EXECUTION DRAFT
DECEMBER 17, 1997
AGREEMENT AND PLAN OF MERGER
dated as of December 17, 1997
by and among
METALS USA, INC.
IM ACQUISITION CORP.
(a subsidiary of Metals USA, Inc.)
INDEPENDENT METALS CO., INC.
and
the Stockholders named herein
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TABLE OF CONTENTS
Page
1. THE MERGER...........................................................................1
1.1 THE MERGER....................................................................1
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1.2 EFFECTIVE TIME................................................................1
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1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF SURVIVING
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CORPORATION...................................................................2
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1.4 EFFECT OF MERGER..............................................................2
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1.5 NAME CHANGE...................................................................3
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2. CONVERSION OF STOCK; CLOSING.........................................................3
2.1 MANNER OF CONVERSION..........................................................3
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2.2 CLOSING.......................................................................3
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3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS...................................4
3.1 DUE ORGANIZATION..............................................................4
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3.2 AUTHORIZATION.................................................................4
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3.3 CAPITAL STOCK OF THE COMPANY..................................................5
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3.4 SUBSIDIARIES..................................................................5
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3.5 FINANCIAL STATEMENTS..........................................................5
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3.6 LIABILITIES AND OBLIGATIONS...................................................6
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3.7 ACCOUNTS AND NOTES RECEIVABLE.................................................6
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3.8 PERMITS AND INTANGIBLES.......................................................6
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3.9 ENVIRONMENTAL MATTERS.........................................................7
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3.10 PERSONAL PROPERTY.............................................................7
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3.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS.....................8
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3.12 REAL PROPERTY.................................................................8
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3.13 INSURANCE.....................................................................9
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3.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS..................9
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3.15 EMPLOYEE BENEFIT PLANS........................................................9
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3.16 CONFORMITY WITH LAW; LITIGATION..............................................11
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3.17 TAXES........................................................................11
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3.18 NO VIOLATIONS; CONSENTS REQUIRED.............................................12
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3.19 GOVERNMENT CONTRACTS.........................................................13
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3.20 ABSENCE OF CHANGES...........................................................13
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3.21 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY.........................................14
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3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS......................15
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3.23 DISCLOSURE...................................................................15
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3.24 PREEMPTIVE RIGHTS............................................................15
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3.25 CERTAIN BUSINESS PRACTICES...................................................15
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4. REPRESENTATIONS OF METALS...........................................................15
4.1 DUE ORGANIZATION.............................................................15
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4.2 AUTHORIZATION................................................................16
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4.3 NO VIOLATIONS................................................................16
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4.4 VALIDITY OF OBLIGATIONS......................................................16
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4.5 METALS STOCK.................................................................16
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5. COVENANTS PRIOR TO CLOSING..........................................................17
5.1 COOPERATION..................................................................17
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5.2 CONDUCT OF BUSINESS PENDING CLOSING..........................................17
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5.3 PROHIBITED ACTIVITIES........................................................17
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5.4 NO SHOP......................................................................18
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5.5 FURTHER ASSURANCES...........................................................18
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5.6 NOTICES AND CONSENTS.........................................................18
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6. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND
COMPANY.............................................................................18
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS...................18
6.2 SATISFACTION.................................................................18
6.3 CONSENTS AND APPROVALS.......................................................18
6.4 NO MATERIAL ADVERSE EFFECT...................................................19
6.5 TAX MATTERS..................................................................19
6.6 BORROWINGS...................................................................19
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF METALS AND
NEWCO...............................................................................19
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS...................19
7.2 NO MATERIAL ADVERSE EFFECT...................................................19
7.3 SATISFACTION.................................................................19
7.4 CONSENTS AND APPROVALS.......................................................19
8. DELIVERIES..........................................................................20
8.1 OPINION OF COUNSEL TO THE COMPANY............................................20
8.2 OPINION OF COUNSEL TO METALS.................................................20
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8.3 EMPLOYMENT AND CONSULTING AGREEMENTS................................................20
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8.4 GOOD STANDING CERTIFICATES...................................................20
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8.5 ESCROW AGREEMENT.............................................................20
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8.6 FIRPTA CERTIFICATE...........................................................20
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8.7 RELATED PARTY TRANSACTIONS...................................................20
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8.8 HSR FILINGS..................................................................21
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8.9 STOCKHOLDERS' RELEASE........................................................21
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8.10 NONCOMPETITION AGREEMENT.....................................................21
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8.11 DELIVERY OF CONSIDERATION....................................................21
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9. POST-CLOSING COVENANTS..............................................................21
9.1 PREPARATION AND FILING OF TAX RETURNS........................................21
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9.2 FURTHER ASSURANCES...........................................................22
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10. INDEMNIFICATION.....................................................................22
10.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES. ..................22
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10.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS..................................22
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10.3 INDEMNIFICATION BY METALS....................................................23
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10.4 THIRD PERSON CLAIMS..........................................................23
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10.5 METHOD OF PAYMENT............................................................24
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10.6 LIMITATIONS ON INDEMNIFICATION...............................................24
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10.7 SOLE REMEDY..................................................................24
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11. TERMINATION OF AGREEMENT............................................................24
11.1 TERMINATION..................................................................24
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12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...........................................25
12.1 GENERAL......................................................................25
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12.2 EQUITABLE RELIEF.............................................................25
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12.3 SURVIVAL.....................................................................25
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13. INTENDED TAX TREATMENT
...................................................................................26
13.1 TAX-FREE REORGANIZATION......................................................26
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14. SECURITIES LAW MATTERS..............................................................27
14.1 ECONOMIC RISK; SOPHISTICATION................................................27
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14.2 COMPLIANCE WITH LAW..........................................................27
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14.3 CONTRACTUAL RESTRICTIONS.....................................................27
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15. GENERAL.............................................................................27
15.1 COOPERATION..................................................................27
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15.2 SUCCESSORS AND ASSIGNS.......................................................28
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15.3 ENTIRE AGREEMENT.............................................................28
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15.4 COUNTERPARTS.................................................................28
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15.5 BROKERS AND AGENTS...........................................................28
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15.6 EXPENSES.....................................................................28
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15.7 NOTICES......................................................................28
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15.8 GOVERNING LAW................................................................29
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15.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................................29
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15.10 EFFECT OF INVESTIGATION; KNOWLEDGE...........................................29
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15.11 EXERCISE OF RIGHTS AND REMEDIES..............................................30
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15.12 TIME.........................................................................30
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15.13 REFORMATION AND SEVERABILITY.................................................30
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15.14 REMEDIES CUMULATIVE..........................................................30
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15.15 CAPTIONS.....................................................................30
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SCHEDULES
SCHEDULE 2.1 Share Value Calculation/Conversion
SCHEDULE 3.1. Due Organization
SCHEDULE 3.2. Authorization
SCHEDULE 3.3. Capital Stock of the Company
SCHEDULE 3.4. Subsidiaries
SCHEDULE 3.5. Financial Statements
SCHEDULE 3.6. Liabilities and Obligations
SCHEDULE 3.7. Accounts and Notes Receivable
SCHEDULE 3.8. Permits and Intangibles
SCHEDULE 3.9. Environmental Matters
SCHEDULE 3.10. Personal Property
SCHEDULE 3.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 3.12. Real Property
SCHEDULE 3.13. Insurance
SCHEDULE 3.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 3.15. Employee Benefit Plans
SCHEDULE 3.16. Conformity with Law; Litigation
SCHEDULE 3.17. Taxes
SCHEDULE 3.18. No Violations; No Consents Required
SCHEDULE 3.20. Absence of Changes
SCHEDULE 3.21. Deposit Accounts; Powers of Attorney
SCHEDULE 3.22. Competing Lines of Business; Related-party Transactions
SCHEDULE 4.2. Authorization
SCHEDULE 5.3. Prohibited Activities
SCHEDULE 8.3. Employment and Consulting Agreements
SCHEDULE 8.7. Related Party Transactions
SCHEDULE 10.6(e). Limitation on Indemnification
SCHEDULE 15.7. Notices
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ANNEXES
ANNEX I - FORM OF EMPLOYMENT AGREEMENTS
ANNEX II - FORM OF OPINION OF COUNSEL TO COMPANY AND
STOCKHOLDERS
ANNEX III - FORM OF OPINION OF COUNSEL TO METALS
ANNEX IV - FORM OF ESCROW AGREEMENT
ANNEX V - FORM OF NON COMPETITION AGREEMENT
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
December 17, 1997, by and among METALS USA, INC., a Delaware corporation
("Metals"), IM ACQUISITION CORP., a Delaware corporation and wholly-owned
subsidiary of Metals ("Newco"), INDEPENDENT METALS CO., INC., a Wisconsin
corporation (the "Company"), and the stockholders identified on the signature
pages hereto (the "Stockholders"). The Stockholders are the only stockholders of
the Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Newco pursuant to this
Agreement and the applicable provisions of the laws of the State of Delaware and
of the State of Wisconsin (the "State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
NOW, THEREFORE, in consideration of the mutual agreements,
representations and warranties herein contained, the parties hereto hereby agree
as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Newco (the "Merger") and the separate existence of the Company
shall cease, all in accordance with the provisions of the law of the State of
Incorporation and the General Corporation Law of the State of Delaware (the
"DGCL"). Newco shall be the surviving corporation in the Merger and is sometimes
hereinafter called the "Surviving Corporation".
