<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9078
------------------------
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 22-1620387
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) No.)
1790 BROADWAY 10019-1412
NEW YORK, NEW YORK (Zip code)
(Address of principal
executive offices)
</TABLE>
Registrant's telephone number, including area code 212-757-3333
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 Days. Yes /X/ No / /
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
<TABLE>
<CAPTION>
OUTSTANDING AT MARCH 17,
CLASS 1998
- ----------------------------------- ----------------------------
<S> <C>
Common Stock, $.10 Par Value 16,930,789
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the requirements of Form 10-Q and, therefore,
do not include all information and footnotes required by generally accepted
accounting principles. However, in the opinion of management, all adjustments
(which, except as disclosed elsewhere herein, consist only of normal recurring
accruals) necessary for a fair presentation of the results of operations for the
relevant periods have been made. Results for the interim periods are not
necessarily indicative of the results to be expected for the year. These
financial statements should be read in conjunction with the summary of
significant accounting policies and the notes to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended April 30, 1997.
2
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31,
1998
APRIL 30, -----------
1997
---------- (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................................................. $ 21,606 $ 9,321
Marketable securities.................................................................. 15,807 14,377
Accounts receivable (less allowance for doubtful accounts of:
April, $2,631; January $3,267)....................................................... 119,506 152,562
Inventories............................................................................ 119,234 140,839
Other current assets................................................................... 17,321 16,086
---------- -----------
Total current assets............................................................... 293,474 333,185
Property, plant and equipment, net....................................................... 155,484 186,248
Long-term investments and other assets................................................... 32,388 38,587
Goodwill (less accumulated amortization: April, $8,036; January$11,183).................. 106,878 200,026
---------- -----------
Total assets....................................................................... $ 588,224 $ 758,046
---------- -----------
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................................................... $ 85,906 $ 93,695
Accrued expenses....................................................................... 69,948 93,818
Current portion of long-term debt...................................................... 2,653 7,416
---------- -----------
Total current liabilities.......................................................... 158,507 194,929
Long-term debt, less current portion..................................................... 308,171 379,831
Other long-term liabilities.............................................................. 45,026 67,062
Minority interest in subsidiary.......................................................... 22,094 44,968
---------- -----------
Total liabilities.................................................................. 533,798 686,790
---------- -----------
Commitments and contingencies
Stockholders' equity:
9% cumulative convertible preferred stock at liquidation value......................... 1,927 427
Common stock, $.10 par value; authorized 25,000,000 shares; issued: April, 18,834,256
shares; January, 19,573,639 shares................................................... 1,883 1,957
Capital in excess of par value......................................................... 113,459 133,579
Cumulative translation adjustment...................................................... (1,316) (170)
Unrealized loss on securities available for sale, net of deferred tax.................. (716) (716)
Accumulated deficit.................................................................... (48,048) (37,553)
---------- -----------
67,189 97,524
Shares of common stock in treasury, at cost: April, 1,612,047 shares; January, 2,624,732
shares................................................................................. (12,130) (25,310)
Receivable from stockholders............................................................. (633) (958)
---------- -----------
Total stockholders' equity............................................................. 54,426 71,256
---------- -----------
Total liabilities and stockholders' equity......................................... $ 588,224 $ 758,046
---------- -----------
---------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
----------------------
<S> <C> <C>
1997 1998
---------- ----------
Net sales................................................................................. $ 121,172 $ 206,504
Cost of goods sold........................................................................ 99,587 169,077
---------- ----------
Gross profit............................................................................ 21,585 37,427
Selling, general and administrative expense............................................... 8,480 17,859
Restructuring charge...................................................................... -- 3,626
Amortization of goodwill.................................................................. 767 1,067
---------- ----------
Operating income........................................................................ 12,338 14,875
Interest income........................................................................... 782 1,048
Interest (expense)........................................................................ (4,345) (6,959)
Other income, net......................................................................... 362 70
---------- ----------
Income before income tax expense and minority interest.................................. 9,137 9,034
Provision for income taxes................................................................ (3,749) (3,500)
---------- ----------
Income before minority interest......................................................... 5,388 5,534
Minority interest in earnings of subsidiary............................................... (3,059) (4,212)
---------- ----------
Income before extraordinary (loss)...................................................... 2,329 1,322
Extraordinary (loss) on early extinguishment of debt...................................... (5,977) --
---------- ----------
Net income (loss)....................................................................... (3,648) 1,322
Preferred stock dividends................................................................. (69) (9)
---------- ----------
Net income (loss) applicable to common stock............................................ $ (3,717) $ 1,313
---------- ----------
---------- ----------
Net income (loss) per share of common stock:
Basic:
Income before extraordinary (loss).................................................... $ 0.13 $ 0.08
Extraordinary (loss) on early extinguishment of debt.................................. (0.34) --
---------- ----------
Net income (loss) per basic share of common stock................................... $ (0.21) $ 0.08
---------- ----------
---------- ----------
Diluted:
Income before extraordinary (loss).................................................... $ 0.12 $ 0.07
Extraordinary (loss) on early extinguishment of debt.................................. (0.31) --
---------- ----------
Net income (loss) per diluted share of common stock................................... $ (0.19) $ 0.07
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JANUARY 31,
----------------------
<S> <C> <C>
1997 1998
---------- ----------
Net sales................................................................................. $ 426,638 $ 646,532
Cost of goods sold........................................................................ 353,730 525,265
---------- ----------
Gross profit............................................................................ 72,908 121,267
Selling, general and administrative expense............................................... 29,480 52,215
Restructuring charge...................................................................... -- 3,626
Amortization of goodwill.................................................................. 2,292 3,160
---------- ----------
Operating income........................................................................ 41,136 62,266
Interest income........................................................................... 1,123 2,603
Interest (expense)........................................................................ (17,954) (21,686)
Gain on sale of subsidiary stock.......................................................... 80,397 --
Other income, net......................................................................... 357 119
---------- ----------
Income before income tax expense and minority interest.................................. 105,059 43,302
Provision for income taxes................................................................ (48,151) (17,220)
---------- ----------
Income before minority interest......................................................... 56,908 26,082
Minority interest in earnings of subsidiary............................................... (3,392) (14,307)
---------- ----------
Income before extraordinary (loss)...................................................... 53,516 11,775
Extraordinary (loss) on early extinguishment of debt...................................... (19,389) (1,221)
---------- ----------
Net income.............................................................................. 34,127 10,554
Preferred stock dividends................................................................. (537) (59)
Preferred stock redemption premium........................................................ (5,195) --
---------- ----------
Net income applicable to common stock................................................... $ 28,395 $ 10,495
---------- ----------
---------- ----------
Net income per share of common stock:
Basic:
Income before extraordinary (loss).................................................... $ 2.93 $ 0.69
Extraordinary (loss) on early extinguishment of debt.................................. (1.07) (0.07)
Preferred stock redemption premium.................................................... (0.29) --
---------- ----------
Net income per basic share of common stock.......................................... $ 1.57 $ 0.62
---------- ----------
---------- ----------
Diluted:
Income before extraordinary (loss).................................................... $ 2.63 $ 0.62
Extraordinary (loss) on early extinguishment of debt.................................. (0.95) (0.06)
Preferred stock redemption premium.................................................... (0.26) --
---------- ----------
Net income per diluted share of common stock........................................ $ 1.42 $ 0.55
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
9% CUMULATIVE UNREALIZED
CONVERTIBLE (LOSS) ON
COMMON STOCK CAPITAL PREFERRED STOCK FOREIGN SECURITIES
---------------------- IN EXCESS ------------------------ CURRENCY AVAILABLE
SHARES AMOUNT OF PAR SHARES AMOUNT TRANSLATION FOR SALE
--------- ----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1997............... 18,834,256 $ 1,883 $ 113,459 1,927 $ 1,927 $ (1,316) $ (716)
Conversion of preferred stock........... 189,873 19 1,481 (1,500) (1,500)
Exercise of stock options............... 437,680 44 2,093
Employee stock purchase plan............ 18,697 2 157
Purchase of treasury stock..............
Compensation expense related to stock
options and grants.................... 93,133 9 1,167
Dividends on preferred stock............
Issuance of minority equity interest in
subsidiary............................ 15,222
Foreign currency translation............ 1,146
Loan to stockholders....................
Net income for the nine months ended
January 31, 1998......................
--------- ----------- ----------- ----------- ----------- ----------- -----
Balance at January 31, 1998............. 19,573,639 $ 1,957 $ 133,579 427 $ 427 $ (170) $ (716)
--------- ----------- ----------- ----------- ----------- ----------- -----
--------- ----------- ----------- ----------- ----------- ----------- -----
<CAPTION>
TREASURY STOCK RECEIVABLE
ACCUMULATED -------------------- FROM
DEFICIT SHARES AMOUNT STOCKHOLDERS TOTAL
------------ --------- --------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Balance at April 30, 1997............... $ (48,048) (1,612,047) $ (12,130) $ (633) $ 54,426
Conversion of preferred stock........... --
Exercise of stock options............... 2,137
Employee stock purchase plan............ 159
Purchase of treasury stock.............. (1,012,685) (13,180) (13,180)
Compensation expense related to stock
options and grants.................... 1,176
Dividends on preferred stock............ (59) (59)
Issuance of minority equity interest in
subsidiary............................ 15,222
Foreign currency translation............ 1,146
Loan to stockholders.................... (325) (325)
Net income for the nine months ended
January 31, 1998...................... 10,554 10,554
------------ --------- --------- ----- ---------
Balance at January 31, 1998............. $ (37,553) (2,624,732) $ (25,310) $ (958) $ 71,256
------------ --------- --------- ----- ---------
------------ --------- --------- ----- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JANUARY 31,
-------------------
1997 1998
-------- ---------
<S> <C> <C>
Cash flows from operating
activities:
Net income before extraordinary
item........................... $ 53,516 $ 11,775
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization................. 10,523 15,950
Amortization of deferred debt
issuance costs and accretion
of debt discount............. 1,699 1,651
Compensation expense related to
stock options and grants..... 1,727 1,176
Minority interest in earnings
of subsidiary................ 3,392 14,307
Gain on sale of subsidiary
stock, net of income taxes... (41,427) --
Provision for deferred taxes... 9,651 6
Change in assets and
liabilities, net of effects
from companies acquired:
Accounts receivable.......... 9,898 (8,109)
Inventories.................. 7,410 6,580
Other current and non-current
assets..................... 5,514 (879)
Accounts payable and accrued
expenses................... (14,396) 1,362
Other long-term
liabilities................ 497 (90)
-------- ---------
Cash provided by operating
activities....................... 48,004 43,729
-------- ---------
Cash flows from investing
activities:
Acquisition, net of cash......... -- (101,424)
Capital expenditures............. (8,790) (15,379)
Investment in marketable
securities..................... (465) 1,430
Advances to PolyVision
Corporation.................... (1,695) (140)
Purchase of subsidiary common
stock.......................... (8,055) --
Net proceeds from the sale of
assets......................... 2,003 5,726
-------- ---------
Cash used for investing
activities....................... (17,002) (109,787)
-------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
7
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JANUARY 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
Cash flows from financing
activities:
Borrowings (repayments) under
revolving credit facilities,
net............................ $ 102,146 $ (28,083)
Long-term borrowings............. 10,000 115,000
Repayments of long-term
borrowings..................... (144,745) (17,696)
Proceeds from sale of stock of
subsidiary, net of current
income tax..................... 62,672 --
Proceeds from exercise of stock
options........................ 713 2,137
Redemption of preferred stock.... (15,590) --
Purchase of treasury shares...... (7,331) (13,180)
Dividends on subsidiary common
stock.......................... -- (1,011)
Dividends on preferred stock..... (537) (59)
Capitalized financing costs...... (5,352) (3,335)
--------- ---------
Cash provided by financing
activities....................... 1,976 53,773
--------- ---------
Net increase (decrease) in cash and
cash equivalents................. 32,978 (12,285)
Cash and cash equivalents at
beginning of period.............. 1,119 21,606
--------- ---------
Cash and cash equivalents at end of
period........................... $ 34,097 $ 9,321
--------- ---------
--------- ---------
Supplemental disclosures:
Cash paid for interest........... $ 21,090 $ 21,496
--------- ---------
--------- ---------
Cash paid for income taxes....... $ 17,973 $ 21,910
--------- ---------
--------- ---------
Non cash financing activity:
Exchange of preferred stock for
common stock:
Common stock issued.......... $ 1,000 $ 1,500
--------- ---------
--------- ---------
Preferred stock redeemed..... $ 1,000 $ 1,500
--------- ---------
--------- ---------
Acquisition of business:
Assets, net of cash acquired... $ 186,920
Issuance of minority equity
interest in subsidiary....... (34,792)
Liabilities assumed............ (50,704)
--------- ---------
Net cash (paid)................ $(101,424)
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
8
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of The Alpine Group, Inc. and its majority-owned
subsidiaries ("Alpine" or the "Company"). Certain reclassifications have been
made to the prior period presentation to conform to the current period
presentation.
2. INVENTORIES
The components of inventories are:
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1998
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Raw materials....................................................... $ 32,894 $ 45,918
Work in process..................................................... 19,211 20,863
Finished goods...................................................... 67,129 74,058
----------- -----------
$ 119,234 $ 140,839
----------- -----------
----------- -----------
</TABLE>
3. EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, NINE MONTHS ENDED JANUARY 31,
1998 1998
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
--------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income attributable to common stock before extraordinary
(loss)................................................... $ 1,322 $ 11,775
Less: preferred stock dividends............................ (9) (59)
--------- ---------
Basic earnings per common share............................ $ 1,313 16,990 $ 0.08 $ 11,716 16,995 $ 0.69
----- -----
----- -----
Dilutive impact of stock options, warrants and grants...... -- 2,118 -- 1,888
Convertible preferred stock................................ 9 82 59 148
--------- --------- --------- ---------
Diluted earnings per common share.......................... $ 1,322 19,190 $ 0.07 $ 11,775 19,031 $ 0.62
--------- --------- ----- --------- --------- -----
--------- --------- ----- --------- --------- -----
</TABLE>
9
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1998
(UNAUDITED)
3. EARNINGS PER SHARE (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, NINE MONTHS ENDED JANUARY 31,
1997 1997
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
--------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income attributable to common stock before extraordinary
(loss)................................................... $ 2,329 $ 53,516
Less: preferred stock dividends............................ (69) (537)
--------- ---------
Basic earnings per common share............................ $ 2,260 17,649 $ 0.13 $ 52,979 18,068 $ 2.93
----- -----
----- -----
Dilutive impact of stock options, warrants and grants...... -- 839 -- 548
Convertible preferred stock................................ 69 543 537 1,723
--------- --------- --------- ---------
Diluted earnings per common share.......................... $ 2,329 19,031 $ 0.12 $ 53,516 20,339 $ 2.63
--------- --------- ----- --------- --------- -----
--------- --------- ----- --------- --------- -----
</TABLE>
Basic earnings per common share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted earnings per common share were determined assuming that stock options
outstanding were converted under the treasury stock method and that the weighted
average number of the convertible preferred stock outstanding during the period
was assumed to be converted at the beginning of each respective fiscal period.
The Company has retroactively adopted SFAS No. 128, "Earnings per Share,"
effective with its quarter ended January 31, 1998. As a result, the Company's
reported earnings per share for the periods ended January 31, 1997 were
restated.
