EXHIBIT 10.34
ASSET PURCHASE AGREEMENT
dated as of September 26, 1997
by and among
METALS USA, INC.
FEDERAL BRONZE ALLOYS INC.
(a subsidiary of Metals USA, Inc.)
FEDERAL BRONZE PRODUCTS, INC.
and
the Stockholders named herein
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE......................................................1
1.1 Purchase and Sale................................................1
1.2 Purchase Price...................................................3
1.3 Assumption of Liabilities........................................3
1.4 Indemnification..................................................3
1.5 The Closing......................................................4
1.6 Instruments of Transfer; Further Assurances......................4
1.7 Value Assigned to the Assets.....................................4
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................4
2.1 Due Organization.................................................4
2.2 Authorization....................................................5
2.3 Capital Stock of the Company.....................................5
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................6
2.6 Liabilities and Obligations......................................6
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................7
2.9 Environmental Matters............................................7
2.10 Personal Property................................................8
2.11 Significant Customers; Material Contracts and Commitments........9
2.12 Real Property....................................................9
2.13 Insurance........................................................9
2.14 Compensation; Employment Agreements; Organized Labor Matters....10
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................12
2.17 Taxes...........................................................12
2.18 No Violations; All Required Consents Obtained...................13
2.19 Government Contracts............................................14
2.20 Absence of Changes..............................................14
2.21 Powers of Attorney..............................................15
2.22 Competing Lines of Business; Related-party Transactions.........15
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2.23 Disclosure......................................................15
2.24 Certain Business Practices......................................15
2.25 Notices and Consents............................................16
3. REPRESENTATIONS OF METALS.............................................16
3.1 Due Organization................................................16
3.2 Authorization...................................................16
3.3 No Violations...................................................16
3.4 Validity of Obligations.........................................16
4. DELIVERIES............................................................17
4.1 Opinion of Counsel..............................................17
4.2 Good Standing Certificates......................................17
4.3 Employment and Consulting Agreements............................17
4.4 Xxxxxx Street Warehouse Lease...................................17
4.5 The 00 Xxxxxxx Xxxxx Xxxx Lease.................................17
4.6 General Conveyance, Transfer and Assignment.....................17
4.7 Escrow Agreement................................................17
4.8 Additional Deliveries...........................................17
5. POST-CLOSING COVENANTS................................................18
5.1 Future Cooperation..............................................18
5.2 Expenses........................................................18
5.3 Payment of Liabilities; Bulk Transfer Compliance................18
5.4 Change of the Company's Name....................................18
5.5 Agreements......................................................18
5.6 Union Employees and the Collective Bargaining Agreement.........19
5.7 Union Employees and the Multiemployer Plan......................19
6. INDEMNIFICATION.......................................................20
6.1 Survival of Representations and Warranties. ...................20
6.2 General Indemnification by the Company..........................21
6.3 Indemnification by Metals.......................................21
6.4 Third Person Claims.............................................21
6.5 Method of Payment...............................................22
6.6 Limitations on Indemnification..................................22
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7. NONCOMPETITION........................................................23
7.1 Prohibited Activities...........................................23
7.2 Equitable Relief................................................23
7.3 Reasonable Restraint............................................24
7.4 Severability; Reformation.......................................24
7.5 Independent Covenant............................................24
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 General.........................................................24
8.2 Equitable Relief................................................25
8.3 Survival........................................................25
9. GENERAL...............................................................25
9.1 Successors and Assigns..........................................25
9.2 Entire Agreement................................................25
9.3 Counterparts....................................................25
9.4 Brokers and Agents..............................................26
9.5 Notices.........................................................26
9.6 Governing Law...................................................26
9.7 Effect of Investigation.........................................26
9.8 Exercise of Rights and Remedies.................................26
9.9 Time............................................................27
9.10 Reformation and Severability....................................27
9.11 Captions........................................................27
9.12 Press Releases and Public Announcements.........................27
9.13 No Third-Party Beneficiaries....................................27
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ANNEXES
Annex I - Form of General Conveyance, Transfer and Assignment
Annex IIA - Form of Employment Agreement
Annex IIB - Form of Consulting Agreement
Annex III - Form of Opinion of Counsel to Company and
Stockholders
Annex IV - Form of Lease
Annex V - Form of Escrow Agreement
Annex VI - Form of Amendment and Assignment of the
00 Xxxxxxx Xxxxx Xxxx Lease
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of September 26, 1997 by and among Federal Bronze Alloys Inc., a Delaware
corporation ("Purchaser") and wholly-owned subsidiary of Metals USA, Inc., a
Delaware corporation ("Metals"), Federal Bronze Products, Inc., a New Jersey
corporation (the "Company"), and the stockholders of the Company identified on
the signature pages hereto (the "Stockholders").
WHEREAS, the Company desires to sell to Purchaser the business of the
Company as a going concern and along therewith substantially all of the assets
of the Company (collectively, the "Business"), and Purchaser desires to purchase
the Business, upon the terms and conditions set forth in this Agreement (the
"Transaction");
WHEREAS, concurrently with the execution and delivery hereof, the parties
hereto are consummating the Transaction;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
1. PURCHASE AND SALE
1.1 PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, the Company hereby sells, conveys, transfers, assigns and
delivers to Purchaser, and Purchaser hereby purchases from the Company, all of
the assets, properties, business, franchises, goodwill and rights of every kind
and character, tangible or intangible, owned or leased by the Company or any of
its subsidiaries (collectively, the "Assets"), free and clear of all liens,
claims and encumbrances of any kind; provided, however, that the Assets do not
include the assets (the "Excluded Assets") identified as such on Schedule 1.1.
Without limiting the generality of the foregoing, the Assets consist of all
assets of the Company other than the Excluded Assets, including, without
limitation, the following:
(a) CUSTOMER LISTS. All customer lists, sales records, credit data
and other information relating to customers of the Company.
(b) CUSTOMER CONTRACTS. All right, title and interest of the Company
in, to and under all existing contracts and agreements, written and verbal, with
customers of the Company,
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including, without limitation, those contracts and agreements identified in
Schedule 1.1(b) (the "Scheduled Contracts").
(c) ACCOUNTS AND NOTES RECEIVABLE. All trade and other accounts and
notes receivable of the Company identified on Schedule 2.7.
(d) VEHICLES. The vehicles and other transportation equipment
identified on Schedule 1.1(d).
(e) EQUIPMENT. All of the equipment, machinery, tools, appliances,
telephone systems, copy machines, fax machines, implements, spare parts,
supplies and all other tangible personal property of every kind and description
owned by the Company (the "Equipment"). The Equipment includes, without
limitation, all of the items listed in Schedule 1.1(e).
