EXHIBIT 2.1
ACQUISITION AGREEMENT
BY AND AMONG
RELIANCE STEEL & ALUMINUM CO.,
RSAC MANAGEMENT CORP.,
PRECISION STRIP, INC.,
PRECISION STRIP TRANSPORT, INC.,
PRECISION STRIP LEASING, INC.,
PRECISION STRIP KENTON, INC.,
PRECISION STRIP KENTON, LTD.,
PSI LIMITED PARTNERSHIP,
XXXX X. XXXXXX (d/b/a X.X. RENTALS),
AND
THE INDIVIDUALS NAMED HEREIN
DATED AS OF JUNE 10, 2003
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (the "Agreement") is entered into as of June
10, 2003, by and among Reliance Steel & Aluminum Co., a California corporation
("Parent"), RSAC Management Corp., a California corporation and wholly-owned
subsidiary of Parent ("Buyer"), Precision Strip, Inc., an Ohio corporation
("Precision Strip"), Precision Strip Transport, Inc., an Ohio corporation
("Transport"), Precision Strip Leasing, Inc., an Ohio corporation ("Leasing"),
Precision Strip Kenton, Inc., an Ohio corporation ("Kenton"), Precision Strip
Kenton, Ltd., an Ohio limited partnership ("Kenton Ltd."), PSI Limited
Partnership, an Ohio limited partnership ("PSI"), and Xxxx X. Xxxxxx ("Xxxxxx"),
as the sole proprietor of X.X. Rentals ("Rentals"), and the individuals
identified on Schedule A attached hereto (each, a "Seller" and collectively, the
"Sellers").
RECITALS
WHEREAS, as of the date hereof, Sellers own all of the issued and
outstanding shares of capital stock (collectively, the "Company Shares") of
Precision Strip, Transport, Leasing and Kenton (collectively, the
"Corporations");
WHEREAS, as of the date hereof, Sellers own all of the outstanding
partnership interests (collectively, the "Interests") in Kenton Ltd. and PSI
(collectively, the "Partnerships" and, together with the Corporations, being
referred to herein, collectively, as the "Companies");
WHEREAS, collectively, the Companies operate a metals toll processing
business (the "Business") at the Facilities (as defined herein);
WHEREAS, Xxxxxx is the sole proprietor of Rentals, an unincorporated
sole proprietorship and the owner of certain real property assets used in the
conduct of the Business as described on Schedule B attached hereto (the "Rentals
Assets"); and
WHEREAS, Buyer desires to purchase from Sellers the Business, and
Sellers desire to sell to Buyer the Business in return for the consideration set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, the
parties agree as follows:
ARTICLE I
THE TRANSACTION
1.1 Reorganization; Sale and Purchase of the Business.
(a) Not less than one business day before the
Closing Date (as defined below) Sellers shall (i) merge Leasing and Kenton with
and into Precision Strip, and (ii) sell, contribute or otherwise transfer to
Precision Strip, and Precision Strip will acquire and assume, all assets
(collectively, the "Partnership Assets") and all liabilities of the Partnerships
and all of
the Rentals Assets and all liabilities relating to the Rentals Assets incurred
in connection with the Business. (The transactions described in this Section
1.1(a) are hereinafter referred to, collectively, as the "Reorganization".) The
documents related to the Reorganization (which shall not contain any
representations and warranties or indemnification provisions, but the absence of
representations and warranties and indemnification provisions shall not
adversely impact the representations and warranties and indemnification
provisions set forth in this Agreement) shall be in a form reasonably acceptable
to Parent and Buyer and shall be provided to Parent and Buyer for review not
less than five business days before the Effective Date. The occurrence of the
Closing shall be a condition subsequent to the effectiveness of the
Reorganization.
(b) Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Parent and Buyer shall purchase
from Sellers, and Sellers shall sell to Buyer, (i) all of the outstanding
capital stock of Precision Strip, as such company has been restructured in
accordance with the Reorganization, (collectively, the "Precision Shares") and
(ii) all of the outstanding capital stock of Transport (collectively, the
"Transport Shares"). The Precision Shares and the Transport Shares shall all be
free and clear of any mortgage, pledge, lien, charge or encumbrance or any
security interest (collectively, "Encumbrances") at the time of such purchase
and sale, except for any such Encumbrance arising out of actions by or the
status of Buyer.
1.2 Purchase Price.
(a) The aggregate purchase price for the
Precision Shares and the Transport Shares shall be Two Hundred Twenty Million
Dollars ($220,000,000) (the "Purchase Price") consisting of (i) cash to be paid
to Sellers in the respective amounts listed on Schedule A (provided, however,
that Sellers may reallocate such amounts among themselves by providing Buyer
with a new Schedule A reflecting such reallocation at least one business day
before the Closing), (ii) cash in the amounts allocated for the covenants not to
compete as listed on Schedule 7.3 (collectively, the payments referred to in
clauses (i) and (ii) above shall be referred to herein, collectively, as the
"Closing Payments") and (iii) cash in the amount of Eleven Million Dollars
($11,000,000) (the "Holdback") to be deposited in an escrow account by Buyer in
accordance with the Holdback Agreement entered into as of the Closing Date by
and among Parent, Buyer, Sellers and Union Bank of California (the "Escrow
Holder") in the form attached hereto as Exhibit 1.2(b) (the "Holdback
Agreement").
(b) Buyer (i) shall be entitled, but not
obligated, to make a claim against the Holdback for any amounts due from any
Seller to Parent or Buyer under Section 6.3 in the event of a Shortfall (as
defined in Section 6.3), and Sellers shall acknowledge and approve payment of
such claim, and (ii) shall make a claim against the Holdback for any other
indemnifiable Losses due from any Seller under Article VI or Article IX, subject
to the limitations set forth therein. In accordance with the Holdback Agreement,
the Holdback shall be released to Sellers, less the amount of any claims made
against the Holdback pursuant to Section 9.2 hereof that have been paid or which
are then pending under the Holdback Agreement, within two business days
following December 31, 2004.
1.3 The Closing; Effective Date. Upon the terms and
subject to the conditions set forth herein, including, without limitation,
receipt by the appropriate party or parties of the
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deliveries contemplated by Sections 1.4 and 1.5, the consummation of the
transactions contemplated hereby (the "Closing") shall take place at 10:00 a.m.
local time on the first business day of the month after the conditions set forth
in Sections 8.1 and 8.2 have been satisfied or waived by the appropriate party
or parties (such date being referred to herein as the "Closing Date"); provided,
however, that, if all conditions precedent to the Closing have been satisfied or
waived after the first business day of the month but on or before the tenth
business day of the month, the Closing shall occur on the next succeeding
business day after such conditions are satisfied or waived, and the effective
date of the Closing shall be deemed to be the first business day of the month
(the "Effective Date") and all profits and losses of Precision Strip and
Transport arising between 12:01 a.m. on the Effective Date and the Closing Date
shall be for the account of Buyer and Parent, unless Xxxxxx shall have given
Parent and Buyer notice, by no later than the ninth business day of the month,
on behalf of the Companies and Sellers, of their election to defer the Closing
until the first business day of the next succeeding calendar month, in which
case the Closing shall occur on such first business day of such calendar month,
but no later than August 1, 2003. In the event that the Closing shall occur
after the tenth business day and on or before the first business day of the
month, "Effective Date" shall mean the Closing Date or such other date as the
parties may mutually determine. The Closing shall take place, or be directed
from, the offices of XxXxxxxxx, Will & Xxxxx, located at 0000 Xxxxxxx Xxxx Xxxx,
00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
1.4 Deliveries by Sellers at the Closing. Sellers shall
deliver or cause to be delivered to Buyer at the Closing:
(a) (i) stock certificates evidencing all of the
Precision Shares and all of the Transport Shares, endorsed in blank or
accompanied by duly executed assignment documents, with the signatures being
notarized or having a medallion guarantee, and (ii) documents reasonably
satisfactory to Parent and Buyer evidencing the Reorganization (including, but
not limited to a copy of any articles or certificate of merger as filed with the
applicable state agencies and certified by the applicable Secretary of State and
any agreement setting forth the terms and conditions of the mergers or transfers
certified by an officer of each of the Companies executing such agreement).
(b) (i) A certificate, as of a date no more than
five days prior to the Closing Date, from each applicable jurisdiction of
organization with respect to Precision and Transport, and from each jurisdiction
where either is qualified, to the effect that such entity is in existence as a
corporation in such jurisdiction, and is in good standing or has paid all taxes
due, (ii) a certificate, as of a date no more than five days prior to the date
of the Reorganization (the "Reorganization Date"), from each applicable
jurisdiction of organization with respect to each of the other Companies, and
from each jurisdiction where any such Company is qualified, to the effect that
such entity was in existence as a corporation or partnership in such
jurisdiction, and was in good standing or has paid all taxes due and (iii) a
certificate from each jurisdiction where merger or other documents were filed in
connection with the Reorganization confirming such action.
(c) A certificate of the Chief Executive Officer
or the Chief Financial Officer of Precision Strip and Transport and of Sellers,
dated as of the Closing Date, certifying as to the matters set forth in Sections
8.1(a), (b) and (c).
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(d) A certificate of the Secretary of Precision
Strip, dated as of the Closing Date certifying with respect to each Company
other than Transport that (i) if such Company is a corporation, attached thereto
are true and correct copies of all resolutions of the Board of Directors of such
Corporation and, if any, of the shareholders of such Corporation adopted to
authorize the execution and delivery of this Agreement and the consummation by
such Corporation of the transactions contemplated hereby, including, but not
limited to, the Reorganization; (ii) if such Company is a partnership, attached
thereto are true and correct copies of all resolutions of the partners of such
Partnership adopted to authorize the execution and delivery of this Agreement
and the consummation by such Partnership of the transactions contemplated
hereby, including, but not limited to, the Reorganization; (iii) (A) attached
thereto are true and correct copies of the articles of incorporation or
certificate of limited partnership, as the case may be, of such Company and the
bylaws or partnership agreement, as the case may be, of such Company, together
with all amendments thereto and (B) such governance documents were in effect on
the date of adoption of such resolutions, the date of execution of this
Agreement and the Reorganization Date with respect to such Companies other than
Precision Strip or Transport and the Closing Date with respect to Precision
Strip and (iv) an Incumbency Certificate confirming the signatures of the
officers or partners of such Companies and Precision Strip executing this
Agreement or any other agreement or certificate or instrument furnished pursuant
hereto or thereto, including, but not limited to, all documents related to the
Reorganization.
(e) The opinion(s) of Xxxxxxx, Xxxxxxxxx &
Xxxxxxx, P.C., and/or XxXxxxxxx, Will & Xxxxx dated as of the Closing Date, in
substantially the form of Exhibit 1.4(e) attached hereto.
(f) A certificate of the Secretary of Transport,
dated as of the Closing Date, certifying with respect to Transport that (i)
attached thereto are true and correct copies of all resolutions of the Board of
Directors of Transport and, if any, of the shareholders of Transport adopted to
authorize the execution and delivery of this Agreement and the consummation by
Transport of the transactions contemplated hereby; (ii) (A) attached thereto are
true and correct copies of the articles of incorporation and the bylaws of
Transport, together with all amendments thereto and (B) such governance
documents were in effect on the date of adoption of such resolutions, the date
of execution of this Agreement and the Closing Date and (iii) an Incumbency
Certificate confirming the signatures of the officers of Transport executing
this Agreement or any other agreement or certificate or instrument furnished
pursuant hereto or thereto .
1.5 Deliveries by Parent and Buyer at the Closing. Parent
and Buyer shall deliver or cause to be delivered to Sellers at the Closing:
(a) The (i) Closing Payments, by wire transfer
of immediately available funds to an account or accounts designated at least one
business day in advance of the Closing in writing by Sellers and (ii) Holdback
by wire transfer of immediately available funds to the Escrow Holder.
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(b) A certificate of the Secretary of State of
the State of California to the effect that Parent is a validly existing
corporation in good standing in the State of California, as of a date no more
than five days prior to the Closing Date.
(c) A certificate of the Secretary of State of
the State of California to the effect that Buyer is a validly existing
corporation in good standing in the State of California, as of a date no more
than five days prior to the Closing Date.
(d) The opinion of Xxx Xxxxxxx, Vice President
and General Counsel of Parent and Buyer, dated as of the Closing Date, in
substantially the form of Exhibit 1.5(d) attached hereto.
(e) A certificate of the Chief Executive Officer
or Chief Financial Officer of Parent and Buyer, dated as of the Closing Date,
certifying as to the matters set forth in Sections 8.2(a), (b) and (c).
