<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: January 20, 1998
(Date of earliest event reported)
METAL MANAGEMENT, INC.
(Exact name of registrant as specified in the charter)
Delaware 0-14836 94-2835068
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
500 Dearborn Street, Suite 405
Chicago, Illinois 60610
(Address of Principal Executive Offices)
(312) 645-0700
Registrant's telephone number including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 20, 1998 (the "Closing Date"), the Company completed the
acquisition (the "Acquisition") of substantially all of the assets of Aerospace
Metals, Inc., Aerospace Parts Security, Inc. and The Suisman Titanium
Corporation (collectively, "Seller"). Pursuant to an Asset Purchase Agreement
dated as of the Closing Date (the "Purchase Agreement"), AMI Acquisition Co.
("AMI"), a wholly-owned subsidiary of the Company, purchased substantially all
of the assets of Seller for consideration consisting of 402,893 shares (the
"Aerospace Shares") of common stock, par value $.01, of the Company, and
approximately $14 million in cash. The Company funded the cash portion of the
consideration from its working capital.
In connection with the Acquisition, Michael Suisman, the Chief
Executive Officer and equity owner of Seller, entered into a one-year
employment agreement with AMI under which he will act as AMI's Chairman of the
Board.
In connection with the Acquisition, the Company entered into a
Registration Rights Agreement with Aerospace Metals, Inc. ("Aerospace") with
respect to the Aerospace Shares. Under this Registration Rights Agreement, the
Company is required to prepare and file a registration statement on Form S-3
covering the resale of the Aerospace Shares within 20 days after the Closing
Date.
In connection with the Acquisition, AMI entered into a Lease Agreement
with Aerospace under which AMI has agreed to lease Aerospace's scrap processing
facility and corporate headquarters (the "Real Property") for a monthly rental
rate of $12,500 for the first two years after the Closing Date and $25,000 per
month thereafter. The initial term of the Lease Agreement is for 10 years and
AMI has an option to renew the lease for up to a total of 14 years and 11
months beyond the expiration of the Lease Agreement's initial term. The Company
guaranteed AMI's obligations under the Lease Agreement pursuant to a separate
Guaranty Agreement. Additionally, Aerospace granted AMI an option to purchase
the Real Property, pursuant to an Option Agreement, for a purchase price based
on the fair market value of the Real Property at the time the option is
exercised by AMI. AMI's option to purchase the Real Property expires on the
five year anniversary of the Closing Date, subject to extension under certain
conditions.
Copies of the Purchase Agreement, the Registration Rights Agreement,
the Lease Agreement, the Option Agreement, and the press release issued by the
Company in connection with the Aerospace transaction are attached as exhibits
hereto and incorporated herein by reference.
All of the statements herein, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties and are subject to change at any time. These statements
reflect the Company's current expectations regarding the future profitability
of the Company and its subsidiaries and the benefits to be derived from the
Company's execution of its industry consolidation strategy. There can be no
assurance that the Company's actual future performance or that of its
1
<PAGE> 3
subsidiaries will meet the Company's expectations for growth and profitability.
The statements in this Form 8-K involve known and unknown risks, uncertainties,
and other factors which may cause actual results, performance, or achievements
to be materially different from any future results, performance, or
achievements expressed or implied by these forward-looking statements. As
discussed in the Company's annual report for the period ended March 31, 1997,
its quarterly reports for the periods ended June 30, 1997 and September 30,
1997, its proxy statement, dated November 20, 1997, and its Registration
Statement on Form S-3, dated January 14, 1998, some of the factors which could
affect the Company's performance include, among other things, cyclicality of
the scrap metal recycling industry, price fluctuations in commodity markets,
adverse economic conditions, inability to successfully access capital,
unavailability of suitable acquisition opportunities, the cost of complying
with environmental laws and regulations, the risk that announced mergers are
not consummated, the risk of challenges by the Company's competition, and the
risk that the Company will face difficulties in consolidating and controlling
operations in diverse geographic locations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The following financial statements of Aerospace Metals, Inc. are attached
hereto:
1. Report of Independent Accountants.
2. Consolidated Balance Sheets as of June 1, 1996 and
May 31, 1997 (audited) and as of September 27, 1997
(unaudited).
3. Consolidated Statements of Income and Retained Earnings
for the years ended June 3, 1995, June 1, 1996 and May
31, 1997 (audited) and for the four months ended
September 28, 1996 and September 27, 1997 (unaudited).
4. Consolidated Statements of Cash Flows for the years
ended June 3, 1995, June 1, 1996 and May 31, 1997
(audited) and for the four months ended September 28,
1996 and September 27, 1997 (unaudited).
5. Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information
The following updated, unaudited pro forma financial statements are
attached hereto:
1. Introduction to Pro Forma Financial Information.
2. Unaudited Pro Forma Combined Condensed Balance Sheet as
of September 30, 1997.
2
<PAGE> 4
3. Unaudited Pro Forma Combined Condensed Statement of
Operations for the six months ended September 30, 1997.
4. Unaudited Pro Forma Condensed Statement of Operations
for the year ended March 31, 1997.
5. Notes to Unaudited Pro Forma Financial Information.
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of January 20, 1998, by and
among the Company; AMI Acquisition Co., a Delaware corporation and a
wholly-owned subsidiary of the Company; Aerospace Metals, Inc., a Connecticut
corporation; Aerospace Parts Security, Inc., a Connecticut corporation; The
Suisman Titanium Corporation, a Connecticut corporation and a wholly-owned
subsidiary of Aerospace; and Michael Suisman, being the sole shareholder of
Aerospace and Security.
10.1 Lease Agreement, dated January 20, 1998, by and between Aerospace
Metals, Inc. and AMI Acquisition Co.
10.2 Option Agreement, dated January 20, 1998, by and between
Aerospace Metals, Inc. and AMI Acquisition Co.
10.3 Registration Rights Agreement, dated January 20, 1998, by and
between Metal Management, Inc. and Aerospace Metals, Inc.
99.1 Press Release announcing the completion of the acquisition of
substantially all of the assets of Aerospace Metals, Inc., Aerospace Parts
Security, Inc. and The Suisman Titanium Corporation.
3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METAL MANAGEMENT, INC.
Dated: February 2, 1998 By: /s/ Gerard M. Jacobs
------------------------------
Gerard M. Jacobs,
Chief Executive Officer
<PAGE> 6
Item 7(a): Financial Statements of Business Acquired.
AEROSPACE METALS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
_______________
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants 1
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 1, 1996 and May 31, 1997 2
Consolidated Statements of Income and Retained Earnings
for the years ended June 3, 1995, June 1, 1996 and May 31, 1997 3
Consolidated Statements of Cash Flows for the years ended
June 3, 1995, June 1, 1996 and May 31, 1997 4
Notes to Consolidated Financial Statements 5-15
</TABLE>
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Aerospace Metals, Inc.:
We have audited the accompanying consolidated balance sheets of Aerospace
Metals, Inc. and Subsidiaries (the "Company") as of June 1, 1996 and May 31,
1997, and the related consolidated statements of income and retained earnings
and cash flows for each of the three years ended June 3, 1995, June 1, 1996 and
May 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Aerospace Metals, Inc. and Subsidiaries as of June 1, 1996 and May 31, 1997, and
the consolidated results of their operations and cash flows for the three years
ended June 3, 1995, June 1, 1996 and May 31, 1997 in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Hartford, Connecticut
August 12, 1997
1
<PAGE> 8
AEROSPACE METALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 1, 1996 and May 31, 1997 and
(unaudited) September 27, 1997
(Dollars in Thousands)
_______________
<TABLE>
<CAPTION>
ASSETS
(Unaudited)
June 1, May 31, September 27,
1996 1997 1997
---- ---- ----
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,936 $ 2,095 $ 3,985
Accounts receivable, less allowance
for doubtful accounts of $159 in 1996 and $138
in 1997 and $146 in September 1997 10,581 10,257 8,340
Inventories 5,127 7,323 8,417
Prepaid expenses and other current assets 1,075 986 908
Deferred income taxes, net 253 210 210
--------- -------- --------
Total current assets 20,972 20,871 21,860
--------- -------- --------
Property, plant and equipment, at cost 16,312 17,040 17,251
Less - accumulated depreciation (12,686) (13,257) (13,449)
--------- -------- --------
3,626 3,783 3,802
--------- -------- --------
Other assets:
Investments 6 8 8
Cash surrender value of life insurance (net of
policy loans of $93 in 1996 and 1997 and
September 1997) 111 134 137
Intangible asset - pension plans 258 224 224
--------- -------- --------
375 366 369
--------- -------- --------
Total assets $ 24,973 $ 25,020 $ 26,031
========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
(Unaudited)
June 1, May 31, September 27,
1996 1997 1997
---- ---- ----
<S> <C> <C> <C>
Current liabilities:
Current portion of long-term debt $ 208 $ 247 $ 505
Accounts payable 4,267 4,101 5,305
Accrued expenses 826 503 305
Accrued and withheld taxes 196 402 148
Accrued pension liability 326 137 -
Income taxes payable 773 276 105
Dividends payable 107 - -
--------- -------- --------
Total current liabilities 6,703 5,666 6,368
Pension liability 60 137 167
Long-term debt, less current portion 712 1,928 1,858
Deferred income taxes, net 535 513 513
--------- -------- --------
Total liabilities 8,010 8,244 8,906
--------- -------- --------
Stockholder's equity:
6% preferred stock (1% cumulative) - $100 par value;
authorized 19,365 shares; issued and outstanding
-0- in 1997 and 17,800 shares in 1996 1,780 - -
Common stock - $25 par value; authorized 32,000
shares; issued and outstanding 14,288 shares 357 357 357
Retained earnings 14,982 16,298 16,601
Paid-in capital - 298 298
Pension liability adjustment (156) (177) (131)
--------- -------- --------
Total stockholder's equity 16,963 16,776 17,125
--------- -------- --------
Total liabilities and stockholder's equity $ 24,973 $ 25,020 $ 26,031
========= ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE> 9
AEROSPACE METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended June 3, 1995, June 1, 1996 and May 31, 1997 and
(unaudited) four months ended September 28, 1996 and September 27, 1997
(Dollars in Thousands)
_______
<TABLE>
<CAPTION>
1995 1996 1997 (Unaudited) (Unaudited)
---- ---- ---- Four Months Four Months
Ended Ended
September 28, September 27,
1996 1997
---- ----
<S> <C> <C> <C> <C> <C>
Net sales $42,264 $54,177 $50,400 $12,954 $16,599
Cost of goods sold 35,209 44,964 44,756 11,670 15,196
------- ------- ------- ------- -------
Gross profit 7,055 9,213 5,644 1,284 1,403
General and administrative expenses 3,497 3,647 3,452 937 921
------- ------- ------- ------- -------
Income from operations 3,558 5,566 2,192 347 482
Other income, net 290 174 204 96 84
Interest expense (110) (81) (148) (26) (52)
------- ------- ------- ------- -------
Income before provision
for income taxes 3,738 5,659 2,248 417 514
Provision for income taxes 1,349 2,370 932 173 211
------- ------- ------- ------- -------
Net income 2,389 3,289 1,316 244 303
Retained earnings, beginning of period 9,518 11,800 14,982 14,982 16,298
Preferred stock dividends ($6 per share) (107) (107) - (36) -
------- ------- ------- ------- -------
Retained earnings, end of period $11,800 $14,982 $16,298 $15,190 $16,601
======= ======= ======= ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 10
AEROSPACE METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended June 3, 1995, June 1, 1996 and May 31, 1997 and
(unaudited) four months ended September 28, 1996 and September 27, 1997
(Dollars in Thousands)
_______________
<TABLE>
<CAPTION>
1995 1996 1997 (Unaudited) (Unaudited)
---- ---- ---- Four Months Four Months
Ended Ended
September 28, September 27,
1996 1997
---- ----
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,389 $ 3,289 $ 1,316 $ 244 $ 303
------- ------- -------- ------ -------
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 663 537 571 188 194
Loss on disposition of property, plant and equipment 6 42 - - -
Deferred income taxes 314 125 21 - -
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, net (4,968) (554) 324 3,085 1,917
(Increase) decrease in inventories 575 399 (2,196) (2,005) (1,094)
Decrease (increase) in prepaid expenses and other
current assets (30) (414) 89 314 78
(Increase) in cash value of life insurance (33) (9) (23) (3) (4)
(Decrease) increase in accounts payable and
accrued expenses 663 362 (283) (1,359) 615
Increase (decrease) in accrued pension costs 16 (778) (99) 106 75
Increase (decrease) in income taxes payable 578 55 (497) (1,164) (171)
------- ------- -------- ------ -------
Total adjustments (2,216) (235) (2,093) (838) 1,610
------- ------- -------- ------ -------
Net cash provided by (used in) operating activities 173 3,054 (777) (594) 1,913
------- ------- -------- ------ -------
Cash flows from investing activities:
Capital expenditures (346) (509) (728) (211) (212)
Proceeds from disposition of property, plant and equipment - 22 - - -
(Increase) in investments - - (2) - -
------- ------- -------- ------ -------
Net cash provided by (used in) investing activities (346) (487) (730) (211) (212)
------- ------- -------- ------ -------
Cash flows from financing activities:
Loan from officer - - 300 300 293
Repayment of loan from officer (46) - (261) - (35)
Repayment of long-term debt (139) (191) (208) (70) (69)
Purchase of preferred stock - - (58)
Preferred stock dividends (18) (107) (107) (107) -
------- ------- -------- ------ -------
Net cash provided by (used in) financing activities (203) (298) (334) 123 189
------- ------- -------- ------ -------
Net increase (decrease) in cash and cash equivalents (376) 2,269 (1,841) (682) 1,890
Cash and cash equivalents at beginning of period 2,043 1,667 3,936 3,936 2,095
------- ------- -------- ------ -------
Cash and cash equivalents at end of period $ 1,667 $ 3,936 $ 2,095 $3,254 $ 3,985
======= ======= ======== ====== =======
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 119 $ 76 $ 135 $ 21 $ 12
Income taxes 457 2,189 1,408 1,337 382
</TABLE>
Non-cash investing and financing activities:
For the years ended June 1, 1996 and May 31, 1997, the Company recorded
minimum pension liability adjustments of $414 and $401, respectively
(see Note 3).
During fiscal year 1997, the Company redeemed its outstanding
6% preferred stock of $1,780 for $1,482, resulting in a paid-in capital
contribution of $298 (see Note 4). The transaction was funded with a
cash payment of $58 and a note in the amount of $1,424.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE> 11
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
Aerospace Metals, Inc. (the "Company") is an international company with
special capabilities in recycling aerospace and high technology metals
and alloys. Through its Suisman and Blumenthal Division, the Company is
a technical and marketing leader in the recycling of aerospace and high
technology metals, especially nickel and cobalt alloys. Suisman Titanium
(a wholly-owned subsidiary) is the world leader in recycling of titanium
for the aerospace industry. The Company is the sole manufacturer of
ST-20001, a titanium scrap turning product.
Fiscal Year
The Company prepares its financial statements on the basis of a 52-53
week fiscal year with the year ending on the Saturday nearest May 31.
Principles of Consolidation
The consolidated financial statements include the accounts of Aerospace
Metals, Inc. (the "Company") and those of its division, Suisman &
Blumenthal, and its wholly-owned subsidiaries, Danny Corp. (formerly
Aerodyne Alloys, Inc.), and Suisman Titanium Corp. Significant
intercompany accounts and transactions have been eliminated in
consolidation.
Cash Equivalents
Short-term investments with original maturities when purchased of three
months or less are considered to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined using the last-in, first-out (LIFO) method for the Suisman &
Blumenthal Division's inventories and the first-in, first-out (FIFO)
method for the inventories of the Company's wholly-owned subsidiaries.
5
<PAGE> 12
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
_______________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Inventories, Continued
Inventories consist of the following:
<TABLE>
<CAPTION>
(Unaudited)
June 1, May 31, September 27,
1996 1997 1997
---- ---- ----
($ in Thousands)
<S> <C> <C> <C>
Processed $ 6,569 $ 8,336 $ 9,008
Partially processed and unprocessed 2,122 2,213 2,635
-------- ------- -------
Gross inventories at FIFO 8,691 10,549 11,643
Less: LIFO reserve (3,564) (3,226) (3,226)
-------- ------- -------
Net inventories $ 5,127 $ 7,323 $ 8,417
======== ======= =======
</TABLE>
Periodically, the Company enters into foreign currency exchange contracts
in order to hedge any currency risks associated with certain purchases of
foreign source aerospace scrap. Any gains or losses on such contracts are
recognized in the period in which the contract is settled.
Property, Plant and Equipment
Property, plant and equipment is stated at cost, less accumulated depreciation.
Depreciation of the related assets is charged against income over their
estimated useful lives by using the straight-line and declining-balance
methods. Estimated useful lives range from 3 to 40 years.
Expenditures for repairs and maintenance are charged to expense as incurred. For
assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period.
6
<PAGE> 13
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
_____
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. Under this method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory rates
applicable to future years to differences between the financial statement
carrying amounts and tax bases of existing assets and liabilities. The
effect on deferred taxes of a change in tax rates is recognized in income in
the period that includes the enactment date. In addition, deferred tax
assets are subject to a valuation allowance to reduce them to net realizable
value.
Pension Plans
The Company has two noncontributory defined benefit pension plans covering
substantially all of its employees. Pension expense is actuarially
determined in accordance with Statement of Financial Accounting Standards
No. 87 (see Note 3). Additionally, the Company offers a 401(k) savings plan
for eligible salaried employees.
Investments
Investments are carried at the lower of cost or market.
Concentrations of Credit Risk
The Company invests its excess cash in deposits and short-term investments,
which have maturities of less than ninety days and, therefore, bear minimal
risk. The Company performs ongoing credit evaluations of its customers and
generally does not require collateral. The Company's sales are concentrated
in the aerospace industry, principally to domestic customers.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
7
<PAGE> 14
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
_______________
2. PROPERTY, PLANT AND EQUIPMENT:
A summary of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
(Unaudited)
June 1, May 31, September 27,
1996 1997 1997
---- ---- ----
($ in Thousands)
<S> <C> <C> <C>
Land $ 269 $ 269 $ 269
Plant and improvements 4,626 4,654 4,654
Roads and surfacing 466 526 526
Machinery and equipment 8,255 8,715 8,854
Trucks, cranes and containers 2,266 2,290 2,316
Furniture, fixtures and office equipment 418 433 437
Construction in process 12 153 195
---------- ---------- --------
16,312 17,040 17,251
Less - accumulated depreciation (12,686) (13,257) (13,449)
--------- --------- -------
$ 3,626 $ 3,783 $ 3,802
========== ========== ========
</TABLE>
3. EMPLOYEE BENEFIT PLANS:
The Company has two defined benefit pension plans (salaried and hourly)
covering substantially all of its employees. The benefits for the salaried
plan are based on years of service and the employee's compensation during
the later years of employment. Benefits for the hourly plan are based on
arrangements set forth in collective bargaining agreements. Contributions
are intended to provide not only for benefits attributed to service to date
but also for those expected to be earned in the future. The Company's
policy is to fund an amount within the deductible range as allowed by
Internal Revenue Service regulations.
8
<PAGE> 15
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
_______
3. EMPLOYEE BENEFIT PLANS, CONTINUED:
The following table sets forth a reconciliation of each of the plan's
funded status to the amounts recognized in the Company's consolidated
balance sheets as of June 1, 1996, May 31, 1997 and September 27, 1997,
respectively:
<TABLE>
<CAPTION>
June 1, 1996
----------------
($ in Thousands)
Salaried Hourly Total
-------- ------- -------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 2,874 $ 1,561 $ 4,435
Nonvested benefits 24 44 68
------- ------- -------
Accumulated benefit obligations 2,898 1,605 4,503
Projected effect of future compensation increases 328 15 343
------- ------- -------
Projected benefit obligations for service rendered to date 3,226 1,620 4,846
Less - plan assets at fair value, primarily insurance company separate
accounts, immediate participation guarantee contracts and
mutual funds (2,915) (1,549) (4,464)
------- ------- -------
Projected benefit obligations in excess of plan assets 311 71 382
Unrecognized prior service cost (39) (143) (182)
Unrecognized net gain (loss) from past experience different from that
assumed and effects of changes in assumptions 292 (171) 121
Unrecognized net obligation at June 1, 1987 being
recognized over 15 years (234) (115) (349)
Additional minimum liability -- 414 414
------- ------- -------
Accrued pension liability included in the
Company's consolidated balance sheets $ 330 $ 56 $ 386
======= ======= =======
</TABLE>
9
<PAGE> 16
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
_____
3. EMPLOYEE BENEFIT PLANS, CONTINUED:
<TABLE>
<CAPTION>
May 31, 1997
----------------
($ in Thousands)
Salaried Hourly Total
-------- ------- -------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 2,756 $ 1,631 $ 4,387
Nonvested benefits 36 50 86
------- ------- -------
Accumulated benefit obligations 2,792 1,681 4,473
Projected effect of future compensation increases 625 -- 625
------- ------- -------
Projected benefit obligations for service rendered to date 3,417 1,681 5,098
Less - plan assets at fair value, primarily insurance company separate
accounts, immediate participation guarantee contracts and
mutual funds (3,105) (1,663) (4,768)
------- ------- -------
Projected benefit obligations in excess of plan assets 312 18 330
Unrecognized prior service cost (37) (127) (164)
Unrecognized net gain (loss) from past experience different from that
assumed and effects of changes in assumptions 187 (177) 10
Unrecognized net obligation at June 1, 1987 being
recognized over 15 years (206) (97) (303)
Additional minimum liability -- 401 401
------- ------- -------
Accrued pension liability included in the
Company's consolidated balance sheets $ 256 $ 18 $ 274
======= ======= =======
</TABLE>
10
<PAGE> 17
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
----------
3. EMPLOYEE BENEFIT PLANS, CONTINUED:
<TABLE>
<CAPTION>
(Unaudited)
September 27, 1997
------------------
($ in Thousands)
Salaried Hourly Total
-------- ------ -----
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 2,845 $ 1,663 $ 4,508
Nonvested benefits 36 52 88
------- ------- -------
Accumulated benefit obligations 2,881 1,715 4,596
Projected effect of future compensation increases 626 --- 626
------- ------- -------
Projected benefit obligations for service rendered to date 3,507 1,715 5,222
Less - plan assets at fair value, primarily
insurance company separate accounts,
immediate participation guarantee contracts and
mutual funds (3,316) (1,771) (5,087)
------- ------- -------
Projected benefit obligations in excess of (less than) plan assets 191 (56) 135
Unrecognized prior service cost (36) (122) (158)
Unrecognized net gain (loss) from past experience
different from that assumed and effects of changes
in assumptions 265 (143) 122
Unrecognized net obligation at June 1, 1987 being (197) (91) (288)
recognized over 15 years
Additional minimum liability --- 356 356
------- ------- -------
Accrued net pension liability included in the
Company's consolidated balance sheets $ 223 $ (56) $ 167
======= ======= =======
</TABLE>
11
<PAGE> 18
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
________
3. EMPLOYEE BENEFIT PLANS, CONTINUED:
Net pension cost included the following components:
<TABLE>
<CAPTION>
(Unaudited)
June 3, June 1, May 31, September 28, September 27,
1995 1996 1997 1996 1997
---- ---- ---- ---- ----
($ in Thousands)
<S> <C> <C> <C> <C> <C>
Service cost - benefits
earned during the period $ 159 $ 123 $ 158 $ 53 $ 54
Interest cost on projected
benefit obligation 369 374 406 162 137
Actual return on plan assets (184) (428) (484) (185) (139)
Net amortization and deferral (32) 178 147 76 21
----- ----- ----- ----- -----
$ 312 $ 247 $ 227 $ 106 $ 73
===== ===== ===== ===== =====
</TABLE>
The weighted-average discount rate, rate of increase in future
compensation levels and the expected long-term rate of return on assets used
in determining the actuarial present value of the projected benefit
obligation for fiscal years 1995, 1996 and 1997 were 8.25%, 4.5% and 9.0%,
respectively.
In accordance with provisions of Statement of Financial Accounting Standards
No. 87, "Employers' Accounting for Pensions" ("SFAS 87"), the Company has
accrued an additional minimum liability of $414,000 and $401,000 as of June
1, 1996 and May 31, 1997, respectively. Under the provisions of SFAS 87, a
corresponding amount is recognized as either an intangible asset, a
reduction of equity or a combination of both. Accordingly, the Company
recorded intangible assets of $258,000 and $224,000 as of June 1, 1996 and
May 31, 1997, respectively. In addition, the Company recorded equity
reductions of $156,000 and $177,000 as of June 1, 1996 and May 31, 1997,
respectively.
The Company offers a savings plan under Section 401(k) of the Internal
Revenue Code. The savings plan allows eligible salaried employees to defer
up to 10% of their income on a pretax basis through contributions to the
plan. For every dollar an employee contributes (up to 6% of an individual's
income on a pretax basis), the Company will match 50%. For the years ended
June 3, 1995, June 1, 1996 and May 31, 1997, the expense for matching
contributions was $48,000, $55,000 and $64,000, respectively.
12
<PAGE> 19
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
______________
4. LONG-TERM DEBT:
Long-term debt comprised the following at:
<TABLE>
<CAPTION>
(Unaudited)
June 1, May 31, September 27,
1996 1997 1997
---- ---- ----
($ in Thousands)
<S> <C> <C> <C>
Officer promissory note, due on demand (a) $ - $ 39 $ 297
Term loan (b) 920 712 642
7-1/2% promissory note, due 2006 (c) - 1,424 1,424
------ ------ -------
920 2,175 2,363
Less - current portion (208) (247) (505)
------ ------ -------
$ 712 $1,928 $ 1,858
====== ====== =======
</TABLE>
(a) This promissory note, which is payable to the Chairman of the Company,
was entered into during fiscal period ended September 27, 1997, in the
amount of $300,000 and is payable upon demand and accrues interest at
the base rate minus 1/2%.
(b) The Company has a credit facility with Fleet Bank consisting of a term
loan facility of $2,500,000 and a revolving working capital line of
credit of $10,000,000. At June 1, 1996 and May 31, 1997, borrowings of
$920,000 and $712,000, respectively, were outstanding under the term
loan facility, which expires on October 1, 2000. These borrowings bear
interest at a fixed rate of 6.98%. Under the terms of this facility,
the Company covenants that, among other things, it will maintain
certain levels of tangible net worth. An additional $1,250,000 is
available to the Company under the term loan facility for a seven-year
term, at a fixed rate of interest to be determined at the time of the
related closing. The revolving $10,000,000 working capital line of
credit expires on December 1, 1998 and bears interest at the bank's
base rate with an option to convert to a LIBOR rate. Borrowings under
this facility are limited by a collateral formula based on levels of
accounts receivable and inventories. At June 1, 1996 and May 31, 1997,
there were no borrowings outstanding under this line of credit,
however, the Company did maintain standby letters of credit in
conjunction with its workers' compensation insurance plan, in the
amount of approximately $165,000 and $100,000, respectively. Both the
term loan and the working capital line of credit are collateralized by
accounts receivable, inventories and certain personal property.
(c) On December 15, 1996, the Company redeemed all the outstanding shares
of its 6% preferred stock in exchange for an initial $58,000 payment
and a $1,424,000 promissory note (the "Note"). The Note, issued to a
related party, bears interest at a fixed rate of 7-1/2% and matures in
2006. The Note is uncollateralized and subordinate to the prior
payment in full of any institutional indebtedness. Interest, in the
amount of approximately $49,000, had been paid as of May 31, 1997.
13
<PAGE> 20
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
________
4. LONG-TERM DEBT, CONTINUED:
Maturities of long-term debt at May 31, 1997 for the succeeding five
fiscal years and thereafter are as follows:
<TABLE>
<CAPTION>
($ In Thousands)
<S> <C>
1998 $ 247
1999 208
2000 208
2001 88
2002 -
Thereafter 1,424
--------
$ 2,175
========
</TABLE>
5. INCOME TAXES:
The provision for income taxes comprised the following:
<TABLE>
<CAPTION>
(Unaudited)
June 3 June 1, May 31, September 28, September 27,
1995 1996 1997 1996 1997
---- ---- ---- ---- ----
($ in Thousands)
<S> <C> <C> <C> <C> <C>
Currently payable:
Federal $ 867 $1,597 $ 666 $128 $157
State 168 648 246 45 54
------- ------ ------ ---- ----
1,035 2,245 912 173 211
------- ------ ------ ---- ----
Deferred:
Federal 278 94 15 - -
State 36 31 5 - -
------- ------ ------ ---- ----
314 125 20 - -
------- ------ ------ ---- ----
$1,349 $2,370 $ 932 $173 $211
======= ====== ====== ==== ====
</TABLE>
Deferred taxes comprised the following:
<TABLE>
<CAPTION>
(Unaudited)
June 1, May 31, September 27,
1996 1997 1997
---- ---- ----
($ in Thousands)
<S> <C> <C> <C>
Deferred tax assets $ 354 $ 272 $ 272
Deferred tax liabilities (636) (575) (575)
----- ------ -----
$(282) $ (303) $(303)
===== ====== =====
</TABLE>
14
<PAGE> 21
AEROSPACE METALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
years ended June 3, 1995, June 1, 1996 and May 31, 1997
and (unaudited) four months ended September 28, 1996 and September 27, 1997
_____
5. INCOME TAXES, CONTINUED:
The principal temporary differences that give rise to deferred tax assets
and liabilities are related to inventory capitalization adjustments,
miscellaneous reserves, and the use of accelerated methods of
depreciation.
The difference between the actual tax provision and the amounts obtained
by applying the statutory U.S. Federal income rate of 34% to income
before taxes is primarily attributable to state income taxes.
6. CONTINGENT LIABILITY:
The Company has been named, together with other parties, in certain claims
by the U.S. Environmental Protection Agency (the "EPA"), as a potentially
responsible party ("PRP"), with respect to alleged liability under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), relating to cleanup costs at certain sites not owned or
operated by the Company.
The Company's counsel has indicated that it is not possible at this
time to provide an opinion as to the potential liability, if any, with
respect to any of the aforementioned CERCLA claims. In the opinion of
management, ultimate resolution of these claims will not have a material
impact on the financial position of the Company.
15
<PAGE> 22
ITEM 7(B): PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
give effect to the Company's acquisition of substantially all of the assets of
Aerospace Metals, Inc., Aerospace Parts Security, Inc. and The Suisman Titanium
Corporation (collectively "Aerospace") using the purchase method of accounting.
An unaudited pro forma combined condensed balance sheet is provided as of
September 30, 1997, giving effect to the acquisition of Aerospace and to other
significant transactions as if these transactions occurred on September 30,
1997. Unaudited pro forma combined condensed statements of operations are
provided for the six months ended September 30, 1997 and the year ended March
31, 1997, giving effect to the acquisition of Aerospace and other significant
transactions as if these transactions had occurred on April 1, 1996.
The following unaudited pro forma combined condensed statements of
operations do not reflect the operating results from discontinued operations.
As previously disclosed, the discontinued operations include i) the
Spectra*Star printer and consumables business, which was sold during the first
quarter of fiscal 1997 and ii) the VideoShow and related product lines
business, which was discontinued during the fourth quarter of fiscal 1995 and
sold during the third quarter of fiscal 1997.
The accompanying unaudited pro forma combined condensed financial
statements have been derived from the Company's unaudited pro forma combined
condensed balance sheet as of September 30, 1997, the unaudited pro forma
combined condensed statement of operations for the year ended March 31, 1997
and the unaudited pro forma combined condensed statement of operations for the
six months ended September 30, 1997 (incorporated by reference to pages 37-51
of the Company's Proxy Statement dated November 20, 1997), and the unaudited
balance sheet as of September 27, 1997 and the unaudited statement of
operations for the twelve months ended March 31, 1997 and the six months ended
September 27, 1997 for Aerospace.
The excess of the acquisition costs over the fair value, as estimated by
the Company, of the net assets to be acquired has been allocated to goodwill.
The Company considers all intangible assets in the allocation of purchase
price. Such allocation of the purchase price may change upon the final
determination of the fair value of assets acquired (including other
intangibles) and liabilities assumed.
The unaudited pro forma combined condensed financial information does not
purport to represent what the Company's combined results of operations would
have been had the acquisition occurred on the dates indicated or for any future
period or date.
The unaudited pro forma combined condensed financial information should be
read in conjunction with: 1) the annual financial statements and notes thereto
for the Company which appear in the Company's Form 10-K for the year ended
March 31, 1997, filed with the Commission on June 20, 1997; (2) the Company's
Proxy Statement dated November 20, 1997, and (3) the historical audited
financial statements and notes thereto and unaudited interim financial
statements and notes thereto for Aerospace which appear elsewhere in this Form
8-K.
<PAGE> 23
METAL MANAGEMENT, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
MTLM
PRO FORMA AEROSPACE PRO FORMA PRO FORMA
9/30/97 9/27/97 ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,643 $ 3,985 $(14,411) 2. $ 16,132
(3,985) 5.
(10,000) 11.
25,000 12.
(8,100) 13.
Accounts receivable, net 88,307 8,340 89 5. 96,736
Inventories 49,561 8,417 3,226 7. 61,204
Other current assets 4,415 1,118 (298) 5. 5,235
-------- ------- -------- --------
Total current assets 165,926 21,860 (8,479) 179,307
Property and equipment, net 93,272 3,802 (1,601) 8. 97,399
1,926 9.
Goodwill and other intangibles 176,713 224 (224) 5. 177,224
511 6.
Other assets 10,793 145 (145) 5. 10,793
-------- ------- -------- --------
TOTAL ASSETS $446,704 $26,031 $ (8,012) $464,723
======== ======= ======== ========
LIABILITIES AND EQUITY
Current liabilities:
Operating lines of credit $ 14,297 $ 0 $ 0 $ 14,297
Accounts payable 54,981 5,305 195 4. 60,481
Other accrued liabilities 16,052 558 (209) 5. 16,304
(97) 14.
Current portion of debt 38,783 505 (505) 5. 19,141
(10,000) 11.
(8,100) 13.
(1,542) 14.
-------- ------- -------- --------
Total current liabilities 124,113 6,368 (20,258) 110,223
Long term debt, less current 96,798 1,858 (1,858) 5. 96,798
Deferred taxes 8,971 513 (513) 5. 8,971
Other liabilities 2,040 167 (167) 5. 2,040
-------- ------- -------- --------
TOTAL LIABILITIES 231,922 8,906 (22,796) 218,032
Stockholders equity:
Convertible preferred stock - Series A 24,323 24,323
Convertible preferred stock - Series B 19,100 19,100
Common stock, warrants and 178,402 655 5,270 3. 210,311
additional paid in capital (655) 10.
25,000 12.
1,639 14.
Retained earnings (accumulated deficit) (7,043) 16,470 (16,470) 10. (7,043)
-------- ------- -------- --------
Total stockholders equity 214,782 17,125 14,784 246,691
-------- ------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $446,704 $26,031 $ (8,012) $464,723
======== ======= ======== ========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
<PAGE> 24
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MTLM PRO FORMA
PRO FORMA AEROSPACE COMBINED
SIX MONTHS SIX MONTHS PRO FORMA SIX MONTHS
9/30/97 9/27/97 ADJUSTMENTS REF 9/30/97
----------- ---------- ----------- --- -----------
<S> <C> <C> <C> <C> <C>
Net sales $ 354,067 $28,904 $ 0 $382,971
Cost of sales 316,646 24,501 338 15. 341,620
135 16.
---------- ------- ------- --------
Gross profit 37,421 4,403 (473) 41,351
Expenses:
General and administrative 22,430 1,994 (610) 17. 23,814
Depreciation and amortization 6,959 299 (66) 16. 7,336
138 18.
6 19.
---------- ------- ------- --------
Operating income from continuing
operations 8,032 2,110 59 10,201
Interest expense (6,807) (80) 54 20. (5,968)
425 21.
371 22.
69 23.
Other income 634 85 0 719
---------- ------- ------- --------
Income from continuing operations
before income taxes 1,859 2,115 978 4,952
Provision for income taxes 744 877 360 24. 1,981
---------- ------- ------- --------
Net income from continuing
operations 1,115 1,238 618 2,971
Accretion of preferred stock to
redemption value 57 57
Preferred stock dividends 6,545 6,545
---------- ------- ------- --------
Net income (loss) from continuing
operations applicable to common stock $ (5,487) $ 1,238 $ 618 $ (3,631)
=========== ======= ======== ==========
Net loss from continuing
operations per common share $ (0.20) n/a n/a $ (0.12)
Weighted average shares outstanding 27,958,973 n/a 402,893 25. 30,014,541
182,087 26.
1,470,588 27.
</TABLE>
See accompanying notes to unaudited pro forma financial information.
<PAGE> 25
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MTLM PRO FORMA
PRO FORMA AEROSPACE COMBINED
FISCAL YEAR TWELVE MONTHS PRO FORMA TWELVE MONTHS
3/31/97 3/31/97 ADJUSTMENTS REF 3/31/97
----------- ------------- ----------- --- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 645,722 $50,112 $ 0 $ 695,834
Cost of sales 581,128 44,261 (389) 15. 625,270
270 16.
---------- ------- ------- ----------
Gross profit 64,594 5,851 119 70,564
Expenses:
General and administrative 40,329 3,526 (741) 17. 43,114
Depreciation and amortization 13,489 565 (149) 16. 14,193
275 18.
13 19.
---------- ------- ------- ----------
Operating income from continuing
operations 10,776 1,760 721 13,257
Interest expense (12,674) (111) 46 20. (10,859)
850 21.
891 22.
139 23.
Other income 2,301 222 0 2,523
---------- ------------ ---------- ----------
Income from continuing operations
before income taxes 403 1,871 2,647 4,921
Provision for income taxes 161 794 1,013 24. 1,968
---------- ------------ ---------- ----------
Net income from continuing
operations 242 1,077 1,634 2,953
Preferred stock dividends 7,745 7,745
---------- ------- ------- ----------
Net income (loss) from continuing
operations applicable to common stock $ (7,503) $ 1,077 $ 1,634 $ (4,792)
=========== ======= ======== ==========
Net loss from continuing
operations per common share $ (0.27) n/a n/a $ (0.16)
Weighted average shares outstanding 27,578,324 n/a 402,893 25. 29,633,892
182,087 26.
1,470,588 27.
</TABLE>
See accompanying notes to unaudited pro forma financial information.
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma combined condensed financial statements as of
September 30, 1997 and for the six months ended September 30, 1997 and the year
ended March 31, 1997 are based on the following assumptions and adjustments:
Items 1 - 10 represent pro forma adjustments to the Company's balance
sheet as of September 30, 1997 giving effect to the acquisition of
substantially all of the assets of Aerospace, using the purchase method of
accounting.
1. The purchase consideration for Aerospace is comprised of the following
($ in 000's):
<TABLE>
<S> <C>
Shares of MTLM restricted common stock issued 402,893
Cash payment $ 14,411
Value of common stock issued 5,270
Cash payment for transaction costs 200
---------
Total estimated consideration $ 19,881
=========
The estimated consideration will be allocated for pro forma purposes as
follows (in 000's):
Current assets $ 20,892
Noncurrent assets 4,127
Current liabilities (5,654)
Long term debts/other liabilities 0
Goodwill 516
---------
$ 19,881
=========
</TABLE>
The above allocation of the estimated consideration is preliminary
and may change upon final determination of the fair value of assets
acquired and liabilities assumed. Goodwill is being amortized over 40
years.
2. Reflects the cash consideration paid to the sole shareholder of Aerospace
in partial consideration for substantially all of the assets of
Aerospace.
3. Reflects the issuance of 402,893 shares of restricted common stock issued
to the sole shareholder of Aerospace in partial consideration for
substantially all of the assets of Aerospace. The Company has agreed to
prepare and file a registration statement on Form S-3 covering the resale
of these shares within 20 days of closing; therefore, the common stock was
valued based on the closing stock price of $13.625 on January 20, 1998,
discounted by 4% for trading restrictions and lack of marketability.
4. Reflects estimated transaction costs remaining to be
incurred for Aerospace (in 000's):
<TABLE>
<S> <C>
Estimated transaction costs $ 200
Incurred through September 30, 1997 5
--------
Remaining costs to be paid $ 195
========
</TABLE>
The remaining costs to be incurred is presented as an increase in accounts
payable.
5. Reflects the elimination of assets and liabilities which were not
purchased or assumed from Aerospace.
6. Reflects the goodwill, net of transaction costs already capitalized,
related to the acquisition of substantially all of the assets of
Aerospace.
<PAGE> 27
7. Reflects the adjustment of LIFO inventory for Aerospace to a FIFO basis
to conform to MTLM's accounting policy for inventory valuation.
8. Reflects the elimination of real property of Aerospace which was not
purchased by the Company.
9. Reflects the write-up of fixed assets purchased from Aerospace to fair
market value (in 000's):
<TABLE>
<S> <C>
Fair market value $ 4,127
Book value 2,201
-------
Write-up of fixed assets $ 1,926
=======
</TABLE>
10. Reflects the elimination of the equity accounts of Aerospace.
Items 11 - 14 reflect pro forma adjustments to the Company's consolidated
balance sheet for significant equity and financing transactions completed by
the Company subsequent to November 20, 1997 assuming these transactions
occurred on September 30, 1997
11. On December 2, 1997, the Company repaid a $10.0 million short-term loan
from a commercial bank. Presented as a $10.0 million decrease in cash and
current portion of debt.
12. On December 19, 1997, the Company completed a $25.0 million private
equity placement to an affiliate of investor Sam Zell. In the
transaction, Samstock, L.L.C., ("Samstock") an affiliate of Sam Zell's
Equity Group Investments, Inc., received 1,470,588 shares of the Company's
common stock, and warrants to purchase an additional 400,000 shares of
common stock at $20 per share and 200,000 shares at $23 per share. The
warrants are subject to mandatory exercise under certain circumstances.
Presented as an $25.0 million increase to cash and equity.
13. On January 7, 1998, the Company repaid a $8.1 million short-term loan
issued to the former shareholders of Proler Southwest, Inc. Presented as
a $8.1 million decrease to cash and current portion of debt.
14. On January 14, 1998, the former shareholders of Reserve converted a
$1,541,660 note payable and accrued interest of $97,124 into 182,087
shares of common stock. Presented as a $1,541,660 reduction in current
portion of debt, a $97,124 reduction in accrued expenses and a $1,638,784
increase in equity.
Items 15 - 20 reflect pro forma adjustments to the Company's statement of
operations giving effect to the Company's acquisition of substantially all of
the assets of Aerospace as if it occurred on April 1, 1996.
15. Reflects the adjustment of LIFO cost of goods sold for Aerospace to a
FIFO basis to conform to MTLM's accounting policy for inventory valuation.
16. The Company did not purchase the real estate where the operations of
Aerospace are conducted. The Company entered into a 10 year lease
agreement for this real estate requiring annual lease payments of $150,000
for the first two years of the lease. The annual lease payments will
increase to $300,000 for the remaining term. The pro forma adjustment
reflects the straight-line lease expense for the period and the
elimination of depreciation expense previously recognized by Aerospace on
the real estate.
17. Reflects the reduction to compensation expense of the former shareholder
of Aerospace who entered into a consulting agreement with the Company.
The pro forma adjustment includes only the historical compensation expense
that has been contractually eliminated.
18. Aerospace records depreciation expense based on the straight-line method.
Pro forma adjustment represents incremental depreciation expense on the
write-up of fixed assets purchased to fair market value. Incremental
depreciation expense was computed assuming an average useful life of 7
years.
19. Pro forma adjustment reflects amortization of goodwill associated with
MTLM's acquisition of substantially
<PAGE> 28
all of the assets of Aerospace. Goodwill is being amortized over 40
years.
20. Pro forma adjustment reflects elimination of interest expense on a
preferred stock redemption and shareholder loan which were not assumed by
the Company.
Items 21 - 23 reflect pro forma adjustments to the Company's statement of
operations giving effect to the Company's significant financing and equity
transactions (refer to adjustments 11 - 14 above) as if these transactions
occurred on April 1, 1996.
21. Reflects the reversal of interest expense associated with a $10.0 million
short-term loan which was repaid on December 2, 1997 (see Note 11 above).
22. Reflects the reversal of interest expense associated with a $8.1 million
short-term loan which was repaid to the former shareholders of Proler
Southwest on January 7, 1998 (see Note 13 above).
23. Reflects the reversal of interest expense associated with a $1.5 million
short-term loan which was converted into common stock on January 14, 1998
(see Note 14 above).
