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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 3, 1995
-----------------------
IMCO Recycling Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-7170 75-2008280
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(Commission File Number) (IRS Employer Identification No.)
5215 North O'Connor Blvd., Suite 940, Irving, Texas 75039
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 869-6575
---------------------
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 3, 1995, IMCO Recycling Inc., a Delaware corporation (the
"Company"), acquired 100% of the issued and outstanding capital stock of
Alumar Associates, Inc., an Illinois corporation ("Alumar"), pursuant to a
merger (the "Merger") of Alumar with and into IMCO Recycling of Illinois Inc.
("Merger Sub"), an Illinois corporation and wholly-owned subsidiary of the
Company, in accordance with the terms of the Agreement and Plan of Merger
dated as of October 1, 1995 (the "Merger Agreement"), among the Company,
Merger Sub, Alumar and the holders of 100% of the issued and outstanding
capital stock of Alumar (the "Shareholders").
Alumar, through its wholly-owned subsidiary, Metal Mark, Inc., an
Illinois corporation ("Metal Mark"), engages in the processing and recycling
of scrap aluminum and drosses, primarily from the transportation industry,
through its operating facility in Chicago Heights, Illinois. Metal Mark also
operates aluminum recycling plants located in Pittsburg, Kansas and Sikeston,
Missouri, and has a fifty-percent-owned facility in East Chicago, Indiana.
At the present time, the Company intends to continue operating the business
and assets of Metal Mark and its subsidiaries in a similar manner as they
were operated prior to the Merger.
Upon the closing of the Merger, the 1,000 issued and outstanding shares
of the common stock, par value $1.00 per share, of Alumar were canceled and
converted into the right of each Shareholder to receive such Shareholder's
respective share of $4,000,000 in cash and an aggregate of 208,213 shares of
the common stock, par value $.10 per share, of the Company (the "Company
Common Stock"), as set forth in the Merger Agreement. Upon the closing of
the Merger, such Company Common Stock had a market value of approximately
$4,500,000. The method of determining the amount of the consideration
delivered in the transaction was arm's-length negotiations between
representatives of Alumar and the Company.
The shares of Company Common Stock were issued to the Shareholders in
reliance upon the exemption from the registration requirements under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof.
Pursuant to the terms of an Escrow Agreement entered into among the
Shareholders, the Company and Texas Commerce Bank National Association,
46,269 of the 208,213 shares of Company Common Stock were placed into escrow
for a term of two years to indemnify the Company against certain liabilities
as set forth in the indemnification provisions of the Merger Agreement.
In connection with the Merger, the Company granted registration rights
to each of the Shareholders pursuant to a Registration Rights Agreement dated
as of October 1, 1995 (the "Registration Rights Agreement"). The
Registration Rights Agreement grants "piggyback" registration rights, which
allow the Shareholders to participate in underwritten public offerings
initiated by the Company during the next two years, subject to certain
limitations and conditions set forth therein. Under the terms of the
Registration Rights Agreement, the ability of any Shareholder to exercise the
rights granted thereunder is expressly subordinate in all respects and
Page 2 of 5 Pages
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subject to the rights granted by the Company pursuant to that certain Amended
and Restated Registration Rights Agreement entered into between the Company
and certain shareholders on September 30, 1988.
In connection with the Merger, the Company also paid approximately
$8,245,000 in full payment and retirement of indebtedness of Metal Mark owed
to Fremont Financial Corporation.
In order to fund the repayment of such indebtedness of Metal Mark and to
fund the cash portion of the purchase price, the Company used approximately
$6,400,000 of its cash on hand and, pursuant to a revolving credit facility
between the Company and Texas Commerce Bank National Association ("TCB"), the
Company borrowed $4,300,000 from TCB (the "Revolving Loan"). The Revolving
Loan matures in May 1996, and the unpaid principal balance thereof bears
interest at a fluctuating ninety-day LIBOR rate which is currently equal to
6.625%. In addition, the Company borrowed $5,000,000 under a forty-five day
note (the "Note"), of which $1,500,000 was used by the Company in connection
with the Merger. The unpaid principal balance of the Note bears interest at
a fixed rate of 6.5%, and the unpaid principal balance of the Note, together
with interest thereon, will be due and payable on November 11, 1995.
The Company will account for its acquisition of Alumar as a purchase
transaction for financial accounting purposes.
ITEM 5. OTHER EVENTS.
On September 29, 1995, the Company completed the purchase of a Bedford,
Indiana recycling facility for approximately $8,500,000 million in cash. The
Company acquired the facility from Ravenswood Aluminum Corporation, a company
headquartered in Ravenswood, West Virginia. The Bedford facility engages in
the recycling of used aluminum beverage containers and supplies the recycled
metal to producers of can sheet. The Company intends to continue operating
the Bedford facility in a similar manner as it was operated prior to the
acquisition.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired:
AT THIS TIME IT IS IMPRACTICABLE TO PROVIDE THE REQUIRED CONSOLIDATED
FINANCIAL STATEMENTS FOR ALUMAR ASSOCIATES, INC.; THEREFORE, THE REQUIRED
FINANCIAL STATEMENTS WILL BE FILED WITH THE COMMISSION NO LATER THAN
DECEMBER 15, 1995.
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(b) Pro forma Financial Information:
AT THIS TIME IT IS IMPRACTICABLE TO PROVIDE THE REQUIRED PROFORMA
FINANCIAL INFORMATION REQUIRED PURSUANT TO ARTICLE 11 OF REGULATION S-X;
THEREFORE, ALL REQUIRED PROFORMA FINANCIAL INFORMATION WILL BE FILED WITH
THE COMMISSION NO LATER THAN DECEMBER 15, 1995.
(c) Exhibits:
1. Agreement and Plan of Merger, dated as of October 1, 1995, among IMCO
Recycling Inc., IMCO Recycling of Illinois Inc., Alumar Associates,
Inc. and the Shareholders.
2. Registration Rights Agreement, dated as of October 1, 1995, among IMCO
Recycling Inc. and the Shareholders.
Page 4 of 5 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMCO RECYCLING INC.
By: /s/ Robert R. Holian
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Robert R. Holian
Vice President and Controller
Date: October 17, 1995
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
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<S> <C> <C>
1. Agreement and Plan of Merger, dated as of October 1, 1995, among IMCO
Recycling Inc., IMCO Recycling of Illinois Inc., Alumar Associates,
Inc. and the Shareholders.
2. Registration Rights Agreement, dated as of October 1, 1995, among IMCO
Recycling Inc. and the Shareholders.
</TABLE>
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______________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IMCO RECYCLING INC.,
IMCO RECYCLING OF ILLINOIS INC.,
ALUMAR ASSOCIATES, INC.
AND
THE SHAREHOLDERS OF ALUMAR ASSOCIATES, INC.
OCTOBER 1, 1995
______________________________________________________________________________
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TABLE OF CONTENTS
<TABLE>
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PAGE
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1. DEFINITIONS .................................................................... 1
2. THE MERGER; TERMS OF THE MERGER; CERTAIN COVENANTS ............................. 6
2.1 The Merger ................................................................ 6
2.1.1 The Merger ...................................................... 6
2.1.2 Effective Time of the Merger .................................... 6
2.1.3 Effect of the Merger ............................................ 6
2.1.4 Certificate of Incorporation; Bylaws; Directors and Officers .... 7
2.1.5 Tax Consequences ................................................ 7
2.2 Terms of the Merger ....................................................... 7
2.2.1 Merger Consideration ............................................ 7
2.2.2 Exchange Procedure for the Shareholders ......................... 8
2.2.3 Escrow Agreement ................................................ 9
2.2.4 Merger Sub Capital Stock; Alumar Treasury Stock ................. 9
2.2.5 Listed Shares ................................................... 9
2.3 Conduct of the Business of Alumar and the Subsidiaries
Prior to Closing .......................................................... 9
2.4 Examination of Records .................................................... 10
2.5 Consents and Approvals .................................................... 10
2.6 Resignation of Directors and Officers ..................................... 10
2.7 Registration Rights Agreement ............................................. 10
2.8 Dissenter's Rights ........................................................ 10
2.9 No Shopping ............................................................... 10
2.10 Related Party Transactions ................................................ 11
2.11 Advise of Change .......................................................... 11
2.12 Air Emissions Permit ...................................................... 11
2.13 Miscellaneous ............................................................. 11
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS ............................. 11
3.1 Joint Representations and Warranties of the Shareholders .................. 11
3.1.1 Capital Stock ................................................... 12
3.1.2 Organization and Good Standing .................................. 12
3.1.3 Corporate Power and Authority; Binding Obligations .............. 13
3.1.4 No Violations ................................................... 13
3.1.5 Consents and Authorizations ..................................... 14
3.1.6 Financial Statements, Etc. ...................................... 14
3.1.7 Title and Condition of Assets ................................... 15
3.1.8 Insurance ....................................................... 16
3.1.9 Litigation and Compliance With Laws, Etc. ....................... 16
3.1.10 Taxes ........................................................... 17
3.1.11 Intangible Assets ............................................... 17
3.1.12 Proprietary Rights .............................................. 17
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<TABLE>
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3.1.13 Instruments in Full Force and Effect; Possession
under Leases .................................................... 18
3.1.14 Employee Plans and Agreements ................................... 18
3.1.15 Labor and Employee Relations .................................... 20
3.1.16 Competing Lines of Business ..................................... 21
3.1.17 Environmental Matters ........................................... 21
3.1.18 Absence of Certain Changes, Etc. ................................ 22
3.1.19 Subsidiaries .................................................... 23
3.1.20 Licenses and Permits ............................................ 23
3.1.21 Absence of Certain Business Practices ........................... 24
3.1.22 Customers ....................................................... 24
3.1.23 Securities Compliance History ................................... 24
3.1.24 Property ........................................................ 24
3.1.25 Certain Representations Pertaining to Marport ................... 25
3.1.26 Inventory ....................................................... 25
3.1.27 Limitation on Marport Representations ........................... 25
3.1.28 Untrue Statements ............................................... 26
3.2 Additional Representations and Warranties of the Shareholders ............. 26
3.2.1 Quality of Title to Shares ...................................... 26
3.2.2 Solvency ........................................................ 26
3.2.3 Securities Compliance History ................................... 26
3.2.4 Shares Acquired for Investment .................................. 26
3.2.5 Competency ...................................................... 26
3.2.6 Binding Obligations ............................................. 27
3.2.7 Receipt of Information .......................................... 27
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND MERGER SUB ................................................................. 27
4.1 Organization and Good Standing ............................................ 27
4.2 Corporate Power and Authority; Binding Obligations ........................ 27
4.3 No Violations ............................................................. 28
4.4 Shares Acquired for Investment ............................................ 28
4.5 Consents and Authorizations ............................................... 29
4.6 Purchaser Information ..................................................... 29
4.7 Purchaser Stock ........................................................... 29
4.8 Acknowledgment of Access to Records ....................................... 29
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
AND MERGER SUB ................................................................. 29
5.1 Representations True at Closing ........................................... 29
5.2 Covenants of Alumar and the Shareholders .................................. 29
5.3 No Injunction, Etc. ....................................................... 30
5.4 Opinion of Counsel ........................................................ 30
5.5 Approvals, Consents and Waivers ........................................... 30
5.6 Absence of Adverse Change ................................................. 30
5.7 No Outstanding Warrants ................................................... 30
</TABLE>
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<TABLE>
<CAPTION>
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5.8 Dissenters ................................................................ 30
5.9 Investment Letter ......................................................... 30
5.10 Release ................................................................... 30
5.11 Title Policy .............................................................. 31
5.12 HSR Compliance ............................................................ 31
5.13 Employment Agreement ...................................................... 31
5.14 Environmental Audit Report ................................................ 31
5.15 U.S. Reduction Stock ...................................................... 31
5.16 Termination of Agreements ................................................. 31
5.17 Tobian Metals ............................................................. 31
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALUMAR
AND THE SHAREHOLDERS ........................................................... 31
6.1 Representations True at Closing ........................................... 32
6.2 Covenants of Purchaser and Merger Sub ..................................... 32
6.3 No Injunction, Etc. ....................................................... 32
6.4 Opinion of Counsel ........................................................ 32
6.5 HSR Compliance ............................................................ 32
7.1 Transactions at Closing ................................................... 32
7.1.1 Alumar's and the Shareholders' Performance ...................... 32
7.1.2 Performance by Purchaser and Merger Sub ......................... 34
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNIFICATION ............................................................ 34
8.1 Survival of Representations and Warranties ................................ 34
8.1.1 Alumar, Subsidiaries and Shareholders ........................... 34
8.1.2 Purchaser and Merger Sub ........................................ 35
8.2 Certain Indemnification by the Shareholders ............................... 35
8.2.1 Indemnification ................................................. 35
8.2.2 Time Limit ...................................................... 37
8.2.3 Indemnification Obligations Non-Recourse ........................ 37
8.3 Indemnification by Purchaser .............................................. 37
8.3.1 Indemnification ................................................. 37
8.3.2 Time Limit; Cap ................................................. 38
8.4 Exclusive Remedy .......................................................... 38
8.5 Defense of Suits and Claims ............................................... 38
8.6 Arbitration ............................................................... 39
8.7 Reimbursement ............................................................. 40
9. TERMINATION .................................................................... 40
9.1 Method of Termination ..................................................... 40
9.1.1 ..................................................................... 40
9.1.2 ..................................................................... 40
9.1.3 ..................................................................... 41
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
10. GENERAL PROVISIONS ............................................................. 41
10.1 Notices .................................................................. 41
10.2 Brokers .................................................................. 42
10.3 Further Assurances ....................................................... 42
10.4 Waiver ................................................................... 42
10.5 Expenses ................................................................. 42
10.6 Binding Effect ........................................................... 43
10.7 Entire Agreement ......................................................... 43
10.8 Counterparts ............................................................. 43
10.9 Pronouns ................................................................. 43
10.10 Descriptive Headings ..................................................... 43
10.11 Governing Law ............................................................ 43
10.12 Assignability ............................................................ 43
10.13 Third Party Rights ....................................................... 43
10.14 Illegalities ............................................................. 43
10.15 Drafting Party ........................................................... 44
10.16 Incorporation of Exhibits and Schedules .................................. 44
10.17 Confidentiality; Public Announcements .................................... 44
10.18 Shareholders' Representative ............................................. 44
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered into as
of October 1, 1995, by and among IMCO RECYCLING INC., a Delaware corporation
("PURCHASER"), IMCO RECYCLING OF ILLINOIS INC., a Delaware corporation and a
wholly owned subsidiary of Purchaser ("MERGER SUB"), ALUMAR ASSOCIATES, INC.,
an Illinois corporation ("ALUMAR"), and those persons or entities listed on
SCHEDULE A to this Agreement (the "SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, the Shareholders own all of the outstanding shares of capital
stock of Alumar; and
WHEREAS, Alumar is the sole shareholder of Metal Mark, Inc., an Illinois
corporation ("METAL MARK"); and
WHEREAS, Purchaser is the sole shareholder of Merger Sub; and
WHEREAS, the parties hereto desire to enter into this Agreement pursuant
to which Purchaser will acquire all of the outstanding shares of the capital
stock of Alumar by means of a merger of Alumar with and into Merger Sub, upon
the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties and covenants hereinafter set forth,
the parties hereto agree as follows:
1. DEFINITIONS.
As used herein, the following terms shall have the following meanings
unless the context otherwise requires:
"AFFILIATE" means any Person that, directly or indirectly, controls, or
is controlled by or under common control with, another Person. For the
purposes of this definition, "CONTROL" (including the terms "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH"), as used with respect to any Person, means
the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities or by contract or otherwise. For the purposes hereof, Affiliate
shall not include U.S. Reduction Co., a Delaware corporation, Indiana Metal
Conversion Corp., an Indiana corporation, American Metal & Salt Recovery
Company, an Indiana corporation, and their respective officers, directors and
shareholders.
"AGREEMENT" means this Agreement and Plan of Merger.
"ALUMAR" means Alumar Associates, Inc., an Illinois corporation.
<PAGE>
"ALUMAR SHARES" means the issued and outstanding shares of common stock,
par value $1.00, of Alumar.
"ASSETS" means the assets listed on SCHEDULE B hereto.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in Section
3.1.6 hereof.
"CASH MERGER CONSIDERATION" has the meaning set forth in Section 2.2.1
hereof.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
"CERTIFICATE OF MERGER" means (collectively) the Certificates of Merger
executed and delivered by Merger Sub in substantially the form of EXHIBIT 1
hereto.
"CLOSING" has the meaning set forth in Section 2.1.2 hereof.
"CLOSING DATE" means the date on which the Closing occurs.
"CODE" or "INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended.
