EXHIBIT 99.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
METAL MANAGEMENT NEW HAVEN, INC.,
X. XXXXX & SONS, INC.
AND
XXXXXX XXXXX
DATED SEPTEMBER 4, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................... 1
1.1 Defined Terms................................................................................. 1
1.2 Interpretation................................................................................ 7
ARTICLE II PURCHASE AND SALE......................................................................... 7
2.1 Purchased Assets.............................................................................. 7
2.2 Excluded Assets............................................................................... 8
2.3 Assignment of Contracts and Permits........................................................... 9
2.4 Assumed Obligations........................................................................... 9
2.5 Excluded Liabilities.......................................................................... 9
ARTICLE III PURCHASE PRICE; EARN OUT; RECEIVABLES..................................................... 10
3.1 Payments at Closing........................................................................... 10
3.2 Earn Out...................................................................................... 10
3.3 Accounts Receivable........................................................................... 11
3.4 Allocation of Purchase Price.................................................................. 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXX........................................ 11
4.1 Corporate Status.............................................................................. 11
4.2 Power and Authority........................................................................... 12
4.3 Enforceability................................................................................ 12
4.4 No Violation.................................................................................. 12
4.5 Litigation.................................................................................... 12
4.6 Title, Condition, and Adequacy of Purchased Assets............................................ 12
4.7 Operating Assets.............................................................................. 13
4.8 Compliance with Laws.......................................................................... 13
4.9 Labor and Employment Matters.................................................................. 13
4.10 Employee Benefit Plans........................................................................ 13
4.11 Tax Matters................................................................................... 14
4.12 Permits....................................................................................... 14
4.13 Customers and Suppliers....................................................................... 14
4.14 Contracts..................................................................................... 14
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(continued)
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4.15 Financial Statements.......................................................................... 14
4.16 No Adverse Effect or Changes.................................................................. 15
4.17 Environmental Matters......................................................................... 15
4.18 Brokerage..................................................................................... 17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER................................................... 17
5.1 Corporate Status.............................................................................. 17
5.2 Corporate Power and Authority................................................................. 17
5.3 Enforceability................................................................................ 18
5.4 Brokerage..................................................................................... 18
ARTICLE VI COVENANTS OF SELLER AND XXXXX............................................................. 18
6.1 Implementing Agreement........................................................................ 18
6.2 Consents and Approvals........................................................................ 18
6.3 Preservation of Business...................................................................... 18
6.4 Access to Information and Facilities.......................................................... 19
6.5 Non-Competition............................................................................... 19
6.6 Tax Matters................................................................................... 20
6.7 Confidentiality............................................................................... 20
6.8 Cooperation................................................................................... 21
6.9 [INTENTIONALLY OMITTED.]...................................................................... 21
6.10 Use of Name................................................................................... 21
6.11 Discharge of Third Party Liabilities.......................................................... 21
6.12 Consulting Services........................................................................... 21
6.13 Environmental Matters......................................................................... 22
6.14 Supplemental Information...................................................................... 22
ARTICLE VII COVENANTS OF BUYER........................................................................ 22
7.1 Implementing Agreement........................................................................ 22
7.2 Consents and Approvals........................................................................ 22
7.3 Confidentiality............................................................................... 23
7.4 Tax Matters................................................................................... 23
7.5 Environmental Improvements.................................................................... 23
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(continued)
PAGE
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.............................................. 23
8.1 Consents and Approvals........................................................................ 23
8.2 Warranties True as of Both Present Date and Closing Date...................................... 24
8.3 Compliance with Agreements and Covenants...................................................... 24
8.4 No Adverse Change or Event.................................................................... 24
8.5 Documents..................................................................................... 24
8.6 Contaminated Soils............................................................................ 24
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER............................................. 24
9.1 Warranties True as of Both Present Date and Closing Date...................................... 24
9.2 Compliance with Agreements and Covenants...................................................... 24
9.3 Documents..................................................................................... 24
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH SELLER AND BUYER.............................. 25
10.1 The Obligations of Both Parties............................................................... 25
ARTICLE XI CLOSING................................................................................... 25
11.1 Closing Date.................................................................................. 25
11.2 Buyer's Deliveries............................................................................ 25
11.3 Seller's Deliveries........................................................................... 26
ARTICLE XII INDEMNIFICATION........................................................................... 27
12.1 Survival...................................................................................... 27
12.2 Indemnification by Seller and Xxxxx........................................................... 27
12.3 Special Indemnification with respect to Environmental Matters................................. 28
12.4 Indemnification by Buyer...................................................................... 28
12.5 Claims........................................................................................ 28
12.6 Notice of Third Party Claims; Assumption of Defense........................................... 29
12.7 Settlement or Compromise...................................................................... 29
12.8 Failure of Indemnifying Person to Act......................................................... 30
12.9 Right of Set Off.............................................................................. 30
ARTICLE XIII EMPLOYEES AND BENEFIT PLANS............................................................... 30
13.1 Employees..................................................................................... 30
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(continued)
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13.2 Cooperation................................................................................... 31
13.3 Compliance with Employee Regulations.......................................................... 31
ARTICLE XIV TERMINATION............................................................................... 31
14.1 Termination................................................................................... 31
14.2 Notice of Termination......................................................................... 31
14.3 Effect of Termination......................................................................... 31
ARTICLE XV GENERAL PROVISIONS........................................................................ 31
15.1 No Public Announcement........................................................................ 31
15.2 Notices....................................................................................... 32
15.3 Successors and Assigns........................................................................ 33
15.4 Entire Agreement; Amendments.................................................................. 33
15.5 Waivers....................................................................................... 33
15.6 Expenses...................................................................................... 33
15.7 Partial Invalidity............................................................................ 33
15.8 Execution in Counterparts..................................................................... 34
15.9 Further Assurances............................................................................ 34
15.10 Governing Law................................................................................. 34
15.11 Jurisdiction of Disputes; Waiver of Jury Trial................................................ 34
15.12 No Third Party Beneficiaries.................................................................. 35
15.13 Parent Guarantee.............................................................................. 35
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INDEX OF EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Escrow Agreement
Exhibit D Form of Lease
Exhibit E Form of Opinion of Seller's Counsel
INDEX OF SCHEDULES
Schedule 1.1(a) Industrial Accounts and Dealers
Schedule 1.1(b) Real Property
Schedule 2.1(a) Operating Assets
Schedule 2.3(a) Purchased Contracts
Schedule 2.3(b) Purchased Permits
Schedule 4.4 Violations, Conflicts and Consents
Schedule 4.5 Existing Litigation and Consent Orders
Schedule 4.6 Exceptions to Title
Schedule 4.8 Compliance with Laws
Schedule 4.9 Employees, Labor and Employment Matters
Schedule 4.10 Employee Benefit Plans
Schedule 4.11 Tax Matters
Schedule 4.12 Permit Matters
Schedule 4.13 Customers and Suppliers
Schedule 4.14 Contracts
Schedule 4.15 Financial Statements
Schedule 4.16 No Adverse Effect or Changes
Schedule 4.17 Environmental Matters
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into
effective as of September 4, 2003, by and between (i) METAL MANAGEMENT NEW
HAVEN, INC., a Delaware corporation ("Buyer"), METAL MANAGEMENT NORTHEAST, INC.,
a New Jersey corporation ("Parent"), (ii) X. XXXXX & SONS, INC., a Connecticut
corporation ("Seller"), and (iii) XXXXXX XXXXX ("Xxxxx").
R E C I T A L S
A. Buyer is a wholly-owned subsidiary of Metal Management, Inc.,
a Delaware corporation ("MTLM").
B. Seller is engaged in, among other things, the business of
buying, processing, recycling and selling obsolete and industrial ferrous and
non-ferrous scrap metals at its recycling facility located at 808 Washington,
New Haven, Connecticut (the "Business").
C. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, those assets of Seller identified herein which are used by or
useful to Seller in the conduct of the Business, all on the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the following terms shall have
the following meanings:
"Accounts Receivable" is defined in Section 2.1(b).
"Affiliate" shall mean, with respect to any specified Person, any other
Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person.
As used in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Allocation Schedule" is defined in Section 3.4.
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement, substantially in the form of Exhibit A, to be entered into
by Seller and Buyer on or prior to the Closing Date.
"Assumed Liabilities" is defined in Section 2.4.
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"Xxxx of Sale" means the Xxxx of Sale, substantially in the form of
Exhibit B, to be executed by Seller on or prior to the Closing Date.
"Xxxxx Payment" is defined in Section 3.1.
"Xxxxx Representations" is defined in the lead-in to Article IV.
"Business" is defined in the second Recital.
"Business Day" means any day of the year other than (i) any Saturday or
Sunday or (ii) any other day on which banks located in New York, N.Y. generally
are closed for business.
"Business Employees" is defined in Section 4.9.
"Buyer Indemnified Party" means Buyer and each of its Affiliates and
their respective officers, directors, employees, agents and representatives.
"Closing" is defined in Section 11.1.
"Closing Date" is defined in Section 11.1.
"Closing Payment" is defined in Section 3.1.
"Code" is defined in Section 4.10(b).
"Collected Amount" is defined in Section 3.3.
"Confidential Information" means all secrets, confidential information,
customer lists, supplier information, and all other data of or pertaining to the
Business that is not and has not become ascertainable or obtainable from public
or published information.
"Connecticut DEP Order" means that certain order, dated July 4, 1984,
issued by the State of Connecticut Department of Environmental Protection
related to the Real Property, as amended through the date of this Agreement.
"Contaminated Soils" is defined in Section 6.13.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or oral.
"Dealers" means Persons (other than Peddlers and other than Industrial
Accounts) which act as dealers or brokers of scrap metals, and demolition
contractors, in each case, from which Seller purchases scrap metals in
connection with the operation of the Business.
"Earn Out Payments" is defined in Section 3.2.
"Earn Out Period" is defined in Section 3.2.
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"EBITDA" means earnings before interest, taxes, depreciation and
amortization, as determined in accordance with GAAP and the reasonable
accounting policies of Buyer, consistently applied.
"Employee Benefit Plans" is defined in Section 4.10(a).
"Environmental Improvements" is defined in Section 4.17(c).
"Environmental Law" means any law, statute, regulation, rule, order,
consent decree, settlement agreement or governmental requirement, which relates
to or otherwise imposes liability or standards of conduct concerning discharges,
releases or threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic wastes (including medical wastes), substances or materials
into ambient air, water or land, or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of pollutants, contaminants or hazardous or toxic
wastes (including medical wastes), or Hazardous Substances, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, any
other so-called "Superfund" or "Superlien" law, the Toxic Substances Control
Act, or any other similar federal, state or local statutes.
