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EXECUTION COPY
PURCHASE AGREEMENT
COMMON STOCK
OF
THE XXXXX CORPORATION,
FERREX TRADING CORPORATION,
PAULDING RECYCLING, INC.
AND
BRIQUETTING CORPORATION OF AMERICA
AND
PLAN OF MERGER
BY AND AMONG
METAL MANAGEMENT, INC.,
XXXXX ACQUISITION CORPORATION
AND
FERREX TRADING CORPORATION
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TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF PURCHASED SECURITIES . . . . . . . . . . . . . . . . . . . . 2
1.1 Purchase and Sale of Xxxxx Purchased Securities . . . . . . . . . . . . . . 2
1.2 Purchase Price of Ferrex Purchased Securities . . . . . . . . . . . . . . . 2
1.3 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Purchase Price of Xxxxx Purchased Securities . . . . . . . . . . . . . . . . 2
1.5 Purchase of Paulding and Briquetting Purchased Securities . . . . . . . . . 3
1.6 Purchase Price of Paulding and Briquetting Purchased Securities . . . . . . 3
1.7 Security for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . 5
2.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MTLM AND SUB . . . . . . . . . . . . . . . . . 5
3.1 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 No Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 SEC Filings and Financial Information . . . . . . . . . . . . . . . . . . 6
3.6 MTLM Shares; Capitalization . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Accuracy of Information Furnished by MTLM . . . . . . . . . . . . . . . . 8
3.10 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Capitalization of Sub; Continuation of Xxxxx Business . . . . . . . . . . 9
3.12 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE
COMPANIES ................................................... 10
4.1 Corporate Status ...................................... 10
4.2 Power and Authority ................................... 10
4.3 Enforceability ........................................ 10
4.4 Capitalization......................................... 11
4.5 Shareholders of each Company........................... 11
4.6 No Violation .......................................... 11
4.7 Records ............................................... 12
4.8 Subsidiaries .......................................... 12
4.9 Financial Statements .................................. 12
4.10 Changes Since the Current Balance Sheet Date .......... 13
4.11 Liabilities ........................................... 13
4.12 Litigation ............................................ 14
4.13 Environmental Matters ................................. 14
4.14 Real Estate ........................................... 19
4.15 Good Title to and Condition of Assets ................. 22
4.16 Compliance with Laws .................................. 22
4.17 Labor and Employment Matters .......................... 23
4.18 Employee Benefit Plans ................................ 24
4.19 Tax Matters ........................................... 26
4.20 Insurance ............................................. 27
4.21 Receivables ........................................... 27
4.22 Licenses and Permits .................................. 28
4.23 Adequacy of the Assets; Relationships with Customers
and Suppliers; Affiliated Transactions ................ 28
4.24 Intellectual Property ................................. 28
4.25 Contracts ............................................. 29
4.26 Customer Lists and Recurring Revenue .................. 30
4.27 Accuracy of Information Furnished by the Shareholders.. 30
4.28 Investment Intent; Accredited Investor Status; Securities
Documents ............................................. 30
4.29 Business Locations .................................... 31
4.30 Names; Prior Acquisitions ............................. 31
4.31 No Commissions ........................................ 31
4.32 Inventory ............................................. 31
4.33 Identification of Assets .............................. 31
4.34 Restrictions .......................................... 31
ARTICLE V CONDUCT OF BUSINESS PENDING THE CLOSING ..................... 32
5.1 Conduct of Business Pending the Closing ............... 32
ARTICLE VI ADDITIONAL AGREEMENTS ....................................... 33
6.1 Further Assurances .................................... 33
6.2 Compliance with Covenants ............................. 34
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6.3 Cooperation ............................................. 34
6.4 Access to Information ................................... 34
6.5 Notification of Certain Matters ......................... 34
6.6 Tax Treatment ........................................... 34
6.7 Confidentiality; Publicity .............................. 34
6.8 No Other Discussions .................................... 34
6.9 Restrictive Covenants ................................... 35
6.10 Trading in MTLM's Common Stock .......................... 36
6.11 Other Agreements ........................................ 36
6.12 [Reserved] .............................................. 36
6.13 Additional Actions ...................................... 36
6.14 Certification of Tax Status ............................. 36
6.15 Option to Purchase Office Building ...................... 36
6.16 Tax Returns of the Companies Subsequent to Closing ...... 37
6.17 Pension Plan ............................................ 37
6.18 Audits .................................................. 37
6.19 Employee Compensation Plan .............................. 37
6.20 First Right to Purchase Certain Property ................ 37
6.21 Additional Consideration ................................ 38
6.22 Xxxxx Proxies ........................................... 39
6.23 Registration Rights ..................................... 39
6.24 Mitigation Rights ....................................... 39
ARTICLE VII CLOSING DELIVERIES OF THE COMPANIES AND THE SHAREHOLDERS ...... 40
7.1 Corporate Documents ..................................... 40
7.2 Opinion of Counsel ...................................... 40
7.3 Consents ................................................ 40
7.4 Company Stock ........................................... 41
7.5 Other Closing Deliveries ................................ 41
7.6 Employment Agreements ................................... 41
7.7 Notes Payable to Xxxxxxx X. Xxxxx and Xxxxx Xxxxx ....... 41
ARTICLE VIII CLOSING DELIVERIES OF MTLM AND SUB ............................. 42
8.1 Purchase Price .......................................... 42
8.2 Opinion of Counsel ...................................... 42
ARTICLE IX INDEMNIFICATION ................................................ 43
9.1 Agreement by the Shareholder Indemnitors to Indemnify ... 43
9.2 Agreement by MTLM to Indemnify .......................... 46
9.3 Conditions of Indemnification ........................... 47
9.4 Held Back Shares and Rights of Set off to Secure the
Shareholder Indemnitors' Indemnification Obligation ..... 48
ARTICLE X SECURITIES LAW MATTERS ......................................... 50
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10.1 Disposition of MTLM Securities ......................... 51
10.2 Legend ................................................. 51
ARTICLE XI DEFINITIONS ........................................ 51
11.1 Defined Terms .......................................... 51
11.2 Other Definitional Provisions .......................... 58
11.3 Knowledge .............................................. 58
ARTICLE XII TERMINATION, AMENDMENT AND WAIVER ............................. 58
12.1 Termination ............................................ 58
ARTICLE XIII GENERAL PROVISIONS ............................................ 58
13.1 Notices ................................................ 58
13.2 Entire Agreement; No Third Party Beneficiaries ......... 60
13.3 Expenses ............................................... 60
13.4 Amendment; Waiver ...................................... 60
13.5 Binding Effect; Assignment ............................. 60
13.6 Counterparts ........................................... 60
13.7 Interpretation ......................................... 60
13.8 Governing Law; Interpretation .......................... 61
13.9 Arm's Length Negotiations .............................. 61
13.10 Xxxxx Children ......................................... 61
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EXHIBITS
Exhibit A MTLM Notes
Exhibit B Downpayment Notes
Exhibit C Xxxxxx III Note
Exhibit D Collateral Agency Agreement
Exhibit E Letter of Credit
Exhibit F Mortgages
Exhibit G MTLM Stock Pledge
Exhibit H Downpayment Pledge
Exhibit I Guaranty Agreement
Exhibit J Certificate of Merger
Exhibit K Form of Warrant
Exhibit L Office Building Option Agreement
Exhibit M Agreement and Form of Proxy
Exhibit N Registration Rights Agreement
Exhibit O Xxxxxx X. Xxxxx, III Employment Agreement
Exhibit P Xxxxxxx X. Xxxxx Employment Agreement
Exhibit Q Escrow Agreement
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PURCHASE AGREEMENT AND PLAN OF MERGER
This Purchase Agreement and Plan of Merger (this "Agreement") is entered
into effective as of June 23, 1997, by and among Metal Management, Inc., a
Delaware corporation ("MTLM"), Xxxxx Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of MTLM ("Sub"); The Xxxxx Corporation
("Xxxxx"), Ferrex Trading Corporation ("Ferrex"), Paulding Recycling, Inc.
("Paulding"), Briquetting Corporation of America ("Briquetting"), all Ohio
corporations (Xxxxx, Ferrex, Paulding and Briquetting being sometimes
hereinafter referred to collectively as the "Companies" and individually as a
"Company") and all of the shareholders of the Companies (collectively the
"Shareholders," and individually, a "Shareholder"). Certain other capitalized
terms used herein are defined in Article XI or elsewhere throughout this
Agreement.
RECITALS
A. The Shareholders own, and until the Closing (as defined herein) will
own, all of the issued and outstanding equity securities of Xxxxx, Ferrex,
Paulding and Briquetting.
B. MTLM has determined it is in its best interests to purchase and the
Shareholders have determined it is in their best interests to sell all of the
equity securities of Xxxxx, Paulding and Briquetting and certain of the equity
securities of Ferrex upon the terms and subject to the conditions set forth in
this Agreement.
C. MTLM desires to acquire from the Shareholders of Ferrex all of the
remaining issued and outstanding equity securities of Ferrex held by the
Shareholders (the "Ferrex Stock"), by means of a merger (the "Merger") of
Ferrex with and into Sub pursuant to which the remaining shares of Ferrex Stock
will be converted into the right to receive 1,942,857 shares of Common Stock of
MTLM of which 717,143 shares of Common Stock of MTLM shall be held in escrow
pursuant to Section 9.4 as security for the Shareholder Indemnitors'
indemnification of MTLM pursuant to Article IX.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED SECURITIES
1.1 PURCHASE AND SALE OF XXXXX PURCHASED SECURITIES. Subject to the
terms and conditions of this Agreement, at the Closing Date, MTLM shall purchase
from the Shareholders, and each Shareholder shall sell, transfer and convey to
MTLM, all of the equity
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securities of Xxxxx (the "Xxxxx Purchased Securities"), certain equity
securities of Ferrex (the "Ferrex Purchased Securities"), and all of the equity
securities of Paulding (the "Paulding Purchased Securities") and Briquetting
(the "Briquetting Purchased Securities") set forth opposite such Shareholder's
name on Schedule 1.1 hereto.
1.2 PURCHASE PRICE OF FERREX PURCHASED SECURITIES. The aggregate
purchase price for the Ferrex Purchased Securities consists of $3,101,927
payable to the Shareholders of Ferrex in accordance with Schedule 1.1 hereof by
MTLM's delivery of promissory notes of MTLM in the form attached hereto as
Exhibit A ("MTLM Notes") accruing interest at a rate equal to the prime lending
rate announced from time to time by Bankers Trust Company in New York, New York
as its prime lending rate (the "Prime Lending Rate"), provided, however, that,
except as otherwise provided in the MTLM Notes, the interest rate on the MTLM
Notes shall at no time exceed 1.0% in excess of, and shall at no time be less
than 1.0% below, the Prime Lending Rate on the Closing Date. All principal and
accrued interest shall be payable over a period of up to three (3) years, as set
forth in the MTLM Notes.
1.3 MERGER. Subject to the terms and conditions of this Agreement, on
the Closing Date, immediately following the transactions described above, Ferrex
will be merged with and into Sub pursuant to the terms set forth in Article II
hereof.
1.4 PURCHASED PRICE OF XXXXX PURCHASED SECURITIES. The aggregate
purchase price for the Xxxxx Purchased Securities consists of:
(a) $10,600,000 payable to the Shareholders of Xxxxx in accordance
with Schedule 1.1 hereto by MTLM's delivery of promissory notes of MTLM in
the form attached hereto as Exhibit B ("Downpayment Notes") accruing
interest at a rate equal to the Prime Lending Rate, provided, however,
that, except as otherwise provided in the Downpayment Notes, the interest
rate on the Downpayment Notes shall at no time exceed 1.0% in excess of,
and shall at no time be less than 1.0% below, the Prime Lending Rate on the
Closing Date. All principal and accrued interest under the Downpayment
Notes shall be payable on November 1, 1997 unless extended pursuant to the
terms of the Downpayment Notes.
(b) $2,000,000 payable to Xxxxxx X. Xxxxx, III in accordance with
Schedule 1.1 hereto, by MTLM's delivery of a promissory note of MTLM in the
form attached hereto as Exhibit C ("Xxxxxx III Note") accruing interest at
a rate equal to the Prime Lending Rate, provided, however, that, except as
provided in the Xxxxxx III Note, the interest rate on the Xxxxxx III Note
shall at no time exceed 1.0% in excess of, and shall at no time be less
than 1.0% below, the Prime Lending Rate on the Closing Date. All principal
and accrued but unpaid interest shall be payable on February 15, 1998; and
(c) $20,394,974 payable to the Shareholders of Xxxxx in accordance
with Schedule 1.1 hereto by MTLM's delivery of MTLM Notes.
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1.5 PURCHASE OF PAULDING AND BRIQUETTING PURCHASED SECURITIES.
Subject to the terms and conditions of this Agreement, at the Closing Date and
immediately following the transactions described above, MTLM shall purchase from
the Shareholders of Paulding and Briquetting, and each such Shareholder shall
sell, transfer and convey to MTLM, the Paulding Purchased Securities and the
Briquetting Purchased Securities set forth opposite such Shareholder's name on
Schedule 1.1 hereto. (The Xxxxx Purchased Securities, the Ferrex Purchased
Securities, the Paulding Purchased Securities, and the Briquetting Purchased
Securities are sometimes referred to herein as the "Purchased Securities").
1.6 PURCHASE PRICE OF PAULDING AND BRIQUETTING PURCHASED SECURITIES.
The aggregate purchase price for the Paulding Purchased Securities and the
Briquetting Purchased Securities consists of $450,000 in MTLM Notes issued in
accordance with Schedule 1.1 hereto. (The Downpayment Notes, the MTLM Notes,
and the Xxxxxx III Note, together with the Xxxxxxx and Xxxxx Notes, shall be
referred to herein collectively as the "Notes").
1.7 SECURITY FOR PAYMENT. The Downpayment Notes, the MTLM Notes and
the Xxxxxxx and Xxxxx Notes shall be secured by the following items:
(a) the delivery by MTLM to the Collateral Agents, as defined in the
form of Collateral Agency Agreement attached hereto as Exhibit D, of an
irrevocable transferable standby letter of credit (the "Letter of Credit"),
which letter of credit shall be in the form attached hereto as Exhibit E;
(b) the delivery by Xxxxx to the Collateral Agents of open end
mortgages and security agreements encumbering real estate in Cuyahoga,
Defiance and Xxxxxxxx Counties, Ohio (collectively, the "Mortgages") in the
form attached hereto as Exhibit F;
(c) the obligation of MTLM to issue, and MTLM agrees that it shall
issue, shares of common stock of MTLM (the "Security Shares"), in an amount
equal to 139,700 shares minus the number of Permitted Additional Shares
previously issued pursuant to Section 6.21 to the Collateral Agents upon
the occurrence of an Event of Default under (and as defined in) the Notes,
such obligation to be evidenced by the Stock Issuance and Pledge Agreement
(the "MTLM Stock Pledge") in the form of Exhibit G hereto; and
(d) the delivery by MTLM and Sub to the Collateral Agents of a Stock
Pledge Agreement providing for a pledge of all of the capital stock of
Isaac, Paulding, Briquetting and Sub (the "Downpayment Pledge") in the form
of Exhibit H hereto; and
(e) the delivery by MTLM to the Collateral Agents of a Guaranty
Agreement (the "Guaranty") in the form of Exhibit I hereto guaranteeing the
Xxxxxxx and Xxxxx Notes. (The Letter of Credit, Mortgages, MTLM Stock
Pledge, Downpayment Pledge and Guaranty are collectively referred to as the
"Collateral Documents").
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1.8 THE CLOSING. The Closing of the transactions contemplated hereby
(the "Closing"), including the purchase and sale of the Purchased Securities,
and immediately thereafter the consummation of the Merger, shall take place on
the date hereof (the "Closing Date"), at the offices of MTLM's counsel in
Chicago, Illinois, or at such other time or place as MTLM and the Shareholder
Indemnitors may otherwise agree.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon execution of this Agreement, a Certificate of
Merger (the "Certificate of Merger") which is substantially in the form attached
hereto as Exhibit J shall be executed and duly acknowledged by the President or
a Vice President and the Secretary or Assistant Secretary of each of Ferrex and
Sub, as the constituent corporations. On the Closing Date, the Certificate of
Merger shall be filed with the (i) Secretary of State of the State of Delaware
in accordance with the Delaware General Corporation Law and (ii) the Secretary
of State of the State of Ohio in accordance with the Ohio General Corporation
Law, and upon such filing and the certification of the Certificate of Merger
(the time of such issuance being the "Effective Time") with respect thereto by,
the Secretary of State of the State of Delaware and the Secretary of State of
the State of Ohio: Ferrex shall be merged with and into the Sub in accordance
with applicable state law and Section 368(a)(2)(D) of the Code; the Ferrex
Purchased Securities shall be canceled and retired and shall cease to exist and
no stock of MTLM or other consideration shall be delivered in exchange therefor;
the remaining outstanding shares of Ferrex Stock shall be converted into the
right to receive 1,942,857 shares of Common Stock of MTLM, plus warrants for the
purchase of 462,500 shares of Common Stock of MTLM exercisable at any time and
from time to time on or before the fifth anniversary of the Closing Date for a
price per share set forth in the warrant (such warrants to be in the form of
Exhibit K hereto) with such Common Stock and warrants of MTLM to be distributed
among the Shareholders as set forth in Schedule 1.1 hereto; and Sub shall be the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of Ferrex shall cease.
2.2 ESCROW. Pursuant to Section 9.4, 717,143 shares of Common Stock of
MTLM shall be held in escrow as security for the Shareholder Indemnitors'
indemnification of MTLM pursuant to Article IX.
2.3 CLOSING. The closing of the Merger will take place concurrently
with the Effective Time of the Merger at the time and according to the
provisions set forth in Section 1.8 hereof, it being understood by the parties
hereto that the Certificate of Merger will be filed with the Secretary of State
of the State of Delaware and with the Secretary of State of the State of Ohio on
such date.
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2.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 252 of the Delaware General Corporation Law.