The effect of the SFAS No. 128 accounting change on previously reported
earnings per share (EPS) data was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JANUARY 31, 1997
-----------------------------------------
<S> <C> <C> <C>
PRIMARY EPS EFFECT OF BASIC EPS
AS REPORTED SFAS NO. 128 AS RESTATED
------------- ------------- -----------
Income before extraordinary (loss)..................................... $ 0.12 $ 0.01 $ 0.13
Extraordinary (loss) on early extinguishment of debt................... (0.32) (0.02) (0.34)
------ ------ -----------
Net (loss) per share of common stock................................... $ (0.20) $ (0.01) $ (0.21)
------ ------ -----------
------ ------ -----------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JANUARY 31, 1997
-----------------------------------------
<S> <C> <C> <C>
PRIMARY EPS EFFECT OF BASIC EPS
AS REPORTED SFAS NO. 128 AS RESTATED
------------- ------------- -----------
Income before extraordinary loss....................................... $ 2.85 $ 0.08 $ 2.93
Extraordinary (loss) on early extinguishment ofdebt.................... (1.04) (0.03) (1.07)
Preferred stock redemption premium..................................... (0.28) (0.01) (0.29)
------ ------ -----------
Net income per share of common stock................................... $ 1.52 $ 0.05 $ 1.57
------ ------ -----------
------ ------ -----------
</TABLE>
10
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1998
(UNAUDITED)
4. ACQUISITION OF AMERICAN PREMIER HOLDINGS, INC.
On January 30, 1998, Refraco Inc. ("Refraco"), a wholly-owned subsidiary of
Alpine, acquired American Premier Holdings, Inc. ("APHI"), a manufacturer and
distributor of refractory products in the United States and Canada, through the
merger of APHI with and into Refraco. The consideration paid by the Company in
the merger amounted to $134.9 million and consisted of (i) the payment of $31.7
million in cash to the stockholders of APHI, (ii) the repayment or assumption of
$68.4 million of indebtedness of APHI, and (iii) the issuance to the
stockholders of APHI of shares representing 16.6% of the issued and outstanding
common stock of Refraco. In connection with the APHI acquisition, Refraco and
its principal wholly-owned subsidiaries entered into an Amended and Restated
Credit Agreement (the "Refraco Credit Agreement") which provides for an increase
in total borrowing availability under such facility from $130.0 to $260.0
million. Upon consummation of the APHI acquisition, incremental borrowings of
$115.0 million were drawn under the Refraco Credit Agreement and were used to
(i) pay the cash portion of the aforementioned purchase price, (ii) repay
certain APHI indebtedness, (iii) repay existing outstanding bank debt and (iv)
pay related transaction expenses (see Note 6 for a description of the Refraco
Credit Agreement).
The acquisition has been accounted for using the purchase method and,
accordingly, the results of operations of APHI will be included in the
consolidated financial statements on a prospective basis from the date of
acquisition. As such, the results of operations of APHI are not reflected in the
accompanying consolidated statements of operations for the periods ended January
31, 1998 and 1997.
The purchase price has been allocated based upon estimated fair values of
assets and liabilities at the date of acquisition, and is subject to adjustment.
The excess of the purchase price over the net assets acquired was approximately
$90.9 million and is being amortized on a straight line basis over 40 years.
PRO FORMA FINANCIAL DATA
Unaudited condensed pro forma results of operations, which give effect to
the APHI acquisition and the acquisition of Hepworth Refractories (Holdings)
Limited (see Note 6 to the Company's Annual Report on Form 10-K for the year
ended April 30, 1997) as if both transactions had occurred on May 1, 1996, are
presented below. The pro forma amounts reflect acquisition related purchase
accounting adjustments, including adjustments to depreciation and amortization
expense and interest expense on acquisition debt
11
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1998
(UNAUDITED)
4. ACQUISITION OF AMERICAN PREMIER HOLDINGS, INC. (CONTINUED)
and certain other adjustments, together with related income tax effects. The pro
forma financial information does not purport to be indicative of either the
results of operations that would have occurred had the acquisition taken place
at the beginning of the periods presented or of future results of operations.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JANUARY 31,
PRO FORMA
----------------------
<S> <C> <C>
1997 1998
---------- ----------
<CAPTION>
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Net sales............................................................. $ 784,314 $ 786,356
Income before income taxes............................................ 108,148 45,864
Income before extraordinary (loss).................................... 55,779 13,120
Extraordinary (loss) on early extinguishment of debt.................. (19,389) (1,221)
Net income applicable to common stock................................. 30,658 11,840
Net income (loss) per diluted share of common stock:
Income before extraordinary (loss).................................. $ 2.72 $ 0.68
Extraordinary (loss) on early extinguishment of debt................ (0.95) (0.06)
Preferred stock redemption premium.................................. (0.26) --
---------- ----------
Net income per diluted share...................................... $ 1.51 $ 0.62
---------- ----------
---------- ----------
</TABLE>
As previously mentioned, as part of the purchase consideration paid for the
APHI acquisition, Alpine caused Refraco to issue 16.6% of the common stock of
Refraco currently outstanding to the APHI shareholders. In connection with this
transaction, the Company reflected as a component of stockholders' equity a
$15.2 million gain, net of tax, on the issuance of a minority equity interest in
Refraco. The gain has not been reflected as a component of the statement of
operations since the common stock issued is, by its terms, subject to repurchase
by Refraco under certain circumstances following the fifth anniversary of the
APHI acquisition.
5. RESTRUCTURING CHARGE
In conjunction with the acquisition of APHI, the Company recorded a
non-recurring restructuring charge of $3.6 million, or $2.2 million, net of tax.
The charge relates to costs to be incurred at the Company's existing refractory
facilities in connection with the consolidation of duplicative manufacturing
capacity and administrative functions.
6. DEBT
In connection with the acquisition of APHI, the Company amended its existing
Refraco Credit Agreement. The Amended and Restated Refraco Credit Agreement
provides for total borrowing availability of up to $260 million; consisting of a
$50.0 million revolving credit facility, a $60.0 million term loan A facility, a
$75.0 million term loan B facility and a $75.0 million term loan C facility.
Proceeds from these facilities were used to complete the acquisition of APHI and
Hepworth (see Note 4 herein; and Note 6 to the Company's Annual Report on Form
10-K for the year ended April 30, 1997).
12
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1998
(UNAUDITED)
6. DEBT (CONTINUED)
At April 30, 1997 and January 31, 1998, long-term debt consists of the
following:
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1997 1998
---------- -----------
<S> <C> <C>
(IN THOUSANDS)
Schedule not indented due to size
Superior revolving credit facility (a)............................... $ 111,657 $ 80,493
Refraco floating rate note (b)....................................... 60,000 60,000
Refraco revolving credit facility (c)................................ 5,805 8,886
Refraco term loan A (c).............................................. 50,000 61,301
Refraco term loan B (c).............................................. 45,000 74,663
Refraco term loan C (c).............................................. -- 75,000
12.25% Senior Secured Notes (principal amount $21.1 million at April
30, 1997 and $14.2 million at January 31, 1998) (d)................ 19,382 13,169
Other................................................................ 18,980 13,735
---------- -----------
Total debt....................................................... 310,824 387,247
Less current portion of long-term debt............................... 2,653 7,416
---------- -----------
$ 308,171 $ 379,831
---------- -----------
---------- -----------
</TABLE>
At January 31, 1998, the fair value of Alpine's debt, based on the quoted
market prices for the same or similar issues or on the current rates offered to
Alpine for debt of the same remaining maturities, approximates its recorded
value.
The aggregate maturities of long-term debt for the five years subsequent to
January 31, 1998, are as follows (in thousands):
<TABLE>
<CAPTION>
JANUARY 31,
-----------
<S> <C>
1999............................................................................. $ 7,416
2000............................................................................. 8,320
2001............................................................................. 10,790
2002............................................................................. 100,276
2003............................................................................. 37,825
Thereafter....................................................................... 222,620
-----------
$ 387,247
-----------
-----------
</TABLE>
- ------------------------
(a) Interest on the Superior Credit Facility is payable quarterly based upon the
base rate (prime) plus 0.5% or the Eurodollar rate plus 0.625%. The variable
components of these rates are subject to periodic adjustment based on the
ratio of debt to cash flow (as defined). The Superior Credit Facility has a
five-year term with a total commitment of $150.0 million, which is reduced
by $25.0 million in each of October 1999 and October 2000. Loans under the
Superior Credit Facility are guaranteed by Superior TeleCom's domestic
subsidiaries (but not by Alpine) and are secured by substantially all of the
assets of Superior TeleCom and by the stock of each of Superior TeleCom's
domestic subsidiaries.
13
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1998
(UNAUDITED)
6. DEBT (CONTINUED)
(b) The Refraco floating rate note facility is due in 2006. Interest is based
upon the base rate (prime) plus 2.75% or the Eurodollar rate plus 3.75%.
Interest is payable quarterly in the case of base rate notes but may be
payable over shorter periods in the case of Eurodollar rate notes. The
Refraco floating rate notes are secured by a pledge of substantially all of
the common stock of Refraco's operating subsidiaries and are guaranteed by
Alpine. The Alpine guaranty is secured by the pledge of the common stock of
Refraco owned by Alpine and a portion of the common stock of Superior
TeleCom owned by Alpine with a market value of $60.0 million.
(c) The Refraco revolving credit facility represents borrowings by Refraco's
principal operating subsidiaries. Borrowings under the facility are
allowable up to $50.0 million in the aggregate. Interest on the outstanding
balance is based upon the base rate (prime) plus 1.50% or the Eurodollar
rate plus 2.50% and is payable at least quarterly. The facility terminates
on April 15, 2003.
The Refraco term loan A represents the dollar equivalent of pounds sterling
borrowings and is repayable in varying amounts over six years with interest
payable at least quarterly based upon the base rate (prime) plus 1.50% or
the Eurodollar rate plus 2.50%.
The Refraco term loan B is repayable in varying amounts over eight years with
interest payable at least quarterly based upon base rate (prime) plus 2.00%
or the Eurodollar rate plus 3.00%.
The Refraco term loan C is repayable in varying amounts over eight years with
interest payable at least quarterly based upon the base rate (prime) plus
2.25% or the Eurodollar rate plus 3.25%.
(d) The Senior Notes are due 2003 and pay interest semiannually on January 15
and July 15 of each year. The Senior Notes were issued at a price of 91.74%
and the discount is being added to the recorded amount through maturity
utilizing the effective interest method.
On February 6, 1998, Alpine entered into a $25.0 million senior secured
credit agreement (the "Alpine Credit Facility"), including $15.0 million under a
revolving credit facility and $10.0 million under a senior secured term loan.
Proceeds from these facilities are for ongoing general working capital and
corporate needs of Alpine. Interest on the revolving credit facility is at base
rate (prime) plus 0.50% or Eurodollar rate plus 1.50% and interest on the term
loan is at base rate (prime) plus 1.00% or Eurodollar rate plus 2.00%. All
borrowings under the Alpine Credit Facility are secured by the pledge of
Superior TeleCom common stock owned by Alpine.
7. SALE OF SUBSIDIARY STOCK
On October 2, 1996, the Company completed a reorganization and refinancing
(the "Reorganization") of its wholly-owned subsidiaries Superior
Telecommunication Inc. ("Superior") and DNE Systems, Inc. ("DNE"). In connection
with the Reorganization, the Company (i) recapitalized Superior, resulting in
Superior issuing to Alpine 20,000 shares of 6% Cumulative Preferred Stock
("Superior Preferred Stock"), par value $1.00 per share, with a liquidation
preference of $1,000 per share, (ii) caused Superior and DNE to declare a
dividend to Alpine of $117.1 million, (iii) contributed all of the common stock
of both Superior and DNE to a newly-formed wholly-owned subsidiary, Superior
TeleCom Inc. ("Superior TeleCom") and (iv) caused Superior TeleCom to enter into
a revolving credit facility (the "Superior Credit
14
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 1998
(UNAUDITED)
7. SALE OF SUBSIDIARY STOCK (CONTINUED)
Facility"), the proceeds of which were used to repay the intercompany debt then
owed to Alpine and to pay $63.8 million of the declared dividend.
On October 17, 1996, Superior TeleCom sold 6,000,000 shares of its common
stock through an initial public offering. Superior TeleCom used the net proceeds
of approximately $88.3 million to repay $34.4 million of the aforementioned
Superior Credit Facility and to pay the remaining balance on the previously
declared dividend.
In November 1996, the underwriters of the initial public offering exercised
their overallotment option to purchase an additional 900,000 shares of Superior
TeleCom common stock. Superior TeleCom used the net proceeds of approximately
$13.3 million to repurchase 450,000 shares of its common stock for approximately
$8.1 million with the balance of such proceeds being used to reduce the amount
outstanding under the Superior Credit Facility. The Superior TeleCom common
stock repurchased was then transferred to the Company in exchange for $8.1
million in liquidation value of Superior Preferred Stock. As a result of the
foregoing transactions, the Company's ownership interest in Superior TeleCom
declined to 50.1% and the Company recorded a gain on sale of subsidiary stock of
$80.4 million ($41.4 million, or $2.04 per diluted share, after provision for
current and deferred income taxes).
8. EXTRAORDINARY (LOSS) ON EARLY EXTINGUISHMENT OF DEBT
During the nine months ended January 1998, the Company retired $7.0 million
face amount ($6.4 million recorded amount) of its 12.25% Senior Secured Notes
("Alpine Senior Notes") and $5.0 million face amount ($4.7 million recorded
amount) of its Adience 11% Senior Secured Notes. In connection with this early
extinguishment of debt, the Company recorded an after tax extraordinary charge
of $1.2 million, or $0.06 per diluted share.
During fiscal 1997, the Company refinanced substantially all of its bank
debt and redeemed $131.9 million face amount ($122.3 million recorded amount) of
Alpine Senior Notes. In connection with the bank refinancing and Alpine Senior
Note redemption, the Company recorded an after tax extraordinary charge of $19.4
million, or $0.95 per diluted share, on the early extinguishment of debt.
9. REDEMPTION OF PREFERRED STOCK
On October 31, 1996, the Company entered into an agreement to repurchase for
$13.2 million, 160,000 shares of the Company's 8% Cumulative Convertible Senior
Preferred Stock ("8% Preferred Stock"), with a carrying value of $8.0 million.
In accordance with generally accepted accounting principles, the repurchase
price paid in excess of the carrying value has been recorded as a redemption
premium and, therefore, as a reduction to net income attributable to common
stockholders.
15
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Alpine, through its subsidiaries, Superior TeleCom Inc. ("Superior TeleCom")
and Refraco Inc. ("Refraco"), operates in three industry segments. Superior
TeleCom, a 50.1% owned subsidiary, operates in the following industry segments:
(i) telecommunications distribution wire and cable products for the
telecommunications industry through its subsidiary, Superior Telecommunications
Inc. ("Superior") and (ii) data communications and electronics products and
systems for defense, governmental and commercial applications through its
subsidiary, DNE Systems, Inc. ("DNE"). Refraco, an 83.4% owned subsidiary,
provides refractory products and services for the iron and steel, glass and
aluminum industries, as well as for other industrial applications. Refraco's
operations through January 31, 1998 include those of its North American
subsidiary, BMI-France, acquired on December 21, 1994 and its European
subsidiaries acquired on April 15, 1997 as part of the Hepworth acquisition (see
Note 6 to the Company's Annual Report on Form 10-K for the year ended April 30,
1997). On January 30, 1998, the Company acquired American Premier Holdings, Inc.
("APHI"), (see Note 4 to the accompanying unaudited Condensed Consolidated
Financial Statements). This acquisition was accounted for as a purchase and,
therefore, the results of operations of APHI will be consolidated with Refraco
on a prospective basis from the date of acquisition, and accordingly, are not
reflected in the following discussion of results of operations for the fiscal
periods ended January 31, 1997 or 1998.
16
<PAGE>
RESULTS OF OPERATIONS
The following table compares operating statement data for Alpine on an
industry segment basis. Such industry segment operating data is presented on an
historical reporting basis for the three month and nine months ended January 31,
1997 and 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1998 1997 1998
--------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales:
Telecommunications wire and cable............................... $ 92,872 $ 107,499 $ 327,728 $ 365,613
Data communications and electronics............................. 4,519 6,162 16,413 18,493
Refractories.................................................... 23,781 92,843 82,497 262,426
--------- ---------- ---------- ----------
Consolidated.................................................. 121,172 206,504 426,638 646,532
Gross profit:
Telecommunications wire and cable............................... $ 16,447 $ 19,489 $ 52,255 $ 65,500
Data communications and electronics............................. 980 2,191 4,134 5,864
Refractories.................................................... 4,158 15,747 16,519 49,903
--------- ---------- ---------- ----------
Consolidated.................................................. 21,585 37,427 72,908 121,267
Gross profit percentage:
Telecommunications wire and cable............................... 17.7% 18.1% 15.9% 17.9%
Data communications and electronics............................. 21.7% 35.6% 25.2% 31.7%
Refractories.................................................... 17.5% 17.0% 20.0% 19.0%
Consolidated.................................................. 17.8% 18.1% 17.1% 18.8%
Selling, general and administrative expense:
Telecommunications wire and cable............................... $ 2,227 $ 2,914 $ 7,199 $ 9,315
Data communications and electronics............................. 1,335 1,487 4,587 4,340
Refractories.................................................... 3,098 10,225 10,817 31,092
Corporate and other expenses.................................... 1,820 3,233 6,877 7,468
--------- ---------- ---------- ----------
Consolidated.................................................. 8,480 17,859 29,480 52,215
Amortization of goodwill:
Telecommunications wire and cable............................... $ 434 $ 428 $ 1,297 $ 1,288
Refractories.................................................... 333 639 995 1,872
--------- ---------- ---------- ----------
Consolidated.................................................. 767 1,067 2,292 3,160
Operating income:(a)
Telecommunications wire and cable............................... $ 13,786 $ 16,147 $ 43,759 $ 54,897
Data communications and electronics............................. (355) 704 (453) 1,524
Refractories(a)................................................. 727 4,883 4,707 16,939
Corporate and other expenses.................................... (1,820) (3,233) (6,877) (7,468)
--------- ---------- ---------- ----------
Consolidated(a)............................................... $ 12,338 $ 18,501 $ 41,136 $ 65,892
--------- ---------- ---------- ----------
</TABLE>
- ------------------------
(a) Operating income for the three month and nine months ended January 31, 1998
presented above excludes a non-recurring restructuring charge of $3.6
million recorded with respect to the Company's refractories operations (see
Note 5 to the accompanying unaudited Condensed Consolidated Financial
Statements).
17
<PAGE>
SUPPLEMENTAL DATA FOR THE TELECOMMUNICATIONS WIRE AND CABLE SEGMENT:
Copper is a significant raw material component of Superior's finished
products. Fluctuations in the price of copper affect per unit product pricing
and related revenues. However, the cost of copper has not had a material impact
on Superior's profitability due to contractually mandated copper-based price
adjustments contained in Superior's customer sales contracts. The Company
believes that the following supplemental comparative data, which are based upon
a constant copper cost of $1.00 per pound for the indicated periods, provide
additional meaningful information concerning Superior's sales and its gross
profit percentage.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1998 1997 1998
--------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales..................................... $ 93,220 $ 105,477 $ 317,879 $ 355,290
Gross profit.................................. 16,447 19,489 52,255 65,500
Gross profit percentage....................... 17.6% 18.5% 16.4% 18.4%
</TABLE>
TELECOMMUNICATIONS WIRE AND CABLE--RESULTS OF OPERATIONS
Superior's net sales for the quarter ended January 1998 were $107.5 million,
representing an increase of $14.6 million, or 15.7%, as compared to the same
period in the prior fiscal year. For the nine months ended January 1998,
Superior's net sales were $365.6 million, representing an increase of $37.9
million, or 11.6%, as compared to the same period in the prior fiscal year.
Adjusted to a constant copper cost of $1.00 per pound, the comparative
percentage increases in net sales for the three and nine months ended January
1998 were 13.1% and 11.8%, respectively (see "Supplemental Data for the Superior
Telecommunications Wire and Cable Segment" included in the industry segment
operating statement data). The increase in comparative net sales that the
Company has experienced in the first three quarters of fiscal 1998 has resulted
primarily from increased demand for copper wire and cable products due to
continuing growth in new copper-based telephone access lines and an increase in
maintenance spending by several of Superior's major telephone company customers.
The growth in access lines is believed to be the result of increased demand for
support of computer, facsimile and internet connections. Additionally,
comparative net sales for the quarter ended January 31, 1998, which is typically
a seasonally slow period, were favorably impacted by the tightness in supply of
telephone wire and cable products, resulting in customer orders and shipment
patterns reflecting less seasonality. Severe weather conditions in the
Northeastern sector also resulted in an increase in demand for replacement wire
and cable products in the January 1998 fiscal quarter. To a lesser degree, the
growth in net sales in fiscal 1998 has been favorably impacted by a modest
increase in market share under long term customer contracts.
In order to keep pace with the growth in demand and increased market share,
Superior has a continuing program to increase its production capacity to a level
that will be sufficient to provide internally for anticipated product demand
levels. However, when required, inventory is supplemented with product purchased
from other wire and cable manufacturers. The Company expects to continue to
increase its production capacity over the next 9-12 months, to a level that will
be sufficient to provide internally for anticipated product demand levels.
Superior's gross profit increased by $3.0 million, or 18.5%, to $19.5
million for the quarter ended January 1998, as compared to the same period in
the prior fiscal year. For the nine months ended January 1998, Superior's gross
profit was $65.5 million, representing an increase of $13.2 million, or 25.3%,
as compared to the same period in the prior fiscal year. Superior's gross profit
percentage, based on actual net sales, was 18.1% for the quarter ended January
1998 and 17.9% for the nine months ended January 1998, as compared to 17.7% for
the quarter ended January 1997 and 15.9% for the nine months ended January 1997.
Adjusted to a constant copper cost of $1.00 per pound, the gross profit
percentage
18
<PAGE>
increased to 18.5% and 18.4%, respectively, for the quarter and nine months
ended January 1998, as compared to 17.6% and 16.4%, respectively, for the
quarter and nine months ended January 1997. The comparative increase in
Superior's gross profit percentage was attributable to a combination of factors,
including manufacturing cost reductions resulting from production efficiencies,
improved cost absorption resulting from higher sales volume, generally higher
comparative market prices and the impact of product mix (particularly in the
quarter ended January 31, 1998).
Superior's SG&A expense for the quarter ended January 1998 was $2.9 million,
representing an increase of $0.7 million, or 30.8%, as compared to SG&A expense
of $2.2 million for the same period in the prior fiscal year. For the nine
months ended January 1998, Superior's SG&A expense was $9.3 million,
representing an increase of $2.1 million, or 29.4%, as compared to the same
period in the prior fiscal year. The increase in SG&A expense for the quarter
and nine months ended January 1998 was attributable primarily to costs
associated with the incremental staff required to support the increased level of
sales activity and the expansion of product development activities, including
the establishment and staffing of a product development facility during the
fourth quarter of fiscal 1997.
Superior's operating income for the quarter ended January 1998 was $16.1
million, representing an increase of $2.4 million, or 17.1%, as compared to the
quarter ended January 1997. For the nine months ended January 1998, Superior's
operating income was $54.9 million, representing an increase of $11.1 million,
or 25.5%, as compared to the same period in the prior fiscal year. The
substantial comparative increase in operating income resulted from higher net
sales and the improvement in gross profit percentage.
DNE--RESULTS OF OPERATIONS
For the quarter ended January 1998, DNE's net sales were $6.2 million,
representing an increase of $1.6 million, or 36.4%, as compared to the same
period in the prior fiscal year. For the nine months ended January 1998, DNE's
net sales were $18.5 million, representing an increase of $2.1 million, or
12.7%, as compared to the same period in the prior fiscal year. The fiscal 1998
comparative increase in net sales was the result of significant shipments under
DNE's first major commercial multiplexer project, along with an improvement in
government-related revenues, offset by a decline in DNE's contract manufacturing
activities.
DNE's gross profit percentage increased to 35.6% for the quarter ended
January 1998 and to 31.7% for the nine months ended January 1998, as compared to
21.7% and 25.2% for the three and nine months ended January 1997, respectively.
The increase in gross profit percentage was attributable to the higher margin
associated with the aforementioned commercial multiplexer sales and the increase
in higher margin government-related revenues.
DNE's SG&A expense in the current fiscal year was comparable to prior
periods, increasing by $0.2 million in the January 1998 quarter and decreasing
by $0.2 million in the January 1998 nine month period, as compared to the same
periods in the prior fiscal year.
As a result of the increase in net sales and gross profit percentage, DNE
generated operating income of $0.7 million during the quarter ended January 1998
and $1.5 million for the nine months ended January 1998, which was an
improvement over DNE's operating losses of $0.4 million and $0.5 million,
respectively, in the same periods of the prior fiscal year.
REFRACTORIES--RESULTS OF OPERATIONS
Refraco's net sales for the quarter ended January 1998 were $92.8 million,
representing an increase of $69.1 million, or 290.4%, as compared to the same
period in the prior fiscal year. Refraco's net sales for the nine months ended
January 1998 were $262.4 million, representing an increase of $179.9 million, or
218.1%, as compared to the same period in the prior fiscal year. The increase in
net sales was due to the
19
<PAGE>
inclusion in the January 1998 fiscal periods of the operations of the European
subsidiaries, which contributed net sales of $65.4 million and $181.1 million,
respectively, for the quarter and nine months ended January 1998. Net sales for
BMI-France for the quarter and nine months ended January 1998 were $27.4 million
and $81.3 million, respectively, representing a comparative increase of 15.5%
for the three months ended January 1998 and a decline of 1.4% for the nine
months ended January 1998. On a comparative basis, the increase in BMI-France's
net sales for the January 1998 quarter was the result of higher revenues at
Furnco, Refraco's coke oven construction services division. The increase in
Furnco's net sales resulted primarily from an anticipated increase in coke oven
relining projects for several major U.S. steel companies. The decline in
Refraco's comparative net sales for the nine months ended January 1998 primarily
resulted from lower sales of specialty refractory block to the plate glass
industry due to an industry-wide slow down.
Refraco's gross profit for the quarter ended January 1998 was $15.7 million,
representing an increase of $11.6 million, or 278.7%, as compared to the same
period in the prior fiscal year. Refraco's gross profit for the nine months
ended January 1998 was $49.9 million, representing an increase of $33.4 million,
or 202.1%, as compared to the same period in the prior fiscal year. The increase
in gross profit was attributable to the inclusion of the operations of the
European subsidiaries in the current fiscal quarter and nine months ended
January 1998, which generated a gross profit of $11.1 million and $35.2 million,
respectively, partially offset by a decline in gross profit at BMI-France of
$1.8 million for the nine months ended January 1998. The combined gross profit
percentage for the quarter and nine months ended January 1998 was 17.0% and
19.0%, respectively, as compared to 17.5% and 20.0%, respectively, for the same
periods in the prior fiscal year. The decline in gross profit percentage
resulted from a change in overall product mix, resulting primarily from the
inclusion of the European operations of Refraco, as well as from the impact of
competitive pricing pressures in the iron and steel industry.
Refraco's SG&A expense for the quarter ended January 1998 was $10.2 million,
representing an increase of $7.1 million, as compared to the same period in the
prior fiscal year. Refraco's SG&A expense for the nine months ended January 1998
was $31.1 million, representing an increase of $20.3 million, as compared to the
same period in the prior fiscal year. The increase in SG&A expense was
attributable primarily to the inclusion of the European operations of Refraco in
the current fiscal periods and an increase in BMI-France's SG&A expense of $0.8
million and $1.2 million for the three and nine months ended January 1998,
respectively. The increase in BMI-France's SG&A expense resulted primarily from
costs associated with the transfer and consolidation of personnel and
administrative functions from Hepworth's North American operations into
BMI-France's operations.
Refraco's operating income, before the non-recurring restructuring charge of
$3.6 million, for the quarter ended January 1998 was $4.9 million, representing
an increase of $4.2 million, or 571.7%, as compared to the same period in the
prior fiscal year. Refraco's comparative operating income, before the
non-recurring restructuring charge, for the nine months ended January 1998 was
$16.9 million, representing an increase of $12.2 million, or 259.9%, as compared
to the same period in the prior fiscal year. The increase in operating income
resulted from the inclusion of $4.5 million and $15.3 million in operating
income from the European operations of Refraco for the quarter and nine months
ended January 1998, respectively. On a comparative basis, operating income for
the BMI-France operations declined by $0.3 million and $3.1 million,
respectively, for the quarter and nine months ended January 1998 with such
decline being primarily the result of lower revenues and the costs associated
with the transfer of certain administrative functions from the European
operations to BMI-France.
CONSOLIDATED RESULTS OF OPERATIONS
The acquisition of the European operations of Refraco and the growth in
sales of Superior TeleCom's telecommunications wire and cable products resulted
in comparative consolidated net sales increasing by $85.3 million, or 70.4%, for
the quarter ended January 1998 and by $219.9 million, or 51.5%, for the nine
months ended January 1998. The increase in net sales and an increase in the
telecommunications wire and
20
<PAGE>
cable products' gross profit percentage, gave rise to a consolidated comparative
increase in gross profit of $15.8 million, or 73.4%, for the quarter ended
January 1998 and by $48.4 million, or 66.3%, for the nine months ended January
1998.
Consolidated SG&A expense for the quarter ended January 1998 was $17.9
million, representing an increase of $9.4 million, or 110.6%, as compared to the
same period in the prior fiscal year. Consolidated SG&A expense for the nine
months ended January 1998 was $52.2 million, representing an increase of $22.7
million, or 77.1%, as compared to the same period in the prior fiscal year. The
increase in consolidated SG&A expense resulted primarily from the inclusion of
the European operations of Refraco for the current fiscal period along with
higher SG&A expense at Superior.
During the quarter ended January 1998, the Company recorded a non-recurring
restructuring charge of $3.6 million ($2.2 million, or $0.11 per diluted share,
after tax). The charge relates to costs to be incurred in the consolidation of
manufacturing capacity and administrative functions in connection with the
integration of American Premier's recently acquired operations with Refraco's
existing North American operations. Administrative head count reductions
associated with this restructuring are expected to be completed in the near term
with immediate synergistic cost savings being realized. The consolidation of
manufacturing facilities and the related cost savings expected to be realized
from manufacturing cost efficiencies and raw material cost savings are expected
to be accomplished over the next twelve months.
Consolidated operating income for the quarter ended January 1998 was $14.9
million, representing an increase of $2.5 million, or 20.6%, as compared to the
same period in the prior fiscal year. Consolidated operating income for the nine
months ended January 1998 was $62.3 million, representing an increase of $21.1
million, or 51.4%, as compared to the same period in the prior fiscal year.
Excluding the impact of the aforementioned restructuring charge, operating
income for the three month and nine month periods ended January 31, 1998 was
$18.5 million (representing a comparative 50.0% increase) and $65.9 million
(representing a comparative 60.3% increase), respectively. The increase in
operating income was primarily the result of the contribution from the European
operations of Refraco and from the growth in net sales and gross profit in
Superior TeleCom's telecommunications wire and cable operations.
Consolidated interest expense for the quarter ended January 1998 was $7.0
million, representing an increase of $2.6 million, or 60.2%, as compared to
consolidated interest expense of $4.3 million for the same period in the prior
fiscal year. Consolidated interest expense for the nine months ended January
1998 was $21.7 million, representing an increase of $3.7 million, or 20.8%, as
compared to consolidated interest expense of $18.0 million for the same period
in the prior fiscal year. The increase in consolidated interest expense
reflected the net increase in consolidated debt resulting from the acquisition
of Refraco's European operations, offset by a reduction in borrowing cost
resulting from the Reorganization (see Note 5 to the Company's Annual Report on
Form 10-K for the year ended April 30, 1997) and associated refinancing of
substantially all of the Company's outstanding debt at lower effective interest
rates during the second and third quarters of fiscal 1997.
In fiscal 1997, the Company completed the sale of 49.9% of the outstanding
shares of its Superior TeleCom subsidiary (see Note 7 to the accompanying
Condensed Consolidated Financial Statements), with such sale resulting in a
pre-tax gain of $80.4 million being recorded as non-operating income. Current
and deferred income tax expense related to this transaction of $39.0 million has
been included in the Company's provision for income taxes. Thus, on an after tax
basis, the net gain on sale of subsidiary stock amounted to $41.4 million, or
$2.04 per diluted share, for the nine months ended January 31, 1998.
For the quarter and nine months ended January 1998, the provision for income
taxes was $3.5 million and $17.2 million, respectively, as compared to a
provision for income taxes of $3.7 million and $48.2 million, respectively, for
the same periods in the prior fiscal year. Included in the provision for income
taxes for the nine months ended January 1997 was $39.0 million related to the
non recurring gain on sale of subsidiary stock. The effective tax rates for the
quarter and nine months ended January 1998 was 38.7% and 39.8%, respectively,
which compares with effective tax rates, excluding income taxes associated with
21
<PAGE>
the aforementioned non recurring gain, of 41.0% and 37.2%, respectively, for the
three and nine months ended January 1997.
As a result of the October 1996 sale of a 49.9% interest in the common stock
of Superior TeleCom, a minority interest charge of $4.2 million and $14.3
million was recorded for the three and nine months ended January 1998,
respectively, as compared to $3.1 million and $3.4 million, respectively, for
the same periods in the prior fiscal year; with such charge representing the
minority stockholders' interest in Superior TeleCom's net income for the
respective periods.
Net income attributable to common stock before extraordinary (loss) and
before non-recurring restructuring charges was $3.5 million, or $0.18 per
diluted share, for the quarter ended January 1998, as compared to net income
attributable to common stock before extraordinary (loss) of $2.3 million, or
$0.12 per diluted share, for the prior year quarterly period. For the nine
months ended January 1998, net income attributable to common stock before
extraordinary (loss) and before a non-recurring restructuring charge was $13.9
million, or $0.73 per diluted share, as compared to net income attributable to
common stock before extraordinary (loss) and before after tax non-recurring
gains and charges of $11.6 million, or $0.59 per share, for the prior year nine
month period. The comparative increase in net income was due to the significant
increase in operating income, partially offset by higher interest charges
(associated with acquisition related debt at Refraco) and the aforementioned
minority interest charge.
EXTRAORDINARY ITEM
During the nine months ended January 1998, the Company incurred an
extraordinary loss of $1.2 million on the early extinguishment of debt. During
the quarter and nine months ended January 1997, the Company incurred an
extraordinary loss of $6.0 million and $19.4 million, respectively, on the early
extinguishment of debt. The extraordinary loss during the January 1997 and 1998
fiscal periods related to the early retirement of debt (see Note 6 to the
accompanying unaudited Condensed Consolidated Financial Statements and Note 10
to the Company's Annual Report on Form 10-K for the year ended April 30, 1997).
22
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended January 31, 1998, the Company generated $43.7
million in cash flow from operating activities, consisting of $44.9 million in
cash flow generated from operations (net income plus non-cash charges) reduced
by $1.2 million in cash flow used for net working capital changes. The major
working capital changes included a $8.1 million increase in accounts receivable,
offset by a $6.6 million reduction in inventories and a $1.4 million increase in
accounts payable and accrued expenses. Cash used for investing activities
amounted to $109.8 million consisting principally of $101.4 million in net cash
paid for the acquisition of American Premier Holdings, Inc. ("APHI") and $15.4
million in capital expenditures, offset by $5.7 million in net proceeds from the
sale of assets. Cash provided by financing activities amounted to $53.8 million,
consisting of $115.0 million in long-term borrowings, offset by $17.7 million in
long-term borrowing repayments (largely due to the redemption of $11.1 million
recorded amount ($12.0 million face amount) of Senior Notes), $28.1 million in
repayments of revolving credit loans and $13.2 million used for repurchases of
Company common stock.
The Company had $23.7 million in cash and marketable securities on a
consolidated basis at January 31, 1998. Of such amount, $15.3 million was
maintained by the Company with the balance held by Refraco and Superior TeleCom.
In addition to the cash and marketable securities discussed above, the
Company also holds 50.1% common share ownership of Superior TeleCom (NYSE: SUT);
which investment, based on the closing price on the New York Stock Exchange on
March 13, 1998, had a market value of approximately $339.7 million and a
consolidated carrying value as recorded by the Company (net of minority
interest) of $36.4 million. The Superior TeleCom common stock owned by Alpine,
with a fair market value of $75.0 million, is pledged as collateral to secure
certain debt of the Company's and of the Company's Refraco subsidiary.
As of January 31, 1998, Superior TeleCom had $1.9 million in cash and cash
equivalents and approximately $69.5 million in excess funds availability under
its revolving credit facility. Superior TeleCom's principal debt service
commitments over the next 12 months amount to $0.1 million and management
anticipates that capital expenditures of $12 to $17 million will be required
over such period. Superior TeleCom has typically generated substantial cash
flows from operating activities. Management anticipates that the Company will be
able to generate sufficient cash flows from operating activities to meet its
annual commitments. However, should any shortfall arise due to working capital
fluctuations or other factors, funds available under the revolving credit
facility should be sufficient to cover any such shortfall.
As discussed in Note 4 to the accompanying unaudited Condensed Consolidated
Financial Statements, Refraco completed the acquisition of APHI on January 30,
1998. In connection with the acquisition, Refraco entered into an Amended and
Restated Credit Agreement (the "Refraco Credit Agreement") aggregating $260.0
million in borrowing availability, with Refraco's incremental borrowings
thereunder being used to complete the APHI acquisition. Included in the Refraco
Credit Agreement is a $50.0 million revolving credit arrangement of which $8.9
million was drawn at January 31, 1998. As of January 31, 1998, Refraco had $41.1
million in excess funds availability under its revolving credit facility and an
additional $6.5 million in cash and cash equivalents. Refraco's principal debt
service commitments for the next 12 months amount to $7.3 million and capital
expenditures over the next 12 months are expected to approximate $12 to $15
million. The Company anticipates that Refraco will generate sufficient cash
flows from its operating activities to meet its annual principal debt service
and capital expenditures commitments. However, should any shortfall arise due to
working capital fluctuations or other factors, funds available under the
revolving credit facility should be sufficient to cover any such shortfall.
The balance of the Company's operations consist of the corporate activities
of Alpine. At January 31, 1998, Alpine had $13.2 million recorded amount ($14.2
million face amount) of debt, none of which is repayable during the next 12
months. On February 6, 1998, Alpine entered into a $25.0 million credit facility
consisting of a revolving credit line of $15.0 million and a term loan of $10.0
million. Proceeds from the facility are to be used for general working capital
and corporate requirements. For the next 12 months,
23
<PAGE>
Alpine expects to fund its corporate activities (which include approximately
$6.0 million in estimated corporate overhead expenses and $3.0 million in
interest expense) from management fees and dividends payable by its subsidiaries
to Alpine and from interest income, with any shortfall funded from Alpine's
cash, cash equivalents and marketable securities and from funds available under
the aforementioned $25.0 million corporate credit facility.
- ------------------------
Except for the historical information herein, the matters discussed in this
Form 10-Q include forward-looking statements that may involve a number of risks
and uncertainties. Actual results may vary significantly based on a number of
factors, including, market acceptance of new products and continuing product
demand, the impact of competitive products and pricing and changing economic
conditions, including changes in short term interest rates, fluctuations in
foreign currency exchange rates and other risk factors detailed in the Company's
most recent annual report and other filings with the Securities and Exchange
Commission.
24
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<C> <C> <C> <S>
(a) Exhibits
EXHIBIT
NUMBER
---------------------------------------------------------------------------------------------------
27 -- FINANCIAL DATA SCHEDULE
99.1 -- Certificate of Incorporation of Refraco Inc.
99.2 -- Certificate of Amendment of Certificate of Incorporation of Refraco Inc.
99.3 -- By-laws of Refraco Inc.
99.4 -- Stockholders Agreement
(b) Reports on Form 8-K
</TABLE>
The Company filed one Report on Form 8-K during the third quarter of
fiscal 1998. The report, dated January 30, 1998 and filed February 12, 1998,
reported the acquisition of American Premier Holdings, Inc. and the Refraco
Inc. Credit Agreement entered into in connection therewith.
25
<PAGE>
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 thereunto duly authorized.
<TABLE>
<S> <C> <C>
THE ALPINE GROUP, INC.
(Registrant)
Date: March 17, 1998 By: /s/ DAVID S. ALDRIDGE
-----------------------------------------
David S. Aldridge
CHIEF FINANCIAL OFFICER
</TABLE>
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 9,321
<SECURITIES> 14,377
<RECEIVABLES> 155,829
<ALLOWANCES> 3,267
<INVENTORY> 140,839
<CURRENT-ASSETS> 333,185
<PP&E> 221,844
<DEPRECIATION> 35,596
<TOTAL-ASSETS> 758,046
<CURRENT-LIABILITIES> 194,929
<BONDS> 0
0
427
<COMMON> 1,957
<OTHER-SE> 68,872
<TOTAL-LIABILITY-AND-EQUITY> 758,046
<SALES> 646,532
<TOTAL-REVENUES> 646,532
<CGS> 525,265
<TOTAL-COSTS> 525,265
<OTHER-EXPENSES> (119)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,686
<INCOME-PRETAX> 43,302
<INCOME-TAX> 17,220
<INCOME-CONTINUING> 11,775
<DISCONTINUED> 0
<EXTRAORDINARY> (1,221)
<CHANGES> 0
<NET-INCOME> 10,554
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.55
</TABLE>
<PAGE>
CERTIFICATE OF INCORPORATION
OF
REFRACO INC.
----------------------------
FIRST. The name of the Corporation is Refraco Inc.
SECOND. The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, in the city of Wilmington, County of New Castle.
The name of its registered agent at such address is CSC The United States
Corporation Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
law of the State of Delaware.
FOURTH. (1) The Corporation is authorized to issue two classes of
shares designated respectively, "Common Stock" and "Preferred Stock." The
aggregate number of shares of capital stock which the Corporation is authorized
to issue is Three Thousand (3,000) shares, consisting of Five Hundred (500)
shares of Common Stock, $.01 par value, and Two Thousand Five Hundred (2,500)
shares of Preferred Stock, $.01 par value.
(2) The Board of Directors is expressly authorized to
provide for the issue of all or any shares of the Preferred Stock in one or more
series, and to fix the number of shares and to determine or alter, for each such
series, such powers, designations, preferences and relative, participating,
optional or other rights and such qualifications, limitations or restrictions
thereof, as shall be stated and expressed in the resolution or resolutions
adopted by the Board of Directors providing for the issue of such series (a
"Preferred Stock Designation") and as may be permitted by the General
Corporation Law of the State of Delaware. The Board of Directors is also
expressly authorized to increase or decease (but not below the number of shares
of any such series then outstanding) the number of shares of any series
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status which they had prior to the adoption of the Preferred
Stock Designation originally fixing the number of shares of such
<PAGE>
series. The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the voting power of all of the
then outstanding shares of the capital stock of the Corporation entitled to
vote, voting together as a single class, without a separate vote of the holders
of the Preferred Stock, or any series thereof, unless a vote of any such holders
is required pursuant to any Preferred Stock Designation.
FIFTH. The name and mailing address of the incorporator is Gregory T.
Walters, c/o Proskauer Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York,
N.Y. 10036.
SIXTH. Election of directors need not be by written ballot.
SEVENTH. The Board of Directors is authorized to adopt, amend, or repeal
the By-Laws of the Corporation.
EIGHTH. Any person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether or not by or
in the right of the Corporation) by reason of the fact that he is or was a
director, officer, incorporator, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
incorporator, employee, partner, trustee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise (including an employee
benefit plan), shall be entitled to be indemnified by the Corporation to the
full extent then permitted by law against expenses (including counsel fees and
disbursements), judgments, fines (including excise taxes assessed on a person
with respect to an employee benefit plan), and amounts paid in settlement
incurred by him in connection with such action, suit, or proceeding. Such right
of indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Article EIGHTH. Such right of
indemnification shall continue as to a person who has ceased to be a director,
officer, incorporator, employee, partner, trustee, or agent and shall inure to
the benefit of the heirs and personal representatives of such a person. The
indemnification provided by this Article EIGHTH shall not be deemed exclusive
of any other rights which may be provided now or in the future under any
2
<PAGE>
provision currently in effect or hereafter adopted of the By-Laws, by any
agreement, by vote of stockholders, by resolution of disinterested directors,
by provision of law, or otherwise.
NINTH. No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, provided that this provision does not eliminate the liability of the
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from
which the director derived an improper personal benefit. For purposes of the
prior sentence, the term "damages" shall, to the extent permitted by law,
include without limitation, any judgment, fine, amount paid in settlement,
penalty, punitive damages, excise or other tax assessed with respect to an
employee benefit plan, or expense of any nature (including, without limitation,
counsel fees and disbursements). Each person who serves as a director of the
Corporation while this Article NINTH is in effect shall be deemed to be doing so
in reliance on the provisions of this Article NINTH, and neither the amendment
or repeal of this Article NINTH nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article NINTH, shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for, arising out of, based upon, or in connection with any acts
or omissions of such director occurring prior to such amendment, repeal, or
adoption of an inconsistent provision. The provisions of this Article NINTH are
cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitations or eliminations arise under or
are created by any law, rule, regulation, by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
TENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the
3
<PAGE>
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
4
<PAGE>
IN WITNESS WHEREOF, I have made, signed, and sealed this Certificate of
Incorporation this 11th day of April 1997.
/s/ Gregory T. Walters
----------------------
Gregory T. Walters,
Sole Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
REFRACO INC.
It is hereby certified that:
1. The name of the Corporation is Refraco Inc.
2. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Article FOURTH thereof and by substituting in lieu of
said Article the following new Article:
FOURTH. (1) The Corporation is authorized to issue three
classes of shares designated, respectively, "Common Stock," "Class B Common
Stock" and "Preferred Stock." The aggregate number of shares of capital stock
which the Corporation is authorized to issue is One Million (1,000,000) shares,
consisting of Five Hundred Thousand (500,000) shares of Common Stock, $.01 par
value, One Hundred Thousand (100,000) shares of Class B Common Stock, $.01 par
value, and Four Hundred Thousand (400,000) shares of Preferred Stock, $.01 par
value.
(2) The Board of Directors is expressly authorized to provide
for the issue of all or any shares of the Preferred Stock in one or more series,
and to fix the number of shares and to determine or alter, for each such series,
such powers, designations, voting rights, if any, preferences and relative,
participating, optional or other rights and such qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing for the issue of such
series (a "Preferred Stock Designation") and as may be permitted by the General
Corporation Law of the State of Delaware. The Board of Directors is also
expressly authorized to increase or decrease (but not below the number of shares
of any such series then outstanding) the number of shares of any series
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status which they had prior to the adoption of the Preferred
Stock Designation originally fixing the number of shares of such series. The
number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the voting power of all of the then
outstanding shares of the capital stock of the Corporation entitled to vote,
voting together as a single class, without a separate vote of the holders of the
Preferred Stock, or any series thereof, unless a vote of any such holders is
required pursuant to any Preferred Stock Designation.