"COLUMBIA ALUMINUM" means Columbia Aluminum Recycling, Ltd., an Illinois
corporation and a wholly owned subsidiary of Metal Mark.
"CONSTITUENT CORPORATIONS" means together, Merger Sub and Alumar.
"DGCL" means the Delaware General Corporation Law, as amended.
"EFFECTIVE TIME" has the meaning set forth in Section 2.1.2 hereof.
"EMPLOYEES" has the meaning set forth in Section 3.1.14 hereof.
"ENVIRONMENTAL AUDIT REPORT" means a Phase I Environmental Audit Report
for each parcel of the Property to be prepared by A&M Engineering for
Purchaser, prepared in accordance with the ASTM Standards for Phase I
Environmental Assessment, including a review of waste management and
record-keeping compliance with respect to operations conducted on each parcel
of the Property. There will be a total of four (4) Environmental Audit
Reports.
"ENVIRONMENTAL LAWS" means any applicable federal, state, or local laws,
rules, or regulations, common law or strict liability provisions, and any
judicial interpretations thereof, including any judicial or administrative
orders or judgments, relating to pollution or environmental matters.
2
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EQUIPMENT" means the machinery, equipment, tools and vehicles included
in the Assets.
"ESCROW AGENT" means Texas Commerce Bank, N.A., a national banking
association.
"ESCROW AGREEMENT" has the meaning set forth in Section 2.2.3 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.1.6 hereof.
"GOVERNMENTAL AUTHORITY" means any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"IBCA" means the Illinois Business Corporation Act of 1983, as amended.
"IMMATERIAL CONTRACTS" has the meaning set forth in Section 3.1.13
hereof.
"INSTRUMENTS" has the meaning set forth in Section 3.1.13 hereof.
"INTANGIBLE ASSETS" means all patents, trademarks, technology, know-how,
data, copyrights, trade names, service marks, licenses, covenants by others
not to compete, rights and privileges used by Alumar and the Subsidiaries in
the conduct of their respective businesses.
"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in Section
3.1.6 hereof.
"LIEN" means all mortgages, deeds of trust, liens, security interests,
pledges, leases, conditional sale contracts, claims, rights of first refusal,
options, charges, easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind.
"MARNOR ALUMINUM" means Marnor Aluminum Processing, Inc., a Missouri
corporation and a wholly owned subsidiary of Metal Mark.
3
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"MARPORT" means Marport Smelting, L.L.C., an Indiana limited liability
company which is 50% owned by Tropram.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean any solid or hazardous
waste, hazardous substance, pollutant, contaminant, oil, petroleum product,
commercial product or other substance which is listed, regulated or
designated as toxic or hazardous (or words of similar meaning and regulatory
effect), or with respect to which remedial obligations may be imposed, under
any Environmental Laws.
"MERGER" has the meaning set forth in Section 2.1.1 hereof.
"MERGER CONSIDERATION" means the consideration stated in Section 2.2.1
hereof, consisting of the Cash Merger Consideration and the Stock Merger
Consideration, collectively, which shall be allocated and distributed in
accordance with Section 2.2.2 hereof to each holder of Alumar Shares
outstanding immediately prior to the Effective Time.
"MERGER SUB" means IMCO Recycling of Illinois Inc., a Delaware
corporation.
"1933 ACT" means the Securities Act of 1933, as amended.
"OPERATIVE DOCUMENTS" means this Agreement, the Releases entered into by
the Shareholders pursuant to Section 5.10 hereof, the Escrow Agreement, and
the Registration Rights Agreement entered into by the parties pursuant to
Section 2.7 hereof.
"PERMITS" means all permits, authorizations, approvals, registrations,
variances, exemptions, franchises, privileges, immunities, grants,
ordinances, licenses and other rights of every kind and character (a) under
any (i) federal, state, local or foreign statute, ordinance or regulation,
including, without limitation, Environmental Laws, (ii) order of any
Governmental Authority or (iii) contract with any Governmental Authority, or
(b) granted by any Governmental Authority.
"PERMITTED ENCUMBRANCES" means (a) the Liens described in SCHEDULE C to
this Agreement, and (b) Liens for current taxes and assessments not yet due
and payable.
"PERSON" means an individual, partnership, joint venture, corporation,
bank, trust company, business entity, or unincorporated organization.
"PITTSBURG ALUMINUM" means Pittsburg Aluminum, Inc., a Kansas
corporation and a wholly owned subsidiary of Metal Mark.
"PLAN" has the meaning set forth in Section 3.1.14 hereof.
4
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"PRICE PER SHARE" means the average closing price of Purchaser Stock on
the New York Stock Exchange for the twenty (20) trading days immediately
preceding the date which is five (5) trading days prior to the Closing Date.
"PROPERTY" means those certain tracts of land described on SCHEDULE D of
this Agreement.
"PURCHASER" means IMCO Recycling Inc., a Delaware corporation.
"PURCHASER STOCK" means the voting common stock, $.10 par value per
share, of Purchaser; PROVIDED, HOWEVER, that in the event of any change in
the capitalization of Purchaser prior to the Closing Date, Purchaser Stock
shall mean the shares or other consideration into which such shares of
Purchaser Stock have been converted.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or discarding
into the environment (including the abandonment or discarding of barrels,
containers and other closed receptacles containing any hazardous substance,
pollutant or contaminant).
"SEC" means the Securities and Exchange Commission or any successor
organization thereto.
"SHAREHOLDERS" means, either singularly or collectively, as the context
requires, those persons or entities listed on SCHEDULE A to this Agreement.
"SHAREHOLDERS' REPRESENTATIVE" means Gary L. Auerbach, a resident of the
State of Illinois, or such successor Shareholders' Representative as may be
appointed pursuant to Section 10.18 hereof.
"STOCK MERGER CONSIDERATION" has the meaning set forth in Section 2.2.1
hereof.
"SUBSIDIARIES" means, collectively, Metal Mark, Columbia Aluminum,
Pittsburg Aluminum, Marnor Aluminum, Tropram and Marport.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.1.1
hereof.
"TAX" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
5
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"TAX OBLIGATION" means any material liability of Alumar or any
Subsidiary for Taxes (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated, and whether due or to become
due).
"TROPRAM" means Tropram, Inc., an Indiana corporation and a wholly owned
subsidiary of Metal Mark.
"U.S. REDUCTION STOCK" has the meaning set forth in Section 3.1.19
hereof.
2. THE MERGER; TERMS OF THE MERGER; CERTAIN COVENANTS.
2.1 THE MERGER.
2.1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL and the IBCA, at
the Effective Time, Alumar shall be merged with and into Merger Sub (the
"Merger"), in accordance with the terms set forth in this Agreement. From
and after the Effective Time, the separate corporate existence of Alumar
shall cease, and Merger Sub shall continue as the surviving corporation in
the Merger and shall continue to be governed by the laws of the State of
Delaware (the "Surviving Corporation"). The Merger shall be consummated by
filing a Certificate of Merger with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Illinois, together with
all other documents, notices and filings required by the DGCL.
2.1.2 EFFECTIVE TIME OF THE MERGER. The closing of the Merger
(the "Closing") shall take place at the offices of Haynes and Boone, L.L.P.,
at 901 Main Street, Suite 3100, Dallas, Texas 75202, at 10:00 a.m., Dallas
time, on October 2, 1995 (to be effective as of October 1, 1995), or, if
later, on the first business day on or by which the last to be fulfilled or
waived of the conditions set forth in Articles 5 and 6 hereof shall be
fulfilled or waived in accordance therewith, but in any event not later than
November 30, 1995. If all of the conditions of the Merger set forth in
Articles 5 and 6 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated in accordance with Section
9.1 hereof, the parties hereto shall cause the Certificate of Merger,
together with all other documents and instruments required by law, together
with all required fees, to be properly executed, filed or paid, as
applicable, in accordance with the DGCL and the IBCA on, or the first
business day immediately following, the Closing Date. The Certificate of
Merger shall provide that the Merger shall be effective as of the time of
filing (the "EFFECTIVE TIME").
2.1.3 EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in Section 259 of the DGCL and Section
5/11.50 of the IBCA. If at any time the Surviving Corporation shall consider
or be advised that any further assignments, assurances in law, or other acts
or instruments are necessary or desirable to vest, perfect, or confirm in the
Surviving Corporation the title to any property or rights of the Constituent
Corporations, the Constituent Corporations and their proper officers and
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directors shall and will do all such acts and things as may be necessary or
proper to vest, effect, or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this
Agreement.
2.1.4 CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND
OFFICERS. The Certificate of Incorporation and Bylaws of Merger Sub, in each
case as in effect at the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation. At the Effective
Time, the Board of Directors and officers of the Surviving Corporation shall
be comprised of the directors and officers of Merger Sub, to hold office
until their respective successors are duly elected or appointed and qualified.
2.1.5 TAX CONSEQUENCES. It is intended that the Merger shall
constitute a reorganization described in Section 368(a)(2)(D) of the Code and
that this Agreement shall constitute a "plan of reorganization" for the
purposes of Section 368 of the Code. It shall not be a condition to the
consummation of the Merger that any party hereto shall have received a ruling
of the Internal Revenue Service as to the federal income tax consequences of
the Merger.
2.2 TERMS OF THE MERGER.
2.2.1 MERGER CONSIDERATION.
(a) At the Effective Time, by virtue of the Merger and without
any action by the holders of the Alumar Shares, all Alumar Shares
issued and outstanding immediately prior to the Effective Time shall
be canceled and retired and converted into and become rights to
receive the Merger Consideration in the manner described in
subsection 2.2.1(c) below.
(b) The aggregate Merger Consideration shall be payable by
delivery of:
(i) $4,000,000 in cash without any interest thereon (the
"CASH MERGER CONSIDERATION"), which shall be payable
by wire transfer or other immediately available
funds; and
(ii) the number of shares of Purchaser Stock determined
by dividing $4,500,000 by the Price Per Share,
rounded to the nearest whole share of Purchaser
Stock (the "STOCK MERGER CONSIDERATION").
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(c) The aggregate Merger Consideration shall be allocated
among the Shareholders in accordance with their percentage interests
set forth on EXHIBIT 2.2(c). At the Effective Time, each issued and
outstanding share of Alumar Shares held by the Shareholders shall
be converted without any action on the part of the holder thereof
into and be exchangeable for:
(i) an amount of the Cash Merger Consideration set forth
opposite such Shareholder's name on Exhibit 2.2(c);
and
(ii) an amount of Purchaser Stock set forth opposite such
Shareholder's name on EXHIBIT 2.2(c).
(d) As soon as practicable after the Effective Time, the Cash
Merger Consideration and the Stock Merger Consideration shall be
distributed pursuant to subsection 2.2.1 and Section 2.2.2 hereof.
(e) After the Effective Time and in accordance with the terms
of this Agreement, Purchaser agrees to deliver a sufficient number
of shares of Purchaser Stock necessary to satisfy its obligations
set forth in this Section 2.2.1.
2.2.2 EXCHANGE PROCEDURE FOR THE SHAREHOLDERS. After the
Effective Time, each holder of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of Alumar Shares
shall surrender such certificate or certificates to the Surviving
Corporation, duly endorsed and executed as the Surviving Corporation may
require, to the Surviving Corporation for cancellation, at which time the
Cash Merger Consideration and the Stock Merger Consideration applicable to
such shares of Alumar Shares shall be delivered to such Shareholder. At the
Effective Time, the holders of certificates evidencing the Alumar Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such stock, and their sole right shall be to receive
their respective portions of the Merger Consideration set forth above. All
rights to receive the Cash Merger Consideration or the Stock Merger
Consideration (or cash in lieu of fractional shares of Purchaser Stock),
shall be deemed, when paid or issued hereunder, to have been paid or issued,
as the case may be, in full satisfaction of all rights pertaining to the
Alumar Shares. Notwithstanding any other provision of this Agreement, no
certificates or scrip representing fractional shares of Purchaser Stock shall
be issued upon the surrender for exchange of certificates which prior to the
Effective Time shall have represented any Alumar Shares. In lieu of any
fractional shares, there shall be paid to each Shareholder who would be
entitled to receive a fractional share of Purchaser Stock an amount of cash
(without interest) determined by multiplying such fraction by the Price Per
Share.
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2.2.3 ESCROW AGREEMENT. At the Closing, the parties hereto
shall execute and deliver an Escrow Agreement with the Escrow Agent (the
"Escrow Agreement") substantially in the form of EXHIBIT 2.2.3 hereto,
pursuant to which certain Shareholders shall deliver to the Escrow Agent
shares of the Purchaser Stock delivered to them pursuant to the Merger and
having a value of approximately $1 million, and in the amounts as set forth
on EXHIBIT 2.2(c) hereto. Such shares of Purchaser Stock shall be held and
distributed under the terms and conditions of the Escrow Agreement.
2.2.4 MERGER SUB CAPITAL STOCK; ALUMAR TREASURY STOCK. Each
share of common stock of Merger Sub issued and outstanding immediately prior
to the Merger shall continue to be issued and outstanding and evidence
ownership of the same number of shares of common stock of the Surviving
Corporation, and the Merger shall effect no change in any of such shares, and
no shares of Merger Sub common stock shall be converted in the Merger. Any
Alumar Shares held in the treasury of Alumar immediately prior to the
Effective Time shall be canceled as of the Effective Time, without payment of
any consideration therefor.
2.2.5 LISTED SHARES. Within 90 days after the Closing Date,
Purchaser shall have caused the Purchaser Shares deliverable pursuant to the
Merger to be duly listed for trading on the New York Stock Exchange and/or
approved for listing upon official notice of issuance.
2.3 CONDUCT OF THE BUSINESS OF ALUMAR AND THE SUBSIDIARIES PRIOR TO
CLOSING. Except with the consent in writing of Purchaser, and except as may
be required to effect the transactions contemplated by this Agreement, the
Shareholders covenant, between the date of this Agreement and the Closing
Date, that they will cause Alumar and the Subsidiaries to conduct their
businesses in the ordinary course and that they will, except as otherwise
provided in this Agreement: (a) preserve the organization of Alumar and the
Subsidiaries intact and to preserve the goodwill of customers, suppliers and
others having business relations with them; (b) keep in force at no less than
their present limits all existing bonds and policies of insurance insuring
Alumar and the Subsidiaries and their properties; (c) not permit Alumar or
the Subsidiaries to enter into any contract, commitment, arrangement or
transaction of the types described in Section 3.1.13 hereof or suffer, permit
or incur any of the transactions or events described in Section 3.1.18 hereof
to the extent such events or transactions are within the control of the
Shareholders, except for (i) metal purchase and sale transactions not to
exceed $250,000 and (ii) tolling transactions not to exceed 2,000,000 pounds
or 3 months in duration; (d) not make or permit any change in the Articles of
Incorporation or Bylaws of Alumar or any Subsidiary, or in their respective
authorized, issued or outstanding securities; (e) not permit Alumar or any
Subsidiary to grant any stock options or rights to purchase any security of
Alumar or any Subsidiary, purchase, redeem, retire or otherwise acquire any
of such securities, issue any shares of the capital stock of Alumar or any
Subsidiary, declare or pay any dividends, or agree to do any of the
foregoing; (f) not voluntarily make any management changes, except for
unsatisfactory performance; and (g) not make any payments to any of the
Shareholders representing salaries, consulting fees, bonuses,
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expenses or any other payments for services rendered to Alumar and the
Subsidiaries except for consulting fees, directors' fees, bonuses and other
compensation to the Shareholders not to exceed $10,500 per month in the
aggregate, plus twenty percent (20%) of the pre-tax FIFO profit of Alumar.
2.4 EXAMINATION OF RECORDS. The Shareholders will allow Purchaser, its
counsel and other representatives reasonable access during normal business
hours to all the books, records, files, documents, assets, properties,
contracts and agreements of Alumar and the Subsidiaries and shall furnish
Purchaser, its officers and representatives with all information concerning
the affairs of Alumar and the Subsidiaries which may be reasonably requested.
Purchaser agrees that it will conduct its review of the foregoing materials
in a manner that will avoid causing any disruption of the business of Alumar
or the Subsidiaries.
2.5 CONSENTS AND APPROVALS. The Shareholders agree to use their best
efforts to obtain the waiver, consent and approval for the Merger of all
persons or entities whose waiver, consent or approval is required by any
material agreement, lease, instrument, arrangement, judgment, decree, order
or license to which Alumar or any Subsidiary is a party or subject on the
Closing Date, and which would prohibit, or require the waiver, consent or
approval of any person or entity to such a transaction or under which,
without such waiver, consent or approval, such a transaction would constitute
an occurrence of default under the provisions thereof, result in the
acceleration of any obligation thereunder, or give rise to a right of any
party thereto to terminate its obligations thereunder. All obtained written
waivers, consents and approvals shall be produced at Closing in form and
content reasonably satisfactory to Purchaser.