2.5 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and Bylaws of Sub, in each case as in effect at the Effective
Time, shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation, provided that, at the Effective Time, Article First of the
Certificate of Incorporation shall read as follows:
"FIRST: The name of the Corporation is Ferrex Trading Corporation."
2.6 DIRECTORS AND OFFICERS. At the Effective Time, the Board of
Directors of the Surviving Corporation shall be comprised of Xxxxxx X. Xxxxxx,
T. Xxxxxxxx Xxxxxxxx and Xxxxxx X. Xxxxx, III, and the initial officers of the
Surviving Corporation shall be the officers of Ferrex.
2.7 FURTHER ASSURANCES. After the Closing, the Shareholders shall
from time to time, at the request of MTLM and without further cost or expense to
MTLM, execute and deliver such other instruments of conveyance and transfer and
take such other actions as MTLM may reasonably request, in order to more
effectively consummate the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF MTLM AND SUB
As a material inducement to the Shareholders to enter into this Agreement
and to consummate the transactions contemplated hereby, MTLM and Sub make, as of
the date hereof, the following representations and warranties to the
Shareholders, provided, however, that all of the following representations and
warranties are expressly qualified by the information and disclosures contained
in the Xxxxx Agreement (as defined herein) including the Schedules thereto (a
copy of which has been furnished to the Companies and the Shareholders) or
contained in the Form 10-K for MTLM's fiscal year ended March 31, 1997 (the
"1997 10-K") which is required to be filed with the SEC on or before June 30,
1997:
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3.1 CORPORATE STATUS. Each of MTLM and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the state of incorporation. Each of MTLM and its Subsidiaries has the
requisite corporate power and authority, and has in effect all material federal,
state, local and other governmental authorizations necessary, to own or lease
its property and to carry on its business as now being conducted. Each of MTLM
and its Subsidiaries is duly qualified to transact business as a foreign
corporation in each jurisdiction where the nature of its property and the
conduct of its business requires such qualification. Schedule 3.1 sets forth a
list of all Subsidiaries of MTLM.
3.2 CORPORATE POWER AND AUTHORITY. Each of MTLM and Sub has the
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. Except as provided on Schedule 3.2, MTLM has, or will have at the time
of Closing, and Sub has taken all action necessary to authorize its execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby.
3.3 ENFORCEABILITY. Each of this Agreement, the Other Agreements and
the Notes has been duly executed and delivered by each of MTLM and Sub, as the
case may be, and constitutes a legal, valid and binding obligation of each of
MTLM and Sub, as the case may be, enforceable against MTLM and/or Sub in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
3.4 NO COMMISSIONS. Neither MTLM nor any of its Subsidiaries has
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
3.5 SEC FILINGS AND FINANCIAL INFORMATION. MTLM has made all filings
required to be made by it with the SEC (as defined herein). All of such
filings made by MTLM (collectively, "SEC Documents") (i) complied in all
material respects as to form with the applicable requirements of the SEC and
(ii) none of such filings contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading. Each of the balance sheets contained in or incorporated
by reference into any such SEC Document (including the related notes and
schedules thereto) fairly presents the financial position of the entity or
entities to which it relates as of its date, and each of the statements of
income and changes in stockholders' equity and cash flows or equivalent
statements in such SEC Documents (including any related notes and schedules
thereto) fairly presents the results of operations, changes in stockholders'
equity and changes in cash flows, as the case may be, of the entity or entities
to which it relates for the periods to which they relate, in each case in
accordance with generally accepted accounting principles consistently applied
during the periods
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involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements.
3.6 MTLM SHARES; CAPITALIZATION.
(a) The shares of Common Stock of MTLM to be issued
pursuant to the Merger, the Security Shares, when issued, and any
Additional Shares to be issued pursuant to Section 6.21, when issued, will
be duly authorized, validly issued, fully paid and non-assessable and will
not be subject to preemptive, first refusal, or similar rights and the
shares of Common Stock of MTLM to be issued pursuant to the Merger, the
Security Shares, when issued, and any Additional Shares, when issued, will
be free of all transfer restrictions (other than those pursuant to this
Agreement or applicable state and federal securities laws). MTLM has duly
authorized and reserved for issuance the shares of Common Stock of MTLM to
be issued pursuant to the Merger, the Security Shares and any Additional
Shares to be issued in accordance with Section 6.21.
(b) Schedule 3.6 sets forth, with respect to MTLM, (i) the
number of authorized shares of each class of its capital stock, (ii) the
number of issued and outstanding shares of each class of its capital stock,
and (iii) the number of shares each class of its capital stock which are
held in treasury. All of the issued and outstanding shares of capital
stock of MTLM (i) have been duly authorized and validly issued and are
fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws and (iii) were not issued in
violation of any preemptive rights or rights of first refusal. No
preemptive rights or rights of first refusal exist with respect to the
shares of capital stock of MTLM, and no such rights arise by virtue of or
in connection with the transactions contemplated hereby. Except as set
forth in Schedule 3.6, there are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind that
could require MTLM to issue or sell any shares of its capital stock (or
securities convertible into or exchangeable for shares of its capital
stock). Except as set forth in Schedule 3.6, there are no outstanding
stock appreciation, phantom stock, profit participation or similar rights
with respect to MTLM. Except as set forth in Schedule 3.6, there are no
proxies, voting rights or other agreements or understandings with respect
to the voting or transfer of the capital stock of MTLM, and MTLM is not
obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
3.7 NO VIOLATION. Except for the filing of the Certificate of
Merger with, and the certification of the Certificate of Merger by, the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Ohio, and the filing of a listing application with the Nasdaq Stock
Market, Inc., the execution and delivery of this Agreement by MTLM and Sub, the
Other Agreements, the Notes and the Confidentiality Agreement by MTLM and Sub,
the performance by each of MTLM and any of its Subsidiaries of its obligations
hereunder and thereunder and the consummation by each of MTLM and any of its
Subsidiaries of the transactions contemplated by this Agreement and the Other
Agreements will not (i) contravene
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any provision of the articles of incorporation or bylaws of MTLM or any of its
Subsidiaries, (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or any self-regulatory organization or securities market or any
arbitration award which is either applicable to, binding upon or enforceable
against MTLM or any of its Subsidiaries, (iii) conflict with, result in any
breach of, or constitute a default (or any event which would, with the passage
of time or the giving of notice or both, constitute a default) under, or give
rise to a right to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable against MTLM or
any of its Subsidiaries, (iv) result in or require the creation or imposition
of any Lien upon or with respect to any of the property or assets of MTLM or
any of its Subsidiaries (except as contemplated by this Agreement and MTLM's
financing arrangements), or (v) require the consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, any
court or tribunal or any other Person, except, in the case of item (iii), for
any such events which would not have a Material Adverse Effect.
3.8 COMPLIANCE WITH LAWS.
(a) Each of MTLM and its Subsidiaries is in material
compliance with all laws, regulations and orders applicable to it, its
business and its operations (as conducted by it now and during the three
consecutive years prior to the Closing) and to its assets and owned and
leased properties (in each case owned or used by it now or during the three
consecutive years prior to Closing). Except as set forth on Schedule 3.8,
neither MTLM nor any of its Subsidiaries has been cited, fined or otherwise
notified of any asserted past or present material failure to comply with
any laws, regulations or orders and no proceeding with respect to any such
material violation is pending or, to the knowledge of MTLM or any of its
Subsidiaries, threatened.
(b) Except as described on Schedule 3.8, neither MTLM nor
any of its Subsidiaries is subject to any Contract, decree or injunction
which restricts the continued operation of any business or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business.
3.9 ACCURACY OF INFORMATION FURNISHED BY MTLM. No representation,
statement or information made or furnished by MTLM, Sub or any of MTLM's
representatives in this Agreement or in any Schedule, certificate or other
document to be delivered pursuant hereto contains any untrue statement of a
material fact or omits any material fact necessary to make the information
contained therein not misleading. MTLM has made available to the Shareholders
true, accurate and complete copies of all documents listed or described in
Schedule 3.10 hereto.
3.10 NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has
not been, with respect to MTLM or any of its Subsidiaries, any Material Adverse
Change (or Effect). For purposes of this paragraph, "Material Adverse Change
(or Effect)" shall not include: (i) the acquisition of or agreement to acquire
any companies or the assets of any companies; (ii) the
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termination of any agreement to acquire or the unwind or sale of any companies
or the assets of any companies; (iii) the placement of, or entering into any
agreement to place, any debt or equity securities of MTLM; (iv) any change in
the trading price of the Common Stock of MTLM; or (v) any change in the Board
of Directors of MTLM; provided that each such item described in (i), (ii),
(iii), and (v) is specifically identified on Schedule 3.10 hereto and MTLM has
made available to the Shareholders copies of all documents, instruments and
other written materials executed in connection therewith; and provided,
further, that the exclusion set forth in clause (i) shall not apply with
respect to any Material Adverse Change (or Effect) to the operations of the
acquired company or companies.
3.11 CAPITALIZATION OF SUB; CONTINUATION OF XXXXX BUSINESS. Prior to
the transaction, MTLM will be in control of Sub within the meaning of Section
368(c)(1) of the Code. Following the transaction, Sub will not issue additional
shares of its stock that would result in MTLM losing control of Sub within the
meaning of Section 368(c)(1) of the Code. MTLM has no plan or intention to
reacquire any of its stock issued in the transaction, except pursuant to the
terms of the Escrow Agreement. MTLM has no plan or intention to liquidate Sub;
to merge Sub with and into another corporation; to sell or otherwise dispose of
the stock of Sub; or to cause Sub to sell or otherwise dispose of any of the
assets of Ferrex acquired in the transaction, except for dispositions made in
the ordinary course of business or transfers described in Section 368(a)(2)(C)
of the Internal Revenue Code. Following the transaction, Sub will continue the
historic business of Ferrex or use a significant portion of Ferrex's business
assets in a business.
3.12 INVENTORY. All properties and assets of MTLM and each of its
Subsidiaries (other than real property), whether personal or mixed, tangible or
intangible, wherever located, that consists of inventory (including any raw
materials and work-in-progress): (i) were acquired in the ordinary course of
business consistent with past practice; (ii) are of a quantity and condition
useable or saleable in the ordinary course of business within the normal
inventory turnover experience of MTLM and its Subsidiaries; and (iii) are valued
at the lower of cost or net realizable market value. Neither MTLM nor any of
its Subsidiaries has any material liability with respect to the return or
repurchase of any goods in the possession of any customer.
3.13 RECEIVABLES. All the Receivables (as hereinafter defined) of MTLM
and its Subsidiaries represent bona fide transactions and arose in the ordinary
course of business of MTLM or such Subsidiaries, as applicable. All of MTLM's
and its Subsidiaries' Receivables are good and reasonably expected to be
collectable Receivables, and are reasonably expected to be collected in the
ordinary course of business, without set off or counterclaims, subject to the
allowance for doubtful accounts, if any, set forth on the March 31, 1997 audited
balance sheets of MTLM or such Subsidiary, as the case may be, as reasonably
adjusted since the date of such balance sheet in the ordinary course of business
consistent with past practice and subject to credit insurance for Receivables.
3.14 LITIGATION. Except as set forth on Schedule 3.14, there is no
action, suit or other legal or administrative proceeding or governmental
investigation, pending or, to the
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knowledge of MTLM or any of its Subsidiaries, threatened, anticipated or
contemplated against, by or affecting any of MTLM, its Subsidiaries or any of
their properties or assets which is reasonably likely to have a Material
Adverse Effect, or relating to the transactions contemplated by this Agreement
or which question the validity or enforceability of this Agreement or the
transactions contemplated hereby, and, to the knowledge of MTLM and its
Subsidiaries, there is no basis for any of the foregoing. Except as set forth
in Schedule 3.14, there are no outstanding orders, decrees or stipulations
issued by any Governmental Authority in any proceeding to which any of MTLM or
any of its Subsidiaries is or was a party which have not been complied with in
full or which continue to impose any material obligations on MTLM or any of its
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTS OF
THE SHAREHOLDERS AND THE COMPANIES
As a material inducement to MTLM and Sub to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Shareholders and
the Companies hereby severally and not jointly makes, as of the date hereof, the
following representations and warranties to MTLM and Sub:
4.1 CORPORATE STATUS. Each Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio. Each
Company has the requisite power and authority to own or lease its property and
to carry on its business as now being conducted. Each Company is legally
qualified to transact business as a foreign corporation in all jurisdictions
where the nature of its property and the conduct of its business requires such
qualification (all of which jurisdictions are listed on Schedule 4.1) and is in
good standing in each of the jurisdictions in which it is so qualified. There is
no pending or threatened proceeding for the dissolution, liquidation, insolvency
or rehabilitation of any Company.
4.2 POWER AND AUTHORITY. The Companies and such Shareholder has the
power and authority to execute and deliver this Agreement, to perform its
respective obligations hereunder and to consummate the transactions contemplated
hereby. Each Company has taken all action necessary to authorize the execution
and delivery of this Agreement, the performance of its respective obligations
hereunder and the consummation of the transactions contemplated hereby. Such
Shareholder has the requisite competence to execute and deliver this Agreement
and to perform his obligations hereunder and to consummate the transactions
contemplated hereby. Each Xxxxx Shareholder represents that he or she is a
resident of the State of Ohio (or, in the case of Xxxxxxx X. Xxxxx, the State of
Florida; in the case of Xxxxxxxxx Xxxxx, the State of California; and in the
case of Xxxxx Xxxxx, the State of Florida).
4.3 ENFORCEABILITY. Each of this Agreement and the Other Agreements
has been duly executed and delivered by each Company and such Shareholder and
constitutes the legal, valid and binding obligation of such Company and such
Shareholder, enforceable against
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it in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
4.4 CAPITALIZATION. Schedule 4.4 sets forth, with respect to each
Company, (i) the number of authorized shares of each class of its capital stock,
(ii) the number of issued and outstanding shares of each class of its capital
stock, and (iii) the number of shares of each class of its capital stock which
are held in treasury. All of the issued and outstanding shares of capital stock
of each Company (i) have been duly authorized and validly issued and are fully
paid and non-assessable, (ii) were issued in compliance with all applicable
state and federal securities laws, and (iii) were not issued in violation of any
preemptive rights or rights of first refusal. No preemptive rights or rights of
first refusal exist with respect to the shares of capital stock of any Company,
and no such rights arise by virtue of or in connection with the transactions
contemplated hereby. There are no outstanding or authorized rights, options,
warrants, convertible securities, subscription rights, conversion rights,
exchange rights or other agreements or commitments of any kind that could
require any of the Companies to issue or sell any shares of its capital stock
(or securities convertible into or exchangeable for shares of its capital
stock). There are no outstanding stock appreciation, phantom stock, profit
participation or other similar rights with respect to any of the Companies.
Except as set forth in Schedule 4.4, there are no proxies, voting rights or
other agreements or understandings with respect to the voting or transfer of the
capital stock of any of the Companies, and none of the Companies is obligated to
redeem or otherwise acquire any of its outstanding shares of capital stock.
4.5 SHAREHOLDERS OF EACH COMPANY. Schedule 4.5 sets forth, with
respect to each Company, (i) the name, address and federal taxpayer
identification number of, and the number of outstanding shares of each class of
its capital stock owned by, each shareholder of record as of the close of
business on the date of this Agreement; and (ii) the name, address and federal
taxpayer identification number of, and number of shares of each class of its
capital stock beneficially owned by, each beneficial owner of outstanding shares
of capital stock (to the extent that record and beneficial ownership of any such
shares are different). The Shareholders are the holders of all issued and
outstanding shares of capital stock of the Companies. Such Shareholder owns the
shares set forth opposite his or her name on Schedule 4.5, free and clear of all
Liens, restrictions and claims of any kind, except as set forth on Schedule 4.5.
Such shares are not subject to any voting trust agreement, proxy or other
Contract, except as set forth on Schedule 4.5.
4.6 NO VIOLATION. Except as set forth on Schedule 4.6, the execution
and delivery of this Agreement by the Companies and the Shareholders, the
performance by each of them of their respective obligations hereunder and the
consummation by them of the transactions contemplated by this Agreement will not
(i) contravene any provision of the articles of incorporation or bylaws of any
Company, (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against any
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Company or the Shareholders; (iii) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which is
applicable to, binding upon or enforceable against any Company or the
Shareholders, (iv) result in or require the creation or imposition of any Lien
upon or with respect to any of the property or assets of any Company, or (v)
require them to obtain the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except in the case of item (iii) for any such
events which would not have a Material Adverse Effect.
4.7 RECORDS. Except as set forth on Schedule 4.7, the copies of the
respective articles of incorporation and Code of Regulations of the Companies
which were or will be provided to MTLM are true, accurate and complete and
reflect all amendments made through the date of this Agreement. The minute
books for each Company provided to MTLM for review were correct and complete as
of the date of such review with respect to all actions of the Company since
1989, no further entries have been made through the date of this Agreement, such
minute books contain the true signatures of the persons purporting to have
signed them, and such minute books contain an accurate record of all corporate
actions of the shareholders and directors (and any committees thereof) of each
Company taken by written consent or at a meeting since 1989. All material
corporate actions taken by each Company have been duly authorized or ratified.
Since January 1, 1989, all accounts, books, ledgers and official and other
records of each Company have been fully, properly and accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained therein. The stock ledgers of each Company,
as previously provided to MTLM, contain accurate and complete records of all
issuances, transfers and cancellations of shares of the capital stock of each of
the Companies.
4.8 SUBSIDIARIES. Except as otherwise set forth on Schedule 4.8, none
of the Companies owns, directly or indirectly, any outstanding voting securities
of or other interests in, or control, any other corporation, partnership, joint
venture or other business entity.
4.9 FINANCIAL STATEMENTS. The Shareholders have delivered to MTLM (i)
the financial statements of Xxxxx and Ferrex as of December 31, 1996, including
the notes thereto, audited by Ernst & Young LLP and (ii) the December 31, 1996
unaudited financial statements of Paulding and Briquetting (collectively, the
"Financial Statements"), copies of which are attached as Schedule 4.9 hereto.