(f) LICENSES, FRANCHISES AND PERMITS. All right, title and interest
of the Company in, to and under all licenses, franchises, permits,
authorizations, certificates, approvals, registrations and other governmental
authorizations (collectively, the "Operating Authorities") owned or possessed by
the Company and relating to the Business or all or any of the Assets, including
those identified on Schedules 2.8 and .2.9.
(g) INTANGIBLE ASSETS. All right, title and interest of the Company
in, to and under all patents, trademarks, service marks, technology, know-how,
copyrights and applications for each of the foregoing, trade names, licenses,
covenants by others not to compete with the Company, rights and privileges used
in the conduct of the Business and the right to recover for infringement thereon
and all goodwill associated with the Business in connection with which any
intellectual property is used.
(h) CORPORATE NAMES. The names "Federal Bronze Products," any
variation thereof and any other names under which the Company operates.
(i) GOODWILL. The goodwill and going concern value of the Business.
(j) BOOKS AND RECORDS. Copies of the Company's books, records,
papers and instruments of whatever nature and wherever located that relate to
the Business or the Assets or which are required or necessary in order for
Purchaser to conduct the Business from and after the date hereof in the manner
in which it is presently being conducted (the "Records").
(k) INSURANCE PROCEEDS. All insurance proceeds and insurance claims
of the Company relating to the Business or all or any part of the Assets and, to
the extent transferable, the
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benefit of and the right to enforce the covenants and warranties, if any, that
the Company is entitled to enforce with respect to the Assets against the
Company's predecessors in title to the Assets, if any.
(l) COMPUTERS AND SOFTWARE. All right, title and interest of the
Company in computer equipment and hardware, including, without limitation, all
central processing units, terminals, disk drives, tape drives, electronic memory
units, printers, keyboards, screens, peripherals (and other input/output
devices), modems and other communication controllers, networking equipment, and
any and all parts and appurtenances thereto, together with all software and
intellectual property used by the Company with such computer equipment and
hardware.
(m) OTHER INTANGIBLES. All right, title and interest of the Company
in, to and under all rights, privileges, claims, causes of action, and options
relating to or pertaining to the Business or the Assets.
(n) CRANES. All cranes and related equipment used by the Company in
the Business.
(o) OTHER PROPERTY. All other or additional privileges, rights,
interests, properties and assets of the Company of every kind and description
and wherever located that are used or intended for use in connection with, or
that are necessary to the continued conduct of, the Business as presently being
conducted.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Assets shall consist of $X,XXX,XXX in cash, of which $XXX,XXX shall be
deposited directly into escrow and held and disbursed in accordance with the
provisions of the Escrow Agreement described herein, and of which $X,XXX,XXX
shall be paid to the Company by wire transfer of immediately available funds.
1.3 ASSUMPTION OF LIABILITIES. As additional consideration for the
purchase of the Assets, Purchaser shall assume and discharge the obligations of
the Company under the leases and agreements specifically identified on Schedule
1.3 (the "Scheduled Obligations"); provided, however, that the aggregate
principal amount of all interest-bearing indebtedness included in the Scheduled
Obligations shall not exceed $240,000.
1.4 INDEMNIFICATION. Except for the Scheduled Obligations, Purchaser does
not assume or agree to pay, perform or discharge, and shall not be responsible
for, any other liabilities or obligations of the Company or any other person,
whether accrued, absolute, contingent or otherwise. The Company agrees that it
shall remain solely responsible for, and it hereby agrees to
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indemnify and hold Purchaser harmless from, any and all liabilities and
obligations of the Company, whether accrued, absolute, contingent or otherwise,
except for the Scheduled Obligations.
1.5 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") is occurring concurrently with the execution and
delivery hereof.
1.6 INSTRUMENTS OF TRANSFER; FURTHER ASSURANCES. Concurrently herewith,
the Company and Purchaser are executing and delivering to each other (a) a
completed General Conveyance, Transfer and Assignment, in the form attached as
Annex I hereto ("General Conveyance, Transfer and Assignment"), covering all of
the Assets, (b) certificates of title to any Asset covered by a certificate of
title, and (c) such other instruments of transfer as may be reasonably necessary
or appropriate to vest in Purchaser good and indefeasible title to the Assets.
At all times hereafter as may be necessary, the Company and, if appropriate, the
stockholders of the Company, shall execute and deliver to Purchaser such
additional instruments of transfer as shall be reasonably necessary or
appropriate to vest in Purchaser good and indefeasible title to the Assets and
to comply with the purposes and intent of this Agreement.
1.7 VALUE ASSIGNED TO THE ASSETS. The Purchase Price shall be allocated to
the Assets as set forth on Schedule 1.7 hereto. Purchaser and the Company and
the Stockholders agree that they shall not take any position or action
inconsistent with such allocation in the filing of any federal income or other
tax returns.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows:
2.1 DUE ORGANIZATION. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of New Jersey
(the "State of Incorporation"), and has full power and authority to carry on its
business as it is now being conducted. The Company is duly authorized or
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except where the failure to be so authorized or
qualified would not have a material adverse effect on the Business, the Assets,
or the operations or condition (financial or otherwise), of the Company taken as
a whole (as used herein with respect to the Company, or with respect to any
other person, a "Material Adverse Effect"). Schedule 2.1 sets forth a list of
all jurisdictions in which the Company is authorized or qualified to do
business. True, complete and correct copies of the Certificate of Incorporation
and By-laws, each as amended, of the Company (the "Charter Documents") are all
attached to Schedule 2.1. There are no minutes in
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the possession of the Company which have not been made available to Metals, and
all of such minutes are correct and complete in all material respects.
2.2 AUTHORIZATION. (i) The representatives of the Company executing this
Agreement have full power and authority to execute and deliver this Agreement
and (ii) the Company has full power and authority to enter into this Agreement
and the transactions contemplated hereby. This Agreement and the transactions
contemplated hereby have been approved by the holders of the requisite majority
of the outstanding capital stock of the Company and the Board of Directors of
the Company, and copies of resolutions adopted by the stockholders and the Board
of Directors of the Company approving this Agreement and the transactions
contemplated hereby, certified by the Secretary or an Assistant Secretary of the
Company, are attached hereto as Schedule 2.2. No stockholder of the Company or
other person has any right to dissent from the Company's sale of the Assets as
contemplated hereby or any right to an appraisal proceeding or any other similar
right as a result of the transactions contemplated hereby. This Agreement has
been validly executed and delivered by the Company and the Stockholders and
constitutes the legal, valid and binding obligation of each of them enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or similar laws now or hereafter in effect relating
to creditors' rights generally.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company is herein called the "Company Stock". Schedule 2.3 sets forth the
ownership of the outstanding shares of Company Stock, all of which shares have
been duly authorized and validly issued, are fully paid and nonassessable. No
person other than the persons set forth on Schedule 2.3 has any right to vote
any of the shares of Company Stock. None of such shares were issued in violation
of any preemptive rights or similar rights of any person. Except as set forth on
Schedule 2.3, no option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any shares of its capital stock
or obligates any stockholder of the Company to transfer any shares of Company
Stock to any person.
