ASSET PURCHASE AGREEMENT
Exhibit 10.1
This Asset Purchase Agreement (the “Agreement”), dated as of January 29 , 2010 is made by and
among Gibraltar Strip Steel, Inc., a Delaware corporation (“GSSI”), Gibraltar Steel Corporation of
New York, a New York corporation (“GSCNY”), and Gibraltar Industries, Inc., a Delaware corporation
(“Parent” and together with GSSI and GSCNY, collectively, the “Sellers”), and The Worthington Steel
Company, LLC, an Ohio limited liability company (“Purchaser”), and The Worthington Steel Company,
an Ohio corporation (“Purchaser Ohio Affiliate”).
RECITALS:
A. GSSI is engaged in the steel processing business. GSCNY owns and operates a
warehousing business located in Detroit, Michigan which is used by GSSI in connection with the
conduct of GSSI’s steel processing business. Cleveland Pickling, Inc., a Delaware corporation
which is a wholly-owned subsidiary of Parent (“CPI”), is the owner of a thirty-one and one-quarter
percent (31.25%) partnership interest in Xxxxxx Steel Pickling Company, a partnership constituted
under the laws of the State of New York (the “Partnership”).
B. Parent has agreed to become a party to this Agreement in order to induce
Purchaser and Purchaser Ohio Affiliate to execute this Agreement and consummate the transactions
contemplated hereunder.
C. Purchaser Ohio Affiliate has agreed to become a party to this Agreement in order
to induce Sellers to execute this Agreement and consummate the transactions contemplated hereunder.
D. Subject only to the limitations and exclusions contained in this Agreement, and
on the terms and conditions hereinafter set forth, Purchaser desires to purchase, together with
certain Purchaser Affiliates, and Sellers desire to sell, substantially all of the assets of the
Business.
CONSIDERATION:
NOW, THEREFORE, in consideration of the foregoing recitals and of the respective covenants,
agreements, representations and warranties herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
DEFINITIONS
“Accounting Principles” means those accounting principles and such other
methodologies used and applied by the Business, consistent with past practices, as more
particularly described in ANNEX I attached to this Agreement.
“Actions” is defined in Section 4.1.10(b)(v).
“Adjusted Closing Payment” is defined in Section 1.3.1.
“Affiliate” means any Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the Person
specified. For purposes of this definition, control of a Person means the power, direct or
indirect, to direct or cause the direction of the management and polices of such Person
whether by Contract or otherwise. In any event and without limitation of the previous
sentence, any Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
“Agreement” means this Asset Purchase Agreement.
“Allocation Objections Notice” is defined in Section 1.3.3(b).
“Allocation Response Period” is defined in Section 1.3.3(b).
“Allocation Schedule” is defined in Section 1.3.3(a).
“Assignment and Assumption Agreement” is defined in Section 2.2(a)(i).
“Assumed Contract” means all Material Contracts of the Business, to the extent
specifically identified as Assumed Contracts in the Disclosure SCHEDULE, and those
non-Material Contracts relating to the Business (other than those related to the Buffalo
Facility and that will not be used by Purchaser in the Business) which have been entered
into by any of the Sellers in the ordinary course of business and which would not reasonably
be expected to be materially adverse to the Business.
“Assumed Liabilities” is defined in Section 1.4.1.
“Authorization” means any franchises, licenses, permits, easements, approvals,
rights, applications, filings, registrations and other authorizations.
“Balance Sheet” is defined in Section 3.1.6.
“Balance Sheet Date” is defined in Section 3.1.6.
“Basket Amount” is defined in Section 6.1.
“Xxxx of Sale” is defined in Section 2.2(a)(i).
“Buffalo Employees” is defined in Section 7.1(b).
“Buffalo Facility” means the facility located on the Buffalo Real Property.
“Buffalo New Hires” is defined in Section 7.1(b).
“Buffalo New Hire Severance” is defined in Section 7.1(b).
“Buffalo Real Property” means the real property located at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxx Xxxx 00000.
“Business” means the steel processing business of GSSI as conducted by GSSI at or
from the Buffalo Facility and the Cleveland Facility on the date hereof, together with the
warehousing business conducted by GSCNY at the Detroit Real Property and the rights,
Liabilities and Obligations of CPI, as owner of a thirty-one and one-quarter percent
(31.25%) partnership interest in the Partnership, as such rights, Liabilities and
Obligations are provided for pursuant to the terms of the Partnership Agreement.
“Business Property” means any real property included in the Purchased Assets.
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“Cap” is defined in Section 6.1.
“Claim” means a claim, action, suit, demand, investigation, proceeding, liability,
assessment, judgment, order or settlement asserting, overtly threatening or involving or
potentially involving Losses.
“Claim Notice” is defined in Section 6.3(a).
“Cleveland/Buffalo Receivables” is defined in Section 1.1.2(h).
“Cleveland Facility” means the facility located on the Cleveland Real Property.
“Cleveland Real Property” means the real property located at 0000 Xxxx
00xx Xxxxxx, Xxxxxxxx Xxxxxxx, Xxxx 00000.
“Closing” is defined in Section 2.1.
“Closing Date” is defined in Section 2.1.
“Closing Payment” is defined in Section 1.3.1.
“Closing Time” means 12:01 a.m., Eastern Standard Time, on the Closing Date.
“COBRA” is defined in Section 7.1(a).
“Code” means the Internal Revenue Code of 1986, as amended.
“Competitive Business” is defined in Section 7.2(c).
“Confidential Information” is defined in Section 10.6(a).
“Confidentiality Agreement” is defined in Section 10.2.
“Contracts” means agreements, contracts, commitments, leases and other instruments,
documents and undertakings (whether written or oral).
“CPI” means Cleveland Pickling, Inc., a Delaware corporation.
“CPI Allocation” is defined in Section 9.9(b)(v).
“CPI Assets” means the assets and properties of CPI; provided that, for the
avoidance of doubt, CPI Assets shall not include any assets or properties owned directly by
the Partnership.
“CPI Shares” is defined in Section 3.1.4(b).
“Current Assets” is defined in Section 1.3.2(b)(v).
“Designated Account” is defined in Section 1.3.1.
“Detroit Business” means the warehousing business conducted by GSCNY at the Detroit
Facility.
“Detroit Facility” means the facility located on the Detroit Real Property.
“Detroit Real Property” means the real property located at 00000 Xxxx Xxxx,
Xxxxxxxxx, Xxxxxxxx 00000.
“Detroit Receivables” is defined in Section 1.1.1(i).
“Direct Claim” is defined in Section 6.3(b).
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“Disclosure SCHEDULE” means the Disclosure SCHEDULE furnished pursuant to this
Agreement.
“Employee Plans” is defined in Section 3.1.21.
“Encumbrances” mean mortgages, liens, pledges, security interests, charges,
conditional sales contracts, claims, restrictions and other encumbrances and defects of
title of any nature whatsoever.
“Environmental Activity” means any storage, holding, existence, release, emission,
management, discharge, generation, processing, abatement, removal, disposition, handling,
transportation or disposal of any Hazardous Substance from, under, into or on the Purchased
Assets or the Seller Property or otherwise relating to the Purchased Assets, the Seller
Property or any Use of the Seller Property or the conduct of the Business which is regulated
by or for which standards of conduct or liability are imposed by any Environmental
Requirements.
“Environmental Law” means the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery
Act (“RCRA”), 42 U.S.C. §6901 et seq., the Hazardous Materials Xxxxxxxxxxxxxx Xxx, 00 X.X.X.
§0000 et seq., the Toxic Substances Xxxxxxx Xxx, 00 X.X.X. §0000 et seq., the Federal Water
Pollution Xxxxxxx Xxx, 00 X.X.X. §0000 et seq., the Clean Xxxxx Xxx, 00 X.X.X. §0000 et
seq., the Clean Air Act, 42 U.S.C. §7401 et seq., Regulations promulgated thereunder, and
any other federal, state or local Regulations or common law which may relate to or deal with
human health or the environment, all as may be from time to time amended.
“Environmental Requirements” means all requirements, including, but not limited to,
Environmental Laws, Authorizations, Orders, concessions, grants, Contracts, and other
restrictions and requirements (whether or not arising under Regulations) relating to any
Hazardous Substances or Environmental Activity as the same may be in effect at any time on
or after the date hereof and prior to the Closing Time.
“ERISA” is defined in Section 3.1.21.
“Estimated Adjustment Amount” is defined in Section 1.3.2(a).
“Estimated Working Capital” is defined in Section 1.3.2(a).
“Excluded Assets” is defined in Section 1.1.2.
“Excluded Contracts” is defined in Section 1.4.2(a).
“Excluded Liabilities” is defined in Section 1.4.2.
“Excluded Operations” means the operations at the Buffalo Real Property conducted
after Closing pursuant to the Transition Agreements.
“Final Closing Statement” is defined in Section 1.3.2(b)(i)(A).
“Final Working Capital” is defined in Section 1.3.2(b)(i)(A).
“Financial Statements” is defined in Section 3.1.6.
“Fixed Price Contracts” is defined in Section 3.1.19(n).
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“Governmental Authority” means any court, arbitrator, or governmental or regulatory
official, body or authority.
“GSCNY” means Gibraltar Steel Corporation of New York, a New York corporation.
“GSSI” means Gibraltar Strip Steel, Inc., a Delaware corporation.
“Hazardous Substances” means: (a) any “hazardous substance” as defined in §101(14)
of CERCLA (42 U.S.C. §9601(14)) or regulations promulgated thereunder as in effect at any
time on or after the date hereof and prior to the Closing Time; (b) any “solid waste,”
“hazardous waste,” “hazardous material” or “infectious waste,” as such terms are defined in
any other Environmental Law as in effect at any time on or after the date hereof and prior
to the Closing Time; (c) asbestos, urea-formaldehyde, polychlorinated biphenyls (“PCBs”),
nuclear fuel or material, chemical waste, radioactive material, explosives, known
carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or identified in, or
regulated by, any Environmental Law as in effect at any time on or after the date hereof and
prior to the Closing Time; and (d) any additional substances or materials which are
classified or considered to be a contaminant or a pollutant or to be hazardous or toxic
under any Environmental Requirements as in effect at any time on or after the date hereof
and prior to the Closing Time.