The balance sheets dated as of December 31, 1996 included in the Financial
Statements are referred to herein as the "Current Balance Sheets". The
Financial Statements fairly present the financial position of each Company at
the balance sheet date and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated, except as set forth in Schedule 4.9. The
books and records of the Companies fully and fairly reflect in all material
respects the transactions, properties, assets and liabilities of each Company.
Except as set forth in Schedule 4.9, there are no material special or
non-recurring items of income or expense during the periods covered by the
Financial Statements, and the balance sheets included in the Financial
Statements
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do not reflect any writeup or revaluation increasing the book value of any
assets, except as specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
4.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as disclosed
in Schedule 4.10, since the date of the Current Balance Sheet, none of the
Companies has (i) issued any capital stock or other securities; (ii) made any
distribution of or with respect to its capital stock or other securities or
purchased or redeemed any of its securities; (iii) paid any bonus to or
increased the rate of compensation of any of its officers or salaried employees
or amended any other terms of employment of such persons; (iv) sold, leased or
transferred any of its properties or assets other than in the ordinary course of
business consistent with past practice; (v) made or obligated itself to make
capital expenditures out of the ordinary course of business consistent with past
practice; (vi) made any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice; (vii) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $25,000 in the
aggregate out of the ordinary course of business, except for this Agreement and
the transactions contemplated hereby; (viii) suffered any theft, damage,
destruction or casualty loss, not covered by insurance and for which a timely
claim was filed; (ix) suffered any extraordinary losses (whether or not covered
by insurance); (x) waived, canceled, compromised or released any rights having a
value in excess of $50,000 in the aggregate; (xi) made or adopted any change in
its accounting practice or policies; (xii) made any adjustment to its books and
records other than in respect of the conduct of its business activities in the
ordinary course consistent with past practice; (xiii) entered into any
transaction with any Affiliate other than intercompany transactions in the
ordinary course of business consistent with past practice; (xiv) entered into
any employment agreement; (xv) terminated, amended or modified, to the knowledge
of the Shareholders, any agreement involving an amount in excess of $50,000;
(xvi) imposed any security interest or other Lien on any of its assets other
than in the ordinary course of business consistent with past practice; (xvii)
delayed paying any accounts payable which is due and payable except to the
extent being contested in good faith or except in the ordinary course of its
business; (xviii) made or pledged any charitable contribution other than in the
ordinary course of business consistent with past practice; (xix) had a Material
Adverse Effect; or (xx) agreed to do or authorized any of the foregoing.
4.11 LIABILITIES. Except as set forth on Schedule 4.11, to the
knowledge of the Shareholders, none of the Companies has any liabilities or
obligations, whether accrued, absolute, contingent or otherwise, except (i) to
the extent reflected or taken into account in the Current Balance Sheet and not
heretofore paid or discharged, (ii) to the extent specifically set forth in or
incorporated by express reference in any of the Schedules attached hereto, (iii)
liabilities incurred in the ordinary course of business consistent with past
practice since the date of the Current Balance Sheet (none of which relates to
breach of contract, breach of warranty, tort, infringement or violation of law,
or which arose out of any action, suit, claim, governmental investigation or
arbitration proceeding), (iv) normal accruals, reclassifications, and audit
adjustments which would be reflected on an audited financial statement and which
would not be material in the aggregate, and (v) liabilities incurred in the
ordinary course of business prior to the date of the Current
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Balance Sheet which, in accordance with GAAP consistently applied, were not
recorded thereon. The consolidated net worth of the Companies will be no less
than $5,750,000 as of the date hereof. As of the date hereof, the aggregate
outstanding indebtedness under (i) The Xxxxx Corporation's Promissory Note
dated March 22, 1996 with National City Bank, Northwest and the Loan Agreement
dated March 29, 1996 with Capital Bank, N.A., and (ii) the Ferrex Trading
Company's Promissory Note dated May 6, 1996 with National City Bank, Northwest
does not exceed $6,000,000. As of the date hereof, the maximum amounts due
under the Officer Wealth Plan have been accrued and are reflected or taken into
account in the Current Balance Sheet
4.12 LITIGATION. Except as set forth on Schedule 4.12, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation, pending or, to the knowledge of the Shareholders, threatened,
anticipated or contemplated: (i) against, by or affecting any of the Companies
or any of their properties or assets, or the Shareholders; (ii) relating to the
transactions contemplated by this Agreement; or (iii) which question the
validity or enforceability of this Agreement or the transactions contemplated
hereby, and, to the knowledge of the Shareholders, there is no basis for any of
the foregoing. Except as set forth in Schedule 4.12, there are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in any
proceeding to which any Company is or was a party which have not been complied
with in full or which continue to impose any material obligations on any
Company.
4.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.13:
(a) To the best of the Shareholders' knowledge, each Company is
in material compliance with all Environmental, Health and Safety Laws (as
defined herein) governing its business, operations, properties and assets,
including, without limitation, Environmental, Health and Safety Laws with
respect to discharges into the ground water, surface water and soil,
emissions into the ambient air, and generation, accumulation, storage,
treatment, transportation, transfer, labeling, handling, manufacturing,
use, spilling, leaking, dumping, discharging, release or disposal of
Hazardous Substances (as defined herein), or other Waste (as defined
herein). None of the Companies is currently liable for any penalties,
fines or forfeitures for failure to comply with any Environmental, Health
and Safety Laws which would have a Material Adverse Effect. Each Company
is in material compliance with all notice, record keeping and reporting
requirements of all Environmental, Health and Safety Laws, and has complied
with all informational requests or demands arising under the Environmental,
Health and Safety Laws.
(b) Each Company has obtained, or caused to be obtained, and, to
the best of the Shareholders' knowledge, is in material compliance with,
all licenses, certificates, permits, approvals and registrations
(collectively "Licenses") required by the Environmental, Health and Safety
Laws for the ownership of its properties and assets and the operation of
its business as presently conducted, including, without limitation, all air
emission, water discharge, water use and solid waste, hazardous waste and
other Waste generation, transportation, transfer, storage, treatment or
disposal Licenses, and to the best
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of the Shareholders' knowledge, each Company is in material compliance with
all the terms, conditions and requirements of such Licenses, and copies of
such Licenses have been made available to MTLM. There are no administrative
or judicial investigations, notices, claims or other proceedings pending
or, to the best of the Shareholders' knowledge, threatened by any
Governmental Authority or third parties against any Company, their
respective businesses, operations, properties, or assets, which question
the validity or entitlement of any Company to any License required by the
Environmental, Health and Safety Laws for the ownership of each of the
respective properties and assets of any Company and the operation of their
respective business or wherein an unfavorable decision, ruling or finding
could have a Material Adverse Effect on the Companies, or upon MTLM in the
event that the transaction contemplated by this Agreement closes.
(c) None of the Companies has received or is aware of any
non-compliance order, warning letter, investigation, notice of violation,
claim, suit, action, judgment, or administrative or judicial proceeding
pending or, to the best of the Shareholders' knowledge, threatened against
or involving any Company, their respective business, operations,
properties, or assets, issued by any Governmental Authority or third party
with respect to any Environmental, Health and Safety Laws in connection
with the ownership by such Company of its properties or assets or the
operation of its business, which has not been resolved with the issuing
Governmental Authority or third party in a manner that would not have a
Material Adverse Effect on MTLM in the event that the transaction
contemplated by this Agreement closes or which could have a Material
Adverse Effect on the Companies.
(d) To the best of the Shareholders' knowledge, each Company is in
full compliance with, and is not in breach of or default under any
applicable writ, order, judgment, injunction, governmental communication or
decree issued to the Company pursuant to the Environmental, Health and
Safety Laws and no event has occurred or is continuing which, with the
passage of time or the giving of notice or both, would constitute such
non-compliance, breach or default thereunder, except for such noncompliance
which in each case would not have a Material Adverse Effect or affect the
Owned Properties or Leased Premises.
(e) To the best of the Shareholders' knowledge, none of the
Companies has (i) generated, manufactured, used, transported, transferred,
stored, handled, treated, spilled, leaked, dumped, discharged, released or
disposed, nor has it allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat, spill, leak,
dump, discharge, release or dispose of, Hazardous Substances or other waste
to or at any location other than a site lawfully allowed to receive such
Hazardous Substances or other waste for such purposes, nor has it
performed, arranged for or allowed by any method or procedure such
generation, manufacture, use, transportation, transfer, storage, treatment,
spillage, leakage, dumping, discharge, release or disposal in material
contravention of any Environmental, Health and Safety Laws or (ii)
generated, manufactured, used, stored, handled, treated, spilled, leaked,
dumped, discharged, released
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or disposed of, or allowed or arranged for any third parties to generate,
manufacture, use, store, handle, treat, spill, leak, dump, discharge,
release or dispose of, any material quantities of Hazardous Substances or
other waste upon Owned Properties or Leased Premises, except as permitted
by law, except as would in each case not have a Material Adverse Effect.
For purposes of this Section 4.13, the term "Hazardous Substances" shall be
construed broadly to include any toxic or hazardous substance, material, or
waste, and any other contaminant, pollutant or constituent thereof, whether
liquid, solid, semi-solid, sludge and/or gaseous, including without
limitation, chemicals, compounds, metals, by-products, pesticides, asbestos
containing materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental, Health and Safety Laws or which are regulated,
listed or controlled by, under or pursuant to any Environmental Health and
Safety Laws, including, without limitation, the United States Department
of Transportation Table (49 CFR 172, 101) or by the Environmental
Protection Agency as hazardous substances (40 CFR Part 302) and any
amendments thereto; the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (hereinafter
collectively "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conversation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq.
(hereinafter, collectively "RCRA"); the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Section 1801, et seq.; the Clean Water Act, as
amended, 33 U.S.C. Section 1311, et seq.; the Clean Air Act, as amended (42
U.S.C. Section 7401-7642); Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the
Emergency Planning and Community Right-to-Know Act of 1986 as amended, 42
U.S.C. Section 11001, et seq. (Title III of XXXX) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section
651, et seq. ("OSHA"); any similar state statute, or regulations
implementing such statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, or which has been determined or interpreted at
any time by any Governmental Authority to be a hazardous or toxic substance
regulated under any other statute, law, regulation, order, code, rule,
order, or decree. For purposes of this Section 4.13, the term "Waste"
shall be construed broadly to include agricultural wastes, biomedical
wastes, biological wastes, bulky wastes, construction and demolition
debris, garbage, household wastes, industrial solid wastes, liquid wastes,
recyclable materials, sludge, solid wastes, special wastes, used oils,
white goods, and yard trash.
(f) To the best of the Shareholders' knowledge, (i) none of the
Companies has caused, nor allowed to be caused or permitted, either by
action or inaction, a Release or Discharge, or threatened Release or
Discharge, of any material quantity of Hazardous Substance on, into or
beneath the surface of any parcel of the Owned Properties or the Leased
Premises or to any properties adjacent thereto and (ii) there has not
occurred, nor is there presently occurring, a Release or Discharge, or
threatened Release or Discharge, of any material quantity of any Hazardous
Substance on, into or beneath the surface of any parcel of the Owned
Properties or the Leased Premises or to
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any properties adjacent thereto. For purposes of this Section, the terms
"Release" and "Discharge" shall have the meanings given them in the
Environmental, Health and Safety Laws.
(g) To the best of the Shareholders' knowledge, none of the
Companies has generated, handled, manufactured, treated, stored, used,
shipped, transported, transferred, or disposed of, nor has it allowed or
arranged, by contract, agreement or otherwise, for any third parties to
generate, handle, manufacture, treat, store, use, ship, transport, transfer
or dispose of, any Hazardous Substance or other Waste to or at a site
which, pursuant to CERCLA or any similar state law (i) has been placed on
the National Priorities List or its state equivalent; or (ii) the
Environmental Protection Agency or the relevant state agency has notified
the Company or any Subsidiary that it has proposed or is proposing to place
on the National Priorities List or its state equivalent. None of the
Companies, nor the Shareholders has received notice, and to the best of the
Shareholders' knowledge, none of the Companies, nor the Shareholders has
knowledge of any facts which could give rise to any notice, that any
Company is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under CERCLA, RCRA or
any other applicable Environmental Health and Safety Laws. None of the
Companies has submitted or was required to submit any notice pursuant to
Section 103(c) of CERCLA with respect to the Leased Premises or the Owned
Properties. None of the Companies has received any written request for
information in connection with any federal or state environmental cleanup
site, or in connection with any of the real property or premises where any
Company has transported, transferred or disposed of other Wastes. To the
best of the Shareholders' knowledge, none of the Companies has been
required to and has not undertaken any response or remedial actions or
clean-up actions of any kind at the request of any Governmental Authorities
or at the request of any other third party and none of the Companies has
any material liability under any Environmental, Health and Safety Laws for
personal injury, property damage, natural resource damage, or clean up
obligations.
(h) Except as set forth on Schedule 4.13, none of the Companies
has or has used, any Aboveground Storage Tanks or Underground Storage
Tanks, and there are not now nor have there ever been any Underground
Storage Tanks on the Owned Properties or Leased Premises. For purposes of
this Section 4.13, the terms "Aboveground Storage Tanks" and "Underground
Storage Tanks" shall have the meanings given them in Section 6901 et seq.,
as amended, of RCRA, or any applicable state or local statute, law,
ordinance, code, rule, regulation, order ruling, or decree governing
Aboveground Storage Tanks or Underground Storage Tanks.
(i) Schedule 4.13 identifies, to the best of the Shareholders'
knowledge, regardless of their materiality (i) all environmental audits,
assessments or occupational health studies of which any Shareholder or
Company is aware of having been undertaken by any Company, or their agents,
or by the Shareholders, or by any Governmental Authority, or by any third
party on behalf of any Company, relating to or affecting any
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Company, or any of the Leased Premises or the Owned Properties; (ii) the
results of which any Company is aware of any ground, water, soil, air or
asbestos monitoring undertaken by any Company, or their respective
agents, or by the Shareholders, or by any Governmental Authority, or by
any third party on behalf of any Company, relating to or affecting any
Company, or any of the Leased Premises or the Owned Properties; (iii) all
written communications between any Company and any Governmental Authority
arising under or related to Environmental, Health and Safety Laws; and
(iv) all citations issued under OSHA, or similar state or local statutes,
laws, ordinances, codes, rules, regulations, orders, rulings, or decrees,
relating to or affecting any Company or any of the Leased Premises or the
Owned Properties.
(j) Schedule 4.13 contains, to the best of the Shareholders'
knowledge, a list of the assets of each Company which contain "asbestos" or
"asbestos-containing material" (as such terms are identified under the
Environmental, Health and Safety Laws). Schedule 4.13 also identifies, to
the best of the Shareholders' knowledge, (i) the degree of friability of
all existing asbestos and asbestos-containing material and (ii) all actions
taken by each Company, directly or indirectly, or by any of their
respective agents, employees, representatives or contractors with respect
to asbestos or asbestos-containing materials, including but not limited to
all methods and manner of abatement, removal, containment, encapsulation,
repair, maintenance, renovation, demolition, salvage, installation,
storage, transportation, disposal, monitoring, spill/emergency clean-up,
protective health and safety measures and training of personnel (whether
employees or independent contractors or otherwise). Except as set forth in
Schedule 4.13, to the best of the Shareholders' knowledge, each Company has
operated and continues to operate in material compliance with all
Environmental, Health & Safety Laws governing the handling, use and
exposure to and disposal of asbestos or asbestos-containing materials.
Except as set forth in Schedule 4.13, there are no claims, actions, suits,
governmental investigations or proceedings before any Governmental
Authority or third party pending, or, to the best of the Shareholders'
knowledge, threatened against or directly affecting any Company, or any of
their respective assets or operations relating to the use, handling or
exposure to and disposal of asbestos or asbestos-containing materials in
connection with their assets and operations.
(k) As used in this Agreement, "Environmental, Health and Safety
Laws" means all federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings, or
ordinances or judicial or administrative interpretations thereof, any of
which govern or relate to pollution, protection of the environment, public
health and safety, air emissions, water discharges, hazardous or toxic
substances, solid or hazardous waste or occupational health and safety, as
any of these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation, RCRA, CERCLA, the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, the Clean
Air Act, the Clean Water Act, FIFRA, EPCRA and OSHA.
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(l) To the best of the Shareholders' knowledge, Schedule 4.13
identifies the operations and activities, and locations thereof, which have
been conducted and are being conducted by each Company on any of the Owned
Properties or the Leased Premises which have involved the generation,
accumulation, storage, treatment, transportation, labeling, handling,
manufacturing, use, spilling, leaking, dumping, discharging, release or
disposal of any material quantities of Hazardous Substances.
(m) To the best of the Shareholders' knowledge, Schedule 4.13
identifies the locations to which each Company has transferred,
transported, hauled, moved, or disposed of Waste over the past five years
and provides general information on the types and volumes of Waste
transferred, transported, hauled, moved, or disposed of to each such
location.
(n) To the best of the Shareholders' knowledge, none of the
Owned Properties or Leased Properties presently includes, or has been
constructed upon, any "wetlands" as defined under applicable Environmental,
Health and Safety Laws.
(o) As used in this Section 4.13, the term "Companies" is deemed
to refer to the Companies predecessors-in-interest and other entities in
which the Companies have an interest.
(p) As used in Section 4.13(e), (f), (g), (h), (i) and (l), the
terms "Owned Properties" and "Leased Premises" are deemed to refer to any
properties previously owned or leased by the Companies and used in the
operation of the scrap metal business.
4.14 REAL ESTATE.
(a) None of the Companies owns any real property or any interest
therein except for the Retained Properties and except those properties as
set forth on Schedule 4.14(a) (the properties listed on Schedule 4.14(a),
the "Owned Properties"), which Schedule sets forth the location and size
of, and principal improvements and buildings on, the Owned Properties.
