EXHIBIT 10.8
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AGREEMENT AND PLAN OF ORGANIZATION
dated as of the 30th day of April, 1997
by and among
METALS USA, INC.
TEXAS ALUMINUM I ACQUISITION CORP.
TEXAS ALUMINUM II ACQUISITION CORP.
TEXAS ALUMINUM III ACQUISITION CORP.
TEXAS ALUMINUM IV ACQUISITION CORP.
TEXAS ALUMINUM V ACQUISITION CORP.
(each a subsidiary of Metals USA, Inc.)
TEXAS ALUMINUM INDUSTRIES, INC.
CORNERSTONE METALS CORPORATION
CORNERSTONE BUILDING PRODUCTS, INC.
CORNERSTONE ALUMINUM COMPANY, INC.
CORNERSTONE PATIO CONCEPTS, L.L.C.
and
the STOCKHOLDERS named herein
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TABLE OF CONTENTS
Page
1. THE MERGER.............................................................6
1.1 Delivery and Filing of Articles of Merger........................6
1.2 Effective Time of the Merger.....................................6
1.3 Certificate of Incorporation, By-laws and Board of
Directors of Surviving Corporation...............................6
1.4 Certain Information With Respect to the Capital Stock
of the COMPANY, METALS and NEWCO.................................7
1.5 Effect of Merger.................................................8
2. CONVERSION OF STOCK....................................................9
2.1 Manner of Conversion.............................................9
3. DELIVERY OF MERGER CONSIDERATION......................................10
4. CLOSING...............................................................11
5. REPRESENTATIONS AND WARRANTIES OF COMPANY
AND STOCKHOLDERS......................................................12
(A) Representations and Warranties of COMPANY and
STOCKHOLDERS..............................................12
5.1 Due Organization................................................12
5.2 Authorization...................................................13
5.3 Capital Stock of the COMPANY....................................13
5.4 Transactions in Capital Stock, Organization Accounting..........14
5.5 No Bonus Shares.................................................14
5.6 Subsidiaries....................................................14
5.7 Predecessor Status; etc.........................................15
5.8 Spin-off by the COMPANY.........................................15
5.9 Financial Statements............................................15
5.10 Liabilities and Obligations.....................................16
5.11 Accounts and Notes Receivable...................................17
5.12 Permits and Intangibles.........................................17
5.13 Environmental Matters...........................................18
5.14 Personal Property...............................................19
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5.15 Significant Customers; Material Contracts and Commitments.......19
5.16 Real Property...................................................20
5.17 Insurance.......................................................21
5.18 Compensation; Employment Agreements; Organized Labor Matters....21
5.19 Employee Plans..................................................22
5.20 Compliance with ERISA...........................................23
5.21 Conformity with Law; Litigation.................................25
5.22 Taxes...........................................................25
5.23 No Violations; Consents, Etc....................................26
5.24 Government Contracts............................................27
5.25 Absence of Changes..............................................27
5.26 Deposit Accounts; Powers of Attorney............................28
5.27 Validity of Obligations.........................................29
5.28 Relations with Governments......................................29
5.29 Disclosure......................................................29
5.30 Prohibited Activities...........................................30
(B) Representations and Warranties of STOCKHOLDERS......31
5.31 Authority; Ownership............................................31
5.32 Preemptive Rights...............................................31
5.33 No Intention to Dispose of METALS Stock.........................31
6. REPRESENTATIONS OF METALS and NEWCO...................................31
6.1 Due Organization................................................32
6.2 Authorization...................................................32
6.3 Capital Stock of METALS and NEWCO...............................33
6.4 Transactions in Capital Stock, Organization Accounting..........33
6.5 Subsidiaries....................................................33
6.6 Financial Statements............................................34
6.7 Liabilities and Obligations.....................................34
6.8 Conformity with Law; Litigation.................................34
6.9 No Violations...................................................35
6.10 Validity of Obligations.........................................36
6.11 METALS Stock....................................................36
6.12 No Side Agreements..............................................36
6.13 Business; Real Property; Material Agreements....................36
6.14 Taxes...........................................................37
6.15 Absence of Changes..............................................38
6.16 Validity of Obligations.........................................39
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6.17 Disclosure......................................................39
6.18 Private Offering................................................39
7. COVENANTS PRIOR TO CLOSING............................................40
7.1 Access and Cooperation; Due Diligence...........................40
7.2 Conduct of Business Pending Closing.............................41
7.3 Prohibited Activities...........................................42
7.4 No Shop.........................................................43
7.5 Notice to Bargaining Agents.....................................44
7.6 Agreements......................................................44
7.7 Notification of Certain Matters.................................44
7.8 Amendment of Schedules..........................................45
7.9 Cooperation in Preparation of Registration Statement............46
7.10 Final Financial Statements......................................47
7.11 Further Assurances..............................................48
7.12 Authorized Capital..............................................48
7.13 Compliance with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 (the "Xxxx-Xxxxx Act").......48
7.14 Environmental Indemnity.........................................48
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF
STOCKHOLDERS AND COMPANY..............................................49
8.1 Representations and Warranties; Performance of Obligations......49
8.2 Satisfaction....................................................50
8.3 No Litigation...................................................50
8.4 Opinion of Counsel..............................................50
8.5 Registration Statement..........................................50
8.6 Consents and Approvals..........................................50
8.7 Good Standing Certificates......................................51
8.8 No Material Adverse Change......................................51
8.9 Closing of IPO..................................................51
8.10 Secretary's Certificate.........................................51
8.11 Employment Agreements...........................................51
8.12 Tax Matters.....................................................51
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF METALS AND NEWCO...............52
9.1 Representations and Warranties; Performance of Obligations......52
9.2 No Litigation...................................................52
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9.3 Secretary's Certificate.........................................53
9.4 No Material Adverse Effect......................................53
9.5 STOCKHOLDERS' Release...........................................53
9.6 Satisfaction....................................................54
9.7 Termination of Related Party Agreements.........................54
9.8 Opinion of Counsel..............................................54
9.9 Consents and Approvals..........................................54
9.10 Good Standing Certificates......................................54
9.11 Registration Statement..........................................54
9.12 Employment Agreements...........................................55
9.13 Closing of IPO..................................................55
9.14 FIRPTA Certificate..............................................55
10. COVENANTS OF METALS AND THE STOCKHOLDERS AFTER CLOSING................55
10.1 Release From Guarantees; Repayment of Certain Obligations.......55
10.2 Preservation of Tax and Accounting Treatment....................55
10.3 Preparation and Filing of Tax Returns...........................56
10.4 Directors.......................................................57
10.5 Preservation of Employee Benefit Plans..........................57
11. INDEMNIFICATION.......................................................58
11.1 General Indemnification by the STOCKHOLDERS.....................58
11.2 Indemnification by METALS.......................................59
11.3 Third Person Claims.............................................60
11.4 Exclusive Remedy................................................62
11.5 Limitations on Indemnification..................................62
12. TERMINATION OF AGREEMENT..............................................63
12.1 Termination.....................................................63
12.2 Liabilities in Event of Termination.............................64
13. NONCOMPETITION........................................................64
13.1 Prohibited Activities...........................................64
13.2 Damages.........................................................66
13.3 Reasonable Restraint............................................66
13.4 Severability; Reformation.......................................66
13.5 Independent Covenant............................................66
13.6 Materiality.....................................................67
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14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION..............................67
14.1 STOCKHOLDERS....................................................67
14.2 METALS AND NEWCO................................................68
14.3 Damages.........................................................69
14.4 Survival........................................................69
15. TRANSFER RESTRICTIONS.................................................69
15.1 Transfer Restrictions...........................................69
16. FEDERAL SECURITIES ACT REPRESENTATIONS................................70
16.1 Compliance with Law.............................................70
16.2 Economic Risk; Sophistication...................................71
17. REGISTRATION RIGHTS...................................................71
17.1 Piggyback Registration Rights...................................71
17.2 Demand Registration Rights......................................72
17.3 Registration Procedures.........................................73
17.4 Indemnification.................................................75
17.5 Underwriting Agreement..........................................76
17.6 Rule 144 Reporting..............................................76
18. GENERAL...............................................................77
18.1 Cooperation.....................................................77
18.2 Successors and Assigns..........................................78
18.3 Entire Agreement................................................78
18.4 Counterparts....................................................78
18.5 Brokers and Agents..............................................78
18.6 Expenses........................................................78
18.7 Notices.........................................................79
18.8 Governing Law...................................................80
18.9 Survival of Representations and Warranties......................81
18.10 Exercise of Rights and Remedies.................................81
18.11 Time............................................................81
18.12 Reformation and Severability....................................81
18.13 Remedies Cumulative.............................................81
18.14 Captions........................................................81
18.15 Amendments and Waivers..........................................81
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18.16 Special Limitations.............................................82
18.17 Special Provisions Regarding CPC................................82
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APPPENDIX
Appendix I - Mergers
ANNEXES
Annex I - Consideration to Be Paid to Stockholders
Annex II - Stockholders and Stock Ownership of the Company
Annex III - Stockholders and Stock Ownership of Metals
Annex IV - Certificate of Incorporation and By-Laws of Metals and Newco
Annex V - Form of Opinion of Counsel to Metals
Annex VI - Form of Opinion of Counsel to Company and Stockholders
Annex VII - Form of Key Employee Employment Agreement
Annex VIII - Form of Indemnification Agreement
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SCHEDULES
5.1 Due Organization
5.2 Authorization
5.3 Capital Stock of the COMPANY
5.4 Transactions in Capital Stock, Organization Accounting
5.5 No Bonus Shares
5.6 Subsidiaries
5.7 Predecessor Status; etc
5.8 Spin-off by the COMPANY
5.9 Financial Statements
5.10 Liabilities and Obligations
5.11 Accounts and Notes Receivable
5.12 Permits and Intangibles
5.13 Environmental Matters
5.14 Personal Property
5.15 Significant Customers; Material Contracts and Commitments
5.16 Real Property
5.17 Insurance
5.18 Compensation; Employment Agreements; Organized Labor Matters
5.19 Employee Plans
5.20 Compliance with ERISA
5.21 Conformity with Law; Litigation
5.22 Taxes
5.23 No Violations, Consents, etc.
5.24 Government Contracts
5.25 Absence of Changes
5.26 Deposit Accounts; Powers of Attorney
5.28 Relations with Governments
5.30 Prohibited Activities
5.31 Authority; Ownership
6.4 Transactions in Capital Stock, Organization Accounting
6.7 Liabilities and Obligations
6.8 Conformity with Law; Litigation
6.9 No Violations
6.13 Business; Real Property; Material Agreements
6.14 Taxes
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7.2 Conduct of Business Pending Closing
7.3 Prohibited Activities
7.5 Notice to Bargaining Agents
9.12 Employment Agreements
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as of
the 30th day of April, 1997, by and among METALS USA, Inc., a Delaware
corporation ("METALS"), TEXAS ALUMINUM I ACQUISITION CORP., TEXAS ALUMINUM II
ACQUISITION CORP., TEXAS ALUMINUM III ACQUISITION CORP., TEXAS ALUMINUM IV
ACQUISITION CORP., and TEXAS ALUMINUM V ACQUISITION CORP., each of which is a
Delaware corporation (collectively "NEWCO", and individually "each NEWCO"), and
TEXAS ALUMINUM INDUSTRIES, INC., a Texas corporation, CORNERSTONE METALS
CORPORATION, a Nevada corporation, CORNERSTONE BUILDING PRODUCTS, INC., a Nevada
corporation, CORNERSTONE ALUMINUM COMPANY, INC., a Nevada corporation and
CORNERSTONE PATIO CONCEPTS, L.L.C., a Nevada limited liability company
(collectively, the "COMPANY", and individually, "each COMPANY"), and the
STOCKHOLDERS identified on the signature pages hereto (the "STOCKHOLDERS").
Except as set forth in Section 18.16 hereof, the STOCKHOLDERS are all the
stockholders of the COMPANY.
WHEREAS, each NEWCO is a corporation duly organized and existing
under the laws of the State of Delaware, having been incorporated on April
23, 1997, solely for the purpose of completing the transactions set forth
herein, and is a wholly-owned subsidiary of METALS, a corporation
organized and existing under the laws of the State of Delaware;
WHEREAS, the respective Boards of Directors of each NEWCO and each
COMPANY (which together are hereinafter collectively referred to as
"Constituent Corporations") deem it advisable and in the best interests of
the Constituent Corporations and their respective stockholders that each
NEWCO merge with and into each COMPANY as set forth on Appendix I hereto
pursuant to this Agreement and the applicable provisions of the laws of
the States of Delaware and the States of Incorporation;
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WHEREAS, METALS is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan of Organization," with each of the
Other Founding Companies (as defined herein) and their respective
stockholders in order to acquire additional metals processing, metals
fabricating and specialty metals companies;
WHEREAS, this Agreement and the Other Agreements constitute the
"METALS Plan of Organization;"
WHEREAS, the STOCKHOLDERS and the Boards of Directors and the
stockholders of METALS, each of the Other Founding Companies and each of
the subsidiaries of METALS that are parties to the Other Agreements have
approved and adopted the METALS Plan of Organization as an integrated plan
pursuant to which the STOCKHOLDERS and the stockholders of each of the
other Founding Companies will transfer the capital stock of each of the
Founding Companies to METALS and the stockholders of each of the other
Founding Companies will acquire the stock of METALS (but not cash or other
property) as a tax-free transfer of property under Section 351 of the
Internal Revenue Code of 1986, as amended;
WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of each
COMPANY has approved this Agreement as part of the METALS Plan of
Organization in order to transfer the capital stock of each COMPANY to
METALS;
WHEREAS, unless the context otherwise requires, capitalized terms
used in this Agreement or in any schedule attached hereto and not
otherwise defined shall have the following meanings for all purposes of
this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
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"Acquired Party" means the COMPANY, any subsidiary and any member of a
Relevant Group.
"Acquisition Companies" shall mean NEWCO and each of the other Delaware
companies wholly-owned by METALS prior to the Funding and Consummation Date.
"Affiliates" has the meaning set forth in Section 5.8.
"Articles of Merger" shall mean those Articles or Certificates of Merger
with respect to the Merger in such forms as may be required by the laws of the
State of Delaware and the States of Incorporation.
"Balance Sheet Date" shall mean December 31, 1996.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COMPANY Stock" has the meaning set forth in Section 2.1.
"Constituent Corporations" has the meaning set forth in the second recital
of this Agreement.
"CPC" means Cornerstone Patio Concepts, L.L.C.
"Draft Registration Statement" means the draft dated April 25, 1997 of the
Registration Statement, and any corrections thereto and supplemental information
delivered by METALS to the COMPANY for delivery to the STOCKHOLDERS prior to the
time this Agreement is delivered to METALS.
"Effective Time of the Merger" shall mean the time as of which the Merger
becomes effective, which shall, in any case, occur on the Funding and
Consummation Date.
"Environmental Laws" has the meaning set forth in Section 5.13.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" means:
Affiliated Metals Company, a Missouri corporation;
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Interstate Steel Supply Company, a Pennsylvania corporation,
Interstate Steel Supply Company of Pittsburgh, a Pennsylvania
corporation, Interstate Steel Supply Company of Maryland, a
Maryland corporation, and Interstate Steel Processing Company,
a Pennsylvania corporation;
Queensboro Steel Corporation, a North Carolina corporation;
Southern Alloy of America, Inc., a North Carolina corporation;
Steel Service Systems, Inc., a Wisconsin corporation;
Texas Aluminum Industries, Inc., a Texas corporation ("TAI"),
Cornerstone Metals Corporation, a Nevada corporation,
Cornerstone Building Products, Inc., a Nevada corporation,
Cornerstone Aluminum Company, Inc., a Nevada corporation, and
Cornerstone Patio Concepts, L.L.C., a Nevada limited liability
company (collectively, such entities other than TAI being
herein called the "Cornerstone Companies");
Uni-Steel Incorporated, an Oklahoma corporation; and
Xxxxxxxx Steel & Supply Co., Inc., a Wisconsin corporation.