2.6 RESIGNATION OF DIRECTORS AND OFFICERS. At the Closing, the
Shareholders covenant to cause all members of the Boards of Directors, and
all elected officers, of Alumar and each Subsidiary to resign, effective
immediately upon Closing, except that Arthur Mendoza shall not resign from
his positions as an officer and member of the Management Committee of Marport.
2.7 REGISTRATION RIGHTS AGREEMENT. At the Closing, Purchaser and the
Shareholders shall enter into a Registration Rights Agreement in
substantially the form of EXHIBIT 2.7 hereto.
2.8 DISSENTER'S RIGHTS. Each Shareholder hereby irrevocably waives any
rights that such Shareholder may have under the IBCA to dissent to the Merger.
2.9 NO SHOPPING. Shareholders shall not, and shall not permit Alumar
and the Subsidiaries, directly or indirectly, through any officer, director,
agent or otherwise, to (i) solicit, initiate or encourage submission of
proposals or offers from any Person (other than Purchaser) relating to any
acquisition or purchase (other than in the ordinary course of business) of
all or a material amount of the assets of, or any equity interest in, Alumar
and the Subsidiaries or any merger, consolidation, or business combination
with Alumar
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and the Subsidiaries, or (ii) participate in any discussions or negotiations
regarding, or furnish to any Person (other than Purchaser) any information
with respect to, any of the foregoing, or (iii) otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. The
Shareholders shall promptly notify Purchaser if Shareholders, Alumar or any
Subsidiary receives any such proposal or offer or any inquiry or contract
with respect thereto.
2.10 RELATED PARTY TRANSACTIONS. Shareholders shall not permit Alumar
and the Subsidiaries to make any loans to, or enter into any business
transaction, agreement, arrangement or understanding of any other nature
with, any shareholder, officer or director of Alumar and the Subsidiaries or
any "associate" of any such shareholder, officer or director (as such term is
defined in Rule 405 under the 1933 Act) except for (i) the transactions
contemplated by this Agreement or specifically identified in Section 2.3(g)
of this Agreement, (ii) ordinary and customary legal fees paid to Katz
Randall & Weinberg, and (iii) other transactions in the ordinary course of
business of Alumar and the Subsidiaries, and consistent with past practice,
not to exceed an aggregate of $25,000.
2.11 ADVISE OF CHANGE. Shareholders shall promptly advise Purchaser in
writing of any event or development that occurs (and that is known by any of
such Shareholders) that (a) had it existed or been known on the date hereof
would have been required to be disclosed under this Agreement, (b) would
cause any of the representations and warranties of the Shareholders contained
herein to be inaccurate or otherwise misleading in any material respect, or
(c) gives any Shareholder any reason to believe that any of the conditions
set forth in Section 5 will not be satisfied prior to the Closing.
2.12 AIR EMISSIONS PERMIT. Columbia Aluminum has been issued an air
emissions Permit by the Illinois Environmental Protection Agency (the
"IEPA"). The Shareholders shall use their best efforts to have the IEPA
modify or clarify the air emissions Permit for Columbia Aluminum in order to
allow Columbia Aluminum to operate its two existing furnaces at the greater
of the applicable limit of its existing air emissions Permit or the maximum
current operating capacity of such furnaces.
2.13 MISCELLANEOUS. Shareholders agree that they shall perform all such
further acts and execute all such further documents as may be reasonably
required in connection with the consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
3.1 JOINT REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The
Shareholders, jointly and severally, represent and warrant to Purchaser as
follows:
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3.1.1 CAPITAL STOCK. The authorized capital stock of Alumar
consists of 100,000 shares of common stock, par value $1.00 per share, of
which, on the date of this Agreement, 1,000 shares of common stock constitute
the only issued and outstanding shares of Alumar. The authorized capital
stock of Metal Mark consists of 50,000 shares of common stock, $1.00 par
value per share, of which 20,250 shares, owned beneficially and of record by
Alumar, constitute the only issued and outstanding shares of Metal Mark. All
of the Alumar Shares and the shares of Metal Mark owned by Alumar and
described above are validly issued, fully paid and non-assessable and are
held on Alumar's records and Metal Mark's records, as applicable, as
reflected on EXHIBIT 3.1.1. No Alumar Shares or shares of capital stock of
any Subsidiary are held in treasury.
The authorized capital stock of Columbia Aluminum consists of 1,000
shares of common stock, no par value, of which, on the date of this
Agreement, 1,000 shares of common stock constitute the only issued and
outstanding shares of Columbia Aluminum. The authorized capital stock of
Pittsburg Aluminum consists of 50,000 shares of common stock, par value $10
per share, of which, on the date of this Agreement, 500 shares of common
stock constitute the only issued and outstanding shares of Pittsburg
Aluminum. The authorized capital stock of Marnor Aluminum consists of 10,000
shares of common stock, par value $1.00 per share, of which, on the date of
this Agreement, 1,500 shares of common stock constitute the only issued and
outstanding shares of Marnor Aluminum. The authorized capital stock of
Tropram consists of 1,000 shares of common stock, no par value, of which, on
the date of this Agreement, 1,000 shares of common stock constitute the only
issued and outstanding shares of Tropram. Fifty percent (50%) of the total
equity interest of Marport is owned beneficially and of record by Tropram.
All of the shares of Columbia Aluminum, Pittsburg Aluminum, Marnor Aluminum
and Tropram owned by Metal Mark and described above are validly issued, fully
paid and non-assessable and are held on Metal Mark's records and such
Subsidiary's records, as applicable, as reflected on EXHIBIT 3.1.1.
Except as disclosed on EXHIBIT 3.1.1 hereto, there are no
outstanding subscriptions, options, warrants, rights, conversion rights,
rights of first refusal or other agreements or commitments (including any
preemptive or other similar rights), other than this Agreement, obligating
Alumar or any Subsidiary to issue or transfer, or granting an option or right
by Alumar or any Subsidiary to any person or entity to purchase, securities
of Alumar or any Subsidiary. There are no outstanding securities or other
instruments authorized, granted or issued by Alumar or any Subsidiary that
are convertible into capital stock of Alumar or any Subsidiary. Except as
disclosed on EXHIBIT 3.1.1 hereto, neither Alumar nor any Subsidiary is a
party to, and neither is either bound by, any oral or written agreement,
contract, arrangement or understanding (i) giving any person or entity any
interest in, or any right to share, participate in, or receive any portion of
the revenues, income, profits, or assets of Alumar or any Subsidiary; or (ii)
obligating Alumar or any Subsidiary to distribute any portion of its income,
profits or assets.
3.1.2 ORGANIZATION AND GOOD STANDING. Alumar and the
Subsidiaries are each a corporation or a limited liability company duly
organized, validly existing and in
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good standing under the laws of their respective states of incorporation or
organization, and each such party has the full power and authority (corporate
or otherwise) to carry on its respective business in the places and as it is
now being conducted and to own, operate and lease the properties and assets
which it now owns, operates or leases. Alumar and each Subsidiary is
qualified to transact business and is in good standing as a foreign
corporation in all of the jurisdictions where it is required to qualify in
order to conduct its business as presently conducted and in which the failure
to be so qualified would have a material adverse effect on the business of
such parties.
Alumar and each Subsidiary (other than Marport) have heretofore
delivered to Purchaser complete and correct copies of their Articles of
Incorporation and Bylaws, as amended and in effect on the date hereof.
Marport has heretofore delivered to Purchaser a complete and correct copy of
its Articles of Organization, as in effect on the date hereof.
3.1.3 CORPORATE POWER AND AUTHORITY; BINDING OBLIGATIONS.
Alumar has the full corporate power and authority to execute and deliver this
Agreement and the other Operative Documents to which it is a party, to
perform hereunder and thereunder, and to consummate the Merger and the other
transactions contemplated hereby and thereby without the necessity of any
act, approval or consent of any other person or entity whomsoever (except for
compliance under the HSR Act). The execution, delivery and performance by
Alumar of this Agreement and the other Operative Documents to which it is a
party and each and every agreement, document and instrument provided for
herein and therein to be executed and delivered by it and the consummation of
the Merger have been duly authorized and approved by the Board of Directors
of Alumar. This Agreement, the other Operative Documents to which it is a
party and each and every other agreement, document and instrument to be
executed, delivered and performed by Alumar in connection herewith constitute
or will, when executed and delivered, constitute the legal, valid and binding
obligations of Alumar, enforceable against Alumar in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization and other laws affecting the enforcement of
creditors' rights generally and except that the availability of the remedy of
specific performance or other equitable relief is subject to the discretion
of the court before which any proceeding therefor may be brought and,
further, except as enforceability may be limited by considerations of public
policy and applicable state and federal securities laws.
3.1.4 NO VIOLATIONS. Except as disclosed on EXHIBIT 3.1.4
hereto, the execution and delivery of this Agreement and the other Operative
Documents to which they are a party by Alumar and the Subsidiaries do not,
and the consummation of the Merger and the other transactions contemplated
hereby and thereby will not:
(a) violate any provisions of the Articles of Incorporation,
as amended, Articles of Organization, as amended, or Bylaws, as
amended, of Alumar and the Subsidiaries, as applicable;
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(b) except for compliance under the HSR Act, violate any
statute, judgment, order, decree or regulation or rule of any
Governmental Authority applicable or relating to Alumar or any
Subsidiary; or
(c) conflict with, or constitute a breach or default under,
or give rise to any right of termination, cancellation or
acceleration under, any material note, mortgage, deed of trust,
lease, license, contract, agreement, or other instrument or
obligation to which Alumar or any Subsidiary is a party or by
which any of them is bound or their assets are affected or an
event which, with notice, lapse of time, or both, would result
in any such conflict, breach, default or right.
3.1.5 CONSENTS AND AUTHORIZATIONS. Except for the requirements
of the HSR Act and except as set forth on EXHIBIT 3.1.5 hereto and the
filings and recordation of the Certificate of Merger required by the DGCL and
the IBCA, no consent, approval or authorization or registration, declaration,
designation, qualification or filing with any Governmental Authority on the
part of Alumar or any Subsidiary is required in connection with the valid
execution and delivery of this Agreement, the other Operative Documents or
the consummation of the transactions contemplated hereby or thereby.
3.1.6 FINANCIAL STATEMENTS, ETC. Attached hereto as EXHIBIT
3.1.6 are true and complete copies of Alumar's audited balance sheet as of
March 31, 1995, and the related statement of income and retained earnings,
and statement of cash flows for the year ended March 31, 1995, on a
consolidated basis, together with the report of Altschuler, Melvoin and
Glasser LLP thereon (the "AUDITED FINANCIAL STATEMENTS"). The Shareholders
shall cause Alumar and the Subsidiaries to provide to Purchaser, within
fifteen (15) days after the end of each calendar month after the execution of
this Agreement and through and including the Closing Date, true and complete
copies of Alumar's unaudited balance sheet as of the end of the preceding
month and the related statement of income and retained earnings and statement
of cash flows for the preceding month, each on a consolidated basis (the
"INTERIM FINANCIAL STATEMENTS") (the Interim Financial Statements and the
Audited Financial Statements are, from time to time, collectively referred to
herein as the "FINANCIAL STATEMENTS"). The Audited Financial Statements are
complete, have been prepared in all material respects in accordance with
generally accepted accounting principles consistently applied (except as
disclosed on EXHIBIT 3.1.6), and fairly present the financial condition of
Alumar on a consolidated basis as of the date thereof. The Interim Financial
Statements will be prepared in a manner consistent with the Audited Financial
Statements, except for year-end adjustments and the utilization of the
first-in, first-out (FIFO) basis of inventory accounting, and will not
contain or fail to contain anything which causes them to be materially
misleading.
The trade accounts and other receivables of Alumar or the
Subsidiaries which are classified on the Financial Statements as current
assets are bona fide receivables, arose in the ordinary course of business,
and, subject to any reserve for
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doubtful accounts, are not subject to offset or deduction, and are
collectible in full within 120 days.
Alumar and the Subsidiaries (on a consolidated basis) have no
material liabilities or obligations of any nature, whether absolute,
contingent, accrued or otherwise, and whether due or to become due, except:
(a) the liabilities set forth or reserved against in the
Financial Statements, in the amounts so reserved against;
(b) the liabilities incurred or accrued since March 31, 1995
in the ordinary course of business; and
(c) those disclosed on EXHIBIT 3.1.6.
There has occurred no event or circumstance which has resulted in,
or which may result in, a claim by any officer, director or Employee of
Alumar or any Subsidiary for indemnification from Alumar or any Subsidiary
pursuant to any agreement of Alumar or any Subsidiary, the articles of
incorporation or bylaws (or other organizational documents) of Alumar or any
Subsidiary, or the IBCA or other applicable state corporation laws.
Alumar's and the Subsidiaries' books of account have been kept
accurately in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses, assets
and liabilities of Alumar or any Subsidiary have been properly recorded in
such books, except for such deviations, if any, which do not, individually or
in the aggregate, materially affect the accuracy thereof.
3.1.7 TITLE AND CONDITION OF ASSETS. Attached as SCHEDULE B
hereto is a complete and correct list and brief description of all material
items of tangible personal property owned or used by Alumar or the
Subsidiaries in the operation of their business. Except as disclosed on
EXHIBIT 3.1.7 hereto, Alumar and the Subsidiaries have good and marketable
title to the Assets and the Property, free and clear of Liens, other than:
(a) those disclosed or reserved against in the Financial
Statements;
(b) Permitted Encumbrances, including those listed on EXHIBIT
3.1.7; or
(c) Liens which will be released or discharged at or prior
to the Effective Time.
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The assets and properties owned, operated or leased by Alumar and
the Subsidiaries and used in their businesses are suitable for the uses
presently made thereof.
All material real and tangible personal property held by Alumar or
the Subsidiaries under lease is held under a valid and binding lease
agreement that is in full force and effect. Neither Alumar nor any
Subsidiary is in default in any material respect, and no written notice of
alleged default has been received by Alumar or any Subsidiary under any such
lease, and no lessor is in default or alleged to be in default thereunder in
any material respect.
EXHIBIT 3.1.7 contains a true and correct list of the names of each
bank, savings and loan or other financial institution in which Alumar or any
Subsidiary has an account, including cash contribution accounts, safe deposit
boxes and lock box arrangements, and the names of all Persons authorized to
draw thereon or to have access thereto.
3.1.8 INSURANCE. EXHIBIT 3.1.8 contains a list of all policies
of insurance maintained, as of the date of this Agreement, by Alumar and the
Subsidiaries, including, without limitation, insurance providing benefits for
Employees, in effect as of the date of this Agreement.
Neither Alumar nor any Subsidiary is in default with respect to any
provisions of any such policy or has failed to give any notice or present any
claim thereunder in due and timely fashion, which failure or failures to give
such notice or present such claim, individually or in the aggregate, would
materially adversely affect or involve any substantial possibility of
materially adversely affecting the condition (financial or other), results of
operations, assets, liabilities, businesses or prospects of Alumar or any
Subsidiary.
No insurance carrier has given written notice of the intention of
such carrier to discontinue any current insurance coverage of Alumar or any
Subsidiary.
3.1.9 LITIGATION AND COMPLIANCE WITH LAWS, ETC. There are no
claims, actions, suits or proceedings, whether in equity or at law, or
governmental or administrative investigations pending or, to the knowledge of
the Shareholders, threatened against Alumar or any Subsidiary or any Asset,
except as described on EXHIBIT 3.1.9.
Except as described on EXHIBIT 3.1.9, as of the date of this
Agreement:
(a) Alumar and each Subsidiary is in compliance with, and
conducts its business and operations in material compliance with,
and is not in default or violation in any material respect under,
any law, regulation, writ, injunction, decree or order applicable
to Alumar, any Subsidiary or any Asset, including without limitation
all safety and health, antitrust, consumer
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protection, labor, equal opportunity or discrimination laws, rules
and regulations (provided, however, that no representation or
warranty is made in this Section 3.1.9(a) with regard to Alumar's
or the Subsidiaries' compliance with any Environmental Laws); and
(b) there are no judgments outstanding and unsatisfied against
Alumar or any Subsidiary.
To the knowledge of the Shareholders, there exists no basis for any
claim against or liability of Alumar or any Subsidiary on account of
warranties or with respect to defective products or services (other than
minor claims arising in the usual and ordinary course of business which may
be satisfied at nominal cost to Alumar or such Subsidiary).
3.1.10 TAXES. Alumar and the Subsidiaries have duly filed when
due, including any extensions, all Tax reports and returns in connection with
and in respect of Alumar and the Subsidiaries. Alumar or the Subsidiaries
have timely paid and discharged all Tax Obligations of Alumar or the
Subsidiaries.