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as certificates of merger, in form appropriate for filing, are
filed with the Secretaries of State (or other appropriate authorities) of the
State of Delaware and the State of Incorporation (the "Merger Filings"). The
Merger Filings shall be made simultaneously with or as soon as practicable after
the closing of the transactions contemplated by this Agreement.
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1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. At the Effective Time:
(i) the Certificate of Incorporation of Newco then in effect
shall be the Certificate of Incorporation of the Surviving Corporation until
changed as provided by law;
(ii)the By-laws of Newco then in effect shall be the By-laws of
the Surviving Corporation until they shall thereafter be duly amended;
(iii)the Board of Directors of the Surviving Corporation shall
consist of (a) the persons who were directors of the Company immediately prior
to the Effective Time, and (b) J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, who shall be appointed to the
Board of Directors of the Surviving Corporation effective immediately after the
Effective Time (and, if necessary, the size of the Board of Directors of the
Surviving Corporation shall be expanded so as to accommodate such appointment);
and
(iv)the officers of the Company immediately prior to the
Effective Time shall become officers of the Surviving Corporation in the same
capacity or capacities, and J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be appointed as an
additional Vice President, and ▇▇▇▇▇ St. Clair shall be appointed as an
Assistant Treasurer, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be appointed as an Assistant
Secretary, of the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the DGCL and the law of the State of Incorporation.
Except as herein specifically set forth, the identity, existence, purposes,
powers, objects, franchises, privileges, rights and immunities of Newco shall
continue unaffected and unimpaired by the Merger and the corporate franchises,
existence and rights of the Company shall be merged with and into Newco, and
Newco, as the Surviving Corporation, shall be fully vested therewith. At the
Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and Newco shall be taken and deemed to be transferred to, and vested in,
the Surviving Corporation without further act or deed; and all property, rights
and privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or interest therein,
whether by deed or otherwise, under the laws of the State of Incorporation
vested in the Company and Newco, shall not revert or be in any way impaired by
reason of the Merger. Except as otherwise provided herein, the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of the Company and Newco and any claim existing, or action or
proceeding pending, by or against the Company or Newco may be prosecuted as if
the Merger had not taken place, or the Surviving Corporation may be substituted
in their place. Neither the rights of creditors nor any liens upon the property
of the Company or Newco shall be impaired
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by the Merger, and all debts, liabilities and duties of the Company and Newco
shall attach to the Surviving Corporation, and may be enforced against the
Surviving Corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by such Surviving Corporation.
1.5 NAME CHANGE. As a part of the Merger, Metals shall cause the
Surviving Corporation to change its name to "Independent Metals Co., Inc.".
2. CONVERSION OF STOCK; CLOSING
2.1 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of the Company ("Company Stock") and (ii) Newco Stock,
issued and outstanding immediately prior to the Effective Time, respectively,
into shares of (x) Metals Stock (as defined below) and (y) common stock of the
Surviving Corporation, respectively, shall be as follows:
As of the Effective Time:
(i) as set forth on SCHEDULE 2.1, each share of Company Stock
issued and outstanding immediately prior to the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, automatically
shall be converted into the right to receive its pro rata interest in the
aggregate consideration payable to all holders of Company Stock, which
consideration shall consist of (a) 607,079 shares of common stock, par value
$.01 per share, of Metals ("Metals Stock"), plus (b) $6,675,000 (payable by wire
transfer of immediately available funds), plus (c) $375,000 in cash and 26,549
shares of Metals Stock as may be distributed to the Stockholders in accordance
with the terms of the Escrow Agreement being entered into in connection
herewith;
(ii) all shares of Company Stock, if any, that are held by
the Company as treasury stock shall be canceled and retired and no shares of
Metals Stock or other consideration shall be delivered or paid in exchange
therefor; and
(iii) each share of Newco Stock issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall
continue to be owned by Metals immediately after the Effective Time.
2.2 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place by exchange among the parties of
facsimiles of executed documents to be delivered at the Closing (with executed
originals to be exchanged by overnight courier service or other means acceptable
to the parties) on the date (the "Closing Date") on which the conditions set
forth herein to the obligations of the parties to consummate the transactions
described herein are satisfied or waived or on such other date and place as the
parties may mutually determine. At the Closing the Stockholders shall deliver to
Metals the certificates representing the Company Stock, duly endorsed in blank
by the Stockholders, or accompanied by duly executed blank stock powers.
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The Stockholders agree promptly to cure any deficiencies with respect to the
endorsement of the stock certificates or other documents of conveyance with
respect to such Company Stock or with respect to the stock powers accompanying
any Company Stock.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders severally represent and warrant that all of the
following representations and warranties are true at the date of this Agreement.
For purposes of this Section 3, except as the context otherwise requires, the
term "Company" shall mean and refer to the Company and each of its subsidiaries,
including without limitation, Metal Ventures L.L.C., a Wisconsin limited
liability company. An item described on any Schedule referred to in any Section
of this Article 3 shall be considered to have been described on all other
Schedules referred to in this Article 3 without the necessity of duplication or
cross referencing, and not withstanding that certain matters are cross
referenced in such Schedules.
3.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing, and Metal Ventures L.L.C. is a limited
liability company duly formed and validly existing, under the laws of the State
of Incorporation, and each has all requisite power and authority to carry on its
business as it is now being conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so authorized or qualified would not
be reasonably likely to have a material adverse effect on the business,
operations, properties, assets or financial condition of the Company taken as a
whole (as used herein with respect to the Company, or with respect to any other
person, a "Material Adverse Effect"). SCHEDULE 3.1 sets forth a list of all
jurisdictions in which the Company is authorized or qualified to do business.
True, complete and correct copies of the Certificate of Incorporation and
Bylaws, each as amended, of the Company (the "Charter Documents") are all
attached to SCHEDULE 3.1. The stock records of the Company, a copy of which is
attached to SCHEDULE 3.1, are correct and complete in all material respects.
There are no minutes for the past three years that have not been made available
to Metals, and all of such minutes are correct and complete in all material
respects.
3.2 AUTHORIZATION. (i) The representatives of the Company executing this
Agreement have the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the Merger, all of which have been
unanimously approved by Stockholders and by the Board of Directors of the
Company. Copies of resolutions adopted by the Stockholders and the Board of
Directors of the Company approving this Agreement and the Merger, certified by
the Secretary or an Assistant Secretary of the Company, are attached hereto as
SCHEDULE 3.2. This Agreement has been validly executed and delivered by the
Company and the Stockholders and constitutes the legal, valid and
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binding obligation of each of them enforceable in accordance with its terms,
subject to the laws of bankruptcy, insolvency, moratorium, and other laws
generally affecting the enforcement of creditors' rights, and except that
enforcement is subject to general equitable principles.
