AGREEMENT AND PLAN OF MERGER
dated as of September 26, 1997
by and among
METALS USA, INC.
HTL ACQUISITION CORP.
XXXXXX TITANIUM, LTD.
and
the Seller named herein
TABLE OF CONTENTS
Page
1 THE MERGER.............................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................1
1.3 Certificate of Incorporation, By-laws and Board of Directors
of Surviving Corporation.........................................2
1.4 Effect of Merger.................................................2
1.5 Manner of Conversion.............................................3
1.6 Delivery of Certificates.........................................4
1.7 Closing..........................................................4
1.8 Name Change......................................................4
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................4
2.1 Due Organization.................................................4
2.2 Authorization....................................................5
2.3 Capital Stock of the Company.....................................5
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................5
2.6 Liabilities and Obligations......................................6
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................6
2.9 Environmental Matters............................................7
2.10 Personal Property................................................8
2.11 Significant Customers; Material Contracts and Commitments........8
2.12 Real Property....................................................9
2.13 Insurance........................................................9
2.14 Compensation; Employment Agreements; Organized Labor Matters.....9
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................11
2.17 Taxes...........................................................12
2.18 No Violations; All Required Consents Obtained...................12
2.19 Government Contracts............................................13
2.20 Absence of Changes..............................................13
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2.21 Powers of Attorney..............................................14
2.22 Competing Lines of Business; Related-party Transactions.........14
2.23 Disclosure......................................................14
2.24 Prohibited Activities...........................................15
2.25 Certain Business Practices......................................15
3. REPRESENTATIONS OF METALS.............................................15
3.1 Due Organization................................................15
3.2 Authorization...................................................15
3.3 No Violations...................................................15
3.4 Validity of Obligations.........................................16
3.5 Capital Stock...................................................16
3.6 Financial Statements............................................16
3.7 No Material Adverse Change......................................16
4. COVENANTS PRIOR TO CLOSING............................................16
4.1 Access and Cooperation; Due Diligence...........................16
4.2 Conduct of Business Pending Closing.............................17
4.3 Prohibited Activities...........................................17
4.4 No Shop.........................................................18
4.5 Notice to Bargaining Agents.....................................18
4.6 Agreements......................................................19
4.7 Notification of Certain Matters.................................19
4.8 Amendment of Schedules..........................................19
4.9 Further Assurances..............................................19
4.10 Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 (the "HSR Act")........................19
4.11 Notices and Consents............................................20
4.12 Seller's Commitment.............................................20
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
AND THE COMPANY.......................................................20
5.1 Representations and Warranties; Performance of Obligations......20
5.2 Satisfaction....................................................20
5.3 Consents and Approvals..........................................20
5.4 Employment and Consulting Agreements............................21
5.5 Opinion of Counsel..............................................21
5.6 Registration....................................................21
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5.7 No Material Adverse Effect......................................21
5.8 Tax Matters.....................................................21
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF METALS AND NEWCO...............21
6.1 Representations and Warranties; Performance of Obligations......21
6.2 No Material Adverse Effect......................................22
6.3 Satisfaction....................................................22
6.4 Opinion of Counsel..............................................22
6.5 Consents and Approvals..........................................22
6.6 Good Standing Certificates......................................22
6.7 Employment Agreement............................................22
6.8 Escrow Agreement................................................22
7. POST-CLOSING COVENANTS................................................22
7.1 Future Cooperation..............................................23
7.2 Expenses........................................................23
7.3 Preservation of Tax and Accounting Treatment....................23
7.4 Preparation and Filing of Tax Returns...........................23
7.5 Preservation of Employee Benefit Plans..........................23
8. INDEMNIFICATION.......................................................24
8.1 Survival of Seller's Representations and Warranties. ..........24
8.2 General Indemnification by the Seller...........................24
8.3 Indemnification by Metals.......................................25
8.4 Specific Indemnification........................................25
8.5 Third Person Claims.............................................25
8.6 Method of Payment...............................................26
8.7 Limitations on Indemnification..................................26
9. TERMINATION OF AGREEMENT..............................................27
9.1 Termination.....................................................27
9.2 Liabilities in Event of Termination.............................27
10. NONCOMPETITION........................................................28
10.1 Prohibited Activities...........................................28
10.2 Equitable Relief................................................28
10.3 Reasonable Restraint............................................28
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10.4 Severability; Reformation.......................................29
10.5 Independent Covenant............................................29
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................29
11.1 General.........................................................29
11.2 Equitable Relief................................................30
11.3 Survival........................................................30
12. SECURITIES LAW MATTERS................................................30
12.1 Contractual Restrictions........................................30
13. GENERAL...............................................................31
13.1 Successors and Assigns..........................................31
13.2 Entire Agreement................................................31
13.3 Counterparts....................................................31
13.4 Brokers and Agents..............................................31
13.5 Notices.........................................................31
13.6 Governing Law...................................................32
13.7 Survival of Representations and Warranties......................32
13.8 Effect of Investigation; Knowledge..............................32
13.9 Exercise of Rights and Remedies.................................33
13.10 Time............................................................33
13.11 Reformation and Severability....................................33
13.12 Remedies Cumulative.............................................33
13.13 Captions........................................................33
13.14 Press Releases and Public Announcements.........................33
13.15 No Third-Party Beneficiaries....................................33
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ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Seller
Annex III - Form of Opinion of Counsel to Metals
Annex IV - Form of Escrow Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of September 26, 1997 by and among Metals USA, Inc., a Delaware
corporation ("Metals"), HTL Acquisition Corp., a Delaware corporation wholly
owned by Metals ("Newco"), Xxxxxx Titanium, Ltd., a California corporation (the
"Company"), and Xxxxx Xxxxxx, the sole stockholder of the Company (the
"Seller").
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Newco pursuant to this
Agreement and the applicable provisions of the laws of the State of California
(the "State of Incorporation") and of the State of Delaware; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1 THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Newco (the "Merger") and the separate existence of the Company
shall cease, all in accordance with the provisions hereof and of the law of the
State of Incorporation and Delaware. Newco shall be the surviving corporation in
the Merger and, after the Effective Time, is sometimes hereinafter called the
"Company" or the "Surviving Corporation".
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in form appropriate for filing, is
filed with the Secretary of State of the State of Delaware (the "Merger
Filing"). The Merger Filing shall be made simultaneously with or as soon as
practicable after the closing of the transactions contemplated by this
Agreement. A certificate of merger also shall be filed with the appropriate
authorities of the State of Incorporation prior to the date six months after the
date on which the Effective Time occurs.
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1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. At the Effective Time:
(i) the Certificate of Incorporation of Newco then in effect shall
be the Certificate of Incorporation of the Surviving Corporation until they
shall thereafter be duly amended;
(ii) the By-laws of Newco then in effect shall be the By-laws of the
Surviving Corporation until they shall thereafter be duly amended;
(iii) the members of the Board of Directors of the Company
immediately prior to the Effective Time shall become the members of the Board of
Directors of the Surviving Corporation, and Xxxxxxx X. Xxxxxxx shall also become
a director of the Surviving Corporation (and the Surviving Corporation shall
take such action as may be necessary to effect the appointment of Xx. Xxxxxxx to
the such Board of Directors), and such persons shall serve as such until their
resignation or replacement in accordance with the provisions applicable law and
of the Certificate of Incorporation and By-laws of the Surviving Corporation;
and
(iv) the officers of the Company immediately prior to the Effective
Time shall become officers of the Surviving Corporation holding the positions
and titles with the Surviving Corporation they held with the Company immediately
prior to the Effective Time, and Xxxxxxx X. Xxxxxxx shall be appointed as a Vice
President of the Surviving Corporation, Xxxxx St. Clair shall be appointed as an
Assistant Treasurer of the Surviving Corporation and Xxxx X. Xxxxxxx shall be
appointed as an Assistant Secretary of the Surviving Corporation, each of such
officers to serve, subject to the provisions of the Certificate of Incorporation
and By-laws of the Surviving Corporation, until his or her successor is duly
elected and qualified.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation and Delaware.