"Environmental Permit" means any Permit required by or pursuant to any
applicable Environmental Law.
"Environmental Security Interest" is defined in Section 6.13.
"Escrow" means the escrow established pursuant to the Escrow Agreement.
"Escrow Agent" means the bank or trust company selected by Buyer and
Seller to hold the Escrow.
"Escrow Agreement" means the Escrow Agreement, substantially in the
form of Exhibit C, to be executed by Buyer, Seller and Escrow Agent on or prior
to the Closing Date.
"ERISA" is defined in Section 4.10(a).
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.5.
"Existing Suppliers" means all (i) Industrial Accounts and Dealers
which have sold scrap metals to Seller during the twelve (12) month period
preceding the date hereof, a complete and accurate list of which will be
delivered by Seller to Buyer prior to the Closing Date and incorporated into
this Agreement as Schedule 1.1(a), together with any successor of any of the
foregoing and (ii) all Peddlers which sell scrap metals to Buyer during the
Earn-out Period, whether or not they have sold scrap metal to Seller during the
twelve (12) month period preceding the date hereof. If Schedule 1.1(a) reveals
the names of any Industrial Accounts or Dealers that are current suppliers of
scrap metals to Buyer (or an Affiliate of Buyer) as demonstrated by the books
and records of Buyer (or such Affiliate), then, prior to the Closing,
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Buyer and Seller shall agree on and appropriate methodology for allocating an
appropriate percentage of the sales volume from such Industrial Account or
Dealer in the calculation of the Earn Out Payments. For the avoidance of doubt,
sales from Industrial Accounts or Dealers shall be included in the calculation
of the Earn Out Payments whether such sales are made to Buyer or its Affiliates
at the Leased Real Property, or elsewhere.
"Financial Statements" is defined in Section 4.15.
"GAAP" means generally accepted accounting principles.
"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.
"Hazardous Substances" means any material or substance that: (i)
constitutes a hazardous substance, toxic substance or pollutant (as such terms
are defined by or pursuant to any Environmental Law); or (ii) is regulated or
controlled as a hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter pursuant to any
Environmental Law.
"Hired Employees" is defined in Section 13.1.
"Indemnified Person" means the Person or Persons entitled to, or
claiming a right to, indemnification under Article XII.
"Indemnifying Person" means the Person or Persons obligated to provide
indemnification under Article XII.
"Industrial Accounts" means Persons (other than Peddlers and other than
Dealers) which generate scrap metals as a by-product of their manufacturing
activities from which Seller purchases scrap metals in connection with the
operation of the Business.
"Initial Consulting Period" is defined in Section 6.12.
"Knowledge" is defined as follows for purposes of this Agreement:
(a) An individual will be deemed to have Knowledge of a
particular fact or other matter if:
(i) That individual is actually aware of that
fact or matter; or
(ii) In light of the circumstances, he should
have been aware of the fact or matter.
(b) A Person (other than an individual) will be deemed to
have Knowledge of a particular fact or other matter if any individual
who is serving, or who has at any time served, as a director, officer,
partner, executor, or trustee of that Person (or in any similar
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capacity) has, or at any time had, Knowledge of that fact or other
matter (as set forth in (a)(i) and (a)(ii) above).
"Law" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority.
"Lease" means the lease with respect to the Leased Real Property,
substantially in the form of Exhibit D, to be executed by Buyer and Seller on or
prior to the Closing Date.
"Leased Real Property" means that portion of the Real Property,
including buildings and fixtures attached thereto, to be leased by Buyer from
Seller pursuant to the Lease, as more fully described in the Lease.
"Lien" means any mortgage, lien (except for any lien for taxes not yet
due and payable), charge, restriction, pledge, security interest, lease or
sublease, claim, right of any third party, easement, encroachment or
encumbrance.
"Loss" or "Losses" means any and all liabilities, losses, costs,
claims, damages (including consequential damages), penalties and expenses
(including reasonable attorneys' fees and expenses and costs of investigation
and litigation). In the event any of the foregoing are indemnifiable hereunder,
the terms "Loss" and "Losses" shall include all reasonable attorneys' fees and
expenses and costs of investigation and litigation incurred by the Indemnified
Person in enforcing such indemnity.
"Material Adverse Effect" means an effect (or circumstance involving a
prospective effect) on (i) the Business or the Purchased Assets or (ii) the
financial condition or prospects of Seller it relates to the Business, in each
case which is materially adverse.
"MTLM" is defined in the first Recital.
"Operating Assets" is defined in Section 2.1(a).
"Opinion of Seller's Counsel" means the Opinion of Seller's Counsel,
covering those matters set forth on Exhibit E, to be executed by Seller's
counsel on or prior to the Closing Date, and containing customary qualifications
and limitations.
"Peddlers" means individuals or sole proprietorships (other than
Dealers or Industrial Accounts) from which Seller has historically purchased
scrap metals on an ad hoc basis in connection with the operation of the
Business, or from which Buyer acquires scrap metals on an ad hoc basis following
the Closing in connection with the operation of the Business.
"Permits" is defined in Section 4.12.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
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"Purchased Assets" is defined in Section 2.1.
"Purchased Contracts" is defined in Section 2.3(a).
"Purchased Permits" is defined in Section 2.3(b).
"Purchase Price" means the aggregate of (i) $784,000, plus (ii) the
Receivables Amount, plus (iii) the Xxxxx Payment, plus (iv) the aggregate of the
Earn Out Payments.
"Real Property" means the real property, the legal description of which
is set forth on Schedule 1.1(b), including all buildings and fixtures attached
thereto, located at 000 Xxxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxxx.
"Receivables Amount" is defined in Section 3.1.
"Related Agreement" means any Contract which is or is to be entered
into at the Closing or otherwise pursuant to this Agreement, including the
Supply Agreement, the Assignment and Assumption Agreement, the Xxxx of Sale, the
Escrow Agreement and the Lease. The Related Agreements executed by a specified
Person shall be referred to as "such Person's Related Agreements," "its Related
Agreements" or another similar expression.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, injecting, depositing, discharging, dumping or leaking into the
environment, including surface water, soil or ground water or as otherwise
defined under applicable Environmental Law.
"Remedial Action" shall mean an action required under Environmental Law
or by a Governmental Authority to clean up soil, sediment, surface water or
ground water, as a result of a Release of Hazardous Substances, including
associated action to investigate, monitor, assess and evaluate the extent and
severity of any such Release, action taken to remediate any such Release, and
the preparation of all reports, studies and analysis or other documents related
to the foregoing. "Remedial Action" shall also refer to any judicial,
administrative, or other proceeding or investigation related to the foregoing.
"Representatives" is defined in Section 7.3.
"Restricted Territory" means a radius of two hundred fifty (250) miles
from the City of New Haven, Connecticut.
"Second Consulting Period" is defined in Section 6.12.
"Shortfall" is defined in Section 3.3.
"Supply Agreement" means the Exclusive Supply Agreement, dated the date
hereof between Seller, Buyer and Xxxxx, to be executed concurrently with the
execution hereof.
"Tax Return" means any report, return or other information required to
be supplied to a Governmental Authority in connection with any Taxes.
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"Tax Warranty" means a representation or warranty in Section 4.11.
"Taxes" means all taxes, charges, fees, duties (including customs
duties), levies or other assessments, including income, gross receipts, net
proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, stamp, leasing, lease,
user, transfer, fuel, excess profits, occupational, interest equalization,
windfall profits, license, payroll, environmental, capital stock, disability,
severance, employee's income withholding, other withholding, unemployment and
Social Security taxes, which are imposed by any Governmental Authority, and such
term shall include any interest, penalties or additions to tax attributable
thereto.
"Third Party Liabilities" is defined in Section 6.11.
"Title and Authorization Warranty" means a representation or warranty
in Section 4.1, 4.2, 4.3, 4.4, 4.6, 5.1, 5.2 or 5.3.
1.2 Interpretation. The headings preceding the text of Articles
and Sections included in this Agreement and the headings to Schedules attached
to this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
herein shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Reference to any Law
means as amended, modified, codified, replaced or re-enacted, in whole or in
part, and in effect on the date hereof, including rules, regulations,
enforcement procedures and any interpretations promulgated thereunder.
Underscored references to Articles, Sections, Clauses, Exhibits or Schedules
shall refer to those portions of this Agreement, and any underscored references
to a clause shall, unless otherwise identified, refer to the appropriate clause
within the same Section in which such reference occurs. The use of the terms
"hereunder", "hereof", "hereto" and words of similar import shall refer to this
Agreement as a whole and not to any particular Article, Section or Clause of or
Exhibit or Schedule to this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1 Purchased Assets. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, Seller shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase from Seller, free and
clear of all Liens, all of the following assets of Seller (collectively, the
"Purchased Assets"):
(a) Operating Assets. All machinery, equipment, fixtures,
furniture, spare parts, tools, supplies, maintenance equipment and
supplies and other operating or manufacturing assets used in the
Business, including those assets listed on Schedule 2.1(a) (the
"Operating Assets");
(b) Accounts Receivable. Any and all accounts receivable,
trade receivables, notes receivable and other receivables of Seller to
the extent related to the sale of scrap
7
metal to customers of the Business, other than those due from Buyer and
its Affiliates (the "Accounts Receivable");
(c) Information and Records. All production records,
production files, maintenance records and maintenance files, technical
information, price lists, marketing information, sales records,
customer accounts, lists and files, environmental records and files,
copies of tax records, financial records, mailing lists, telephone
numbers, subscriber lists, processes, manuals or business procedures,
trade secrets, designs, reports, know-how and other proprietary or
Confidential Information of Seller used in the Business; and
(d) Trade Name. The trade name "X. Xxxxx & Sons, Inc.".
2.2 Excluded Assets. All assets of Seller that are not Purchased
Assets shall be retained by Seller and are not being sold or assigned to Buyer
hereunder, including the following (collectively, the "Excluded Assets"):
(a) Cash. All cash and marketable securities;
(b) Real Property. All real property owned by Seller
(including the Real Property) and any and all buildings, fixtures and
other structures and improvements situated or located thereon or
attached thereto, other than those constituting Operating Assets;
(c) Inventories. All of Seller's inventories of scrap
metal (the "Inventories");
(d) Corporate Records. All corporate minute books, stock
record books, originals of tax returns and other financial records,
books of account and personnel records;
(e) Rights under this Agreement. All of Seller's right,
title and interest under this Agreement or any Related Agreement;
(f) Tax Benefits. All Benefits and rights of Seller
arising under state and federal income tax laws;
(g) Accounts Receivable. Any and all accounts receivable,
trade receivables, notes receivable and other receivables of Seller
that are not Accounts Receivable;
(h) Prepaid Assets. All prepaid assets of Seller
including utility deposits and prepaid insurance premiums.