3.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of (i) 56,000 shares of common stock, par value $1.00
per share, of which 670 shares are issued and outstanding. The Company Stock is
owned of record and beneficially by the Stockholders in the amounts set forth on
SCHEDULE 3.3 and, except as set forth on SCHEDULE 3.3, and except as otherwise
provided by Section 180.0622(2)(b) of the Wisconsin Statutes, as judicially
interpreted, all of such shares are owned free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind; provided that each Stockholder is only making the
foregoing representation and warranty to the extent it applies to the Company
Stock shown as owned by such Stockholder on SCHEDULE 3.3. All of the issued and
outstanding shares of the capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable, except as otherwise
provided by Section 180.0622(2)(b) of the Wisconsin Statutes, as judicially
interpreted, and were offered, issued, sold and delivered by the Company in
compliance with all applicable state and federal laws concerning the issuance of
securities. None of such shares were issued in violation of any preemptive
rights or similar rights of any person. Except as set forth on SCHEDULE 3.3
which sets forth the existing options and option holders of Company, no option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any shares of its capital stock or obligates any
Stockholder to transfer any shares of Company Stock to any person except
pursuant to this Agreement.
3.4 SUBSIDIARIES. Except as set forth on SCHEDULE 3.4, the Company has
no subsidiaries and has not conducted business under any name except its exact
legal name set forth on its certificate or articles of incorporation. Except as
set forth in SCHEDULE 3.4, the Company does not own, of record or beneficially,
or control, directly or indirectly, any capital stock, securities convertible
into capital stock or any other equity interest in any corporation, association
or other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
3.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 3.5:
(i) balance sheets of the Company as of December 31, 1996,
December 31, 1995 and September 30, 1994, and any related statements of
operations, stockholder's equity and cash flows for the years ended December 31,
1996, December 31, 1995 and September 30, 1994, together with any related notes
and schedules (the "Year-end Financial Statements"); and
(ii)balance sheet of the Company as of October 31, 1997 (the
"Balance Sheet Date"), and any related statements of operations, stockholder's
equity and cash flows for the ten-month period then ended, together with any
related notes and schedules (the "Interim Financial Statements"). The Year-end
Financial Statements and the Interim Financial Statements are collectively
referred to as the "Financial Statements".
Except as provided on SCHEDULE 3.5, the Financial Statements have been
prepared from the books and records of the Company in conformity with generally
accepted accounting principles applied on a basis consistent with preceding
years and throughout the periods involved ("GAAP") and present fairly the
financial position and results of operations of the Company as of the dates of
such statements and for the periods covered thereby. The books of account of the
Company have been kept accurately in all material respects in the ordinary
course of business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of the Company
have been properly recorded therein in all material respects.
3.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed
and adequately provided for on the face of the Financial Statements (rather than
in any notes thereto) or on SCHEDULE 3.6 hereto, and except for liabilities and
obligations which have arisen since the Balance Sheet Date in the ordinary
course of business or in connection with the transaction contemplated hereby, to
the knowledge of the Stockholders or Company, the Company has no liabilities or
obligations of a type required by GAAP to be reflected on a balance sheet,
whether accrued, absolute, secured or unsecured, contingent or otherwise.
3.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 3.7 sets forth an accurate
summary list of the accounts and notes receivable of the Company, as of the
Balance Sheet Date, and generated subsequent to the Balance Sheet Date to within
five business days of the date hereof. Receivables from and advances to
employees and the Stockholders and any entities or persons related to or
affiliated with the Stockholders are separately identified on SCHEDULE 3.7.
SCHEDULE 3.7 also sets forth an accurate aging analysis of all accounts as of
the Balance Sheet Date, showing amounts due in 30-day aging categories. Except
to the extent reflected on SCHEDULE 3.7, all such accounts, notes and other
receivables were incurred in the ordinary course of business.
3.8 PERMITS AND INTANGIBLES. To the knowledge of the Company and the
Stockholders, the Company holds all licenses, permits and other governmental
authorizations required in connection with the conduct of the Company's
business. SCHEDULE 3.8 sets forth an accurate list and summary description of
all such licenses, permits and other governmental authorizations, trademarks,
trade names, patents, patent applications and copyrights owned or held by the
Company (including interests in software or other technology systems, programs
and intellectual property) (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on SCHEDULE
3.9). To the knowledge of the Company and the Stockholders, the licenses,
permits and other governmental authorizations listed on SCHEDULES 3.8 and 3.9
are valid, and the Company has not received any notice that any person intends
to cancel, terminate or not
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renew any such license, permit or other governmental authorization. To the
knowledge of the Company and the Stockholders, the Company has conducted and is
conducting its business in compliance with the requirements, standards, criteria
and conditions set forth in the licenses, permits and other governmental
authorizations listed on SCHEDULES 3.8 and 3.9 and is not in violation of any of
the foregoing. Except as specifically set forth on SCHEDULE 3.8 or 3.9, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by, any such licenses, permits or government
authorizations.
3.9 ENVIRONMENTAL MATTERS. To the knowledge of the Company and the
Stockholders, except as set forth on SCHEDULE 3.9: (A) the Company is in
substantial compliance with all federal, state, and local statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees relating to environmental protection (collectively
"Environmental Laws") including, without limitation, those relating to the
protection of air, water, land and the generation, storage, handling,
transportation, treatment or disposal of Hazardous Wastes (as defined in the
federal Resource Conservation and Recovery Act ("RCRA")), Hazardous Materials
(as defined in the federal Hazardous Materials Transportation Act ("HMTA")), and
Hazardous Substances (as defined in the federal Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA")), and petroleum and petroleum
products except to the extent that any noncompliance with any Environmental
Laws, individually, (i) has not had and is not reasonably likely to have a
Material Adverse Effect on the Company, and (ii) is not reasonably likely to
necessitate any material expenditure by or on behalf of the Company; (B) the
Company has obtained and is in substantial compliance with all necessary permits
and other approvals required under any Environmental Laws to treat, transport,
store, dispose of and otherwise handle Hazardous Wastes (as defined in RCRA),
Hazardous Materials (as defined in HMTA), and Hazardous Substances (as defined
in CERCLA), a list of all of which permits and approvals is set forth on
SCHEDULE 3.9; (C) there have been no releases (as defined in Environmental Laws)
at, from, or on any property owned or operated by the Company during the
Company's ownership or operation of such property except as permitted by
Environmental Laws; and (D) there is no on-site or off-site location at or to
which the Company has transported or disposed of or arranged for the
transportation of Hazardous Wastes (as defined in RCRA), Hazardous Materials (as
defined in HMTA) or Hazardous Substances (as defined in CERCLA) which is the
subject of any federal, state, or local enforcement action or any other
investigation which is reasonably likely to lead to any claim against the
Company, Metals or Newco for any clean-up cost, remedial work, damage to natural
resources, or property damage under any Environmental Laws.
3.10 PERSONAL PROPERTY. SCHEDULE 3.10 sets forth an accurate list of (a)
all personal property included in "plant and equipment" on the balance sheet of
the Company as of the Balance Sheet Date, (b) all other tangible personal
property other than inventory or supplies owned by the Company with an
individual value in excess of $10,000 (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date and (c) all leases of personal property,
including, in the case
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of each of (a), (b) and (c), an indication as to which assets are currently
owned, by the Stockholders, relatives of the Stockholders, or Affiliates of the
Company or the Stockholders. True, correct and complete copies of all of the
documents listed on SCHEDULE 3.10 have been delivered to Metals. Except as set
forth and specifically described on SCHEDULE 3.10, (i) all material tangible
personal property used by the Company in its business is either owned by the
Company or leased by the Company pursuant to a lease included on SCHEDULE 3.10,
(ii) all of the personal property listed on SCHEDULE 3.10 is in a condition,
taken as a whole, which is adequate for the conduct of the Company's business
and is maintained by the Company in accordance with reasonable maintenance
practices and (iii) all leases included on SCHEDULE 3.10 are in full force and
effect and constitute valid and binding agreements of the parties (and their
successors) thereto in accordance with their respective terms.