(f) A certificate of the Secretary of Parent and
Buyer, dated as of the Closing Date, certifying that (i) attached thereto are
true and correct copies of all resolutions of such company adopted to authorize
the execution and delivery of this Agreement and the consummation by such
company of the transactions contemplated hereby and (ii) (A) attached thereto
are true and correct copies of the articles of incorporation and bylaws of such
company, together with all amendments thereto and (B) such articles of
incorporation and bylaws were in effect on the date of adoption of such
resolutions, the date of execution of this Agreement and the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
The Companies and Xxxxxx, jointly and severally, represent and warrant
to Parent and to Buyer as of the date hereof as follows:
2.1 Agreement Authority. Each Company has the requisite
corporate or partnership power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of, and the performance by each Company of its obligations under,
this Agreement have been duly and validly authorized by all necessary corporate
or partnership action. No other corporate or partnership proceedings on the part
of each Company are necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each Company and constitutes its valid and binding
obligation, enforceable against each Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by general equitable principles (whether or not such
enforceability is considered in a proceeding at law or in equity).
2.2 Organization and Good Standing of the Companies. Each
Company is a corporation or partnership duly organized, validly existing and in
good standing under the laws
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of the State of Ohio and has all requisite power and authority to own, operate
and lease its assets and to carry out its business as presently conducted. Each
Company is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which such qualification or licensing is necessary under
applicable law, except where the failure to be so qualified and to be in good
standing would not have a material adverse effect on the Companies, taken as a
whole or would not make this Agreement or the transactions contemplated
hereunder void or voidable. None of the Companies is in default under, or in
violation of, any provision of its articles of incorporation, bylaws or
partnership agreement, as applicable.
2.3 Subsidiaries. None of the Companies has any direct or
indirect subsidiaries.
2.4 No Conflicts; Consents. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) violate or conflict with any provisions of the articles of
incorporation, bylaws, partnership agreements or other applicable governing
documents of any Company, (ii) except as set forth on Schedule 2.4, violate,
conflict with, or result in the breach or termination of, or otherwise give any
other contracting party (which has not consented to such execution, delivery,
and consummation) the right to change any material terms of or to terminate or
accelerate the maturity of or to be entitled to a material penalty or other
material payment or material price reduction under, or constitute a material
default under the terms of, (A) any lease of real property, (B) any agreement,
note, or instrument for borrowed money, (C) any tolling or other processing or
storage agreement with a mill customer or end use customer of any Company, or
(D) any other material agreement or instrument to which any Company is a party,
(iii) result in the creation of any Encumbrance on any Company's properties or
assets pursuant to the terms of any such lease, agreement or instrument, except
for any Encumbrances which would not, individually or in the aggregate, have a
material adverse effect on the Companies, taken as a whole, (iv) except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and any similar foreign statutes or
regulations, violate or conflict with (or require any filing, consent, or
similar action under) any law, rule, regulation, judgment, order, injunction,
decree or award that applies to or binds any Company, or (v) require the consent
of any other person.
2.5 Capitalization.
(a) The currently authorized capital stock of
Precision Strip consists solely of 7,800 shares of capital stock, no par value
per share, consisting of 1,000 shares of Class A voting common stock, of which
952 shares are issued and outstanding as of the date of this Agreement, 5,000
shares of Class B non-voting common stock, of which 2,472 shares are issued and
outstanding as of the date of this Agreement, and 1,800 shares of preferred
stock, of which no shares are issued and outstanding.
(b) The currently authorized capital stock of
Transport consists solely of 750 shares of capital stock, no par value per
share, consisting of 300 shares of Class A voting common stock, of which 60
shares are issued and outstanding, and 450 shares of Class B non-voting common
stock, of which no shares are issued and outstanding.
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(c) The currently authorized capital stock of
Leasing consists solely of 750 shares of common stock, no par value per share,
of which 60 shares are issued and outstanding. Following the Reorganization, no
shares are expected to be issued and outstanding.
(d) The currently authorized capital stock of
Kenton consists solely of 750 shares of capital stock, no par value per share,
consisting of 350 shares of Class A voting common stock, of which 60 shares are
issued and outstanding, and 400 shares of Class B non-voting common stock, of
which no shares are issued and outstanding. Following the Reorganization, no
shares are expected to be issued and outstanding.
(e) Schedule A lists the partners of Kenton Ltd.
and their respective Partnership Interests. There are no assessments or other
payments required under the partnership agreement of Kenton Ltd. that have not
been paid in full by the partners thereof.
(f) Schedule A lists the partners of PSI and
their respective Partnership Interests. There are no assessments or other
payments required under the partnership agreement of PSI that have not been paid
in full by the partners thereof.
(g) The names and addresses of the shareholders
of each of the Corporations, as of the date hereof, and the number and type of
their respective shares in each of the Companies, as of the date hereof, are set
forth on Schedule A.
(h) Except as set forth on Schedule 2.5(h), all
of the Company Shares have been duly authorized and validly issued and are fully
paid and nonassessable; such Company Shares were issued without any violation of
preemptive rights. Except for the transactions contemplated hereby and as set
forth on Schedule 2.5(h), none of the Companies is bound by any outstanding
subscriptions, options, warrants, calls, commitments, or agreements of any
character calling for the purchase or issuance of any shares of capital stock,
any partnership interests or any other equity security of such Company or any
securities convertible or exchangeable into or representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Company, or requiring any payment relating to any shares of
capital stock or any other equity security of such Company.
(i) No person or entity has any agreement or
option, any right of first refusal, any security interest, or any right or
privilege (whether by law, preemptive or contractual) capable of becoming an
agreement or option for the purchase or other acquisition from any Company or
any Seller of any securities of any Company. There are no shareholder agreements
affecting any Corporation, and there are no voting agreements affecting any
Company.
2.6 Tax Matters, Tax Returns and Tax Audits.
(a) Tax Returns of Companies. Within the times
and in the manner prescribed by law, each Company (i) has filed all Tax Returns
required by law to be filed before the date hereof, and shall file all Tax
Returns that are required to be filed on or after the date hereof and on or
before the Closing Date, other than those the non-filing of which would not,
individually or in the aggregate, have a material adverse effect on the
Companies, taken as a
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whole, (ii) has paid, or on or before the Closing shall have paid or otherwise
provided for, all Taxes owed or required to be paid by it in respect of the
period through December 31, 2002. All Tax Returns of the Companies that have
been filed prior to the date hereof are, and all Tax Returns of the Companies
that are filed on or after the date hereof and on or before the Closing Date
shall be, complete and correct in all material respects; such Tax Returns are
not subject to penalties under Sections 6662 or 6663 of the Code relating to
accuracy and fraud-related penalties (or their predecessor Code provisions or
any corresponding or similar provision of federal, state, local, foreign, or
territorial Income Tax law). None of the Companies is currently the beneficiary
of any extension of time within which to file any Tax Return. No claim has been
made by a taxing authority in a jurisdiction against any Company where such
Company does not file Tax Returns that such Company is or may be subject to
taxation by that jurisdiction.
(b) Affiliated Group Tax Returns. Except as such
terms may apply solely to relationships between or among the Companies and
except as otherwise set forth on Schedule 2.6(b), none of the Companies is, or
during the prior ten years has been, a member of an affiliated group of
corporations within the meaning of Code Section 1504 (or any combined,
consolidated, or unitary group of corporations or analogous grouping under
state, local, foreign or territorial tax law).
(c) Tax Assessments and Disputes. Except as set
forth on Schedule 2.6(c), (i) there is no claim or assessment pending or, to the
best knowledge of any Company and Xxxxxx, threatened against or with respect to
such Company for any alleged deficiency in Tax, (ii) none of the Companies is
currently involved in, or has received any written notice of, any audit or
investigation with respect to any liability for or relating to Taxes, and (iii)
there are no present disputes of which any Company is aware as to Taxes payable
by or with respect to such Company.
(d) Extensions of Statute of Limitations. Each
Company's U.S. federal Income Tax Returns were last examined by the Internal
Revenue Service for the fiscal year ended December 31, 1999. The states in the
United States in which any Company files an Income Tax Return, as well as the
date any such Income Tax Returns were last examined by the relevant state tax
authorities (and for which fiscal years), are set forth on Schedule 2.6(d). None
of the Companies is currently subject to any waiver of any statute of limitation
in respect of Taxes or any agreement to any extension of time with respect to a
Tax assessment or deficiency.
(e) S Election. Pursuant to an election
effective for the tax year beginning in January 1989 for Precision Strip, August
1988 for Transport, February 1992 for Leasing and October 1988 for Kenton (each,
an "Election Time"), each Company has, since its respective Election Time, with
all requisite consent of its shareholders, validly elected to be treated as an S
Corporation under Section 1362 of the Code (or its predecessor Code provision)
and under the corresponding provisions of applicable state and local laws where
such Company files Income Tax Returns. Such elections have never been terminated
or revoked, are currently in effect, and will be in effect through such time as
they terminate as a result of the consummation of the transactions contemplated
hereby. Since its respective Election Time, no Company has acquired assets with
a carryover basis from a C Corporation under the Code, and no shares of capital
stock of such Company have been held by any person or entity that was ineligible
to be an S Corporation shareholder. None of the Companies shall be liable for
any Tax
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under Section 1374 of the Code (or any similar provision of state, local or
foreign law) in connection with the consummation of the transactions
contemplated by this Agreement.
(f) Tax Classifications. Schedule 2.6(f)
identifies the federal income tax classifications of each of Kenton Ltd., PSI
and Rentals.
(g) No Liability for Other Persons. Except as
set forth on Schedule 2.6(g), none of the Companies has liability for any Taxes
of any person other than itself (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, territorial, or foreign law), (ii) as
a transferee or successor, or (iii) by contract or otherwise. To the extent that
any Company has any liability for any Taxes of any person other than another
Company, such liabilities shall be paid in full or otherwise satisfied before
the Closing.
(h) Parachute Payment. None of the Companies is
a party to any agreement, contract, arrangement, or plan that has resulted or
would result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(i) Definitions. As used in this Agreement, (i)
"Taxes" (or "Tax") means all federal, state, county, local, foreign,
territorial, and other taxes, imposts, charges, fees, levies, and duties
(including, without limitation, income, profits, premium, estimated, excise,
tollgate, sales, use, license, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, gain, withholding, employment and
payroll related, and property taxes, import duties, and other governmental
charges and assessments), whether attributable to statutory or nonstatutory
rules, whether or not measured in whole or in part by net income, and whether
disputed or not, including interest, additions to tax or interest, and
assessments and penalties with respect thereto, and including expenses
associated with contesting any proposed adjustment relating to any of the
foregoing; (ii) "Income Taxes" (or "Income Tax") shall mean all Taxes based
upon, measured by, assessed or imposed upon gross or net income; (iii) "Tax
Return" shall mean any and all reports, returns, declarations, schedules,
information returns, statements, or other information required to be supplied to
a taxing or governmental authority with respect to any Tax or Taxes, including
without limitation any individual, combined or consolidated return; and (iv)
"Income Tax Return" shall mean any Tax Return relating to Income Taxes.
2.7 Financial Statements. The Companies have engaged
Ernst & Young LLP to prepare, and shall provide to Buyer on or before June 30,
2003, combined audited financial statements of Precision Strip, Transport,
Leasing, Xxxxxx, Xxxxxx Ltd. and PSI, in each case, for the periods as of and
ended December 31, 2001 and 2002 (December 31, 2002 being referred to herein as
the "Balance Sheet Date") (such financial statements, including all notes and
schedules thereto and the independent auditors' report, as applicable, of Ernst
& Young LLP thereon, being referred to herein, collectively, as the "Financial
Statements"), which shall be attached to Schedule 2.7. As of the date of this
Agreement, attached as Schedule 2.7 are true copies of (i) the audited financial
statements of Precision Strip for the periods as of and ended December 31, 2001
and 2002 (the "Audited Financial Statements") and (ii) the unaudited financial
statements of the Companies for the three-month period ended on March 31, 2003
(collectively, such unaudited financial statements shall be referred to herein
as the "Interim Financial Statements").
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Sellers and the Companies shall provide such additional unaudited financial
statements for the Companies as and when they become available after the date of
this Agreement and before the Closing Date, including, but not limited to,
monthly financial statements, (collectively, the "Additional Financial
Statements"). The Financial Statements, the Audited Financial Statements and the
Interim Financial Statements fairly present the financial position of the
Companies to which they apply as of the respective dates of the balance sheets
included therein and the results of their operations, cash flows and
stockholders' equity for the respective periods indicated and such presentation
is all in accordance with generally accepted accounting principles consistently
applied throughout the periods (except as noted in the Financial Statements or
the notes thereto or reports thereon), and the Additional Financial Statements
(as and when available) shall fairly present, in all material respects, the
financial position of the Companies as of the respective dates of the balance
sheets included therein and the results of their operations, cash flows and
stockholders' equity for the respective periods indicated and such presentations
shall be in accordance with generally accepted accounting principles
consistently applied throughout the periods; provided, however, that the Interim
Financial Statements and the Additional Financial Statements do not have notes
thereto and are subject to changes resulting from normal, recurring year-end
adjustments which, alone or in the aggregate, shall not have a material adverse
effect on the Companies taken as a whole.