No notice has been received of any Tax deficiency outstanding,
proposed or assessed against or allocable to Alumar or any Subsidiary, and
there is no waiver of any statute of limitation on the assessment or
collection of any tax. Neither Alumar nor any Subsidiary has executed or
filed with the Internal Revenue Service or any other Governmental Authority
any agreement now in effect extending the period for assessment or collection
of any Taxes against Alumar or any Subsidiary.
There are no Tax Liens upon, pending against or threatened against
the Alumar Shares or any Asset.
The consummation of the Merger will not result in the imposition or
creation of any Tax Obligations on the Assets or Alumar Shares.
3.1.11 INTANGIBLE ASSETS. EXHIBIT 3.1.11 sets forth a list of
all material intangible Assets of Alumar or the Subsidiaries. EXHIBIT 3.1.11
describes the nature of Alumar's or the Subsidiaries' rights in such
Intangible Assets. There are no pending or, to the knowledge of the
Shareholders, threatened infringement claims against Alumar or any Subsidiary
by any Person with respect to any of the Intangible Assets.
3.1.12 PROPRIETARY RIGHTS. Neither Alumar nor any Subsidiary is
currently in receipt of any notice of any violation of, and the Shareholders
have no reason to believe that the operations of Alumar or any Subsidiary
have violated or are violating, the rights of others in any trademark,
tradename, service mark, copyright, patent or other intangible asset in any
material respect.
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3.1.13 INSTRUMENTS IN FULL FORCE AND EFFECT; POSSESSION UNDER
LEASES. EXHIBIT 3.1.13 hereto consists of a true and complete list of all
contracts, agreements and instruments to which Alumar or any Subsidiary is a
party as of the date of this Agreement, including, without limitation,
licenses, royalties, assignments, contracts and agreements with Governmental
Agencies, and futures market contracts; provided, however, that (i) no
contract, agreement or instrument involving payments or potential payments by
Alumar or any Subsidiary of less than $250,000 per year and no employment
agreements or other agreements terminable at will without penalty need be
disclosed ("IMMATERIAL CONTRACTS") and (ii) all futures market contracts
shall be disclosed on EXHIBIT 3.1.13 hereto, regardless of the amount
thereof. The contracts, agreements and instruments disclosed on EXHIBIT
3.1.13 are hereinafter referred to as the "INSTRUMENTS." The Instruments are
valid and binding on Alumar and the Subsidiaries and have not been amended in
any material respect, except as disclosed on EXHIBIT 3.1.13; and, to the
knowledge of the Shareholders, the Instruments are valid and binding on the
other parties thereto; and the Instruments are in full force and effect;
PROVIDED, that enforceability of the Instruments may be limited by
bankruptcy, insolvency, reorganization and other laws affecting the
enforcement of creditors' rights generally, and except that the availability
of the remedy of specific performance or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be
brought. Except as set forth on EXHIBIT 3.1.13, neither Alumar nor, to the
knowledge of the Shareholders, any Subsidiary, nor any other party to any
Instrument, has breached any provision of, or is in default under the terms
thereof.
Alumar has heretofore delivered, or made available, to Purchaser or
its counsel complete copies of all Instruments.
Alumar and the Subsidiaries are not parties to any agreement,
contract or covenant limiting the freedom of Alumar or the Subsidiaries or
any party contracting with Alumar or the Subsidiaries from competing in any
line of business or with any Person in any geographic area, except (i) that
certain Agreement dated as of March 9, 1992, between Marport and Metal Mark,
and (ii) that certain Agreement, dated September 21, 1982, between Marnor
Aluminum and Noranda Aluminum, Inc.
3.1.14 EMPLOYEE PLANS AND AGREEMENTS. EXHIBIT 3.1.14 lists all
of the pension plans, stock option plans, stock bonus plans, employee stock
purchase plans, and all other employee compensation or benefit plans,
agreements, practices, policies, customs, contracts, arrangements or
commitments, including, without limitation "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA), "employee pension benefit plans" (as
defined in Section 3(2) of ERISA) (collectively, the "PLANS" and
individually, a "PLAN") relating to officers or employees (including former
officers or employees) of Alumar or the Subsidiaries, or of any Affiliates of
Alumar or the Subsidiaries, who perform services, or have performed services,
for the benefit of Alumar or the Subsidiaries ("EMPLOYEES"). All Plans are,
and have been, in material compliance with all laws, rules, and regulations
governing or applying to such Plans, including, but not limited to, ERISA,
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the Code, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, and the Family and Medical Leave Act.
No Plan is subject to Title I, Subtitle B, Part 3 of ERISA
(concerning funding). Neither Alumar nor the Subsidiaries, nor any Affiliate
of Alumar or the Subsidiaries, has maintained or contributed to any employee
pension benefit plan subject to Title IV of ERISA which has been terminated
within five years. Since 1975, neither Alumar nor the Subsidiaries, nor any
Affiliate of Alumar or the Subsidiaries, has contributed to, or has been
required to contribute to, any "multi employer plan" (as defined in Section
3(37) of ERISA).
Alumar, the Subsidiaries and their Affiliates have no material
liabilities to, or arising from, any Plan or any Employee because of a Plan
other than for contributions due and owing but not paid, and all
contributions not paid as of the Closing have been properly accrued.
All filings for each Plan that ERISA and the Code require have been
timely filed and all notices and disclosures to participants that ERISA or
the Code require have been timely provided. Each trust under each employee
pension benefit plan is intended to be exempt from tax under Section 501(a)
of the Code. No event has occurred that will give rise to disqualification
or loss of tax-exempt status of any employee pension benefit plan or trust
hereunder. No event has occurred that will or could subject any employee
pension benefit plan or any other Plan to tax under Section 511 of the Code.
Alumar and the Subsidiaries have made or shall make full and timely
payment of or have accrued or shall accrue all amounts which are required
under the terms of the Plans to be paid as a contribution with respect to the
period from the end of the last plan year ending before the date of this
Agreement to the Closing Date.
No dispute exists between any Employee (or beneficiary) and any
Plan, or Alumar or the Subsidiaries relating to any Plan. On and after
January 1, 1975, neither Alumar nor the Subsidiaries, nor any Affiliate of
Alumar or the Subsidiaries, has engaged in any transaction in violation of
Section 406(a) or (b) of ERISA or Section 4975(c) of the Code which would
subject Alumar, any Subsidiary, or Purchaser to any taxes, penalties or other
liabilities resulting from such prohibited transaction and no condition
exists that would subject Alumar, any Subsidiary, or Purchaser to any such
excise tax, penalty, or liability. No Plan is being audited or investigated
by any Governmental Agency. There are no actions, suits or claims that
involve any Plan (other than routine claims for benefits in the ordinary
course) pending or, to the knowledge of Alumar or the Shareholders,
threatened, and Alumar and the Subsidiaries have no knowledge of any facts
which could give rise to any such actions, suits or claims.
All contributions made to or accrued with respect to all Plans are
deductible under Sections 404 or 162 of the Code.
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True and complete copies of the following have heretofore been
delivered by Alumar to Purchaser: each Plan and related trust agreements or
annuity contracts (or any other funding instruments), summary plan
descriptions for all employee pension benefit plans and employee welfare
benefit plans, and Annual Reports on Form 5500 Series (including all
schedules, financial statements and opinions of independent accountants)
required to be filed with any Governmental Agency for each Plan for the two
most recent plan years of each such Plan. The financial statements so
delivered fairly present the financial condition and the results of
operations of each such Plan as of the dates indicated, in accordance with
generally accepted accounting principles.
No Plan provides (or has any obligation or commitment to provide)
health, medical, disability, life or other similar benefits with respect to
any Employee (or beneficiary thereof) of Alumar or any Subsidiary beyond
retirement or other termination of service (other than coverage mandated by
Title 1, Subtitle B, Part 6 of ERISA, which coverage the former Employee or
his dependents fully pay).
All group health plans of Alumar, the Subsidiaries, and each
Affiliate of Alumar or the Subsidiaries, have been operated in compliance
with the group health plan continuation coverage requirements of Part 6 of
Subtitle B of Title I of ERISA and Section 4980B of the Code.
3.1.15 LABOR AND EMPLOYEE RELATIONS. EXHIBIT 3.1.15 lists all
current Employees of Alumar or the Subsidiaries as of the date of this
Agreement, their compensation and job title; provided, however, that only
salaried employees of Marport shall be listed on EXHIBIT 3.1.15. Except as
set forth on EXHIBIT 3.1.15, there exists no collective bargaining agreement
or other labor union contract applicable to any Employee of Alumar or the
Subsidiaries and, within the last three (3) years, there has been no union
organizing campaign nor has a petition for recognition been filed by any
union or group of employees.
The Shareholders have no knowledge of any current union organizing
activities or proceedings involving, or any pending petitions for recognition
of, a labor union or association as the exclusive bargaining agent for, or
where the purpose is to organize, any group or groups of Employees of Alumar
or the Subsidiaries.
The Shareholders have no knowledge of any proposed strikes, work
stoppages, work slowdowns or lockouts nor of any threats thereof, by or with
respect to any of the Employees of Alumar or the Subsidiaries. Within the
last three (3) years, there have been no labor disputes, strikes, slowdowns,
work stoppages or lockouts by Employees of Alumar or the Subsidiaries, except
as disclosed on EXHIBIT 3.1.15.
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Except as disclosed on EXHIBIT 3.1.15, employment of all Employees
of Alumar or the Subsidiaries is terminable at will by Alumar or such
Subsidiary.
3.1.16 COMPETING LINES OF BUSINESS. Except as disclosed on
EXHIBIT 3.1.16 with respect to the U.S. Reduction Stock, no Affiliate of
Alumar or the Subsidiaries owns, directly or indirectly, any interest in
(excepting not more than a 1% holding for investment purposes in securities
of publicly held or traded companies), or is an officer, director, employee
or consultant of, or otherwise receives remuneration (other than dividends or
other distributions received as a shareholder) from, any Person which is, or
is engaged in business as, a competitor, lessor, lessee, customer or supplier
of Alumar or any Subsidiary. Except as disclosed on EXHIBIT 3.1.16, no
officer or director or shareholder of Alumar or the Subsidiaries, or any
Affiliate of Alumar or the Subsidiaries, has, nor had, during the period
beginning January 1, 1992 through, to and including the date hereof any,
interest in any material item of property, real or personal, tangible or
intangible, used in the business of Alumar or the Subsidiaries. Except as
disclosed on EXHIBIT 3.1.16, neither Alumar nor the Subsidiaries, nor any
Affiliate of Alumar or the Subsidiaries, has any agreement, understanding,
contract, lease, commitment, loan or other arrangement with, and has not
entered into any transactions involving or relating to, any officer,
director, shareholder or Employee of Alumar or the Subsidiaries, or any
relative of any of the foregoing, or any corporation, partnership, trust,
unincorporated association or similar entity in which any officer, director,
shareholder or Employee of Alumar or the Subsidiaries has any equity interest.
3.1.17 ENVIRONMENTAL MATTERS.
(a) All waste materials (including salt cake and bag house
dust) related to the operations of Alumar or any of the Subsidiaries
which have been disposed of off-site were disposed of at only the
following locations: CID Recycling & Disposal Landfill in Calumet
City, Illinois; Land & Lakes Landfill in Chicago, Illinois; Dexter
Landfill (formerly known as Lemons Landfill) in Dexter, Missouri;
Laraway Landfill in Elmwood, Illinois; Wheeler Landfill in Wheeler,
Indiana; LaPorte County Landfill in LaPorte, Indiana; Crawford County
Landfill in Arma, Kansas; Wheatland Sanitary Landfill in Columbus,
Kansas; Deffenbaugh Industries Oak Grove Landfill in Arcadia, Kansas;
CDT Landfill in Joliet, Illinois; Woodland Recycling and Disposal
Facility in South Elgin, Illinois; Solar Aluminum Technology
Services, Inc. landfill in Wendover, Utah; Waste Management landfill
in Fort Wayne, Indiana; and the Aluminum Waste Technology facility
in Cleveland, Ohio.
(b) As a result of such off-site disposal, Alumar and the
Subsidiaries are not subject to any (i) contingent liability in
connection with any Release or threatened Release of any Materials
of Environmental Concern into the environment at any such location,
or (ii) reclamation or remediation requirements under Environmental
Laws, or any reporting requirements related thereto.
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(c) With respect to the off-site disposal of any waste
materials, neither Alumar nor any of the Subsidiaries has been
named as a potentially responsible party under, and none of the
off-site locations set forth in paragraph (a) above are subject to
any existing or potential claim under, CERCLA or comparable
Environmental Laws, and no such off-site location is subject to
any Lien arising under Environmental Laws.
(d) Alumar and the Subsidiaries have not received any notices
of any material Release or threatened Release of Materials of
Environmental Concern, or of any material violation of, noncompliance
with, or remedial obligation under, any Environmental Laws relating
to such off-site disposal.
(e) There are no obligations, undertakings or liabilities
arising out of or relating to such off-site disposal which Alumar
or the Subsidiaries have agreed to assume or retain, by contract or
otherwise.
3.1.18 ABSENCE OF CERTAIN CHANGES, ETC. Except as disclosed in
this Agreement, or on EXHIBIT 3.1.18, since March 31, 1995, there has been no
occurrence of any event, condition or state of facts, or series of events or
conditions (other than those generally known in the general business
community or the metals recycling industry), of any character whatsoever
which, individually or in the aggregate, materially adversely affects the
condition (financial or other), results of operations, assets, liabilities,
businesses or prospects of Alumar or the Subsidiaries.
Since March 31, 1995 and except as disclosed in, or permitted by,
this Agreement or on EXHIBIT 3.1.18, Alumar and the Subsidiaries have:
(a) conducted their operations in the ordinary course;
(b) not entered into any transaction or contract, or amended or
terminated any transaction or contract, or incurred any liability,
debt or obligation (absolute or contingent), except normal
transactions or contracts consistent in nature and scope with prior
practices and entered into in the ordinary course of business;
(c) not sold, transferred, distributed or otherwise disposed
of any of the Assets, except in the ordinary course of business;
(d) not experienced any damage, destruction or loss to or of
any Assets materially and adversely affecting the properties or
business of Alumar or the Subsidiaries, except in the ordinary course
of business and except to the extent that any Asset damaged,
destroyed or lost (and material to the operation of the business of
Alumar or the Subsidiaries) has been repaired or replaced or is in
the process of being repaired or replaced;
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(e) not made or agreed to make any capital expenditures for
additions to property, plant or equipment, except for individual
expenditures and commitments not exceeding $50,000 in amount;
(f) not made or agreed to make any change in the compensation
payable to any employee, except for increases in compensation in the
ordinary course of business substantially consistent with past
practices of Alumar or the Subsidiaries;
(g) not granted credit to any customer on terms more favorable
than the terms on which credit has been extended to such customer in
the past nor changed the terms of any credit previously extended; or
(h) not made any distribution to, or redemption of the Alumar
Shares from, the holders of the Alumar Shares.
3.1.19 SUBSIDIARIES. Except for (a) ownership of Metal Mark by
Alumar, (b) ownership of Columbia Aluminum, Pittsburg Aluminum, Marnor
Aluminum and Tropram by Metal Mark, (c) ownership of a fifty percent (50%)
interest in Marport by Tropram, and (d) record (but not beneficial) ownership
of 142.5 shares of the common stock of U.S. Reduction Co., a Delaware
corporation, by Alumar (the "U.S. REDUCTION STOCK"), Alumar and the
Subsidiaries do not, either directly or indirectly, own or hold beneficial or
record ownership in any corporation, partnership, joint venture, business
trust or other legal entity. The Shareholders agree to cause Alumar to
assign record ownership to the U.S. Reduction Stock to the Shareholders or
their nominee prior to the Closing.
3.1.20 LICENSES AND PERMITS. Alumar or the Subsidiaries
currently possess all of the Permits listed in EXHIBIT 3.1.20, copies of all
of which have been delivered to Purchaser. Such Permits constitute all of
the Permits necessary under applicable law for Alumar and the Subsidiaries to
conduct their businesses as now being conducted and to construct, own,
operate, maintain and use the Assets in the manner in which they are now
being constructed, operated, maintained and used, except for those Permits,
the absence of which will not have a material adverse effect on the assets or
business of Alumar or the Subsidiaries.