24. Adjustment to income tax provision to reflect the combined results of
operations of the Company and Aerospace assuming a combined 40% effective
federal and state effective tax rate.
25. Reflects the number of shares of common stock issued to the former
shareholder of Aerospace in partial consideration for substantially all of
the assets of Aerospace.
26. Reflects the number of shares of common stock issued to the former
shareholders of Reserve in connection with the conversion of a note
payable (see Note 14 above).
27. Reflects the number of shares of common stock issued to Samstock, L.L.C.
in a private offering on December 18, 1997 (See Note 12 above).
<PAGE> 1
Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AEROSPACE METALS, INC.,
AEROSPACE PARTS SECURITY, INC.,
THE SUISMAN TITANIUM CORPORATION,
MICHAEL SUISMAN,
METAL MANAGEMENT, INC.
AND
AMI ACQUISITION CO.
DATED AS OF JANUARY 20, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS ................................................................ 1
ARTICLE I - PURCHASE AND SALE ........................................... 1
1.1 Purchased Assets ..................................... 1
1.2 Excluded Assets ...................................... 3
1.3 Assumed Liabilities .................................. 3
1.4 Excluded Liabilities ................................. 4
ARTICLE II - PURCHASE PRICE ............................................. 5
2.1 Purchase Price ....................................... 5
2.2 Allocation of Purchase Price ......................... 5
2.3 Adjustment of Purchase Price ......................... 6
2.4 Adjustment to Stock Portion .......................... 6
ARTICLE III - CLOSING ................................................... 7
3.1 Closing Date ......................................... 7
3.2 Payment of the Purchase Price ........................ 7
3.3 Buyer's Additional Deliveries ........................ 7
3.4 Companies' Deliveries ................................ 8
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE
SHAREHOLDERS ............................................... 9
4.1 Corporate Status ..................................... 9
4.2 Power and Authority .................................. 9
4.3 Enforceability ....................................... 9
4.4 No Restrictions ...................................... 10
4.5 Capitalization of the Companies; Shareholder ......... 10
4.6 No Violation ......................................... 10
4.7 Records .............................................. 10
4.8 Subsidiaries ......................................... 11
4.9 Financial Statements ................................. 11
4.10 Changes Since the Current Balance Sheet Date ......... 11
4.11 Liabilities .......................................... 12
4.12 Litigation ........................................... 12
4.13 Environmental Matters ................................ 12
4.14 Real Estate .......................................... 18
4.15 Good Title to, Condition of and Adequacy of
Purchased Assets ................................... 19
4.16 Compliance with Laws ................................. 19
4.17 Labor and Employment Matters ......................... 20
4.18 Employee Benefit Plans ............................... 20
4.19 Tax Matters .......................................... 22
4.20 Insurance ............................................ 24
4.21 Receivables .......................................... 24
4.22 Licenses and Permits ................................. 24
4.23 Relationships with Customers and Suppliers;
Affiliated Transactions ............................ 25
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
4.24 Intellectual Property ................................ 25
4.25 Contracts ............................................ 25
4.26 Customer Lists and Recurring Revenue ................. 26
4.27 Accuracy of Information Furnished to MTLM ............ 26
4.28 Investment Intent; Accredited Investor Status;
Securities Documents ............................... 26
4.29 Business Locations ................................... 27
4.30 Names; Prior Acquisitions ............................ 27
4.31 No Commissions ....................................... 27
4.32 Inventory ............................................ 27
4.33 Identification, Acquisition and Disposition of
Assets and Liabilities ............................. 28
4.34 Product Warranty ..................................... 28
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER ..................... 28
5.1 Corporate Status ..................................... 28
5.2 Corporate Power and Authority ........................ 28
5.3 Enforceability ....................................... 29
5.4 No Commissions ....................................... 29
5.5 SEC Filings and Financial Information ................ 29
5.6 Capitalization ....................................... 30
5.7 MTLM Shares. ......................................... 30
5.8 New Permits .......................................... 30
ARTICLE VI - CONDUCT OF BUSINESS PENDING THE CLOSING .................... 30
6.1 Affirmative Covenants Pending the Closing ............ 30
6.2 Negative Covenants Pending Closing ................... 31
ARTICLE VII - CONDITIONS TO THE OBLIGATIONS OF BUYER .................... 33
7.1 Accuracy of Representations and Warranties
and Compliance with Obligations .................... 33
7.2 No Material Adverse Change or Destruction of Property. 33
7.3 Corporate Certificate ................................ 33
7.4 Opinions of Counsel .................................. 34
7.5 Consents ............................................. 34
7.6 Governmental Approvals; HSR Act Compliance ........... 34
7.7 Securities Laws ...................................... 34
7.8 Title Documents; Title Insurance ..................... 34
7.9 No Adverse Litigation ................................ 34
7.10 Approvals; Consents .................................. 34
7.11 Intentionally Omitted ................................ 35
7.12 Intentionally Omitted ................................ 35
7.13 Other Closing Deliveries ............................. 35
7.14 Licenses and Permits ................................. 35
7.15 Employment Agreements ................................ 35
7.16 Lease and Option ..................................... 35
7.17 Defined Benefit Plan ................................. 35
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VIII - CONDITIONS TO THE OBLIGATIONS OF EACH OF THE COMPANIES
AND THE SHAREHOLDER ...................................... 35
8.1 Accuracy of Representations and Warranties
and Compliance with Obligations .................... 35
8.2 Purchase Price ....................................... 36
8.3 No Adverse Litigation ................................ 36
8.4 Other Closing Deliveries ............................. 36
8.5 Opinion of Counsel ................................... 36
8.6 Governmental Approvals; HSR Act Compliance ........... 36
8.7 Securities Laws ...................................... 36
ARTICLE IX - INDEMNIFICATION ............................................ 37
9.1 Agreement by the Companies and the Shareholder
to Indemnify ....................................... 37
9.2 Conditions of Indemnification of Buyer ............... 38
9.3 Agreement by Buyer to Indemnify ...................... 39
9.4 Conditions of Indemnification of Companies and
Shareholder ........................................ 40
9.5 Effect of Insurance and Taxes ........................ 41
9.6 Minimum Threshold for Indemnification ................ 41
9.7 Security for Indemnification Obligation .............. 42
9.8 Collection of Receivables ............................ 42
ARTICLE X - SECURITIES LAW MATTERS ...................................... 43
10.1 Legend ............................................... 43
10.2 Registration Rights .................................. 43
ARTICLE XI - ADDITIONAL AGREEMENTS ...................................... 43
11.1 Further Assurances ................................... 43
11.2 Compliance with Covenants ............................ 43
11.3 Cooperation .......................................... 43
11.4 Access to Information ................................ 44
11.5 Notification of Certain Matters ...................... 44
11.6 Tax Treatment ........................................ 44
11.7 No Other Discussions ................................. 44
11.8 Restrictive Covenants ................................ 44
11.9 Trading in MTLM's Common Stock ....................... 45
11.10 HSR Act Compliance ................................... 46
11.11 Corporate Authority .................................. 46
11.12 Taxes and Transfer Taxes ............................. 46
11.13 Other Agreements ..................................... 47
11.14 Employment Procedure ................................. 47
11.15 Corporate Name Change ................................ 47
11.16 Payments of Accounts Receivable ...................... 47
11.17 Securities Laws ...................................... 48
11.18 New Permits an ....................................... 48
11.19 Environmental Covenants of the Companies ............. 48
11.20 Environmental Covenants of Buyer ..................... 52
11.21 Covenants as to Management and
Containment Improvements ........................... 55
11.22 Buyer's Right to Cure the Companies' Noncompliance
with Remediation Obligation ........................ 55
</TABLE>
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<TABLE>
<S> <C>
11.23 Payment of Estimated Amounts; Adjustments ............ 56
ARTICLE XII - TERMINATION ............................................... 56
12.1 Termination .......................................... 56
12.2 Notice of Termination ................................ 57
12.3 Effect of Termination ................................ 57
ARTICLE XIII - DEFINITIONS .............................................. 57
13.1 Defined Terms ........................................ 57
13.2 Other Definitional Provisions ........................ 63
ARTICLE XIV - GENERAL PROVISIONS ........................................ 64
14.1 Survival of Obligations .............................. 64
14.2 Confidential Nature of Information ................... 64
14.3 No Public Announcement ............................... 64
14.4 Notices .............................................. 65
14.5 Successors and Assigns ............................... 66
14.6 Access to Records after Closing ...................... 66
14.7 Entire Agreement; Amendments ......................... 67
14.8 Interpretation ....................................... 67
14.9 Waivers .............................................. 67
14.10 Expenses ............................................. 67
14.11 Partial Invalidity ................................... 67
14.12 Execution in Counterparts ............................ 68
14.13 Further Assurances ................................... 68
14.14 Governing Law ........................................ 68
14.15 Submission to Jurisdiction ........................... 68
</TABLE>
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INDEX OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A Lease Agreement
Exhibit B Option Agreement
Exhibit C Bill of Sale
Exhibit D-1 Opinion of Counsel to Buyer
Exhibit D-2(a) Opinion of Counsel to the Companies and the Shareholder
Exhibit D-2(b) Opinion of Counsel to the Companies and the Shareholder
Exhibit E Assumption Agreement
Exhibit F Cleanup Escrow Agreement
Exhibit G General Escrow Agreement
Exhibit H Registration Rights Agreement
Exhibit I Employment Agreements
INDEX OF SCHEDULES
Schedule 1.1(k) Prepaid Expenses
Schedule 1.2(c) Deferred Income Taxes
Schedule 1.2(e) Insurance Policies
Schedule 1.2(g) Other Excluded Assets
Schedule 1.2(h) Shareholder Personal Property
Schedule 4.1 Jurisdictions in which Qualified to do Business
Schedule 4.5 Capitalization of the Companies; Shareholder
Schedule 4.6 Violations; Conflicts; etc.
Schedule 4.8 Subsidiaries
Schedule 4.9 Financial Statements
Schedule 4.10 Changes since the Current Balance Sheet Date
Schedule 4.11 Liabilities
Schedule 4.12 Litigation
Schedule 4.13 Environmental Matters
Schedule 4.14(a) Owned Premises
Schedule 4.14(b) Leased Premises
Schedule 4.14(c) Additional Locations
Schedule 4.15 Title to and Condition of Assets
Schedule 4.16 Compliance with Laws
Schedule 4.17 Labor and Employment Matters
Schedule 4.18 Employee Benefit Plans
Schedule 4.19 Tax Matters
Schedule 4.20 Insurance
Schedule 4.21 Receivables
Schedule 4.22 Licenses and Permits
Schedule 4.23 Relationships with Customers and Suppliers
Schedule 4.24 Intellectual Property
Schedule 4.25 Purchased Contracts
Schedule 4.27 Documents Not Prepared by Companies or Shareholder
Schedule 4.30 Names
Schedule 4.31 Commissions
</TABLE>
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<TABLE>
<S> <C>
Schedule 4.33(a) Fixed Asset Schedule
Schedule 4.33(b) Liability Schedule
Schedule 5.5 SEC Filings and Financial Information
Schedule 6.2 Negative Covenants
Schedule 11.19(a) Remediation Plan
</TABLE>
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT") is entered into effective
as of January 20, 1998, by and among Metal Management, Inc., a Delaware
corporation ("MTLM"); AMI Acquisition Co., a Delaware corporation and a
wholly-owned subsidiary of MTLM ("AMI" together with MTLM, "BUYER"); Aerospace
Metals, Inc., a Connecticut corporation ("AEROSPACE"); Aerospace Parts
Security, Inc., a Connecticut corporation ("SECURITY"); The Suisman Titanium
Corporation, a Connecticut corporation and a wholly-owned subsidiary of
Aerospace ("TITANIUM") (Aerospace, Security and Titanium are hereinafter
sometimes referred to individually as a "COMPANY" and collectively as the
"COMPANIES"); and Michael Suisman, being the sole shareholder of Aerospace and
Security ("SHAREHOLDER"). Certain other capitalized terms used herein are
defined in Article XIII or elsewhere throughout this Agreement.
R E C I T A L S:
A. The Companies are engaged in the business of processing and recycling
high temperature nickel and cobalt alloys, titanium and other high grade alloy
metals (the "BUSINESS").
B. The Companies desire to sell to Buyer, and Buyer desires to purchase
from the Companies, on a going concern basis, substantially all of the
Companies' assets, properties and business, other than certain excluded assets,
all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchased Assets. Upon the terms and subject to the conditions of
this Agreement, on the Closing Date, each of the Companies shall sell,
transfer, assign, convey and deliver to Buyer, and Buyer shall purchase from
each of the Companies, on a going concern basis, free and clear of all Liens
(except for Permitted Liens), all of the business and operations of each of the
Companies related to the Business and, except for the Excluded Assets as set
forth in Section 1.2 hereof, all of the assets and properties of each of the
Companies of every kind and description, wherever located, real, personal or
mixed, tangible or intangible, used in connection with the Business as the same
shall exist on the Closing Date (collectively, the "PURCHASED ASSETS"),
including, without limitation, all right, title and interest of each of the
Companies in, to and under:
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(a) All of the assets reflected on the Balance Sheet, including
without limitation the Receivables identified on Schedule 4.21, and those
assets acquired subsequent to the Balance Sheet Date, except those assets
disposed of or converted into cash after the Balance Sheet Date in the
ordinary course of business;
(b) All raw materials, supplies, parts, work-in progress, and other
materials (including all such materials subject to a consignment
relationship) included in the inventory of the Business ("INVENTORY");
(c) The Permits listed in Schedule 4.22;
(d) The Purchased Contracts identified in Schedule 4.25, as well as
all contracts-in-process;
(e) The personal property listed in the August 31, 1997 unaudited
financial statements of each of the Companies;
(f) The trademarks, trade names, service marks, and copyrights,
including but not limited to the names "Aerospace Metals, Inc.",
"Aerospace Parts Security, Inc.", "Suisman & Blumenthal" and "The Suisman
Titanium Corporation" and all abbreviations or derivations thereof which
any of the Companies owns or has the right to use (and all goodwill
associated therewith), registered or unregistered, and the applications
for registration thereof, and the patents and applications
therefor, and the licenses relating to any of the foregoing listed in
Schedule 4.24 (as further defined in Section 4.24, the "INTELLECTUAL
PROPERTY");
(g) All mailing lists, telephone numbers, customer lists, subscriber
lists, processes, computer software, manuals or business procedures,
trade secrets, designs, engineering drawings and reports, know-how and
other proprietary or confidential information used in or relating to the
Business;
(h) All books and records (including all data and other information
stored on discs, tapes or other media) of each of the Companies relating
to the assets, properties and operations of the Business;
(i) All of the Companies' rights, claims or causes of action against
third parties relating to the assets, properties or operations of the
Business (other than those arising from the ownership of the Owned
Premises) arising out of transactions occurring prior to the Closing
Date;
(j) All of the Companies' interest in and to all telephone, telexes
and telephone facsimile numbers and other directory listings of the
Business and any assumed or fictitious names related to the Business;
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(k) All prepaid expenses and deposits that benefit the Buyer after
the Closing Date, a list of which is included in Schedule 1.1(k);
(l) All of the Companies' interests in, and the assets under, the
Employee Benefit Plans; and
(m) All of the Companies' rights, claims or causes of action against
third parties arising from warranties or guarantees received in
connection with materials, products or services purchased by the
Companies prior to the Closing Date.
1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1, the
Purchased Assets shall not include the following (herein referred to as the
"EXCLUDED ASSETS"):
(a) All cash, bank deposits and cash equivalents;
(b) Any casualty, products liability or tort claim, or proceeds
thereof, relating to the operation of the Business and the property,
plant and equipment of the Companies, which arose prior to the Closing
Date;
(c) All deferred income taxes, income tax refunds and investments
set forth on Schedule 1.2(c);
(d) All corporate minute books and stock transfer books and the
corporate seal of each Company;
(e) Those insurance policies listed on Schedule 1.2(e);
(f) the real property parcels commonly known as 173 Bartholomew
Avenue, 201 Bartholomew Avenue and 500 Flatbush Avenue, Hartford,
Connecticut, including any rights and easements of the Companies related
thereto each as more fully described or referred to in Schedule 4.14(a)
(the "OWNED PREMISES");
(g) Such other Excluded Assets as are listed on Schedule 1.2(g); and
(h) The Shareholder's personal property listed on Schedule 1.2(h),
which is owned by the Shareholder and not the Companies.
1.3 Assumed Liabilities. On the Closing Date, Buyer shall deliver to the
Companies the Assumption Agreement (attached hereto as Exhibit E) pursuant to
which Buyer shall assume and agree to discharge the following obligations and
liabilities of each of the Companies:
(a) All of the accounts payable and accrued expenses of each of the
Companies incurred in the ordinary course of business and as reflected on
each of the Companies' balance sheets as of the Closing Date;
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(b) All obligations of each of the Companies to be paid or performed
on or after the Closing Date under the Purchased Contracts; except:
(i) to the extent such liabilities and obligations, but for a
breach or default by any of the Companies, would have been
paid, performed or otherwise discharged on or prior to the Closing
Date or to the extent such liabilities and obligations arise out of
any such breach or default; and
(ii) to the extent such liabilities and obligations were not
taken into account as a deduction in connection with the adjustment
of the Purchase Price pursuant to Section 2.3;
(c) all obligations of the Companies under the Employee Benefit
Plans; and
(d) all obligations of the Companies under the Union Contract.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"ASSUMED LIABILITIES."
1.4 Excluded Liabilities. Buyer shall not assume or be obligated to pay,
perform or otherwise discharge any liability or obligation of the Companies,
direct or indirect, known or unknown, absolute or contingent, not expressly
assumed by Buyer pursuant to the Assumption Agreement (all such liabilities and
obligations not being assumed being herein called the "EXCLUDED LIABILITIES")
and, notwithstanding anything to the contrary in Section 1.3, none of the
following shall be "ASSUMED LIABILITIES" for purposes of this Agreement:
(a) Any liabilities of the Companies in respect of Taxes of the
Companies for which any of the Companies are liable pursuant to Section
4.19;
(b) Any intercompany payables and other liabilities or obligations
of the Companies to any of their respective Affiliates;
(c) Any costs and expenses incurred by any of the Companies or the
Shareholder incident to its negotiation and preparation of this Agreement
and its performance and compliance with the agreements and conditions
contained herein;
(d) Any liabilities or obligations in respect of any Excluded
Assets;
(e) Any debts or obligations owed by any of the Companies to any
Bank or other financial institution;
(f) Any liabilities or obligations, to the extent such liabilities
or obligations were not deducted in connection with the adjustment of the
Purchase Price pursuant to
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Section 2.3, arising from the violation or breach of, or default by
the Companies, the Shareholder, employees, agents or independent
contractors relating to the Owned Premises or Leased Premises under: (i)
any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration
award which is either applicable to, binding upon or enforceable against
any of the Companies or the Shareholder; or (ii) any Contract which is
applicable to, binding upon or enforceable against any of the Companies
or the Shareholder;
(g) Any liabilities or obligations, whether under guaranty,
warranty, or indemnity provisions or otherwise, for replacement, return,
exchange or repair of, or other damages in connection with, products
sold, manufactured or delivered by any of the Companies, to the extent
such liabilities or obligations were not deducted in connection with the
adjustment of the Purchase Price pursuant to Section 2.3; or
(h) Any other liabilities of any kind or nature whatsoever other
than those described in Section 1.3.
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. Subject to the Purchase Price Adjustment, the
purchase price ("PURCHASE PRICE") for the Purchased Assets shall be
$24,250,000, consisting of:
(a) $18,000,000 in cash (the "CASH PORTION"), from which MTLM shall
withhold a total of $4,600,725 (the "ESCROW AMOUNT") and deliver to the
Escrow Agent to hold in separate escrow accounts pursuant to the Cleanup
Escrow Agreement and the General Escrow Agreement (together, the "ESCROW
AGREEMENTS") in accordance with Section 9.7; and
(b) 284,091 shares (valued at $22 per share based upon the closing
price of the Common Stock on the Nasdaq National Market on August 28,
1997) of Common Stock, subject to adjustment as set forth in Section 2.4
(the "STOCK PORTION"; such shares, together with the shares of Common
Stock, if any, issued in connection with a Purchase Price Adjustment, the
"MTLM SHARES") subject to the restrictions and entitled to the
registration and other rights set forth in the Registration Rights
Agreement and bearing the legend set forth in Section 10.1 of this
Agreement. The Registration Rights Agreement will provide, among other
terms and conditions, that MTLM will file a single registration statement
with respect to the MTLM Shares within 20 days after the Closing Date.
2.2 Allocation of Purchase Price. The Purchase Price shall be allocated
as set forth in a schedule to be mutually determined by Buyer and the Companies
on or prior to the Closing Date. Each of the Companies shall sign and submit
all necessary forms to report this transaction for
5
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federal and state income tax purposes in accordance with that allocation and
shall not take a position for tax purposes inconsistent therewith.
2.3 Adjustment of Purchase Price.
(a) Within four (4) days prior to the Closing Date, the Companies'
auditors shall perform a physical inventory (the "PRE-CLOSING INVENTORY")
of the Inventory of the Companies (which physical inventory shall be
observed and reviewed by AMI's auditors). The Pre-Closing Inventory
shall be adjusted for any transactions by the Companies between the date
of the Pre-Closing Inventory and the Closing Date and shall be used by
Buyer and the Companies to jointly prepare a statement calculating the
Valuation Date Amount. The Pre-Closing Inventory and all adjustments
through the Closing Date shall be valued using the "First In, First Out"
valuation method. The cost of such inventory shall be based on the cost
to each of the Companies as reflected on its books and records.
(b) The Purchase Price shall be increased or decreased (the
"PURCHASE PRICE ADJUSTMENT") as follows if the Valuation Date Amount and
the August 31 Valuation Amount differ by more than $100,000:
(i) if the Valuation Date Amount exceeds the August 31
Valuation Amount by more than $100,000, then the Stock Portion of
the Purchase Price shall be increased by the full amount of such
excess by increasing the Common Stock comprising the Stock Portion
by that number of shares of Common Stock derived by dividing (a)
the full amount of such excess by (b) $22, which additional Shares
of Common Stock shall be subject to the restrictions and entitled
to the registration and other rights set forth in the Registration
Rights Agreement, and bear the legend set forth in Section 10.2; or
(ii) if the August 31 Valuation Amount exceeds the Valuation
Date Amount by more than $100,000, then the Cash Portion of the
Purchase Price shall be decreased by the full amount of this
difference.
2.4 Adjustment of Stock Portion. If the closing price of the Common
Stock on the Nasdaq National Market on the trading day prior to the day of
Closing (the "CLOSING PRICE") is less than $19.50 per share, then the number of
shares in the Stock Portion of the Purchase Price shall equal the number
(rounded to the next highest whole number) obtained by dividing: (i) $5,539,774
(the product of 284,091 shares times $19.50 per share); by (ii) the Closing
Price. If the Closing Price is greater than $24.50 per share, then the number
of shares in the Stock Portion of the Purchase Price shall equal the number
(rounded to the next highest whole number) obtained by dividing: (i) $6,960,230
(the product of 284,091 shares times $24.50 per share); by (ii) the Closing
Price.
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ARTICLE III
CLOSING
3.1 Closing Date. The Closing of the transactions contemplated by this
Agreement shall be consummated after all of the conditions set forth in
Articles VII and VIII have been satisfied or waived, on a date mutually agreed
upon by the parties but no later than January 31, 1998, at the offices of
Shefsky & Froelich Ltd., 444 North Michigan Avenue, Suite 2500, Chicago,
Illinois 60611 or at such other place as shall be agreed upon by Buyer and the
Shareholder. The time and date on which the Closing is actually held is
sometimes referred to herein as the "CLOSING DATE." The Closing shall be
deemed to be effective as of 12:01 a.m. (Chicago time) on the Closing Date (the
"EFFECTIVE TIME").
3.2 Payment of the Purchase Price. Subject to fulfillment or waiver of
the conditions set forth in Article VII, the Purchase Price (subject to the
Purchase Price Adjustment) shall be payable by Buyer to the Companies at
Closing as follows: Buyer shall: (i) pay to the Companies an amount equal to
the Cash Portion minus the Escrow Amount by wire transfer of immediately
available funds to an account designated by the Companies in writing not less
than two (2) days prior to the Closing Date; (ii) deliver to the Companies a
certificate representing the Stock Portion and bearing the legend set forth in
Section 10.1; and (iii) deliver the Escrow Amount in accordance with the Escrow
Agreements.
3.3 Buyer's Additional Deliveries. At Closing Buyer shall deliver to
the Companies all the following:
(a) A certificate of the Secretary or an Assistant Secretary of each
of MTLM and AMI, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Companies, as to: (i) no amendments to the
Articles of Incorporation of MTLM or AMI, as applicable, since a
specified date; (ii) the by-laws of MTLM or AMI, as applicable; (iii) the
resolutions of the Board of Directors of MTLM or AMI, as applicable,
authorizing the execution and performance of this Agreement, the Other
Agreements and the transactions contemplated thereby; and (iv) incumbency
and signatures of the officers of MTLM or AMI, as applicable, executing
this Agreement and the Other Agreements;
(b) The Other Agreements, each duly executed by each of MTLM and
AMI, as applicable;
(c) The certificate contemplated by Section 8.1, duly executed by
the President or any Vice President of each of MTLM and AMI;
(d) Such other documents as the Companies may reasonably request or
as may be otherwise necessary to evidence and effect the sale,
assignment, transfer, conveyance and delivery of the Purchased Assets to
Buyer;
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(e) A Certificate of Good Standing, issued by the Secretary of State
of Delaware, with respect to each of MTLM and AMI, dated no earlier than
thirty (30) days prior to the Closing Date;
(f) An opinion of counsel to Buyer substantially in the form of
Exhibit D-1; and
(g) The Assumption Agreement, duly executed and delivered by Buyer.
3.4 Companies' Deliveries. At Closing the Companies and the Shareholder
shall deliver to Buyer all the following:
(a) A certificate of the Secretary or an Assistant Secretary of each
of the Companies, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to: (i) no amendments to the
Certificate of Incorporation of such Company since a specified date; (ii)
the by-laws of such Company; (iii) the resolutions of the Board of
Directors and shareholders of such Company authorizing the execution and
performance of this Agreement, the Other Agreements and the transactions
contemplated thereby; and (iv) incumbency and signatures of the officers
of such Company executing this Agreement and the Other Agreements.
(b) Opinions of counsel to the Companies and the Shareholder
substantially in the form contained in Exhibit D-2(a) and Exhibit D-2(b).
(c) The Bill of Sale duly executed by each of the Companies in
substantially the form contained in Exhibit C;
(d) Certificates of title or origin (or like documents) with respect
to any aircraft, vehicles or equipment included in the Purchased Assets
for which a certificate of title or origin is required in order to
transfer title;
(e) The consents, waivers or approvals obtained by each of the
Companies with respect to the Purchased Assets or the consummation of the
transactions contemplated by this Agreement;
(f) The certificate contemplated by Section 7.1, duly executed by
the authorized officers of each of the Companies;
(g) Certificates of Existence issued by the Secretary of State of
Connecticut with respect to each of the Companies, dated no more than
thirty (30) days prior to the Closing Date;
(h) UCC-3 termination statements or other applicable releases
relating to any Liens other than Permitted Liens; and
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(i) Such other bills of sale, assignments and other instruments of
transfer or conveyance as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment,
transfer, conveyance and delivery of the Purchased Assets to Buyer.
In addition to the above deliveries, each of the Companies and the Shareholder
shall take all steps and actions as Buyer may reasonably request or as may
otherwise be necessary to put Buyer in actual possession or control of the
Purchased Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
COMPANIES AND THE SHAREHOLDERS
As a material inducement to MTLM and AMI to enter into this Agreement and
to consummate the transactions contemplated hereby, the Shareholder and each of
the Companies hereby jointly and severally make the following representations
and warranties to MTLM and AMI:
4.1 Corporate Status. Each of the Companies is a corporation duly
organized and legally existing, and has filed all required annual reports and
paid all required franchise and other taxes and fees, under the laws of the
State of Connecticut. Each of the Companies has the requisite power and
authority to own or lease its property and to carry on its business as now
being conducted. Each of the Companies is legally qualified to transact
business as a foreign corporation in all jurisdictions where the nature of its
respective properties and the conduct of its business requires such
qualification (all of which jurisdictions are listed on Schedule 4.1) and is in
good standing in each of the jurisdictions in which it is so qualified. There
is no pending or threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of any of the Companies.
4.2 Power and Authority. Each of the Companies and the Shareholder has
the power and authority to execute and deliver this Agreement, to perform its
respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Companies has taken all action necessary to
authorize the execution and delivery of this Agreement, the performance of its
respective obligations hereunder and the consummation of the transactions
contemplated hereby. The Shareholder is a resident of the State of Connecticut
and has the requisite competence to execute and deliver this Agreement and to
perform his obligations hereunder and to consummate the transactions
contemplated hereby.
4.3 Enforceability. Each of this Agreement and the Other Agreements has
been or will have been at the time of Closing duly executed and delivered by
each of the Companies and the Shareholder and constitutes or will constitute
the legal, valid and binding obligation of each of them, enforceable against
them in accordance with their respective terms.
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4.4 No Restrictions. There are no proxies, voting rights, Contracts or
other agreements or understandings with respect to the voting of shares in any
of the Companies or the transfer of the Purchased Assets other than as set
forth in this Agreement.
4.5 Capitalization of the Companies; Shareholder. The Shareholder is the
holder beneficially and of record of all issued and outstanding shares of
capital stock of Aerospace and Security, and the Shareholder owns such shares
as set forth on Schedule 4.5, free and clear of all Liens, restrictions and
claims of any kind, except as set forth on Schedule 4.5. Aerospace is the
holder beneficially and of record of all issued and outstanding shares of
capital stock of Titanium, and Aerospace owns such shares as set forth in
Schedule 4.5 free and clear of all Liens, restrictions and claims of any kind.
4.6 No Violation. Except as set forth on Schedule 4.6 and upon
compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated thereunder
(the "HSR ACT"), the execution and delivery of this Agreement by each of the
Companies and the Shareholder, the performance by each of them of their
respective obligations hereunder and the consummation by them of the
transactions contemplated by this Agreement will not: (i) contravene any
provision of the certificate of incorporation or bylaws of the respective
Company; (ii) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against any of the Companies or the Shareholder; (iii)
conflict with, result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding
upon or enforceable against any of the Companies or the Shareholder; (iv)
result in or require the creation or imposition of any Lien upon or with
respect to any of the property or assets of any of the Companies; or (v)
require the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person, except any SEC and other filings required to be made by MTLM.
4.7 Records. The copies of the respective certificate of incorporation
and bylaws of each of the Companies which were provided to MTLM are true,
accurate and complete and reflect all amendments made through the date of this
Agreement. The minute books for each of the Companies provided to MTLM for
review were correct and complete as of the date of such review, no further
entries have been made through the date of this Agreement, such minute books
contain the true signatures of the persons purporting to have signed them, and
such minute books contain an accurate record of all corporate actions of the
shareholders and directors (and any committees thereof) of each of the
Companies taken by written consent or at a meeting within ten (10) years of
the date hereof. All material corporate actions taken by each of the Companies
have been duly authorized or ratified. All accounts, books, ledgers and
official and other records of each of the Companies within ten (10) years of
the date hereof have been fully, properly and
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accurately kept and completed in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained therein.
4.8 Subsidiaries. Except as set forth on Schedule 4.8, none of the
Companies owns, directly or indirectly, any outstanding voting securities of or
other interests in, or controls, any other corporation, partnership, joint
venture or other business entity. Except as set forth on Schedule 4.8, none of
the Companies has any liabilities or obligations, whether accrued, absolute,
contingent or otherwise, arising from its interest in the entities set forth on
such schedule.
4.9 Financial Statements. The Shareholder has delivered to MTLM: (i)
the financial statements of each of the Companies, except Security, as of May
31, 1997, including the notes thereto, audited by Coopers & Lybrand L.L.P., and
the unaudited financial statements of Security as of May 31, 1997, and (ii) the
August 31, 1997 unaudited financial statements of each of the Companies
(collectively, the "FINANCIAL STATEMENTS"), copies of which are attached as
Schedule 4.9 hereto. The balance sheets dated as of August 30, 1997, included
in the Financial Statements are referred to herein as the "CURRENT BALANCE
SHEET". The Financial Statements fairly present the consolidated financial
position of each of the Companies (except Security) at each of the balance
sheet dates and the results of operations for the periods covered thereby and,
except as set forth in Schedule 4.9, have been prepared in accordance with GAAP
consistently applied throughout the periods indicated. Except as set forth in
Schedule 4.9, the books and records of each of the Companies fully and fairly
reflect the transactions, properties, assets and liabilities of the respective
Company. Except as set forth in Schedule 4.9, there are no material special or
non-recurring items of income or expense during the periods covered by the
Financial Statements, and the balance sheets included in the Financial
Statements do not reflect any writeup or revaluation increasing the book value
of any assets, except as specifically disclosed in the notes thereto. Except
as set forth in Schedule 4.9, the Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information contained
therein.
4.10 Changes Since the Current Balance Sheet Date. Except as disclosed
in Schedule 4.10, since the date of the Current Balance Sheet, none of the
Companies has: (i) sold, leased or transferred any of its properties or assets
other than in the ordinary course of business consistent with past practice;
(ii) made any payment in respect of its liabilities other than in the ordinary
course of business consistent with past practice; (iii) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $10,000 in the
aggregate out of the ordinary course of business, except for this Agreement and
the transactions contemplated hereby; (iv) suffered any theft, damage,
destruction or casualty loss, not covered by insurance and for which a timely
claim was filed, in excess of $10,000 in the aggregate; (v) suffered any
extraordinary losses (whether or not covered by insurance); (vi) waived,
cancelled, compromised or released any rights having a value in excess of
$10,000 in the aggregate; (vii) made or adopted any change in its accounting
practices or policies; (viii) made any adjustment to its books and records
other than in respect of the conduct of its business activities in the
ordinary course of business consistent with past practice; (ix) entered into
any transaction with any Affiliate other than intercompany transactions in the
ordinary course of business consistent with past practice; (x) entered into any
employment agreement; (xi)
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terminated, amended or modified any agreement involving an amount in excess of
$50,000; (xii) imposed any security interest or other Lien on any of its assets
other than in the ordinary course of business consistent with past practice;
(xiii) delayed paying any account payable which is due and payable except to the
extent being contested in good faith and except in the ordinary course of its
business consistent with past practice; or (xiv) made or pledged any charitable
contribution other than in the ordinary course of business consistent with past
practice.
4.11 Liabilities. Except as set forth on Schedule 4.11, none of the
Companies has any liabilities or obligations, whether accrued, absolute,
contingent or otherwise, except: (i) to the extent reflected or taken into
account in the Current Balance Sheet and not heretofore paid or discharged;
(ii) to the extent specifically set forth in or incorporated by express
reference in any of the Schedules attached hereto; (iii) liabilities incurred
in the ordinary course of business consistent with past practice since the date
of the Current Balance Sheet (none of which relates to breach of contract,
breach of warranty, tort, infringement or violation of law, or which arose out
of any action, suit, claim, governmental investigation or arbitration
proceeding); (iv) normal accruals, reclassifications, and audit adjustments
which would be reflected on an audited financial statement and which would not
be material in the aggregate; and (v) liabilities incurred in the ordinary
course of business prior to the date of the Current Balance Sheet which, in
accordance with GAAP consistently applied, were not recorded thereon.
4.12 Litigation. Except as set forth on Schedule 4.12 or Schedule 4.13,
there is no action, suit, or other legal or administrative proceeding or
governmental investigation pending or threatened by or against the Companies or
the Shareholder or anticipated or contemplated by the Companies or the
Shareholder, nor, to the best knowledge of the Companies and the Shareholder,
is there any such action, suit, or other legal or administrative proceeding or
governmental investigation anticipated or contemplated against the Companies or
the Shareholder, affecting any of the Companies or any of their respective
properties or assets, or the Shareholder, or which question the validity or
enforceability of this Agreement or the transactions contemplated hereby, and
to the best knowledge of the Shareholder and each of the Companies, there is no
basis for any of the foregoing. Except as set forth in Schedule 4.12 or
Schedule 4.13, there are no outstanding orders, decrees or stipulations issued
by any Governmental Authority in any proceeding to which any of the Companies
is or was a party which have not been complied with in full or which continue
to impose any material obligations on any of the Companies.
4.13 Environmental Matters. Except as set forth on Schedule 4.13:
(a) Each of the Companies is and has at all times been in material
compliance with all Environmental, Health and Safety Laws (as defined
herein) governing its business, operations, properties and assets,
including, without limitation, Environmental, Health and Safety Laws with
respect to discharges into the ground water, surface water and soil,
emissions into the ambient air, and generation, accumulation, storage,
treatment, transportation, transfer, labeling, handling, manufacturing,
use, spilling, leaking, dumping, discharging, release or disposal of
Hazardous Substances (as defined herein), or other Waste (as defined
herein). None of the Companies is currently liable for any penalties,
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fines or forfeitures for failure to comply with any Environmental, Health
and Safety Laws. Each of the Companies is in material compliance with
all notice, record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied with all
informational requests or demands arising under the Environmental, Health
and Safety Laws.
(b) Each of the Companies has obtained, or caused to be obtained,
and is in material compliance with, all licenses, certificates, permits,
approvals and registrations (collectively "LICENSES") required by the
Environmental, Health and Safety Laws for the ownership of its properties
and assets and the operation of its business as presently conducted,
including, without limitation, all air emission, water discharge, water
use and solid waste, hazardous waste and other Waste generation,
transportation, transfer, storage, treatment or disposal Licenses, and is
in compliance in all material respects with all the terms, conditions and
requirements of such Licenses, and copies of such Licenses have been
provided to MTLM. There are no administrative or judicial investigations,
notices, claims or other proceedings pending or threatened by any
Governmental Authority or third parties against any of the Companies,
their respective businesses, operations, properties, or assets, which
question the validity or entitlement of any of the Companies to any
License required by the Environmental, Health and Safety Laws for the
ownership of each of the respective properties and assets of each of the
Companies and the operation of their respective business or wherein an
unfavorable decision, ruling or finding could have a Material Adverse
Effect on the Purchased Assets, the Business or any of the Companies, or
which would impose any liability upon MTLM in the event that the
transaction contemplated by this Agreement closes.
(c) None of the Companies has received or is aware of any
non-compliance order, warning letter, investigation, notice of violation,
claim, suit, action, judgment, or administrative or judicial proceeding
pending or threatened against or involving any of the Companies, their
respective business, operations, properties, or assets, issued by any
Governmental Authority or third party with respect to any Environmental,
Health and Safety Laws in connection with the ownership by any of the
Companies of its properties or assets or the operation of its business,
which has not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not impose
any obligation, burden or continuing liability on MTLM in the event that
the transaction contemplated by this Agreement closes, or which could
have a Material Adverse Effect on the Purchased Assets, the Business or
any of the Companies.
(d) Each of the Companies is in full compliance with, and is not in
breach of or default under any applicable writ, order, judgment,
injunction, governmental communication or decree issued pursuant to the
Environmental, Health and Safety Laws and no event has occurred or is
continuing which, with the passage of time or the giving of notice or
both, would constitute such non-compliance, breach or default thereunder,
or affect the Business or the Purchased Assets.
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(e) None of the Companies has generated, manufactured, used,
transported, transferred, stored, handled, treated, spilled, leaked,
dumped, discharged, released or disposed, nor has it allowed or arranged
for any third parties to generate, manufacture, use, transport, transfer,
store, handle, treat, spill, leak, dump, discharge, release or dispose
of, Hazardous Substances or other waste to or at any location other than
a site lawfully permitted to receive such Hazardous Substances or other
waste for such purposes, nor has it performed, arranged for or allowed by
any method or procedure such generation, manufacture, use,
transportation, transfer, storage, treatment, spillage, leakage, dumping,
discharge, release or disposal in contravention of any Environmental,
Health and Safety Laws. None of the Companies has generated,
manufactured, used, stored, handled, treated, spilled, leaked, dumped,
discharged, released or disposed of, or allowed or arranged for any
third parties to generate, manufacture, use, store, handle, treat, spill,
leak, dump, discharge, release or dispose of, Hazardous Substances or
other waste upon property currently or previously owned or leased by it,
except as permitted by law. For purposes of this Agreement, the term
"Hazardous Substances" shall be construed broadly to include any toxic or
hazardous substance, material, or waste, and any other contaminant,
pollutant or constituent thereof, whether liquid, solid, semi-solid,
sludge and/or gaseous, including without limitation, chemicals, compounds,
metals, by-products, pesticides, asbestos containing materials, petroleum
or petroleum products, and polychlorinated biphenyls, the presence of
which requires investigation or remediation under any Environmental,
Health and Safety Laws or which are or become regulated, listed or
controlled by, under or pursuant to any Environmental Health and Safety
Laws, including, without limitation, the United States Department of
Transportation Table (49 CFR 172, 101) or by the Environmental Protection
Agency as hazardous substances (40 CFR Part 302) and any amendments
thereto; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (hereinafter
collectively "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conversation and Recovery Act of 1976 and subsequent Hazardous
and Solid Waste Amendments of 1984, 42 U.S.C. Section 6901 et seq.
(hereinafter, collectively "RCRA"); the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Section 1801, et seq.; the Clean Water Act, as
amended, 33 U.S.C. Section 1311, et seq.; the Clean Air Act, as amended
(42 U.S.C. Section 7401-7642); Toxic Substances Control Act, as amended,
15 U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. Section 136-136y ("FIFRA"); the
Emergency Planning and Community Right-to-Know Act of 1986 as amended, 42
U.S.C. Section 11001, et seq. (Title III of SARA) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section
651, et seq. ("OSHA"); any similar state statute, or any future amendments
to, or regulations implementing such statutes, laws, ordinances, codes,
rules, regulations, orders, rulings, or decrees, or which has been or
shall be determined or interpreted at any time by any Governmental
Authority to be a hazardous or toxic substance regulated under any other
statute, law, regulation, order, code, rule, order, or decree. For
purposes of this Section 4.13, the term "Waste" shall be construed broadly
to include agricultural wastes, biomedical wastes, biological wastes,
bulky wastes, construction and demolition debris, garbage,
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household wastes, industrial solid wastes, liquid wastes, recyclable
materials, sludge, solid wastes, special wastes, used oils, white goods,
and yard trash.
(f) None of the Companies has caused, allowed to be caused or
permitted, either by action or inaction, a Release or Discharge, or
threatened Release or Discharge, of any Hazardous Substance on, into or
beneath the surface of any parcel of the Purchased Assets, the Owned
Premises or the Leased Premises or to any properties adjacent thereto.
There has not occurred, nor is there presently occurring, a Release or
Discharge, or threatened Release or Discharge, of any Hazardous Substance
on, into or beneath the surface of any portion of the Owned Premises or
the Leased Premises or to any properties adjacent thereto. For purposes
of this Section, the terms "Release" and "Discharge" shall have the
meanings given them in the Environmental, Health and Safety Laws.
(g) None of the Companies has generated, handled, manufactured,
treated, stored, used, shipped, transported, transferred, or disposed of,
nor have they allowed or arranged, by contract, agreement or otherwise,
for any third parties to generate, handle, manufacture, treat, store,
use, ship, transport, transfer or dispose of, any Hazardous Substance or
other Waste to or at a site which, pursuant to CERCLA or any similar
state law: (i) has been placed on the National Priorities List or its
state equivalent; or (ii) the Environmental Protection Agency or the
relevant state agency has notified any of the Companies that it has
proposed or is proposing to place on the National Priorities List or its
state equivalent. None of the Companies nor the Shareholder has received
notice, and none of the Companies nor the Shareholder has knowledge of
any facts which could give rise to any notice, that any of the Companies
is a potentially responsible party for a federal or state environmental
cleanup site or for corrective action under CERCLA, RCRA or any other
applicable Environmental Health and Safety Laws. None of the Companies
has submitted nor was required to submit any notice pursuant to Section
103(c) of CERCLA with respect to the Leased Premises, the Owned Premises
or the Purchased Assets. None of the Companies has received any written
or oral request for information in connection with any federal or state
environmental cleanup site, or in connection with any of the real
property or premises where any of the Companies has transported,
transferred or disposed of other Wastes. None of the Companies has been
required to and has not undertaken any response or remedial actions or
clean-up actions of any kind at the request of any Governmental
Authorities or at the request of any other third party. None of the
Companies has any liability under any Environmental, Health and Safety
Laws for personal injury, property damage, natural resource damage, or
clean up obligations.
