EXHIBIT 99.1
JOINT VENTURE
INTEREST PURCHASE AGREEMENT
This AGREEMENT, dated September 30, 1995 by and among Xxxx Xxx
Corporation, a New York corporation formerly known as Xxxx Xxx & Sons, Inc.
("HNC"), and Proler International Corp., a Delaware corporation ("Proler");
W I T N E S S E T H:
WHEREAS, Proler and HNC are participants in HPI, a joint venture formed
and operated pursuant to that certain Joint Venture Agreement dated May 25, 1989
by and between HNC, Proler and Intercontinent Chartering Corporation ("ICC") and
in HPNJ, a joint venture formed and operated pursuant to that certain Joint
Venture Agreement dated as of May 25, 1989 between HNC and Proler, as amended,
(HPI and HPNJ are each referred to herein as a Joint Venture and collectively as
the "Joint Ventures" and reference hereinafter to the Joint Ventures shall be
deemed to refer to either or both of the Joint Ventures, as the context may
require), and Metro Metal Recycling Corp. ("Metro") is a New York corporation,
the shares of which are wholly-owned by HPI; and
WHEREAS, Proler wishes to transfer to HNC all of Proler's right, title
and interest in and to HPI and HPNJ (such right, title and interest hereafter
referred to as the "Proler Interests") and HNC wishes to acquire the Proler
Interests,
NOW THEREFORE, the parties, in consideration of the representations,
warranties, covenants and agreements made herein, hereby agree as follows:
1
1. TRANSFER OF INTERESTS. Proler hereby transfers the Proler Interests to
HNC, effective as of the date hereof. As soon as practicable following
the execution of this Agreement, HNC will purchase or cause the Joint
Ventures to purchase, ICC's interest in HPI. An amount equal to $47,500,
representing Proler's Percentage Share (as defined below) of the
consideration for such purchase shall be deducted from the purchase
price paid Proler as set forth in Section 2(a) below. For purposes of
this Agreement, Proler's Percentage Share and HNC's Percentage Share
shall each mean fifty percent (50%).
2. PAYMENTS.
a. PURCHASE PRICE. In full payment and consideration for the
transfer of the Proler Interests, HNC shall pay or cause to be
paid to Proler the amount of $3,272,927 (the "Purchase Price")
upon the execution and delivery of this Agreement, less the
amount of $47,500 described in Section 1 above.
b. ALLOCATION OF PURCHASE PRICE. Of the Purchase Price, $1,776,890
shall be allocable to the purchase of Proler's right, title and
interest in HPI and $1,496,037 shall be allocable to the
purchase of Proler's right, title and interest in HPNJ.
c. REIMBURSEMENT OF ADVANCES. In full reimbursement for advances
made by Proler to the Joint Ventures on behalf of HNC, HNC shall
pay or cause to be paid to Proler the amount of $4,370,850 upon
the execution and delivery of this Agreement.
2
3. REPRESENTATIONS AND WARRANTIES OF PROLER. Proler hereby represents and
warrants as follows:
a. TITLE TO PROLER INTERESTS. Proler is the record and beneficial
owner of the Proler Interests, free and clear of any liens,
security interests, claims or encumbrances.
b. DUE AUTHORIZATION. Proler has full corporate power and authority
to execute and deliver this Agreement and the Remediation
Agreement, as defined below, and to perform its obligations
thereunder, and the execution, delivery and performance of this
Agreement and the Remediation Agreement by Proler have been duly
authorized by all necessary corporate action on the part of
Proler. This Agreement and the Remediation Agreement have been
duly executed and delivered by Proler and are the valid and
binding obligations of Proler enforceable in accordance with
their respective terms.
c. NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement and the Remediation Agreement by Proler and the
consummation of the transactions contemplated thereby do not and
will not contravene the Certificate of Incorporation or By-Laws
of Proler, and do not and will not conflict with or result in
the breach of or default under, or result in or permit the
creation of any lien, security interest, claim or encumbrance
upon the Proler Interests pursuant to any indenture, mortgage,
lease, agreement, instrument, judgment, decree, order or ruling
to which Proler is a party or by which it or any of its
properties, are bound or affected.
d. REGULATORY APPROVALS. No governmental notice, filing,
authorization, approval, order or consent is required to be
given, filed or obtained by Proler in connection with the
execution, delivery and performance of this Agreement and the
Remediation Agreement by Proler.