2.4 SUBSIDIARIES. Except as set forth on Schedule 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name on its certificate or articles of incorporation. Except as
set forth in Schedule 2.4, the Company does not own, of record or beneficially,
or control, directly or indirectly, any capital stock, securities convertible
into capital stock or any other equity interest in any corporation, association
or other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
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2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as Schedule 2.5:
(i) the balance sheets of the Company as of December 31, 1996 and
1995 and the related statements of operations, retained earnings and cash
flows for the two-year period ended December 31, 1996, together with the
related notes and schedules (the "Year-end Financial Statements"); and
(ii) the balance sheet (the "Interim Balance Sheet") of the Company
as of August 31, 1997 (the "Balance Sheet Date") and the related statement
of operations for the eight-month period ended August 31, 1997 (the
"Interim Financial Statements"). The Year-end Financial Statements and the
Interim Financial Statements are collectively called the "Financial
Statements".
The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years and throughout the periods involved
("GAAP") (except as reflected in the independent accountants' review report
thereon or on Schedule 2.5 hereto), and the Financial Statements present fairly
in all material respects the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
2.6 LIABILITIES AND OBLIGATIONS. Other than liabilities arising in the
ordinary course of business after the Balance Sheet Date, and except as and to
the extent disclosed and adequately provided for in the Financial Statements
(including any notes thereto) or on Schedule 2.6 hereto, the Company has no
liabilities or obligations of any kind, whether accrued, absolute, secured or
unsecured, contingent or otherwise, which would be required to be reflected or
reserved against in a year-end balance sheet (including the notes thereto).
2.7 ACCOUNTS AND NOTES RECEIVABLE. Schedule 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the Balance
Sheet Date and generated subsequent to the Balance Sheet Date, including any
such amounts which are not reflected in the balance sheet as of the Balance
Sheet Date. Receivables from and advances to employees and the stockholders of
the Company and any entities or persons related to or affiliated with any of
them are separately identified on Schedule 2.7. Schedule 2.7 also sets forth an
accurate aging analysis of all accounts, notes and other receivables as of the
Balance Sheet Date, showing amounts due in 30-day
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aging categories. Except to the extent reflected on Schedule 2.7, all such
accounts, notes and other receivables were incurred in the ordinary course of
business, are stated in accordance with GAAP and are, to the best knowledge of
the Company, collectible in the amounts shown on Schedule 2.7, net of reserves
reflected in the balance sheet as of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required in connection with the
conduct of the Company's business, the absence of any of which would have a
Material Adverse Effect. Schedule 2.8 sets forth an accurate list of all such
licenses, franchises, permits and other governmental authorizations, including
permits, titles (including licenses, franchises, certificates, trademarks, trade
names, patents, patent applications and copyrights owned or held by the Company
or any of its employees (including interests in software or other technology
systems, programs and intellectual property) (collectively, the "Intangible
Assets")) (it being understood and agreed that a list of all environmental
permits and other environmental approvals is set forth on Schedule 2.9). To the
best knowledge of the Company, the Intangible Assets and other governmental
authorizations listed on Schedules 2.8 and 2.9 are valid. The Company has not
received any notice that any person intends to cancel, terminate or not renew
any such Intangible Assets or other governmental authorization. To the best
knowledge of the Company, the Company has conducted and is conducting its
business in compliance with the requirements, standards, criteria and conditions
set forth in the Intangible Assets and other governmental authorizations listed
on Schedules 2.8 and 2.9 and is not in violation of any of the foregoing, except
where any such violation would not have a Material Adverse Effect. Except as
specifically set forth on Schedule 2.8 or 2.9, (a) the transactions contemplated
by this Agreement will not result in a default under or a breach or violation
of, or adversely affect the rights and benefits afforded to the Company by, any
such Intangible Assets or other governmental authorizations, and (b) all of such
rights and benefits are transferable to the Purchaser and are being transferred
to the Purchaser on the date hereof.
2.9 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 2.9 and except
where any of the following has not had and will not have a Material Adverse
Effect or require any material expenditure in connection with the Business after
the date hereof, (i) the Company is in compliance with all federal, state, local
and foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to the Company or any
of its properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances including petroleum and petroleum
products (as such terms are defined in any applicable Environmental Law)
(collectively referred to herein as "Hazardous Substances"), (ii) the Company
has obtained and adhered to all material
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permits and other approvals necessary to treat, transport, store, dispose of and
otherwise handle Hazardous Substances, a list of all of which permits and
approvals is set forth on Schedule 2.9, and have reported to the appropriate
authorities, to the extent required by all Environmental Laws, all past and
present sites owned and operated by the Company where Hazardous Substances have
been treated, stored, disposed of or otherwise handled, (iii) there have been no
releases or threats of releases (as defined in Environmental Laws) at, from, in
or on any property owned or operated by the Company except as permitted by
Environmental Laws, (iv) to the Company's best knowledge, there is no on-site or
off-site location to which the Company has transported or disposed of Hazardous
Substances or arranged for the transportation of Hazardous Substances which is
the subject of any federal, state, local or foreign enforcement action or any
other investigation which could lead to any claim against the Company, Metals or
Purchaser for any clean-up cost, remedial work, damage to natural resources,
property damage or personal injury, including, but not limited to, any claim
under (i) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) the Resource Conservation and Recovery Act, (iii)
the Hazardous Materials Transportation Act or (iv) comparable state or local
statutes and regulations. The Company has no contingent liability in connection
with any release of any Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. Schedule 2.10 sets forth an accurate list of (a)
all material personal property included in "plant, property and equipment" or
"inventory" on the balance sheet of the Company, (b) all other personal property
owned by the Company with an individual value in excess of $10,000 (i) as of the
Balance Sheet Date and (ii) acquired since the Balance Sheet Date and (c) all
leases and agreements in respect of personal property, including, in the case of
each of (a), (b) and (c), (1) true, complete and correct copies of all such
leases and (2) an indication as to which assets are currently owned, or were
formerly owned, by stockholders of the Company, relatives of stockholders of the
Company, or persons controlling, controlled by, or under common control with,
