections:
"(d) Upon receipt of a confidentiality agreement from
Purchaser's lender ("Lender") in form and substance
suitable to Seller, Seller shall cooperate with the
reasonable requests of an environmental consulting firm
("Consultant") retained by Lender to conduct a modified
Phase One environmental audit of Seller's operations at
the Site. Such cooperation may include interviews by
Consultant with key employees of Seller and Proler, as
necessary, and allowing Consultant to review Seller's
environmental compliance file, if necessary. Such
cooperation shall not include any other communications
between lender, its officers, directors, employees or
representatives with the officers, directors, employees
or other representatives of Seller or Proler.
(e) The modified Phase One environmental audit referred
to in Section 7(d) and to which Seller gives its consent
may consist of, and shall be limited to, the following
procedures:
(i) Review of federal, state and local
environmental agency files and interviews with
agency representatives for compliance history,
correspondence, permits or registrations and
inclusion under the following:
ERN
CERCLIS
NPL
RCRA generator
RCRA TSD facilities
State or local UST and LUST
State or local hazardous waste sites
State or local landfill or solid waste
disposal sites
and others as appropriate.
(ii) Site visit to
- determine the use of property
- determine the use of surrounding property
- review environmental permits,
registrations, etc.
- interview key employees
(iii) Review of aerial photographs or fire insurance
maps.
(f) Seller agrees promptly to discuss with its legal
counsel the possible need to give notice to any
governmental agency of any recent remediation conducted
by Seller at the Site. In the event such counsel advises
Seller that such notice is required to be given, or that
the law is unsettled and that such notice may be
required, Seller agrees promptly to provide such notice
to the appropriate agency or agencies."
6. Amendment of Section 17.
(a) Section 17(a) of the Agreement is hereby deleted in
its entirety.
(b) Section 17(d) of the Agreement is hereby amended to
read in its entirety as follows:
"(d) Access to Information, Premises. Prior to the
Closing and subject to notice from Purchaser that it is
prepared to consummate the transactions under the
Agreement, Seller shall give to Purchaser, and its
representatives, reasonable access, after reasonable
notice, during normal business hours, to the Site for the
sole purpose of inspecting the Inventory and the
Improvements, Fixtures and Equipment prior to the
Closing."
7. Amendment of Section 18. Section 18(a) of the Agreement
is hereby deleted in its entirety.
8. Deletion of Section 19. Section 19 of the Agreement is
hereby deleted in its entirety.
9. Amendment of Section 21. Section 21 of the Agreement is
hereby amended to read in its entirety as follows:
"(a) Seller. At the Closing, Seller shall deliver to
Purchaser:
(i) Instruments of sale, transfer, assignment and
conveyance covering the Assets and substantially in the
form attached hereto as Exhibits 2, 3, and 4;
(ii) An executed certificate in the form attached
hereto as Exhibit 5.
(iii) An opinion of counsel to Seller substantially
in the form attached hereto as Exhibit 6.
(b) Purchaser. At the Closing, Purchaser shall deliver
to Seller:
(i) The Purchase Price as provided in Section 4;
(ii) The amount owed to Seller as set forth in
Section 6(c);
(iii) Instruments of assumption of each of the
contracts, leases and obligations to be assumed by
Purchaser substantially in the form attached hereto as
Exhibits 2, 3, and 4;
(iv) An executed certificate in the form attached
hereto as Exhibit 7; and
(v) An opinion of counsel to Purchaser in form and
substance satisfactory to Seller as to Purchaser's
corporate existence, its authority to enter into this
Agreement and consummate the transactions contemplated
hereby, the enforceability (subject to customary
exceptions) of the Agreement against Purchaser and such
other matters as may be reasonably requested by Seller."
10. Amendment of Section 23.
(a) Section 23(a) of the Agreement is hereby amended to
read in its entirety as follows:
"(a) Termination. This Agreement may be terminated, by
written notice from the terminating party to the
other, as follows:
(i) by Seller, if the conditions precedent to
Seller's obligations to close as set forth in Section 20
shall not have been satisfied or waived by the Closing
Date; or
(ii) by Purchaser for any reason.
In the event of the termination of this Agreement
pursuant to this Section 23(a), neither party shall have
any obligation or liability to the other hereunder,
except that any provision which by its terms shall
survive the termination of this Agreement, and the
Confidentiality Agreement, shall continue in full force
and effect. Without limiting the foregoing, the Deposit
shall remain the property of Seller."
(b) Section 23(b)(i) of the Agreement is hereby amended
to read in its entirety as follows:
"(i) In the event that Purchaser has complied with
all of its obligations under this Agreement and is ready,
willing and able to consummate the transactions
hereunder, and Seller fails to complete this sale when
all of the conditions set forth in Section 20 have been
fulfilled and Purchaser is not in default under this
Agreement, Purchaser shall have, as Purchaser's only
remedy against Seller, the option of (a) terminating this
Agreement by giving written notice to Seller at or prior
to the Closing whereupon the Deposit shall be returned to
Purchaser by Seller and Seller shall have no other or
further liability or obligation to Purchaser, or (b)
enforcing this Agreement, after waiving any defaults
constituting Seller's breach of this Agreement and taking
such title to and possession of the Assets as Seller is
then able to transfer and convey against receipt from
Purchaser of the full Purchase Price and the amount
referred to in Section 6(c), and Purchaser's performance
of all of its other obligations hereunder, with no
diminution as a result of any default of Seller
hereunder. Purchaser shall not have any right to
terminate this Agreement under this Section 23(b)(i)
until it has notified Seller pursuant to Section 30 that
it deems Seller to be in default for failing to complete
the sale and has given Seller a reasonable opportunity to
cure such default and complete the sale."
(c) Sections 23(b) (ii) and (iii) are hereby deleted in
their entirety.
11. Effectiveness and Effect. This Amendment shall become
effective upon the actual receipt by Seller of the Deposit from the
Escrow Agent and, until such receipt, the terms and conditions of
the Agreement as executed on January 14, 1994 shall continue in
full force and effect. Except as amended hereby, the terms and
conditions of the Agreement shall remain in full force and effect;
provided, however, that to the extent any of such terms and
conditions are inconsistent with the provisions of this Amendment,
the provisions of this Amendment shall control and all such
inconsistent terms and conditions in the Agreement shall
automatically be amended to conform to the provisions of this
Amendment.
IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed as of the day and year first above written.
PROLERIZED STEEL CORPORATION
By HERMAN PROLER
Herman Proler, Chairman and
Chief Executive Officer
KAW RIVER SHREDDING, INC.
By RICHARD I. GALAMBA
Richard I. Galamba, President
The undersigned Proler International Corp. joins in the
signing of the foregoing Amendment, solely for the purpose of
acknowledging its assent thereto.
PROLER INTERNATIONAL CORP.
By HERMAN PROLER
Herman Proler, Chairman and
Chief Executive Officer