3
4. REPRESENTATIONS AND WARRANTIES OF HNC. HNC hereby represents and
warrants as follows:
a. DUE AUTHORIZATION. HNC has full corporate power and authority to
execute and deliver this Agreement and the Remediation Agreement
and to perform its obligations thereunder, and the execution,
delivery and performance of this Agreement and the Remediation
Agreement by HNC have been duly authorized by all necessary
corporate action on the part of HNC. This Agreement and the
Remediation Agreement have been duly executed and delivered by
HNC and are the valid and binding obligations of HNC enforceable
in accordance with their respective terms.
b. NON-CONTRAVENTION. The execution, delivery and performance of
this Agreement and the Remediation Agreement by HNC and the
consummation of the transactions contemplated thereby do not and
will not contravene the Certificate of Incorporation or By-Laws
of HNC and do not and will not conflict with or result in the
breach of or default under any indenture, mortgage, lease,
agreement, instrument, judgment, decree, order or ruling to
which HNC is a party or by which it or any of its properties are
bound or affected.
c. REGULATORY APPROVALS. No governmental notice, filing,
authorization, approval, order or consent is required to be
given, filed or obtained by HNC in connection with the
execution, delivery and performance of this Agreement and the
Remediation Agreement by HNC.
4
5. REMEDIATION AGREEMENT.
Simultaneously with the execution and delivery hereof, the parties shall
enter into an agreement (the "Remediation Agreement") in the form attached as
Exhibit A hereto.
6. INDEMNIFICATION.
x. Xxxxxx agrees to indemnify and hold HNC harmless against and
from any and all taxes, claims, costs, expenses, liabilities,
fines, penalties and damages, including, without limitation,
reasonable attorneys' fees and costs, known or unknown, actual
or contingent, (collectively, all of the foregoing being called
"Claims"), incurred by HNC directly, or indirectly as a result
of its ownership of Metro, and arising out of or attributable to
(i) any breach of any representation, warranty or covenant made
by Proler herein or in the Remediation Agreement, or (ii)
Proler's Percentage Share of any Claim which now exists or may
exist at any time before or after the date of this Agreement and
which arises out of or may arise out of, by virtue of or based
upon the business or operations of the Joint Ventures or Metro
on or prior to December 31, 1994 (the "Cut-Off Date"), including
but not limited to any Claims with respect to environmental
matters, other than Environmental Remediation and Restoration
and Repair (as defined in and provided for in the Remediation
Agreement).
b. HNC agrees to indemnify and hold Proler harmless against and
from any and all Claims, as defined in Section 6(a), incurred by
Proler and arising out of or attributable to (i) any breach of
any representation, warranty or covenant made by HNC herein or
in the Remediation Agreement, (ii) HNC's Percentage Share of any
Claim which now exists or may exist at any time before or after
the date of this Agreement and which
5
arises out of or may arise out of, by virtue of or based upon
the business or operations of the Joint Venture or Metro on or
prior to the Cut-Off Date, including any Claim with respect to
Environmental Remediation or Restoration and Repair, (iii) any
Claim arising out of or by virtue of or based upon Environmental
Remediation or Restoration and Repair commenced after the
Remediation Commencement Period (as defined in and provided for
in the Remediation Agreement) or (iv) any Claim arising out of,
or by virtue of, or based upon HNC's operation or conduct of the
business of the Joint Ventures or Metro after the Cut-Off Date.
c. Notwithstanding anything to the contrary contained herein, the
indemnification provided for in Section 6(a), above with respect
to Claims arising out of, by virtue of or based upon the
business or operations of Metro prior to the Cut-Off Date, shall
apply only to the extent that such costs are (i) incurred by
Metro during such time as Metro is owned by HNC or an Affiliate
of HNC or (ii) incurred by HNC at any time (whether or not HNC
or an Affiliate of HNC owns Metro at such time). HNC's rights
pursuant to such indemnification may not be transferred or
assigned to any person or entity other than an Affiliate of HNC
and any such purported transfer or assignment shall be void and
of no force and effect. The term "Affiliate" as used in this
Agreement shall mean, with respect to any person or entity, any
other person or entity controlling, controlled by, or under
common control with, such person or entity, directly or
indirectly. For purposes hereof, without limitation, direct or
indirect ownership of 50% or more of the equity interest of an
entity shall be deemed a controlling interest in such entity.