the Company or any of such stockholders (collectively, "Affiliates"). Except as
set forth on Schedule 2.10, (i) all material personal property used by the
Company in its business is either owned by the Company or leased by the Company
pursuant to a lease included on Schedule 2.10, (ii) all of the personal property
listed on Schedule 2.10 is in good working order and condition, ordinary wear
and tear excepted or, in the case of inventory (except the inventory described
as Special Inventory on Schedule 2.10), is salable in the ordinary course of
business, and (iii) all leases and agreements included on Schedule 2.10 are in
full force and effect and constitute valid and binding agreements of the parties
(and to the Company's knowledge their successors) thereto in accordance with
their respective terms. Except as set forth on Schedule 2.10, the Company has
good and marketable title to the tangible and intangible personal property
included in the Assets, including the assets listed on Schedule 2.10, subject to
no security interest, pledge, lien, claim, conditional sales agreement,
encumbrance, charge or restriction on transfer. The overhead cranes and related
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equipment used in the Company's business constitute personal property under
applicable law, are owned by the Company, and are included in the Assets to be
conveyed to Purchaser pursuant to this Agreement.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. Schedule
2.11 sets forth a list of (i) all customers representing 5% or more of the
Company's revenues during the eight months ended on the Balance Sheet Date or
during the 12 months ended December 31, 1996 ("Significant Customers"), and (ii)
all material contracts, commitments and similar agreements to which the Company
is a party or by which it or any of its properties are bound (including, but not
limited to, contracts with Significant Customers, joint venture or partnership
agreements, contracts with any labor organizations, strategic alliances and
options to purchase land). True, complete and correct copies of such agreements
are attached to Schedule 2.11. Except as described on Schedule 2.11, (i) none of
the Company's Significant Customers have canceled or substantially reduced or,
to the knowledge of the Company, are currently attempting or threatening to
cancel a contract or substantially reduce utilization of the services provided
by the Company, and (ii) the Company has complied with all material commitments
and obligations pertaining to the Company, and is not in default under any
contracts or agreements listed on Schedule 2.11 and no notice of default under
any such contract or agreement has been received. Except as specifically set
forth on Schedule 2.11, (a) the transactions contemplated by this Agreement will
not result in a default under or a breach or violation of, or adversely affect
the rights and benefits afforded to the Company by, any such contracts or
agreements, and (b) all of the rights and benefits under all such contracts and
agreements are transferable to the Purchaser and are being transferred to the
Purchaser as of the date hereof. Schedule 2.11 also includes a list of all
material plans or projects relating to the Business or any of the Assets
involving the opening of new operations, expansion of existing operations, the
acquisition of any property, business or assets requiring, in any event, the
payment of more than $10,000.
2.12 REAL PROPERTY. Schedule 2.12 includes a list of all real property
owned or leased by the Company at the date hereof, and all other real property,
if any, used by the Company in the conduct of its business. True, complete and
correct copies of all leases and agreements in respect of real property leased
by the Company that is being assigned to Purchaser, if any, are attached to
Schedule 2.12, and an indication as to which such properties, if any, are
currently owned, or were formerly owned, by stockholders or affiliates of the
Company or stockholders is included in Schedule 2.12. Except as set forth on
Schedule 2.12, all of such leases included on Schedule 2.12 are in full force
and effect and constitute valid and binding agreements of the parties (and, to
the knowledge of the Company, their successors) thereto in accordance with their
respective terms.
2.13 INSURANCE. The Company has been covered during the past three years
by insurance in scope and amount customary and reasonable for the businesses in
which the Company has
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engaged during such period. Schedule 2.13 sets forth an accurate list as of the
Balance Sheet Date of all insurance policies then or now carried by the Company
and an accurate list of all insurance loss runs and workers compensation claims
received for the past three policy years. True, complete and correct copies of
all insurance policies currently in effect are attached to Schedule 2.13. Such
insurance policies evidence all of the insurance that the Company is required to
carry pursuant to all of its contracts and other agreements and pursuant to all
applicable laws, and provide adequate coverage against the risks involved in the
Company's business. Except as set forth in Schedule 2.13, none of such policies
is a "claims made" policy except the Employers' Liability Policy relating to the
Company's employee benefit plans. All of such insurance policies are currently
in full force and effect.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of (i) the Balance Sheet Date and (ii)
the date hereof. Since the Balance Sheet Date, except as specifically noted on
Schedule 2.14, or reflected in the Interim Balance Sheet, there have been no
increases in the compensation payable or any special bonuses to any officer,
director, key employee or other employee.
Except as set forth on Schedule 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past three years. The Company believes its
relationship with its employees is good.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, copies of which are attached
thereto. There are no agreements or arrangements (oral or in writing) containing
"golden parachute" or other similar provisions, and deferred compensation
agreements. Except for the employee benefit plans described on Schedule 2.15,
the Company does not sponsor, maintain or contribute to any plan program, fund
or arrangement that constitutes an "employee pension benefit plan," nor does the
Company have any obligation to contribute to or accrue or pay any benefits under
any deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within
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the meaning of Section 3(36) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or any non-qualified deferred compensation
arrangement). For the purposes of this Agreement, the term "employee pension
benefit plan" shall have the same meaning as is given that term in Section 3(2)
of ERISA. Except as set forth on Schedule 2.15, the Company has not sponsored,
maintained or contributed to any employee pension benefit plan other than the
plans set forth on Schedule 2.15, and is not required to contribute to any
retirement plan pursuant to the provisions of any collective bargaining
agreement establishing the terms and conditions or employment of any of the
Company's employees except as set forth on Schedule 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation or to any multi
employer employee pension benefit plan under the provisions of Title IV of ERISA
except as set forth on Schedule 2.15. All employee benefit plans listed on
Schedule 2.15 and the administration thereof are in compliance in all material
respects with their terms and all applicable provisions of ERISA and the
regulations issued thereunder, as well as with all other applicable federal,
state and local statutes, ordinances and regulations. All accrued contribution
obligations of the Company with respect to any plan listed on Schedule 2.15 have
either been fulfilled in their entirety or are fully reflected on the balance
sheet of the Company as of the Balance Sheet Date.
