Exhibit 10.19
Alabama Metal Industries Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
(000) 000-0000
May 28, 1999
Xx. Xxxxxxx X. Xxxxxxx
Senior Vice President
Chatwins Group, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Re: Proposed Acquisition of Xxxxx Division
Dear Xxxxxxx:
This letter of intent outlines the terms on which Alabama Metal Industries
Corporation ("Purchaser") proposes to purchase substantially all of the business
and assets of the Xxxxx Division (the "Business") from Chatwins Group, Inc. (the
"Seller").
1. Purchase
At closing, Purchaser will buy and Seller will sell and transfer to
Purchaser all of the equipment, machinery, furniture and fixtures, accounts
receivable, inventory, prepaid expenses, real estate, and all other
tangible and intangible assets (including, but not limited to, patents,
trademarks, trade names, licenses, customer lists, customer contracts, and
operating records) of the Business. This will include the assets of any
subsidiaries, specifically including the Mexican and Chinese operations.
2. Price and Payment
The purchase price for the assets purchased and for a mutually acceptable
non-competition agreement will be $35,000,000 plus the assumption of
certain liabilities. The purchase price shall be payable as follows:
a. $34,000,000 in cash, subject to adjustment as described below, and
b. Common stock of Purchaser, to equal the number of shares that will
represent $1,000,000 valued at the same price per share as those which
will be issued by Purchaser for cash in connection with the financing of
this transaction, such common stock to be subject to a shareholders'
agreement providing equal benefits and protections to all shareholders.
Attached hereto as Exhibit A, is a balance sheet of the Business as of
4/30/99, as adjusted by Purchaser (the "Balance Sheet") indicating a Net
Worth of $23,335,000. If the Net
Xx. Xxxxxxx X. Xxxxxxx
May 28, 1999
Page 2
Worth (determined in the same way as on the Balance Sheet) of the Business
as of the closing date is less than $23,335,000, then the cash portion of
the purchase price shall be reduced by the amount of the decrease. If the
Net Worth is more than $23,335,000 then the cash portion of the purchase
price shall be increased by the amount of the increase.
However, the parties agree that Purchaser's due diligence will include
confirmation that the working capital component of the Balance Sheet is
adequate and consistent with historical levels reasonably required to
operate the Business.
3. Liabilities Assumed
Purchaser shall not assume and shall not be obligated to pay, perform, or
discharge any debts, liabilities, or obligations of the Business, whether
actual, contingent, or accrued, except for liabilities to trade creditors,
and accrued expenses incurred in the normal course of business outstanding
at closing which shall be assumed by Purchaser.
4. Conditions to Closing
Consummation of the proposed acquisition is contingent upon:
a. The satisfactory completion of Purchaser's due diligence.
b. The preparation and execution of a definitive purchase agreement and
related agreements in form acceptable to Purchaser and Seller. Such
agreements will include covenants, representations, warranties,
indemnifications, and legal opinions customary in this type of
transaction.
c. Between the date hereof and closing, Seller will not sell or otherwise
dispose of any of the assets of the Business, other than the disposal of
current assets in the ordinary course of business.
d. Arranging the necessary financing on terms acceptable to Purchaser.
5. Conduct of Business
Until closing, Seller will conduct the Business in the same manner as
heretofore conducted and will use its best efforts to pay its liabilities
on a timely basis and maintain and preserve intact the Business and its
relationships with employees, customers, and suppliers.
Xx. Xxxxxxx X. Xxxxxxx
May 28, 1999
Page 3
6. Access
Prior to closing, Purchaser and its agents shall have access to the
business premises, books, and records of the Business to conduct such
inspections and investigations as Purchaser determines reasonably
necessary. Such inspections and investigations shall be held at such times
and places as the parties shall agree.
7. Fees and Expenses
Each of the parties hereto shall bear its own costs and expenses incurred
in connection with the transactions contemplated hereby.
8. Exclusivity
The Seller agrees that neither it nor any officer, agent, director,
employee, or affiliate of it will, directly or indirectly, discuss a
possible sale or other disposition of all or any part of the Business,
provide any information to, or close any such transaction with any other
purchaser unless Purchaser is unable to close this transaction under
similar terms to those contained herein on or before 60 days from the
acceptance hereof, or Purchaser waives its rights under this provision in
writing. If, notwithstanding the foregoing, any officer, agent, director,
employee, or affiliate of Seller, should receive an acquisition proposal or
any inquiry regarding such proposal from a third party, such party shall
promptly inform Purchaser thereof.
Except for the provisions of Sections 5, 6, 7, and 8, each of which shall
be binding upon the parties hereto, this letter: a) shall be considered
only a list of proposed terms; b) is not based upon any agreement or
understanding between the parties and; c) is not intended to impose any
obligation on either party hereto, including, without limitation, any
obligation to bargain in good faith or in any way other than at arms'
length with respect to any matter or proposed term set forth herein.
Except for the binding obligations set forth in the Sections enumerated in
the preceding sentence and in that certain Confidentiality and Non-
Disclosure Agreement between Purchaser and Seller executed December 1,
1998, the parties do not intend to be bound by any agreement or obligation
until they have signed and delivered a definitive written agreement
relating to the transactions contemplated by this letter, and neither party
may reasonably rely on any promises inconsistent with this paragraph.
If you have any questions or comments regarding any of the provisions of
this proposal, please contact Xxxx X. XxXxxx at (000) 000-0000.
Xx. Xxxxxxx X. Xxxxxxx
May 28, 1999
Page 4
Please signify your acceptance of the above proposed terms and conditions
by signing below and returning a signed copy of this letter to the undersigned.
This proposal shall expire on June 1, 1999.
Very truly yours,
Alabama Metals Industries Corporation
By: /s/ Xxxx X. XxXxxx
------------------------------------
Xxxx X. XxXxxx
Chairman
Accepted June 1, 1999
Chatwins Group, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Xx. Xxxxxxx X. Xxxxxxx
May 28, 1999
Page 5
Exhibit A
Xxxxx Division
Balance Sheet
April 30, 1999
Actual Adjustments As Adjusted
----------------- ------------------ -----------------
Assets
Cash $ 119 $ 119
A/R - net 8,099 8,099
Inventory (FIFO) 6,152 6,152
Other 444 444
------- -------
Total Current 14,814 14,814
Xxx P, P & E 14,234 14,234
Goodwill 905 905
Inv - Foreign Subs 100 100
Other 1,162 1,162
------- -------
Total $31,215 $31,215
======= =======
Liabilities & Net
Worth
Current Maturities 697 (697) -0-
A/P 5,335 5,335
Accrued Payroll 557 557
Accrued Pension 104 104
Accrued Taxes 179 179
Customer Deposits 65 65
Accrual - Other 663 663
------- -------
Total Current 7,600 (697) 6,903
IDB 680 (680) -0-
Inter-Company 20,909 (20,909) -0-
Minority Interests 977 977
Net Worth 1,049 22,286 23,335
------- -------
Total $31,215 $31,215
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