“HSR Act” is defined in Section 7.5.
“Indemnified Purchaser Party” is defined in Section 6.1
“Indemnified Seller Party” is defined in Section 6.2.
“Indemnitee” is defined in Section 6.3.
“Indemnitor” is defined in Section 6.3.
“Independent Auditor” is defined in Section 1.3.2(b)(ii)(B).
“Intellectual Property” is defined in Section 3.1.22(a).
“Intellectual Property Assignment” is defined in Section 2.2(a)(i).
“Interim Balance Sheet” is defined in Section 3.1.6.
“Interim Balance Sheet Date” is defined in Section 3.1.6.
“Inventories” is defined in Section 1.1.1(g).
“Knowledge” or “ knowledge” is defined in Section 10.13.
“Liabilities and/or Obligations” means “liabilities” and “obligations” which shall
include, without limitation, any direct or indirect indebtedness, guaranty, endorsement,
claim, loss, damage, deficiency, cost, expense, fee, liability, obligation, duty or
responsibility, fixed or unfixed, known or unknown, matured or unmatured, accrued, absolute
or contingent, asserted or unasserted, liquidated or unliquidated, vested or unvested,
secured or unsecured.
“Losses” is defined in Section 6.1.
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“Material Adverse Effect” means a material adverse effect on the Purchased Assets or
on the Business or its operations, assets, rights or condition (financial or otherwise, as
currently conducted), taken as a whole.
“Material Contracts” is defined in Section 3.1.19.
“Notice of Objection” is defined in Section 1.3.2(b)(i)(B).
“Other Intellectual Property” is defined in Section 3.1.22(a).
“Order” means any judgment, decision, order, writ, injunction, decree or award of
any Governmental Authority.
“Parent” means Gibraltar Industries, Inc., a Delaware corporation.
“Partnership” means Xxxxxx Steel Pickling Company, a partnership constituted under
the laws of the State of New York.
“Partnership Agreement” means the partnership agreement, dated as of June 1, 1988,
and made by and between Universal Steel Co., an Ohio corporation and Ruscon Steel Corp., a
New Jersey corporation, as amended.
“Patents and Names” is defined in Section 3.1.22(a).
“Permitted Liens” means (a) any lien for Taxes not yet due or delinquent or being
contested in good faith by appropriate Proceedings for which adequate reserves have been
established in accordance with the Accounting Principles, (b) any statutory lien arising in
the ordinary course of business by operation of law with respect to a Liability or
Obligation that is not yet due or delinquent, (c) liens to be removed at the Closing, (d)
deposits made in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return of money bonds and similar obligations; (e) with respect to the
Cleveland Real Property and the Detroit Real Property, applicable zoning ordinances,
easements and restrictions of record set forth in the Title Commitments and any state of
facts which a current, accurate survey would show; provided that such zoning ordinances,
easements, restrictions of record and/or state of facts would not materially interfere with
the conduct of the business at the Cleveland Facility or the Detroit Facility as presently
conducted or materially reduce the value of the Cleveland Facility or the Detroit Facility;
(f) Encumbrances approved by Purchaser in writing; and (g) any minor imperfection of title
or similar Encumbrance which would not materially and adversely affect the Use or value of
the Purchased Assets to which it relates.
“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other entity (including an entity disregarded for federal income tax
purposes) or Governmental Authority.
“Post Signing Returns” is defined in Section 4.1.10(b)(i).
“Pre-Closing Period Tax Return” means a Tax Return for a Tax period that ends on or
prior to the Closing Date.
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“Proceeding” means any judicial, administrative or arbitral actions, audits,
hearings, formal investigations, suits or proceedings (public or private) by or before any
Governmental Authority or before any arbitrator, mediator or other alternative dispute
resolution provider pursuant to any collective bargaining agreement, contractual agreement
or Regulation, and including any audit or examination, or other administrative or court
proceeding with respect to Taxes and Tax Returns.
“Purchase Price” is defined in Section 1.3.1.
“Purchased Assets” is defined in Section 1.1.
“Purchaser” means The Worthington Steel Company, LLC, an Ohio limited liability
company.
“Purchaser Affiliates” means the Purchaser and its Affiliates.
“Purchaser Closing Documents” means each agreement, document or instrument (other
than this Agreement) required to be executed or delivered by Purchaser or Purchaser Ohio
Affiliate at the Closing or otherwise in accordance with this Agreement.
“Related Business” means the steel processing business currently being performed by
the Purchaser Affiliates.
“Regulations” means any law, ordinance, governmental or regulatory rule, code
regulation or Order, whether federal, state, local or foreign.
“SCHEDULE” means a SCHEDULE of the Disclosure SCHEDULE.
“Seller” and “ Sellers” mean, individually, each of Parent, GSSI and GSCNY
and, collectively, all of Parent, GSSI and GSCNY.
“Seller Affiliates” means each of the Sellers and their Affiliates.
“Seller Closing Documents” means each agreement, document or instrument (other than
this Agreement) required to be executed or delivered by any of the Sellers in accordance
with this Agreement.
“Seller Group” is defined in Section 3.1.10.
“Seller Property” is defined in Section 3.1.23(a).
“Straddle Period” means a Tax period that begins on or before the Closing Date, and
ends after the Closing Date.
“Straddle Period Tax Returns” means a Tax Return for a Straddle Period.
“Target Working Capital” is defined in Section 1.3.2(a)(i).
“Tax Returns” means federal, state, local and foreign tax returns, reports,
declarations, information returns, statements and other similar filings relating to Taxes,
including any schedule or attachment thereto, and including any amendment thereof.
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“Tax” or “ Taxes” shall mean all (a) taxes, charges, withholdings, fees,
levies, imposts, duties and governmental fees or other like assessments or charges of any
kind whatsoever in the nature of taxes imposed by any United States federal, state, or local
or any foreign or other taxing authority (including but not limited to those related to
income, net income, gross income, receipts, capital, windfall profit, severance, property
(real and personal), production, sales, goods and services, use, business and occupation,
license, excise, registration, franchise, employment, payroll (including social security
contributions), deductions at source, withholding, alternative or add-on minimum,
intangibles, ad valorem, transfer, gains, stamp, customs, duties, estimated, transaction,
title, paid-up capital, profits, premium, value added, recording, inventory and merchandise,
business privilege, federal highway use, commercial rent or environmental tax, and any
liability under unclaimed property, escheat, or similar Regulations), (b) interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing authority in
connection with (i) any item described in clause (a) or (ii) the failure to comply with any
requirement imposed with respect to any Tax Return, and (c) liability in respect of any
items described in clause (a) and/or (b) payable by reason of Contract (including any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar Contract or
arrangement, whether written or unwritten), assumption, transferee, successor or similar
liability, operation of law (including pursuant to Treasury Regulations Section 1.1502-6 (or
any predecessor or successor thereof or any analogous or similar state, local, or foreign
Regulations)) or otherwise.
“Third-Party Claim” is defined in Section 6.3(a).
“Title Commitments” is defined in Section 3.1.24(r).
“Title Company” is defined in Section 3.1.24(r).
“Transition Agreements” means, collectively: (a) a transition agreement relating to
toll processing by GSSI at the Buffalo Facility and removal of equipment from the Buffalo
Facility in substantially the form of Exhibit A attached hereto; (b) a transition agreement
relating to the collection of the accounts receivables of the Sellers attributable to the
Cleveland Facility and the Buffalo Facility in substantially the form of Exhibit B attached
hereto; (c) a transition agreement relating to the provision of treasury services,
information technology systems and support and payroll and group medical benefits to
employees of the Cleveland Facility and the Detroit Facility in substantially the form of
Exhibit C attached hereto; and (d) a transition agreement relating to the provision of
accounting services by Purchaser for the benefit of Sellers in respect of the Buffalo
Facility in substantially the form of Exhibit D attached hereto.
“Treasury Regulations” means those regulations promulgated under the Code, as
currently in effect, and as modified and clarified by amendment or successor regulation.
“Unmatched Fixed Price Contracts” is defined in Section 3.1.19.
“Use” means use, ownership, development, construction, maintenance, management,
operation or occupancy.
“Vehicles” is defined in Section 1.1.1(h).
“WARN Act” is defined in Section 3.1.20.
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“Working Capital” is defined in Section 1.3.2(b)(v).
“Worthington Warehouse” means Worthington Warehouse, Inc., a Michigan Corporation.
“WS Michigan” means Worthington Steel of Michigan, Inc., a Michigan Corporation.
“338 Forms” is defined in Section 9.9(b)(i).
“338(h)(10) Election” is defined in Section 9.9(a).
“338(h)(10) Notice” is defined in Section 9.9(a).
ARTICLE 1 — PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing and except as otherwise expressly provided in
Section 1.1.2 or Section 2.3 hereof: (a) GSSI shall sell, convey, assign, transfer and deliver to
Purchaser, upon and subject to the terms and conditions of this Agreement, all right, title and
interest of GSSI in and to all of the assets, properties and rights of GSSI, including those
constituting the steel processing business as conducted by GSSI at the Buffalo Facility and the
Cleveland Facility or used therein, of every kind and description, real, personal and mixed,
tangible and intangible, wherever situated; (b) GSCNY shall sell, convey, assign, transfer and
deliver to Worthington Warehouse, an Affiliate of Purchaser, upon and subject to the terms and
conditions of this Agreement, all right, title and interest of GSCNY in and to all of the assets,
properties and rights of GSCNY of every kind and description, real, personal and mixed, tangible
and intangible and wherever situated, which are owned by GSCNY and/or used by GSCNY in the conduct
of the warehousing business at the Detroit Facility; (c) GSSI and GSCNY shall sell, convey, assign,
transfer and deliver to Purchaser, upon and subject to the terms and conditions of this Agreement,
all right, title and interest of GSSI and GSCNY in and to all of the Inventories and other assets
of GSSI and GSCNY located in Illinois; and (d) Parent shall sell, convey, assign, transfer and
deliver to WS Michigan, upon and subject to the terms and conditions of this Agreement, all right,
title and interest of Parent in and to all of the issued and outstanding capital stock of CPI
(which assets, properties and rights described above in this Section 1.1 are sometimes hereinafter
referred to as the “Purchased Assets”), free and clear of all Encumbrances except any Permitted
Liens.