All plans listed on Schedule 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") are and have been so qualified and have been determined by
the Internal Revenue Service to be so qualified. Except as disclosed on Schedule
2.15, all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 2.15. Neither
any plan listed in Schedule 2.15 nor the Company has engaged in any transaction
prohibited under the provisions of Section 4975 of the Code or Section 406 of
ERISA. No plan listed in Schedule 2.15 has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA; and the Company has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service or any liability to the Pension Benefit
Guaranty Corporation. Except as set forth on Schedule 2.15, there have been no
terminations, partial terminations or discontinuance of contributions to any
such Qualified Plan intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no plan listed in
Schedule 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed in Schedule 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and except
as set forth on Schedule 2.15, no circumstances exist pursuant to which the
Company could have any direct or indirect liability whatsoever
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(including, but not limited to, any liability to any multi employer plan or the
PBGC under Title IV of ERISA or to the Internal Revenue Service for any excise
tax or penalty, or being subject to any statutory lien to secure payment of any
such liability) with respect to any plan now or heretofore maintained or
contributed to by any entity other than the Company that is, or at any time was,
a member of a "controlled group" (as defined in Section 412(n)(6)(B) of the
Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.16, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Business or any of the Assets, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over the Company, the Business or
any of the Assets. Except as set forth on Schedule 2.16, no notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received by
the Company during the last five years and there is no basis therefor. Except as
set forth on Schedule 2.16, the Company has conducted for the past five years
and now conducts its business in material compliance with all laws, regulations,
writs, injunctions, decrees and orders of governmental authorities applicable to
the Company or its assets. The Company is not in violation of any law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it. The Company has conducted and is conducting its
business in compliance with the requirements, standards, criteria and conditions
set forth in applicable federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations, including all
such permits, licenses, orders and other governmental approvals set forth on
Schedules 2.8 and 2.9, except where any failure to comply has not had and will
not have a Material Adverse Effect or require any material expenditure in
connection with the operation of the Business after the date hereof.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof, whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties or additional amounts
attributable to or imposed with respect to any such taxes, charges, fees, levies
or other assessments. The Company has timely filed all requisite federal, state
and other tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date. Except as set forth on Schedule 2.17, there are
no examinations in progress or claims against the Company for federal, state or
other taxes (including penalties and interest) for any period or
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periods prior to or on the Balance Sheet Date and no notice of any claim for
taxes, whether pending or threatened, has been received. All Taxes, including
interest and penalties (whether or not shown on any tax return) owed by the
Company, any member of an affiliated or consolidated group which includes or
included the Company has been paid. The amounts shown as accruals for taxes on
the Financial Statements are sufficient for the payment of all taxes of the
kinds indicated (including penalties and interest) for all periods shown. Copies
of (i) any tax examinations, (ii) extensions of time for filing and (iii) the
federal and local income tax returns and franchise tax returns of Company for
the last three fiscal years, or such shorter period of time as any of them shall
have existed, are attached hereto as Schedule 2.17. The stockholders of the
Company made a valid election under the provisions of Subchapter S of the Code
and the Company has not, within the past five years, been taxed under the
provisions of Subchapter C of the Code. The stockholders of the Company shall
remain liable for all income taxes payable for all periods through and including
the date hereof. The Company uses the accrual method of accounting for income
tax purposes, and the Company's methods of accounting have not changed in the
past five years. The Company is not an investment company as defined in Section
351(e)(1) of the Code.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of its Articles of Incorporation or Bylaws, each as amended to date
("Charter Documents") . Neither the Company nor, to the knowledge of the
Company, any other party thereto, is in material default under any lease,
instrument, license, permit or material agreement to which the Company is a
party or by which its properties are bound (the "Material Documents"). Except as
set forth in Schedule 2.18, (a) the execution of this Agreement by the Company
and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby (including, without
limitation, the assignment to Purchaser of the rights and benefits to which the
Company is entitled under the Material Documents) will not result in any
violation or breach or constitute a default under, any of the terms or
provisions of the Material Documents or the Charter Documents, and (b) at and
after the date hereof the Purchaser will be entitled to the rights and benefits
the under the Material Documents to which the Company is entitled immediately
prior to the date hereof. Except as set forth on Schedule 2.18 (and except for
consents already obtained), none of the Material Documents requires notice to,
or the consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit. Except as set forth on Schedule 2.18, none of the
Material Documents prohibits the use or publication of the name of any other
party to such Material Document, and none of the Material Documents prohibits or
restricts the Company or will prevent or restrict the Purchaser from freely
providing services to any person.
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2.19 GOVERNMENT CONTRACTS. Except as set forth on Schedule 2.19, the
Company is not a party to any governmental contract subject to price
redetermination or renegotiation.
2.20 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on Schedule 2.20 or as otherwise contemplated hereby, there has not been:
(i) any change in the Business, any of the Assets, or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the Assets or the Business that would have a
Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company to any of its
officers, directors, employees, consultants or agents except as reflected
in the Interim Balance Sheet;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character that would have a Material Adverse
Effect;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of Company to any person;
(viii)any cancellation, or agreement to cancel, any material
indebtedness or other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a party;
(xiii)any transaction by the Company outside the ordinary course of
its business;
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(xiv) any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date; or
(xv) any distribution of property or assets by the Company, other
than as set forth on Schedule 2.20 or otherwise permitted by this
Agreement.
2.21 POWERS OF ATTORNEY. Schedule 2.21 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company.
2.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on Schedule 2.22, neither any of the stockholders of the Company nor
any other affiliate of the Company owns, directly or indirectly, any interest
in, or is an officer, director, employee or consultant of or otherwise receives
remuneration from, any business which is a competitor, lessor, lessee, customer
or supplier of the Company. Except as set forth on Schedule 2.22, no officer,
director or stockholder of the Company has, nor during the period beginning
January 1, 1990 through the date hereof had, any interest in any property, real
or personal, tangible or intangible, used in or pertaining to the Company's
business.
2.23 DISCLOSURE. The Company has provided Purchaser with all the
information that Purchaser has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Company contained in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Company which has specific application to the Business or the Assets
(other than general economic or industry conditions) which materially adversely
affects or, so far as the Company can reasonably foresee, materially threatens,
the Business or the Assets, or the condition (financial or otherwise), results
of operations or prospects of the Company, which has not been described in this
Agreement or the Schedules hereto. The disclosures in the Schedules, and those
in any supplement thereto, shall relate only to the representations and
warranties in the Section of this Agreement to which each Schedule expressly
relates, and to no other representation or warranty in this Agreement.
2.24 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
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2.25 NOTICES AND CONSENTS. Except as set forth on Schedule 2.25, the
Company has given any notices to third parties and obtained any third party
consents that may be necessary to transfer the Assets to Purchaser pursuant to
this Agreement.
2.26 NOTICE TO BARGAINING AGENTS. The Company has satisfied any and all
requirements for notice of or consents to the transactions contemplated by this
Agreement under applicable collective bargaining agreements, and copies of such
notices are attached hereto on Schedule 2.26.
3. REPRESENTATIONS OF METALS
Metals represents and warrants that all of the following representations
and warranties in this Section 3 are true at the date of this Agreement.
