EXHIBIT 99.1
JOINT VENTURE AGREEMENT
This Agreement, made this 26th day of August, 1997, by and between
Crumb Rubber Technology, Inc. ("CRT") and XxxxxXxx Technologies, Inc.
("XXXXXXXX") (all of whom together are hereinafter collectively referred to as
"Venturers").
WITNESSETH
Whereas the Parties hereto desire to form a Joint Venture (hereinafter
referred to as the "Venture") upon the terms and conditions hereinafter set
forth:
Now, therefore, in consideration of the mutual covenants hereinafter
contained, it is agreed by and among the Parties hereto as follows:
Article I
BASIC STRUCTURE
ss. 1.1 Form
The Parties hereby form a Venture which shall be in the form of an
entity commonly referred to as an "L.L.C.", or Limited Liability Corporation
established and incorporated pursuant to the laws of the State of New York.
ss. 1.2 Applicable Law
The Parties agree that said Venture and this Joint Venture Agreement
shall be governed by the Laws of The State of New York.
ss. 1.3 Name
The business of the Venture shall be registered with the Secretary of
State of New York and conducted under the name of Tire Disposal Services, Inc.
ss. 1.4 Period of Duration
The period of duration of the Limited Liability Company shall be thirty
(30) years from the date of the issuance of its Certificate of Organization by
the Secretary of State of New York.
ss. 1.5 Place of Business
The Venture shall commence the operation of its business on August 1,
1997, and shall continue until terminated in the following manner:
(a) By the completion of the purpose intended, or
(b) Pursuant to this Agreement, or
(c) By the bankruptcy, withdrawal, resignation, or expulsion of
any one or all of the Venturers.
ss. 1.6 Purpose
The purpose for which the Venture is organized is to:
(a) Collect waste scrap tires;
(b) Process waste scrap tires using the crumb rubber producing
equipment previously purchased by XXXXXXXX from CRT;
(c) Produce crumb rubber;
(d) Market all such products produced by the Venture.
Neither Venturer hereto shall have any rights or duties with regard to
any other businesses of the other, except that those expressly specified in this
Agreement.
Article II
FINANCIAL ARRANGEMENTS
ss. 2.1 Definitions
For purposes of this document "capital" shall be defined as property
made available to and/or owned by the Venture other than property which is held
for sale to customers of the Venture in its ordinary course of business. The
gain on such property and the losses, deductions, amortization and depreciation
associated with such property shall be added to or subtracted from the
Venturer's respective capital accounts (using the then capital accounts as a
base) according to their then percentage of ownership in Venture.
All other operating profits (or losses) of the Venture shall be (if
income) deemed to be income of the Venturers according to their shares of
respective profits and losses. If losses, the amount thereof shall be deducted
from the Venturer's capital accounts according to their respective shares of
profits and losses. Undistributed profits, if any, shall be added to the
relevant Venturer's capital accounts. At the end of the fiscal year, as defined
within ss. 6.1, losses, if any, shall be deducted from each Venturers respective
capital account according to their respective shares of profits and losses.
2
ss. 2.2 Initial Contributions of Venturers
1. XXXXXXXX has made available, as its initial capital contribution to the
Venture, the crumb rubber producing equipment previously purchased by
it from CRT, which is currently situate at XXXXXXXX'x Xxxxxxx, Xxxxxxx
location.
The above referenced CRT unit contributed to the Venture by XXXXXXXX
does not include the Untha Shredder previously sold to XXXXXXXX by CRT.
The above referenced CRT unit contributed to the Venture by XXXXXXXX
shall include the electrical panel prepared by XXXXXXXX specifically
for the CRT unit, and the same shall be delivered by XXXXXXXX to the
Venture forthwith.
The Venturers agree and acknowledge that said crumb rubber producing
equipment has been valued by the Venture at the sum of One Million Four
Hundred Thousand ($1,400,000.00) Dollars.
Title to and ownership of said crumb rubber producing equipment shall
be transferred to the Venture immediately.
CRT shall arrange for its delivery to the proposed business location of
the Venture.
2. CRT's initial capital investment is the operating assets, permits,
licenses and intangible assets of the entity heretofore owned and
operated by principal(s) of CRT and referred to as "Tire Disposal
Services." CRT in addition, shall secure execution of the proposed
lease (attached hereto as EXHIBIT "A") on behalf of the Venture from
Servico Realty Corporation for the office and manufacturing space at
which the Venture will be situate and located at #000-00 Xxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxx.
CRT will also arrange to provide the personnel and expertise to operate
the day to day operations of the Venture, the cost and expenses of
which shall be paid by the Venture.
ss. 2.3 Additional Capital Contribution
Upon execution of this Agreement, CRT will pay to XXXXXXXX the sum of
Three Hundred Thousand ($300,000.00) Dollars.
CRT shall assume responsibility for the shipment and cost of shipping
and transporting the CRT unit to the business location of the Venture in Xxxxxx,
New York.