Marport has applied to the State of Indiana Department of Environmental
Protection for a new air emissions Permit. Such new Permit (when granted)
will allow Marport to operate its facility at the greater of the applicable
limit of its existing air emissions Permit or the maximum current operating
capacity of such facility. Except as disclosed on EXHIBIT 3.1.20, each of
such Permits and Alumar's or the Subsidiaries' rights with respect thereto
(a) is valid and subsisting, in full force and effect, and enforceable by
Alumar or the Subsidiaries (except as enforceability may be limited by
bankruptcy, insolvency, reorganization and other laws affecting the
enforcement of creditors' rights generally and except that the availability
of the remedy of specific performance or other
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equitable relief is subject to the discretion of the court before which any
proceeding therefor may be brought), and (b) following consummation of the
Merger will continue to be valid and subsisting in full force and effect, and
enforceable by the Surviving Corporation or the Subsidiary holding such
Permit (subject to the foregoing limitation) without any consent or approval
of any Governmental Authority. Alumar and the Subsidiaries are in compliance
in all material respects with the terms of such Permits. None of such
Permits have been, or, to the knowledge of the Shareholders, are threatened
to be, revoked, canceled, suspended or modified.
3.1.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Alumar or
the Subsidiaries nor any officer, Employee or agent of Alumar or the
Subsidiaries has, directly or indirectly, within the past five years, given
or agreed to give any gift or similar benefit to any customer, supplier,
government employee or other Person who is or may be in a position to help or
hinder the business of Alumar or the Subsidiaries (or to assist Alumar or the
Subsidiaries in connection with any actual or proposed transaction) which
will subject Alumar or the Subsidiaries to any material damage or penalty in
any civil, criminal or governmental litigation or proceeding.
3.1.22 CUSTOMERS. EXHIBIT 3.1.22 sets forth a true and correct
list of the ten (10) largest customers of Alumar or the Subsidiaries (other
than customers of Marport), both in terms of sales and in terms of pounds
processed, during the twelve months ended March 31, 1995, showing the
approximate total sales to each such customer for the twelve month period
ended on such date. The Shareholders shall cause Alumar and the Subsidiaries
to provide to Purchaser, within ten (10) days after the end of each calendar
month after the execution of this Agreement and through and including the
Closing Date, an updated list of the ten (10) largest customers of Alumar or
the Subsidiaries (other than the customers of Marport), both in terms of
sales and in terms of pounds processed, as of the end of the previous month.
Except to the extent set forth in EXHIBIT 3.1.22, there has not been any
material adverse change in the business relationship of Alumar or the
Subsidiaries with any customer listed on EXHIBIT 3.1.22 since March 31, 1995
through the date of this Agreement, except as disclosed on EXHIBIT 3.1.22.
3.1.23 SECURITIES COMPLIANCE HISTORY. All offers and sales of
securities of Alumar or the Subsidiaries by Alumar or the Subsidiaries have
been made in compliance with the 1933 Act and all applicable state blue sky
laws.
3.1.24 PROPERTY.
(a) The zoning classification of the Property is such that,
as of the Effective Date, the Property may be used as currently used
in the business of Alumar and the Subsidiaries.
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(b) Except as set forth on EXHIBIT 3.1.24, there are no third
parties in possession of any portion of the Property as lessees,
tenants at sufferance or trespassers.
(c) There is no pending or threatened condemnation or similar
proceeding or assessment affecting the Property, or any part thereof,
nor, to the knowledge of the Shareholders, is any such proceeding or
assessment proposed by any Governmental Authority.
(d) The Property has full and free access to and from public
highways, streets or roads, and there is no pending or, to the
knowledge of the Shareholders, threatened proceeding by any
Governmental Authority which would impair or result in the
termination of such access.
3.1.25 CERTAIN REPRESENTATIONS PERTAINING TO MARPORT. Alumar and
the Subsidiaries have heretofore delivered to Purchaser the following
documents regarding Marport (i) Pre-Formation Agreement and Assignment
Agreement dated as of December 27, 1994, between Tropram and Indiana Metal
Conversion Corp., (ii) Articles of Organization of Marport dated December 27,
1994, (iii) Operating Agreement of Marport Smelting, L.L.C. dated effective
as of January 1, 1995 (the "MARPORT OPERATING AGREEMENT"), between Tropram
and Indiana Metal Conversion Corp., (iv) Memorandum of Understanding dated
May 1, 1993, between Marport and American Metal & Salt Recovery Company, as
amended by the Amendment Agreement dated as of November 1, 1993, (v) Option
Agreement dated May 1, 1993, by American Metal & Salt Recovery Company, and
(vi) Agreement dated as of March 9, 1992, between Marport and Metal Mark.
The foregoing documents constitute all material documents, agreements or
contracts relating to the interests and obligations of Alumar or any
Subsidiary with respect to the investment in or operations of Marport, except
as set forth in the minutes of the Management Committee of Marport (a
complete copy of which has been provided to Purchaser). Alumar or any
Subsidiary has not given to Indiana Metal Conversion Corp., nor has Alumar or
any Subsidiary received from Indiana Metal Conversion Corp., any "Offer
Notice" pursuant to Section 8.2 of the Marport Operating Agreement (as such
term is defined therein).
3.1.26 INVENTORY. All inventory of Alumar consists of materials
usable or saleable in the ordinary course, and the aggregate market value of
the inventory included in the Financial Statements is at least equal to the
value specified therefor in the Financial Statements. The inventory records
for Alumar that have been delivered to Purchaser are in all material respects
accurate with respect to the data contained therein.
3.1.27 LIMITATION ON MARPORT REPRESENTATIONS. To the extent the
representations and warranties of the Shareholders contained in Section 3.1
relate to Marport or its operations (other than the representations and
warranties set forth in Section 3.1.1 and 3.1.25), such representations and
warranties shall be made to the knowledge of the Shareholders, it being
understood by Purchaser that Alumar and the
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Subsidiaries own 50% of the membership interests in Marport and that Marport
is operated by its president and current management pursuant to the Marport
Operating Agreement.
3.1.28 UNTRUE STATEMENTS. Neither this Agreement (including the
Exhibits and Schedules) nor any certificate or document furnished or to be
furnished to Purchaser in connection with this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make such statements contained herein or
in any such certificate or document not misleading.
3.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS . Each
Shareholder represents and warrants to Purchaser, severally and not jointly,
solely with respect to such Shareholder, the following:
3.2.1 QUALITY OF TITLE TO SHARES. Except as disclosed on
EXHIBIT 3.2.1, there are no outstanding subscriptions, options, warrants,
rights, conversion rights, rights of first refusal or other agreements or
commitments, other than this Agreement, obligating such Shareholder to
transfer, or granting an option or right by such Shareholder to any person or
entity to purchase or acquire securities of Alumar or any Subsidiary from
such Shareholder. Such Shareholder has not made or entered into any
agreement or understanding with respect to the disposition of the Alumar
Shares owned beneficially or of record by such Shareholder in any manner
other than by this Agreement. Such Shareholder is the record and beneficial
owner of the Alumar Shares, shown as held by such Shareholder on EXHIBIT
3.2.1 and holds such Alumar Shares free and clear of any pledge, Lien,
encumbrance, security interest, voting trust or voting agreement or similar
arrangement, proxy, prior purchase right or other restriction on transfer or
equitable rights or other adverse claim.
3.2.2 SOLVENCY. Such Shareholder is solvent and will not be
rendered insolvent by the occurrence of the Merger and is entering into this
Agreement without any actual intent to hinder, delay or defraud any creditor
of such Shareholder.
3.2.3 SECURITIES COMPLIANCE HISTORY. All offers and sales of
Alumar Shares by such Shareholder have been made in compliance with the 1933
Act and all applicable state blue sky laws.
3.2.4 SHARES ACQUIRED FOR INVESTMENT. Such Shareholder is
acquiring Purchaser Stock for such Shareholder's own account as an investment
and without an intent to distribute or present intent to resell the Purchaser
Stock.
3.2.5 COMPETENCY. Such Shareholder is competent and possesses
full power and ability to execute, deliver and perform this Agreement
(including, without limitation, the execution, delivery and performance of
any Operative Documents to be executed, delivered or performed by such
Shareholder) and may execute, deliver and perform such Shareholder's
obligations under this Agreement without the necessity of
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obtaining any consent, approval, authorization or waiver or giving any notice
or otherwise, except for consents, approvals, authorizations, waivers and
notices which have been given or obtained (or will be given or obtained on or
prior to the Closing Date).
3.2.6 BINDING OBLIGATIONS. This Agreement constitutes, and the
other Operative Documents to be entered into by such Shareholder constitute,
the legal, valid and binding obligations of such Shareholder, enforceable
against such Shareholder in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency and other similar laws of general application relating
to or affecting the enforcement of rights of creditors, and except that the
availability of the remedy of equitable relief is subject to the discretion
of the court before which any proceeding therefor may be brought and,
further, except as enforceability may be limited by considerations of public
policy and applicable state and federal securities laws.
3.2.7 RECEIPT OF INFORMATION. Such Shareholder acknowledges
that the Shareholder has received and reviewed the following documents from
Purchaser: (i) Purchaser's Annual Report to Stockholders for its fiscal year
ended December 31, 1994, (ii) Purchaser's Annual Report on Form 10-K for the
year ended December 31, 1994, (iii) Purchaser's Quarterly Reports on Form
10-Q for its fiscal quarters ended March 31, 1995 and June 30, 1995, and (iv)
Purchaser's Proxy Statement for its 1995 annual meeting of stockholders
(collectively, the "PURCHASER INFORMATION"). Such Shareholder has had an
opportunity to ask questions of and receive satisfactory answers from
Purchaser sufficient to enable such Shareholder to evaluate the merits and
risks of the acquisition of the Purchaser Stock pursuant to the Merger.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB.
Purchaser and Merger Sub, jointly and severally, represent and warrant
to the Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING. Purchaser and Merger Sub are each a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and each such party has the full power and
authority (corporate or otherwise) to carry on its respective business in the
places and as it is now being conducted and to own, operate and lease the
properties and assets which it now owns, operates or leases. Purchaser owns,
beneficially and of record, all of the issued and outstanding shares of the
capital stock of Merger Sub.
4.2 CORPORATE POWER AND AUTHORITY; BINDING OBLIGATIONS. Purchaser and
Merger Sub each have the full corporate power and authority to execute and
deliver this Agreement and the other Operative Documents to which it is a
party, to perform hereunder and thereunder, and to consummate the Merger and
the other transactions contemplated hereby and thereby without the necessity
of any act, approval or consent of any other person or entity whomsoever
(except for compliance under the HSR Act).
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The execution, delivery and performance by each of Purchaser and Merger Sub
of this Agreement and the other Operative Documents to which they are a party
and each and every agreement, document and instrument provided for herein and
therein to be executed and delivered by them and the consummation of the
Merger have been duly authorized and approved by the Board of Directors of
Purchaser and by the Board of Directors and sole shareholder of Merger Sub.
This Agreement, the other Operative Documents to which they are a party and
each and every other agreement, document and instrument to be executed,
delivered and performed by them in connection herewith constitute or will,
when executed and delivered, constitute the legal, valid and binding
obligations of Purchaser and Merger Sub, as applicable, enforceable against
each such party in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization and
other laws affecting the enforcement of creditors' rights generally and
except that the availability of the remedy of specific performance or other
equitable relief is subject to the discretion of the court before which any
proceeding therefor may be brought and, further, except as enforceability may
be limited by considerations of public policy and applicable state and
federal securities laws.
4.3 NO VIOLATIONS. The execution and delivery of this Agreement and
the other Operative Documents to which they are a party by Purchaser and
Merger Sub do not, and the consummation of the Merger and the other
transactions contemplated hereby and thereby will not:
(a) violate any provisions of the Certificate of Incorporation,
as amended, or Bylaws, as amended, of Purchaser or Merger Sub, as
applicable;
(b) except for compliance under the HSR Act, violate any statute,
judgment, order, decree or regulation or rule of any Governmental
Authority applicable or relating to either Purchaser or Merger Sub; or
(c) conflict with, or constitute a breach or default under, or give
rise to any right of termination, cancellation or acceleration under,
any material note, mortgage, deed of trust, lease, license, contract,
agreement, or other instrument or obligation to which either Purchaser
or Merger Sub is a party or by which either of them is bound or their
assets are affected or an event which, with notice, lapse of time, or
both, would result in any such conflict, breach, default or right.
4.4 SHARES ACQUIRED FOR INVESTMENT. Purchaser is acquiring the Alumar
Shares for its own account as an investment and not with a view to any
distribution thereof. Purchaser acknowledges and understands that none of the
Alumar Shares have been registered under the 1933 Act, or under any other
federal, state or local statute or regulation and that, as a consequence,
Purchaser may not sell or otherwise dispose of any of such shares unless such
shares are registered or an exemption from such registration is available to
Purchaser at the time of and in connection with any proposed sale or
disposition.
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4.5 CONSENTS AND AUTHORIZATIONS. Except with respect to the HSR Act
and as set forth on EXHIBIT 4.5 hereto and the filings and recordation of the
Certificate of Merger required by the DGCL and the IBCA, no consent, approval
or authorization or registration, declaration, designation, qualification or
filing with any Governmental Authority on the part of Purchaser or Merger Sub
is required in connection with the valid execution and delivery of this
Agreement, the other Operative Documents or the consummation of the
transactions contemplated hereby or thereby.
4.6 PURCHASER INFORMATION. Purchaser has previously delivered to the
Shareholders true, correct and complete copies of the Purchaser Information.
4.7 PURCHASER STOCK. The Purchaser Stock, when delivered to the
Shareholders pursuant to the Merger, will be validly issued and outstanding,
fully paid and nonassessable and free of all Liens, claims and encumbrances,
except for restrictions on resale under applicable securities laws.
4.8 ACKNOWLEDGMENT OF ACCESS TO RECORDS. Purchaser acknowledges that
its agents and representatives have had complete access to all books,
records, files, documents, assets, properties, contracts and agreements of
Alumar and the Subsidiaries and all other information concerning Alumar and
the Subsidiaries as they have requested and have had an opportunity to ask
questions of and receive satisfactory answers from the Shareholders and
officers and employees of Alumar and the Subsidiaries sufficient to enable
Purchaser to evaluate the merits and risks of the acquisition of the shares
of capital stock of Alumar.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND
MERGER SUB.
The obligations of Purchaser and Merger Sub to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived by Purchaser in whole
or in part:
5.1 REPRESENTATIONS TRUE AT CLOSING. The representations and
warranties made by the Shareholders in this Agreement and the Exhibits hereto
shall be true and correct on the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of such
time, except as otherwise set forth herein or contemplated hereby.
5.2 COVENANTS OF ALUMAR AND THE SHAREHOLDERS. Alumar and the
Shareholders shall have duly performed all of the covenants, acts and
undertakings to be performed by them on or prior to the Closing Date and a
duly authorized executive officer of Alumar and each of the Shareholders
shall deliver to Purchaser a certificate dated as of the Closing Date
certifying to the fulfillment of this condition. At the Closing, each
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Shareholder shall deliver a certificate certifying as to the satisfaction of
this condition and the condition set forth in Section 5.1 hereof.
5.3 NO INJUNCTION, ETC. No action, proceeding or investigation shall
have been instituted or threatened before any court or Governmental Authority
to enjoin, restrain, prohibit, or obtain substantial damages in respect of
the consummation of the transactions contemplated hereby, or that would limit
or adversely affect Purchaser's ability to acquire, or Purchaser's ownership
of, the Alumar Shares.
5.4 OPINION OF COUNSEL. A favorable opinion of Katz Randall & Weinberg
shall have been delivered to Purchaser dated as of the Closing Date,
substantially in form and substance of the opinion attached hereto as EXHIBIT
5.4.
5.5 APPROVALS, CONSENTS AND WAIVERS. The execution and the delivery of
this Agreement and the consummation of the transactions contemplated hereby
shall have been approved by all Governmental Authorities whose approvals are
required by law, and Purchaser shall have received a true and correct copy of
each consent and waiver referred to in Section 2.5 hereof.
5.6 ABSENCE OF ADVERSE CHANGE. Since the date of this Agreement,
Alumar and the Subsidiaries shall not have suffered, on a consolidated basis,
any material adverse changes in their financial condition, business,
property, assets or prospects.
5.7 NO OUTSTANDING WARRANTS. On the Closing Date, there are no
outstanding rights, options, warrants, conversion rights or agreements for
the purchase or acquisition from Alumar of any shares of its capital stock
other than the rights created by this Agreement.
5.8 DISSENTERS. None of the Shareholders shall have exercised their
dissenters' rights under the IBCA arising in connection with the Merger.
Each Shareholder shall have tendered, at Closing, to Purchaser such
Shareholder's certificates for Alumar Shares, together with appropriate
executed transfer documents.
5.9 INVESTMENT LETTER. Each Shareholder shall have delivered to
Purchaser an executed Investment Letter in the form of EXHIBIT 5.9 hereto.
5.10 RELEASE. Each Shareholder shall have delivered to Purchaser a
Release in the form of EXHIBIT 5.10 hereto.