3.1 DUE ORGANIZATION. Metals and Purchaser are each corporations duly
incorporated, validly existing and in good standing under the laws of the state
of Delaware, and each has the full power and authority to carry on its business
as it is now being conducted. Metals and Purchaser are each qualified to do
business and are each in good standing in each jurisdiction in which the nature
of its business makes such qualification necessary, except where the failure to
be so authorized or qualified would not have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The respective representatives of Metals and
Purchaser executing this Agreement have the authority to enter into and bind
Metals and Purchaser to the terms of this Agreement and (ii) Metals and
Purchaser have the full legal right, power and authority to enter into this
Agreement and the transactions contemplated hereby. All corporate actions
required to have been taken by Metals and Purchaser to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been taken.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, of Metals, or the Amended and Restated Bylaws of Metals or the
Certificate of Incorporation or Bylaws of Purchaser.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by Metals and Purchaser and the performance of the transactions contemplated
herein have been duly and validly authorized by the respective Boards of
Directors of Metals and Purchaser and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and binding
obligation of Metals and Purchaser.
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4. DELIVERIES
Concurrently with the execution and delivery of this Agreement, in
addition to the deliveries described elsewhere herein, the parties hereto are
taking the following actions:
4.1 OPINION OF COUNSEL. Counsel to the Company and the stockholders of the
Company is delivering an opinion dated the date hereof to Purchaser in the form
annexed hereto as Annex III.
4.2 GOOD STANDING CERTIFICATES. The Company is delivering to Purchaser
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company is in good standing and authorized to do business
and that all state franchise and/or income tax returns and taxes for the Company
for all periods prior to the date hereof have been filed and paid.
4.3 EMPLOYMENT AND CONSULTING AGREEMENTS. Xxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, Xx. are entering into Employment and Consulting Agreements in the forms
of Annex IIA and Annex IIB hereto.
4.4 XXXXXX STREET WAREHOUSE LEASE. The Company and Purchaser are entering
into a lease of the Xxxxxx Street Warehouse in the form of Annex IV hereto.
4.5 THE 00 XXXXXXX XXXXX XXXX LEASE. The Company is executing an amendment
to and an assignment of its rights under the 00 Xxxxxxx Xxxxx Xxxx lease
effective as of the date hereof in the form of Annex VI hereto.
4.6 GENERAL CONVEYANCE, TRANSFER AND ASSIGNMENT. The Company is executing
and delivering to Purchaser a General Assignment, Transfer and Assignment in the
form of Annex I hereto.
4.7 ESCROW AGREEMENT. The Company and Purchaser are executing and
delivering an Escrow Agreement with the Escrow Agent named therein in the form
of Annex V hereto.
4.8 ADDITIONAL DELIVERIES. In addition to the documents specifically
required to by delivered hereby, Purchaser and the Company shall execute and
deliver such other documents, certificates, and instruments as the other may
reasonably request in order to effect the transactions contemplated hereby.
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5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION. The Company and Purchaser shall each deliver or
cause to be delivered to the other following the date hereof such additional
instruments as the other may reasonably request for the purpose of transferring,
assigning and delivering to Purchaser and its assigns the Business and fully
carrying out the intent of this Agreement. After the date hereof, Purchaser
shall permit the Company and its representatives reasonable access, during
regular business hours, and upon reasonable advance notice, to the Company's
books and records in connection with the preparation and review of tax returns
and any audit thereof.
5.2 EXPENSES. Purchaser will pay the fees, expenses and disbursements of
Purchaser and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company will pay the fees, expenses and disbursements of the
Company and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement.
5.3 PAYMENT OF LIABILITIES; BULK TRANSFER COMPLIANCE. The Company shall
pay or otherwise satisfy all of its trade payables, other current liabilities
and all other liabilities of the Company and shall fully pay or otherwise
satisfy all other claims or liabilities relating to the Assets, the Business or
the Company other than the Scheduled Obligations. The Company hereby indemnifies
and holds Purchaser harmless from and against all claims, losses, demands,
damages, liabilities, costs and expenses resulting from or relating to
non-compliance by the Company with the bulk transfer provisions of the Uniform
Commercial Code (or any similar law) in connection with the sale and transfer of
the Business to Purchaser. The Company and the Purchaser shall equally bear and
pay when due any sales, transfer or similar Taxes which may become applicable in
respect of the Company's sale of the Business or any of the Assets to Purchaser.
5.4 CHANGE OF THE COMPANY'S NAME. Immediately following the execution of
this Agreement, the Company shall cease to use the name "Federal Bronze
Products" or any similar name or names and as soon as practical thereafter will
file with the office of the Secretary of State of the State of New Jersey any
and all documents necessary to discontinue the authority of the Company to
conduct business under such names.
5.5 AGREEMENTS. Upon the request of Purchaser, at any time after the date
hereof, the Stockholders agree to cause any stockholder of the Company to
terminate any existing agreements
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to which the Company or and any such stockholder of the Company may be parties
relating to or affecting the Business or any of the Assets.
5.6 UNION EMPLOYEES AND THE COLLECTIVE BARGAINING AGREEMENT. Purchaser
agrees to recognize the Glass, Molders, Pottery, Plastics & Allied Workers
International Union, AFL-CIO CLC (the "Union") as the exclusive bargaining
representative of the employees in the applicable bargaining unit, and to assume
the collective bargaining agreement currently in effect between Company and the
Union.
5.7 UNION EMPLOYEES AND THE MULTIEMPLOYER PLAN. (a) The parties intend to
comply with the requirements of Section 4204 of the ERISA in order that the
transactions contemplated by this Agreement shall not be deemed a complete or
partial withdrawal from the GMP and Employers Pension Fund (the "Multiemployer
Plan"). Accordingly, Company and Purchaser agree to the following:
(i) After the date hereof, Purchaser agrees to contribute in a
manner complying with Section 4202 (a) (1) (A) of ERISA to the
Multiemployer Plan for substantially the same number of "contribution base
units" with respect to the operations of the Business for which Company
had an "obligation to contribute" (as those terms are defined in Section
4001 (a) (11) and 4212 of ERISA, respectively) to the Multiemployer Plan
pursuant to the agreement between Company and the Union.
(ii) Prior to the first day of the first plan year after the date
hereof, Purchaser and Company shall jointly apply to the Multiemployer
Plan for a variance from the requirement of Section 4204(a) (1) (B) of
ERISA, that a bond be obtained or an amount be held in escrow as provided
in said Section. In the event that the Multiemployer Plan determines that
the request does not qualify for such variance, within thirty (30) days
after the date on which Company or Purchaser receives notice of the
Multiemployer Plan's decision, Purchaser will provide to the Multiemployer
Plan, for a period of five consecutive plan years commencing with the
first plan year beginning after the Closing Date or such shorter time
period in the manner and to the extent permitted pursuant to ERISA Section
4204, either a bond issued by a surety company that is an acceptable
surety for purposes of Section 412 of ERISA, or an amount held in escrow
by a bank or similar financial institution satisfactory to the
Multiemployer Plan. The amount of such bond or escrow deposit shall be
greater of (i) the average annual contribution that Company was required
to make under the Multiemployer Plan with respect to the operations of the
Business for the three plan years immediately preceding the plan year
which includes the date hereof, or (ii) the annual contribution that
Company was required to make under the Multiemployer Plan with respect to
the operations
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of the Business for the last plan year immediately preceding the plan year
which includes the date hereof.