3.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
3.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues for (a) the year ended December 31, 1996, and (b) the period
from January 1, 1997 to the Balance Sheet Date, and (ii) to the knowledge of the
Company and the Stockholders, all material contracts, commitments and similar
agreements to which the Company is a party or by which it or any of its
properties are bound (including, but not limited to, contracts with significant
customers, joint venture or partnership agreements, contracts with any labor
organizations, strategic alliances and options to purchase land, but excluding
contracts, commitments and similar agreements with customers representing less
than 1% of the Company's revenues for the periods of January 1, 1997 to the
Balance Sheet Date). True, complete and correct copies of such agreements have
been provided to Metals. Except as described on SCHEDULE 3.11, (i) none of the
Company's customers identified on SCHEDULE 3.11 with respect to the period of
January 1, 1997 to the Balance Sheet Date have canceled or substantially reduced
or, to the knowledge of the Company and the Stockholders, are currently
attempting or threatening to cancel a contract or substantially reduce
utilization of the services provided by the Company, and (ii) the Company has
complied with all material commitments and obligations pertaining to it, and is
not in default, under any contracts or agreements listed on SCHEDULE 3.11 and no
notice of default under any such contract or agreement has been received by the
Company. SCHEDULE 3.11 also includes a summary description of all plans or
projects involving the opening of new operations, expansion of existing
operations, the acquisition of any property, business or assets requiring, in
any event, the payment in the aggregate of more than $10,000 by the Company.
3.12 REAL PROPERTY. SCHEDULE 3.12 includes a list of all real property
owned or leased by the Company at the date hereof, and all other real property,
if any, used by the Company in the conduct of its business. Except as set forth
on SCHEDULE 3.12, the Company has good and marketable title in fee simple to the
real property it purports to own, subject to no encumbrances except encumbrances
that do not interfere with the use of such property, and has good and valid
leasehold interests in the real property it purports to lease. True, complete
and correct copies of all leases and agreements in respect of real property
leased by the Company have been furnished to Metals. Except
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as set forth on SCHEDULE 3.12, all of such leases included on SCHEDULE 3.12 are
in full force and effect and constitute valid and binding agreements of the
parties (and their successors) thereto in accordance with their respective
terms.
3.13 INSURANCE. SCHEDULE 3.13 sets forth an accurate list as of the
Balance Sheet Date of all insurance policies carried by the Company and an
accurate list of all insurance loss runs or workers compensation claims received
for the past three policy years. True, complete and correct copies of all
insurance policies currently in effect have been provided to Metals. Such
insurance policies evidence all of the insurance that the Company is required to
carry pursuant to all of its contracts and other agreements and, to the
knowledge of the Company and the Stockholders, pursuant to all applicable laws.
None of such policies is a "claims made" policy. All of such insurance policies
are currently in full force and effect.
3.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 3.14 sets forth an accurate list showing all officers and directors of
the Company, and management personnel of the Company with annual salaries of
$50,000 or more, listing all employment agreements with such officers, directors
and management personnel and their annual salaries, bonuses payable and other
compensation payable other than fringe benefits as of (i) the Balance Sheet Date
and (ii) the date hereof. Attached to SCHEDULE 3.14 are true, complete and
correct copies of any employment agreements for the persons listed on SCHEDULE
3.14 and all other employment and other agreements of any nature containing any
provision that could require the Company to make any payment to any person as a
result of the transactions contemplated by this Agreement. Since the Balance
Sheet Date, except as set forth on SCHEDULE 3.14, there have been no increases
in the compensation payable or any special bonuses to any officer, director, or
other employee, except ordinary salary and wage increases implemented on a basis
consistent with past practices.
Except as set forth on SCHEDULE 3.14, (i) the Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
arrangement with any labor union, (ii) no employees of the Company are
represented by any labor union or covered by any collective bargaining
agreement, (iii) to the knowledge of the Company and the Stockholders, no
campaign to establish such representation is in progress and (iv) there is no
pending or, to the knowledge of the Company and the Stockholders, threatened,
labor dispute involving the Company and any group of its employees. The Company
has not experienced any labor interruptions over the past five years.
3.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.15 sets forth an accurate
schedule showing all employee benefit plans of Company, including all agreements
or arrangements (other than agreements or arrangements set forth on SCHEDULE
3.14) containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 3.15, the Company does not sponsor,
maintain or contribute to any plan
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program, fund or arrangement that constitutes an "employee pension benefit
plan," nor does the Company have any obligation to contribute to or accrue or
pay any benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as, for example, and
without limitation, any individual retirement account or annuity, any "excess
benefit plan" (within the meaning of Section 3(36) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given that
term in Section 3(2) of ERISA. The Company has not sponsored, maintained or
contributed to any employee pension benefit plan other than the plans set forth
on SCHEDULE 3.15, and is not required to contribute to any retirement plan
pursuant to the provisions of any collective bargaining agreement establishing
the terms and conditions or employment of any of the Company's employees.
The Company is not now, and cannot as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation or to any multi
employer employee pension benefit plan under the provisions of Title IV of
ERISA. To the knowledge of the Company and the Stockholders, all employee
benefit plans listed on SCHEDULE 3.15 and the administration thereof are in
compliance in all material respects with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable federal, state and local statutes, ordinances and regulations.
Except as set forth on SCHEDULE 3.15, all accrued contribution obligations of
Company with respect to any plan listed on SCHEDULE 3.15 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Balance Sheet Date. All plans listed on SCHEDULE 3.15 that are
intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
are, and have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and copies of the determination letters relating
thereto are included as part of SCHEDULE 3.15. Except as disclosed on SCHEDULE
3.15, all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies of the most recent provisions thereof are included as
part of SCHEDULE 3.15. To the knowledge of the Company and the Stockholders,
neither the Stockholders, any plan listed in SCHEDULE 3.15 nor the Company has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No plan listed in SCHEDULE 3.15 has incurred
an accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and the Company has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service or any liability to
the Pension Benefit Guaranty Corporation. There have been no terminations,
partial terminations or discontinuance of contributions to any such Qualified
Plan intended to qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service; no plan listed in SCHEDULE 3.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan listed in SCHEDULE 3.15; the Company has not
incurred liability under Section 4062 of ERISA; and no circumstances exist
pursuant to which the Company could have any
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direct or indirect liability whatsoever (including, but not limited to, any
liability to any multi employer plan or the PBGC under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty, or being subject to
any statutory lien to secure payment of any such liability) with respect to any
plan now or heretofore maintained or contributed to by any entity other than the
Company that is, or at any time was, a member of a "controlled group" (as
defined in Section 412(n)(6)(B) of the Code) that includes the Company.
3.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
3.16, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over the Company. Except as set forth on
SCHEDULE 3.16, no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been received by the Company during the last three
years (except customer claims received in the ordinary course of business) and,
to the knowledge of the Company and the Stockholders, there is no basis
therefor. Except as set forth on SCHEDULE 3.16, to the knowledge of the Company
and the Stockholders, the Company has conducted for the past three years and now
conducts its business in material compliance with all laws, regulations, writs,
injunctions, decrees and orders applicable to the Company or its assets. To the
knowledge of the Company and the Stockholders, the Company is not in violation
of any law or regulation or any order of any court or federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them.
3.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof, whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties or additional amounts
attributable to or imposed with respect to any such taxes, charges, fees, levies
or other assessments.
To the knowledge of the Company and the Stockholders (which qualifier
applies to all of this sentence), and except as set forth on SCHEDULE 3.17, all
Tax returns ("Returns") required to be filed with respect to any Tax for which
the Company is liable have been duly and timely filed with the appropriate
taxing authority, each Tax shown to be payable on each such Return has been
paid, each Tax payable by the Company by assessment has been timely paid in the
amount assessed to the extent due. Except as set forth on SCHEDULE 3.17, the
Company is not, and never has been, liable for any Tax payable by reason of the
income or property of a Person other than the Company or Metal Ventures L.L.C.
To the knowledge of the Company and the Stockholders, the Company has timely
filed true, correct and complete declarations of estimated Tax in each
jurisdiction in which any such
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declaration is required to be filed by it. To the knowledge of the Company and
the Stockholders, no liens for Taxes exist upon the assets of the Company except
liens for Taxes which are not yet due. The Company is not, and never has been,
subject to Tax in any jurisdiction outside the United States. Except as set
forth on SCHEDULE 3.17, no litigation with respect to any Tax for which the
Company is asserted to be liable is pending or, to the knowledge of the Company
and the Stockholders, threatened, and, to the knowledge of the Company and the
Stockholders, no basis exists on which any claim for any such Tax can be
asserted against the Company. There are no requests for rulings or
determinations in respect of any Taxes pending between the Company and any
taxing authority. Except as set forth on SCHEDULE 3.17, no extension of any
period during which any Tax may be assessed or collected and for which the
Company is or may be liable has been granted to any taxing authority. The
Company is not, and has not been, party to any tax allocation or sharing
agreement. To the knowledge of the Company and the Stockholders, all amounts
required to be withheld by the Company and paid to governmental agencies for
income, social security, unemployment insurance, sales, excise, use and other
Taxes have been collected or withheld and paid to the proper taxing authority to
the extent payment is due. The Company has made all deposits required by law to
be made with respect to employees' withholding and other employment Taxes.