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5.11 TITLE POLICY. An owner's policy of title insurance, issued by a
title company acceptable to Purchaser, shall have been delivered to Purchaser
with respect to each parcel of Property, which title policy shall show good
and indefeasible title to each such parcel of Property to be vested in
Purchaser as of the Closing, free and clear of all Liens except (a) Permitted
Encumbrances and (b) such Liens and encumbrances that may be waived or
accepted by Purchaser prior to the Closing. The title policies shall be in
the following amounts with respect to each Property: Columbia Aluminum - $5
million; Marnor Aluminum - $1 million; Pittsburg Aluminum - $1 million; and
Marport - $1.5 million.
5.12 HSR COMPLIANCE. The waiting period under the HSR Act shall have
expired or the parties shall otherwise be permitted under the HSR Act to
proceed with the Closing.
5.13 EMPLOYMENT AGREEMENT. Jonathan C. Markle shall have entered into
an Employment Agreement with Purchaser, on terms mutually acceptable to Mr.
Markle and Purchaser.
5.14 ENVIRONMENTAL AUDIT REPORT. Purchaser shall have received an
Environmental Audit Report with respect to each parcel of the Property (a
total of four (4) reports), each of which shall be in form and substance
reasonably satisfactory to Purchaser.
5.15 U.S. REDUCTION STOCK. Alumar shall have distributed to the
Shareholders all of the U.S. Reduction Stock.
5.16 TERMINATION OF AGREEMENTS. Alumar, the Subsidiaries, and each of
the Shareholders shall have entered into written agreements, in form and
substance satisfactory to Purchaser, terminating all agreements (oral or
written) between Alumar or any Subsidiary, on the one hand, and any
Shareholder, on the other hand, with regard to employment, consulting and all
other matters whatsoever (except with respect to the Employment Agreement
referred to in Section 5.13).
5.17 TOBIAN METALS. Tobian Metals, Inc. ("TOBIAN") shall have entered
into a written agreement with Metal Mark (i) transferring to Metal Mark
(without cost to Metal Mark) any equity interest Tobian may have in Columbia
Aluminum and (ii) terminating any right of Tobian to purchase any such equity
interest, with such agreement being in form and substance satisfactory to
Purchaser.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALUMAR AND THE
SHAREHOLDERS.
The obligations of Alumar and the Shareholders to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction, on or before the
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Closing Date, of each and every one of the following conditions, all or any
of which may be waived by Alumar and the Shareholders in whole or in part:
6.1 REPRESENTATIONS TRUE AT CLOSING. The representations and
warranties made by Purchaser and Merger Sub in this Agreement shall be true
and correct on the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of such time.
6.2 COVENANTS OF PURCHASER AND MERGER SUB. Purchaser and Merger Sub
shall have duly performed all of the covenants, acts and undertakings to be
performed by them on or prior to the Closing Date and duly authorized
executive officers of Purchaser and Merger Sub shall deliver to Alumar and
the Shareholders a certificate dated as of the Closing Date certifying to the
fulfillment of this condition and the condition set forth in Section 6.1
hereof.
6.3 NO INJUNCTION, ETC. No action, proceeding or investigation shall
have been instituted or threatened before any court or Governmental Authority
to enjoin, restrain, prohibit, or obtain substantial damages in respect of
the consummation of the transactions contemplated hereby.
6.4 OPINION OF COUNSEL. A favorable opinion of Haynes and Boone,
L.L.P. shall have been delivered to Alumar and the Shareholders, dated as of
the Closing Date, substantially in form and substance of the opinion attached
hereto as EXHIBIT 6.4.
6.5 HSR COMPLIANCE. The waiting period under the HSR Act shall have
expired or the parties shall otherwise be permitted under the HSR Act to
proceed with the Closing.
7. CLOSING.
7.1 TRANSACTIONS AT CLOSING. At the Closing, each of the following
transactions shall occur:
7.1.1 ALUMAR'S AND THE SHAREHOLDERS' PERFORMANCE. At the Closing,
Alumar and the Shareholders shall deliver to Purchaser the following:
(a) all certificates representing the shares of the outstanding
capital stock of Alumar, duly endorsed for transfer or accompanied
by instruments of transfer satisfactory in form and substance to
Purchaser and its counsel;
(b) certificates of existence and of good standing of Alumar
and each Subsidiary, as of the most recent practicable date, from
the Secretary of State, or other appropriate Governmental Authority,
of the state of
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incorporation or organization (or state of the principal location
of business, if different) of Alumar and each Subsidiary;
(c) certified copies of resolutions of the Board of Directors
and shareholders of Alumar approving the transactions set forth in
this Agreement;
(d) opinion of Katz Randall & Weinberg in substantially the
form of EXHIBIT 5.4;
(e) executed Registration Rights Agreement, as contemplated by
Section 2.7 hereof;
(f) evidence of the resignations described in Section 2.6;
(g) evidence of the consents and waivers contemplated by
Sections 2.5 and 5.5;
(h) the certificate of an officer of Alumar and the certificate
from each Shareholder, as described in Section 5.2 hereof;
(i) incumbency certificates for the officers of Alumar and the
Subsidiaries executing this Agreement or any agreement ancillary
hereto;
(j) executed Investment Letters, as contemplated by Section
5.9;
(k) executed Releases, as contemplated by Section 5.10; and
(l) an owner's title policy with respect to each parcel of
Property, reasonably satisfactory in form and substance to Purchaser,
as contemplated by Section 5.11;
(m) all corporate and other records of or applicable to Alumar
and each Subsidiary, including but not limited to minute books, stock
books and transfer registers, books of accounts, leases, material
contracts, computer programs, data processing records, computer
software, documents and other information relating to any of the
foregoing;
(n) executed Certificate of Merger;
(o) executed Escrow Agreement, in substantially the form of
EXHIBIT 2.2.3; and
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(p) such other evidence of the performance of all covenants
and satisfaction of all conditions required of Alumar and the
Shareholders by this Agreement, at or prior to Closing, as Purchaser
or its counsel may reasonably require.
7.1.2 PERFORMANCE BY PURCHASER AND MERGER SUB. At the Closing,
Purchaser and Merger Sub shall deliver to Alumar and/or the Shareholders, as
appropriate, the following:
(a) shares of Purchaser Stock deliverable to the Shareholders
pursuant to the Merger;
(b) executed Registration Rights Agreement, as contemplated by
Section 2.7 hereof;
(c) opinion of Haynes and Boone, L.L.P., in substantially the
form of EXHIBIT 6.4 ;
(d) certified copies of resolutions of (i) the Board of
Directors of Purchaser, and (ii) the Board of Directors and sole
shareholder of Merger Sub, approving the transactions set forth
in this Agreement;
(e) incumbency certificates for the officers of Purchaser
and Merger Sub executing this Agreement or any agreement ancillary
hereto;
(f) the certificate of the executive officer of Purchaser and
Merger Sub described in Section 6.2 hereof;
(g) executed Certificate of Merger;
(h) executed Escrow Agreement, in substantially the form of
EXHIBIT 2.2.3; and
(i) such other evidence of all covenants and satisfaction of
all conditions required of Purchaser by this Agreement at or prior
to closing, as Alumar and the Shareholders or their counsel may
reasonably require.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION.
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
8.1.1 ALUMAR, SUBSIDIARIES AND SHAREHOLDERS. All
representations, warranties, agreements, covenants and obligations made or
undertaken by Alumar, the Subsidiaries and the Shareholders in this
Agreement, any other Operative Document, or
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in any document or instrument executed and delivered pursuant hereto are
material, have been relied upon by Purchaser, shall survive the Closing
hereunder for the applicable period indicated in Section 8.2.2 and shall not
merge in the performance of any obligation by any party hereto.
8.1.2 PURCHASER AND MERGER SUB. All representations,
warranties, agreements, covenants and obligations made or undertaken by
Purchaser and Merger Sub in this Agreement, any other Operative Document, or
in any document or instrument executed and delivered pursuant hereto are
material, have been relied upon by Alumar and the Shareholders, shall survive
the Closing hereunder for the applicable period indicated in Section 8.3.2
hereof and shall not merge in the performance of any obligation by any party
hereto.
8.2 CERTAIN INDEMNIFICATION BY THE SHAREHOLDERS.
8.2.1 INDEMNIFICATION. The following indemnifications and
obligations of the Shareholders set forth in subsections (a) and (b) below
are expressly made subject to all of the provisions of Article 8 of this
Agreement.
(a) GENERAL INDEMNIFICATION. The Shareholders, jointly and
severally, hereby agree to indemnify and hold Purchaser (and also,
after the Closing, the Surviving Corporation and the Subsidiaries)
harmless from any and all damages, losses, expenses, deficiencies,
liabilities, obligations and penalties, including all reasonable
costs and expenses (including reasonable attorneys' fees and
reasonable settlement costs related thereto) arising from or in
connection with:
(i) any breach or violation of, or inaccuracy in, any
representation, warranty, covenant or agreement of
Alumar, the Subsidiaries or the Shareholders contained
in this Agreement (except Section 3.2 hereof), or in
any Operative Document, or in any certificate
delivered pursuant to Section 5.2 hereof;
(ii) any claims which may be made against Purchaser, the
Surviving Corporation or the Subsidiaries by any
Person, including without limitation any legal,
governmental or administrative action, suit or
proceeding against Purchaser, the Surviving
Corporation or the Subsidiaries, which arise from the
conduct of the business of Alumar or the Subsidiaries
on or prior to the Closing (but excluding any claims
arising under Environmental Laws) and which were not
fully disclosed to Purchaser in writing prior to the
Closing;
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(iii) any liability or obligation of any nature not fully
disclosed or reserved for on the Financial Statements
that should have been so disclosed or reserved for
pursuant to generally accepted accounting principles;
(iv) the payment by Purchaser, the Surviving Corporation
or the Subsidiaries of liabilities for Taxes, if any,
that accrued or relate to the period prior to the
Closing which are in excess of the amounts accrued and
reflected for such purposes on the books of Alumar or
the Subsidiaries as of the Effective Time;
(v) the payment by Purchaser, the Surviving Corporation or
the Subsidiaries of any liability for Taxes that arise
from Alumar's distribution of the U.S. Reduction Stock
to the Shareholders;
(vi) the failure of either Marport or Columbia Aluminum
to be able to lawfully operate their respective
facilities at the greater of (i) the applicable limit
of their existing air emissions Permit or (ii) the
maximum current operating capacity of such facilities;
and
(vii) any and all actions, suits, proceedings, claims,
demands, assessments, deficiencies, judgments, costs
and reasonable expenses arising out of any of the
foregoing or the enforcement by Purchaser, the
Surviving Corporation or the Subsidiaries of a valid
right of indemnity hereunder.
(b) ADDITIONAL SHAREHOLDERS' INDEMNITIES. Each Shareholder,
severally and not jointly, hereby agrees to indemnify and hold
Purchaser (and also, after the Closing, the Surviving Corporation
and the Subsidiaries) harmless from any and all damages, losses,
expenses, deficiencies, liabilities, obligations and penalties,
including all reasonable costs and expenses (including reasonable
attorneys' fees and reasonable settlement costs related thereto)
arising from or in connection with:
(i) any breach or violation of, or inaccuracy in, any
representation, warranty, covenant or agreement of
such Shareholder contained in Section 3.2 of this
Agreement, or in any Operative Documents, or in the
certificate of such Shareholder delivered pursuant to
Section 5.2 hereof; and
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(ii) any and all actions, suits, proceedings, claims,
demands, assessments, deficiencies, judgments, costs
and reasonable expenses arising out of any of the
foregoing, or the enforcement by Purchaser, the
Surviving Corporation or the Subsidiaries of a valid
right of indemnity under this Section 8.2.1(b).
8.2.2 TIME LIMIT. The Shareholders shall not be required to
indemnify or otherwise be obligated to Purchaser, the Surviving Corporation
or the Subsidiaries under this Article 8 unless Purchaser notifies the
Shareholders of the facts which are the basis for indemnification pursuant to
this Article 8 on or before the second anniversary of the Closing.
Notwithstanding the foregoing, Purchaser, the Surviving Corporation or the
Subsidiaries may seek indemnification hereunder at any time before or after
the second anniversary of the Closing with respect to (i) Section 8.2.1(a)(v)
or (ii) the breach by a Shareholder of the representations and warranties
contained in Section 3.2.1 hereof.
8.2.3 INDEMNIFICATION OBLIGATIONS NON-RECOURSE. Except as
provided in the following paragraph, the Shareholders shall have no personal
liability under Section 8.2.1 of this Agreement, except to the extent of
their interest in the Purchaser Stock held pursuant to the Escrow Agreement.
Accordingly, except as provided in the following paragraph, Purchaser agrees
to look solely to such shares of Purchaser Stock held pursuant to the Escrow
Agreement for payment and satisfaction of the obligations and liabilities of
the Shareholders under Section 8.2.1 of this Agreement.
With respect to any obligations of the Shareholders arising from (i)
Section 8.2.1(a)(v) (which relates to the distribution of U.S. Reduction
Stock), and (ii) any breach of the representations and warranties contained
in Section 3.2.1, such obligations shall be personal recourse obligations of
the Shareholders and shall not be satisfied from the Purchaser Stock held
pursuant to the Escrow Agreement.
8.3 INDEMNIFICATION BY PURCHASER.
8.3.1 INDEMNIFICATION. Purchaser hereby agrees to indemnify and
hold each Shareholder harmless from and against all liabilities, losses,
expenses, deficiencies, liabilities, obligations and penalties, including all
reasonable costs and expenses (including reasonable attorneys' fees and
reasonable settlement costs related thereto) suffered or incurred by such
Shareholder arising from or in connection with:
(a) any breach or violation of, or inaccuracy in, any
representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or any Operative Document;
(b) any material actual or threatened violation of or non-
compliance with, or remedial obligation arising under, any
Environmental
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Laws arising from any event, condition, circumstance, activity,
practice, incident, action or plan, to the extent, and only to the
extent that it arises or occurs after the Closing, relating in any
way to the assets or the business of the Surviving Corporation or
the Subsidiaries (including without limitation the ownership,
operation or use of the Assets and the conduct of the business of
the Surviving Corporation or the Subsidiaries after the Closing); the
presence of any underground storage tanks or any Materials of
Environmental Concern on, in, under or affecting all or any portion
of the Surviving Corporation's or the Subsidiaries' properties after
the Closing; any Release or threatened Release after the Closing
with respect to such underground storage tanks or Materials of
Environmental Concern; and the storage, disposal or treatment, or
transportation for storage, disposal or treatment, of Materials
of Environmental Concern after the Closing; and
(c) any and all actions, suits, proceedings, claims, demands,
assessments, deficiencies, judgments, costs and reasonable expenses
arising out of any of the foregoing, or the enforcements by any
Shareholder of a valid right of indemnity under this Section 8.3.1.
8.3.2 TIME LIMIT; CAP. Purchaser shall not be required to
indemnify or otherwise be obligated to any Shareholder under this Article 8
unless any Shareholder notifies Purchaser of the facts which are the basis
for indemnification pursuant to this Article 8 on or before the second
anniversary of the Closing. The maximum liability of the Purchaser to each of
the Shareholders under this Agreement shall be equal to the portion of the
Merger Consideration received by such Shareholder (valued as of the date or
dates such consideration becomes payable).
8.4 EXCLUSIVE REMEDY. Except for remedies that cannot be waived as a
matter of law, including, without limitation, claims under applicable state
and federal securities laws, the indemnification obligations under this
Article 8 shall be sole and the exclusive remedy of the parties hereto with
respect to any breach of any representation, warranty, covenant or agreement
under this Agreement by any party hereto, except that nothing herein shall be
construed or interpreted as limiting or impairing the rights or remedies that
the parties hereto may have at equity for injunctive relief or specific
performance.
8.5 DEFENSE OF SUITS AND CLAIMS.
(a) In order for a party to seek indemnification pursuant to this
Section 8 (an "INDEMNITEE"), the Indemnitee must promptly give notice of
such claim for indemnification to the indemnifying party (the
"INDEMNITOR") after the Indemnitee becomes aware of the basis for a claim;
PROVIDED, HOWEVER, that failure of the Indemnitee(s) to give such notice
promptly shall not render the Indemnitor's obligation of indemnity
inapplicable to such claim unless such failure materially prejudices the
Indemnitor(s) in the defense or settlement of such claim. Such notice
shall (i) be in writing, (ii) be given prior to the date set forth in
Section 8.2.2
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or 8.3.2 above, as applicable, and (iii) specifically identify the
matters which have given rise to such indemnity claims.