(i) Loans and Exchanges. All outstanding loans of Seller
to Affiliates or employees;
(j) Vehicles. All automobiles and other vehicles of
Seller to the extent not included in the Operating Assets; and
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(k) Insurance. All insurance policies of Seller including
life insurance policies (including the cash surrender value thereof).
2.3 Assignment of Contracts and Permits. Subject to the terms and
conditions of this Agreement, Seller shall assign and transfer to Buyer,
effective as of the Closing Date, all of Seller's right, title and interest in
and to, and Buyer shall take assignment of, only the following (all of which
shall be deemed included in the term "Purchased Assets" as used herein):
(a) Purchased Contracts. The Contracts of Seller set
forth on Schedule 2.3(a) (the "Purchased Contracts"); and
(b) Permits. All permits applicable to the Business or
otherwise required by any Governmental Authority in connection with the
Business, including those set forth on Schedule 2.3(b), to the extent
that the same are assignable (the "Purchased Permits").
Anything in this Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to assign any Contract or any claim or right or any
benefit or obligation thereunder or resulting therefrom if an assignment
thereof, without the consent of a third party thereto, would constitute a breach
or violation thereof. If such a consent is required or if an attempted
assignment is for any other reason ineffective, Seller shall cooperate with
Buyer in any reasonable arrangement requested by Buyer to provide Buyer the
benefits under any such Contracts or Permits.
2.4 Assumed Obligations. At the Closing, Buyer shall assume, and
agree to pay, perform, fulfill and discharge, the following obligations of
Seller (the "Assumed Liabilities") which are required to be performed, and which
accrue, after the Closing Date under the following Contracts (but not any
liabilities of Seller in respect of a breach of or default under such Contracts
arising prior to the Closing), to the extent such Contracts, and all rights of
Seller thereunder, are effectively assigned to Buyer on the Closing Date
pursuant to Section 2.3: (a) the Purchased Contracts and (b) the Purchased
Permits.
2.5 Excluded Liabilities. Buyer shall not assume or be obligated
to pay, perform or otherwise discharge any liability or obligation of Seller,
direct or indirect, known or unknown, absolute or contingent, not expressly
assumed by Buyer pursuant to the Assignment and Assumption Agreement and
pursuant to Section 2.4 hereof (all such liabilities and obligations not being
assumed being herein referred to as the "Excluded Liabilities"), including: (a)
any liabilities in respect of Taxes arising out of or relating to the Business
which relate to periods prior to the Closing Date, (b) any costs and expenses
incurred incident to Seller's negotiation and preparation of this Agreement and
its performance and compliance with the agreements and conditions contained
herein, (c) any liabilities with respect to products sold, or committed to be
sold, by Seller before or after the Closing, (d) any liabilities arising under
Environmental Law, whether arising before or after the Closing, and which are
based on actions or events first occurring prior to the Closing Date, including
any Release of Hazardous Substances at, on, in or under the Real Property, the
off-site transportation, storage, treatment, recycling or disposal of Hazardous
Substances by or on behalf of Seller, or any violation of Environmental Law by
Seller in connection with the conduct of the Business, (e) any liabilities
arising under the accounts payable or trade payables of Seller, (f) liabilities
in respect of trade payables for periods prior to the Closing Date, or in
respect of loans or other indebtedness of Seller, and (g) any liabilities of
9
Seller to employees of the Business, including accrued salary and wages,
bonuses, profit sharing or other incentive compensation and any related payroll
taxes, 401(k) deferrals or matching contributions or related to injuries
occurred during any employee's employment with Seller.
ARTICLE III
PURCHASE PRICE; EARN OUT; RECEIVABLES
3.1 Payments at Closing. At the Closing, in consideration for the
Purchased Assets and the agreement of Seller pursuant to Section 6.5, Buyer
shall pay Seller (or cause to be paid to Seller) an aggregate amount in cash
(the "Closing Payment") equal to (a) $784,000 plus (b) 90% of the face value of
the Accounts Receivables outstanding as of the close of business on the date
immediately preceding the Closing Date that are less than 60 days old as of that
date (the "Receivables Amount"). In order to determine the Receivables Amount,
Seller shall deliver to Buyer a true and correct listing of the Accounts
Receivable (including agings) as of the close of business on the Business Day
immediately preceding the Closing Date. In addition, at the Closing, in
consideration for the agreement of Xxxxx pursuant to Section 6.5, Buyer shall
pay to Xxxxx (or cause to be paid to Xxxxx) an amount equal to $50,000 (the
"Xxxxx Payment"). The Closing Payment and the Xxxxx Payment shall be paid by
Buyer to Seller or Xxxxx (as applicable) at the Closing by wire transfer of
immediately available funds to a bank account pursuant to wiring instructions
designated by Seller or Xxxxx (as applicable) at least three (3) Business Days
prior to the Closing Date.
3.2 Earn Out. As additional consideration for the Purchased
Assets, for a period of three years following the first day of the month
immediately following the Closing (the "Earn Out Period"), Buyer shall pay to
the Escrow Agent or Seller (as set forth below) an amount equal to 25% of the
annual EBITDA generated by Buyer after the Closing (whether Buyer is operating
out of the Leased Real Property or otherwise) from the Existing Suppliers up to
a maximum of $300,000 per year (the "Earn Out Payments"). The amount of each
Earn Out Payment shall be determined in accordance with GAAP and MTLM's
reasonable standard accounting practices, consistently applied (it being
understood that the calculation of EBIDTA for purposes of determining each Earn
Out Payment shall include a reasonable allocation of certain general and
administrative expenses incurred by Metal Management Northeast, Inc. but shall
not include an allocation of any general and administrative expenses incurred by
Metal Management, Inc.). The Earn Out Payments, if any, for the first two years
of the Earn Out Period shall be paid by Buyer to the Escrow Agent no later than
the 45th day after the end of the applicable one-year period. The Earn Out
Payment for the third year of the Earn Out Period shall be paid as follows: (a)
if at the end of the third year of the Earn Out Period Buyer has asserted a
claim for indemnification pursuant to Section 12.3 which has not been resolved
(and which claim is in excess of the amount then held in Escrow), then Buyer
shall pay to (i) the Escrow Agent the amount of the Earn Out Payment, if any,
that is necessary to cause the aggregate amount of the Escrow to equal $600,000
(if the aggregate amount of the Escrow is at such time less than $600,000) and
(ii) Seller the remainder of the Earn Out Payment and (b) if at the end of the
third year of the Earn Out Period Buyer has not asserted a claim for
indemnification pursuant to Section 12.3 which has not been resolved, then Buyer
shall make the final Earn Out Payment directly to Seller. The Earn Out Payments
that are paid to the Escrow Agent shall be released from Escrow as and to the
extent provided in the Escrow Agreement. Buyer shall provide Seller with
reasonable access to
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those of its books and records which are relevant to the determination of the
Earn Out Payments for the purpose of allowing Seller to verify the accuracy of
Buyer's determination thereof. It is expressly understood that, subsequent to
the Closing, Buyer shall in all respects have complete authority and control
over the Business and its manner of operation, including the ability to close or
sell all or any portion of the Business and operate the Business in Buyer's sole
and absolute discretion without liability of any kind to Seller. Seller's right
to receive Earn Out Payments pursuant to this Section 3.2 shall be subject to
Buyer's authority, control, ability and discretion contemplated by the previous
sentence. Buyer and its Affiliates shall be under no obligation whatsoever to
operate the Business subsequent to the Closing in a manner that does not reduce
or eliminate the possibility of Seller receiving all or any portion of any Earn
Out Payments.
3.3 Accounts Receivable. If the aggregate amount collected by
Buyer with respect to the Accounts Receivable in the first 45 days subsequent to
the Closing (the "Collected Amount") is less than the Receivables Amount, then,
on the third Business Day following the termination of such 45-day period,
Seller shall pay to Buyer the amount of the difference between the Receivables
Amount and the Collected Amount (the "Shortfall"). If the Collected Amount is
greater than the Receivables Amount, then, on the third Business Day following
the termination of such 45-day period, Buyer shall pay to Seller the amount of
the excess of the Collected Amount over the Receivables Amount. Xxxxx
unconditionally guarantees the payment to Buyer of the Shortfall. Buyer shall
provide Seller with reasonable access to its books and records which are
relevant to the collection of the Accounts Receivable in order to permit Seller
to verify the amount of the Accounts Receivable which have been collected by
Buyer.
3.4 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets as set forth in a schedule (the "Allocation
Schedule") to be prepared by Buyer and delivered to, and approved by, Seller
within one hundred twenty (120) days after the Closing Date. The allocation with
respect to the Operating Assets shall be based on an appraisal to be obtained
from an independent appraiser with expertise in the scrap metal industry to be
selected and paid for by Buyer. The Allocation Schedule shall be subject to the
approval of Seller. Seller shall sign and submit all necessary forms to report
this transaction for federal and state income Tax purposes in accordance with
the Allocation Schedule, and shall not take a position for Tax purposes
inconsistent therewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXX
As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller (and, solely as set
forth in Sections 4.2, 4.3, 4.4 and 4.18 (collectively, the "Xxxxx
Representations"), Xxxxx) hereby makes the following representations and
warranties to Buyer:
4.1 Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Connecticut, with all requisite corporate power and authority under the laws of
such state to own, lease and operate its properties and to conduct its affairs
as now owned, leased and operated. Seller is licensed or qualified to do
business and is in good standing in each other jurisdiction where the nature of
the properties owned, leased or
11
operated by it and the businesses transacted by Seller require such licensing or
qualification, except where the failure to be so qualified would not reasonably
be expected to have a Material Adverse Effect. There is no pending or, to
Seller's Knowledge, threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of Seller.
4.2 Power and Authority. Each of Seller and Xxxxx has the power
and authority to execute and deliver this Agreement and its Related Agreements,
to perform its respective obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. Each of Seller and Xxxxx has
taken all action necessary to authorize the execution and delivery of this
Agreement and its Related Agreements, the performance of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby.
4.3 Enforceability. This Agreement and each Related Agreement to
which it is a party has been duly executed and delivered by each of Seller and
Xxxxx and constitutes the legal, valid and binding obligation of Seller and
Xxxxx, enforceable against it in accordance with its terms.