Except as set forth on Schedule 4.14(a), with respect to each such parcel
of Owned Property:
(i) each Company has good and marketable title to each
parcel of its Owned Property, free and clear of any Lien other than
(x) liens for real estate taxes not yet due and payable; (y) recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy or value of the property subject thereto, and
(z) encumbrances and restrictions described in the title insurance
policies listed on Schedule 4.14(a), all of which policies have been
previously delivered to XXXX.
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(xx) there are no pending or, to the knowledge of the
Shareholders, threatened condemnation proceedings, suits or administrative
actions relating to the Owned Properties or other matters materially
affecting adversely the current use, occupancy or value thereof;
(iii) the legal descriptions for the parcels of Owned Property
contained in the deeds thereof describe such parcels fully and adequately;
to the knowledge of the Shareholders, the buildings and improvements are
located within the boundary lines of the described parcels of land, are not
in violation of applicable setback requirements, local comprehensive plan
provisions, zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are subject to "permitted non-conforming
use" or "permitted non-conforming structure" classifications), building
code requirements, permits, licenses or other forms of approval by any
Governmental Authority, and do not encroach on any easement which may
burden the land; the land does not serve any adjoining property for any
purpose inconsistent with the use of the land; and the Owned Properties are
not located within any flood plain (such that a mortgagee would require a
mortgagor to obtain flood insurance) or subject to any similar type
restriction for which any permits or licenses necessary to the use thereof
have not been obtained;
(iv) to the knowledge of the Shareholders, all facilities have
received all approvals of Governmental Authorities (including licenses and
permits) required in connection with the ownership or operation thereof and
have been operated and maintained in material compliance with applicable
laws, ordinances, rules and regulations;
(v) there are no Contracts granting to any party or parties the
right of use or occupancy of any portion of the parcels of Owned Property,
except as set forth on Schedule 4.14(a);
(vi) there are no outstanding options or rights of first refusal
to purchase the parcels of Owned Property, or any portion thereof or
interest therein;
(vii) there are no parties (other than the Companies) in possession
of the parcels of Owned Property, other than tenants under any leases
disclosed in Schedule 4.14(a) who are in possession of space to which they
are entitled;
(viii) all facilities located on the parcels of Owned Property are
supplied with utilities and other services necessary for the operation of
such facilities as presently being used, including gas, electricity, water,
telephone, sanitary sewer and storm sewer, all of which services are
adequate in accordance with all applicable laws, ordinances, rules and
regulations, and are provided via
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public roads or via permanent, irrevocable, appurtenant easements
benefitting the parcels of Owned Property;
(ix) each parcel of Owned Property abuts on and has direct
vehicular access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of
Owned Property; and there is no pending or, to the knowledge of the
Shareholders, threatened termination of the foregoing access rights;
(x) all improvements and buildings on the Owned Property
are in good repair and are safe for occupancy and use, free from termites
or other wood-destroying organisms; the roofs thereof are watertight; and
the structural components and systems (including plumbing, electrical, air
conditioning/heating, and sprinklers) are in good working order and
adequate for the use of such Owned Property in the manner in which
presently used; and
(xi) there are no service contracts, management agreements
or similar agreements which affect the parcels of Owned Property, except as
set forth on Schedule 4.14(a).
(b) Schedule 4.14(b) sets forth a list of all leases, licenses or
similar agreements ("Leases") to which each Company is a party (copies of which
have previously been furnished to MTLM), in each case, setting forth (A) the
lessor and lessee thereof and the date and term of each of the Leases, (B) the
legal description or street address of each property covered thereby, and (C) a
brief description (including size and function) of the principal improvements
and buildings thereon (the "Leased Premises"), all of which are within the
property set-back and building lines of the respective property or are otherwise
set forth on Schedule 4.14(b). The Leases are in full force and effect and have
not been amended except as set forth on Schedule 4.14(b), and no party thereto
is in default or breach under any such Lease. To the knowledge of the
Shareholders, no event has occurred which, with the passage of time or the
giving of notice or both, would cause a material breach of or default under any
of such Leases. To the knowledge of the Shareholders, there is no breach or
anticipated breach by any other party to such Leases. Except as set forth on
Schedule 4.14(b), with respect to each such Leased Premises:
(i) each Company has valid leasehold interests in the
Leased Premises leased by it, which leasehold interests are free and clear
of any Liens, covenants and easements or title defects of any nature
whatsoever, other than those that would not have a Material Adverse Effect;
(ii) the portions of the buildings located on the Leased
Premises that are used in the business of each Company are in good repair
and condition, normal wear and tear excepted, and are in the aggregate
sufficient to satisfy each
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Company's current and reasonably anticipated normal business activities as
conducted thereat;
(iii) each of the Leased Premises (a) has direct access to public
roads or access to public roads by means of a perpetual access easement,
such access being sufficient to satisfy the current and reasonably
anticipated normal transportation requirements of each Company's respective
business as presently conducted at such parcel; and (b) is served by all
utilities in such quantity and quality as are sufficient to satisfy the
current normal business activities as conducted at such parcel; and
(iv) none of the Companies has received notice of (a) any
condemnation proceeding with respect to any portion of the Leased Premises
or any access thereto, and, to the knowledge of the Shareholders, no such
proceeding is contemplated by any Governmental Authority; or (b) any
special assessment which may affect any of the Leased Premises and, to the
knowledge of the Shareholders, no such special assessment is contemplated
by any Governmental Authority.
4.15 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Except as set forth on Schedule 4.15, each Company has good and
marketable title to all of its respective Assets (as hereinafter defined), free
and clear of any Liens or restrictions on use. For purposes of this Agreement,
the term "Assets" means all of the properties and assets of each Company, other
than the Owned Properties, the Retained Properties and the Leased Premises,
whether personal or mixed, tangible or intangible, wherever located.
(b) The Fixed Assets (as hereinafter defined) currently in use or
necessary for the business and operations of each Company are in good operating
condition, normal wear and tear excepted, and have been maintained in accordance
with sound industry practices. For purposes of this Agreement, the term "Fixed
Assets" means all vehicles, machinery, equipment, tools, supplies, leasehold
improvements, furniture and fixtures used by or located on the premises of each
Company or set forth on the Current Balance Sheet or acquired by each Company
since the date of the Current Balance Sheet. Schedule 4.15 lists the vehicles
owned, leased or used by each Company, setting forth the make, model,
description of body and chassis, vehicle identification number, and year of
manufacture, and for each vehicle, whether it is owned or leased, and if owned,
the name of any lienholder and the amount of the lien, and if leased, the name
of the lessor and the general terms of the lease, and, whether owned or leased,
if it is used to transport, transfer, handle, dispose or haul Waste materials.
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4.16 COMPLIANCE WITH LAWS.
(a) Each Company is in material compliance with all laws,
regulations and orders applicable to it, its respective business and
operations (as conducted by it now and in the past), the Assets, the Owned
Properties and the Leased Premises and any other properties and assets (in
each case owned or used by it now or in the past). Except as set forth on
Schedule 4.16, none of the Companies has been cited, fined or otherwise
notified of any asserted past or present material failure to comply with
any laws, regulations or orders and no proceeding with respect to any such
material violation is pending or, to the knowledge of the Shareholders,
threatened.
(b) None of the Companies has made any payment of funds in
connection with its business which is prohibited by law, and no funds have
been set aside to be used in connection with its business for any payment
prohibited by law.
(c) Each Company is in full compliance with the terms and
provisions of the Immigration Reform and Control Act of 1986, as amended
(the "Immigration Act"). With respect to each Employee (as defined in 8
C.F.R. 274a.1(f)) of each Company for whom compliance with the Immigration
Act as employer is required, such Company has on file a true, accurate and
complete copy of (i) each Employee's Form I-9 (Employment Eligibility
Verification Form) and (ii) all other records, documents or other papers
prepared, procured and/or retained by such Company pursuant to the
Immigration Act. None of the Companies has been cited, fined, served with
a Notice of Intent to Fine or with a Cease and Desist Order, nor has any
action or administrative proceeding been initiated or, to the knowledge of
the Shareholders, threatened against it, by the Immigration and
Naturalization Service by reason of any actual or alleged failure to comply
with the Immigration Act.
(d) Except as fully described on Schedule 4.16, none of the
Companies is subject to any Contract, decree or injunction which restricts
the continued operation of any business or the expansion thereof to other
geographical areas, customers and suppliers or lines of business.
4.17 LABOR AND EMPLOYMENT MATTERS. Schedule 4.17 sets forth the name,
address, social security number and current rate of compensation of each of the
employees of each Company. Except as set forth on Schedule 4.17, none of the
Companies is a party to or bound by any collective bargaining agreement or any
other agreement with a labor union, and there have been no efforts by any labor
union during the 24 months prior to the date hereof to organize any employees of
any Company into one or more collective bargaining units. There is no pending
or threatened labor dispute, strike or work stoppage which affects or which may
affect the business of any Company which may interfere with its continued
operations. To the knowledge of the Shareholders, none of the Companies has
within the last 24 months committed any unfair labor practice as defined in the
National Labor Relations Act, as amended, and there is no pending or threatened
charge or complaint against any Company by or with the National
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Labor Relations Board or any representative thereof. There has been no strike,
walkout or work stoppage involving any of the employees of any Company during
the 24 months prior to the date hereof. The Shareholders are not aware that any
executive or key employee or group of employees has any plans to terminate his,
her or their employment with the Companies as a result of this Agreement or
otherwise. Schedule 4.17 lists each contract, agreement or plan of the
following nature, whether formal or informal, and whether or not in writing, to
which each Company is a party or under which it has an obligation: (i)
employment agreements, (ii) employee handbooks, policy statements and similar
plans, (iii) noncompetition agreements, and (iv) consulting agreements. To the
knowledge of the Shareholders, each Company has complied with applicable laws,
rules and regulations relating to employment, civil rights and equal employment
opportunities, including but not limited to, the Civil Rights Act of 1964, the
Fair Labor Standards Act and the Worker Adjustment and Retraining Notification
Act of 1988.
4.18 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 4.18 contains a list setting
forth each employee benefit plan or arrangement of each Company, including
but not limited to employee pension benefit plans, as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), multiemployer plans, as defined in Section 3(37) of ERISA,
employee welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus plans, stock
purchase plans, hospitalization, disability and other insurance plans,
severance or termination pay plans and policies, whether or not described
in Section 3(3) of ERISA, in which employees, their spouses or dependents,
of each Company participate ("Employee Benefit Plans") (true and accurate
copies of which, together with the most recent annual reports on Form 5500
and summary plan descriptions with respect thereto, were furnished to
MTLM).
(b) Compliance with Law. With respect to each Employee Benefit
Plan (i) each has been administered in all material respects in compliance
with its terms and with all applicable laws, including, but not limited to,
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"); (ii)
no actions, suits, claims or disputes are pending, or, to the knowledge of
the Shareholders, threatened (except routine claims for benefits); (iii) no
audits, inquiries, reviews, proceedings, claims, or demands are pending
with any governmental or regulatory agency; (iv) there are no facts known
to the Shareholders which could give rise to any material liability in the
event of any such investigation, claim, action, suit, audit, review, or
other proceeding; (v) all material reports, returns, and similar documents
required to be filed with any governmental agency or distributed to any
plan participant have been duly or timely filed or distributed; and (vi) no
"prohibited transaction" has occurred within the meaning of the applicable
provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee Benefit Plan
intended to qualify under Code Section 401(a) or 403(a) (i) the Internal
Revenue Service
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has issued a favorable determination letter, true and correct copies of
which have been furnished to MTLM, to the effect that such plans are
qualified and exempt from federal income taxes; (ii) to the knowledge of
the Shareholders, no such determination letter has been revoked, no
revocation has been threatened, and no amendment or other action or
omission has occurred with respect to any such plan since the date of its
most recent determination letter or application therefor in any respect
which would adversely affect its qualification or materially increase its
costs; (iii) no such plan has been amended in a manner that would require
security to be provided in accordance with Section 401(a)(29) of the Code;
(iv) no reportable event (within the meaning of Section 4043 of ERISA) has,
to the knowledge of the Shareholders, occurred, other than one for which
the 30-day notice requirement has been waived; and (v) as of the Effective
Date, the present value of all liabilities that would be "benefit
liabilities" under Section 4001(a)(16) of ERISA if benefits described in
Code Section 411(d)(6)(B) were included will not exceed the then current
fair market value of the assets of such plan (determined using the
actuarial assumptions used for the most recent actuarial valuation for such
plan); (vi) except as disclosed on Schedule 4.18, all contributions to, and
payments from and with respect to such plans, which may have been required
to be made in accordance with such plans and, when applicable, Section 302
of ERISA or Section 412 of the Code, have been timely made; (vii) all such
contributions to the plans, and all payments under the plans (except those
to be made from a trust qualified under Section 401(a) of the Code) and all
payments with respect to the plans (including, without limitation, PBGC and
insurance premiums) for any period ending before the date hereof that are
not yet, but will be, required to be made are properly accrued and
reflected on the Current Balance Sheet or are disclosed on Schedule 4.18.
(d) Multiemployer Plans. None of the Companies maintains,
contributes or has any obligation to contribute to any multiemployer plan,
as described in Section 4001(a)(3) of ERISA ("MPPA Plan").
(e) Welfare Plans. Other than as disclosed in Schedule 4.18, (i)
none of the Companies is obligated under any employee welfare benefit plan
as described in Section 3(1) of ERISA ("Welfare Plan"), whether or not
disclosed in Schedule 4.18, to provide medical or death benefits with
respect to any employee or former employee of any Company, or their
predecessors after termination of employment; (ii) each Company has
complied with the notice and continuation coverage requirements of Section
4980B of the Code and the regulations thereunder with respect to each
Welfare Plan that is, or was during any taxable year for which the statute
of limitations on the assessment of federal income taxes remains, open, by
consent or otherwise, a group health plan within the meaning of Section
5000(b)(1) of the Code, (iii) there are no reserves, assets, surplus or
prepaid premiums under any Welfare Plan which is an Employee Benefit Plan,
and (iv) the consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay, and, will not
accelerate the time of payment or vesting, or increase the amount of
compensation, due to any individual.
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(f) Controlled Group Liability. None of the Companies, nor any
entity that would be aggregated with them under Code Section 414(b), (c),
(m) or (o): (i) has ever terminated or withdrawn from an employee benefit
plan under circumstances resulting (or expected to result) in liability to
the Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the
employee benefit plan is funded, or any employee or beneficiary for whose
benefit the plan is or was maintained (other than routine claims for
benefits); (ii) has any assets subject to (or expected to be subject to) a
lien for unpaid contributions to any employee benefit plan; (iii) has
failed to pay premiums to the PBGC when due; (iv) is subject to (or
expected to be subject to) an excise tax under Code Section 4971; (v) has
engaged in any transaction which would give rise to liability under Section
4069 or Section 4212(c) of ERISA; or (vi) has violated Code Section 4980B
or Section 601 through 608 of ERISA.
(g) Other Liabilities. Except as set forth on Schedule 4.18, (i)
none of the Employee Benefit Plans obligates any Company to pay separation,
severance, termination or similar benefits solely as a result of any
transaction contemplated by this Agreement or solely as a result of a
"change of control" (as such term is defined in Section 280G of the Code),
(ii) all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals
for all fiscal years ending prior to or as of the date hereof shall have
been made or properly accrued on the Current Balance Sheet or will be
properly accrued on the books and records of each Company as of the date
hereof, and (iii) none of the Employee Benefit Plans has any unfunded
liabilities which are not reflected on the Current Balance Sheet or the
books and records of each Company.
4.19 TAX MATTERS. Except as set forth in Schedule 4.19 hereto, all Tax
Returns required to be filed prior to the date hereof with respect to each
Company, or any of its income, properties, franchises or operations have been
filed, each such Tax Return has been prepared in substantial compliance with all
applicable laws and regulations, and all such Tax Returns are true, complete and
accurate in all material respects. All Taxes due and payable by or with respect
to each Company have been paid or accrued on the Current Balance Sheet or will
be accrued on its books and records with respect to fiscal years ending on or
before December 31, 1996 as of the date hereof. Except as set forth in Schedule
4.19 hereto: (i) with respect to each taxable period of each Company ending
within the last six years, no taxable period has been audited by the relevant
taxing authority; (ii) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Taxes has been asserted or
assessed by any taxing authority; (iii) none of the Companies has consented to
extend the time in which any Taxes may be assessed or collected by any taxing
authority; (iv) none of the Companies has requested or been granted an extension
of the time for filing any Tax Return to a date later than the date hereof; (v)
there is no action, suit, taxing authority proceeding, or audit or claim for
refund now in progress, pending or, to the knowledge of the Shareholders,
threatened against or with respect to any Company regarding Taxes; (vi) none of
the Companies has made an election or filed a consent under Section 341(f) of
the Code (or any corresponding provision of state, local or foreign law) on or
prior to the date hereof; (vii) there are no Liens for Taxes (other than for
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current Taxes not yet due and payable) upon the assets of each Company, (viii)
none of the Companies will be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the date hereof, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the date hereof or (B) as a result
of any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign law), to include any item of
income or exclude any item of deduction from any taxable period (or portion
thereof) beginning after the date hereof; (ix) none of the Companies is a party
to or bound by any tax allocation or tax sharing agreement or has any current or
potential contractual obligation to indemnify any other Person with respect to
Taxes; (x) to the knowledge of the Shareholders, there is no basis for any
assessment, deficiency notice, 30-day letter or similar notice with respect to
any Tax to be issued to any Company with respect to any period on or before the
date hereof; (xi) none of the Companies has made any payments, and is or will
not become obligated (under any contract entered into on or before the date
hereof) to make any payments, that will be non-deductible under Section 280G of
the Code (or any corresponding provision of state, local or foreign law); (xii)
none of the Companies has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code (or any corresponding
provision of state, local or foreign law) during the applicable period specified
in Section 897(c)(1)(a)(ii) of the Code (or any corresponding provision of
state, local or foreign law); (xiii) no claim has ever been made by a taxing
authority in a jurisdiction where any Company does not file Tax Returns that it
is or may be subject to Taxes assessed by such jurisdiction; (xiv) none of the
Companies has any permanent establishment in any foreign country, as defined in
the relevant tax treaty between the United States of America and such foreign
country; (xv) true, correct and complete copies of all income and sales Tax
Returns filed by or with respect to each Company for the past two years have
been furnished or made available to MTLM; (xvi) no Company will be subject to
any Taxes for the period ending at the Closing Date for any period for which a
Tax Return has not been filed pursuant to Section 1374 or Section 1375 of the
Code (or any corresponding provision of state, local or foreign law); and (xvii)
no sales or use tax or property transfer tax (other than sales tax on aircraft,
boats, mobile homes and motor vehicles), non-recurring intangibles tax,
documentary stamp tax or other excise tax (or comparable tax imposed by any
Governmental Authority) will be payable by any Company or MTLM by virtue of the
transactions contemplated by this Agreement.