1.1.1 Purchased Assets. The Purchased Assets shall include, without limitation, the
following assets, properties and rights of Sellers as of the Closing Date, except as otherwise
expressly provided in Section 1.1.2 or Section 2.3 hereof:
(a) all assets and properties reflected on the Balance Sheet and any assets and properties
acquired since the Balance Sheet Date and on or before the Closing Date, except for: (i) inventory
sold and Detroit Receivables collected after the Balance Sheet Date and on or before the Closing
Date, in the ordinary course of business consistent with past practices; and (ii) any immaterial
tangible personal property used or disposed of in the ordinary course of business consistent with
past practice after the Balance Sheet Date and on or before the Closing Date;
(b) the Intellectual Property owned by or licensed to Sellers or used in the Business but
excluding the right to use the “Gibraltar” name and excluding any Intellectual Property which is
not used exclusively in connection with the Business;
(c) to the extent permitted by applicable Regulations, all rights under each Assumed Contract
and each Authorization which is used in or related to the Business, including all pending
applications therefor or renewals thereof;
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(d) all rights under express or implied warranties from third Persons relating to the
Purchased Assets to the extent transferable;
(e) all machinery, equipment (including cranes), tools, dies, furniture, furnishings,
fixtures, goods and other tangible personal property (including rolls, spare motors and parts,
repair parts, etc.) of the Business, including, without limitation, those items set forth on
SCHEDULE 1.1.1(e), including all such items which are located at the Buffalo Facility and the
Detroit Facility, but excluding those repair parts related to the building and the building systems
at the Buffalo Facility;
(f) the Cleveland Real Property and the Detroit Real Property;
(g) all inventory of the Business including, without limitation, finished products, work in
process, parts, components, products under research and development, raw materials, packaging
materials, labels, office and other supplies, merchandise and other inventories of the Business
(“Inventories”);
(h) all trucks, tractors, trailers and motor vehicles used in connection with the Business
(“Vehicles”);
(i) all accounts, notes and other receivables and other rights to payment from customers of
the Detroit Business (regardless of whether such customers are also customers of the Buffalo
Facility and/or the Cleveland Facility) and the full benefit of all security for such receivables
or rights to payment but in any case, only to the extent that such accounts, notes and other
receivables are attributable to the operations of the Business at the Detroit Facility (“Detroit
Receivables”);
(j) all prepaid expenses of the Business and all unbilled costs and fees of the Business;
(k) all other information, files, books, records, data, plans, contracts and recorded
knowledge, including, without limitation, customer and supplier lists, related to any of the
foregoing; and
(l) all goodwill and going concern value of the Business, as well as all other assets,
properties and rights associated with the Business, whether or not such assets, properties and
rights are properly included on a balance sheet of any of the Sellers.
1.1.2 Excluded Assets. Notwithstanding anything to the contrary contained in Section
1.1 and Section 1.1.1 above, the Purchased Assets shall not include any of the assets, properties
or rights of the Sellers specifically set forth below in this Section or specifically identified on
SCHEDULE 1.1.2 of the Disclosure SCHEDULE (the “Excluded Assets”):
(a) The Buffalo Real Property;
(b) The minute books, stock transfer books and corporate record books of the Sellers;
(c) The business and financial records of Wm. X. Xxxxxxx Steel Corporation;
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(d) Those Contracts of GSSI listed on SCHEDULE 1.1.2(d);
(e) Those assets of GSSI listed on SCHEDULE 1.1.2(e);
(f) The rights of Sellers under this Agreement;
(g) Cash;
(h) all accounts, notes and other receivables and other rights to payment from customers of
the Business, other than the Detroit Receivables, and the full benefit of all security for such
receivables or rights to payment, including all receivables representing amounts receivable in
respect of products sold or services rendered to: (i) customers of the Buffalo Facility, regardless
of whether such customers are also customers of the Detroit Facility, but with respect to such
customers, only to the extent that such accounts, notes, other receivables and other rights to
payment are attributable solely to the operations of the Buffalo Facility and any claim, remedy and
right relating to the foregoing; and (ii) customers of the Cleveland Facility, regardless of
whether such customers are also customers of the Detroit Facility, but with respect to such
customers, only to the extent that such accounts, notes, other receivables and other rights to
payment are attributable solely to the operations of the Cleveland Facility and any claim, remedy
and right relating to the foregoing (the accounts, notes, other receivables, other rights to
payment and claims, remedies or rights relating thereto as described in this Section 1.1.2(h) being
hereinafter collectively the “Cleveland/Buffalo Receivables”);
(i) The rights of Sellers in the “Gibraltar” name;
(j) All assets, properties and rights of GSCNY determined as of the Closing Date, including,
without limitation, all Authorizations, real property, Claims, Confidential Information, Contracts,
Intellectual Property, Patents and Names, software and Vehicles, owned by or leased or licensed to
GSCNY other than all assets, properties and rights of GSCNY determined as of the Closing Date which
are used exclusively in or related exclusively to the conduct by GSCNY of the warehousing business
at the Detroit Facility including, but not limited to, Authorizations, Claims, Confidential
Information, Contracts, Intellectual Property, Patents and Names, software and vehicles, owned by
or leased or licensed to GSCNY exclusively in connection with the conduct by GSCNY of the
warehousing business at the Detroit Facility and all machinery, equipment, tools, dies, furniture,
furnishings, fixtures, goods and inventories located at the Detroit Facility; and
(k) All assets, properties and rights of Parent other than the issued and outstanding capital
stock of CPI and any assets of the Parent which are exclusively related to or used exclusively in
the Business, determined as of the Closing Date, including, without limitation, all Authorizations,
real property, Claims, Confidential Information, Contracts, Intellectual Property, Patents and
Names, software and vehicles owned by or leased or licensed to Parent.
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1.2 Agreement to Purchase. At the Closing, Purchaser, Worthington Warehouse and WS
Michigan shall purchase the Purchased Assets from Sellers as contemplated by Section 1.1, upon and
subject to the terms and conditions of this Agreement and in reliance on the representations,
warranties, covenants and agreements of Sellers contained herein, in exchange for the Purchase
Price. In addition, Purchaser and Worthington Warehouse shall assume at the Closing and agree to
pay, discharge or perform, as appropriate, certain Liabilities and Obligations of Sellers, but only
to the extent expressly provided in Section 1.4.1 of this Agreement. Except as expressly provided
in Section 1.4.1 hereof, none of Purchaser, Worthington Warehouse and WS Michigan shall assume or
be responsible for any Liability or Obligation of the Business or the Sellers and the transfer of
the Purchased Assets pursuant to this Agreement shall not include the assumption of any Liability
or Obligation related to the Purchased Assets unless Purchaser or Worthington Warehouse expressly
assumes that Liability or Obligation pursuant to Section 1.4.1 hereof.
1.3 Purchase Price.
1.3.1 Purchase Price. The purchase price (the “Purchase Price”) for the Purchased
Assets shall be an amount equal to the sum of (a) Thirty Four Million Dollars ($34,000,000.00) to
be paid by Purchaser, Worthington Warehouse and WS Michigan to Sellers at the Closing (the “Closing
Payment”) plus or minus the Estimated Adjustment Amount (as defined in Section 1.3.2 hereof) to be
paid in accordance with the terms of Section 1.3.2 hereof (the Closing Payment as so adjusted is
hereinafter referred to as the “Adjusted Closing Payment”) and (b) the amount of the Assumed
Liabilities; provided that the Purchase Price shall be allocated in accordance with Section 1.3.3.
The Purchase Price shall be paid at the Closing Date by the payment by Purchaser, Worthington
Warehouse and WS Michigan to Sellers, by wire transfer of immediately available funds, of the
amount of the Adjusted Closing Payment to an account designated by Sellers (the “Designated
Account”) and by the assumption by Purchaser and Worthington Warehouse of the Assumed Liabilities;
provided that the parties hereto will treat the payment of the Purchase Price as the payment by
each of Purchaser, Worthington Warehouse and WS Michigan of a portion of the Purchase Price to each
separate Seller in an amount equal to the amount allocable to each of Purchaser, Worthington
Warehouse and WS Michigan and each Seller as determined pursuant to Section 1.3.3 (followed by a
contribution by each Seller of the cash portion of the Purchase Price to the Designated Account).
1.3.2 Adjustment of Purchase Price.
(a) Estimated Working Capital. Sellers shall cause an estimate of the amount of
Working Capital of the Business to the extent attributable to the operations of the Buffalo
Facility and the Cleveland Facility as of Closing (“Estimated Working Capital”) to be calculated on
a basis consistent with the Accounting Principles. These calculations shall be delivered to
Purchaser three (3) days prior to the Closing. The Closing Payment paid at Closing will be
adjusted by the excess or shortfall in the Estimated Working Capital relating to the operations of
the Business to the extent attributable to the Buffalo Facility and the Cleveland Facility (the
“Estimated Adjustment Amount”) as follows:
(i) The target Working Capital (“Target Working Capital”) of the Business to the extent
attributable to the operation of the Buffalo Facility and the Cleveland Facility is Seven Million
Dollars ($7,000,000.00). If the amount of Estimated Working Capital exceeds the Target Working
Capital, the Purchase Price shall be increased by the full amount of such excess; and
(ii) If the amount of Estimated Working Capital is less than the Target Working Capital, the
Purchase Price shall be reduced by the full amount of such shortfall.
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For purposes of clarity, the working capital relating to the Detroit Business shall be included as
part of the Purchased Assets, but is excluded from the calculation of Working Capital for purposes
of this Section 1.3.2.