Unless otherwise directed by HNC any and all amounts due under
Section 6(a) shall be paid to
6
HNC and shall be treated for tax purposes as a reduction in the
purchase price paid by HNC for the Proler Interests. Except as
otherwise specifically provided in this Agreement, the
indemnities provided for in Section 6(a) and Section 6(b) shall
be without limitation as to time.
d. WITHOUT LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION
PROVISIONS CONTAINED HEREIN EACH PARTY'S INDEMNIFICATION
OBLIGATION UNDER THIS AGREEMENT SHALL BE IRRESPECTIVE OF THE
BASIS (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OF ANY CLAIM
AGAINST AN INDEMNIFIED PARTY; PROVIDED, HOWEVER, THAT A PARTY'S
OBLIGATION SHALL NOT BE APPLICABLE TO LIABILITY ARISING OUT OF,
OR BY VIRTUE OF, OR BASED UPON AN ACT OR OMISSION OF THE PARTY
BY OR THROUGH WHOM THE INDEMNITY IS CLAIMED WHICH WAS (i) IN BAD
FAITH, (ii) INVOLVED INTENTIONAL OR WILLFUL MISCONDUCT,
INCLUDING INTENTIONAL AND WILLFUL MISCONDUCT WHICH CONSTITUTES
OR GIVES RISE TO AN ILLEGAL OR UNLAWFUL ACT OR OMISSION AND
(iii) INVOLVED THE RECEIPT OF A BENEFIT BY THE PARTY BY OR
THROUGH WHOM THE INDEMNITY IS CLAIMED NOT SHARED IN BY THE JOINT
VENTURES, METRO OR THE INDEMNIFYING PARTY. THE INDEMNIFICATION
PROVIDED FOR IN SECTION 6(a) AND SECTION 6(b) ABOVE SHALL BE IN
ADDITION TO AND NOT IN LIEU OF ANY OTHER REMEDIES AVAILABLE TO
THE PARTIES AT LAW OR IN EQUITY.
7. CONTINGENT PAYMENT FOR PROLER. In the event that within twelve (12)
months after the date of execution of this Agreement HNC shall, directly
or indirectly, sell, assign, dispose of or otherwise transfer the
business and/or all or substantially all of the assets of a Joint
Venture or Metro or HNC's interest therein to any person or entity not
an Affiliate of HNC, or cause such business and/or substantially all of
the assets of or HNC's interest in such entities to be sold,
7
assigned, disposed of or otherwise transferred to any person or entity
not an Affiliate of HNC, whether pursuant to a sale of substantially all
of the assets of the Joint Ventures or Metro, a sale of HNC's interest
in the Joint Ventures or Metro, or otherwise (in any such case, a
"Sale"), and the consideration received in such Sale, exclusive of an
amount equal to the difference between the current assets and current
liabilities of the Joint Ventures and Metro assumed by the transferee
(as determined by any allocation agreed between the parties to the Sale
or if not so agreed, as otherwise agreed upon by HNC and Proler) and
exclusive of an amount equal to the original cost to HNC, Metro or the
Joint Ventures of any transferred assets acquired after the Cut-Off Date
(the "Adjusted Sale Consideration") exceeds $1,371,911, then HNC shall
pay or cause to be paid to Proler the amount, if any, equal to the
difference (if a positive number) between (i) fifty percent (50%) of the
Adjusted Sale Consideration, less fifty percent (50%) of any losses
(exclusive of depreciation and any other non-cash losses) incurred in
the conduct of the Joint Ventures' and Metro's business during the
period from the Cut-off Date to the date of the Sale and (ii) $685,956.
Such difference (if a positive number) shall be paid to Proler by HNC
promptly upon receipt of such consideration. If the purchase price for a
Sale consists of consideration other than cash or promissory notes, then
those assets shall be valued at their fair market value.
8. COOPERATION. HNC and Proler will cooperate after the date hereof in
effecting the transactions contemplated by this Agreement. In addition,
at the request of any party, the other party shall execute and deliver
from time to time such further instruments of assignment, conveyance and
transfer or other documents and shall cooperate in the conduct of
litigation, the collection of receivables or payment of payables or
claims and shall take such other actions as may reasonably be required
to accomplish the orderly transfer to HNC of the Proler Interests.