4.20 INSURANCE. Each Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by reputable insurers covering
its properties, assets and businesses against risks of the nature normally
insured against by businesses in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such businesses (the
"Insurance Policies"). Such Insurance Policies are in full force and effect, and
all premiums due thereon have been paid. As of the date hereof each of the
Insurance Policies is in full force and effect. None of the Insurance Policies
will lapse or terminate as a result of the transactions contemplated by this
Agreement. Each Company has complied with the provisions of such Insurance
Policies. Schedule 4.20 contains (i) a complete and correct list of all
Insurance Policies and all amendments and riders thereto (copies of which have
been provided to MTLM) and (ii) a detailed description of each pending claim
under any of the Insurance
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Policies for an amount in excess of $5,000 that relates to loss or damage to
the properties, assets or businesses of any Company. None of the Companies has
failed to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
4.21 RECEIVABLES. All of the Companies' Receivables (as hereinafter
defined) represent bona fide transactions and arose in the ordinary course of
business of each Company as applicable. All of the Companies' Receivables are
good and reasonably expected to be collectable receivables, and are reasonably
expected to be collected in the ordinary course of business, without set off or
counterclaims, subject to the allowance for doubtful accounts, if any, set forth
on the Current Balance Sheet as reasonably adjusted since the date of the
Current Balance Sheet in the ordinary course of business consistent with past
practice and subject to credit insurance for Receivables. For purposes of this
Agreement, the term "Receivables" means, with respect to any entity, all
receivables of such entity, including all trade account receivables arising from
the provision of services or sale of inventory, notes receivable, and insurance
proceeds receivable.
4.22 LICENSES AND PERMITS.
(a) Each Company possesses all material licenses and required
governmental or official approvals, permits or authorizations
(collectively, the "Permits") for its business and operations, including
the operation of the Owned Properties and Leased Premises, which Permits
are listed on Schedule 4.22. All such Permits are valid and in full force
and effect, each Company is in material compliance with the requirements
thereof, and no proceeding is pending or, to the knowledge of the
Shareholders, threatened to revoke or amend any of them. None of such
Permits is or will be impaired or in any way affected by the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby including without limitation the merger of Ferrex with
and into Sub.
(b) There are no material licenses or required governmental or
official approvals, permits or authorizations for the conduct of the
business and operations of Ferrex as such business is operated.
4.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS;
AFFILIATED TRANSACTIONS. The Assets, Owned Properties and Leased Premises
constitute, in the aggregate, all of the assets and properties necessary for the
conduct of the business of the Companies in the manner in which and to the
extent to which such business is currently being conducted. To the knowledge of
the Shareholders, no current supplier to any Company of items essential to the
conduct of its business will or has, to the knowledge of the Shareholders,
threatened to terminate its respective business relationship with it for any
reason. Except as set forth on Schedule 4.23, none of the Companies has any
direct or indirect interest in any customer, supplier or competitor of such
Company, or in any person from whom or to whom such Company leases real or
personal property. Except as set forth on Schedule 4.23, no officer, director or
shareholder of any Company, nor any person related by blood or marriage to any
such
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person, nor any entity in which any such person owns any beneficial
interest, is a party to any Contract or transaction with such Company or has
any interest in any property used by such Company.
4.24 INTELLECTUAL PROPERTY. Each Company has full legal right, title
and interest in and to all trademarks, servicemarks, tradenames, copyrights,
know-how, patents, trade secrets, licenses (including licenses for the use of
computer software programs), and other intellectual property used in the conduct
of their respective businesses (the "Intellectual Property"). The conduct of
the business of each Company as presently conducted, and the unrestricted
conduct and the unrestricted use and exploitation of the Intellectual Property,
does not infringe or misappropriate any rights held or asserted by any Person,
and no Person is infringing on the Intellectual Property. No payments are
required for the continued use of the Intellectual Property. None of the
Intellectual Property has ever been declared invalid or unenforceable, or is the
subject of any pending or threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding.
4.25 CONTRACTS.
(a) Schedule 4.25 sets forth a list of each Contract to which each
Company is a party or by which its properties and assets are bound and
which is material to its business, assets, properties or prospects (the
"Designated Contracts"), true and correct copies of which have been
provided to MTLM. The copy of each Designated Contract furnished to MTLM
is a true and complete copy of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement. To
the knowledge of the Shareholders, except as set forth on Schedule 4.25, no
Company has violated any of the material terms or conditions of any
Designated Contract or any term or condition which would permit termination
or material modification of any Designated Contract, and all of the
covenants to be performed by any other party thereto have been fully
performed and there are no claims for breach or indemnification or notice
of default or termination under any Designated Contract. To the knowledge
of the Shareholders, except as set forth on Schedule 4.25, no event has
occurred which constitutes, or after notice or the passage of time, or
both, would constitute, a material default by any Company under any
Designated Contract, and no such event has occurred which constitutes or
would constitute a material default by any other party. No Company is
subject to any material liability or payment resulting from renegotiation
of amounts paid it under any Designated Contract. As used in this Section,
Designated Contracts shall mean (a) loan agreements, indentures, mortgages,
pledges, hypothecations, deeds of trust, conditional sale or title
retention agreements, security agreements, equipment financing obligations
or guaranties, or other sources of contingent liability in respect of any
indebtedness or obligations to any other Person, or letters of intent or
commitment letters with respect to same; (b) contracts obligating any
Company to purchase or sell products or services other than individual
contracts for the purchase or sale of scrap individually not exceeding
$2,000,000; (c) leases of real property, and leases of personal property
not cancelable without penalty on notice of 60 days or less or calling for
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payment of an annual gross rental exceeding $10,000.00; (d) distribution,
sales agency or franchise or similar agreements, or agreements providing
for an independent contractor's services, or letters of intent with respect
to same; (e) employment agreements, management service agreements,
consulting agreements, confidentiality agreements, noncompetition
agreements and any other agreements relating to any employee, officer or
director of any Company; (f) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets
or know how, or other agreements regarding proprietary rights or
intellectual property; (g) any Contract relating to pending capital
expenditures by any Company in excess of $150,000; and (h) other material
Contracts or understandings, irrespective of subject matter and whether
written or, to the knowledge of the Shareholders, unwritten, not entered
into in the ordinary course of business by any Company and not otherwise
disclosed on the Schedules.
(b) There are no Designated Contracts with respect to the business
and operations of Ferrex that are or will be impaired or in any way
affected by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby including without
limitation the merger of Ferrex with and into Sub.
4.26 CUSTOMER LISTS AND RECURRING REVENUE. The Companies prepared and
made available to MTLM a true, correct and complete list for the fiscal year
ended December 31, 1996 of the Companies' 20 largest customers ("Material
Customers") and suppliers together with the applicable percentage of total sales
or purchases, as applicable. True, correct and complete copies of any
agreements with such customers or suppliers which are anticipated to endure
beyond the date hereof have been furnished by the Shareholders to MTLM. Except
as provided on Schedule 4.26, other than Material Customers, no customer of the
Companies as of the date of this Agreement accounts for more than 1% of the
Companies' combined annual revenue. The Companies have made available to MTLM
each Material Customer's name, address, account number, term of franchise or
agreement, billing cycle, type of service and rates charged.
4.27 ACCURACY OF INFORMATION FURNISHED BY THE SHAREHOLDERS. No
representation, statement or information made or furnished by the Shareholders
to MTLM or any of MTLM's representatives in this Agreement or in any Schedule,
certificate or other document to be delivered pursuant hereto contains or shall
contain any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein not
misleading. The Shareholders have provided MTLM with true, accurate and
complete copies of all documents listed or described in the various Schedules
provided by or on behalf of Shareholders and attached hereto.
4.28 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Such Xxxxx Shareholder is acquiring his or her interest in the
shares of Common Stock of MTLM pursuant to this Agreement for his own account
for investment and not with a view to, or for the sale in connection with, any
distribution of his interest, except in compliance with applicable state and
federal securities laws. Such Xxxxx Shareholder has been provided, to his
satisfaction, the
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opportunity to discuss the transactions contemplated hereby with MTLM and has
had the opportunity to obtain such information pertaining to MTLM as has been
requested, including but not limited to filings made by MTLM with the SEC under
the Exchange Act. Such Xxxxx Shareholder is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act or, in the case of
Xxxxxxxxx Xxxxx and Xxxxx Xxxxx, represented by a "purchaser representative"
within the meaning of Regulation D promulgated under the Securities Act. Such
Xxxxx Shareholder, or such purchaser representative in the case of Xxxxxxxxx
Xxxxx and Xxxxx Xxxxx, has such knowledge and experience in business and
financial matters that he or she is capable of evaluating the merits and risks
of an investment in shares of Common Stock of MTLM, and such Xxxxx Shareholder
is capable of bearing the economic risks of such investment and is able to bear
a complete loss of his or her investment in shares of Common Stock of MTLM.
Such Xxxxx Shareholder acknowledges that the shares of Common Stock of MTLM to
be received pursuant to the Merger have not been registered under the Securities
Act and understands that such shares must be held indefinitely unless they are
subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement.
4.29 BUSINESS LOCATIONS. As of the date hereof, none of the Companies
has any office or place of business other than as identified on Schedules
4.14(a) and 4.14(b) and each Company's principal place of business and chief
executive office (as such terms are used in Title XIII of the Ohio Revised Code
Section 1309.38 as of the date hereof) are indicated on Schedule 4.14(a) or
4.14(b), and, all locations where the equipment, inventory, chattel paper and
books and records of each Company are located as of the date hereof are fully
identified on Schedules 4.14(a) and 4.14(b).
4.30 NAMES; PRIOR ACQUISITIONS. All names under which each Company does
business as of the date hereof are specified on Schedule 4.30. Except as set
forth on Schedule 4.30, none of the Companies has changed its name or used any
assumed or fictitious name, or been the surviving entity in a merger, acquired
any business or changed its principal place of business or chief executive
office, within the past 10 years.
4.31 NO COMMISSIONS. None of the Companies or the Shareholders have
incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
4.32 INVENTORY. All Assets that consist of inventory (including raw
materials and work-in-progress): (i) were acquired in the ordinary course of
business consistent with past practice; (ii) are of a quantity, and condition
useable or saleable in the ordinary course of business within each Company's
normal inventory turnover experience; and (iii) are valued at the lower of cost
or net realizable market value. None of the Companies has any material
liability with respect to the return or repurchase of any goods in the
possession of any customer.
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4.33 IDENTIFICATION OF ASSETS. Schedule 4.33 sets forth a listing of
all of the fixed assets and properties (including real, personal and mixed)
owned by each Company as of March 31, 1996.
4.34 RESTRICTIONS. Schedule 4.34 sets forth a list of all
non-competition, non-solicitation, confidentiality and other restrictive
covenants to which each Company and/or Shareholder is a party or otherwise
bound. Except as set forth on Schedule 4.34, there are no contracts or
agreements to which the Companies are parties or which are specifically
applicable to the Companies which would in any way limit or restrict the rights
of MTLM, or any Company from engaging in any business anywhere in the world.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 CONDUCT OF BUSINESS PENDING THE CLOSING. Except as set forth on
Schedule 5.1, each Company covenants and agrees that, between the date of this
Agreement and the Closing Date, the business of each Company shall be conducted
only in, and each Company shall not take any action except in, the ordinary
course of business, consistent with past practice and in material compliance
with all rules, regulations and laws. Each Company shall use its best efforts
to preserve intact its respective business organization, to keep available the
services of its respective current officers, employees and consultants, and to
preserve its respective present relationships with customers, suppliers and
other persons with which it has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, or
as set forth on Schedule 5.1, none of the Companies shall, between the date of
this Agreement and the Closing Date, directly or indirectly, do or propose or
agree to do any of the following without the prior written consent of MTLM:
(a) amend or otherwise change its Articles of Incorporation or Code
of Regulations;
(b) issue, sell, pledge, dispose of, encumber, or, authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of its capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest, of it, or, (ii) any of
their respective assets, tangible or intangible, except in the ordinary
course of business consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
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(e) (i) acquire (including, without limitation, for cash or shares
of stock, by merger, consolidation, or acquisition of stock or assets) any
interest in any corporation, partnership or other business organization or
division thereof, or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or, except in
the ordinary course of business, consistent with past practice, purchase
any property or assets of any other Person, (ii) incur any indebtedness for
borrowed money except under lines of credit existing as of the date hereof
and enumerated in Section 4.11, and in any event not in excess of
$6,000,000 or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of
any Person, or make any loans or advances, or (iii) enter into any Contract
other than in the ordinary course of business, consistent with past
practice;
(f) increase the compensation payable or to become payable to its
respective officers or directors, or, except as presently bound to do,
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any of its respective directors or officers, or
establish, adopt, enter into or amend or take any action to accelerate any
rights or benefits under any collective bargaining, bonus, profit sharing,
trust, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(g) take any action other than in the ordinary course of business
and in a manner consistent with past practice with respect to accounting
policies or procedures;
(h) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than as required by law or a governmental authority and
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of due and payable liabilities
reflected or reserved against in its financial statements, as appropriate,
or liabilities incurred after the date hereof in the ordinary course of
business and consistent with past practice;
(i) increase or decrease prices charged to its respective
customers, except for previously announced price changes or except in the
ordinary course of business, or take any other action which might
reasonably result in any material increase in the loss of customers through
non-renewal or termination of contracts or other causes; or
(j) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or
warranty in Article IV untrue or incorrect.
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ARICLE VI
ADDITIONAL AGREEMENTS
6.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
6.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause each
Company to comply with all of the respective covenants of the Companies under
this Agreement.
6.3 COOPERATION. Each of the parties agrees to cooperate
with the others in the preparation and filing of all forms, notifications,
reports and information, if any, required or reasonably deemed advisable
pursuant to any law, rule or regulation or the rules of the Nasdaq Stock Market
or of any exchange on which the Common Stock is listed in connection with the
transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
6.4 ACCESS TO INFORMATION. From the date hereof to the Closing Date,
each Company and MTLM shall (and shall cause its respective directors,
officers, employees, auditors, counsel and agents to) afford each other
and their officers, employees, auditors, counsel and agents reasonable access
at all reasonable times to its properties, offices, and other facilities, to
its officers and employees and to all books and records, and shall furnish such
persons with all financial, operating and other data and information as may be
requested. No information provided to or obtained by MTLM or the Shareholders
shall affect any representation or warranty in this Agreement.
6.5 NOTIFICATION OF CERTAIN MATTERS. The Shareholders and MTLM shall
give prompt notice to the other of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition, or agreement contained herein
not to be complied with or satisfied.
6.6 TAX TREATMENT. Each party to this Agreement has sought and
received its own advice as to the tax treatment of the transactions covered by
this Agreement and is not relying on any representations of the other parties or
their respective advisers with respect thereto. All parties hereto agree to
fully and completely comply with the reporting requirements of the Internal
Revenue Service.
6.7 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or terms hereof without the
prior consent of the other parties hereto. No
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press release or other public announcement related to this
Agreement or the transactions contemplated hereby shall be issued by any party
hereto without the prior approval of the other parties, except that any party
hereto may make such public disclosure which such party believes in good faith
is required by law or by the terms of any listing agreement with or
requirements of a securities exchange.
6.8 NO OTHER DISCUSSIONS. None of the Companies, nor the Shareholders,
and their respective Affiliates, employees, agents or representatives shall (i)
initiate or encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Companies (whether by merger, consolidation, sale
of stock or otherwise) or (ii) enter into any agreement or commitment (whether
or not binding) with respect to any of the foregoing transactions. The
Shareholders will immediately notify MTLM if any third party attempts to
initiate any solicitation, discussion or negotiation with respect to any of the
foregoing transactions.
6.9 RESTRICTIVE COVENANTS. In order to assure that MTLM will realize
the benefits of this Agreement and in consideration of the transactions set
forth in this Agreement, each Shareholder Indemnitor agrees with MTLM that he
shall not for a period of sixty (60) months from the later of the Closing Date
or the date each such Shareholder Indemnitor ceases to be an employee, officer
or director of MTLM or the Company (except as may otherwise be set forth in an
employment agreement with such Shareholder Indemnitor):
(a) directly or indirectly, alone or as a partner, joint venturer,
member, officer, director, employee, consultant, agent, independent
contractor, stockholder, or in any other capacity of any company or
business, engage in any business activity in the States of Ohio, Michigan
and Indiana, which is directly in competition with the business conducted
by the Companies at the Closing Date (other than real estate development);
provided, however, that, the beneficial ownership of less than 5% of the
shares of stock of any corporation having a class of equity securities
actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the prohibitions
of this Section;
(b) directly or indirectly (i) induce any Person which is a
customer of any Company at the Closing Date to patronize any business
directly in competition with the business conducted by the Companies; (ii)
canvass, solicit or accept from any Person which is a customer of the
Companies at the Closing Date, any such competitive business, or (iii)
request or advise any Person which is a customer of the Companies at the
Closing Date to withdraw, curtail or cancel any such customer's business
with the Companies;
(c) directly or indirectly employ, or knowingly permit any company
or business directly or indirectly controlled by him, to employ, any person
who was employed by any of the Companies at or within six months prior to
the Closing Date, or in any manner seek to induce any such Person to leave
his or her employment;
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(d) directly or indirectly, at any time following the Closing Date,
in any way utilize, disclose, copy, reproduce or retain in his possession
any of the Companies' proprietary rights or records, including, but not
limited to, any of their customer lists.