(b) Upon receipt by the Indemnitor(s) of the notice of claim for
indemnity required to be given by the Indemnitee(s) under subsection
8.5(a) above, the Indemnitor(s) shall have the right at any time
thereafter to be represented, at such Person's own expense, by legal
counsel and/or accountants of such Person's own choosing, with respect
to (i) any settlement negotiations, or (ii) any action, suit or other
proceeding, legal, administrative or arbitrative, including any appeal
proceeding ((i) and (ii) collectively, a "CLAIM"), in each case with
respect to the matter giving rise to the indemnity claim. In the event
of any Claim, the Indemnitor, at its option, shall have the right to
assume the control and defense of such Claim (at such Person's expense
and with legal counsel reasonably acceptable to the Indemnitee),
including, without limitation, the right to control all negotiations,
litigation, arbitration, settlements, compromises and appeals of such
Claim; PROVIDED, HOWEVER, that prior to entering into any final settlement
or compromise, the Indemnitor(s) shall obtain the Indemnitee(s) consent
(which consent shall not be unreasonably withheld). Subject to the
Indemnitor(s) right to control the defense of any Claim as set forth
above, the Indemnitee(s) shall have the right to participate in the
defense of any such Claim at such Person's own cost and expense.
(c) In the defense of any Claim, regardless of who is in control
thereof, each of the parties shall fully cooperate with the other party,
and shall cause their Affiliates, counsel and advisors to do so, and
shall make available to each other all relevant books and records during
normal business hours and shall furnish each other such assistance as
each may reasonably request in connection with such defense.
(d) In the event a Claim arises under Section 8.2.1(ii), 8.2.1(iv),
or 8.2.1(v) hereof (a "Third Party Claim"), the reasonable costs and
expenses of the Shareholders (including fees and expenses of counsel
reasonably acceptable to the Indemnitee) shall be a Claim which shall
be reimbursable to the Shareholders pursuant to the provisions of
Section 2A of the Escrow Agreement.
8.6 ARBITRATION. Notwithstanding anything else contained herein
(except as set forth in Section 8.2.2 and Section 8.3.2), the agreements of
the parties set forth in this Section 8.6 shall survive the Closing until all
Claims are resolved in accordance with the provisions hereof, but not
thereafter. In the event any party hereto disputes any Claim, the parties
shall attempt to resolve such dispute within thirty (30) days after delivery
of the indemnification notice required by Section 8.5(a) above. If the
parties are unable to resolve such dispute within such 30-day period, the
parties shall submit the dispute in question for arbitration in the City of
Chicago, Illinois for resolution. Such arbitration shall be conducted in
accordance with the rules of the American Arbitration Association then in
effect by a panel of three (3) arbitrators, one of which is selected by each
of Purchaser
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and the Shareholders' Representative, and the third of which is selected by
the two arbitrators so designated. The parties will select their respective
arbitrators within thirty (30) days from the expiration of the aforesaid
30-day period. The arbitration panel and any such proceeding may require
discovery from the parties. The arbitration panel shall not be entitled to
determine any disputes arising under this Agreement other than those
submitted pursuant to this Section 8.6 and shall not have the right to
increase or in any way alter the respective obligations of the parties under
this Agreement or the Escrow Agreement. Any such decision which the
arbitration panel reaches shall be final and binding upon the parties to this
Agreement, and shall be specifically enforceable by a court of competent
jurisdiction. This provision for arbitration shall be specifically
enforceable by the parties hereto. In the event of any such arbitration, the
arbitration panel shall award to Prevailing Party (as hereinafter defined)
all of such reasonable attorneys' fees which the Prevailing Party incurred in
connection with such arbitration. As used herein, the term "PREVAILING
PARTY" shall mean the party which is awarded the greater relief in such
arbitration proceeding. The arbitration panel shall require the other party
to reimburse the Prevailing Party for all of its aforesaid costs and fees,
within fifteen (15) days from the date the arbitration panel renders its
decision. The Escrow Agent shall not be a necessary party in resolving
disputes under this Section 8.
8.7 REIMBURSEMENT. In the event that an Indemnitor undertakes,
conducts, or controls the defense or settlement of any claim or action as
contemplated by Section 8.5 hereof and it is later determined that such claim
or action was not a claim or action for which the Indemnitor is required to
indemnify the Indemnitee under this Article 8, the Indemnitee shall
immediately reimburse the Indemnitor for all of its costs and expenses with
respect to such settlement or defense, including reasonable attorneys' fees
and disbursements.
9. TERMINATION.
9.1 METHOD OF TERMINATION. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions
contemplated hereby, the consideration for which is (a) the covenants set
forth in Article 2 hereof, and (b) expenditures and obligations incurred and
to be incurred by Purchaser and Alumar and the Shareholders in respect of
this Agreement, and this Agreement may be terminated or abandoned only as
follows:
9.1.1 By the mutual consent of the Boards of Directors of Alumar
and Purchaser and the Shareholders' Representative.
9.1.2 By the Board of Directors of Purchaser on or after
November 30, 1995, if any of the conditions set forth in Article 5 hereof, to
which the obligations of Purchaser are subject, have not been fulfilled or
waived, unless such fulfillment has been frustrated or made impossible by any
act or failure to act of Purchaser.
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9.1.3 By the Board of Directors of Alumar and the Shareholders'
Representative on or after November 30, 1995, if any of the conditions set
forth in Article 6 hereof, to which the obligations of Alumar and the
Shareholders are subject, have not been fulfilled or waived, unless such
fulfillment has been frustrated or made impossible by any act or failure to
act of Alumar or the Shareholders.
10. GENERAL PROVISIONS.
10.1 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand, or mailed by
registered or certified mail, return receipt requested, first class postage
prepaid, addressed (or sent) as follows:
If to Alumar or the Shareholders, to the Shareholders' Representative
at the following address:
Gary L. Auerbach
Katz Randall & Weinberg
200 North LaSalle Street
Suite 2300
Chicago, Illinois 60601-1097
and to:
Katz Randall & Weinberg
200 North LaSalle Street
Suite 2300
Chicago, Illinois 60601-1097
Attention: Gary L. Auerbach
If to Purchaser, to:
IMCO Recycling Inc.
5215 North O'Connor Blvd.
Suite 940
Central Tower at Williams Square
Irving, Texas 75039
Attention: Mr. Frank H. Romanelli
and to:
Haynes and Boone, L.L.P.
901 Main Street
Suite 3100
Dallas, Texas 75202
41
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Attention: David H. Oden
If delivered personally, the date on which a notice, request, instruction or
document is delivered shall be the date on which such delivery is made and,
if delivered by mail, the date on which such notice, request, instruction or
document is received shall be the date of delivery.
For purposes of any notice, request, instruction or document required or
permitted to be given pursuant to this Agreement, delivery of such notice,
request, instruction or document to the Shareholders' Representative shall be
deemed to be delivery thereof to each Shareholder.
Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 10.1.
10.2 BROKERS. Purchaser, on the one hand, and Alumar and the
Shareholders, on the other hand, represent and warrant to each other that no
broker or finder has acted for them or any entity controlling, controlled by
or under common control with them in connection with this Agreement, and
agree to indemnify and hold harmless the other against any fee, loss or
expense arising out of any claim by any broker or finder employed or alleged
to have been employed by them or such entity.
10.3 FURTHER ASSURANCES. At any time, and from time to time, after the
Closing Date, each party will execute such additional instruments and take
such actions as may be reasonably requested by the other party to confirm or
perfect or otherwise to carry out the intent and purposes of this Agreement.
10.4 WAIVER. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived by
any other party to whom such compliance is owed. No waiver of any provision
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver.
10.5 EXPENSES. All expenses incurred by Purchaser in connection with or
related to the authorization, preparation and execution of this Agreement and
the closing of the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel,
investment bankers and accountants, shall be borne solely and entirely by
Purchaser. All expenses incurred by the Shareholders, Alumar or the
Subsidiaries in connection with or related to the authorization, preparation
and execution of this Agreement and the closing of the transactions
contemplated hereby, including, without limitation, all fees and expenses of
agents, representatives, counsel, investment bankers and accountants, shall
be borne solely and entirely by the Shareholders.
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10.6 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
10.7 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto, constitutes the entire agreement among the parties hereto
and supersedes and cancels any prior agreements, representations, warranties,
or communications, whether oral or written, among the parties hereto relating
to the transactions contemplated hereby or the subject matter herein,
excluding that certain letter agreement dated April 18, 1995, executed by and
among Purchaser, Alumar, Metal Mark, Jonathan C. Markle, William H. Markle,
Louis H. Washauer and Eleanor R. Marsh, which shall survive the execution of
this Agreement, but which shall terminate at Closing. Neither this Agreement
nor any provision hereof may be changed, waived, discharged or terminated
orally, but only by an agreement in writing signed by the party against whom
or which the enforcement of such change, waiver, discharge or termination is
sought.
10.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 PRONOUNS. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
10.10 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are for convenience or reference only and shall not control or affect the
meaning or construction of any provision of this Agreement.
10.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (OTHER THAN THE CHOICE
OF LAW PRINCIPLES THEREOF).
10.12 ASSIGNABILITY. This Agreement shall not be assignable otherwise
than by operation of law by any party without the prior written consent of
the other parties, and any purported assignment by any party without the
prior written consent of the other parties shall be void.
10.13 THIRD PARTY RIGHTS. Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any Person
who is not a party to this Agreement (including without limitation any broker
or finder, notwithstanding the provisions of Section 10.2 hereof), and this
Agreement shall be effective only as between the parties hereto, their
successors and permitted assigns.
10.14 ILLEGALITIES. In the event that any provision contained in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the
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remaining provisions of this Agreement shall not, at the election of the
party for whose benefit the provisions exists, be in any way impaired.
10.15 DRAFTING PARTY. This Agreement expresses the mutual intent of the
parties to this Agreement. Accordingly, regardless of the party preparing
any document, the rule of construction against the drafting party shall have
no application to this Agreement.
10.16 INCORPORATION OF EXHIBITS AND SCHEDULES. All Exhibits, Schedules
and annexes attached to this Agreement are incorporated into this Agreement
as fully as if stated within the body of this Agreement. A matter disclosed
on one Exhibit or Schedule shall be deemed to be constructively disclosed on
any other Exhibit or Schedule, as the context may require.
10.17 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. Alumar, each Shareholder,
Merger Sub and Purchaser agree that each will use their best efforts to
maintain the confidentiality of the terms and provisions of this Agreement
and the information and materials delivered to them or made available for
their inspection pursuant to this Agreement. In the event the Closing does
not occur, Alumar, each Shareholder, Merger Sub and Purchaser will as soon as
practicable return all material of or concerning the other party obtained
from such other party then in their possession and hereby covenant to keep
confidential any information concerning the other party and ascertained from
their review for a period of five (5) years commencing upon the termination
of this Agreement. Notwithstanding the foregoing, the prohibitions and
restrictions set forth in this Section 10.17 shall not apply to any
information (a) in the public domain not as a result of the violation of
Purchaser's, Merger Sub's, any Shareholder's or Alumar's undertaking herein,
(b) available to Purchaser, Merger Sub, the Shareholders or Alumar on a
non-confidential basis without regard to the disclosure by Purchaser, Merger
Sub, the Shareholders or Alumar to the other party, (c) available to
Purchaser, Merger Sub, the Shareholders or Alumar from a source other than
the other party (provided that such source in so acting is not violating any
duty or agreement of confidentiality), or (d) required to be disclosed by any
law, rule or regulation.
No party hereto shall, without the approval of the other parties hereto
(or, in the case of the Shareholders, the Shareholders' Representative acting
on behalf of the Shareholders), make any press release or other public
announcement concerning the transactions contemplated by this Agreement,
except as and to the extent that any such parties shall be so obligated by
law, in which case the other parties shall be so advised and the parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued; PROVIDED that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and SEC disclosure obligations.
10.18 SHAREHOLDERS' REPRESENTATIVE. The Shareholders hereby authorize
the Shareholders' Representative to take all actions and to execute and
deliver all documents contemplated by this Agreement to be taken, executed or
delivered by him or by or on
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<PAGE>
behalf of the Shareholders, including, without limitation, authorization to
employ accountants, counsel and other agents as the Shareholders'
Representative deems advisable, in his discretion, and to pay reasonable
compensation for their services. The Shareholders hereby irrevocably appoint
Gary L. Auerbach to act as the initial Shareholders' Representative.
In the event the Shareholders' Representative shall at any time resign,
the resigning Shareholders' Representative shall appoint a successor
Shareholders' Representative, either from among the Shareholders or who shall
otherwise be acceptable to Purchaser, and who shall be recognized and
entitled to act in such capacity hereunder upon his assumption in writing of
the duties and responsibilities of the Shareholders' Representative under
this Agreement; PROVIDED that the resigning Shareholders' Representative's
resignation shall not be effective until such a successor shall exist. In
the event the Shareholders' Representative shall at any time be unable to act
as such hereunder as a result of his death or disability, a majority of the
remaining Shareholders shall, as soon as reasonably practical under the then
existing circumstances, appoint a substitute Shareholders' Representative
either from among the Shareholders or who shall otherwise be acceptable to
Purchaser and who shall be recognized and be entitled to act in such capacity
hereunder upon his assumption in writing of the duties and responsibilities
of the Shareholders' Representative under this Agreement. The choice of a
successor Shareholders' Representative appointed in any manner permitted
above shall be final and binding upon all of the Shareholders.
Each Shareholder has made, constituted and appointed and by the
execution of this Agreement hereby irrevocably makes, constitutes and
appoints the Shareholders' Representative as such person's true and lawful
attorney in fact and agent, for such person and in such person's name,
(a) to receive all notices of Claims pursuant to Section 8.5 hereof
and all other notices and communications directed to such Shareholder
under this Agreement and to take any action (or to determine to take no
action) with respect thereto as he may deem appropriate as effectively as
such Shareholder could act for himself or herself, including without
limitation, the settlement or compromise of any dispute or controversy,
and
(b) to execute and deliver all instruments and documents of every
kind incident to the foregoing, for all intents and purposes and with the
same effect as such Shareholder could do personally, and each such
Shareholder hereby ratifies and confirms as his or her own act, all that
the Shareholders' Representative shall do or cause to be done pursuant
to the provisions hereof. All notices of Claims pursuant to Section 8.5
hereof and all other notices and communications directed to Shareholders
under this Agreement shall be given to the Shareholders' Representative.
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<PAGE>
Purchaser and the Surviving Corporation shall be entitled to rely upon
and protected in their reliance upon the decisions, actions and omissions to
act by the Shareholders' Representative as the authorized representative of
all of the Shareholders. The death or incapacity of any Shareholder shall
not terminate the authority and agency of the Shareholders' Representative.
[Next following page is the signature page.]
46
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed or caused this
Agreement to be executed on its behalf, all on the day and year first above
written.
PURCHASER:
IMCO RECYCLING INC.
By: Frank H. Romanelli
------------------------------------------
Frank H. Romanelli
President and Chief Executive Officer
MERGER SUB:
IMCO RECYCLING OF ILLINOIS INC.
By: Robert Holian
------------------------------------------
Name: Robert Holian
Title: Vice President
ALUMAR:
ALUMAR ASSOCIATES, INC.
By: William H. Markle
------------------------------------------
Name: William H. Markle
Title: President
THE SHAREHOLDERS:
Jonathan C. Markle
----------------------------------------------
Jonathan C. Markle
LOUIS H. WASHAUER INSURANCE TRUST
(u/a/d 4/19/89)
By: Louis H. Washauer
------------------------------------------
Trustee
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<PAGE>
Eleanor R. Marsh
----------------------------------------------
Eleanor R. Marsh
MARKLE FAMILY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Braintree Associates, Inc., General
Partner
By: William H. Markle
------------------------------------------
Name: William H. Markle
Title: Vice-President/Treasurer
BRAINTREE ASSOCIATES, INC.,
a Vermont corporation
By: William H. Markle
------------------------------------------
Name: William H. Markle
Title: Vice-President/Treasurer
WASHAUER ASSOCIATES, INC. PENSION PLAN
By: Louis H. Washauer
------------------------------------------
Name: Louis H. Washauer
Trustee
48
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered
into as of October 1, 1995, by and between IMCO Recycling Inc., a Delaware
corporation (the "Company") and the Purchasers (as defined below).