(b) Post-Closing Purchase Price Adjustment.
(i) Final Closing Statement.
(A) Within thirty (30) days after the Closing Date, Purchaser shall conduct a review of
Working Capital of the Business as of the Closing Time to the extent attributable to the operations
of the Buffalo Facility and the Cleveland Facility and shall prepare and deliver a statement (the
“Final Closing Statement”) to Sellers, which contains a computation of the Working Capital as of
the Closing Time, prepared on a basis consistent with the Accounting Principles (the “Final Working
Capital”).
(B) Sellers shall provide written notice of any objections to the Final Closing Statement,
together with an explanation of the basis of such objection (the “Notice of Objection”), within
thirty (30) days of the delivery of the Final Closing Statement. Promptly following the delivery
of the Final Closing Statement and until any such objections are resolved pursuant to the
application of Section 1.3.2(b)(ii) of this Agreement, Sellers and their advisors shall be entitled
to review, at Sellers’ sole expense, Purchaser’s work papers (hardcopy and electronic) and any
summaries of unadjusted differences relating to the Final Closing Statement. Purchaser shall
provide Sellers and their advisors with timely access to the personnel, properties, books and
records of the Business during regular business hours and upon reasonable advance written notice
solely to the extent reasonably necessary for Sellers and their advisors to conduct such review.
(ii) Objections; Resolutions of Disputes.
(A) Except as to objections duly set forth in any Notice of Objection made within thirty (30)
days after the receipt by Sellers of the Final Closing Statement, the Final Closing Statement shall
be final and binding for all purposes of this Agreement.
(B) If Sellers provide the Notice of Objection within such 30-day period, Purchaser and
Sellers shall, during the 30-day period following the delivery of such Notice of Objection, attempt
in good faith to resolve the objections. If Purchaser and Sellers are unable to resolve all such
objections within such period, the matters remaining in dispute and which were included in the
Notice of Objection shall be arbitrated by an accounting firm that is independent of both Sellers,
on the one hand, and Purchaser, on the other hand, and reasonably acceptable to the parties that
must be selected with the joint approval of Sellers and Purchaser within forty-five (45) days
following the delivery of the Notice of Objection (such arbitrating firm being the “Independent
Auditor”). The arbitration of disputed items by the Independent Auditor shall be final and
binding, and the determination of the Independent Auditor shall constitute an arbitral award that
is final, binding and non-appealable and upon which a judgment may be entered by a court having
jurisdiction thereover. Purchaser and Sellers shall instruct the Independent Auditor to render its
decision within thirty (30) days of its selection.
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(C) In the event the Independent Auditor resolves all disputes presented to it including, but
not limited to, the dollar amount of any proposed adjustment, exactly as proposed by Purchaser or
Sellers, as the case may be, the fees and expenses of the Independent Auditor relating to the
resolution of such dispute shall be paid by the other party. In all other events, the fees and
expenses of the Independent Auditor shall be shared in the same proportion that Sellers’ position,
on the one hand, and Purchaser’s position, on the other hand, initially presented to the
Independent Auditor (based on the aggregate of all differences taken as a whole) bear to the final
resolution as determined by the Independent Auditor.
(iii) Post-Closing Adjustment Payment. The following payments shall be made within
ten (10) days after the Final Working Capital has been agreed or finally determined in accordance
with Section 1.3.2(b)(ii):
(A) if the amount of Final Working Capital exceeds the Estimated Working Capital, Purchaser
shall pay to GSSI the full amount of such excess, plus simple interest thereon at the rate of 4%
per annum from the Closing Date to the date of payment; and
(B) if the amount of the Final Working Capital is less than the Estimated Working Capital,
Sellers shall pay to Purchaser the full amount of such shortfall, plus simple interest thereon at
the rate of 4% per annum from the Closing Date to the date of payment.
(iv) The payments due to either Purchaser or GSSI under Section 1.3.2(b)(iii) shall be made by
wire transfer of immediately available funds to an account designated by Purchaser to Sellers or to
an account designated by Sellers to Purchaser, as the case may be; provided, however, that if such
payment is not made when due (as provided for in Section 1.3.2(b)(iii)), it shall bear interest at
the rate of 12% per annum after the due date. Notwithstanding the foregoing, the parties hereto
will treat each of the payments described in Section 1.3.2(b)(iii) as having been made to the
Purchaser or GSSI, as set forth therein.
(v) For purposes of this Agreement, “Working Capital” means Current Assets minus Assumed
Liabilities (excluding the Current Assets and Assumed Liabilities of the Detroit Business), each
determined in accordance with the Accounting Principles, except as specifically noted in this
definition. For purposes of this definition of Working Capital, “Current Assets” shall include
only the following to the extent included in the Purchased Assets:
| A. | Inventories, less applicable reserves, of finished goods, raw material and work in process, excluding all Inventories which are located at the Detroit Facility or relate to the Detroit Business. | ||
| B. | Prepaid expenses, including real property taxes, if any, paid with respect to the Cleveland Facility, but excluding prepaid expenses (including real property taxes) to the extent attributable to the Detroit Business. |
(vi) Physical Inventory. On or about the Closing Date, Purchaser and Sellers shall
conduct a physical inventory count of the Inventories to be included in the Purchased Assets and a
valuation thereof which shall be calculated in a manner which is consistent with the Accounting
Principles and such count and valuation shall, to the extent provided in Section 1.3(b)(v)(A)
above, be used for all purposes herein.
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1.3.3 Allocation of Purchase Price.
(a) Within ninety (90) days after the Closing Date, Purchaser shall prepare or have prepared
and deliver to Sellers a schedule (an “Allocation Schedule”) allocating an amount equal to the
actual Purchase Price among the Purchased Assets immediately after the Closing, in such amounts as
are reasonably determined by Purchaser to be consistent with Section 1060 of the Code and the
Treasury Regulations thereunder. Such Allocation Schedule shall also reflect the allocation of the
Purchase Price among each of Purchaser, Worthington Warehouse and WS Michigan and among the
Purchased Assets acquired from each Seller, on a separate basis. Purchaser will obtain an appraisal
to support the Purchase Price allocation at Purchaser’s expense.
(b) Sellers shall have a period of ten (10) business days after the delivery of the Allocation
Schedule (the “Allocation Response Period”) to present in writing to Purchaser notice of any
objections Sellers may have to the allocations set forth therein (an “Allocation Objections
Notice”).
(c) If Sellers shall raise any objections within the Allocation Response Period, Purchaser and
Sellers shall negotiate in good faith and use their reasonable best efforts to resolve such
dispute. If the parties fail to agree within fifteen (15) days after the delivery of the
Allocation Objections Notice, then the disputed items shall be resolved by an Independent Auditor,
whose determination shall be final and binding on the parties. The Independent Auditor shall
resolve the dispute within thirty (30) days after the item has been referred to it. The costs,
fees and expenses of the Independent Auditor shall be borne equally by Sellers, on the one hand,
and Purchaser, on the other hand.
(d) Sellers and Purchaser agree (i) to report the federal, state, local and foreign income and
other Tax consequences of the transactions contemplated herein, and in particular to report the
information required by Section 1060(b) of the Code, and to jointly prepare Form 8594 (Asset
Acquisition Statement under Section 1060) in a manner consistent with such allocation and (ii) not
to take any position inconsistent therewith upon examination of any Tax Return, in any refund
claim, in any litigation, investigation or otherwise unless Purchaser and Sellers agree to such
position. Sellers and Purchaser agree that each will furnish the other a copy of Form 8594 (Asset
Acquisition Statement under Section 1060) proposed to be filed with the IRS within ten (10) days
prior to the filing of such form with the IRS. Purchaser, Sellers and their applicable Affiliates
will file all Tax Returns (including amended Tax Returns and claims for refund) and information
reports in a manner consistent with such allocation.
(e) The parties agree that the allocation of Purchase Price made to the Purchased Assets that
are acquired from GSSI shall be adjusted by the amount of the adjustment to Purchase Price computed
pursuant to Section 1.3.2 hereof.