4.4 No Violation. Except as set forth on Schedule 4.4, the
execution and delivery of this Agreement and its Related Agreements by Seller
and Xxxxx, the performance by it of its respective obligations hereunder and
thereunder and the consummation by it of the transactions contemplated by this
Agreement and its Related Agreements will not: (i) contravene any provision of
the articles of incorporation or bylaws of Seller; (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 Seller or
Xxxxx (as applicable); (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 Seller or Xxxxx (as
applicable) or the Purchased Assets; (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
Seller or Xxxxx (as applicable), including the Purchased Assets; 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.
4.5 Litigation. Except as set forth on Schedule 4.5, there is no
action, suit, or other legal or administrative proceeding or governmental
investigation pending or to Seller's Knowledge, threatened against, by or
affecting Seller which is related to the Business or any of the Purchased Assets
or the Real Property or which questions the validity or enforceability of this
Agreement or the transactions contemplated hereby. Except as set forth on
Schedule 4.5, there are no outstanding orders, decrees or stipulations issued by
any Governmental Authority in any proceeding to which Seller is or was a party
which have not been complied with in full or which continue to impose any
material obligations on Seller, in each case, which is related to the Business.
4.6 Title, Condition, and Adequacy of Purchased Assets. Except as
set forth on Schedule 4.6, Seller has good title to all of the Purchased Assets,
free and clear of any Liens.
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Except as set forth on Schedule 4.6, to the Knowledge of Seller, the tangible
Purchased Assets are in similar operating condition (normal wear and tear
excepted) to the condition existing on the date of Buyer's inspection thereof
which inspection occurred on or about April 29, 2003.
4.7 Operating Assets. Schedule 2.1(a) sets forth a true, accurate
and complete list of all of all machinery, equipment, fixtures, furniture, spare
parts, tools, supplies, maintenance equipment and supplies and other tangible
assets that are owned by Seller and used in the Business. Seller has delivered
to Buyer true, accurate and complete copies of all leases for personal property
which is currently leased by Seller.
4.8 Compliance with Laws. The operation of the Business by Seller
complies in all material respects with all Laws applicable to the Business and
the Purchased Assets. Except as set forth on Schedule 4.8, during the past three
years Seller has not been cited, fined or otherwise notified of any asserted
past or present failure to comply with any Laws with respect to the Business or
the Purchased Assets, and no proceeding with respect to any such violation is
pending or, to Seller's Knowledge, threatened with respect to the Business or
the Purchased Assets.
4.9 Labor and Employment Matters. Schedule 4.9 sets forth an
accurate list of the name, address, social security number and current rate of
compensation of each of the employees of Seller used in the Business which Buyer
has indicated it intends to hire following the Closing (the "Business
Employees"). Except as set forth on Schedule 4.9, Seller is not 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 twenty-four
(24) months prior to the date hereof to organize any employees of Seller into
one or more collective bargaining units. There is no pending or, to Seller's
Knowledge, threatened labor dispute, strike or work stoppage which affects or
which may affect the Business or which may interfere with its continued
operations.
4.10 Employee Benefit Plans.
(a) Employee Benefit Plans. Schedule 4.10 contains a list
setting forth each employee benefit plan or arrangement maintained by
or contributed to by Seller with respect to employees of the Business,
including employee benefit plans, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("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 (collectively, the "Employee Benefit
Plans"). A true and correct copy of each of the Employee Benefit Plans
and all contracts relating thereto, or to the funding thereof, each as
in effect on the date hereof, has been supplied to Buyer.
(b) Compliance with Law. Each Employee Benefit Plan has
been administered in all material respects in compliance with its terms
and with all applicable laws, including ERISA and the Internal Revenue
Code of 1986, as amended (the "Code").
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4.11 Tax Matters. Except as set forth in Schedule 4.11: (a) all
federal, state, local, and foreign income, corporate and other Tax Returns have
been timely filed (or will be timely filed subject to a valid extension received
by Seller) for Seller, and all other filings in respect of Taxes have been made
for Seller, for all periods through and including the Closing Date as required
by applicable Law; all Taxes shown as due on all such Tax Returns and other
filings have been paid; and all Taxes which Seller is required by Law to
withhold or collect, including sales and use taxes, and amounts required to be
withheld for Taxes of employees and other withholding taxes, have been duly
withheld or collected and, to the extent required, have been paid over to the
proper Governmental Authorities or are held in separate bank accounts for such
purposes; and (b) Seller is not a "foreign person" as defined in Section
1445(f)(3) of the Code.
4.12 Permits.
(a) Except as set forth on Schedule 4.12, to the
Knowledge of Seller, Seller owns, holds or possesses all material
governmental licenses, permits, franchises, approvals and other
authorizations (collectively, "Permits") that are necessary to entitle
it to own, lease, operate and use the Purchased Assets and to conduct
the Business as currently owned, leased, operated, used, and conducted.
Schedule 2.3(b) sets forth a list of each Permit held by Seller as of
the date hereof with respect to the Business (and the expiration date
of each such Permit).
(b) Except as set forth on Schedule 4.12, no notice of
cancellation, default or any dispute concerning any Permit, or of any
event, condition or state of facts described in the preceding sentence,
has been received by Seller. Except as set forth in Schedule 4.12, no
Permit will be impaired or in any way affected by the execution and
delivery of this Agreement, the Related Agreements, or the consummation
of the transactions contemplated hereby or thereby.
4.13 Customers and Suppliers. Schedule 1.1(a), when delivered will
accurately set forth all of the suppliers of scrap metal of the Business,
including all peddlers, dealers and industrial accounts that have sold scrap
metal to Seller in the twelve (12) month period preceding the date hereof.
Seller has not received any indication from any of the material suppliers of
scrap metal to the Business to the effect that any such supplier intends to
stop, or materially decrease the rate of supplying scrap metals to the Business.
4.14 Contracts. Schedule 4.14 sets forth all of the Contracts of
Seller related to the Business. True and correct copies of the Contracts listed
on Schedule 4.14 have been provided to Buyer. Except as set forth on Schedule
4.14, the Contracts listed on Schedule 4.14 have been entered into by Seller in
the ordinary course of business and no event has occurred which constitutes, or
after notice or the passage of time, or both, would constitute, a material
default by Seller under any Purchased Contract.
4.15 Financial Statements. Seller has delivered to Buyer the
balance sheet and income statements of Seller as of and for the years ended
September 30, 2002 and September 30, 2001, and an unaudited balance sheet and
income statement of Seller as of and for the six months ended March 31, 2003,
copies of which are attached hereto as Schedule 4.15 (collectively, the
"Financial Statements"). The Financial Statements (a) were prepared from the
books and records
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of Seller and (b) in all material respects, completely and accurately account
for the purchases and sales of Inventories by Seller for the periods covered
thereby.
4.16 No Adverse Effect or Changes. Except as set forth on Schedule
4.16, since December 31, 2002, Seller has conducted the Business in all material
respects only in the ordinary course and consistent with past practices. Without
limiting the foregoing, except as set forth on Schedule 4.16, since December 31,
2002, Seller has not:
(a) suffered any Material Adverse Effect;
(b) suffered any material damage, destruction or Loss to
any of its assets or properties (whether or not covered by insurance);
or
(c) sold, transferred, conveyed, assigned or otherwise
disposed of any of its material assets or properties, except sales of
inventory or redundant or obsolete equipment in the ordinary course of
business and consistent with past practice.
4.17 Environmental Matters.
(a) Except as set forth on Schedule 4.17:
(i) To Seller's Knowledge, Seller is in material
compliance with all Environmental Laws, and no condition
exists or event has occurred which, with or without notice or
the passage of time or both, would constitute a material
violation of any Environmental Law or would give rise to any
suit or proceeding, or any Lien on any of the assets of Seller
under any Environmental Law;
(ii) Seller is in possession of all Environmental
Permits (copies of which have been provided to Buyer) required
for the operation of the Business, and Seller is in material
compliance with all of the requirements and limitations
included in such Environmental Permits;
(iii) To Seller's Knowledge, Seller has never
generated, manufactured, used, transported, transferred,
stored, handled, treated, discharged, released or disposed or,
nor has Seller allowed or arranged for any third parties to
generate, manufacture, use, transport, transfer, store,
handle, treat, discharge, release or dispose of, Hazardous
Substances to or at any location other than a site lawfully
permitted to receive such Hazardous Substances for such
purposes, nor has Seller 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
contravention of any Environmental Laws. To Seller's
Knowledge, Seller has never generated, manufactured, used,
stored, handled, treated, discharged, released 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 Hazardous Substances
upon property currently or previously owned or leased by
Seller (including the Real Property), except in accordance
with all applicable Environmental Laws and Environmental
Permits;
15
(iv) Seller has not within the five-year period
preceding the date hereof received any notice from any
Governmental Agency or any other person or entity that any
aspect of the Business or any of the assets of Seller are, or
have been, in violation of any Environmental Law or
Environmental Permit, or that Seller is or has been
responsible (or potentially responsible) for the cleanup or
remediation of any substances at any location (including the
Real Property);
(v) To Seller's Knowledge, Seller has not at any
time deposited or incorporated any Hazardous Substances into,
on, beneath or adjacent to any real property ever owned or
leased by Seller or any other property (including the Real
Property);
(vi) Seller has not within the five-year period
preceding the date hereof been subject to any, and Seller is
currently not subject to any, pending or, to Seller's
Knowledge, threatened litigation or proceedings in any forum,
judicial or administrative, involving a demand for damages,
injunctive relief, penalties, or other potential liability
with respect to violation of any Environmental Law or
Environmental Permit;
(vii) Seller has within the five-year period
preceding the date hereof timely filed all reports and
notifications required to be filed with respect to all of its
assets and the Business, and has generated and maintained all
required records and data concerning the Business under all
applicable Environmental Laws;
(viii) To Seller's Knowledge, no condition has ever
existed and no event has ever occurred with respect to any
property used in the Business (including the Real Property),
or by any direct or indirect subsidiary that was at any time
owned by Seller, any predecessor to Seller or any person that
is or was an Affiliate of Seller (including any property or
subsidiary that has been sold, transferred or disposed of or
for which any lease has terminated) that in any case could,
with or without notice, passage of time or both, give rise to
any present or future liability of Seller pursuant to any
Environmental Law, or negatively affect Seller; and
(ix) To Seller's knowledge, Seller has never
generated, handled, manufactured, treated, stored, used,
shipped, transported, transferred, or disposed of, nor has
Seller 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 Substances to or at a site which,
pursuant to CERCLA or any similar state law, has been placed
or been proposed for placement on the National Priorities List
or its state equivalent. Seller has not within the five-year
period preceding the date hereof received notice, and Seller
has no Knowledge of any facts that could give rise to any
notice, that Seller is a potentially or actual responsible
party for a federal or state environmental cleanup site or for
corrective action under any Environmental Law. Seller has not
within the five-year period preceding the date hereof
submitted or has been required to submit any notice pursuant
to Section 103(c) of CERCLA with respect to any property ever
owned, leased or used by Seller. Seller has not within the
five-year
16
period preceding the date hereof 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 Seller has transported,
transferred or disposed of Hazardous Substances or other
wastes. Seller has not within the five-year period preceding
the date hereof been required or has ever undertaken any
response or remedial actions or clean-up actions of any kind
at the request of any Governmental Agency or at the request of
any other third party. To Seller's Knowledge, Seller has no
liability under any Environmental Law for personal injury,
property damage, natural resource damage, or clean up
obligations as a result of its ownership, leasing or use of
real property prior to the Closing Date.