<PAGE>
(3) Except as set forth in this Article FOURTH, the shares of Common
Stock and Class B Common Stock shall be identical in all respects. Without
limiting the foregoing,
(a) If the Corporation shall subdivide either class of common stock
into a greater number of shares of such class, the shares of the other
class of common stock shall be subdivided, by the same factor, into a
greater number of shares of such class. If the Corporation shall combine
shares of either class of common stock into a lesser number of shares of
such class, the shares of the other class of common stock shall be
combined, by the same factor, into a lesser number of shares of such class.
(b) If the Corporation shall declare, or fix a record date for the
determination of holders of either class of common stock entitled to
receive, a dividend or other distribution, then and in each such event
provision shall be made so that the holders of each class of common stock
shall receive in such dividend or distribution the same amount and types of
cash, property, securities, or other consideration per share as is received
by the holders of the other class.
(c) If at any time or from time to time there shall be a capital
reorganization of the common stock (other than a subdivision or combination
described in clause 3(a) above) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any other
person, then, as a part of such reorganization, merger, consolidation, or
sale, provision shall be made so that the holders of the shares of Class B
Common Stock shall be entitled to receive, with respect to each such share,
the number or amount, and the kind, of shares of stock or other securities,
property, or other consideration of the Corporation, or of the successor
corporation resulting from such merger or consolidation or sale, which a
holder of a share of Common Stock is entitled to receive pursuant to such
capital reorganization, merger, consolidation or sale. In addition, the
Certificate of Incorporation or other governing documents of any successor
corporation resulting from such merger or consolidation or (if, in
connection with a sale, the Corporation liquidates or the holders of the
Class B Common Stock receive securities of such successor corporation and,
in either case, under the terms of Section 4 of this Article FOURTH, the
Put Right (as defined below) would otherwise not terminate on or
immediately after the consummation of any such transaction) sale shall
contain provisions which preserve as nearly as practicable the rights of
the holders of the Class B Common Stock set forth in Section 4 of this
Article FOURTH. The protections afforded to the Class B Common Stock by
the provisions of this Section 3(c) of this Article FOURTH shall apply to
successive reorganizations, mergers, consolidations, and sales.
(4)(a) On and subject to the terms and conditions of this Article
FOURTH, each person (each, an "Initial Holder") who becomes a holder of Class B
Common Stock on the date on which Class B Common Stock is first issued (the
"Initial Issuance Date") and each Permitted Transferee (as defined below; the
Initial Holders and Permitted Transferees are sometimes referred to herein as a
"Holder" or "Holders") shall have the right and option (the "Put Right"),
2
<PAGE>
exercisable during the Exercise Period (as defined below), to require the
Corporation to purchase from such Holder all, but not less than all, of its or
his respective Class B Common Stock Units (as defined below) for a purchase
price (the "Put Price") equal to (i) $2,077 per unit (the "Base Put Price") plus
(ii) an amount, if any, in the nature of interest on the aggregate Base Put
Price, calculated at a rate of 8% per annum, compounded annually, from the third
anniversary of the Initial Issuance Date to the date the Put Price is paid.
"Class B Common Stock Unit" shall mean (i) one share of Class B Common Stock and
(ii) all cash (other than regular cash dividends), property, securities, and
other consideration, if any, received with respect to such share as a result of
dividends, distributions, capital reorganizations, mergers, consolidations, or
sales of all or substantially all of the assets (collectively, the "Other
Consideration").
(b) A Holder shall exercise the Put Right by giving notice (a "Put
Notice"), at any time during the Exercise Period, by first class mail, postage
prepaid. Each Put Notice shall be accompanied by the certificates for the
shares of Class B Common Stock held by the Holder giving such Put Notice,
properly endorsed or accompanied by stock powers properly endorsed for transfer,
and appropriate transfer documents with respect to the Other Consideration held
by the Holder giving such Put Notice, and shall state (i) the election of the
Holder to exercise the Put Right and (ii) the number of Class B Common Stock
Units owned by such Holder. Within five days after receipt of a Put Notice in
proper form, the Corporation shall pay the Put Price by certified or bank check
or wire transfer in accordance with instructions received from the Holder. Upon
payment of the Put Price, the shares of Class B Common Stock so repurchased by
the Corporation shall no longer be deemed to be outstanding, all rights of the
holders thereof as stockholders of the Corporation shall cease, and the
Corporation shall thereupon cancel the certificates representing those shares.
(c)(i) On each of the second through fifth anniversaries of the Initial
Issuance Date, the Corporation will cause to be issued for the benefit of the
Holders a standby letter of credit (a "Letter of Credit") in a face amount (or
cause the face amount of a previously issued Letter of Credit to be increased)
such that the aggregate face amount of the Letters of Credit outstanding during
the year (or, with respect to the fifth anniversary, during the 180 days)
commencing on such anniversary date is equal to the respective percentage set
forth below of the aggregate Base Put Price that would be payable by the
Corporation if the Put Right were then exercised as to all outstanding Class B
Common Stock Units:
<TABLE>
Anniversary Percentage
----------- ----------
<S> <C> <C>
2 15
3 30
4 45
5 60
</TABLE>
(ii) Each Letter of Credit shall provide that (A) it shall be renewed
annually so that the Letter of Credit issued on the fifth anniversary of the
Initial Issuance Date expires not earlier than 180 days after the fifth
anniversary of the Initial Issuance Date, (B) it may not be revoked or
3
<PAGE>
its amount reduced (except as set forth in Section 4(c)(iii)) without the
unanimous consent of the Holders of the Class B Common Stock, and (C) the issuer
of the Letter of Credit shall pay to any Holder, within the LC Payment Period
(as defined below), the amount of the Put Price (or the allocated portion
thereof as provided in Section 4(c)(iv)) for the Class B Common Stock Units held
by such Holder upon presentation by such Holder of a request for payment
certifying that (I) the Corporation has failed to pay any or a specified portion
of the Put Price within the five day period provided in Section 4(b) or
(II) pursuant to the Guarantee by The Alpine Group Inc. ("Alpine") relating to
the performance by the Corporation of the Corporation's obligations hereunder as
the same may be amended from time to time (the "Guarantee"), Alpine has failed
to pay any or a specified portion of the Put Price within the five day period
provided in Section 4(b) or as required upon proper exercise of the Accelerated
Put Right under (and as defined in) the Guarantee, and in each case accompanied
by a copy of such Holder's Put Notice. Each Letter of Credit shall be issued by
a commercial bank or other financial institution domiciled in the United States
having a combined capital and surplus or net worth of at least $500 million.
The "LC Payment Period" shall mean, for any request for payment made (x) within
30 days of the first such request made within any Exercise Period, the period
commencing 31 days after, and ending 35 days after, the date of such first
request for payment, and (y) after such 30 day period, the period ending five
days after such request for payment.
(iii) Upon expiration or termination of the Put Right for any reason,
the Corporation may cancel or revoke all outstanding Letters of Credit. The
Corporation may at any time replace a Letter of Credit with a substitute Letter
of Credit. If at any time the aggregate face amount of the Letters of Credit
then outstanding is greater than the amount required to be outstanding under
Section 4(c)(i), the Corporation shall be entitled to reduce the face amount of
the Letters of Credit to the required amount.
(iv) If and to the extent the Corporation or Alpine fails to pay the Put
Price upon proper exercise of the Put Right or the Accelerated Put Right by a
Holder or Holders, such Holder or Holders shall be entitled to draw upon the
Letters of Credit. If, within 30 days of the first request for payment under
the Letters of Credit with respect to an Exercise Period, more than one Holder
has made a request for payment under the Letters of Credit, and the aggregate
face amount of the Letters of Credit is not sufficient to fully satisfy the
unpaid portion of the Corporation's or Alpine's obligation to pay the Put Price
payable to all such Holders (the "Requesting Holders"), the proceeds of the
Letters of Credit shall be allocated (A) first, to the Requesting Holder or
Requesting Holders who have received the lowest amount per Class B Common Stock
Unit, until such Requesting Holder or Requesting Holders have received the
amount per unit paid to the Requesting Holder or Requesting Holders who have
received the second lowest amount per unit or the proceeds of the Letters of
Credit are exhausted, (B) then to the Requesting Holder or Requesting Holders
who have received the second lowest amount per unit, and the Requesting Holder
or Requesting Holders who have received the lowest amount per Class B Common
Stock Unit, until such Requesting Holder or Requesting Holders have received the
amount per unit paid to the Requesting Holder or Requesting Holders who have
received the third lowest amount per unit or the proceeds of the Letters of
Credit are exhausted, (C) successively, in the same fashion, until all
Requesting Holders have received the same
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amount per unit or the proceeds of the Letters of Credit are exhausted, and
(D) finally, among all Requesting Holders (or, if the proceeds of the Letters of
Credit are exhausted before all Requesting Holders have received the same amount
per unit, then among the last group of Requesting Holders who are entitled to an
allocation under (A), (B), or (C) of this Section 4(c)(iv)), pro rata among such
Requesting Holders based on the respective amounts of the aggregate Put Price
payable to each such Requesting Holder.
(d) The "Exercise Period" shall mean, for all or that class of Holders
specified below, the 180-day period following the earliest to occur with respect
to such Holders of any of the following events:
(i) for all Holders, the fifth anniversary of the Initial Issuance
Date; or
(ii) for the Holders who are members of a Qualifying Group (as defined
below) which has given the Corporation notice (the "Acceleration Notice")
of the occurrence of a Default (as defined below), the date on which such
Acceleration Notice is given.
(A) "Qualifying Group" means (I) Minerals Trading, Inc., a
Delaware corporation ("MTI"), together with the Permitted Transferees
of MTI, or (II) the Initial Holders other than MTI, together with the
Permitted Transferees of such Initial Holders. Each Qualifying Group
shall give an Acceleration Notice only if authorized by vote or
written consent of the Holders owning a majority of the shares of
Class B Common Stock then owned by all members of such Qualifying
Group in the aggregate (it being understood that each member of a
Qualifying Group which becomes entitled to exercise the Put Right
shall be entitled and required to separately exercise or not exercise
such Put Right, and that either or both of the Qualifying Groups may
give an Acceleration Notice).
(B) A "Default" shall have occurred if any lender to the
Corporation or any trustee under any of its credit agreements or
indentures with respect to borrowed money shall have declared the
principal amount thereunder to be due and payable prior to scheduled
maturity.
(e)(i) The Put Right with respect to any Class B Common Stock Unit shall
terminate upon (A) the expiration of the Exercise Period during which the Put
Right becomes actually exercisable with respect to such Unit, provided that the
Corporation has not defaulted in its obligations with respect to the exercise of
the Put Right, (B) the sale, assignment, transfer, or other disposition, direct
or indirect, of the share of Class B Common Stock included in such Unit, except
for the sale, assignment, transfer, or other disposition to any Permitted
Transferee (and provided, that a pledge of or other encumbrance on a share of
Class B Common Stock shall not be deemed a disposition unless and until such
pledge or other encumbrance is levied upon and results in the actual transfer of
beneficial ownership of such share), (C) the expiration of the exercise period
during which the Accelerated Put Right becomes actually exercisable with
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respect to such Unit under the Guarantee, provided that Alpine has not defaulted
in its obligations with respect to the exercise of the Accelerated Put Right, or
(D) the Fair Market Value (as defined below) of a Class B Common Stock Unit
exceeding 115% of the Put Price for each of 20 trading days contained in a
period of 30 consecutive trading days (the "30-Day Period") commencing after the
latest of (I) the listing of the Common Stock on a national securities exchange
or the Nasdaq National Market, (II) 33 months after the Initial Issuance Date,
and (III) the expiration of any lock-up period to which the Holder agrees in
connection with a public offering by the Corporation, provided that in the case
of clause (D), the Put Right with respect to any Class B Common Stock Unit shall
terminate only if the securities included in such Class B Common Stock Unit are
freely-tradable by the Holder during the 30-Day Period and thereafter (it being
understood with respect to clauses (A) and (C) that neither the Put Right nor
the Accelerated Put Right shall terminate or be deemed to have been waived if a
Qualifying Group shall have a right to accelerate the Put Right or to obtain the
Accelerated Put Right but does not exercise such right). "Fair Market Value" on
any day shall mean (A) for Class B Common Stock, the closing price on such day
of one share of Common Stock on a national securities exchange or the Nasdaq
National Market and (B) for any Other Consideration, the fair market value on
such day of such Other Consideration as determined by a nationally recognized
investment banking firm with which the Corporation and its affiliates have had
no prior relationship and which shall be selected by the Corporation.
(ii) Upon the expiration or earlier termination of the Put Right with
respect to any Class B Common Stock Unit, or at any other time upon the
election of the holder of such Class B Common Stock Unit, the share of Class B
Common Stock included in such unit shall be converted, without any further
action, into one share of Common Stock. The holder of any certificate
representing shares of Class B Common Stock so converted shall, promptly upon
the request of the Corporation, deliver such certificates to the Corporation for
cancellation, and the Corporation shall promptly issue to such holder a new
certificate representing the corresponding number of shares of Common Stock;
provided, that the failure of the Corporation to request such delivery, or such
holder to make such delivery, shall not affect the conversion, which shall be
effective upon the date of expiration of termination as provided in the first
sentence of this Section 4(e)(ii).
(iii) The term "Permitted Transferee" shall mean
(A) the spouse or issue of a Holder or a trust of which there are no
principal beneficiaries other than Holders and spouses and issue of
Holders;
(B) the estate or heirs of a Holder upon the death of the Holder;
(C) a legal representative of a Holder in the event such Holder
becomes mentally incompetent;
(D) another Holder; or
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(E) the ultimate parent corporation (a "Parent") of a Holder that
is a corporation or any wholly-owned direct or indirect subsidiary of
such Parent (a "Controlled Subsidiary"), provided that upon the
subsequent sale, liquidation or spin-off of such Controlled Subsidiary
or other transaction in which the Parent ceases to control, directly or
indirectly, 100% of the equity of the Controlled Subsidiary the Put
Right shall immediately terminate with respect to any Class B Common
Stock Units held by such Controlled Subsidiary.
(f) The Corporation shall deliver to each Holder:
(i) As soon as available but no later than 120 days after the end of
each fiscal year, a balance sheet of the Corporation and its subsidiaries
as of the end of such year, together with the related statements of
operations, stockholders' equity, and cash flow for the Corporation for
such fiscal year, on a consolidated basis. Such financial statements shall
be in reasonable detail with appropriate notes and be prepared in
accordance with generally accepted accounting principles consistently
applied from year to year. The annual financial statements shall be
audited by the independent public accountants then regularly employed by
the Corporation.
(ii) As soon as available but no later than 60 calendar days after the
end of each of the first three fiscal quarters of each fiscal year, a
balance sheet of the Corporation and its subsidiaries and related
statements of operations, stockholders' equity, and cash flow for such
quarterly period and for the period from the beginning of such fiscal year
to the end of such fiscal quarter, certified by the chief financial officer
or controller of the Corporation as having been prepared in accordance with
generally accepted accounting principles consistently applied (subject to
changes resulting from audits and year-end adjustments).
(iii) Together with each delivery of financial statements pursuant
to Section 4(f)(i) or (ii), a certificate of the chief financial officer of
the Corporation that no Default or Refraco Default (as defined in the
Guarantee) has occurred and is continuing or, if any Default or Refraco
Default has occurred and is continuing, a description thereof in reasonable
detail and of the action the Corporation has taken or proposes to take with
respect thereto.