1.4 Liabilities and Obligations of Sellers.
1.4.1 Assumed Liabilities. At the Closing, Purchaser shall assume and agree to pay,
discharge or perform, when due, the following and only the following Liabilities and Obligations of
Sellers to the extent the same do not relate to the Detroit Business and Worthington Warehouse
shall assume and agree to pay, discharge or perform, when due, the following and only the following
Liabilities and Obligations of Sellers to the extent the same relate to the Detroit Business
(collectively, the “Assumed Liabilities”):
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(a) all accounts payable of Sellers that relate to the Business and remain unpaid as of the
Closing Time, and which are either (i) those accounts payable of the Sellers that relate to the
Business which are included in the amount of the accounts payable reflected on the Balance Sheet
and are unpaid as of the Closing Date; or (ii) those accounts payable of the Sellers which relate
to the Business and have been incurred in the ordinary course of business after the Balance Sheet
Date;
(b) all obligations of Sellers to the customers of the Business arising under the terms of
purchase orders that relate to the Business, that have been accepted by Sellers in the ordinary
course of business consistent with past practices of the Business and that are outstanding as of
the Closing Time; provided, however, that (i) Purchaser and Worthington Warehouse shall not and do
not assume or agree to pay, discharge or perform any Liability or Obligation arising out of
Sellers’ breach of or failure to perform any purchase order in accordance with its terms prior to
the Closing, and (ii) to the extent that a Seller has prior to Closing received any payments from
or invoiced any amounts to its customers in advance of the delivery of the products, goods or
services of the Business to which such payments or invoices relate and the amount of such payments
or invoices is not included as a liability in the Estimated Working Capital, then (A) Sellers shall
pay to Purchaser at the Closing the aggregate amount of such payments received or to be received by
Sellers or (B) Purchaser shall deduct such aggregate amount from the Closing Payment;
(c) all Liabilities and Obligations of Sellers arising after the Closing in respect of the
Assumed Contracts; provided, however, that, Purchaser and Worthington Warehouse shall not, and do
not, assume or agree to pay, discharge or perform any Liability or Obligation arising under any
Assumed Contract arising out of a Seller’s breach of or failure to perform any Assumed Contract in
accordance with its terms prior to the Closing;
(d) direct obligations of Sellers for replacement of or refund for damaged, defective or
returned goods produced by the Business not in excess of the reserve therefor on the Final Closing
Statement;
(e) all Liabilities and Obligations of Sellers for payment of any termination of employment or
severance benefits, if any, of employees of GSSI (other than Xxxx Xxxxxxx and except as provided in
Section 7.1(b) hereof) who are employed by GSSI at the Cleveland Facility to the extent disclosed
on SCHEDULE 7.1(a), including, but not limited to, all Liabilities and Obligations of Sellers, if
any, to any such employees (other than Xxxx Xxxxxxx and employees identified in Section 7.1(b)
hereof) under the WARN Act;
(f) all Liabilities and Obligations of Sellers for payment of any termination of employment or
severance benefits, if any, to employees of GSCNY employed at the Detroit Facility to the extent
disclosed on SCHEDULE 7.1(a), including, but not limited to, all Liabilities and Obligations, if
any, to such employees under the WARN Act;
(g) all Liabilities and Obligations of GSSI, if any, for accrued and unpaid real estate taxes
payable with respect to the Cleveland Facility to the extent reserved on the Final Closing
Statement (excluding any reserve for deferred Taxes established to reflect timing differences
between book and Tax income);
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(h) all Liabilities and Obligations of GSCNY, if any, for accrued and unpaid real estate taxes
payable with respect to the Detroit Facility in respect of any Tax attributable to the period after
the Closing Date, to the extent reserved on the Final Closing Statement (excluding any reserve for
deferred Taxes established to reflect timing differences between book and Tax income);
(i) all Liabilities and Obligations of Sellers, if any, for accrued and unpaid sales and use
Taxes payable in connection with the operation of the Business to the extent reserved on the Final
Closing Statement (excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income); and
(j) all Liabilities and Obligations of Sellers, if any, arising as a result of the termination
of any Assumed Contracts after the Closing Date; provided, however, that Purchaser and Worthington
Warehouse shall not, and do not, agree to pay, discharge or perform any Liability or Obligation
arising as a result of the termination of any Assumed Contract after the Closing Date as a result
of a Seller’s breach of or failure to perform such Assumed Contract in accordance with its terms
prior to the Closing.
1.4.2 Excluded Liabilities. In no event shall Purchaser, Worthington Warehouse or WS
Michigan assume or agree to pay, discharge or perform, as appropriate, under this Section 1.4 or
otherwise, any Liability or Obligation of Sellers other than the Assumed Liabilities, including,
without limitation, any Liability or Obligation in respect of any of the following (the “Excluded
Liabilities”):
(a) any Liability or Obligation arising under the terms of: (i) any collective bargaining
agreement or other Contract made by Sellers with any labor organization relating to the terms and
conditions of employment of any employees of the Business; (ii) any agreement, promissory note,
indenture or other instrument or Contract creating or relating to any obligation of any of the
Sellers for payment of any indebtedness of any of the Sellers or any Seller Affiliate for borrowed
money, including, but not limited to, any guaranty made by any Seller of any indebtedness for
borrowed money of any Seller or any Seller Affiliate and any security agreement made by any Seller
in connection with any indebtedness for borrowed money of any Seller or any Seller Affiliate; (iii)
any Contract made by any Seller with any insurance company providing for the issuance of any
insurance coverage with respect to the Business, any employees of the Business or the Purchased
Assets; (iv) any Contract entered into by any Seller or any Seller Affiliate concerning any
acquisition or divestiture of all or a substantial portion of the assets and related liabilities
of, or any acquisition or divestiture of all the outstanding equity interests of, any operating
business which is now or, prior to any such divestiture was, included within the assets of
Business; and (v) any other Contract not identified as an Assumed Contract (all of the foregoing
Contracts being hereinafter referred to as the “Excluded Contracts”);
(b) all Liabilities and Obligations of Sellers arising from a failure by Sellers to comply
with the provisions of the WARN Act, to the extent applicable, in connection with the shutdown of
the Buffalo Facility; provided, however, that nothing herein shall be deemed or construed to limit
or impair any obligation of Purchaser to reimburse the Sellers for any such Liabilities or
Obligations as provided for by the Transition Agreements;
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(c) any product liability or similar claim for injury to person or property, regardless of
when made or asserted, which arises out of or is based upon any express or implied representation,
warranty, agreement or guarantee made by any of the Sellers, or alleged to have been made by any of
the Sellers, or which is imposed or asserted to be imposed by operation of law, in connection with
any service performed or product licensed, sold, distributed, leased or manufactured by or on
behalf of Sellers prior to the Closing, including, without limitation, any claim relating to any
product delivered in connection with the performance of such service and any claim seeking recovery
for special, incidental or consequential damages, including, without limitation, lost revenues or
income;
(d) except as otherwise provided for by Section 1.4.1(g), Section 1.4.1(h), Section 1.4.1(i),
Section 9.3, Section 9.4 and Section 9.6 hereof, any Taxes or other Obligation and expense of any
kind or nature relating to Taxes, including without limitation, any Liabilities, Obligations and
expenses pursuant to any tax sharing agreement, tax indemnification and expenses pursuant to any
tax sharing agreement, tax indemnification or similar arrangement (and all penalties, interest and
additions with respect thereto) (i) payable with respect to any of the Sellers, the Seller Group,
the Business, the Purchased Assets or the assets, properties or operations of any of the Sellers,
or (ii) incident to or arising as a consequence of the negotiation or consummation of this
Agreement and the transactions contemplated hereby by Sellers;
(e) any Liability or Obligation under, in connection with or related to the Excluded Assets
including, without limitation, those Liabilities and Obligations related to severance, shutdown, or
other costs related to the closing of the Buffalo Facility; provided, however, that nothing herein
shall be deemed or construed to limit or impair any obligation of Purchaser to reimburse the
Sellers for any such Liabilities or Obligations as provided for by the Transition Agreements;
(f) except as included within accounts payable and/or Assumed Contracts assumed by Purchaser
or Worthington Warehouse, any Liability or Obligation arising prior to or as a result of the
Closing to any agent, independent contractor or consultant of any of the Sellers, whether or not
employed or engaged by Purchaser or Worthington Warehouse after the Closing, or under any benefit
arrangement with respect thereto;
(g) any Liability or Obligation arising under any Employee Plans maintained by Sellers;
(h) any Liability or Obligation of Sellers arising or incurred in connection with the
negotiation, preparation and consummation of this Agreement and the transactions contemplated
hereby and the fees and expenses of counsel, accountants and other experts;
(i) any Liability or Obligation with respect to defective products sold by Sellers except as
set forth in Section 1.4.1(d);
(j) any Liability or Obligation of any of Sellers for indebtedness for borrowed money,
indebtedness secured by Encumbrances on any of Sellers’ assets, or guarantees of any of the
foregoing;
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(k) any Liability or Obligation of Sellers arising by reason of any violation or alleged
violation of, or non-compliance with, any Regulation which occurred prior to the Closing Date,
including, without limitation, any Environmental Law or Environmental Requirement, or any
requirement of any Governmental Authority or by reason of any breach or alleged breach of any
Contract, Authorization, approval, or Order, regardless of when any such violation or breach is
asserted;
(l) any Liability or Obligation arising or occurring in connection with Environmental
Activities conducted by any of the Sellers prior to the Closing Date or the environmental condition
of any Seller Property and the Use of any Seller Property prior to the Closing, including, without
limitation, any Liability or Obligation under CERCLA or RCRA;
(m) any Liability or Obligation of any of the Sellers to such Seller’s shareholders or any
former shareholders of such Seller;
(n) any Liability or Obligation of any of the Sellers for payment of any fees, expenses,
commissions or other similar payments which may be due and payable to any agent, broker or finder
arising in connection with the consummation of the transactions contemplated by this Agreement;
(o) any Liability or Obligation of any of the Sellers arising under Chapter 5 of Title 11 of
the United States Code, but only to the extent that any such Liability or Obligation is
attributable to (i) payment(s) received by any of the Sellers from any Debtor (within the meaning
of Title 11 of the United States Code), including, without limitation, the payments made to one or
more of the Sellers totaling approximately $733,000.00, as set forth in the Statement of Financial
Affairs of Debtor DynAmerica Manufacturing, LLC filed on August 18, 2008, Case No. 08-11515 (KG),
pending in the United States Bankruptcy Court for the District of Delaware, (ii) transfer(s) to the
Sellers of an interest of the Debtor in property, (iii) the incurrence of any obligation of the
Debtor, or (iv) an improvement in position of any of the Sellers relative to the Debtor as set
forth in Section 553(b) of the Bankruptcy Code; or
(p) any other Liability or Obligation of Sellers not expressly assumed by Purchaser or
Worthington Warehouse under Section 1.4.1 hereof, including, without limitation, any other
Liability or Obligation, which arises out of or is based upon the operation of the Business or
ownership of the Purchased Assets prior to the Closing.
ARTICLE II — CLOSING AND THIRD-PARTY CONSENTS
2.1 Time and Place of Closing. Subject to the provisions of Section 8.1 hereof, the
closing (the “Closing”) of the transactions contemplated by this Agreement shall take place at 8:00
a.m., Eastern Standard Time, on February 1, 2010 at the offices of Purchaser’s counsel, Vorys,
Xxxxx, Xxxxxxx and Xxxxx LLP, 2100 One Cleveland Center, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000, or on such other date and/or at such other place as may be mutually agreed upon in writing
by Purchaser and Sellers. The date of the Closing is sometimes hereinafter referred to as the
“Closing Date.” Except as provided in the Transition Agreements, at the Closing, possession and
operating control of the Purchased Assets shall be delivered and/or tendered by Sellers to
Purchaser, Worthington Warehouse and WS Michigan, as appropriate, and title to the Purchased Assets
shall pass to Purchaser, Worthington Warehouse and WS Michigan, as appropriate, effective as of the
Closing Time upon such delivery or tender of the Purchased Assets.