(b) Schedule 4.17 identifies: (i) all environmental
audits, assessments or occupational health studies that were undertaken
by Seller or its agents, any Governmental Authority or any third party
in the five-year period preceding the date hereof relating to or
affecting Seller or any of its assets and (ii) all citations issued
under OSHA or similar Laws in the five-year period preceding the date
hereof relating to or affecting Seller or any of its assets.
(c) Seller has constructed a berm and a roadway (the
"Environmental Improvements") at the Real Property in order to comply
with the Connecticut DEP Order. The Environmental Improvements (A) were
approved by the State of Connecticut Department of Environmental
Protection and (B) comply fully with the Connecticut DEP Order and
applicable Environmental Laws. Except as set forth on Schedule 4.17,
Seller has not incurred any fines or other penalties for failure to
comply with the Connecticut DEP Order.
4.18 Brokerage. No broker or finder has acted directly or
indirectly for Seller or Xxxxx in connection with this Agreement or the
transactions contemplated hereby, and no broker or finder is entitled to any
brokerage or finder's fee or other commission in respect thereof based in any
way on agreements, arrangements or understandings made by, or on behalf of,
Seller or Xxxxx.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer makes the following
representations and warranties to Seller:
5.1 Corporate Status. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
5.2 Corporate Power and Authority. Buyer has, or at the time of
Closing will have, the corporate power and authority to execute and deliver this
Agreement and its Related Agreements, to perform its obligations hereunder and
thereunder, and consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement
17
and its Related Agreements by Buyer, the performance by it of its obligations
hereunder and thereunder and the consummation by it of the transactions
contemplated by this Agreement will and its Related Agreements will not: (i)
contravene any provision of the certificate of incorporation or bylaws of Buyer;
(ii) in any material respect violate or conflict with any Law or any arbitration
which is either applicable to, binding upon, or enforceable against Buyer; or
(iii) conflict with, result in breach of, or constitute a default (or any event
which would, with the passage of time or the giving of notice or both,
constitute default) under, or give rise to a right to terminate, amend, modify
or accelerate any material Contract.
5.3 Enforceability. This Agreement and the Related Agreements to
which Buyer is a party has been, or will have been at the time of Closing, duly
executed and delivered by Buyer and constitutes, or will constitute, a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its respective terms.
5.4 Brokerage. No broker or finder has acted directly or
indirectly for Buyer in connection with this Agreement or the transactions
contemplated hereby, and no broker or finder is entitled to any brokerage or
finder's fee or other commission in respect thereof based in any way on
agreements, arrangements or understandings made by, or on behalf of, Buyer.
ARTICLE VI
COVENANTS OF SELLER AND XXXXX
6.1 Implementing Agreement. Subject to the terms and conditions
hereof, Seller shall take all action required of it to fulfill its obligations
under the terms of this Agreement and shall otherwise use commercially
reasonable efforts to facilitate the consummation of the transactions
contemplated hereby. Except as otherwise expressly permitted hereby, Seller
shall not take any action which would have the effect of preventing or impairing
Seller's performance of its obligations under this Agreement.
6.2 Consents and Approvals. Seller shall use commercially
reasonable efforts to obtain all consents, approvals, certificates and other
documents required in connection with the performance by it of this Agreement
and the consummation of the transactions contemplated hereby, including all such
consents and approvals by each party to any of the Purchased Contracts. Without
limiting the foregoing, Seller and Xxxxx shall provide Buyer with such
reasonable assistance as Buyer may request to facilitate Buyer's efforts to
obtain zoning approvals/exemptions and other necessary Permits from the City of
New Haven to allow the continued operation of a scrap metal recycling business
by Buyer on the Leased Real Property following the Closing on substantially the
same terms and conditions as have been in place historically in connection with
the operation of the Business.
6.3 Preservation of Business.
Seller shall, except as otherwise approved by Buyer in writing, after
date hereof and prior to the Closing, and except as otherwise permitted by this
Agreement:
(a) conduct the Business only in the ordinary course of
business consistent with past practice;
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(b) use commercially reasonable efforts to preserve the
Business, the Purchased Assets and its relationships with customers,
suppliers and others having business relationships with each of them,
and to retain the services of present officers, employees and agents;
(c) maintain the operating equipment used in the Business
in a similar state of repair (ordinary wear and tear excepted) to the
condition thereof at the time of Buyer's inspection thereof;
(d) not sell, lease, mortgage, pledge or otherwise
dispose of any of the Purchased Assets, and not grant any security
interest in any of such assets;
(e) do any act or omit to do any act, or permit any act
or omission to act, which would cause a material breach of any of the
Purchased Contracts or any other Contract or obligation the breach of
which could have a Material Adverse Effect;
(f) except for increases or changes in the ordinary
course of business consistent with past practice and except as required
by Law, not increase or otherwise change the rate or nature of the
compensation (including wages, salaries, bonuses and other benefits)
paid or payable to any of its respective employees; and
(g) not enter into any commitment to do any of the
foregoing.
6.4 Access to Information and Facilities. Until the Closing,
Seller shall give Buyer and Buyer's representatives access during normal
business hours to the Business premises (including the Real Property), and to
the books, Contracts, and records of Seller pertaining to the Business, and
shall make the officers and employees of Seller available to Buyer and its
representatives as Buyer and its representatives shall from time to time
reasonably request. Buyer and its representatives shall be furnished with any
and all information concerning Seller and the Business which Buyer or its
representatives reasonably request.
6.5 Non-Competition.
(a) From and after the Closing Date until five (5) years
after the Closing Date, neither Seller nor Xxxxx shall, and neither
Seller nor Xxxxx shall permit its respective Affiliates or any of its
or their respective directors, officers or employees to, directly or
indirectly:
(i) engage in, control, advise, manage, serve as
a director, officer, or employee of, act as a consultant to,
receive any economic benefit from or exert any influence upon,
any business which conducts activities in the Restricted
Territory similar to and /or competitive with the Business;
(ii) solicit, divert or attempt to solicit or
divert any party who is, was, or was solicited to become, a
customer or supplier of the Business at any time prior to the
Closing Date;
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(iii) employ, solicit for employment or encourage
to leave their employment with Buyer, any person who is a
Hired Employee; or
(iv) disturb, or attempt to disturb, any business
relationship between any third party and Buyer.
For purposes of this Section, the term "directly or indirectly" shall
include acts or omissions as proprietor, partner, joint venturer, employer,
salesman, agent, employee, officer, director, landlord, lender or consultant of,
or owner of any interest in, any Person.
(b) The restrictions of clause (a) above shall not limit
or restrict the right of Seller (or its Affiliates) to (i) sell
Inventories that are not purchased by Buyer or (ii) acquire and own,
directly or indirectly, less than five percent (5%) of the outstanding
shares of any class of securities of any Person registered under
Section 12(b) or (g) of the Securities Exchange Act of 1934, as
amended.
(c) In the event of actual or threatened breach of the
provisions of this Section 6.5, Buyer, in addition to any other
remedies available to it for such breach or threatened breach,
including the recovery of damages, shall be entitled to an injunction
restraining Seller and Xxxxx from such conduct.
6.6 Tax Matters. Seller shall make available to Buyer such records
as Buyer may require for the preparation of any Tax Returns or other similar
reports or forms required to be filed by Buyer and such records as Buyer may
require for the defense of any audit, examination, administrative appeal or
litigation of any such Tax Return or other similar report or form. Any Tax
attributable to the sale or transfer of the Purchased Assets shall be paid by
Seller, including any tax, if any, attributable to bulk sales of assets or sales
of assets outside the ordinary course of business. Moreover, Seller shall comply
with the requirements, if any, of applicable tax Law governing bulk sales of
assets or sales of assets outside the ordinary course of business and shall
provide evidence to Buyer prior to Closing that all required filings have been
made and certification from the relevant taxing governmental authorities that
there is no tax liability to which Buyer may be subject under such Laws.
6.7 Confidentiality. Except as required by Law or any Governmental
Authority, after the Closing, Seller shall maintain all Confidential Information
(other than such Confidential Information which after the Closing is received
from a third party (provided such third party is not known by Seller to be bound
by an obligation of secrecy)) in strict confidence in accordance with the
procedures it uses to protect its own information of a similar nature and shall
not use any such Confidential Information for any purpose. Notwithstanding the
foregoing, any party to this Agreement (and each employee, agent or
representative of the foregoing) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the transaction
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to Buyer or Seller relating to such tax
treatment and tax structure except to the extent maintaining such
confidentiality is necessary to comply with any applicable federal or state
securities Laws (provided, however, that such disclosure may not be made until
the earlier of the date of the public announcement of discussions relating to
the transaction
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contemplated hereby, the date of the public announcement of the transaction
contemplated hereby, or the date of the execution of this Agreement).
6.8 Cooperation. Prior to the Closing, Seller shall cooperate with
Buyer and shall take all actions reasonably requested by Buyer to ensure a
smooth transition of the customers of the Business from Seller to Buyer,
including participating in joint marketing efforts, allowing access to
communications channels with such customers, and providing information regarding
such transition to such customers. Seller shall use commercially reasonable
efforts to persuade its existing customers and suppliers to transfer to Buyer
the business previously conducted with Seller.
6.9 [INTENTIONALLY OMITTED.]
6.10 Use of Name. On or before the Closing Date, Seller shall (a)
amend its governing documents and take all other actions necessary to change its
name to one sufficiently dissimilar to "X. Xxxxx & Sons, Inc." to avoid
confusion in Buyer's reasonable judgment and (b) take all actions requested by
Buyer to enable Buyer to register the assumed name "X. Xxxxx & Sons", and to use
such name as assumed name in each jurisdiction in which Seller presently
conducts the Business. From and after the Closing Date, Seller and its
Affiliates shall not directly or indirectly use in any manner any trade name,
trademark, service xxxx or logo used by the Business or any work or logo that is
similar in sound or appearance to "X. Xxxxx & Sons".