RECITALS
WHEREAS, the Company, a wholly-owned subsidiary of the Company, Alumar
Associates, Inc., an Illinois corporation ("Alumar"), and the Purchasers have
entered into an Agreement and Plan of Merger dated as of October 1, 1995 (the
"Merger Agreement"), pursuant to which Alumar merged with and into the
wholly-owned subsidiary of the Company, and all of the issued and outstanding
capital stock of Alumar was converted into the right to receive shares of the
Company's common stock, $.10 par value ("Common Stock"); and
WHEREAS, prior to the consummation of the Merger, each of the Purchasers
owned shares of the capital stock of Alumar; and
WHEREAS, as a result of the Merger, each of the Purchasers owns shares
of Common Stock (collectively, the "Shares"); and
WHEREAS, the Company wishes to grant each of the Purchasers certain
registration rights in respect of that portion of the Shares held thereby.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"PURCHASERS" shall mean the owners of Common Stock identified on the
signature page hereof, each of whom is referred to individually herein as
a "Purchaser" and a transferee of Registrable Securities from a Purchaser,
provided such transfer complies with Section 3.2 of this Agreement.
"REGISTRABLE SECURITIES" shall mean (i) the Shares and any and all
shares of Common Stock issued or issuable at any time or from time to time
in respect of which the Company has previously or may in the future grant
in writing registration rights (collectively, the "Registrable Common");
and (ii) any Common Stock issued or issuable at any time or from time to
time in respect of the Shares
<PAGE>
or the Registrable Common upon a stock split, stock dividend,
recapitalization or other similar event involving the Company.
The terms "REGISTER," "REGISTERED", and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, other than Selling
Expenses (as defined below), incurred by the Company in complying with
Section 2.1 hereof, including, without limitation, all registration,
qualification and filing fees, exchange listing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky
fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean only the underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities
registered by a Purchaser and all fees and disbursements of counsel for
such Purchaser.
"UNDERWRITTEN PUBLIC OFFERING" shall mean a public offering in which
the Common Stock is offered and sold on a firm commitment basis through one
or more underwriters, all pursuant to an underwriting agreement between the
Company and such underwriters.
2. REGISTRATION RIGHTS.
2.1 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. Subject to the terms hereof, if at any
time or from time to time prior to the expiration of two years from the
date of this Agreement (except as otherwise provided in Section 3.2), the
Company shall determine to register any of its Common Stock, for its own
account relating to an Underwritten Public Offering, the Company shall:
(i) promptly, but in any event at least 30 days before the
Company files a registration statement pursuant to an Underwritten
Public Offering, give to each Purchaser written notice thereof; and
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<PAGE>
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in the underwriting
involved therein, such Registrable Securities as each Purchaser may
request in a writing delivered to the Company within 20 days after
each Purchaser's receipt of the Company's written notice delivered
pursuant to Section 2.1(a)(i) above.
(b) UNDERWRITING. The right of each Purchaser to registration
pursuant to Section 2.1 shall be conditioned upon such Purchaser's
participation in such underwriting, and the inclusion of Registrable
Securities in the underwriting shall be limited to the extent provided
herein. Each Purchaser and all other stockholders proposing to distribute
their securities through such underwriting shall (together with the Company
and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by the Company.
Subject only to the provisions of Section 2.1(c) below, if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter may limit
some or all of the Registrable Securities that may be included in the
registration and underwriting as follows: the number of Registrable
Securities that may be included in the registration and underwriting by
each Purchaser shall be determined by multiplying the number of shares of
Registrable Securities of all selling shareholders of the Company which
the managing underwriter is willing to include in such registration and
underwriting, times a fraction, the numerator of which is the number of
Registrable Securities requested to be included in such registration and
underwriting by each Purchaser, and the denominator of which is the total
number of Registrable Securities which all selling shareholders of the
Company have requested to have included in such registration and
underwriting. To facilitate the allocation of shares in accordance with
the above provisions, the Company may round the number of shares allocable
to any such person to the nearest 100 shares. If any Purchaser disapproves
of the terms of any such underwriting, it may elect to withdraw therefrom
by written notice to the Company and the managing underwriter, delivered
not less than seven days before the effective date.
(c) SUBORDINATION OF REGISTRATION RIGHTS. Notwithstanding any other
provision of this Section 2.1 to the contrary, the registration rights
granted pursuant hereto are expressly subordinate in all respects to the
registration rights previously granted by the Company to each of Merrill
Lynch Interfunding Inc., a Delaware corporation, Don V. Ingram, a resident
of Dallas County, Texas, and PTX Partners, a Texas limited partnership
(collectively, the "Existing Holders"), pursuant to that certain Amended
and Restated Registration Agreement, dated September 30, 1988 (the "1988
Agreement"). In the event that the managing underwriter of any
underwriting shall inform the Company of its intention to limit the number
of Registrable Securities to be included in any registration and
underwriting pursuant to Section 2.1(b) above, all Registrable Securities
held by the Existing Holders who have notified the Company of their intent
to include their Registrable Securities in
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such registration and underwriting pursuant to Section 2.1(a)(ii) above,
shall be included in such registration and underwriting (subject to the
terms of the 1988 Agreement), before the Purchasers shall be permitted to
include any of their Shares in such registration and underwriting. In the
event that additional Registrable Securities are available for inclusion
in such registration and underwriting after the inclusion of the Existing
Holders' Registrable Securities, then the number of Registrable Securities
to be included in such registration and underwriting by the Purchasers
shall be determined by multiplying the number of shares of Registrable
Securities remaining after the inclusion of the Existing Holders'
Registrable Securities which the managing underwriter is willing to include
in such registration and underwriting, times a fraction, the numerator of
which is the number of Registrable Securities requested to be included in
such registration and underwriting by each Purchaser, and the denominator
of which is the total number of Registrable Securities which all Purchasers
have requested to have included in such registration and underwriting.
(d) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right
to terminate or withdraw any registration initiated by it under this
Section 2.1 prior to the effectiveness of such registration whether or not
any Purchaser has elected to include its Registrable Securities in such
registration, provided, however, that in such event, the Company shall
promptly pay all reasonable out-of-pocket costs and expenses of the
Purchasers (including, without limitation, all reasonable fees and
disbursements of one law firm chosen to represent the Purchasers) incurred
in connection with such terminated registration.
(e) NO OTHER REGISTRATION RIGHTS. Except as set forth in the first
sentence of Section 2.1(c) hereof and except for rights granted pursuant to
this Agreement, the Company has not previously entered into or become a
party to, nor is it bound by any agreement with respect to its capital
stock which grants registration rights to any person or entity.
2.2 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with all registrations pursuant to Section 2.1 shall be borne
by the Company. Unless otherwise stated herein, all Selling Expenses
relating to securities registered on behalf of any Purchaser shall be borne
by such Purchaser.
2.3 COMPANY'S OBLIGATIONS IN REGISTRATION. In the case of each
registration, qualification or compliance effected by the Company pursuant
to this Agreement the Company will keep each Purchaser advised in writing
as to the initiation of each registration, qualification and compliance and
as to the completion thereof. At its expense, the Company will:
4
<PAGE>
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its commercially reasonable best
efforts to cause such registration statement to become and remain effective
with respect to a registration statement filed regarding an Underwritten
Public Offering, for the lesser of (i) 90 days or (ii) until the
distribution described in such registration statement has been completed;
and
(b) Furnish to each underwriter such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
underwriter may reasonably request in order to facilitate the public sale
of the shares by such underwriter, and promptly furnish to each underwriter
and Purchaser notice of any stop-order or similar notice issued by the
Commission or any state agency charged with the regulation of securities,
and notice of any NASDAQ or securities exchange listing; and
(c) Furnish prospectuses, including preliminary prospectuses and
amendments and supplements thereto, to the Purchasers electing to sell any
of their Registrable Securities pursuant to Section 2.1 hereof, all in
accordance with applicable securities laws; and
(d) Notify the Purchasers in the event that the Company becomes
aware that a prospectus relating to the Registrable Securities contains a
materially untrue statement or omits to state a material fact; and
(e) Apply to register or otherwise qualify the Registrable Securities
offered by the Purchasers or any of them under all applicable blue sky laws
of any state.
2.4 INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Purchaser, each of its officers and directors and
partners, and each person controlling each Purchaser within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement,
against all expenses, claims, losses, damages or liabilities (or actions
in respect thereof) to the extent to which such person or entity is
subject, including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, to the extent such expenses, claims,
losses, damages or liabilities (or proceedings in respect thereof) arise
out of or are based on any untrue statement (or alleged untrue statement)
of a material fact contained in any registration statement, prospectus,
offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance,
or arise out of or are based on any omission (or alleged omission) to state
therein a material fact required to be stated
5
<PAGE>
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by
the Company of the Securities Act or any rule or regulation promulgated
under the Securities Act applicable to the Company in connection with any
such registration, qualification or compliance, and the Company will
reimburse each Purchaser, each of its officers and directors and partners,
and each person controlling each Purchaser for any legal and any other
expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, PROVIDED,
HOWEVER, that the indemnity contained herein shall not apply to amounts
paid in settlement of any claim, loss, damage, liability or expense if
settlement is effected without the consent of the Company (which consent
shall not unreasonably be withheld); PROVIDED, FURTHER, that the Company
will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to the
Company expressly for inclusion in such registration by such Purchaser or
such controlling person specifically for use therein. Notwithstanding the
foregoing, insofar as the foregoing indemnity relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission)
made in the preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the Commission at the time the registration
statement becomes effective or in the final prospectus filed with the
Commission pursuant to the applicable rules of the Commission or in any
supplement or addendum thereto, the indemnity agreement herein shall not
inure to the benefit of any underwriter or (if there is no underwriter) any
Purchaser if a copy of the final prospectus filed pursuant to such rules,
together with all supplements and addenda thereto, was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Securities Act.
(b) To the extent permitted by law, each Purchaser will, severally
but not jointly, if securities held by such Purchaser are included in the
securities as to which such registration, qualification or compliance is
being effected pursuant to the terms hereof, indemnify and hold harmless
the Company, each of its directors and officers, each person who controls
the Company within the meaning of Section 15 of the Securities Act, and
each other person selling the Company's securities covered by such
registration statement, each of such person's officers and directors and
each person controlling such persons within the meaning of Section 15 of
the Securities Act, against all claims, losses, damages and liabilities
(or actions in respect thereof) to the extent to which such person or
entity is subject, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document,
or arising out of or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by such Purchaser
of any rule or regulation promulgated under the Securities Act applicable
to such
6
<PAGE>
Purchaser and relating to action or inaction required of such Purchaser in
connection with any such registration, qualification or compliance, and
will reimburse the Company, such other persons, such directors, officers,
persons or control persons for any legal or other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with information furnished to the Company by such Purchaser
expressly for inclusion in such registration; PROVIDED, HOWEVER, that the
indemnity contained herein shall not apply to amounts paid in settlement of
any claim, loss, damage, liability or expense if settlement is effected
without the consent of the Purchaser (which consent shall not be
unreasonably withheld). Notwithstanding the foregoing, insofar as the
foregoing indemnity relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file
with the Commission at the time the registration statement becomes
effective or in the final prospectus filed pursuant to applicable rules of
the Commission or in any supplement or addendum thereto, the indemnity
agreement herein shall not inure to the benefit of the Company, any
underwriter or any other person if a copy of the final prospectus filed
pursuant to such rules, together with all supplements and addenda thereto,
was not furnished to the person or entity asserting the loss, liability,
claim or damage at or prior to the time such furnishing is required by the
Securities Act.
(c) Each party entitled to indemnification under this Section 2.4
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any action or proceeding
commenced against, or written demand made on any such party in respect of
which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's expense,
and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such
action and provided further, that the Indemnifying Party shall not assume
the defense for matters as to which there is a conflict of interest or as
to which the Indemnifying Party is asserting separate or different
defenses, which defenses are inconsistent with the defenses of the
Indemnified Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does
not include as an
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unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim
or litigation. No Indemnified Party shall consent to entry of any judgment
or enter into any settlement without the consent of each Indemnifying
Party.
(d) If the indemnification provided for in this Section 2.4 is
unavailable to an Indemnified Party in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and all stockholders offering securities in the offering (the
"Selling Stockholders") on the other from the offering of the Company's
securities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Selling
Stockholders on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Selling Stockholders on the other
shall be the net proceeds from the offering (before deducting expenses)
received by the Company on the one hand and the Selling Stockholders on
the other. The relative fault of the Company on the one hand and the
Selling Stockholders on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Selling
Stockholders and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Selling Stockholders agree that it would not
be just and equitable if contribution pursuant to this Section 2.4(d) were
based solely upon the number of entities from whom contribution was
requested or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 2.4(d).
The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages and liabilities referred to above in this Section
2.4(d) shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim, subject to the provisions of Section
2.4(c) hereof. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act).
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2.5 CERTAIN INFORMATION. Each Purchaser agrees, with respect to any
Registrable Securities included in any registration, to furnish to the
Company such information regarding such Purchaser, the Registrable
Securities and the distribution proposed by such Purchaser as the Company
may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in Section
2.1.
2.6 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time
permit the sale of the Restricted Securities (used herein as defined in
Rule 144 under the Securities Act) to the public without registration, the
Company agrees to use its best lawful efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act (at all times during which the Company is subject to such reporting
requirements); and
(c) So long as any Purchaser owns any Restricted Securities, to
furnish to such Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule
144 and with regard to the Securities Act and the Exchange Act (at all
times during which the Company is subject to such reporting requirements),
a copy of the most recent annual or quarterly report of the Company, and
such other non-confidential reports and documents of the Company and other
non-confidential information in the possession of or reasonably obtainable
by the Company as such Purchaser may reasonably request in availing itself
of any rule or regulation of the Commission allowing Purchaser to sell any
such securities without registration.
3. MISCELLANEOUS.
3.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the internal laws of the State of Texas.
3.2 NO TRANSFER; TERMINATION. The registration rights contemplated
herein are not transferable, except (i) by operation of law and by the laws
of descent and distribution; (ii) to any member of a Purchaser's immediate
family; or (iii) to any trust, partnership or other entity as to which all
of the beneficiaries or partners consist of a Purchaser or members of such
Purchaser's immediate family. The registration rights granted herein shall
terminate, and the registration rights will not
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be exercisable by any Purchaser (or such Purchaser's lawful transferees
pursuant to this Section 3.2) after said termination date, on the earlier
of (i) the second anniversary date of this Agreement, or (ii) at such time
as all shares of Registrable Securities held by such Purchaser may
immediately be sold under Rule 144 (as amended from time to time) during
any 90-day period.
3.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to
the subject hereof. This Agreement, or any provision hereof, may be
amended, waived, discharged or terminated only upon the written consent of
the Company and those Purchasers who are the record holders of at least
majority of the Shares issued pursuant to the Merger Agreement.
3.4 NOTICES. All notices or other communications which are required
or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person, transmitted by
telecopier or mailed by registered or certified first class mail, postage
prepaid, return receipt requested to the parties hereto at the address set
forth below (as the same may be changed from time to time by notice
similarly given) or the last known business or residence address of such
other person as may be designated by either party hereto in writing.
If to the Purchasers:
At their respective addresses set forth
next to each signature below
If to the Company:
IMCO Recycling Inc.
5215 North O'Connor Blvd., Suite 940
Irving, Texas 75039
Attention: Chief Executive Officer and Chief
Financial Officer
3.5 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any
party to this Agreement shall impair any such right, power or remedy of
such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind
or character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this agreement, must be in writing and shall be effective
only to the
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extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party to this
Agreement, shall be cumulative and not alternative.
3.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
3.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
3.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have executed this agreement effective
upon the date first set forth above.
COMPANY:
IMCO RECYCLING INC.,
a Delaware corporation
By: Robert Holian
-------------------------------------------
Its: Vice President
-------------------------------------------
PURCHASERS:
Jonathan C. Markle
-----------------------------------------------
Jonathan C. Markle
Address:
2530 E. Creekwood Ct.
Crete, IL 60417
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LOUIS H. WASHAUER INSURANCE TRUST
(u/a/d 4/19/89)
By: Louis H. Washauer
--------------------------------------------
Name: Louis H. Washauer
Title: Trustee
Address:
3200 N. Lake Shore Drive
Chicago, IL 60657
Eleanor R. Marsh
-----------------------------------------------
Eleanor R. Marsh
Address:
850 N. DeWitt Place
Chicago, IL 60611
MARKLE FAMILY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Braintree Associates, Inc., General
Partner
By: William H. Markle
-------------------------------------------
Name: William H. Markle
Title: Vice-President/Treasurer
Address:
P. O. Box 157
Randolph, VT 05060
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BRAINTREE ASSOCIATES, INC., a Vermont
corporation
By: William H. Markle
-------------------------------------------
Name: William H. Markle
Title: Vice-President/Treasurer
Address:
P. O. Box 157
Randolph, VT 05060
WASHAUER ASSOCIATES, INC. PENSION PLAN
By: Louis H. Washauer
-------------------------------------------
Name: Louis H. Washauer
Title: Trustee
Address:
c/o Louis H. Washauer
3200 N. Lake Shore Drive
Chicago, IL 60657
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