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2.2 Items to be Delivered at Closing. At the Closing and subject to the terms and
conditions herein contained:
(a) Sellers, as applicable, shall deliver to Purchaser the following:
(i) a duly executed xxxx of sale (the “Xxxx of Sale”), a duly executed assignment and
assumption agreement (the “Assignment and Assumption Agreement”), and an assignment of intellectual
property (the “Intellectual Property Assignment”) in such forms as may be mutually agreeable to the
parties, together with such other duly executed instruments of conveyance, assignment and transfer,
in form reasonably acceptable to Purchaser, as shall be effective to vest in Purchaser, Worthington
Warehouse and WS Michigan good and valid title to the Purchased Assets purchased by each of them,
respectively, free and clear of all Encumbrances except any Permitted Liens;
(ii) evidence satisfactory to Purchaser that Sellers have taken all actions, other than the
filing of any applicable UCC-3 termination statements and any mortgage discharges (which shall be
filed promptly following the receipt by Sellers of the Adjusted Closing Payment), required to
release and terminate all Encumbrances against the Purchased Assets, other than the Permitted
Liens, upon receipt by Sellers of the Adjusted Closing Payment;
(iii) actual possession and operating control of the Purchased Assets except as provided in
the Transition Agreements;
(iv) an affidavit of each Seller and CPI pursuant to Section 1445(b)(2) of the Code stating,
under penalties of perjury, such Seller’s or CPI’s (as applicable) United States taxpayer
identification number and that such Seller or CPI (as applicable) is not a foreign person, which
affidavit complies with the requirements of Treasury Regulation Section 1.1445-2(b)(2);
(v) duly executed Transition Agreements;
(vi) a duly executed stock transfer power, transferring all the CPI Shares to WS Michigan;
(vii) duly executed general warranty deeds transferring the Cleveland Real Property to
Purchaser and the Detroit Real Property to Worthington Warehouse;
(viii) duly executed certificates of title transferring ownership of the Vehicles included in
the Purchased Assets to Purchaser or Worthington Warehouse, as appropriate;
(ix) a title policy issued by the Title Company in accordance with the Title Commitment,
insuring Purchaser’s fee simple title to the Cleveland Real Property as of the Closing Date,
subject only to the Permitted Liens, in such amount as Purchaser and Sellers mutually determine to
be the value of the Cleveland Real Property;
(x) a title policy issued by the Title Company in accordance with the Title Commitment,
insuring Worthington Warehouse’s fee simple title to the Detroit Real Property as of the Closing
Date, subject only to the Permitted Liens, in such amount as Worthington Warehouse and Sellers
mutually determine to be the value of the Detroit Real Property;
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(xi) an indemnity agreement pursuant to which GSSI and Parent agree to indemnify, defend and
hold harmless Purchaser, its successors and assigns, from and against any and all damages and/or
actions of any nature whatsoever incurred by or filed against Purchaser, its successors or assigns,
because a portion of the building currently located on the Cleveland Real Property overlaps the
property line and encroaches onto the property to the north of the Cleveland Real Property, as
depicted upon that certain ALTA/ACSM Land Title Survey of the Cleveland Real Property performed by
Blue-J Surveying, LLC, dated January 22, 2010, as revised; and
(xii) such other documents as Purchaser, Worthington Warehouse and WS Michigan reasonably may
request in connection with the transfer of title in and to the Purchased Assets purchased by each
of them to Purchaser, Worthington Warehouse and WS Michigan and the consummation of the
transactions contemplated by this Agreement.
All of the foregoing documents in this Section 2.2(a) shall be reasonably satisfactory in form
and substance to Purchaser, shall be dated the Closing Date and shall be duly executed by Sellers,
as applicable.
(b) Purchaser shall deliver, or cause to be delivered by the appropriate Purchaser Affiliate,
to Sellers, as applicable, the following:
(i) the Adjusted Closing Payment in accordance with Section 1.3.1 hereof;
(ii) a duly executed Assignment and Assumption Agreement;
(iii) duly executed Transition Agreements; and
(iv) such other documents as Sellers may reasonably request to consummate the transactions
contemplated by this Agreement.
All of the foregoing documents in this Section 2.2(b) shall be reasonably satisfactory in form
and substance to Sellers, shall be dated as of the Closing Date and shall be duly executed by
Purchaser.
(c) At or prior to the Closing, the parties hereto shall also deliver to each other the
agreements, certificates and other documents and instruments referred to in Article V hereof.
2.3 Item to be Delivered after Closing. Within ten (10) days after the Final Working
Capital has been agreed or finally determined in accordance with Section 1.3.2(b)(ii) and
contemporaneously with any payment to be made by Sellers or Purchaser, as appropriate, in
accordance with Section 1.3.2(b)(iii), Purchaser shall deliver to Sellers a certified check or wire
transfer of immediately available funds to the Designated Account in an amount equal to the prepaid
real property taxes attributable to the Detroit Facility in respect of any Tax Obligation
attributable to the period after the Closing Date.
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2.4 Third-Party Consents. To the extent that the rights of any of Sellers under any
Assumed Contract or other Purchased Assets may not be assigned without the approval, consent or
waiver of another Person which has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a breach thereof or be
unlawful, and Sellers shall use commercially reasonable efforts to obtain any such required
approval(s), consent(s) and waiver(s) as promptly as possible. If any such approval, consent or
waiver shall not be obtained or if any attempted assignment would be ineffective or would impair
the rights of Purchaser, Worthington Warehouse or WS Michigan, as appropriate, under the Assumed
Contract or other Purchased Asset in question so that Purchaser, Worthington Warehouse or WS
Michigan, as appropriate, would not acquire the benefit of all such rights, the applicable Seller,
to the maximum extent permitted by applicable Regulations and the Assumed Contract or other
Purchased Asset, shall act after the Closing as agent of Purchaser, Worthington Warehouse or WS
Michigan, as appropriate, in order to obtain for Purchaser, Worthington Warehouse or WS Michigan,
as appropriate, the benefit of all such rights thereunder and shall cooperate with Purchaser in any
other mutually agreeable arrangements to provide the benefit of all such rights to Purchaser,
Worthington Warehouse or WS Michigan, as appropriate.
ARTICLE III — REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sellers. Sellers hereby, jointly and severally,
represent and warrant to Purchaser, Purchaser Ohio Affiliate, Worthington Warehouse and WS Michigan
that, as of the date hereof and as of the Closing Date, except for the exceptions set forth on the
Disclosure SCHEDULE, each of which exceptions shall specifically identify the relevant subsection
hereof to which such Disclosure SCHEDULE relates and shall be deemed to be representations and
warranties as if made:
3.1.1 Corporate Existence. Each of the Sellers is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its incorporation.
Each of the Sellers has full corporate power and authority to conduct the Business as now
conducted; to own, lease or use the assets, properties and rights that it purports to own, lease or
use in connection with the Business and to perform all of its obligations under this Agreement, the
Seller Closing Documents to which it is party and the Assumed Contracts. Each of the Sellers is
duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction
where the conduct of the Business by such Seller requires it to be so qualified except where the
failure to so qualify has not had, or would not have, a Material Adverse Effect. SCHEDULE 3.1.1
sets forth the jurisdiction of incorporation of each Seller and the jurisdictions in which GSSI and
GSCNY are qualified as foreign corporations.
3.1.2 Corporate Power; Authorization; Enforceable Obligations. Each Seller has the
corporate power, authority and legal right to execute, deliver and perform this Agreement and each
of the Seller Closing Documents to which it is a party. The execution, delivery and performance by
each Seller of this Agreement and each of the Seller Closing Documents to which it is a party have
been duly authorized by all necessary corporate and shareholder action on the part of such Seller.
This Agreement has been duly executed and delivered by each Seller. This Agreement constitutes,
and each of the Seller Closing Documents (to which each Seller is a party) when executed and
delivered will constitute, the legal, valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its respective terms except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter affecting the enforcement of creditors’ rights and the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any Proceeding therefor may be brought.
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3.1.3 Validity of Contemplated Transactions, Etc. Except as set forth on SCHEDULE
3.1.3, neither the execution, delivery and performance of this Agreement or the Seller Closing
Documents by any of the Sellers, nor the consummation of the transactions contemplated hereby or
thereby violates, conflicts with or results in the breach of, or will violate, conflict with or
result in the breach of, any term, condition or provision of, or requires or will require the
consent of any other Person under: (a) any Regulation to which any of the Sellers, the Business,
any of the Purchased Assets or CPI is subject; (b) any Order to which any of the Sellers, the
Business, any of the Purchased Assets or CPI is subject; (c) the charter or organizational
documents of, or any securities issued by, any of the Sellers, CPI or the Partnership; or (d) any
Encumbrance, Contract (including any collective bargaining agreement), Employee Plan,
Authorization, or other instrument, document or undertaking, oral or written, to which any Seller
or CPI is a party or by which any Seller, the Business, any of the Purchased Assets or CPI is
otherwise bound or affected, which violation, conflict or breach, in the case of this clause (d),
individually or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect, or give any party with rights thereunder the right to terminate, modify, accelerate
or otherwise change the existing rights or obligations of any Seller or CPI thereunder if such
termination, modification, acceleration or other change would have a Material Adverse Effect.
Except as aforesaid, no authorization, approval or consent of, and no registration or filing with,
any Governmental Authority is required (i) in connection with the execution, delivery and
performance of this Agreement or any of the Seller Closing Documents by any of the Sellers or the
consummation of the transactions contemplated hereby or thereby, or (ii) to enable Purchaser,
Worthington Warehouse and WS Michigan to continue to operate the Business in the same manner as
operated prior to Closing.
