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Exhibit 10.1
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STOCK PURCHASE AGREEMENT
BETWEEN
GS TECHNOLOGIES OPERATING CO., INC.,
AND
INSTEEL INDUSTRIES, INC.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS ............................................................................................1
ARTICLE II
PURCHASE AND SALE OF FWC SHARES ........................................................................5
2.1. Purchase and Payment of Purchase Price ...........................................................5
2.2. Purchase Price Adjustment ........................................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER ...............................................................7
3.1. Corporate Organization ...........................................................................7
3.2. Capitalization of FWC ............................................................................7
3.3. Authority ........................................................................................8
3.4. Consents and Approvals; No Violations ............................................................8
3.5. Financial Statements .............................................................................8
3.6. Undisclosed Liabilities ..........................................................................9
3.7. Taxes ............................................................................................9
3.8. Title to Properties .............................................................................10
3.9. Absence of Changes ..............................................................................10
3.10. Patents, Trademarks, Trade Names ................................................................11
3.11. Leases ..........................................................................................12
3.12. Bank Accounts ...................................................................................12
3.13. Material Contracts ..............................................................................13
3.14. Related Transactions ............................................................................13
3.15. Insurance .......................................................................................13
3.16. Labor Matters ...................................................................................14
3.17. Employees; Benefit Plans ........................................................................14
3.18. Litigation ......................................................................................16
3.19. Compliance with Laws ............................................................................16
3.20. Environmental Matters ...........................................................................16
3.21. Books and Records ...............................................................................17
3.22. Minute and Stock Transfer Books .................................................................17
3.23. Brokers .........................................................................................17
3.24. Inventories .....................................................................................17
3.25. Year 2000 .......................................................................................17
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3.26. Receivables ....................................................................................17
3.27. Guaranty Agreements ............................................................................18
3.28. Major Suppliers and Customers ..................................................................18
3.29. Names ..........................................................................................18
3.30. Disclosure .....................................................................................18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER ..............................................................19
4.1. Corporate Organization .........................................................................19
4.2. Authority ......................................................................................19
4.3. Consents and Approvals; No Violations ..........................................................19
4.4. Litigation .....................................................................................19
4.5. Investment Intent ..............................................................................19
4.6. Buyer's Investigation ..........................................................................20
4.7. Ability to Perform .............................................................................20
4.8. Brokers ........................................................................................20
ARTICLE V
FURTHER COVENANTS AND AGREEMENTS .....................................................................20
5.1. Covenants of Seller Pending the Closing ........................................................20
5.2. Covenants of Buyer Pending the Closing .........................................................22
5.3. Filings ........................................................................................22
5.4. Effective Time of Closing ......................................................................22
5.5. Announcements ..................................................................................22
5.6. Costs and Expenses .............................................................................23
5.7. Further Assurances .............................................................................23
5.8. Cooperation and Preservation of Records ........................................................23
5.9. Limitation of Liabilities ......................................................................25
5.10. Employees and Employee Benefit Plans ...........................................................26
5.11. Distributions in the Ordinary Course ...........................................................27
5.12. Termination of Tax Sharing and Management Agreements ...........................................27
5.13. Release of Liens ...............................................................................27
5.14. Certain Reimbursements .........................................................................28
5.15. Intercompany Debt and Ongoing Obligations ......................................................29
5.16. Tax Matters ....................................................................................29
5.17. No Other Solicitations .........................................................................31
5.18. Restrictive Covenant ...........................................................................31
5.19. Allianz Case ..................................................................................31
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ARTICLE VI
TERMINATION ..........................................................................................32
6.1. Termination ....................................................................................32
6.2. Procedure and Effect of Termination ............................................................32
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS ....................................................................33
7.1. Seller's Closing Deliveries ....................................................................33
7.2. Representations and Warranties True ............................................................34
7.3. Performances ...................................................................................34
7.4. Legal Opinion ..................................................................................34
7.5. Governmental Consents and Approvals ............................................................34
7.6. No Injunction or Proceeding ....................................................................35
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS ...................................................................35
8.1. Payment of Purchase Price ......................................................................35
8.2. Buyer's Closing Deliveries .....................................................................35
8.3. Representations and Warranties True ............................................................35
8.4. Performances ...................................................................................35
8.5. Legal Opinion ..................................................................................36
8.6. Governmental Consents and Approvals ............................................................36
8.7. No Injunction or Proceeding ....................................................................36
ARTICLE IX
TAX INDEMNIFICATION ..................................................................................36
9.1. Tax Indemnification ............................................................................36
9.2. Notice of Claim ................................................................................36
9.3. Defense ........................................................................................37
ARTICLE X
MISCELLANEOUS ........................................................................................37
10.1. No Survival of Representations and Warranties ..................................................37
10.2. Entire Understanding, Waiver, Etc ..............................................................37
10.3. Severability ...................................................................................38
10.4. Captions .......................................................................................38
10.5. Notices ........................................................................................38
10.6. Successors and Assigns .........................................................................39
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10.7. Parties in interest ............................................................................39
10.8. Counterparts ...................................................................................39
10.9. Construction of Terms ..........................................................................40
10.10. Governing Law ..................................................................................40
EXHIBITS TO STOCK PURCHASE AGREEMENT
Exhibit A Commitment Letter
Exhibit B Stockholders Equity as of June 30, 1999
Exhibit C Purchase Price Allocation
Exhibit D Legal Opinion of Seller's Counsel (Xxxxxx Xxx Xxxxx &
Xxxxxxxxx L.L.P.)
Exhibit E Legal Opinion of Buyer's Counsel (Womble, Carlyle,
Xxxxxxxxx & Xxxx)
DISCLOSURE SCHEDULE
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of November 19, 1999, by and between GS TECHNOLOGIES OPERATING CO.,
INC., a Delaware corporation ("Seller"), and INSTEEL INDUSTRIES, INC., a North
Carolina corporation ("Buyer").
RECITALS
WHEREAS, Seller owns all of the issued and outstanding shares (the "FWC
Shares") of common stock, no par value per share, of Florida Wire and Cable,
Inc., a Delaware corporation: and
WHEREAS, Seller desires to sell the FWC Shares to Buyer and Buyer
desires to purchase the FWC Shares from Seller, on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby expressly acknowledged by Seller and Buyer, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1. The terms defined in this Article shall have the following
respective meanings for all purposes of this Agreement, with the definitions
being equally applicable to both the singular and plural forms of the terms
defined:
"Affiliate" means any Person controlling, controlled by, or
under common control with another Person. For purposes of this definition of
"Affiliate", a Person shall be deemed to control another Person if it possesses,
directly or indirectly, the power to direct or cause the direction of the
management policies of such other Person, whether through ownership of voting
securities, by contract or otherwise.
"Xxxxxx Xxxxxxxx" Xxxxxx Xxxxxxxx LLP.
"Business" means the business conducted by FWC in producing,
distributing and selling PC strand and galvanized products and other specialty
products.
"Business Day" means any day on which banks are open for
business in New York, New York.
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"Closing" means the consummation and effectuation of the
transactions contemplated herein pursuant to the terms and conditions of this
Agreement which shall be held on the l4th day of January, 2000 at 10:00 AM in
the offices of Xxxxxx Xxx Xxxxx & Xxxxxxxxx L.L.P. in Charlotte, North Carolina
or on such other date or at such other time or place as is mutually agreed by
the parties hereto.
"Closing Date" means the date on which the Closing actually
occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Letter" means the financing commitment letter
dated November 11, 1999 among Buyer, Bank of America, N.A. and Banc of America
Securities LLC, a copy of which is attached hereto as Exhibit A.
"Confidentiality Agreement" means the Confidentiality
Agreement dated June 11, 1999 between Buyer and Xxxxxxx Xxxxx Barney, Inc. on
behalf of GSI and FWC.
"Contracts" shall have the meaning given to such term in
Section 3.13 hereof.
"Controlled Entity" means GSI and any Person controlled by
GSI. For purposes of this definition of "Controlled Entity", a Person shall be
deemed to control another Person if it possesses, directly or indirectly, the
power to direct or cause the direction of the management policies of such other
Person, whether through ownership of voting securities, by contract or
otherwise.
"Cutoff" means the last moment on the Closing Date.
"Disclosure Schedule" means the disclosure schedule document
executed by Seller and Buyer as of the date hereof.
"Employee Benefit Plan" means, with respect to FWC employees,
any plan described in Section 3(3) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Financial Statements" means the unaudited financial
statements of FWC as identified and defined in Section 3.5 hereof.
"FWC" means Florida Wire and Cable, Inc., a Delaware
corporation.
"FWC Medical Plan" means the medical and health care benefits
program(s) under the Florida Wire and Cable, Inc. Group Insurance Plan.
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"FWC Shares" shall have the meaning given to such term in the
Recitals to this Agreement.
"GAAP" means United States generally accepted accounting
principles applied on a basis consistent with past practices and procedures for
interim and year end financial statements of FWC.
"GE Capital Loan" means that certain Loan Agreement dated
October 5, 1995, as amended, among FWC and certain members of the Retained
Group, as Borrowers, General Electric Capital Corporation, as Agent, and General
Electric Capital Corporation and certain other financial institutions named
therein, as Lenders, and Mellon Bank, N.A., as Documentation Agent.
"GSI" means GS Industries, Inc., a Delaware corporation.
"GSI Group" means collectively FWC and the Retained Group.
"GST Note" means the Amended and Restated Subordinated
Revolving Credit Note dated September 1, 1997 in the principal amount of up to
$50,000,000 made by FWC and payable to Seller.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Independent Accounting Firm" means the Charlotte office of
Ernst & Young.
"Intangible Property" shall have the meaning given to such
term in Section 3.10 hereof
"Interim Statement of Assets and Liabilities" means the
unaudited statement of assets and liabilities, stockholders equity, cash flows
and retained earnings of FWC as of June 30, 1999 (including any related notes
thereto), a copy of which is included as part of the Financial Statements.
"Intercompany Debt" means all indebtedness for borrowed money
of FWC owed to any member of the Retained Group, including without limitation
the indebtedness evidenced by the GST Note and all accrued interest on such
indebtedness for borrowed money and provided that trade payables of FWC owed to
any member of the Retained Group shall not be construed to be Intercompany Debt.
"Leased Real Property" means the real property leased by FWC
and used in the Business, which real property is described in Section 1.1 of the
Disclosure Schedule.
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"Management Services Agreement" means that certain Amended and
Restated Management Services Agreement dated as of August 17,1996 among FWC and
members of the Retained Group.
"Material Adverse Effect" means an effect that is reasonably
likely to have a material adverse effect on the Business or the financial
condition of FWC, taken as a whole.
"Non-Transferred Plans" shall have the meaning given to such
term in Section 5.10 hereof.
"Owned Real Property" means the real property owned by FWC and
used in the Business, including the buildings, improvements and fixtures located
thereon, which real property is described in Section 1.2 of the Disclosure
Schedule.
"Permitted Encumbrances" means each of the following: (i)
liens for property taxes, special assessments and governmental charges with
respect to the Owned Real Property and/or the personal property owned by FWC
with respect to 1999 and subsequent years; (ii) mechanic's, builders' and
materialmen's liens arising in the ordinary course of business; (iii) such
imperfections of title and encumbrances as do not impair the use in the Business
of any Owned Real Property or any other material properties or assets of FWC;
(iv) restrictions, easements, covenants, reservations and rights of way of
record which do not in any material respect affect the full use and enjoyment of
the Owned Real Property or detract from its value; (v) matters which would be
revealed by an accurate survey of the Owned Real Property; and (vi) zoning
ordinances, restrictions, prohibitions and other requirements imposed by
governmental authority.
"Person" means any individual, partnership, corporation,
limited liability company, trust, unincorporated organization, association,
joint venture or other entity or a government, agency, political subdivision or
instrumentality thereof.
"Price Adjustment" shall have the meaning ascribed to such
term in Section 2-2(a) hereof.
"PriceWaterhouse" means PriceWaterhouseCoopers LLP.
"Purchase Price" means the sum of Sixty-Eight Million Five
Hundred Thousand Dollars ($68,500,000), subject to adjustment as provided in
Section 2.2 hereof.
"Retained Group" means collectively GSI and each Controlled
Entity other than and expressly excluding FWC.
"Retained Plans" shall have the meaning given to such term in
Section 5.10 hereof.
"Stockholders Equity" means, with respect to FWC, stockholders
equity as defined by GAAP excluding (i) cash, (ii) Intercompany Debt, (iii) the
liabilities for which Buyer
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has specifically assumed responsibility pursuant to Section 5.10(e) hereof,
(iv) the assets and liabilities relating to the tax matters against which Seller
has provided indemnification to FWC pursuant to Section 9.1 hereof including,
but not limited to, deferred income tax liabilities, (v) liability of FWC with
respect to the GS Industries, Inc. Employees' Pension Plan, and (vi) excluding
any impact on stockholders equity relating to the Section 338(h)(l0) Election
contemplated by Section 5.16 hereof.
"Tax Return" means any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Taxes" means all taxes, assessments, and charges imposed by
any federal, state, local, or foreign taxing authority (including all taxes,
assessments and charges required to be collected or withheld), plus interest,
penalties and additions thereto.