(iii) If Purchaser withdraws from the Multiemployer Plan with
respect to operations of the Business in a complete withdrawal (within the
meaning of Section 4203 of ERISA), or a partial withdrawal (within the
meaning of Section 4205 of ERISA) prior to the end of the fifth plan year
beginning after the date hereof, and the resulting liability of Purchaser
with respect to the Multiemployer Plan is not paid, then Company shall be
secondarily liable in an amount not to exceed the amount of withdrawal
liability Company would have had to pay to the Multiemployer Plan as a
result of the transactions contemplated by this Agreement but for Section
4204 of ERISA. Purchaser shall indemnify Company against any liability
incurred by Company pursuant to this clause (iii).
(iv) The Company and Purchaser shall take all further actions, and
execute such documents as may be required or appropriate in order to give
effect to the foregoing provisions of this Section 5.7, including to
assure that the parties have properly perfected the "asset sale exception"
pursuant to Section 4204 of ERISA, and to seek calculation of Purchaser's
withdrawal liability, if applicable, pursuant to Section 4204 (b) (1) of
ERISA.
(b) The Company shall cooperate with Purchaser in preparing and submitting
to the Multiemployer Plan or the Pension Benefit Guaranty Corporation ("PBGC")
the request for a variance or exemption from the bond/escrow requirement of
Section 4204 (a) (1) (B) of ERISA (as described in clause (ii). Unless and until
such a variance or exemption is granted, Purchaser shall comply with the
bond/escrow requirement, except to the extent provided in PBGC Regulation
Section 2643.11(d)
6. INDEMNIFICATION
The Company, Metals and Purchaser each make the following covenants that
are applicable to them, respectively:
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Company made in this
Agreement and in the documents and certificates delivered in connection herewith
shall survive for a period of two years from the date hereof, provided that
representations and warranties and indemnification obligations with respect to
which a claim is made within such two-year period shall survive until such claim
is finally determined and paid.
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(b) The representations and warranties of Metals and Purchaser made
in this Agreement and in the certificates delivered in connection herewith shall
survive for a period of two years following the date hereof, provided, however,
that representations and warranties with respect to which a claim is made within
such two year period shall survive until such claim is finally determined and
paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE COMPANY. The Company covenants and
agrees that it will indemnify, defend, protect, and hold harmless Metals,
Purchaser, and their respective subsidiaries and officers, directors, employees,
stockholders, agents, representatives and affiliates at all times from and after
the date hereof until the Expiration Date from and against all claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) (collectively "Damages") incurred by such
indemnified person as a result of or incident to (i) any breach of any
representation or warranty of the Company set forth herein or in the
certificates or other documents delivered in connection herewith, and (ii) any
breach or nonfulfillment of any covenant or agreement by the Company under this
Agreement. Purchaser shall not be entitled to indemnification hereunder to the
extent that Purchaser is compensated for any Damages sustained by Purchaser by
any insurance policy proceeds paid to Purchaser or tax benefit realized by
Purchaser as a result of such Damages or is otherwise compensated for such
Damages.
6.3 INDEMNIFICATION BY METALS. Metals covenants and agrees that it will
indemnify, defend, protect and hold harmless the Company at all times from and
after the date hereof until the Expiration Date from and against all Damages
incurred by the Company and the Stockholders (as defined herein) as a result of
or incident to (i) any breach of any representation or warranty of Metals or
Purchaser set forth herein or in the certificates delivered in connection
herewith; (ii) any breach or nonfulfillment of any covenant or agreement by
Metals or Purchaser under this Agreement; and (iii) any environmental condition
arising out of, resulting from or relating to the operation or ownership of the
Assets after the date hereof.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the
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commencement of such action or proceeding; provided, however, that the failure
to give such notice will not relieve such Indemnifying Party from liability
under this Section with respect to such claim, action or proceeding, except to
the extent that the Indemnifying Party has been actually prejudiced as a result
of such failure. The Indemnifying Party (at its own expense) shall have the
right and shall be given the opportunity to associate with the Indemnified Party
in the defense of such claim, suit or proceedings, provided that counsel for the
Indemnified Party shall act as lead counsel in all matters pertaining to the
defense or settlement of such claims, suit or proceedings. The Indemnified Party
shall not, except at its own cost, make any settlement with respect to any such
claim, suit or proceeding without the prior consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed. It is understood
and agreed that in situations where failure of the Indemnified Party to settle a
claim expeditiously could have an adverse effect on the Indemnified Party, the
failure of the Indemnifying Party to act upon the Indemnified Party's request
for consent to such settlement within five business days of the Indemnifying
Party's receipt of notice thereof from the Indemnified Party shall be deemed to
constitute consent by the Indemnifying Party of such settlement for purposes of
this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
6.6 LIMITATIONS ON INDEMNIFICATION. Metals, Purchaser and the other
persons or entities indemnified pursuant to this Section shall not assert any
claim for indemnification hereunder against the Company until such time as, and
solely to the extent that, the aggregate of all claims which such persons may
have against the Company shall exceed $75,000 (the "Indemnification Threshold").
The Company shall not assert any claim for indemnification hereunder against
Metals or Purchaser until such time as, and solely to the extent that the
aggregate of all claims which the Company may have against Metals or Purchaser
shall exceed the Indemnification Threshold. The Company's aggregate liability
for indemnification for breaches of representations or warranties contained in
this Agreement shall under no circumstances exceed $750,000. A portion of the
Purchase Price equal to $750,000 (the "Escrowed Funds") shall be placed into an
escrow account and held and disbursed in accordance with the terms of an Escrow
Agreement in the form of Annex V hereto. The amount of any Damages incurred by
Purchaser hereunder shall be disbursed to Purchaser from the Escrowed Funds in
accordance with the terms of such Escrow Agreement.
No person shall be entitled to indemnification under this Section if and
to the extent that such person's claim for indemnification is directly or
indirectly caused by a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement. The indemnification
provided for herein shall be the exclusive remedy in any action seeking damages
or any other form of monetary relief brought by any party to this Agreement
against any other party hereto.