3.1.4 Ownership; Options. (a) Except for this Agreement, there are no existing
Contracts, options, commitments or rights with, of, or to, any Person to acquire any of the assets,
properties or rights included in the Purchased Assets or any interest therein, except for those
Contracts entered into in the ordinary course of business consistent with past practice for the
sale of inventory of the Business;
(b) The authorized capital stock of CPI consists of one thousand (1,000) shares of Class A
voting common stock, par value One Dollar ($1.00) per share, and one thousand (1,000) shares of
Class B non-voting common stock, par value One Dollars ($1.00) per share. Parent is the owner of
thirty-five (35) shares of Class A voting common stock of CPI and sixty-five (65) shares of Class B
non-voting common stock of CPI which shares of Class A voting common stock and Class B non-voting
common stock (hereinafter, the “CPI Shares”) constitute all the issued and outstanding capital
stock of CPI. The CPI Shares were duly authorized for issuance and are validly issued, fully paid
and non-assessable.
(c) There is no existing option, warrant, call, right, commitment or other agreement of any
character to which any of the Sellers is a party or which is binding on any of the Sellers which
requires, and there are no securities of CPI or any of the Sellers or any Seller Affiliate
outstanding which, upon conversion or exchange would require, the issuance, sale or transfer of any
additional shares of capital stock or other equity securities in CPI or the issuance of securities
convertible into or exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of CPI.
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3.1.5 No Interest in Other Entities.
(a) Except for the CPI Shares and the partnership interest in the Partnership owned by CPI,
there are no shares of capital stock or other equity interests in any Person which are included in
the Purchased Assets. GSSI does not have any assets, properties or rights which are not used in
the Business or conduct any business other than that described in Recital A of this Agreement. CPI
does not have any assets, and has never had any assets, other than the partnership interest in the
Partnership and an intercompany receivable from Parent attributable to Partnership distributions,
and does not conduct and has not conducted any business.
(b) Except as set forth on SCHEDULE 3.1.5(b), Parent has no assets related to or used in the
Business other than the CPI Shares.
(c) Except as set forth on SCHEDULE 3.1.5(c), GSCNY does not have any assets at the Detroit
Facility which are not included in the Purchased Assets.
3.1.6 Financial Statements. Seller has delivered to Purchaser true and complete
copies of (a) unaudited balance sheets of the combined operations of GSSI at the Buffalo Facility
and the Cleveland Facility as of December 31, 2007, December 31, 2008 and September 30, 2009 and
the related unaudited statements of income of the combined operations of GSSI at the Buffalo
Facility and the Cleveland Facility for the twelve (12) months ended December 31, 2007 and 2008 and
the nine (9) month period ended September 30, 2009 (September 30, 2009 being hereinafter referred
to as the “Interim Balance Sheet Date”); (b) unaudited balance sheets of the operations of GSCNY at
the Detroit Facility as of December 31, 2007, December 31, 2008 and September 30, 2009 and the
related unaudited statements of income of the operations of GSCNY at the Detroit Facility for the
twelve (12) months ended December 31, 2007 and 2008 and the nine (9) month period ended September
30, 2009 (the balance sheet of the combined operations of GSSI at the Buffalo Facility and the
Cleveland Facility as of September 30, 2009 and the balance sheet of GSCNY with respect to the
operations of GSCNY at the Detroit Facility as of September 30, 2009 being hereinafter collectively
referred to as the “Interim Balance Sheet”); (c) the unaudited balance sheet of the combined
operations of GSSI at the Buffalo Facility and the Cleveland Facility as of December 31, 2009 and
the unaudited balance sheet of the operations of GSCNY at the Detroit Facility as of December 31,
2009 (such balance sheets being hereinafter collectively the “Balance Sheet” and December 31, 2009
being hereinafter the “Balance Sheet Date”); and (d) the unaudited statements of income of the
combined operations of GSSI at the Buffalo Facility and the Cleveland Facility for the twelve (12)
months ended December 31, 2009 and the unaudited statement of income of the operations of GSCNY at
the Detroit Facility for the twelve (12) months ended December 31, 2009 (all of the balance sheets
and statements of income identified in the preceding provisions of this Section 3.1.6 being
hereinafter collectively referred to as the “Financial Statements”). The Financial Statements have
been prepared in accordance with the Accounting Principles, fairly present the financial position,
assets and liabilities (whether accrued, absolute, contingent or otherwise) of the Business at the
dates indicated and, fairly present the results of operations of the Business for the periods
indicated.
3.1.7 Accounts Receivables. The accounts receivables of the Business as set forth on
the Balance Sheet or arising since the Balance Sheet Date and reflected in Sellers’ books of
account have arisen solely out of bona fide sales of goods, performance of services and other
business transactions in the ordinary course of business consistent with past practice, and, to the
knowledge of the Sellers, represent valid obligations of the Sellers. SCHEDULE 3.1.7 contains a
complete and accurate list of (a) the Cleveland/Buffalo Receivables and (b) the Detroit
Receivables, each as of the Balance Sheet Date, which list sets forth the aging of each such
account receivable.
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3.1.8 Inventory. All inventory of the Business as set forth on the Balance Sheet or
acquired since the Balance Sheet Date and reflected in Sellers’ books of account and records was
acquired and has been maintained in the ordinary course of business consistent with past practice,
to the knowledge of Sellers, is of a quality and quantity usable, and, in the case of finished
goods, salable, in the ordinary course of business consistent with past practice, except for
obsolete items and items of below-standard quality, and excess inventory, all of which have been
reserved for in the Balance Sheet or on the accounting records of Sellers consistent with the
Accounting Principles. No Seller is under any Liability or Obligation with respect to the return
of inventory in the possession of suppliers, distributors, resellers or customers in connection
with the Business.
3.1.9 Absence of Undisclosed Liabilities. There are no Liabilities and/or Obligations
of the Sellers with respect to the Business, except those Liabilities or Obligations:
(a) set forth on the Balance Sheet and not heretofore paid or discharged;
(b) incurred in the ordinary course of business consistent with past practice since the
Balance Sheet Date;
(c) arising under the terms of the Assumed Contracts;
(d) arising with respect to environmental matters disclosed pursuant to Section 3.1.23; and
(e) set forth on SCHEDULE 3.1.9(e).
3.1.10 Taxes and Tax Returns. All Tax Returns of each Seller and CPI have been timely
filed after taking into account any permitted extensions, with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns of the applicable Seller or CPI, as the
case may be, are required to be filed and all such Tax Returns properly reflect the liability of
the applicable Seller or CPI, as the case may be, for Taxes for the periods, property or events
covered thereby. All such Tax Returns were true, correct and complete in all material respects
when filed. All Taxes, including, without limitation, those which are called for by the Tax
Returns or heretofore or hereafter claimed to be due by any taxing authority from each Seller and
CPI, as applicable, have been properly accrued or paid and the amount of accruals for Taxes
recorded by each Seller and CPI on its books (other than deferred Taxes to reflect timing
differences between book and Tax income) are adequate to cover the Tax liabilities of such Seller
or CPI, as applicable, in all material respects. None of the Sellers or CPI has received any
notice of assessment or proposed assessment in connection with any Tax Returns of any Seller or
CPI, as applicable, and, except as set forth in SCHEDULE 3.1.10, there are no pending Tax
examinations of or Tax claims asserted or proposed against any of the Sellers with respect to the
Business or any of the Purchased Assets or against CPI. Except as set forth in SCHEDULE 3.1.10, no
request to extend or waive the application of any statute of limitations of any jurisdiction
regarding the assessment or collection of any Tax liability of any Seller or CPI is currently
pending and none of the Sellers or CPI has extended, or waived the application of, any statute of
limitations of any jurisdiction regarding the assessment or collection of any Taxes. Except as set
forth on SCHEDULE 3.1.10, during the five (5) year period ending on the date hereof no claim has
been made, and no other claim is currently outstanding, by an authority in a jurisdiction where a
Seller or CPI, as applicable, does not file a Tax Return that such Seller or CPI, as applicable, is
or may be subject to taxation by that jurisdiction (in the case of a Seller, with respect to the
Business or any Purchased Assets). There are no Tax liens (other than any lien for current Taxes
not yet due and payable) on any of the Purchased Assets or any of the CPI Assets. None of the
Sellers has any knowledge of any basis for any additional assessment of any
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Taxes relating to the Business. Each Seller has made all deposits required by applicable
Regulations to be made by it with respect to withholding and other employment Taxes payable with
respect to employees of the Business, including, without limitation, the portion of such deposits
relating to Taxes imposed upon such Seller. Except as set forth in SCHEDULE 3.1.10, there are no
tax-sharing agreements or arrangements in effect pursuant to which any of the Sellers or CPI is
obligated to pay the tax liability of any other Person, or to indemnify any other Person with
respect to any Taxes. None of the Assumed Liabilities is an obligation to make a payment that will
not be deductible under Section 280G of the Code. Each of Parent, CPI, GSSI and GSCNY (a) is not
and has not been a member of an “affiliated group” filing a consolidated federal income Tax Return
other than the group of which Parent is the common parent (the “Seller Group”) and (b) has no
liability for the Taxes of any other Person (other than members of the Seller Group) under Section
1.1502-6 of the Treasury Regulations (or any similar provision of state, local, or foreign law), as
a transferee or successor, by Contract or otherwise. CPI has withheld and paid all Taxes required
to have been withheld and paid, if any, in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other party. Sellers have delivered to Purchaser
correct and complete copies of all Tax Returns, examination reports and statements of deficiencies
assessed against or agreed to by CPI for any taxable period ended on or after December 31, 2006.
CPI has not made any payments, is not obligated to make any payments, and is not a party to any
agreement that under any circumstances could obligate it to make any payments, that will not be
fully deductible under Section 280G of the Code. CPI has disclosed on its Tax Returns all
positions taken therein that could give rise to a substantial understatement of federal income Tax
within the meaning of Section 6662 of the Code, except for those which relate to positions taken by
the Partnership and reflected on the K-1s received by CPI from the Partnership. CPI will not be
required to include any item of income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i)
change in method of accounting of CPI for a taxable period ending on or prior to the Closing Date
under Section 481(c) of the Code (or any corresponding or similar provision of state, local, or
foreign income Tax law); (ii) “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local, or foreign income Tax law) executed on or prior
to the Closing Date; (iii) deferred intercompany gain or any excess loss account described in
Treasury Regulations promulgated under Section 1502 of the Code (or any corresponding or similar
provision of state, local, or foreign income Tax law); (iv) installment sale or open transaction
disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the
Closing Date.