"Funding and Consummation Date" has the meaning set forth in
Section 4.
"IPO" means the initial public offering of METALS Stock pursuant to the
Registration Statement as referenced in Section 9.13.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"Merger" means the merger of each NEWCO with and into each COMPANY as set
forth on Appendix I hereto pursuant to this Agreement and the applicable
provisions of the laws of the State of Delaware and the laws of the States of
Incorporation.
"METALS" has the meaning set forth in the first paragraph of this
Agreement.
"METALS Charter Documents" has the meaning set forth in Section 6.1.
"METALS Stock" means the common stock, par value $.01 per share, of
METALS.
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"NEWCO" has the meaning set forth in the first paragraph of this
Agreement.
"NEWCO STOCK" means the common stock, par value $.01 per share, of NEWCO.
"Other Founding Companies" means all of the Founding Companies other than
the Company.
"Plans" has the meaning set forth in Section 5.19.
"Pricing" means the date of determination by METALS and the Underwriters
of the public offering price of the shares of METALS Stock in the IPO; the
parties hereto contemplate that the Pricing shall take place on the Closing
Date.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on Form
S-1 to be filed with the SEC covering the shares of METALS Stock to be issued in
the IPO and all amendments thereto.
"Relevant Group" means the COMPANY and any affiliated, combined,
consolidated, unitary or similar group of which the COMPANY is or was a member.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"States of Incorporation" means the States of Texas and Nevada.
"STOCKHOLDERS" has the meaning set forth in the first paragraph of this
Agreement.
"Surviving Corporation" shall mean each COMPANY as the surviving party in
each Merger.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, employment, excise, property, deed, stamp, alternative
or add on minimum, or other taxes, assessments, duties, fees,
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levies or other governmental charges, whether disputed or not, together with any
interest, penalties, additions to tax or additional amounts with respect
thereto.
"Underwriters" means the prospective underwriters identified in the
Registration Statement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE MERGER
1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause the Articles of Merger to be signed, verified and placed
in escrow under the control of METALS to be held for filing with the Secretary
of State of the State of Delaware and the Secretary of State of the States of
Incorporation on the Funding and Consummation Date.
1.2 EFFECTIVE TIME OF THE MERGER. At the Effective Time of the Merger,
each NEWCO shall be merged with and into each COMPANY as set forth in Appendix I
hereto in accordance with the Articles of Merger, the separate existence of each
NEWCO shall cease, each COMPANY shall be the surviving party in the Merger and
each COMPANY is sometimes hereinafter referred to as the Surviving Corporation.
The Merger will be effected in a single transaction.
1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. At the Effective Time of the Merger:
(i) the Certificate of Incorporation of each COMPANY then in effect
shall be the Certificate of Incorporation of the respective Surviving
Corporation until changed as provided by law;
(ii) the By-laws of each NEWCO then in effect shall become the
By-laws of the respective Surviving Corporation; and subsequent to the
Effective Time of the Merger, such By-laws shall be the By-laws of the
Surviving Corporation until they shall thereafter be duly
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amended (and such By-laws shall be amended, if necessary, to comply with
applicable state law);
(iii) except with respect to CPC, the Board of Directors of the
respective Surviving Corporation shall consist of the persons who are on
the Board of Directors of each COMPANY immediately prior to the Effective
Time of the Merger, provided that J. Xxxxxxx Xxxxxxx shall be elected as a
director of each Surviving Corporation effective as of the Effective Time
of the Merger; the Board of Directors of each Surviving Corporation shall
hold office subject to the provisions of the laws of the appropriate State
of Incorporation and of the Certificate of Incorporation and By-laws of
the respective Surviving Corporation; and
(iv) the officers of each COMPANY immediately prior to the Effective
Time of the Merger shall continue as the officers of the respective
Surviving Corporation in the same capacity or capacities, and effective
upon the Effective Time of the Merger J. Xxxxxxx Xxxxxxx shall be
appointed as a vice president of each Surviving Corporation and Xxxxx X.
Xxxxxxx shall be appointed as an Assistant Secretary of each Surviving
Corporation, each of such officers to serve, subject to the provisions of
the Certificate of Incorporation and Bylaws of the respective Surviving
Corporation, until his or her successor is duly elected and qualified.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE COMPANY,
METALS AND NEWCO. The respective designations and numbers of outstanding shares
and voting rights of each class of outstanding capital stock of each COMPANY,
METALS and each NEWCO as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and outstanding
capital stock of each COMPANY is as set forth on Schedule 5.3 hereto;
(ii) immediately prior to the Closing Date and the Funding and
Consummation Date, the authorized capital stock of METALS will consist of
50,000,000 shares of METALS Stock, of which the number of issued and
outstanding shares will be set forth in the
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Registration Statement, and 5,000,000 shares of preferred stock, $.01 par
value, of which no shares will be issued and outstanding, and a number of
shares of Restricted Voting Common Stock, $.01 par value (the "Restricted
Common Stock"), to be determined by METALS in good faith, all of which
will be issued and outstanding except as otherwise set forth in the
Registration Statement; and
(iii) as of the date of this Agreement, the authorized capital stock
of each NEWCO consists of 1,000 shares of NEWCO Stock, of which one
hundred (100) shares are issued and outstanding.
1.5 EFFECT OF MERGER. At the Effective Time of the Merger, the effect of
the Merger shall be as provided in the applicable provisions of the General
Corporation Law of the State of Delaware (the "Delaware GCL") and the law of the
States of Incorporation. Except as herein specifically set forth, the identity,
existence, purposes, powers, objects, franchises, privileges, rights and
immunities of each COMPANY shall continue unaffected and unimpaired by the
Merger and the corporate franchises, existence and rights of each NEWCO shall be
merged with and into the respective COMPANY, and the respective COMPANY, as the
Surviving Corporation, shall be fully vested therewith. At the Effective Time of
the Merger, the separate existence of each NEWCO shall cease and, in accordance
with the terms of this Agreement, the respective 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
respective COMPANY and respective NEWCO shall be transferred to, and vested in,
the respective 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 respective
Surviving Corporation as they were of the respective COMPANY and respective
NEWCO; and the title to any real estate, or interest therein, whether by deed or
otherwise, under the
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laws of the sppropriate State of Incorporation vested in each COMPANY and each
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
respective COMPANY and respective 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.
2. CONVERSION OF STOCK
2.1 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of the COMPANY (including the outstanding equity
interests in CPC) ("COMPANY Stock") and (ii) NEWCO Stock, issued and outstanding
immediately prior to the Effective Time of the Merger, respectively, into shares
of (x) METALS Stock and cash and (y) common stock of the Surviving Corporation,
respectively, shall be as follows:
As of the Effective Time of the Merger:
(i) all of the shares of COMPANY Stock issued and outstanding
immediately prior to the Effective Time of the Merger, by virtue of the
Merger and without any action on the part of the holder thereof,
automatically shall be deemed to represent (1) the right to receive the
number of shares of METALS Stock set forth on Annex I hereto with respect
to such holder and (2) the right to receive the amount of cash set forth
on Annex I hereto with respect to such holder;
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(ii) all shares of COMPANY Stock 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 of the Merger, shall, by virtue of the Merger
and without any action on the part of METALS, automatically be converted
into one fully paid and non-assessable share of common stock of the
Surviving Corporation which shall constitute all of the issued and
outstanding shares of common stock of the Surviving Corporation
immediately after the Effective Time of the Merger. All METALS Stock
received by the STOCKHOLDERS pursuant to this Agreement shall,
except for restrictions on resale or transfer described in Sections 15 and 16
hereof, have the same rights as all the other shares of outstanding METALS Stock
by reason of the provisions of the Certificate of Incorporation of METALS or as
otherwise provided by the Delaware GCL. All METALS Stock received by the
STOCKHOLDERS shall be issued and delivered to the STOCKHOLDERS free and clear of
any liens, claims or encumbrances of any kind or nature. All voting rights of
such METALS Stock received by the STOCKHOLDERS shall be fully exercisable by the
STOCKHOLDERS and the STOCKHOLDERS shall not be deprived nor restricted in
exercising those rights. At the Effective Time of the Merger, METALS shall have
no class of capital stock issued and outstanding other than the METALS Stock and
the Restricted Voting Common Stock.
3. DELIVERY OF MERGER CONSIDERATION
3.1 On the Funding and Consummation Date the STOCKHOLDERS, who are the
holders of all outstanding certificates representing shares of COMPANY Stock,
shall, upon surrender of such certificates, receive the respective number of
shares of METALS Stock and the amount of cash described on Annex I hereto, said
cash to be payable by certified check.
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3.2 The STOCKHOLDERS shall deliver to METALS at the Closing the
certificates representing COMPANY Stock, duly endorsed in blank by the
STOCKHOLDERS, or accompanied by blank stock powers, and with all necessary
transfer tax and other revenue stamps, acquired at the STOCKHOLDERS' expense,
affixed and canceled. The STOCKHOLDERS agree 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.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions necessary
to prepare to (i) effect the Merger (including the execution of the Articles of
Merger which shall be placed in escrow under the control of METALS for filing
with the appropriate authorities on the Funding and Consummation Date) and (ii)
effect the conversion and delivery of shares referred to in Section 3 hereof;
provided, that such actions shall not include the actual completion of the
Merger or the conversion and delivery of the shares and certified check(s)
referred to in Section 3 hereof, each of which actions shall only be taken upon
the Funding and Consummation Date as herein provided. The escrow agreement
relating to the Articles of Merger shall provide that in the event that there is
no Funding and Consummation Date and this Agreement automatically terminates as
provided in this Section 4 the Articles of Merger shall not be filed and shall
be returned to the STOCKHOLDERS. The taking of the actions described in clauses
(i) and (ii) above (the "Closing") shall take place on the closing date (the
"Closing Date") at the offices of Bracewell & Xxxxxxxxx, L.L.P., South Tower
Pennzoil Place, 000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000. On the Funding
and Consummation Date (x) the Articles of Merger shall be filed with the
appropriate state authorities so that they shall be, as early as practicable on
the Funding and Consummation Date, effective and the Merger shall thereby be
effected, (y) all transactions contemplated by this Agreement, including the
conversion and delivery of shares, the delivery of a certified check or
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checks in an amount equal to the cash portion of the consideration which the
STOCKHOLDERS shall be entitled to receive pursuant to the Merger referred to in
Section 3 hereof and (z) the closing with respect to the IPO shall occur and be
completed. The date on which the actions described in the preceding clauses (x),
(y) and (z) occurs shall be referred to as the "Funding and Consummation Date."
Except as otherwise provided in Section 12 hereof, during the period from the
Closing Date to the Funding and Consummation Date, this Agreement may only be
terminated by the parties if the underwriting agreement in respect of the IPO is
terminated pursuant to the terms of such agreement. This Agreement shall also in
any event automatically terminate if the Funding and Consummation Date has not
occurred within 10 business days of the Closing Date. Time is of the essence.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDERS
(A) REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDERS.
Each of the COMPANY and the STOCKHOLDERS jointly and severally represent
and warrant that all of the following representations and warranties in this
Section 5(A) are true at the date of this Agreement and, subject to Section 7.8
hereof, shall be true at the time of Closing and the Funding and Consummation
Date, and that such representations and warranties shall survive the Funding and
Consummation Date for a period of twelve months (the last day of such period
being the "Expiration Date"), except that the warranties and representations set
forth in Section 5.22 hereof shall survive until such time as the limitations
period has run for all tax periods ended on or prior to the Funding and
Consummation Date, which shall be deemed to be the Expiration Date for Section
5.22. For purposes of this Section 5, the term COMPANY shall mean and refer to
the COMPANY and all of its subsidiaries.
5.1 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 the requisite
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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 (i) as set forth on
Schedule 5.1 or (ii) where the failure to be so authorized or qualified would
not have a material adverse effect on the business, operations, properties,
assets 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 5.1 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 Certificate of Incorporation and
By-laws, each as amended, of the COMPANY (the "Charter Documents") are all
attached to Schedule 5.1. The stock records of the COMPANY, as heretofore made
available to METALS, are correct and complete in all material respects. There
are no minutes in the possession of the COMPANY or the STOCKHOLDERS which have
not been made available to METALS, and all of such minutes are complete in all
material respects.
5.2 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 Merger. The most recent
resolutions adopted by the Board of Directors of the COMPANY and the most recent
resolutions adopted by the STOCKHOLDERS, all of which are dated no earlier than
ten business days prior to the date hereof, approve this Agreement and the
transactions contemplated hereby in all respects, and copies of all such
resolutions, certified by the Secretary or an Assistant Secretary of the COMPANY
as being in full force and effect on the date hereof, are attached hereto as
Schedule 5.2.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
COMPANY is as set forth on Schedule 5.3. All of the issued and outstanding
shares of the capital stock of the COMPANY are owned by the STOCKHOLDERS in the
amounts set forth in Annex II. Each STOCKHOLDER, severally, represents and
warrants that except as set forth on Schedule 5.3, the
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shares of capital stock of the COMPANY owned by such STOCKHOLDER are owned free
and clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the issued and
outstanding shares of the capital stock of the COMPANY have been duly authorized
and validly issued, are fully paid and nonassessable, are owned of record and
beneficially by the STOCKHOLDERS and further, such shares were offered, issued,
sold and delivered by the COMPANY in compliance with all applicable state and
Federal laws concerning the issuance of securities. Further, none of such shares
were issued in violation of any preemptive rights of any past or present
stockholder.
5.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except as set
forth on Schedule 5.4, the COMPANY has not acquired any COMPANY Stock since
January 1, 1995. Except as set forth on Schedule 5.4, (i) no option, warrant,
call, conversion right or commitment of any kind exists which obligates the
COMPANY to issue any of its authorized but unissued capital stock; (ii) the
COMPANY has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof; and (iii) neither
the voting stock structure of the COMPANY nor the relative ownership of shares
among any of its respective stockholders has been altered or changed in
contemplation of the Merger and/or the METALS Plan of Organization. Schedule 5.4
also includes a complete and accurate list of all stock option or stock purchase
plans, including a list of all outstanding options, warrants or other rights to
acquire shares of the COMPANY's stock and copies of such plans have been
delivered to METALS or are attached to Schedule 5.4.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of COMPANY Stock was issued pursuant to awards, grants or bonuses in
contemplation of the Merger or the METALS Plan of Organization.
5.6 SUBSIDIARIES. Except as set forth on Schedule 5.6, the COMPANY has no
subsidiaries. Except as set forth in Schedule 5.6 and except for any
corporations or entities with respect to which the COMPANY owns less than 1% of
the issued and outstanding stock, the
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COMPANY does not presently 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 business entity nor
is the COMPANY, directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7 is a listing of all
names of all predecessor companies of the COMPANY, including the names of any
entities acquired by the COMPANY (by stock purchase, merger or otherwise) or
owned by the COMPANY or from whom the COMPANY previously acquired material
assets, in any case, from the earliest date upon which any STOCKHOLDER acquired
his or her stock in any COMPANY. Except as disclosed on Schedule 5.7, the
COMPANY has not been, within such period of time, a subsidiary or division of
another corporation or a part of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
COMPANY or any other person or entity that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the COMPANY ("Affiliates") since January 1, 1995.
5.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are copies of
the following financial statements (the "COMPANY Financial Statements") of the
COMPANY: TAI's audited Balance Sheets as of June 30, 1996 and 1995, and
Statements of Income, Statements of Stockholders' Equity and Statements of Cash
Flows for each of the three years in the period ended June 30, 1996, the
Cornerstone Companies' audited Balance Sheets as of December 31, 1995 and 1996
and Statements of Income, Statements of Stockholders' Equity, and Statements of
Cash Flows for each of the three years in the period ended December 31, 1996
(December 31, 1996 being hereinafter referred to as the "Balance Sheet Date" for
both TAI and the Cornerstone Companies). Such Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except as noted thereon or
on Schedule 5.9). Except as set forth on Schedule 5.9, such Balance Sheets
present fairly in all
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material respects the financial position of the COMPANY as of the dates
indicated thereon, and such Statements of Income, Stockholders Equity and Cash
Flows present fairly in all material respects the results of operations for the
periods indicated thereon.