The agreement of CRT to enter into this Venture shall be subject to
CRT's prior inspection of the CRT unit, and having satisfied itself that said
unit can be reassembled at thebusiness location of the Venture, and function
properly thereat.
3
ss. 2.4 Resources for Business Operations
CRT understands and agrees to arrange for the human resources necessary
to oversee the business operations of the Venture as is reasonably required to
effect the operation of the Venture is in accordance with all state, federal and
other regulatory agencies for safety and environmental requirements. The
foregoing shall be at the cost and expense of the Venture.
CRT and XXXXXXXX understand and agree that all reasonable, necessary
and prudent insurance requirements shall be arranged by and at the cost and
expense of the Venture.
Said insurance requirements shall provide for property damage coverage
in the sum of the greater of Two Million ($2,000,000) Dollars, in which the
Venture is reimbursed the value of demolishing, purchasing and installing
replacement equipment.
ss. 2.5 Allocation of Profits and Losses
The Venturers agree that profits and losses of the Venture are to be
allocated to each Venturer according to the following percentages:
(a) CRT - eighty (80%) percent;
(b) XXXXXXXX - twenty (20%) percent;
Distributions to the Venturers of the net operating profits of the
Venture shall be made at such time as the Board of Directors, as hereinafter
defined, shall reasonably agree. Such distributions shall be made to the
Venturers equally and simultaneously.
For the purpose of this Agreement, net operating profit for each
accounting period shall mean the gross receipts of the Venture for such period,
less the sum of all expenses of operation of the Venture, and such sums as may
be necessary to establish and thereafter supplement a reasonable reserve for
operating expenses of the Venture.
ss. 2.6 Discount Purchases
Upon execution of this Agreement, the Venture shall execute a separate
agreement permitting XXXXXXXX to purchase crumb rubber produced by the Venture
at a ten (10%) percent discount below the then current sales price established
by the Venture from time to time.
ss. 2.7 Commissions Paid to XXXXXXXX on CRT Unit Sales
CRT hereby understands and agrees that should XXXXXXXX introduce to CRT
a prospective purchaser of a CRT unit, and should CRT ultimately enter into and
fully consummate a contract for sale of a CRT unit to said purchaser, CRT shall
pay to XXXXXXXX a commission of ten (10%) percent of the net purchase price
(exclusive of taxes, shipping and assembly charges) of each CRT unit sold to
said purchaser introduced to CRT by XXXXXXXX. The term of said sales agency
shall be five (5) years next succeeding the date hereof.
ss. 2.8 Compensation
No Venturer shall be entitled to receive compensation from the Venture
for its services to the Venture, except as provided in paragraph ss. 2.5 hereof.
4
The Venture shall be solely responsible for the payment of any and all
employees or agents hired by the Venture.
Article III
VENTURER COVENANTS
ss. 3.1 Waiver Of All Prior Claims
CRT and XXXXXXXX understand, as an express consideration for, and by
executing the within Agreement each waives, releases and relinquishes any and
all claims that each may have had against the other that arose prior to the
execution of said Agreement, including without limitation, those claims arising
out of the sale and purchase agreements between CRT and XXXXXXXX with respect to
crumb rubber equipment installed and to be installed by CRT at the XXXXXXXX
facilities situate in Xxxxxxx, Xxxxxxx.
Article IV
MANAGEMENT
ss. 4.1 Directors
The Board of Directors of the Venture shall consist of two (2)
Directors; all such directors shall be appointed exclusively by CRT.
XXXXXXXX hereby acknowledges that, by reason of its minority interest
in the Venture, it shall not be entitled to appoint a director on the board, and
shall have no voting rights upon the Board of Directors or otherwise.
Article V
DISSOLUTION
ss. 5.1 Dissolution
That if and in the event that the Venture shall hereafter be dissolved
for any reason whatsoever, a full and general account of its assets, liabilities
and fiscal condition shall thereupon be promptly established. Such assets of the
Venture shall be sold and/or liquidated as soon as practical and all accounts
receivables and other funds due the Venture collected as reasonably as can be.
In furtherance thereof, the Venturers recognize that the equipment of
the Venture will realize its highest resale value if sold, in place. As such,
the Venture shall exercise due diligence and good judgment in seeking such
prospective user to purchase the equipment of the Venture at the best possible
price. CRT reserves the right to be and become the purchaser thereof, subject to
its satisfaction of the leasehold obligations for a reasonable period to
accommodate the sale of said equipment.
The proceeds from the sale of said assets and equipment shall thereupon
be applied in the following order of priority:
5
(a) To discharge just debts to third parties and liabilities of
the Venture and the expenses of sale and liquidation.
(b) To pay each Venturer earned but then undistributed profits to
which each shall then be entitled, if any.
(c) To repay to any Venturer the capital investment of each,
pro-rata.
(d) To divide the surplus, if any, among the Venturers according
to each Venturer's Percentage Share of Profits as specified
within ss. 2.5.
Article VI
MISCELLANEOUS
ss. 6.1 Accounting Year, Books Statements
The Venture's fiscal year shall be January 1st to December 31st of each
year. The Venturers shall file a short period return for calendar year 1997.