6.11 Discharge of Third Party Liabilities. Subsequent to the
Closing, Seller shall, consistent with its past practices, discharge all of the
valid and enforceable third party claims included in the Excluded Liabilities
owed to third parties (the "Third Party Liabilities") promptly after such Third
Party Liabilities become due. Notwithstanding the foregoing, Seller agrees to
discharge all of the Third Party Liabilities within sixty (60) days of the
Closing Date. Xxxxx agrees to fully and unconditionally guaranty the obligations
of Seller set forth in this Section 6.11. Pursuant to the previous sentence, if
all of the Third Party Liabilities are not discharged by Seller within sixty
(60) days of the Closing Date, Xxxxx shall, promptly after the expiration of
such sixty-day period, discharge such Third Party Liabilities on behalf of
Seller. Seller or Xxxxx, as applicable, shall provide evidence to Buyer of the
discharge of the Third Party Liabilities promptly after receiving a request for
such evidence from Buyer.
6.12 Consulting Services. For a period of nine (9) weeks from the
Closing Date (the "Initial Consulting Period"), Xxxxx shall act as a consultant
to Buyer and its Affiliates (including MTLM) for purposes of ensuring an
efficient transfer of the Purchased Assets. Xxxxx'x duties as a consultant
during the Initial Consulting Period shall include (a) assisting with the
transition of customer accounts from Seller to Buyer, (b) assisting with the
collection of the Accounts Receivable and (c) such other duties as are
reasonably requested by Buyer and its Affiliates. During the Initial Consulting
Period, Xxxxx shall provide no more than 40 hours per week of consulting
services to Buyer and its Affiliates. Buyer shall pay Xxxxx $1,500 per week for
the consulting services rendered during the Initial Consulting Period. In
addition, for a period of four (4) months commencing at the end of the Initial
Consulting Period (the "Second Consulting Period"), Xxxxx shall provide
consulting services to Buyer and its Affiliates (including MTLM) during normal
business hours upon the reasonable request of Buyer and its Affiliates. Xxxxx'x
duties as a consultant during the Second Consulting Period shall include (a)
assisting with the
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transition of customer accounts from Seller to Buyer, (b) assisting with the
operation of the Business and (c) such other duties as are reasonably requested
by Buyer and its Affiliates. Buyer shall not compensate Xxxxx for the consulting
services rendered during the Second Consulting Period.
6.13 Environmental Matters. Prior to the Closing, Seller shall
cooperate with Buyer and take all actions requested by Buyer in order for Buyer
to obtain a fully perfected first Lien on the Real Property for purposes of
securing Seller's indemnification obligations set forth in Section 12.3 (the
"Environmental Security Interests"). The cost and expenses associated with
filing such first priority Lien shall be paid by Buyer. In the event that, prior
to the Closing, Seller is unable to secure the discharge of the Lien of its
senior lenders on the Real Property, the Closing shall nonetheless take place
(assuming other conditions have been satisfied), and Seller and Xxxxx agree to
use their best efforts to discharge such Lien following the Closing including,
applying the proceeds of sales of Inventory to discharge the indebtedness
secured thereby. If such indebtedness has not been discharged on or prior to the
date which is sixty (60) days following the Closing, Buyer may make rent
payments under the Lease directly to Seller's senior lenders until the
indebtedness to the senior lenders is discharged. Seller shall not sell all or
any portion of the Real Property during the time Buyer or any Affiliate of Buyer
operates thereon. As soon as reasonably practicable following the date hereof,
and prior to the Closing, Seller shall remove and properly dispose of (in
accordance with applicable Environmental Law) all soils that have been
identified as having been contaminated and that are located at the Real Property
(the "Contaminated Soils"). Subsequent to the Closing, Seller shall maintain the
portion of the Environmental Improvements that are not located on the Leased
Real Property in accordance with the Connecticut DEP Order and applicable
Environmental Laws.
6.14 Supplemental Information. From time to time prior to the
Closing, Seller shall promptly disclose in writing to Buyer (a) any matter
hereafter arising or discovered which, if existing, occurring or known at the
date of this Agreement would have been required to be disclosed to Buyer or
which would render inaccurate any of the representations, warranties or
statements set forth in Article IV hereof and (b) the occurrence of any fact or
event that constitutes, or could reasonably be expected to result in, a breach
of this Agreement. No information provided to a party pursuant to this Section
6.14 shall be deemed to cure any breach of any representation, warranty or
covenant made in this Agreement.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees to perform each of the following covenants:
7.1 Implementing Agreement. Subject to the terms and conditions
hereof, Buyer shall take all action required of it to fulfill its obligations
under this Agreement and shall use commercially reasonable efforts to facilitate
the consummation of the transactions contemplated hereby.
7.2 Consents and Approvals. Buyer shall use commercially
reasonable efforts to obtain all consents, approvals, certificates and other
documents required in connection with the
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performance of its respective obligations under this Agreement and the
consummation of the transactions contemplated hereby. Buyer shall make all
filings, applications, statements and reports to all Governmental Authorities
and other Persons which are required to be made prior to the Closing Date by or
on behalf of Buyer or any of its respective Affiliates pursuant to any
applicable Law or Contract in connection with this Agreement and the
transactions contemplated hereby. Without limiting the foregoing, Buyer shall
promptly file with the City of New Haven such applications and supporting
documentation as are required for the issuance in favor of Buyer of such zoning
approvals/exemptions and any such additional Permits as may be required to allow
Buyer to continue to operate a scrap metal recycling business on the Lease Real
Property following the Closing on substantially the same terms and conditions as
have been in place historically in connection with the operation of the
Business.
7.3 Confidentiality. Except as required by Law or any Governmental
Authority, prior to the Closing, Buyer and its directors, officers, employees,
and outside advisors (its "Representatives") shall maintain all Confidential
Information (other than such Confidential Information which (a) has been
received from a third party, (b) was in Buyer's or any of its Representative's
possession prior to disclosure thereof to Buyer or its Representatives in
connection with this Agreement, or (c) was independently developed by Buyer or
its Representatives) in strict confidence in accordance with the procedures it
uses to protect its own information of a similar nature. In the event that this
Agreement is terminated prior to the Closing, upon Seller's written request,
Buyer and its Representatives shall return to Seller all such Confidential
Information. Prior to providing Confidential Information to any Representatives
(other than legal advisors), Buyer shall advise such Representatives of the
confidential nature of such information and of the obligation to maintain the
confidentiality thereof.
7.4 Tax Matters. Buyer shall make available to Seller such records
as Seller may require for the preparation of any Tax Returns or other similar
reports or forms required to be filed by Seller and such records as Seller may
require for the defense of any audit, examination, administrative appeal or
litigation of any such Tax Return or other similar report or form.
7.5 Environmental Improvements. During the term of the Lease,
Buyer shall maintain the portion of the Environmental Improvements that are
located on the Leased Real Property in accordance with the Connecticut DEP Order
and applicable Environmental Laws.
ARTICLE VIII
CONDITIONS PRECEDENT
TO OBLIGATIONS OF BUYER
The obligations of Buyer under Articles II and III of this Agreement
are subject to the satisfaction or waiver by Buyer of the following conditions
precedent on or before the Closing Date:
8.1 Consents and Approvals. Buyer shall have received written
evidence satisfactory to it that (a) all consents and approvals required for the
consummation of the transactions contemplated hereby for the ownership by Buyer
of the Business and the Purchased Assets, and
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the operation by Buyer of the Business and the Purchased Assets, have in each
case been obtained, including any consent required by the senior lenders in
connection with the Environmental Security Interests; (b) all required filings
have been made; (c) all Permits necessary or desirable for Buyer to operate the
Business subsequent to the Closing (including all Permits set forth on Schedule
2.3(b)) shall have been transferred to or obtained by Buyer (without imposing on
Buyer restrictions or limitations which are more onerous than those restrictions
or limitation which currently apply to the operation of the Business); and (d)
all Liens have been removed from the Purchased Assets.
8.2 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Seller contained herein shall have been true,
accurate and correct on and as of the date of this Agreement, and shall also be
true, accurate and correct on and as of the Closing Date, with the same force
and effect as though made by Seller on and as of the Closing Date.
8.3 Compliance with Agreements and Covenants. Seller shall have
performed and complied with all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with by it on or prior
to the Closing Date.
8.4 No Adverse Change or Event. No event shall have occurred which
would reasonably be expected to have a Material Adverse Effect.
8.5 Documents. Buyer shall have received all of the agreements,
documents and items specified in Section 11.3.
8.6 Contaminated Soils. Seller shall have removed the Contaminated
Soils from the Real Property in compliance with applicable Environmental Law.
ARTICLE IX
CONDITIONS PRECEDENT
TO OBLIGATIONS OF SELLER
The obligations of Seller under Article II of this Agreement are
subject to the satisfaction or waiver by Seller of the following conditions
precedent on or before the Closing Date:
9.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Buyer contained herein shall have been true,
accurate and correct on and as of the date of this Agreement, and shall also be
true, accurate and correct on and as of the Closing Date with the same force and
effect as though made by Buyer on and as of the Closing Date.
9.2 Compliance with Agreements and Covenants. Buyer shall have
performed and complied with all of its covenants, obligations and agreements
contained in this Agreement to be performed and complied with by it on or prior
to the Closing Date.
9.3 Documents. Seller shall have received all of the agreements,
documents and items specified in Section 11.2.
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ARTICLE X
CONDITIONS PRECEDENT
TO OBLIGATIONS OF BOTH SELLER AND BUYER
10.1 The Obligations of Both Parties. The obligations of Seller
under Article II and Buyer under Article II and Article III of this Agreement
are subject to the satisfaction of the following further conditions precedent on
or before the Closing Date:
(a) No action, suit or proceeding by any Governmental
Authority or other Person shall have been instituted which, in the
reasonable opinion of Buyer or Seller, as the case may be, could result
in significant damages to Seller, Buyer or the Business in respect of
this Agreement or the consummation of the transactions contemplated
hereby (with Buyer and Seller agreeing to use commercially reasonable
efforts to have such action, suit or proceeding dismissed).
(b) No injunction, restraining order or decree of any
Governmental Authority shall exist against Buyer, Seller or any of
their respective Affiliates, or any of the shareholders, officers or
directors of any of them, that restrains, prevents or would reasonably
be expected to have a material adverse effect on the ability of Buyer
or Seller to consummate the transactions contemplated hereby (with
Buyer and Seller agreeing to use commercially reasonable efforts to
have such injunction, order or decree removed).