Neither the Company nor any stockholder is a "foreign person," as that term is
referred to in Section 1445(f)(3) of the Code. The Company has not filed a
consent pursuant to Section 341 (f) of the Code or any comparable provision of
any other tax statute and has not agreed to have Section 341 (f)(2) of the Code
or any comparable provision of any other Tax statute apply to any disposition of
an asset. The Company has not made, is not obligated to make and is not a party
to any agreement that could require it to make any payment that is not
deductible under Section 280G of the Code. Except as provided on SCHEDULE 3.17,
no asset of the Company is subject to any provision of applicable law which
eliminates or reduces the allowance for depreciation or amortization in respect
of that asset below the allowance generally available to an asset of its type.
Except as set forth on SCHEDULE 3.17, no accounting method changes of the
Company exist or are proposed or, to the knowledge of the Company and the
Stockholders, threatened which could give rise to an adjustment under Section
481 of the Code.
The Stockholders made a valid election under the provisions of
Subchapter S of the Code, and the Company has not, within the past five years,
been taxed under the provisions of Subchapter C of the Code.
3.18 NO VIOLATIONS; CONSENTS REQUIRED. The Company is not in violation
of any of its Charter Documents. Except as set forth on Schedule 3.18, to the
knowledge of the Stockholders or Company, neither the Company nor any other
party thereto, is in default under any lease, instrument, license, permit or
material agreement to which the Company is a party or by which its properties
are bound (the "Material Documents") that would have a Material Adverse Effect
on the Company. Except as set forth on SCHEDULE 3.18, the execution of this
Agreement and the performance of the obligations hereunder and the consummation
of the transactions contemplated hereby will not result in any material
violation or breach or constitute a default under, any of the terms or
provisions of
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the Material Documents or the Charter Documents, and the rights and benefits of
the Company under the Material Documents will not be adversely affected by the
transactions contemplated hereby. Except as set forth on SCHEDULE 3.18, none of
the Material Documents requires notice to, or any consent or approval that has
not been obtained of, any governmental agency or other third party with respect
to any of the transactions contemplated hereby in order to remain in full force
and effect. Except as set forth on SCHEDULE 3.18, consummation of the
transactions contemplated hereby will not give rise to any right to termination,
cancellation or acceleration or loss of any material right or benefit. None of
the Material Documents prohibits or restricts the Company from freely providing
services to any other person.
3.19 GOVERNMENT CONTRACTS. The Company is not a party to any
governmental contracts subject to price redetermination or renegotiation.
3.20 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 3.20, there has not been:
(i) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of the
Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
Company;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any grant of
any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company;
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company to any of its
officers, directors, Stockholders, employees, consultants or agents;
(vi) any work interruptions, labor grievances or claims filed
materially adversely affecting the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of Company (other than inventory) to any
person, including, without limitation, the Stockholders and their affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company, including without limitation any
indebtedness or obligation of any Stockholder, customer or any affiliate
thereof, other than adjustments of amounts owed by customers which, in the
aggregate, are not materially different than those experienced by the Company in
the ordinary course of its business;
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(ix) any plan, agreement or arrangement entered into granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement entered into to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company,
provided, however, that this shall not be deemed to apply to ordinary
adjustments of bills with customers consistent with past practice;
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a party;
(xiii) any transaction by the Company outside the ordinary course
of its business;
(xiv) any cancellation or termination of a material contract with
a customer or client prior to the scheduled termination date; or
(xv) any distribution of property or assets by the Company other
than in the ordinary course of business.
(xvi) any change in the Company's Articles of Incorporation or
By-laws;
(xvii) any contract, commitment or liability entered into or
incurred or any capital expenditures made except in the normal course of
business consistent with past practice in an individual amount not in excess of
$10,000 and in an aggregate amount not in excess of $200,000;
(xviii) any mortgage, pledge or other lien or encumbrance upon
any assets or properties created, except (1) with respect to purchase money
liens incurred in connection with the acquisition of equipment with an aggregate
cost not in excess of $50,000 necessary or desirable for the conduct of the
business of the Company, (2) (A) liens for taxes either not yet due or being
contested in good faith and by appropriate proceedings (and for which contested
taxes adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like liens
arising in the ordinary course of business;
(xix) any transfer or disposition of any property or equipment
except in the normal course of business;
(xx) any other transaction outside the ordinary course of its
business or prohibited hereunder; or
(xxi) any increase or commitment to any increase in the salary,
bonus, commission or other compensation of any officer, director, employee or
agent of the Company except for ordinary salary and wage increases implemented
on a basis consistent with past practices.
3.21 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.21 sets forth a
schedule as of the date of this Agreement of: (i) the name of each financial
institution in which the Company has accounts or safe deposit boxes, (ii) the
names in which the accounts or boxes are held, (iii) the type of account and
account number, and (iv) the name of each person authorized to draw thereon or
have access thereto. SCHEDULE 3.21 also sets forth the name of each person,
corporation, firm or other
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entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 3.22, neither the Stockholders nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company, except for ownership of less than 1% of the outstanding stock of any
publicly traded company in which such person has no management or other similar
position. Except as set forth on SCHEDULE 3.22, no officer, director or
stockholder of the Company has any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
3.23 DISCLOSURE. To the knowledge of the Company and the Stockholders,
no representation or warranty contained in this Agreement contains any untrue
statement or omits to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
3.24 PREEMPTIVE RIGHTS. The Stockholders do not have, and hereby waive,
any preemptive or other right to acquire shares of the Company's capital stock
that the Stockholders have or may have had. No other person has any preemptive
or other right to acquire any shares of the Company's capital stock.
3.25 CERTAIN BUSINESS PRACTICES. To the knowledge of the Company and the
Stockholders, neither the Company nor any person acting on behalf of the
Company, has given or offered anything of value to any governmental official,
political party or candidate for government office nor has it or any of them
otherwise taken any action which would cause the Company to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended, or any law of similar
effect.
4. REPRESENTATIONS OF METALS
Metals represents and warrants that all of the following representations
and warranties in this Section 4 are true at the date of this Agreement.
4.1 DUE ORGANIZATION. Metals and Newco are each corporations duly
incorporated, validly existing and in good standing under the laws of the state
of Delaware, and each has the requisite power and authority to carry on its
business as it is now being conducted. Metals and Newco are each qualified to do
business and are each in good standing in each jurisdiction in which the nature
of its business makes such qualification necessary, except where the failure to
be so authorized or qualified would not have a Material Adverse Effect.
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4.2 AUTHORIZATION. (i) The respective representatives of Metals and
Newco executing this Agreement have the authority to enter into and bind Metals
and Newco to the terms of this Agreement and (ii) Metals and Newco have the full
legal right, power and authority to enter into this Agreement and the Merger.
Copies of resolutions adopted by the Board of Directors of Metals and Newco and
Metals as the sole stockholder of Newco approving this Agreement and the Merger,
certified by the secretary or an assistant secretary of each of Metals and
Newco, are attached hereto as SCHEDULE 4.2.
4.3 NO VIOLATIONS. The execution of this Agreement and the performance
of the obligations hereunder and the consummation of the transactions
contemplated hereby will not result in any violation or breach or constitute a
default under any of the terms or provisions of (i) the Restated Certificate of
Incorporation, as amended, of Metals or the Amended and Restated Bylaws of
Metals or the Certificate of Incorporation or Bylaws of Newco; or (ii) any
lease, instrument, license, permit or material agreement to which Metals or
Newco is a party or by which any of their properties are bound.
4.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by Metals and Newco and the performance of the transactions
contemplated herein have been duly and validly authorized by the respective
Boards of Directors of Metals and Newco and by Metals as the sole shareholder of
Newco and this Agreement has been duly and validly authorized by all necessary
corporate action. This Agreement has been validly executed and delivered by
Metals and Newco and constitutes the legal, valid and binding obligation of
Metals and Newco enforceable in accordance with its terms, subject to the laws
of bankruptcy, insolvency, moratorium and other laws affecting the rights of
creditors generally.