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7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. The Stockholders identified on the signature
pages hereto will not, for a period of five (5) years following the date hereof,
for any reason whatsoever, directly or indirectly, for themselves or on behalf
of or in conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature (including, without limitation, the
Company):
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with Metals or any of its subsidiaries within 200 miles of
where the Company is located, conducts business or has sales
representatives located (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of Metals or any of its subsidiaries for the
purpose or with the intent of enticing such employee away from or out of
the employ of Metals or any of its subsidiaries;
(iii) call upon any person or entity which is, at that time, or
which has been, within one year prior to the date hereof, a customer of
Metals or any of its subsidiaries within the Territory for the purpose of
soliciting or selling products or services in direct competition with
Metals or any of its subsidiaries within the Territory.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (1%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The Company acknowledges that Xx. Xxxxxxx Xxxxxxx, Xx. and Xx. Xxxxxx Xxxxxxx
are presently in involved with Machine Parts, Inc., which engages in precision
machining, and the Company acknowledges that such activities, as conducted as of
the date hereof, are not prohibited by the foregoing covenant.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to Metals as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to Metals for which
it would have no other adequate remedy, each Stockholder agrees that the
foregoing covenant may be enforced by Metals in the event of breach by such
Stockholder, by injunctions, restraining orders and other equitable actions.
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7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders in light of the activities and business of the Company and Metals
and its subsidiaries.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholders acknowledge that their
covenants set forth in this Section are material conditions to Metals'
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of any Stockholder against
Metals or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Metals of such
covenants. It is specifically agreed that the period of five (5) years stated at
the beginning of this Section, during which the agreements and covenants of each
Stockholder made in this Section shall be effective, shall be computed by
excluding from such computation any time during which such Stockholder is in
violation of any provision of this Section. The covenants contained in this
Section shall not be affected by any breach of any other provision hereof by any
party hereto and shall have no effect if the transactions contemplated by this
Agreement are not consummated.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholders recognize and acknowledge that they have
access to certain confidential information of the Company, such as operational
policies, pricing and cost policies, and other information, that are valuable,
special and unique assets, and are included in the Assets to be acquired by
Purchaser hereunder. The Stockholders agree that they will not disclose such
confidential information, or any confidential information of Purchaser or Metals
to which they may have access in the future, to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except (a) to
authorized representatives of Purchaser, (b) such information may be disclosed
by the Stockholders as is required in the course of performing their duties, if
any, for Purchaser and (c) to counsel and other advisers, unless (i) such
information becomes known to the public generally through no fault of the
Stockholders, (ii) disclosure is required by law or the order of any
governmental authority, provided, that prior to disclosing any
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information pursuant to this clause (ii), the Stockholders shall give prior
written notice thereof to Purchaser and provide Purchaser with the opportunity
to contest such disclosure, or (iii) the disclosing party in good faith believes
that such disclosure is required in connection with the defense of a lawsuit
against the other party. In the event of a breach or threatened breach by any of
the Stockholders of the provisions of this Section, Purchaser shall be entitled
to injunctive or other equitable relief restraining such Stockholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting Purchaser from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which Purchaser would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for a period of five years.
9. GENERAL
9.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except as expressly permitted hereby or by
operation of law) and shall be binding upon and shall inure to the benefit of
the parties hereto, the successors of the Company, Purchaser and Metals, and the
heirs and legal representatives of the Stockholders.
9.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Purchaser and Metals and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the Company, the Stockholders party hereto,
Purchaser and Metals, acting through their respective officers, duly authorized
by their respective Boards of Directors.
9.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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9.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
9.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person or by facsimile to an officer or agent of such party, as follows:
If to Metals or Purchaser, addressed to it at:
Metals USA, Inc.
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No.: 000-000-0000
If to the Company or the Stockholders party hereto, addressed to it
or them at their addresses set forth on Schedule 9.5 hereto, or to
such other address as any party hereto shall specify pursuant to
this Section from time to time.
9.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware other than its principles governing conflicts
of laws.
9.7 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation. Neither Purchaser nor Metals during
the course of its investigation of the Company or its assets, liabilities or
business, has discovered any fact or information that Purchaser or Metals
believes is a breach of a representation or warranty made by the Company.
9.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
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any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
9.9 TIME. Time is of the essence with respect to this Agreement.
9.10 REFORMATION AND SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
9.11 CAPTIONS. The headings of this Agreement are inserted for convenience
only, and shall not constitute a part of this Agreement or be used to construe
or interpret any provision hereof.
9.12 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities.
9.13 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
METALS USA, INC.
By:
Name:
Title:
FEDERAL BRONZE ALLOYS INC.
By:
Name:
Title:
FEDERAL BRONZE PRODUCTS, INC.
By:
Name:
Title:
Stockholders:
Xxxxxxx Xxxxxxx, Xx.
Xxxx Xxxxxxx
Xxxxxx Xxxxxxx, as Custodian for his minor
children
Xxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxxx, Xx.
ANNEX I
GENERAL CONVEYANCE, TRANSFER AND ASSIGNMENT
Reference is hereby made to the Asset Purchase Agreement dated as of
September 26, 1997 (the "Asset Purchase Agreement") among Federal Bronze Alloys
Inc., a Delaware corporation (the "Purchaser"), Federal Bronze Products, Inc., a
New Jersey corporation (the "Seller"), and the other parties named therein.
Terms defined in the Asset Purchase Agreement and not otherwise defined herein
are used herein with the meanings so defined.
1. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Seller hereby sells, conveys, transfers,
assigns and delivers to the Purchaser all right, title and interest in and to
all of the Assets, to have and to hold the Assets hereby conveyed, transferred,
assigned and delivered, or intended so to be, unto the Purchaser, its successors
and assigns forever.
2. The Seller hereby irrevocably constitutes and appoints the Purchaser,
its successors and assigns, the true and lawful attorney of the Seller, with
full power of substitution, in the name of the Seller or otherwise, and on
behalf and for the benefit of the Purchaser, its successors and assigns, to
demand and receive from time to time any and all of the Assets hereby conveyed,
transferred, assigned and delivered, or intended so to be, and to institute,
defend and compromise any and all actions, suits or proceedings in respect of
any of the Assets hereby conveyed, transferred, assigned and delivered, or
intended so to be, that the Purchaser, its successors or assigns shall deem
desirable, and to do all acts and things in relation to the Assets and interests
which the Purchaser, its successors or assigns deem desirable. The Seller hereby
declares that the foregoing powers are coupled with an interest and shall be
irrevocable by it in any manner or for any reason.
3. This instrument shall be binding upon and inure to the benefit of the
respective successors and assigns of the Purchaser and the Seller.
IN WITNESS WHEREOF, the Seller has caused this instrument to be duly
executed as of the day and year first above written.
FEDERAL BRONZE PRODUCTS, INC.
By:
Name:
Title:
