Exhibit 10.3
Memorandum of Understanding (Wise Metals Co., Inc.)
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This memorandum of understanding supersedes any
and all other correspondence and discussions related to
the proposed transaction between Avalon Aluminum and Wise
Metals Co., Inc. The parties, Avalon Aluminum and Wise
Metals Co., Inc., or its nominated subsidiary, agree that
in order for Avalon Aluminum to purchase the assets and
business of the Reynolds Metals "Alloys" complex under
the agreement dated October 28, 1998 between
Avalon-Borden Companies and Reynolds Metals Company, the
parties, Avalon Aluminum, Avalon-Borden Companies and
Wise Metals Co., Inc. agree;
1. that Wise Metals Co., Inc. shall assume
responsibility and control of the
negotiations between Avalon Aluminum and the
Reynolds Metals Company, and
2. Wise shall arrange to provide Avalon
Aluminum with the funds necessary to
consummate the transaction between Avalon
Aluminum and the Reynolds Metals Company.
In consideration for the foregoing, it is agreed
between Avalon Aluminum, Avalon-Borden Companies and the
Wise Metals Co., Inc. that Wise Metals Co., Inc. shall
receive 98% of the issued and outstanding common stock in
Avalon Aluminum and that subject to the option granted
Avalon-Borden Companies and subject to the consummation
of the purchase by Avalon Aluminum from Reynolds Metals
Company, of the "Alloys" complex, Avalon-Borden Companies
shall receive 2% of the issued and outstanding common
stock in Avalon Aluminum and reimbursement for its
documented, direct expenses incurred through the date of
closing, or a fee of $1,000,000, and said expenses. The
reimbursement of expenses shall be paid on the day of
closing and $1,000,000 in fees shall be paid to equal
installments on the 1st and 2nd anniversary dates of the
closing. This election shall be decided by Avalon-Borden
Companies no later than the date of closing. In the event
that Wise Metals Co., Inc., elects to sell or enter into
any transaction which requires Avalon-Borden to tender
its shares in Avalon Aluminum, Avalon-Borden shall
receive the fair market value for the shares tendered,
payment for which may be in the form of shares of stock
in a new company.
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This memorandum Constitutes the entire agreement between
the parties, Avalon Aluminum, Avalon-Borden Companies and
Wise Metals Co., Inc.
Signed and agreed this date - December 2, 1998 between,
/s/ John Cameron
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John Cameron
President
Wise Metals Co., Inc.
/s/ Das Borden
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Das Borden
C.E.O.
Avalon-Borden Companies
Aluminum
/s/ Bobby Irons
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Bobby Irons
President
Avalon Aluminum
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SUPPLEMENT TO MEMORANDUM OF UNDERSTANDING
This Supplement supplements that certain December 2, 1998 memorandum of
understanding between Wise Metals Co., Inc. and Avalon-Borden Companies, Inc.
and Avalon Aluminum. The December 2, 1998 memorandum of understanding
contemplated a two percent (2%) ownership of Avalon Aluminum by Avalon-Borden
(or a $1 million fee) and the payment of an expense reimbursement to
Avalon-Borden upon a purchase by Avalon Aluminum of the "Alloys Complex" from
Reynolds Metals Company pursuant to an October 28, 1998 Reynolds Metals Company
letter of intent.
Wise has determined that it desires for the purchase to be made by a
liminted liability company rather than by Avalon Aluminum and other changes have
been negotiated in the October 28, 1998 letter of intent. Accordingly, the
purpose of this Supplement is to agree that the expense reimbursement provisions
for the benefit of Avalon-Borden and the provisions that afford Avalon-Bordon an
between a $1 million fax or a two percent (2%) ownership interest shall remain
applicable notwithstanding negotiated departures from the October 28, 1998
letter of interest and regardless of the entry that Wise designates to
consummate the purchase such that Avalon-Bordon (unless it elects, instead, to
receive the $1 million fee) will be entitled to be a two percent (2%) ownership
of the entity that Wise designates to acquire the "Alloys Complex".
Signed and agreed this December 9th, 1998.
WISE METALS CO., INC.
By: /s/ GEORGE P. STOE
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Title: Executive V.P.
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AVALON-BORDEN COMPANIES, INC.
By: /s/ DAS A. BORDEN
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Title: CEO
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AVALON ALUMINUM CORPORATION
By: /s/ BOBBY E. IRONS
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Title: President
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