"Transferred Employees" means Xxxx Xxxxxxxxxx and all
employees of FWC, including (i) all active employees of FWC as of the Closing
Date, and (ii) all former active employees of FWC subject to union contracts or
other ongoing legal obligations of FWC (including those who have been laid off
and may have a contractual right to return to work for FWC).
ARTICLE II
PURCHASE AND SALE OF FWC SHARES
SECTION 2.1. PURCHASE AND PAYMENT OF PURCHASE PRICE. Upon the
terms and subject to the conditions hereof, at the Closing Seller shall sell,
assign, transfer and convey to Buyer, and Buyer shall purchase and accept from
Seller, all of Seller's right, title and interest in and to the FWC Shares for
the Purchase Price free and clear of all pledges, security interests, liens,
claims, options, charges, encumbrances and restrictions. Upon the terms and
subject to the conditions herein, the sum of Sixty-Eight Million Five Hundred
Thousand Dollars ($68,500,000), which the parties agree is the unadjusted
Purchase Price, shall be payable and paid by Buyer on the Closing Date by wire
transfer of immediately available funds in accordance with Seller's written wire
instructions. Seller expects and shall be entitled to receive the unadjusted
Purchase Price on the Closing Date in time to invest the funds in the ordinary
course of business consistent with its cash management practices. In the event
of an increase in the Purchase Price pursuant to Section 2.2 hereof, the amount
of such increase shall be paid by Buyer by wire transfer in immediately
available funds in accordance with Seller's written wire instructions within ten
(10) days following the determination in accordance with Section 2.2 hereof of
the amount of such increase. In the event of a reduction in the Purchase Price
pursuant to Section 2.2 hereof, the amount of such reduction shall be paid by
Seller by wire transfer in immediately available funds in accordance with
Buyer's written wire instructions within ten (10)
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days following the determination in accordance with Section 2.2 hereof of the
amount of such reduction.
SECTION 2.2. PURCHASE PRICE ADJUSTMENT.
(a) The Purchase Price shall be (a) increased by the amount,
if any, by which Stockholders Equity as of the Cutoff exceeds Fifty-Six Million
Eight Hundred Ten Thousand Four Hundred Thirteen Dollars ($56,810,413), or (b)
reduced by the amount, if any, by which Fifty-Six Million Eight Hundred Ten
Thousand Four Hundred Thirteen Dollars ($56,810,413) exceeds Stockholders Equity
as of the Cutoff; provided that the Purchase Price shall not be increased
pursuant to this Section 2.2 by any amount in excess of $2,000,000. The amount
of any adjustment to the Purchase Price required by this Section 2.2 is referred
to in this Agreement as the "Price Adjustment".
(b) As soon as practicable following the Closing, Buyer, at
its expense, shall cause Xxxxxx Xxxxxxxx to deliver an audited statement of net
assets of FWC as of the Closing Date prepared in accordance with GAAP, together
with a calculation in reasonable detail of Stockholders Equity as of the Cutoff
and the Price Adjustment. Buyer shall cause such audited statement of net assets
and calculation of the Price Adjustment to be delivered to Seller as soon as
available and in any event within thirty (30) days of the Closing Date. The
audited statement of net assets and calculation of Stockholders Equity as of the
Cutoff shall be prepared in accordance with GAAP and on a basis consistent with
the basis utilized in determining Stockholders Equity as of June 30, 1999;
provided, that inventories reflected in the audited statement of net assets and
calculation of Stockholders Equity as of the Cutoff shall be valued at the lower
of cost or market (including appropriate reserves for slow moving or obsolete
inventories) in accordance with generally accepted accounting principles
consistently applied. The parties' calculation of Stockholders Equity as of June
30, 1999 is set forth on Exhibit B. Seller shall, at any time and from time to
time, be provided reasonable access upon reasonable notice during normal
business hours to the accounting books and records and to the accounting
personnel of Xxxxxx Xxxxxxxx, Buyer and FWC during such thirty (30) day period
and thereafter until the Price Adjustment has been finally determined in
accordance with the provisions of this Section 2.2. Seller and its
representatives, including PriceWaterhouse, shall have the ability to
participate in the physicals and shall have access to the work papers of FWC,
Buyer and Xxxxxx Xxxxxxxx. In addition, no adjustment shall be made by Xxxxxx
Xxxxxxxx to any account or item used in determining Stockholders Equity as of
the Cutoff without prior consultation and discussion with Seller and its
representatives.
(c) Within thirty (30) days following Seller's receipt of the
audited statement of net assets and calculation of the Price Adjustment, Seller
may, but shall not be required to, cause such calculation to be reviewed, at the
expense of Seller, by PriceWaterhouse and, in the event of such review, Seller
shall deliver to Buyer a copy of such PriceWaterhouse's report in which
PriceWaterhouse calculates Stockholders Equity as of the Cutoff and the
resulting Price Adjustment. If Seller disagrees with the Price Adjustment as
determined by Xxxxxx Xxxxxxxx, within thirty (30) days following Seller's
receipt of the audit report of Xxxxxx Xxxxxxxx, including Xxxxxx Xxxxxxxx'x
calculation of the Price Adjustment, Seller shall notify Buyer of its objection,
setting forth in reasonable detail Seller's determination of Stockholders Equity
as of the Cutoff and the basis of Seller's disagreement. A failure by Seller to
notify Buyer of Seller's disagreement within such thirty (30) days will
constitute acceptance by Seller of Buyer's calculation of Stockholders Equity as
of the Cutoff and the resulting Price Adjustment. Seller
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and Buyer will negotiate in good faith to resolve any disagreement during the
ten (10) day period following Seller's notification of a disagreement.
(d) In the event such disagreement is not resolved within such
ten (10) day period, the disputed matter shall be promptly submitted to the
Independent Accounting Firm for final resolution within thirty (30) days after
the expiration of a ten (10) day negotiation period. The Independent Accounting
Firm will be requested to review only the matters in dispute between Buyer and
Seller and to determine Stockholders Equity as of the Cutoff and the Price
Adjustment in accordance with the provisions of Article I and this Section 2.2.
In its determination, the Independent Accounting Firm shall be entitled to rely
on work papers and similar items generated by Xxxxxx Xxxxxxxx and Buyer in
connection with Xxxxxx Xxxxxxxx'x preparation of the audited statement of net
assets and calculation of the Price Adjustment and the work papers of
PriceWaterhouse and Seller in respect of their determination of Stockholders
Equity as of the Cutoff and the resulting Price Adjustment. The decision of the
Independent Accounting Firm shall be final and binding on the parties with
respect to the disputed matters. If the determination of the Independent
Accounting Firm is that Stockholders Equity as of the Cutoff is the same or
greater than the average of the Stockholders Equity as of the Cutoff as
calculated by Buyer and Seller, the fees and expenses of the Independent
Accounting Firm will be paid by Buyer. If the determination of the Independent
Accounting Firm is that Stockholders Equity as of the Cutoff is less than the
average of the Stockholders Equity as of the Cutoff as calculated by Buyer and
Seller, the fees and expenses of the Independent Accounting Firm will be paid by
Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
SECTION 3.1. CORPORATE ORGANIZATION. Each of Seller and FWC is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the full corporate right, power and
authority to own, lease and operate all of its properties and assets and to
carry out its business as it is presently conducted. FWC is duly licensed or
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership of property or the conduct of its
business requires such qualification or license. Except as identified in Section
3.1 of the Disclosure Schedule, FWC has no subsidiaries and there are no
corporations, joint ventures, partnerships or other entities or arrangements in
which FWC, directly or indirectly, owns any capital stock or an equity interest.
SECTION 3.2. CAPITALIZATION OF FWC. The authorized capital
stock of FWC consists solely of ten thousand (10,000) shares of voting common
stock, no par value per share, of which five thousand (5,000) shares are issued
and outstanding and owned by Seller. Such five thousand (5,000) shares
constitute the FWC Shares. No shares are held as treasury shares. All issued and
outstanding shares of capital stock of FWC have been duly authorized and validly
issued, are fully paid and nonassessable, were issued without violation of any
preemptive rights
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and are free of any preemptive rights. Except for this Agreement and as set
forth in Section 3.2 of the Disclosure Schedule, there are no options, warrants
or other rights, nor any agreements, commitments or arrangements of any kind,
relating to the subscription to or the issuance, voting, acquisition, sale,
repurchase, transfer or disposition of (i) any capital stock of FWC or
securities convertible into or exchangeable for capital stock of FWC, or (ii)
any options, warrants or subscription rights relating to any such capital stock
or securities of FWC. The consummation of the transactions contemplated hereby
will convey to Buyer good title to the FWC Shares free and clear of all claims,
liens, encumbrances, security interests, charges or restrictions on transfer of
any nature whatsoever, except as created by Buyer.
SECTION 3.3. AUTHORITY. Seller has all requisite corporate
right, power and authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Seller has been duly
and validly authorized and approved by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by Seller and,
assuming this Agreement has been duly authorized, executed and delivered by
Buyer, constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
SECTION 3.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Except as
set forth on Section 3.4 of the Disclosure Schedule, the execution, delivery and
performance of this Agreement by Seller will not (with or without the giving of
notice or the passage of time, or both) (i) violate any applicable provision of
law or any rule or regulation of any administrative agency or governmental
authority applicable to Seller or FWC, or any order, writ, injunction, judgment
or decree of any court, administrative agency or governmental authority
applicable to Seller or FWC, (ii) violate the Certificate of Incorporation or
Bylaws of Seller or FWC, (iii) require any consent under or constitute a default
under any material agreement, indenture, mortgage, deed of trust, lease,
license, or other instrument to which Seller or FWC is a party or by which any
of them is bound, or any material license, permit or certificate held by any of
them, (iv) require any material consent or approval by, notice to or
registration with any governmental authority other than the appropriate filings,
if any, pursuant to the HSR Act and the expiration of the applicable waiting
period thereunder or (v) result in the creation of any lien, claim, encumbrance
or charge upon any of the FWC Shares or any property or assets of FWC, except as
may be created by Buyer.
SECTION 3.5. FINANCIAL STATEMENTS. Section 3.5 of the
Disclosure Schedule contains (i) the unaudited statement of assets and
liabilities and the related unaudited statement of operations, stockholders
equity, cash flows and retained earnings (including any related notes thereto)
of FWC as of and for the fiscal year ended December 31, 1998; and (ii) the
unaudited statement of assets and liabilities and the related unaudited
statement of operations, Stockholders Equity, cash flows and retained earnings
(including any related notes thereto) of FWC as of and for the six-month period
ended June 30, 1999 (the unaudited financial statements identified in
subparagraphs (i) and (ii) in this Section 3.5 are hereinafter collectively
referred to as the "Financial Statements"). Except as set forth on Section 3.5
of the Disclosure Schedule and subject to normal year-end adjustments, if
applicable, the Financial Statements have been prepared in accordance with GAAP
and fairly present (i) the financial condition of FWC as of
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the respective dates thereof; and (ii) the results of operations, stockholders
equity, cash flows and retained earnings, respectively, of FWC for the fiscal
year ended December 31, 1998 and for the six-month period ended June 30,1999.
SECTION 3.6. UNDISCLOSED LIABILITIES. Except as set forth on
Section 3.6 of the Disclosure Schedule and subject to normal year-end
adjustments, FWC does not have any liabilities required by GAAP to be reflected
or reserved against in a statement of assets and liabilities of FWC as of the
date hereof or the Closing Date, as applicable except (i) liabilities reflected
or reserved against in the Interim Statement of Assets and Liabilities, and (ii)
liabilities (absolute, accrued, contingent or otherwise) required by GAAP to be
reflected on a statement of assets and liabilities of FWC which were incurred
since June 30, 1999 in the ordinary course of business. Except as set forth in
Section 3.6 of the Disclosure Schedule, to Seller's knowledge, after due
inquiry, FWC (including its officers, directors, employees and counsel) has not
received any information, or otherwise become aware of, any claim or threatened
claim resulting from any accident, event or occurrence alleged to have been
caused, or alleged to have been contributed to, by any product made or
manufactured by FWC, including, without limitation, any slippage of strand
manufactured by FWC and incorporated in prestressed concrete.
SECTION 3.7. TAXES. Except as set forth in Section 3.7 of the
Disclosure Schedule, FWC has filed all material Tax Returns that it was required
to file before the Closing Date. All such Tax Returns were correct and complete
in all material respects. All Taxes owed by FWC as reflected on any filed Tax
Return have been paid. To Seller's knowledge, all Taxes owed by FWC (whether or
not shown on any Tax Return) have been paid. Except as set forth in Section 3.7
of the Disclosure Schedule, FWC currently is not the beneficiary of any
extension of time within which to file any Tax Return. Except as set forth in
Section 3.7 of the Disclosure Schedule, to Seller's knowledge, no claim has ever
been made by an authority in a jurisdiction where FWC does not file any Tax
Return that it is or may be subject to taxation by that jurisdiction. Other than
Permitted Encumbrances, there are no liens on any of the assets of FWC that
arose in connection with any failure (or alleged failure) to pay any Tax. FWC
has withheld and paid all Taxes required under applicable law to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party. Neither
Seller nor any director or officer (or employee responsible for Tax matters) of
FWC expects any governmental or taxing authority to assess any additional Taxes
for any period for which Tax Returns have been filed. Except as set forth in
Section 3.7 of the Disclosure Schedule, there is no dispute or claim concerning
any Tax Liability of FWC either (i) claimed or raised by any governmental or
taxing authority in writing or (ii) as to which Seller and the directors and
officers (and employees responsible for Tax matters) of FWC have knowledge based
upon personal contact with any agent of such governmental or taxing authority.