Except as herein specifically set forth, the identity, existence, purposes,
powers, objects, franchises, privileges, rights and immunities of Newco shall
continue unaffected and unimpaired by the Merger and the corporate franchises,
existence and rights of the Company shall be merged with and into Newco, and
Newco, as the Surviving Corporation, shall be fully vested therewith. At the
Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and Newco shall be taken and deemed to be transferred to, and vested in,
the Surviving Corporation without further act or deed; and all property, rights
and privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or
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interest therein, whether by deed or otherwise, under the laws of the state of
incorporation or Delaware vested in the Company and Newco, shall not revert or
be in any way impaired by reason of the Merger. Except as otherwise provided
herein, the Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of the Company and Newco and any claim
existing, or action or proceeding pending, by or against the Company or Newco
may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place. Neither the rights of creditors
nor any liens upon the property of the Company or Newco shall be impaired by the
Merger, and all debts, liabilities and duties of the Company and Newco shall
attach to the Surviving Corporation, and may be enforced against such Surviving
Corporation to the same extent as if said debts, liabilities and duties had been
incurred or contracted by such Surviving Corporation.
1.5 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of the Company ("Company Stock") and (ii) the capital
stock of Newco ("Newco Stock") issued and outstanding immediately prior to the
Effective Time, respectively, into shares of (x) Metals Stock (as defined below)
and (y) common stock of the Surviving Corporation, respectively, shall be as
follows:
As of the Effective Time:
(i) each share of Company Stock issued and outstanding immediately
prior to the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, automatically shall be converted
into the right to receive its pro rata interest in the aggregate
consideration payable to all holders of Company Stock, which consideration
shall be $35,540,000, consisting of (a) $15,770,000 in cash (payable by
wire transfer of immediately available funds), (b) delivery of 1,292,363
shares of Metals Stock, and (c) such additional amount, if any, as may be
distributed to Seller in accordance with the terms of the Escrow Agreement
being entered into in connection herewith; and
(ii) all shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired and no shares of
Metals Stock or other consideration shall be delivered or paid in exchange
therefor; and
(iii) each share of Newco Stock issued and outstanding immediately
prior to the Effective Time, shall continue and remain unaffected by the
Merger, and such shares shall constitute all of the issued and outstanding
shares of common stock of the Surviving Corporation immediately after the
Effective Time, and all of such shares shall be owned by Metals.
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Pursuant to the right described in Section 1.5(i) above, 1,292,363 shares
of Metals Stock were issued to Seller at the Effective Time.
1.6 DELIVERY OF CERTIFICATES. At the Closing, in addition to the other
instruments and agreements contemplated hereby, (i) the Seller shall deliver to
Metals the certificates representing the Company Stock, duly endorsed by the
Seller, or accompanied by duly executed stock powers, and (ii) Metals shall
deliver to the Seller certificates representing the Metals Stock described in
Section 1.5(i) above. The Seller agrees promptly to cure any deficiencies with
respect to the endorsement of the stock certificates or other documents of
conveyance with respect to such Company Stock or with respect to the stock
powers accompanying any Company Stock.
1.7 CLOSING. The closing of the transactions contemplated by this
Agreement shall take place on the date hereof (the "Closing Date") by the
exchange of faxed documents and signature pages, which shall be followed by the
exchange of manually signed originals of all documents contemplated hereby
promptly after the Closing Date.
1.8 NAME CHANGE. After the Effective Time, the Surviving Corporation shall
have the right to change its name to "Xxxxxx Titanium, Ltd."
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
For purposes of this Section 2, except as otherwise indicated, the term
"Company" shall mean Xxxxxx Titanium, Ltd. and all of its Subsidiaries, if any.
The Seller represents and warrants to Metals, except as set forth on Seller's
disclosure schedule attached hereto (the "Disclosure Schedule"; it being agreed
that each reference herein to any numbered Schedule shall mean the appropriate
portion of the Disclosure Schedule) as follows:
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise), of the Company taken as a whole (as used herein with
respect to the Company, or with respect to any other person, a "Material Adverse
Effect"). Schedule 2.1 sets forth a list of all jurisdictions in which the
Company is authorized or qualified to do business. True, complete and correct
copies of the Articles of Incorporation and By-laws, each as amended, of the
Company (the "Charter Documents") have been provided to Metals. The stock
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records of the Company made available to Metals are correct and complete in all
material respects. There are no minutes in the possession of the Company or the
Seller which have not been made available to Metals.
2.2 AUTHORIZATION. (i) The representatives of the Company executing this
Agreement have the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been unanimously approved by all of the shareholders and the
Board of Directors of the Company. This Agreement has been validly executed and
delivered by the Company and the Seller and constitutes the legal, valid and
binding obligation of each of them enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of (i) 7,500 shares of common stock, no par value, of
which 489 shares are issued and outstanding and constitute all of the Shares,
all of which are owned of record and beneficially by the Seller free and clear
of all liens, security interests, pledges, charges, voting trusts, restrictions
(other than restrictions on transfer resulting solely from applicable state or
federal securities laws), encumbrances and claims of every kind, except as set
forth on Schedule 2.3. All of the Shares have been duly authorized and validly
issued, are fully paid and nonassessable, and were offered, issued, sold and
delivered by the Company in compliance with all applicable state and federal
laws concerning the issuance of securities. None of the Shares were issued in
violation of any preemptive rights or similar rights of any person. No option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any additional shares of its capital stock or obligates the
Seller to transfer any of the Shares to any person.
2.4 SUBSIDIARIES. Except as set forth on Schedule 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in Schedule 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Schedule 2.5 hereto includes complete and
correct copies of the balance sheets of the Company as of June 30, 1997 (the
"Balance Sheet Date") and June 30, 1996 and 1995 and the related statements of
operations, stockholder's equity and cash flows for the three-year period ended
June 30, 1997, together with the related notes and schedules (such balance
sheets, the related statements of operations, stockholder's equity and cash
flows and the related notes
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and schedules are referred to herein as the "Year-end Financial Statements").
The Financial Statements have been prepared from the books and records of the
Company in conformity with generally accepted accounting principles applied on a
basis consistent with preceding years and throughout the periods involved
("GAAP") and present fairly the financial position and results of operations of
the Company as of the dates of such statements and for the periods covered
thereby. The books of account of the Company have been kept accurately in all
material respects in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on the Disclosure
Schedule, the Company has no liabilities or obligations of any kind, whether
accrued, absolute, secured or unsecured, contingent or otherwise. Except and to
the extent disclosed on the Disclosure Schedule, there are no claims,
liabilities or obligations, nor any reasonable basis for assertion against the
Company, of any claim, liability or obligation, of any nature whatsoever.
Schedule 2.6 contains a reasonable good faith estimate of the maximum amount
which may be payable with respect to liabilities which are not fixed. For each
such liability for which the amount is not fixed, Schedule 2.6 includes a
summary description of the liability. Copies of all relevant documentation
relating thereto have been furnished to Metals.
2.7 ACCOUNTS AND NOTES RECEIVABLE. Schedule 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the Balance
Sheet Date and generated subsequent to the Balance Sheet Date, including any
such amounts which are not reflected in the balance sheet as of the Balance
Sheet Date. Receivables from and advances to employees and the Seller and any
entities or persons related to or affiliated with the Seller are separately
identified on Schedule 2.7. Schedule 2.7 also sets forth an accurate aging
analysis of all accounts, notes and other receivables as of the Balance Sheet
Date, showing amounts due in 30-day aging categories. Except to the extent
reflected on Schedule 2.7, all such accounts, notes and other receivables were
incurred in the ordinary course of business, are stated in accordance with GAAP
and, to the best of the Stockholder's knowledge, are collectible in the amounts
shown on Schedule 2.7, net of reserves reflected in the balance sheet as of the
Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations ("Authorizations") required in
connection with the conduct of the Company's business except where the failure
to hold any such Authorization would not have a Material Adverse Effect.
Schedule 2.8 sets forth an accurate list and summary description of all such
Authorizations, including permits, titles (including licenses, franchises,
certificates, trademarks, trade
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names, patents, patent applications and copyrights owned or held by the Company
or any of its employees (including interests in software or other technology
systems, programs and intellectual property) (collectively, the "Intangible
Assets") (it being understood and agreed that a list of all environmental
permits and other environmental approvals is set forth on Schedule 2.9). To the
best of the Company's knowledge, the Intangible Assets and other Authorizations
listed on Schedules 2.8 and 2.9 are valid, and the Company has not received any
notice that any person intends to cancel, terminate or not renew any such
Intangible Assets or other Authorization. The Company has conducted and is
conducting its business in compliance with the requirements, standards, criteria
and conditions set forth in the Intangible Assets and other Authorizations
listed on Schedules 2.8 and 2.9 and is not in violation of any of the foregoing
except where any such violation would not have a Material Adverse Effect. Except
as specifically set forth on Schedule 2.8 or 2.9, (a) the transactions
contemplated by this Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to the
Company by, any such Intangible Assets or Authorizations, and (b) all of such
rights and benefits will be rights and benefits of the Surviving Corporation
upon consummation of the Merger.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances including petroleum and petroleum
products (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, (i) has not had and will not have a Material Adverse Effect on
the Company or any of its businesses, and (ii) will not necessitate any material
expenditure by or on behalf of the Company. The Company has obtained and adhered
to all necessary permits and other approvals necessary to treat, transport,
store, dispose of and otherwise handle Hazardous Wastes, Hazardous Materials and
Hazardous Substances, a list of all of which permits and approvals is set forth
on Schedule 2.9, and have reported to the appropriate authorities, to the extent
required by all Environmental Laws, all past and present sites owned and
operated by the Company where Hazardous Wastes, Hazardous Materials or Hazardous
Substances have been treated, stored, disposed of or otherwise handled. During
the time the Company has been in possession, there have been no releases or
threats of releases (as defined in Environmental Laws) at, from, in or on any
property owned or operated by the Company, and, to the knowledge of the Company,
there were no such releases prior to the time the Company took possession of
such properties, except as permitted by Environmental Laws. There is no on-site
or off-site location to which the Company has transported or disposed of
Hazardous Wastes, Hazardous
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Materials or Hazardous Substances or arranged for the transportation of
Hazardous Wastes, Hazardous Materials or Hazardous Substances which is the
subject of any federal, state, local or foreign enforcement action or any other
investigation which is reasonably likely to lead to any claim against the
Company or Metals for any clean-up cost, remedial work, damage to natural
resources, property damage or personal injury, including, but not limited to,
any claim under (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) the Resource Conservation and Recovery
Act, (iii) the Hazardous Materials Transportation Act or (iv) comparable state
or local statutes and regulations. The Company has no contingent liability in
connection with any release of any Hazardous Waste, Hazardous Material or
Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. Schedule 2.10 sets forth an accurate list of (a)
all material personal property included in "plant, property and equipment" on
the balance sheet of the Company, (b) all other personal property material to
the operations of the Company owned by the Company with an individual value in
excess of $10,000 as of the Balance Sheet Date or acquired since the Balance
Sheet Date, (c) all material leases and agreements in respect of personal
property (true, complete and correct copies of which have been provided to
Metals) and (d) an indication as to which assets are currently owned, or were
formerly owned, by Seller, relatives of Seller, or Affiliates of the Company or
the Seller. Except as set forth on Schedule 2.10, (i) all material personal
property used by the Company in its business is either owned by the Company or
leased by the Company pursuant to a lease included on Schedule 2.10, (ii) all of
the personal property listed on Schedule 2.10 is in good working order and
condition, ordinary wear and tear excepted and (iii) all leases and agreements
included on Schedule 2.10 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. Except as set forth on Schedule 2.10, the Company
has good and marketable title to the tangible and intangible personal property
it purports to own, subject to no mortgage, lien, charge, encumbrance, easement,
or security interests, except (a) liens for current taxes not due and payable,
(b) purchase money security interests incurred in the ordinary course of
business, (c) matters disclosed in the Financial Statements, (d) any such
matters that do not in the aggregate materially detract from the value of the
property or materially detract from or interfere with the use of property in the
ordinary conduct of business as currently conducted, (e) the matter set forth on
Schedule 2.10, or (f) materialmens', mechanics', carriers', workmens',
repairmens' or other like liens arising in the ordinary course of business
(collectively, "Encumbrances").
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. Schedule
2.11 sets forth a list of (i) all customers representing 2% or more of the
Company's revenues in either fiscal 1996 or fiscal 1997, and (ii) all material
contracts, commitments and similar agreements to which the Company is a party or
by which it or any of its properties are bound (including, but not
-8-
limited to, contracts with significant customers, joint venture or partnership
agreements, contracts with any labor organizations, strategic alliances and
options to purchase land). True, complete and correct copies of such agreements
have been provided to Metals. None of the Company's significant customers
(including those identified on Schedule 2.11) have canceled or substantially
reduced or, to the knowledge of the Company, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by the Company. The Company has complied with all material
commitments and obligations pertaining to it, and is not in default under any
contracts or agreements listed on Schedule 2.11 and no notice of default under
any such contract or agreement has been received. The transactions contemplated
by this Agreement will not result in a default under or a breach or violation
of, or adversely affect the rights and benefits afforded to the Company by, any
such contracts or agreements, and all of the rights and benefits under all such
contracts and agreements will be rights and benefits of the Surviving
Corporation upon consummation of the Merger. The Company has no plans or
projects involving the opening of new operations, expansion of existing
operations, the acquisition of any property, business or assets requiring, in
any event, the payment of more than $50,000.
2.12 REAL PROPERTY. Schedule 2.12 includes a list of all real property
owned or leased by the Company at the date hereof, and all other real property,
if any, used by the Company in the conduct of its business. True, complete and
correct copies of all leases and agreements in respect of real property leased
by the Company have been provided to Metals, and an indication as to which such
properties, if any, are currently owned, or were formerly owned, by Seller or
affiliates of the Company or Seller is included in Schedule 2.12. Except as set
forth on Schedule 2.12, (a) all of such leases included on Schedule 2.12 are in
full force and effect and, to the best knowledge of the Company, constitute
valid and binding agreements of the parties (and their successors) thereto in
accordance with their respective terms, (b) the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
leases, and (c) all of the rights and benefits under all such leases will be
rights and benefits of the Surviving Corporation upon consummation of the
Merger.
2.13 INSURANCE. Schedule 2.13 sets forth an accurate list as of the
Balance Sheet Date of all insurance policies now carried by the Company and an
accurate list of all insurance loss runs and workers compensation claims
received for the past five policy years. True, complete and correct copies of
all insurance policies currently in effect have been provided to Metals. Such
insurance policies evidence all of the insurance that the Company is required to
carry pursuant to all of its contracts and other agreements and pursuant to all
applicable laws. None of such policies is a "claims made" policy.
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2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of (i) the Balance Sheet Date and (ii)
the date hereof. Since the Balance Sheet Date, there have been no increases in
the compensation payable or any special bonuses to any officer, director, key
employee or other employee, except ordinary salary increases implemented on a
basis consistent with past practices.
Except as set forth on Schedule 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past three years. The Company considers its
relationship with its employees to be good.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on Schedule 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 2.15, the Company does not sponsor,
maintain or contribute to any plan program, fund or arrangement that constitutes
an "employee pension benefit plan," nor does the Company have any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any
non-qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same meaning
as is given that term in Section 3(2) of ERISA. The Company has not sponsored,
maintained or contributed to any employee pension benefit plan other than the
plans set forth on Schedule 2.15, and is not required to contribute to any
retirement plan pursuant to the provisions of any collective bargaining
agreement establishing the terms and conditions or employment of any of the
Company's employees.
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Except as set forth on Schedule 2.15, the Company is not now, and will not
as a result of its past activities become, liable to the Pension Benefit
Guaranty Corporation or to any multi employer employee pension benefit plan
under the provisions of Title IV of ERISA. All employee benefit plans listed on
Schedule 2.15 and the administration thereof are in compliance in all material
respects with their terms and all applicable provisions of ERISA and the
regulations issued thereunder, as well as with all other applicable federal,
state and local statutes, ordinances and regulations. All accrued contribution
obligations of Company with respect to any plan listed on Schedule 2.15 have
either been fulfilled in their entirety or are fully reflected on the balance
sheet of the Company as of the Balance Sheet Date. All plans listed on Schedule
2.15 that are intended to qualify (the "Qualified Plans") under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code") are, and have
been, so qualified and have been determined by the Internal Revenue Service to
be so qualified. All reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries have
been timely filed or distributed, and copies thereof are included as part of
Schedule 2.15. Neither the Seller, any plan listed in Schedule 2.15 nor the
Company has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA. No plan listed in Schedule
2.15 has incurred an accumulated funding deficiency, as defined in Section
412(a) of the Code and Section 302(1) of ERISA; and the Company has not incurred
any liability for excise tax or penalty due to the Internal Revenue Service or
any liability to the Pension Benefit Guaranty Corporation. There have been no
terminations, partial terminations or discontinuance of contributions to any
such Qualified Plan intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no plan listed in
Schedule 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed in Schedule 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and no
circumstances exist pursuant to which the Company could have any direct or
indirect liability whatsoever (including, but not limited to, any liability to
any multi employer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty, or being subject to any statutory
lien to secure payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than the Company
that is, or at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.16, there are no claims, actions, suits or proceedings, pending or threatened
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over the Company that, if
adversely determined, would have a Material Adverse Effect. Except as set forth
on Schedule 2.16, no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been
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received by the Company during the last five years and there is no basis
therefor. Except as set forth on Schedule 2.16, the Company has conducted for
the past five years and now conducts its business in substantial compliance with
the requirements, standards, criteria and conditions set forth in applicable
laws, regulations, writs, injunctions, decrees and orders applicable to the
Company or its assets, except where any failure to comply would not have a
Material Adverse Effect. The Company is not in violation of any law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them that could have a Material Adverse Effect.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof, whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties or additional amounts
attributable to or imposed with respect to any such taxes, charges, fees, levies
or other assessments. Notwithstanding anything else to the contrary in this
Agreement, including, but not limited to, any reference with respect to laws,
regulations, filings, GAAP, or other similar matters, all representations and
warranties in this Agreement with respect to Taxes are exclusively those set
forth under this Section 2.17, and no other representation or warranty shall be
deemed to be made with reference to Taxes.
The Company has timely filed all federal, state and other tax returns or
extension requests for all fiscal periods ended on or before the Balance Sheet
Date. There are no examinations in progress or claims pending against the
Company for federal, state or other taxes (including penalties and interest) for
any period or periods prior to or on the Balance Sheet Date and no notice of any
claim for taxes, whether pending or threatened, has been received. All Taxes,
including interest and penalties, shown on any tax return to be owed by the
Company or any member of an affiliated or consolidated group which includes or
included the Company, has been paid or an amount sufficient to make such payment
has been accrued in the Financial Statements. Copies of (i) any tax
examinations, (ii) extensions of time for filing and (iii) the federal and local
income tax returns and franchise tax returns of Company (including any
subsidiaries) for the last three fiscal years, or such shorter period of time as
any of them shall have existed have been delivered to Metals. The Company is not
an S corporation. The Company uses the accrual method of accounting for income
tax purposes, and the Company's methods of accounting have not changed in the
past five years. The Company is not an investment company as defined in Section
351(e)(1) of the Code.
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2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents . Neither the Company nor, to the
knowledge of the Company, any other party thereto, is in default under any
lease, instrument, license, permit or material agreement to which the Company is
a party or by which its properties are bound (the "Material Documents") that
would have a Material Adverse Effect. The execution of this Agreement by the
Company and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby will not result in any
violation or breach or constitute a default under, any of the terms or
provisions of the Material Documents or the Charter Documents. At and after the
Closing and the Merger the Surviving Corporation will be entitled to the rights
and benefits the under the Material Documents to which the Company is entitled
immediately prior to the Merger. Except for consents already obtained, none of
the Material Documents requires notice to, or the consent or approval of, any
governmental agency or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect, and
consummation of the transactions contemplated hereby will not give rise to any
right to termination, cancellation or acceleration or loss of any material right
or benefit. None of the Material Documents prohibits the use or publication of
the name of any other party to such Material Document, and none of the Material
Documents prohibits or restricts the Company or will prevent or restrict the
Surviving Corporation or Metals from freely providing services to any person.
2.19 GOVERNMENT CONTRACTS. The Company is not a party to any governmental
contract subject to price redetermination or renegotiation.
2.20 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on Schedule 2.20, there has not been:
(i) any material adverse change in the business, assets, or
financial condition of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting any of the material assets or
the business of the Company;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
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(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company to any of its
officers, directors, stockholders, employees, consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any similar event or condition of any character, materially adversely
affecting the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of Company to any person other
than in the ordinary course of business, including, without limitation,
the Seller or any of his affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company, other than in the ordinary course
of business, including without limitation any indebtedness or obligation
of any Seller or any affiliate thereof;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
provided that this shall not be deemed to apply to ordinary adjustments of
bills with non-affiliated customers in a manner consistent with past
practice,
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a party;
(xiii) any transaction by the Company outside the ordinary course of
its business; (xiv) any cancellation or termination of a material contract
with a customer or client prior to the scheduled termination date; or
(xv) any distribution of property or assets by the Company.
2.21 POWERS OF ATTORNEY. Schedule 2.21 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Neither the
Seller nor any other affiliate of the Company owns, directly or indirectly, any
interest in, or is an officer, director, employee or consultant of or otherwise
receives remuneration from, any business which is a competitor, lessor, lessee,
customer or supplier of the Company, except for ownership of less than 1% of the
outstanding capital stock of any publicly traded company in which such person
has no management or other similar position. Neither the Stockholder nor any
officer or director of the
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Company has any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the Company's business.
2.23 DISCLOSURE. The Seller has provided Metals with all the information
that Metals has requested in analyzing whether to consummate the transactions
contemplated hereby. There is no fact not disclosed on the Disclosure Schedule
that to Seller's actual knowledge has specific application to the Company or its
business or assets (other than general economic or industry conditions) which
materially adversely affects or, so far as the Seller can reasonably foresee,
materially threatens, the Company or its business or assets, or the condition
(financial or otherwise), results of operations or prospects of the Company.
2.24 PROHIBITED ACTIVITIES. Except as set forth on Schedule 2.24, the
Company has not, between the Balance Sheet Date and the date hereof, taken any
of the actions (Prohibited Activities) described in Section 4.3.
2.25 CERTAIN BUSINESS PRACTICES. Neither the Company nor, to the knowledge
of the Company or the Stockholder, any person acting on behalf of the Company
has given or offered anything of value to any governmental official, political
party or candidate for government office nor has it or any of them otherwise
taken any action which would cause the Company to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, or any law of similar effect.
3. REPRESENTATIONS OF METALS
Metals represents and warrants that all of the following representations
and warranties in this Section 3 are true at the date of this Agreement and
shall be true at the time of Closing.
3.1 DUE ORGANIZATION. Metals and Newco are each duly incorporated, validly
existing and in good standing under the laws of the state of their
incorporation, and each has the requisite power and authority to carry on its
business as it is now being conducted. Metals and Newco are each qualified to do
business and is in good standing in each jurisdiction in which the nature of
their business makes such qualification necessary, except where the failure to
be so authorized or qualified would not have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of Metals and Newco executing
this Agreement have the authority to enter into and bind Metals and Newco to the
terms of this Agreement and (ii) Metals and Newco have the full legal right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
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3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Certificate of Incorporation or Bylaws of
Metals and Newco.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by Metals and Newco and the performance of the transactions contemplated hereby
have been duly and validly authorized by the Boards of Directors of Metals and
Newco and this Agreement has been duly and validly authorized by all necessary
corporate action and is a legal, valid and binding obligation of Metals and
Newco.
3.5 CAPITAL STOCK. The authorized capital stock of Metals is as described
in the Prospectus contained in Metals' Registration Statement on Form S-1 as
filed with the Securities and Exchange Commission on September 12, 1997 (the
"Prospectus"). At the date hereof, 18,544,109 shares of Metals Stock are issued
and outstanding, 3,122,914 shares of Metals Restricted Voting Common Stock are
issued and outstanding, and no shares of Metals Preferred Stock are issued or
outstanding. The shares of Metals Stock to be issued to Seller pursuant to this
Agreement will be validly issued, fully paid and nonassessable, and will be
freely tradeable, subject to applicable securities laws and the contractual
restrictions set forth herein.
3.6 FINANCIAL STATEMENTS. The financial statements of Metals contained in
the Prospectus have been prepared from the books and records of Metals in
conformity with GAAP and present fairly the financial position and results of
operations of Metals as of the dates of such statements and for the periods
covered thereby. The books of account of Metals have been kept accurately in all
material respects in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses, assets and
liabilities of Metals have been properly recorded therein in all material
respects.
3.7 NO MATERIAL ADVERSE CHANGE. Since the date of the most recent
financial statements referred to in Section 3.6, there has not been any material
adverse change in the business, assets or financial condition of Metals.
4. COVENANTS PRIOR TO CLOSING
4.1 ACCESS AND COOPERATION; DUE DILIGENCE. Between the date of this
Agreement and the Closing Date, the Company will afford to the officers and
authorized representatives of Metals and Newco access (in a manner that will not
disrupt the Company's operations) to all of the Company's sites, properties,
books and records and will furnish Metals and Newco with such
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additional financial and operating data and other information as to the business
and properties of the Company as Metals and Newco may from time to time
reasonably request. The Company will cooperate with Metals and Newco, their
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with the transactions
contemplated by this Agreement. Metals, Newco, the Seller and the Company will
treat all information obtained in connection with the negotiation and
performance of this Agreement as confidential in accordance with the provisions
of Section 11 hereof.
4.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing Date, the Company will use commercially reasonable
efforts to:
(i) carry on its respective businesses in substantially the same
manner as it has heretofore and not introduce any material new method of
management, operation or accounting;
(ii) maintain its respective properties and facilities, including
those held under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
(iii) perform in all material respects all of its respective
obligations under agreements relating to or affecting its respective
assets, properties or rights;
(iv) use all reasonable efforts to keep in full force and effect
present insurance policies or other comparable insurance coverage;
(v) use its reasonable efforts to maintain and preserve its business
organization intact, retain its respective present key employees and
maintain its respective relationships with suppliers, customers and others
having business relations with the Company;
(vi) maintain compliance with all material permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities; and
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments without the knowledge and consent
of Metals (which consent shall not be unreasonably withheld), provided
that debt and/or lease instruments may be replaced without the consent of
Metals if such replacement instruments are on terms at least as favorable
to the Company as the instruments being replaced.
4.3 PROHIBITED ACTIVITIES. Except as set forth on Schedule 4.3, between
the date hereof and the Closing Date, the Company will not, without prior
written consent of Metals (which will not be unreasonably withheld):
(i) make any change in its Articles of Incorporation or By-laws;
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(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its stock;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except in the normal
course of business consistent with past practice in an amount not in
excess of $10,000;
(v) create, assume or permit to exist any new Encumbrance upon any
assets or properties whether now owned or hereafter acquired;
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(vii) negotiate for the acquisition of any business or the start-up
of any new business;
(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation or other entity;
(ix) waive any material rights or claims of the Company, provided
that the Company may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past practice;
(x) amend or terminate any material agreement, permit, license or
other right of the Company;
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder; or
(xii) increase or commit to any increase in the salary, bonus,
commission or other compensation of any officer, director, employee or
agent of the Company.
4.4 NO SHOP. None of the Seller, the Company, nor any agent, officer,
director, trustee or any representative of any of the foregoing will, during the
period commencing on the date of this Agreement and ending with the earlier to
occur of the Closing Date or the termination of this Agreement in accordance
with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than Metals and
Newco or their authorized agents relating to, any acquisition or purchase
of all or a material amount of the assets (except for sales in the
ordinary course of business) of, or any equity interest in, the Company or
a merger, consolidation or business combination involving the Company.
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4.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the Company
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide Metals and Newco with proof that any required notice has been sent.
4.6 AGREEMENTS. Upon the request of Metals, at, or at any time after, the
Closing, the Seller and the Company shall terminate any existing agreements
between the Company and the Seller.
4.7 NOTIFICATION OF CERTAIN MATTERS. The Seller and the Company shall give
prompt notice to Metals of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause any
representation or warranty of the Company or the Seller contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing and (ii)
any material failure of any Seller or the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by such person
hereunder. Metals shall give prompt notice to the Company of (i) the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which would
be likely to cause any representation or warranty of Metals contained herein to
be untrue or inaccurate in any material respect at or prior to the Closing and
(ii) any material failure of Metals to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this Section 4.7 shall not be deemed to (i)
modify the representations or warranties hereunder of the party delivering such
notice, (ii) modify the conditions to Closing set forth herein, or (iii) limit
or otherwise affect the remedies available hereunder to the party receiving such
notice.
4.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing occurs to
notify the other parties hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules.