Full and accurate books of account shall be kept and maintained at the principal
place of business of the Venture and shall at all times state the fiscal
condition of the business and finances of the Venture. Each Venturer shall have
access to said books of account and shall be entitled to examine the same at any
time during regular business hours of the Venture.
At the end of each year, the accountants regularly employed by the
Venture shall prepare a certified balance sheet setting forth the financial
position of the Venture as of the end of each such year. A copy of the balance
sheet and statement of operations shall be delivered to each Venturer as soon
thereafter as is practicable.
In addition to the foregoing, each venturer shall receive, not later
than thirty (30) days after the close of the quarter, a quarterly financial
report of operations and a balance sheet accompanied by the outside accountants
compilation statement therewith.
ss. 6.2 Arbitration
Any controversy or claim arising out of or relating to this Agreement
and/or the relationship of the Venturers shall be settled by arbitration in
accordance with the rules of the American Arbitration Association venued in the
State of New York, whose participation may be initiated at the written request
of either or both Venturers on written notice to the other, and such award or
determination (as the case may be) shall be enforceable in any federal or state
court situate in the State of New York having competent jurisdiction.
ss. 6.3 Required Conditions Precedent to the Effective
Commencement Date of the Venture
(a) CRT shall have obtained receipt of written commitment from the
New York City Economic Development Authority, (or other such
equivalent governmental
6
authority), for a grant to finance the start-up and operations
of the Venture on terms and conditions satisfactory to both
Venturers.
(b) The Venture shall apply for and/or cause to be obtained by the
Venture, all requisite permits and/or licenses to enable the
Venture to commence and thereafter continue its business
operations;
ss. 6.4 Indemnifications
The Venture shall indemnify any person who is made, or threatened to be
made, a party to any action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that the individual, his
testator or intestate is or was a manager, employee or agent of the Venture or
serves or served any other enterprises at the request of the Venture, to the
extent to which such Venturer was not acting with gross negligence or wilful or
wanton disregard of this Agreement or any civil and/or criminal statute, rule or
regulation.
The extent of such indemnify, however, shall be limited in amount to
the Venturer assets only, and no Venturer shall have or assume hereby any
personal liability with respect to said indemnity or otherwise.
ss. 6.5 Notices
Any and all notices provided or required in connection herewith or with
the Venture, shall be given in writing dispatched by United States prepared
registered or certified mail, return receipt requested, and shall be addressed
to the last address of the addressee known to the sender.
ss. 6.6 Binding Effect
This Agreement shall be binding upon and inure to the benefits of the
respective parties hereto. The parties hereto agree to execute such other and
further documents reasonably necessary to carry out the intent and purpose of
this Agreement.
ss. 6.7 Amendments
This Agreement may be altered only by the unanimous approval of the
Venturers, and such amendment shall be in writing and executed by each Venturer.
ss. 6.8 Titles and Subtitles
Titles of the paragraphs and subparagraphs are placed herein for
convenient reference only and shall not to any extent have the effect of
modifying, amending or changing the express terms and provisions of this
Agreement.
ss. 6.9 Severability
In the event any part(s) of this Agreement are determined or
adjudicated to be void, the remaining provisions of this Agreement shall
nevertheless be binding upon the Venturers and the Venture with the same effect
as though the void parts had been deleted herefrom.
7
ss. 6.10 Non-Assignability
The Venturers agree that their interest in the Venture cannot be sold,
transferred or assigned to any other party without the express written consent
of the other Venturer.
No assignment of any rights an interests of either Venturer shall be
valid or binding upon the parties hereto unless each is in writing an signed by
each of the Venturers.
ss. 6.11 Waiver
No waiver of any provisions of this Agreement shall be valid or binding
upon the parties hereto unless each is in writing and signed by each of the
Venturers.
ss. 6.12 Effective Date
This Agreement shall be effective only upon execution by each of the
proposed Venturers.
CRUMBRUBBER TECHNOLOGY, INC.
Dated: 8-26-97 By: /s/ Xxxxxxx Xxxxx
Title: President
(Authorized Officer)
XXXXXXXX TECHNOLOGIES, INC.
Dated: 8-26-97 By: /s/ Xxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
(Authorized Officer)
8
PAYMENT SCHEDULE
The payment of $300,000 from CRT to GMT will be completed according to
the following time schedule:
1. CRT will pay GMT $100,000.00 when the CRT system is delivered
to CRT's place of business located at 000-00 Xxxxxx Xxxxxx.
2. CRT will pay GMT $100,000.00 within 3 months after the first
payment.
3. CRT will pay GMT $100,000.00 within 3 months of the second
payment.
CRUMBRUBBER TECHNOLOGY, INC.
Dated: 8-26-97 By: /s/ Xxxxxxx Xxxxx
Title: President
(Authorized Officer)
XXXXXXXX TECHNOLOGIES, INC.
Dated: 8-26-97 By: /s/ Xxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
(Authorized Officer)
9