4.5 METALS STOCK. At the time of issuance thereof, the Metals Stock to
be delivered to the Stockholders pursuant to this Agreement will constitute
valid and legally issued, fully paid and nonassessable shares of Metals. The
offer and sale of the Metals Stock to be delivered to the Stockholders pursuant
to this Agreement have been registered on Metals' Registration Statement on Form
S-1 originally filed with the Securities and Exchange Commission on September
12, 1997 (Registration No. 333-35575) (such Registration Statement, as amended
at the time of the delivery of the Metals Stock to the Stockholders pursuant to
this Agreement, being herein called the "Registration Statement"; and the
Prospectus contained therein being herein called the "Prospectus"). The shares
of Metals Stock to be delivered to the Stockholders have been approved for
listing on The New York Stock Exchange, subject to official notice of issuance.
4.6 FINANCIAL STATEMENTS. Metals has previously delivered to each
stockholder copies of the Prospectus. There has been no change since the date of
such Prospectus which has had a material adverse affect on the business,
operations or financial condition of Metals and its subsidiaries.
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4.7 BUSINESS CONTINUITY. It is the present intention of Metals and Newco
for the Surviving Corporation to continue at least one significant historic
business line of the Company, or to use are least significant portion of the
Company's historic business assets in a business, in each case within the
meaning of Reg. Section 1.368-1(d) under the Code.
5. COVENANTS PRIOR TO CLOSING
5.1 COOPERATION. Between the date of this Agreement and the Closing
Date, the Company and Metals will cooperate with one another and their
respective auditors and counsel in the preparation of any documents or other
material which may be required in connection with this Agreement. Metals, Newco,
the Stockholders and the Company will treat all information obtained in
connection with the negotiation and performance of this Agreement as
confidential in accordance with the confidentiality agreements previously
executed by the parties.
5.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing Date, the Company will, use commercially reasonable
efforts to carry on its respective businesses in substantially the same manner
as it has heretofore and not introduce any material new method of management,
operation or accounting.
5.3 PROHIBITED ACTIVITIES. Except as set forth on SCHEDULE 5.3, between
the date hereof and the Closing Date, the Company will not, without prior
written consent of Metals, which will not be unreasonably withheld:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock (other than the declaration and payment of $2.5 million of
dividends to the Stockholders) whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of its
stock;
(iv) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(v) negotiate for the acquisition of any business or the start-up
of any new business;
(vi) merge or consolidate or agree to merge
or consolidate with or into any other corporation or other entity;
(vii) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder except that the Company may
borrow funds in order to pay a $2.5 million dividend to the Stockholders; or
(viii) increase or commit to any increase in the salary, bonus,
commission or other compensation of any officer, director, employee or agent of
the Company outside of the ordinary course of business.
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5.4 NO SHOP. Neither the Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers
from any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than Metals or
its authorized agents relating to, any acquisition or purchase of all or a
material amount of the assets of, or any equity interest in, the Company or a
merger, consolidation or business combination involving the Company.
5.5 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
5.6 NOTICES AND CONSENTS. The Company will use commercially reasonable
best efforts to give any notices to third parties, and obtain any third party
consents, that may be necessary to consummate the transactions contemplated
hereby.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND
COMPANY
The obligations of the Stockholders and the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions.
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of Metals contained in Section 6 shall be true
and correct in all material respects as of the Closing Date as though such
representations and warranties had been made as of that time; all of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Metals and Newco on or before the Closing Date shall have been duly complied
with and performed in all material respects; and certificates to the foregoing
effect dated the Closing Date and signed by the President or any Vice President
of Metals shall have been delivered to the Stockholders.
6.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to the Company and its counsel.
6.3 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transaction contemplated
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herein shall have been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit the Merger and no
governmental agency or body shall have taken any other action or made any
request of the Company as a result of which the Company deems it inadvisable to
proceed with the transactions hereunder.
6.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to Metals that would constitute a Material Adverse Effect.
6.5 TAX MATTERS. Tax advisors to the Stockholders shall have delivered
an opinion to the Stockholders that the Merger will constitute a reorganization
under Sections 368(a)(1)(A) and (a)(2)(D) of the Code.
6.6 BORROWINGS. Company shall have paid a $2.5 million dividend to the
Stockholders before the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF METALS AND NEWCO
The obligations of Metals and Newco with respect to actions to be taken
on the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions.
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the Stockholders and the Company contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date; all of the terms, covenants and conditions
of this Agreement to be complied with or performed by the Stockholders and the
Company on or before the Closing Date, as the case may be, shall have been duly
performed or complied with in all material respects; and the Stockholders shall
have delivered to Metals certificates dated the Closing Date to such effect.
7.2 NO MATERIAL ADVERSE EFFECT. Since the date of this Agreement, no
event or circumstance shall have occurred with respect to the Company which
would constitute a Material Adverse Effect.
7.3 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall be reasonably
satisfactory to Metals and its counsel.
7.4 CONSENTS AND APPROVALS. As of the Closing Date, the Company shall
have delivered all material consents as set forth on Schedule 3.18. All
necessary consents of and filings with any governmental authority or agency
relating to the consummation of the transactions contemplated
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herein (including the expiration or termination of the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976) shall have been obtained
and made shall have been obtained; and no action or proceeding shall have been
instituted or threatened to restrain or prohibit the Merger and no governmental
agency or body shall have taken any other action or made any request of Metals
as a result of which Metals deems it inadvisable to proceed with the
transactions hereunder.
8. DELIVERIES
8.1 OPINION OF COUNSEL TO THE COMPANY. On the Closing Date, counsel to
the Company and the Stockholders shall deliver to Metals an opinion dated as of
the Closing Date in the form of ANNEX II.
8.2 OPINION OF COUNSEL TO METALS. On the Closing Date, counsel to Metals
shall deliver to the Company an opinion dated as of the Closing Date in the form
of ANNEX III.
8.3 EMPLOYMENT AND CONSULTING AGREEMENTS. On the Closing Date, the
Surviving Corporation and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall enter into the Employment
Agreement in the form of Annex I-A hereto. On the Closing Date, the Surviving
Corporation shall enter into an Employment Agreement in the form of Annex I-B
with those persons listed on Schedule 8.3 who desire to enter into such an
agreement..
8.4 GOOD STANDING CERTIFICATES. On the Closing Date, the Company shall
deliver to Metals a certificate, dated as of a date no earlier than twenty days
prior to the Closing Date, duly issued by the appropriate governmental authority
in the State of Incorporation and in each state in which the Company is
authorized to do business, showing the Company is in good standing and
authorized to do business.
8.5 ESCROW AGREEMENT. On the Closing Date, the persons identified in the
form of Escrow Agreement attached hereto as ANNEX IV shall enter into an escrow
agreement in the form of such ANNEX IV, which provides for a post-Closing
balance sheet review as described therein.
8.6 FIRPTA CERTIFICATE. On the Closing Date, each Stockholder shall
deliver to Metals a certificate to the effect that he is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.
8.7 RELATED PARTY TRANSACTIONS. Except as set forth on SCHEDULE 8.7, on
the Closing Date all existing leases, agreements and arrangements between the
Company and any Stockholder or any affiliate of any Stockholder (including
without limitation any stockholders agreements, voting agreements, voting
trusts, options, warrants and employment agreements between the Company and any
employee except as specifically approved in writing by Metals) are either being
canceled or the terms thereof are being renegotiated on an arm's length basis
satisfactory to Metals.
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8.8 HSR FILINGS. Metals shall bear all filing fees for all filings
required by the ▇▇▇▇- ▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act") in connection with the transactions contemplated hereby.
Metals shall bear all of its expenses of preparing its filings under the HSR
Act, and the Company shall bear all of the Company's expenses of preparing the
Company's filings under the HSR Act.
8.9 STOCKHOLDERS' RELEASE. On the Closing Date, the Stockholders shall
deliver to Metals an instrument dated as of the Closing Date releasing the
Company from (i) any and all claims of the Stockholders against the Company and
(ii) obligations of the Company to the Stockholders, except for (x) rights to
indemnification under the Company's Charter, Bylaws and applicable state
statutes, (y) continuing obligations to Stockholders relating to employment by
the Company and salary and fringe benefits owed with respect to employment prior
to the Closing Date and (z) obligations arising under this Agreement.