8
9. CONTINUING JOINT VENTURES. Neither the transactions contemplated hereby
nor anything contained in this Agreement shall in any way affect the
rights, duties and obligations of the parties hereto with respect to
their continuing joint ventures (e.g., Xxxx Xxx-Xxxxxx Company ("HNP"),
Prolerized New England Company, including its Patriot Metals Company
division ("PNE), and Prolerized Schiabo-Neu Company ("PSN")), or in any
way amend or modify the joint venture agreements with respect thereto;
provided, however, that to the extent Metro acts as agent for PNE in
making domestic sales of scrap, Metro shall be entitled to receive a
commission equal to 2% of such sales. Metro shall also be entitled to a
commission of 2% with respect to domestic sales of scrap made by Metro
on behalf of PSN, subject to the approval of Xxxxxxxxx-Xxxxxx
Corporation. Proler shall cooperate with HNC in seeking to obtain such
approval. The parties further agree that a calculation will be made
annually to equalize the net FOB yields realized from each grade of
ferrous inventory at PNE, PSN, HPI, HPNJ and Metro in accordance with
the equalization procedures currently used by La Guardia & Xxxxxxxx,
CPAs with respect to the shredded scrap sales of PSN and PNE. Upon
completion of the equalization calculation, a payment(s) will be made
within three working days to equalize the yields in accordance with such
current equalization procedures. The sales commissions to Metro as
provided above will be adjusted to reflect the equalized sales amounts.
10. ENTIRE AGREEMENT. This Agreement and the Remediation Agreement
constitute the entire understanding and agreement among the parties with
respect to the subject matter and supersede any prior understandings and
agreements (whether written or oral) among them respecting such subject
matter.
9
11. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not affect its interpretation.
12. SEVERABILITY. If any provision of this Agreement is held illegal,
invalid, or unenforceable, such illegality, invalidity or
unenforceability will not affect any other provision hereof. This
Agreement shall, in such circumstances, be deemed modified to the extent
necessary to render enforceable the provisions hereof.
13. NOTICES. All notices, requests, demands, waivers, consents, approvals or
other communications required or permitted hereunder shall be in writing
and shall be deemed to have been given if delivered personally or sent
by registered or certified mail, postage prepaid, return receipt
requested or sent by same day or overnight courier or express service,
postage prepaid, return receipt requested, to the following addresses:
If to Proler, to:
Proler International Corp.
0000 Xxx Xxxxxx Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx,
Chairman and Chief
Executive Officer
with a copy to:
Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Mayor
10
If to HNC or Metro, to:
Xxxx Xxx Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx X. Xxx
with a copy to: Xxxxxx Xxxxxxxxxx
Notice of any change in any such address shall also be given in the manner set
forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice. Notice shall
be deemed given on the date received.
14. WAIVER. The failure of any party to insist upon strict performance of
any of the terms or conditions of this Agreement will not constitute a
waiver of any of its rights hereunder.
15. NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement will be
construed as giving any person, firm, corporation or other entity, other
than the parties hereto and their successors and assigns (as provided in
Section 16), any right, remedy or claim under or in respect of this
Agreement or any provisions hereof.
16. SUCCESSORS AND ASSIGNS. This Agreement binds, inures to the benefit of,
and is enforceable by the successors and assigns of the parties, subject
to the limitations contained in Section 6(c) above, and does not confer
any rights on any other persons or entities.