2.8 Undisclosed Liabilities. Since the Balance Sheet
Date, none of the Companies has incurred any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) except (i) as and to
the extent set forth on the balance sheets of the Companies as of the Balance
Sheet Date (including the notes thereto) included in the Financial Statements,
(ii) as incurred after the Balance Sheet Date in the ordinary course of business
and consistent with past practice, (iii) as contemplated by or incurred in
connection with the transactions contemplated by this Agreement and (iv) as
would not, individually or in the aggregate, have a material adverse effect with
respect to the Companies, taken as a whole.
2.9 Title to Assets; Litigation. Schedule 2.9 lists all
real properties owned or leased by any of the Companies, identifying which are
owned and which are leased and setting forth the address of the property, name
of the landlord, term of the lease, monthly rent and a description of any
adjustment methodology and the times applicable, the number and length of any
option to extend or renew, and whether there is an option to purchase and the
purchase price therefor with respect to any lease.
(a) Each Company has good and indefeasible title
to its real properties and good title to its toll processing assets and all of
its other properties and assets reflected on the Financial Statements as of the
Balance Sheet Date (including, but not limited to the Partnership Assets), free
and clear of any Encumbrance of any kind, except (i) as set forth on Schedule
2.9(a), (ii) statutory liens securing payments not yet due, (iii) for assets
sold or otherwise disposed of since the Balance Sheet Date (A) in the ordinary
course of business or (B) in connection with the Reorganization and (iv)
Encumbrances which would not, individually or in the aggregate, have a material
adverse effect on the Companies, taken as a whole.
(b) Except as set forth on Schedule 2.9(b),
there are no claims, suits, actions, proceedings, arbitrations, or
investigations pending or, to the best knowledge of any Company and Xxxxxx,
threatened against or otherwise relating to or involving any Company or
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any of its properties, the outcome of which would reasonably be expected to have
a material adverse effect on the Companies, taken as a whole. None of the
Companies is subject to any judgment, order, decree, or other direction of any
court or other governmental authority or tribunal which is material to the
conduct of the business or financial condition of the Companies, taken as a
whole.
(c) Except as set forth on Schedule 2.9(c), to
the best knowledge of the Companies and Xxxxxx, the Companies' tangible assets
are reasonably well maintained and in good operating condition (ordinary wear
and tear excepted).
(d) To the best knowledge of the Companies and
Xxxxxx, there are no facts which would prevent Buyer after the Closing from
using the Companies' assets to carry on the Business at the Facilities in
substantially the same manner as the Companies have prior to the Closing Date;
provided, however, that this representation shall not extend to any fact
relating to the status, business, condition or identity of Parent or Buyer.
2.10 Compliance with Laws; Licenses. Except as set forth
on Schedule 2.10,
(a) none of the Companies is in violation of any
applicable federal, state, local, foreign, or territorial law, regulation, or
order or any other requirement of any governmental, regulatory, or
administrative agency or authority or court or other tribunal, except for
possible violations which would not, individually or in the aggregate, have a
material adverse effect on the Companies, taken as a whole;
(b) no investigation or review by any
governmental, regulatory, or administrative agency or authority or court or
other tribunal concerning any such possible violation of law is pending or, to
the best knowledge of any Company or Xxxxxx, threatened; and
(c) (i) each Company holds all licenses,
permits, registrations and other authorizations required to conduct its business
as it is currently conducted, except for possible failures to hold such
licenses, permits, registrations and other authorizations which would not,
individually or in the aggregate, have a material adverse effect on the
Companies, taken as a whole, (ii) all such licenses, permits, registrations, and
other authorizations are valid and in full force and effect, except for those
the absence of which would not, individually or in the aggregate, have a
material adverse effect on the Companies, taken as a whole, and (iii) each
Company is in compliance with all such licenses, permits, registrations, and
other authorizations, except for possible failures to be so in compliance which
would not, individually or in the aggregate, have a material adverse effect on
the Companies, taken as a whole.
2.11 Absence of Certain Changes. Since the Balance Sheet
Date, except as set forth on Schedule 2.11, (i) there has been no material
adverse change in, or occurrence which would reasonably be expected to result in
a material adverse change in the Companies, taken as a whole, and (ii) none of
the Companies has taken any action that, after the date of this Agreement, would
be prohibited under Section 5.2, except that the Companies, prior to the date
hereof, have paid to Sellers dividends in cash in the aggregate amount of
$10,546,488 declared prior to the Balance Sheet Date and reflected in the
Financial Statements, and, since the Balance Sheet Date, have declared and paid
to Sellers additional dividends in cash in an aggregate amount which,
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together with all dividends and distributions paid between the date of this
Agreement and the Closing Date, does not exceed the Permitted Distribution (as
such term is defined in Section 5.3), and which dividends or distributions shall
be reflected on the Closing Financial Statements.
2.12 Employee Matters.
(a) Schedule 2.12(a) lists all "employee benefit
plans," as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") that are maintained by the
Companies (collectively, the "Employee Plans"). None of the Companies has been a
participating employer in any "multiemployer plan" within the meaning of Section
3(37) of ERISA within the last six years, except to the extent that any employee
benefit plan in which the Companies are or were the sole participating entities
may be deemed to be or have been such a multiemployer plan. All Employee Plans
have been administered at all times and are being administered in compliance in
all material respects with their terms and applicable law, including, where
applicable, ERISA and the Code and the regulations promulgated thereunder.
Except as set forth on Schedule 2.12(a), each Company, as applicable, has made
or accrued on the appropriate balance sheet all contributions due to date under
or with respect to the Employee Plans.
(b) With respect to each Employee Plan, (i) no
"reportable event," as defined in Section 4043 of ERISA, exists that would
constitute grounds for termination of such Employee Plan by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer such Employee Plan, in each case as
contemplated by Section 4042 of ERISA; (ii) none of any Company or any
fiduciary, trustee, or administrator of any such Employee Plan has engaged in a
"prohibited transaction" as defined in Section 4975 of the Code or a "prohibited
transaction" as defined in Section 406 of ERISA that could reasonably be
expected to subject any Company to any material tax imposed by Section 4975 of
the Code or any material penalty imposed by Section 502 of ERISA; and (iii)
there is no current matter, including, without limitation, any matter involving
the administration and operation of the Employee Plans, which would reasonably
be expected to result in any Employee Plan being deemed to be not in substantial
compliance with the pertinent provisions of any law, regulation or ruling
applicable thereto and which would reasonably be expected to impose any material
liability upon any Company. No accumulated funding deficiency under Section 302
of ERISA or Section 412 of the Internal Revenue Code, whether or not waived,
exists with respect to any Employee Plan that is subject to either of such
sections.
(c) With respect to all Employee Plans which are
group health plans, all such plans have been operated in compliance in all
material respects with applicable law, including the group health plan
continuation coverage requirements of Section 4980B of the Code, to the extent
such requirements are applicable.
(d) Each Employee Plan that is intended to be a
qualified plan (as described in Section 401(a) of the Internal Revenue Code) (i)
has received from the Internal Revenue Service a determination that such
Employee Plan is a qualified plan under section 401 of the Internal Revenue
Code, (ii) has been timely and properly amended so as to comply in all material
respects with all laws applicable to such Employee Plans and (iii) has received
a favorable determination letter issued by the Internal Revenue Service to the
extent required by all
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applicable laws. Schedule 2.12(d) describes, to the extent known by the
Companies or Xxxxxx, all required reports and descriptions (including, but not
limited to, Form 5500 Annual Reports, Summary Annual Reports and Summary Plan
Descriptions) that have not been properly and timely filed or distributed with
respect to each Employee Plan.
(e) None of the Companies is a party to or
obligated under any collective bargaining agreements nor are any of its
employees represented by trade organizations. To the best knowledge of any
Company and Xxxxxx, each Company is in compliance with all such agreements, laws
and regulations, except for possible failures to be so in compliance which would
not, individually or in the aggregate, have a material adverse effect on the
Companies, taken as a whole. There is no pending or, to the best knowledge of
any Company and Xxxxxx, threatened strike or work stoppage or union organizing
activities by employees of any Company or against any Company.
2.13 Related Party Transactions. Except as set forth on
Schedule 2.13 or reflected on the Financial Statements, none of the Companies
leases or is committed to lease any properties or assets from, or owes any
amounts to, or uses or holds in its business any properties or assets of, nor is
it a creditor of, any other Company, any Seller, any member of any Seller's
family, or any other persons affiliated with any Seller or members of his or her
family.
2.14 Compliance with Environmental Laws.
(a) Except as set forth on Schedule 2.14(a), to
the best knowledge of each Company and Xxxxxx, the operations of the Companies
and all real property owned or leased or otherwise occupied by any such Company
(the "Property") comply in all material respects with the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
the Resource Conservation and Recovery Act of 1976, as amended, together with
all other laws (including rules, regulations and orders thereunder) of federal,
state, local and foreign governments (and all agencies thereof) concerning
releases of pollutants, contaminants or chemical, industrial, hazardous or toxic
materials or wastes into ambient air, surface water, ground water or lands
("Environmental Laws"), except for violations which would not, individually or
in the aggregate, have a material adverse effect on the Companies, taken as a
whole.
(b) Except as set forth on Schedule 2.14(b), to
the best knowledge of any Company and Xxxxxx, none of any Company, any agent,
employee, or representative of any Company, or any predecessor or tenant of any
Company or any third party known to any Company, has used, installed, generated,
produced, stored or released on or in the Property any hazardous materials,
including any hazardous or toxic substance, material, or waste which is
regulated under the Environmental Laws, in breach or violation of the
Environmental Laws.
(c) Except as set forth on Schedule 2.14(c), to
the best knowledge of any Company and Xxxxxx, none of the Companies, or any
predecessor or tenant of any Company, has received any written notice or claim
from any governmental, regulatory or administrative agency or authority or court
or other tribunal or any private party alleging a breach or violation of the
Environmental Laws by any such Company, or any predecessor or tenant of any
Company of the Property.
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(d) To the knowledge of the Company and Xxxxxx,
none of the buildings, structures, fixtures or equipment on any of the Property
contains any (i) asbestos as defined under any Environmental Law, (ii) urea
formaldehyde foam insulation, (iii) polychlorinated biphenyls in concentrations
greater than fifty parts per million (including in any electrical transformer or
capacitor located on any of the Property) or (iv) any other hazardous substance
that is prohibited or regulated when present in buildings, structures, fixtures
or equipment.
(e) Except as set forth in Schedule 2.14(e), to
the knowledge of the Company and Xxxxxx, there are no underground storage tanks
(whether or not excluded from regulation under any Environmental Law) on any of
the Property, including, but not limited to, any and all underground storage
tanks that are in use, abandoned, out of service, closed or decommissioned.
(f) The Companies and Xxxxxx have disclosed and
made available to Buyer true, complete and correct copies or results of any and
all records, reports, studies, analyses, tests and monitoring in the possession
of any Company pertaining to the existence of any hazardous substance in, on,
under or affecting any Company or the Property.
2.15 Intellectual Property. Schedule 2.15 hereto sets
forth a list of all trademark and service xxxx rights, applications and
registrations, trade names, fictitious names, service marks, copyright
applications, letters patent, patent applications and written licenses of any of
the foregoing owned by any Company or licensed to such entities by third parties
and identifies the ownership of each item. To the knowledge of any Company and
Xxxxxx, except as set forth on Schedule 2.15: (a) all the registered patents,
trademarks and service marks described on Schedule 2.15 are valid and
enforceable, except for possible failures to have valid and enforceable
registered patents, trademarks and service marks which would not, individually
or in the aggregate, have a material adverse effect on the Companies, taken as a
whole; and (b) none of (i) the equipment developed by or on behalf of any
Company, (ii) the products manufactured and sold by any Company, or (iii) any
Intellectual Property owned or used by any Company infringes any Intellectual
Property rights of any other party; and (c) no third party has infringed any
Intellectual Property right of any Company, except for possible infringements
which would not, individually or in the aggregate, have a material adverse
effect on the Companies, taken as a whole. For purposes of this Agreement,
"Intellectual Property" means trademark and service xxxx rights, applications
and registrations, trade names, fictitious names, service marks, copyright
applications, letters patent, patent applications, know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, blue prints, inventions, discoveries and
ideas, and licenses of any of the foregoing.