(h) None of the Companies uses, or has used, any Aboveground Storage
Tanks or Underground Storage Tanks, and there are not now nor have there
ever been any Underground Storage Tanks. For purposes of this Section
4.13, the terms "Aboveground Storage Tanks" and "Underground Storage
Tanks" shall have the meanings given them in Section 6901 et seq., as
amended, of RCRA, or any applicable state or local statute, law,
ordinance, code, rule, regulation, order ruling, or decree governing
Aboveground Storage Tanks or Underground Storage Tanks.
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(i) Schedule 4.13 identifies, regardless of their materiality: (i)
all environmental audits, assessments or occupational health studies
undertaken by any of the Companies or their respective agents, or by the
Shareholder, or by any Governmental Authority, or by any third party,
relating to or affecting any of the Companies or any of the Leased
Premises, the Owned Premises or the Purchased Assets; (ii) the results of
any ground, water, soil, air or asbestos monitoring undertaken by the any
of the Companies or their respective agents, or by the Shareholder, or by
any Governmental Authority, or by any third party, relating to or
affecting the Company or any of the Leased Premises, the Owned Premises
or the Purchased Assets; (iii) all written communications between any of
the Companies and any Governmental Authority arising under or related to
Environmental, Health and Safety Laws; and (iv) all citations issued
under OSHA, or similar state or local statutes, laws, ordinances, codes,
rules, regulations, orders, rulings, or decrees, relating to or affecting
any of the Companies or any of the Leased Premises, the Owned Premises
or the Purchased Assets.
(j) Schedule 4.13 contains a recent survey, including
recommendations for management, of "friable asbestos" (as such term is
identified under the Environmental, Health and Safety Laws) present on
the Owned Premises and Leased Premises. The recommendations have been
fully implemented as of the date of this Agreement. Each of the
Companies has operated and continues to operate in compliance with all
Environmental, Health & Safety Laws governing the handling, use and
exposure to and disposal of asbestos or asbestos-containing materials.
There are no claims, actions, suits, governmental investigations or
proceedings before any Governmental Authority or third party pending, or
threatened against or directly affecting any of the Companies, or any of
their respective assets or operations relating to the use, handling or
exposure to and disposal of asbestos or asbestos-containing materials in
connection with their assets and operations.
(k) As used in this Agreement, "Environmental, Health and Safety
Laws" means all federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings, and
changes or ordinances or judicial or administrative interpretations
thereof, whether currently in existence or hereafter enacted or
promulgated, any of which govern (or purport to govern) or relate to
pollution, protection of the environment, public health and safety, air
emissions, water discharges, hazardous or toxic substances, solid or
hazardous waste or occupational health and safety, as any of these terms
are or may be defined in such statutes, laws, rules, regulations, codes,
orders, plans, injunctions, decrees, rulings and changes or ordinances,
or judicial or administrative interpretations thereof, including, without
limitation, RCRA, CERCLA, the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Clean Air Act, the Clean Water Act,
FIFRA, EPCRA and OSHA, as any of them may be or have been amended from
time to time, together with all regulations promulgated thereunder. In
the event any Environmental, Health and Safety Law is amended to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment.
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(l) Schedule 4.13 identifies the operations and activities, and
locations thereof, which have been conducted and are being conducted by
each of the Companies on any of the Purchased Assets, the Owned Premises
or the Leased Premises which have involved the generation, accumulation,
storage, treatment, transportation, labeling, handling, manufacturing,
use, spilling, leaking, dumping, discharging, release or disposal of
Hazardous Substances.
(m) Schedule 4.13 identifies the locations to which each of the
Companies has transferred, transported, hauled, moved, or disposed of
Waste over the past five years and the types and volumes of Waste
transferred, transported, hauled, moved, or disposed of to each such
location.
(n) None of the Purchased Assets, the Owned Premises or Leased
Premises presently includes, or has been constructed upon, any "wetlands"
as defined under applicable Environmental, Health and Safety Laws.
(o) Schedule 4.13 identifies all Material:
(i) Remediation of any and all Hazardous Substances Discharged
or Released from the operations of the Business and any other
investigative, clean-up and corrective actions, and the planning
thereof, including without limitation, corrective, remedial or
removal actions, and pre- or post-remediation monitoring, conducted
with respect to any Environmental Condition ("REMEDIAL ACTION"); or
(ii) Claims, citations, notices of violation or similar
notices, actions, suits, orders, governmental investigations or
proceedings, whether administrative or judicial and whether civil
or criminal, alleging the violation of any Environmental, Health or
Safety Laws ("LEGAL ACTION").
For purposes of this Section 4.13(o), the term "MATERIAL" when
applied to a Remedial Action shall mean: (i) any Remedial Action
(excluding attorneys fees) undertaken as a result of any Legal Action,
and for which the potential costs have exceeded or could reasonably be
expected to exceed $100,000; (ii) any Remedial Action not undertaken as a
result of any Legal Action, and for which the potential costs have
exceeded or could reasonably be expected to exceed $500,000. For purposes
of this Section 4.13(o), the term "MATERIAL" when applied to a Legal
Action shall mean: (i) any Legal Action to which any Governmental
Authority is a party, and for which the potential liability to the
Companies or the Shareholder collectively has exceeded or could
reasonably be expected to exceed $100,000; and (ii) any Legal Action to
which any Governmental Authority is not a party, and for which the
potential liability to the Companies or the Shareholder (excluding
attorneys fees) collectively has exceeded or could reasonably be expected
to exceed $500,000.
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(p) During the previous five years: (i) no employees, agents or
independent contractors of the Companies have died or sustained severe
personal injuries on the Owned Premises or Leased Premises or in the
course of their employment or engagement by the Companies; and (ii) none
of the Companies nor any of their properties has been the subject of
fines, penalties or charges issued or assessed by OSHA in excess of
$20,000.
4.14 Real Estate.
(a) None of the Companies owns any real property, or any interest
therein except as set forth on Schedule 4.14(a), which Schedule sets
forth the location and size of, and principal improvements and buildings
on, the Owned Premises.
(b) Schedule 4.14(b) sets forth a list of all leases, licenses or
similar agreements with respect to interests in real estate ("LEASES") to
which any of the Companies is a party (copies of which have previously
been furnished to MTLM), in each case, setting forth: (i) the lessor and
lessee thereof and the date and term of each of the Leases; (ii) the
legal description or street address of each property covered thereby; and
(iii) a brief description (including size and function) of the principal
improvements and buildings thereon (the "LEASED PREMISES"), all of which
are within the property set-back and building lines of the respective
property. The Leases are in full force and effect and have not been
amended except as set forth on Schedule 4.14(b), and no party thereto is
in default or breach under any such Lease. No event has occurred which,
with the passage of time or the giving of notice or both, would cause a
material breach of or default under any of such Leases. To the best
knowledge of the Companies and the Shareholder, there is no breach or
anticipated breach by any other party to such Leases. Except as set
forth on Schedule 4.14(b), with respect to each such Leased Premises:
(i) each of the Companies has valid leasehold interests in
the Leased Premises leased by it, which leasehold interests are free
and clear of any Liens, covenants and easements or title defects of
any nature whatsoever;
(ii) the portions of the buildings located on the Leased
Premises that are used in the business of each of the Companies are
in good repair and condition, normal wear and tear excepted, and
are in the aggregate sufficient to satisfy the respective Company's
current and reasonably anticipated normal business activities as
conducted thereat;
(iii) each of the Leased Premises: (a) has direct access to
public roads or access to public roads by means of a perpetual
access easement, such access being sufficient to satisfy the
current and reasonably anticipated normal transportation
requirements of each Company's respective business as presently
conducted at such parcel; and (b) is served by all utilities in
such quantity and quality as are sufficient to satisfy the current
normal business activities as conducted at such parcel; and
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(iv) none of the Companies has received notice of: (a) any
condemnation proceeding with respect to any portion of the Leased
Premises or any access thereto, and to the best knowledge of the
Companies and the Shareholder, no such proceeding is contemplated
by any Governmental Authority; or (b) any special assessment which
may affect any of the Leased Premises and to the best knowledge of
the Companies and the Shareholder, no such special assessment is
contemplated by any Governmental Authority.
(c) all of the Purchased Assets are located on the Owned Premises,
the Leased Premises or the other locations identified on Schedule
4.14(c).
4.15 Good Title to, Condition of and Adequacy of Purchased Assets.
(a) Except as set forth on Schedule 4.15, each of the Companies has
good and marketable title to all of the Purchased Assets, free and clear
of any Liens (other than Permitted Liens) or restrictions on use.
(b) The Purchased Assets are in good operating condition, normal
wear and tear excepted, and have been maintained in accordance with sound
industry practices.
(c) Except for the Owned Premises, the Purchased Assets constitute
all of the assets and properties necessary for the conduct of the
business of each of the Companies in the manner in which and to the
extent to which such business is currently being conducted.
4.16 Compliance with Laws.
(a) Except as set forth in Schedule 4.13 or Schedule 4.16, each of
the Companies is and has been in compliance in all material respects with
all laws, regulations and orders applicable to it, its respective
business and operations (as conducted by it now and in the past), and the
Purchased Assets. Except as set forth on Schedule 4.13 or Schedule 4.16,
none of the Companies has been cited, fined or otherwise notified of any
asserted past or present failure to comply with any laws, regulations or
orders which have not been permanently cured and no proceeding with
respect to any such violation is pending or threatened.
(b) None of the Companies has made any payment of funds in
connection with their business which is prohibited by law, and no funds
have been set aside to be used in connection with their business for any
payment prohibited by law.
(c) None of the Companies is subject to any Contract, decree or
injunction which restricts the continued operation of any business or the
expansion thereof to other geographical areas, customers and suppliers or
lines of business.
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4.17 Labor and Employment Matters. Schedule 4.17 sets forth the name,
address, social security number and current rate of compensation of each of the
employees of each of the Companies. Except as set forth in Schedule 4.17, none
of the Companies is a party to or bound by any collective bargaining agreement
or any other agreement with a labor union, and there have been no efforts by
any labor union during the 24 months prior to the date hereof to organize any
employees of any of the Companies into one or more collective bargaining units.
There is no pending or threatened labor dispute, strike or work stoppage which
affects or which may affect the business of any of the Companies or which may
interfere with their respective continued operations. None of the Companies
has within the last 24 months committed any unfair labor practice as defined in
the National Labor Relations Act, as amended, and there is no pending or
threatened charge or complaint against any of the Companies by or with the
National Labor Relations Board or any representative thereof. There has been
no strike, walkout or work stoppage involving any of the employees of any
Company during the 24 months prior to the date hereof. The Shareholder is not
aware that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with any of the Companies as a result of
this Agreement or otherwise. Schedule 4.17 contains detailed information about
each contract, agreement or plan of the following nature, whether formal or
informal, and whether or not in writing, to which any of the Companies is a
party or under which it has an obligation: (i) employment agreements, (ii)
employee handbooks, policy statements and similar plans, (iii) noncompetition
agreements, and (iv) consulting agreements. None of the parties to any of the
contracts or agreements listed on Schedule 4.17 is an Affiliate of the
Shareholder, any Company or any of their respective directors, employees,
officers, relatives or Affiliates, except by reason of the contract or
agreement listed on Schedule 4.17. Each of the Companies has complied with
applicable laws, rules and regulations relating to employment, civil rights and
equal employment opportunities, including but not limited to, the Civil Rights
Act of 1964, the Fair Labor Standards Act and the Worker Adjustment and
Retraining Notification Act of 1988.
4.18 Employee Benefit Plans.
(a) Employee Benefit Plans. Schedule 4.18 contains a list setting
forth each employee benefit plan or arrangement of each of the Companies,
including but not limited to employee pension benefit plans, as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), multiemployer plans, as defined in Section 3(37) of
ERISA, employee welfare benefit plans, as defined in Section 3(1) of
ERISA, deferred compensation plans, stock option plans, bonus plans,
stock purchase plans, hospitalization, disability and other insurance
plans, severance or termination pay plans and policies, whether or not
described in Section 3(3) of ERISA, in which employees, their spouses or
dependents, of each of the Companies participate ("EMPLOYEE BENEFIT
PLANS") (true and accurate copies of which, together with the most recent
annual reports on Form 5500 and summary plan descriptions with respect
thereto, were furnished to MTLM).
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(b) Compliance with Law. With respect to each Employee Benefit
Plan: (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but
not limited to, ERISA and the Internal Revenue Code of 1986, as amended
(the "CODE"); (ii) no actions, suits, claims or disputes are pending, or
threatened; (iii) no audits, inquiries, reviews, proceedings, claims, or
demands are pending with any governmental or regulatory agency; (iv)
there are no facts which could give rise to any material liability in the
event of any such investigation, claim, action, suit, audit, review, or
other proceeding; (v) all reports, returns, and similar documents
required to be filed with any governmental agency or distributed to any
plan participant have been duly or timely filed or distributed; and (vi)
no "prohibited transaction" has occurred within the meaning of the
applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee Benefit Plan
intended to qualify under Code Section 401(a): (i) the Internal Revenue
Service has issued a favorable determination letter, true and correct
copies of which have been furnished to MTLM, that such plans are
qualified and exempt from federal income taxes; (ii) no such
determination letter has been revoked nor has revocation been threatened,
nor has any amendment or other action or omission occurred
with respect to any such plan since the date of its most recent
determination letter or application therefor in any respect which would
adversely affect its qualification or materially increase its costs;
(iii) no such plan has been amended in a manner that would require
security to be provided in accordance with Section 401(a)(29) of the
Code; (v) no reportable event (within the meaning of Section 4043 of
ERISA) has occurred, other than one for which the 30-day notice
requirement has been waived; and (vi) as of the Effective Time, the
present value of all liabilities that would be "benefit liabilities"
under Section 4001(a)(16) of ERISA if benefits described in Code Section
411(d)(6)(B) were included will not exceed the then current fair market
value of the assets of such plan (determined using the actuarial
assumptions used for the most recent actuarial valuation for such plan);
(vii) except as disclosed on Schedule 4.18, all contributions to, and
payments from and with respect to such plans, which may have been
required to be made in accordance with such plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely made;
(viii) all such contributions to the plans, and all payments under the
plans (except those to be made from a trust qualified under Section
401(a) of the Code) and all payments with respect to the plans
(including, without limitation, PBGC and insurance premiums) for any
period ending before the Closing Date that are not yet, but will be,
required to be made are properly accrued and reflected on the Current
Balance Sheet or are disclosed on Schedule 4.18.
(d) Multiemployer Plans. None of the Companies contributes to, or
within the past ten years has contributed to, a multiemployer plan
described in Section 3(37) of ERISA.
(e) Welfare Plans. Other than as disclosed in Schedule 4.18: (i)
none of the Companies is obligated under any employee welfare benefit
plan as described in Section 3(1) of ERISA ("WELFARE PLAN"), whether or
not disclosed in Schedule 4.18, to provide
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medical or death benefits with respect to any employee or former
employee of any of the Companies or its predecessors after termination of
employment; (ii) each of the Companies has complied in all material
respects with the notice and continuation coverage requirements of Section
4980B of the Code and the regulations thereunder with respect to each
Welfare Plan that is, or was during any taxable year for which the statute
of limitations on the assessment of federal income taxes remains, open, by
consent or otherwise, a group health plan within the meaning of Section
5000(b)(1) of the Code; and (iii) there are no reserves, assets, surplus
or prepaid premiums under any Welfare Plan which is an Employee
Benefit Plan. The consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay, and, will not
accelerate the time of payment or vesting, or increase the amount of
compensation, due to any individual.
(f) Controlled Group Liability. None of the Companies nor any
entity that would be aggregated with any of the Companies under Code
Section 414(b), (c), (m) or (o): (i) has ever terminated or withdrawn
from an employee benefit plan under circumstances resulting (or expected
to result) in liability to the Pension Benefit Guaranty Corporation
("PBGC"), the fund by which the employee benefit plan is funded, or any
employee or beneficiary for whose benefit the plan is or was maintained
(other than routine claims for benefits); (ii) has any assets subject to
(or expected to be subject to) a lien for unpaid contributions to any
employee benefit plan; (iii) has failed to pay premiums to the PBGC when
due; (iv) is subject to (or expected to be subject to) an excise tax
under Code Section 4971; (v) has engaged in any transaction which would
give rise to liability under Section 4069 or Section 4212(c) of ERISA; or
(vi) has violated Code Section 4980B or Section 601 through 608 of ERISA.
(g) Other Liabilities. Except as set forth on Schedule 4.18: (i)
none of the Employee Benefit Plans obligates any of the Companies to pay
separation, severance, termination or similar benefits solely as a result
of any transaction contemplated by this Agreement or solely as a result
of a "change of control" (as such term is defined in Section 280G of the
Code); (ii) all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals
for all periods ending prior to or as of the Effective Date shall have
been made or properly accrued on the Current Balance Sheet or will be
properly accrued on the books and records of each of the Companies as of
the Effective Date; and (iii) none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current Balance Sheet
or the books and records of any of the Companies.
4.19 Tax Matters. Except as set forth in Schedule 4.19 hereto, all Tax
Returns required to be filed prior to the date hereof with respect to each of
the Companies or any of their respective income, properties, franchises or
operations have been filed, each such Tax Return has been prepared in
compliance with all applicable laws and regulations, and all such Tax Returns
are true, complete and accurate in all respects. All Taxes due and payable by
or with respect to each of the Companies have been paid or accrued on the
Current Balance Sheet or will be accrued on its
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books and records as of the Closing. Except as set forth in Schedule 4.19
hereto: (i) with respect to each taxable period of each Company, no taxable
period has been audited by the relevant taxing authority; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
any of the Companies; (iii) none of the Companies has consented to extend the
time in which any Taxes may be assessed or collected by any taxing authority;
(iv) none of the Companies has requested or been granted an extension of the
time for filing any Tax Return to a date later than the Closing Date; (v) there
is no action, suit, taxing authority proceeding, or audit or claim for refund
now in progress, pending or threatened against or with respect to any of the
Companies regarding Taxes; (vi) none of the Companies has made an election or
filed a consent under Section 341(f) of the Code (or any corresponding provision
of state, local or foreign law) on or prior to the Closing Date; (vii) there are
no Liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of the any of the Companies; (viii) none of the Companies will be
required (A) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, to include any adjustment under
Section 481(c) of the Code (or any corresponding provision of state, local or
foreign law) in taxable income for any taxable period (or portion thereof)
beginning after the Closing Date or (B) as a result of any "closing agreement,"
as described in Section 7121 of the Code (or any corresponding provision of
state, local or foreign law), to include any item of income or exclude any item
of deduction from any taxable period (or portion thereof) beginning after the
Closing Date; (ix) none of the companies is a party to or bound by any tax
allocation or tax sharing agreement or has any current or potential contractual
obligation to indemnify any other Person with respect to Taxes; (x) there is no
basis for any assessment, deficiency notice, 30-day letter or similar notice
with respect to any Tax to be issued to the any of the Companies with respect to
any period on or before the Closing Date; (xi) none of the Companies has made
any payments, and is or will not become obligated (under any contract entered
into on or before the Closing Date) to make any payments, that will be
non-deductible under Section 280G of the Code (or any corresponding provision of
state, local or foreign law); (xii) none of the Companies has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code (or any corresponding provision of state, local or foreign law)
during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code
(or any corresponding provision of state, local or foreign law); (xiii) no claim
has ever been made by a taxing authority in a jurisdiction where any of the
Companies does not file Tax Returns that is or may be subject to Taxes assessed
by such jurisdiction; and (xiv) none of the Companies has any permanent
establishment in any foreign country, as defined in the relevant tax treaty
between the United States of America and such foreign country; (xv) true,
correct and complete copies of all income and sales Tax Returns filed by or with
respect to each of the Companies for the past two years have been furnished or
made available to MTLM; (xvi) none of the Companies will be subject to any Taxes
for the period ending at the Closing Date for any period for which a Tax Return
has not been filed imposed pursuant to Section 1374 or Section 1375 of the Code
(or any corresponding provision of state, local or foreign law); and (xvii) no
sales or use tax or property transfer tax (other than sales tax on aircraft,
boats, mobile homes and motor vehicles), non-recurring intangibles tax,
documentary stamp tax or other excise tax (or comparable tax imposed by any
Governmental Authority) will be payable by any of the Companies or MTLM by
virtue of the transactions completed in this Agreement.
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4.20 Insurance. Each of the Companies is covered by valid, outstanding
and enforceable policies of insurance issued to it by reputable insurers
covering its properties, assets and businesses against risks of the nature
normally insured against by businesses in the same or similar lines of business
and in coverage amounts typically and reasonably carried by such businesses
(the "INSURANCE POLICIES"). Such Insurance Policies are in full force and
effect, all premiums due thereon have been paid, and each of the Companies has
complied with the provisions of such Insurance Policies. Schedule 4.20
contains: (i) a complete and correct list of all Insurance Policies and all
amendments and riders thereto (copies of which have been provided to MTLM); and
(ii) a detailed description of each pending claim under any of the Insurance
Policies for an amount in excess of $5,000 that relates to loss or damage to
the properties, assets or businesses of any of the Companies. None of the
Companies has failed to give, in a timely manner, any notice required under any
of the Insurance Policies to preserve its rights thereunder.
4.21 Receivables. All of the Receivables (as hereinafter defined) are
valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of each of the Companies, as the case may be. All
of the Receivables are good and collectible receivables, without set-off or
counterclaims. Each of the Companies and the Shareholder hereby absolutely and
unconditionally guarantees and agrees to be a surety for the full and prompt
payment to Buyer, no later than ninety (90) days following the Closing, of all
amounts owing under each of the Receivables included in the Purchased Assets,
as more fully identified and described on Schedule 4.21. Each of the Companies
and the Shareholder acknowledge that any failure to perform this guaranty
obligation shall constitute a breach of this Agreement and shall entitle the
Buyer to recover Indemnifiable Damages. Each of the Companies and the
Shareholder agrees: (i) to pay to Buyer, upon demand, all amounts owing under
any Receivables identified on Schedule 4.21 which have not been paid by the
applicable account debtor within ninety (90) days following the Closing; and
(ii) any amounts owing to Buyer from the Companies and the Shareholders under
this Section 4.21 shall be deducted from the Escrow Amount pursuant to the
General Escrow Agreement.
4.22 Licenses and Permits. Each of the Companies possesses all
environmental licenses and permits and all other licenses and required
governmental or official approvals, permits or authorizations (collectively,
the "PERMITS") for its respective Business and operations, including the
operation of the Owned Premises and the Leased Premises, which Permits are
listed on Schedule 4.22. All such Permits are valid and in full force and
effect, each of the Companies is in full compliance with the requirements
thereof, and no proceeding is pending or threatened to revoke or amend any of
them. Schedule 4.22 specifies all Permits which must be obtained by AMI in
order for AMI to own the Purchased Assets and operate the Business of the
Companies consistent with past practice (the "NEW PERMITS"). Except for the
New Permits, none of the Permits is or will be impaired or in any way affected
by the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, and are freely transferable to AMI and will
be transferred to AMI at closing.
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4.23 Relationships with Customers and Suppliers; Affiliated Transactions.
No current supplier to any of the Companies of any items essential to the
conduct of its business has threatened to terminate its respective business
relationship with it for any reason. Except as set forth on Schedule 4.23,
none of the Companies or the Shareholder has any direct or indirect interest in
any customer, supplier or competitor of any of the Companies, or in any person
from whom or to whom any of the Companies leases real or personal property.
Except as set forth on Schedule 4.23, no officer, director or shareholder of
any of the Companies, nor any person related by blood or marriage to any such
person, nor any entity in which any such person owns any beneficial interest,
is a party to any Contract or transaction with any of the Companies or has any
interest in any property used by any of the Companies.
4.24 Intellectual Property. Schedule 4.24 sets forth a list of all
trademarks, service marks, trade names, copyrights, know-how, patents, trade
secrets, licenses (including licenses for the use of computer software
programs), and other intellectual property used in the conduct of each
Company's business (the "INTELLECTUAL PROPERTY") and all such rights, titles
and interests shall be transferred to AMI at Closing, free and clear of any
Liens or restrictions. Each of the Companies has full legal right, title and
interest in and to all Intellectual Property used in its respective business.
The conduct of the business of each of the Companies as presently conducted,
and the unrestricted conduct and the unrestricted use and exploitation of the
Intellectual Property, does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property, except as set forth in Schedule 4.24. None of the Intellectual
Property has ever been declared invalid or unenforceable, or is the subject of
any pending or threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like
claim, action or proceeding.
4.25 Contracts. Schedule 4.25 sets forth a list of each Contract to
which each of the Companies is a party or by which its properties or assets are
bound and which is material to its business, assets, properties or prospects
(the "PURCHASED CONTRACTS"), true and correct copies of which have been
provided to MTLM. The copy of each Purchased Contract furnished to MTLM is a
true and complete copy of the document it purports to represent and reflects
all amendments thereto made through the date of this Agreement. Except as set
forth on Schedule 4.25, none of the Companies has violated any of the material
terms or conditions of any Purchased Contract or any term or condition which
would permit termination or material modification of any Purchased Contract,
and all of the covenants to be performed by any other party thereto have been
fully performed and there are no claims for breach or indemnification or notice
of default or termination under any Purchased Contract. Except as set forth on
Schedule 4.25, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a material default by any of the
Companies under any Purchased Contract, and to the best knowledge of the
Companies and the Shareholder, no such event has occurred which constitutes or
would constitute a material default by any other party. Except as set forth in
Schedule 4.25, all Purchased Contracts are freely assignable to AMI without
notice to or the consent of any third party and, none of the Companies is
subject to any liability or payment resulting from renegotiation of amounts
paid it under any Purchased Contract. As used in this Section, Purchased
Contracts shall include, without limitation:
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(a) loan agreements, indentures, mortgages, pledges, hypothecations,
deeds of trust, conditional sale or title retention agreements, security
agreements, equipment financing obligations or guaranties, or other sources of
contingent liability in respect of any indebtedness or obligations to any other
Person, or letters of intent or commitment letters with respect to same; (b)
contracts obligating any of the Companies to purchase or sell products or
services; (c) leases of real property, and leases of personal property not
cancelable without penalty on notice of 60 days or less or calling for payment
of an annual gross rental exceeding $10,000.00; (d) distribution, sales agency
or franchise or similar agreements, or agreements providing for an independent
contractor's services, or letters of intent with respect to same; (e) employment
agreements, management service agreements, consulting agreements,
confidentiality agreements, noncompetition agreements and any other agreements
relating to any employee, officer or director of any of the Companies; (f)
licenses, assignments or transfers of trademarks, trade names, service marks,
patents, copyrights, trade secrets or know how, or other agreements regarding
proprietary rights or intellectual property; (g) any Contract relating to
pending capital expenditures by any of the Companies; and (h) other material
Contracts or understandings, irrespective of subject matter and whether or not
in writing, not entered into in the ordinary course of business by any of the
Companies and not otherwise disclosed on the Schedules.
4.26 Customer Lists and Recurring Revenue. The Companies have provided a
true, correct and complete list of each of the Companies' 20 largest customers
("MATERIAL CUSTOMERS") and suppliers together with the applicable percentage of
total sales or purchases, as applicable. True, correct and complete copies of
any agreements with such customers or suppliers which are anticipated to endure
beyond the Closing have been furnished by the Shareholder to MTLM. Other than
Material Customers, no customer of any of the Companies as of the date of this
Agreement accounts for more than 3% of the combined annual revenue of such
Company. The list of the Companies' 20 largest customers and suppliers sets
forth each Material Customer's name, address, account number, term of franchise
or agreement, billing cycle, type of service and rates charged.
4.27 Accuracy of Information Furnished to MTLM. No representation,
statement or information made or furnished by the Shareholder or the Companies
to MTLM or any of MTLM's representatives, including those contained in this
Agreement and the various Schedules attached hereto and the other information
and statements referred to herein and previously furnished by any of the
Companies or the Shareholder, contains or shall contain any untrue statement
of a material fact or omits any material fact necessary to make the information
contained therein not misleading, provided, however, that the Companies and the
Shareholder make no representations or warranties as to the accuracy or
completeness of the documents listed on Schedule 4.27, which have been prepared
by persons other than the Companies or the Shareholder, or their
representatives. The Shareholder and the Companies have provided MTLM with
true, accurate and complete copies of all documents listed or described in the
various Schedules attached hereto.
4.28 Investment Intent; Accredited Investor Status; Securities Documents.
The Companies are acquiring their respective interests in MTLM Shares for
their own account for investment and not with a view to, or for the sale in
connection with, any distribution of their
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interest, except in compliance with applicable state and federal securities
laws. Each of the Companies and the Shareholder has been provided, to its or
his satisfaction, the opportunity to discuss the transactions contemplated
hereby with MTLM and has had the opportunity to obtain such information
pertaining to MTLM as has been requested, including but not limited to filings
made by MTLM with the SEC under the Exchange Act. Each of the Companies and the
Shareholder is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act. Each of the Companies and the Shareholder
has such knowledge and experience in business and financial matters that it or
he is capable of evaluating the merits and risks of an investment in MTLM
Shares, and is capable of bearing the economic risks of such investment and is
able to bear a complete loss of its investment in MTLM Shares. Each of the
Companies and the Shareholder acknowledges that MTLM Shares have not been
registered under the Securities Act and understands that MTLM Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or such sale is permitted pursuant to an available exemption from such
registration requirement, in which case the Company desiring to sell the Common
Stock shall first supply to MTLM an opinion of counsel (which counsel shall be
satisfactory to MTLM and in whose opinion counsel to MTLM shall concur) that
such exemption is available. Each of the Companies and the Shareholder
acknowledges that it or he was not induced to acquire MTLM Shares through any
general solicitation or general advertising.
4.29 Business Locations. Except for the Owned Premises, as of the date
hereof, none of the Companies has any office or place of business other than as
identified on Schedules 4.14(a) and 4.14(b) and the principal place of business
and chief executive office (as such terms are used in subsection 9-401 of the
Uniform Commercial Code as enacted in the State of Connecticut as of the date
hereof) are indicated on Schedule 4.14(a) or 4.14(b), and all locations where
the equipment, inventory, chattel paper and books and records of each of the
Companies are located as of the date hereof are fully identified on Schedules
4.14(a) and 4.14(b).
4.30 Names; Prior Acquisitions. All names under which any of the
Companies does business as of the date hereof are specified on Schedule 4.30.
Except as set forth on Schedule 4.30, none of the Companies has changed its
name or used any assumed or fictitious name, or been the surviving entity in a
merger, acquired any business or changed its principal place of business or
chief executive office, within the past 10 years.
4.31 No Commissions. Except as specified on Schedule 4.31, none of the
Companies nor the Shareholder has incurred any obligation for any finder's or
broker's or agent's fees or commissions or similar compensation in connection
with the transactions contemplated hereby.
4.32 Inventory. All Purchased Assets that consist of inventory
(including raw materials and work-in-progress): (i) were acquired in the
ordinary course of business consistent with past practice; (ii) are of a
quality, quantity, and condition useable or saleable in the ordinary course of
business within the respective Company's normal inventory turnover experience;
and (iii) are valued at the lower of cost or net realizable market value. None
of the Companies has any material liability with respect to the return or
repurchase of any goods in the possession of any customer.
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4.33 Identification, Acquisition and Disposition of Assets and
Liabilities. Schedule 4.33(a) sets forth a listing of all of the assets and
properties (including real, personal and mixed) owned by each of the Companies
as of August 31, 1997. Not more than 10 days prior to the Closing Date, the
Companies shall deliver to MTLM a schedule reflecting any additions or
deletions to fixed assets as of such date relating to items which individually
have a value (defined as the higher of book value or fair market value) of
$10,000 or more (the "FIXED ASSET UPDATE SCHEDULE") and a revised Schedule
4.33(a) listing all of the assets and properties of each of the Companies as of
such date. Schedule 4.33(b) sets forth a listing of all of the liabilities of
each of the Companies as of August 31, 1997. Not more than 10 days prior to
the Closing, the Companies shall deliver to MTLM a revised Schedule 4.33(b)
listing all of the liabilities of each of the Companies as of such date. All
additions and deletions reflected in the Fixed Asset Update Schedule shall be
the result of transactions occurring in the ordinary course of business since
August 31, 1997 and no such additions or deletions will violate the covenants
contained in Section 6.1 nor would such additions or deletions have violated
the covenants contained in Section 6.1 if such addition or deletion had
occurred after the date of this Agreement.
4.34 Product Warranty. None of the Companies has any liability or
obligation (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, or demand against any of
them giving rise to any liability or obligation) for replacement or repair
thereof or other damages in connection therewith. No product sold, manufactured
or delivered by any of the Companies is subject to any guaranty, warranty, or
other indemnity beyond the applicable standard terms and conditions of sale or
lease. Schedule 4.25 includes copies of the standard terms and conditions of
sale for each of the Companies, including applicable guaranty, warranty, and
indemnity provisions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Shareholder and each of the Companies to
enter into this Agreement and to consummate the transactions contemplated
hereby, each of MTLM and AMI makes the following representations and warranties
to the Shareholder and each of the Companies:
5.1 Corporate Status. Each of MTLM and AMI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 Corporate Power and Authority. Each of MTLM and AMI has, or at the
time closing will have, the corporate power and authority to execute and
deliver this Agreement, to perform its respective obligations hereunder, and
consummate the transactions contemplated hereby. MTLM and AMI have or will
have taken at or prior to Closing all action necessary to authorize the
execution and delivery of this Agreement, the performance of their respective
obligations hereunder and the consummation of the transactions contemplated
hereby. The
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execution and delivery of this Agreement by MTLM and AMI, the performance by
them of their respective obligations hereunder and the consummation by them of
the transactions contemplated by this Agreement will not: (i) contravene any
provision of the Articles of Incorporation or Bylaws of either of them; (ii) in
any material respect violate or conflict with any law, statute, ordinance, rule
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon, or enforceable against either of them; (iii) conflict with, result in
breach of, or constitute a default (or any event which would, with the passage
of time or the giving of notice or both, constitute a default) under, or give
rise to a right to terminate, amend, modify, abandon or accelerate any material
contract; (iv) result in or require the creation or imposition of any lien upon
or with respect to any property or assets of MTLM or AMI; or (v) require the
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other Person,
except any SEC and other securities or exchange filings required to be made by
MTLM following the Closing Date.
5.3 Enforceability. Each of this Agreement and the Other Agreements has
been, or will have been at the time of Closing, duly executed and delivered by
each of MTLM and AMI and constitutes or will constitute a legal, valid and
binding obligation of each of MTLM and AMI, enforceable against each of MTLM
and AMI in accordance with their respective terms.
5.4 No Commissions. Neither MTLM nor AMI has incurred any obligation for
any finder's or broker's or agent's fees or commissions or similar compensation
in connection with the transactions contemplated hereby.
5.5 SEC Filings and Financial Information. MTLM has filed with the
Commission: (i) MTLM's Annual Report on Form 10-K for the year ended March 31,
1997, (ii) Quarterly Reports on Form 10-Q and 10-Q/A for the quarters ended
January 31, 1996, March 31, 1996, June 30, 1996, September 30, 1996, December
31, 1996, June 30, 1997 and September 30, 1997, (iii) all Current Reports on
Form 8-K required to be filed with the Commission since January 31, 1996, and
(iv) MTLM's definitive Proxy Statement dated November 20, 1997 for its Annual
Meeting of Shareholders, (v) any amendments to the foregoing and (vi) all
schedules and exhibits attached thereto (collectively, the "SEC Documents").
Except as set forth on Schedule 5.5 hereto, and except for the transactions
contemplated hereby, MTLM is not aware of any event that would require the
filing of a Form 8-K within fifteen (15) days following the Closing Date. Each
SEC Document, as of the date of the filing thereof with the Commission,
conformed in all material respects with the requirements of the Exchange Act,
and the rules and regulations thereunder and, as of the date of such filing or,
if such Disclosure Document was subsequently amended, as of the date of the
filing of any amendment thereto with the Commission, such Disclosure Document
did not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of MTLM, including the notes thereto,
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance
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with GAAP consistently applied (except as may be indicated in the notes
thereto) and present fairly the consolidated financial position of MTLM at the
dates thereof and of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal audit adjustments).
5.6 Capitalization. The authorized capital stock of MTLM consists of:
80,000,000 shares of Common Stock and 4,000,000 shares of Preferred Stock.
As of the date hereof, 30,130,916 shares of Common Stock are validly issued and
outstanding, fully paid and non-assessable, 36,000 shares of Preferred Stock
have been designated as Series A Convertible Preferred Stock, face amount
$1,000 per share, 25,000 shares of which are issued and outstanding, and 23,000
shares of Preferred Stock have been designated as Series B Convertible
Preferred Stock, face amount $1,000 per share, 20,000 shares of which are
issued and outstanding. As of the date hereof, 10,586,923 shares of Common
Stock are issuable pursuant to various stock option plans, warrants, and
pending contracts for business acquisitions, and no other shares of Common
Stock or Preferred Stock, or any rights, options, warrants, convertible
securities, subscription rights or other agreements or commitments of any kind
obligating MTLM to issue or sell any other shares of Common Stock or Preferred
Stock, are outstanding or have been authorized, as of the date hereof. All
issued and outstanding shares of capital stock of AMI are owned beneficially
and of record by MTLM. No other shares of capital stock of AMI or any rights,
options, warrants, convertible securities, subscription rights or other
agreements, or commitments of any kind obligating AMI to issue or sell other
such shares are outstanding or have been authorized.
5.7 MTLM Shares. Upon consummation of the Closing and the issuance and
delivery of certificates representing the MTLM Shares to the Companies, the
MTLM Shares will be duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock.
5.8 New Permits. There are no facts known to MTLM or AMI that will
materially and adversely affect their eligibility for the transfer or
reissuance of any New Permits.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 Affirmative Covenants Pending the Closing. At all times prior to the
Closing Date, each of the Companies covenants and agrees that it will:
(a) conduct the Business and operations only in the ordinary course
of business and use its commercially reasonable efforts consistent with
past practice to preserve intact its business organization, keep
available satisfactory relationships with suppliers, customers and others
having business relationships with it;
(b) maintain its cash management practices (including, without
limitation, the collection of Receivables and the payment of payables)
and its policies, practices and
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procedures with respect to collection of trade accounts receivable,
establishment of reserves for uncollectible accounts, accrual of accounts
receivable, inventory control, prepayment of expenses, payment of trade
accounts payable, accrual of other expenses, deferral of revenue, and
acceptance of customer deposits in accordance with past custom and
practice;
(c) cause its current insurance policies not to be canceled or
terminated or any of the coverage thereunder to lapse, unless,
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under
the canceled, terminated or lapsed policies to the extent practicable for
market premiums are in full force and effect;
(d) maintain, repair and replace its assets consistent with past
practices;
(e) use reasonable efforts to retain its present employees and to
maintain its relationships with its agents, distributors, licensees,
suppliers and customers;
(f) maintain its books, accounts and records in accordance with past
custom and practice as used in the preparation of the Financial
Statements;
(g) maintain in full force and effect the existence of all
Intellectual Property;
(h) comply in all material respects with all legal requirements and
contractual obligations applicable to or binding upon it;
(i) maintain all authorizations, consents, accreditation, Licenses,
Permits and approvals pertaining to it; and
(j) duly and timely file (by the due date or any duly granted
extension thereof) all income Tax reports an returns and non-income Tax
reports and returns required to be filed with federal, state, county,
local, foreign and other Tax authorities, promptly pay all Taxes
indicated by such returns or otherwise lawfully levied or assessed upon
it or any of its properties, unless it is contesting such levy or
assessment in good faith and, if appropriate, has established reasonable
reserves therefor, and withhold or collect and pay to the proper
governmental authorities or hold in separate bank accounts for such
payment all Taxes required by law to be so withheld or collected.
6.2 Negative Covenants Pending Closing. Except as set forth on Schedule
6.2, prior to the Closing Date, each of the Companies covenants and agrees that
except to the extent contemplated by this Agreement, it will not:
(a) issue, sell, pledge, dispose of, encumber, or, authorize the
issuance, sale, pledge, disposition, grant or encumbrance of: (i) any
shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares
of such capital stock, or any other ownership interest, of it; or (ii)
any of its
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respective assets, tangible or intangible, except in the ordinary course
of business consistent with past practice;
(b) (i) acquire (including, without limitation, for cash or shares
of stock or units, by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership or other business
organization or division thereof or any assets, or make any investment
either by purchase of stock or securities, contributions of capital or
property transfer, or, except in the ordinary course of business,
consistent with past practice, purchase any property or assets of any
other Person; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans or advances; or (iii) enter into any Contract other than
in the ordinary course of business, consistent with past practice;
(c) increase the compensation payable or to become payable to its
respective officers or directors, or, except as presently bound to do,
grant any severance or termination pay to, or enter into any employment
or severance agreement with, any of its respective directors
or officers, or establish, adopt, enter into or amend or take any action
to accelerate any rights or benefits under any collective bargaining,
bonus, profit sharing, trust, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(d) take any action other than in the ordinary course of business
and in a manner consistent with past practice with respect to accounting
policies or procedures;
(e) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of due and
payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date hereof
in the ordinary course of business and consistent with past practice;
(f) increase or decrease prices charged to its respective customers,
except for previously announced price changes or except in the ordinary
course of business, or take any other action which might reasonably
result in any material increase in the loss of customers through
non-renewal or termination of contracts or other causes;
(g) forgive, cancel, or waive any rights of material value or any
debts or other material obligations owed to it, in each case, to the
extent included in the Purchased Assets; or
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(h) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or
warranty in Article IV untrue or incorrect.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer hereunder shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, any or all of which
may be waived in whole or in part by Buyer:
7.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of the Companies and the
Shareholder contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as though made at and as of that time except: (i) for changes specifically
permitted by or disclosed pursuant to this Agreement; and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date. Each of the Companies and
the Shareholder shall have performed and complied with all of their respective
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date. Each of the Companies and the Shareholder shall
have delivered to MTLM a certificate, dated as of the Closing Date, duly signed
(in the case of each of the Companies by their respective chief executive
officer and chief financial officer), stating that such representations and
warranties are true and correct and that all such obligations have been
performed and complied with.
7.2 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Closing Date: (i) there shall have been no Material
Adverse Change to any of the Companies; (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the services, products or business of any of the Companies;
and (iii) none of the properties and assets of any of the Companies shall have
been damaged by fire, flood, casualty, act of God or the public enemy or other
cause (regardless of insurance coverage for such damage) which damages may have
a Material Adverse Effect thereon, and there shall have been delivered to MTLM
a certificate to that effect, dated the Closing Date and signed by or on behalf
of each of the Companies.
7.3 Corporate Certificate. The Shareholder shall have delivered to
MTLM: (i) copies of the certificate of incorporation and bylaws of each of the
Companies as in effect immediately prior to the Closing Date; (ii) copies of
resolutions adopted by the Board of Directors of each of the Companies and the
Shareholder authorizing the transactions contemplated by this Agreement;
and (iii) certificates of legal existence of each of the Companies issued by
the State of Connecticut and each other state in which each of them is
qualified to do business as of a date not more than thirty days prior to the
Closing Date, certified in each case as of the Closing Date by the Secretary as
being true, correct and complete.
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7.4 Opinions of Counsel. Buyer shall have received opinions dated as of
the Closing Date from counsel for each of the Companies and the Shareholder
substantially in the form of Exhibit D-2(a) and Exhibit D-2(b) attached
hereto.
7.5 Consents. MTLM shall have received written consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Company from any Person from whom
such consent or waiver is required under any Purchased Contract or instrument
as of a date not more than ten days prior to the Closing Date, or who, as a
result of the transactions contemplated hereby, would have such rights to
terminate or modify such Contracts or instruments, either by the terms thereof
or as a matter of law.
7.6 Governmental Approvals; HSR Act Compliance. All consents,
authorizations and approvals from, and all declarations, filings and
registrations with any governmental authority required to consummate the
transactions contemplated by this Agreement, including those set forth on
Schedule 4.6, shall have been obtained or made without the imposition of any
material conditions, and all applicable waiting periods under the HSR Act shall
have expired or terminated.
7.7 Securities Laws. MTLM shall have received all necessary consents
and otherwise complied with any state Blue Sky or securities laws applicable to
the issuance of MTLM Shares, in connection with the transactions contemplated
hereby.