(iv) Promptly after the Chief Financial Officer of the Corporation
shall obtain knowledge of the occurrence of any Default or Refraco Default,
a notice specifying that such notice is a "Notice of Default" and
describing such Default or Refraco Default in reasonable detail and, in
such Notice of Default or as soon thereafter as practicable, a description
of the action the Corporation has taken or proposes to take with respect
thereto.
(g) If the Corporation (i) subdivides outstanding shares of Class B Common
Stock into a greater number of shares or (ii) combines outstanding shares of
Class B Common Stock
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into a smaller number of shares, then the Put Price in effect immediately prior
to such action shall be adjusted so that the aggregate Put Price that would be
payable to the Holders upon exercise of the Put Right immediately after such
action is equal to the aggregate Put Price that would have been payable to the
Holders upon exercise of the Put Right immediately prior to such action. The
adjustment shall become effective immediately after the effective date of the
subdivision or combination. Whenever the Put Price is adjusted, the Corporation
shall calculate the adjustment to be made and shall promptly mail to the Holders
a notice of the adjustment briefly stating the facts requiring the adjustment
and the manner of computing it.
(h) If, at the time the Corporation is required to purchase Class B Common
Stock Units pursuant to this Section 4, its surplus is legally insufficient for
the Corporation to make the portion of the payment attributable to the purchase
of the Class B Common Stock (or other securities of the Corporation) included in
such Units, the entire available surplus shall be applied to the payment, and
the Corporation shall promptly take all such action as may be permitted by law
(including any reduction in the par value of any of its shares) to reduce the
capital of the Corporation or to revalue its assets to the greatest extent
permitted by law so as to increase its surplus to the extent necessary to permit
the Corporation to purchase all shares it is required to purchase or, if that is
not legally permissible, as many of such shares as possible.
(i) All certificates for the shares of Class B Common Stock shall bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFICATION
UNDER THE BLUE SKY LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED OF, BENEFICIALLY OR ON THE RECORDS OF THE
CORPORATION, UNLESS THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
AND QUALIFIED UNDER APPLICABLE BLUE SKY LAWS OR AN EXEMPTION
FROM SUCH REGISTRATION AND QUALIFICATION IS AVAILABLE.
The certificates evidencing such shares shall also bear any legends required
pursuant to any state, local or foreign law governing such securities.
(5) Shares of Class B Common Stock which are acquired by the Corporation,
whether by exercise of the Put Right or otherwise, or which are converted into
Common Stock, shall be retired and not reissued.
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(6) Sections 3, 4, 5, and this Section 6 of this Article FOURTH may be
amended, any of the obligations of the Corporation therein may be waived, and
additional shares of Class B Common Stock may be issued after the Initial
Issuance Date, only with the unanimous consent of the holders of the Class B
Common Stock.
3. The amendment of the Certificate of Incorporation herein
certified has been duly adopted and written consent has been given in accordance
with the provisions of Sections 228 and 242 of the General Corporation Law of
the State of Delaware.
Dated: January 30, 1998
REFRACO INC.
By: /s/ Bragi F. Schut
--------------------------------
Name: Bragi F. Schut
Title: Executive Vice President
<PAGE>
BY-LAWS
OF
REFRACO INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stock-holders shall be
held on the first Monday of May in each year, or as soon thereafter as
practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or
purposes of the meeting) of a majority of the directors then in office or of
the holders of a majority of the outstanding shares entitled to vote. Only
business related to the purposes set forth in the notice of the meeting may be
transacted at a special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may
be held in or outside Delaware at the place and time specified by the Board or
the officers or stockholders requesting the meeting.
<PAGE>
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except when required
under section 1.5 below or by law. Each notice of a meeting shall be given,
personally or by mail, not fewer than 10 nor more than 60 days before the
meeting and shall state the time and place of the meeting, and, unless it is the
annual meeting, shall state at whose direction or request the meeting is called
and the purposes for which it is called. If mailed, notice shall be considered
given when mailed to a stockholder at his address on the corporation's records.
The attendance of any stockholder at a meeting, without protesting at the
beginning of the meeting that the meeting is not lawfully called or convened,
shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no
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stockholders are present, any officer entitled to preside at or to act as
secretary of the meeting, may adjourn the meeting until a quorum is present.
At any adjourned meeting at which a quorum is present, any action may be
taken that might have been taken at the meeting as originally called. No
notice of an adjourned meeting need be given, if the time and place are
announced at the meeting at which the adjournment is taken, except that, if
adjournment is for more than 30 days or if, after the adjournment, a new
record date is fixed for the meeting, notice of the adjourned meeting shall
be given pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders, except as otherwise
provided by law or by section 1.8. Directors shall be elected in the manner
provided in section 2.1. Voting need not be by ballot, unless requested by a
majority of the stockholders entitled to vote at the meeting or ordered by the
chairman of the meeting. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person
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to act for him by proxy. No proxy shall be valid after three years from its
date, unless it provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so
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taken, shall be signed by the holders of outstanding stock having not fewer than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voting. Prompt notice of the taking of any such action shall be given to
those stockholders who did not consent in writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of one director. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. Directors shall be elected at
each annual meeting of stockholders by a plurality of the votes cast and shall
hold office until the next annual meeting of stockholders and until the election
and qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
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2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the
vote of the majority of the directors present at the time of the vote, if there
is a quorum, unless otherwise provided by law or these by-laws. In the absence
of a quorum, a majority of the directors present may adjourn any meeting from
time to time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
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2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the
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members of the Board or the committee consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consents by
the members of the Board or the committee shall be filed with the minutes of the
proceedings of the Board or the committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
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2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement of their reasonable expenses in
connection with the performance of their duties. A director also may be paid
for serving the corporation or its affiliates or subsidiaries in other
capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
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3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee shall adopt rules of procedure
and shall meet as provided by those rules or by resolutions of the Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so
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determines), a secretary and a treasurer. Any two or more offices may be held
by the same person. The board may require any officer, agent or employee to
give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary
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to make it effective. Any officer elected or appointed by the Board or
appointed by an executive officer or by a committee may be removed by the Board
either with or without cause, and in the case of an officer appointed by an
executive officer or by a committee, by the officer or committee that appointed
him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of
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the corporation's books and accounts. Subject to the control of the Board, he
shall have such other powers and duties as the Board or the president assigns to
him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have
such powers and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be
signed by the president or a vice
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president, and by the secretary or an assistant secretary or the treasurer or an
assistant treasurer, and shall be sealed with the corporation's seal or a
facsimile of the seal. Any or all of the signatures on the certificate may be a
facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose of
any other action. The record date may not be more than 60 or fewer than 10 days
before the date of the meeting or more than 60 days before any other action.
6. INDEMNIFICATION AND INSURANCE.
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6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his heirs,
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executors and administrators; provided, however, that, except as provided in
section 6.2, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
that person, only if that proceeding (or part thereof) was authorized by the
Board. The right to indemnification conferred in these by-laws shall be a
contract right and shall include the right to be paid by the corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law of
Delaware, as amended from time to time, requires, the payment of such expenses
incurred by a director or officer in his capacity as a director or officer (and
not in any other capacity in which service was or is rendered by that person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding shall
be made only upon delivery to the corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced, if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under these by-laws or otherwise. The corporation may, by action of
its Board, provide indemnification to employees and agents of the
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corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board, its
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
permissible in the circumstances because he has met that standard of conduct,
nor an actual determination by the corporation (including its Board, its
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independent counsel or its stockholders) that the claimant has not met that
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by
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reason of such position, or a position with another entity at the request of the
corporation, a witness in any action, suit or proceeding, he shall be
indemnified against all costs and expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be April 30.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies
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appointed by one of them. The Board may, however, appoint some other person to
vote the shares.
7.4 Amendments. The holders of shares entitled at the time to vote
for the election of directors shall have power to adopt, amend, or repeal the
by-laws of the Corporation by vote of not less than a majority of such shares,
and except as otherwise provided by law, the Board of Directors shall have power
equal in all respects to that of the stockholders to adopt, amend, or repeal the
by-laws by vote of not less than a majority of the entire Board. However, any
by-law adopted by the Board may be amended or repealed by vote of the holders of
a majority of the shares entitled at the time to vote for the election of
directors.
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STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of January 30, 1998, by and among
Refraco Inc., a Delaware corporation (the "Company"), The Alpine Group,
Inc., a Delaware corporation ("Alpine"), Minerals Trading, Inc., a
Delaware corporation ("MTI"), and Ralph Feuerring, Charles Gehret, John
Gehret and Stanley Weiss (collectively, the "Individual Refraco
Stockholders" and, together with Alpine and MTI, the "Stockholders").
W I T N E S S E T H :
WHEREAS, concurrently with the execution and delivery of
this Agreement, the Company is acquiring American Premier Holdings, Inc., a
Delaware corporation ("APHI"), through the statutory merger of APHI with
and into the Company (the "Merger"), pursuant to which MTI and the
Individual Refraco Stockholders (collectively, the "Minority Stockholders")
are acquiring shares of Class B common stock, par value $.01 per share (the
"Class B Common Stock"), of the Company upon the terms and conditions set
forth in the merger agreement, dated as of January 18, 1998, by and among
Alpine, the Company, APHI and the Minority Stockholders the "Merger
Agreement"); and
WHEREAS, Alpine, which currently holds all of the issued
and outstanding shares of common stock, par value $.01 per share (the
"Ordinary Common Stock" and, together with the Class B Common Stock, the
"Common Stock"), of the Company, and the Minority
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Stockholders desire to enter into this Stockholders Agreement for the purpose
of regulating certain aspects of their relationship as stockholders of the
Company; and
WHEREAS, it is in the best interests of the Company and the
Stockholders that such aspects of their relationship be so regulated;
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings (such meanings being
equally applicable to both the singular and plural form of the terms
defined).
"Affiliate"of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned Person.
"Agreement" means this Stockholders Agreement, including
all amendments, modifications and supplements hereto and any exhibits or
schedules to any of the foregoing, and shall refer to this Agreement as the
same may be in force and effect at the time such reference becomes operative.
"By-Laws" means the By-Laws of the Company, as the same may be in
force and effect as of the date hereof.
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"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as the same may be in force and effect as of
the date hereof.
"Closing" means the closing of the Merger, which shall occur on the
date hereof.
"Convertible Securities" means any evidences of indebtedness,
shares (other than Common Stock) or other securities convertible into or
exchangeable for Common Stock.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any Person exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Person"means an individual, corporation, partnership, association,
trust or any unincorporated organization.
"Put Right" means the right of each of the Minority Stockholders
to elect to sell to the Company shares of Class B Common Stock on the terms
and conditions set forth in the Certificate of Incorporation.
"Registration Rights Agreement" means that certain agreement, dated
as of the date hereof, by and among the Company, Alpine and the Minority
Stockholders pursuant to which the Company grants the Minority Stockholders
certain registration rights.
"Rule 144 Sales" means open market sales pursuant to Rule 144
under the Securities Act (or any successor rule or regulation).
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"Securities Act" means the Securities Act of 1933, as
amended.
Section 2. Certain Agreements.
2.1 Board of Directors. Each Stockholder shall vote (or shall cause
to be voted) all of the shares of Common Stock owned or controlled by such
Stockholder (including any shares of Common Stock hereafter acquired), at any
regular or special meeting of stockholders of the Company, shall take all
action by written consent in lieu of such meeting of stockholders, and shall
take all other actions necessary, to ensure:
(a) that the Board of Directors of the Company shall consist
of such number of directors as may be determined by Alpine in its sole
discretion (which number shall be greater than or equal to 10 so long as
Alpine owns at least 80% of the outstanding Common Stock and the Minority
Stockholders have their rights to designate board members hereunder); and
(b) that there shall be elected as members of the Board
of Directors:
(i) one individual designated by MTI;
(ii) one individual designated by the Individual
Refraco Stockholders collectively, as determined by the vote or consent of
the Individual Refraco Stockholders holding a majority of the Common Stock
held in the aggregate by all of the Individual Refraco Stockholders; and
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(iii) the individuals designated by Alpine to fill
the remaining directorships.
2.2 Removal. Any or all of the directors may be removed at any
time, either with or without cause, by the affirmative vote or action by
written consent of holders of a majority of the then outstanding Common Stock
in accordance with the By-Laws; provided, however, that any director
designated by MTI pursuant to the provisions of Section 2.1(b)(i) and any
director designated by the Individual Refraco Stockholders collectively
pursuant to the provisions of Section 2.1(b)(ii) may be removed at such time
and in such manner only with cause and otherwise may be removed only by the
party that designated such director.
2.3 Vacancies. In the event that a vacancy is created on the Board
of Directors of the Company by the death, disability, retirement, resignation
or removal (with or without cause) of a director, or otherwise there shall
exist or occur any vacancy on the Board of Directors of the Company, each
Stockholder hereby agrees to use its or his best efforts to cause the
remaining directors to vote or take action by written consent, in accordance
with the By-Laws, for the election of a nominee to be designated by the
entity or group which had designated or was entitled to designate the
director whose position has become vacant, provided that such designee was
not previously a director of the Company or any of its Affiliates who was
removed for cause from the Board of Directors of the Company or any of its
Affiliates.
2.4 No Proxies. Each Stockholder covenants and agrees that, except
(i) as a result of transfers expressly permitted by, and pursuant to and in
accordance with, this
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Agreement and (ii) as otherwise provided in the last sentence of Section 2.5
hereof, such Stockholder will have sole voting power with respect to such
Stockholder's Common Stock and will not grant any proxy with respect to such
Common Stock, enter into any voting trust or other voting agreement or
arrangement with respect to such Common Stock or grant any other rights to
vote such Common Stock other than the agreement to vote such Common Stock set
forth herein.
2.5 Further Assurances. In order to effectuate the provisions of
this
Section 2, the Stockholders hereby agree that when any action or vote is
required to be taken by such Stockholders pursuant to this Agreement, such
Stockholders shall use their respective best efforts to call, or cause the
appropriate officers and directors of the Company to call, a special or
annual meeting of stockholders of the Company, as the case may be, or execute
or cause to be executed a consent in writing in lieu of any such meetings in
accordance with the General Corporation Law of the State of Delaware, to
effectuate such action. In addition, if any Stockholder shall fail to vote as
required by the specific terms of this Section 2, such Stockholder shall be
deemed to have irrevocably constituted and appointed the other Stockholders
as his proxy coupled with an interest to vote such Stockholder's Common Stock
on a pro rata basis in accordance with the terms of this Section 2.
2.6 Affiliate Transactions. During the term of this Agreement,
(a) Alpine will continue to provide to Refraco the same level of staff
support for corporate and administrative services that is currently being
provided, on a basis consistent with past practice using existing
staff and replacements thereof, but there shall be no charge by Alpine
to Refraco for such staff support (other than for out-of-pocket costs
reasonably incurred in connection therewith and
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the cost for employees of Alpine who devote substantially all their business
time to Refraco) and (b) neither Alpine nor any of its Affiliates (other than
any of Refaco's Subsidiaries) shall enter into any agreement or arrangement
with Refraco or any of its Subsidiaries other than as contemplated by this
Agreement, except for agreements or arrangements on an arm's length basis at
rates or charges to Refraco or its Subsidiaries that are not less favorable
than could be obtained by them from an unrelated third party. In connection
with the administration of any insurance maintained by Alpine both for
Refraco and for Alpine and other Subsidiaries of Alpine, Alpine shall submit
and prosecute claims and otherwise provide such administration in a fair and
equitable manner and shall not intentionally take any action in connection
therewith that would give a preference or advantage to Alpine or to one
Subsidiary over another under circumstances when Alpine has the ability to
act in an manner that would not provide such a preference or advantage.