2.16 Brokers and Finders. No broker, finder or other
financial consultant, other than Xxxxxxx Xxxxx & Company, L.L.C. (whose fees and
expenses are set forth on Schedule 2.16 and will be paid solely by Sellers), has
acted on behalf of any Company in connection with this Agreement or the
transactions contemplated hereby in such a way as to create any liability on
Parent, Buyer or any Company.
2.17 Material Contracts. Schedule 2.17 contains a true and
complete list of all (a) tolling or other processing or storage agreements with
mill customers or end use customers,
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(b) other contracts (other than supplier or distributor contracts described
below), loan agreements, mortgages, deeds of trust, indentures, joint venture or
partnership agreements, consulting agreements, leases and licenses, the
performance of which will extend over a period of more than one year or involve
consideration in excess of $500,000 and (c) all agreements with suppliers or
distributors which represent in excess of five percent of the annual revenues of
any Company or with any third party which in the aggregate represent more than
five percent of the annual revenues or expenses of all the Companies taken as a
whole (collectively, the "Material Contracts"). To the best knowledge of each
Company and Xxxxxx, each Company has performed in all material respects its
obligations under the Material Contracts to which it is a party to the extent
such obligations to perform have accrued. To the best knowledge of each Company
and Xxxxxx, except as set forth on Schedule 2.17, the other parties to the
Material Contracts have performed in all material respects their obligations
thereunder. To the best knowledge of each Company and Xxxxxx, all the Material
Contracts are in full force and effect in the form provided to Buyer.
2.18 Insurance. Schedule 2.18 contains a true and complete
list of all insurance policies covering the Companies and their respective
assets or businesses presently in effect. To the best knowledge of each Company
and Xxxxxx, such Company has in effect policies of insurance with respect to
such Company's assets and businesses against such casualties and contingencies
and in such amounts, types and forms as are appropriate for such Company's
business, operations, properties and assets. All such insurance policies are in
full force and effect and all premiums that are due and payable with respect
thereto have been paid.
2.19 Accurate Disclosures. No representation or warranty
made by the Companies or Sellers in this Agreement, together with the schedules,
or in any other agreements executed in connection with this Agreement contains
any untrue statement of a material fact, or omits to state a material fact,
known to any Company or Xxxxxx necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading which, alone or together with other such statements or omissions,
would have a material adverse effect on the Companies taken as a whole. Without
limiting the generality of the foregoing representation, except as set forth on
Schedule 2.19, to the best knowledge of each Company and Xxxxxx no supplier,
customer, agent or representative of any Company intends to terminate or
substantially reduce its sales to or its purchases from or its contractual
relationships with or its use of services of such Company, whether or not as a
result of the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, severally and not jointly, represents and warrants to
Parent and Buyer as of the date hereof as follows:
3.1 Authority of Each Seller; Ownership.
(a) Such Seller has the requisite competence, power
and authority to execute and deliver this Agreement, to perform such Seller's
obligations hereunder and to
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consummate the transactions contemplated hereby and this Agreement constitutes
the valid and binding obligation of such Seller, enforceable against such Seller
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general equitable principles (whether or
not such enforceability is considered in a proceeding at law or in equity). As
of the date hereof, the Company Shares constitute all of the issued and
outstanding shares of capital stock of the Companies. As of the date hereof, the
Interests constitute all of the issued and outstanding interests of the
Partnerships.
(b) As of the date hereof, all of the Company
Shares and Interests set forth opposite such Seller's name on Schedule A are
owned of record and beneficially by such Seller free and clear of any
Encumbrances, and upon delivery of the Precision Shares and the Transport
Shares, Buyer will acquire title thereto, free and clear of any and all
Encumbrances, except for any such Encumbrances arising out of actions by or the
status of Buyer and any restrictions under the Securities Act of 1933, as
amended (the "Securities Act"), and state securities laws.
(c) Xxxxxx has good and indefeasible title to
each parcel of real property included in the Rentals Assets and, except as set
forth on Schedule 2.9(a), owns each such parcel free and clear of any
Encumbrances, and upon delivery of the Rentals Assets, Precision Strip will
acquire title thereto, free and clear of any and all Encumbrances, except for
any such Encumbrances arising out of (i) actions by or the status of Buyer, (ii)
taxes, fees, assessments or governmental charges not yet due and payable or
(iii) any Permitted Liens (as such term is defined in Section 5.5 hereof). The
Rentals Assets only include Property leased by one or more of the Companies, but
do not include any real property or other assets used or leased by any person
other than one or more of the Companies.
3.2 No Conflicts. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby by
such Seller will (i) violate, conflict with, or result in the breach or
termination of, or otherwise give any other contracting party (which has not
consented to such execution, delivery, and consummation) the right to change the
terms of or to terminate or accelerate the maturity of, or constitute a default
under the terms of, any agreement or instrument to which any Seller is a party,
(ii) except for applicable requirements of the HSR Act and any similar foreign
statute or regulation, violate or conflict with (or require any filing, consent,
or similar action, other than any such action required under the Securities Act
or applicable state securities laws, under) any law, rule, regulation, judgment,
order, injunction, decree or award that applies to or binds such Seller or (iii)
require the consent of any governmental agency or of any person who is not a
party to this Agreement.
3.3 S Corporation Income Taxes. Within the times and in
the manner prescribed by law, such Seller has included in such Seller's Income
Tax Returns filed prior to the date hereof and shall include in such Seller's
Income Tax Returns filed on or after the date hereof, his or her distributive
share of the income of the Companies set forth on the information returns
furnished by the Companies to such Seller for inclusion in such Seller's Income
Tax Returns, and has paid and shall pay the amounts owed or required to be paid
under applicable Tax Law with respect to such distributive share, in respect of
the periods covered by such Income Tax Returns.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Parent and Buyer jointly and severally represent and warrant to each
Company and each Seller as of the date hereof as follows:
4.1 Organization and Good Standing of Parent and Buyer;
Authority.
(a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite power and authority to own, operate and lease its assets
and to carry on its business as presently conducted. Parent has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of,
and the performance by Parent of its obligations under, this Agreement have been
duly and validly authorized by all necessary corporate action of Parent. This
Agreement has been duly and validly executed and delivered by Parent and
constitutes its valid and binding obligation, enforceable against Parent in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general equitable principles (whether or
not such enforceability is considered in a proceeding at law or in equity).
(b) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Buyer has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of, and the performance by Buyer of its obligations
under, this Agreement have been duly and validly authorized by all necessary
corporate action of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes its valid and binding obligation, enforceable
against Buyer in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general equitable principles
(whether or not such enforceability is considered in a proceeding at law or in
equity).
4.2 No Conflicts. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
(i) violate or conflict with any provisions of either Parent's or Buyer's
articles of incorporation or bylaws, (ii) violate, conflict with or result in
the breach or termination of, or otherwise give any other contracting party
(which has not consented to such execution, delivery, and consummation) the
right to change the terms of or to terminate or accelerate the maturity of, or
constitute a default under the terms of, any material agreement or instrument to
which Parent or Buyer is a party, or (iii) except for applicable requirements of
the HSR Act and similar foreign statutes and regulations, violate or conflict
with (or require any filing, consent, or similar action under) any law, rule,
regulation, judgment, order, injunction, decree or award that applies to or
binds Parent or Buyer, other than violations which would not, individually or in
the aggregate, have a material adverse effect on Parent and Buyer, taken as a
whole.
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4.3 Investment.
(a) Buyer is purchasing the Precision Shares and
the Transport Shares for investment for its own account, and not with a view to,
or for the offer or sale in connection with, any distribution thereof. Buyer
acknowledges that the sale of the Precision Shares and the Transport Shares has
not been registered under the Securities Act or applicable state securities
laws, and that the Precision Shares and the Transport Shares may not be
transferred or sold except pursuant to the registration provisions of the
Securities Act and applicable state securities laws or pursuant to an applicable
exemption therefrom.
(b) Each of Parent and Buyer is, and on the
Closing will be, an "accredited investor" within the meaning of Rule 501
promulgated under the Securities Act.
4.4 Brokers and Finders. No broker, finder or other
financial consultant has acted on behalf of Parent or Buyer in connection with
this Agreement or the transactions contemplated hereby in such a way as to
create any liability on any Seller or any Company.
4.5 Financial Capacity. Buyer has or shall have
sufficient funds available to consummate the transactions contemplated hereby
and to support the operations of the Companies for a period of one year after
the Closing Date.
ARTICLE V
COVENANTS OF THE COMPANIES AND SELLERS
5.1 Access to the Companies' Premises, Etc. Between the
date hereof and the Closing Date, upon no less than two business days notice,
each Company shall give Parent and Buyer and their authorized representatives
such access as they shall reasonably request, during regular business hours, to
any and all of the Companies' properties, contracts, books and records, and
shall cause each Company's officers and employees to furnish or make available
to Parent, Buyer and such representatives any and all information pertaining to
its business that Parent, Buyer or such representatives shall reasonably
request; provided, however, that information that the Companies determine, in
their reasonable business judgment, to be sensitive, such as current pricing,
future pricing, and plans and customer specific negotiations need not be
provided or furnished to Parent or Buyer unless such sensitive information is
material to, and required by, Parent or Buyer in connection with their analysis
of the Companies and the transactions contemplated hereby. Notwithstanding such
materiality and such requirement, to the extent that Precision Strip reasonably
believes that a specific contract or customer negotiation is competitive with
Parent or Buyer, Precision Strip is not required to furnish any information to
Parent or Buyer regarding such contract or negotiation. Parent and Buyer shall
coordinate all inspection and due diligence activities contemplated by this
Section 5.1 through Xxxxxx X. Xxxxxxxx of Xxxxxxx Xxxxx & Company, L.L.C. or his
designee. Unless and until the transactions contemplated herein have been
consummated, but in any event for no more than five years, (i) Parent and Buyer
shall hold in confidence and shall cause all of their attorneys, accountants,
agents, advisors and representatives involved in this transaction (the "Parent
and Buyer Representatives") to hold in confidence all information regarding the
Companies furnished or made available by any Company or any Seller
("Confidential Company Information"), and (ii) in
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all events at all times before and after the Closing, but in any event for no
more than five years, Parent, Buyer and the Parent and Buyer Representatives
shall hold in confidence all information regarding any Seller furnished or made
available by any Company or any Seller, and (iii) in all events each Company and
each Seller shall hold in confidence and shall cause all of their attorneys,
accountants, agents, advisors and representatives involved in this transaction
(the "Company and Seller Representatives") to hold in confidence all information
regarding Parent or Buyer furnished or made available by Parent or Buyer, or any
Confidential Company Information. In each case, the obligation to maintain
confidentiality will not extend to information in the public domain not as a
result of a breach of this Section 5.1, or information required to be disclosed
by law or stock exchange rule in connection with the transactions contemplated
hereby. Parent and Buyer shall be responsible for any breach of this Section 5.1
by any Parent and Buyer Representative. Sellers shall be responsible for any
breach of this Section 5.1 by any Company and Seller Representative. If such
transactions are not consummated, Parent and Buyer shall (i) return to the
appropriate Company or Seller all Confidential Company Information, and (ii)
destroy all documents or materials containing information derived from
Confidential Company Information and certify in writing to the Companies and
Sellers that it has returned to the Companies and Sellers all such documents
received and destroyed all documents or other materials containing information
derived from Confidential Company Information.
5.2 Conduct Prior to Closing Date. From the date hereof
through the Closing Date, each Company will (i) conduct its business and affairs
in the ordinary course of business (except as expressly permitted by this
Section 5.2 and Section 5.3), and (ii) use its reasonable efforts to keep intact
its goodwill, keep available the services of its employees, and maintain good
relationships with vendors, customers and employees having business or financial
relationships with it. From the date hereof through Closing Date, without the
prior written consent of Parent and Buyer (which shall not be unreasonably
withheld or delayed), none of the Companies shall (except as may be necessary or
desirable to facilitate the Reorganization or as expressly permitted by Section
5.3):
(a) except as contemplated by Section 1.1 in
connection with the Reorganization, issue any capital stock, partnership
interests or other securities, or any securities convertible or exchangeable
into capital stock, partnership interests or other securities, or any securities
requiring any payment relating to capital stock, partnership interests or other
securities, or any options, warrants, or rights with respect to capital stock,
partnership interests or other securities, or split, subdivide, or reclassify
its capital stock, partnership interests or other securities; provided, however,
that the Companies may issue capital stock or other securities to the Sellers in
order to change the relative number of Company Shares held by and among the
Sellers prior to the Closing if there is no adverse impact on any of the
Companies or on Parent or Buyer or the transactions contemplated by this
Agreement as a result of such issuance;
(b) amend, in any material respect, its articles
of incorporation, bylaws or partnership agreement, as the case may be, or merge,
consolidate, liquidate, or dissolve;
(c) except as contemplated by Sections 2.11 and
5.3, declare or pay any dividend or make any other distribution on its capital
stock or other securities, or purchase or redeem any capital stock or other
securities;
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(d) acquire or agree to acquire by merging or
consolidating with, or by purchasing the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof;
(e) create or incur any security interest, lien,
mortgage, claim or other encumbrance on any of its properties (except for
statutory liens securing payments not yet due), incur or assume any guaranty or
other liability to discharge an obligation of another, incur or assume any
obligations for money borrowed, or cancel or discount any material debt owed to
it, other than in the ordinary course of business;
(f) enter into or terminate (other than in
accordance with its terms) any material contract, or settle any tax claim,
assessment, or liability except in the ordinary course of business; or
(g) incur any debt to make capital expenditures
in excess of the budgeted amount set forth on Schedule 5.2.
5.3 Permitted Distribution. Notwithstanding the
provisions of Section 5.2, prior to the Closing Date, the Companies may declare
and pay to Sellers dividends in cash totaling an aggregate amount (such
aggregate amount being referred to herein as the "Permitted Distribution") of
not more than 100 percent of the reasonably estimated aggregate net income (the
"Interim Net Income") of the Companies for the period commencing September 30,
2002 and ending on the last day immediately preceding the Effective Date (the
"Interim Period"); provided that the Companies shall not borrow any amount to
fund the Permitted Distribution that would make the debt of the Companies exceed
$25.64 million in the aggregate (the "Maximum Debt") as of the Effective Date or
as of the Closing Date. The Interim Net Income shall be determined as follows:
(a) Not later than three business days prior to
the Closing Date, the Companies shall deliver to Parent and Buyer a combined
income statement of the Companies for the Interim Period, which shall include
the Companies' good faith and reasonable estimate of the Companies' aggregate
net income for the Interim Period.
(b) Together with such combined income
statement, each Company making any such declaration or payment shall deliver to
Parent and Buyer a certificate of the Treasurer or Chief Financial Officer of
such Company showing the amount of the Permitted Distribution, the aggregate
amount of dividends declared since September 30, 2002, and the aggregate amount
of dividends paid, or to be paid, by such Company pursuant to this Section 5.3.
5.4 No Solicitation. Except in connection with the
Reorganization, the Companies and the Sellers, alone or together, shall not, and
shall cause their officers, directors, employees, investment bankers,
consultants, attorneys, accountants, agents and other representatives
(collectively, "Company and Seller Agents") not to, directly or indirectly, take
any action to solicit, initiate, encourage or facilitate the making of any
direct or indirect sale, acquisition or purchase of any Company Shares, any
Interests, or any business or assets of any of the Companies or any inquiry with
respect thereto or engage in substantive discussions or negotiations with any
person with respect thereto, or in connection with any proposal related
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thereto, disclose any Confidential Company Information or afford access to the
properties, books or records of any Company, to any person that has made, or to
such party's knowledge, is considering making, any proposal to sell, acquire or
purchase, directly or indirectly, any Company Shares, any Interests, or any
business or assets of any of the Companies, other than sales, acquisitions and
purchases in the ordinary course of business.
5.5 Real Property. No later than ten (10) business days
after the date of this Agreement, Sellers shall provide to Buyer, at Buyer's
expense, Preliminary Title Reports for the Property (the "Preliminary Title
Reports") issued by a title company reasonably acceptable to Buyer (the "Title
Company") and the Company shall cause the Title Company to provide copies of all
documents to which any Seller or any Company is a party that is noted as an
exception or is underlying any exception noted in the Preliminary Title Reports.
Sellers shall also provide Buyer a copy of any unrecorded agreements affecting
title to the Property that have not otherwise been provided. On the Closing
Date, the Property shall be subject only to (a) taxes and assessments not yet
due and payable, (b) the Permitted Liens and (c) any exceptions created by
Buyer. For purposes of this Agreement, the term "Permitted Liens" shall mean (i)
any lien for taxes not yet due or payable, (ii) any easements, exceptions, or
covenants, conditions or restrictions recorded against the Property which do not
interfere with the operation of the Business or the use of the Property as being
used by the Companies as of the date of this Agreement, (iii) exceptions to
title approved or created by Buyer and (iv) mortgages or deeds of trust of
financial institutions or other lenders with respect to any debts approved by
Buyer.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Cooperation.
(a) Parent, Buyer, each Company, and each Seller
agree to use all reasonable efforts in good faith to perform and fulfill all
conditions and obligations to be fulfilled or performed by each of them
hereunder to the end that the transactions contemplated by this Agreement will
be fully and timely consummated as provided herein. Sellers, Parent, Buyer and
each Company shall promptly prepare and file the appropriate forms to comply
with the HSR Act and shall respond to any request for additional information
pursuant to the HSR Act. Upon the terms and subject to the provisions hereof,
Sellers, Parent, Buyer and each Company shall use all commercially reasonable
efforts to resolve objections, if any, as may be asserted by any applicable
governmental authority with respect to the transactions contemplated hereby
under any antitrust or trade or regulatory laws or regulations of any applicable
governmental authority, provided that Parent and Buyer will not be required to
resolve such objections by agreeing to enter into agreements, to sell, license
or otherwise dispose of, or hold separate or otherwise divest itself of, all or
any portion of Parent's and Buyer's businesses or assets or any portion of the
businesses or assets of any of their subsidiaries or any portion of the
businesses or assets of the Companies. Parent and Buyer shall reasonably consult
with each Company and each Seller and, subject to being permitted by the
applicable governmental authority to do so, each Company and each Seller shall
have the right to attend and participate in any telephone calls or meetings that
Parent or Buyer may have with any person working for any such governmental
authority with regard to this Agreement.
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(b) Notwithstanding anything to the contrary in
this Agreement, Parent and Buyer shall cause Precision Strip and Transport (i)
to take commercially reasonable actions in good faith in connection with any
Outstanding Employee Plan Matters (as such term is defined in Section 9.2(b)),
at Sellers' sole cost and expense, and (ii) otherwise to cooperate fully with
Sellers, to the extent reasonably requested by Sellers, in connection with the
administration of, or the defense of, any claim, audit, litigation or other
proceeding relating to any Outstanding Employee Plan Matter. To the extent that,
after the Closing, action by Parent, Buyer, Precision Strip or Transport is
required by applicable laws, regulations or administrative pronouncements in
order to extend any statute of limitation relating to any such claim, audit,
litigation or other proceeding, Parent and Buyer shall take, or cause Precision
Strip and Transport, to take such action as is necessary to extend such statute
of limitations where such extension is reasonably requested by Sellers. After
the Closing, Parent and Buyer shall not, and shall not permit Precision Strip or
Transport to, act or fail to act in a manner which could adversely affect such
claim, audit, litigation or other proceeding without the prior written consent
of Sellers.
6.2 Preparation of Tax Returns; Tax Covenants.
(a) Sellers shall be responsible for preparing
and filing, and shall prepare and file, at the Companies' expense, within the
times and in the manner prescribed by law (subject, however, to filing under any
extension), all Income Tax Returns of each Company for any Tax period ending on
or before the Effective Date that are required to be filed after the Closing
Date; provided that the costs and expense of such preparation shall be accrued
in connection with the preparation of the Closing Financial Statements (as
defined below), if not otherwise reflected on the Financial Statements, Interim
Financial Statements and/or Additional Financial Statements. Each Seller
covenants that (i) any Income Tax Returns of any Company for any Tax period
ending on or before the Closing Date that are filed after the Closing Date will
be complete, correct and filed consistently with such Company's prior Income Tax
Returns, (ii) such Income Tax Returns will not be subject to penalties under
Sections 6662 or 6663 of the Code relating to accuracy and fraud-related
penalties (or their predecessor Code provisions or any corresponding or similar
provision of federal, state, local, foreign, or territorial Income Tax law), and
(iii) except for Taxes payable by the Companies which are attributable solely to
the Section 338(h)(10) Elections (as hereinafter defined), shall pay all Taxes
owed or required to be paid by such Seller in respect of any period ending on or
before the Closing Date. All Tax Returns that are required to be filed pursuant
to this Section 6.2(a) shall not be filed without the prior approval of Parent
and Buyer, which approval shall not be unreasonably withheld.
(b) Parent, Buyer and each Seller shall
cooperate fully as and to the extent reasonably requested by the other party in
connection with the preparation and filing of any Tax Return, and the defense of
any claim, audit, litigation or other proceeding, with respect to Taxes of any
Company or any Seller for any Tax period ending on or prior to the Closing Date.
Parent, Buyer and each Seller agree to abide by all record retention
requirements of, or record retention agreements entered into with, any taxing
authority. To the extent that action by Parent, Buyer or companies controlled by
them or any Seller is required by applicable laws, regulations or administrative
pronouncements in order to extend any statute of limitation for any Tax Return,
claim, audit, litigation or other proceeding described above in this Section
6.2(b), such party shall take such action as is necessary to extend a statute of
limitations where such extension is reasonably requested by the other party in
connection with the preparation by such
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other party of such Tax Return or defense by such other party of such claim,
audit, litigation or other proceeding.
(c) Parent and Buyer shall provide each Seller
with prompt notice of any inquiries, audits, examinations or proposed
adjustments by the Internal Revenue Service or any other Income Tax authorities,
which relate to any Income Tax period ending on or before the Closing Date.
Sellers shall have the right to represent the interests of the Companies in any
Income Tax audit or administrative proceeding relating to any federal Income Tax
period ending on or before the Closing Date, to employ counsel of their choice
at their sole expense, and to settle any issues and to take any other actions in
connection with such proceedings relating to such Income Tax periods; provided,
that each Seller shall use reasonable efforts to inform Parent and Buyer of the
status of any such proceedings, shall provide Parent and Buyer (at Parent's and
Buyer's cost and expense) with copies of any pleadings, correspondence, and
other documents as Parent or Buyer may reasonably request, and shall consult
with Parent and Buyer prior to the settlement of any such proceedings, and
provided further, that no Seller shall settle any such proceedings in a manner
which could adversely affect the Companies, Parent or Buyer without the prior
written consent of Parent and Buyer, which shall not be unreasonably withheld.
(d) Except to the extent otherwise required by
law, Parent, Buyer, each Seller and each Company agree that all federal tax
deductions attributable to obligations relating to or arising out of any
deferred compensation payments, to the extent any such payments are made prior
to the Closing Date or within two-and-one-half months thereafter, shall be
reported on the Companies' Income Tax Returns for the Tax Period ending on the
Closing Date and shall be appropriately reflected on the Closing Financial
Statements.
(e) Within 120 days following the Closing,
Parent and Buyer shall determine whether they desire to make an election under
Section 338(h)(10) of the Code. If so,
(i) Parent, Buyer and each Seller shall
timely make joint elections under Section 338(h)(10) of the Code and comparable
provisions of state law with respect to the purchase and sale of the Precision
Shares and the Transport Shares (the "Section 338(h)(10) Elections"), and shall
timely file executed copies of IRS Form 8023, the required schedules thereto and
any similar state forms, with the proper authorities. Each Seller will include
any income, gain, loss or deduction resulting from any Section 338(h)(10)
Elections on his or her Tax Return to the extent required by applicable law and,
subject to Section 6.2(e)(ii) below, shall pay any Tax imposed on such Seller
attributable to the consummation of the transactions contemplated hereby,
including Taxes attributable to the making of the Section 338(h)(10) Elections.
Parent or Buyer shall pay all Taxes imposed upon any Company to the extent that
such Taxes are attributable to the making of the Section 338(h)(10) Elections.
Parent and Buyer shall prepare an allocation schedule allocating the aggregate
deemed sales price of the assets among the assets of the Companies in accordance
with Section 338(h)(10) of the Code and the regulations thereunder (the
"Allocation Schedule"), subject to the consent of each Seller, which consent
shall not be unreasonably withheld. The Allocation Schedule shall be binding on
all parties for all applicable purposes, including tax purposes, and no party
shall file any Tax Returns or take any other action which is inconsistent with
the Allocation Schedule.