7.8 Title Documents; Title Insurance. At the Closing: (i) the Company
shall have delivered all title documents evidencing the Purchased Assets held
by it in a form acceptable to MTLM for transfer on the books of the Company;
and (ii) MTLM shall have received title insurance commitments, policies and
riders acceptable to MTLM in its sole discretion with respect to the Owned
Premises and the Leased Premises. MTLM acknowledges receipt of Title
Commitment No. SP103070 of First American Title Insurance Company, effective
date of October 21, 1997 at 8:00 a.m. The Company shall deliver at the
Closing: (i) a title affidavit to enable Exceptions 1 and 3 of the Title
Commitment to be omitted; and (ii) releases or other assurances to enable
Exceptions 4, 7, 8, 9 and 10 to be omitted. MTLM has no objections to the
remaining Exceptions.
7.9 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Agreement or any other transaction contemplated hereby, and which, in the
judgment of MTLM, makes it inadvisable to proceed with the Agreement and other
transactions contemplated hereby.
7.10 Approvals; Consents. Within five (5) business days after the
execution hereof, the Board of Directors of MTLM and AMI shall have authorized
and approved this Agreement and the transactions contemplated hereby.
7.11 Intentionally Omitted.
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7.12 Intentionally Omitted.
7.13 Other Closing Deliveries. At Closing, the Buyer shall have
received:
(a) each Other Agreement to which any of the Companies or the
Shareholder is a party, duly executed by the Companies or the
Shareholders, as the case may be;
(b) resignations effective as of the Closing Date from such officers
and directors of the Company as MTLM or AMI shall have requested in
writing; and
(c) all other previously undelivered agreements, certificates,
documents, instruments or writings required to be delivered by the
Company and/or the Shareholder at or prior to the Closing pursuant to
this Agreement or otherwise in connection herewith, duly executed by the
Company and/or the Shareholder, as the case may be, who is a party
thereto.
7.14 Licenses and Permits. AMI shall have obtained all of the New
Permits and all assignable Permits shall have been duly assigned to AMI on or
before the Closing Date.
7.15 Employment Agreements. At Closing, MTLM shall have received each
of the Employment Agreements, executed by each of the parties thereto.
7.16 Lease and Option. At Closing, MTLM shall have received the Lease
and the Option Agreement, executed by each of the parties thereto.
7.17 Defined Benefit Plan. At Closing, MTLM shall have received a
certificate from CIGNA Retirement & Investment Services certifying to MTLM that
the Aerospace Metals, Inc. Hourly Pension Plan and the Aerospace Metals, Inc.
Salaried Retirement Plan are fully-funded as of the Closing Date.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
EACH OF THE COMPANIES AND THE SHAREHOLDER
The obligations of each of the Companies and the Shareholder to effect
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions, any or all of which may be waived in whole or
in part by each of the Companies and the Shareholder:
8.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material aspects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except: (i) for changes specifically permitted by or disclosed pursuant
to
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this Agreement; and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as
of such date. Buyer shall have performed and complied with all of its
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date. Each of MTLM and AMI shall have delivered to the
Shareholder a certificate, dated as of the Closing Date, and signed by an
executive officer, certifying that such representations and warranties are true
and correct and that all such obligations have been performed and complied
with.
8.2 Purchase Price. At the Closing, MTLM shall have delivered to the
Companies the Cash Portion minus the Escrow Amount and shares of Common Stock
representing the Stock Portion of the Purchase Price and shall have delivered
the Escrow Amount to the Escrow Agent.
8.3 No Adverse Litigation. There shall not be pending or threatened
any action or proceeding by or before any court or other governmental body
which shall seek to restrain, prohibit, invalidate or collect damages arising
out of the Agreement or any of the transactions contemplated hereby, and which
in the judgment of the Shareholder makes it inadvisable to proceed with the
Agreement or any other transaction contemplated hereby.
8.4 Other Closing Deliveries. At Closing, each of the Companies and
the Shareholder shall have received (a) each Other Agreement to which MTLM or
AMI is a party, duly executed by MTLM or AMI, as the case may be and (b) all
other previously undelivered agreements, certificates, documents, instruments
or writings required to be delivered by MTLM or AMI at or prior to the Closing
pursuant to this Agreement or otherwise in connection herewith, duly executed
by MTLM and/or AMI, as the case may be.
8.5 Opinion of Counsel. The Companies and the Shareholder shall have
received an opinion dated as of the Closing Date from counsel for each of MTLM
and AMI substantially in the form of Exhibit D-1 hereto.
8.6 Governmental Approvals; HSR Act Compliance. All consents,
authorizations and approvals from and all declarations, filings and
registrations with any Governmental Authority required to consummate the
transactions contemplated by this Agreement, including those set forth on
Schedule 4.6, shall have been obtained or made without the imposition of any
material conditions and all applicable waiting periods under the HSR Act shall
have expired or terminated.
8.7 Securities Laws. MTLM shall have received all necessary consents
and otherwise complied with any state Blue Sky or securities laws applicable to
the issuance of the MTLM Shares in connection with the transactions
contemplated hereby.
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ARTICLE IX
INDEMNIFICATION
9.1 Agreement by the Companies and the Shareholder to Indemnify. Each of
the Companies and the Shareholder agrees, jointly and severally, to indemnify,
defend and hold Buyer harmless from and against the aggregate of all Buyer
Indemnifiable Damages (as defined below); provided, however, that the aggregate
indemnification liability of the Companies and the Shareholder collectively
shall not exceed the Cash Portion of the Purchase Price (plus any costs of
collection), and the individual indemnification liability of the Shareholder
shall not exceed $12 million (plus any costs of collection).
(a) For purposes of this Agreement, "BUYER INDEMNIFIABLE DAMAGES"
means, without duplication, the aggregate of all expenses, losses, costs,
claims, deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses) incurred or
suffered by Buyer, to the extent: (i) resulting from any breach of a
representation or warranty made by any of the Companies or the
Shareholder in or pursuant to this Agreement; (ii) resulting from any
breach of the covenants or agreements made by any of the Companies or the
Shareholder pursuant to this Agreement; (iii) resulting from any
inaccuracy in any certificate or environmental report (except those
listed in Scheduled 4.27) delivered by any of the Companies or the
Shareholder pursuant to this Agreement; (iv) resulting from any Excluded
Liabilities; (v) resulting from any remediation, cleanup or other actions
required by this Agreement to be taken by the Companies or the
Shareholder that may be taken to ensure that the Owned Premises are in
compliance with all Environmental, Health and Safety Laws (the "CLEANUP
LIABILITY"); (vi) resulting from any default or failure to pay by the
account debtors with respect to any of the Receivables identified on
Schedule 4.21; or (vii) resulting from any fact, condition, event, act,
omission or other matter whose occurrence or failure to occur would have
constituted a breach of a representation or warranty made by any of the
Companies or the Shareholder in or pursuant to this Agreement were not
that representation or warranty qualified by the words "to the best
knowledge of the Companies and/or the Shareholder" or other words of
similar import.
(b) Each of the representations and warranties made by the
Shareholder and each of the Companies in this Agreement or pursuant
hereto shall survive for a period of 24 months after the Closing Date
except as follows: (i) the representations and warranties of the
Shareholder to the extent relating to tax attributes or liabilities with
respect to Taxes of each of the Companies, shall expire at the time the
period of limitations (including any extensions thereof pursuant to the
delivery of waivers of the applicable period of limitations) expires for
the assessment by the taxing authority of additional Taxes with respect
to which the representations and warranties relate; (ii) the
representations and warranties of the Shareholder and each of the
Companies contained in Sections 4.13 and 4.16 shall expire at the time
the latest period of limitations expires for the enforcement by an
applicable Governmental Authority of any remedy with respect to which the
particular
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representations and warranties of the Shareholder related and if there
is no such period of limitations, then the representations and warranties
shall continue indefinitely; and (iii) the representations and warranties
of the Shareholder and each of the Companies contained in Sections 4.1,
4.2, 4.3, 4.4, and 4.5 shall not expire, but shall continue indefinitely.
No claim for the recovery of Buyer Indemnifiable Damages may be asserted
by Buyer against any of the Companies or the Shareholder after such
representations and warranties shall thus expire; provided, however, that
claims for Buyer Indemnifiable Damages first asserted within the
applicable period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by
investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered
in connection herewith (except those documents listed on Schedule 4.27).
Each representation, warranty, covenant and agreement of the parties
contained in this Agreement is independent of each other representation,
warranty, covenant and agreement.
(c) In the event that Buyer believes it is entitled to a claim for
any Buyer Indemnifiable Damages hereunder, Buyer shall promptly give
written notice to the Companies and the Shareholder of such claim and the
amount or the estimated amount of such claim, and the basis for such
claim. If none of the Companies nor the Shareholder pays the amount of
the claim for Buyer Indemnifiable Damages to Buyer within 10 days, then
Buyer may take any action or exercise any remedy available to Buyer by
appropriate legal proceedings to collect the Buyer Indemnifiable Damages
or make a claim for payment pursuant to the Escrow Agreements.
9.2 Conditions of Indemnification of Buyer. The obligations and
liabilities of the Companies and the Shareholder hereunder with respect to the
indemnities pursuant to this Article IX resulting from any claim or other
assertion of liabilities by third parties (hereinafter called collectively
"BUYER CLAIMS"), shall be subject to the following terms and conditions:
(a) Buyer must give the Companies and the Shareholder notice of any
such Buyer Claim promptly after Buyer receives notice thereof;
(b) the Companies and the Shareholder shall have the right to
undertake, by counsel or other representatives of their own choosing, the
defense of such Buyer Claim; provided, however, if a Buyer Claim is made
against Buyer which exceeds the value of the Indemnification Security at
such time, Buyer shall have the right to control the defense of the Buyer
Claim;
(c) in the event that the Companies and the Shareholder shall elect
not to undertake such defense, or within a reasonable time after notice
of any such Buyer Claim from Buyer shall fail to defend, Buyer (upon
further written notice to the Companies and the Shareholder) shall have
the right to undertake the defense, compromise or settlement of such
Buyer Claim, by counsel or other representatives of its own choosing, on
behalf of and for the account and risk of the Companies and the
Shareholder (subject to the right
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of the Companies and the Shareholder to assume defense of such Buyer
Claim at any time prior to settlement, compromise or final determination
thereof);
(d) anything in this Section 9.2 to the contrary notwithstanding:
(i) Buyer shall have the right, at its own cost and expense, to have its
own counsel to protect its own interests and participate in the defense,
compromise or settlement of the Buyer Claim; (ii) none of the Companies
nor the Shareholder shall, without Buyer's written consent, settle or
compromise any Buyer Claim or consent to entry of any judgement which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to Buyer of a release from all liability in
respect of such Buyer Claim; and (iii) Buyer, by counsel or other
representatives of its own choosing and at its sole cost and expense,
shall have the right to consult with the Companies, the Shareholder and
their respective counsel or other representatives concerning such Buyer
Claim, and the Companies, the Shareholder and Buyer and their respective
counsel shall cooperate with respect to such Buyer Claim.
9.3 Agreement by Buyer to Indemnify. Each of MTLM and AMI agrees jointly
and severally to indemnify, defend and hold each of the Companies and the
Shareholder harmless from and against the aggregate of all Seller Indemnifiable
Damages (as defined below); provided, however, that the aggregate
indemnification liability of MTLM and AMI collectively shall not exceed the
Cash Portion of the Purchase Price (plus any costs of collection).
(a) For purposes of this Agreement, "SELLER INDEMNIFIABLE DAMAGES"
means, without duplication, the aggregate of all expenses, losses, costs,
claims, deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses) incurred or
suffered by any one or more of the Companies or the Shareholder to the
extent: (i) resulting from any breach of a representation or warranty
made by MTLM or AMI in or pursuant to this Agreement; (ii) resulting from
any breach of the covenants or agreements made by MTLM or AMI pursuant to
this Agreement; (iii) resulting from any inaccuracy in any certificate or
report prepared by or on behalf of MTLM or AMI delivered by MTLM or AMI
pursuant to this Agreement; or (iv) resulting from any default or failure
to pay or perform any of the Assumed Liabilities.
(b) Each of the representations and warranties made by MTLM and/or
AMI in this Agreement or pursuant hereto shall survive for a period of 24
months after the Closing Date. No claim for the recovery of Seller
Indemnifiable Damages may be asserted by any of the Companies or the
Shareholder against MTLM or AMI after such representations and warranties
shall thus expire; provided, however, that claims for Seller
Indemnifiable Damages first asserted within the applicable period shall
not thereafter be barred. Notwithstanding any knowledge of facts
determined or determinable by any party by investigation, each party
shall have the right to fully rely on the representations, warranties,
covenants and agreements of the other parties contained in this Agreement
or in any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the parties
contained in this Agreement is independent of each other representation,
warranty, covenant and agreement.
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(c) In the event that any of the Companies or the Shareholder
believes it or he is entitled to a claim for any Seller Indemnifiable
Damages hereunder, the claimant shall promptly give written notice to
MTLM and AMI of such claim and the amount or the estimated amount of
such claim, and the basis for such claim. If neither MTLM nor AMI pays
the amount of the claim for Seller Indemnifiable Damages to the claimant
within 10 days, then the claimant may take any action or exercise any
remedy available to it by appropriate legal proceedings to collect the
Seller Indemnifiable Damages.
9.4 Conditions of Indemnification of Companies and Shareholder. The
obligations and liabilities of MTLM and AMI hereunder with respect to the
indemnities pursuant to this Article IX resulting from any claim or other
assertion of liabilities by third parties (hereafter called collectively
"SELLER CLAIMS"), shall be subject to the following terms and conditions:
(a) the Company or the Shareholder asserting the claim for
indemnification, as the case may be (the "INDEMNIFIED PARTY"), must give
notice of any such Seller Claim promptly after the Indemnified Party
receives notice thereof;
(b) MTLM and AMI shall have the right to undertake, by counsel or
other representatives of their own choosing, the defense of such Seller
Claim; provided, however, if a Seller Claim is made which exceeds
$100,000 the Indemnified Party shall have the right to control the
defense of the Seller Claim;
(c) in the event that MTLM and AMI shall elect not to undertake such
defense, or within a reasonable time after notice of any such Seller
Claim from the Indemnified Party shall fail to defend, the Indemnified
Party (upon further written notice to MTLM or AMI) shall have the right
to undertake the defense, compromise or settlement of such Seller Claim,
by counsel or other representatives of its own choosing, on behalf of and
for the account and risk of MTLM and AMI (subject to the right of MTLM
and AMI to assume defense of such Seller Claim at any time prior to
settlement, compromise or final determination thereof);
(d) anything in this Section 9.4 to the contrary notwithstanding:
(i) the Indemnified Party shall have the right, at its own cost and
expense, to have its own counsel to protect its own interests and
participate in the defense, compromise or settlement of the Seller Claim;
(ii) nether MTLM nor AMI shall, without the Indemnified Party's written
consent, settle or compromise any Seller Claim or consent to entry of any
judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Seller Claim; and (iii) the
Indemnified Party, by counsel or other representatives of its own choosing
and at its sole cost and expense, shall have the right to consult with
MTLM and AMI and their respective counsel or other representatives
concerning such Seller Claim, and MTLM, AMI and the Indemnified Party and
their respective counsel shall cooperate with respect to such Seller
Claim.
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9.5 Effect of Insurance and Taxes.
(a) Any party or parties shall be deemed to have suffered a loss for
which the other party or parties shall be liable for indemnification only
to the extent that the party or parties claiming indemnification is or
are unable to obtain monetary recovery with respect thereto under an
insurance policy or from any other third party. If a party's entitlement
to such a recovery is discovered after payments of indemnification
hereunder, then the amount of such indemnification subject to such claim
of entitlement against such third party shall be refunded to the party or
parties who paid it, but only after and only to the extent of such
recovery from such insurance policy or third party. An indemnified party
who has received a recovery for a loss arising from a breach of a
representation, warranty or covenant under the Agreement which is subject
to indemnification shall have no right to recover twice for the same loss
under the indemnification provided in this Agreement.
(b) In determining the amount of any loss to an indemnified party,
any available tax benefits to the indemnified party, such as, for
example, the ability to take any deduction of all or any part of the
amount on such party's tax returns or the ability to exclude from income
for tax purposes amounts which would have been includable in such party's
income absent the loss, damage or expense, shall be taken into account,
such that only the net after tax effect of the loss or expense to the
indemnified party shall be considered a loss subject to the
indemnification provisions of this Agreement, provided, however, if any
indemnity payment is includable in the income of the indemnified party,
such payment shall be grossed up to the extent required to fully
compensate the indemnified party after taking into account the associated
tax liability.
(c) For purposes of this Section 9.5, the term "loss" means any
loss, liability, damage, cost or expense indemnified against under this
Article IX.
9.6 Minimum Threshold for Indemnification.
(a) By the Companies and the Shareholder. No indemnification shall
be paid by the Companies or the Shareholder hereunder until such time as
the amount for which indemnification would otherwise be due to any and
all parties entitled to indemnification from the Companies and the
Shareholder hereunder exceeds $50,000 in the aggregate, and then only to
the extent of the excess over $50,000; provided, however, that the
Companies and the Shareholder shall be obligated to pay to Buyer the full
amount of Buyer Indemnifiable Damages hereunder for any Buyer Claims,
regardless of the dollar amount claimed, arising from or related to: (i)
any sales taxes payable to the Connecticut Department of Revenue Services
as a result of operations of the Companies prior to the Closing Date; and
(ii) compliance with the Consent Order issued on January 9, 1998 by the
State of Connecticut Department of Environmental Protection regarding
Analytical and Effluent Violations, including without limitation the cost
of installing facilities necessary
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to achieve compliance with all material terms and conditions contained
in State Permit SP0000050, or any modifications thereof, issued by the
Commissioner of Environmental Protection of the State of Connecticut on
November 17, 1993, and any fines, penalties and charges relating thereto.
(b) By MTLM or AMI. No indemnification shall be paid by MTLM or AMI
hereunder until such time as the amount for which indemnification would
otherwise be due to any and all parties entitled to indemnification from
MTLM or AMI hereunder exceeds $50,000 in the aggregate, and then only to
the extent of the excess over $50,000.
9.7 Security for Indemnification Obligation. As security (the
"INDEMNIFICATION SECURITY") for the agreement by each of the Companies and the
Shareholder to indemnify and hold Buyer harmless as described in Section 9.1,
MTLM shall have the right to offset any Indemnifiable Damages against the
amounts held pursuant to the Escrow Agreements, subject to the provisions of
the Escrow Agreements as to agreement or final decision in legal proceedings
before release of funds, and provided that the amounts held pursuant the
Cleanup Escrow Agreement shall only be used to offset those Indemnifiable
Damages resulting from the Cleanup Liability. Notwithstanding any provision of
this Agreement or the Escrow Agreement to the contrary, the obligations of each
of the Companies and the Shareholder to indemnify and hold MTLM harmless with
respect to the Cleanup Liability shall not be limited to the amounts held
pursuant to the Cleanup Escrow Agreement. The administration, investment and
release of funds held pursuant to the Escrow Agreements shall, to the extent
not inconsistent with this Agreement, be governed by the terms of the Escrow
Agreements.
9.8 Collection of Receivables. AMI agrees to use all reasonable and
normal efforts to collect the Receivables and will cooperate with the Companies
and the Shareholder in such collection efforts, both before and after that date
which is ninety (90) days following the Closing. Payments received from
customers after the Closing shall be applied against the oldest Receivables
first unless a customer specifically directs otherwise in writing. If material
which is covered by uncollected Receivables is returned after the Closing, AMI
shall credit the value of the returned material against the uncollected
Receivables. The Companies agree to pay to AMI, promptly after AMI delivers
written notice to the Companies, an amount equal to any reduction in the amount
of a Receivable due to a sales adjustment made by a customer after the Closing.
If AMI subsequently collects any portion of a Receivable for which the
Companies and/or the Shareholder have paid AMI pursuant to the Section 4.21
guaranty of Receivables (whether directly or through a deduction from the
Escrow Amount), AMI will reimburse the Companies and/or the Shareholder by
payment in the amount of such subsequent collection to the source from which
such indemnification payment came, i.e., either the Companies and/or the
Shareholder if they paid AMI directly or the Escrow Amount if the
indemnification payment was deducted therefrom. AMI agrees that it will, at
the request of the Companies and/or the Shareholder, assign and transfer to the
Companies any uncollected Receivables for which AMI has been paid
indemnification pursuant to Section 4.21, and upon such assignment the
Companies will be free to use any lawful means to collect such Receivable.
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ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other disposition
after the Closing Date of the Common Stock:
10.1 Legend. Each certificate representing the Common Stock shall bear the
following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
MTLM may, unless a registration statement is in effect covering the Common
Stock, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
10.2 Registration Rights. MTLM shall execute and deliver to the Companies
a registration rights agreement concerning the MTLM Shares substantially in the
form attached as Exhibit H hereto.
ARTICLE XI
ADDITIONAL AGREEMENTS
11.1 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
11.2 Compliance with Covenants. The Shareholder shall cause each of the
Companies to comply with all of the respective covenants of the Companies under
this Agreement.
11.3 Cooperation. Each of the parties agrees to cooperate with the other
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation or the rules of the Nasdaq
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Stock Market in connection with the transactions contemplated by this
Agreement and to use their respective best efforts to agree jointly on a method
to overcome any objections by any Governmental Authority to any such
transactions.
11.4 Access to Information. From the date hereof to the Closing Date,
each of the Companies and MTLM shall (and shall cause its respective directors,
officers, employees, auditors, counsel and agents to) afford each other and
their officers, employees, auditors, counsel and agents reasonable access at
all reasonable times to its properties, offices, and other facilities, to its
officers and employees and to all books and records, and shall furnish such
persons with all financial, operating and other data and information as may be
requested. No information provided to or obtained by any of the parties hereto
shall affect any representation or warranty in this Agreement.
11.5 Notification of Certain Matters. The Shareholder and MTLM shall give
prompt notice to the other of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition, or agreement contained herein
not to be complied with or satisfied.
11.6 Tax Treatment. Each party to this Agreement has sought and received
its own advice as to the tax treatment of the transactions covered by this
Agreement and is not relying on any opinions of the other parties or their
respective advisers with respect thereto. All parties hereto agree to fully
and completely comply with the reporting requirements of the Internal Revenue
Service.
11.7 No Other Discussions. None of the Companies, the Shareholder, nor any
of their respective Affiliates, employees, agents or representatives shall: (i)
initiate or encourage the initiation by others of discussions or negotiations
with third parties (other than MTLM or AMI) or respond to solicitations by
third persons relating to any merger, sale, business combination, or other
disposition of any substantial part of the assets, business or properties of
any of the Companies (whether by merger, business combination, consolidation,
sale of stock or otherwise); (ii) respond in any way to an unsolicited
acquisition proposal; (iii) participate in any discussions or negotiations
relating to any acquisition proposal, or furnish any confidential
information concerning any of the Companies to any party other than Buyer; or
(iv) enter into any oral or written agreement or understanding that would have
the effect of preventing the consummation of the transactions contemplated by
this Agreement. Each of the Companies and the Shareholder will immediately
notify MTLM if any of the Companies or the Shareholder receives an acquisition
proposal or any inquiry which they reasonably believe could lead to an
acquisition proposal.
11.8 Restrictive Covenants. In order to assure that MTLM will realize the
benefits of this Agreement and in consideration of the transactions set forth
in this Agreement, each of the Companies and the Shareholder agrees with MTLM
that they shall not for a period of sixty (60) months from the Closing Date:
(a) directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or
stockholder of any company or
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business, engage in any business activity in the Restricted Territory (as
defined below), and which is directly or indirectly in competition with
the business conducted by the Companies at the Closing Date; provided,
however, that, the beneficial ownership of less than 5% of the shares of
stock of any corporation having a class of equity securities actively
traded on a national securities exchange or over-the-counter market shall
not be deemed, in and of itself, to violate the prohibitions of this
Section. As used in this Section 11.8, the term "Restricted Territory"
means all states in which MTLM or any of its Subsidiaries operates a
facility on the Closing Date;
(b) directly or indirectly: (i) induce any Person which is a
customer of any of the Companies at the Closing Date to patronize any
business directly or indirectly in competition with the business
conducted by any of the Companies; (ii) canvass, solicit or accept from
any Person which is a customer of any of the Companies any such
competitive business; or (iii) request or advise any Person which is a
customer of any of the Companies at the Closing Date to withdraw, curtail
or cancel any such customer's business with any of the Companies;
(c) without the prior written consent of MTLM, directly or
indirectly, employ, or knowingly permit any company or business directly
or indirectly controlled by the Companies or the Shareholder, to employ,
any person who was employed by any of the Companies at or within six
months prior to the Closing Date, or in any manner seek to induce any
such Person to leave his or her employment;
(d) directly or indirectly, at any time following the Closing Date,
in any way utilize, disclose, copy, reproduce or retain in their
possession any of the Companies' proprietary rights or records,
including, but not limited to, any of their customer lists.
Each of the Companies and the Shareholder agrees and acknowledges that the
restrictions contained in this Section 11.8 are reasonable in scope and
duration and are necessary to protect MTLM after the Closing Date. If any
provision of this Section as applied to any party or to any circumstance is
adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of this
Agreement. If any such provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision, and/or to
delete specific words or phrases, and in its reduced form, such provision shall
then be enforceable and shall be enforced. The parties agree and acknowledge
that the breach of this Section will cause irreparable damage to MTLM and upon
breach of any provision of this Section, MTLM shall be entitled to injunctive
relief, specific performance or other equitable relief; provided, however, that
this shall in no way limit any other remedies which MTLM may have (including,
without limitation, the right to seek monetary damages).
11.9 Trading in MTLM's Common Stock. Except as otherwise expressly
consented to by MTLM, from the date of this Agreement until the Closing Date,
none of the Companies, nor
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the Shareholder (nor any Affiliates thereof) will directly or indirectly
purchase or sell (including short sales) any shares of the Common Stock in any
transactions effected on the Nasdaq Stock Market or otherwise.
11.10 HSR Act Compliance. Each of the Companies, the Shareholder and MTLM
will as promptly as practicable, but in no event later than 5 business days
following the execution and delivery of this Agreement, file or cause to be
filed with the United States Federal Trade Commission (the "FTC") and the
United State Department of Justice (the "DOJ") the notification and report form
required for the transactions contemplated hereby and any supplemental
information requested in connection therewith pursuant to the HSR Act. Any
such notification and report form and supplemental information will be in
substantial compliance with the requirements of the HSR Act. Each of the
Companies, MTLM and the Shareholder will furnish to the others such necessary
information and reasonable assistance as the others may request in connection
with the preparation of any filing or submission which is necessary under the
HSR Act. Each of the Companies, the Shareholder and MTLM will keep each other
apprised of the status of any communications with, and inquiries or requests
for additional information addressed to the entity that filed a notification
and report form as an acquired or acquiring person from, the FTC or the DOJ and
shall comply or cause its respective filing person to comply promptly with any
such inquiry or request. Each of the Companies, the Shareholder and MTLM will
use commercially reasonable efforts to obtain any clearance required under the
HSR Act for the purchase and sale of the MTLM Shares.
11.11 Corporate Authority. MTLM, AMI, each of the Companies and the
Shareholder agree to use their individual best efforts to obtain the
authorizations required for each to execute and deliver this Agreement and to
perform each of their respective obligations hereunder and to consummate the
transactions contemplated hereby.
11.12 Taxes and Transfer Taxes.
(a) The Companies shall be liable for and shall pay all Taxes
(whether assessed or unassessed) applicable to the Business or the
Purchased Assets, in each case attributable to periods (or portions
thereof) prior to the Closing Date. Buyer shall be liable for and shall
pay (i) all Taxes reflected as a liability on the Closing Date Statement
and (ii) all Taxes (whether assessed or unassessed) applicable to the
Business or the Purchased Assets, in each case attributable to periods
(or portions thereof) beginning on the Closing Date. For purposes of
this paragraph (a), any period beginning before and ending after the
Closing Date shall be treated as two partial periods, one ending on the
Closing Date and the other beginning after the Closing Date.
(b) Notwithstanding Section 11.13(a), any Tax (including a sales
Tax, use Tax, or gains Tax) directly attributable to the sale or transfer
of the Purchased Assets, shall be paid by the Companies. Buyer, each of
the Companies and the Shareholder agree to timely sign and deliver such
certificates or forms as may be necessary or appropriate to establish an
exemption from (or otherwise reduce), or make a report with respect to,
such Taxes.
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11.13 Other Agreements. Upon the Closing, each party hereto that is a
signatory to any of Exhibits A through I (the "OTHER AGREEMENTS") agrees to
execute and deliver such Other Agreements, as appropriate, to the other parties
to such Other Agreements, and each party who is a married individual shall
cause his spouse to execute all consents requested by MTLM to consummate the
transactions set forth herein. The parties agree that the non-competition
covenants contained in the Employment Agreements with the Shareholder attached
as Exhibit I are an integral part of this Agreement.
11.14 Employment Procedure.
(a) The Companies shall retain all liability for wages and payroll
deductions with respect to employees of the Companies for the period
ending on the day preceding the Closing Date.
(b) Effective as of the Closing Date, each of the Companies shall
assign all of its rights, and Buyer shall assume and shall timely perform
all of the Companies' obligations, under the collective bargaining
agreements listed in Schedule 4.17.
(c) Pursuant to IRS Revenue Procedure 84-77, Buyer shall assume the
Companies' obligations to furnish Forms W-2 to Employees for the calendar
year in which the Closing Date occurs.
(d) Nothing in this Section 11.14 express or implied shall confer
upon any Employee, any legal representative thereof or any third party
rights, benefits or remedies, including any right to employment, or
continued employment for any specified period, of any nature or kind
whatsoever under or by reason of this Agreement or any of the Other
Agreements.
(e) Buyer shall retain the right to amend or terminate any Employee
Benefit Plan, in accordance with the terms of such Employee Benefit Plan.
11.15 Corporate Name Change. Each of the Companies shall, immediately
following the Closing, execute and deliver to MTLM for filing all documents or
certificates necessary to change the legal, trade or assumed names of the
Companies to names which do not, in the sole discretion of MTLM, create any
likelihood of confusion with the names "Aerospace Metals, Inc.", "Aerospace
Parts Security, Inc." "Suisman & Blumenthal", and "The Suisman Titanium
Corporation," any abbreviations or derivations thereof, or any other names
which are included in the Intellectual Property.
11.16 Payments of Accounts Receivable. In the event any of the Companies
or the Shareholder shall receive any instrument of payment of any of the
Receivables not repurchased from AMI by the Companies or the Shareholder, the
Companies or the Shareholder, whichever the
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case may be, shall forthwith deliver such payment or instrument to AMI,
endorsed where necessary, without recourse, in favor of AMI.
11.17 Securities Laws. Prior to or following the Closing, as applicable,
MTLM and AMI shall use reasonable efforts to obtain all necessary consents and
to otherwise comply with any state Blue Sky or securities laws applicable to
the issuance of MTLM Shares, in connection with the transactions contemplated
by this Agreement.
11.18 New Permits and Environmental Due Diligence. MTLM or AMI shall
duly file and diligently pursue all applications for New Permits and pay all
associated filing and permit transfer fees. The Companies shall use their best
efforts to assist the prompt transfer or assignment to AMI of all New Permits.
Any application for the renewal of any License due prior to the Closing Date
has been, or will be, timely filed prior to the Closing date. On and after
execution of this Agreement, the Companies will take all actions necessary to
assist AMI in obtaining all New Permits.
11.19 Environmental Covenants of the Companies.
(a) Remediation of Environmental Conditions.
(1) For purposes of this Agreement, the following words and
phrases shall have the meanings set forth below:
(i) "ENVIRONMENTAL CONDITION" means the Release or
Discharge or threatened Release or Discharge of Hazardous
Substances at, upon, under or emanating from the Owned
Premises.
(ii) "REMEDIATION" means all investigative, clean-up and
corrective actions, and the planning thereof, including
without limitation, corrective, remedial or removal actions,
and pre- or post-remediation monitoring, conducted under
applicable Environmental, Health and Safety Laws concerning
any Environmental Condition (including but not limited to
Remediation required as a result of governmental action
and/or litigation). Remediation shall include, without
limitation, groundwater monitoring, soil boring and soil
sampling, sample collection and analysis, delineation of
source areas, removal of floating product, bioremediation,
groundwater collection and treatment, off-site soil or debris
disposal, soil vapor sampling, monitoring or extraction, and
underground tank removal.
(iii) "REMEDIATION STANDARDS" shall mean the Remediation
Standard Regulations, Conn. Agencies Regs. 22a-133k-1 et seq.
adopted by the Connecticut Department of Environmental
Protection. The Companies may, within their sole discretion,
execute and record environmental land use restrictions
consistent with Connecticut General Statutes 22a-133o, and
the
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Conn. Agencies Regs 22a-133q-1 et seq., to allow
application of less stringent Remediation Standards,
consistent with the current use of the Owned Premises or any
other ferrous or non-ferrous scrap metal processing or
recycling operations, and MTLM and AMI shall subordinate any
interest they have in the Owned Premises or Leased Premises,
including but not limited to its leasehold interests, to such
restrictions, provided that such subordination will not
unreasonably interfere with AMI's business conducted pursuant
to the New Lease.
(2) Transfer Act Compliance. The Companies shall be
responsible for filing the appropriate forms with the Connecticut
Department of Environmental Protection ("DEP") pursuant to the
provisions of Connecticut General Statutes 22a-134 et seq. (the
"TRANSFER ACT"). The Companies shall act as the certifying party
with respect to the Transfer Act in connection with this
transaction.
(3) Remediation of the Owned Premises and Leased Premises.
(i) The Companies shall be solely responsible for the
Remediation of any Environmental Condition existing on or
emanating from the Owned Premises or Leased Premises prior to
the Closing Date to the extent required by Environmental,
Health and Safety Laws. At a minimum, however, the Companies
shall implement the Remediation Plan set forth in Schedule
11.19(a) (the "REMEDIATION PLAN") in accordance with the
schedule set forth therein. If during the Remediation, any
railroad ties are removed from the Owned Premises or Leased
Premises which Figures 4-2, 4-3 or 4-4, as applicable, of the
Remediation Plan indicate will be present after the
Remediation is completed, the Companies will replace these
railroad ties at the positions indicated in Figures 4-2, 4-3
or 4-4, as applicable, of the Remediation Plan. The Companies
shall reimburse MTLM and AMI on a time and materials basis
for the reasonable fees paid by them to Continental Placer
Inc. or such other environmental engineering firm selected by
MTLM and AMI as is reasonably satisfactory to the Companies
in connection with its work on the preparation of and
overseeing, on a regular and ongoing basis until completion,
the implementation of the Remediation Plan. An estimate for
such work is set forth in Schedule 11.19(a) attached hereto.
The Companies reserve the right to appeal any Governmental
Authority's determination regarding the appropriate
requirements for the Remediation. The Companies shall have
the right to seek application of any alternative or site
specific remediation standards or any variances approved by
the Commissioner of Environmental Protection that the
Companies deem necessary or desirable, provided that the
application of such alternative or site specific remediation
standards or of such variance shall be consistent with the
current use of the Owned
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Premises or other ferrous or non-ferrous scrap metal
processing and recycling operations.
(ii) The Companies shall also be responsible for the
Remediation of Total Petroleum Hydrocarbons ("TPH") Released
from operations in the ordinary course after the Closing Date
in the container storage area west of the Main building on
the South Property (as shown on the Remediation Plan); and
Hazardous Substances Discharged or Released from operations
in the ordinary course after the Closing Date in the
following specific locations on the North Property: the crane
runway, and the pads around the Shredder (as shown on the
Remediation Plan), until the Companies complete the
improvements as required in Section 11.21 of this Agreement in
each such location. Nothing in this Section 11.19(a)(3)(ii)
shall relieve MTLM and AMI of responsibility for the
Remediation of any Environmental Conditions created on and
after the Closing Date from the operation of the Business
other than in the ordinary course, including, without
limitation, Discharges or Releases caused by the negligent or
intentional conduct of MTLM or AMI employees or agents.
(iii) In accordance with the Remediation Plan, the
Companies expect to utilize bioremediation techniques for the
Remediation of certain TPH-contaminated soils. The
Remediation Plan sets forth certain milestones ("MILESTONES")
with respect to the excavation, on-site relocation and
treatment of those soils. Specifically, all TPH-contaminated
soils in the following specified areas (as identified in the
Remediation Plan) must by the dates indicated have been
excavated, relocated and treated by bioremediation to a level
no greater than the level required by the Remediation
Standards:
(A) By December 31, 1998 (the "PHASE ONE
MILESTONE"), all TPH-contaminated soils in Areas A and
B in the Container Storage Area, the Overhead Crane
Area, and the Shredder Area;
(B) By December 31, 1999 (the "PHASE TWO
MILESTONE"), all TPH-contaminated soils in the vicinity
of the ASP Building; and
(C) By December 31, 2000 (the "PHASE THREE
MILESTONE"), all TPH-contaminated soils in Area C of
the Container Storage Area and in all remaining
Non-Critical operational areas designated in the
Remediation Plan.
In the event that a Milestone is not met, Continental Placer
Inc. or such other party as MTLM shall designate to the
Companies in writing
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("MTLM'S CONSULTANT") shall, in its sole discretion,
following consultation with the Companies's remediation
consultant, determine whether to extend the applicable
Milestone to permit further bioremediation efforts. If
MTLM's Consultant determines not to extend the date of the
Milestone, the Companies shall promptly discontinue their
efforts to remediate the TPH-contaminated soils by
bioremediation and shall instead meet their obligations under
the Remediation Plan through removal and off-site disposal of
the TPH-contaminated soils. If MTLM's Consultant determines
to extend the date of a Milestone, it shall also, in its sole
discretion, determine whether and to what extent any
subsequent Milestone or Milestones shall also be extended.
All determinations by MTLM's Consultant under this subsection
(iii) shall be binding upon and shall not be appealable by the
Companies.
(iv) During the course of their implementation of the
Remediation Plan, the Companies shall at all times keep
MTLM's Consultant fully advised concerning all aspects of the
Remediation and shall provide to the Consultant all data and
other information with respect to the Remediation that the
Consultant shall request. In addition, the Companies shall
provide MTLM's Consultant with quarterly written reports
concerning the implementation of the Remediation Plan, in
such form and detail as the Consultant shall reasonably
request and shall afford the Consultant full opportunity to
comment upon and make non-binding suggestions concerning the
Remediation.
(v) The Companies covenant that completion of the Phase
One portion of the Remediation Plan shall not in any way
interfere with the operation of the fragmentizer equipment
used in connection with the Business.
(4) Satisfaction of Companies' Remediation Obligation.
(i) If, as a result of the aforementioned Transfer Act
filing, the Commissioner of Environmental Protection requires
DEP review and approval of Remediation of the Owned Premises
and Leased Premises, the Companies' responsibility for such
Remediation shall be satisfied upon written approval by the
DEP that all Remediation has been performed in accordance
with the Remediation Standards except postremediation
monitoring or natural attenuation monitoring.
(ii) If the Commissioner of Environmental Protection
allows a Licensed Environmental Professional ("LEP") to
verify that Remediation has been performed in accordance with
the Remediation Standards, the Companies' responsibility for
such Remediation shall be satisfied upon
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written verification by Roy F. Weston, Inc. or another LEP
reasonably satisfactory to MTLM that the Remediation has been
performed in accordance with the Remediation Standards except
postremediation monitoring or natural attenuation monitoring,
or that no Remediation is necessary to achieve compliance with
the Remediation Standards. Upon issuance of such
verification, the Companies shall cause the LEP to
simultaneously certify such verification to MTLM and AMI.
(iii) Upon receipt of documentation under Sections
11.19(a)(4)(i) or (ii), above that the Environmental
Conditions and/or Remediation of the Owned Premises and
Leased Premises meet the Remediation Standards in effect at
that time, the Companies shall have no further responsibility
for the Remediation of the Owned Premises and Leased
Premises; provided, however, that nothing contained in this
Section 11.19(a)(4) shall relieve the Companies or the
Shareholder from liability for inaccuracy or breach of any of
the representations, warranties or covenants contained in
this Agreement. If postremediation monitoring or natural
attenuation monitoring is required it shall be the
responsibility of the Companies to conduct such monitoring
(which responsibility of the Companies shall continue after
purchase of the Owned Premises by Buyer), and if further
remediation of Environmental Conditions existing
on or emanating from the Owned Premises or Leased Premises
prior to the Closing Date is necessary based upon the results
of such monitoring, the Companies shall take such further
action to remediate the Owned Premises and Leased Premises in
accordance with the Remediation Standards (which
responsibility of the Companies shall continue after purchase
of the Owned Premises by Buyer).
(5) The Companies' Cooperation with Buyer during Remediation.
In connection with the Remediation of the Owned Premises and Leased
Premises, the Companies covenant that they shall take all
reasonable steps to minimize interference with Buyer's ability to
conduct operations in the ordinary course, including the provision
of reasonable advance notice of work to be performed.
(b) Off-Site Environmental Liabilities. The Companies covenant that
they shall be responsible for all actions brought or claims made pursuant
to any Environmental, Health and Safety Laws arising from the alleged
Discharge or Release, or threatened Discharge or Release of Hazardous
Substances transported off the Owned Premises or Leased Premises prior to
the Closing Date.
11.20. Environmental Covenants of Buyer.
(a) Buyer covenants that on and after the Closing Date, it will
comply with all applicable Environmental, Health and Safety Laws and will
maintain compliance in all material respects with the terms and
conditions of all Permits required for the ongoing
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operation of the Business and its use and occupancy of the Owned Premises
and Leased Premises, as more fully described in the Lease, a copy of which
is attached hereto as Exhibit A.
(b) Buyer covenants that on and after the Closing Date and until the
expiration of the term of the Lease, including any extensions thereof, it
will continue to operate the Business and will use and occupy the Owned
Premises and Leased Premises in substantially the same manner (as to type
of business) as the Companies currently operate the Business and use and
occupy the Owned Premises and Leased Premises. In addition Buyer may
engage in other ferrous and non-ferrous scrap metal processing and
recycling operations without the consent of the Companies or the lessor
under the Lease, and such other uses and activities as may be approved
in writing by the Companies and the lessor under the Lease.
(c) Remediation of Environmental Conditions Arising After Closing
Date. Buyer covenants that it shall be responsible for remediation of
Environmental Conditions resulting from its operations on the Owned
Premises and the Leased Premises after the Closing Date, except as set
forth in Section 11.19(a)(3) herein with respect to the Remediation of
certain post-closing Releases from operations in the ordinary course in
the areas specified in Section 11.19(a)(3). In addition to the
obligations in the foregoing sentence, with respect to each of the
locations identified in Section 11.19(a)(3), upon completion of the
improvements as required in Section 11.21 of this Agreement, Buyer shall,
for each respective location, be responsible for Remediation of any and
all Hazardous Substances Discharged or Released from the operations of
the Business at each such location.
(d) Buyer's Cooperation with Companies' Remediation.
(i) Buyer covenants that, except as provided in
subsection (ii) below, it will use reasonable efforts not to
materially interfere with or substantially increase the cost of
the Companies' performance of Remediation of any Environmental
Condition or any other obligations of the Companies required by
this Agreement other than in the ordinary course of business.
Buyer also covenants that it will cooperate with any application
by the Companies for any alternative or site specific remediation
standards, or any variances sought pursuant to the Remediation
Standards.
(ii) In the event that Buyer elects to modify or expand
its operations or activities in a way that materially
interferes with the Companies' performance of Remediation of any
Environmental Condition, Buyer shall reimburse the Companies for
any additional costs that they incur in the Remediation in excess
of those costs that the Companies would otherwise have incurred
in implementing the Remediation Plan (the "INCREMENTAL COSTS"),
and any Milestones and other conditions of the Remediation Plan
shall be extended to reflect such interference; provided,
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however, that Buyer may not modify or expand its operations or
activities in a way that prevents or substantially
interferes with the Companies' compliance with the orders or
directives of any Governmental Entity or prevents or
substantially jeopardizes the Companies' ability to complete
the Remediation Plan by December 31, 2001. Without limiting
the foregoing, if Buyer requires access to certain on-site
land for new operations and wishes the Companies to excavate
TPH-contaminated soils and replace those soils with clean
fill in a manner that is inconsistent with the Remediation
Plan, Buyer shall reimburse the Companies for any Incremental
Costs incurred and shall modify the Milestones to reflect the
consequences of such requirement.