The Shareholders agree and acknowledge that the restrictions contained in this
Section 6.9 are reasonable in scope and duration and are necessary to protect
MTLM after the Closing Date. If any provision of this Section as applied to
any party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. The
parties agree and acknowledge that the breach of this Section will cause
irreparable damage to MTLM and upon breach of any provision of this Section,
MTLM shall be entitled to injunctive relief, specific performance or other
equitable relief; provided, however, that this shall in no way limit any other
remedies which MTLM may have (including, without limitation, the right to seek
monetary damages).
6.10 TRADING IN MTLM'S COMMON STOCK. Except as otherwise expressly
consented to by MTLM, from the date of this Agreement until the Closing Date,
none of the Companies, nor the Shareholders (nor any Affiliates thereof) will
directly or indirectly purchase or sell (including short sales) any shares of
the Common Stock in any transactions effected on the Nasdaq Stock Market or
otherwise.
6.11 OTHER AGREEMENTS. On the date hereof, each party hereto that is a
signatory to any of the documents forms of which are attached as Exhibits "A"
through "Q" (the "Other Agreements") agrees to execute and deliver such Other
Agreements, as appropriate, to the other parties to such Other Agreements, and
each party who is a married individual shall cause his spouse to execute all
consents requested by MTLM to consummate the transactions set forth herein. The
parties agree that the non-competition covenants contained in the employment
agreements attached as Exhibits "O" and "P" are an integral part of this
Agreement.
6.12 [RESERVED]
6.13 ADDITIONAL ACTIONS. MTLM, the Companies and the Shareholders agree
to use their individual best efforts to obtain the authorizations required for
each to execute and deliver this Agreement and to perform each of their
respective obligations hereunder and to consummate the transactions contemplated
hereby. Additionally, MTLM agrees to use its best efforts to recover any
insurance proceeds which would otherwise reduce the Indemnifiable Damages under
Article IX which MTLM would otherwise suffer.
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6.14 CERTIFICATION OF TAX STATUS. The Shareholders shall deliver to
MTLM either: (i) a Certificate of Nonforeign Status under Treasury Regulation
Section 1.1445-2(b)(1), or (ii) a Certificate meeting the requirements of
Treasury Regulation Sections 1.987-2(g) and 1.897-2(h)(2) that the Purchased
Securities do not constitute a U.S. real property interest.
6.15 OPTION TO PURCHASE OFFICE BUILDING. At the date hereof, the
Shareholders shall cause Xxxxx Building Company, Ltd. to enter into an
agreement, attached hereto as Exhibit L, with MTLM or a Subsidiary of MTLM
granting MTLM or such Subsidiary the right and option to purchase Xxxxx Building
Company, Ltd.'s office building in Maumee, Ohio for a price of $3.2 million in
cash, free and clear of any and all liens, claims and encumbrances, at any time
after the third anniversary of the Closing Date but prior to the fifth
anniversary of the Closing Date.
6.16 TAX RETURNS OF THE COMPANIES SUBSEQUENT TO CLOSING. The
Shareholders shall have the right and obligation to supervise and control the
preparation and filing of the federal income tax return and State of Ohio
franchise returns or alternative reports for electing Subchapter S corporations
with respect to the periods commencing on or after January 1, 1996 and ending on
or before the Closing Date. MTLM shall provide such information and otherwise
cooperate with the Shareholders as the Shareholders shall reasonably deem
necessary to accomplish the foregoing.
6.17 PENSION PLAN. Following the Closing, The Xxxxx Corporation Pension
Plan-80 (the "Pension Plan") shall initially continue to be administered as it
was administered prior to the Closing, consistent with prior practice in all
material respects. On or before December 31, 1997, Xxxxxx X. Xxxxxx
representing and on behalf of MTLM and Xxxx X. Xxxxx representing and on behalf
of those employees who are not continuing employees of the Companies, each
acting with the advice and prior written approval of his respective competent
professional advisors, shall mutually agree upon lawful terms and conditions
pursuant to which the Pension Plan will be transferred to Xxxxx Investments,
Inc. and a portion of the Pension Plan shall be transferred to a new benefit
plan to be maintained by Xxxxx.
6.18 AUDITS. The Shareholders shall have the right and obligation to
respond, contest, settle and otherwise handle in all respects any and all
inquiries, demands, requests or audits of the Internal Revenue Service regarding
or in connection with any and all federal income tax returns filed by any of the
Companies for periods ending on or before the Closing Date. MTLM shall provide
such information and otherwise cooperate with the Shareholders as the
Shareholders shall reasonably deem necessary to accomplish the foregoing.
6.19 EMPLOYEE COMPENSATION PLAN. On the Closing Date, the Shareholders
shall have the right, but not the obligation, to cause Xxxxx to adopt an
employee benefit plan covering certain employees of the Companies and containing
such terms and funding as shall be specified by the Shareholders. Such plan
shall provide for the payment by MTLM of cash to those employees specified by
the Shareholders in the aggregate amount of $700,000, subject to a vesting
schedule of three (3) years. Any amount paid by MTLM to any such employee
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pursuant to such plan shall reduce, dollar-for dollar, the payment of principal
and/or interest under certain MTLM Notes in accordance with their terms.
6.20 FIRST RIGHT TO PURCHASE CERTAIN PROPERTY. In the event MTLM or
Xxxxx, as applicable, (the "Grantor") after the Closing Date decides to dispose
of all or any part of Isaac's Owned Property located in Cuyahoga, Lorain, Xxxxxx
or Summit Counties, Ohio, or property acquired after the Closing Date and made a
part of the Owned Property located in such counties (together, the "Sale
Property"), it shall first offer the Sale Property by written notice to the
Shareholder Indemnitors or their designee (the "Grantee"). Such notice shall
identify the Sale Property and designate a cash purchase price (the "Sale
Price") for which it will be sold. For forty-five (45) days following such
notice, the Grantee shall have the exclusive right to purchase the Sale Property
for the Sale Price. During such notice period, Grantor shall permit Grantee to
review its files with respect to the Sale Property. The Grantee shall accept
the offer to purchase the Sale Property by notice to the Grantor within the
forty-five (45) day notice period. The sale of the Sale Property shall be closed
in escrow through the title company insuring title to the Sale Property within
thirty (30) days following notice of acceptance. At the closing, the Sale
Property shall be conveyed to the Grantee by general warranty deed subject only
to easements and restrictions of record which do not adversely affect the
current use of the Sale Property, zoning ordinances which permit the continued
existing use of the Sale Property and real property taxes and installments of
assessments not then due and payable (which shall be pro rated as of the closing
date in accordance with local custom). The Grantor, at its cost, shall furnish
the Grantee: (i) an Owner's Policy of Title Insurance issued by a national title
insurance company acceptable to the Grantee in the amount of the purchase price,
without exception for mechanics liens or matters which would be disclosed by
survey; and (ii) an ALTA Survey of the Sale Property prepared by a registered
surveyor acceptable to the title insurer. If the Grantee does not give notice
of acceptance of the offer to purchase the Sale Property, the Grantor shall be
free to sell such property to a third party, but only if such sale is closed
within ninety (90) days thereafter for cash in the amount not less than 97.5
percent of the Sale Price. If the Grantor receives a bona fide third party
offer to purchase the Sale Property for less than 97.5 percent of the Sale
Price, which it desires to accept, the Grantor shall give the Grantee notice of
such offer, accompanied by a copy of the offer. The Grantee shall have thirty
(30) days after such notice within which to give notice to the Grantor that the
Grantee elects to purchase the Sale Property (or the portion thereof which is
the subject of this offer) on the terms of the offer. If the Grantee does not
give notice of its election to purchase the Sale Property within thirty (30)
days after receiving notice of its right of first refusal, then the Grantor
shall have the right to sell the Sale Property to a third party, but only if
such sale is closed within ninety (90) days thereafter for cash in the amount
not less than 97.5 percent of the first refusal offer price. If the Grantor
does not close the sale of the Sale Property within the ninety (90) day sale
periods set forth above, then the Sale property shall again be offered to the
Grantee in accordance with the requirements of this Section 6.20 before it can
be sold to a third party. The rights granted to the Grantee under this Section
6.20 run with the land.
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6.21 ADDITIONAL CONSIDERATION.
(a) If the transactions contemplated in the Agreement and Plan of
Merger dated as of May 16, 1997 among Xxxxx Iron & Metal, Inc. and its
shareholders, MTLM and CIM Acquisition Co. (the "Xxxxx Agreement") are not
consummated prior to the date set forth in Section 12.1(f) thereof (as such
date may be amended by the parties thereto) or if such Agreement and Plan
of Merger is otherwise terminated by the parties thereto (the date of
public announcement of such event, the "Trigger Date"), MTLM shall issue
additional shares of Common Stock of MTLM (the "Additional Shares") to the
Shareholders of Ferrex who receive shares of Common Stock of MTLM in the
Merger (the "Xxxxx Shareholders") in accordance with this Section 6.21.
(b) The number of shares to be issued by MTLM shall equal the
positive difference, if any, of (i) $12,200,000 divided by the greater of
(y) $5.75, or (z) the average closing price per share of MTLM's Common
Stock on the Nasdaq Stock Market (or such other public market upon which
the Common Stock of MTLM is then primarily traded) for the 15 trading days
immediately following the Trigger Date, minus (ii) 1,742,857.
(c) MTLM shall, prior to or on the fifth trading day after the
Trigger Date, provide written notice to the Xxxxx Shareholders of the
number of Permitted Additional Shares. MTLM shall issue such Permitted
Additional Shares to the Xxxxx Shareholders on the seventeenth trading day
after the Trigger Date. To the extent that the number of Permitted
Additional Shares is less than the total number of Additional Shares
calculated pursuant to Section 6.21(b) (the difference, the "Prohibited
Additional Shares"), the Xxxxx Shareholders shall be entitled to receive
cash in lieu of such Prohibited Additional Shares as set forth below. At
any time (and from time to time) after such seventeenth trading day the
Shareholder Indemnitor Designees, on behalf of the Xxxxx Shareholders, may
at their option demand payment in cash for some or all of the Prohibited
Additional Shares.
(d) If such a cash payment is demanded, MTLM shall, on the third
business day after such demand, pay to the Xxxxx Shareholders by wire
transfer of immediately available funds an amount equal to the number of
Prohibited Additional Shares for which cash is to be paid in lieu thereof
multiplied by the average closing price of MTLM's Common Stock determined
pursuant to Section 6.21(b). Any such amount of cash which is not paid
prior to or on such third business day shall accrue interest at 15% per
annum on the basis of a 365-day year.
(e) All payments or delivery of cash or stock by MTLM to the Xxxxx
Shareholders pursuant to this Section 6.21 shall be in proportions set
forth on Schedule 1.1.
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6.22 XXXXX PROXIES. Each Xxxxx Shareholder shall vote his shares of
Common Stock of MTLM received pursuant to the Merger in favor of the
transactions contemplated by the Xxxxx Agreement when and if such a vote of the
shareholders of MTLM is taken, and shall provide MTLM with an agreement and
irrevocable proxy substantially in the form attached as Exhibit M.
6.23 REGISTRATION RIGHTS. MTLM shall enter into a Registration Rights
Agreement in the form attached hereto as Exhibit N with the Xxxxx Shareholders.
6.24 MITIGATION RIGHTS. During the period of employment of Xxxxxx X.
Xxxxx, III pursuant to the employment agreement attached as Exhibit O hereto, he
shall have the authority to do or cause to be done such acts and things as he in
his reasonable discretion deems necessary or desirable to reduce or mitigate the
potential liability for Indemnifiable Damages as a result of claims for breach
of the representations and warranties contained in Sections 4.22(b) and 4.25(b).
ARTICLE VII
CLOSING DELIVERIES OF THE COMPANIES AND THE SHAREHOLDERS
At the Closing, the Companies and the Shareholders shall provide or cause
to be provided to MTLM the following documents and items:
7.1 CORPORATE DOCUMENTS. (i) Copies of the Articles of Incorporation
and Code of Regulations of each Company as in effect immediately prior to the
date hereof, (ii) copies of resolutions adopted by the Board of Directors of
each Company and the Shareholders authorizing the transactions contemplated by
this Agreement, and (iii) certificates of good standing of each Company issued
by the State of Ohio and each other state in which each of them is qualified to
do business as of a date not more than thirty days prior to the date hereof,
certified in each case as of the date hereof by the Secretary as being true,
correct and complete.
7.2 OPINION OF COUNSEL. An opinion dated as of the date hereof from
counsel for the Companies and the Shareholders, in form and substance acceptable
to MTLM, to the effect that:
(i) each Company is a corporation duly organized and existing
and in good standing under the laws of its state of incorporation, and
each of them is authorized to carry on the business now conducted by
it and to own or lease the properties now owned or leased by it;
(ii) each Company has obtained all necessary corporate
authorizations and consents to effect the transactions contemplated in
this Agreement;
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(iii) except as set forth in Schedule 4.12, such counsel has no
actual knowledge (without any independent investigation of any sort)
of any litigation, proceeding or investigation pending or threatened
which might result in any material adverse change in the properties,
business or prospects or in the condition of the Companies, or which
questions the validity of this Agreement;
(iv) each of this Agreement and the Other Agreements to which
a Company or the Shareholders is a valid and binding obligation of
such Company and the Shareholders, as the case may be, and enforceable
against each of them in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors'
rights generally.
7.3 CONSENTS. Written consents to the transactions contemplated
hereby and waivers of rights to terminate or modify any material rights or
obligations of any Company from any Person from whom such consent or waiver is
required under any Designated Contract or instrument as of a date not more than
ten days prior to the date hereof, or who, as a result of the transactions
contemplated hereby, would have such rights to terminate or modify such
Contracts or instruments, either by the terms thereof or as a matter of law.
7.4 COMPANY STOCK. All certificates evidencing the Purchased
Securities held by the Shareholders, together with stock powers duly executed in
blank, with signatures guaranteed, and otherwise in form acceptable to MTLM for
transfer on the books of each Company.
7.5 OTHER CLOSING DELIVERIES.
(a) A current title policy insuring title to the real property
owned by each Company as set forth on Schedule 4.14 (a) which shows no
Liens other than Liens disclosed on such Schedule 4.14(a);
(b) Each Other Agreement executed by each Company and/or the
Shareholders, as the case may be, who is a party thereto;
(c) resignations effective as of the Closing Date from such
officers and directors of each Company as MTLM shall have requested in
writing;
(d) the stock books, stock ledgers, minute books, corporate
seal and other books and records of each Company (provided, that the minute
books, corporate seal and other books and books and records necessary for
the continued operation of a Company may continue to be held at the
executive offices of the Companies); and
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(e) all other previously undelivered agreements, certificates,
documents, instruments or writings required to be delivered by each Company
and/or the Shareholders at or prior to the date hereof pursuant to this
Agreement or otherwise in connection herewith, duly executed by the Company
and/or the Shareholders, as the case may be, who is a party thereto.
7.6 EMPLOYMENT AGREEMENTS. Employment agreements acceptable to MTLM
executed by each of Xxxxxx X. Xxxxx, III and Xxxxxxx X. Xxxxx, copies of which
are attached hereto as Exhibits O and P, respectively.
7.7 NOTES PAYABLE TO XXXXXXX X. XXXXX AND XXXXX XXXXX. Existing
promissory notes of Xxxxx, payable to Xxxxxxx X. Xxxxx and Xxxxx Xxxxx in the
aggregate amount of $5,091,102, promissory notes of Xxxxx payable to Xxxxxxx X.
Xxxxx and Xxxxx Xxxxx in the aggregate amount of $3,453,098 (issuance contingent
upon consummation of the transactions contemplated hereby) (such notes in the
aggregate amounts of $5,091,102 and $3,453,098 the "Xxxxxxx and Xxxxx Notes")
and promissory notes of Xxxxx payable to Xxxxxxx X. Xxxxx and Xxxxx Xxxxx dated
June 30, 1996 (marked "canceled").
ARTICLE VIII
CLOSING DELIVERIES OF MTLM AND SUB
At the Closing (or within 5 Business Days of the Closing with respect to
Items 8.1(b) and (d)), MTLM shall provide or cause to be provided to the
Shareholders the following documents and items:
8.1 PURCHASE PRICE.
(a) The Notes described in Article I;
(b) 1,942,857 shares of Common Stock of MTLM, as described in
Articles I and II;
(c) $27,400,000 Letter of Credit;
(d) The Warrants described in Section 2.1;
(e) Each Other Agreement to which MTLM or Sub is a party, duly
executed by MTLM or Sub as the case may be; and
(f) all other previously undelivered agreements, certificates,
documents, instruments or writings required to be delivered by MTLM or Sub
at or prior to the date
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hereof pursuant to this Agreement or otherwise in connection herewith, duly
executed by MTLM or Sub, as the case may be, who is a party thereto.
8.2 OPINION OF COUNSEL. An opinion dated as of the date hereof from
counsel for MTLM, in form and substance acceptable to the Shareholders, to the
effect that:
(i) MTLM and Sub are each corporations duly organized and
existing and in good standing under the laws of the State of Delaware
and each is authorized to carry on the business now conducted by it
and to own or lease the properties now owned or leased by it;
(ii) MTLM and Sub has each obtained all necessary corporate
authorizations and consents to effect the transactions contemplated in
this Agreement; provided, however, that the filing of the Certificate
of Merger with, and the acceptance of the filing of the Certificate of
Merger by, the Secretary of State of the State of Delaware shall be
necessary to effectuate the Merger;
(iii) such counsel has no actual knowledge (without any
independent investigation of any sort) of any litigation, proceeding
or investigation pending or threatened which might result in any
material adverse change in the properties, business or prospects or in
the condition of MTLM, or which questions the validity of this
Agreement;
(iv) each of this Agreement, the Other Agreements to which
MTLM or Sub is a party, and the Notes is a valid and binding
obligation of MTLM and Sub, as the case may be, and enforceable
against each of them in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors'
rights generally, and the stated rate of interest on the Notes does
not violate any applicable laws, regulations or orders of the United
States or the State of Illinois.