Other than Tax Returns relating to Taxes against which Seller has agreed to
indemnify Buyer pursuant to Section 9.1 hereof, Section 3.7 of the Disclosure
Schedule lists all state, local and foreign income Tax Returns filed with
respect to FWC for taxable periods ended on or after December 31, 1992,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. Except as set forth in Section
3.7 of the Disclosure Schedule, FWC has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. FWC has not
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filed a consent under Code Section 341(f) concerning collapsible corporations.
FWC has not made any payments, is not obligated to make any payments and is not
a party to any agreement that under certain circumstances could obligate it to
make any payments, that will not be deductible under Code Section 280G. Except
as set forth in Section 3.7 of the Disclosure Schedule, FWC has no liability for
the Taxes of any individual, partnership, corporation, association, joint stock
company, trust joint venture or unincorporated organization (other than FWC) as
a transferee or successor, by contract or otherwise.
SECTION 3.8. TITLE TO PROPERTIES. Section 1.2 of the
Disclosure Schedule contains a complete and accurate list of all real property
owned by FWC. None of the Owned Real Property is leased by FWC to any Person.
Except for Permitted Encumbrances and as set forth in Section 3.8 of the
Disclosure Schedule, FWC has good and marketable title to the Owned Real
Property and all personal property and assets (tangible and intangible)
reflected as owned by it on the Interim Statement of Assets and Liabilities or
acquired since June 30, 1999 (except for properties and assets disposed of since
such date in the ordinary course of business), and has such title free and clear
of all liens, charges, security interests or other encumbrances of any nature
whatsoever. The Owned Real Property is zoned for the various purposes for which
the buildings and other improvements located thereon are presently being used by
FWC, and such uses thereof are in compliance with all applicable zoning and land
use laws, ordinances and regulations. Except as set forth in Section 3.8 of the
Disclosure Schedule no part of any such improvement encroaches on any real
property not included in the Owned Real Property. Seller has delivered to Buyer
complete copies of (i) all deeds, title insurance policies and surveys of the
Owned Real Property, and (ii) all instruments, agreements and other documents
creating, evidencing or constituting any lien or encumbrances upon any of the
Owned Real Property other than those relating to the GE Capital Loan.
SECTION 3.9. ABSENCE OF CHANGES. Except as set forth in
Section 3.9 of the Disclosure Schedule, since June 30, 1999 there has not been:
(i) any material change in the business, financial
condition, results of operations or assets or liabilities of FWC, other than
changes in the ordinary course of business;
(ii) any damage or destruction, loss or other casualty,
however arising and whether or not covered by insurance with a value greater
than $500,000;
(iii) any material labor dispute;
(iv) any indebtedness incurred by FWC for borrowed money
(except by endorsement for collection or for deposit of negotiable instruments
received in the ordinary course of business), or any agreement to incur any such
indebtedness or any loan or advance to, or any guarantee for the benefit of, any
Person;
(v) any change in the accounting methods or practices of
FWC or any change in depreciation or amortization policies or rates theretofore
adopted;
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(vi) any amendment, entering into or termination by FWC of
any material contract, agreement, lease, franchise or license, except in the
ordinary course of business;
(vii) any amendment of the Certificate of Incorporation or
Bylaws of FWC;
(viii) except for Permitted Encumbrances and other than in the
ordinary course of business, any mortgage, pledge or other encumbering of any
material assets of FWC;
(ix) any sale, assignment, transfer, lease, abandonment or
other disposal of any material asset of FWC (real, personal or mixed, tangible
or intangible), except in the ordinary course of business;
(x) any transfer, disposal or grant of any rights under any
patent, trademark, trade name, copyright, service xxxx, invention or license
owned by FWC, or any disposal of or disclosure to any Person other than
representatives of Buyer of any material trade secret, formula, process or other
proprietary know-how (including documents or electronically stored information)
owned by FWC not theretofore a matter of public knowledge; except, in each case,
in the ordinary course of business;
(xi) any grant by FWC of any increase in the compensation of
its officers, employees or directors; or any grant by FWC of any increase in
compensation payable to or to become payable to any of its officers, employees
or directors; or any agreement by FWC entered into with any of its officers,
employees or directors; except, in each case, in the ordinary course of
business;
(xii) aggregate capital expenditures made, or aggregate
commitments to make capital expenditures by FWC, in excess of Five Hundred
Thousand Dollars ($500,000 (US)) for any tangible or intangible capital assets,
additions or improvements, except in the ordinary course of business, or any
charitable contribution or pledge in excess of Ten Thousand Dollars ($10,000),
in the aggregate;
(xiii) except for distributions since June 30,1999 of the type
contemplated by Section 5.11 hereof, any declaration, payment or reservation for
payment of any cash or stock dividend or other distribution in respect of the
capital stock or other securities of FWC or any redemption, purchase or other
acquisition, directly or indirectly, of any shares of capital stock or other
securities of FWC;
(xiv) except in the ordinary course of business, any grant or
extension of any power-of-attorney or guaranty in respect of the obligation of
any Person by FWC; or
(xv) any entry by FWC into any binding agreement, whether in
writing or otherwise, to take any action described in this Section 3.9.
SECTION 3.10. PATENTS, TRADEMARKS, TRADE NAMES. Section 3.10
of the Disclosure Schedule lists and indicates the ownership of all material
patents and patent
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applications owned by FWC and all material copyrights, trademarks, trade names,
and service marks for which registrations have been obtained or applications
therefor have been filed by FWC (collectively, the "Intangible Property").
Except as set forth in Section 3.10 of the Disclosure Schedule, (i) no Person
other than FWC has the right to use any of the Intangible Property, and FWC has
all right, title and interest to all Intangible Property, without any conflict
known to Seller with the rights of others, and (ii) documentation for the
continuance of registration and applications for registration have been timely
filed with the appropriate authorities for the patents, trademarks, trade names,
and service marks included in the Intangible Property. Except as set forth on
Section 3.10 of the Disclosure Schedule, neither Seller nor FWC has received
within the immediately preceding three (3) years any written notice that (a) any
operation of FWC infringes on the asserted rights of others or requires payment
for the use of, or infringes or otherwise interferes with, any patent, trade
name, trademark, or service xxxx of another, or any such right which might be so
infringed has been applied for by another, or (b) any of the Intangible Property
has been legally declared invalid or is the subject of a pending or threatened
action for opposition or cancellation or a declaration of invalidity, or is
infringed by the activities of another.
SECTION 3.11. LEASES. Section 1.1 of the Disclosure Schedule
contains a complete and accurate list of all Leased Real Property and an
indication of whether any Leased Real Property is subleased by FWC to any
Person. Section 3.11 of the Disclosure Schedule contains an accurate and
complete list of all real property leases and all material personal property
leases pursuant to which FWC leases real or personal property. Except as set
forth in Section 3.11 of the Disclosure Schedule, all such leases are in full
force and effect and are valid, binding and enforceable in accordance with their
terms. Except as set forth in Section 3.11 of the Disclosure Schedule, there are
no existing defaults or events which, with the giving of notice or the lapse of
time or both, would constitute a default thereunder by FWC or, to Seller's
knowledge, by any other party to any such lease. The Leased Real Property is
zoned for the various purposes for which the buildings and other improvements
located thereon are presently being used, and such uses thereof are in
compliance with all applicable zoning and land use laws, ordinances and
regulations. To Seller's knowledge, no part of any such improvement encroaches
on any real property not included in the Leased Real Property. To the extent the
same are in Seller's or FWC's possession, Seller has delivered to Buyer complete
copies of (i) all leases pursuant to which FWC leases real property, (ii) all
subleases pertaining to Leased Real Property, (iii) all title insurance policies
insuring any leasehold or other interest of FWC in, and all surveys of, the
Leased Real Property and (iv) all instruments, agreements and other documents
creating, evidencing or constituting any lien or encumbrance upon or materially
affecting any of FWC's rights to or interests in any or the Leased Real Property
or such real property leases other than those relating to the GE Capital Loan.
SECTION 3.12. BANK ACCOUNTS. Section 3.12 of the Disclosure
Schedule sets forth the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at which FWC
maintains safe deposit boxes or accounts of any nature and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
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SECTION 3.13. MATERIAL CONTRACTS. Section 3.13 of the
Disclosure Schedule contains a true and correct list of each contract, agreement
and commitment to which FWC is a party: (i) calling for payment or receipt by
FWC of more than One Million Dollars ($1,000,000 (US)) during the term thereof,
which contract, agreement or commitment is not terminable by FWC on less than
one hundred eighty (180) days' notice without penalty (except for agreements
relating to the acquisition or disposition of inventory in the ordinary course
of business), (ii) containing covenants limiting, in any material respect, the
freedom of FWC to compete with any Person in any line of business or in any
territory, or (iii) evidencing or relating to indebtedness for borrowed money
not to be repaid on or before the Closing Date (collectively, the "Contracts";
provided that the term "Contract" shall not include any contract or agreement
listed in any Section of the Disclosure Schedule that is not also listed or
cross-referenced in Section 3.13 of the Disclosure Schedule). True and complete
copies of each of the Contracts have been made available to Buyer by Seller.
Except as set forth in Section 3.13 of the Disclosure Schedule, each of the
Contracts is in full force and effect and is valid, binding and enforceable
against FWC in accordance with its terms. Except as set forth in Section 3.13 of
the Disclosure Schedule, there exists no default or event which, with the giving
of notice or lapse of time or both, would constitute a default thereunder by
FWC. Except as set forth in Section 3.13 of the Disclosure Schedule, no written
notice of termination or nonrenewal has been received or given under any
Contract. The dollar amounts set forth in this Section 3.13 with respect to the
Contracts shall not be deemed to represent any standard of "materiality" with
respect to the Contracts or otherwise for any other purpose and shall have no
application to any other Section of this Agreement.
SECTION 3.14. RELATED TRANSACTIONS.
(a) Except as set forth in Section 3.14 of the Disclosure
Schedule, no member of the Retained Group and no director or officer of any
member of the Retained Group has any material financial interests, direct or
indirect, in any Person which (i) is a material competitor, customer,
subcontractor or supplier of FWC, or (ii) has an existing material financial
relationship with, or a material financial interest in, FWC, including but not
limited to lessors of real or personal property and Persons against which rights
or options are exercisable by FWC.
(b) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, to the best knowledge of Seller, there are no outstanding contractual
obligations between FWC, on the one hand, and any member of the Retained Group,
on the other hand.
SECTION 3.15. INSURANCE. Other than insurance policies of the
type described in Section 3.17 of this Agreement, Section 3.15 of the Disclosure
Schedule contains an accurate and complete list of all policies of insurance
maintained with respect to FWC or under which FWC was a named insured, from on
or after November 10, 1992, through the Closing Date. To Seller's knowledge,
after reasonable inquiry, Seller has provided Buyer with complete information to
the extent such information is in the possession of the GSI Group or its
insurance carriers concerning all claims of any kind pending or threatened
against FWC or any insurance carrier under any such policy, including, without
limitation, any claims filed by FWC under any listed policy. All premiums on all
such policies were paid when such premiums became due, or
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have since been paid in full, and no notice of cancellation or termination was
or has been received with respect to any policy except, and only to the extent
of, the effect of the contracted ends of the policy periods. There is, and has
been, no material default by FWC or the Retained Group with respect to their
obligations under any listed policy. Any listed policies that provide insurance
coverage to FWC for the current policy period (during 1999 and, as applicable,
2000) are in full force and effect. To the best of Seller's knowledge after
reasonable inquiry, Seller knows of no reason that coverage afforded under the
insurance policies listed in Section 3.15 of the Disclosure Schedule would not
be available to and for FWC in accordance with and subject to the terms of such
policies for any and all claims, demands, liability, cost or charges, including
all costs of defense, as a result of any accident, event or occurrence prior to
the Closing Date.
SECTION 3.16. LABOR MATTERS. Except as set forth in Section
3.16 of the Disclosure Schedule: (a) there is no unfair labor practice charge or
complaint against FWC pending before the National Labor Relations Board; (b)
there is no labor strike or stoppage pending, or to Seller's knowledge
threatened, against FWC; (c) FWC is not a party to any collective bargaining
agreement or contract with any labor union and, to the knowledge of Seller, no
union representation question or application for certification exists respecting
the employees of FWC; (d) no material grievance nor any arbitration proceeding
arising out of or under collective bargaining agreements has been filed or is
pending; (e) no event has occurred, and FWC has not taken any action prior to
the Closing, which would require notification to employees under the Worker
Adjustment and retraining Act of 1988 and the regulations promulgated
thereunder; (f) no employee employed in the Business has any written employment
agreement nor any agreement as to the length of notice required to terminate his
or her employment, other than such as results by law from the employment and
termination of employment of an employee without agreement as to such notice;
(g) all levies, assessments and penalties under applicable workers' compensation
legislation in respect of employees employed in the Business have been paid or
to Seller's knowledge are reflected and accrued in the books and records of FWC
and all claims, current assessment rates and special assessments under such
legislation have been disclosed to Buyer, and (h) all vacation pay (including
accrued vacation pay), bonuses, commissions and other employee compensation
payments (except for severance and stay pay agreements and change of control
agreements) in respect of employees employed in the Business are reflected and
have been accrued in the books and records of FWC.
SECTION 3.17. EMPLOYEES; BENEFIT PLANS.
(a) Section 3.17 of the Disclosure Schedule contains an
accurate and complete list of all Plans, as defined below, contributed to,
maintained or sponsored by FWC, to which FWC is obligated to contribute. For
purposes of this Agreement, the term "Plans" shall mean (A) employee benefit
plans as defined in Section 3(3) of ERISA, whether or not funded and whether or
not terminated; (B) employment agreements; and (C) to the extent material,
personnel policies or fringe benefit plans, policies, programs and arrangements,
whether or not subject to ERISA, whether or not funded, and whether or not
terminated, including without limitation, stock bonus, deferred compensation,
pension, severance, bonus, vacation, travel incentive, and
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health, disability and welfare plans. The term "Retained Plan" shall mean those
Plans identified in Section 5.10(a)(2) hereof.
(b) Except as disclosed in Section 3.17 of the Disclosure
Schedule, the GSI Group does not contribute to, has no obligation to contribute
to or otherwise has no liability or potential liability with respect to (A) any
Multiemployer Plan (as such term is defined in Section 3(37) of ERISA) or (B)
any Plan of the type described in Sections 4063 and 4064 of ERISA or in Section
413 of the Code (and regulations promulgated thereunder).
(c) Except as disclosed on 3.17 of the Disclosure Schedule,
none of the Plans obligates FWC to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control", as such term is used
in Section 280G of the Code (and regulations promulgated thereunder).
(d) Each Retained Plan and all related trusts, insurance
contracts, and funds have been maintained, funded and administered in compliance
in all material respects with all applicable laws and regulations, including but
not limited to ERISA and the Code. None of FWC, any trustee or administrator of
the Retained Plans or any other person has engaged in any transaction with
respect to the Retained Plans which could subject FWC or Buyer to any material
tax or penalty imposed by any applicable law, including but not limited to ERISA
and the Code. No material actions, suits, claims, complaints, charges,
proceedings, hearings, investigations, or demands with respect to the Retained
Plans (other than routine claims for benefits) are pending or threatened, and
the GSI Group has no knowledge of any facts which could give rise to or be
expected to give rise to any such actions, suits, claims, complaints, charges,
proceedings, hearings, investigations, or demands. The GSI Group has, or will
have, as of the Closing Date, made all contributions or payments to or under
each Plan required by applicable law, including all contributions required to be
made under Section 412 of the Code and Section 302 of ERISA. No Plan that is
subject to the funding requirements of Section 412 of the Code or Section 302 of
ERISA has incurred any "accumulated funding deficiency" as such term is defined
in such sections of ERISA and the Code, whether or not waived. Except as set
forth in Section 3.17 of the Disclosure Schedule, no liability to the Pension
Benefit Guaranty Corporation ("PBGC") (except for routine payment of premiums)
has been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in Section
4043 of ERISA) has occurred with respect to any such Plan, and the PBGC has not
commenced or threatened the termination of any Plan. None of the assets of the
GSI Group is the subject of any lien arising under Section 302(f) of ERISA or
Section 412(n) of the Code, the GSI Group has not been required to post any
security pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code,
and neither the GSI Group nor any officer or director of any member of the GSI
Group has knowledge of any facts which could be expected to give rise to such
lien or such posting of security.
(e) Each Retained Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a part of such
Plan, has received a favorable determination letter from the Internal Revenue
Service as to the qualification under the Code of
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such Plan and the tax exempt status of such related trust, and to Seller's
knowledge nothing has occurred since the date of such determination letter that
could adversely affect the qualification of such Plan or the tax exempt status
of such related trust.
(f) With respect to each Retained Plan, the GSI Group has
provided Buyer with true, complete and correct copies, to the extent applicable,
of (A) all documents pursuant to which the Retained Plan is maintained, funded
and administered, (B) the two most recent annual reports (Form 5500 series)
filed with the Internal Revenue Service (with attachments), (C) the two most
recent actuarial reports, (D) the two most recent financial statements, and (E)
all governmental rulings, determinations, and opinions (and pending requests for
governmental ruling, determinations, and opinions).
SECTION 3.18. LITIGATION. Except as set forth in Section 3.18
of the Disclosure Schedule, there are no material claims, actions, suits, or
proceedings pending or, to the best knowledge of Seller, threatened, against FWC
relating to this Agreement, the transactions contemplated hereby, the Business
or the property of FWC, at law or in equity or before or by any federal, state,
local, or foreign court or other governmental department, commission, board,
agency, instrumentality or authority, nor any arbitration proceeding relating to
the same. Except as set forth in Section 3.18 of the Disclosure Schedule, to the
best knowledge of Seller, FWC is not is subject to any judgment, order, writ,
injunction or decree of any court or governmental body.
SECTION 3.19. COMPLIANCE WITH LAWS. Except as set forth in
Section 3.19 of the Disclosure Schedule, FWC is not in any material respect in
violation of, nor has it received any written notice claiming it is in any
material respect in violation of, any order, law, ordinance, statute, rule or
regulation applicable to it or any of its assets. Except as set forth in Section
3.19 of the Disclosure Schedule, FWC has all material licenses, permits,
certificates of occupancy and authorizations (governmental and otherwise)
necessary to conduct the Business.
SECTION 3.20. ENVIRONMENTAL MATTERS. Except as set forth in
Section 3.20 of the Disclosure Schedule:
(a) all properties currently owned or used by FWC in
connection with its operation of the Business and all activities of FWC are in
compliance in all material respects with all applicable federal, state and local
environmental laws, rules and regulations;
(b) neither Seller nor FWC has received written notification
within the immediately preceding five (5) years from any governmental authority
with respect to current, existing material violations relating to the Business
of any of the laws referred to in clause (a) of this Section 3.20, or pursuant
to any of the respective implementing regulations or state analogues to such
laws, rules or regulations; and
(c) FWC has not (i) received written notification within the
immediately preceding five (5) years from the United States Environmental
Protection Agency that it is a Potentially Responsible Party under the
Comprehensive Environmental Response, Compensation
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and Liability Act ("CERCLA") for "removal" or "remedial" action at a waste site
listed on the National Priorities List to which it sent or arranged for the
transportation or disposal of hazardous waste, or (ii) received written
notification that it is liable for contribution for costs incurred by another
Person in taking "removal" or "remedial" action under CERCLA.
SECTION 3.21. BOOKS AND RECORDS. The books, accounts and
records of FWC are true, accurate, and complete in all material respects and
have been maintained in accordance with good business practice and, where
applicable, in accordance with GAAP. At Closing, all such books and records,
including, without limitation, all tax returns of FWC, shall be in the
possession of FWC.
SECTION 3.22. MINUTE AND STOCK TRANSFER BOOKS. The minute
books of FWC are complete and current in all material respects and contain
accurate and complete records of all material actions taken by its shareholders,
its Board of Directors and each committee of its Board of Directors, and all
signatures contained in such minute books are the true signatures of the persons
whose signatures they purport to be. The stock transfer books of FWC are
complete and current in all respects. Section 3.22 of the Disclosure Schedule
sets forth an accurate and complete list of the names and titles of all officers
and directors of FWC.
SECTION 3.23. BROKERS. Except as disclosed in Section 3.23 of
the Disclosure Schedule, no finder, broker, agent or other intermediary has
acted for or on behalf of FWC or Seller in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, the finder's fee or similar payment due from Seller or FWC.
SECTION 3.24. INVENTORIES. Except as disclosed in Section 3.24
of the Disclosure, all items included in the inventories of FWC are reflected in
the Financial Statements (i) are usable or saleable in the ordinary course of
the Business, (ii) are located on the Real Property or on Leased Real Property,
and (iii) have been acquired or manufactured by FWC in the ordinary course of
business.
SECTION 3.25. YEAR 2000. To the best of Seller's knowledge
after due inquiry and investigation, all Systems (as defined below) and all
material components thereof will function in accordance with the applicable
specifications, documentation and warranties prior to, during and after the
calendar year 2000. Prior to, during and after the calendar year 2000, to the
best of Seller's knowledge after due inquiry and investigation, each of the
Systems will accept date-related records and information for the years 2000 and
following and perform computations respecting or based on such date-related
information in a correct and appropriate matter. For purpose of this paragraph,
"Systems" consists of all proprietary and third party software and automated
machines or systems owned or used by FWC in the Business.
SECTION 3.26. RECEIVABLES. All accounts receivable reflected
on the Interim Statement of Assets and Liabilities (less any such receivables
collected since June 30, 1999) and all accounts receivable presently owing to
FWC (collectively the "Receivables") are legal, valid and binding obligations
created in the ordinary course of business. To the best knowledge of
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Seller, there are no setoffs, counterclaims or disputes asserted with respect to
any Receivable, and no discount or allowance from any Receivable has been made
or agreed to by FWC.
SECTION 3.27. GUARANTY AGREEMENTS. Effective November 12,
1992, FWC changed its corporate name from FWC Acquisition Co., Inc. to Florida
Wire and Cable, Inc. Pursuant to an assignment dated October 29, 1992,
Georgetown Steel Corporation ("GSC"), a Delaware corporation and the then parent
company of FWC, assigned to FWC all of GSC's right, title and interest in and to
the Asset Purchase Agreement dated September 10, 1992, as amended (the "Asset
Purchase Agreement"), among GSC, Florida Wire and Cable Company, Wiremil, Inc.
and Flo-Mach, Inc. In connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement, National Wire Products Industries,
Inc., a New York corporation ("National"), and Ivaco, Inc., a Canadian
corporation ("Ivaco"), each entered into a Guaranty Agreement (the "National
Guaranty" and the "Ivaco Guaranty", respectively) in favor of GSC and its
assignee FWC. Pursuant to the National Guaranty, National unconditionally and
irrevocably guaranteed to GSC and its successors and assigns, expressly
including FWC, certain obligations and liabilities described in the National
Guaranty. Pursuant to the Ivaco Guaranty, Ivaco unconditionally and irrevocably
guaranteed to GSC and its successors and assigns, expressly including FWC, all
of National's obligations and liabilities under the National Guaranty. The
consummation of the sale of the outstanding capital stock of FWC to Buyer as
contemplated by this Agreement will not adversely affect FWC's rights under
either of the National Guaranty or the Ivaco Guaranty.
SECTION 3.28. MAJOR SUPPLIERS AND CUSTOMERS. Each supplier of
goods or services from whom FWC purchased more than $1,000,000 of goods or
services, in the aggregate, during 1998 or during the 10 months ended on October
31, 1999, and each customer to whom FWC sold more than $1,000,000 of products,
in the aggregate, during such periods, is disclosed in Section 3.28, of the
Disclosure Schedule, which Section of the Disclosure Schedule reflects in each
case the amounts so purchased or sold, as the case may be. Except as set forth
in Section 3.28 of the Disclosure Schedule, FWC is not engaged in any dispute
with any of such suppliers or customers.
SECTION 3.29. NAMES. Except as disclosed in Section 3.29 of
the Disclosure Schedule, during the term of its existence, FWC has not been
known by or conducted business under any other name. Except as disclosed in
Section 3.29 of the Disclosure Schedule, all assets and rights are held by, and
all agreements, obligations, expenses and transactions have been entered into,
incurred and conducted by FWC. To Seller's knowledge, after reasonable inquiry,
FWC has the unencumbered right to use its name and neither FWC nor Seller is
aware of the use of any corporate name, trade name, trademark, service xxxx, or
other designation which could create a likelihood of confusion with FWC's name.
SECTION 3.30. DISCLOSURE. No representation, warranty or
statement made by Seller in this Agreement contains any untrue statement of a
material fact, or omits to state any material fact necessary to make the
representations and warranties contained in this Agreement not misleading. The
fact that Seller or FWC has delivered copies of certain documents to Buyer
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shall not alone constitute disclosure of facts required to be disclosed on any
Schedule to this Agreement unless such document is expressly referenced in such
Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
SECTION 4.1. CORPORATE ORGANIZATION. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of North
Carolina and has the full corporate right, power and authority to own, lease and
operate all of its properties and assets and to carry out its business as it is
presently conducted.
SECTION 4.2. AUTHORITY. Buyer has all requisite corporate
right, power and authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Buyer has been duly and
validly authorized and approved by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement has been duly authorized, executed and delivered by
Seller, constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
SECTION 4.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except as
set forth in Section 4.3 of the Disclosure Schedule, the execution, delivery and
performance of this Agreement by Buyer will not (with or without the giving of
notice or the passage of time, or both), (i) violate any applicable provision of
law or any rule or regulation of any administrative agency or governmental
authority applicable to Buyer, or any order, writ, injunction, judgment or
decree of any court, administrative agency or governmental authority applicable
to Buyer, (ii) violate the Certificate of Incorporation or Bylaws of Buyer, or
any agreement of Buyer or its shareholders, (iii) require any consent under or
constitute a default under any material agreement, indenture, mortgage, deed of
trust, lease, license, or other instrument to which Buyer is a party or by which
it is bound, or any material license, permit or certificate held by Buyer, or
(iv) require any material consent or approval by, notice to or registration with
any governmental authority other than the appropriate filings, if any, pursuant
to the HSR Act, and the expiration of the applicable waiting period thereunder.
SECTION 4.4. LITIGATION. Buyer is not engaged in, nor is there
pending or, to the best knowledge of Buyer, threatened, any action, dispute,
claim, litigation, arbitration, investigation or other proceeding at law or in
equity or before any governmental or other administrative agency which could
materially and adversely affect the ability of Buyer to perform any of its
payment or other obligations hereunder or the transactions contemplated by this
Agreement.
SECTION 4.5. INVESTMENT INTENT. Buyer is purchasing the FWC
Shares for its own account for investment and not with a view to, or for resale
in connection with, the
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distribution thereof, nor with any present intention of distributing or selling
any such FWC Shares. Buyer agrees that the FWC Shares may not be sold,
transferred, or offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933, as amended, and/or any
applicable state securities laws, except pursuant to an exemption from such
registration under the Securities Act of 1933, as amended, and any applicable
state securities laws.
SECTION 4.6. BUYER'S INVESTIGATION. Buyer is an informed and
sophisticated purchaser, and has engaged expert advisors, experienced in the
evaluation and purchase of companies such as FWC. Buyer has undertaken such
investigation as it has deemed necessary to enable it to make an informed and
intelligent decision with respect to this Agreement and the transactions
contemplated hereby and Buyer acknowledges that Seller and FWC have allowed
Buyer such access as has been reasonably requested by Buyer to the personnel,
properties, premises and records of FWC for this purpose. To the extent
expressly permitted hereafter under this Agreement, Buyer will undertake such
further investigation as it deems necessary. Buyer acknowledges that in entering
into this Agreement, in acquiring the FWC Shares and in consummating the other
transactions contemplated herein, Buyer has relied solely upon its own
investigation analysis and, to the extent expressly permitted by this Agreement,
the representations and warranties contained in this Agreement, and that none of
FWC and the Retained Group (and any of their respective agents, officers,
directors, employees, affiliates or representatives) has made any representation
or warranty as to Seller, FWC, the FWC Shares, this Agreement or the Business,
except as expressly set forth in this Agreement, and Buyer agrees to the
fullest extent permitted by law, that none of FWC and the Retained Group (and
any of their respective agents, officers, directors, employees, affiliates or
representatives) shall have any liability to Buyer (or any of its agents,
officers, directors, employees, affiliates or representatives) on any basis
based upon any information made available or statements made to Buyer (or any of
its agents, officers, directors, employees, affiliates or representatives).
SECTION 4.7. ABILITY TO PERFORM. Buyer currently has available
to Buyer sufficient funding to enable Buyer to consummate the purchase of the
FWC Shares from Seller and otherwise to perform all of Buyer's obligations under
this Agreement.
SECTION 4.8. BROKERS. Except as disclosed on Section 4.8 of
the Disclosure Schedule, no finder, broker, agent or other intermediary has
acted for or on behalf of Buyer in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from Buyer.
ARTICLE V
FURTHER COVENANTS AND AGREEMENTS
SECTION 5.1. COVENANTS OF SELLER PENDING THE CLOSING. Seller
covenants and agrees that, pending the Closing and prior to the termination of
this Agreement, and except as otherwise agreed to in writing by Buyer, Seller
shall, or as appropriate shall cause FWC to:
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(a) conduct the Business solely in the ordinary course
and consistent with the past practices of FWC;
(b) not take or intentionally omit to take any action
which would result in a breach of any of Seller's representations and warranties
hereunder in any material respect;
(c) continue to maintain and service the physical assets
used by FWC in the conduct of the Business consistently with its past practices;
(d) promptly disclose to Buyer any information relating
to Seller's representations and warranties hereunder which, because of an event
occurring after the date hereof, is incomplete or is no longer correct in any
material respect;
(e) use its reasonable efforts to cause all of the
conditions to the obligations of Buyer under Article VII hereof to be satisfied
on or prior to the Closing Date and to obtain, prior to the Closing, all
consents of all third parties and governmental authorities necessary for the
consummation by Seller of the transactions contemplated hereby. Subject to
Section 7.1(viii), all such consents will be in writing and executed
counterparts will be delivered to Buyer at or prior to the Closing;
(f) cooperate with Buyer in Buyer's making reasonable
arrangements to obtain licenses, permits and certificates required to conduct
the Business or own the FWC Shares at Closing;
(g) provide Buyer's officers, employees, counsel,
accountants and other representatives with reasonable access to, during normal
business hours, all of the books and records of FWC, make available to
representatives of Buyer members of senior management of FWC for reasonable
periods of time to answer inquiries of such representatives with respect to
Buyer's investigation of FWC and permit such representatives of Buyer to consult
with the officers, accountants and counsel of Seller; provided that no such
activities unreasonably interfere with normal operation of the Business;
(h) manage the working capital of FWC consistent with the
past practices of FWC and pay all intercompany payables in accordance with their
terms and consistent with the past practices of FWC;
(i) maintain the inventories of FWC so that the value of
such inventories does not exceed $21,000,000 as reflected in accordance with
GAAP on the books and records of FWC as of the Closing Date; and
(j) not cause the price for wire rod sold by any member
of the Retained Group to FWC after the date hereof and prior to the Closing to
be set at a level higher than that shown on Exhibit 2 of the Rod Supply
Agreement of even date herewith between GSI and FWC.
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SECTION 5.2. COVENANTS OF BUYER PENDING THE CLOSING. Buyer
covenants and agrees that, pending the Closing and prior to the termination of
this Agreement, and except as otherwise agreed to in writing by Seller, Buyer
shall:
(a) not take or intentionally omit to take any action
which would result in a breach of any of Buyer's representations and warranties
hereunder in any material respect;
(b) have available, as of the Closing Date, sufficient
funding to enable Buyer to consummate the purchase of the FWC Shares from Seller
and otherwise to perform all of Buyer's obligations under this Agreement;
(c) use its reasonable efforts to cause all of the
conditions to the obligations of Seller under Article VIII hereof to be
satisfied on or prior to the Closing Date and to obtain, prior to the Closing,
all consents of all third parties and governmental authorities necessary for the
consummation by Buyer of the transactions contemplated hereby. All such consents
will be in writing and executed counterparts thereof will be delivered to Seller
at or prior to the Closing; and
(d) promptly disclose to Seller any information relating
to Buyer's representations and warranties hereunder which, because of an event
occurring after the date hereof, is incomplete or is no longer correct in any
material respect.
SECTION 5.3. FILINGS. Promptly after the execution of this
Agreement, each of the parties hereto shall prepare and make or cause to be
made any required filings, submissions and notifications under the laws of any
domestic or foreign jurisdictions to the extent that such filings are necessary
to consummate the transactions contemplated hereby and will use its reasonable
efforts to take all other actions necessary to consummate the transactions
contemplated hereby in a manner consistent with applicable law. Each of the
parties hereto will furnish to the other party such necessary information and
reasonable assistance as such other party may reasonably request in connection
with the foregoing.
SECTION 5.4. EFFECTIVE TIME OF CLOSING. The Closing shall be
effective for all purposes as of the Cutoff and Buyer and Seller acknowledge and
agree that the books and records of FWC shall be closed appropriately to reflect
the effective time of the Closing.
SECTION 5.5. ANNOUNCEMENTS. Except as expressly contemplated
by this Agreement, at all times on or before the Closing Date, the parties will
mutually agree as to the time, form and content before issuing any press
releases or otherwise making any public statements or statements to third
parties with respect to transactions contemplated hereby and shall not issue any
press release or, except as necessary to perform their respective obligations
hereunder, discuss the transactions contemplated hereby with any third party
prior to reaching mutual agreement with respect thereto, except as may be
required by law. Notwithstanding the foregoing, in the event prior to the
Closing any party hereto or any Affiliate of such party is required by law, the
Securities Exchange Commission or the rules of any stock exchange on which such
party's securities are traded to make a statement with respect to the
transactions
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contemplated herein, such party shall notify in writing the other party hereto
as to the time, form and content of such statement.
SECTION 5.6. COSTS AND EXPENSES. Whether or not the
transactions contemplated by this Agreement are consummated, each party hereto
shall pay its own costs and expenses (including legal fees, consultant fees and
expenses) incurred in connection with due diligence reviews, the preparation,
negotiation and execution of this Agreement and all other agreements,
certificates, instruments and documents delivered hereunder, and all other
matters relating to the transactions contemplated hereby. The filing fee
relating to any notification or report form required under the HSR Act for the
transactions contemplated hereby shall be paid by Buyer. All transfer and
intangible taxes, if any, in connection with the sale and delivery of the FWC
Shares hereunder shall be paid by Buyer.
SECTION 5.7. FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing Date any
further action is reasonably necessary to carry out the purposes of this
Agreement, the parties hereto shall take or cause to be taken all necessary
action, including, without limitation, the execution and delivery of such
further instruments and documents as may be reasonably requested by the other
party for such purposes or otherwise to consummate and give effect to the
transactions contemplated hereby. Specifically, and without limiting the
foregoing, from and after the date hereof, Seller and the Retained Group agree
to take all reasonable actions which FWC shall request to enable FWC to retain,
enforce and exercise all of its rights under both the National Guaranty and the
Ivaco Guaranty.
SECTION 5.8. COOPERATION AND PRESERVATION OF RECORDS.
(a) The parties covenant that they will cooperate with
each other after the Closing to provide each other with reasonable information
relating to the Business. From and after the Closing Date, all books, records
and documents, if any, which were not acquired by Buyer as a result of the
consummation of the transactions contemplated by this Agreement and which
directly relate to the Business shall be available during regular business
hours, upon reasonable notice, to the officers, attorneys, accountants and other
authorized representatives of Buyer. Seller shall, for a period of six (6) years
from and after the Closing Date, maintain and preserve all such books, records
and documents and, during such six (6) year period, Buyer may copy, at Buyer's
expense, any such books, records and documents. Seller acknowledges and agrees
that the books and records of Seller and FWC relating to the employees of FWC
shall be acquired by Buyer as a result of the consummation of the transactions
contemplated by this Agreement; provided, that Buyer acknowledges and agrees
that Seller may make and retain a copy of such books and records relating to
such employees.
(b) From and after the Closing Date, all books, records
and documents which were acquired by Buyer as a result of the consummation of
the transactions contemplated by this
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Agreement and/or which relate to the operation of the Business up to the Closing
shall be available during regular business hours, upon reasonable notice, to the
officers, attorneys, accountants and other authorized representatives of Seller.
Subject to the following, Buyer shall for a period of at least six (6) years
from and after the Closing Date, maintain and preserve all such books, records
and documents. If upon or prior to the end of such six (6) years Buyer desires
to dispose of any such records, Buyer shall give Seller not less than sixty (60)
days' prior written notice specifying the categories desired to be destroyed and
shall give Seller reasonable access to inspect such records, and Seller shall
have the right to remove, at Seller's expense, any records covered by such
notice it may desire to retain. Any records not removed within one hundred
twenty (120) days after the date of the mailing of the notice to Seller by Buyer
may be disposed of, without further obligation to Seller under this subparagraph
(b).
(c) In the event Seller is required to defend any action,
suit or proceeding arising out of a claim pertaining to the Business which
involves actions or events occurring prior to the Closing Date, Buyer shall
provide assistance and cooperation to Seller, including witnesses and
documentary or other evidence, as may reasonably be requested by Seller in
connection with its defense. Seller shall reimburse Buyer for its reasonable
out-of-pocket expenses (including attorneys' fees and expenses) incurred in
providing such assistance and cooperation.
(d) In the event Buyer is required to defend against any
action, suit or proceeding arising out of a claim pertaining to the business
conducted by Buyer as a result of the consummation of the transactions
contemplated by this Agreement, Seller shall provide assistance and cooperation
to Buyer, including witnesses and documentary or other evidence, as may
reasonably be requested by Buyer in connection with its defense. Buyer shall
reimburse Seller for Seller's reasonable out-of-pocket expenses (including
attorneys' fees and expenses) incurred in providing such assistance.
(e) For such periods as may be stipulated by applicable
law, and in any event until the final adjudication or settlement of any dispute
or investigation involving Taxes arising out the Business or the operations or
affairs of FWC prior to the Closing Date, Buyer will cause FWC to maintain all
tax books and records of FWC relating to the Business or to the operations and
affairs of FWC before the Closing on a basis consistent with past practice, but
in any event until final closing or remedy is reached with respect to any such
tax year.
(f) Without the prior written consent of Seller, Buyer
shall take no action, and Buyer shall cause FWC to refrain from taking any
action, that affects the federal consolidated income tax return or federal or
state tax liability of GSI or any predecessor of GSI, including without
limitation amending any federal or state tax return of FWC covering any period
or periods ending on or prior to the Closing Date, or settling any examination,
administrative appeal or judicial action with respect to any such return to the
extent such amendment or settlement would affect the federal consolidated income
tax return or federal or state tax liability of GSI or any predecessor of GSI.
In the event FWC shall receive any notice of examination, proposed deficiency,
statutory notice of deficiency or other communication from the Internal Revenue
Service or any other taxing jurisdiction with respect to any federal or state
income tax liability or
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return of FWC for any period through the Closing Date, Buyer shall cause such
communication to be immediately forwarded to Seller and shall cause FWC to
cooperate with GSI in permitting GSI to control the response to and defense of
any matter reflected on such communication that could affect the federal
consolidated income tax return or federal or state tax liability of GSI or any
predecessor of GSI.
SECTION 5.9. LIMITATION OF LIABILITIES.
(a) From and after the Closing Date, except as expressly
otherwise provided for in this Agreement, no member of the Retained Group shall
have any obligation or liability for any deductibles or reimbursement
obligations of FWC as outlined in Sections 5.14(a) and (b) below with respect to
any past or present insurance policies (including, without limitation, any
arrangement between FWC, on the one hand, and any member of the Retained Group,
on the other hand, with respect to self-insurance) and obligations or
liabilities under any guaranties by any member of the Retained Group of any
obligations or liabilities of FWC. Buyer shall release, indemnify and hold the
Retained Group harmless from all such obligations and liabilities (including the
cost of defense thereof and reasonable attorneys' fees and expenses incurred in
litigation or otherwise) that are alleged against or might otherwise be imposed
on any member of the Retained Group for an event or occurrence after the Closing
Date; provided that the foregoing indemnity shall not be construed to require
any payment to the Retained Group which would result in double recovery by the
Retained Group for the same obligation or liability. Consequently, Buyer's
indemnification obligations shall be reduced or offset, as the case may be, by
the amount of any insurance proceeds actually received by the Retained Group in
respect of such obligations and liabilities. In the event the Retained Group
receives insurance proceeds in respect of obligations or liabilities as to which
Buyer has provided indemnification payments to the Retained Group pursuant to
this Section 5.9 and the retention by the Retained Group of such insurance
proceeds would result in double recovery by the Retained Group for the same
obligation or liability, Seller shall promptly pay to Buyer the amount of such
proceeds to the extent the proceeds would otherwise result in such double
recovery.
(b) Buyer shall cooperate with the Retained Group, both
before and after the Closing Date, by taking, and after Closing, causing FWC to
take, all reasonable actions which Seller shall request to effect the
termination of any Retained Group guaranty, obligation or liability described in
(a) above. At Closing, Buyer shall provide to Seller certificates of insurance
evidencing that coverage for FWC is effected from and after the Closing Date for
events or occurrences occurring after the Closing Date. The parties agree that
FWC will be removed as an insured from the insurance policies maintained or
provided by the Retained Group as of the Closing Date, but not effective prior
to the Closing Date, and that such removal shall have no effect on the insurance
coverage provided to or for FWC by the Retained Group under any such policy
prior to the Closing Date. The removal of FWC as an insured from insurance
coverage maintained or provided by the Retained Group shall be without prejudice
to the reimbursement obligations of FWC as outlined in Section 5.14(a) and (b)
below. Seller shall cooperate with Buyer and Seller with respect to coverage
afforded under the insurance policies listed in Section 3.15 of the Disclosure
Schedule.
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SECTION 5.10. EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) General Employment, Medical Plans, Unions.
(1) Service Credit. Buyer agrees that
Transferred Employees' service with FWC, any member of the Retained Group or any
predecessor of FWC or the Retained Group shall be credited in determining
eligibility and vesting (but not benefit accruals or retirement eligibility)
under any employee benefit plans, programs, policies or arrangements covering
such Transferred Employees established, continued, or otherwise sponsored by FWC
or by Buyer or any of its Affiliates after the Closing Date.
(2) Retained Plans, Medical Plans, COBRA. On and
after the Closing Date, FWC shall remain and be responsible and liable for the
FWC Group Insurance Plan and all other employee welfare and benefit plans and
insurance coverages sponsored by FWC for FWC employees (the "Retained Plans").
The FWC Medical Plan shall provide continuation coverage as applicable and
mandated by Sections 601-609 of ERISA or Section 4980B of the Code to any
Transferred Employees or former FWC employees (and their eligible spouses and
dependents), other than former employees (and their eligible spouses and
dependents) whose last employment was with operating subsidiaries of Seller
other than FWC.
(b) GSI Savings Plans. Transferred Employees who are
participants in the GS Industries, Inc. Retirement Savings Plan shall be treated
as separating from service on the Closing for all purposes under that plan and
any benefits shall be maintained in that plan until such time as distributions
can be made in accordance with the plan and relevant law, including any
provisions permitting distributions upon sale of assets or a subsidiary under
Code Section 401(k)(10) and the regulations thereunder.
(c) Pension Plan. Effective as of Closing, Transferred
Employees who are participants in the GS Industries, Inc. Employees' Pension
Plan shall no longer accrue benefits under that plan and FWC shall be removed as
a sponsoring employer of that plan. The Retained Group shall continue to make
all contributions or payments to the GSI Pension Plan required by applicable
law, including all contributions required to be made under Section 412 of the
Code and Section 302 of ERISA. The Retained Group shall be responsible for
complying with all notice requirements arising from any reportable event (as
such term is defined in Section 4043 of ERISA) with respect to the GSI Pension
Plan which occurs on or after the Closing.
(d) Nonqualified Plans and Related Liabilities. Buyer
agrees that as of the Closing Date and thereafter, FWC shall continue to have
responsibility for (and future liability with respect to) the nonqualified
retirement plans, welfare plans, severance agreements and other benefit
arrangements listed in Section 5.10 of the Disclosure Schedule ("Nonqualified
Plans"), with respect to any Transferred Employee or former employee of FWC.
Buyer further agrees that no member of the Retained Group shall have any
responsibility or liability with respect to the Nonqualified Plans regarding any
Transferred Employee or former employee of FWC.
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(e) Certain Employment Agreements. Buyer specifically
assumes and accepts full responsibility for all payments and obligations under
the written employment agreements identified in Section 5.10 of the Disclosure
Schedule.
(f) Cooperation and Temporary Support. Seller will
cooperate with Buyer to transfer employee records as may be necessary to
implement this Agreement. Buyer agrees to maintain such records in confidence as
required by applicable law.
(g) Union Agreements and Benefits. Buyer agrees that as
of the Closing Date and thereafter, Buyer shall recognize and bargain with the
union with respect to all terms and conditions of employment provided for in the
union contract listed in Section 3.16 of the Disclosure Schedule.
(h) No Claims Based on Agreement. No Person (other than
parties to this Agreement and members of the Retained Group), including without
limitation Transferred Employees, former employees of FWC, and their spouses and
beneficiaries, shall be entitled to assert any claim based on any of the
provisions of this Section against any party to this Agreement (or any of their
Affiliates).
Section 5.11. DISTRIBUTIONS IN THE ORDINARY COURSE.
Notwithstanding any other provision of this Agreement to the contrary, from and
after the date hereof, FWC shall be entitled to declare and pay dividends and
make other distributions (including, without limitation, distributions of cash)
to its parent corporation, in the ordinary course of the business of the GSI
Group, consistent with past practice.
SECTION 5.12. TERMINATION OF TAX SHARING AND MANAGEMENT
AGREEMENTS. On or prior to the Closing Date, Seller shall cause that certain Tax
Sharing Agreement dated October 5, 1995 among FWC and members of the Retained
Group to be terminated in respect of FWC such that, effective upon Closing, such
Tax Sharing Agreement shall not be binding on or enforceable by or against FWC
and shall not result in any further right or obligation thereunder of FWC from
the Closing Date; provided that such Tax Sharing Agreement shall continue to be
applicable in accordance with its terms among members of the Retained Group. On
or prior to the Closing Date, Seller shall cause the Management Services
Agreement to be terminated in respect of FWC such that the Management Services
Agreement shall not be binding on or enforceable by or against FWC.
SECTION 5.13. RELEASE OF LIENS. The FWC Shares currently are
pledged to secure repayment of the indebtedness evidenced by the GE Capital
Loan. In addition, the indebtedness evidenced by the GE Capital Loan is secured
by liens on certain assets of FWC. On or prior to the Closing Date, Seller shall
obtain valid releases of such FWC Shares from all encumbrances and pledges
relating to the GE Capital Loan. In addition, on or before the Closing Date,
Seller shall obtain valid releases of the assets of FWC from all liens and
encumbrances relating to the GE Capital Loan; provided, however, that, with
respect to the releases of liens on assets, Buyer acknowledges that Seller shall
have fulfilled its obligations under this Section 5.13 as long as Seller
delivers to Buyer at the Closing all documents necessary to accomplish such
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valid releases upon the recording thereof in the appropriate office(s). Seller
shall use its reasonable best efforts to obtain on or before the Closing Date
valid releases of the assets of FWC from all other liens and encumbrances that
are not Permitted Encumbrances or disclosed in Section 3.8 of the Disclosure
Schedule.
SECTION 5.14. CERTAIN REIMBURSEMENTS.
(a) Reimbursement of Post-Closing Premiums, Audits and
Deductibles. The parties hereby acknowledge that the general liability, foreign
general liability, umbrella and excess umbrella liability policies identified as
such in Section 3.15 of the Disclosure Schedule (the "General Liability
Policies") are all occurrence based policies. As such, the aggregate amount of
the incurred losses that are attributable to the Business and covered by the
General Liability Policies will not be known for an indefinite period of time
following the Closing. Buyer hereby agrees to cause FWC to reimburse the
Retained Group for all amounts that the Retained Group is required to pay for
such post closing premiums relating to the Business for as long as such premiums
are required to be paid by the Retained Group. The Retained Group shall provide
all reasonable documentation with respect thereto as reasonably required by FWC.
The audited general liability premium adjustment for FWC will be billed to FWC
and Buyer shall cause FWC to reimburse the Retained Group within thirty (30)
days of notice thereof if a payment is due for the portion relating to the
Business and Seller will reimburse FWC within thirty (30) days of notice thereof
if a refund is applicable to the Business. Certain of the General Liability
Policies provide for deductibles or self insured retentions with respect to
insured claims relating to the Business. Buyer hereby agrees to cause FWC to
immediately reimburse the Retained Group, upon the provision of reasonable
documentation with respect thereto, for all deductible or self insured retention
amounts made by or charged to the Retained Group following the Closing with
respect to any insured losses arising, directly or indirectly, from the
Business, whether arising under the General Liability Policies or from any
former general liability, foreign general liability, umbrella or excess
liability policy maintained by the Retained Group for the benefit of FWC prior
to the Closing, regardless of when the relevant insured loss occurred.
(b) Reimbursement of Retroactive Premium Adjustments. The
parties hereby acknowledge that prior to the date hereof the Retained Group has
maintained worker's compensation insurance policies which have named FWC as
covered insureds or which coverages apply to the employees and operations of FWC
and which policies cover, may cover or may incur outstanding claims under the
respective insurance policies in effect at the time of the loss giving rise to
the claim by FWC. The parties acknowledge that the worker's compensation
policies maintained by the Retained Group which have covered the employees and
operations of FWC (the "Worker's Compensation Policies") have premiums and
administrative costs which are retroactively adjusted by the relevant insurance
providers based upon the aggregate loss experience actually incurred with
respect to claims covered by each particular policy (which aggregate loss
experience may not be known for an indefinite period of time beyond the policy's
term). Buyer hereby agrees to cause FWC to reimburse the Retained Group
immediately upon the provision of reasonable documentation with respect thereto
for all deductible/retrospective payments made by or charged to the Retained
Group following the
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Closing with respect to all claims insured under the Worker's Compensation
Policies which relate to the employees and operations of FWC. The obligation of
FWC to reimburse the Retained Group for deductible/retrospective/paid
loss/administrative payments and retroactive increases in premiums on Worker's
Compensation Policies shall continue for so long as any insurance providers
continue to make such calculations or require such payments. The allocation of
premiums on Worker's Compensation Policies to FWC made by the Retained Group at
the time of premium assessment shall be used as the basis against which any
increase due to a deductible/retrospective premium adjustment shall be measured.
SECTION 5.15. INTERCOMPANY DEBT AND ONGOING OBLIGATIONS. The
parties intend for all Intercompany Debt to be discharged or otherwise
terminated on or prior to the Closing Date such that FWC shall have no further
obligation in respect of the Intercompany Debt. Such discharge or other
termination may be affected by a capital contribution by Seller of the
Intercompany Debt. Such discharge or other termination shall not result in or be
construed to discharge or otherwise affect in any way any other rights or
obligations of FWC, on the one hand, or any member of the Retained Group, on the
other hand, including, without limitation, FWC's obligations in respect of rod
purchased from any member of the Retained Group and any management fees which
have accrued up to the Closing Date under the Management Services Agreement.
SECTION 5.16. TAX MATTERS.
(a) Seller agrees to join with Buyer in making an
election under Section 338(h)(10) of the Code (and any corresponding elections
under applicable state, local or foreign Tax law) (collectively, a "Section
338(h)(10) Election") to treat the purchase and sale of the FWC Shares as a
deemed purchase and sale of the assets of FWC for federal income Tax purposes
and for applicable state, local and foreign income Tax purposes. Seller and FWC
shall report for federal income Tax purposes (and for state, local and foreign
income Tax purposes where permitted by applicable law) the purchase of the FWC
Shares consistent with the Section 338(h)(10) Election and with the allocation
of the Purchase Price set forth on Exhibit C attached hereto, subject to
reasonable modifications to the agreed allocation as a direct result of any
adjustment to the Purchase Price pursuant to Section 2.2 hereof. Buyer shall be
responsible for the actual preparation and timely filing of all forms (including
without limitation Form 8023) required to be submitted to the IRS (and, where
applicable, all state, local and foreign taxing authorities) in connection with
properly effecting and preserving the Section 338(h)(10) Election in accordance
with the Code (or similar provisions of state, local or foreign law) and the
terms of this Agreement, which forms shall reflect the allocation set forth on
Exhibit C attached hereto. If any changes are required to these forms subsequent
to their filing, the parties shall promptly agree and cooperate with respect to
such changes. To the extent not executed and completed as of the date hereof,
Seller shall execute and deliver to Buyer such forms, including any amended or
replacement Forms 8023, as are reasonably requested by Buyer or as are required
by the Code, or under similar provisions of state, local or foreign law within
60 days after such completed forms are presented to Seller for execution or such
shorter period as is necessary to comply with applicable law. Seller shall
provide Buyer with such information as Buyer reasonably requests in order to
prepare any forms within thirty (30) days of Buyer's request for
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such information or within such shorter period as is necessary to comply with
applicable law. Seller will pay any federal income Tax, including any federal
income Tax liability of FWC resulting from the application to it of treasury
regulation Section 1.338(h)(10)l(f)(5), attributable to the making of the
Section 3.38(h)(10) Election and will indemnify Buyer and FWC against any
adverse consequences arising out of any failure to pay such Tax. Seller will
also pay any state income Tax (and indemnify Buyer and FWC against any adverse
consequences arising out of any failure to pay such Taxes) attributable to the
Section 3.38(h)(10) Election.
(b) Seller shall be liable for and shall pay any and all
franchise Tax of FWC payable to the State of Texas for any taxable period
commencing before the Closing Date and ending after the Closing Date (the
"Straddle Period"), but only with respect to the portion of such period up to
and including the Closing Date ("Pre-Closing Period"). Franchise Tax payable to
the State of Texas attributable to the Pre-Closing Period shall be based on the
actual activities, net taxable surplus or loss of FWC during such Pre-Closing
Period as if such taxable period ended as of the close of business on the
Closing Date. The computation of net taxable surplus attributable to the
Pre-Closing Period shall include available net operating loss carryforwards
from any period ending prior to the Closing Date. With respect to any franchise
Tax payable to the State of Texas for a Straddle Period, Buyer shall consult
with Seller and thereafter present Seller with a schedule detailing the
computation of the franchise Tax due for the Pre-Closing Period at least thirty
days prior to the due date for the payment of such franchise Tax to the State
of Texas. Within twenty days after receipt of such schedule, the Seller shall
pay the Buyer the amount of the Pre-Closing Period franchise Tax payable to the
State of Texas as computed by Buyer. If Seller disputes Buyer's computation of
the Pre-Closing Period franchise Tax payable to the State of Texas, Seller
shall not be relieved of its obligation to pay, in the first instance, any such
disputed amount. Whether any such disputed amount was in fact due from Seller
shall be resolved by the Independent Accounting Firm, in its sole discretion
and whose decision shall be final. If upon such resolution it is determined
that any of such disputed amount was not payable to Buyer and such amount has
been paid to Buyer, then Buyer shall refund to Seller such amount, plus
interest at the rate required to be paid under Section 6621 of the Code.
(c) GSI shall be responsible for, and shall have ultimate
discretion with respect to, (i) the preparation and filing of all income Tax
Returns required or permitted by applicable law to be filed by FWC (or by GSI or
any Affiliate of GSI on FWC's behalf) with respect to any federal consolidated
income Tax Return or any state or local combined or unitary income Tax Return
that includes FWC with respect to taxable years (including short taxable years)
that end on or before the Closing Date (and the payment of all income Taxes
reported on such income Tax Returns) and (ii) representation and responsibility
for any Tax audit, including the execution of any waiver of limitation with
respect to any Tax audit, relating to any such income Tax Returns. Buyer will
timely execute or cause FWC to timely execute all powers of attorney reasonably
requested by GSI to allow GSI or its Affiliates to represent FWC on all matters
pertaining to income Taxes on such income Tax Returns for any taxable period
that ends on or before the Closing Date. In addition, GSI shall be responsible
for, and shall have ultimate discretion with respect to, (i) the preparation and
filing of all other state income Tax Returns for FWC with respect to the taxable
year of FWC that ends on the Closing Date (and the payment of the portion, if
any, of all income Taxes reported on such state income Tax Return attributable
to
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the Section 338(h)(10) Election), and (ii) the representation and responsibility
for any Tax audit, including the execution of any waiver of limitation with
respect to any Tax audit, relating to any such income Tax Return to the extent
such Tax audit pertains to the Section 338(h)(l0) Election or any tax liability
resulting from the Section 338(h)(10) Election. Buyer will timely execute or
will cause FWC to timely execute all income Tax Returns or other documents
reasonably requested by GSI in connection with this Section 5.16. Except as
otherwise provided in this subparagraph (c), Buyer shall prepare and file or
cause to be filed all Tax Returns required of FWC, or in respect of FWC's
activities, for any taxable period ending after Closing that includes the
operations of FWC prior to Closing.
Section 5.17. No Other Solicitations. Until the earlier of the
Closing Date or the termination of this Agreement, the GSI Group, its management
and representatives shall not solicit or encourage any offer, proposal or
inquiry from, or engage in any negotiations with, any Person regarding the sale
of the FWC Shares, the sale of FWC's assets (other than sales in the ordinary
course of business) or any merger or other business combination involving FWC.
Section 5.18. Restrictive Covenant. In order to protect the
value of FWC and the Business, Seller agrees for five (5) years from the Closing
Date that neither Seller nor any member of the Retained Group (as long as such
member remains a member of the Retained Group) shall directly or indirectly in
the continental United States (i) sell or distribute products directly
competitive with the products currently sold by FWC, or (ii) engage in any
business directly competitive with the Business currently conducted by FWC.
Seller agrees that any breach of this Section 5.18 may result in irreparable
damage to Buyer for which Buyer may have no adequate remedy at law, and
therefore, if such breach should occur, Seller consents to any temporary or
permanent injunction or decree of specific performance by any court of competent
jurisdiction in favor of Buyer enjoining any such breach, without prejudice to
any other right or remedy to which Buyer shall be entitled. In the event any
portion of this Section 5.18 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a period of time or too large of a geographic area or over too great a range of
activities, it shall be interpreted to extend only over the maximum period of
time, geographic area or range of activities as to which it may be enforceable.
In the event Seller breaches any of the provisions of this Section 5.18, Buyer
shall be entitled to recover all reasonable costs of enforcement, including
reasonable attorney's fees.
SECTION 5.19. ALLIANZ CASE. FWC and GSI are plaintiffs in a
legal action named Florida Wire and Cable, Inc. and GS Industries, Inc. v.
Allianz Insurance Co., Mecklenburg County, North Carolina Superior Court, Civil
Action No. 99-CVS-9247 (the "Lawsuit"). FWC and GSI have agreed that any
recovery from Allianz Insurance Co. ("Allianz") in the Lawsuit shall be paid to
GSI. Seller acknowledges and agrees that GSI shall pay for any and all costs
and expenses incurred in connection with the Lawsuit subsequent to the date of
this Agreement and that none of the costs and expenses shall be allocated to or
payable by FWC; provided, that FWC does not incur such expenses without the
prior written consent of Seller or GSI. Buyer shall cause FWC to cooperate with
Seller and GSI and to comply with all reasonable demands made by Seller or GSI
in connection with prosecuting the Lawsuit, including, without limitation, (i)
providing Seller and GSI with access to all documents which may be relevant to
the Lawsuit,
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including all financial records and billing statements, (ii) providing Seller
and GSI an opportunity to collect and copy such documents, and (iii) providing
Seller and GSI with reasonable access to all past, present and future FWC
employees, agents and representatives to obtain their testimony, expertise or
advice on issues related to the Lawsuit. Buyer shall cause FWC not to waive or
settle voluntarily any claim, assume any obligation, or incur any expense with
regard of the Lawsuit without the prior written consent of GSI. Buyer shall
cause FWC to inform promptly Seller of any notice, demand or communication
which Buyer or FWC receives which is in any way related to the Lawsuit by
providing written notice to Seller in accordance with Section 10.5 hereof.
ARTICLE VI
TERMINATION
SECTION 6.1. TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement executed by Seller and
Buyer;
(b) by Seller or Buyer at any time after January 31,
2000, if, through no fault of the party seeking termination, the Closing shall
not have occurred;
(c) by Seller or Buyer, if any governmental or regulatory
authority, agency or commission, including courts of competent jurisdiction,
domestic or foreign, shall have issued an order, decree, or ruling or taken
other action, restraining, enjoining or otherwise prohibiting the transfer of
the FWC Shares contemplated hereby and such order, decree, ruling or other
action shall have become final and nonappealable;
(d) by Buyer, if there has been a material violation or
breach by Seller of any agreement or, subject to Section 7.2 hereof, any
representation or warranty contained in this Agreement which (i) has rendered
the satisfaction of any condition to the obligations of Buyer impossible or is
not curable or, if curable, has not been cured within forty-five (45) days
following receipt by the non-terminating party of notice of such breach from the
terminating party, and (ii) has not been waived by Buyer; or
(e) by Seller, if there has been a material violation or
breach by Buyer of any agreement, representation or warranty contained in this
Agreement which (i) or has rendered the satisfaction of any condition to the
obligations of Seller impossible or is not curable or, if curable, has not been
cured within forty-five (45) days following receipt by the non-terminating party
of notice of such breach from the terminating party, and (ii) has not been
waived by Seller.
SECTION 6.2. PROCEDURE AND EFFECT OF TERMINATION. In the event
of termination of this Agreement pursuant to Section 6.1 hereof, written notice
thereof shall
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forthwith be given to the other parties hereto and this Agreement (other than
Section 5.6 hereof and as provided in paragraph (b) below) shall terminate and
the transactions contemplated hereby shall be abandoned without further action
by the parties hereto. If this Agreement is terminated as provided herein:
(a) all information received by Buyer with respect to the
Business, the Retained Group or FWC shall be held subject to and returned or
destroyed in accordance with the terms of the Confidentiality Agreement, which
agreement shall continue to be in full force and effect notwithstanding the
termination of this Agreement and all copies of such information in Buyer's
possession or in the possession of any of its representatives shall be returned
to GSI or destroyed by Buyer;
(b) except as otherwise expressly provided in this
Agreement, any termination pursuant to Section 6.1 hereof shall not relieve any
party from any liability for any material breach prior to such termination of
such party's covenants or agreements set forth in the Agreement; and
(c) all filings, applications and other submissions made
pursuant to Section 5.3 hereof or prior to the execution of this Agreement in
contemplation thereof shall, to the extent practicable, be withdrawn from the
agency or other Person to which made.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to consummate the transactions
described in this Agreement shall be subject to the fulfillment, on or before
the Closing Date, of the following conditions precedent:
SECTION 7.1. SELLER'S CLOSING DELIVERIES. Seller shall have
delivered, or caused to be delivered, to Buyer at the Closing each of the
following:
(i) stock certificates representing the FWC Shares, duly
endorsed in blank, or accompanied by duly endorsed stock transfer powers;
(ii) a copy of the Certificate of Incorporation of FWC as
in effect on the Closing Date;
(iii) a certificate of good standing with respect to FWC
issued by the Secretary of State of the State of Delaware and a certificate of
qualification of good standing or registration in each of the states in which
FWC is required to be qualified to transact business issued by the secretary of
state of each such state except where the failure to be so qualified would not
have a material adverse effect on FWC or the Business or any material portion
thereof in each case, dated no more than sixty (60) days prior to the Closing
Date;
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(iv) a copy of the bylaws of FWC which shall be certified
to be accurate and complete as of the Closing Date by the Secretary of FWC;
(v) the minute book and corporate seal of FWC;
(vi) the resignations of those officers and directors of
FWC as are identified in Section 7.1 of the Disclosure Schedule;
(vii) valid and binding consents of all Persons whose
material consent or approval is required to be set forth in Section 3.4 of the
Disclosure Schedule;
(viii) a certified copy of the resolutions of the Board of
Directors of Seller authorizing the execution, delivery and performance of this
Agreement;
(ix) the termination of the Tax Sharing Agreement and
Management Services Agreement as contemplated by Section 5.12 hereof executed by
each member of the GSI Group which is a party thereto;
(x) valid releases as contemplated by Section 5.13
hereof; and
(xi) the certificates referenced in Sections 7.2 and 7.3
hereof.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of Seller contained in this Agreement, as
modified by the Disclosure Schedule, shall have been true on the date hereof,
and shall be true on the Closing Date with the same effect as though such
representations were made as of such date or, in case of representations and
warranties made as of a specified date earlier than the Closing Date, on and as
of such earlier date and Seller shall have delivered to Buyer on the Closing
Date a certificate, dated the Closing Date, to such effect; provided, however,
that notwithstanding anything contained herein to the contrary, this Section 7.2
shall be deemed to have been satisfied unless the failure of any of the
representations or warranties to be true would have, individually or in the
aggregate, a Material Adverse Effect.