ARTICLE XI
CLOSING
11.1 Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be consummated on October 8, 2003, or such
later date as may be mutually agreed upon by the parties, effective at 12:01
a.m., at the offices of Mayer, Brown, Xxxx & Maw LLP, 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, or at such other place as shall be agreed upon by Buyer
and Seller. The time and date on which the Closing is actually held is referred
to herein as the "Closing Date."
11.2 Buyer's Deliveries. At the Closing, in addition to any other
documents or agreements required under this Agreement, Buyer shall deliver to
Seller or Xxxxx, as applicable, the following:
(a) The Closing Payment and the Xxxxx Payment pursuant to
Section 3.1;
(b) A certificate of the Secretary or an Assistant
Secretary of Buyer, dated as of the Closing Date, in form and substance
reasonably satisfactory to Seller, as to: (i) the resolutions of the
Board of Directors of Buyer, authorizing the execution and performance
of this Agreement, the Related Agreements and the transactions
contemplated thereby; and (ii) incumbency and signatures of the
officers of Buyer, as applicable, executing this Agreement and the
Related Agreements;
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(c) A certificate, dated the Closing Date, of an
executive officer of Buyer, certifying as to compliance by Buyer with
Sections 9.1 and 9.2;
(d) The Assignment and Assumption Agreement, duly
executed by Buyer;
(e) The Lease, duly executed by Buyer;
(f) The Escrow Agreement, duly executed by Buyer and
Escrow Agent; and
(g) Such other documents as Seller may reasonably request
or as may be otherwise necessary to evidence and effect the sale,
assignment, transfer, conveyance and delivery of the Purchased Assets
to Buyer.
11.3 Seller's Deliveries. At Closing, Seller shall deliver to Buyer
all of the following:
(a) A certificate of the Secretary or an Assistant
Secretary of Seller, dated the Closing Date as to: (i) the bylaws of
Seller; (ii) the resolutions of the Board of Directors and the
shareholders of Seller authorizing the execution and performance of
this Agreement, the Related Agreements and the transactions
contemplated thereby; and (iii) incumbency and signatures of the
officers of Seller executing this Agreement and the Related Agreements;
(b) The long-form certificate of incorporation or similar
instrument of Seller, certified by the Connecticut Secretary of State,
and dated no more than ten (10) calendar days prior to the Closing
Date;
(c) A Certificate of Legal Existence for Seller, issued
by the Connecticut Secretary of State and each jurisdiction in which
Seller is qualified to conduct business as a foreign corporation, and
dated not more than ten (10) calendar days prior to the Closing Date;
(d) A certificate, dated the Closing Date, of an
executive officer of Seller, certifying the compliance by Seller with
Sections 8.2 and 8.3;
(e) The Xxxx of Sale, duly executed by Seller;
(f) The Assignment and Assumption Agreement, duly
executed by Seller;
(g) The Lease, duly executed by Seller;
(h) The Escrow Agreement, duly executed by Seller;
(i) The Opinion of Seller's Counsel, duly executed by
Seller's counsel;
(j) Evidence of the consents, waivers or approvals
required in this Agreement to be obtained by Seller with respect to the
Purchased Assets or the consummation of the transactions contemplated
by this Agreement;
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(k) UCC-3 termination statements or other applicable
releases or other documentation relating to any Liens on the Purchased
Assets;
(l) Evidence, satisfactory to Buyer, that the Liens
represented by the Environmental Security Interests are fully
perfected; and
(m) Such other bills of sale, assignments and other
instruments of transfer or conveyance as Buyer may reasonably request
or as may be otherwise necessary to evidence and effect the sale,
assignment, transfer, conveyance and delivery of the Purchased Assets
to Buyer.
In addition to the above deliveries, Seller shall take all steps and actions as
Buyer may reasonably request or as may otherwise be necessary to put Buyer in
actual possession or control of the Purchased Assets.
ARTICLE XII
INDEMNIFICATION
12.1 Survival. The representations and warranties of the parties
contained in Articles IV and V shall survive the Closing for a period of
eighteen (18) months, except that (i) Tax Warranties shall survive until the
expiration of the applicable statute of limitation for Taxes, and (ii) Title and
Authorization Warranties shall survive for five (5) years.
12.2 Indemnification by Seller and Xxxxx. Seller and, solely with
respect to Section 12.2(a), Xxxxx, jointly and severally, shall indemnify the
Buyer Indemnified Parties against, and hold each of them harmless from, any and
all Losses incurred or suffered by them relating to or arising out of or in
connection with any of the following:
(a) any breach of or any inaccuracy in any representation
or warranty made by Seller in this Agreement or any document delivered
at the Closing; provided that (i) except for breaches of or
inaccuracies in Tax Warranties or Title and Authorization Warranties, a
notice of the Buyer Indemnified Party's claim shall have been given to
Seller not later than the close of business on the third anniversary of
the Closing Date, and (ii) in the case of a Tax Warranty and the Title
and Authorization Warranties, a notice of the Buyer Indemnified Party's
claim shall have been given to Seller not later than the end of the
period specified in Section 12.1; and provided, further, that (i) in
order for Xxxxx to have an obligation to indemnify Buyer pursuant to
this Section 12.2(a) for a breach of any representation or warranty
other than a Xxxxx Representation, Xxxxx shall have had Knowledge of
the facts or circumstances giving rise to the breach of the
representation or warranty at issue and (ii) Xxxxx, individually, shall
have no obligation to indemnify Buyer pursuant to this Section 12.2(a)
with respect to any breach of or any inaccuracy in any representation
or warranty set forth in Section 4.17 of this Agreement;
(b) any breach of or failure by Seller to perform any
covenant or obligation of Seller set out or contemplated in this
Agreement or any Related Agreement or any document delivered at the
Closing;
27
(c) the Excluded Assets or the Excluded Liabilities; or
(d) any liabilities or obligations resulting from the
operation of the Business by Seller prior to the Closing Date
(including any liabilities or obligations related to Seller's ownership
and/or use of real property prior to the Closing Date or the failure by
Seller to maintain the Environmental Improvements in accordance with
the DEP Order), unless such liability or obligation would constitute an
Assumed Liability or an Environmental Liability.
12.3 Special Indemnification with respect to Environmental Matters.
In addition, and not in limitation of, the indemnification obligations set forth
in Section 12.2, Seller shall indemnify the Buyer Indemnified Parties against,
and hold each of them harmless from, any and all Losses incurred or suffered by
them relating to or arising out of or in connection with any Remedial Action
resulting from actions, or events, including a Release of Hazardous Substances,
first occurring prior to the Closing. Notwithstanding the foregoing, Losses
incurred by Buyer with respect to Remedial Actions shall not include any
allocation of salary or benefits of any employees of Buyer or any of its
Affiliates or other general and administrative costs and expenses of Buyer.
Without limiting any other remedies available to the Buyer Indemnified Parties
pursuant to this Agreement or otherwise, the Buyer Indemnified Parties may seek
satisfaction of Seller's indemnification obligations pursuant to this Section
12.3 from (a) the Escrow and (b) if the funds in the Escrow are depleted, the
Environmental Security Interests.
12.4 Indemnification by Buyer. Buyer shall indemnify Seller and
each of its Affiliates, officers, directors, employees, agents and
representatives against, and hold each of them harmless from, any and all Losses
incurred or suffered by them relating to or arising out of or in connection with
any of the following:
(a) any breach of or any inaccuracy in any representation
or warranty made by Buyer in this Agreement or any Related Agreement or
any document delivered at the Closing; or
(b) any breach of or failure by Buyer to perform any
covenant or obligation of Buyer set out or contemplated in this
Agreement or any Related Agreement or any document delivered at the
Closing.
12.5 Claims. The provisions of this Section shall be subject to
Section 12.6. As soon as is reasonably practicable after becoming aware of a
claim for indemnification under this Agreement, the Indemnified Person shall
promptly give notice to the Indemnifying Person (and, if the claim is pursuant
to Section 12.3, the Escrow Agent) of such claim and the amount the Indemnified
Person will be entitled to receive hereunder from the Indemnifying Person;
provided that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this Article XII,
except to the extent (if any) that the Indemnifying Person shall have been
prejudiced thereby. If the Indemnifying Person does not object in writing to
such indemnification claim within thirty (30) calendar days of receiving notice
thereof, the Indemnified Person shall be entitled to recover promptly from the
Indemnifying Person (and, if the claim is pursuant to Section 12.3, the Escrow
Agent) the amount of such claim (but such recovery shall not limit the amount of
any additional indemnification to which the Indemnified
28
Person may be entitled pursuant to Section 12.2, 12.3 or 12.4) and no later
objection by the Indemnifying Person shall be permitted. If the Indemnifying
Person agrees that it has an indemnification obligation, but objects that it is
obligated to pay only a lesser amount, the Indemnified Person shall nevertheless
be entitled to recover promptly from the Indemnifying Person (and, if the claim
is pursuant to Section 12.3, the Escrow Agent) the lesser amount, without
prejudice to the Indemnified Person's claim for the difference.
12.6 Notice of Third Party Claims; Assumption of Defense. The
Indemnified Person shall give notice as promptly as is reasonably practicable to
the Indemnifying Person (and, if the claim is pursuant to Section 12.3, the
Escrow Agent) of the assertion of any claim, or the commencement of any suit,
action or proceeding, by any Person not a party hereto in respect of which
indemnity may be sought under this Agreement; provided that the failure of the
Indemnified Person to give notice shall not relieve the Indemnifying Person of
its obligations under this Article XII, except to the extent (if any) that the
Indemnifying Person shall have been prejudiced thereby. The Indemnifying Person
may, at its own expense (a) participate in the defense of any claim, suit,
action or proceeding, and (b) upon notice to the Indemnified Person and the
Indemnifying Person's delivering to the Indemnified Person a written agreement
that the Indemnified Person is entitled to indemnification pursuant to Section
12.2, 12.3 or 12.4 for all Losses arising out of such claim, suit, action or
proceeding and that the Indemnifying Person shall be liable for the entire
amount of any Loss, at any time during the course of any such claim, suit,
action or proceeding, assume the defense thereof; provided that (i) the
Indemnifying Person's counsel is reasonably satisfactory to the Indemnified
Person, and (ii) the Indemnifying Person shall thereafter consult with the
Indemnified Person upon the Indemnified Person's reasonable request for such
consultation from time to time with respect to such claim, suit, action or
proceeding. If the Indemnifying Person assumes such defense, the Indemnified
Person shall have the right (but not the obligation) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Person. If, however, the Indemnified Person
reasonably determines in its judgment that representation by the Indemnifying
Person's counsel of both the Indemnifying Person and the Indemnified Person
would present such counsel with a conflict of interest, then such Indemnified
Person may employ separate counsel to represent or defend it in any such claim,
action, suit or proceeding, and the Indemnifying Person shall pay the fees and
disbursements of such separate counsel. Whether or not the Indemnifying Person
chooses to defend or prosecute any such claim, suit, action or proceeding, all
of the parties hereto shall cooperate in the defense or prosecution thereof.