5.10 LIABILITIES AND OBLIGATIONS. The COMPANY has delivered to METALS an
accurate list (which is set forth on Schedule 5.10) as of the Balance Sheet Date
of (i) all liabilities of the COMPANY of a nature that they are required in
accordance with GAAP to be reflected on a balance sheet and which are not
reflected on the balance sheet of the COMPANY at the Balance Sheet Date or
otherwise reflected in the COMPANY Financial Statements at the Balance Sheet
Date, and which are not disclosed on any of the other Schedules to this
Agreement and which would have a Material Adverse Effect on the COMPANY, and
(ii) all loan agreements, indemnity or guaranty agreements, bonds, mortgages,
pledges or other security agreements to which the COMPANY is a party or by which
its properties may be bound. Except as set forth on Schedule 5.10, to the best
knowledge of the COMPANY, since the Balance Sheet Date the COMPANY has not
incurred any material liabilities of any kind, character or description, whether
accrued, absolute, secured or unsecured, contingent or otherwise, other than
liabilities incurred in the ordinary course of business. The COMPANY has also
delivered to METALS on Schedule 5.10, in the case of those contingent
liabilities related to pending or threatened litigation, or other liabilities
which are not fixed, a good faith and reasonable estimate of the maximum amount
which the COMPANY reasonably expects will be payable and the amount, if any,
accrued or reserved for each such potential liability on the COMPANY's Financial
Statements. For each such contingent liability or liability for which the amount
is not fixed or is contested, the COMPANY has provided to METALS the following
information:
(i) a summary description of the liability together with the
following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought; and
(c) name of claimant and all other parties to the claim, suit
or proceeding;
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(ii) the name of each court or agency before which such claim, suit
or proceeding is pending; and
(iii) the date such claim, suit or proceeding was instituted; and
(iv) a good faith and reasonable estimate of the maximum amount, if
any, which is likely to become payable with respect to each such
liability. If no estimate is provided, the estimate shall for purposes of
this Agreement be deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. The COMPANY has delivered to METALS an
accurate list (which is set forth on Schedule 5.11) of the accounts and notes
receivable of the COMPANY, as of the Balance Sheet Date, including any such
amounts which are not reflected in the balance sheet as of the Balance Sheet
Date, and including receivables from and advances to employees and the
STOCKHOLDERS. Except to the extent reflected on Schedule 5.11, such accounts,
notes and other receivables are collectible in the amounts shown on Schedule
5.11, net of reserves reflected in the balance sheet as of the Balance Sheet
Date.
5.12 PERMITS AND INTANGIBLES. The COMPANY or its employees, as
appropriate, hold all licenses, franchises, permits and other governmental
authorizations ("Licenses") the absence of any of which could have a Material
Adverse Effect on the Company's business, and the COMPANY has delivered to
METALS an accurate list and summary description (which is set forth on Schedule
5.12) of all such Licenses, including any trademarks, trade 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) (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on Schedule
5.13). At or prior to the Closing, all such trademarks, trade names, patents,
patent applications, copyrights and other intellectual property will be assigned
or licensed to the COMPANY for no additional consideration. To the best
knowledge of the COMPANY, the Licenses and other rights listed on Schedules 5.12
and 5.13 are valid, and the COMPANY has not received any notice that any person
intends to cancel, terminate or not renew any such License or other right. The
COMPANY has
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conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in the Licenses and other rights
listed on Schedules 5.12 and 5.13 and is not in violation of any of the
foregoing except where such non-compliance or violation would not have a
Material Adverse Effect on the COMPANY. Except as specifically provided in
Schedule 5.12, 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 Licenses or other rights.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, and
except where any failure to comply or action would not have a Material Adverse
Effect, (i) 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 and Hazardous Substances (as such terms are defined
in any applicable Environmental Law), as well as petroleum and petroleum
products (collectively "Hazardous Materials"); (ii) the COMPANY has obtained and
adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Materials, a list of
all of which permits and approvals is set forth on Schedule 5.13, 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 Materials have been treated, stored, disposed of or otherwise
handled; (iii) there have been no releases or threats of releases (as these
terms are defined in Environmental Laws) of any Hazardous Materials at, from, in
or on any property owned or operated by the COMPANY except as permitted by
Environmental Laws; (iv) the COMPANY knows of no on-site or off-site location to
which the COMPANY has transported or disposed of Hazardous Materials or arranged
for the transportation of Hazardous
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Materials, which site 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, METALS or NEWCO for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended; and (v) to the
best knowledge of the COMPANY, the COMPANY has no contingent liability in
connection with any release of any Hazardous Materials into the environment;
provided, however, that the representation set forth in this clause (v) shall
not be deemed to limit in any way the representations and warranties set forth
in clauses (i) - (iv) of this Section 5.13.
5.14 PERSONAL PROPERTY. The COMPANY has delivered to METALS an accurate
list (which is set forth on Schedule 5.14) of (x) all personal property material
to the operations of the COMPANY included (or that will be included) in
"depreciable plant, property and equipment" on the balance sheet of the COMPANY,
(y) all other personal property owned by the COMPANY with an individual value in
excess of $50,000 (i) as of the Balance Sheet Date and (ii) acquired since the
Balance Sheet Date and (z) all material leases and agreements in respect of
personal property, including, in the case of each of (x), (y) and (z), (1) true,
complete and correct copies of all such leases and (2) an indication as to which
assets are currently owned, or were formerly owned, by STOCKHOLDERS, relatives
of STOCKHOLDERS, or Affiliates of the COMPANY. Except as set forth on Schedule
5.14, (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 5.14, (ii) all of the personal property listed on Schedule
5.14 is in good working order and condition, ordinary wear and tear excepted and
(iii) all leases and agreements included on Schedule 5.14 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.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. The
COMPANY has delivered to METALS an accurate list (which is set forth on Schedule
5.15) of (i) all significant
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customers, it being understood and agreed that a "significant customer," for
purposes of this Section 5.15, means a customer (or person or entity)
representing 5% or more of the COMPANY's annual revenues for its most recently
completed fiscal year. Except to the extent set forth on Schedule 5.15, none of
the COMPANY's significant customers 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 listed on Schedule 5.15 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 limited to, contracts
with significant customers, joint venture or partnership agreements, contracts
with any labor organizations, strategic alliances and options to purchase land),
other than agreements listed on Schedule 5.10, 5.14 or 5.16, (a) in existence as
of the Balance Sheet Date and (b) entered into since the Balance Sheet Date, and
in each case has delivered true, complete and correct copies of such agreements
to METALS. The COMPANY has also indicated on Schedule 5.15 a summary description
of all plans or projects involving the opening of new operations, expansion of
existing operations, the acquisition of any personal property, business or
assets requiring, in any event, the payment of more than $50,000 by the COMPANY
during any 12- month period.
5.16 REAL PROPERTY. Schedule 5.16 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. Except as set forth
on Schedule 5.16, any such real property owned by the COMPANY will be sold or
distributed by the COMPANY and leased back by the COMPANY on terms no less
favorable to the COMPANY than those available from an unaffiliated party and
otherwise reasonably acceptable to METALS at or prior to the Closing Date. The
COMPANY has good and insurable title to any real property owned by it that is
not shown on Schedule 5.16 as property intended to be sold or distributed prior
to the Closing Date, subject to no mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, except for:
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(i) liens reflected on Schedules 5.10 or 5.16 as securing specified
liabilities (with respect to which no material default exists);
(ii) liens for current taxes not yet payable and assessments not in
default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions to
title which do not adversely affect the current use of the property.
True, complete and correct copies of all leases and agreements in respect
of such real property leased by the COMPANY are attached to Schedule 5.16, and
an indication as to which such properties, if any, are currently owned, or were
formerly owned, by STOCKHOLDERS or affiliates of the COMPANY or STOCKHOLDERS is
included in Schedule 5.16. Except as set forth on Schedule 5.16, all of such
leases included on Schedule 5.16 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.
5.17 INSURANCE. The COMPANY has delivered to METALS (i) an accurate list
as of the Balance Sheet Date of all insurance policies carried by the COMPANY,
(ii) an accurate list of all insurance loss runs or workers compensation claims
received for the past three (3) policy years and (iii) true, complete and
correct copies of all insurance policies currently in effect. 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. All of such insurance policies are currently in full force and
effect and shall, to the best knowledge of the COMPANY, remain in full force and
effect through the Funding and Consummation Date. Since January 1, 1994, no
insurance carried by the COMPANY has been canceled by the insurer and the
COMPANY has not been denied coverage.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. The
COMPANY has delivered to METALS an accurate list (which is set forth on Schedule
5.18) showing all officers, directors and key employees of the COMPANY, listing
all employment
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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. The COMPANY has provided to METALS true, complete
and correct copies of any employment agreements for persons listed on Schedule
5.18. Since the Balance Sheet Date, there have been no material 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 5.18, (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 nor has the COMPANY experienced any labor
interruptions over the past three years. The COMPANY believes its relationship
with employees to be good.
5.19 EMPLOYEE PLANS. The STOCKHOLDERS have delivered to METALS an accurate
schedule (Schedule 5.19) showing all employee benefit plans of COMPANY
(including COMPANY's Subsidiaries), including all employment agreements and
other agreements or arrangements 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 5.19,
COMPANY (including the COMPANY's Subsidiaries) does not sponsor, maintain or
contribute to any plan program, fund or arrangement that constitutes an
"employee pension benefit plan," nor has COMPANY or any Subsidiary 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,
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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. Neither COMPANY nor any
Subsidiary has sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth on Schedule 5.19, nor is COMPANY or
any Subsidiary 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 COMPANY's or any Subsidiary's employees.
Neither the COMPANY nor any Subsidiary is now, or will as a result of its
past activities become, liable to the Pension Benefit Guaranty Corporation or to
any multiemployer employee pension benefit plan under the provisions of Title IV
of ERISA for any amounts which would have a Material Adverse Effect on the
COMPANY.
All employee benefit plans listed on Schedule 5.19 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 or any Subsidiary with
respect to any plan listed on Schedule 5.19 have either been fulfilled in their
entirety or are fully reflected on the balance sheet of the COMPANY as of the
Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All such plans listed on Schedule 5.19 that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
are, and have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and copies of such determination letters are
included as part of Schedule 5.19 hereof. Except as disclosed on Schedule 5.20,
all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits
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or tax returns) have been timely filed or distributed, and copies thereof are
included as part of Schedule 5.19 hereof. Neither STOCKHOLDERS, any such plan
listed in Schedule 5.19, nor COMPANY (including the COMPANY's Subsidiaries) has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No such Plan listed in Schedule 5.19 has
incurred an accumulated funding deficiency, as defined in Section 412(a) of the
Code and Section 302(1) of ERISA; and COMPANY (including the COMPANY's
Subsidiaries) has not incurred any liability for excise tax or penalty due to
the Internal Revenue Service nor any liability to the Pension Benefit Guaranty
Corporation. The STOCKHOLDERS further represent that except as set forth on
Schedule 5.19 hereto:
(i) 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;
(ii) no such plan listed in Schedule 5.19 subject to the provisions
of Title IV of ERISA has been terminated;
(iii) 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 5.19;
(iv) COMPANY (including the COMPANY's Subsidiaries) has not incurred
liability under Section 4062 of ERISA; and
(v) To their best knowledge, circumstances exist pursuant to which
the COMPANY could have any direct or indirect liability whatsoever
(including, but not limited to, any liability to any multiemployer 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.
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5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or 5.13, 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 it which would have a Material Adverse Effect; and except to
the extent set forth on Schedule 5.10 or 5.13, there are no material claims,
actions, suits or proceedings, pending or, to the knowledge of the COMPANY,
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 any of them
and no notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the COMPANY. The COMPANY has conducted and is
conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable Federal, state and
local statutes, ordinances, orders, approvals, variances, rules and regulations,
including all such orders and other governmental approvals set forth on
Schedules 5.12 and 5.13, except where any such noncompliance, individually or in
the aggregate, would not have a Material Adverse Effect.
5.22 TAXES. COMPANY (including the COMPANY's Subsidiaries) has timely
filed all requisite Federal, state and other tax returns or extension requests
for all fiscal periods ended on or before the Balance Sheet Date; and except as
set forth on Schedule 5.22, there are no examinations in progress or claims
pending against any of them for federal, state and other taxes (including
penalties and interest) for any period or periods prior to and including the
Balance Sheet Date and no notice of any claim for taxes, whether pending or
threatened, has been received. All tax, including interest and penalties
(whether or not shown on any tax return) owed by the COMPANY or any of the
COMPANY's Subsidiaries has been paid. The amounts shown as accruals for taxes on
the COMPANY Financial Statements are sufficient for the payment of all taxes of
the kinds indicated (including penalties and interest) for all fiscal periods
ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal and local
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income tax returns and franchise tax returns of COMPANY (including the COMPANY
Subsidiaries) for their last three (3) fiscal years, or such shorter period of
time as any of them shall have existed, are attached hereto as Schedule 5.22 or
have otherwise been delivered to METALS. The COMPANY has a taxable year ended
December 31. 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.
5.23 NO VIOLATIONS; CONSENTS, ETC. The COMPANY is not in violation of any
Charter Document. Neither the COMPANY nor, to the best knowledge of the COMPANY,
any other party thereto, is in default under any lease, instrument, agreement,
license, or permit set forth on Schedule 5.12, 5.13, 5.14, 5.15 or 5.16, or any
other material agreement to which it is a party or by which its properties are
bound (the "Material Documents") in any manner that could result in a Material
Adverse Effect; and, except as set forth in Schedule 5.23, (a) the rights and
benefits of the COMPANY under the Material Documents will not be materially
adversely affected by the transactions contemplated hereby and (b) 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
material violation or breach or constitute a default under, any of the terms or
provisions of the Material Documents or the Charter Documents. Except as set
forth on Schedule 5.23, 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. Except as set forth on Schedule 5.23,
none of the Material Documents prohibits the use or publication by the COMPANY,
METALS or NEWCO of the name of any other party to such Material Document, and
none of the Material Documents prohibits or restricts the COMPANY from freely
providing services to any other customer or potential customer of the COMPANY,
METALS, NEWCO or any Other Founding Company.
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5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24, the
COMPANY is not now a party to any governmental contracts subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 5.25 or as otherwise contemplated hereby, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of the COMPANY;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or 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
except for distributions that would have been permitted after the date
hereof under Section 7.3(iii) hereof;
(v) any material 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, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice;
(vi) any work interruptions, labor grievances or claims filed, or
any 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,
including, without limitation, the STOCKHOLDERS and their affiliates;
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(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the COMPANY, including without limitation any
indebtedness or obligation of any STOCKHOLDERS 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;
(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 other distribution of property or assets by the COMPANY
other than in the ordinary course of business and other than distributions
of real estate and other assets as permitted by this Agreement (including
the Schedules hereto).
5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The COMPANY has delivered to
METALS an accurate schedule (which is set forth on Schedule 5.26) as of the date
of the Agreement of:
(i) the name of each financial institution in which the COMPANY has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
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(iv) the name of each person authorized to draw thereon or have
access thereto. Schedule 5.26 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the COMPANY and a description of the terms of such power.
5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by the COMPANY and the performance of the transactions contemplated herein have
been duly and validly authorized by the Board of Directors of the COMPANY and
this Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of the COMPANY.
5.28 RELATIONS WITH GOVERNMENTS. Except for political contributions made
in a lawful manner which, in the aggregate, do not exceed $10,000 per year, the
COMPANY has not over the past five (5) years made, offered or agreed to offer
anything of value to any governmental official, political party or candidate for
government office nor has it 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. If political contributions made by the
COMPANY have exceeded $10,000 per year for each year in which any STOCKHOLDER
has been a stockholder of the COMPANY, each contribution in the amount of $5,000
or more shall be described on Schedule 5.28.