4.9 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
4.10 COMPLIANCE WITH THE XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF
0000 (XXX "XXX XXX"). Each of the parties hereto agrees to cooperate and use its
best efforts to comply with the HSR Act. The expiration or termination of the
applicable waiting period under the HSR Act shall be deemed a condition
precedent in addition to the conditions precedent set forth elsewhere
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in this Agreement. The costs and expenses of HSR Act filings (including filing
fees) shall be borne by the parties required to make the filings.
4.11 NOTICES AND CONSENTS. The Company will give any notices to third
parties, and the Company will use commercially reasonable efforts to obtain any
third party consents, that may be necessary to consummate the transactions
contemplated hereby or that Metals may request.
4.12 SELLER'S COMMITMENT. The Seller hereby agrees to cause the Company to
comply with its obligations under this Agreement and to use its best efforts to
cause the conditions to the Closing to be satisfied.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND THE COMPANY
The obligations of the Seller and the Company with respect to actions to
be taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions. If any such
conditions has not been satisfied, the Seller shall have the right to terminate
this Agreement, or in the alternative, waive any condition not so satisfied. Any
act or action of the Seller in consummating the Closing shall constitute a
waiver of any conditions not so satisfied. However, no such waiver shall be
deemed to affect the survival of the representations and warranties of Metals
contained in Section 3 or the indemnification obligations contained in Section
8.
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of Metals contained in Section 3 shall be true
and correct in all material respects as of the Closing Date as though such
representations and warranties had been made as of that time; all of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Metals on or before the Closing Date shall have been duly complied with and
performed in all material respects; and certificates to the foregoing effect
dated the Closing Date and signed by the President or any Vice President of
Metals shall have been delivered to the Seller.
5.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to the Seller and his counsel.
5.3 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated hereby shall have been obtained and made, and no
governmental agency or body shall have taken
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any other action or made any requests of the Company or Seller as a result of
which the Seller reasonably deems it inadvisable to proceed with the
transactions hereunder.
5.4 EMPLOYMENT AND CONSULTING AGREEMENTS. Seller shall have been afforded
an opportunity to enter into an Employment Agreement with the Company in the
form of Annex I.
5.5 OPINION OF COUNSEL. Seller and the Company shall have received an
opinion from counsel for the Purchaser, date of the Closing Date, in
substantially the form annexed hereto as Annex III.
5.6 REGISTRATION. Any registration statement required on the part of
Metals to have been declared effective by the Securities and Exchange Commission
in order to register the shares of Metal that constitute a portion of the
Purchase Price shall have been declared effective.
5.7 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to Metals or the Purchaser that would constitute a
Material Adverse Effect.
5.8 TAX MATTERS. The Seller shall have received advice from his tax
advisers that the transaction contemplated hereby, to the extent of the receipt
of the Metals Stock, will not be taxable and that the Seller will not recognize
gain to the extent he exchanges stock of the Company for Metals Stock (but not
cash or other property) pursuant hereto.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF METALS AND NEWCO
The obligations of Metals and Newco with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. If any such conditions has not
been satisfied, Metals and Newco shall have the right to terminate this
Agreement, or in the alternative, waive any condition not so satisfied. Any act
or action of Metals and Newco in consummating the Closing shall constitute a
waiver of any conditions not so satisfied. However, no such waiver shall be
deemed to affect the survival of the representations and warranties of the
Seller contained in Section 2 or the indemnification obligations contained in
Section 8 as they relate to non-waived matters.
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date; all of the terms, covenants and conditions of this Agreement to
be complied with or performed by the Seller and the Company on or before the
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Closing Date, as the case may be, shall have been duly performed or complied
with in all material respects; and the Seller shall have delivered to Metals and
Newco certificates dated the Closing Date and signed by Seller to such effect.
6.2 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company which would constitute a Material Adverse
Effect, and the Company shall not have suffered any material loss or damages to
any of its material assets, whether or not covered by insurance, or any material
adverse change, loss or damage to the Company's business.
6.3 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to Metals and Newco.
6.4 OPINION OF COUNSEL. Metals shall have received an opinion, dated the
Closing Date, substantially in the form annexed hereto as Annex II.
6.5 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 2.18 shall have been obtained;
and no action or proceeding shall have been instituted or threatened to restrain
or prohibit the transactions contemplated hereby and no governmental agency or
body shall have taken any other action or made any request of Metals or Newco as
a result of which Metals reasonably deems it inadvisable to proceed with the
transactions hereunder.
6.6 GOOD STANDING CERTIFICATES. The Seller shall have delivered to Metals
certificates, dated as of a date no later than the Closing Date, duly issued by
the appropriate governmental authority in the State of Incorporation and in each
state in which the Company is authorized to do business, showing the Company is
in good standing and authorized to do business.
6.7 EMPLOYMENT AGREEMENT. Seller shall have entered into the Employment
Agreement referred to therein.
6.8 ESCROW AGREEMENT. The parties identified in the form of Escrow
Agreement attached hereto as Annex IV shall have entered into an escrow
agreement in the form of Annex IV.
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7. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
7.1 FUTURE COOPERATION. The Seller, the Company, Metals and Newco shall
each deliver or cause to be delivered to the other following the date hereof
such additional instruments as the other may reasonably request for the purpose
of effecting the Merger and fully carrying out the intent of this Agreement.
7.2 EXPENSES. Metals will pay the fees, expenses and disbursements of
Metals and Newco and their agents, representatives, financial advisors,
accountants and counsel incurred in connection with the execution, delivery and
performance of this Agreement. The Seller will pay the fees, expenses and
disbursements of the Seller and Seller's agents, representatives, financial
advisors, accountants and counsel incurred in connection with the execution,
delivery and performance of this Agreement.
7.3 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. After the Closing Date,
Metals will not, and will not permit any of its subsidiaries to, undertake any
act that would jeopardize the tax-free status of the reorganization contemplated
hereby.
7.4 PREPARATION AND FILING OF TAX RETURNS. The Surviving Corporation,
under the direction of Xxxxx Xxxxxx, will prepare and file or cause to be filed
all federal and state income tax returns for all taxable periods that end on or
before the Closing Date; provided, however, that all such filings shall be
reviewed prior to filing by Metals' independent accountants (the "Independent
Accountants"), and such filings shall not take any positions the Independent
Accountants advise Metals are not supported by substantial authority. Except to
the extent of Taxes reserved or accrued on the Financial Statements, Seller will
pay or cause to be paid all Tax liabilities owing by the Company for periods
prior to the Closing Date, subject to the procedures set forth in Section 8.
Each party will provide the other party such cooperation and information as any
of them reasonably requests in filing any Tax return, amended return or claim
for refund, determining a liability for Taxes or a right to refund of Taxes or
in conducting any audit or other proceeding in respect of Taxes. Neither Metals
nor the Surviving Corporation will amend any tax return of the Company (or the
Surviving Corporation) for any period ending on or prior to the Closing Date
without the consent of Seller, which consent shall not be unreasonably withheld.
7.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. On the Closing Date, the
employees of the Company will become the employees of the Purchaser with date of
employment and service for all employee benefit purposes dating to the date of
their original employment by the Company. The
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foregoing will not (except as set forth in any Employment Agreement), have any
effect on the employment status of any employee and the foregoing will not in
any way limit the management rights of the Surviving Corporation to assess work
force needs and make appropriate adjustments as necessary or desirable within
their discretion subject to applicable laws.