17. ARBITRATION. All disputes arising under this Agreement or the
Remediation Agreement shall be arbitrated by an arbitrator mutually
agreed upon by Proler and HNC or if Proler and HNC cannot agree on an
arbitrator within thirty days after notice of the dispute is provided by
one party to the other, by an arbitrator selected by the New York City
office of the American Arbitration Association. Whenever a dispute is
required to be submitted to an arbitrator selected
11
by the American Arbitration Association under this Agreement, the
parties shall request such American Arbitration Association to select an
arbitrator who is knowledgeable in the subject under dispute and who
does not have a conflict of interest. In the event of a dispute
involving the Remediation Agreement, an individual selected as an
arbitrator shall have not less than ten (10) years experience as a
professional environmental specialist or as an attorney with experience
appropriate to the issues in dispute. If the matters in dispute
principally concern the legal interpretation of this Agreement or the
Remediation Agreement, the arbitrator shall be an attorney. If the
matters in dispute principally concern technical issues of environmental
science or engineering (such as the application of technical
environmental regulations, guidance, practices or policies), the
arbitrator shall be an environmental specialist. If the parties hereto
are unable to determine if the matter in dispute requires the services
of an attorney, an environmental specialist or both as an arbitrator or
arbitrators, this determination shall be made by the New York office of
the American Arbitration Association. If a matter in dispute presents
significant issues of both interpretation of this Agreement and
technical issues of environmental science or engineering, the matter may
be bifurcated and separate arbitrators selected for the bifurcated
issues. Arbitrators for such bifurcated issues shall be entitled to
confer, but shall each render separate determinations. All arbitration
under this Agreement shall be conducted pursuant to the commercial
arbitration rules and procedures of the American Arbitration Association
and the determination of the arbitrator shall be final and binding on
the parties. If any arbitration proceeding is brought by any party with
respect to the Agreement or the interpretation, enforcement or breach
hereof, and if in the opinion of the arbitrator one of the parties
substantially prevails, then the party who substantially prevails in
such action shall be entitled to an award of
12
all reasonable costs of arbitration, including, without limitation,
reasonable attorney's fees, to be paid by the other party, in such
amounts as may be determined by the arbitrator, plus interest on any
disputed amounts awarded to such prevailing party, from the date of such
party's original demand for payment with respect thereto, at an annual
rate equal to 300 basis points over the published prime (or alternate
base) rate of The Chase Manhattan Bank, N.A. in effect from time to time
but not in excess of any legally permitted rate.
18. RELEASE. Each of Proler and HNC hereby releases the other party, its
employees, officers, directors, shareholders and Affiliates from any
claims whatsoever it may have against them arising from or relating to
the management of the Joint Ventures or Metro prior to the Cut-Off Date,
except for any claims arising from or relating to any acts or omissions
of the other party or any of its employees, officers, directors or
shareholders which (a) (i) were in bad faith, (ii) involve intentional
or willful misconduct, including intentional or willful misconduct which
constitutes or gives rise to an illegal or unlawful act or omission, and
(iii) involve the receipt of a benefit by the released party not shared
in by the Joint Ventures, Metro or the releasing party or (b) arise
under or as a result of a breach of any provision of this Agreement or
the Remediation Agreement.
19. TAX MATTERS. Federal and state tax returns with respect to the Joint
Ventures and Metro for periods prior to the date of this Agreement will
be prepared in accordance with past practice, except that HNC may
designate an accounting firm other than Coopers & Xxxxxxx for the period
from January 1, 1995 through the date of this Agreement. The costs with
respect to such federal and state tax returns for periods on or prior to
the Cut-Off Date will be shared equally by Proler and HNC or their
designees. The costs with respect to such federal and state tax returns
for
13
periods after the Cut-Off Date shall be borne by HNC or its designees.
Each of the parties agrees to cooperate fully with the other and to
provide reasonable access to the records and personnel of the other and
the work papers of its accountants in connection with any tax audit or
the preparation of tax returns with respect to the Joint Ventures and
Metro.
20. OPINION OF COUNSEL. Proler shall deliver to HNC simultaneously with the
execution hereof an opinion of its counsel substantially in the form
previously provided to HNC.
21. AMENDMENTS AND TERMINATION. This Agreement may be amended, supplemented,
and terminated only by a written instrument duly executed by HNC and
Proler.
22. PUBLICITY. All notices to third parties and all other publicity relating
to the transactions contemplated by this Agreement, other than required
filings with the Securities and Exchange Commission, shall be jointly
planned, coordinated and agreed to by Proler and HNC. To the extent
practicable, Proler will provide HNC with an opportunity to comment in
advance on any disclosure in such filings with respect to the
transactions contemplated hereby.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each
of which when executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one
and the same instrument. The execution of this Agreement by any party
hereto will not become effective until counterparts hereof have been
executed by all the parties hereto. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.
14
24. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH NEW YORK LAW, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
25. JOINDER. Metro hereby joins in this Agreement for the purpose of
agreeing to the provisions set forth in Sections 5, 9, 15, 16, 17, 19
and 24 hereof and except as specifically set forth in such sections
shall have no rights or obligations hereunder.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have
executed this Agreement on the date first above written.
XXXX XXX CORPORATION
By: /s/ XXXX XXX, PRESIDENT
PROLER INTERNATIONAL CORP.
By: /s/ XXXXXX X. XXXXXXXXX, PRESIDENT
METRO METAL RECYCLING CORP.
By: /s/ XXXX XXX, PRESIDENT
15