Alpine shall purchase excess general liability insurance in the amount of $10
million for the benefit of Refraco.
Section 3. Restrictions on Transfer of Shares of the Company.
3.1 Transfer Restricted.
3.1.1 No Common Stock, or any interest therein, shall be
sold, assigned, transferred, pledged or otherwise encumbered or disposed of,
directly or indirectly, except in accordance with the provisions of this
Agreement or as required by applicable law. The Company shall not transfer
upon its books and records any shares of Common Stock purported to be
transferred to any Person in violation of this Agreement.
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3.1.2 In addition to each other restriction on transfer
contained in this Agreement, except for Rule 144 Sales, a sale of
shares in a public offering and a transfer to the Company, no Stockholder
shall sell, assign, transfer, pledge or otherwise encumber or dispose of
any shares of Common Stock or any interest therein to any Person
(regardless of the manner in which such Stockholder initially acquired such
Common Stock), unless (a) the certificates representing the shares issued
to the transferee bear appropriate legends reflecting the
restrictions on transfer contained in this Agreement substantially
to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF JANUARY 30,
1998 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY) AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH THE PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT."
and (b) the transferee shall have executed and delivered to the Company, as a
condition to its acquisition of the Common Stock, an appropriate document
confirming that such transferee takes such shares subject to all the terms
and conditions of this Agreement.
3.1.3 In addition to each other restriction on transfer
contained in this Agreement, no Stockholder shall sell, assign, transfer,
pledge or otherwise encumber or dispose of any shares of Common Stock, or any
interest therein, to any Person unless such sale, assignment, transfer,
pledge or other encumbrance or disposition is pursuant to an effective
registration statement under the Securities Act and under applicable state
securities laws or an exemption from such registration is available.
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3.1.4 The restrictions on transfer contained in this
Agreement are in addition to, and not in limitation of, each other
restriction on transfer contained in the Merger Agreement.
3.2 Certain Permitted Transfers. Notwithstanding anything in
this Agreement to the contrary, the restrictions contained in Section 3.3
of this Agreement shall not apply to the transfers of Common Stock described
in clauses (a), (b) and (c) below and the restrictions contained in
Sections 3.4, 3.5 and 3.6 of this Agreement shall not apply to transfers of
Common Stock described in any of the following clauses:
(a) any transfer to a legal representative in the
event any Stockholder who is an individual becomes mentally
incompetent;
(b) any transfer by Alpine to a corporation or other entity that
owns, directly or indirectly, 100% of the equity of Alpine (an "Alpine
Parent") or to any wholly-owned direct or indirect subsidiary of such
Alpine Parent (an "Alpine Controlled Subsidiary"), it being
understood with respect to such Alpine Controlled Subsidiary that
the later sale, liquidation or spin-off of such Alpine Controlled
Subsidiary or other transaction in which the Alpine Parent ceases to
control, directly or indirectly, 100% of the equity of the Alpine
Controlled Subsidiary would constitute an indirect sale of Common
Stock, which sale may only be made in compliance with the terms and
restrictions set forth in this Agreement;
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(c) any pledge by Alpine of the shares of Common Stock owned by it
to any lender or trustee under any credit agreements or indentures
with respect to borrowed money of Alpine or the Company;
(d) any transfer without consideration by a Stockholder who is
an individual to the spouse or issue of such Stockholder or to a
trust of which there are no principal beneficiaries other than such
Stockholder or the spouse or issue of such Stockholder;
(e) any transfer by a Stockholder that is not an individual
to a corporation or other entity that owns, directly or indirectly,
100% of the equity of such entity (a "Parent") or to any
wholly-owned direct or indirect subsidiary of such Parent (a
"Controlled Subsidiary"), it being understood with respect to such
Controlled Subsidiary that the later sale, liquidation or spin-off of
such Controlled Subsidiary or other transaction in which the Parent
ceases to control, directly or indirectly, 100% of the equity of the
Controlled Subsidiary would constitute an indirect sale of Common
Stock, which sale may only be made in compliance with the terms and
restrictions set forth in this Agreement;
(f) any transfer between Stockholders; or
(g) any transfer by a Stockholder to the Company pursuant to any
agreement between the Company and such Stockholder;
provided that in the cases of (a) through (f), each transferee agrees in
writing to take such Common Stock subject to, and to comply with, the
restrictions on transfer contained in this
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Agreement. In addition, none of the restrictions on transfers of Common
Stock contained in this Agreement shall apply to a transfer by a Stockholder
who is an individual upon his death, by will, by the laws of descent or by
operation of law, except that any such transfer shall be subject to the
requirements of Section 3.1.2 of this Agreement. Any transfer of Common
Stock pursuant to and in compliance with this Section 3.2 shall be a
permitted transfer under this Agreement, and any transferee of Common
Stock pursuant to and in compliance with this Section 3.2 (other than
the Company) is herein referred to as a "Permitted Transferee." Each
Permitted Transferee, if not previously a Minority Stockholder, shall,
upon consummation of the transfer, be deemed a Minority Stockholder for
purposes of this Agreement.
3.3 Holding Periods.
3.3.1 Each Minority Stockholder shall not sell,
exchange, distribute or otherwise dispose of, or reduce the risk of loss by
short sale or otherwise with respect to, any of its or his shares of Common
Stock, or enter into any contract or arrangement with respect to any of the
foregoing matters, during the period commencing on the date of the Closing
and ending on the thirty-third monthly anniversary thereof, except (i) for
transfers described in Section 3.2(a) of this Agreement or the third from
last sentence of Section 3.2 of this Agreement, (ii) pursuant to Section 3.5
or 3.6 of this Agreement, (iii) pursuant to the terms of the Registration
Rights Agreement, (iv) pursuant to the terms of the Guaranty (as defined in
the Merger Agreement), (v) pursuant to the exercise of the Put Right
following acceleration, if any, of such right as provided in the Certificate
of Incorporation, or (vi) by reason of a transaction described in clause (z)
of Section 3.3.2.
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3.3.2 Except for transfers permitted under Section 3.2 of
this Agreement, Alpine agrees that it will not, and will not enter into any
contract or agreement or adopt any resolution to (a) sell, exchange,
distribute or otherwise dispose of, or reduce the risk of loss by short sale
or otherwise with respect to, any of its equity interest in the Company or
the capital stock of American Premier Inc., APHI's wholly-owned subsidiary
("API"), or enter into any contract or arrangement with respect to any of the
foregoing matters, or (b) cause or permit the Company to liquidate or to
sell, exchange, distribute or otherwise dispose of any of the assets of API
(other than in the ordinary course of its business and except for transfers
to a wholly-owned subsidiary of the Company) during the period commencing on
the date hereof and ending on the second anniversary of the date hereof;
provided, however, that nothing herein will prevent Alpine from (x)
responding to, negotiating with respect to or completing a transaction
resulting from, an unsolicited offer received prior to that time which the
Board of Directors of Alpine determines is necessary in order to comply with
its fiduciary obligations to Alpine's public shareholders, (y) causing the
merger of API, API Technologies and Adience, or (z) causing the acquisition
of the Company in a transaction that qualifies as a reorganization within the
meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended
(the "Code"), in which the shareholders of the Company receive solely stock
of the acquiring corporation as consideration for their capital stock of the
Company and that does not affect the treatment for tax purposes of the
Split-Off as a tax free distribution to MTI under Section 355(a) of the Code
and the Merger as an "A" reorganization under Section 368(a)(1)(A) of the
Code.
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3.4 First Offer Rights. The Minority Stockholders may sell
or otherwise transfer Common Stock only in compliance with the provisions of
this Section 3.4 and Section 3.3.1 of this Agreement, except for sales and
transfers permitted by the exceptions to Section 3.3.1.
3.4.1 Any Minority Stockholder desiring to sell or
otherwise transfer Common Stock in compliance with this Section 3.4 (a
"Selling Stockholder") shall first deliver written notice to Alpine, the
Company and the other Minority Stockholders (the "Notice of Offer"), which
Notice of Offer shall specify: (i) the number of shares of Common Stock owned
by the Selling Stockholder which such Selling Stockholder wishes to sell (the
"Offered Shares"); (ii) the proposed cash purchase price per share of the
Offered Shares (the "Offer Price"); and (iii) the name of the prospective
purchaser and all other material terms and conditions of the offer. The
Notice of Offer shall constitute an irrevocable offer by the Selling
Stockholder to sell to the other Stockholders the Offered Shares at the Offer
Price, as hereinafter provided.
3.4.2 Within 15 days following their receipt of the Notice
of Offer, each of the Minority Stockholders other than the Selling
Stockholder (the "Retaining Stockholders") shall notify the Company, Alpine,
the Selling Stockholder and the other Minority Stockholders in writing as to
the number of Offered Shares, if any, up to his or its pro rata portion of
the Offered Shares (based on the number of shares of Common Stock owned by
such Retaining Stockholder compared to the number of shares of Common Stock
owned by all Retaining Stockholders), that it or he is electing to purchase
(such notification is hereinafter referred to as the "Stockholder's
Acceptance" and each Retaining Stockholder electing to purchase Offered
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Shares is hereinafter referred to as an "Accepting Stockholder"). If any
Retaining Stockholder does not provide a Stockholder's Acceptance to the
Company, Alpine, the Selling Stockholder and the other Minority Stockholders
within such 15-day period, such Retaining Stockholder shall be deemed to have
declined to purchase any of the Offered Shares. A Stockholder's Acceptance
shall be deemed to be an irrevocable commitment to purchase at the Offer
Price from the Selling Stockholder the number of Offered Shares which such
Accepting Stockholder has elected to purchase pursuant to its or his
Stockholder's Acceptance.
3.4.3 If any Retaining Stockholder fails to exercise his right
to purchase his full pro rata portion of the Offered Shares, each of the
Accepting Stockholders who has exercised his right to purchase his full pro
rata portion of the Offered Shares shall have an additional five days after
the expiration of such 15-day period in which to give to the Selling
Stockholder and to the other Accepting Stockholders who have exercised their
right to purchase their full pro rata portion of the Offered Shares further
notice (the "Further Notice") of his election to purchase all or a part of
the Offered Shares that the Retaining Stockholders have not theretofore
elected to purchase (the "Remaining Shares"). Each Further Notice shall state
the number of additional shares which the Stockholder giving the Further
Notice elects to purchase. The Remaining Shares shall be apportioned among
those Stockholders who have given a Further Notice as follows:
(a) Each Stockholder who has given a Further Notice and who has
not yet been apportioned that number of additional shares that
he elected to purchase in his Further Notice (a "Participating
Stockholder") shall be apportioned the lesser of (i) that number
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of additional shares that he elected to purchase in his Further Notice
and which he has not yet been apportioned pursuant to this Section
3.4.3(a) or (ii) his Pro Rata Portion of the Unpurchased Shares,
whichever is lesser.
(b) If the apportionment in Section 3.4.3(a) is followed and
there remain at least one Participating Stockholder and any Unpurchased
Shares, the procedure described in Section 3.4.3(a) shall be repeated.
(c) For purposes of this Section 3.4.3, "Unpurchased Shares" shall
be the Remaining Shares that have not yet been apportioned to
Participating Stockholders pursuant to Section 3.4.3(a), and a
Participating Stockholder's "Pro Rata Portion" of the Unpurchased
Shares shall be the number of Unpurchased Shares multiplied by the
fraction determined by dividing the number of shares of Common Stock
that such Participating Stockholder held on the date the Company
received the Notice of Offer by the number of shares of Common Stock
that all of the Participating Stockholders held on the date the Company
received the Notice of Offer.
3.4.4 If the Retaining Stockholders do not elect to purchase
all of the Offered Shares available for purchase under this Section 3.4,
Alpine shall, within 30 days following the Company's receipt of the Notice of
Offer, notify the Company and the Selling Stockholder in writing as to the
number of remaining Offered Shares, if any, it is electing to purchase (such
notification is hereinafter referred to as the "Alpine Acceptance"). If
Alpine does not provide the Alpine Acceptance to the Company and the Selling
Stockholder within such
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30-day period, Alpine shall be deemed to have declined to purchase any of the
Offered Shares. The Alpine Acceptance shall be deemed to be an irrevocable
commitment to purchase from the Selling Stockholder at the Offer Price the
number of Offered Shares which Alpine has elected to purchase pursuant to the
Alpine Acceptance.
3.4.5 If the Retaining Stockholders and Alpine do not elect
to purchase all of the Offered Shares available for purchase under this
Section 3.4, the Selling Stockholder (a) shall be under no obligation to sell
any of the Offered Shares to any Stockholder, unless the Selling Stockholder
so elects, and (b) may, within a period of 180 days from the date of the
Notice of Offer, and subject to the terms and conditions of this Section
3.4.5, sell any or all of the Offered Shares to one or more third parties
(each a "Third Party Transferee") for cash at a price per share not less than
the Offer Price, and on such other terms and conditions as are no more
favorable to the proposed Third Party Transferee than those specified in the
Notice of Offer. Upon any such sale, the Third Party Transferee of such
Offered Shares shall execute an agreement in form and substance reasonably
satisfactory to the Company and the Stockholders pursuant to which such Third
Party Transferee agrees that the Offered Shares it is acquiring from the
Selling Stockholder are subject to the provisions of this Agreement. Any
Third Party Transferee to whom Offered Shares are transferred pursuant to and
in compliance with this Section 3.4.5 shall, with respect to such shares upon
consummation of such transfer, be deemed a Minority Stockholder. If the
Selling Stockholder does not complete the sale of the Offered Shares within
such 180-day period, the provisions of this Section 3.4 shall again apply,
and no
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sale of such Offered Shares by the Selling Stockholder shall be made
otherwise than in accordance with the terms of this Agreement.
3.4.6 The closing of purchases of Offered Shares by the
Accepting Stockholders and/or Alpine pursuant to this Section 3.4 shall
take place no later than 45 days after the date of the Notice of Offer, at
10:00 A.M. local time at the principal offices of the Company, or at such
other date, time or place as the parties to the sale may agree. At least
five business days prior to such closing, the Company shall notify the
Selling Stockholder in writing of the names of the purchasers and the portion
of the Offered Shares to be purchased by each. At such closing, the Selling
Stockholder shall sell, transfer and deliver to each purchaser its or his
full right, title and interest in and to the Offered Shares so
purchased by such purchaser, free and clear of all liens, security
interests, adverse claims or restrictions (other than those contained
herein) of any kind and nature, and shall deliver to each purchaser
a certificate or certificates representing the Offered Shares sold
to such purchaser, in each case duly endorsed for transfer or accompanied by
appropriate stock transfer powers duly endorsed, and any other documents
necessary for transfer. Simultaneously with the delivery of such
certificates, each purchaser of the Offered Shares shall deliver to the
Selling Stockholder, by wire transfer of immediately available funds to such
bank account as the Selling Stockholder shall designate, a cash amount
equal to the product of the Offer Price and the number of Offered Shares
being acquired by such purchaser, in full payment of the purchase price of
the Offered Shares purchased.
3.5 Right to Join in Sale.
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3.5.1 If Alpine proposes in a single transaction or series
of related transactions permitted by Section 3.3.2 and the other
terms and provisions of this Agreement to transfer all or a portion of
the Common Stock held by it to one or more third parties (a "Transaction"),
then Alpine shall refrain from effecting a Transaction unless, prior to the
consummation thereof, the Minority Stockholders shall have been afforded
the opportunity to join in such Transaction on a pro rata basis, as
hereinafter provided. Any purported transfer by Alpine subject to this
Section 3.5 not made in compliance with this Section 3.5 shall be void and
shall not be consummated upon the books and records of the Company.