12.7 Settlement or Compromise. Any settlement or compromise made or
caused to be made by the Indemnified Person or the Indemnifying Person, as the
case may be, of any such claim, suit, action or proceeding of the kind referred
to in Section 12.6 shall also be binding upon the Indemnifying Person or the
Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; provided that no obligation,
restriction or Loss shall be imposed on the Indemnified Person as a result of
such settlement without its prior written consent. The Indemnified Person shall
give the Indemnifying Person at least thirty (30) calendar days' notice of any
proposed settlement or compromise of any claim, suit, action or proceeding it is
defending, during which time the Indemnifying Person may reject such proposed
settlement or compromise; provided that from and after such rejection, the
Indemnifying Person shall be obligated to assume the defense of and full and
complete liability and responsibility for such
29
claim, suit, action or proceeding and any and all Losses in connection therewith
in excess of the amount of unindemnifiable Losses which the Indemnified Person
would have been obligated to pay under the proposed settlement or compromise.
12.8 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations hereunder.
12.9 Right of Set Off. In the event a Buyer Indemnified Party is
entitled to receive any amount from Seller under this Agreement, including any
indemnification payment under this Agreement, then, without limiting Buyer's
rights to seek any recovery against Seller or Xxxxx directly, Buyer shall be
entitled to recover all or any portion of such amount by setting off all or any
portion of such amount against (i) any amount owing by Buyer to Seller under the
Lease or (ii) any Earn Out Payment owing by Buyer hereunder.
ARTICLE XIII
EMPLOYEES AND BENEFIT PLANS
13.1 Employees. Seller shall make the Business Employees available
to Buyer for interviews promptly following the date hereof. On or prior to the
Closing Date, Buyer shall give notice to Seller of those Business Employees, if
any, to whom it intends to offer employment effective as of the day after the
Closing Date. The employees not included in the notice shall not be offered
employment by Buyer. Effective as of the Closing Date, Buyer shall make offers
of employment to each employee, if any, listed in the notice on MTLM's standard
employment terms and conditions (including non-compete terms ) as Buyer shall
determine in its sole discretion. Nothing in this Section 13.1 shall obligate
Buyer to offer employment to any Business Employee in the identical job or with
identical responsibilities as such employee was employed by Seller. Each
employee who accepts Buyer's offer of employment and becomes an employee of
Buyer as of the day following the Closing Date (a "Hired Employee") shall, for
periods thereafter, be subject to such terms and conditions of employment as
determined by Buyer in its sole discretion. Seller shall cooperate in good faith
with Buyer in Buyer's efforts to employ all employees to whom Buyer makes an
offer of employment in accordance with this Section 13.1. With respect to all
Hired Employees, Seller shall be solely responsible for and shall pay:
(a) all wages, bonuses, vacation pay, pay for other
compensated absences and other remuneration (including discretionary
benefits) earned or accrued by each employee as of the close of
business on the Closing Date;
(b) workers' compensation claims or amounts payable in
connection with or arising out of events occurring on or prior to the
Closing Date; and
(c) all severance payments (if any) due to any employees
arising out of any agreement providing for severance payments in
connection with any change of control or
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other similar event, regardless of whether such employees are
subsequently employed by Buyer.
13.2 Cooperation. Seller and Buyer shall cooperate, both before and
after the Closing Date, in exchanging information including permanent employment
records, benefits information, salary and compensation records and other data
related to employees, and in taking other actions related to the transfer of
employment of the Hired Employees so as to ensure an orderly transition of the
Hired Employees from Seller to Buyer.
13.3 Compliance with Employee Regulations. Seller shall comply with
all applicable Laws and collective bargaining agreements, if any, requiring
notification and consultation with employees with respect to the transactions
contemplated hereby.
ARTICLE XIV
TERMINATION
14.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated:
(a) at any time prior to the Closing Date, by mutual
written consent of all of the parties hereto;
(b) at any time prior to the Closing Date, by Buyer in
the event of a material breach by Seller of any provision of this
Agreement;
(c) at any time prior to the Closing Date, by Seller in
the event of a material breach by Buyer of any provision of this
Agreement; or
(d) at any time after November 10, 2003, by either Buyer
or Seller.
14.2 Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 14.1 shall give notice of such termination to the
other parties to this Agreement.
14.3 Effect of Termination. In the event that this Agreement shall
be terminated pursuant to this Article XIV, all further obligations of the
parties under this Agreement (other than Sections 7.3, 15.1 and 15.6) shall be
terminated without further liability of any party to the other, provided that
nothing herein shall relieve any party from liability for its breach of any
provision of this Agreement.
ARTICLE XV
GENERAL PROVISIONS
15.1 No Public Announcement. No party hereto, without the approval
of the other parties hereto, shall make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by Law, in which
case the other parties shall be advised and the parties shall
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use commercially reasonable efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not: (i) preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with any accounting rules; or (ii) prevent Buyer from
making any public disclosure which Buyer believes in good faith is required by
law or by the terms of any listing agreement with or requirements of a
securities exchange. Notwithstanding the foregoing, promptly following the
Closing, Buyer (or one of its Affiliates) shall be entitled to issue a press
release or other public announcement regarding the consummation of the
transactions contemplated hereby, which press release, without the consent of
Seller, will not refer to the identity of Seller.
15.2 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given, delivered and
received (a) when delivered, if delivered personally by a commercial messenger
delivery service with verification of delivery, (b) four (4) calendar days after
mailing, when sent by registered or certified mail, return receipt requested and
postage prepaid, (c) one (1) Business Day after delivery to a private courier
service, when delivered to a private courier service providing documented
overnight service, (d) on the date of delivery if delivered by facsimile and
electronically confirmed before 5:00 p.m. (local time) on any Business Day, or
(e) on the next business day if delivered by facsimile and electronically
confirmed either after 5:00 p.m. (local time) or on a non-Business Day, in each
case addressed as follows:
If to Seller or Xxxxx:
c/o Xxxxxx Xxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
with a copy to:
Xxxx X. Xxxxxxxx, P.C.
0 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Buyer or Parent:
c/o Metal Management Northeast, Inc.
Foot of Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
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Mayer, Brown, Xxxx & Maw LLP
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others.
15.3 Successors and Assigns. The rights of any party under this
Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of each of the other parties, except that the rights
of Buyer hereunder may be assigned prior to the Closing, without the consent of
Seller, to any of its Affiliates.
15.4 Entire Agreement; Amendments. This Agreement and the Exhibits
and Schedules referred to herein and the documents delivered pursuant hereto
contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or letters of intent between or among any of the parties hereto.
This Agreement shall not be amended, modified or supplemented except by a
written instrument signed by an authorized representative of each of the parties
hereto.
15.5 Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
15.6 Expenses. Except as otherwise set forth in this Agreement,
each party hereto shall pay all costs and expenses incident to its negotiation
and preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants.
15.7 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
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15.8 Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties hereto and delivered to each of the parties hereto.
15.9 Further Assurances. On the Closing Date, Seller shall: (i)
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of Seller in, to or under any or all of the Purchased
Assets; and (ii) take all steps as may be reasonably necessary to put Buyer in
actual possession and control of all the Purchased Assets. From time to time
following the Closing, Seller shall execute and deliver, or cause to be executed
and delivered, to Buyer such other instruments of conveyance and transfer as
Buyer may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets.
15.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Connecticut.
15.11 Jurisdiction of Disputes; Waiver of Jury Trial. In the event
any party to this Agreement commences any litigation, proceeding or other legal
action in connection with or relating to this Agreement, any Related Agreement
or any matters described or contemplated herein or therein, with respect to any
of the matters described or contemplated herein or therein, the parties to this
Agreement hereby (a) agree under all circumstances absolutely and irrevocably to
institute any litigation, proceeding or other legal action in a court of
competent jurisdiction located within the Connecticut, whether a state or
federal court; (b) agree that in the event of any such litigation, proceeding or
action, such parties will consent and submit to personal jurisdiction in any
such court described in clause (a) and to service of process upon them in
accordance with the rules and statutes governing service of process (it being
understood that nothing in this Section 15.11 shall be deemed to prevent any
party from seeking to remove any action to a federal court in Connecticut; (c)
agree to waive to the fullest extent permitted by law any objection that they
may now or hereafter have to the venue of any such litigation, proceeding or
action in any such court or that any such litigation, proceeding or action was
brought in an inconvenient forum; (d) agree to service of process in any legal
proceeding by mailing of copies thereof to such party at its address set forth
in Section 15.2 for communications to such party; (e) agree that any service
made as provided herein shall be effective and binding service in every respect;
and (f) agree that nothing herein shall affect the rights of any party to effect
service of process in any other manner permitted by Law. EACH PARTY HERETO
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR
CONTEMPLATED HEREIN OR THEREIN, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY
OR APPROPRIATE TO EFFECT SUCH WAIVER.
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15.12 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and their respective Affiliates and no provision
of this Agreement shall be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
15.13 Parent Guarantee. Parent does hereby irrevocably and
unconditionally guarantee the performance by Buyer of each and every obligation
of Buyer under this Agreement, including the obligation to make all payments
which become due from Buyer hereunder. In addition, Parent shall be responsible
for the accuracy of each and every representation and warranty made by Buyer
under this Agreement. The guaranty set forth in this Section 15.13 shall in all
respects be a continuing, absolute and unconditional guaranty, and shall remain
in full force until all guaranteed obligations are performed in full.
Notwithstanding the foregoing, Parent shall be entitled to assert any defenses
to payment or performance that would be available to Buyer in any action
commenced by Seller to enforce the foregoing guaranty.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
METAL MANAGEMENT NEW HAVEN, INC.
By: ____________________________
Name: Xxxx X. Xxxxxx
Title: President
METAL MANAGEMENT NORTHEAST, INC.
By: ____________________________
Name: Xxxx X. Xxxxxx
Title: President
X. XXXXX & SONS, INC.
By: ____________________________
Name: __________________________
Title: _________________________
_________________________________
Xxxxxx Xxxxx
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