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(ii) On or before January 15, 2004,
Buyer shall pay each Seller an amount equal to such Seller's Excess Section
338(h)(10) Election Taxes (as defined below); provided, however, that, upon not
less than five business days' notice, any Seller may request Buyer to pay on
December 15, 2003, an amount equal to that portion of such Seller's Excess
Section 338(h)(10) Election Taxes which are state income Taxes payable by such
Seller. . For purposes of this Section 6.2(e)(ii), "Excess Section 338(h)(10)
Election Taxes" for any Seller shall mean the incremental federal, state and
local income Taxes payable by such Seller on the income and gain from the sale
of the Precision Shares and the Transport Shares as compared to what the
federal, state and local income Taxes would have been but for the Section
338(h)(10) Elections. The calculation of a Seller's Excess Section 338(h)(10)
Election Taxes shall include, but not be limited to: (A) such Seller's
incremental federal income Taxes (including any recapture) attributable to the
difference between the Seller's marginal rate of tax on ordinary income and the
Seller's marginal tax rate on long-term capital gains with respect to any
ordinary income recognized by the Seller as a result of the sale of the
Precision Shares and the Transport Shares, which ordinary income would have been
long-term capital gain but for solely the Section 338(h)(10) Elections, (B) such
Seller's incremental state income Taxes attributable to the difference between
the Seller's effective state and local tax rate on income and gain recognized by
the Seller as a result of the sale of the Precision Shares and the Transport
Shares as compared to what the Seller's effective state and local tax rate would
have been with respect to such income and gain but for the Section 338(h)(10)
Elections, and (C) any additional federal, state and local income Taxes incurred
by such Seller attributable to the payment made to Seller pursuant to this
Section 6.2(e)(ii). The amount of Seller's Excess Section 338(h)(10) Election
Taxes, if any, shall be determined by an independent tax accounting expert
mutually agreeable to Sellers and Buyer, which shall be subject to the
reasonable review and comment by the Companies' independent tax accountants. All
payments made pursuant to this Section 6.2(e) shall be treated as additional
Purchase Price for all tax and financial accounting purposes. All calculations
shall be made based on the respective states of residence of Sellers at the date
of this Agreement and, at Buyer's option, need not be adjusted for changes in
any Seller's state of residence between the date of this Agreement and the
Closing Date.
(f) Buyer shall also reimburse each Seller for
any incremental federal, state and local income Taxes payable by such Seller as
a result of the consummation of the Reorganization as compared to what the
federal, state and local income Taxes payable by such Seller would have been if,
in lieu of the transactions described in Section 1.1(a), (i) Sellers sold the
stock of Leasing and Kenton to Buyer (without a Section 338(h)(10) election),
(ii) Sellers sold the Interests to Buyer and (iii) Xxxxxx sold the Rentals
Assets to Buyer. The excess Taxes to be reimbursed pursuant to this Section
6.2(f) shall be calculated in a manner similar to the calculation of Excess
Section 338(h)(10) Election Taxes under Section 6.2(e)(ii) and shall be
determined by an independent accounting expert mutually agreeable to Sellers and
Buyer, which shall be subject to the reasonable review and comment by the
Companies' and Buyer's respective independent tax accountants. Any excess Taxes
reimbursed pursuant to this Section 6.2(f) shall not be treated as Excess
Section 338(h)(10) Election Taxes for purposes of Section 6.2(e)(ii).
Notwithstanding the foregoing, in no event shall Buyer be liable for (1) any
Taxes related to any distributions by the Companies to Sellers before the
Closing Date or (2) any Taxes under Section 1374 of the Code.
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6.3 Closing Financial Statements.
(a) Promptly following the Closing, Sellers and
Buyer shall cause Ernst & Young LLP, an independent certified public accountant
(the "Auditor"), to audit the combined financial statements, including the
balance sheet, income statement and cash flow statement, of Precision Strip, as
restructured after the Reorganization, and Transport for the period ended and as
at midnight on the day immediately preceding the Effective Date (the "Closing
Financial Statements"). The Closing Financial Statements shall be properly and
accurately prepared in accordance with generally accepted accounting principles
applied consistently with past practice, and shall fairly and accurately
represent the financial condition of the combined Companies; provided, however,
that, to the extent that the Closing Date is not the Effective Date and the
following payments or reimbursements are made after the Effective Date and on or
before the Closing Date, the Closing Financial Statements shall reflect the
following transactions as having occurred at midnight on the day immediately
preceding the Effective Date: (i) the payment of the Permitted Distribution,
(ii) the payment and reimbursement of all amounts paid and reimbursed pursuant
to Section 6.4(b) hereof , (iii) any transfer of assets by Precision Strip or
Transport, outside the ordinary course of business, between the Effective Date
and the Closing Date and (iv) any increase in the aggregate debt of Precision
Strip and Transport to the extent that it exceeds the Maximum Debt. In the event
that the combined net assets reflected in the Closing Financial Statements are
less than $130 million, the Purchase Price shall be decreased by an amount equal
to the difference between $130 million and such combined net assets (a
"Shortfall"). If a Shortfall exists, Sellers shall remit an amount equal to such
Shortfall to Buyer within ten (10) business days after calculation of the
Shortfall is conclusively determined pursuant to this Section 6.3 or, if Sellers
fail to do so, Buyer, in its sole discretion, shall be entitled, but not
obligated, to make a claim against the Holdback for the amount of such Shortfall
and Sellers or Sellers' Representative (as defined in the Holdback Agreement)
shall acknowledge and approve any such claim in accordance with the Holdback
Agreement. For purposes of this Section, "net assets" shall be determined as of
midnight on the day immediately preceding the Effective Date and shall mean the
value of the total assets, less cash, cash equivalents and money market funds,
of the Companies held as of midnight on the day immediately preceding the
Effective Date by Precision Strip and Transport minus total liabilities
remaining as liabilities of Precision Strip or Transport after the Effective
Date as reflected on the Closing Financial Statements as determined in
accordance with this Section.
(b) The Auditor shall furnish copies of the
Closing Financial Statements to the parties no later than ten (10) business days
after the audit is completed, provided that the parties shall use their best
efforts to have the audit completed within forty-five (45) days after the
Closing Date, and the parties shall have five (5) business days to review and
approve the Closing Financial Statements. If there is any dispute over the
computation or amount of the net assets, the disputing party shall so notify the
other parties in writing within such five (5) business days. If Sellers and
Buyer are unable to agree on the computation of the net assets within ten (10)
days thereafter, then the calculation shall be submitted for resolution to a
firm of independent certified public accountants selected by the Auditor (the
"Selected Firm"), and the net assets as computed by the Selected Firm shall be
conclusive for the purposes of this Section. Buyer and Sellers shall each pay
one-half of the fees and expenses of the Auditor and the Selected Firm. Buyer
and Sellers shall cooperate with one another and shall assist in the audit to
the extent reasonably necessary.
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6.4 Expenses. Whether or not the transactions
contemplated by this Agreement are consummated and except as otherwise
specifically provided in this Agreement, the following fees and expenses shall
be paid by the following parties:
(a) Parent and Buyer shall pay (i) all fees and
expenses incurred by them in structuring, negotiating, and consummating this
Agreement, (ii) all filing fees (including filing fees required to be paid under
the HSR Act); and (iii) one-half of the fees and expenses of the Auditor
incurred by Sellers or the Companies in connection with the audit of the
Financial Statements; and
(b) except as provided in Section 6.4(a),
Sellers shall pay, or (if paid by the Companies before the Closing) reimburse
the Companies for, (i) all fees and expenses incurred by Sellers and the
Companies in structuring, negotiating, and consummating this Agreement,
including, without limitation, all fees and expenses and other amounts, if any,
to be paid to Xxxxxxx Xxxxx & Company, L.L.C., Xxxxxxx, Xxxxxxxxx & Xxxxxxx,
P.C. and XxXxxxxxx, Will & Xxxxx in connection with the transactions
contemplated hereby, (ii) fees and expenses incurred by Sellers or the Companies
relating primarily to estate planning or other financial or tax matters of
Sellers personally in connection with the transactions contemplated by this
Agreement; and (iii) one-half of the fees and expenses of the Auditor incurred
by Sellers or the Companies in connection with the audit of the Financial
Statements.
6.5 Public Announcements. Parent, Buyer, the Companies,
and Sellers will consult each other and provide each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement without the prior
written consent of the other party, except as may be required by applicable law,
by court process or by obligations pursuant to any listing agreement with or
rule of any national securities exchange. The parties agree that any press
release or releases to be issued with respect to the transactions contemplated
by this Agreement shall be mutually agreed upon prior to the issuance thereof,
except as set forth above. Notwithstanding anything in this Section 6.5 to the
contrary, after the Closing of the transactions contemplated by this Agreement,
Xxxxxxx Xxxxx & Company, L.L.C. may publicly disclose the fact of its
participation in the transactions contemplated by this Agreement in any
tombstone advertisement and, in connection with such disclosure, Xxxxxxx Xxxxx &
Company, L.L.C. may use the names of the parties hereto and may describe its
role in the such transactions in a very general manner and without reference to
any specific terms or conditions of such transactions.
6.6 Control of the Companies' Operations. Nothing
contained in this Agreement shall give to Parent or Buyer, directly or
indirectly, the right to control or direct the operations of any of the
Companies prior to the Closing Date. Nor shall Parent or Buyer incur any
liability to Sellers or with respect to the Companies prior to the Closing of
the transactions contemplated by this Agreement.
6.7 Updated Disclosure Schedules. At any time and from
time to time prior to the Closing, Sellers and the Companies may deliver to
Parent and Buyer updated versions of the disclosure schedules relating to the
representations made by the Companies and Sellers in Articles II and III,
respectively, attached hereto (such attached disclosure schedules being
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referred to herein, collectively, as the "Disclosure Schedules") and, in any
event, Sellers and the Companies shall deliver to Parent and Buyer updated
versions of the Disclosure Schedules no later than two business days before the
Closing. Each such updated version of a Disclosure Schedule (an "Updated
Disclosure Schedule") will update the information contained in such Disclosure
Schedule. Within seven (7) business days after receipt of an Updated Disclosure
Schedule (or, with respect to any Updated Disclosure Schedule delivered later
than seven (7) business days, but not less than two (2) business days before the
Closing, at any time prior to the Closing), Parent and Buyer may either (a)
accept and acknowledge in writing such Updated Disclosure Schedule or (b) in the
event the information reflected in such Updated Disclosure Schedule would allow
Parent and Buyer to terminate this Agreement pursuant to Section 10.1, elect to
terminate this Agreement. In the event Parent and Buyer accept and acknowledge
such Updated Disclosure Schedule or fail to provide notice of termination in
accordance with this Section 6.7 during such seven (7) business-day period (or
before the Closing, if applicable), each such Updated Disclosure Schedule shall
be deemed to have been accepted by Buyer and the applicable Disclosure Schedule
shall be deemed to be amended and superseded by such Updated Disclosure Schedule
for all purposes of this Agreement, including (without limitation) Section
8.1(a).
6.8 Litigation Support. After the Closing Date, in the
event and for so long as any party hereto actively is contesting or defending
against any third party claim made in connection with (a) any transaction
contemplated under this Agreement or (b) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
any Company, each of the other parties hereto will cooperate with him or it and
its counsel in such contest or defense, make available their personnel, and
provide such testimony and access to such of their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or defending
party is entitled to indemnification therefor under Article IX).
6.9 Employee Benefits.
(a) During the period commencing at the Closing
Date and ending on the first anniversary thereof, Parent and Buyer shall provide
(or shall cause the Companies or their successors to provide) employees of the
Companies with salary and benefits under employee benefit plans that are no less
favorable than those currently provided by the Companies to their employees
(including benefits pursuant to qualified and nonqualified retirement plans,
savings plans, medical, dental, disability and life insurance plans and
programs, deferred compensation arrangements, bonus and incentive compensation
plans, and retiree benefit plans, policies and arrangements). Parent and Buyer
shall cause all medical and dental employee benefit plans maintained by the
Companies as of the date of this Agreement and remaining in effect following the
Reorganization to be maintained for the benefit of the employees, who are
employed by Precision Strip or Transport as of the Closing Date, for a period of
one year following the Closing. For purposes of any employee benefit plan or
arrangement maintained by Parent or Buyer or any Company after the Closing Date,
Parent and Buyer or such Company shall recognize (or cause to be recognized)
service with such Company and any predecessor entities (and any other service
credited by such Company under similar benefit plans) for all purposes
(including for vesting, eligibility to participate, severance and benefit
accrual). On or
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immediately prior to the Closing, Precision Strip shall provide to Buyer a
Schedule 6.9(a) listing the service dates for all employees then employed by
Precision Strip or Transport. From and after the Closing Date, Parent, Buyer and
the Companies shall waive any pre-existing condition limitations that are
applicable under the employee benefit plans of the Companies.