(iii) Buyer shall allow the Companies to use its
treatment facilities in connection with the Companies'
Remediation, as long as: (x) such use does not unreasonably
interfere with Buyer's operations, and (y) the Companies
compensate Buyer for any incremental costs incurred by Buyer
in connection with the use of its facilities. In particular,
and without limiting the foregoing, Buyer covenants that it
will continue to operate and maintain the wastewater
treatment system in compliance with its wastewater discharge
permit, and will accept and treat wastewater collected in the
Companies' remediation trench system, as long as inclusion of
wastewater from the trench system does not result in a
violation of Buyer's wastewater discharge permit, and as long
as the Companies reimburse Buyer for any increased costs to
Buyer in operating Buyer's wastewater treatment system. To
the extent reasonably necessary, the Companies shall have
full right and privilege to the use of all utilities which
are reasonably necessary for performance of the Companies'
environmental obligations pursuant to this Agreement. The
Companies shall promptly reimburse Buyer for the costs of any
utilities consumed by the Companies.
(e) In recognition of the desirability of coordinating
communications with environmental agencies, unless otherwise required by
law, Buyer shall generally allow the Companies to serve as the liaison
with the DEP or other agencies with jurisdiction over Environmental
Conditions with respect to any Environmental Condition for which the
Companies are responsible, and, in the event Buyer desires to engage in
direct communications with the DEP or other such agency with respect to
any Environmental Condition for which the Companies are responsible,
Buyer will not initiate any such communications without first notifying
the Companies and affording the Companies a reasonable opportunity to
participate in such communications. Buyer will be provided with a
reasonable opportunity to comment on the Companies' proposed Remediation
plans. However, as long as such plans are consistent with the
Remediation Plan set forth in Schedule 11.19(a), final decisions as to
the manner and nature of the specific plans by which the Remediation Plan
is implemented shall be at the sole discretion of the
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Companies. Buyer shall promptly refer to the Companies any DEP or other
agency communications relating to any Environmental Condition which are
received by Buyer.
(f) Off-Site Environmental Liabilities. Buyer covenants that it
shall be responsible for all actions brought or claims made pursuant to
any Environmental, Health and Safety Laws arising from the alleged
Discharge or Release or threatened Discharge or Release of Hazardous
Substances transported off the Owned Premises or Leased Premises on or
after the Closing Date. This provision shall not apply to Hazardous
Substances transported off site by the Companies or their agents in
connection with the Remediation of the Owned Premises and Leased Premises
conducted by the Companies under this Agreement.
11.21 Covenants as to Management and Containment Improvements.
(a) As an adjunct to Remediation of the Owned Premises and Leased
Premises in the South and North Properties, (and in order to avoid
recontamination of certain portions of the Owned Premises and Leased
Premises, as shown on Schedule 11.19(a) after Remediation), the Companies
shall use their best efforts to complete no later than one year after the
Closing Date, but in no event later than the eighteen (18) month
anniversary of the Closing Date at their sole cost and expense, certain
improvements in the South and North Properties in the following specific
locations: (i) container storage area (west of the Main building on the
South Property), (ii) crane runway (North Property); and (iii) pads
around the Shredder (North Property). Schedule 11.19(a) attached hereto
contains a design of the required improvements. No changes to the design
or scope of the improvements, or reduction in size of the pads or
canopies included as part of the improvements, shall be made without the
prior written approval of MTLM's Consultant.
(b) Construction of the improvements described in Schedule 11.19(a)
shall be undertaken in phases and shall be closely coordinated between
the Companies and MTLM and AMI so as to minimize interference with MTLM's
and AMI's operations in the ordinary course and the Companies'
Remediation of the Owned Premises and Leased Premises. All construction
shall be performed in a good and workmanlike manner in accordance with
all applicable laws and building codes and to the reasonable satisfaction
of MTLM and AMI. Prior to implementation of the improvements, each of
the Shareholder, John Lane (or, if applicable, his successor) and Larry
Snyder (or, if applicable, his successor) shall certify in writing that
in his judgment implementation of the proposed improvements will not,
either during construction or thereafter, have a material adverse impact
on the current and anticipated operations of MTLM and AMI.
11.22 Buyer's Right to Cure the Companies' Noncompliance with Remediation
Obligation. In connection with the Companies' obligation to remediate
Environmental Conditions on the Owned Premises or Leased Premises pursuant to
Section 11.19 of this Agreement, if the Companies fail to comply with: (i) a
final administrative order (after appeal rights have been exhausted), (ii) a
consent order, (iii) a final judgment in an action brought by the Attorney
General
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to enforce the Transfer Act, or (iv) any requirement of the Remediation
Plan (unless an order, judgment or other directive of a governmental entity
requires otherwise), Buyer may give written notice of its intent to cure such
noncompliance, and unless the Companies shall within ten (10) days of receipt
of such notice, undertake and proceed with reasonable diligence to cure such
noncompliance, Buyer may at its election, but without the obligation so to do,
cause such work as is required to be performed in order to cure such failure of
compliance. Any amounts paid by Buyer as a result of the Companies' failure to
comply herewith, together with interest thereon at the Prime Rate announced
from time to time by LaSalle National Bank or its successor, shall be
immediately due and payable by the Companies to Buyer.
11.23 Payment of Estimated Amounts; Adjustments. The parties acknowledge
that certain accrued expenses and accounts payable of the Companies used in
determining the Valuation Date Amount (such as certain inventory which has not
yet been processed) have been estimated by the parties using good faith
estimates of the amount they actually expect to incur. In the event that the
actual amount of such estimated amounts (to be determined by the parties within
90 days following the Closing Date) are more or less than the amounts
estimated, AMI shall pay to the Companies the net amount of any excess of
estimated amounts over actual amounts, and/or the Companies shall pay to AMI the
net amount of any excess of actual amounts paid over such estimated amounts.
Personal and real property taxes payable to the City of Hartford shall be
adjusted between AMI and the Companies so that AMI shall bear the portion
thereof which is allocable to the period from and after the Closing Date and the
Companies shall bear the portion thereof which is allocable to the period prior
to the Closing Date. This adjustment shall be made as soon as is practical
following the Closing and any amounts due either AMI or the Companies, as the
case may be, shall be paid promptly after such adjustment is determined.
ARTICLE XII
TERMINATION
12.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated:
(a) at any time prior to the Closing Date, by mutual written consent
of all of the parties hereto;
(b) at any time prior to the Closing Date, by MTLM in the event of a
material breach by any of the Companies or the Shareholder of any
provision of this Agreement;
(c) at any time prior to the Closing Date, by the Companies or the
Shareholder in the event of a material breach by MTLM or AMI of any
provision of this Agreement;
(d) Intentionally Omitted;
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(e) By Buyer in the event that any of the conditions precedent to
Closing set forth in Articles VI and VII shall not have been satisfied or
waived on or prior to the Closing; or
(f) By the Companies or the Shareholder in the event that any of the
conditions precedent to Closing set forth in Article VIII shall not have
been satisfied or waived by the Companies or the Shareholder on or prior
to Closing.
12.2 Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 12.1 shall give notice of such termination to the
other party to this Agreement.
12.3 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to this Article XII all further obligations of the parties
under this Agreement (other than Sections 14.2 and 14.10) shall be terminated
without further liability of any party to the other, provided that nothing
herein shall relieve any party from liability for its breach of any provision
of this Agreement.
ARTICLE XIII
DEFINITIONS
13.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
"Aboveground Storage Tanks" defined in Section 4.13(h).
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on
the date hereof.
"Asbestos" or "Asbestos-containing material" defined in Section
4.13(j).
"Assumed Liabilities" defined in Section 1.3.
"Assumption Agreement" defined in Section 1.3.
"August 31, 1997 Valuation Amount" means the greater of: (a)
$20,000,000; and (b) (i) the net book value of the Purchased Assets as of
August 31, 1997, less (ii) the amount of the liabilities to be assumed as
of August 31, 1997 as reflected in the August 31, 1997 balance sheets of
the Companies subject to adjustment consistent with the Balance Sheet
Adjustments determined in accordance with GAAP, after making the Balance
Sheet Adjustments.
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"Balance Sheet" means the audited balance sheet of the Companies as
of May 31, 1997, included in Schedule 4.9.
"Balance Sheet Adjustments" means the adjustments to the balance
sheet listed below: (i) elimination of cash, deferred income taxes,
investments, officer's life insurance, intangible asset - pension plans,
income taxes payable, all notes payable (including the bank note
payable), pension liability, common stock, additional paid in capital,
retained earnings, pension liability adjustment and intercompany
Receivables and accounts payable between either Aerospace or Titanium and
Danny Corp., a Connecticut corporation and a wholly-owned subsidiary of
Aerospace; (ii) increase in Receivables by the allowance for doubtful
accounts and the reserve for sales adjustments; (iii) increase or
decrease, as applicable, in inventory due to the change in inventory
valuation method from LIFO to FIFO; and (iv) decrease in (a) property,
plant and equipment by the net book value of real estate and (b) prepaid
items by the amount of all prepaid insurance premiums which will not
accrue to the benefit of the Buyer.
"Balance Sheet Date" means May 31, 1997.
"Bill of Sale" means the Bill of Sale in the form attached hereto as
of Exhibit C.
"Business" defined in the Recitals to this Agreement.
"Buyer Claims" as defined in Section 9.2.
"Buyer Indemnifiable Damages" defined in Section 9.1(a).
"Cash Portion" defined in Section 2.1(a).
"CERCLA" defined in Section 4.13(e).
"Cleanup Escrow Agreement" means the Escrow Agreement in the form
attached as Exhibit F.
"Cleanup Liability" defined in Section 9.1(a).
"Closing Date" defined in Section 3.1.
"Code" defined in Section 4.18(b).
"Common Stock" means shares of MTLM's common stock, $.01 par value
per share.
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"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust,
commitment, obligation or other contract, agreement or instrument,
whether written or oral.
"Current Balance Sheet" defined in Section 4.9.
"DEP" defined in Section 11.19(a).
"Discharge" defined in Section 4.13(f).
"DOJ" defined in Section 11.10.
"Effective Time" defined in Section 3.1.
"Employee Benefit Plans" defined in Section 4.18(a).
"Employment Agreements" means the Employment Agreements between
Buyer and each of Michael Suisman, John Lane, David Borg, Rick Dzubin,
Roderick Hamilton, Harland Graine and Mark Winter in the forms attached
hereto as Exhibit I.
"Environmental Condition" defined in Section 11.19(a).
"Environmental, Health and Safety Laws" defined in Section 4.13(k).
"EPCRA" defined in Section 4.13(e).
"ERISA" defined in Section 4.18(a).
"Escrow Agreements" defined in Section 2.1(a).
"Escrow Amount" defined in Section 2.1(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" defined in Section 1.2.
"Excluded Liabilities" defined in Section 1.4.
"FIFRA" defined in Section 4.13(e).
"Financial Statements" defined in Section 4.9.
"Fixed Asset Update Schedule" defined in Section 4.33.
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"FTC" defined in Section 11.10.
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time, consistently applied.
"General Escrow Agreement" means the Escrow Agreement in the form
attached as Exhibit G.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substances" defined in Section 4.13(e).
"HSR Act" defined in Section 4.6.
"Incremental Costs" defined in Section 11.20(d).
"Indemnification Security" defined in Section 9.7.
"Indemnified Party" defined in Section 9.4(a).
"Insurance Policies" defined in Section 4.20.
"Intellectual Property" defined in Section 4.24.
"Lease" means the Lease Agreement in the form attached hereto as
Exhibit A.
"Leased Premises" defined in Section 4.14(b).
"Leases" defined in Section 4.14(b).
"LEP" defined in Section 11.19(a).
"Licenses" defined in Section 4.13(b).
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law or any
jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Milestones" defined in Section 11.19(a).
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"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects which change (or
effect) individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
"Material Customers" defined in Section 4.26.
"MTLM's Consultant" defined in Section 11.19(a).
"MTLM Shares" defined in Section 2.1(b).
"New Permits" defined in Section 4.22.
"Option Agreement" means the Option Agreement in the form attached
hereto as Exhibit B.
"OSHA" defined in Section 4.13(e).
"Other Agreements" defined in Section 11.13.
"Owned Premises" defined in Section 1.2(f).
"PBGC" defined in Section 4.18(f).
"Permits" defined in Section 4.22.
"Permitted Liens" means: (a) Liens for taxes and other governmental
charges and assessments which are not yet due and payable; (b) Liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen
and other like Liens arising in the ordinary course of business for sums
not yet due and payable; and (c) other Liens or imperfections on property
which are not material in amount or do not materially detract from the
value of or materially impair the existing use of the property affected
by such Lien or imperfection.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever nature.
"Phase One Milestone" defined in Section 11.19(a).
"Phase Three Milestone" defined in Section 11.19(a).
"Phase Two Milestone" defined in Section 11.19(a).
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"Pre-Closing Inventory" defined in Section 2.3.
"Purchased Assets" defined in Section 1.1.
"Purchased Contracts" defined in Section 4.25.
"Purchase Price" defined in Section 2.1
"Purchase Price Adjustment" defined in Section 2.3.
"RCRA" defined in Section 4.13(e).
"Receivables" means all receivables of each the Companies, including
all trade account receivables arising from the provision of services or
sale of inventory, notes receivable, and insurance proceeds receivable.
"Register", "registered" and "registration" refer to a registration
of the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration
statement.
"Registration Rights Agreement" means the Registration Rights
Agreement in the form attached hereto as Exhibit H.
"Release" defined in Section 4.13(f).
"Remediation" defined in Section 11.19(a).
"Remediation Plan" defined in Section 11.19(a).
"Remediation Standards" defined in Section 11.19(a).
"Restricted Territory" defined in Section 11.8(a).
"SEC" means the Securities and Exchange Commission.
"SEC Documents" defined in Section 5.5.
"Securities Act" means the Securities Act of 1933, as
amended.
"Seller Claims" as defined in Section 9.4.
"Seller Indemnifiable Damages" defined in Section 9.3(a).
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"Shareholder" defined in the introductory paragraph of this Agreement
"Stock Portion" defined in Section 2.1(b).
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes; and
"Taxes" means all taxes, fees or other assessments, including, but
not limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any
federal, state, local or foreign governmental agency, and any interest or
penalties related thereto.
"TPH" defined in Section 11.19(a).
"Transfer Act" defined in Section 11.19(a).
"Underground Storage Tanks" defined in Section 4.13(h).
"Union Contract" shall mean the collective bargaining agreement by
and between Suisman & Blumenthal and the United Steelworkers of America
Local 14294.
"Valuation Date" means the close of business on the last day prior
to the Closing Date.
"Valuation Date Amount" means the net book value of the Purchased
Assets as of the Valuation Date less the amount of the liabilities to be
assumed as of the Valuation Date, which shall be those categories of
liabilities, but not necessarily the amounts, reflected in the August 31,
1997 balance sheets of the Companies, subject to adjustment consistent
with the Balance Sheet Adjustments, determined in accordance with GAAP.
"Waste" defined in Section 4.13(e).
"Welfare Plan" defined in Section 4.18(e).
13.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made
or delivered pursuant hereto or thereto, unless the context otherwise
requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
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(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods,
where applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Survival of Obligations. All representations, warranties, covenants
and obligations contained in this Agreement shall survive for such time as the
indemnity for the breach thereof shall survive as set forth in Sections 9.1,
9.2 and 9.3.
14.2 Confidential Nature of Information. Each party agrees that it will
treat in confidence all documents, materials and other information which it
shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), the
investigation provided for herein and the preparation of this Agreement and
other related documents. Such documents, materials and information shall not
be communicated to any third Person (other than, in the case of Buyer, to its
counsel, accountants, financial advisors or lenders, and in the case of the
Companies and the Shareholder, to their counsel, accountants or financial
advisors). No other party shall use any confidential information in any manner
whatsoever except solely for the purpose of evaluating the proposed purchase
and sale of the Purchased Assets; provided, however, that after the Closing
Buyer may use or disclose any confidential information included in the
Purchased Assets. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any
information which: (i) is or becomes available to such party on a
non-confidential basis from a source other than such party; (ii) is or becomes
available to the public other than as a result of disclosure by such party or
its agents; (iii) is required to be disclosed under applicable law or judicial
process, but only to the extent it must be disclosed; or (iv) such party
reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby, provided that the disclosing party gives
reasonable prior notice to the other parties.
14.3 No Public Announcement. Neither Buyer nor any of the Companies, nor
the Shareholder, without the approval of the other, shall make any press
release or other public announcement concerning the transactions contemplated
by this Agreement, except as and to the extent that any such party shall be so
obligated by law, in which case the other party shall be advised and the
parties shall use their best efforts to cause a mutually agreeable release or
announcement to be issued; provided that the foregoing shall not: (i) preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with any
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accounting rules; or (ii) prevent MTLM from making any public disclosure
which MTLM believes in good faith is required by law or by the terms of any
listing agreement with or requirements of a securities exchange.
14.4 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered and received
(a) when delivered, if delivered personally by a commercial messenger delivery
service with verification of delivery, (b) four days after mailing, when sent
by registered or certified mail, return receipt requested and postage prepaid,
(c) one business day after delivery to a private courier service, when
delivered to a private courier service providing documented overnight service,
(d) on the date of delivery if delivered by facsimile and electronically
confirmed before 5:00 p.m. (local time) on any business day, or (e) on the next
business day if delivered by facsimile and electronically confirmed either
after 5:00 p.m. (local time) or on a non-business day, in each case addressed
as follows:
If to any of the Companies or the Shareholder:
c/o Michael Suisman
48 Orchard Road
West Hartford, Connecticut 06117
Telecopy No.: (860) 521-9212
with a copy to:
Mr. Dwight Johnson
Murtha, Cullina, Richter & Pinney
Cityplace I
185 Asylum Street
Hartford, Connecticut 06103-3469
Telecopy No.: (860) 240-6150
If to Buyer:
Metal Management, Inc.
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attn: Chief Executive Officer
Fax: (312) 645-0714
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with a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue, Suite 2500
Chicago, Illinois 60611
Attention: Stuart M. Savitz
Fax: (312) 527-5921
or to such other address or addresses as may hereafter be specified by notice
given by any of the above to the others.
14.5 Successors and Assigns.
(a) The rights of any party under this Agreement shall not be
assignable by such party hereto prior to the Closing without the written
consent of the other, except that the rights of Buyer (but not its
obligations) hereunder may be assigned without the consent of any of the
Companies or the Shareholder, (i) prior to the Closing, to any of its
Affiliates and (ii) to financial institutions from time to time providing
financing to Buyer or such Affiliate.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The
successors and permitted assigns hereunder shall include without
limitation, in the case of Buyer, any Affiliate as well as the
successors in interest to such Affiliate (whether by merger, liquidation
(including successive mergers or liquidations) or otherwise). Nothing in
this Agreement, expressed or implied, is intended or shall be construed
to confer upon any Person other than the parties and successors and
assigns permitted by this Section 14.5 any right, remedy or claim under
or by reason of this Agreement.
14.6 Access to Records after Closing. For the period of the survival of
any indemnification obligations hereunder, each of the Companies and its
representatives shall have reasonable access to all of the books and records of
the Business transferred to Buyer hereunder to the extent that such access may
reasonably be required by any of the Companies or the Shareholder in connection
with matters relating to or affected by the operations of the Business prior to
the Closing Date or pursuant to any collections of accounts receivable. Such
access shall be afforded by Buyer upon receipt of reasonable advance notice and
during normal business hours. Each of the Companies shall be solely
responsible for any costs or expenses incurred by it pursuant to this Section
14.6. If Buyer shall desire to dispose of any of such books and records prior
to the expiration of such period, Buyer shall, prior to such disposition, give
the Companies a reasonable opportunity, at the Companies' expense, to segregate
and remove such books and records as the Companies may select.
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For a period of three years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Business which any of the Companies or any of their Affiliates
may retain after the Closing Date. Such access shall be afforded by the
Companies and their respective Affiliates upon receipt of reasonable advance
notice and during normal business hours. Buyer shall be solely responsible for
any costs and expenses incurred by it pursuant to this Section 14.6. If any of
the Companies or any of their Affiliates shall desire to dispose of any of such
books and records prior to the expiration of such three-year period, such party
shall, prior to such disposition, give Buyer a reasonable opportunity, at
Buyer's expense, to segregate and remove such books and records as Buyer may
select.
14.7 Entire Agreement; Amendments. This Agreement and the Exhibits and
Schedules referred to herein and the documents delivered pursuant hereto
contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or letters of intent between or among any of the parties hereto.
This Agreement shall not be amended, modified or supplemented except by a
written instrument signed by an authorized representative of each of the
parties hereto.
14.8 Interpretation. Article titles and headings to sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.
14.9 Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor
in any way to affect the validity of this Agreement or any part hereof or the
right of any party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to constitute a waiver of
any other or subsequent breach.
14.10 Expenses. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel and accountants.
14.11 Partial Invalidity. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable
law, but in case any one or more of the provisions contained herein shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
such provision shall be ineffective to the extent, but only to the extent, of
such invalidity, illegality or unenforceability without invalidating the
remainder of such invalid, illegal
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or unenforceable provision or provisions or any other provisions hereof,
unless such a construction would be unreasonable.
14.12 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by each of the
parties hereto and delivered to each of the Companies, the Shareholder and
Buyer.
14.13 Further Assurances. On the Closing Date, the Companies shall: (i)
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of the Companies in, to or under any or all of the
Purchased Assets; and (ii) take all steps as may be reasonably necessary to put
Buyer in actual possession and control of all the Purchased Assets. From time
to time following the Closing, each of the Companies shall execute and deliver,
or cause to be executed and delivered, to Buyer such other instruments of
conveyance and transfer as Buyer may reasonably request or as may be otherwise
necessary to more effectively convey and transfer to, and vest in, Buyer and
put Buyer in possession of, any part of the Purchased Assets.
14.14 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Illinois.
14.15 Submission to Jurisdiction. Each of the Companies, the Shareholder
and Buyer hereby irrevocably submit in any suit, action or proceeding arising
out of or related to this Agreement or any of the transactions contemplated
hereby or thereby to the jurisdiction of the United States District Court for
the Northern District of Illinois and the jurisdiction of any court of the
State of Illinois located in Chicago and waive any and all objections to
jurisdiction that they may have under the laws of the States of Connecticut or
Illinois or the United States.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
BUYER:
METAL MANAGEMENT, INC., A DELAWARE CORPORATION
By: /s/ Gerard M. Jacobs
-------------------------------
Name: Gerard M. Jacobs
Title: Chief Executive Officer
AMI ACQUISITION CO., A DELAWARE
CORPORATION
By: /s/ Gerard M. Jacobs
--------------------------------
Name: Gerard M. Jacobs
Title: President
THE COMPANIES:
AEROSPACE METALS, INC., A CONNECTICUT
CORPORATION
By: /s/ Michael Suisman
--------------------------------
Name: Michael Suisman
Title: Chief Executive Officer
AEROSPACE PARTS SECURITY, INC. A
CONNECTICUT CORPORATION
By: /s/ Michael Suisman
-------------------------------
Name: Michael Suisman
Title: Chief Executive Officer
THE SUISMAN TITANIUM CORPORATION, A
CONNECTICUT CORPORATION
By: /s/ Michael Suisman
-------------------------------
Name: Michael Suisman
Title: Chief Executive Officer
/s/ Michael Suisman
----------------------------------
MICHAEL SUISMAN
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<PAGE> 1
Exhibit 10.1
LEASE AGREEMENT
BY AND BETWEEN
AEROSPACE METALS, INC.
("LANDLORD")
AND
AMI ACQUISITION CO.
("TENANT")
DATED: January 20, 1998
<PAGE> 2
LEASE AGREEMENT
This Lease Agreement ("Lease") is made and entered into as of the 20th
day of January, 1998, by and between AEROSPACE METALS, INC., a Connecticut
corporation ("Landlord"), having its principal office at 500 Flatbush Avenue,
Hartford, Connecticut 06106, and AMI ACQUISITION CO., a Delaware corporation
("Tenant"), having its principal office at 500 North Dearborn Street, Suite
405, Chicago, Illinois 60610.
ARTICLE 1
Lease of Property - Term of Lease
Section 1.01. Landlord, for and in consideration of the rents to be paid
and of the covenants and agreements hereinafter contained to be kept and
performed by Tenant, hereby leases to Tenant, and Tenant hereby hires from
Landlord, that certain parcel of land consisting of over thirty (30) acres of
real property, more particularly described in Exhibit A hereto, together with
the buildings and all improvements located thereon, and all rights, privileges,
easements, appurtenances and immunities belonging to or in any way pertaining
to the aforesaid real property, commonly known and designated as 500 Flatbush
Avenue, Hartford, Connecticut 06106 ( the "Premises") subject to the exceptions
listed on Exhibit A-1; reserving, however, to the Landlord the right to go upon
the Premises for purposes of discharging and performing Landlord's
environmental remediation and environmental auditing obligations and
responsibilities as more specifically set forth in that certain Asset Purchase
Agreement dated of even date herewith between Landlord, Aerospace Parts
Security, Inc., The Suisman Titanium Corporation, Michael Suisman, Metal
Management, Inc. and Tenant (the "Asset Purchase Agreement") and as further set
forth in this Lease.
Section 1.02. The term of this Lease shall be for a period of ten (10)
years commencing on January 20, 1998 (the "Commencement Date") and expiring on
January 19, 2008 (the "Initial Term").
Section 1.03. Provided that this Lease has not been terminated prior to the
normal expiration date hereof, Tenant shall have the option to renew this Lease
for the following consecutive terms (each, an "Extension Period"): (i)
commencing on the expiration date of the Initial Term and expiring five (5)
years thereafter ("First Extension Period"), (ii) commencing on the expiration
date of the First Extension Period and expiring five (5) years thereafter
("Second Extension Period"), and (iii) commencing on the expiration date of the
Second Extension Period and expiring fifty-nine (59) months thereafter. Each
option to extend shall be exercised by Tenant by the giving of notice to such
effect to Landlord not less than one hundred eighty (180) days prior to the
expiration date of the existing Initial Term or the Extension Period of this
Lease, as the case may be. The terms and conditions for any Extension Period
shall be the same terms and conditions as shall be provided herein with respect
to the Initial Term of this Lease, except (x) that the rent during any such
Extension Period shall be as hereinafter provided and (y) Tenant shall not have
any further option to renew this Lease after the last Extension Period set
forth above.
<PAGE> 3
ARTICLE 2
Rent
Section 2.01. Tenant covenants and agrees to pay to Landlord, during the
term of this Lease, the annual rental (such annual rent is herein sometimes
referred to as the "Basic Rent") specified below, payable in advance in equal
monthly installments on the first day of each calendar month during said
period. All rent shall be paid to Landlord in lawful money of the United
States of America at Landlord's address as set forth in this Lease or to such
other person or such other address as Landlord shall designate in writing.
Basic Rent Schedule
Period Monthly Rental Annual Rental
Commencement Date -
24th full month of Initial Term $12,500.00 $150,000.00
25th full month of Initial Term -
120th full month of Initial Term $25,000.00 $300,000.00
Section 2.02. During each Extension Period if applicable, Tenant shall pay
the Basic Rent as determined in the following manner:
(a) The Tenant shall pay as Basic Rent during each Extension Period an
amount equal to the Fair Market Rental Value (as hereinafter defined and
established) of the Premises for such Extension Period. The "Fair Market
Rental Value" of the Premises shall be defined as the most probable rent, as of
the date of commencement of the applicable Extension Period, for which the
Premises should rent for the term of such applicable Extension Period, on a
triple net basis after reasonable exposure in a competitive market under all
conditions then and there existing with the Landlord and Tenant each acting
prudently, knowledgeably and for self-interest, and assuming that neither is
under undue duress. Fair Market Rental Value shall be determined without
regard to the existence of this Lease or the monthly rentals then being paid
hereunder. The Fair Market Rental Value of the Property may be established
only by means of a full scope appraisal report ("Qualified Appraisal") rendered
by an MAI real estate appraiser who shall be independent, familiar with the
rental values in the immediate geographic area of the Property, experienced in
making real estate appraisals of property of this type, and be of good business
reputation (hereinafter a "Qualified Appraiser").
(b) Landlord, at Landlord's sole cost and expense, shall submit to the
Tenant a Qualified Appraisal of the Premises conducted by a Qualified Appraiser
dated within thirty days of the expiration of the Initial Term or then expiring
Extension Period, as applicable, (hereinafter referred to as "Landlord's
Appraisal"). For a period of thirty days after receipt of Landlord's
Appraisal, Tenant shall have the right to accept or reject Landlord's Appraisal
in accordance with the notice provisions set forth herein. If Tenant finds
Landlord's Appraisal acceptable, or fails to
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<PAGE> 4
reject Landlord's Appraisal within said thirty-day period, or fails to submit
Tenant's Appraisal (as hereinafter defined) within forty-five days of the date
of receipt of Landlord's Appraisal, the Fair Market Rental Value, as
determined by Landlord's Appraisal, shall be used to determine Basic Rent
during the applicable Extension Period.
(c) If Tenant rejects Landlord's Appraisal within said thirty-day period,
Tenant shall, at Tenant's sole cost and expense and within forty-five days of
the date of receipt of Landlord's Appraisal, cause a Qualified Appraiser to
render a Qualified Appraisal of the Property as of the commencement of the
applicable Extension Period, and submit a copy of the same to Landlord
(hereinafter referred to as "Tenant's Appraisal" and "Tenant's Appraiser"). If
the Fair Market Rental Value indicated by Tenant's Appraisal and the Fair
Market Rental Value of Landlord's Appraisal varies by ten percent or less, the
Fair Market Rental Value used to determine Basic Rent for such Extension Period
shall be calculated by adding the Fair Market Rental Value of Landlord's
Appraisal and the Fair Market Rental Value of Tenant's Appraisal together and
dividing the total by two. If the Fair Market Rental Value indicated by
Tenant's Appraisal and the Fair Market Rental Value of Landlord's Appraisal
varies by more than ten percent, Tenant's Appraiser and Landlord's Appraiser
shall select a third Qualified Appraiser ("Third Appraiser"). The Third
Appraiser shall then conduct and render its own independently prepared
Qualified Appraisal as of the commencement of the then applicable Extension
Period ("Third Appraisal") and submit a copy of the same to Landlord and
Tenant. The Fair Market Rental Value as determined by the Third Appraisal
shall be then used to determine the Basic Rent for the applicable Extension
Period. The cost of the Third Appraisal shall be divided equally between the
Landlord and the Tenant. For each additional Extension Period, the process for
determining Fair Market Rental Value shall be determined in accordance with
this section.
(d) Basic Rent as determined by Fair Market Rental Value shall accrue from
the first day of the first month of the Extension Period in question. Until
Fair Market Rent Value is ascertained, Tenant shall in the interim pay Basic
Rent in the same amount as was paid during the month preceding the then
expiring term. Once Fair Market Rental Value is ascertained, Basic Rent, as
adjusted to Fair Market Rental Value, shall be payable commencing on the first
day of the month next following the month in which Fair Market Rental Value is
ascertained and any shortfalls or overpayments of Basic Rent made in the
interim shall be debited or credited against such first month's payment as
appropriate.
Section 2.03. Whenever under the terms of this Lease any sum of money is
required to be paid by Tenant in addition to the rental reserved, and said
additional amount so to be paid is not designated as "additional rent", then
said amount shall nevertheless, at the option of Landlord, if not paid when
due, be deemed "additional rent" and collectible as such with any installment
of rental thereafter falling due hereunder. Nothing herein contained shall be
deemed to suspend or delay the payment of any sum at the time the same becomes
due and payable hereunder, or limit any other remedy of Landlord. Landlord
shall have all the rights, powers and remedies provided for in this Lease or
at law or in equity or otherwise for the failure to pay additional rent as are
available for the non-payment of Basic Rent.
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<PAGE> 5
ARTICLE 3
Payment of Taxes, Assessments, Utility Charges, Etc.
Section 3.01. (a) Tenant, as additional rent, shall pay and discharge all
real estate taxes, assessments, sewer and water charges imposed by any
governmental or public authority which may be assessed against the Premises
for and with respect to the term hereof. (All of the foregoing taxes,
assessments and governmental charges are herein referred to as the
"Impositions"). Landlord represents that the total amount of all real estate
taxes paid or payable with respect to the Premises for the tax year commencing
July 1, 1997 and ending June 30, 1998 were $171,489.51, and Landlord is not
aware of any events, facts or conditions which are likely to cause a
significant increase in such real estate taxes for any subsequent tax year.
(b) Tenant shall pay all Impositions before any fine, penalty, interest or
cost may be added thereto or be imposed thereon for the non-payment thereof,
except that if, by law, the taxpayer may elect to pay any special assessments
levied against the Premises in installments (whether or not interest shall
accrue on the unpaid balance of such special assessments), Tenant may exercise
the option to pay the same in installments. In such event, Tenant shall pay
those installments of said special assessments becoming due during the term of
this Lease as and when the same become due, before any fine, penalty, further
interest or cost may be added thereto. Landlord does hereby agree that the
Tenant shall have the right, but not the obligation, to contest Impositions
levied against the Premises.
(c) With respect to any Impositions which are due for or relate to the
fiscal years in which the Commencement Date and expiration date of this Lease
occur, such Impositions shall be apportioned in accordance with the practices
normally followed by the Hartford County Bar Association so that Tenant shall
bear the portion thereof which is allocable to the term hereof and Landlord
shall bear the balance thereof. To the extent Tenant has prepaid any
Impositions which are allocable to a period subsequent to the expiration of the
term, Landlord shall refund such prepaid amounts to Tenant within ten (10) days
after the expiration of the term. Landlord's obligation to refund any such
prepaid amount to Tenant shall survive the expiration or earlier termination of
this Lease.
(d) Notwithstanding anything to the contrary contained herein, Tenant
shall not be responsible for any increase in real estate taxes resulting from
any sale of the Premises by Landlord.
Section 3.02. Tenant, as additional rent, shall pay and discharge all
charges for water meter costs, sewer, water, gas, electricity or other public
utility service or services furnished to the Premises during the term hereof.
Section 3.03. Tenant shall also pay and discharge, as additional rent, all
taxes and assessments which shall or may during the term of this Lease be
charged, laid, levied, assessed or
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<PAGE> 6
imposed upon, or become a lien upon the personal property of Tenant in the
operation of the Premises or in connection with Tenant's business conducted on
the Premises.
Section 3.04. If at any time during the term of this Lease the method or
scope of taxation prevailing at the commencement of the Lease term shall be
altered, modified or enlarged so as to cause the method of taxation to be
changed, in whole or in part, so that in substitution for the real estate taxes
now assessed there may be, in whole or in part, a capital levy or other
imposition based on the value of the Premises or the rents received therefrom,
or some other form of assessment based in whole or in part on some other
valuation of Landlord's real property comprising the Premises, then and in such
event, such substituted tax or imposition shall be payable and discharged by
Tenant.
ARTICLE 4
Use, Maintenance, Alterations, Repairs, Etc.
Section 4.01. Landlord represents and warrants that, on the date of
delivery of possession of the Premises to Tenant, the Premises shall be free of
all violations, orders or notices of violations of all public or quasi-public
authorities which would inhibit lawful possession and use or quiet enjoyment of
the Premises and that Tenant shall be permitted by authorities having
jurisdiction thereover to occupy the Premises for any uses and purposes herein
provided.
Section 4.02. Except for Landlord's environmental remediation and
environmental auditing responsibilities and obligations set forth in the Asset
Purchase Agreement which are incorporated herein by this reference as if fully
set forth herein and which Landlord covenants and agrees to perform, Landlord
shall not be required to furnish any services or facilities or to make any
repairs or alterations in or to the Premises, Tenant hereby assuming the full
and sole responsibility for the condition, operation, repair, maintenance and
management of the entire Premises. Landlord represents and warrants that, on
the date of delivery of possession of the Premises to Tenant, the electric,
gas, water, sewer, plumbing, heating, air conditioning and all other systems
servicing the Premises are in good working order and repair.
Section 4.03. The Premises shall be used as an office and for the
collection, recycling and processing of ferrous and non-ferrous scrap metal
(the "Permitted Use"); which use by Tenant, however, is and shall continue to
be expressly subject to all appropriate zoning ordinances and rules and
regulations of any governmental instrumentality, board or bureau having
jurisdiction thereof. Landlord represents and warrants that the Permitted Use
specified above currently complies with all applicable zoning ordinances and
rules and regulations of any governmental instrumentality, board or bureau
having jurisdiction over the Premises.
Section 4.04. Tenant shall not use or occupy or permit the Premises to be
used or occupied, nor do or permit anything to be done in or on the Premises,
in whole or in part, in a manner which would violate any certificate of
occupancy affecting the Premises or make void or voidable any insurance then in
force with respect thereto, or which make it impossible to obtain fire or other
insurance thereof required to be furnished by Tenant hereunder, or cause
structural injury to the
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<PAGE> 7
improvements on the Premises or any part thereof, and shall not use or occupy
or permit the Premises to be used or occupied, in whole or in part, in a manner
which may violate any laws, regulations, ordinances or requirements of the
federal, state or municipal governments, or of any departments, subdivisions,
bureaus or offices thereof, or any other governmental, public or quasi-public
authorities now existing or hereafter created, having jurisdiction over and
applicable to the structure, use, contents and occupancy of the Premises and
shall promptly comply with any such laws, regulations, ordinances and
requirements, including, but not limited to, the removal or cleanup of
hazardous or toxic materials brought onto the Premises by Tenant (specifically
excluding from Tenant's obligations hereunder the removal or cleanup of
hazardous or toxic materials existing on the Premises as of the Commencement
Date and any other remediation obligations of Landlord as set forth in the
Asset Purchase Agreement) that may be required to comply with such laws,
regulations, ordinances and requirements. In addition, Tenant shall effect the
correction, prevention and abatement of nuisances, violations or other
grievances in, upon or connected with the Premises which were caused by Tenant
and shall also promptly comply with all rules, orders and regulations of the
Board of Fire Underwriters. Tenant will remedy any violations of the covenants
contained in this Section 4.04 which were caused by Tenant and will pay the
cost of the same. Notwithstanding anything in this Lease to the contrary,
Tenant shall be obligated to comply with any laws, directions, rules or
regulations of any governmental or quasi-governmental body, agency, authority
or the like or any insurance company or board of fire underwriters or some
other body which require structural alterations, structural changes, structural
repairs or structural additions, and all of the foregoing shall be the
obligation of Tenant unless Landlord initiated such change. Tenant
acknowledges it is responsible for code compliance of Tenant installed
improvements.
Section 4.05. Tenant shall, on an "as needed" basis, and at its sole cost
and expense, keep and maintain the Premises in a good and complete state of
repair and condition, except for fire or other casualty damage and ordinary
wear and tear resulting from use and occupancy. Except as otherwise provided
in this Article 4, Tenant shall, at its sole cost and expense, make all
replacements and repairs of every kind and character, interior and exterior,
structural and nonstructural, ordinary and extraordinary, foreseen and
unforeseen, including, but not limited to, the windows and doors, broken glass,
the air conditioning and heating plant, plumbing, pipes and fixtures belonging
thereto; and shall keep the water and sewer pipes and connections free from
ice and other obstructions and shall generally maintain and repair the gutters,
leaders, flashes, metal gravel stops and roof drains, stanchions and fences, if
any, and the sidewalks and paved areas, necessary to preserve and maintain the
Premises and appurtenances belonging thereto and shall generally maintain and
repair the interior and exterior of the Premises; and shall repair and
replace, as needed, all mechanical systems and working parts used in
connection with the air conditioning, electrical, heating and plumbing plants,
fixtures and systems, including ballasts and fluorescent fixtures. To the
extent the replacement of any of these systems is required, the replacement
shall be performed by the Tenant at its sole cost and expense. Tenant
covenants and agrees that it shall not cause or permit any waste (other than
reasonable wear and tear), damage or disfigurement to the Premises, or any
overloading of the floors of the buildings constituting part of the Premises.
All repairs shall (a) be performed in a good and workmanlike manner, (b) be of
first-class modern character, and (c) not diminish the overall value of the
Premises. All repairs and other property permanently attached to the Premises
by or on behalf of Tenant, except for machinery and equipment which is attached
to the Premises,
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<PAGE> 8
shall be and become the property of Landlord without payment, immediately upon
completion or installation thereof except as otherwise herein expressly
provided. Notwithstanding the foregoing, Landlord shall remain responsible for
any of the foregoing maintenance, repair and replacement obligations to the
extent the need for such maintenance, repair or replacement is caused by any
act or omission of Landlord, its agents, employees or any person or entity
acting under Landlord's control or direction.
Section 4.06. Tenant, at its cost and expense, shall (a) maintain lawns,
shrubbery, driveways and parking areas within the Premises, (b) keep the
parking area and driveways, sidewalks and steps of the Premises free and clear
of ice and snow and all defects, obstructions and encumbrances and (c) keep the
exterior of the Premises free and clear of paper and other debris so as to keep
same in a neat, good and orderly condition. Except as provided in the
following sentence, Tenant, at its sole cost and expense, shall be responsible
for the replacement of the lawns, driveways, parking areas, sidewalks, steps
and shrubbery located on the Premises. Notwithstanding the foregoing, Landlord
shall remain responsible for any of the foregoing maintenance and repair
obligations to the extent the need for such maintenance or repair is caused by
any act or omission of Landlord, its agents, employees or any person or entity
acting under Landlord's control or direction.
Section 4.07. Tenant covenants and agrees that any improvements, changes,
installations, renovations, additions or alterations made by Tenant in and
about the Premises shall be performed in a good and workmanlike manner and
Tenant shall give Landlord prior notice of all changes, installations,
renovations, additions or alterations to be made in the Premises by Tenant in
excess of twenty-five thousand dollars ($25,000.00) for each such change,
installation, renovation, addition or alteration. All such alterations,
additions or improvements shall be only in conformity with applicable
governmental and insurance company requirements and regulations applicable to
the Premises. In the event Tenant installs or makes any improvements,
additions, installations, renovations, changes or alterations in the Premises,
which are permanently affixed to the Premises, all of such improvements,
changes, additions, installations, renovations or alterations (except
machinery, equipment or other trade fixtures) shall be and remain in the
Premises and be surrendered upon the expiration of the term hereof. Upon
removal of any improvement, alteration, addition, etc., Tenant shall be
responsible for the repair of any damage or disfigurement which may occur to
any walls, ceilings, floors or any other part of the Premises by reason of the
installation or removal of the same.
Section 4.08. Tenant may erect and maintain signs advertising its business
and such signs may be displayed in the interior of the building on the Premises
or on the exterior thereof; provided, however, that all signs comply with all
laws, ordinances and regulations of any governmental authority having
jurisdiction. Upon the termination of this Lease, Tenant shall remove such
sign or signs and shall repair any damage to the Premises caused by the
erection or removal thereof.
Section 4.09. Notice is hereby given that Landlord shall not be liable for
any labor or materials furnished or to be furnished to Tenant upon credit, and
that no mechanic's, construction or other lien, for any such labor or materials
shall attach to or affect the estate or interest of Landlord in and to the
Premises. In the event that any mechanic's or construction lien is filed
against the
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Premises as a result of alterations, additions or improvements made by Tenant,
then Landlord, at its option, after thirty (30) days' notice to Tenant, may
pay the said lien, without inquiring into the validity thereof, and Tenant
shall forthwith reimburse Landlord for the total expenses, including, but not
limited to, reasonable attorneys' fees, incurred by Landlord in discharging
the same, unless within said thirty (30) day period Tenant shall either cause
said lien to be discharged or shall appropriately bond said lien in a manner
reasonably satisfactory to Landlord.
ARTICLE 5
Environmental Provisions
Section 5.01. Capitalized terms set forth in this Article 5, which are not
defined in this Lease, shall have the meanings ascribed to such terms in the
Asset Purchase Agreement.
Section 5.02. (a) Landlord and its affiliates, collectively designated as
the "Companies" in the Asset Purchase Agreement, shall be solely responsible
for the Remediation of any Environmental Condition existing on or emanating
from the Premises prior to the Commencement Date to the extent required by
Environmental, Health and Safety Laws. At a minimum, however, Landlord shall
implement the Remediation Plan set forth in Schedule 11.19(a) of the Asset
Purchase Agreement in accordance with the schedule set forth therein. If
during Remediation, any railroad spurs are damaged, removed or eliminated from
the Premises, Landlord will rebuild such railroad spurs to the extent required
and to the positions identified in the Remediation Plan.