8. INDEMNIFICATION
The Seller and Metals each make the following covenants that are
applicable to them, respectively:
8.1 SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Seller made in this
Agreement and in the documents and certificates delivered in connection herewith
shall survive the Closing for a period of two years from the Closing Date,
except that:
(i) such representations and warranties that relate to Taxes shall
survive until the expiration of the applicable statutes of limitations for
such Taxes (including any extensions thereof granted with Seller's
consent, which shall not be unreasonably withheld); and
(ii) the representations and warranties in Sections 2.8, 2.9, 2.16
and 2.25 hereof shall survive for a period of ten years; provided,
however, that representations and warranties with respect to which a good
faith claim is made, together with related indemnification obligations,
within the applicable survival period, shall survive until such claim is
finally determined and paid (if applicable).
(b) The representations and warranties of Metals made in this
Agreement and in the certificates delivered in connection herewith shall survive
the Closing for a period of two years following the Closing Date, provided,
however, that representations and warranties (and related indemnification
obligations) with respect to which a good faith claim is made within such two
year period shall survive until such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
8.2 GENERAL INDEMNIFICATION BY THE SELLER. The Seller covenants and agrees
that Seller will indemnify, defend, protect, and hold harmless Metals and the
Surviving Corporation at all times from and after the date of this Agreement
until the Expiration Date from and against all claims,
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damages actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but not limited to, reasonable attorneys'
fees and expenses of investigation) (collectively, "Damages") incurred as a
result of (i) any breach of any representation or warranty of the Seller set
forth herein or in the certificates or other documents delivered at the Closing,
and (ii) any breach or nonfulfillment of any covenant or agreement by the
Company or the Seller under this Agreement. Metals and the Purchaser acknowledge
and agree that other than the representations and warranties of the Seller and
the Company specifically contained in this Agreement, there are no
representations or warranties of the Seller or the Company, either express or
implied, with respect to the transactions contemplated by this Agreement, the
Company, its assets, or business.
8.3 INDEMNIFICATION BY METALS. Metals covenants and agrees that it will
indemnify, defend, protect and hold harmless the Seller at all times from and
after the date of this Agreement until the Expiration Date from and against all
Damages incurred by the Seller as a result of (i) any breach of any
representation or warranty of Metals set forth herein or in the certificates
delivered at the Closing; (ii) any breach or nonfulfillment of any covenant or
agreement by Metals under this Agreement; (iii) any liability, contingent or
otherwise, of the Company that was either set forth on the Balance Sheet,
disclosed to the Purchaser in the Disclosure Schedule, incurred in the ordinary
course of the business of the Company in a manner not requiring disclosure under
this Agreement (other than such matters as to which Seller has specifically
provided indemnification herein); and (iv) any liability of Seller under his
Guaranty of the Lease dated June 1, 1996 between Xxxx Investment Co. of Santa
Xxxxxx and the Company relating to the property at 0000 Xxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxxxxxxxxx.
8.4 SPECIFIC INDEMNIFICATION.
(a) In addition to the indemnification provided for in Section 8.1,
Seller shall indemnify, defend, protect and hold harmless Metals and the
Surviving Corporation from all Damages resulting from any breach of the
representation and warranty set forth in Section 2.9.
(b) In addition to the indemnification provided for in Section 8.1,
Seller shall indemnify, defend, protect and hold harmless Metals and the
Surviving Corporation from and against all tax liabilities of any nature
whatsoever payable by the Company for any period ending on or prior to the
Closing Date, to the extent they are in excess of the amounts reserved therefor
on the Company's Financial Statements.
8.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") that could give rise to Damages or the
commencement of any action or proceeding by a
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Third Person that may give rise to a right of indemnification hereunder, such
Indemnified Party shall give to the party obligated to provide indemnification
hereunder (an "Indemnifying Party") written notice of such claim or the
commencement of such action or proceeding; provided, however, that the failure
to give such notice will not relieve such Indemnifying Party from liability
under this Section with respect to such claim, action or proceeding, except to
the extent that the Indemnifying Party has been actually prejudiced as a result
of such failure. The Indemnifying Party (at its own expense) shall have the
right and shall be given the opportunity to associate with the Indemnified Party
in the defense of such claim, suit or proceedings, and the Indemnified Party and
the Indemnifying Party shall make a good faith effort to cooperate in such
defense, provided that, unless the Indemnified Party otherwise agrees, counsel
for the Indemnified Party shall act as lead counsel in all matters pertaining to
the defense or settlement of such claims, suit or proceedings. In the event that
the Indemnified Party and the Indemnified Party are unable to agree on the
selection of lead counsel, each party shall be entitled, at its own expense, to
retain counsel and to participate in the defense of such suit, claim or
proceeding. The Indemnified Party shall not, except at its own cost, make any
settlement with respect to any such claim, suit or proceeding without the prior
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnified Party to settle a claim expeditiously could have a
Material Adverse Effect on the Indemnified Party, the failure of the
Indemnifying Party to act upon the Indemnified Party's request for consent to
such settlement within ten business days of the Indemnifying Party's receipt of
notice thereof from the Indemnified Party shall be deemed to constitute consent
by the Indemnifying Party of such settlement for purposes of this Section.
8.6 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash. In no event will any Indemnified Party have the right, nor will it assert,
any right to withhold payments of amounts otherwise due from the Indemnifying
Party, including, but not limited to, any amounts owing at the time or in the
future under any Employment Agreement. Any indemnification payment under this
Section 8 will be treated as an adjustment to the exchange consideration for tax
purposes unless a final determination with respect to the Indemnified Party or
any of its affiliates causes such payment not to be treated as an adjustment to
the exchange consideration for United States federal income tax purposes.
8.7 LIMITATIONS ON INDEMNIFICATION. Metals and the Surviving Corporation
and the other persons or entities indemnified pursuant to this Section shall not
assert any claim for indemnification hereunder against the Seller until such
time as, and solely to the extent that, the aggregate of all claims which such
persons may have against such the Seller shall exceed $350,000 (the
"Indemnification Threshold"). The Seller shall not assert any claim for
indemnification hereunder against Metals until such time as, and solely to the
extent that the aggregate of all claims which
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Seller may have against Metals shall exceed the Indemnification Threshold. In no
event shall Seller or Metals be obligated to make indemnification payments
hereunder in excess of an aggregate of $8,000,000.
No person shall be entitled to indemnification under this Section 8 if and
to the extent that such person's claim for indemnification is directly or
indirectly caused by a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
The amount of any Damages payable hereunder shall be reduced by the amount
of any tax benefit actually realized and any insurance payment actually received
by the Indemnified Party as a result of the event giving rise to such Damages.
9. TERMINATION OF AGREEMENT
9.1 TERMINATION.This Agreement may be terminated at any time prior to the
Closing Date solely:
(i) by mutual consent of Metals and the Seller;
(ii) by the Metals or by the Seller, if the transactions
contemplated by this Agreement to take place at the Closing shall not have
occurred by October 31, 1997 (the "Termination Date"), unless the failure
of such transactions to be consummated is due to the willful failure of
the party seeking to terminate this Agreement to perform any of its
obligations under this Agreement to the extent required to be performed by
it prior to or on the Closing Date; or
(iii) by Metals or by the Seller if a material breach or default
shall be made by the other in the observance or in the due and timely
performance of any of the covenants or agreements contained herein, and
the curing of such default shall not have been made within ten business
days after written notice thereof is delivered to the breaching or
defaulting party by the other party.
9.2 LIABILITIES IN EVENT OF TERMINATION. The termination of this Agreement
will in no way limit any obligation or liability of any party based on or
arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this Agreement
including, but not limited to, legal and audit costs and out of pocket expenses.