(b) During the period commencing at the Closing
Date and through at least the first anniversary thereof, in the event that Buyer
terminates the employment of any employee of any Company without cause, Parent
or Buyer shall provide written notice of such termination of employment to such
employee at least one week prior to the termination date for each year that the
employee had been employed by any Company; provided that Parent and Buyer shall
provide no more than eight week's prior notice. In no event shall Parent or
Buyer be obligated to give such prior notice to any employee terminated for
cause.
(c) Prior to the Closing Date, each Company
shall honor all employment, change of control, severance, retirement or
termination agreements between such Company, and any officer, director or
employee of any Company.
(d) Sellers acknowledge that Buyer may, in its
sole discretion, merge one or more of the Companies' Employee Plans with and
into Parent's Master 401(k) Plan.
6.10 Director and Officer Indemnification. Parent and
Buyer shall cause Precision Strip and Transport to keep in effect provisions in
its articles of incorporation and bylaws with respect to indemnification no less
favorable to directors and officers of the Corporations (collectively, the "D&O
Indemnitees") than those contained therein on December 31, 2002, which
provisions shall not be amended, repealed or otherwise modified for a period of
at least six years from the Closing Date in any manner that would adversely
affect the rights thereunder of individuals who at any time prior to the Closing
Date were directors or officers of any Corporation in respect of actions or
omissions at or prior to the Closing (including the transactions contemplated by
this Agreement), except as required by applicable law or except to make changes
permitted by law that would not materially diminish such rights of
indemnification.
6.11 Certain Matters Concerning the Reorganization.
Precision Strip may issue additional shares of its capital stock as a result of
the Reorganization. On or before the Closing, the Companies and Sellers shall
provide a Schedule 6.11 showing the number of shares of capital stock of each
Corporation, to the extent still in existence following the Reorganization, then
issued and outstanding and the names of the holders of such shares. All
Precision Shares and Transport Shares outstanding following the Reorganization
shall be free and clear of all Encumbrances immediately prior to the Closing.
ARTICLE VII
COVENANT NOT TO COMPETE
7.1 Covenant of Xxxxxx and Xxxxx Xxxxxx. For a period of
five (5) years from and after the Closing, Xxxxxx and Xxxxx Xxxxxx, jointly and
severally, hereby covenant and agree that neither of them shall engage or
participate, directly or indirectly, in any business, which
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includes the processing of metal products or the development of equipment or
technology to do so, in competition with the business conducted by the Companies
immediately prior to the Closing within the States of Ohio, Kentucky, Indiana,
or Alabama. Any passive beneficial ownership of less than five percent (5%) of
the shares of a company whose securities are actively traded on a national
securities exchange or NASDAQ shall not be deemed to be a violation of this
Section.
7.2 Public Policy and Law. The parties to this Agreement
expressly agree that it is not their intention to violate any public policy or
statutory or common law. The parties intend that the covenant set forth above
shall be construed as a series of separate covenants, one for each county or
state within the specified geographic area, each of which covenants shall be
deemed to be identical. If, in any judicial proceedings, a court shall refuse to
enforce any of the separate covenants deemed included in this Article VII, then
such unenforceable covenant shall be deemed to be eliminated therefrom or
modified to the extent necessary to permit it and the remaining separate
covenants to be enforceable. Without limiting the generality of the foregoing,
if any court of competent jurisdiction determines that the foregoing covenant
not to compete is invalid because of its length of time or geographic scope,
then the parties hereto agree that such covenant shall be reduced either or both
in length of time or geographic scope to the extent necessary to make such
covenant enforceable against Xxxxxx and Xxxxx Xxxxxx.
7.3 Remedy. The parties acknowledge and agree that the
remedy at law for any breach of the foregoing covenant not to compete will be
inadequate and that Parent and Buyer shall be entitled, in addition to any
remedy at law, to injunctive relief. The consideration for the foregoing
covenant not to compete, which is hereby agreed to be a material element of this
Agreement, is Buyer's agreement to purchase the Precision Shares and the
Transport Shares and to pay the Purchase Price provided herein, as well as the
amounts set forth in Schedule 7.3, and Xxxxxx and Xxxxx Xxxxxx acknowledge the
adequacy of such consideration.
ARTICLE VIII
CONDITIONS
8.1 Conditions to the Obligations of Parent and Buyer.
The obligations of Parent and Buyer to effect the transactions contemplated
hereby are subject to the satisfaction on or before the Closing Date of the
following conditions (any of which Parent or Buyer may waive):
(a) All of Sellers' and the Companies'
respective representations and warranties herein shall be true in all material
respects (except for such representations and warranties which are qualified by
their terms by reference to materiality or a material adverse effect, which
representations and warranties as so qualified shall be true and correct in all
respects) as though made on and as of the Closing Date; provided, however, that
representations and warranties that address matters only as of a particular date
or period shall be true in all material respects as of such date or period of
time.
(b) Each Seller and each Company shall have
performed and complied in all material respects with all covenants, agreements
and conditions required by this Agreement
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to be performed or complied with by him, her or it prior to or on the Closing
Date (including, without limitation, the delivery of all documents and other
items set forth in Section 1.4).
(c) All filings with, approvals by, and consents
of third parties required to be made or received by or on the part of any Seller
or any Company, and all approvals by governmental authorities required to be
received by Parent or Buyer, for the consummation of the transactions
contemplated hereby shall have been made or obtained, and any applicable waiting
period under the HSR Act (and any extension thereof) shall have expired or been
terminated (provided, however, that neither Parent nor Buyer may rely on this
condition if it is not met due to the failure of Parent or Buyer either to make
a required filing with such a governmental authority, or to use all reasonable
efforts in good faith to obtain a required approval of such a governmental
authority).
(d) No party hereto shall be subject to any
order, injunction, or other legal restraint of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of any of the
transactions contemplated hereby; and no statute, rule, regulation, order,
injunction, or decree shall have been enacted, entered, promulgated, or enforced
by any governmental authority which prohibits, restricts, or makes illegal the
consummation of any of the transactions contemplated by this Agreement.
(e) There shall have been no material adverse
change in the business, operations, financial condition or assets of the
Companies between the date of this Agreement and the Closing Date.
(g) Sellers shall have delivered two separate
pro forma balance sheets showing the combined financial condition of Precision
Strip, as restructured pursuant to the Reorganization, and Transport at a date
not more than three (3) days before the Effective Date (the "Effective Date Pro
Forma Balance Sheet") and at a date not more than three (3) days before the
Closing Date (the "Closing Date Pro Forma Balance Sheet"), respectively, and the
amount of the Companies' combined net assets as shown on the Effective Date Pro
Forma Balance Sheet shall be not less than $130 million and the aggregate debt
as shown on the Effective Date Pro Forma Balance Sheet and the Closing Date Pro
Forma Balance Sheet shall be no more than $25.64 million; provided, however,
that, if the net assets as shown on the Effective Date Pro Forma Balance Sheet
are less than $130 million, the Purchase Price shall be adjusted in accordance
with Section 6.3 prior to the Closing and subject to a second adjustment after
completion of the audit. The Effective Date Pro Forma Balance Sheet shall be
prepared in accordance with Section 6.3, and the Closing Date Pro Forma Balance
Sheet shall be properly and accurately prepared in accordance with generally
accepted accounting principles applied consistently with past practice, and
shall fairly and accurately represent the financial condition of the combined
Companies.
8.2 Conditions to the Obligations of Each Seller. The
obligations of each Seller to effect the transactions contemplated hereby are
subject to the satisfaction on or before the Closing Date of the following
conditions (any of which such Seller may waive):
(a) All of Parent's and Buyer's representations
and warranties herein shall be true in all material respects (except for such
representations and warranties which are
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qualified by their terms by reference to materiality or a material adverse
effect, which representations and warranties as so qualified shall be true and
correct in all respects) as though made on and as of the Closing Date; provided,
however, that representations and warranties that address matters only as of a
particular date or period shall be true in all material respects as of such date
or period of time.
(b) Parent and Buyer shall have performed and
complied in all respects with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by Parent or Buyer prior to
or on the Closing Date (including, without limitation, the delivery of all
documents, payments and other items set forth in Section 1.5).
(c) All filings with, approvals by, or consents
of third parties required to be made or received by or on the part of Parent or
Buyer, and all approvals by governmental authorities required to be received by
any Seller, for the consummation of the transactions contemplated hereby shall
have been made or obtained, and any applicable waiting period under the HSR Act
(and any extension thereof) shall have expired or been terminated (provided,
however, that each Seller may not rely on this condition if it is not met due to
the failure of any Seller either to make a required filing with such a
governmental authority, or to use all reasonable efforts in good faith to obtain
a required approval of such a governmental authority).
(d) No party hereto shall be subject to any
order, decree, injunction, or other legal restraint or prohibition of a court or
agency of competent jurisdiction which enjoins or prohibits the consummation of
any of the transactions contemplated by this Agreement; and no statute, rule,
regulation, order, injunction, or decree shall have been enacted, entered,
promulgated, or enforced by any governmental authority which prohibits,
restricts, or makes illegal the consummation of any of the transactions
contemplated by this Agreement.
ARTICLE IX
INDEMNITY
9.1 Survival of Representations and Warranties. The
representations and warranties of (i) each Company in Sections 2.1, 2.5, 2.6,
2.12 and 2.14 (ii) each Seller in Sections 3.1 and 3.3 and (iii) Parent and
Buyer in Sections 4.1 and 4.4 shall survive the Closing Date and claims with
respect thereto shall be governed by the applicable statute of limitations. The
representations and warranties of each Company in all other sections of Article
II, of Sellers in all other sections of Article III, and of Parent and Buyer in
all other sections of Article IV, shall survive for that period from the Closing
Date to December 31, 2004, after which date no claim for indemnification or
otherwise not theretofore asserted may be brought in respect of any
misrepresentation or breach of warranty based on such other representations and
warranties.
9.2 Indemnification by Sellers.
(a) Except as provided in (b), each Seller,
severally and not jointly, shall indemnify and hold harmless Parent and Buyer
and, after the Closing Date, the Companies (collectively, "Parent and Buyer
Indemnitees"), from any liability, obligations, fines, penalties,
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settlements, damages, claims, interest, awards and judgments, costs and
expenses, including reasonable attorneys' fees and other reasonable costs and
expenses of investigating or contesting any of the foregoing (collectively,
"Losses"), suffered or incurred by any of them for, or arising out of or based
upon, or relating to the breach of any representation, warranty, agreement or
covenant of such Seller contained in this Agreement or any document or
certificate of such Seller referenced in Section 1.4 relating thereto.
(b) Xxxxxx and Xxxxx Xxxxxx (collectively, the
"Eitings"), jointly and severally, shall indemnify and hold harmless the Parent
and Buyer Indemnitees from any Losses suffered or incurred by any of them for,
or arising out of or based upon, or relating to the breach of any
representation, warranty, agreement or covenant of any Company contained in this
Agreement or any document or certificate of any Company referenced in Section
1.4 relating thereto. Without limiting the generality of the above indemnity,
Eitings, jointly and severally, shall indemnify, defend and hold harmless Parent
and Buyer and their respective officers, directors, employees and agents, from
and against, any and all funding and other costs, including the fees for any
attorney or consultant, to bring into compliance with its terms and applicable
law any Employee Plan that is not in compliance with its terms and applicable
law as of the Closing Date, whenever such fees are incurred and whether or not
it is known as of the Closing Date that the Employee Plan is not in compliance
with its terms or applicable law or that the Employee Plan is not fully funded,
including, but not limited to, any Losses in an aggregate amount of up to
$200,000 (the "EP Cap") incurred as a result of (i) amendments to any Employee
Plan that were not properly adopted, (ii) any late filings of Forms 5500 or
other required reports and (iii) any prohibited transactions with respect to
participant loans (the matters identified in clauses (i), (ii) and (iii) above
being referred to herein, collectively, as the "Outstanding Employee Plan
Matters"). Xxxxxx and Xxxxx Xxxxxx specifically acknowledge and agree that any
Losses incurred by Buyer, Parent, Precision Strip or Transport in an aggregate
amount not to exceed the EP Cap with respect to any Outstanding Employee Plan
Matters shall not be subject to the limits set forth in Section 9.6.
(c) Except for amounts owed by any Seller for
any Shortfall under Section 6.3 with respect to which Sellers shall pay Parent
and Buyer directly unless Parent and Buyer elect to make a claim against the
Holdback, Parent and Buyer shall, subject to the limitations set forth in
Section 9.6 if applicable, submit all claims for indemnifiable Losses under this
Section 9.2 to the Escrow Holder for payment from the Holdback in accordance
with the Holdback Agreement.