(b) Landlord shall also be responsible for the Remediation of Total
Petroleum Hydrocarbons ("TPH") Released from operations in the ordinary course
after the Commencement Date in accordance with the terms and conditions of the
Asset Purchase Agreement and Remediation Plan; and Hazardous Substances
Discharged or Released from operations in the ordinary course after the
Commencement Date in accordance with the terms and conditions of the Asset
Purchase Agreement and Remediation Plan, until Landlord completes the
improvements as required in Section 11.21 of the Asset Purchase Agreement.
Nothing in this Section 5.02(b) shall relieve Tenant of responsibility for the
Remediation of any Environmental Conditions created on and after the
Commencement Date from the operation of the Business other than in the ordinary
course, including, without limitation, Discharges or Releases caused by the
negligent or intentional conduct of Tenant's employees or agents.
(c) Landlord's satisfactory completion of its Remediation Obligations
shall be determined as follows:
(i) If, as a result of the Transfer Act filing in accordance with the
Asset Purchase Agreement, the Commissioner of Environmental Protection requires
DEP review and approval of Remediation of the Premises, Landlord's
responsibility for such Remediation shall be satisfied upon written approval by
the DEP that all Remediation has been performed in accordance
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with the Remediation Standards, except postremediation monitoring or natural
attenuation monitoring.
(ii) If the Commissioner of Environmental Protection allows a Licensed
Environmental Professional ("LEP"), to verify that Remediation has been
performed in accordance with the Remediation Standards, Landlord's
responsibility for such Remediation shall be satisfied upon written
verification by such LEP identified in the Asset Purchase Agreement or
otherwise reasonably satisfactory to Tenant that the Remediation has been
performed in accordance with the Remediation Standards, except postremediation
monitoring or natural attenuation monitoring, or that no Remediation is
necessary to achieve compliance with the Remediation Standards. Upon issuance
of such verification, Landlord shall cause the LEP to simultaneously certify
such verification to Tenant.
(iii) Upon receipt of documentation under Sections 5.02(c)(i) or (ii),
above that the Environmental Conditions and/or Remediation of the Premises meet
the Remediation Standards in effect at that time, Landlord shall have no
further responsibility for the Remediation of the Premises; provided, however,
that nothing contained in this Section 5.02(c) shall relieve Landlord or any
other person from liability for inaccuracy or breach of any of the
representations, warranties or covenants contained in the Asset Purchase
Agreement. If postremediation monitoring or natural attenuation monitoring is
required it shall be the responsibility of Landlord to conduct such monitoring,
and if further remediation of Environmental Conditions existing on or emanating
from the Premises prior to the Commencement Date is necessary based upon the
results of such monitoring, Landlord shall take such further action to
remediate the Premises in accordance with the Remediation Standards.
(d) Landlord covenants that completion of the Phase One portion of the
Remediation Plan shall not in any way interfere with the operation of the
fragmentizer equipment used in connection with the Business.
(e) In connection with the Remediation of the Premises, Landlord covenants
that it shall take all reasonable steps to minimize interference with Tenant's
ability to conduct operations in the ordinary course, including the provision
of reasonable advance notice of work to be performed.
(f) Landlord covenants that it shall be responsible for all actions
brought or claims made pursuant to any Environmental, Health and Safety Laws
arising from the alleged Discharge or Release, or threatened Discharge or
Release of Hazardous Substances transported off the Premises prior to the
Commencement Date.
Section 5.03. (a) Tenant covenants that on and after the Commencement Date,
it will comply with all applicable Environmental, Health and Safety Laws and
will maintain compliance in all material respects with the terms and conditions
of all Permits required for the ongoing operation of the Business and its use
and occupancy of the Premises.
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(b) Tenant covenants that on and after the Commencement Date and until the
expiration of the term of this Lease, including any extensions thereof, it will
continue to operate the Business and will use and occupy the Premises in
substantially the same manner (as to type of business) as Landlord currently
operates the Business and uses and occupies the Premises. In addition, Tenant
may engage in other ferrous and non-ferrous scrap metal processing and
recycling operations without the consent of Landlord, and such other uses and
activities as may be approved in writing by Landlord.
(c) Tenant covenants that it shall be responsible for Remediation of
Environmental Conditions resulting from its operations on the Premises after
the Commencement Date, except as set forth in Section 5.02 herein with respect
to the Remediation of certain post-closing Releases from operations in the
ordinary course as set forth in Section 5.02(b) and required by the Asset
Purchase Agreement and the Remediation Plan. In addition to the obligations in
the foregoing sentence, upon Landlord's completion of the improvements as
required in Section 11.21 of the Asset Purchase Agreement, Tenant shall be
responsible for Remediation of any and all Hazardous Substances Discharged or
Released from the operations of the Business in accordance with the terms of
the Asset Purchase Agreement.
(d) In cooperation with Landlord's Remediation:
(i) Tenant covenants that, except as provided in subsection (ii) below, it
will use reasonable efforts not to materially interfere with or substantially
increase the cost of Landlord's performance of Remediation of any Environmental
Condition or any other obligations of Landlord required by this Lease or the
Asset Purchase Agreement other than in the ordinary course of business. Tenant
also covenants that it will cooperate with any application by Landlord for any
alternative or site specific remediation standards, or any variances sought
pursuant to the Remediation Standards in accordance with the Asset Purchase
Agreement.
(ii) In the event that Tenant elects to modify or expand its operations or
activities in a way that materially interferes with Landlord's performance of
Remediation of any Environmental Condition, Tenant shall reimburse Landlord for
any additional costs that it incurs in the Remediation in excess of those costs
that Landlord would otherwise have incurred in implementing the Remediation
Plan (the "Incremental Costs"); provided, however, that Tenant may not modify
or expand its operations or activities in a way that prevents or substantially
interferes with Landlord's compliance with the orders or directives of any
Governmental Entity or prevents or substantially jeopardizes Landlord's ability
to complete the Remediation Plan within the time frames set forth therein and
in the Asset Purchase Agreement. Without limiting the foregoing, if Tenant
requires access to certain on-site land for new operations and wishes Landlord
to excavate TPH-contaminated soils and replace those soils with clean fill in a
manner that is inconsistent with the Remediation Plan, Tenant shall reimburse
Landlord for any Incremental Costs incurred.
(iii) Tenant shall allow Landlord to use its treatment facilities in
connection with Landlord's Remediation, as long as: (x) such use does not
unreasonably interfere with Tenant's operations, and (y) Landlord compensates
Tenant for any incremental costs incurred
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by Tenant in connection with the use of its facilities. In particular, and
without limiting the foregoing, Tenant covenants that it will continue to
operate and maintain the wastewater treatment system in compliance with its
wastewater discharge permit, and will accept and treat wastewater collected in
Landlord's remediation trench system, as long as inclusion of wastewater from
the trench system does not result in a violation of Tenant's wastewater
discharge permit, and as long as Landlord reimburses Tenant for any increased
costs to Tenant in operating Tenant's wastewater treatment system. To the
extent reasonably necessary, Landlord shall have full right and privilege to
the use of all utilities which are reasonably necessary for performance of
Landlord's environmental obligations pursuant to this Lease and the Asset
Purchase Agreement. Landlord shall promptly reimburse Tenant for the use of
any utilities consumed by Landlord.
(e) Tenant covenants that it shall be responsible for all actions brought
or claims made pursuant to any Environmental, Health and Safety Laws arising
from the alleged Discharge or Release or threatened Discharge or Release of
Hazardous Substances transported off the Premises on or after the Commencement
Date. This provision shall not apply to Hazardous Substances transported off
site by Landlord or its agents in connection with the Remediation of the
Premises conducted by Landlord hereunder and under the Asset Purchase
Agreement.
Section 5.04. As an adjunct to Remediation of the Premises (and in order to
avoid recontamination of certain portions of the Premises) Landlord shall
complete at its sole cost and expense, certain improvements within the time
frames and in accordance with the terms and conditions of the Asset Purchase
Agreement and Remediation Plan. Construction of the improvements described
shall be undertaken in phases and shall be closely coordinated between
Landlord and Tenant so as to minimize interference with Tenant's operations in
the ordinary course and Landlord's Remediation of the Premises. All
construction shall be performed in a good and workmanlike manner in accordance
with all applicable laws and building codes and to the reasonable satisfaction
of Tenant. Prior to implementation of the improvements, Tenant shall have
received the written certifications required from the appropriate parties under
the Asset Purchase Agreement that implementation of the proposed improvements
will not, either during construction or thereafter, have a material adverse
impact on the current and anticipated operations of Tenant.
Section 5.05. In connection with Landlord's obligation to remediate
Environmental Conditions on the Premises pursuant to this Lease and Section
11.19 of the Asset Purchase Agreement, if Landlord fails to comply with: (i) a
final administrative order (after appeal rights have been exhausted), (ii) a
consent order, (iii) a final judgment in an action brought by the Attorney
General to enforce the Transfer Act, or (iv) any requirement of the Remediation
Plan (unless an order, judgment or other directive of a governmental entity
requires otherwise), Tenant may give written notice of its intent to cure such
noncompliance, and unless Landlord shall within ten (10) days of receipt of
such notice, undertake and proceed with reasonable diligence to cure such
noncompliance, Tenant may at its election, but without the obligation so to do,
cause such work as is required to be performed in order to cure such failure of
compliance. Any amounts paid by Tenant as a result of Landlord's failure to
comply herewith, together with interest thereon, shall be immediately due and
payable by Landlord to Tenant.
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ARTICLE 6
Waiver of Certain Claims; Indemnification
Section 6.01. To the extent not expressly prohibited by law, Tenant hereby
releases Landlord and waives all claims for any damage or injury to any
property, fixtures, merchandise or decorations of Tenant or any other person,
or to any person or persons at any time on the Premises as a consequence of the
failure, breakage, leakage or obstruction of the water, plumbing, steam, gas,
sewer, waste or spoil pipes, roof, drains, leaders, gutters, valleys, down
spouts or the like, or of the electrical, ventilation, air conditioning, gas,
power, conveyor, refrigeration, sprinkler, heating or other systems, elevators
or hoisting equipment, if any, in the Premises; or by reason of the elements;
or resulting from acts, conduct or omissions on the part of Tenant or of
Tenant's agents, employees, licensees, assignees or successors, nor shall
Landlord be in any way responsible or liable in case of any accident or injury
including death to any of Tenant's servants, employees, agents, or to any
person or persons in or about the Premises existing from the foregoing
conditions.
Section 6.02. (a) In addition to Tenant's obligation to provide insurance
pursuant to Article 7 hereof, Tenant covenants and agrees that it will
indemnify, defend and save harmless Landlord from and against any and all
liabilities, obligations, damages, penalties, claims, costs, charges and
expenses, including without limitation reasonable attorneys' fees, which may be
imposed upon or incurred by Landlord by reason of any of the following
occurring during the term of this Lease except to the extent caused by the
negligent or intentional act or omission of Landlord, its agents, employees,
contractors, or any other person or entity operating under Landlord's direction
or control:
(i) Any matter, cause or thing arising out of the use, occupancy, control
or management of the Premises and any part thereof;
(ii) Any negligence on the part of Tenant or any of its agents,
contractors, servants, employees or licensees;
(iii) Any accident, injury or damage to any person or property occurring
in or about the Premises; or
(iv) Any failure on the part of Tenant to perform or comply with any of
the covenants, agreements, terms or conditions contained in this Lease on its
part to be performed or complied with.
Notwithstanding anything to the contrary contained in this Section 6.02 or
elsewhere in this Lease, Tenant shall not indemnify Landlord and shall have no
responsibility whatsoever to Landlord for any liabilities, obligations,
damages, penalties, claims, costs, charges and expenses, including, without
limitation, attorneys' fees, which may be imposed upon or incurred by Landlord
in regard
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to Environmental Conditions of the Premises or the Remediation thereof for
which Landlord is responsible under the Asset Purchase Agreement or elsewhere
in this Lease.
(b) Landlord covenants and agrees that it will indemnify, defend and save
harmless Tenant from and against any and all liabilities, obligations, damages,
penalties, claims, costs, charges and expenses, including without limitation
reasonable attorneys' fees, which may be imposed upon or incurred by Tenant
arising out of any failure on the part of Landlord to perform or comply with
any of the covenants, agreements, terms or conditions contained in this Lease
on its part to be performed or complied with occurring during the term of this
Lease.
(c) The party seeking indemnification under this Section 6.02 (the
"indemnified party") shall promptly notify the other party (the "indemnifying
party") of any such claim asserted against it for which the indemnified party
is entitled to indemnification pursuant to this Section 6.02 and shall promptly
send to the indemnifying party copies of all papers or legal process served
upon the indemnified party in connection with any action or proceeding brought
against the indemnified party by reason of any such claim. The indemnified
party reserves the right, at its cost and expense, to join in the defense of
any such action or claim with co-counsel of its choosing, which co-counsel
shall cooperate with the indemnifying party's counsel in the defense of any
such action. The indemnifying party shall not, without the indemnified party's
written consent, settle or compromise any claim or consent to entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to indemnified party a release from all liability
in respect of such claim; and the indemnified party, by counsel or other
representatives of its own choosing and at its sole cost and expense, shall
have the right to consult with the indemnifying party and their respective
counsel or other representatives concerning such claim, and the indemnifying
party and the indemnified party and their respective counsel shall cooperate
with respect to such claim.
Section 6.03. The liability of either party to indemnify the other as set
forth in Section 6.02 shall not extend to any matter against which the
indemnified party shall be protected by insurance, provided, however, that if
any such liability shall exceed the amount of the effective and collectible
insurance in question, the said liability of the indemnifying party shall apply
to such excess. All indemnities provided in this Article 6 shall survive the
expiration or earlier termination of this Lease.
ARTICLE 7
Insurance
Section 7.01. During the term of this Lease, Tenant, at its sole cost and
expense, and for the mutual benefit of Landlord and Tenant, and at Landlord's
request, Landlord's mortgagee, shall carry and maintain the following types of
insurance in the amounts specified:
(a) Fire and extended coverage insurance covering the Premises against
loss or damage by fire and against loss or damage by vandalism and malicious
mischief and by other risks
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now or hereafter embraced by the standard "All Risk" extended coverage
endorsement used in the State of Connecticut, in amounts at all times
sufficient to prevent Landlord or Tenant from becoming a co-insurer under the
terms of the applicable policies and not less than the full replacement value
of the insurable building and other improvements to the Premises. The term
"full replacement value" shall mean actual replacement value (exclusive of cost
of excavation, foundations and footings).
(b) Fire and extended coverage insurance insuring all improvements,
additions, fixtures and contents installed or owned by Tenant in, on or at the
Premises, against loss or damage by fire and against loss or damage by
vandalism and malicious mischief and by other risks now or hereafter embraced
by the standard "All Risk" extended coverage endorsement used in the State of
Connecticut, in amounts equal to the full replacement value of such
improvements, alterations, additions, fixtures and contents. Said insurance
shall be deemed to cover Tenant's property and not Landlord's property.
(c) Comprehensive general public liability insurance, insuring Landlord
and Tenant against liability for injury and death to persons, or property
damage, including water damage and legal liability, occurring in or about the
Premises or arising out of the ownership, maintenance, use or occupancy
thereof. The coverage under such insurance shall not be less than Ten Million
Dollars ($10,000,000.00) combined single limit in respect of personal injury or
death to any person or persons and/or property damage. Such liability policy
shall include a Broad Form Comprehensive General Liability endorsement.
(d) Pollution legal liability for damage to natural resources or other
properties caused by the migration of hazardous substances onto adjacent
property with a coverage amount of not less than Five Million Dollars
($5,000,000.00) on a "claims made" basis.
(e) Boiler and pressure vessel insurance including pressure pipes.
(f) If a sprinkler system shall be located in the Premises, sprinkler
leakage insurance in amounts and form reasonably acceptable to Tenant and
Landlord.
Section 7.02. (a) All insurance provided for in Section 7.01 hereof, if
readily obtainable, shall be effected under standard form policies issued by
insurers of recognized responsibility, authorized to do business in the State
of Connecticut which are well rated by national rating organizations and have
been approved in writing by Landlord, such approval not to be unreasonably
withheld. Landlord hereby approves the (i) use of all current insurers who
have issued policies to Landlord covering the above risks, and (ii) form,
content and coverage of such policies. Landlord and Tenant, and at the
Landlord's request, Landlord's mortgagee, shall be named insureds on such
insurance policies. Any insurance required by this Lease may, at Tenant's
option, be effected by umbrella policies issued to Tenant.
(b) Each policy of insurance required to be obtained by Tenant as herein
provided and each certificate therefor issued by the insurer shall contain an
agreement by the insurer that such
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policy shall not be canceled or modified without at least thirty (30) days
prior written notice to Landlord and to any mortgagee to whom a loss
thereunder may be payable.
Section 7.03. Prior to the Tenant taking possession of the Premises or the
Commencement Date, whichever shall occur earlier, Tenant shall deliver to
Landlord evidence of the abovementioned insurance coverage reasonably
satisfactory to counsel for Landlord. No later than fifteen (15) days prior
to the expiration of any policy of insurance required to be maintained by
Tenant under this Lease, Tenant shall deliver to Landlord in its reasonable
discretion evidence of the renewal of the above-mentioned insurance coverage
reasonably satisfactory to Landlord. Upon Tenant's failure to comply in full
with this Article VII, Landlord shall have the right, upon ten (10) days prior
written notice and provided Tenant has not obtained the required insurance
within said ten (10) day period, to obtain the aforesaid insurance coverage, to
pay the premiums therefor and to add the said premiums to the monthly
installment of rent next due, which amount shall be paid by Tenant to Landlord
as additional rent, in addition to said monthly installment.
Section 7.04. The parties hereto mutually covenant and agree that each
party, in connection with insurance policies required to be furnished in
accordance with the terms and conditions of this Lease, or in connection with
insurance policies which they obtain insuring such insurable interest as
Landlord or Tenant may have in its own properties, whether personal or real,
shall expressly waive any right of subrogation on the part of the insurer
against Landlord or Tenant as the same may be applicable, and Landlord and
Tenant each mutually waive all right of recovery against each other, their
officers, directors, agents or employees for any loss, damage or injury of any
nature whatsoever to property or person for which either party is required by
this Lease to carry insurance, even if the loss, damage or injury shall have
been caused by the fault or negligence of the other party or anyone for whom
such party may be responsible. Notwithstanding the foregoing or anything
contained in this Lease to the contrary, any release or any waiver of claims
shall not be operative, nor shall the foregoing endorsements be required, in
any case where the effect of such release or waiver is to invalidate insurance
coverage or invalidate the right of the insured to recover thereunder or to
increase the cost thereof (provided that in the case of increased cost the
other party shall have the right, within ten (10) days following written
notice, to pay such increased cost keeping such release or waiver in full force
and effect).
ARTICLE 8
Damage or Destruction
Section 8.01. If, any time during the term of this Lease, the Premises
shall be totally or substantially destroyed or damaged by fire or other
casualty (including any casualty for which insurance coverage was not obtained)
of any kind or nature, ordinary or extraordinary, foreseen or unforeseen, then
Tenant shall have the option to terminate this Lease. Said option shall be
exercised by Tenant on or before sixty (60) days after the occurrence of any
such damage or destruction by written notice given to the Landlord. In the
event Tenant shall exercise such option the rentals due hereunder shall be
apportioned as of the date of such destruction and any balance of the prepaid
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rentals shall be immediately repaid to Tenant. All proceeds of insurance
collected by Landlord or Tenant on account of the destruction of the Premises
(but not as a result of destruction of furniture, movable trade fixtures,
machinery and equipment owned by Tenant) shall be the property of Landlord and
shall be promptly paid over to Landlord upon receipt of same by Tenant from the
insurance company.
Section 8.02. In the event that either (x) the Premises shall be totally or
substantially destroyed and Tenant shall not exercise its option as set forth
in Section 8.01 or (y) the Premises shall be only partially destroyed, then and
in either such event, Landlord shall promptly replace, repair and rebuild the
damaged or destroyed Premises to the extent that the proceeds of any insurance
policy are made available; provided, however, if any casualty loss is a result
of any act or omission of Landlord, its agents, employees or contractors,
Landlord shall promptly repair, replace and rebuild the damaged or destroyed
Premises without regard to the availability of any insurance proceeds.
Section 8.03. During the period of reconstruction and restoration of the
Premises following a fire or other casualty, Tenant shall be entitled to an
abatement, allowance, reduction or suspension of rentals due hereunder on an
equitable basis that corresponds to the diminution in usefulness of the
Premises to Tenant during such period.
ARTICLE 9
Condemnation, Taking by Eminent Domain
Section 9.01. If the entire Premises shall be taken under the exercise of
the power of eminent domain by any competent governmental authority, this Lease
shall terminate as of the date when physical possession of the Premises is
taken by the condemning authority; and, in such event, the rentals due
hereunder shall be apportioned as of the date of such taking and any balance of
the prepaid rentals not theretofore applied towards the payment of accrued
installments of rent in accordance with the provisions hereof shall be
immediately repaid to Tenant.
Section 9.02. If less than the entire Premises should become subject to an
eminent domain proceeding, Tenant shall have the option to terminate this Lease
if, and only if, in Tenant's reasonable judgment, the Premises cannot be
operated by Tenant because of such taking in the same economically viable
fashion as it was operated prior to such taking. Such termination by Tenant
must be exercised by written notice given to Landlord on or before forty-five
(45) days after such taking or the vacating of possession by Tenant, whichever
is later. If Tenant shall exercise such option to terminate, the rentals due
hereunder shall be apportioned as of the date of the exercise of such option
and any balance of the prepaid rentals not theretofore applied towards the
payment of accrued installments in accordance with the provisions hereof shall
be immediately repaid to Tenant.
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Section 9.03. If the Lease is not terminated as set forth in Section 9.02:
(i) the Lease shall continue as to the portion of the Premises not subject to
condemnation proceedings and future rentals will be adjusted on an equitable
basis to reduce the total rental to the extent the Premises have been
diminished in quantity and usefulness to Tenant by the partial condemnation,
and (ii) Landlord shall make such repairs and restorations as may be necessary
fully to restore the remaining portion of the Premises to a condition as good
as that prior to the taking.
Section 9.04. In the event of any partial taking that does not result in a
termination of this Lease pursuant to Section 9.02, Tenant shall have no claim
in or to any award of damages for such taking and Tenant hereby expressly
grants unto Landlord the entire amount of said award or compensation, hereby
expressly disclaiming all rights, title and interest therein and agrees that it
shall have no claim for any damages or loss against Landlord by reason of such
condemnation or taking. In the event there is a taking and this Lease is
terminated, Tenant shall be entitled to receive out of the award the value of
the unexpired portion of its leasehold estate under this Lease and the value
of all improvements constructed, erected or installed on the Premises by Tenant
and the balance of the award shall be paid to Landlord.
Section 9.05. The terms "condemnation", "taking" or similar terms as herein
used shall mean the acquisition by a public or quasi-public authority having
the right to take the same by condemnation or eminent domain or otherwise,
regardless of whether such taking is the result of actual condemnation or of
voluntary conveyance by Landlord.
Section 9.06. Tenant agrees to execute and deliver any instruments as may
be deemed necessary by Landlord to expedite any condemnation proceeding or to
effectuate a proper transfer of title to such governmental or other public
authority, agency, body or public utility seeking to take or acquire the
Premises or any portion thereof.
ARTICLE 10
Assignment, Subletting
Section 10.01. Tenant upon written notice to Landlord shall have the right
to assign, mortgage, pledge, encumber, or in any manner transfer this Lease, or
any part thereof, or sublease all or any part of the Premises without the prior
written consent of Landlord. The making of any assignment, mortgage, pledge,
encumbrance or subletting, in whole or in part, shall operate to relieve Tenant
from its obligations under this Lease provided that the assignee has a net
worth equal to or greater than Five Million Dollars ($5,000,000.00) and working
capital in an amount of not less than Three Million Dollars ($3,000,000.00).
Notwithstanding the foregoing, Tenant shall not be relieved of any liabilities
under environmental laws resulting from Tenant's introduction of hazardous
substances into or onto the Premises.
Section 10.02. Without limiting any of the provisions of Article 11, if
pursuant to the Federal Bankruptcy Code (or any similar law hereafter enacted
having the same general
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purpose), Tenant is permitted to assign this Lease, adequate assurance of
future performance by assignee expressly permitted under such Code shall be
deemed to mean the deposit of cash security in an amount equal to the sum of
six (6) months fixed rental plus the real estate taxes for the Premises and the
costs of the insurance carried by Tenant pursuant to Subsections 7.01(a), (c),
(d) and (e) for the calendar year preceding the year in which such assignment
is intended to become effective, which deposit shall be held by Landlord for
the balance of the term of this Lease, without interest, as security for the
full performance of all of Tenant's obligations under this Lease.
ARTICLE 11
Default Provisions
Section 11.01. This Lease and the term and estate hereby granted are
subject to the limitation that:
(a) whenever Tenant shall default in the payment of any installment of
rent or of any other sum payable by Tenant to Landlord, on any day upon which
the same ought to be paid, and if such default shall continue for ten (10)
business days after Landlord's written notice to Tenant specifying said late
payment; provided, however, such written notice shall be required to be given
no more than twice in each calendar year; or
(b) whenever Tenant shall do, or permit anything to be done, whether by
action or inaction, contrary to any covenant or agreement on the part of Tenant
herein contained or contrary to any of the covenants, agreements, terms or
provisions of this Lease, or shall fail in the keeping or performance of any of
the covenants, agreements, terms or provisions contained in this Lease which on
the part or behalf of Tenant are to be kept or performed (other than those
referred to in the foregoing subsection (a) of this Section), and Tenant shall
fail to cure same within thirty (30) days after written notice specifying the
same; provided, however, that if the nature of Tenant's obligation is such that
more than thirty (30) days are required for performance, then Tenant shall not
be in default if Tenant commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion; or
(c) whenever an involuntary petition shall be filed against Tenant under
any bankruptcy or insolvency law or under the reorganization provision of any
law of like import, or a receiver of Tenant or of or for the property of Tenant
shall be appointed without the acquiescence of Tenant, or whenever this Lease
or the estate hereby granted or the unexpired balance of the term would, by
operation of law or otherwise, except for this provision, devolve upon or pass
to any person, firm or corporation other than Tenant and such situation under
this subsection (c) shall continue and shall remain undischarged or unstayed
for an aggregate period of ninety (90) days (whether or not consecutive) or
shall not be remedied by Tenant within ninety (90) days; or
(d) whenever Tenant shall make an assignment of the property of Tenant for
the benefit of creditors or shall file a voluntary petition for an arrangement
or reorganization under the
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provisions of the United Stated Bankruptcy Act or under the provisions of any
law of like import, whether State or Federal;
then regardless of, and notwithstanding the fact that Landlord has or may have
some remedy under this Lease or by virtue hereof, or in law or in equity,
Landlord may either (1) terminate this Lease, or (2) without terminating this
Lease, re-enter and take possession of the Premises, with legal process.
Either such election shall terminate Tenant's right to possession of the
Premises under this Lease without prejudice, however, to the rights of Landlord
to exercise all other available legal remedies and without discharging Tenant
from any of its liabilities hereunder.
Section 11.02. In the event Landlord elects to terminate Tenant's right to
possession of the Premises under Section 11.01, Landlord may re-enter and take
possession of the Premises, with legal process, and Tenant hereby waives any
claim for damages as a result thereof, except for damage caused by the
negligent or intentional acts or omissions of Landlord, its agents, its
employees, or any other person or entity under Landlord's direction or control,
and Tenant shall be obligated to pay to Landlord as damages within thirty (30)
days following Landlord's written demand for payment, and Landlord shall be
entitled to recover of and from Tenant, in addition to any other remedy
Landlord may have (a) all fixed rent and additional rent payable to the date of
termination of Tenant's right to possession, plus (b) the cost to Landlord of
all reasonable legal and other expenses and costs (including, without
limitation reasonable attorneys' fees, disbursements, court costs and fees for
experts, and reports including appraisals and testimony) incurred by Landlord
in obtaining possession of the Premises or in enforcing any provision of this
Lease.
In the event Landlord elects to terminate Tenant's right to possession
without terminating this Lease, Tenant shall pay to Landlord as damages
(payable in monthly installments, in advance, on the first day of each calendar
month following the giving of such notice and continuing until the date
originally fixed herein for the expiration of the then current term of this
Lease) in amounts equal to the Basic Rent and additional rent herein reserved
plus all costs and expenses actually incurred by Landlord in (x) preserving the
Premises during any period of vacancy, (y) making such alterations and repairs
as Landlord may reasonably deem necessary or advisable to relet the Premises,
and (z) reletting the Premises, including reasonable brokerage commissions,
less the net amount of Basic Rent or additional rent, if any, which may be
collected and received by Landlord from the Premises for and during the balance
of the term hereof resulting from the Landlord's reletting of the Premises.
Landlord may relet the Premises, or any part or parts thereof, for a term or
terms which may at Landlord's option be less than or exceed the period
constituting the balance of the term hereof, and Landlord may grant concessions
or charge a rental in excess of that provided in this Lease (Tenant shall have
no right to any excess but shall remain liable for any deficiency as set forth
above). Notwithstanding anything contained herein to the contrary, Landlord
shall be required to mitigate its damages by reletting the Premises.
In the event Landlord elects to terminate this Lease and the term created
hereby, Landlord may forthwith repossess the Premises and be entitled to
recover as liquidated damages under this Lease an amount which, at the time of
such termination, represents the excess, if any, of the installments of Basic
Rent and the aggregate of all sums payable hereunder as
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additional rent (for such purpose considering the annual amount of such
additional rent to equal the amount thereof payable for the twelve (12) months
immediately preceding such termination, or the annualized portion of additional
rent payable from the Commencement Date of this Lease to the date of such
termination if this Lease then shall have been in effect for less than twelve
(12) months) reserved hereunder for the period which would otherwise have
constituted the unexpired portion of the then current term of this Lease, plus
the value of all other considerations to be paid or performed by Tenant during
such period, over the fair and reasonable rental value of the Premises for the
same period, both discounted to present value using the "Discount Rate" (being
the per annum rate (based on a 360-day year as reported in The Wall Street
Journal) of U.S. Government Treasury securities having a maturity date that is
the same as, or the nearest date to, the expiration date of the then current
term of this Lease in effect on the date of termination of this Lease by
Landlord). Prior to Tenant's full payment of any liquidated damages awarded to
Landlord, Tenant shall continue to pay punctually to Landlord all Basic Rent
and additional rent to the same extent and at the same time as if this Lease
had not been terminated and receive full credit for such payments against
the award for liquidated damages. Once Tenant has paid the aforesaid
liquidated damages, this Lease and the Tenant's liability thereunder shall
terminate.
Section 11.03. Landlord may sue for and collect any amounts which may be
due pursuant to the provisions of Section 11.02 above from time to time as
Landlord may elect, but no such suit shall bar or in any way prejudice the
rights of Landlord to enforce the collection of amounts due at any time
thereafter by a like or similar proceeding.
Section 11.04. No remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other remedy herein, under any other agreement
or document or by law or in equity; rather, each shall be cumulative and shall
be in addition to every other remedy given hereunder or under any other
agreement or document now or hereafter existing at law or in equity or by
statute. The receipt and acceptance by Landlord of rent with knowledge of the
default by Tenant in any of Tenant's obligations under this Lease shall not be
deemed a waiver by Landlord of such default. Nothing contained in this Lease
shall limit or prejudice the right of Landlord to prove for and obtain in
proceedings for bankruptcy or insolvency an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount
be greater, equal to, or less than the amount of the loss or damages referred
to above.
ARTICLE 12
Attorneys' Fees; Default by Landlord
Section 12.01. If Tenant shall fail to pay any taxes or make any other
payment required to be made under this Lease or shall default in the
performance of any other covenant, agreement, term, provision or condition
herein contained, Landlord, without being under any obligation to do so and
without thereby waiving such default, may make such payment and/or remedy such
other default for the account and at the expense of Tenant, immediately and
without
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notice in the case of emergency, or in any other case only provided Tenant
shall fail to make such payment or remedy such default within thirty (30) days
after Landlord shall have notified Tenant in writing of such default except as
to non-monetary defaults which require more than thirty (30) days to cure, so
long as Tenant has commenced said cure within said thirty (30) days. Tenant
shall reimburse Landlord for all of the said payments made for the account of
Tenant, at the time for the payment of the monthly installment of rent next
due, which amount shall be paid by Tenant to Landlord, as additional rent,
in addition to said monthly installment of rent.
Section 12.02. Either party may restrain by injunction or otherwise any
breach or threatened breach of any covenant, agreement, term, provision or
condition herein contained, but the mention herein of any particular remedy
shall not preclude either party from any other remedy it might have, either in
law or in equity. The failure of a party to insist upon the strict performance
of any one of the covenants, agreements, terms, provisions or conditions of
this Lease or to exercise any right, remedy or election herein contained or
permitted by law shall not constitute or be construed as a waiver or
relinquishment for the future of such covenant, agreement, term, provision,
condition, right, remedy or election, but the same shall continue to remain in
full force and effect. Any right or remedy of either party in this Lease
specified or any other right or remedy that such party may have at law, in
equity or otherwise upon breach of any covenant, agreement, term, provision or
condition in this Lease contained upon the part of the other party to be
performed, shall be distinct, separate and cumulative rights or remedies and no
one of them whether exercised by a party or not, shall be deemed to be in
exclusion of any other. No covenant, agreement, term, provision or condition
of this Lease shall be deemed to have been waived by a party unless such waiver
be in writing, signed by such party waiving same. Receipt or acceptance of
rent by Landlord shall not be deemed to be a waiver of any default under the
covenants, agreements, terms, provisions and conditions of this Lease, or of
any right which Landlord may be entitled to exercise under this Lease and
payment of Rent by Tenant shall not be deemed a similar waiver by Tenant. No
payment by Tenant or receipt by Landlord of a lesser amount than the rent
stipulated in this Lease shall be deemed to be other than on account of the
earliest stipulated rent, nor shall any endorsement or statement on any check
or payment, or any writing accompanying any check or payment of such rent, be
deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided in this Lease. No receipt of money by
Landlord from any receiver, trustee or custodian, debtor in possession, or any
permitted subtenant, shall reinstate, continue or extend the term of this Lease
or affect any notice theretofore given to Tenant, or to any such receiver,
trustee or custodian, debtor in possession, or any permitted subtenant, or
operate as a waiver or estoppel of the right of Landlord to recover possession
of the Premises for any of the causes therein enumerated by any lawful remedy;
and the failure of Landlord to enforce any covenant or condition by reason of
its breach by Tenant shall not be deemed to void or affect the right of
Landlord to enforce the same covenant or condition on the occasion of any
subsequent default or breach.
Section 12.03. In the event of any default by a party under this Lease, the
non-defaulting party shall be entitled in addition to any other rights and
remedies hereunder, to the reimbursement by the defaulting party of all costs
and reasonable attorneys' fees incurred by the non-defaulting party in the
exercise of its rights and remedies.
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Section 12.04. Landlord shall not be in default unless Landlord fails to
perform obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after written notice by Tenant to Landlord;
provided, however, that if the nature of Landlord's obligation is such that
more than thirty (30) days are required for performance, then Landlord shall
not be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.
Notwithstanding anything contained in this Lease to the contrary, in the event
that the Landlord fails to perform any of the agreements and covenants that
Landlord is required to perform as set forth and described herein and such
failure is not cured within a period of thirty (30) days after receipt of
written notice from the Tenant specifying the nature of such default (except
that in the case of an emergency a telephone call to Landlord, or if
unavailable, its manager, is required but no thirty (30) day notice shall be
required), then, in such event (unless such default cannot be cured within said
thirty (30) day period but Landlord has taken good faith efforts to cure said
default and continuously prosecutes cure to completion), Tenant shall have the
right to cure such default on the part of the Landlord for the account and at
the expense of the Landlord, but shall not be obligated to do so; provided,
however, that in the event such default is not an emergency and the Landlord
raises a bonafide objection to the existence of a Landlord default, then the
right of Tenant to correct such default (or, if an emergency was claimed by
Tenant, only the right to offset expenditures) shall be immediately submitted
to binding arbitration, to be resolved within 45 days of the date Landlord
raises its objection. The arbitrator may be appointed by mutual agreement or
by petition to the courts. Each party shall bear one-half the cost of the
arbitrator. Said costs and expenses incurred in correcting the default
(together with interest at two percent (2%) per annum in excess of the prime
rate of First National Bank of Chicago from time to time, from the date of
Tenant's payment of such amount or incurring of such cost or expense until the
date of full repayment by Landlord) will be payable by Landlord to Tenant on
demand. If Landlord fails to reimburse Tenant within ten (10) days of Tenant's
demand for reimbursement (or within ten (10) days of the arbiter's ruling, in
the event the objection was raised within five (5) business days of notice from
Tenant that corrective work has or will commence) then Tenant shall, in
addition to any other right for remedy that the Tenant may have, be entitled to
deduct from Tenant's rental payments next due or rental payments that will
become due in the future to the Landlord, the costs and expenses incurred by
the Tenant in curing such default and performing Landlord's obligations until
the Tenant is fully reimbursed. If the Lease term shall terminate and the
Tenant has not been fully reimbursed, Tenant shall have the option to extend
the term of this Lease until such indebtedness is fully paid by the application
to rent.
ARTICLE 13
Quiet Enjoyment
Landlord covenants that so long as Tenant is not in default under this
Lease beyond any applicable cure periods, Tenant shall quietly enjoy the
Premises without hindrance or molestation by Landlord, subject to the
covenants, agreements, terms, provisions and conditions of this Lease.
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ARTICLE 14
Landlord's Right to Enter Premises
Upon ten (10) days prior written notice to Tenant, Landlord may enter upon
the Premises or any part thereof, for the purpose of ascertaining the condition
of the Premises or whether Tenant is observing and performing the obligations
assumed by it under this Lease, or for making repairs or construction or
erection of any additions or improvements to the Premises or buildings thereon,
all without hindrance or molestation from Tenant. Ten (10) days prior written
notice shall not be required when Landlord is performing its environmental
remediation, environmental improvements and environmental auditing
responsibilities hereunder and under the Asset Purchase Agreement; provided,
however, that such entry onto the Premises does not involve entering into any
fenced or secured area. Where Tenant shall fail, after written notice, to make
repairs or perform work required of Tenant hereunder, Landlord shall also have
the right upon ten (10) days prior written notice to Tenant and provided Tenant
has not commenced the required repairs within said ten (10) day period, to
enter upon the Premises for the purpose of making such repairs or performing
such work, in which event Tenant shall pay, as additional rent upon demand
therefor, the reasonable cost incurred by Landlord in performing such repairs
and/or such work. Nothing contained herein, however, shall impose or imply any
duty on the part of Landlord to make any such repairs or perform any such work.
ARTICLE 15
Surrender by Tenant at End of Term
Section 15.01. Tenant will surrender possession of the Premises and remove
all goods and chattels and other personal property in the possession of Tenant,
by whomsoever owned, within ninety (90) days following the end of the term of
this Lease, or at such other time as Landlord may be entitled to re-enter and
take possession of the Premises pursuant to any provision of this Lease, and
leave the Premises free of occupants and in as good order and condition as they
were at the beginning of the term, reasonable wear and tear excepted, together
with all permanently affixed alterations, additions and improvements in, to or
on the Premises made by Tenant as permitted under the Lease. In default of
such surrender of possession and removal of goods and chattels at the time
aforesaid, Tenant will pay to Landlord one hundred fifty percent (150%) of the
rent reserved by the terms of this Lease for such period as Tenant either holds
over possession of the Premises or allows its goods and chattels or other
personal property in its possession at such time to remain in the Premises.
Section 15.02. In the event Tenant fails to remove all goods and chattels
and other personal property in possession of Tenant, by whomsoever owned,
within ninety (90) days after the end of the term of this Lease, or at such
other time as Landlord may be entitled to re-enter and take possession of the
Premises pursuant to any provision of this Lease, then upon ninety (90) days
prior
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written notice to Tenant and provided Tenant has not removed its personal
property from the Premises within said ninety (90) day period, Landlord shall
have the right to remove all goods and chattels and other personal property, by
whomsoever owned, from the Premises to a reasonably safe place of storage, such
moving and storage to be at the sole cost and expense of Tenant, and Tenant
covenants and agrees to reimburse and pay to Landlord all reasonable expenses
which Landlord incurs for the removal and storage of all such goods and
chattels. The provisions of this Section 15.02 shall survive the termination
of this Lease.
Section 15.03. Neither acceptance of the keys nor any other act or thing
done by Landlord or any agent or employee of Landlord shall be deemed an
acceptance of the surrender of the Premises unless Landlord shall execute a
written release of Tenant. Tenant's liability hereunder shall not be
terminated by the execution by Landlord of a new lease of the Premises.
ARTICLE 16
Subordination
Upon request of Landlord, Tenant will subordinate this Lease, in writing,
to the lien of any mortgage, now or hereafter in force against the Premises.
In the event any proceedings are brought for foreclosure, or in the event of a
conveyance by deed in lieu of foreclosure under any mortgage made by Landlord
covering the Premises, Tenant shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Landlord under this
Lease. Notwithstanding the foregoing, Tenant's obligation to subordinate its
rights hereunder to the lien of any such mortgage shall be conditioned upon (i)
Tenant's receipt of a non-disturbance agreement from any party seeking such
superior position providing that so long as Tenant is not in default hereunder
beyond the expiration of applicable grace periods, this Lease shall remain in
full force and effect for the full term hereof, notwithstanding the foreclosure
of any mortgage to which Tenant has subordinated this Lease, and (ii) such
mortgage, lien or encumbrance does not by itself or in the aggregate with any
other mortgage, lien or encumbrance on the Premises, secure indebtedness at any
time in excess of Four Million Nine Hundred Thousand and No/100 Dollars
($4,900,000.00).
ARTICLE 17
Memorandum of Lease
In accordance with applicable Connecticut statutes, Landlord and Tenant
agree to execute and acknowledge a Memorandum of Lease that refers to this
Lease and that certain Option Agreement, dated of even date herewith between
Landlord and Tenant ("Option Agreement") granting Tenant an option to purchase
the Premises, which Memorandum of Lease will be recorded in accordance with the
laws governing and regulating the recording of such documents in the State of
Connecticut. It is understood that such Memorandum of Lease is for the purpose
of notice only and is not intended and shall not in any way modify, amend,
supersede or otherwise affect this Lease or the Option Agreement.
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ARTICLE 18
Certificates
Landlord and Tenant shall, at any time and from time to time, within ten
(10) business days following notice by the other party, execute, acknowledge
and deliver to the other party which gave such notice, a statement in writing,
certifying that this Lease is unmodified and in full force and effect, or if
there shall have been any modifications stating the same, and the date to which
all rent has been paid in advance hereunder, and whether or not, to the best
knowledge of the signer of such certificate, the other party is in default
hereunder, and, if so, specifying such default; it being intended that any such
statement delivered pursuant to this Article may be relied upon as to the facts
contained therein.
ARTICLE 19
Broker
The parties hereto represent to each other that said party has not dealt
with any person, firm or entity to act as a broker in connection with this
Lease. Tenant agrees to indemnify and hold Landlord harmless from and against
any claim for a brokerage commission, finder's fee or other compensation
asserted by any person claiming to have been engaged by Tenant in connection
with this Lease. Landlord agrees to indemnify and hold Tenant harmless from
and against any claim for a brokerage commission, finder's fee or other
compensation asserted by any person claiming to have been engaged by Landlord
in connection with this Lease.
ARTICLE 20
Notices
All notices or other communications required or permitted hereunder shall
be in writing and shall be deemed given, delivered and received (a) when
delivered, if delivered personally by a commercial messenger delivery service
with verification of delivery, (b) four days after mailing, when sent by
registered or certified mail, return receipt requested and postage prepaid, (c)
one business day after delivery to a private courier service, when delivered to
a private courier service providing documented overnight service, (d) on the
date of delivery if delivered by facsimile and electronically confirmed before
5:00 p.m. (local time) on any business day, or (e) on the next business day
if delivered by facsimile and electronically confirmed either after 5:00 p.m.
(local time) or on a non-business day, in each case addressed as follows:
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If to Landlord:
Aerospace Metals, Inc.
c/o Mr. Michael Suisman
49 Orchard Road
West Hartford, Connecticut 06117
Telecopy: (860) 521-9212
with copies to:
Mr. Dwight Johnson
Murtha, Cullina, Richter & Pinney
Cityplace I
185 Asylum Street
Hartford, Connecticut 06103-3469
If to Tenant:
Metal Management, Inc.