3.5.2 Prior to the consummation of any Transaction, Alpine
shall cause each person or persons that propose to acquire Common
Stock in the Transaction (the "Proposed Purchasers") to offer (the
"Purchase Offer") in writing to purchase from the Minority Stockholders
that number of shares of Common Stock from each such Minority Stockholder
that constitutes the same percentage of the aggregate number of shares of
Common Stock held by each such Minority Stockholder as the percentage
determined by dividing the number of shares of Common Stock to be purchased
from Alpine by the aggregate number of shares of Common Stock held by
Alpine, at the same price per share, and on such other terms and
conditions, as the Proposed Purchaser has offered to purchase the Common
Stock to be sold by Alpine. Each of the Minority Stockholders shall have 15
days from the receipt of the Purchase Offer in which to accept the
Purchase Offer and, to the extent any such Minority Stockholder accepts
such Purchase Offer in accordance with the terms hereof, the number of
shares of Common Stock to be sold by Alpine shall be reduced.
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3.5.3 The provisions of this Section 3.5 shall not apply to
(w) Rule 144 Sales by Alpine otherwise permitted by this Agreement, (x) a
sale by Alpine of shares in a public offering (it being understood that
nothing herein shall limit the Minority Stockholders' rights under the
Registration Rights Agreement) and (y) transfers by Alpine to Permitted
Transferees in accordance with Section 3.2. Alpine shall notify any
third party transferee that the transfer of Common Stock pursuant to
this Section 3.5 is subject to this Agreement and shall ensure that no
Transaction is consummated without compliance with this Section 3.
3.6 Right to Require Sale.
3.6.1 If Alpine proposes in a single transaction or series
of related transactions permitted by Section 3.3.2 and the other
terms and provisions of this Agreement to transfer all of the shares of
Common Stock held by it to one or more third parties, then Alpine shall have
the right to require each of the Minority Stockholders, upon 15 days'
written notice, to sell all of its or his shares of Common Stock to such
third party(ies) at the same price per share (the "Drag-Along Price"), and on
such other terms and conditions, as such third party(ies) has offered to
purchase the Common Stock to be sold by Alpine, provided that the Drag-Along
Price equals or exceeds the price then payable by the Company upon
exercise of the Put Right (assuming the Put Right were accelerated if
it is not otherwise then exercisable); provided, however, that if the
Drag-Along Price is not payable solely in cash or marketable securities or a
combination thereof, then in connection with any such transaction
or transactions, Alpine shall provide to the Minority Stockholders the
right to require Alpine to purchase from the Minority Stockholders the
consideration received in such transaction or transactions other than
cash or
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marketable securities on terms and conditions that are substantially
equivalent to the terms of the Put Right and the Accelerated Put Right (as
defined in the Guaranty by Alpine in favor of the Minority Stockholders
entered into on the date hereof).
3.6.2 The provisions of this Section 3.6 shall not apply to
(w) Rule 144 Sales by Alpine otherwise permitted by this Agreement, (x) a
sale by Alpine of shares in a public offering (it being understood that
nothing herein shall limit the Minority Stockholders' rights under the
Registration Rights Agreement) and (y) transfers to Permitted Transferees in
accordance with Section 3.2. Alpine shall notify any third party transferee
that the transfer of Common Stock pursuant to this Section 3.6 is subject to
this Agreement and shall ensure that no Transaction is consummated without
compliance with this Section 3.
Section 4. Preemptive Rights. The Company hereby grants to each of
the Minority Stockholders a preemptive right to purchase all or any part
of such Minority Stockholder's "pro rata share" (as defined in this
Section 4) of any "New Securities" (as defined in this Section 4) that the
Company may, from time to time, propose to sell or issue. Such preemptive
right shall be subject to the following provisions of this Section 4.
4.1 "Pro Rata Share." A Minority Stockholder's "pro rata share,"
for purposes of this Section 4, is the ratio that (i) the number of shares of
Common Stock then held by such Minority Stockholder bears to (ii) the total
number of shares of Common Stock then held by all Stockholders.
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4.2 "New Securities." "New Securities" shall mean any shares
of capital stock of the Company, whether now authorized or not, and any
rights, options or warrants to purchase such shares, and any Convertible
Securities of any type whatsoever; provided, however, that "New Securities"
shall not include (i) securities offered to the public generally pursuant to
an effective registration statement under the Securities Act, (ii) securities
issued pursuant to a merger, purchase of shares, purchase of assets or other
reorganization whereby the Company acquires not less than 20% of the voting
power of another corporation, (iii) Common Stock issued to officers,
directors or employees of, or independent consultants to, the Company
pursuant to stock options granted or other employee benefit plans adopted
after the date hereof on terms approved by the Board of Directors of the
Company (including a majority of the members of the Board of Directors who
are not officers or employees of the Company (or any relative thereof)), (iv)
shares of the Company's capital stock issued pursuant to any rights or
agreements, including, without limitation, Convertible Securities, provided
that the preemptive rights established by this Section 4 apply with respect
to the initial sale or grant by the Company of such rights or agreements, or
(v) shares of the Company's capital stock issued in connection with any stock
split, stock dividend or recapitalization by the Company.
4.3 Procedure. In the event that the Company proposes to undertake
an issuance of New Securities, the Company shall give each Minority
Stockholder written notice of its intention (the "Original Notice"),
describing the type of New Securities and the price and material terms upon
which the Company proposes to issue the same. Each Minority Stockholder shall
have 15 days from the date any such Original Notice is given to agree to
purchase all or any
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part of its pro rata share of such New Securities for the price and upon the
general terms specified in the Original Notice by giving written notice to
the Company and stating therein the quantity of New Securities to be
purchased. In the event that one or more, but not all, of the Minority
Stockholders exercises in full its preemptive right within such 15-day
period, the Company shall, upon the expiration of such 15-day period, give
each Minority Stockholder having exercised such right (an "Exercising
Stockholder") written notice containing the quantity of New Securities with
respect to which any Minority Stockholder's preemptive rights were not
exercised (the "Remaining New Securities"). Each Exercising Stockholder shall
have 10 days from the date any such notice is given to elect to purchase all
or any part of the Remaining New Securities for the price and upon the
general terms specified in the Original Notice by giving written notice to
the Company and stating therein the quantity of Remaining New Securities to
be purchased. If the Exercising Stockholders have elected to purchase a
number of Remaining New Securities that in the aggregate exceeds the total
number of Remaining New Securities, the Remaining New Securities shall be
allocated among the Exercising Stockholders on a basis consistent with the
procedures set forth in Section 3.4.3 of this Agreement.
4.4 Failure to Exercise Preemptive Rights. In the event that
any Minority or Exercising Stockholder fails to exercise in full its
preemptive right within the aforementioned time periods, the Company shall
have 180 days thereafter to sell the New Securities with respect to which any
such Minority or Exercising Stockholder's preemptive rights were not
exercised, at a price and upon general terms no more favorable to the
purchasers thereof than specified in the Original Notice. In the event the
Company has not sold the New Securities within such 180-day
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period, the Company shall not thereafter issue or sell any New Securities
without first offering such securities to the Minority Stockholders in the
manner provided above.
Section 5. Representations and Warranties. Each of the parties
hereto severally as to itself or himself, and not jointly, hereby represents
and warrants to each of the other parties to this Agreement that:
(i) such party has the full right, power and authority to
execute, deliver and perform this Agreement (and any other agreements or
instruments to be executed by such party in connection herewith);
(ii) this Agreement has been duly executed and delivered by or
on behalf of such party and constitutes (and each other agreement or
instrument to be executed by such party in connection herewith will, upon
such execution, have been duly executed and delivered by or on behalf
of such party and will constitute) a legal, valid and binding obligation
of such party, enforceable against such party in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the rights of creditors generally or by the
application of general equity principles;
(iii) no consent, approval, authorization or order of any Person
is required for the execution, delivery or performance of this Agreement
(or any such other agreement or instrument) by such party;
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(iv) neither the execution, delivery nor performance of this
Agreement (or any such other agreement or instrument) by such party will (A)
conflict with, or result in a breach of, or constitute a default under, or
result in a violation of, any agreement or instrument to which such party is
a party or by which such party or its or his property is bound, or (B) result
in the violation of any applicable law or order, judgment, writ, injunction,
decree or award of any Governmental Authority; and
(v) the Common Stock held by such party is being held for its
own account for investment and without a view to the public distribution of
such Common Stock or any interest therein.
Each of the parties hereto agrees that the representations
and warranties set forth in this Section 5 shall survive the execution and
delivery of this Agreement.
Section 6. Termination.
6.1 Entire Agreement. If at any time the Minority Stockholders do
not own any of the outstanding shares of Common Stock, this Agreement will
terminate, without any other action by the parties or otherwise.
6.2 Right to Designate Directors. If at any time the Common Stock
is registered under the Securities Exchange Act of 1934, as amended, Section
2 of this Agreement will terminate immediately after the first election of
directors following the effective date of such registration, without any
other action by the parties or otherwise. If at any time MTI (or its
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Permitted Transferees or Permitted Transferees of Permitted Transferees) or
the Individual Refraco Stockholders collectively (or their Permitted
Transferees or Permitted Transferees of Permitted Transferees) own less than
2.5% of the Common Stock, Section 2 of this Agreement will terminate with
respect to such Minority Stockholder(s), without any other action by the
parties or otherwise.
Section 7. Confidentiality. Each Stockholder agrees that, unless
the Company otherwise consents, such Stockholder will maintain the
confidentiality of any confidential information relating to, and provided to
it by, Alpine, the Company or any of its subsidiaries; provided, however,
that any Stockholder may disclose any such information (i) to such
Stockholder's Affiliates, and to such Stockholder's and such Affiliates'
officers, directors, employees, partners, agents, accountants, counsel and
other professional advisors, (ii) that is or has become generally available
to the public, (iii) as may be required or appropriate in any filing, report,
statement or testimony submitted to any Governmental Authority, (iv) as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation, (v) to comply with any law, order, regulation
or ruling applicable to such Stockholder, (vi) to the extent necessary to
enforce the provisions of this Agreement, and (vii) to any prospective
transferee in connection with any contemplated transfer of any of the shares
of Common Stock (or any interest therein) by such Stockholder, provided that
such prospective transferee agrees to be bound by this Section 7 to the same
extent as such Stockholder.
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Section 8. Miscellaneous.
8.1 Specific Performance. Since a breach of the provisions of
this Agreement could not adequately be compensated by money damages, any
party shall be entitled, in addition to any other right or remedy available
to it, to an injunction restraining such breach or a threatened breach and to
specific performance of any such provision of this Agreement, and in either
case no bond or other security shall be required in connection therewith, and
the parties hereby consent to the issuance of such injunction and to the
ordering of specific performance. Notwithstanding the foregoing, the parties
agree that the Minority Stockholders shall not be entitled to, and shall not
seek, an injunction or other temporary relief restraining the breach, alleged
breach or threatened breach of the covenant of Alpine set forth in Section
3.3.2 in the event that such breach, alleged breach or threatened breach
arises out of or relates to a transaction that Alpine has notified the
Minority Stockholders is intended to qualify as a reorganization that is
described in clause (z) of Section 3.3.2, and the Minority Stockholders shall
not be entitled to, and shall not seek, the ordering of specific performance
with respect to any such matter; provided, however, that nothing herein shall
limit, or be deemed to waive, the rights of the Minority Stockholders to seek
monetary relief against Alpine or any other Person.
8.2 Further Assurances. Each party hereto shall do and perform
or cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry
out the intent and accomplish the purposes of this Agreement.
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8.3 Governing Law. This Agreement and the rights and obligations
of the parties hereunder shall be governed by, and construed and interpreted
in accordance with, the laws of the State of Delaware without giving effect
to the choice of law principles thereof.
8.4 Entire Agreement; Amendment; Waiver. This Agreement: (a)
contains the entire agreement among the parties hereto with respect to the
subject matter hereof, (b) supersedes all prior written agreements and
negotiations and oral understandings, if any, with respect thereto, and (c)
may not be amended or supplemented except by an instrument or counterparts
thereof in writing signed by the parties hereto. No waiver of any term or
provision of this Agreement shall be effective unless in writing signed by
the party to be charged. The waiver by any party of a breach of any term or
provision of this Agreement shall not be construed as a waiver of any
subsequent breach.
8.5 Binding Effect. This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective Permitted
Transferees, legal representatives, successors and Third Party Transferees;
provided, however, that none of the rights of any Stockholder or group of
Stockholders to designate director(s) under the provisions of Section 2
hereof shall be transferable to a Third Party Transferee. Any transfer not in
compliance with the provisions of this Agreement shall be null and void and
of no effect.
8.6 Invalidity of Provision. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of
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the remainder of this Agreement in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction.
8.7 Notice. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly
given (x) on the date of delivery, if delivered personally or by telecopier,
receipt confirmed, (y) on the second following business day, if delivered by
a recognized overnight courier service, or (z) seven days after mailing, if
sent by registered or certified mail, return receipt requested, postage
prepaid, in each case, to the party to whom it is directed at the address set
forth below (or at such other address as any party hereto shall hereafter
specify by notice in writing to the other parties hereto):
If to the Company or Alpine:
c/o The Alpine Group, Inc.
1790 Broadway
New York, New York 10019-1412
Attention: Stewart H. Wahrsager, Esq.
Fax: (212) 757-3423
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attention: Ronald R. Papa, Esq.
Fax: (212) 969-2900
If to MTI:
c/o CE Minerals Inc.
901 East 8th Avenue
King of Prussia, Pennsylvania 19406
Attention: Timothy J. McCarthy
Fax: (610) 337-1387
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with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Ellen J. Odoner, Esq.
Fax: (212) 310-8007
If to the Individual Refraco Stockholders:
Ralph Feuerring
11111 Biscayne Boulevard
Miami, Florida 33161
Fax: (305) 893-3843
Charles H. Gehret
5275 Militia Hill Road
Plymouth Meeting, Pennsylvania 19462
Fax: (610) 649-5639
John Gehret
56 Crosby Brown Road
Gladwyne, Pennsylvania 19035
Fax: (610) 649-5639
Stanley A. Weiss
American Premier, Inc.
1717 Pennsylvania Avenue, NW
Suite 350
Washington, DC 20006-4603
Fax: (202) 296-8099
with copies to:
Duane, Morris & Heckscher LLP
122 East 42nd Street, Suite 3300
New York, New York 10168
Attention: Robert J. Hasday, Esq.
Fax: (212) 692-1020
and
Bernard Petrie, Esq.
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633 Battery Street
San Francisco, California 94111
Fax: (415) 982-4746
8.8 Headings; Execution in Counterparts. The headings and
captions contained herein are for convenience of reference only and shall not
control or affect the meaning or construction of any provision hereof. This
Agreement may be executed in any number of counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
REFRACO INC.
By: /s/ Bragi F. Schut
--------------------------------------
Name: Bragi F. Schut
Title: Executive Vice President
THE ALPINE GROUP, INC.
By: /s/ Bragi F. Schut
--------------------------------------
Name: Bragi F. Schut
Title: Executive Vice President
MINERALS TRADING, INC.
By: /s/ John A. Lindstrom
--------------------------------------
Name: John A. Lindstrom
Title: Vice President
/s/ Charles Gehret
--------------------------------------
Name: Charles Gehret
/s/ John Gehret
--------------------------------------
Name: John Gehret
/s/ Ralph Feuerring
--------------------------------------
Name: Ralph Feuerring
/s/ Stanley Weiss
--------------------------------------
Name: Stanley Weiss
31