8.10 NONCOMPETITION AGREEMENT. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall enter into and
deliver to Metals a Noncompetition Agreement in the form of ANNEX V hereto as of
the Closing Date.
8.11 DELIVERY OF CONSIDERATION. On the Closing Date, Metals shall
deliver and pay to the Stockholders the shares of Metals Stock and cash provided
for at Sections 2.1(i)(a) and (b).
9. POST-CLOSING COVENANTS
9.1 PREPARATION AND FILING OF TAX RETURNS.
(i) At the expense of the Surviving Corporation, the Stockholders
shall file or cause to be filed all income tax returns for the Company for all
taxable periods that end on or before the Closing Date, but in each case only
after furnishing Metals a copy of the return to be filed at least five business
days before the filing thereof. All such filings shall be consistent with the
Company's filings for the three preceding years except for the Company's current
year election to be treated as a dealer in securities pursuant to Internal
Revenue Code Section 475. The Stockholders shall control all matters pertaining
to income taxes and returns for periods when the Company was an S corporation
for tax purposes, including, without limitation, audits and refund claims, and
shall be solely responsible for any and all income taxes owed, but shall not
amend any return without the consent of Metals, which consent shall not be
unreasonably withheld. In the event of an audit, Company shall bear the expenses
of such audit, including any appeal within the applicable tax authority, but
Stockholders shall bear the costs of any litigation resulting from such audit.
(ii) Metals shall file or cause to be filed all other tax returns
for the Surviving Corporation and the Company.
(iii) Each party hereto shall, and shall cause its subsidiaries
and affiliates to, provide to each of the other parties hereto such cooperation
and information as any of them reasonably may request in filing any tax returns,
amended tax returns or claim for refund, determining a liability for
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Taxes or a right to refund of Taxes or in conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of all relevant portions of relevant tax returns, together with
relevant accompanying schedules and relevant work papers, relevant documents
relating to rulings or other determinations by taxing authorities and relevant
records concerning the ownership and Tax basis of property, which such party may
possess. Metals and the Surviving Corporation shall make their employees
reasonably available on a mutually convenient basis at their cost to provide
explanation of any documents or information so provided. Metals and the
Surviving Corporation shall bear all costs of filing such tax returns.
9.2 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
10. INDEMNIFICATION
The Stockholders, Metals and Newco each make the following covenants
that are applicable to them, respectively:
10.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholders made
in this Agreement and in the documents and certificates delivered in connection
herewith shall survive the Merger for a period of one year after the Closing
Date, except that the representations and warranties relating to tax matters
shall survive for a period of four years after the Closing Date, and the
representations and warranties relating to environmental matters shall survive
for a period of three years after the Closing Date; provided, however, that
representations and warranties and indemnification obligations with respect to
which a claim is made within the applicable survival period shall survive until
such claim is finally determined and paid.
(b) The representations and warranties of Metals and Newco made
in this Agreement and in the certificates delivered in connection herewith shall
survive the Merger for a period of two years after the date hereof, provided,
however, that representations and warranties (and related indemnification
obligations) with respect to which a claim is made within such period shall
survive until such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
10.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders
severally covenant and agree to indemnify, defend, protect, and hold harmless
Metals and the Surviving Corporation
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(the "Metals Indemnitees") at all times from and after the date of this
Agreement until the Expiration Date from and against all claims, damages
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) (collectively "Damages") incurred by such
indemnified person as a result of or incident to (i) any breach of any
representation or warranty of the Stockholders set forth herein, and (ii) any
breach or nonfulfillment of any covenant or agreement by the Company or the
Stockholders under this Agreement, provided, however, that the payment of any
amount of Damages shall be reduced by any tax, insurance, or other third party
recovery benefit accruing to the Indemnified Party as a result of the event
giving rise to such Damages, even though such benefit may arise after the
Expiration Date. Notwithstanding the foregoing, the term "Damages" shall not
include any punitive damages. Each Indemnified Party agrees in good faith to
make insurance claims for all matters which are covered by insurance.
10.3 INDEMNIFICATION BY METALS. Metals covenants and agrees that it will
indemnify, defend, protect and hold harmless the Stockholders at all times from
and after the date of this Agreement until the Expiration Date from and against
all Damages incurred by the Stockholders as a result of (i) any breach of any
representation or warranty of Metals or Newco set forth herein or in the
certificates delivered in connection herewith; or (ii) any breach or
nonfulfillment of any covenant or agreement by Metals, Newco or the Surviving
Corporation under this Agreement.
10.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person") or the commencement of any
action or proceeding by a Third Person that may give rise to a right of
indemnification hereunder, such Indemnified Party shall give to the party
obligated to provide indemnification hereunder (an "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding; provided,
however, that the failure to give such notice will not relieve such Indemnifying
Party from liability under this Section with respect to such claim, action or
proceeding, except to the extent that the Indemnifying Party has been actually
prejudiced as a result of such failure. The Indemnifying Party (at its own
expense) may assume the primary defense of such claim, suit or proceedings. The
Indemnified Party will cooperate with and make available to the Indemnifying
Party such assistance and materials as may be reasonably requested of it without
charge, and the Indemnified Party shall have the right, at its expense, to
participate in the defense. The Indemnifying Party shall have the right to
settle and compromise such claim, action, or proceeding; provided, however, that
no settlement or compromise of any claim shall be made without the consent of
the Indemnified Party, which consent shall not be unreasonably withheld or
delayed, unless such settlement or compromise results in the complete release of
all claims against the Indemnified Party with respect to such claim, action or
proceeding. In the event the indemnifying Party declines to conduct the defense
against any such claim, action or proceeding, then the Indemnified Party shall
have the right to conduct the defense against such claim, action or proceeding
and shall have the right to settle or compromise such claim, action or
proceeding upon five days notice to, but without the consent of, the
Indemnifying Party.
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10.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash. Any indemnification payment by the Stockholders under this Section 10 will
be treated as an adjustment to the exchange consideration for tax purposes
unless a final determination with respect to the Indemnified Party or any of its
affiliates causes such payment not to be treated as an adjustment to the
exchange consideration for United States federal income tax purposes.
10.6 LIMITATIONS ON INDEMNIFICATION. (a) The Metals Indemnitees shall
not be entitled to indemnification with respect to any matter under Section
10.2(i) until the total amount of Damages that the Metals Indemnitees are
entitled to indemnification under Section 10.2(i), but for this Section 10.6(a)
exceeds $250,000 (the "Indemnification Basket"), and then only for the excess
over the Indemnification Basket. The Stockholders shall not be entitled to
indemnification with respect to any matter under Section 10.3(i) until the total
amount of Damages that the Stockholders are entitled to indemnification under
Section 10.3(i), but for this Section 10.6(a), exceeds the Indemnification
Basket, then only for the excess over the Indemnification Basket. No person
shall be entitled to indemnification under this Section 10 if and to the extent
that such person's claim for indemnification is directly or indirectly caused by
a breach by such person of any representation, warranty, covenant or other
agreement set forth is this Agreement.
(b) The aggregate liability of the Stockholders in connection with their
indemnification obligations under Section 10.2 shall not exceed $6,375,000.
(c) If the Metals Indemnitees bring any claim for indemnification
against any Stockholder pursuant to this Section 10, such Stockholder shall only
be liable to pay a percentage of the aggregate amount payable to the Metals
Indemnities hereunder as a result of the matter giving rise to such
indemnification claim, which is equal to the percentage set forth opposite such
Stockholder's name on SCHEDULE 10.6(C).
(d) The Metals Indemnitees shall not be entitled to indemnification
under Section 10.2(i) with respect to a breach of a representation or warranty,
if, on the date hereof, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.. ▇▇▇▇, ▇▇▇▇▇ St. Clair,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇ had actual (and not constructive
or implied) knowledge of such breach.
10.7 SOLE REMEDY. The sole remedy of the Metals Indemnitees for any
claim for monetary damages resulting or arising in any manner from or with
respect to the transactions contemplated by this Agreement shall be a claim for
indemnity made pursuant to, and subject to the limitations contained in, this
Section 10.