In no event will any party be obligated to any other party for any Damage in the
nature of lost profits, consequential damages, or punitive damages. Any Damage
resulting from a breach of this Agreement will be limited to the direct
out-of-pocket expenses of the party and subject to the other limitations set
forth in this Agreement.
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10. NONCOMPETITION
10.1 PROHIBITED ACTIVITIES. The Seller will not, for a period of five (5)
years following the Closing Date, for any reason whatsoever, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Company anywhere in the world or in competition with
Metals or any of its subsidiaries within 200 miles of where Metals or any
of its subsidiaries conducts business (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company, Metals or any of its other
subsidiaries for the purpose or with the intent of enticing such employee
away from or out of the employ of the Company, Metals or any of its other
subsidiaries;
(iii) call upon any person or entity which is, at that time, or
which has been, within one year prior to the Closing Date, a customer of
the Company, Metals or any of its other subsidiaries within the Territory
for the purpose of soliciting or selling products or services in direct
competition with the Company, Metals or any of its other subsidiaries
within the Territory.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any Seller from acquiring as a passive investor with no involvement in
the operations or management of the business, not more than one percent (1%) of
the capital stock of a competing business whose stock is publicly traded on a
national securities exchange or over-the-counter market, unless otherwise
approved in writing by Metals, such approval not to be unreasonably withheld.
10.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to the Company or Metals as a result of a breach of the foregoing
covenant, and because of the immediate and irreparable damage that could be
caused to the Company or Metals for which it would have no other adequate
remedy, each Seller agrees that the foregoing covenant may be enforced by the
Company or Metals in the event of breach by such Seller, by injunctions,
restraining orders and other equitable actions.
10.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the Seller
in light of the activities and business of
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the Company or Metals and its other subsidiaries on the date of the execution of
this Agreement and the current plans of the Company or Metals.
10.4 SEVERABILITY; REFORMATION. The covenants in this Section are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the provisions of this Section 10 shall thereby be
reformed.
10.5 INDEPENDENT COVENANT. The Seller acknowledges that his covenants set
forth in this Section 10 are material conditions to Metals' willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this Section 10 shall be construed
as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Seller against Metals or any
subsidiary thereof, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company or Metals of such
covenants. It is specifically agreed that the period of five (5) years stated at
the beginning of this Section 10, during which the agreements and covenants of
each Seller made in this Section 10 shall be effective, shall be computed by
excluding from such computation any time during which such Seller shall have
been determined by a court of competent jurisdiction to have been in material
violation of any provision of this Section 10. The covenants contained in
Section 10 shall not be affected by any breach of any other provision hereof by
any party hereto and shall have no effect if the transactions contemplated by
this Agreement are not consummated.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
11.1 GENERAL. The Seller recognizes and acknowledges that he has had
access to certain confidential information of the Company, such as operational
policies, pricing and cost policies, and other information, that are valuable,
special and unique assets of the Company. The Seller agrees that he will not
disclose such confidential information, or any confidential information of the
Company or Metals to which he may have access in the future, to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of the Company or Metals,
(b) following the Closing, such information may be disclosed by Seller as may be
required in the course of performing his duties for the Company and (c) to
counsel and other advisers, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 11.1, unless (i) such
information becomes known to the public generally through no fault of the
Seller, or (ii) disclosure is required by law or the order of
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any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the Seller shall give
prior written notice thereof to the Company or Metals and provide the Company or
Metals with the opportunity to contest such disclosure. In the event of a breach
or threatened breach by the Seller of the provisions of this Section, the
Company or Metals shall be entitled to injunctive or other equitable relief
restraining the Seller from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting the Company or
Metals from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages, subject to the limitations of Section
9.2.
11.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which the Company or
Metals would have no other adequate remedy, the Seller agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
11.3 SURVIVAL. The obligations of the parties under this Article 11 shall
survive the termination of this Agreement for a period of five years.
12. SECURITIES LAW MATTERS
12.1 CONTRACTUAL RESTRICTIONS. The Seller agrees that he will not offer,
sell, assign, pledge, hypothecate, transfer or otherwise dispose of or reduce
his risk with respect to any of the shares of Metals Stock issued to the Seller
pursuant to this Agreement prior to the date one year after the Closing Date,
except with the approval of Metals, which will not be unreasonably withheld. The
foregoing shall not apply to any transfer by Seller to a trust, limited
liability company, family partnership, S corporation or other entity controlled
by Seller for the benefit of Seller, Seller's immediate relatives, or his or
their descendants, or any combination of them or (subject to Metals' consent,
which will not be unreasonably withheld), any transfer to any charitable,
educational, religious or nonprofit organization, provided that any such
transferee described in this sentence agrees to be bound by the foregoing
one-year holding period. Certificates representing the Metals Stock issued to
the Seller shall bear substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTION ON
TRANSFER AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE ENCUMBERED,
AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY SUCH
TRANSACTION, UNTIL SEPTEMBER 26, 1998, WITHOUT THE WRITTEN CONSENT OF THE
ISSUER.
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13. GENERAL
13.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Metals, and the heirs and legal representatives of the Seller.
13.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Seller, the Company
and Metals, and supersede any prior agreement and understanding relating to the
subject matter of this Agreement except for the provisions of the
Confidentiality Agreement between the parties, which shall remain in effect
until the Closing. This Agreement, upon execution, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and may be modified or amended only by a written instrument executed by the
Seller, the Company and Metals.
13.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
13.4 BROKERS AND AGENTS. Each party agrees to pay and hereby indemnifies
the other parties hereto against any fees due to any broker or finder engaged by
such party.
13.5 NOTICES. All notices, including communications required or permitted
hereunder shall be in writing. Any notice will be deemed to have been duly given
if personally delivered, sent by a recognized messenger or next day courier
service or sent by United States mail, telex or facsimile transmission, and will
be deemed received, unless earlier received (a) if sent by express, certified or
regular mail, return receipt requested, when actually received or delivery
refused; (b) if sent by messenger or courier, when actually received or delivery
refused; (c) if delivered by hand, on the date of delivery; and (d) if sent by
telex or facsimile transmission, on the date sent, so long as a confirming
notice is sent by one of the foregoing methods.
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If to Metals, addressed to it at:
Metals USA, Inc.
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
If to the Company, addressed to it at:
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile (000) 000-0000
If to the Seller, addressed to him at:
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile (000) 000-0000
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
13.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California other than its principles governing
conflicts of laws, except to the extent that the law of the State of Delaware
applies to the Merger.
13.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the applicable Expiration
Date.
13.8 EFFECT OF INVESTIGATION; KNOWLEDGE. No investigation by the parties
hereto in connection with this Agreement or otherwise shall affect the
representations and warranties of the parties contained herein or in any
certificate or other document delivered in connection herewith and each such
representation and warranty shall survive such investigation.
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13.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
13.10 TIME. Time is of the essence with respect to this Agreement.
13.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
reasonably possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
13.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
13.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
13.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that any party may, after making a reasonable effort to obtain such
approval, make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities.
13.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
METALS USA, INC.
By:/s/ A. L. FRENCH
Name: A. L. French
Title: CEO
HTL ACQUISITION CORP.
By:/s/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: Sr. VP & CFO
XXXXXX TITANIUM, LTD.
By:/s/ XXXXX XXXXXX
Name: Xxxxx Xxxxxx
Title: President & CEO
Seller:
/s/ XXXXX XXXXXX
Xxxxx Xxxxxx
Sole Stockholder
/s/ XXXX XXXXXX
Xxxx Xxxxxx