(v) MTLM has duly authorized the shares of Common Stock of
MTLM to be issued pursuant to the Merger and the shares of Common
Stock of MTLM to be issued pursuant to the Merger, when issued in
accordance with the Merger, will be duly authorized, validly issued,
fully paid and non-assessable. To our knowledge, the issuance of the
shares of Common Stock of MTLM pursuant to the Merger and any
Additional Shares will not be subject to preemptive, first refusal or
similar rights or transfer restrictions (other than those pursuant to
this Agreement or applicable state and federal securities laws);
(vi) Except for (i) the Nasdaq National Market Notification
Form for Listing of Additional Shares required to be filed with the
Nasdaq Stock Market, Inc. and (ii) the acceptance of the filing of the
Certificate of Merger by
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the Secretary of State of the State of Delaware, no other consent,
approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, self-regulatory organization or
securities market is necessary for MTLM to effect the transactions
contemplated by this Agreement (except that no such opinion is
expressed with respect to the issuance of any Additional Shares).
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE SHAREHOLDER INDEMNITORS TO INDEMNIFY. The
Shareholder Indemnitors agree to severally indemnify, defend and hold MTLM
harmless (with each such Shareholder Indemnitors' liability to MTLM being equal
to such Shareholder Indemnitors' proportionate share, as set forth in Schedule
9.1 hereto, of any Indemnifiable Damages, subject to the limitations set forth
in Section 9.1(e) below) from and against the aggregate of all Indemnifiable
Damages (as defined below).
(a) For purposes of this Agreement, "Indemnifiable Damages"
means, without duplication, the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation,
related and reasonable counsel and paralegal fees and expenses) incurred or
suffered by MTLM, on a pre-tax consolidated basis calculated after the
application of any and all amounts received under insurance contracts or
similar arrangements by MTLM with respect thereto which reduce the
Indemnifiable Damages that would otherwise be sustained, to the extent (i)
resulting from any breach of a representation or warranty made by each
Company or the Shareholders in this Agreement, (ii) resulting from any
breach of the covenants or agreements made by each Company or the
Shareholders in this Agreement, (iii) resulting from (a) any payments made
by The Xxxxx Corporation pursuant to that certain Guaranty dated as of
December 4, 1996 (and any amendment, replacement or restatement thereof) by
The Xxxxx Corporation in favor of General Electric Capital Corporation with
respect to the indebtedness of Miltec Resources or (b) any claims,
expenses, losses, costs, deficiencies, liabilities and damages relating in
any manner to the partnership agreement of Miltec Resources, a Pennsylvania
general partnership or any alleged breach thereof, or (iv) resulting from
any inaccuracy in any certificate delivered by each Company or the
Shareholders pursuant to this Agreement; provided, that Indemnifiable
Damages shall include any increase in MTLM's insurance premiums arising in
connection with the payment of such insurance proceeds.
(b) Without limiting the generality of the foregoing, with
respect to the measurement of Indemnifiable Damages, MTLM shall have the
right, subject to the limitations set forth in Section 9.1(e) below, to be
put in the same pre-tax consolidated financial position, after the
application of any insurance proceeds received, as MTLM would have been in
had each of the representations and warranties of the Shareholders
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hereunder been true and correct and had the covenants and agreements of
each Company and the Shareholders hereunder been performed in full.
(c) Each of the representations and warranties made by the
Shareholders in this Agreement or pursuant hereto shall survive for a
period of 12 months after the Closing Date except as follows: (i) the
representations and warranties of the Shareholders contained in Section
4.19, with respect to Taxes of the Companies, shall expire at the time the
period of limitations (including any extensions thereof pursuant to the
delivery of waivers of the applicable period of limitations) expires for
the assessment by the taxing authority of additional Taxes with respect to
which the representations and warranties relate; (ii) the representations
and warranties of the Shareholders contained in Sections 4.13 and 4.16
shall survive for a period of 12 months after the Closing Date; (iii) the
representations and warranties of the Shareholders contained in Sections
4.1, 4.2 and 4.3 shall expire 180 days after the end of MTLM's fiscal year
in which the Closing shall occur; (iv) the representations and warranties
of the Shareholders contained in Sections 4.4, 4.5 and 4.31 shall not
expire, but shall continue indefinitely; and (v) the representations and
warranties of the Shareholders contained in Section 4.25(b) shall expire 90
days after the Closing Date. No claim for the recovery of Indemnifiable
Damages may be asserted by MTLM against the Shareholders after such
representations and warranties shall thus expire, provided, however, that
claims for Indemnifiable Damages first asserted within the applicable
period shall not thereafter be barred. Notwithstanding any knowledge of
facts determined or determinable by any party by investigation, each party
shall have the right to fully rely on the representations, warranties,
covenants and agreements of the other parties contained in this Agreement
or in any schedule, certificate or other document to be delivered pursuant
hereto. Each representation, warranty, covenant and agreement of the
parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement; provided, that any item
disclosed with respect to any representation or warranty shall be deemed to
have been disclosed for purposes of all other representations and
warranties where disclosure of such item would be pertinent.
(d) The Shareholder Indemnitors hereby designate Xxxxxxx X.
Xxxxx and Xxxx X. Xxxxx or their successors chosen pursuant to this Section
9.1(d) (the "Shareholder Indemnitors Designees") to monitor the defense of
any Indemnifiable Damages against the Shareholder Indemnitors and to
otherwise act on behalf of the Shareholder Indemnitors in respect thereto,
and their actions shall constitute the actions and decisions of the
Shareholder Indemnitors and shall bind all such Shareholder Indemnitors.
The Shareholder Indemnitors agree that by the written consent of the
Shareholder Indemnitors holding 75% or more of the Shareholder Percentages
as set forth in Schedule 9.1 hereto, the Shareholder Indemnitors may
designate other individuals to monitor on behalf of the Shareholder
Indemnitors any claim for Indemnifiable Damages made under Article IX. Any
action to be taken by the Shareholder Indemnitors Designees must be taken
by both Shareholder Indemnitors Designees to have effect hereunder, unless
specifically provided otherwise.
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(e) Notwithstanding anything to the contrary contained in
this Agreement, the Shareholder Indemnitors' aggregate liability for
Indemnifiable Damages shall be limited as follows:
(i) MTLM shall have no claim for Indemnifiable
Damages unless and until all Indemnifiable Damages incurred by MTLM
exceed an aggregate of $500,000, in which event the Shareholder
Indemnitors shall be liable for only such Indemnifiable Damages in
excess of $500,000; and
(ii) for amounts in excess of the $500,000 amount
referred to in Section 9.1(e)(i), the total amount of Indemnifiable
Damages for which the Shareholder Indemnitors shall be liable to MTLM
shall not exceed (1) at the First Measurement Date, the lesser of
$5,020,000 and the value of 717,143 shares of Common Stock of MTLM (as
adjusted for any stock dividend, stock split, conversion,
recapitalization, reclassification, combination or other similar item)
("as adjusted") as of the First Measurement Date and (2) at or after
the Second Measurement Date, the lesser of (x) $5,020,000 less the
amount of any payments of or set offs against the Escrow Collateral
previously made and (y) the value of the 717,143 shares of Common
Stock of MTLM (as adjusted) as of the Second Measurement Date less the
amount of any payments of or set offs against the Escrow Collateral
previously made (the applicable limitation being referred to as the
"Maximum Indemnification Amount"); except that,
(iii) if and to the extent that Indemnifiable
Damages exceed the limitations set forth above solely as a result of
claims for breach of the representations and warranties contained in
Sections 4.22(b) and 4.25(b), then the Maximum Indemnification Amount
with respect to claims for breaches of representations and warranties
contained in Sections 4.22(b) and 4.25(b) shall be $16,000,000;
provided, however, that the limitations contained in Section 9.1(e)(i)
shall not apply to any Indemnifiable Damages arising pursuant to
Section 9.1(a)(iii).
9.2 AGREEMENT BY MTLM TO INDEMNIFY. MTLM agrees to indemnify, defend
and hold the Shareholders harmless from and against the aggregate of all
Shareholders Indemnifiable Damages (as defined below).
(a) For purposes of this Agreement, "Shareholders Indemnifiable
Damages" means, without duplication, the aggregate of all expenses, losses,
costs, deficiencies, liabilities and damages (including, without
limitation, related and reasonable counsel and paralegal fees and expenses)
incurred or suffered by the Shareholders, on a pre-tax consolidated basis,
to the extent (i) resulting from any breach of a representation or warranty
made by MTLM and Sub in or pursuant to this Agreement, (ii) resulting from
any breach of the covenants or agreements made by MTLM and Sub in or
pursuant to this
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Agreement, or (iii) resulting from any inaccuracy in any certificate
delivered by MTLM and Sub pursuant to this Agreement.
(b) Without limiting the generality of the foregoing, with respect
to the measurement of Shareholders Indemnifiable Damages, the Shareholders
have the right to be put in the same pre-tax consolidated financial
position as he, she or it would have been in had each of the
representations and warranties of MTLM and Sub hereunder been true and
correct and had the covenants and agreements of MTLM hereunder been
performed in full.
(c) Each of the representations and warranties made by MTLM and Sub
in this Agreement or pursuant hereto shall survive for a period of one year
after the Closing Date, notwithstanding any investigation at any time made
by or on behalf of the Shareholders, and upon expiration of such one year
period, such representations and warranties shall expire, except for the
representations contained in Sections 3.1, 3.2, 3.3 and 3.4 shall not
expire, but shall continue indefinitely. No claim for the recovery of
Shareholders Indemnifiable Damages may be asserted by the Shareholders
against MTLM after such representations and warranties shall thus expire,
provided, however, that claims for Shareholders Indemnifiable Damages first
asserted within the applicable period shall not thereafter be barred.
Notwithstanding any knowledge of facts determined or determinable by any
party by investigation, each party shall have the right to fully rely on
the representations, warranties, covenants and agreements of the other
parties contained in this Agreement or in any other documents or papers
delivered in connection herewith. Each representation, warranty, covenant
and agreement of the parties contained in this Agreement is independent of
each other representation, warranty, covenant and agreement; provided, that
any item disclosed with respect to any representation or warranty shall be
deemed to have been disclosed for purposes of all other representations and
warranties where disclosure of such item would be pertinent.
(d) In the event that the Shareholders believe they are entitled to
a claim for any Shareholders Indemnifiable Damages hereunder, the
Shareholders shall promptly give written notice to MTLM of such claim and
the amount or the estimated amount of such claim, and the basis for such
claim. In the event of a dispute under this Section 9.2, the provisions of
Section 9.4(a)(i) and (iii) shall apply mutatis mutandis.
(e) Notwithstanding anything to the contrary contained in this
Agreement, Shareholders shall have no claim for Indemnifiable Damages
unless and until all Indemnifiable Damages incurred by the Shareholders
exceed an aggregate of $500,000 in which event MTLM shall be liable for
only such Indemnifiable Damages in excess of $500,000.
9.3 CONDITIONS OF INDEMNIFICATION. The obligations and liabilities of
the Shareholders and MTLM hereunder with respect to their respective indemnities
pursuant to this
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Article IX resulting from any claim or other assertion of liabilities by third
parties (hereinafter called collectively "Claims"), shall be subject to the
following terms and conditions:
(a) the party seeking indemnification (the "Indemnified Party")
must give the other party or parties, as the case may be (the "Indemnifying
Party"), notice of any such Claim within 20 days after the Indemnified
Party receives notice thereof;
(b) the Indemnifying Party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense of such
Claim; provided, however, if a Claim is made against MTLM for an amount
which exceeds the value of the Escrow Collateral at such time, MTLM shall
have the right to control the defense of the Claim;
(c) in the event that the Indemnifying Party shall elect not to
undertake such defense, or within a reasonable time after notice of any
such Claim from the Indemnified Party shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have
the right to undertake the defense, compromise or settlement of such Claim,
by counsel or other representatives of its own choosing, on behalf of and
for the account and risk of the Indemnifying Party (subject to the right of
the Indemnifying Party to assume defense of such Claim at any time prior to
settlement, compromise or final determination thereof);
(d) anything in this Section 9.3 to the contrary notwithstanding,
(A) the Indemnified Party shall have the right, at its own cost and
expense, to have its own counsel to protect its own interests and
participate in the defense, compromise or settlement of the Claim, (B) the
Indemnifying Party shall not, without the Indemnified Party's written
consent, settle or compromise any Claim or consent to entry of any
judgement which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Claim, and (C) the
Indemnified Party, by counsel or other representatives of its own choosing
and at its sole cost and expense, shall have the right to consult with the
Indemnifying Party and its counsel or other representatives concerning such
Claim, and the Indemnifying Party and the Indemnified Party and their
respective counsel shall cooperate with respect to such Claim.
9.4 HELD BACK SHARES AND RIGHTS OF SET OFF TO SECURE THE SHAREHOLDER
INDEMNITORS' INDEMNIFICATION OBLIGATION. As security for the agreement by the
Shareholder Indemnitors to indemnify and hold MTLM harmless as described in
Section 9.1, at the Closing, MTLM shall set aside the certificates representing
717,143 shares of Common Stock of MTLM (the "Held Back Shares") issued pursuant
to this Agreement. The Held Back Shares and any cash collateral substituted
therefor (collectively, the "Escrow Collateral") shall be placed in an escrow
account (the "Escrow Account") in accordance with the terms of the Escrow
Agreement, substantially in the form attached hereto as Exhibit Q. Shareholder
Indemnitors hereby pledge and grant to MTLM a security interest in the Escrow
Collateral for the performance of the
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Shareholder Indemnitors' Indemnification Obligations; provided that the Escrow
Collateral shall be released automatically from such security interest upon
distribution of the Escrow Collateral to the shareholders in accordance with the
terms hereof. MTLM's sole remedy for any claims for Indemnifiable Damages which
is asserted on or before the Second Measurement Date shall be by set off against
or payment from the Escrow Collateral.
(a) MTLM may set off against the Escrow Collateral any
Indemnifiable Damages for which the Shareholders are responsible pursuant
to this Agreement, subject, however, to the limitations set forth in
Section 9.1(e) and to the following terms and conditions:
(i) MTLM shall give written notice to the
Shareholder Indemnitors Designees of any claim for Indemnifiable
Damages, which notice shall set forth (1) the amount of Indemnifiable
Damages which MTLM claims to have sustained by reason thereof, and (2)
a statement in reasonable detail of the basis of such claim;
(ii) Either Shareholder Indemnitors Designee shall
have the right, within 10 business days from the date of such notice
provided pursuant to clause (i) above, to notify MTLM whether the
Shareholder Indemnitors contest such claim.
(1) If such claim is not contested, the
escrow agent shall effect such set off of the Escrow Collateral
equal to the amount of such claim up to the Maximum
Indemnification Amount; provided, that such set off shall not be
effected except at a Measurement Date.
(2) If such claim is disputed, such dispute
shall be resolved in accordance with clause (iii) below. If the
Shareholder Indemnitors are liable for such claim as determined
pursuant to clause (iii), the escrow agent shall effect such set
off of the Escrow Collateral equal to the amount of such claim up
to the Maximum Indemnification Amount; provided, that such set
off shall not be effected except at the Second Measurement Date
or as provided in Section 9.4(b) below.
(iii) If a Shareholder Indemnitors Designee shall notify MTLM
in writing of an intention to dispute the claim and if such dispute is
not resolved within 30 days thereafter (the "Resolution Period"), then
MTLM or the Shareholder Indemnitors Designees may elect that such
dispute shall be resolved by a committee of three arbitrators (one
appointed by the Shareholder Indemnitors Designees, one appointed by
MTLM and one appointed by the two arbitrators so appointed), which
shall be appointed within 30 days after the expiration of the
Resolution Period. The arbitration shall take place in Chicago,
Illinois. The arbitrators shall abide by the Commercial Arbitration
Rules of the American
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Arbitration Association and they shall use their best efforts to make
their decision within 45 days of being appointed and their decision
shall be final and binding on all parties and enforceable in any court
of competent jurisdiction. Notwithstanding anything to the contrary
herein, including Section 13.8, any arbitration conducted hereunder
shall be governed by the Federal Arbitration Act, Xxxxx 0, Xxxxxx
Xxxxxx Code. The losing party in any arbitration hereunder shall
reimburse the winning party for its expenses incurred in connection
with such arbitration, including reasonable attorney fees.
(b) Promptly after the Second Measurement Date, MTLM agrees to
instruct the Escrow Agent to deliver to the Shareholders any Escrow
Collateral; provided, however, if there then remain unresolved any claims
for Indemnifiable Damages as to which notice has been given to MTLM prior
to or on the Second Measurement Date pursuant to Section 9.4(a)(i), then
such Escrow Collateral shall be so delivered only to the extent that the
value thereof exceeds the lesser of (i) the Maximum Indemnification Amount
and (ii) the amount of such claims.
(c) MTLM agrees to instruct the Escrow Agent to deliver to the
Shareholder Indemnitors promptly after final satisfaction of all claims in
accordance with the provisions of this Article IX, any Escrow Collateral
remaining in the Escrow Account.
(d) (i) For all purposes of this Article IX, the value of the
shares of Common Stock of MTLM or Held Back Shares shall be the price per
share equal to the closing price per share of the Common Stock of MTLM on
the Nasdaq Stock Market (or such other public market upon which the Common
Stock of MTLM is then primarily traded) on the business day immediately
preceding the applicable date of valuation.
(ii) At any time while any Held Back Shares are in the Escrow
Account the Shareholders may replace any or all of such Held Back
Shares with cash equal to the value of such Held Back Shares and the
escrow agent shall deliver such Held Back Shares so replaced to the
Shareholder Indemnitors; provided, that prior to the Second
Measurement Date a Held Back Share shall not be replaced with less
than $7 in cash.
(iii) At any time after the Held Back Shares remaining in the
Escrow Account are registered or any restrictions on sale imposed
under the Securities Act are terminated or expire, at the request of
the Shareholder Indemnitors Designees, MTLM will join the Shareholder
Indemnitors in instructing the escrow agent to sell some or all of
such remaining Held Back Shares and the net proceeds thereof shall be
substituted for such Held Back Shares in the Escrow Account.