5.29 DISCLOSURE. (a) This Agreement, including the Annexes and Schedules
hereto, and the completed Director and Officer Questionnaires and the completed
S-1 Questionnaire furnished to METALS by the COMPANY and the STOCKHOLDERS in
connection herewith, do not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements herein and
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing does not apply to statements
contained in or omitted from any of such documents made or omitted in reliance
upon information furnished in writing by METALS. If, prior to the 25th day after
the date of the final prospectus of METALS utilized in connection with the IPO,
the COMPANY or the STOCKHOLDERS become aware of any
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fact or circumstance which would affect the accuracy of a representation or
warranty of COMPANY or STOCKHOLDERS in this Agreement in any material respect,
the COMPANY and the STOCKHOLDERS shall immediately give notice of such fact or
circumstance to METALS. However, subject to the provisions of Section 7.8, such
notification shall not relieve either the COMPANY or the STOCKHOLDERS of their
respective obligations under this Agreement, and, subject to the provisions of
Section 7.8, at the sole option of METALS, the truth and accuracy of any and all
warranties and representations of the COMPANY, or on behalf of the COMPANY and
of STOCKHOLDERS at the date of this Agreement and on the Closing Date and on the
Funding and Consummation Date, shall be a precondition to the consummation of
this transaction.
(b) The COMPANY and the STOCKHOLDERS acknowledge and agree (i)
that there exists no firm commitment, binding agreement, or promise or other
assurance of any kind, whether express or implied, oral or written, that a
Registration Statement will become effective or that the IPO pursuant thereto
will occur at a particular price or within a particular range of prices or occur
at all; (ii) that neither METALS or any of its officers, directors, agents or
representatives nor any Underwriter shall have any liability to the COMPANY, the
STOCKHOLDERS or any other person affiliated or associated with the COMPANY for
any failure of the Registration Statement to become effective, the IPO to occur
at a particular price or within a particular range of prices or to occur at all;
and (iii) that the decision of STOCKHOLDERS to enter into this Agreement, or to
vote in favor of or consent to the proposed Merger, has been or will be made
independent of, and without reliance upon, any statements, opinions or other
communications, or due diligence investigations which have been or will be made
or performed by any prospective Underwriter, relative to METALS or the
prospective IPO. METALS agrees, however, to use all reasonable efforts to
consummate the METALS Plan of Organization and IPO as contemplated hereby.
5.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.30, the
COMPANY has not, between the Balance Sheet Date and the date hereof, taken any
of the actions (Prohibited Activities) set forth in Section 7.3.
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(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each STOCKHOLDER severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement and, subject to Section 7.8 hereof, shall be true at the time of
Closing and on the Funding and Consummation Date, and that the representations
and warranties set forth in Sections 5.31 and 5.32 shall survive until the first
anniversary of the Funding and Consummation Date, which shall be the Expiration
Date for purposes of Sections 5.31 and 5.32.
5.31 AUTHORITY; OWNERSHIP. Such STOCKHOLDER has the full legal right,
power and authority to enter into this Agreement. Such STOCKHOLDER owns
beneficially and of record all of the shares of the COMPANY stock identified on
Annex II as being owned by such STOCKHOLDER, and, except as set forth on
Schedule 5.31, such COMPANY Stock is owned free and clear of all liens,
encumbrances and claims of every kind.
5.32 PREEMPTIVE RIGHTS. Such STOCKHOLDER does not have, or hereby waives,
any preemptive or other right to acquire shares of COMPANY Stock or METALS Stock
that such STOCKHOLDER has or may have had. Nothing herein, however, shall limit
or restrict the rights of any STOCKHOLDER to acquire METALS Stock pursuant to
(i) this Agreement or (ii) any option granted by METALS.
5.33 NO INTENTION TO DISPOSE OF METALS STOCK. No STOCKHOLDER is under any
binding commitment or contract to sell, exchange or otherwise dispose of shares
of METALS Stock received as described in Section 3.1.
6. REPRESENTATIONS OF METALS AND NEWCO
METALS and NEWCO jointly and severally represent and warrant that
all of the following representations and warranties in this Section 6 are true
at the date of this Agreement and, subject to Section 7.8 hereof, shall be true
at the time of Closing and the Funding and Consummation Date, and that such
representations and warranties shall survive the Funding and Consummation
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Date for a period of twelve months (the last day of such period being the
"Expiration Date"), except that (i) the warranties and representations set forth
in Section 6.14 hereof shall survive until such time as the limitations period
has run for all tax periods ended on or prior to the Funding and Consummation
Date, which shall be deemed to be the Expiration Date for Section 6.14 and (ii)
solely for purposes of determining whether a claim for indemnification under
Section 11.2(iv) hereof has been made on a timely basis, and solely to the
extent that in connection with the IPO, any of the STOCKHOLDERS actually incurs
liability under the 1933 Act, the 1934 Act, or any other Federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period, which shall
be deemed to be the Expiration Date for such purposes.
6.1 DUE ORGANIZATION. METALS and NEWCO are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware, 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 are each in good standing in each jurisdiction in which the nature
of its business makes such qualification necessary, except where the failure to
be so authorized or qualified would not have a Material Adverse Effect. True,
complete and correct copies of the Certificate of Incorporation and By-laws,
each as proposed to be amended, of METALS and NEWCO (the "METALS Charter
Documents") are all attached hereto as Annex IV.
6.2 AUTHORIZATION. (i) The respective representatives 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 consummate the
Merger. All corporate acts and other proceedings required to have been taken by
METALS and NEWCO to authorize the execution, delivery and performance of this
Agreement and the consummation of the Merger have been duly and properly taken.
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6.3 CAPITAL STOCK OF METALS AND NEWCO. The authorized capital stock of
METALS and NEWCO is as set forth in Sections 1.4(ii) and (iii), respectively.
All of the issued and outstanding shares of the capital stock of NEWCO are owned
by METALS and all of the issued and outstanding shares of the capital stock of
METALS are owned by the persons set forth on Annex III hereof, in each case,
free and clear of all liens, security interests, pledges, charges, voting
trusts, restrictions, encumbrances and claims of every kind. All of the issued
and outstanding shares of the capital stock of METALS and NEWCO have been duly
authorized and validly issued, are fully paid and nonassessable, are owned of
record and beneficially by METALS and the persons set forth on Annex III,
respectively, and further, such shares were offered, issued, sold and delivered
by METALS and NEWCO in compliance with all applicable state and Federal laws
concerning the issuance of securities. Further, none of such shares were issued
in violation of the preemptive rights of any past or present stockholder of
METALS or NEWCO.
6.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except for the
Other Agreements and except as set forth on Schedule 6.4, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
METALS or NEWCO to issue any of their respective authorized but unissued capital
stock; and (ii) neither METALS nor NEWCO has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof. Schedule 6.4 also includes complete and accurate copies of all
stock option or stock purchase plans, including a list, accurate as of the date
hereof, of all outstanding options, warrants or other rights to acquire shares
of the stock of METALS.
6.5 SUBSIDIARIES. NEWCO has no subsidiaries. METALS has no subsidiaries
except for NEWCO and each of the companies identified as "NEWCO" in each of the
Other Agreements. Except as set forth in the preceding sentence, neither METALS
nor NEWCO presently owns, of record or beneficially, or controls, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in any corporation, association or business entity, and
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neither METALS nor NEWCO, directly or indirectly, is a participant in any joint
venture, partnership or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. Included in the Draft Registration Statement are
copies of the following financial statements (the "METALS Financial Statements")
of METALS, which reflect the results of its operations from inception in July
1996: METALS's audited Balance Sheet as of December 31, 1996. Such METALS
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as noted thereon). Such Balance Sheet presents fairly the
financial position of METALS as of such date.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule 6.7,
METALS and NEWCO have no material liabilities, contingent or otherwise, except
as set forth in or contemplated by this Agreement and the Other Agreements and
except for fees incurred in connection with the transactions contemplated hereby
and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 6.8, neither METALS nor NEWCO is 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 either of them which would have a Material Adverse Effect; and
except to the extent set forth in Schedule 6.8, there are no material claims,
actions, suits or proceedings, pending or, to the knowledge of METALS or NEWCO,
threatened against or affecting, METALS or NEWCO, 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
either of them and no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been received. METALS and NEWCO have conducted and
are conducting their respective businesses in substantial compliance with the
requirements, standards, criteria and conditions set forth in applicable
Federal, state and local statutes, ordinances, permits, licenses,
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orders, approvals, variances, rules and regulations and are not in violation of
any of the foregoing which would have a Material Adverse Effect.
6.9 NO VIOLATIONS. Neither METALS nor NEWCO is in violation of any METALS
Charter Document. None of METALS, NEWCO, or, to the knowledge of METALS and
NEWCO, any other party thereto, is in default under any lease, instrument,
agreement, license, or permit to which METALS or NEWCO is a party, or by which
METALS or NEWCO, or any of their respective properties, are bound (collectively,
the "METALS Documents"); and (a) the rights and benefits of METALS and NEWCO
under the METALS Documents will not be adversely affected by the transactions
contemplated hereby and (b) the execution and delivery of this Agreement by
METALS and NEWCO and the performance of their obligations hereunder do not, and
the consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation or default
(with or without notice or lapse of time, or both), under or give rise to a
right of termination, cancellation, or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any lien upon any of
the assets of METALS or any NEWCO under, any provision of (i) the Certificate of
Incorporation or Bylaws of METALS or the comparable governing instruments of any
NEWCO, (ii) any note, bond, mortgage, indenture or deed of trust or any license,
lease, contract, commitment, agreement or arrangement to which METALS and any
NEWCO is a party or by which any of their respective properties or assets are
bound or (iii) any judgment, order, decree or law, ordinance, rule or
regulation, applicable to METALS or any NEWCO or their respective properties or
assets. 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 material violation or breach or constitute a default under, any of
the terms or provisions of the METALS Documents or the METALS Charter Documents.
Except as set forth on Schedule 6.9, none of the METALS 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
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the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any right or benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by METALS and NEWCO and the performance of the transactions contemplated herein
have been duly and validly authorized by the respective 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.
6.11 METALS STOCK. At the time of issuance thereof and delivery to the
STOCKHOLDERS, the METALS Stock to be delivered to the STOCKHOLDERS pursuant to
this Agreement will constitute valid and legally issued shares of METALS, fully
paid and nonassessable, and with the exception of restrictions upon resale set
forth in Sections 15 and 16 hereof, will be identical in all substantive
respects (which do not include the form of certificate upon which it is printed
or the presence or absence of a CUSIP number on any such certificate) to the
METALS Stock issued and outstanding as of the date hereof by reason of the
provisions of the Delaware GCL. The METALS Stock issued and delivered to the
STOCKHOLDERS shall at the time of such issuance and delivery be free and clear
of any liens, claims or encumbrances of any kind or character. The shares of
METALS Stock to be issued to the STOCKHOLDERS pursuant to this Agreement will
not be registered under the 1933 Act, except as provided in Section 17 hereof.
6.12 NO SIDE AGREEMENTS. Neither METALS nor NEWCO has entered or will
enter into any agreement with any of the Founding Companies or any of the
stockholders of the Founding Companies or METALS other than the Other Agreements
and the agreements contemplated by each of the Other Agreements, including the
employment agreements, leases and Indemnification Agreements referred to herein
or entered into in connection with the transactions contemplated hereby and
thereby.
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. METALS was formed in
July 1996 and has conducted limited operations since that time. Neither METALS
nor NEWCO has
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conducted any material business since the date of its inception, except in
connection with this Agreement, the Other Agreements and the IPO. Neither METALS
nor NEWCO owns or has at any time owned any real property or any material
personal property or is a party to any other agreement, except as listed on
Schedule 6.13 and except that METALS is a party to the Other Agreements and the
agreements contemplated thereby and to such agreements as will be filed as
Exhibits to the Registration Statement.
6.14 TAXES.METALS and NEWCO have timely filed all requisite federal, state
and other tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth on Schedule 6.14, there
are no examinations in progress or claims against METALS for federal, state and
other taxes (including penalties and interest) for any period or periods prior
to and including the Balance Sheet Date and no notice of any claim for taxes,
whether pending or threatened, has been received. All taxes which METALS or any
NEWCO has been required to collect or withhold have been duly and timely
collected and withheld and have been set aside in accounts for such purposes, or
have been duly and timely paid to the proper governmental authority. All tax,
including interest and penalties (whether or not shown on any tax return) owed
by METALS, any member of an affiliated or consolidated group which includes or
included METALS, or with respect to any payment made or deemed made by METALS
herein has been paid. The amounts shown as accruals for taxes on METALS
Financial Statements are sufficient for the payment of all taxes of the kinds
indicated (including penalties and interest) for all fiscal periods ended on or
before that date. Copies of any (i) tax examinations, (ii) extensions of
statutory limitations, (iii) federal and local income tax returns and franchise
tax returns of METALS for the year ended December 31, 1996, are attached hereto
as Schedule 6.14. Except as set forth in Schedule 6.14, METALS and NEWCO have
not entered into any tax sharing agreement or similar arrangement. METALS is not
an investment company as defined in Section 351(e)(1) of the Code.
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6.15 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in the Draft Registration Statement delivered to the STOCKHOLDERS, and except as
contemplated by this Agreement and the Other Agreements, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of METALS or
NEWCO;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
METALS or NEWCO;
(iii) any change in the authorized capital of METALS or NEWCO or
their outstanding securities or any change in their 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 METALS or
NEWCO;
(v) any work interruptions, labor grievances or claims filed, or any
event or condition of any character, materially adversely affecting the
business of METALS or NEWCO;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of METALS or NEWCO to any person;
(vii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to METALS or NEWCO;
(viii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of METALS or NEWCO or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(ix) any waiver of any material rights or claims of METALS or NEWCO;
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(x) any amendment or termination of any material contract,
agreement, license, permit or other right to which METALS or NEWCO is a
party;
(xi) any transaction by METALS or NEWCO outside the ordinary course
of its business;
(xii) any other distribution of property or assets by METALS or
NEWCO other than in the ordinary course of business.
6.16 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by METALS and NEWCO and the performance of the transactions contemplated herein
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.
6.17 DISCLOSURE. The Draft Registration Statement delivered to the COMPANY
and the STOCKHOLDERS, together with this Agreement and the information furnished
to the COMPANY and the STOCKHOLDERS in connection herewith, does not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the foregoing does not apply
to statements contained in or omitted from any of such documents made or omitted
in reliance upon information furnished by the COMPANY or the STOCKHOLDERS.
6.18 PRIVATE OFFERING. (a) Neither METALS, any of its affiliates nor
anyone on its or their behalf, has issued, sold, or offered any securities of
METALS to any person under circumstances that would cause the issuance and sale
of the METALS Stock to the STOCKHOLDERS pursuant to this Agreement, to be
subject to the registration requirements of the 1933 Act.
(b) The offering of shares of METALS Stock pursuant to the METALS Plan of
Organization has been made in compliance with applicable federal and state
securities laws.
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7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY will afford to the
officers and authorized representatives of METALS and the Other Founding
Companies access to all of the COMPANY's sites, properties, books and records
and will furnish METALS with such additional financial and operating data and
other information as to the business and properties of the COMPANY as METALS or
the Other Founding Companies may from time to time reasonably request. The
COMPANY will cooperate with METALS and the Other Founding Companies, its
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. METALS, NEWCO, the STOCKHOLDERS and the
COMPANY will treat all information obtained in connection with the negotiation
and performance of this Agreement or the due diligence investigations conducted
with respect to the Other Founding Companies as confidential in accordance with
the provisions of Section 14 hereof. In addition, METALS will cause each of the
Other Founding Companies to enter into a provision similar to this Section 7.1
requiring each such Other Founding Company, its stockholders, directors,
officers, representatives, employees and agents to keep confidential any
information obtained by such Other Founding Company.