SECTION 7.3. PERFORMANCES. Seller shall have, in all material
respects, performed and complied with all covenants required by this Agreement
to be performed or complied with by it prior to or at the Closing and Seller
shall have delivered to Buyer on the Closing Date a certificate, dated the
Closing Date, to such effect.
SECTION 7.4. LEGAL OPINION. Counsel for Seller shall have
delivered to Buyer its opinion dated the Closing Date and substantially in the
form of Exhibit D attached hereto.
SECTION 7.5. GOVERNMENTAL CONSENTS AND APPROVALS. All
necessary and appropriate governmental consents, approvals and filings,
including those pursuant to the HSR Act, if applicable, shall have been obtained
or made and all applicable waiting periods (including any extensions thereof)
relating thereto shall have expired or otherwise terminated.
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SECTION 7.6. NO INJUNCTION OR PROCEEDING. No governmental or
regulatory authority, agency or commission, including courts of competent
jurisdiction, domestic or foreign, shall have issued an order, decree, or ruling
or taken other action, restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby, which order, decree, ruling or other action
remains in effect.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
Each and every obligation of Seller to consummate the transactions
described in this Agreement shall be subject to the fulfillment, on or before
the Closing Date, of the following conditions precedent:
SECTION 8.1. PAYMENT OF PURCHASE PRICE. Buyer shall have
satisfied and paid the unadjusted Purchase Price pursuant to Article II hereof.
SECTION 8.2. BUYER'S CLOSING DELIVERIES. Buyer shall deliver,
or cause to be delivered, to Seller at the Closing each of the following:
(i) valid and binding consents of all Persons,
if any, whose consent or approval is required to be set forth in Section 4.3 of
the Disclosure Schedule;
(ii) the certificates of insurance referenced in
Section 5.9 hereof;
(iii) a certified copy of the resolutions of the
Board of Directors of Buyer authorizing the execution, delivery and performance
of this Agreement; and
(iv) the certificates referenced in Sections 8.3
and 8.4 hereof.
SECTION 8.3. REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of Buyer contained in this Agreement, as modified
by the Disclosure Schedule, shall have been true on the date hereof in all
material respects and shall be true on the Closing Date in all material
respects, with the same effect as though such representations were made as of
such date or, in case of representations and warranties made as of a specified
date earlier than the Closing Date, on and as of such earlier date, and Buyer
shall have delivered to Seller on the Closing Date a certificate, dated as of
the Closing Date, to such effect.
SECTION 8.4. PERFORMANCES. Buyer shall have, in all material
respects, performed and complied with all covenants required by this Agreement
to be performed or complied with by it prior to or at the Closing and Buyer
shall have delivered to Seller on the Closing Date a certificate, dated as of
the Closing Date, to such effect.
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SECTION 8.5. LEGAL OPINION. Counsel for Buyer shall have
delivered to Seller its opinion dated the Closing Date and substantially in the
form of Exhibit E attached hereto.
SECTION 8.6. GOVERNMENTAL CONSENTS AND APPROVALS. All
necessary and appropriate governmental consents, approvals and filings,
including those pursuant to the HSR Act, if applicable, shall have been
obtained or made and all applicable waiting periods (including any extensions
thereof) relating thereto shall have expired or otherwise terminated.
SECTION 8.7. NO INJUNCTION OR PROCEEDING. No governmental or
regulatory, authority, agency or commission, including courts of competent
jurisdiction, domestic or foreign, shall have issued an order, decree, or ruling
or taken other action, restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby, which order, decree, ruling or other action
remains in effect.
ARTICLE IX
TAX INDEMNIFICATION
SECTION 9.1. TAX INDEMNIFICATION. From and after the Closing,
Seller shall indemnify and hold Buyer harmless from and against any and all
liability, cost and expense (including without limitation reasonable attorneys'
fees) (a "Tax Liability") relating to, resulting from or arising out of any
United States federal income tax liability, or any state income tax liability
for states which compute tax on a unitary basis, of GSI, Georgetown Industries,
Inc. or any member of the GSI Group, in each case for any and all periods prior
to and including the period which includes the Closing Date. Buyer acknowledges
and agrees that all refunds of any taxes for time periods through the Closing
Date with respect to which Seller has agreed to provide indemnification to Buyer
pursuant to this Section 9.1 shall be the property of Seller and the Retained
Group. To the extent such refunds are received by FWC or Buyer, Buyer will cause
FWC immediately to remit the amounts of any such refunds to Seller. The
indemnification obligations of Seller under this Section 9.1 shall expire and
terminate 15 days after the expiration of the applicable limitation period
(including the expiration of any period for which the otherwise applicable
limitation period has been or is extended). If Buyer provides written notice to
Seller in accordance with Section 9.2 hereof of an assertion by Buyer of a right
of indemnification under this Section 9.1 hereof prior to the expiration of the
applicable limitation period, the obligations of Seller with respect to the
asserted right of indemnification under this Section 9.1 shall continue until
the appropriate amount of indemnification, if any, is determined, paid and
satisfied in full. For purposes of this Section 9.1, any and all obligations
relating to, resulting from or arising out of the matters to be indemnified by
Seller pursuant to this Section 9.1 which are suffered or incurred by FWC shall
be deemed to have been suffered or incurred by Buyer on a non-duplicative dollar
for dollar basis.
SECTION 9.2. NOTICE OF CLAIM. Buyer shall within 15 days
following discovery of the matters giving rise to a Tax Liability, promptly
notify Seller in writing of any claim for
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recovery, specifying in reasonable detail the nature of the Tax Liability and
the amount of the liability estimated to arise therefrom. Buyer shall provide
Seller as promptly as practicable thereafter all information and documentation
reasonably requested by Seller to verify the claim asserted.
SECTION 9.3. DEFENSE. Seller may, by giving written notice to
Buyer within 30 days following its receipt of the notice of such claim, elect to
assume the defense or the prosecution of such claim, including the employment of
counsel or accountants at its cost and expense; provided, however, that during
the interim Buyer shall, and shall cause FWC to, use its best efforts to take
all action (not including settlement) reasonably necessary to protect against
further damage or loss with respect to the Tax Liability. Buyer shall have the
right to employ counsel separate from counsel employed by Seller in any such
action and to participate in such action, but the fees and expenses of such
counsel shall be at Buyer's own expense. Buyer and Seller shall cooperate in the
defense or prosecution of such claim and shall furnish such records, information
and testimony and shall attend such conferences, discovery proceedings and
trials as may be reasonably requested in connection therewith. Seller shall not
be liable under this Article IX for any settlement of any such claim effected
without its prior written consent.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Each and every representation and warranty contained in this Agreement shall
expire with, and be terminated and extinguished by, any of (i) the Closing, or
(ii) the termination of this Agreement pursuant to Article VI hereof, and
thereafter none of the parties hereto and no Affiliate of any of the parties
hereto shall be under any liability whatsoever with respect to any such
representation and warranty. In addition, upon the expiration and extinguishment
of such representations and warranties, none of the parties hereto nor any of
their Affiliates shall have any liability whatsoever arising out of or with
respect to (i) the accuracy or completeness of the Disclosure Schedule or any
certificate delivered pursuant to Section 7.2 or Section 8.3 hereof or (ii) any
breach of any covenant set forth in Section 5.1 hereof. This Section 9.1 shall
have no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing.
SECTION 10.2. ENTIRE UNDERSTANDING, WAIVER, ETC. This
Agreement and the Confidentiality Agreement set forth the entire understanding
of the parties and supersede any and all prior or contemporaneous
agreements, arrangements and understandings relating to the subject matter
hereof, and the provisions hereof may not be changed, modified, waived or
altered except by an agreement in writing signed by the party entitled to the
benefit of the provision(s) to be changed, modified or waived hereto. A waiver
by any party of any of the terms or conditions of this Agreement, or of any
breach thereof, shall not be deemed a waiver of such term or condition for the
future, or of any other term or condition hereof, or of any subsequent breach
thereof.
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SECTION 10.3. SEVERABILITY. If any provision of this Agreement
or the application of such provision shall be held by a court of competent
jurisdiction to be unenforceable, the remaining provisions of this Agreement
shall remain in full force and effect.
SECTION 10.4. CAPTIONS. The captions herein are for
convenience only and shall not be considered a part of this Agreement for any
purpose, including, without limitation, the constructions or interpretation of
any provision hereof.
SECTION 10.5. NOTICES. All notices, requests, demands
and other communications (collectively, "Notices") that are required or may be
given under this Agreement shall be in writing. All Notices shall be deemed to
have been duly given or made: if by hand, immediately upon delivery if it is a
Business Day during the hours of 9:00 a.m. and 5:00 p.m. in the place of
receipt and otherwise at the beginning of the first Business Day thereafter; if
by telecopier or similar device, immediately upon sending, provided notice is
sent on a Business Day during the hours of 9:00 a.m. and 5:00 p.m. Eastern
Time, but if not, then immediately upon the beginning of the first Business Day
after being sent; if by Fed Ex, Express Mail or any other reputable overnight
delivery service, one day after being placed in the exclusive custody and
control of said courier; and if mailed by certified mail, return receipt
requested, five (5) Business Days after mailing. Notwithstanding the foregoing,
with respect to any Notice given or made by telecopier or similar device, such
Notice shall not be effective unless and until (i) the telecopier or similar
device being used prints a written confirmation of the successful completion of
such communication by the party sending the Notice, and (ii) a copy of such
Notice is deposited in first class mail to the appropriate address for the
party to whom the Notice is sent. In addition, notwithstanding the foregoing, a
Notice of a change of address by a party hereto shall not be effective until
received by the party to whom such notice of a change of address is sent. All
Notices are to be given or made to the parties at the following addresses (or
to such other address as either party may designate by Notice in accordance
with the provisions of this Section):
(a) If to Seller:
GS Technologies Operating Co., Inc.
c/o GS Industries, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxx
Fax Number: (000) 000-0000
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with a copy (which shall not constitute Notice) to:
Xxxxxx Xxx Xxxxx & Xxxxxxxxx L.L.P.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Xx., Esq.
Fax Number: (000) 000-0000
(b) If to Buyer:
Insteel Industries, Inc.
0000 Xxxxx Xxxxx
Xx. Xxxx, XX 00000
Attention: H.O. Xxxxx, III
Fax Number: (000)000-0000
with a copy (which shall not constitute Notice) to:
Womble, Carlyle, Xxxxxxxxx & Rice
1600 BB&T Financial Center Building
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esquire
Fax Number: (000) 000-0000
SECTION 10.6. SUCCESSORS AND ASSIGNS. Neither this Agreement
nor any of the rights or obligations arising hereunder shall be assignable
without the prior written consent of the parties hereto. Provided, however, that
notwithstanding the foregoing Buyer may assign its rights and obligations under
this Agreement to any wholly owned subsidiary of Buyer which agrees in writing
to be bound by and to perform fully all of Buyer's obligations hereunder and,
provided that in the event of any such assignment by Buyer, Buyer shall remain
liable hereunder for the performance of Buyer's obligations hereunder
notwithstanding such assignment.
SECTION 10.7. PARTIES IN INTEREST. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as otherwise expressly
provided herein with respect to members of the Retained Group, nothing in this
Agreement and nothing implied by this Agreement shall confer upon any Person,
other than the parties hereto, and their respective successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
SECTION 10.8. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which, together, shall constitute one and the same instrument.
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SECTION 10.9. CONSTRUCTION OF TERMS. Any reference herein to
the masculine or neuter shall include the masculine, the feminine and the
neuter, and any reference herein to the singular or plural shall include the
opposite thereof. The parties to this Agreement acknowledge that each party and
counsel to each party has participated in the drafting of this Agreement and
agree that this Agreement shall not be interpreted against one party or the
other based upon who drafted it.
SECTION 10.10. GOVERNING LAW. This Agreement shall be
controlled, construed and enforced in accordance with the laws of the State of
North Carolina applicable to agreements made and to be performed in that State.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
SELLER:
GS TECHNOLOGIES OPERATING CO., INC.
By: /s/ Xxxx X. Xxxx
----------------------------
Its: EVP & CFO
----------------------------
BUYER:
INSTEEL INDUSTRIES, INC.
By:
----------------------------
Its:
----------------------------
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
SELLER:
GS TECHNOLOGIES OPERATING CO., INC.
By:
----------------------------
Its:
----------------------------
BUYER:
INSTEEL INDUSTRIES, INC.
By: /s/ H. O. Xxxxx III
----------------------------
Its: President
----------------------------
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