9.3 Indemnification by Parent and Buyer. Parent and Buyer
shall indemnify and hold harmless each Seller from any Losses suffered or
incurred by any of them for, or arising out of or based upon, or relating to any
of the following:
(a) any and all liabilities and obligations of
any Company arising after the Effective Date, except to the extent Parent or
Buyer is otherwise indemnified by the Eitings therefor under Section 9.2; or
(b) any breach of any representation, warranty,
covenant or agreement of Parent or Buyer contained in this Agreement or any
document or certificate of Parent or Buyer referenced in Section 1.5 relating
thereto.
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9.4 Third-Party Claims. Within ten (10) business days
after receipt by a person entitled or claiming to be entitled to indemnification
pursuant to this Article IX (each an, "Indemnitee") of written notice of the
commencement of any action or the assertion of any claim, liability or
obligation by a third party, against which claim, liability or obligation a
person is, or may be, required under this Article IX to indemnify Indemnitee
("Indemnitor"), Indemnitee will, if a claim thereon is to be made against
Indemnitor, notify Indemnitor in writing of the commencement or assertion
thereof (the "Claim Notice") and give Indemnitor a copy of such claim, process
and all legal pleadings relating thereto. Indemnitor shall have the right to
contest and conduct the defense of such action with counsel reasonably
acceptable to Indemnitee by giving written notice to Indemnitee of its election
to do so within ten (10) business days of the receipt of the Claim Notice, and
Indemnitee may participate in such defense by counsel of its own choosing at its
own expense. If Indemnitee shall be required by final judgment not subject to
appeal or by a settlement agreement to pay any amount in respect of any
obligation or liability against which Indemnitor has agreed to indemnify
Indemnitee under this Agreement, such amount plus all reasonable expenses
incurred by such Indemnitee in accordance with such obligation or liability
(including, without limitation, reasonable attorneys' fees (other than fees
incurred by counsel to Indemnitee employed pursuant to the immediately preceding
sentence) and costs of investigation) shall be promptly paid by Indemnitor to
Indemnitee, subject to reasonable documentation. Indemnitee shall not settle or
compromise any claim, action or proceeding without the prior written consent of
Indemnitor, which shall not be unreasonably withheld. Indemnitee shall use
reasonable efforts to mitigate any Losses with respect to which it shall be
entitled to indemnification hereunder. Failure of Indemnitee to give the Claim
Notice to Indemnitor within the ten (10) business-day period required hereunder
shall not affect Indemnitee's rights to indemnification hereunder, except (a) as
provided in Section 9.1 above, and (b) if (and then only to the extent that)
Indemnitor incurs additional expenses or Indemnitor's defense of such claim is
actually prejudiced by reason of such failure to give timely notice.
9.5 Direct Claims. With respect to claims other than
third-party claims, Indemnitee shall use reasonable efforts promptly to notify
Indemnitor of such claims, but failure of Indemnitee so to give notice to
Indemnitor shall not affect the rights of Indemnitee to indemnification
hereunder, except (a) as provided in Section 9.1 above and (b) if (and then only
to the extent that) Indemnitor incurs additional expenses or Indemnitor is
actually prejudiced by reason of such failure to give timely notice. Indemnitee
shall use reasonable efforts to mitigate any Losses with respect to which it
shall be entitled to indemnification hereunder.
9.6 Limits on Indemnification. Notwithstanding the
provisions of Sections 9.2(a) and (b):
(a) No Seller (including the Eitings) shall have
any obligation to indemnify any Parent and Buyer Indemnitee for any Losses, and
no claim for Losses shall be made by any Parent and Buyer Indemnitee, with
respect to any representation and warranty made by any Company or any Seller
under this Agreement, if the Chief Executive Officer, President or Chief
Financial Officer of Parent knows on or before the Closing Date that such
Company or such Seller has breached such representation and warranty or
otherwise knows of the likely incurrence of such Loss, except as specifically
provided in Section 9.2(b).
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(b) No Seller (including the Eitings) shall have
any obligation to indemnify any Parent and Buyer Indemnitee for any Losses until
the Parent and Buyer Indemnitees have suffered Losses in excess of $1,500,000 in
the aggregate (at which point Sellers will be obligated to indemnify the
applicable Parent and Buyer Indemnitee from and against all such Losses from the
first dollar), except as specifically provided in Section 9.2(b).
(c) Sellers (including the Eitings) shall have
no obligation to indemnify any Parent and Buyer Indemnitee for any Losses in
excess of $15,000,000 in the aggregate; provided, however, that with respect to
any Losses arising out of a breach by any Seller of a representation and
warranty contained in Section 3.1, the Seller breaching such representation and
warranty shall be liable for any such Losses up to the full amount of the
Purchase Price received by such Seller as set forth on Schedule A attached
hereto.
(d) In computing the amount of any Losses as to
which a party shall be entitled to indemnification hereunder,
(i) the Indemnitor shall be given the
benefit of any insurance proceeds which may become available to the Indemnitee;
and
(ii) such amounts shall be limited to
the after-tax consequences to the Indemnitee (or the affiliated group of which
such Indemnitee is a member).
9.7 Exclusive Remedy. If the Closing occurs, this Article
IX shall be the exclusive remedy for breaches of this Agreement (including any
covenant, obligation or representation and warranty contained in this Agreement
or in any certificate delivered pursuant to this Agreement).
ARTICLE X
MISCELLANEOUS
10.1 Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time upon notice from the
terminating party to the other parties as follows:
(a) By mutual written consent of Parent, Buyer
and each Seller;
(b) By Parent, Buyer or any Seller, if the
Closing Date shall not have occurred on or before September 5, 2003 (other than
as a result of, in the case of a notice given by Parent or Buyer, a failure
which results primarily from Parent or Buyer breaching any representation,
warranty, or covenant contained in this Agreement, or in the case of a notice
given by any Seller, a failure which results primarily from such Seller
breaching any representation, warranty, or covenant contained in this
Agreement);
(c) By any Seller, if a representation or
warranty of Parent or Buyer, or by Parent or Buyer if a representation or
warranty of any Company or any Seller, is or becomes materially false or
inaccurate, or by any Seller if Parent or Buyer, or by Parent or Buyer if any
Company or any Seller, materially fails to comply with a covenant in a timely
manner and,
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in either event such falsity, inaccuracy, or failure shall not have been cured
within fifteen (15) days of written notice of such breach from the party seeking
to terminate;
(d) By Parent, Buyer or any Seller, if
consummation of the transactions contemplated hereby shall violate any final
order, decree, or judgment of any court or governmental body having competent
jurisdiction; or
(e) By Parent or Buyer if there has been a
material adverse change in the Business, or the Companies' operations, condition
(financial or other), Property or assets, taken as a whole.
All rights and obligations of all parties under this Agreement (other
than rights and obligations arising from the breach of this Agreement before
termination) shall terminate upon such termination, except for the obligations
under Section 5.1 and under Section 6.4.
10.2 Amendment and Waiver. This Agreement may be amended
and its provisions and the effects thereof waived only in accordance with the
provisions of this Section 10.2.
(a) This Agreement may not be modified, amended,
supplemented, except by written instrument executed by all parties hereto.
(b) Parent or Buyer may waive any condition to
the obligations of Parent or Buyer hereunder in writing by at or prior to the
Closing Date, and any condition to the obligations of any Seller hereunder may
be waived in writing by such Seller at or prior to the Closing Date.
(c) No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
10.3 Assignment. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of Parent, Buyer and each
Company, and the heirs, legatees, executors, personal representatives,
successors and assigns of each Seller; provided, however, that this Agreement
shall not be assignable or transferable by Parent or Buyer (other than, in
either case, to a subsidiary of Parent), without the prior written consent of
each Seller, or by any Seller or any Company, without the prior written consent
of Parent.
10.4 Notices. Any notice or communication given pursuant
hereto shall be in writing and delivered in hand; mailed by registered or
certified mail, postage prepaid (mailed notices shall be deemed given five
calendar days after deposit in the United States mail); or sent by facsimile
(facsimile notices shall be deemed given upon receipt of any automatic
answer-back or other similar evidence of transmission thereof) as follows, or to
such other address or facsimile number of which a party has given notice to the
other parties in accordance with this Section 10.4:
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If to Parent or Buyer: Reliance Steel & Aluminum Co.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to: Reliance Steel & Aluminum Co.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
and a copy to: Xxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
If to the Companies: c/o Precision Strip, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to: XxXxxxxxx, Will & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxxx, Xxxxxxxxx & Xxxxxxx, P.C.
Union Bank of California Tower
000 XX Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
and, following the Closing Date,
with a copy to Parent and Buyer as
provided above
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If to Sellers: Xxxx X. Xxxxxx
x/x Xxxxxxx, Xxxxxxxxx & Xxxxxxx, X.X.
Union Bank of California Tower
000 XX Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
with a copy to: Xxxxxxx, Xxxxxxxxx & Xxxxxxx, P.C.
Union Bank of California Tower
000 XX Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
and
XxXxxxxxx, Will & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
10.5 Entire Agreement; Contents of Disclosure Schedules.
This Agreement, together with the schedules and exhibits hereto, constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. The inclusion of an item
on any Disclosure Schedule shall be deemed to include such item on all other
appropriate Disclosure Schedules.
10.6 Further Action. Each party covenants with the other
that such party will execute and deliver all other and further instruments and
take such other action as such requesting party reasonably requires to carry
into effect the provisions of this Agreement.
10.7 Third Party Beneficiaries. There shall exist no right
of any person to claim a beneficial interest in this Agreement or any rights
accruing by virtue of this Agreement except for (a) the parties to this
Agreement, (b) with respect to Section 6.10, any D&O Indemnitee and (c) with
respect to Article IX, any Indemnitee.
10.8 Applicable Law; Counterparts; Headings. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio applicable to contracts made and to be performed within such state
by residents of such state. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any signature page of any
such counterpart, or any fax thereof, may be attached or appended to any other
counterpart to complete a fully executed counterpart of this Agreement, and any
fax transmission of any signature shall be deemed an original and shall bind
such party. The headings contained in this
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Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
10.9 Definitions. For purposes of this Agreement:
(a) "to the best knowledge of any Company" or
any similar phrase means the current actual knowledge of each Seller and the
officers and directors of the Companies.
(b) "material adverse change" or "material
adverse effect" means, when used in connection with Parent and Buyer, taken as a
whole, or the Companies, taken as a whole, any change or effect, individually or
in the aggregate, that is materially adverse to the business, assets,
properties, financial condition or results of operations of Parent and Buyer,
taken as a whole, or the Companies, taken as a whole, as the case may be;
provided, however, that occurrences or effects resulting from (i) a decline in
general or local economic conditions affecting Parent and Buyer, taken as a
whole, or the Companies, taken as a whole, as the case may be, or (ii) the
announcement of this Agreement or the transactions contemplated hereby shall
not, in any such case, be deemed to be a "material adverse change" or to have a
"material adverse effect" with respect to Parent and Buyer, taken as a whole, or
the Companies, taken as a whole, as the case may be.
(c) "Facilities" means those facilities leased
or owned by the Companies and listed on Schedule 10.9(c).
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IN WITNESS WHEREOF, Parent, Buyer, each Company and each
Seller have executed this Agreement, by duly authorized officers or agents
thereof, or personally, as applicable, as of the day and year first above
written.
PARENT: RELIANCE STEEL & ALUMINUM CO.
By:___________________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
By:___________________________________
Name: Xxxxx XxXxxxxx
Title: Executive Vice President and
Chief Financial Officer
BUYER: RSAC MANAGEMENT CORP.
By:___________________________________
Name: Xxxxx XxXxxxxx
Title: Executive Vice President and
Chief Financial Officer
COMPANIES: PRECISION STRIP, INC.
By:___________________________________
Name:
Title:
PRECISION STRIP TRANSPORT, INC.
By:___________________________________
Name:
Title:
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PRECISION STRIP LEASING, INC.
By:___________________________________
Name:
Title:
PRECISION STRIP KENTON, INC.
By:___________________________________
Name:
Title:
PRECISION STRIP KENTON, LTD.
By:___________________________________
Name:
Title:
PSI LIMITED PARTNERSHIP
By:___________________________________
Name:
Title:
______________________________________
XXXX X. XXXXXX (d/b/a X.X. RENTALS)
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SELLERS:
______________________________________
Xxxx X. Xxxxxx
______________________________________
Xxxxx Xxxxxx
______________________________________
Xxxxxxxx Xxxxxx Xxxxx
______________________________________
Xxxxxxxx X. Xxxxxx
______________________________________
Xxxxxxxxx X. Xxxxxx
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