(b) Between the date of this Agreement and the Funding and Consummation
Date, METALS will afford to the officers and authorized representatives of the
COMPANY access to all of METALS's and NEWCO's sites, properties, books and
records and will furnish the COMPANY with such additional financial and
operating data and other information as to the business and properties of METALS
and NEWCO as the COMPANY may from time to time reasonably request. METALS and
NEWCO will cooperate with the COMPANY, its representatives, auditors and counsel
in the preparation of any documents or other material which may be required in
connection with any documents or materials required by this Agreement. The
COMPANY will cause all
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information obtained in connection with the negotiation and performance of this
Agreement to be treated as confidential in accordance with the provisions of
Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY will, except as set
forth on Schedule 7.2:
(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) use all reasonable efforts to 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) use all reasonable efforts to 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;
(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; and
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(viii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for ordinary and
customary bonus and salary increases for employees in accordance with past
practices.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, between
the date hereof and the Funding and Consummation Date, the COMPANY will not,
without prior written consent of METALS, which consent will not be unreasonably
withheld:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other than in
connection with the exercise of options or warrants listed in Schedule
5.4;
(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
except for distributions in the amount of estimated taxes payable by the
STOCKHOLDERS on S corporation earnings (if any) of the COMPANY for the
period from the Balance Sheet Date to the Closing Date and specified on
Schedule 7.3 hereto, and any other distributions of Accumulated
Adjustments Accounts amounts specified on Schedule 7.3 hereto, it being
understood and agreed that any such distributions in excess of such
estimated taxes shall result in a corresponding dollar for dollar decrease
in the amount of cash otherwise payable to the STOCKHOLDERS as part of the
Merger consideration hereunder;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except if it is in
the normal course of business (consistent with past practice) or involves
an amount not in excess of $100,000;
(v) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except (1) with respect to purchase money liens
incurred in connection with the acquisition of
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equipment with an aggregate cost not in excess of $50,000 necessary or
desirable for the conduct of the businesses of the COMPANY, (2) (A) liens
for taxes either not yet due or being contested in good faith and by
appropriate proceedings (and for which contested taxes adequate reserves
have been established and are being maintained) or (B) materialmen's,
mechanics', workers', repairmen's, employees' or other like liens arising
in the ordinary course of business (the liens set forth in clause (2)
being referred to herein as "Statutory Liens"), or (3) liens set forth on
Schedule 5.10 and/or 5.15 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business and other
than distributions of real estate and other assets as permitted in this
Agreement (including the Schedules hereto);
(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;
(ix) waive any material rights or claims of the COMPANY, provided
that the COMPANY may negotiate and adjust bills and accounts in the course
of good faith disputes with customers in a manner consistent with past
practice, provided, further, that such adjustments shall not be deemed to
be included in Schedule 5.11 unless specifically listed thereon;
(x) amend or terminate any material agreement, permit, license or
other right of the COMPANY; or
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
7.4 NO SHOP. None of the STOCKHOLDERS, the COMPANY, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing
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on the date of this Agreement and ending with the earlier to occur of the
Funding and Consummation 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 or its
authorized agents relating to, any acquisition or purchase of all or a
material amount of the assets of, or any equity interest in, the COMPANY
or a merger, consolidation or business combination of the COMPANY.
7.5 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 on Schedule 7.5 with proof that any required notice has been
sent.
7.6 AGREEMENTS. The STOCKHOLDERS and the COMPANY shall terminate (i) any
stockholders agreements, voting agreements, voting trusts, options, warrants and
employment agreements between the COMPANY and any employee listed on Schedule
9.12 hereto and (ii) any existing agreement between the COMPANY and any
STOCKHOLDER, on or prior to the Funding and Consummation Date provided that
nothing herein shall prohibit or prevent the COMPANY from paying (either prior
to or on the Closing Date) notes or other obligations from the COMPANY to the
STOCKHOLDERS in accordance with the terms thereof, which terms have been
disclosed to METALS. Such termination agreements are listed on Schedule 7.6 and
copies thereof shall be attached thereto.
7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDERS 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 STOCKHOLDERS contained herein
to be untrue or inaccurate in any material respect at or prior to the Closing
and (ii) any material failure of any STOCKHOLDER or the
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COMPANY to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by such person hereunder. METALS and NEWCO 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 or NEWCO contained herein to be untrue or
inaccurate in any material respect at or prior to the Closing and (ii) any
material failure of METALS or NEWCO 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 7.7 shall not be deemed to (i)
modify the representations or warranties hereunder of the party delivering such
notice, which modification may only be made pursuant to Section 7.8, (ii) modify
the conditions set forth in Sections 8 and 9, or (iii) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
7.8 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 24 hours prior to the
anticipated effectiveness of the Registration Statement to supplement or amend
promptly the Schedules 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, provided however,
that supplements and amendments to Schedules 5.10, 5.11, 5.14 and 5.15 shall
only have to be delivered at the Closing Date, unless such Schedule is to be
amended to reflect an event occurring other than in the ordinary course of
business. Notwithstanding the foregoing sentence, no amendment or supplement to
a Schedule prepared by the COMPANY that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect may be made unless METALS
and a majority of the Founding Companies other than the COMPANY consent to such
amendment or supplement; and provided further, that no amendment or supplement
to a Schedule prepared by METALS or NEWCO that constitutes or reflects an event
or occurrence that would have a Material Adverse Effect may be made unless a
majority of the Founding Companies consent to such amendment or supplement. For
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all purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Sections 8.1 and 9.1 have been
fulfilled, the Schedules hereto shall be deemed to be the Schedules as amended
or supplemented pursuant to this Section 7.8. In the event that one of the Other
Founding Companies seeks to amend or supplement a Schedule pursuant to Section
7.8 of one of the Other Agreements, and such amendment or supplement constitutes
or reflects an event or occurrence that would have a Material Adverse Effect on
such Other Founding Company, METALS shall give the COMPANY notice promptly after
it has knowledge thereof. If METALS and a majority of the Founding Companies
consent to such amendment or supplement, which consent shall have been deemed
given by METALS or any Founding Company if no response is received within 24
hours following receipt of notice of such amendment or supplement (or sooner if
required by the circumstances under which such consent is requested), but the
COMPANY does not give its consent, the COMPANY may terminate this Agreement
pursuant to Section 12.1(iv) hereof. In the event that the COMPANY seeks to
amend or supplement a Schedule pursuant to this Section 7.8, and METALS and a
majority of the Other Founding Companies do not consent to such amendment or
supplement, this Agreement shall be deemed terminated by mutual consent as set
forth in Section 12.1(i) hereof. In the event that METALS or NEWCO seeks to
amend or supplement a Schedule pursuant to this Section 7.8 and a majority of
the Founding Companies do not consent to such amendment or supplement, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
12.1(i) hereof. No party to this Agreement shall be liable to any other party if
this Agreement shall be terminated pursuant to the provisions of this Section
7.8. No amendment of or supplement to a Schedule shall be made later than 24
hours prior to the anticipated effectiveness of the Registration Statement.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The COMPANY and
STOCKHOLDERS shall furnish or cause to be furnished to METALS and the
Underwriters all of the information concerning the COMPANY and the STOCKHOLDERS
required for inclusion in, and will cooperate with METALS and the Underwriters
in the preparation of, the Registration
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Statement and the prospectus included therein (including audited and unaudited
financial statements, prepared in accordance with generally accepted accounting
principles, in form suitable for inclusion in the Registration Statement). The
COMPANY and the STOCKHOLDERS agree promptly to advise METALS if at any time
during the period in which a prospectus relating to the offering is required to
be delivered under the Securities Act, any information contained in the
prospectus concerning the COMPANY or the STOCKHOLDERS becomes incorrect or
incomplete in any material respect, and to provide the information needed to
correct such inaccuracy. Insofar as the information relates solely to the
COMPANY or the STOCKHOLDERS, the COMPANY represents and warrants as to such
information with respect to itself, and each Stockholder represents and
warrants, as to such information with respect to the COMPANY and himself or
herself, that the Registration Statement will not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
7.10 FINAL FINANCIAL STATEMENTS. The COMPANY shall provide prior to the
Funding and Consummation Date, and METALS shall have had sufficient time to
review the unaudited consolidated balance sheets of the COMPANY as of the end of
all fiscal quarters following the Balance Sheet Date, and the unaudited
consolidated statement of income, cash flows and retained earnings of the
COMPANY for all fiscal quarters ended after the Balance Sheet Date, disclosing
no material adverse change in the financial condition of the COMPANY or the
results of its operations from the financial statements as of the Balance Sheet
Date. Such financial statements shall have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as noted therein). Except as noted in
such financial statements, all of such financial statements will present fairly
the results of operations of the COMPANY for the periods indicated therein.
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7.11 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.
7.12 AUTHORIZED CAPITAL. Prior to the Funding and Consummation Date,
METALS shall maintain its authorized capital stock as set forth in the
Registration Statement filed with the SEC except for such changes in authorized
capital stock as are made to respond to comments made by the SEC or requirements
of any exchange or automated trading system for which application is made to
register the METALS Stock and any changes necessary or advisable in order to
permit the delivery of the opinion contemplated by Section 8.12 hereof.
7.13 COMPLIANCE WITH THE XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF
1976 (THE "XXXX-XXXXX ACT"). All parties to this Agreement hereby recognize that
one or more filings under the Xxxx-Xxxxx Act may be required in connection with
the transactions contemplated herein. If it is determined by the parties to this
Agreement that filings under the Xxxx-Xxxxx Act are required, then: (i) each of
the parties hereto agrees to cooperate and use its best efforts to comply with
the Xxxx-Xxxxx Act, (ii) such compliance by the STOCKHOLDERS and the COMPANY
shall be deemed a condition precedent in addition to the conditions precedent
set forth in Section 9 of this Agreement, and such compliance by METALS and
NEWCO shall be deemed a condition precedent in addition to the conditions
precedent set forth in Section 8 of this Agreement, and (iii) the parties agree
to cooperate and use their best efforts to cause all filings required under the
Xxxx-Xxxxx Act to be made. If filings under the Xxxx-Xxxxx Act are required, the
costs and expenses thereof (including filing fees) shall be borne by METALS. The
obligation of each party to consummate the transactions contemplated by this
Agreement is subject to the expiration or termination of the waiting period
under the Xxxx-Xxxxx Act, if applicable.
7.14 ENVIRONMENTAL INDEMNITY. At or prior to the Closing, the parties
identified in the form of Indemnification Agreement attached hereto as ANNEX
VIII shall enter into an
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Indemnification Agreement in the form attached hereto as ANNEX VIII, with such
changes thereto as may be approved by METALS, in its sole discretion.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of STOCKHOLDERS 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. The obligations of
the STOCKHOLDERS and the COMPANY with respect to actions to be taken on the
Funding and Consummation Date are subject to the satisfaction or waiver on or
prior to the Funding and Consummation Date of the conditions set forth in
Sections 8.1, 8.5, 8.8, 8.9 and 8.12. As of the Closing Date or, with respect to
the conditions set forth in Sections 8.1, 8.5, 8.8, 8.9 and 8.12, as of the
Funding and Consummation Date, if any such conditions have not been satisfied,
the Stockholders (acting in unison) shall have the right to terminate this
Agreement, or in the alternative, waive any condition not so satisfied. Any act
or action of the Stockholders in consummating the Closing or delivering
certificates representing COMPANY Stock as of the Funding and Consummation Date
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 and NEWCO contained in Section 6 hereof.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of METALS and NEWCO contained in Section 6 shall
be true and correct in all material respects as of the Closing Date and the
Funding and Consummation 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 and NEWCO on or before the
Closing Date and the Funding and Consummation Date shall have been duly complied
with and performed in all material respects; and certificates to the foregoing
effect dated the Closing
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Date and the Funding and Consummation Date, respectively, and signed by the
President or any Vice President of METALS shall have been delivered to the
STOCKHOLDERS.
8.2 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 COMPANY and its counsel.
The STOCKHOLDERS and the COMPANY shall be satisfied that the Registration
Statement and the prospectus forming a part thereof, including any amendments
thereof or supplements thereto, shall not contain any untrue statement of a
material fact, or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that the condition contained in this sentence shall be deemed satisfied if the
COMPANY or STOCKHOLDERS shall have failed to inform METALS in writing prior to
the effectiveness of the Registration Statement of the existence of an untrue
statement of a material fact or the omission of such a statement of a material
fact.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of the COMPANY as a result of which
the management of the COMPANY deems it inadvisable to proceed with the
transactions hereunder.
8.4 OPINION OF COUNSEL. The COMPANY shall have received an opinion from
counsel for METALS, dated the Closing Date, in the form annexed hereto as Annex
V.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the underwriters named therein shall have
agreed to acquire on a firm commitment basis, subject to the conditions set
forth in the underwriting agreement, on terms such that the aggregate value of
the cash and the number of shares of METALS Stock to be received by the
STOCKHOLDERS is not less than the Minimum Value set forth on Annex I.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated
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herein shall have been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit the Merger and no
governmental agency or body shall have taken any other action or made any
request of COMPANY as a result of which COMPANY deems it inadvisable to proceed
with the transactions hereunder.
8.7 GOOD STANDING CERTIFICATES. METALS and NEWCO each shall have delivered
to the COMPANY a certificate, dated as of a date no later than ten days prior to
the Closing Date, duly issued by the Delaware Secretary of State and in each
state in which METALS or NEWCO is authorized to do business, showing that each
of METALS and NEWCO is in good standing and authorized to do business and that
all state franchise and/or income tax returns and taxes for METALS and NEWCO,
respectively, for all periods prior to the Closing have been filed and paid.
8.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to METALS or NEWCO which would constitute a Material
Adverse Effect.
8.9 CLOSING OF IPO. The closing of the sale of the METALS Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The COMPANY shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of METALS and of NEWCO, certifying the truth and correctness of attached copies
of the METALS's and NEWCO's respective Certificates of Incorporation (including
amendments thereto), By-Laws (including amendments thereto), and resolutions of
the boards of directors and, if required, the stockholders of METALS and NEWCO
approving METALS's and NEWCO's entering into this Agreement and the consummation
of the transactions contemplated hereby.
8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 9.12
shall have been afforded the opportunity to enter into an employment agreement
substantially in the form of Annex VII hereto.
8.12 TAX MATTERS. The STOCKHOLDERS shall have received an opinion of
Xxxxxx Xxxxxxxx LLP that the METALS Plan of Organization will qualify as a
tax-free transfer of property
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under Section 351 of the Code and that the STOCKHOLDERS will not recognize gain
to the extent the STOCKHOLDERS exchange stock of the COMPANY for METALS stock
(but not cash or other property) pursuant to the METALS Plan of Organization.
9. 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. The obligations of METALS and
NEWCO with respect to actions to be taken on the Funding and Consummation Date
are subject to the satisfaction or waiver on or prior to the Funding and
Consummation Date of the conditions set forth in Sections 9.1, 9.4 and 9.13. As
of the Closing Date or, with respect to the conditions set forth in Sections
9.1, 9.4 and 9.13, as of the Funding and Consummation Date, if any such
conditions have not been satisfied, METALS and NEWCO shall have the right to
terminate this Agreement, or waive any such condition, but no such waiver shall
be deemed to affect the survival of the representations and warranties contained
in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the STOCKHOLDERS and the COMPANY contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date and the Funding and Consummation 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 STOCKHOLDERS and the COMPANY on or before the Closing Date
or the Funding and Consummation Date, as the case may be, shall have been duly
performed or complied with in all material respects; and the STOCKHOLDERS shall
have delivered to METALS certificates dated the Closing Date and the Funding and
Consummation Date, respectively, and signed by them to such effect.
9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO
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and no governmental agency or body shall have taken any other action or made any
request of METALS as a result of which the management of METALS deems it
inadvisable to proceed with the transactions hereunder.