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attention: Chief Executive Officer
Telecopy: (312) 645-0714
with a copy to:
Shefsky & Froelich, Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Erhard R. Chorle
Telecopy: (312) 527-5921
or to such other addresses as may hereafter be specified by notice given by any
of the above to the others.
ARTICLE 21
Force Majeure
Any period of time during which Landlord or Tenant is prevented from
performing any act required to be performed under this Lease by reason of fire,
catastrophe, strikes, lockouts, civil commotion, acts of God or the public
enemy, government prohibitions or preemptions, embargoes,
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inability to obtain material or labor by reason of governmental regulations or
prohibitions, the act or default of the other party, or other events beyond the
reasonable control of Landlord or Tenant, as the case may be, shall be added
to the time for performance of such act.
ARTICLE 22
Covenants and Conditions
All of the terms and provisions of this Lease shall be deemed and
construed to be "covenants" and "conditions" to be performed by the respective
parties as though words specifically expressing or importing covenants and
conditions were used in each separate term and provision hereof.
ARTICLE 23
Entire Agreement
Except with respect to "Environmental Provisions" Article 5 and except
with respect to the Option Agreement, this Lease contains the entire agreement
between the parties with respect to the subject matter hereof and shall not be
modified in any manner except by an instrument in writing executed by the
parties. With respect to "Environmental Provisions" Article 5, this Lease and
the Asset Purchase Agreement contain the entire agreement between the parties
with respect to the subject matter thereof and in the event of any conflict
between the Asset Purchase Agreement and this Lease with respect thereto, the
Asset Purchase Agreement shall control.
ARTICLE 24
Article Headings
The article headings in this Lease are for convenience of reference only
and shall not be deemed to define, limit, or describe the scope and intent of
this Lease, or alter or affect any provisions.
ARTICLE 25
Covenants Binding
The covenants, agreements, terms, provisions and conditions of this Lease
shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of Landlord
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and, except as otherwise provided herein, the heirs, legal representatives,
successors and assigns of Tenant.
ARTICLE 26
Situs
This Lease shall be interpreted and construed in accordance with, and the
rights of the parties hereto shall be determined by, the Laws of the State of
Connecticut.
ARTICLE 27
Construction
Landlord and Tenant agree that each party and its counsel have reviewed
and revised this Lease and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Lease or any amendments hereof.
ARTICLE 28
Landlord's Waiver of Lien Rights
Landlord hereby covenants and agrees that it has no right, title or
interest in and to the Tenant's personal property, inventory or trade fixtures
located in, on or about the Premises from time to time. Landlord hereby waives
any rights which Landlord might have pursuant to law with respect to a lien on
Tenant's property. Landlord covenants and agrees to execute, from time to
time, upon reasonable request of Tenant or Tenant's lender, a certificate
certifying that Landlord has no rights in or to Tenant's property and, further,
that this Lease is in full force and effect and there are no defaults by Tenant
pursuant to this Lease or if there are such defaults indicating the nature and
extent thereof. Any lender securing Tenant's property shall only be able to
repossess such property after arranging same with Landlord, and shall agree to
repair any damage to the Premises as a result of such removal.
ARTICLE 29
Landlord Authority
Landlord hereby represents and warrants that Landlord (i) is the sole fee
simple owner of the Premises, and (ii) has full right and authority to make or
enter into this Lease for the full term
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granted herein and any extensions thereof and that no joinder or approval of
any other person or entity is required with respect to Landlord's right and
authority to enter into the Lease.
ARTICLE 30
Tenant Authority
Tenant hereby represents and warrants that it has full right and authority
to make or enter into this Lease for the full term granted herein and any
extensions thereof and that no joinder or approval of any other person or
entity is required with respect to Tenant's right and authority to enter into
the Lease.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals, or caused these presents to be signed by their proper corporate
officers, the day and year first above written.
WITNESSES: LANDLORD
/s/ Hugh P. McGee Jr. AEROSPACE METALS, INC., a
- ------------------------------ Connecticut corporation
Print Name: Hugh P. McGee Jr.
-------------------
/s/ Jeremy Stonehill By: /s/ Michael Suisman
- ------------------------------ -------------------------
Print Name: Jeremy Stonehill Name: Michael Suisman
------------------- Title: Chief Executive Officer
WITNESSES: TENANT
/s/ Jeremy Stonehill AMI ACQUISITION CO., a Delaware
- ------------------------------ corporation
Print Name: Jeremy Stonehill
-------------------
/s/ Dwight A. Johnson By: /s/Gerard M. Jacobs
- ------------------------------ -------------------------
Print Name: Dwight A. Johnson Name: Gerard M. Jacobs
------------------- Title: President
29
<PAGE> 31
EXHIBIT A
LEGAL DESCRIPTION
Two certain pieces or parcels of land situated in the City and County of
Hartford and State of Connecticut, described as follows:
FIRST PIECE:
A certain piece or parcel of land with the building and improvements
thereon known as 500 Flatbush Avenue, more particularly bounded and described
as follows:
Beginning at a point at the intersection of the northwesterly line of Flatbush
Avenue and the westerly line of land now or formerly of the State of
Connecticut, which point is the southeasterly corner of the premises; thence
running southwesterly along said northwesterly line of Flatbush Avenue a
distance of 122.23 feet to an angle point; thence continuing southwesterly
along Flatbush Avenue a distance of 73.385 feet to a point; thence running
northerly along land now or formerly of Harsco Corp. a distance of 126.37 feet
to a point; thence running northwesterly along said land now or formerly of
Harsco Corp. a distance of 62.55 feet to a point; thence running northerly
along said land now or formerly of Harsco Corp. a distance of 205.18 feet to a
point; thence running northwesterly along said land now or formerly of Harsco
Corp. a distance of 181.5 feet to a point; thence running northeasterly along
land now or formerly of the New York, New Haven and Hartford Railroad Company a
distance of 110 feet to a point; thence continuing northeasterly along land now
or formerly of said Railroad Company a distance of 146.22 feet to an angle
point; thence continuing northeasterly along land now or formerly of said
Railroad Company a distance of 136 feet, more or less, to an angle point;
thence continuing northeasterly along land now or formerly of said Railroad
Company a distance of 1595 feet, more or less to a point; thence running
southeasterly along land now or formerly of said Railroad Company a distance of
28 feet to a point; thence running northeasterly along land now or formerly of
said Railroad Company a distance of 266 feet, more or less, to a point; thence
running in a northeasterly, southeasterly, southerly, southwesterly, southerly
and southwesterly direction along land now or formerly of the State of
Connecticut a distance of 2680 feet, more or less, to the point and place of
beginning.
Together with the rights reserved by Michael Suisman, et. al. in Agreements
dated June 18, 1959 and April 19, 1962 and recorded in Volume 1028, Page 296
and Volume 1112, Page 686, respectively, of the Hartford Land Records.
Together with the rights of Michael Suisman et. al., excepted, retained, and/or
agreed upon in instruments recorded in Volume 1099, Page 173, Volume 1111, Page
107 and Volume 1112, Page 676 of the Hartford Land Records.
<PAGE> 32
SECOND PIECE:
A certain piece or parcel of land with the buildings and improvements
thereon known as 173 and 201 Bartholomew Avenue, more particularly bounded and
described as follows:
Beginning at the northernmost point of said parcel, at the intersection of land
now or formerly of the New York, New Haven and Hartford Railroad Company and
land now or formerly of Hartford Faience Company; thence running southeasterly
along said land now or formerly of the Hartford Faience Company a distance of
420.61 feet to a point; thence running southwesterly along land now or formerly
of Harry Phillips, Trustee, et. al. a distance of 239.76 to a point; thence
running southeasterly along said land now or formerly of Harry Phillips,
Trustee, et. al. a distance of 367.21 feet to a point in the westerly line of
Bartholomew Avenue; thence running southerly along Bartholomew Avenue a
distance of 8.52 feet to a point; thence deflecting southwesterly along land
now or formerly of H. Bixon & Sons, a distance of 280 feet to a point; thence
running southerly along said land of H. Bixon & Sons, a distance of 80 feet,
more or less, to a point; thence running southwesterly along land now or
formerly of the State of Connecticut a distance of 478 feet to a point; thence
running westerly along said land now or formerly of the State of Connecticut a
distance of 150 feet, more or less, to a point; thence running southwesterly
along said land now or formerly of the State of Connecticut a distance of 87
feet, more or less, to a point; thence running westerly along said land now or
formerly of the State of Connecticut a distance of 203 feet, more or less, to a
point; thence running northeasterly along land now or formerly of the New York,
New Haven and Hartford Railroad Company a distance of 290.21 feet, more or
less, to a point; thence deflecting northeasterly along land now or formerly of
said Railroad Company a distance of 553.36 feet to a point; thence running
southeasterly along land now or formerly of said Railroad Company a distance of
25.92 feet to a point; thence running northerly along land now or formerly of
said Railroad Company a distance of 42.38 feet to a point; thence running
northwesterly along land now or formerly of said Railroad Company a distance of
30.27 feet to a point; thence deflecting northwesterly along land now or
formerly of Railroad Company a distance of 16.69 feet to a point; thence
running northeasterly along land now or formerly of said Railroad Company a
distance of 279.08 feet to the point and place of beginning.
Together with the right and privilege to install, construct and maintain pipes,
mains, and conduits for gas, water, sewage, and electrical current granted in a
deed dated March 19, 1942 and recorded in Volume 750, Page 509 of the Hartford
Land Records.
Together with the rights of Suisman & Blumenthal, Inc. excepted, retained
and/or agreed upon in instruments recorded in Volume 1097, Page 314, Volume
1111, Page 104 and Volume 1112, Page 672 of the Hartford Land Records.
Together with the rights reserved in a deed from Suisman & Blumenthal, Inc. to
H. Bixon & Sons dated August 17, 1983 and recorded in Volume 2105, Page 244 of
the Hartford Land Records.
A-2
<PAGE> 33
EXHIBIT A-1
Permitted Exceptions
1. Any state of facts which an accurate survey or personal inspection of
the premises would disclose.
2. Taxes on the List of October 1, 1996 as follows:
(a) 500 Flatbush Avenue: $133,659.06/year; First half paid, second
half due January 1, 1998.
(b) 173 Bartholomew Avenue: $26,187.27/year; First quarter paid,
second quarter paid, third and fourth quarters due January 1,
1998 and April 1, 1998, respectively.
(c) 201 Bartholomew Avenue $11,643.18/year, First quarter paid,
second quarter paid, third and fourth quarters due January 1,
1998 and April 1, 1998, respectively.
3. Existing drainage conditions.
4. Effect, if any of Certificate of Compliance (with Order No. 3677) dated
September 22, 1994 and recorded in Volume 3519, Page 32 of the Hartford Land
Records.
5. Consent Order No. WC4921 of the Commissioner of Environmental
Protection dated February 16, 1990 and recorded in Volume 3044, Page 307 of the
Hartford Land Records (500 Flatbush Avenue only).
6. Special Exception recorded March 24,1976 in Volume 1509, Page 178 of
the Hartford Land Records (500 Flatbush Avenue only).
7. Special Exception recorded September 26, 1977 in Volume 1590, Page 218
of the Hartford Land Records (500 Flatbush Avenue only).
8. Rights acquired by the City of Hartford in a deed from Suisman &
Blumenthal, Incorporated dated October 17, 1973 and recorded in Volume 1537,
Page 255 of the Hartford Land Records (500 Flatbush Avenue only).
9. Right to maintain crossarms and wires and agreement to construct,
maintain and assume the expense of constructing and maintaining a fence
contained in a deed dated July 23, 1951 and recorded in Volume 888, Page 130 of
the Hartford Land Records (500 Flatbush Avenue only).
10. Rights and agreements contained in a deed dated June 11, 1963 and
recorded in Volume 1106, Page 546 of the Hartford Land Records, as modified by
a Quit-Claim Deed dated August 9, 1967 and recorded in Volume 1187, Page 365 of
said Land Records (500 Flatbush Avenue only).
<PAGE> 34
11. Agreement dated June 18, 1959 and recorded in Volume 1028, Page 296 of
the Hartford Land Records, as modified and amended by Agreement dated April 19,
1962 and recorded in Volume 1112, Page 686 of said Land Records (500 Flatbush
Avenue only).
12. Water Main Caveat in favor of the Water Bureau of the Metropolitan
District dated June 12, 1950 and recorded in Volume 865, Page 81 of the
Hartford Land Records (500 Flatbush Avenue only).
13. Rights taken by the State of Connecticut in a Certificate of Taking
dated February 14, 1963 and recorded in Volume 1099, Page 173 of the Hartford
Land Records; See Quit-Claim Deed dated September 17, 1963 and recorded in
Volume 1111, Page 107 of said Land Records; See also Agreement dated September
17, 1963 and recorded in Volume 1112, Page 676 of said Land Records (500
Flatbush Avenue only).
14. Easement in favor of the Hartford Electric Light Company dated
February 4, 1971 and recorded in Volume 1264, Page 266 of the Hartford Land
Records (500 Flatbush Avenue only).
15. Rights and Agreement described and contained in a deed dated October
5, 1950 and recorded in Volume 872, Page 485 of the Hartford Land Records
(Bartholomew Avenue only).
16. Reservation and Agreement contained in a deed dated April 15, 1952 and
recorded in Volume 899, Page 544 of the Hartford Land Records (Bartholomew
Avenue only).
17. Rights and Agreement described and contained in a deed dated December
5, 1957 and recorded in Volume 1002, Page 468 of the Hartford Land Records
(Bartholomew Avenue only).
18. Rights of access taken by the State of Connecticut in a Certificate of
Taking dated January 10, 1963 and recorded in Volume 1097, Page 314 of the
Hartford Land Records; See Quit-Claim Deed dated September 12, 1963 and
recorded in Volume 1111, Page 104 of said Land Records; See also Agreement
dated September 12, 1963 and recorded in Volume 1112, Page 672 of said Land
Records (Bartholomew Avenue only).
19. Possible effect of License in favor of the City of Hartford dated
April 12, 1900 and recorded in Volume 276, Page 506 of the Hartford Land
Records (Bartholomew Avenue only).
20. Provisions contained in a deed from Suisman & Blumenthal, Incorporated
to H. Bixon & Sons dated August 17, 1983 and recorded in Volume 2105, Page 244
of the Hartford Land Records (affect rights appurtenant to the Bartholomew
Avenue property).
21. Possible effect of the right to use a 45 foot wide right of way
granted in a deed dated April 11, 1935 and recorded in Volume 703, Page 651 of
the Hartford Land Records (may affect the rights reserved in a deed recorded in
Volume 2105, Page 244 of said Land Records; Bartholomew Avenue).
22. A perpetual right of drainage as set forth in a warranty deed dated
January 28, 1964 and recorded in Volume 1116, Page 479 on the Hartford Land
Records.
<PAGE> 1
Exhibit 10.2
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement"), is made this 20th day of
January, 1998, by and between AEROSPACE METALS, INC., a Connecticut corporation
("Owner"), and AMI ACQUISITION CO., a Delaware corporation ("Optionee").
R E C I T A L S:
A. Owner holds fee simple title to that certain parcel of land more
particularly described in Exhibit A attached hereto and made a part hereof,
together with all rights, privileges, easements and appurtenances belonging
thereto, and all right, title and interest of Owner in and to any streets,
passages and other rights-of-way included therein or adjacent thereto (the
"Land"), and together with the buildings and improvements situated thereon, if
any, (the "Improvements," with the Improvements and the Land being hereinafter
referred to collectively as the "Property") and commonly known as 500 Flatbush
Avenue, Hartford, Connecticut.
B. Pursuant to Section 7.16 of that certain Asset Purchase Agreement by
and between the Owner, Aerospace Parts Security, Inc., a Connecticut
corporation, The Suisman Titanium Corporation, a Connecticut corporation,
Michael Suisman, Metal Management, Inc., a Delaware corporation, and the
Optionee dated of even date herewith (the "Asset Purchase Agreement"), Owner
has agreed to grant to Optionee an option to purchase the Property.
C. Owner has leased the Property to Optionee under a triple net lease (the
"Lease") for a ten (10) year term, with certain renewal options as set forth
therein.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the foregoing
recitals and other good and valuable consideration, the receipt and sufficiency
of which are hereby expressly acknowledged, the parties hereto agree as
follows:
1. GRANT OF OPTION. Upon and subject to the terms, covenants and
provisions of this Option Agreement, Owner hereby grants, gives, sells and
conveys to Optionee the exclusive option (the "Option") to purchase fee simple
title to the Property at a price (the "Purchase Price") equal to the greater of
(i) the Property's Fair Market Value (as hereinafter defined and established),
less (w) the net book value of any leasehold improvements made to the Property
by the Optionee as reflected on Optionee's books and records and (x) the sum of
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) for maintaining the
interceptor trenches and collection sumps located at the Property, or (ii) Four
Million Nine Hundred Thousand and No/100 Dollars ($4,900,000.00), less (y) the
sum of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) for
maintaining the interceptor trenches and collection sumps located at the
Property and (z) the amount of any condemnation proceeds received by Owner
during the Term and prior to receipt of the Exercise Notice (as hereinafter
defined), in accordance with the terms and conditions set forth in that certain
Sale and Purchase Agreement attached hereto as Exhibit B ("Purchase Contract")
and subject to only those title exceptions listed on Exhibit C attached hereto
and incorporated hereby (the "Permitted Exceptions"). The "Fair Market Value"
of the
<PAGE> 2
Property shall be defined as the most probable price, as of a specified date,
in cash, or in terms equivalent to cash, for which the fee simple for the
Property should sell after reasonable exposure in a competitive market under
all conditions requisite to fair sale, with the Owner and Optionee each acting
prudently, knowledgeably, and for self interest, and assuming that neither is
under undue duress. Fair Market Value shall be determined (i) without regard to
the existence of the Lease or this Option Agreement, and (ii) without regard to
the existence of any eminent domain or condemnation proceedings then pending
for the taking of all or any part of the Property. The Fair Market Value of the
Property may be established only by means of a full scope appraisal report
rendered by a qualified real estate appraiser who shall be independent,
familiar with land and building values in the immediate geographic area of the
Property, experienced in making real estate appraisals of property of this
type, of good business reputation, and a M.A.I. member (any appraisal and
appraiser meeting such requirements and qualifications shall be respectively
referred to herein as a "Qualified Appraisal" and a "Qualified Appraiser").
To establish the Fair Market Value to be used in calculating the Purchase
Price, Optionee shall submit to Owner a Qualified Appraisal of the Property
dated within thirty (30) days of the Exercise Date from a Qualified Appraiser
(hereinafter referred to respectively as "Optionee's Appraisal" and "Optionee's
Appraiser"). For a period of thirty (30) days after receipt of Optionee's
Appraisal, Owner shall have the right to accept or reject Optionee's Appraisal
in accordance with the notice provisions set forth herein. If Owner finds
Optionee's Appraisal acceptable or fails to reject Optionee's Appraisal within
said thirty (30) day period or fails to submit Owner's Appraisal (as
hereinafter defined) within forty-five (45) days of the date of the receipt of
Optionee's Appraisal, the Fair Market Value as determined by Optionee's
Appraisal shall be used in calculating the Purchase Price. If Owner rejects
Optionee's Appraisal within said thirty (30) day period, Owner shall, at
Owner's sole cost and expense and within forty-five (45) days of the date of
the receipt of Optionee's Appraisal, cause a Qualified Appraiser to render a
Qualified Appraisal of the Property as of the Exercise Date and submit a copy
of the same to Optionee (hereinafter referred to respectively as "Owner's
Appraisal" and "Owner's Appraiser"). If the Fair Market Value indicated by
Optionee's Appraisal and Owner's Appraisal varies by ten percent (10%) or less,
the Fair Market Value used in calculating the Purchase Price shall be
determined by adding the Fair Market Value of Owner's Appraisal and Optionee's
Appraisal together and dividing the total by two (2). If the Fair Market Value
indicated by Owner's Appraisal and Optionee's Appraisal varies by more than ten
percent (10%), Owner's Appraiser and Optionee's Appraiser shall select a third
Qualified Appraiser ("Third Appraiser"). The Third Appraiser shall then conduct
and render its own independently prepared Qualified Appraisal of the Property
as of the Exercise Date ("Third Appraisal") and submit a copy of the same to
Owner and Optionee. The Fair Market Value as determined by the Third Appraisal
shall then be used in calculating the Purchase Price. The cost of the Third
Appraisal shall be divided equally between Owner and Optionee.
2. TERM OF OPTION. The term of the Option (the "Term") shall commence on
the date hereof ("Commencement Date") and shall expire at 5:00 p.m.
(Connecticut time) on the fifth (5th) anniversary date of the date hereof (the
"Expiration Date"); provided, however, that if (i) Optionee has not received
the Remediation Certification (as hereinafter defined) on or before the
2
<PAGE> 3
fourth (4th) anniversary date of the date hereof, (ii) if within the thirty
(30) day period prior to and including the Expiration Date (including any
extensions for delays in Optionee receiving the Remediation Certification)
there is or has been any litigation or proceeding pending, including any appeal
periods therefrom (the "Litigation") against Owner, the Property or Optionee
with respect to any environmental matters relating to or arising from the
Property, including, without limitation, any remedial action taken with respect
thereto, or any personal injury or property damage arising out of or related to
environmental conditions thereon, or (iii) after the Remediation Certification
has been received by Optionee, an Environmental Condition is discovered with
respect to the Property which is the responsibility of Owner pursuant to the
Asset Purchase Agreement (a "Subsequent Condition"), then the Expiration Date
shall automatically be extended until one (1) year after the date which is the
later of: (i) the date upon which the Remediation Certification is received by
the Optionee, (ii) the date upon which all Litigation has concluded, and all
applicable appeal periods therefrom have expired and evidence thereof has been
delivered to Optionee, or (iii) the date upon which the Subsequent Condition is
remediated by Owner. In addition to the foregoing, if any action, suit or
proceeding is pending to condemn or take all or any part of the Property under
power of eminent domain on a scheduled Expiration Date, such Expiration Date
shall automatically be extended to the date which is thirty (30) days after the
date upon which the condemnation award judgment is final and non-appealable and
evidence thereof has been delivered to Optionee. Notwithstanding any extensions
of the Expiration Date as set forth above, in no event will the term of the
Option extend beyond two hundred ninety-nine (299) months from the date hereof.
3. EXERCISE OF OPTION. Optionee may exercise the Option only from and
after the earlier to occur of the (i) fourth anniversary date of the date
hereof or (ii) date the Optionee receives a certification (the "Remediation
Certification") from the Commissioner of Environmental Protection for the State
of Connecticut (or a licensed environmental professional if permitted in
accordance with the terms of the Asset Purchase Agreement) approving Owner's
completion of its environmental remediation obligations pursuant to the Asset
Purchase Agreement, and on or before the expiration of the Term by delivery of
written notice (the "Exercise Notice") to Owner of Optionee's intent to
exercise the Option in accordance with the notice provisions set forth herein,
together with two (2) copies of the Purchase Contract dated the date of the
Exercise Notice and executed by Optionee (the date of the Exercise Notice being
referred to herein as the "Exercise Date"). Within seven (7) days after Owner's
receipt of the Exercise Notice, Owner shall execute and return to Optionee one
(1) copy of the Purchase Contract. If Optionee does not give the Exercise
Notice on or before the end of the Term, the Option shall automatically
terminate and Optionee shall have no further rights with respect to the
purchase of the Property.
4. FIRE DAMAGE AND CONDEMNATION.
(a) In the event Optionee shall elect to exercise the Option after all
or any portion of the Property shall have been damaged or destroyed by
fire or other casualty and prior to the completion of the repairs and
restoration of the Property, Optionee shall receive a credit at the
Closing (as defined in the Purchase Contract) against the Purchase
3
<PAGE> 4
Price in the amount of the deductible under the insurance policy
maintained by or caused to be maintained for the benefit of Owner and
Owner shall pay over or assign to Optionee all insurance proceeds
recovered or recoverable on account of such damage or destruction and
shall execute and deliver to Optionee such other and further documents as
Optionee may reasonably request to perfect its interest in and to collect
such proceeds.
(b) In the event that prior to the end of the Term, written notice
shall be received by Owner of any action, suit or proceeding to condemn
or take all or any part of the Property under the power of eminent domain,
Owner shall promptly send written notice thereof to Optionee. If the
Exercise Notice is given at the time an eminent domain or condemnation
action is pending, then, at Closing under the Purchase Contract either:
(1) in the event that such condemnation or sale in lieu of
condemnation has been concluded prior to Closing, (i) the net proceeds
of such partial condemnation or sale in lieu of condemnation (i.e. the
entire award made in favor of Owner for the portion of the Property so
taken or sold), shall be retained by Owner and Optionee shall receive a
credit at closing against the Purchase Price in the amount of such
entire award, and (ii) the portions of the Property so taken or sold
shall not be subject to this Option Agreement; or
(2) in the event that such condemnation or sale in lieu of
condemnation has not been concluded prior to Closing, (i) Owner shall
at the Closing, assign to Optionee all of Owner's rights to the
condemnation proceeds, and (ii) the portion of the Property subject to
the condemnation or sale in lieu thereof shall be conveyed to Optionee
at the Closing.
5. OWNER'S REPRESENTATIONS AND WARRANTIES. As of the date hereof; Owner
hereby represents and warrants as follows:
(a) Subject to the Permitted Exceptions, Owner is the legal fee simple
titleholder of, and has good, marketable and insurable (at normal rates)
title to, the Property. Upon exercise of the Option and on or before the
Closing, Owner, at its sole cost and expense, will have obtained all
required consents, releases and permissions, if any, in order to convey to
Optionee good and marketable title to the Property subject only to the
Permitted Exceptions.
(b) Neither the terms of this Option Agreement or of the Purchase
Contract, nor anything provided to be done hereunder or thereunder,
including, but not limited to, the conveyance and transfer of the
Property, will violate any government regulation, contract, agreement or
instrument to which Owner is subject or a party to and/or which would
affect the transfer contemplated hereunder.
(c) Except as disclosed in the Asset Purchase Agreement, Owner is not
in default of any obligations or liabilities pertaining to the Property
that would transfer to
4
<PAGE> 5
or affect Optionee or the Property, and to the best of Owner's knowledge,
there is no state of facts, circumstances, conditions or events which with
the giving of notice or lapse of time, or both, would constitute or result
in any such default.
(d) Except as disclosed in the Asset Purchase Agreement, there is no
litigation or proceeding by third parties against Owner or the Property
which may affect the Property, including, but not limited to, pending or
threatened condemnation proceedings or proceedings alleging the violation
of any environmental, health or safety law, rule, regulation, ordinance,
statute, administrative and court rulings and orders, or codes
(collectively, "Laws"), whether pending or threatened.
(e) Except as disclosed in the Asset Purchase Agreement, Owner has not
received Notice (as defined below) of any violation of any Laws,
including, but not limited to, zoning, building, environmental protection,
safety, fire or health codes relating to the Property that has not been
corrected.
(f) as disclosed in the Asset Purchase Agreement, to the best of
Owner's knowledge, Owner is not in violation of any Laws relating to the
Property and, to the best of Owner's knowledge, there is no state of facts
which might give rise to such a violation.
(g) Except as disclosed in the Asset Purchase Agreement, there is no
lien, encumbrance or preferential arrangement of any kind in favor of any
governmental entity in connection with the Property for: (i) any liability
under federal, state or local environmental Laws; or (ii) damages arising
from, or costs incurred by such governmental entity in response to, a
release or threatened release of any hazardous or toxic substance or other
contaminant onto the Property.
(h) Except for items listed in the Permitted Exceptions, and the Lease
by and between the Owner and the Optionee, there are no written or oral
contracts, management agreements, leasing agreements, repair or service
agreements, employment agreements, union agreements, insurance policies,
easements, rights, privileges, licenses or options to purchase affecting
the Property (collectively, the "Contracts").
(i) There is no pending special assessment or, to the best of Owner's
knowledge, any proposed special assessment that affects, or may affect,
the Property or any portion thereof.
(j) The Property has access to a publicly dedicated street.
(k) The Improvements do not unlawfully encroach over lot lines,
building lines, easements or rights of way and there are no encroachments
from improvements on adjoining properties onto the Land which materially
adversely affect Optionee's use of the Property.
5
<PAGE> 6
(l) No consent to the execution, delivery and performance of this
Option Agreement is required from any creditor, investor, judicial or
administrative body, governmental authority or other person. Neither the
execution of this Option Agreement nor the consummation of the
transactions contemplated hereby will violate any restriction, court order
or agreement to which Owner or the Property is subject.
(m) Seller is a corporation, duly organized and validly existing under
the laws of the State of Connecticut and duly qualified to transact
business in the State of Connecticut. The execution and delivery of this
Option Agreement by the signatories hereto on behalf of Owner and the
performance of this Option Agreement by Owner have been duly authorized.
For purposes of this Option Agreement, "Notice" shall mean any and all
oral and/or written notice received by Owner or its officers, employees, agents
or attorneys or by their partners or affiliates ("Owner's Parties") and "to the
best of Owner's knowledge" shall be deemed to include the knowledge of the
Owner and any of Owner's Parties.
Owner shall promptly notify Optionee of the occurrence of any event or
condition that would make the foregoing representations and warranties untrue,
incomplete or inaccurate. To the extent Owner does not give Optionee such
notice, Owner shall be deemed to have remade such representations and
warranties as of the Exercise Date and at Closing. All representations and
warranties contained herein shall survive the execution of the Purchase
Contract and the Closing thereunder and shall not merge with the Purchase
Contract or deed.
6. OPTIONEE'S REPRESENTATIONS AND WARRANTIES. Optionee hereby represents
and warrants as follows:
(a) Optionee is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware, and Optionee has
all necessary authority to enter into this Option Agreement and to
consummate the transactions provided for herein.
(b) Neither the terms of this Option Agreement nor the consummation of
the transactions provided for herein will violate any contract, agreement
or instrument to which Optionee is a party or any law or regulation that
applies to Optionee or to the conduct of its business.
7. OWNER'S COVENANTS. Owner hereby covenants and agrees that during the
Term and, unless otherwise indicated, at all times prior to Closing:
(a) Owner shall not commit, approve, or consent to any Unpermitted
Transfer (as hereinafter defined) without the prior written consent of
Optionee. Any Unpermitted Transfer which is effected without the prior
written consent of Optionee shall be void, invalid and of no force or
effect against Optionee or Optionee's rights hereunder in the
6
<PAGE> 7
Property. As used herein, an "Unpermitted Transfer" shall include, without
limitation, any of the following (or the execution or acquiescence by Owner of
any agreement which would have the effect of causing or resulting in any of the
following):
(i) any lease affecting all or any portion of the Property other than
the Lease;
(ii) any grant, sale, transfer or other conveyance of all or any
portion of or interest in the Property unless the deed or other
instrument of conveyance expressly states that the grantee or transferee
and its heirs, representatives, successors and assigns take subject to the
rights and interest of Optionee hereunder, including, without limitation,
Optionee's right to purchase the Property;
(iii) any mortgage, lien or other encumbrance of all or any portion of
the Property, unless such mortgage, lien or encumbrance expressly states,
without reservation, that it is in all respects subordinate and subject to
the interest of Optionee hereunder, including, without limitation,
Optionee's right to purchase the Property and provided that such mortgage,
lien or encumbrance does not, by itself or in the aggregate with any other
mortgage, lien, or encumbrance on the Property, secure obligations at any
time in excess of Four Million Nine Hundred Thousand and NO/100 Dollars
($4,900,000.00);
(iv) any contract or other agreement pursuant to which any party may
obtain lien rights affecting all or any portion of the Property, unless
the lien rights that may arise from such contract or other agreement are
by law subordinate and subject to the interest of Optionee hereunder,
including, without limitation, Optionee's right to purchase the Property;
(v) any zoning change, annexation or subdivision of all or any portion
of the Property; or
(vi) any other act or omission affecting the Property which would
diminish or otherwise adversely affect Optionee's rights or interest under
this Option Agreement or which might prevent Owner's full performance of
its obligations hereunder or under the Purchase Contract.
(b) Owner shall from and after the date of this Option Agreement, promptly
give to Optionee copies of any Notices Owner receives with respect to any
zoning, building, environmental protection, safety, fire or health code
violations relating to the Property.
(c) Seller shall not default in respect to any of its obligations or
liabilities pertaining to the Property.
7
<PAGE> 8
8. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered and received
(a) when delivered, if delivered personally by a commercial messenger delivery
service with verification of delivery, (b) four days after mailing, when sent
by registered or certified mail, return receipt requested and postage prepaid,
(c) one business day after delivery to a private courier service, when
delivered to a private courier service providing documented overnight service,
(d) on the date of delivery if delivered by facsimile and electronically
confirmed before 5:00 p.m. (local time) on any business day, or (e) on the next
business day if delivered by facsimile and electronically confirmed either
after 5:00 p.m. (local time) or on a non-business day, in each case addressed
as follows:
If to Owner:
Aerospace Metals, Inc.
c/o Michael Suisman
48 Orchard Road
West Hartford, Connecticut 06117
Telecopy: (860) 521-9212
with a copy to:
Mr. Dwight Johnson
Murtha, Cullina, Richter & Pinney
Cityplace I
185 Asylum Street
Hartford, Connecticut 06103-3469
If to Optionee:
AMI Acquisition Co.
c/o Metal Management, Inc.
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attention: Chief Executive Officer
Telecopy: (312) 645-0714
8
<PAGE> 9
with a copy to:
Shefsky & Froelich, Ltd.
444 North Michigan Avenue
Chicago, Illinois 60611
Attention: Erhard R. Chorle
Telecopy: (312) 527-5921
or to such other address or addressee as may hereafter be specified by notice
given by any of the above to the others.
9. COVENANTS RUNNING WITH THE LAND; SPECIFIC PERFORMANCE. The covenants
and agreements of Owner under this Option Agreement are intended to be and
shall be covenants running with the land with respect to the Property and shall
be binding upon Owner and Owner's successors and assigns. This Option Agreement
and the Purchase Contract to be entered into pursuant hereto shall be
specifically enforceable by Optionee and by Optionee's successors and assigns.
10. Brokers. Owner and Optionee hereby represent and warrant to each other
that the party making such representation and warranty has not dealt with any
broker, finder or any other similar person in connection with the grant of this
Option or the sale of the Property to Optionee. Owner and Optionee hereby save,
defend, indemnify and hold harmless the other party from and against any
claims, harm, loss, costs, expenses (including, without limitation, reasonable
attorneys' fees), damages and awards arising out of or in any way connected to
a breach of such warranty and representation. Notwithstanding anything to the
contrary contained in this Option Agreement, this indemnification shall survive
the closing under the Purchase Contract.
11. RECORDING. The parties hereby agree that a fully executed and
acknowledged memorandum of this Option Agreement in the form attached hereto as
Exhibit "D" shall be recorded by Optionee at its sole expense with the Town
Clerk of the City of Hartford. In the event that the Option shall expire and
Optionee shall not have acquired the Property pursuant hereto, then Optionee
shall, upon the written request of Owner, promptly execute, acknowledge and
deliver to Owner (and the other owners of title, if any) a recordable quitclaim
deed to the Property or any other instrument reasonably requested by Owner for
the release of said recorded document and otherwise indicating the expiration
of Optionee's rights hereunder and with respect to the Property.
12. PRESS RELEASES; CONFIDENTIALITY. Prior to the Exercise Date, neither
party will issue any press release regarding the Option Agreement except as
required by securities laws, rules or regulations or by applicable exchange
rules. After Optionee has acquired the Property (subject however to securities
laws, rules or regulations or applicable exchange rules which may require
earlier disclosure), Optionee shall have the sole and exclusive right (as
between Owner and Optionee) to convey any and all information to the media and
the business community concerning Optionee's execution of this Option
Agreement, potential purchase of the Property,
9
<PAGE> 10
size of Property or proposed building, location of the Property and the
individuals or entities involved, whether in the form of conducting informal or
formal discussions, making press releases, direct mail or other
broadly-distributed announcements regarding discussions, negotiations, lease
signings, occupancy, contact with print or broadcast reporters, paid
advertising, or any subsequent agreements between Optionee and Owner.
13. TIME. Time shall be of the essence of this Option Agreement. If the
performance of any obligation required hereunder or the last day of any time
period determined in accordance with the terms and provisions of this Option
Agreement is to occur on a Saturday, Sunday or legal holiday under the laws of
the State of Connecticut, then the day on which the performance of any such
obligation is to occur or the last day of any such time period, as the case may
be, shall be extended to the next succeeding business day.
14. ENTIRE AGREEMENT. This Option Agreement, including the attached
exhibits, embodies the entire agreement and understanding of the parties with
respect to the purchase of the Property and may not be changed, altered or
modified except by an instrument in writing signed by the party against whom
the enforcement of any such change, alteration or modification is sought.
15. GOVERNING LAW. This Option Agreement shall be construed in accordance
with and governed by the laws of the State of Connecticut.
16. HEADINGS. The subject headings of the paragraphs in this Option
Agreement are for convenience of reference only, and shall not affect the
construction or interpretation of any of its provisions.
17. CONSTRUCTION. This Option Agreement shall not be construed more
strictly against one party hereto than against the other party merely by virtue
of the fact that it may have been prepared primarily by counsel for one of the
parties. It is understood and recognized that both parties have contributed
substantially and materially to the preparation of this Option Agreement. In
the event a conflict arises between the terms of this Option Agreement and the
terms of the Purchase Contract after the Purchase Contract has been executed by
both Owner and Optionee, then the terms of the Purchase Contract shall control
for the sole purpose of resolving such conflict.
18. COUNTERPARTS. This Option Agreement may be executed in any number of
counterparts, any or all of which may contain the signature of only one of the
parties, and all of which shall be construed together as a single instrument.
19. SEVERABILITY. In the event any of the covenants, agreements, terms or
provisions contained in this Option Agreement shall be invalid, illegal or
unenforceable in any respect, the validity of the remaining covenants,
agreements, terms and provisions contained herein shall not in any way be
affected, prejudiced or disturbed thereby.
10
<PAGE> 11
20. REMEDIES. In the event that any of the representations and warranties
of Owner contained herein shall not be true or correct, or if Owner fails to
perform all of its obligations and this Option Agreement for any reason other
than by reason of Optionee's default hereunder, Owner shall be in default
hereunder and Optionee shall be entitled to any remedy available at law or in
equity.
21. ASSIGNABLE BY OPTIONEE. Optionee may not transfer, assign, convey or
sell any rights of Optionee under the Option Agreement without the prior
written consent of Owner, provided, however, that Optionee shall have the right
to assign the Option Agreement without Owner's consent to (i) any assignee of
the Lease, (ii) any affiliate of Optionee or Metal Management, Inc., (iii) any
financial institution (for collateral purposes or otherwise), or (iv) in
connection with a financing arrangement for the Property. Optionee shall
promptly notify Owner of any assignment of Optionee's rights hereunder.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first above written.
WITNESSES: OWNER:
/s/ Jeremy Stonehill
- ---------------------------------- AEROSPACE METALS, INC., a
Print Name: Jeremy Stonehill Connecticut corporation
-----------------------
/s/ Hugh P. McGee, Jr. By: /s/ Michael Suisman
- ---------------------------------- ------------------------------
Print Name: Hugh P. McGee Jr. Name: Michael Suisman
----------------------- Title: Chief Executive Officer
WITNESSES: OPTIONEE:
/s/ Jeremy Stonehill
- ---------------------------------- AMI ACQUISITION CO., a Delaware
Print Name: Jeremy Stonehill corporation
-----------------------
/s/ Hugh P. McGee, Jr. By: /s/ Gerard M. Jacobs
- ---------------------------------- ------------------------------
Print Name: Hugh P. McGee, Jr. Name: Gerard M. Jacobs
----------------------- Title: President
12
<PAGE> 13
STATE OF _____________________)
) SS
COUNTY OF ____________________)
I the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY, that Michael Suisman, personally known to me to
be the Chief Executive Officer of Aerospace Metals, Inc., a Connecticut
corporation, and known to me to be the same person whose name is subscribed to
the foregoing instrument, appeared before me this day in person and
acknowledged that as such Chief Executive Officer, he signed and delivered the
said instrument, pursuant to authority given by the Board of Directors of said
corporation, as his free and voluntary act, and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein set forth.
Given under my hand and official seal, this ________ day of _____________,
1998.
-------------------------
Notary Public
My commission expires:
- ----------------------------
STATE OF )
--------------------
) SS
COUNTY OF
--------------------)
I the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY, that Gerard M. Jacobs, personally known to me to
be the President of AMI Acquisition Co., a Delaware corporation, and known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that as such officer, he
signed and delivered the said instrument, pursuant to authority given by the
Board of Directors of said corporation, as his free and voluntary act, and as
the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
Given under my hand and official seal, this _______ day of ____________,
1998.
-------------------------
Notary Public
My commission expires:
- ----------------------------
<PAGE> 14
EXHIBIT A
Legal Description
Two certain pieces or parcels of land situated in the City and County of
Hartford and State of Connecticut, described as follows:
FIRST PIECE:
A certain piece or parcel of land with the building and improvements
thereon known as 500 Flatbush Avenue, more particularly bounded and described
as follows:
Beginning at a point at the intersection of the northwesterly line of Flatbush
Avenue and the westerly line of land now or formerly of the State of
Connecticut, which point is the southeasterly corner of the premises; thence
running southwesterly along said northwesterly line of Flatbush Avenue a
distance of 122.23 feet to an angle point; thence continuing southwesterly
along Flatbush Avenue a distance of 73.385 feet to a point; thence running
northerly along land now or formerly of Harsco Corp. a distance of 126.37 feet
to a point; thence running northwesterly along said land now or formerly of
Harsco Corp. a distance of 62.55 feet to a point; thence running northerly
along said land now or formerly of Harsco Corp. a distance of 205.18 feet to a
point; thence running northwesterly along said land now or formerly of Harsco
Corp. a distance of 181.5 feet to a point; thence running northeasterly along
land now or formerly of the New York, New Haven and Hartford Railroad Company a
distance of 110 feet to a point; thence continuing northeasterly along land now
or formerly of said Railroad Company a distance of 146.22 feet to an angle
point; thence continuing northeasterly along land now or formerly of said
Railroad Company a distance of 136 feet, more or less, to an angle point;
thence continuing northeasterly along land now or formerly of said Railroad
Company a distance of 1595 feet, more or less to a point; thence running
southeasterly along land now or formerly of said Railroad Company a distance of
28 feet to a point; thence running northeasterly along land now or formerly of
said Railroad Company a distance of 266 feet, more or less, to a point; thence
running in a northeasterly, southeasterly, southerly, southwesterly, southerly
and southwesterly direction along land now or formerly of the State of
Connecticut a distance of 2680 feet, more or less, to the point and place of
beginning.
Together with the rights reserved by Michael Suisman, et. al. in Agreements
dated June 18, 1959 and April 19, 1962 and recorded in Volume 1028, Page 296
and Volume 1112, Page 686, respectively, of the Hartford Land Records.
Together with the rights of Michael Suisman et. al., excepted, retained, and/or
agreed upon in instruments recorded in Volume 1099, Page 173, Volume 1111, Page
107 and Volume 1112, Page 676 of the Hartford Land Records.
<PAGE> 15
SECOND PIECE:
A certain piece or parcel of land with the buildings and improvements
thereon known as 173 and 201 Bartholomew Avenue, more particularly bounded and
described as follows:
Beginning at the northernmost point of said parcel, at the intersection of land
now or formerly of the New York, New Haven and Hartford Railroad Company and
land now or formerly of Hartford Faience Company; thence running southeasterly
along said land now or formerly of the Hartford Faience Company a distance of
420.61 feet to a point; thence running southwesterly along land now or formerly
of Harry Phillips, Trustee, et. al. a distance of 239.76 to a point; thence
running southeasterly along said land now or formerly of Harry Phillips,
Trustee, et. al. a distance of 367.21 feet to a point in the westerly line of
Bartholomew Avenue; thence running southerly along Bartholomew Avenue a
distance of 8.52 feet to a point; thence deflecting southwesterly along land
now or formerly of H. Bixon & Sons, a distance of 280 feet to a point; thence
running southerly along said land of H. Bixon & Sons, a distance of 80 feet,
more or less, to a point; thence running southwesterly along land now or
formerly of the State of Connecticut a distance of 478 feet to a point; thence
running westerly along said land now or formerly of the State of Connecticut a
distance of 150 feet, more or less, to a point; thence running southwesterly
along said land now or formerly of the State of Connecticut a distance of 87
feet, more or less, to a point; thence running westerly along said land now or
formerly of the State of Connecticut a distance of 203 feet, more or less, to a
point; thence running northeasterly along land now or formerly of the New York,
New Haven and Hartford Railroad Company a distance of 290.21 feet, more or
less, to a point; thence deflecting northeasterly along land now or formerly of
said Railroad Company a distance of 553.36 feet to a point; thence running
southeasterly along land now or formerly of said Railroad Company a distance of
25.92 feet to a point; thence running northerly along land now or formerly of
said Railroad Company a distance of 42.38 feet to a point; thence running
northwesterly along land now or formerly of said Railroad Company a distance of
30.27 feet to a point; thence deflecting northwesterly along land now or
formerly of Railroad Company a distance of 16.69 feet to a point; thence
running northeasterly along land now or formerly of said Railroad Company a
distance of 279.08 feet to the point and place of beginning.