(e) Except with respect to shares transferred pursuant to the
foregoing right of set off (and in the case of such shares, until the same
are transferred), all Held Back Shares shall be deemed to be owned by the
Shareholder Indemnitors and the
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Shareholder Indemnitors shall be entitled to vote the same. All shares of
MTLM Common Stock issued to the Shareholder Indemnitors as a result of any
stock dividend, stock split, conversion, recapitalization,
reclassification, combination or other similar item and all cash issuable
to the Stockholder Indemnitors as a result of any special cash dividend
distribution with respect to the Held Back Shares shall remain in the
Escrow Account. All cash issued or paid upon Held Back Shares shall as the
result of any regular cash dividend distribution be distributed to the
Shareholder Indemnitors.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other disposition
after the Closing Date of MTLM Securities:
10.1 DISPOSITION OF MTLM SECURITIES. Each of the Shareholders
represents and warrants that each of the shares of Common Stock of MTLM being
acquired by him hereunder is being acquired and will be acquired for his own
account and will not be sold or otherwise disposed of, except pursuant to (i)
the provisions of Rules 144 and 145 (or any successor regulations) or another
exemption from the registration requirements under the Securities Act, which
does not require the filing by MTLM with the SEC of any registration statement,
offering circular or other document, in which case the Shareholders shall first
supply to MTLM an opinion of counsel (which counsel and opinions shall be
reasonably satisfactory to MTLM) that such exception is available, or (ii) an
effective registration statement filed by MTLM with the SEC under the Securities
Act.
10.2 LEGEND. Each of the shares of Common Stock of MTLM shall bear the
following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER THE ACT WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
MTLM may, unless a registration statement is in effect covering the shares of
Common Stock of MTLM, place stop transfer orders with its transfer agents with
respect to such certificates in accordance with federal securities laws.
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ARTICLE XI
DEFINITIONS
11.1 Defined Terms. As used herein, the following terms shall have
the following meanings:
"Aboveground Storage Tanks" defined in Section 4.13 (h).
"Additional Shares" defined in Section 6.21(a).
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Asbestos" or "Asbestos-containing material" defined in Section 4.13
(j).
"Assets" defined in Section 4.15 (a).
"Briquetting" defined in the introductory paragraph of this Agreement.
"Briquetting Purchased Securities" defined in Section 1.1.
"CERCLA" defined in Section 4.13 (e).
"Certificate of Merger" defined in Section 2.1.
"Claims" defined in Section 9.3.
"Closing" defined in Section 1.8.
"Closing Date" defined in Section 1.8.
"Code" defined in Section 4.18 (b).
"Collateral Agents" defined in Section 1.7(a).
"Collateral Documents" defined in Section 1.7(e).
"Common Stock" means shares of MTLM's common stock, $.01 par value.
"Company" and "Companies" defined in the introductory paragraph of
this Agreement.
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59
"Confidentiality Agreement" means the Confidentiality Agreement dated
March 24, 1997 between the Companies and MTLM.
"Contract" means any written indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument.
"Xxxxx Agreement" defined in Section 6.21(a).
"Current Balance Sheets" defined in Section 4.9.
"Designated Contracts" defined in Section 4.25(a).
"Discharge" defined in Section 4.13 (f).
"Downpayment Notes" defined in Section 1.4(a).
"Downpayment Pledge" defined in Section 1.7(d).
"Effective Time" defined in Section 2.1.
"Employee Benefit Plans" defined in Section 4.18 (a).
"Employment Agreements" means the employment agreements by and between
Xxxxxx X. Xxxxx, III and MTLM and Xxxxxxx X. Xxxxx and MTLM in the forms
attached hereto as Exhibits N and O, respectively.
"Environmental, Health and Safety Laws" defined in Section 4.13 (k).
"EPCRA" defined in Section 4.13 (e).
"ERISA" defined in Section 4.18 (a).
"Escrow Account" defined in Section 9.4.
"Escrow Collateral" defined in Section 9.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Ferrex" defined in the introductory paragraph of this Agreement.
"Ferrex Purchased Securities" defined in Section 1.1.
"Ferrex Stock" defined in the Recitals to this Agreement.
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"FIFRA" defined in Section 4.13 (e).
"Financial Statements" defined in Section 4.9.
"First Measurement Date" means, with respect to claims by MTLM for
Indemnification Damages that are made not later than the 10th day prior to
the six month anniversary of the Closing Date and are not contested by
either Shareholder Indemnitors Designee by such six month anniversary, the
six month anniversary of the Closing Date (or the next succeeding day which
is a business day).
"Fixed Assets" defined in Section 4.15 (b).
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Xxxxxx III Note" defined in Section 1.4(b).
"Governmental Authority" means any nation or government, any State,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranty" defined in Section 1.7(e).
"Hazardous Substances" defined in Section 4.13 (e).
"Held Back Shares" defined in Section 9.4.
"III" defined in Section 6.17(a).
"Immigration Act" defined in Section 4.16 (c).
"Indemnifiable Damages" defined in Section 9.1 (a).
"Indemnified Party" defined in Section 9.3 (a).
"Indemnifying Party" defined in Section 9.3(a).
"Insurance Policies" defined in Section 4.20.
"Intellectual Property" defined in Section 4.24.
"Xxxxx" defined in the introductory paragraph of this Agreement.
"Xxxxx Child" and "Xxxxx Children" defined in Section 13.10.
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"Xxxxx Purchased Securities" defined in Section 1.1.
"Xxxxx Shareholders" defined in Section 6.21(a).
"Leased Premises" defined in Sections 4.13(p) and 4.14(b).
"Leases" defined in Section 4.14 (b).
"Letter of Credit" defined in Section 1.7(a).
"Licenses" defined in Section 4.13 (b).
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional
sale or other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law or any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or
charge).
"Material Adverse Change (or Effect)" means with respect to the
Companies or MTLM respectively, a change (or effect), in the condition
(financial or otherwise), properties, assets, liabilities, rights,
obligations, operations or business or prospects which change (or effect)
is materially adverse to such condition, properties, assets, liabilities,
rights, obligations, operations business or prospects of the Companies
taken as a whole or MTLM and its subsidiaries taken as a whole,
respectively; provided, however, that Material Adverse Change (or Effect)
shall not be deemed to include the effects of compliance with this
Agreement and the transactions contemplated hereby.
"Material Customers" defined in Section 4.26.
"Maximum Indemnification Amount" defined in Section 9.1(e).
"Measurement Date" means the First Measurement Date or the Second
Measurement Date, as applicable.
"Merger" defined in the Recitals to this Agreement.
"Mortgages" defined in Section 1.7(b).
"MPPA Plan" defined in Section 4.18(d).
"MTLM" defined in the introductory paragraph of this Agreement.
"MTLM Notes" defined in Section 1.2(a).
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"MTLM Stock Pledge" defined in Section 1.7(c).
"New Plan" defined in Section 6.17(b).
"Notes" defined in Section 1.6.
"OSHA" defined in Section 4.13 (e).
"Other Agreements" defined in Section 6.11.
"Owned Properties" defined in Sections 4.13(p) and 4.14(a).
"Paulding" defined in the introductory paragraph of this Agreement.
"Paulding Purchased Securities" defined in Section 1.1.
"PBGC" defined in Section 4.18 (f).
"Pension Plan" defined in Section 6.17(a).
"Permits" defined in Section 4.22(a).
"Permitted Additional Shares" means, from time to time, the maximum
number of shares of Common Stock of MTLM which can be issued in connection
with this Agreement pursuant to Section 6.21 without obtaining the approval
of the shareholders of Common Stock of MTLM, to the extent required by the
Nasdaq Stock Market (or such other public market upon which the Common
Stock of MTLM is then primarily traded).
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever nature.
"Prime Lending Rate" defined in Section 1.2.
"Prohibited Additional Shares" defined in Section 6.21(c).
"Purchased Securities" defined in Section 1.5. "RCRA" defined in
Section 4.13 (e).
"Receivables" defined in Section 4.21.
"Register", "registered" and "registration" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance
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with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
"Release" defined in Section 4.13 (f).
"Resolution Period" defined in Section 9.4(a)(iii).
"Retained Properties" defined in items A1-A4 on Schedule 4.10.
"Xxxxxxx and Xxxxx Notes" defined in Section 7.7.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" defined in Section 3.5.
"Second Measurement Date" means the business day which is the first
anniversary of the Closing Date (or the next succeeding day which is a
business day).
"Securities Act" means the Securities Act of 1933, as amended.
"Security Shares" defined in Section 1.7(c).
"Shareholder" and "Shareholders" defined in the introductory paragraph
of this Agreement
"Shareholder Indemnitors" means Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxx,
III, X.X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx.
"Shareholder Indemnitors Designees" defined in Section 9.1(d).
"Shareholders Indemnifiable Damages" defined in Section 9.2 (a).
"Sub" defined in the introductory paragraph of this Agreement.
"Subsidiary," with respect to any Person, means a Person controlled by
such person directly, or indirectly through one or more intermediaries.
"Surviving Corporation" defined in Section 2.1 hereof.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes.
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and
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unemployment taxes imposed by any federal, state, local or foreign
governmental agency, and any interest or penalties related thereto.
"Trigger Date" defined in Section 6.21.
"Underground Storage Tanks" defined in Section 4.13 (h).
"Waste" defined in Section 4.13 (e).
"Welfare Plan" defined in Section 4.18(e).
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates, reports or other documents
made or delivered pursuant hereto or thereto, unless the context otherwise
requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined
in accordance with GAAP applied on a basis consistent with prior periods,
where applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
11.3 KNOWLEDGE. The phrases "to the knowledge of the Shareholders"
and "to the best of the Shareholders' knowledge" shall, in each case, mean the
actual knowledge of a Shareholder.
ARTICLE XII
TERMINATION AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, by mutual written consent of all of the Companies,
MTLM, Sub and the Shareholder Indemnitors on behalf of all of the Shareholders
hereto.
ARTICLE XIII
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GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by certified or registered mail (first class postage
prepaid) two business days after such delivery, guaranteed overnight delivery on
the next business day, or facsimile transmission (with confirmation of receipt),
to the following addresses and telecopy numbers (or to such other addresses or
telecopy numbers which such party shall designate in writing to the other
party):
(a) IF TO MTLM TO:
Metal Management, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy No.: (000) 000-0000
WITH A COPY TO:
Xxxxxxx & Xxxxxxxx Ltd.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
(b) IF TO THE COMPANIES OR THE SHAREHOLDERS TO:
Xxxxxxx X. Xxxxx
c/o Secura Group
0000 Xxxxxxxx Xxxx
0xx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
AND TO:
L.A. Isaac
0000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
WITH A COPY TO:
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Xxxxxxxx, Loop & Xxxxxxxx, LLP
Xxxxx Xxxxxxxxxx Xxxxxx
0000 Xxxxxxx
Xxxxxx, Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
13.2 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the Exhibits and Schedules attached hereto) and other documents
delivered at the Closing pursuant hereto, contains the entire understanding of
the parties in respect of its subject matter and supersedes all prior agreements
and understandings (oral or written) between or among the parties with respect
to such subject matter (other than the Confidentiality Agreement). The Exhibits
and Schedules constitute a part hereof as though set forth in full above.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
13.3 EXPENSES. Except as otherwise provided herein, MTLM shall pay its
own fees and expenses, including its own counsel fees, incurred in connection
with this Agreement or any transaction contemplated hereby, and the Companies
shall pay all reasonable fees and expenses, including counsel fees for two law
firms to jointly represent the Companies and the Shareholders, incurred by the
Companies and the Shareholders in connection with this Agreement or any
transaction contemplated hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by any of the Shareholders or MTLM without the
prior written consent of MTLM or the Shareholder Indemnitors Designee,
respectively.
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13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
Illinois applicable to contracts executed and to be wholly performed within such
State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
13.10 XXXXX CHILDREN. Notwithstanding anything to the contrary herein,
each of Xxxxxx Xxxxxx Xxxxx, XX, Xxxxxxx Xxxxx, Xxxxxxxx X. Xxxxx, Xxxxx Xxxxx
and Xxxxxxxxx Xxxxx are signatories to this Agreement with respect to the
agreement to sell the Purchased Securities owned by them pursuant to Article I
in exchange for the consideration as set forth on Schedule 1.1. Xxxxxx Xxxxxx
Xxxxx, XX, Xxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxxxxx X. Xxxxx is
each an "Xxxxx Child" and, collectively, are the "Xxxxx Children." Each Xxxxx
Child is also a signatory to this Agreement with respect to the representation
and warranty provided in the next to last sentence of Section 4.5 with respect
to such Xxxxx Child's Xxxxx Purchased Securities. Notwithstanding anything to
the contrary herein, each Xxxxx Child individually, and the Xxxxx Children
collectively, make no other representations, warranties or covenants under this
Agreement and are not party to this Agreement for any other purpose, including
without limitation the provisions of Article XI.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
METAL MANAGEMENT, INC.,
A DELAWARE CORPORATION
Date: June 23, 1997 By: Xxxxxx X. Xxxxxx
--------------------------
Name: XXXXXX X. XXXXXX
---------------------
Title: President
--------------------
XXXXX ACQUISITION CORPORATION,
A DELAWARE CORPORATION
Date: June 23, 1997 By: Xxxxxx X. Xxxxxx
--------------------------
Name: XXXXXX X. XXXXXX
---------------------
Title: President
--------------------
THE XXXXX CORPORATION,
AN OHIO CORPORATION
Date: June 23, 1997 By: Xxxxxx X. Xxxxx
--------------------------
Name: XXXXXX X. XXXXX III
---------------------
Title: President
--------------------
FERREX TRADING CORPORATION,
AN OHIO CORPORATION
Date: June 23, 1997 By: Xxxxxx X. Xxxxx
--------------------------
Name: XXXXXX X. XXXXX III
---------------------
Title: President
--------------------
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PAULDING RECYCLING, INC.,
AN OHIO CORPORATION
Date: June 23, 1997 By: Xxxxxx X. Xxxxx
-------------------------
Name: XXXXXX X. XXXXX III
--------------------
Title: President
--------------------
BRIQUETTING CORPORATION OF
AMERICA, AN OHIO CORPORATION
Date: June 23, 1997 By: Xxxxxx X. Xxxxx
--------------------------
Name: XXXXXX X. XXXXX III
---------------------
Title: President
--------------------
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THE XXXXX CORPORATION
SHAREHOLDERS Voting Shares Non-Voting Shares
------------ ------------- -----------------
5,580.75 16,742.25
Xxxxxxx X. Xxxxx
------------------------
Xxxxxxx X. Xxxxx
May, 1997 Revocable Trust
5,712.5 16,609.50
Xxxxxx X. Xxxxx III
--------------------------
Xxxxxx X. Xxxxx, III
Second Revocable Trust
528
Xxxxxx X. Xxxxx III
---------------------------
Xxxxxx X. Xxxxx, III
Custodian for Xxxxxx
Xxxxxx Xxxxx, XX
5,712.50 17,137.50
Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx
Second Revocable Trust
4,753.00 11,858.75
---------------------------
Xxxxxxx X. Xxxxx
Revocable Trust dated
October 5, 1992
1,200
---------------------------
Xxxxx Xxxxx, by Xxxxxxx X.
Xxxxx, attorney-in-fact
1,200
---------------------------
Xxxxxxxxx Xxxxx, by
Xxxxxxx X. Xxxxx,
attorney-in-fact
4,753.00 10,208.75
Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx
May 1997 Revocable Trust
2,025
Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx Xxxxx, by
Xxxxxxx X. Xxxxx,
attorney-in-fact
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2,025
Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxxx X. Xxxxx, by
Xxxxxxx X. Xxxxx,
attorney-in-fact
FERREX TRADING CORPORATION
SHAREHOLDERS Voting Shares
------------ -------------
100
Xxxxxxx X. Xxxxx
--------------------------
Xxxxxxx X. Xxxxx
May 1997 Revocable Trust
100
Xxxxxx X. Xxxxx III
---------------------------
Xxxxxx X. Xxxxx, III
Second Revocable Trust
100
Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx
Second Revocable Trust
100
---------------------------
Xxxxxxx X. Xxxxx
Revocable Trust dated
October 5, 1992
100
Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
May, 1997 Revocable Trust
PAULDING RECYCLING, INC.
SHAREHOLDERS Voting Shares
------------ -------------
Xxxxxxx X. Xxxxx 100
-------------------------
Xxxxxxx X. Xxxxx
May, 1997 Revocable Trust
Xxxxxx X. Xxxxx, III 100
--------------------------
Xxxxxx X. Xxxxx, III
Second Revocable Trust
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100
Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx
Second Revocable Trust
100
Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
Revocable Trust dated
October 5, 1992
Xxxxxxx X. Xxxxx 100
------------------------------
Xxxxxxx X. Xxxxx
May, 1997 Revocable Trust
BRIQUETTING CORPORATION OF AMERICA
SHAREHOLDERS Voting Shares
------------ -------------
100
Xxxxxxx X. Xxxxx
--------------------------
Xxxxxxx X. Xxxxx
May, 1997 Revocable Trust
100
Xxxxxx X. Xxxxx III
---------------------------
Xxxxxx X. Xxxxx, III
Second Revocable Trust
100
Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx
Second Revocable Trust
Xxxxxxx X. Xxxxx 100
---------------------------
Xxxxxxx X. Xxxxx
Revocable Trust dated
October 5, 1992
Xxxxxxx X. Xxxxx 100
---------------------------
Xxxxxxx X. Xxxxx
May, 1997 Revocable Trust
The undersigned have joined in the execution and delivery of this
Agreement as affirmation and acknowledgment of their obligations pursuant to
Article IX hereof.
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SHAREHOLDER INDEMNITORS
Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxx III
-----------------------------
Xxxxxx X. Xxxxx, III
L.A. Isaac
-----------------------------
L.A. Isaac
-----------------------------
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
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