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11. TERMINATION OF AGREEMENT
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date solely:
(i) by mutual consent of Metals and the Company;
(ii) by Metals or by the Company, if the transactions
contemplated by this Agreement to take place at the Closing shall not have been
consummated by January 15, 1998 (the "Termination Date"), unless the failure of
such transactions to be consummated is due to the willful failure of the party
seeking to terminate this Agreement to perform any of its obligations under this
Agreement to the extent required to be performed by it prior to or on the
Closing Date; or
(iii) by Metals or by the Company, if a material breach or
default shall be made by the other party in the observance or in the due and
timely performance of any of the covenants or agreements contained herein, and
the curing of such default shall not have been made within ten days after
written notice thereof is delivered to the breaching or defaulting party by the
other party.
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
12.1 GENERAL. The Stockholders recognize and acknowledge that they may
have had in the past, may currently have, and in the future may possibly have,
access to certain confidential information of the Company and/or Metals, such as
operational policies, pricing and cost policies, and other information, that are
valuable, special and unique assets of the Company and/or Metals. The
Stockholders agree not to disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of Metals, (b) following
the Closing, such information may be disclosed by the Stockholders as is
required in the course of performing duties for Metals or the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholders, or (ii) disclosure is required by law or the order of
any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the Stockholders shall,
if possible, give prior written notice thereof to Metals and provide Metals with
the opportunity to contest such disclosure. In the event of a breach or
threatened breach by the Stockholders of the provisions of this Section, Metals
shall be entitled to injunctive or other equitable relief restraining the
Stockholders from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting Metals from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
12.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which Metals would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced by injunctions, restraining orders and other
appropriate equitable relief.
12.3 SURVIVAL. The obligations of the parties under this Article shall
survive the termination of this Agreement for a period of five years.
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13. INTENDED TAX TREATMENT
13.1 TAX-FREE REORGANIZATION.
(a) Metals and the Stockholders are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholders will not take any actions that disqualify the Merger for such
treatment. The Stockholders represent and warrant that:
(i) the Company operates at least one historic business line,
or owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) the Stockholders have no present plan, intention or
arrangement to dispose of any of the Metals Stock to be received in the Merger
in a manner that would cause the Merger to violate the continuity of shareholder
interest requirements set forth in Reg. Section 1.368-1 under the Code.
(iii) In the Merger, Metals and Newco will acquire
"substantially all of the properties" of the Company within the meaning of
Section 368(a)(2)(D) of the Code (that is, in the Merger, Metals and Newco will
acquire at least 90% of the fair market value of the net assets and at least 70%
of the gross assets held by the Company immediately prior to the Effective
Time). For purposes of the preceding sentence, amounts paid by the Company to
dissenters, amounts paid by the Company to shareholders who receive cash or
other property and the Company assets used to pay its reorganization expenses
and all redemptions and distributions (except for regular, normal dividends)
made by the Company immediately preceding the Effective Time, pursuant to this
Agreement or otherwise as part of the plan of the Merger provided for herein,
will be included as assets of the Company held immediately prior to the Merger.
(b) Metals and Newco covenant and agree as follows:
(i) The Surviving Corporation will continue at least one
significant historic business line of the Company, or use at least a significant
portion of the Company's historic business assets in a business, in each case
within the meaning of Reg. Section 1.368-(1)(d) of the Code.
(ii) Neither Metals nor the Surviving Corporation shall take
or cause to be taken any action which would disqualify the Merger as a
reorganization under Sections 368(a)(1)(A) and (a)(2)(D) of the Code.
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14. SECURITIES LAW MATTERS
14.1 ECONOMIC RISK; SOPHISTICATION. Each Stockholder acknowledges and
confirms that he or she has received and reviewed a Prospectus from Metals
relating to his or her acquisition of shares of Metals Stock hereunder and fully
understands the nature, scope and duration of any limitations on transfer
described in this Agreement. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ represents that he has such
knowledge, sophistication and experience in business and financial matters that
he is capable of evaluating the merits and risks of an investment in the shares
of Metals Stock, and that he can bear the economic risk of an investment in the
shares of Metals Stock. Each Stockholder has had an adequate opportunity to ask
questions and receive answers from the officers of Metals concerning any and all
matters relating to the transactions described herein including without
limitation the background and experience of the officers and directors of
Metals, the plans for the operations of the business of Metals, the business,
operations and financial condition of Metals, and any plans for additional
acquisitions and the like. Each Stockholder has asked any and all questions in
the nature described in the preceding sentence and all questions have been
answered to his or her satisfaction.
14.2 COMPLIANCE WITH LAW. Each Stockholder covenants that none of the
Metals Stock will be offered, sold, assigned, hypothecated, transferred or
otherwise disposed of by such Stockholder except in full compliance with all
applicable provisions of the Securities Act of 1933, as amended (the "Act") and
the rules and regulations of the Securities and Exchange Commission.
14.3 CONTRACTUAL RESTRICTIONS Each Stockholder agrees that he or she
will not offer, sell, assign, pledge, hypothecate, transfer or otherwise dispose
of or reduce his or her risk with respect to any of the shares of Metals Stock
issued to such Stockholder pursuant to this Agreement prior to the date one year
after the date hereof. Certificates representing the Metals Stock issued to the
Stockholders shall bear a legend or legends reflecting the foregoing restriction
as well as the restrictions referred to in Section 14.2 hereof.
15. GENERAL
15.1 COOPERATION. The Company, the Stockholders, Metals and Newco shall
each deliver or cause to be delivered to the other after the date hereof such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement. The Company will cooperate and use its reasonable
efforts to have the present officers, directors and employees of the Company
cooperate with Metals on and after the date hereof in furnishing information,
evidence, testimony and other assistance in connection with any tax return
filing obligations, actions, proceedings, arrangements or disputes of any nature
with respect to matters pertaining to all periods prior to the date hereof.
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15.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of Metals, and the heirs and legal representatives of the
Stockholders.
15.3 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Newco and Metals and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the Stockholders, the Company, Newco and
Metals, acting through their respective officers, duly authorized by their
respective Boards of Directors.
15.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.5 BROKERS AND AGENTS. The Stockholders agree to pay all fees and
other amounts, if any, due to any broker, if any, engaged by the Stockholders or
the Company, and agree to indemnify the other parties hereto against all loss,
cost, damages or expense arising out of claims for fees or commission of brokers
employed or alleged to have been employed by such indemnifying party. Metals
agrees to pay all fees and other amounts, if any, due to any broker, if any,
engaged by Metals or Newco, and Metals agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for fees
or commission of brokers employed or alleged to have been employed by Metals.
15.6 EXPENSES. Except as otherwise provided herein, whether or not the
transactions herein contemplated shall be consummated, Metals will pay the fees
and expenses of Metals' representatives, accountants and counsel incurred in
connection herewith, and the Company will pay the fees and expenses of the
Stockholders' and the Company's representatives, accountants and counsel
incurred in connection herewith. Metals or the Company shall pay any sales, use,
transfer, real property transfer, recording, gains, stock transfer and other
similar taxes and fees ("Transfer Taxes") imposed in connection with the Merger.
Metals or the Company shall file all necessary documentation and Returns with
respect to such Transfer Taxes. The Stockholders acknowledge that the
Stockholders, and not the Company or Metals, will pay all taxes, if any, due
upon receipt of the consideration payable to the Stockholders pursuant to this
Agreement.
15.7 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to
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be notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by facsimile to an officer or
agent of such party, as follows:
(a) If to Metals or Newco, addressed to it at:
Metals USA, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
(b) If to the Company or the Stockholders, addressed to it or
them at:
Independent Metals Co., Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section from time to time.
15.8 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Wisconsin other than its principles governing conflicts
of laws.
15.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein or in writing
delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties until the applicable Expiration Date.
15.10 EFFECT OF INVESTIGATION; KNOWLEDGE. When a representation or
warranty contained herein or in any certificate or other document delivered in
connection herewith is made to the "knowledge" of the Company and the
Stockholders, the phrase "to the knowledge of the Company
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and the Stockholders" means the actual (and not constructive or implied)
knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. Feireisen, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
15.11 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
15.12 TIME. Time is of the essence with respect to this Agreement.
15.13 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
15.14 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
15.15 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
METALS USA, INC.
By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman & Chief Executive Officer
IM ACQUISITION CORP.
By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
INDEPENDENT METALS CO., INC.
By:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman
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Stockholders:
____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
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