9.3 SECRETARY'S CERTIFICATE. METALS shall have received a certificate,
dated the Closing Date and signed by the secretary of the COMPANY, certifying
the truth and correctness of attached copies of the COMPANY's Certificate of
Incorporation (including amendments thereto), By-Laws (including amendments
thereto), and resolutions of the board of directors and the STOCKHOLDERS
approving the COMPANY's entering into this Agreement and the consummation of the
transactions contemplated hereby.
9.4 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 properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of the COMPANY
to conduct its business.
9.5 STOCKHOLDERS' RELEASE. The STOCKHOLDERS shall have delivered to METALS
an instrument dated the Closing Date which shall be effective only upon the
occurrence of the Funding and Consummation Date releasing the COMPANY from (i)
any and all claims of the STOCKHOLDERS against the COMPANY and METALS and (ii)
obligations of the COMPANY and METALS to the STOCKHOLDERS, except for (x) items
specifically identified on Schedules 5.10 and 5.15 as being claims of or
obligations to the STOCKHOLDERS, (y) continuing obligations to STOCKHOLDERS
relating to their employment by the COMPANY and (z) obligations arising under
this Agreement or the transactions contemplated hereby. In the event that the
Funding and Consummation Date does not occur, then the release instrument
referenced herein shall be void and of no further force or effect.
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9.6 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.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 9.7, all existing agreements between the COMPANY and the STOCKHOLDERS
(and entities controlled by the STOCKHOLDERS) shall have been canceled effective
prior to or as of the Funding and Consummation Date.
9.8 OPINION OF COUNSEL. METALS shall have received an opinion from Counsel
to the COMPANY and the STOCKHOLDERS, dated the Closing Date, substantially in
the form annexed hereto as Annex VI.
9.9 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 5.23 shall have been obtained;
and no action or proceeding shall have been instituted or threatened to restrain
or prohibit the Merger and no governmental agency or body shall have taken any
other action or made any request of METALS as a result of which METALS deems it
inadvisable to proceed with the transactions hereunder.
9.10 GOOD STANDING CERTIFICATES. The COMPANY shall have delivered to
METALS a certificate, dated as of a date no earlier than ten days prior to the
Closing Date, duly issued by the appropriate governmental authority in the
COMPANY's state of incorporation and, unless waived by METALS, in each state in
which the COMPANY is authorized to do business, showing the COMPANY is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the COMPANY for all periods prior to the
Closing have been filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
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9.12 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 9.12
shall enter into an employment agreement substantially in the form of Annex VII
hereto.
9.13 CLOSING OF IPO. The closing of the sale of the METALS Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
9.14 FIRPTA CERTIFICATE. Each STOCKHOLDER shall have delivered to METALS a
certificate to the effect that he is not a foreign person pursuant to Section
1.1445-2(b) of the Treasury regulations.
10. COVENANTS OF METALS AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. METALS
shall use its best efforts to have the STOCKHOLDERS released from any and all
guarantees on any indebtedness that they personally guaranteed and from any and
all pledges of assets that they pledged to secure such indebtedness for the
benefit of the COMPANY, with all such guarantees on indebtedness being assumed
by METALS. In the event that METALS cannot obtain such releases from the lenders
of any such guaranteed indebtedness on or prior to 120 days subsequent to the
Funding and Consummation Date, METALS shall promptly pay off or otherwise
refinance or retire such indebtedness. From and after the Funding and
Consummation Date and until such time as all of such indebtedness is paid off,
refinanced or retired, METALS shall maintain unencumbered funds in amounts
sufficient to provide for such pay off, refinancing or retirement, provided that
METALS may use such funds for other purposes, in its sole discretion, with the
prior written consent of each STOCKHOLDER who has not as of that time been
released from his or her guarantee as described above and whose indebtedness as
described above has not as of that time been paid off, refinanced or retired.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as contemplated
by this Agreement or the Registration Statement, after the Funding and
Consummation Date, METALS
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shall not and shall not permit any of its subsidiaries to undertake any act that
would jeopardize the tax-free status of the organization, including without
limitation:
(a) the retirement or reacquisition, directly or indirectly, of all
or part of the METALS Stock issued in connection with the transactions
contemplated hereby; or
(b) the entering into of financial arrangements for the benefit of
the STOCKHOLDERS.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The COMPANY, if possible, or otherwise the STOCKHOLDERS shall
file or cause to be filed all federal income Tax Returns of any Acquired
Party for all taxable periods that end on or before the Funding and
Consummation Date, and shall permit METALS to review all such Tax Returns
prior to such filings. Unless the COMPANY is a C corporation, the
STOCKHOLDERS shall pay or cause to be paid all Tax liabilities (in excess
of all amounts already paid with respect thereto or properly accrued or
reserved with respect thereto on the COMPANY Financial Statements) shown
by such Returns to be due.
(ii) METALS shall file or cause to be filed all separate Returns of,
or that include, any Acquired Party for all taxable periods ending after
the Funding and Consummation Date.
(iii) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such
cooperation and information as any of them reasonably may request in
filing any 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. Such cooperation and
information shall include providing copies of all relevant portions of
relevant Returns, together with relevant accompanying schedules and
relevant work papers, relevant documents relating to rulings or other
determinations by Taxing Authorities and relevant records concerning the
ownership and Tax basis of property, which such party may possess. Each
party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide
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explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
(iv) Each of the COMPANY, NEWCO, METALS and each STOCKHOLDER shall
comply with the tax reporting requirements of Section 1.351-3 of the
Treasury Regulations promulgated under the Code, and treat the transaction
as a tax-free contribution under Section 351(a) of the Code subject to
gain, if any, recognized on the receipt of cash or other property under
Section 351(b) of the Code subject to gain, if any, recognized on the
receipt of cash or other property under Section 351(b) of the Code.
10.4 DIRECTORS. The persons named in the Draft Registration Statement
shall be appointed as directors and elected as officers of METALS, as and to the
extent set forth in the Draft Registration Statement, promptly following the
Funding and Consummation Date. This provision shall not imply that the
STOCKHOLDERS have any power or duty to elect officers of METALS.
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Funding and
Consummation Date, METALS shall use all reasonable efforts to permit the COMPANY
to maintain all health insurance, life insurance, 401(k) plan and other employee
benefit plans in effect at the COMPANY, unless any such change is (a) approved
by a vote of at least two-thirds of the members of the Board of Directors of
METALS, or (b) required by applicable laws or regulations, including the
antidiscriminatory provisions of ERISA and the related regulations. In the event
that any such changes (other than changes so approved by the Board of Directors
of METALS) are required, subject to applicable law, METALS shall permit the
COMPANY to implement alternative benefits that provide the affected employees of
the COMPANY with an undiminished aggregate level of benefits. On the Funding and
Consummation Date, the employees of the COMPANY will be the employees of the
Surviving Corporation (provided that this provision is for purposes of
clarifying that the Merger, in and of itself, will not have any impact on the
employment status of any employee and provided, further that this provision
shall not in any way limit the management rights of the
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Surviving Corporation or METALS to assess workforce needs and make appropriate
adjustments as necessary or desirable within their discretion subject to
applicable laws and collective bargaining agreements).
11. INDEMNIFICATION
The STOCKHOLDERS, METALS and NEWCO each make the following covenants that
are applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The STOCKHOLDERS
covenant and agree that they, jointly and severally, will indemnify, defend,
protect and hold harmless METALS, NEWCO, the COMPANY and the Surviving
Corporation at all times, from and after the date of this Agreement until the
Expiration Date (provided that for purposes of Section 11.1(iii) below, the
Expiration Date shall be the date on which the applicable statute of limitations
expires), from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by METALS, NEWCO, the COMPANY or the Surviving
Corporation as a result of or arising from (i) any breach of the representations
and warranties of the STOCKHOLDERS or the COMPANY set forth herein or on the
schedules or certificates delivered in connection herewith, (ii) any breach of
any agreement on the part of the STOCKHOLDERS or the COMPANY under this
Agreement, or (iii) any liability under the 1933 Act, the 1934 Act or other
Federal or state law or regulation, at common law or otherwise, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact relating to the COMPANY or the STOCKHOLDERS, and provided to METALS or its
counsel by the COMPANY or the STOCKHOLDERS (but in the case of the STOCKHOLDERS,
only if such statement was provided in writing) contained in the Registration
Statement or any prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact relating to the COMPANY
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or the STOCKHOLDERS required to be stated therein or necessary to make the
statements therein not misleading, provided, however, that such indemnity shall
not inure to the benefit of METALS, NEWCO, the COMPANY or the Surviving
Corporation to the extent that such untrue statement (or alleged untrue
statement) was made in, or omission (or alleged omission) occurred in, any
preliminary prospectus and the STOCKHOLDERS provided, in writing, corrected
information to METALS counsel and to METALS for inclusion in the final
prospectus, and such information was not so included or properly delivered, and
provided further, that no STOCKHOLDER shall be liable for any indemnification
obligation pursuant to this Section 11.1 to the extent attributable to a breach
of any representation, warranty or agreement made herein individually by any
other STOCKHOLDER.
METALS and NEWCO acknowledge and agree that other than the representations
and warranties of COMPANY or STOCKHOLDERS specifically contained in this
Agreement, there are no representations or warranties of COMPANY or
STOCKHOLDERS, either express or implied, with respect to the transactions
contemplated by this Agreement, the COMPANY or its assets, liabilities and
business.
METALS and any NEWCO further acknowledge and agree that, should the
Closing occur, their sole and exclusive remedy with respect to any and all
claims relating to this Agreement and the transactions contemplated in this
Agreement, shall be pursuant to the indemnification provisions set forth in this
Section 11. METALS and NEWCO hereby waive, from and after the Closing, to the
fullest extent permitted under applicable law, any and all rights, claims and
causes of action they or any indemnified person may have against the COMPANY or
any STOCKHOLDER relating to this Agreement or the transactions arising under or
based upon any federal, state, local or foreign statute, law, rule, regulation
or otherwise.
11.2 INDEMNIFICATION BY METALS. METALS covenants and agrees that it will
indemnify, defend, protect and hold harmless the STOCKHOLDERS at all times from
and after the date of this Agreement until the Expiration Date, from and against
all claims, damages, actions, suits,
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proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by the STOCKHOLDERS as a result of or arising from (i)
any breach by METALS or NEWCO of their representations and warranties set forth
herein or on the schedules or certificates attached hereto, (ii) any breach of
any agreement on the part of METALS or NEWCO under this Agreement, (iii) any
liabilities which the STOCKHOLDERS may incur due to METALS's or NEWCO's failure
to be responsible for the liabilities and obligations of the COMPANY as provided
in Section 1 hereof (except to the extent that METALS or NEWCO has claims
against the STOCKHOLDERS by reason of such liabilities); or (iv) any liability
under the 1933 Act, the 1934 Act or other Federal or state law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact relating to METALS, NEWCO or any of
the Other Founding Companies contained in any preliminary prospectus, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to METALS
or NEWCO or any of the Other Founding Companies required to be stated therein or
necessary to make the statements therein not misleading.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying
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Party shall not settle any criminal proceeding without the written consent of
the Indemnified Party. If the Indemnifying Party undertakes to defend or settle,
it shall promptly notify the Indemnified Party of its intention to do so, and
the Indemnified Party shall cooperate with the Indemnifying Party and its
counsel in the defense thereof and in any settlement thereof. Such cooperation
shall include, but shall not be limited to, furnishing the Indemnifying Party
with any books, records or information reasonably requested by the Indemnifying
Party that are in the Indemnified Party's possession or control. All Indemnified
Parties shall use the same counsel, which shall be the counsel selected by
Indemnifying Party, provided that if counsel to the Indemnifying Party shall
have a conflict of interest that prevents counsel for the Indemnifying Party
from representing Indemnified Party, Indemnified Party shall have the right to
participate in such matter through counsel of its own choosing and Indemnifying
Party will reimburse the Indemnified Party for the reasonable expenses of its
counsel. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except (i) as set forth in the preceding sentence
and (ii) to the extent such participation is requested by the Indemnifying
Party, in which event the Indemnified Party shall be reimbursed by the
Indemnifying Party for reasonable additional legal expenses and out-of-pocket
expenses. If the Indemnifying Party desires to accept a final and complete
settlement of any such Third Person claim and the Indemnified Party refuses to
consent to such settlement, then the Indemnifying Party's liability under this
Section with respect to such Third Person claim shall be limited to the amount
so offered in settlement by said Third Person. Upon agreement as to such
settlement between said Third Person and the Indemnifying Party, the
Indemnifying Party shall, in exchange for a complete release from the
Indemnified Party, promptly pay to the Indemnified Party the amount agreed to in
such settlement and the Indemnified Party shall, from that moment on, bear full
responsibility for any additional costs of defense which it subsequently incurs
with respect to
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such claim and all additional costs of settlement or judgment. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a complete release of the Indemnified
Party, unless the Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for insurance proceeds in determining
the amount of any indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section 11
shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party, provided that, nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement. Any indemnity payment under this Section
11 shall be treated as an adjustment to the exchange consideration for tax
purposes unless a final determination (which shall include the execution of a
Form 870-AD or successor form) with respect to the indemnified party or any of
its affiliate causes any such payment not to be treated as an adjustment to the
exchange consideration for U.S. Federal Income Tax purposes.
11.5 LIMITATIONS ON INDEMNIFICATION. METALS, NEWCO, the Surviving
Corporation and the other persons or entities indemnified pursuant to Section
11.1 or 11.2 shall not assert any claim for indemnification hereunder against
the STOCKHOLDERS until such time as, and solely to the extent that, the
aggregate of all claims which such persons may have against such the
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STOCKHOLDERS shall exceed the greater of (a) 1.0% of the sum of (i) the cash
paid to STOCKHOLDERS plus (ii) the value of the METALS Stock delivered to
STOCKHOLDERS (calculated as provided in this Section 11.5) or (b) $50,000 (the
"Indemnification Threshold"). STOCKHOLDERS shall not assert any claim for
indemnification hereunder against METALS or NEWCO until such time as, and solely
to the extent that, the aggregate of all claims which STOCKHOLDERS may have
against METALS or NEWCO shall exceed $50,000.
No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
Notwithstanding any other term of this Agreement, no STOCKHOLDER shall be
liable under this Section 11 for an amount which exceeds the amount of proceeds
received by such STOCKHOLDER in connection with the Merger. For purposes of
calculating the value of the METALS Stock received by a STOCKHOLDER, METALS
Stock shall be valued at its initial public offering price as set forth in the
Registration Statement. It is hereby understood and agreed that a STOCKHOLDER
may satisfy an indemnification obligation through payment of a combination of
stock and cash in proportion equal to the proportion of stock and cash received
by such STOCKHOLDER in connection with the Merger, valued as described
immediately above.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION.This Agreement may be terminated at any time prior to the
Funding and Consummation Date solely:
(i) by mutual consent of the boards of directors of METALS and the
COMPANY;
(ii) by the STOCKHOLDERS or the COMPANY (acting through its board of
directors), on the one hand, or by METALS (acting through its board of
directors), on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by
December 31, 1997, 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
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obligations under this Agreement to the extent required to be performed by it
prior to or on the Funding and Consummation Date;
(iii) by the STOCKHOLDERS or COMPANY, on the one hand, or by METALS, on
the other hand, if a material breach or default shall be made by the other party
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 on or before the Funding and Consummation Date or by the STOCKHOLDERS
or the COMPANY, if the conditions set forth in Section 8 hereof have not been
satisfied or waived as of the Closing Date or the Funding and Consummation Date,
as applicable, or by METALS, if the conditions set forth in Section 9 hereof
have not been satisfied or waived as of the Closing Date or the Funding and
Consummation Date, as applicable;
(iv) pursuant to Section 7.8 hereof; or
(v) pursuant to Section 4 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, 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.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. The STOCKHOLDERS will not, for a period of
five (5) years following the Funding and Consummation Date, for any reason
whatsoever, directly or indirectly, for themselves 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 metals
processing, metals fabricating and/or specialty metals business,
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including brokering, manufacturing and distribution services, in direct
competition with METALS or any of the subsidiaries thereof, within 200 miles of
where the COMPANY or any of its subsidiaries conducted business prior to the
effectiveness of the Merger (the "Territory");
(ii) call upon any person who is, at that time, within the Territory, an
employee of METALS (including the subsidiaries thereof) in a sales
representative or managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of METALS (including the
subsidiaries thereof), provided that each STOCKHOLDER shall be permitted to call
upon and hire any member of his or her immediate family;
(iii) call upon any person or entity which is, at that time, or which has
been, within one (1) year prior to the Funding and Consummation Date, a customer
of METALS (including the subsidiaries thereof), of the COMPANY or of any of the
Other Founding Companies within the Territory for the purpose of soliciting or
selling products or services in direct competition with METALS within the
Territory;
(iv) call upon any prospective acquisition candidate, on any STOCKHOLDER's
own behalf or on behalf of any competitor in the metals processing, metals
fabricating and/or specialty metals business, including brokering, manufacturing
and distribution services, which candidate, to the actual knowledge of such
STOCKHOLDER after due inquiry, was called upon by METALS (including the
subsidiaries thereof) or for which, to the actual knowledge of such STOCKHOLDER
after due inquiry, METALS (or any subsidiary thereof) made an acquisition
analysis, for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of the COMPANY
to any person, firm, partnership, corporation or business for any reason or
purpose whatsoever except to the extent that the COMPANY has in the past
disclosed such information to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any STOCKHOLDER from acquiring as an investment not more than one
percent (1%) of the capital
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stock of a competing business whose stock is traded on a national securities
exchange or over-the-counter.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
METALS as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to METALS for which it
would have no other adequate remedy, each STOCKHOLDER agrees that the foregoing
covenant may be enforced by METALS in the event of breach by such STOCKHOLDER,
by injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
STOCKHOLDERS in light of the activities and business of METALS (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of METALS.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 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 Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13 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 STOCKHOLDER
against METALS (including the subsidiaries thereof), whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
METALS of such covenants. It is specifically agreed that the period of five (5)
years stated at the beginning of this Section 13, during which the agreements
and covenants of each STOCKHOLDER made in this Section 13 shall be effective,
shall be computed by excluding from such computation any time during which such
STOCKHOLDER is in violation of any provision of this Section 13. The covenants
contained in Section 13 shall not be affected by any breach of any
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other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
13.6 MATERIALITY. The COMPANY and the STOCKHOLDERS hereby agree that this
covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The STOCKHOLDERS recognize and acknowledge that they
had in the past, currently have, and in the future may possibly have, access to
certain confidential information of the COMPANY, the Other Founding Companies,
and/or METALS, such as operational policies, and pricing and cost policies that
are valuable, special and unique assets of the COMPANY's, the Other Founding
Companies' and/or METALS's respective businesses. The STOCKHOLDERS agree that
they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of METALS, (b) following the Closing,
such information may be disclosed by the STOCKHOLDERS as is required in the
course of performing their duties for METALS or the Surviving Corporation and
(c) to counsel and other advisers, provided that such advisers (other than
counsel) agree to the confidentiality provisions of this Section 14.1, unless
(i) such information becomes known to the public generally through no fault of
the STOCKHOLDERS, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), the STOCKHOLDERS shall, if
possible, give prior written notice thereof to METALS and provide METALS with
the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any of the STOCKHOLDERS of the provisions of this Section,
METALS shall be entitled to an injunction restraining such STOCKHOLDERS from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as
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prohibiting METALS from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. In the event the
transactions contemplated by this Agreement are not consummated, STOCKHOLDERS
shall have none of the above-mentioned restrictions on their ability to
disseminate confidential information with respect to the COMPANY.
14.2 METALS AND NEWCO. METALS and NEWCO recognize and acknowledge that
they had in the past and currently have access to certain confidential
information of the COMPANY, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of the COMPANY's business.
METALS and NEWCO agree that, prior to the Closing, or if the Transactions
contemplated by this Agreement are not consummated, they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to authorized
representatives of the COMPANY, (b) to counsel and other advisers, provided that
such advisers (other than counsel) agree to the confidentiality provisions of
this Section 14.1, (c) to the Other Founding Companies and their representatives
pursuant to Section 7.1(a), unless (i) such information becomes known to the
public generally through no fault of METALS or NEWCO, (ii) disclosure is
required by law or the order of any governmental authority under color of law,
provided, that prior to disclosing any information pursuant to this clause (ii),
METALS and NEWCO shall, if possible, give prior written notice thereof to the
COMPANY and the STOCKHOLDERS and provide the COMPANY and the STOCKHOLDERS with
the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party, and (d) to the public to the
extent necessary or advisable in connection with the filing of the Registration
Statement and the IPO and the securities laws applicable thereto and to the
operation of METALS as a publicly held entity after the IPO. In the event of a
breach or threatened breach by METALS or NEWCO of the provisions of this
Section, the COMPANY and the STOCKHOLDERS shall be entitled to an injunction
restraining METALS and NEWCO from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as
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prohibiting the COMPANY and the STOCKHOLDERS from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14 shall
survive the termination of this Agreement for a period of five years from the
Funding and Consummation Date.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Unless otherwise agreed by METALS, except for
transfers to immediate family members who agree to be bound by the restrictions
set forth in this Section 15.1 (or trusts for the benefit of the STOCKHOLDERS or
family members, the trustees of which so agree), for a period of one year from
the Closing, except pursuant to Section 17 hereof, none of the STOCKHOLDERS
shall sell, assign, exchange, transfer, encumber, pledge, distribute, appoint,
or otherwise dispose of any shares of METALS Stock as described in Section 3.1
received by the STOCKHOLDERS in the Merger. The certificates evidencing the
METALS Stock delivered to the STOCKHOLDERS pursuant to Section 3 of this
Agreement will bear a legend substantially in the form set forth below and
containing such other information as METALS may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
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ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT
OR OTHER DISPOSITION PRIOR TO [FIRST ANNIVERSARY OF CLOSING DATE]. UPON THE
WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE
THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT)
AFTER THE DATE SPECIFIED ABOVE.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The STOCKHOLDERS acknowledge that the shares of
METALS Stock to be delivered to the STOCKHOLDERS pursuant to this Agreement have
not been and will not be registered under the 1933 Act (except as provided in
Section 17 hereof) and therefore may not be resold without compliance with the
1933 Act. The METALS Stock to be acquired by such STOCKHOLDERS pursuant to this
Agreement is being acquired solely for their own respective accounts, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of it in connection with a distribution. The STOCKHOLDERS
covenant, warrant and represent that none of the shares of METALS Stock issued
to such STOCKHOLDERS will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the 1933 Act and the rules and regulations of the
SEC. All the METALS Stock shall bear the following legend in addition to the
legend required under Section 15 of this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND APPLICABLE SECURITIES LAW.
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16.2 ECONOMIC RISK; SOPHISTICATION. The STOCKHOLDERS are able to bear the
economic risk of an investment in the METALS Stock to be acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment in the
METALS Stock. The STOCKHOLDERS party hereto have had an adequate opportunity to
ask questions and receive answers from the officers of METALS concerning any and
all matters relating to the transactions described herein including, without
limitation, the background and experience of the current and proposed officers
and directors of METALS, the plans for the operations of the business of METALS,
the business, operations and financial condition of the Founding Companies other
than the COMPANY, and any plans for additional acquisitions and the like. The
STOCKHOLDERS have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the Closing,
whenever METALS proposes to register any METALS Stock for its own or others
account under the 1933 Act for a public offering, other than (i) any shelf
registration of shares to be used as consideration for acquisitions of
additional businesses by METALS and (ii) registrations relating to employee
benefit plans, METALS shall give each of the STOCKHOLDERS prompt written notice
of its intent to do so. Upon the written request of any of the STOCKHOLDERS
given within 30 days after receipt of such notice, METALS shall cause to be
included in such registration all of the METALS Stock issued to the STOCKHOLDERS
pursuant to this Agreement (including any stock issued as (or issuable upon the
conversion or exchange of any convertible security, warrant, right or other
security which is issued by METALS as) a dividend or other distribution with
respect to, or in exchange for, or in replacement of such METALS Stock) which
any such STOCKHOLDER requests, provided that METALS shall have the right to
reduce the number of shares included in such registration to
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the extent that inclusion of such shares could, in the written opinion of tax
counsel to METALS or its independent auditors, jeopardize the status of the
transactions contemplated hereby and by the Registration Statement as a tax-free
organization under Section 351 of the Code. In addition, if METALS is advised in
writing in good faith by any managing underwriter of an underwritten offering of
the securities being offered pursuant to any registration statement under this
Section 17.1 that the number of shares to be sold by persons other than METALS
is greater than the number of such shares which can be offered without adversely
affecting the offering, METALS may reduce pro rata the number of shares offered
for the accounts of such persons (based upon the number of shares held by such
person) to a number deemed satisfactory by such managing underwriter, provided,
that, for each such offering made by METALS after the IPO, such reduction shall
be made first by reducing the number of shares to be sold by persons other than
METALS, the STOCKHOLDERS and the stockholders of the Other Founding Companies
(collectively, the STOCKHOLDERS and the stockholders of the other Founding
Companies being referred to herein as the "Founding Stockholders"), and
thereafter, if a further reduction is required, by reducing the number of shares
to be sold by the Founding Stockholders.
17.2 DEMAND REGISTRATION RIGHTS. At any time after the date one year after
the Closing and prior to the date three years after the Closing, the holders of
a majority of the shares of METALS Stock issued to the Founding Stockholders
pursuant to this Agreement and the Other Agreements which have not been
previously registered or sold and which are not entitled to be sold under Rule
144(k) (or any similar or successor provision) promulgated under the 1933 Act
may request in writing that METALS file a registration statement under the 1933
Act covering the registration of the shares of METALS Stock issued to the
STOCKHOLDERS pursuant to this Agreement and the Other Agreements (including any
stock issued as (or issuable upon the conversion or exchange of any convertible
security, warrant, right or other security which is issued by METALS as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of such METALS Stock) then held by such Founding Stockholders (a
"Demand Registration"). Within ten (10) days of the
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receipt of such request, METALS shall give written notice of such request to all
other Founding Stockholders and shall, as soon as practicable but in no event
later than 45 days after notice from any STOCKHOLDER, file and use its best
efforts to cause to become effective a registration statement covering all such
shares. METALS shall be obligated to effect only one Demand Registration for all
Founding Stockholders and will keep such Demand Registration current and
effective for not less than 120 days (or such shorter period as is required to
sell all of the shares registered thereby).
Notwithstanding the foregoing paragraph, following any such a demand, a
majority of METALS's disinterested directors (i.e. directors who have not
demanded or elected to sell shares in any such public offering) may defer the
filing of the registration statement for up to a 30 day period after the date on
which METALS would otherwise be required to make such filing pursuant to the
foregoing paragraph.
If at the time of any request by the Founding Stockholders for a Demand
Registration METALS has fixed plans to file within 60 days after such request a
registration statement covering the sale of any of its securities in a public
offering under the 1933 Act, no registration of the Founding Stockholders'
METALS Stock shall be initiated under this Section 17.2 until 90 days after the
effective date of such registration unless METALS is no longer proceeding
diligently to effect such registration; provided that METALS shall provide the
Founding Stockholders the right to participate in such public offering pursuant
to, and subject to, Section 17.1 hereof.
17.3 REGISTRATION PROCEDURES. Whenever METALS is required to register
shares of METALS Stock pursuant to Sections 17.1 and 17.2, METALS will, as
expeditiously as possible:
a. Prepare and file with the SEC a registration statement with respect to
such shares and use its best efforts to cause such registration statement to
become effective (provided that before filing a registration statement or
prospectus or any amendments or supplements or term sheets thereto, METALS will
furnish a representative of the STOCKHOLDERS with copies of all such documents
proposed to be filed) as promptly as practical;
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b. Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 120 days;
c. Furnish to each STOCKHOLDER who so requests such number of copies of
such registration statement, each amendment and supplement thereto and the
prospectus included in such registration statement (including each preliminary
prospectus and any term sheet associated therewith), and such other documents as
such STOCKHOLDER may reasonably request in order to facilitate the disposition
of the relevant shares;
d. Use its best efforts to register or qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the STOCKHOLDERS, and to keep
such registration or qualification effective during the period such registration
statement is to be kept effective, provided that METALS shall not be required to
become subject to taxation, to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions;
e. Cause all such shares of METALS Stock to be listed or included on any
securities exchanges or trading systems on which similar securities issued by
METALS are then listed or included;
f. Notify each STOCKHOLDER at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act within the period that METALS is
required to keep the registration statement effective of the happening of any
event as a result of which the prospectus included in such registration
statement, together with any associated term sheet, contains an untrue statement
of a material fact or omits any fact necessary to make the statement therein not
misleading, and, at the request of such STOCKHOLDER, METALS will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of the covered shares, such prospectus will not contain an untrue
statement of material fact or omit to state any fact necessary to make the
statements therein not misleading.
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All expenses incurred in connection with the registration under this
Article 17 (including all registration, filing, qualification, legal, printer
and accounting fees, but excluding underwriting commissions and discounts),
shall be borne by METALS.
17.4 INDEMNIFICATION.
(a) In connection with any demand registration, METALS shall indemnify, to
the extent permitted by law, each STOCKHOLDER (an "Indemnified Party") against
all losses, claims, damages, liabilities and expenses arising out of or
resulting from any untrue or alleged untrue statement of material fact contained
in any registration statement, prospectus or preliminary prospectus or
associated term sheet or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading except insofar as the same are caused by or contained in
or omitted from any information furnished in writing to METALS by such
Indemnified Party expressly for use therein or by any Indemnified Parties'
failure to deliver a copy of the registration statement or prospectus or any
amendment or supplements thereto after METALS has furnished such Indemnified
Party with a sufficient number of copies of the same.
(b) In connection with any demand registration, each STOCKHOLDER shall
furnish to METALS in writing such information as is reasonably requested by
METALS for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, METALS, its directors and officers
and each person who controls METALS (within the meaning of the 0000 Xxx) against
any losses, claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement or material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such STOCKHOLDER specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of a STOCKHOLDER under this Section
17.5 shall be limited to an amount
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equal to the net proceeds actually received by such STOCKHOLDER from the sale of
the relevant shares covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified parties' reasonable
judgment, a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. Any failure to give prompt notice shall deprive a party of
its right to indemnification hereunder only to the extent that such failure
shall have adversely effected the indemnifying party. If the defense of any
claim is assumed, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled or elects not,
to assume the defense of a claim, will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
17.5 UNDERWRITING AGREEMENT. In connection with each registration pursuant
to Sections 17.1 and 17.2 covering an underwritten registered offering, METALS
and each participating holder agree to enter into a written agreement with the
managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
managing underwriters and companies of METALS's size and investment stature,
including indemnification.
17.6 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the sale of METALS
stock to the public without registration, METALS agrees to use its best efforts
to:
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(i) make and keep public information regarding METALS available as
those terms are understood and defined in Rule 144 under the 1933 Act for
a period of four years beginning 90 days following the effective date of
the Registration Statement;
(ii) file with the SEC in a timely manner all reports and other
documents required of METALS under the 1933 Act and the 1934 Act at any
time after it has become subject to such reporting requirements; and
(iii) so long as a STOCKHOLDER owns any restricted METALS Common
Stock, furnish to each STOCKHOLDER forthwith upon written request a
written statement by METALS as to its compliance with the reporting
requirements of Rule 144 (at any time from and after 90 days following the
effective date of the Registration Statement, and of the 1933 Act and the
1934 Act (any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
METALS, and such other reports and documents so filed as a STOCKHOLDER may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a STOCKHOLDER to sell any such shares without registration.
18. GENERAL
18.1 COOPERATION. The COMPANY, STOCKHOLDERS, METALS and NEWCO shall
each deliver or cause to be delivered to the other on the Funding and
Consummation Date, and at such other times and places as shall be reasonably
agreed to, such additional instruments as the other may reasonably request for
the purpose of carrying out this Agreement. The COMPANY will cooperate and use
its reasonable efforts to have the present officers, directors and employees of
the COMPANY cooperate with METALS on and after the Funding and Consummation Date
in furnishing information, evidence, testimony and other assistance in
connection with any tax return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Funding and Consummation Date.
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18.2 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 STOCKHOLDERS.
18.3 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
(including the letter regarding patents, etc.) constitute the entire agreement
and understanding among the STOCKHOLDERS, the COMPANY, NEWCO and METALS and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement. 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
STOCKHOLDERS, the COMPANY, NEWCO and METALS, acting through their respective
officers or trustees, duly authorized by their respective Boards of Directors.
Any disclosure made on any Schedule delivered pursuant hereto shall be deemed to
have been disclosed for purposes of any other Schedule required hereby, provided
that the COMPANY shall make a good faith effort to cross reference disclosure,
as necessary or advisable, between related Schedules.
18.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, each party
represents and warrants that it employed no broker or agent in connection with
this transaction and agrees to indemnify the other parties hereto against all
loss, cost, damages or expense arising out of claims for fees or commission of
brokers employed or alleged to have been employed by such indemnifying party.
18.6 EXPENSES. Whether or not the transactions herein contemplated shall
be consummated, METALS will pay the fees, expenses and disbursements of METALS
and its agents,
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representatives, accountants and counsel incurred in connection with the subject
matter of this Agreement and any amendments thereto, including all costs and
expenses incurred in the performance and compliance with all conditions to be
performed by METALS under this Agreement, including the fees and expenses of
Xxxxxx Xxxxxxxx, LLP, Xxxxxxxxx & Xxxxxxxxx, L.L.P., and any other person or
entity retained by METALS or by Notre Capital Ventures II, L.L.C., and the costs
of preparing the Registration Statement. Each STOCKHOLDER shall pay all sales,
use, transfer, real property transfer, recording, gains, stock transfer and
other similar taxes and fees ("Transfer Taxes") imposed in connection with the
Merger, other than Transfer Taxes, if any, imposed by the State of Delaware.
Each STOCKHOLDER shall file all necessary documentation and Returns with respect
to such Transfer Taxes. In addition, each STOCKHOLDER acknowledges that he, and
not the COMPANY or METALS, will pay all taxes due upon receipt of the
consideration payable pursuant to Section 2 hereof. The STOCKHOLDERS acknowledge
that the risks of the transactions contemplated hereby include tax risks, with
respect to which the STOCKHOLDERS are relying solely on the opinion contemplated
by Section 8.12 hereof.
18.7 NOTICES. All notices of communication required or permitted hereunder
shall be in writing and may be given by depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person to
an officer or agent of such party.
(a) If to METALS, or NEWCO, addressed to them at: Metals USA, Inc.
0000 Xxxxxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxxxx Xxxxxxx
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with copies to:
Xxxxxx X. Xxxxxx
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
South Tower Pennzoil Place
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
(b) If to the STOCKHOLDERS, addressed to them at their addresses set
forth on Annex II, with copies to:
Xxxxxxxxxxx X. Xxxxxxx
Xxxxxxx & Xxxxx, L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
(c) If to the COMPANY, addressed to it at:
Texas Aluminum Industries, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxx, President
Tele: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Metals USA, Inc.
0000 Xxxxxxx, Xxxxx 000X
Xxxxxxx, XX 00000
Attn: J. Xxxxxxx Xxxxxxx
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware.
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18.9 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 Expiration Date.
18.10 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.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
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.
18.13 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.
18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of METALS, NEWCO, the COMPANY and STOCKHOLDERS who hold or who
will hold at least
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50% of the METALS Stock issued or to be issued upon consummation of the Merger.
Any amendment or waiver effected in accordance with this Section 18.15 shall be
binding upon each of the parties hereto, any other person receiving METALS Stock
in connection with the Merger and each future holder of such METALS Stock.
18.16 NON-SIGNATORIES. Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx, Xxxxx Xxxxx,
Xxxxxxx Xxxxxx, Xxxxxxxx X. Xxxxxx, Xxxxx Xxxx and Xxxxxxx Xxxxxx are holders
of, in the aggregate, less than 5% of the outstanding Class B Common Stock, and
are not signatories hereto. However, such persons shall be deemed "STOCKHOLDERS"
as that term is used herein for purposes of Section 2.1, Articles 3, 4, 6, 8 and
17 hereof, and shall be third party beneficiaries of those sections, provided
that such persons shall deliver to METALS a letter satisfactory to METALS
regarding their ownership of such stock and related matters.
18.17 SPECIAL PROVISIONS REGARDING CPC. METALS may, in its sole
discretion, substitute a limited liability company, partnership, limited
partnership or other entity (the "Substitute Entity") for Texas Aluminum V
Acquisition Corp. ("Acquisition Corp. V") hereunder, in which case the
Substitute Entity shall assume all obligations of Acquisition Corp. V hereunder
and Acquisition Corp. V shall be relieved of all obligations hereunder. Any such
substitution shall not change in any manner the consideration payable to the
STOCKHOLDERS pursuant to this Agreement, the sole purpose of this provision
being to provide METALS with the ability to structure the acquisition of all of
the outstanding equity interests in CPC in the manner most desirable to METALS.
All references herein to the board of directors or stockholders of CPC shall be
deemed to be references to the members or other equity interest holders of CPC,
all references herein to the capital stock of CPC shall be deemed to be
references to the membership interests or other equity interests in CPC, all
references herein to CPC as a corporation shall be deemed to be references to
CPC as a limited liability company, all references herein to the Certificate of
Incorporation of CPC shall refer to the Limited Liability Charter and Operating
Agreement of CPC, and other similar references relating to CPC shall be
similarly changed.
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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/ ART FRENCH
Name: Art French
Title: Chief Executive Officer
TEXAS ALUMINUM I ACQUISITION CORP.
By:/S/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: President
TEXAS ALUMINUM II ACQUISITION CORP.
By:/S/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: President
TEXAS ALUMINUM III ACQUISITION CORP.
By:/S/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: President
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TEXAS ALUMINUM IV ACQUISITION CORP.
By:/S/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: President
TEXAS ALUMINUM V ACQUISITION CORP.
By:/S/ J. XXXXXXX XXXXXXX
Name: J. Xxxxxxx Xxxxxxx
Title: President
TEXAS ALUMINUM INDUSTRIES, INC.
By:/S/ XXXX X. XXXXXX
Name: XXXX X. XXXXXX
Title: PRESIDENT
CORNERSTONE METALS CORPORATION
By:/S/ XXXXXXX XXXXXXXXXXX
Name: XXXXXXX XXXXXXXXXXX
Title: DIRECTOR
CORNERSTONE BUILDING PRODUCTS, INC.
By:/S/ XXXXXXX XXXXXXXXXXX
Name: XXXXXXX XXXXXXXXXXX
Title: PRESIDENT
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CORNERSTONE ALUMINUM COMPANY, INC.
By:/S/ XXXXXXX XXXXXXXXXXX
Name: XXXXXXX XXXXXXXXXXX
Title: PRESIDENT
CORNERSTONE PATIO CONCEPTS, L.L.C.
By:/S/ XXXXXXX XXXXXXXXXXX
Name: XXXXXXX XXXXXXXXXXX
Title: PRESIDENT
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STOCKHOLDERS:
CLASS A COMMON STOCK:
/S/ XXXX XXXXXX
Xxxx Xxxxxx
/S/ XXXXXX XXXXXX
Xxxxxx Xxxxxx
XXXXXX FAMILY TAI LTD PARTNERSHIP
By: /S/ XXXX XXXXXX
Name: XXXX XXXXXX
Title:MANAGER
XXXXXX INDUSTRIES, LTD.
By: /S/ XXXX X. XXXXXX
Name:XXXX X. XXXXXX
Title:MANAGER
/S/ XXXX XXXXXX
Xxxx Xxxxxx
/S/ XXXX XXXXXX, TRUSTEE
Xxxx Xxxxxx
'86 Trust
-86-
/S/ XXXXX XXXXXX
Xxxxx Xxxxxx
/S/ XXXX X. XXXXXX, TRUSTEE
Xxxxxxx X. Xxxxxx
'94 Trust
/S/ XXXX X. XXXXXX, TRUSTEE
Xxxx X. Xxxxxx
'94 Trust
/S/ XXXX X. XXXXXX, TRUSTEE
Xxxxx X. Xxxxxx
'94 Trust
/S/ XXXXX XXXXXXXXXXX
Xxxxx Xxxxxxxxxxx
/S/ XXXXX XXXXXXXXXXX, TRUSTEE
Xxxxx Xxxxxxxxxxx
'86 Trust
/S/ XXXX XXXXXXXXXXX
Xxxx Xxxxxxxxxxx
/S/ XXXXX XXXXXXXXXXX, TRUSTEE
Xxxxxx Xxxxxxxxxxx
'94 Trust
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/S/ XXXXX XXXXXXXXXXX, TRUSTEE
Xxxx Xxxxxxxxxxx
'94 Trust
/S/ XXXXX XXXXXXXXXXX, TRUSTEE
Xxxxx Xxxxxxxxxxx
'94 Trust
CLASS B COMMON STOCK:
/S/ XXXX XXXXXX
Xxxx Xxxxxx
/S/ XXXXXX XXXXXX
Xxxxxx Xxxxxx
XXXXXX FAMILY TAI LTD PARTNERSHIP
By: /S/ XXXX XXXXXX
Name:XXXX X. XXXXXX
Title:MANAGER
XXXXXX INDUSTRIES, LTD.
By: /S/ XXXX X. XXXXXX
Name:XXXX X. XXXXXX
Title:MANAGER
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PREFERRED STOCK
XXXXXX FAMILY PARTNERSHIP
By: /S/ XXXX XXXXXX
Name:XXXX X. XXXXXX
Title:MANAGER
EmC INDUSTRIES
By: /S/ XXXX X. XXXXXX
Name:XXXX X. XXXXXX
Title:PRESIDENT
-00-
XXXXXXXX X
XXXXXXX
Xxxxx Aluminum I Acquisition Corp. shall merge with and into Texas Aluminum
Industries, Inc.
Texas Aluminum II Acquisition Corp. shall merge with and into Cornerstone Metals
Corporation.
Texas Aluminum III Acquisition Corp. shall merge with and into Cornerstone
Building Products, Inc.
Texas Aluminum IV Acquisition Corp. shall merge with and into Cornerstone
Aluminum Company, Inc.
Texas Aluminum V Acquisition Corp. shall merge with and into Cornerstone Patio
Concepts, L.L.C.*
---------------------
* The merger of Texas Aluminum V Acquisition Corp. with and into Cornerstone
Patio Concepts, L.L.C. is subject to the provisions of Section 18.17 of
the Agreement.
SCHEDULE 6.4
None except as described in the Registration Statement.
SCHEDULE 6.7
None except as described in the Registration Statement.
SCHEDULE 6.8
None.
SCHEDULE 6.9
None.
SCHEDULE 6.13
None.
SCHEDULE 6.14
None.
SCHEDULE 9.12
TAI/CORNERSTONE GROUP
KEY EMPLOYEES
Xxxxxxxx, Xxxxxxx
Xxxxx, Xxxxx
Xxxxx, Xxx
Xxxxxxx, Xxxx
Xxxxxxxxxx, Xxx
Xxxxx, Xxxxx
Xxxx, Xxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxx
Xxxxxx, Xxx
Xxxxxxx, Xxxx
Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxx, Xxx
Xxxxx, Xxxxx
Xxxxxxxx, Xxxx
Xxxxxx, Xxx
XXXXXXXX STEEL & SUPPLY CO., INC.
Xxxxxxxx, Xxx
Petz, Xxx
Xxxxx, Xxxx
UNI-STEEL
Xxxx, Xxxxx
AFFILIATED METALS
Xxxxxxxxx, Xxxxxx
XXXXX SERVICE SYSTEMS, INC.
Xxxxxxx, Xxxxxxx
Xxxxx, Xxxxx
Xxx Xxxxxx, Xxxx
Xxxxxxx, Xxxxx
XxXxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx
SOUTHERN ALLOY
Xxxxxxx, Xxx
Xxxxx, Xxx
Xxxxxxx, Xxx
QUEENSBORO
Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxx, Xxxxxx
Xxxxxxxx, XxXxxx
INTERSTATE STEEL
Xxxxxxx, Xxx
Xxxxx, Xxxx
Xxxxx, Xxxxxxx
Xxxxx, Xxxxxx
Kindness, Xxxxxx
Xxxxxxx, Xxxxx
Xxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxx, Xxxxxxx
Xxxxxxx, Xxxx
Xxxxx, Xxxxx
ANNEX I
TO THE AGREEMENT
AND PLAN OF REORGANIZATION
DATED AS OF APRIL 30, 1997
BY AND AMONG
METALS USA, INC.
AND THE OTHER PARTIES NAMED THEREIN
CONSIDERATION TO BE PAID TO THE STOCKHOLDERS
Aggregate consideration to be paid to the STOCKHOLDERS:
$42,254,555.80 in cash and the value of outstanding Common Stock of Metals
(assuming an offering price of $13.00 per share), consisting of 2,383,874 shares
of Metals Stock and $11,264,193.80 in cash, it being agreed that the actual
amount of all cash payments described in this Annex I will depend on the actual
initial offering price of the Common Stock of Metals in the IPO, and may be more
or less than $13.00 per share; provided, however that such price shall not be
less than $8.00 per share.
Consideration to be paid to each STOCKHOLDER:
---------------------------------------------
Shares of Common Merger
Stockholder Stock of Metals Cash
----------- ------------- -------------
EmC Industries LLC ............................. -- 195,772.05
Xxxxxx Family Partnership ...................... -- 109,421.92
Gene & Xxxxxx Xxxxxx ........................... 14,474 80,624.94
Xxxxx X. Xxxxxx ................................ 61,819 344,402.72
Xxxx X. Xxxxxx ................................. 55,254 307,830.47
Xxxxxx Family TAI Ltd. Partnership ............. 340,504 1,897,080.96
Xxxxxx Industries, Ltd. ........................ 517,338 1,681,337.60
Xxxxx Xxxx ..................................... 5,624 31,322.57
Xxxxxxx Xxxxxx ................................. 2,330 12,969.86
Xxxxx Xxxxxx ................................... 1,639 9,119.31
Xxxxxxx Xxxxxx ................................. 1,610 8,957.92
Xxx Xxxxxx ..................................... 40 214.17
Xxxx Xxxxxx .................................... 598,837 2,709,648.57
Xxxxx Xxxxxx ................................... -- 272,986.74
Xxxx Xxxxxx, 1986 Trust ........................ 37,152 0.54
Xxxxxxx X. Xxxxxx, 1994 Trust .................. 18,544 103,311.27
Xxxx X.Xxxxxx, 1994 Trust ...................... 18,544 103,311.27
Xxxxx X. Xxxxxx, 1994 Trust .................... 18,544 103,311.27
Xxxxx Xxxxxxxxxxx .............................. -- 373,277.87
Xxxxxxx Xxxxxxxxxxx ............................ 598,837 2,609,357.44
Xxxxx Xxxxxxxxxxx, 1986 Trust .................. 37,152 0.54
Xxxxxx Xxxxxxxxxxx, 1994 Trust ................. 18,544 103,311.27
Xxxx Xxxxxxxxxxx, 1994 Trust ................... 18,544 103,311.27
Xxxxx Xxxxxxxxxxx, 1995 Trust .................. 18,544 103,311.27
------------- -------------
2,383,874 11,264,193.80
============= =============
MINIMUM VALUE: $27,233,573 (based on a price of $8.00 per share
===========
Total non-tax related MA distributions: 2,000,000.00
============