Together with the right and privilege to install, construct and maintain pipes,
mains, and conduits for gas, water, sewage, and electrical current granted in a
deed dated March 19, 1942 and recorded in Volume 750, Page 509 of the Hartford
Land Records.
Together with the rights of Suisman & Blumenthal, Inc. excepted, retained
and/or agreed upon in instruments recorded in Volume 1097, Page 314, Volume
1111, Page 104 and Volume 1112, Page 672 of the Hartford Land Records.
Together with the rights reserved in a deed from Suisman & Blumenthal, Inc. to
H. Bixon & Sons dated August 17, 1983 and recorded in Volume 2105, Page 244 of
the Hartford Land Records.
<PAGE> 16
EXHIBIT B
SALE AND PURCHASE AGREEMENT
THIS SALE AND PURCHASE AGREEMENT ("Agreement") has been entered into by
Aerospace Metals, Inc., a Connecticut corporation ("Seller"), and AMI
Acquisition Co., a Delaware corporation ("Purchaser"), in furtherance of that
certain Option Agreement (the "Option Agreement") to which this Agreement is
attached. The parties hereby agree as follows:
1. Agreement to Sell and Purchase. Subject to the terms and conditions
contained herein, Seller hereby agrees to sell, transfer and convey to
Purchaser, and Purchaser hereby agrees to purchase and accept from Seller, the
Property (as defined in the Option Agreement).
2. Purchase Price and Closing. The Purchase Price shall be the amount
determined in accordance with the Option Agreement. Within seven (7) days after
Purchaser's receipt of an executed copy of this Agreement from Seller,
Purchaser shall deposit with Escrowee (as hereinafter defined) the sum of Ten
Thousand and No/100 Dollars ($10,000.00) as earnest money to be applied against
the Purchase Price. The Purchase Price, plus or minus prorations and
adjustments as provided herein, shall be paid by Purchaser to Seller in
immediately available funds by cashier's check, certified check, or bank wire
transfer at the closing of the transaction contemplated by this Agreement. The
earnest money shall be held by First American Title Insurance Company
("Escrowee") in a strict joint order escrow for the mutual benefit of the
parties. The closing ("Closing") shall occur at a time mutually agreed upon by
the parties but in no event later than forty-five (45) days after the Exercise
Date (as defined in the Option Agreement) or on the date, if any, to which such
time is extended for determining the fair market value of the Property to be
used in calculating the Purchase Price as provided in the Option Agreement, or
as provided hereinafter.
3. Representations and Warranties.
Seller and Purchaser agree that all representations and warranties
provided for in the Option Agreement shall be deemed remade as of the Exercise
Date and the Closing Date. The representations and warranties contained herein
shall survive and shall not merge with this Agreement or the deed conveying the
Property. In the event Seller notifies Purchaser or Purchaser receives notice
of any condition or other matter relating to the Property which is
unsatisfactory to Purchaser or if any representation or warranty of Seller,
through no act, omission or fault of Seller, is no longer true and accurate as
of the Closing Date, then Purchaser, at its sole election, shall have the right
to: (i) close the transaction hereunder and allow Seller to omit such
inaccurate representation and warranty from the terms of this Agreement, or
(ii) terminate this Agreement.
The Asset Purchase Agreement by and among Seller, Aerospace Parts
Security, Inc., the Suisman Titanium Corporation, Michael Suisman, Metal
Management, Inc. and Purchaser (the "Asset Purchase Agreement") contains
detailed provisions regarding the respective obligations of the parties
regarding Environmental Conditions (as defined in the Asset Purchase
Agreement),
B-1
<PAGE> 17
the Remediation (as defined in the Asset Purchase Agreement) of such
Environmental Conditions and any post-Remediation monitoring or natural
attenuation monitoring. Notwithstanding anything contained herein to the
contrary, the consummation of this Agreement and conveyance of the Property to
Purchaser shall not reduce, alter or otherwise abrogate any of Seller's
Remediation or post-Remediation or natural attenuation monitoring obligations
under the Asset Purchase Agreement.
4. Title Evidence. Survey and Other Searches.
(a) Purchaser, at Purchaser's cost and expense, may obtain prior to
Closing:
(i) A commitment for an owner's title insurance policy from a title
company in the amount of the purchase price, covering title to the
Property and verifying that fee simple title to the Property is vested
in Seller, subject only to the Permitted Exceptions (as defined in the
Option Agreement).
(ii) A survey of the Land, certified by a licensed surveyor in the
State of Connecticut. Such survey shall show all improvements on the
Land, all easements, rights of way and building lines affecting the
Land and shall verify that none of the following conditions exists
(collectively, "Survey Defects"): (x) encroachments by the improvements
over the lot lines, building lines, easements or rights of way, (y)
encroachments by improvements on adjoining properties onto the Land, or
(z) other survey defects exist that are unacceptable by Purchaser in
Purchaser's sole discretion (collectively, "Survey Defects").
(iii) Searches of such records as Purchaser deems necessary
confirming the absence of security interests, judgments, tax liens and
bankruptcy proceedings affecting Seller's interest in the Property.
(b) If the title commitment, record searches or survey disclose either
unpermitted exceptions (i.e., any exception to title other than Permitted
Exceptions), Survey Defects or other matters that render title
unmarketable, Seller, at Seller's sole cost and expense, shall have thirty
(30) days after notice from Purchaser to Seller of such unpermitted
exceptions, Survey Defects or other matters that render title
unmarketable, to have such unpermitted exceptions, Survey Defects and
other matters either removed or corrected or, at Seller's sole cost and
expense, to have the title insurer commit to insure against loss or damage
that may be occasioned by such unpermitted exceptions or Survey Defects
and, in such event, the time of Closing shall be thirty-five (35) days
after delivery of the commitment or the time specified in Paragraph 2,
whichever is later. If Seller fails to have the unpermitted exceptions
removed or to correct any Survey Defects or have the title insurer commit
to insure against loss or damage that may be occasioned by such
unpermitted exceptions or Survey Defects, within the specified time,
Purchaser may terminate this Agreement or may elect, upon notice to Seller
to take title as it then is with the right to deduct from the Purchase
Price liens, encumbrances or other unpermitted
B-2
<PAGE> 18
exceptions that can be quantified to a definite or ascertainable amount
or to require Seller's compliance with the title requirements (excluding
Survey Defects), in which event Purchaser shall have all its remedies at
both law and at equity.
5. Prorations, Adjustments and Expenses.
(a) The Purchase Price for the Property is subject to prorations and
adjustments to be determined as of 12:01 a.m. on the date of the Closing.
All items of expense or receipt shall be prorated between the parties
hereto as of the Closing. Real estate taxes shall be adjusted on a uniform
fiscal year basis as paid or payable in advance.
(b) Seller shall pay all state, county, and municipal transfer,
conveyance and documentary taxes.
(c) Purchaser shall pay the recording fees for recording the deed to
the Purchaser.
(d) The title company's closing charges and fees shall be shared
equally.
(e) This transaction shall be closed through an escrow with the
Escrowee/title company, in accordance with the general provisions of the
usual form of deed and money escrow agreement then in use by such title
company, with such special provisions inserted in the escrow agreement as
may be required to conform with this Agreement. Upon the creation of such
an escrow, anything herein to the contrary notwithstanding, payment of the
Purchase Price and delivery of the deed shall be made through the escrow.
The date of the escrow disbursement shall be deemed the date of closing
for all purposes of this Agreement. At the election of Seller or
Purchaser, the transaction may be closed by means of a so-called New York
Style Closing, with the concurrent delivery of the documents of title,
transfer of interest, delivery of the owner's title policy and the payment
of the Purchase Price. Seller shall provide any undertaking (the "Gap
Undertaking") to the title insurer necessary to the New York Style
Closing.
6. Closing Deliveries.
The transaction contemplated hereby shall close on the date of Closing
at the offices of the Escrowee or at such other date and place as the parties
may mutually agree at a time agreed on by the parties.
(a) On the date of Closing, Seller shall deliver to the Escrowee for
deposit into the escrow, the following closing documents, all duly
executed and acknowledged and in recordable form as appropriate, each of
which shall be in form and substance acceptable to counsel for Purchaser:
B-3
<PAGE> 19
(i) a warranty deed conveying good and marketable fee simple
title to the Property, and all easements and other rights
appurtenant thereto, to Purchaser or its designee, subject only to
Permitted Exceptions;
(ii) such other documents and instruments as are required to
transfer Seller's interest in the Property as required by the
title company or any laws or regulations;
(iii) an executed certification by Seller as of the date of Closing
reaffirming its representations and warranties set forth in the Option
Agreement;
(iv) an affidavit of non-foreign status of Seller as in the form
attached hereto as Exhibit A;
(v) such information about Seller required by escrowee or
Purchaser which is required for federal, state or local income tax
information recording purposes;
(vi) an Owner's Affidavit in the form required by the title
company;
(vii) the Gap Undertaking;
(viii) any required documentary or transfer tax declaration; and
(ix) Connecticut Transfer Act Disclosure document.
(b) On the Closing Date, Purchaser shall deliver to the Escrowee for
deposit into the escrow, the following items:
(i) the balance of the Purchase Price;
(ii) Owner's Affidavit; and
(iii) any required documentary or transfer stamp declaration.
(c) Seller and Purchaser shall jointly deposit into the escrow or
deliver to each other at Closing and agreed proration statement fully
executed by the respective parties.
(d) Purchaser and Seller shall cooperate in the filing of the
appropriate forms with the Connecticut Department of Environmental
Protection ("DEP") pursuant to the provisions of Connecticut General
Statutes Section 22a-134 et. seq. (the "Transfer Act"). If a Form III or
Form IV is required, due in whole or in part to Discharges or Releases of
Hazardous Substances for which Purchaser is responsible under the Asset
Purchase Agreement or the Lease, Purchaser shall act as the certifying
party with respect to the
B-4
<PAGE> 20
Transfer Act in connection with the transaction; provided, however, that
if there also exists an Environmental Condition which is the obligation of
Seller pursuant to the Asset Purchase Agreement or the Lease, Seller shall
execute an agreement to indemnify, defend and save harmless Purchaser from
and against any and all liabilities, obligations, damages, penalties,
claims, costs, charges and expenses, including without limitation,
attorneys' fees, which may be imposed upon or incurred by Purchaser for
such Discharges or Releases of Hazardous Substances for which Seller is
responsible under the Asset Purchase Agreement or the Lease (without in
any way limiting, reducing or superseding the indemnification provided in
the Asset Purchase Agreement) and provided, further, that notwithstanding
the foregoing, Purchaser, at its option, may postpone the Closing for up
to one (1) year after the date the Environmental Condition is remediated.
If a Form II is the appropriate form to be filed, or if a Form IV is
required due solely to Discharges or Releases of Hazardous Substances that
occurred prior to the Closing Date or for which Seller is otherwise
responsible under the Asset Purchase Agreement, Seller shall prepare, act
as the certifying party under and file such Form. If post-remediation
monitoring or natural attenuation monitoring is required as a result of
Discharges or Releases of Hazardous Substances that occurred prior to the
Closing Date under the Asset Purchase Agreement, it shall be the
responsibility of the Seller to conduct such monitoring. If further
remediation of Hazardous Substances existing on or emanating from the Land
prior to the Closing Date under the Asset Purchase Agreement is necessary
based upon the results of such monitoring, the Seller shall take such
further action to remediate the Land in accordance with the Remediation
Standards.
7. Fire Damage and Condemnation.
(a) In the event that prior to the Closing, any portion of the Property
shall be damaged or destroyed by fire or other casualty, Purchaser shall
have the right to terminate this Agreement within twenty (20) days after
receiving the adjuster's estimate of repair. In the event that Purchaser
shall not elect to terminate this Agreement pursuant to this Paragraph
7(a), the sale contemplated hereby shall close as scheduled and Seller
shall pay over or assign to Purchaser all insurance proceeds recovered or
recoverable on account of such damage or destruction and shall execute and
deliver to Purchaser such other and further documents as Purchaser may
reasonably request to perfect its interest in and to collect such
proceeds.
(b) In the event that prior to the Closing written notice shall be
received by Seller of any action, suit or proceeding to condemn or take
all or any part of the Property under the power of eminent domain, Seller
shall promptly send written notice thereof to Purchaser and Purchaser
shall have the right by written notice to Seller given within twenty (20)
days after receiving Seller's notice to (i) terminate this Agreement, or
(ii) postpone the Closing until the amount of the condemnation award is
ascertainable, whereupon Purchaser may then elect by written notice to
Seller given within twenty (20) days after the date the condemnation award
is ascertainable to terminate this Agreement, provided, that in the event
Purchaser does not give Seller such notice of termination, the
B-5
<PAGE> 21
Closing shall be thirty (30) days after the date the condemnation award
is ascertainable. In the event Purchaser shall not elect to terminate this
Agreement pursuant to this Paragraph 7(b), Purchaser shall receive an
absolute assignment at the Closing of the entire proceeds of such
condemnation award and any rights of Seller in connection with the
condemnation (or a credit against the Purchase Price if the condemnation
has been concluded prior to Closing) and Seller shall convey the Property
subject to the condemnation proceeding or less the part so taken, as the
case may be.
8. Failure to Close; Default. The following provisions shall govern the
rights of the parties in the event the transaction contemplated hereby fails to
close pursuant to the terms hereof:
(a) In the event either Seller or Purchaser has terminated this
Agreement pursuant to a right to do so contained herein and neither party
is in default hereunder (a "Permitted Termination"), the earnest money
shall be immediately returned to Purchaser and this Agreement shall be of
no further force or effect, and neither party hereto shall have any
further obligation or liability to the other.
(b) In the event any of the representations and warranties of Seller
contained herein shall not be true and correct in all material respects,
or if Seller fails to perform all of its obligations under this Agreement
for any reason, except for a Permitted Termination or by reason of a
default on the part of Purchaser, Seller shall be in default under this
Agreement and the earnest money shall be returned to Purchaser and
Purchaser shall be entitled to any rights or remedies available at law or
in equity.
(c) In the event Purchaser fails to perform all of its obligations
under this Agreement for any reason, except for a Permitted Termination
or by reason of a default on the part of Seller, Purchaser shall be in
default under this Agreement and Seller shall be entitled, upon providing
Purchaser with written notice of such default and reasonable time to cure
same, as Seller's sole an exclusive remedy, to terminate this Agreement
and Seller shall be reimbursed by Purchaser for all out-of-pocket expenses
actually incurred by Seller up to a maximum amount of $10,000.00. The
earnest money deposit shall be refunded to Purchaser less the amount of
such out-of-pocket expenses actually incurred. Seller shall be entitled to
no other remedy at law or in equity.
Both Seller and Purchaser acknowledge and agree that the foregoing
provisions are reasonable in light of the intent of the parties and the
circumstances surrounding the execution of this Agreement, and they hereby
expressly agree that their respective rights and remedies shall be limited as
hereinabove set forth.
9. Notices. Any notices or other communications required or desired to be
served, given or delivered under the terms of this Agreement shall be sent and
deemed received in accordance with Section 8 of the Option Agreement.
B-6
<PAGE> 22
10. Assignment. Purchaser may not assign any of its rights under this
Agreement without the prior written consent of Seller, provided, however, that
Purchaser shall have the right to assign this Agreement without Seller's
consent to (i) any assignee of the Lease, (ii) any affiliate of Purchaser or
Metal Management, Inc., (iii) any financial institution (for collateral
purposes or otherwise), or (iv) in connection with a financing arrangement for
the Property. Purchaser shall promptly notify Seller of any assignment of
Purchaser's rights hereunder.
11. Costs of Enforcement. In the event any action or proceeding is
brought in connection with this Agreement, the prevailing party in such action
or proceeding shall be entitled to have all of its court costs, attorneys' and
paralegals' fees and expenses, expenditures for documentary and expert
evidence, stenographer's charges and all other costs and expenses incurred in
connection with such action or proceeding paid or reimbursed by the
non-prevailing party in such action or proceeding.
12. Binding Effect. This Agreement shall survive the Closing and be
binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
13. Entire Agreement. This Agreement, including the attached exhibits,
embodies the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof, and cannot be changed, altered, or
modified except by their subsequent written agreement signed by the party
against whom the enforcement of any such change, alteration or modification is
being sought.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
15. Time. Time is of the essence of this Agreement and each and every
provision hereof. If the performance of any obligation required hereunder or
the last day of any time period determined in accordance with the terms and
provisions of this Agreement is to occur on a Saturday, Sunday or legal holiday
under the laws of the State of Connecticut, then the day on which the
performance of any such obligation is to occur or the last day of any such time
period, as the case may be, shall be extended to the next succeeding business
day.
16. Construction. This Agreement shall not be construed more strictly
against one party hereto than against the other party merely by virtue of the
fact that it may have been prepared primarily by counsel for one of the
parties. It is understood and recognized that both parties have contributed
substantially and materially to the preparation of this Agreement. All
capitalized terms not otherwise defined herein shall have the meaning ascribed
to such terms in the Option Agreement.
17. Severability. In the event any of the covenants, agreements, terms
or provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect, the validity of the remaining covenants,
agreements, terms and provisions contained herein shall not in any way be
affected, prejudiced or disturbed thereby.
B-7
<PAGE> 23
18. Headings. The subject headings of the paragraphs contained herein
are for convenience of reference only, and shall not affect the construction or
interpretation of any of the provisions contained herein.
19. Counterparts. This Agreement may be executed in any number of
counterparts, any or all of which may contain the signature of only one of the
parties, and all of which shall be construed together as a single instrument.
B-8
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WITNESSES: OWNER:
- ---------------------------------- AEROSPACE METALS, INC., a
Print Name: Connecticut corporation
-----------------------
By:
- ---------------------------------- ------------------------------
Print Name: Name: Michael Suisman
----------------------- Title: Chief Executive Officer
WITNESSES: OPTIONEE:
- ---------------------------------- AMI ACQUISITION CO., a Delaware
Print Name: corporation
-----------------------
By:
- ---------------------------------- ------------------------------
Print Name: Name: Gerard M. Jacobs
----------------------- Title: President
B-9
<PAGE> 25
STATE OF _____________________)
) SS
COUNTY OF ____________________)
I the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY, that Michael Suisman, personally known to me to
be the Chief Executive Officer of Aerospace Metals, Inc., a Connecticut
corporation, and known to me to be the same person whose name is subscribed to
the foregoing instrument, appeared before me this day in person and
acknowledged that as such Chief Executive Officer, he signed and delivered the
said instrument, pursuant to authority given by the Board of Directors of said
corporation, as his free and voluntary act, and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein set forth.
Given under my hand and official seal, this ________ day of _____________,
1998.
-------------------------
Notary Public
My commission expires:
- ----------------------------
STATE OF )
--------------------
) SS
COUNTY OF
--------------------)
I the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY, that Gerard M. Jacobs, personally known to me to
be the President of AMI Acquisition Co., a Delaware corporation, and known to
me to be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that as such officer, he
signed and delivered the said instrument, pursuant to authority given by the
Board of Directors of said corporation, as his free and voluntary act, and as
the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
Given under my hand and official seal, this _______ day of ____________,
1998.
-------------------------
Notary Public
My commission expires:
- ----------------------------
B-10
<PAGE> 26
EXHIBIT A
Affidavit
TO: AMI Acquisition Co.
c/o Metal Management, Inc.
500 North Dearborn Street, Suite 405
Chicago, Illinois 60610
Attention: Chief Executive Officer
Section 1445 of the Internal Revenue Code (hereinafter called the "Code")
provides that a transferee (buyer) of a United States real property interest
(as defined in the Code) must withhold tax if the transferor (seller) is a
foreign person. As required by the Internal Revenue Service and to inform you,
the transferee, that withholding of tax is not required upon the disposition of
a United States real property interest by Aerospace Metals, Inc., a Connecticut
corporation (hereinafter called the "Transferor"), the undersigned hereby
certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code
and Income Tax Regulations);
2. The Transferor's United States employer identification number
is ; and
3. The Transferor's office address is .
The Transferor understands that this affidavit, or a copy thereof, may be
disclosed to the Internal Revenue Service by you, and the Transferor grants
permission for such disclosure. I further understand that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this affidavit
and to the best of my knowledge and belief it is true, correct and complete,
and I further declare that I have authority to sign this document on behalf of
the Transferor.
AEROSPACE METALS, INC., a Connecticut
corporation
By:
-------------------------
Name:
-----------------------
Title:
----------------------
Subscribed and Sworn to
before me this ____ day
of _____________, 19__.
- -----------------------
Notary Public
B-11
<PAGE> 27
EXHIBIT C
Permitted Exceptions
1. Any state of facts which an accurate survey or personal inspection of
the premises would disclose.
2. Taxes on the List of October 1, 1996 as follows:
a. 500 Flatbush Avenue: $133,659.06/year; First half paid, second
half due January 1, 1998.
b. 173 Bartholomew Avenue: $26,187.27/year; First quarter paid, second
quarter paid, third and fourth quarters due January 1, 1998 and
April 1, 1998, respectively.
c. 201 Bartholomew Avenue $11,643.18/year, First quarter paid, second
quarter paid, third and fourth quarters due January 1, 1998 and
April 1, 1998, respectively.
3. Existing drainage conditions.
4. Effect, if any of Certificate of Compliance (with Order No. 3677) dated
September 22, 1994 and recorded in Volume 3519, Page 32 of the Hartford Land
Records.
5. Consent Order No. WC4921 of the Commissioner of Environmental
Protection dated February 16, 1990 and recorded in Volume 3044, Page 307 of the
Hartford Land Records (500 Flatbush Avenue only).
6. Special Exception recorded March 24, 1976 in Volume 1509, Page 178 of
the Hartford Land Records (500 Flatbush Avenue only).
7. Special Exception recorded September 26, 1977 in Volume 1590, Page 218
of the Hartford Land Records (500 Flatbush Avenue only).
8. Rights acquired by the City of Hartford in a deed from Suisman &
Blumenthal, Incorporated dated October 17, 1973 and recorded in Volume 1537,
Page 255 of the Hartford Land Records (500 Flatbush Avenue only).
9. Right to maintain crossarms and wires and agreement to construct,
maintain and assume the expense of constructing and maintaining a fence
contained in a deed dated July 23, 1951 and recorded in Volume 888, Page 130 of
the Hartford Land Records (500 Flatbush Avenue only).
10. Rights and agreements contained in a deed dated June 11, 1963 and
recorded in Volume 1106, Page 546 of the Hartford Land Records, as modified by
a Quit-Claim Deed dated August 9, 1967 and recorded in Volume 1187, Page 365 of
said Land Records (500 Flatbush Avenue only).
<PAGE> 28
11. Agreement dated June 18, 1959 and recorded in Volume 1028, Page 296 of
the Hartford Land Records, as modified and amended by Agreement dated April 19,
1962 and recorded in Volume 1112, Page 686 of said Land Records (500 Flatbush
Avenue only).
12. Water Main Caveat in favor of the Water Bureau of the Metropolitan
District dated June 12, 1950 and recorded in Volume 865, Page 81 of the
Hartford Land Records (500 Flatbush Avenue only).
13. Rights taken by the State of Connecticut in a Certificate of Taking
dated February 14, 1963 and recorded in Volume 1099, Page 173 of the Hartford
Land Records; See Quit-Claim Deed dated September 17, 1963 and recorded in
Volume 1111, Page 107 of said Land Records; See also Agreement dated September
17, 1963 and recorded in Volume 1112, Page 676 of said Land Records (500
Flatbush Avenue only).
14. Easement in favor of the Hartford Electric Light Company dated
February 4, 1971 and recorded in Volume 1264, Page 266 of the Hartford Land
Records (500 Flatbush Avenue only).
15. Rights and Agreement described and contained in a deed dated October
5, 1950 and recorded in Volume 872, Page 485 of the Hartford Land Records
(Bartholomew Avenue only).
16. Reservation and Agreement contained in a deed dated April 15, 1952 and
recorded in Volume 899, Page 544 of the Hartford Land Records (Bartholomew
Avenue only).
17. Rights and Agreement described and contained in a deed dated December
5, 1957 and recorded in Volume 1002, Page 468 of the Hartford Land Records
(Bartholomew Avenue only).
18. Rights of access taken by the State of Connecticut in a Certificate of
Taking dated January 10, 1963 and recorded in Volume 1097, Page 314 of the
Hartford Land Records; See Quit-Claim Deed dated September 12, 1963 and
recorded in Volume 1111, Page 104 of said Land Records; See also Agreement
dated September 12, 1963 and recorded in Volume 1112, Page 672 of said Land
Records (Bartholomew Avenue only).
19. Possible effect of License in favor of the City of Hartford dated
April 12, 1900 and recorded in Volume 276, Page 506 of the Hartford Land
Records (Bartholomew Avenue only).
20. Provisions contained in a deed from Suisman & Blumenthal, Incorporated
to H. Bixon & Sons dated August 17, 1983 and recorded in Volume 2105, Page 244
of the Hartford Land Records (affect rights appurtenant to the Bartholomew
Avenue property).
C-2
<PAGE> 29
21. Possible effect of the right to use a 45 foot wide right of way
granted in a deed dated April 11, 1935 and recorded in Volume 703, Page 651 of
the Hartford Land Records (may affect the rights reserved in a deed recorded in
Volume 2105, Page 244 of said Land Records; Bartholomew Avenue).
22. A perpetual right of drainage as set forth in a warranty deed dated
January 28, 1964 and recorded in Volume 1116, Page 479 on the Hartford Land
Records.
C-3
<PAGE> 30
EXHIBIT D
NOTICE OF LEASE AND NOTICE OF PURCHASE OPTION
THIS NOTICE OF LEASE AND NOTICE OF PURCHASE OPTION dated as of the 20th
day of January, 1998, by and between AEROSPACE METALS, INC., a Connecticut
corporation ("Landlord"), and AMI ACQUISITION CO., a Delaware corporation
("Tenant").
W I T N E S S E T H:
Pursuant to Section 47-19 of the Connecticut General Statutes, notice is
hereby given that the Landlord and the Tenant have entered into a Lease
containing in part the following terms.
1. PARTIES.
Landlord: Aerospace Metals, Inc.
c/o Michael Suisman
48 Orchard Road
West Hartford, Connecticut 06117
Tenant: AMI Acquisition Co.
c/o Metal Management, Inc.
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attn: Chief Executive Officer
2. EXECUTION. The Lease was executed on January 20, 1998.
3. TERM. The initial term of the Lease commenced on January 20, 1998 and
will expire on January 19, 2008 ("Initial Term")
4. DEMISED PREMISES. The demised premises are described in Exhibit A
attached hereto and made a part hereof.
5. RENEWALS OR EXTENSIONS. The Lease provides for the following rights of
extension or renewal for consecutive terms as follows: (i) commencing on the
expiration date of the Initial Term and expiring five (5) years thereafter
("First Extension Period"), (ii) commencing on the expiration date of the First
Extension Period and expiring five (5) years thereafter ("Second Extension
Period"), and (iii) commencing on the expiration date of the Second Extension
Period and expiring fifty-nine (59) months thereafter.
D-1
<PAGE> 31
7. LEASE ON FILE. Copies of the Lease are on file at the offices of the
Landlord and Tenant at the addresses set forth above.
IN WITNESS WHEREOF, the parties have executed this Notice of Lease and
Notice of Purchase Option on the date first above written.
WITNESSES: LANDLORD:
/s/ Jeremy Stonehill
- ---------------------------------- AEROSPACE METALS, INC., a
Print Name: Jeremy Stonehill Connecticut corporation
-----------------------
/s/ Hugh P. McGee Jr. By: /s/ Michael Suisman
- ---------------------------------- ------------------------------
Print Name: Hugh P. McGee Jr. Name: Michael Suisman
----------------------- Title: Chief Executive Officer
WITNESSES: TENANT:
/s/ Jeremy Stonehill
- ---------------------------------- AMI ACQUISITION CO., a Delaware
Print Name: Jeremy Stonehill corporation
-----------------------
/s/ Hugh P. McGee Jr. By: /s/ Gerard M. Jacobs
- ---------------------------------- ------------------------------
Print Name: Hugh P. McGee Jr. Name: Gerard M. Jacobs
----------------------- Title: President
2
<PAGE> 32
STATE OF ILLINOIS IL :
-----------
: ss January 20, l998
COUNTY OF COOK COOK :
--------------
The foregoing instrument was acknowledged before me this 20th day of
January by Michael Suisman, the Chief Executive Officer of AEROSPACE METALS,
INC., a Connecticut corporation, on behalf of the corporation.
"OFFICIAL SEAL" /s/ SCOTT D. FEHLAN
SCOTT D. FEHLAN ----------------------------------------
NOTARY PUBLIC, STATE OF ILLINOIS Notary Public
MY COMMISSION EXPIRES 2/22/99 My Commission Expires
Commissioner of the Superior Court
STATE OF ILLINOIS :
: ss. January 20, 1998
COUNTY OF COOK :
The foregoing instrument was acknowledged before me this 20th day of
January by Gerard M. Jacobs, the President of AMI ACQUISITION CO., a Delaware
corporation, on behalf of the corporation.
"OFFICIAL SEAL" /s/ SCOTT D. FEHLAN
SCOTT D. FEHLAN ----------------------------------------
NOTARY PUBLIC, STATE OF ILLINOIS Notary Public
MY COMMISSION EXPIRES 2/22/99 My Commission Expires:
Commissioner of the Superior Court
3
<PAGE> 1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of the 20th day of January, 1998, by and between Metal
Management, Inc., a Delaware corporation (the "COMPANY") and Aerospace Metals,
Inc. a Connecticut corporation ("STOCKHOLDER").
RECITALS:
A. Pursuant to the Asset Purchase Agreement dated as of
January 20, 1998, by and among the Company, Stockholder, Aerospace Parts
Security, Inc., a Connecticut corporation, The Suisman Titanium Corporation, a
Connecticut corporation, AMI Acquisition Co., a Delaware corporation, and
Michael Suisman (the "PURCHASE AGREEMENT"), Stockholder received from the
Company shares of the Company's common stock, par value $.01 per share (the
"COMMON STOCK"). All terms which are capitalized and used without definition
herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
B. As a condition to Stockholder agreeing to enter into the
Purchase Agreement, Stockholder is being granted registration rights with
respect to its shares of Common Stock.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. (a) Piggyback Registration. If, at any time during the
120 day period commencing on the Closing Date, the Company shall file a
registration statement (other than a registration statement on Form S-4, Form
S-8, or any successor form) with the Securities and Exchange Commission (the
"COMMISSION") while any Registrable Securities (as hereinafter defined) are
outstanding, the Company shall give Stockholder, to the extent it then holds
any Registrable Securities (the "ELIGIBLE HOLDER") at least 30 days' prior
written notice of the filing of such registration statement. Unless the
Eligible Holder notifies the Company in writing within 20 days after receipt of
any such notice to the contrary, the Company shall, at the Company's sole
expense (other than the fees and disbursements of counsel for the Eligible
Holder, and the underwriting discounts, if any, payable in respect of the
Registrable Securities sold by any Eligible Holder), register all of the
Registrable Securities of all Eligible Holder, concurrently with the
registration of such other securities, all to the extent requisite to permit
the public offering and sale of the Registrable Securities through the
facilities of all appropriate securities exchanges, if any, on which the
Company's Common Stock is being sold or on the over-the-counter market, and
will use its best efforts through its officers, directors, auditors, and
counsel to cause such registration statement to become effective as promptly as
practicable. Notwithstanding the foregoing, if the managing underwriter of any
such offering shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Registrable Securities to be included
in the registration concurrently with the securities being registered by the
Company would materially adversely affect the distribution of such securities
by the Company for its own account, then the Company shall delay the offering
and sale of such Registrable Securities (or the portions thereof so designated
by such managing underwriter) for such period, not to exceed 120 days (the
"DELAY PERIOD"), as the managing underwriter shall request. As used herein,
"REGISTRABLE SECURITIES" shall mean the shares
<PAGE> 2
of Common Stock owned by Stockholder on the date hereof as set forth on
Schedule 1(a), which, with respect to Stockholder, have not been previously
sold pursuant to a registration statement or Rule 144 promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
(b) Mandatory Registration. On or before the date which is 20
days after the Closing Date (the "FILING DEADLINE"), subject to extension as
described in Section 1(i) below, the Company shall prepare and file at the
Company's sole cost and expense (other than the fees and disbursements of
counsel for the Eligible Holder, and the underwriting discounts, if any,
payable in respect of the Registrable Securities sold by the Eligible Holder)
one registration statement on Form S-3 covering the resale of the Registrable
Securities. The Company will use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable following the filing thereof, but in no
event later than 90 days after the Closing Date.
(c) In the event of a registration pursuant to the provisions of
this Section 1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Eligible Holder or
such holder may reasonably request; provided, however, that the Company shall
not be required to qualify to do business in any state by reason of this
Section 1(c) in which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Eligible Holder to complete the offer
and sale of the Registrable Securities covered thereby. The Company shall in
no event be required to keep any such registration or qualification in effect
for a period in excess of nine (9) months from the date on which the Eligible
Holder are first free to sell such Registrable Securities; provided, however,
that, if the Company is required to keep any such registration or qualification
in effect with respect to securities other than the Registrable Securities
beyond such period, the Company shall keep such registration or qualification
in effect as it relates to the Registrable Securities for so long as such
registration or qualification remains or is required to remain in effect in
respect of such other securities.
(e) In the event of a registration pursuant to the provisions of
this Section 1, the Company shall furnish to each Eligible Holder such number
of copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of
copies of each prospectus contained in such registration statement and each
supplement or amendment thereto (including each preliminary prospectus), all of
which shall conform to the requirements of the Securities Act and the rules and
regulations thereunder, and such other documents, as any Eligible Holder may
reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.
2
<PAGE> 3
(f) In the event of a registration pursuant to the provisions of
this Section 1, the Company shall furnish each Eligible Holder of any
Registrable Securities so registered with an opinion of its counsel (reasonably
acceptable to the Eligible Holder) to the effect that (i) the registration
statement has become effective under the Securities Act and no order suspending
the effectiveness of the registration statement, preventing or suspending the
use of the registration statement, any preliminary prospectus, any final
prospectus, or any amendment or supplement thereto has been issued, nor has the
Commission or any securities or blue sky authority of any jurisdiction
instituted or threatened to institute any proceedings with respect to such an
order, (ii) the registration statement and each prospectus forming a part
thereof (including each preliminary prospectus), and any amendment or
supplement thereto, comply as to form with the Securities Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as
amended or supplemented. Such opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section 1(c).
(g) The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Securities Act, it shall use its best efforts to keep current in filing all
reports, statements and other materials required to be filed with the
Commission to permit holders of the Registrable Securities to sell such
securities under Rule 144.
(h) The Company shall notify the Eligible Holder of the
Registrable Securities promptly when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed. The Company shall notify the Eligible Holder of the
Registrable Securities promptly of the happening of any event as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and use its
best efforts to promptly update and/or correct such prospectus; provided,
however, that the Company shall not be required to update and/or correct such
prospectus if, and so long as, the Board of Directors of the Company determines
in good faith that to do so at such time would be detrimental to the business
or prospects of the Company.
(i) The Company shall notify the Eligible Holder of the
Registrable Securities promptly (i) when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed; and (i) of the issuance by the Commission of any stop
or other order suspending the effectiveness of the registration statement. If
at any time the Company shall receive any such order, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time; provided, however, that the Company shall not be required to
obtain the withdrawal or lifting of such order if, and so long as, the Board of
Directors of the Company determines in good faith that to do so at such time
would be detrimental to the business or prospects of the Company.
3
<PAGE> 4
(j) The Filing Deadline shall be extended by the number of days
during (i) any period in which the Company has been advised by its outside
counsel that the registration statement will not be accepted for filing by the
Commission as a result of the Company then having on file a registration
statement which has not yet gone effective or a proxy statement that is then
being reviewed by the Commission, and (ii) any period (a "STANDSTILL PERIOD")
in which the Board of Directors of the Company determines in good faith (A)
that an amendment or supplement to the registration statement or prospectus
contained therein is necessary in order to correct a material misstatement made
therein or to include information the absence of which would render the
registration statement or such prospectus materially misleading and (B) that
the disclosure of such information at such time would be detrimental to the
business or prospects of the Company.
(k) If requested by the underwriter for any underwritten offering
of Registrable Securities on behalf of an Eligible Holder of Registrable
Securities pursuant to a registration requested under Section 1(b), the Company
and such Eligible Holder of Registrable Securities will enter into an
underwriting agreement with such underwriter for such offering, which shall be
reasonably satisfactory in substance and form to the Company and the Company's
counsel, such Eligible Holder of Registrable Securities and the underwriter,
and such agreement shall contain such representations and warranties by the
Company and such Eligible Holder of Registrable Securities and such other terms
and provisions as are customarily contained in an underwriting agreement with
respect to secondary distributions solely by selling stockholders, including,
without limitation, indemnities substantially to the effect and to the extent
provided in Section 2 hereof.
(l) In connection with the registration of Registrable Securities
pursuant to a registration statement, each Eligible Holder shall: (i) furnish
to the Company such information regarding itself and the intended method of
disposition of Registrable Securities as the Company shall reasonably request
in order to effect the registration thereof; and (ii) upon receipt of any
notice from the Company of the initiation of a Standstill Period, immediately
discontinue disposition of Registrable Securities pursuant to the registration
statement until receiving written notice from the Company that the Standstill
Period has terminated.
(m) The Company shall use its best efforts to have the Registrable
Securities included for quotation on the Nasdaq National Market.
2. Indemnification. (a) Subject to the conditions set forth
below, the Company agrees to indemnify and hold harmless each Eligible Holder,
its officers, directors, partners, employees, agents, and counsel, and each
person, if any, who controls any such person within the meaning of Section 15
of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), from and against any and all loss, liability,
charge, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 2, but not be limited to, reasonable attorneys' fees
and any and all reasonable expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or
4
<PAGE> 5
final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, relating to the sale of any of the Registrable
Securities or (B) in any application or other document or communication (in
this Section 2 collectively called an "APPLICATION") executed by or on behalf
of the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to register or qualify any of
the Registrable Securities under the securities or blue sky laws thereof or
filed with the Commission or any securities exchange; or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading, unless (x) such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to such Eligible Holder by or
on behalf of such person expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (y) such loss,
liability, charge, claim, damage or expense arises out of such Eligible
Holder's failure to comply with the terms and provisions of this Agreement, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to indemnify
shall be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any
controlling persons of such person (an "INDEMNIFIED PARTY") in respect of which
indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
in writing of the institution of such action (but the failure so to notify
shall not relieve the Company from any liability other than pursuant to this
Section 2(a)) and the Company shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such
indemnified party or parties), provided that the indemnified party shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to
such indemnified party or parties, or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different
from or additional to those available to the Company, in any of which events
such fees and expenses shall be borne by the Company and the Company shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written
consent of each indemnified party that is not released as described in this
sentence, settle or compromise any action, or permit a default or consent to
the entry of judgment in or otherwise seek to terminate any pending or
threatened action, in respect of which indemnity may be sought hereunder
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify Eligible Holder of the commencement of
any litigation or proceedings against the Company
5
<PAGE> 6
or any of it officers or directors in connection with the sale of any
Registrable Securities or any preliminary prospectus, prospectus, registration
statement, or amendment or supplement thereto, or any application relating to
any sale of any Registrable Securities.
(b) Each Eligible Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
such Eligible Holder, each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, and its or their respective counsel, to the same extent as the
foregoing indemnity from the Company to such Eligible Holder in Section 2(a),
but only with respect to statements or omissions, if any, made in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
or in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to such Eligible Holder by or
on behalf of such Eligible Holder, expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus,
or final prospectus or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against such
Eligible Holder pursuant to this Section 2(b), such Eligible Holder shall have
the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 2(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise,
then the Company (including for this purpose any contribution made by or on
behalf of any director of the Company, any officer of the Company who signed
any such registration statement, any controlling person of the Company, and its
or their respective counsel), as one entity, and the Eligible Holder of the
Registrable Securities, included in such registration in the aggregate
(including for this purpose any contribution by or on behalf of an indemnified
party), as a second entity, shall contribute to the losses, liabilities,
claims, damages, and expenses whatsoever to which any of them may be subject,
on the basis of relevant equitable considerations such as the relative fault of
the Company and such Eligible Holder in connection with the facts which
resulted in such losses, liabilities, claims, damages, and expenses. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission, or alleged omission shall be determined by, among other things,
whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by such Eligible Holder, and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and Eligible Holder agree that it would be unjust and
inequitable if the respective obligations of the Company and the Eligible
Holder for contribution were determined by pro rata or per capita
6
<PAGE> 7
allocation of the aggregate losses, liabilities, claims, damages, and expenses
(even if each Eligible Holder and the other indemnified parties were treated as
one entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 2(c). In no
case shall any Eligible Holder be responsible for a portion of the contribution
obligation imposed on all Eligible Holder in excess of its pro rata share based
on the number of shares of Common Stock owned by him and included in such
registration as compared to the number of shares of Common Stock owned by all
Eligible Holder and included in such registration. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section
2(c), each person, if any, who controls any Eligible Holder within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee, agent, and counsel of Eligible
Holder or control person shall have the same rights to contribution as such
Eligible Holder or control person and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed any such
registration statement, each director of the Company, and its or their
respective counsel shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 2(c). Anything in this
Section 2(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 2(c) is intended to supersede any
right to contribution under the Securities Act, the Exchange Act or otherwise.
3. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, Stockholder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in accordance with the provision of the
Purchase Agreement.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of the Registrable Securities subject to the
terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall
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be deemed to be an original and all of which taken together shall constitute
one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience
of references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without
reference to its conflicts of law provisions.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions contained herein shall not be affected or
impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of this agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises warranties or undertakings, other than those set forth or referred to
herein, concerning the registration rights granted by the Company pursuant to
this Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
METAL MANAGEMENT, INC.
/s/ Gerard M. Jacobs
By:_____________________________________
Name: Gerard M. Jacobs
Title: Chief Executive Officer
AEROSPACE METALS, INC.
/s/ Michael Suisman
By:_____________________________________
Name: Michael Suisman
Title: Chief Executive Officer
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SCHEDULE 1(a)
REGISTRABLE SECURITIES
STOCKHOLDER NUMBER OF SHARES OF COMMON STOCK
Aerospace Metals, Inc. 402,893
<PAGE> 1
EXHIBIT 99.1
Wednesday January 21, 12:46 pm Eastern Time
Metal Management closes Conn. acquisition
CHICAGO, Jan 21 (Reuters) - Metal Management Inc said Wednesday it has
completed the acquisition of Aerospace Metals Inc, a Hartford, Conn. based
recycler of high temperature nickel and cobalt alloys and titanium, generated
as scrap at aircraft engine, airframe and helicopter plants.
In the transaction, the shareholders of Aerospace Metals, Inc. received about
$14.4 million in cash and 402,893 shares of Metal Management's common stock. In
addition, Metal Management will lease Aerospace Metals' real property.
Aerospace Metals has estimated annualized consolidated gross revenues of more
than $50 million.
Aerospace Metals' management will remain in place under Metal Management.
Aerospace Metals has long-term purchase contracts with aerospace and high
technology companies in North America, Europe, the Middle East and the Pacific
Rim, employs 150 people at its 30-acre site, and holds patents for its
recycling and processing of high grade alloy metals in the U.S., Canada,
Germany, France, England and Japan.
Metal Management has been acquiring companies in the scrap metal recycling
industry.
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