3.1.11 Books of Account. The books of account and records of Sellers with respect to
the Business are complete and correct; represent actual, bona fide transactions; and have been
maintained in accordance with good business practices. The Sellers have not engaged in any
transaction with respect to the Business, maintained any bank account for the Business or used any
of the funds of any of the Sellers in the conduct of the Business except for transactions, bank
accounts and funds which have been and are reflected in the books of account and records of the
Business.
3.1.12 Existing Condition. Since the Interim Balance Sheet Date, the Sellers have
not:
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(a) except as set forth on SCHEDULE 3.1.12(a), incurred any Liability or Obligation with
respect to the Business other than any Liability or Obligation incurred in the ordinary course of
business consistent with past practice, discharged or satisfied any material Encumbrance or paid
any material Liability or Obligation, other than in the ordinary course of business consistent with
past practice, or failed to pay or discharge when due any Liability or Obligation the failure of
which to pay or discharge has caused or will cause any material damage or risk of material loss to
the Business or any of its assets, properties or rights;
(b) except as set forth on SCHEDULE 3.1.12(b), sold, encumbered, assigned or transferred any
material assets, properties or rights which would have been included in the Purchased Assets if the
Closing had been held on the Balance Sheet Date or on any date since then, except for the sale of
inventory by the Business in the ordinary course of business consistent with past practice;
(c) except as set forth on SCHEDULE 3.1.12(c), created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or subjected any of their assets, properties
or rights to any Encumbrance, except for any Permitted Liens;
(d) except as set forth on SCHEDULE 3.1.12(d), made or suffered any amendment, modification or
termination of any Material Contract or Employee Plan with respect to the Sellers, the Business or
its employees, or by which the Business or any of the Purchased Assets are bound or affected, or
canceled, modified or waived any debts or claims held by them or waived any rights whether or not
in the ordinary course of business, which amendment, modification, termination, cancellation or
waiver, individually or in the aggregate, has had or would have a Material Adverse Effect;
(e) materially changed any of the Accounting Principles followed by Sellers for book or Tax
purposes or the methods of applying such Accounting Principles;
(f) suffered any damage, destruction or loss, whether or not covered by insurance, materially
affecting the Business, or its operations, assets, properties, rights, or condition (financial or
otherwise) or suffered any repeated, recurring or prolonged material shortage, cessation or
interruption of supplies or utilities or other services required to conduct the Business and its
operations;
(g) except as set forth on SCHEDULE 3.1.12(g), suffered any material adverse change in the
Business or its operations, assets, properties, rights, or condition (financial or otherwise);
(h) received notice or had knowledge of any occurrence, event or condition which has had or
would reasonably be expected to have a Material Adverse Effect except as set for on SCHEDULE
3.1.12(h) and except for any change, event or circumstance existing, resulting from, relating to or
arising out of: (i) general economic conditions, including changes in: (A) financial or credit
market conditions; (B) interest rates or currency exchange rates; or (C) the price of commodities
or raw materials, including steel, used in the Business; or (ii) conditions affecting the market
for processed steel;
(i) except as set forth on SCHEDULE 3.1.12(i), made commitments or Contracts for capital
expenditures or capital additions or betterments with respect to the Business exceeding $25,000
individually and $150,000 in the aggregate; provided that for purposes of this Section 3.1.12(i)
only, the Balance Sheet Date shall be the reference date in lieu of the Interim Balance Sheet Date;
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(j) except as set forth on SCHEDULE 3.1.12(j), increased the salaries, other compensation or
benefits of, or made any advance (excluding advances for ordinary and necessary business expenses)
or loan to, any of their respective officers, directors, employees, independent contractors or
consultants or made any increase in, or any addition to, other benefits to which any such Persons
may be entitled, except for annual salary increases or bonus awards to employees of the Business
made in the ordinary course of business consistent with past practice as explained on SCHEDULE
3.1.12(j), or entered into or amended any employment, severance or similar agreement with any
officer, director or employee of Business; or
(k) entered into any Contract to do any of the foregoing.
3.1.13 Title to Purchased Assets. Sellers have good and valid title to all of the
Purchased Assets other than the Cleveland Real Property and the Detroit Real Property (the
respective titles of GSSI and GSCNY to which is as described in the Title Commitments), free and
clear of all Encumbrances, except for Permitted Liens and those Encumbrances listed on SCHEDULE
3.1.13 which, except for the filing of any required UCC-3 termination statements and any discharge
of mortgage (which will be filed promptly following the receipt by Sellers of the Adjusted Closing
Payment) will be released at Closing. Sellers warrant to Purchaser, Purchaser Ohio Affiliate,
Worthington Warehouse and WS Michigan that, at the time of the Closing, the Purchased Assets shall,
except for the filing of any required UCC-3 termination statements and any discharge of mortgage
(which will be filed promptly following the receipt by Sellers of the Adjusted Closing Payment), be
free and clear of all Encumbrances, except for Permitted Liens.
3.1.14 Tangible Assets. To the knowledge of Sellers, all material equipment and
material tangible property included in the Purchased Assets are usable in the ordinary course of
business consistent with past practice, and conform to all applicable Regulations and
Authorizations relating to their use and operation, excluding such minor failures to conform which,
in the aggregate, have not had, and would not have, a Material Adverse Effect. Sellers have
maintained the material equipment which is included in the Purchased Assets consistent with normal
practice, have not, except as set forth in SCHEDULE 3.1.14, delayed in any material respects, any
scheduled maintenance to any such material equipment, and, to the knowledge of Sellers, no material
maintenance or replacement costs need to be expended as of the Closing Date in connection with the
material equipment which is included within the Purchase Assets.
3.1.15 Compliance with Regulations; Authorizations. The Sellers have, in all material
respects, complied with each, and are not in violation of any, Regulation to which the Business or
any of the Purchased Assets are subject, excluding such minor failures to comply and violations
which, in the aggregate, have not had, and would not have, a Material Adverse Effect. Except as
set forth in SCHEDULE 3.1.15, Sellers have not received any written notice or other formal
communication regarding a failure of the Business to comply with, or a violation of, any
Regulation. Sellers own, hold, possess and lawfully use in the operation of the Business all
Authorizations which are required for the conduct the Business or for the ownership and use of the
Purchased Assets, except those Authorizations which, if not owned, held or possessed by Sellers,
would not have a Material Adverse Effect. SCHEDULE 3.1.15 contains a list of all Authorizations
owned, held or possessed by any of the Sellers in connection with the Business. Sellers have
complied with the Authorizations listed in SCHEDULE 3.1.15 and are not in violation of any such
Authorizations except failures to comply with such Authorizations or violations of such
Authorizations which have not had and would not have a Material Adverse Effect. Sellers have not
received any written notice or other formal communication from any Person regarding any failure of
the Business or the Purchased Assets to comply with or a violation by the Business or Purchased
Assets of any Authorization. To the knowledge of Sellers, all Authorizations listed on SCHEDULE
3.1.15 or which are necessary for the Business,
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if transferable to Purchaser, are renewable by their terms or in the ordinary course of
business without the need to comply with any special qualification procedures or to pay any amounts
other than routine filing fees. Except as set forth on SCHEDULE 3.1.15, none of the Sellers or any
Seller Affiliate owns or has any proprietary, financial or other interest (direct or indirect) in
any Authorization listed on SCHEDULE 3.1.15.
3.1.16 Litigation. Except as set forth on SCHEDULE 3.1.16, no Proceeding is pending
or, to the knowledge of Sellers, threatened against any of the Sellers which relates to the
Business, the Purchased Assets or the transactions contemplated by this Agreement and, to the
knowledge of Sellers, there is no basis for any such Proceeding. None of the Sellers is a party
to, or subject to the provisions of, any Order which, individually or in the aggregate, has had, or
would have, a Material Adverse Effect or would materially adversely affect the transactions
contemplated by this Agreement.
3.1.17 Transactions with Affiliates.
(a) Except for the ownership by the officers and directors of the Sellers of shares of common
stock of Parent and ownership by the officers and directors of the Sellers of shares of stock or
other equity interests in any publicly-traded entities which may, directly or indirectly, have a
material relationship with the Business, no director or officer of any of the Sellers, no member of
the immediate family of any such Person and no Affiliate of any such Person, has any ownership,
financial or profit interest in any entity that is a party to any Material Contract which is
binding upon GSSI, GSCNY in connection with its operation of the Detroit Facility, the Purchased
Assets or CPI or in any entity that has a material relationship with the Business or CPI.
(b) Except as set forth on SCHEDULE 3.1.17, no Seller Affiliate provides to the Business any
products, assets, services or facilities used in connection with the Business which is not provided
by or through the Purchased Assets or the Excluded Assets; and the Business does not provide any
products, assets, services or facilities to any Seller Affiliate.
3.1.18 Insurance. The assets, properties and operations of Sellers with respect to
the Business are insured under policies of general liability and other forms of insurance, all of
which are set forth in SCHEDULE 3.1.18, which SCHEDULE discloses for each policy the risks insured
against, coverage limits and the amount of the deductibles provided by such policies with respect
to claims thereunder. All such policies are in full force and effect in accordance with their
respective terms, no notice of cancellation has been received, and there is no existing default or,
to the knowledge of Sellers, any event which, with the giving of notice or lapse of time or both,
would constitute a default thereunder, in either case, which default, individually or in the
aggregate, has had, or would have, a Material Adverse Effect. All premiums payable with respect to
such policies have been paid as required by the terms of such policies. During the five (5) year
period ending on the date hereof, Sellers have not been refused any insurance coverage, nor has any
insurance coverage been cancelled or limited by any insurance carrier which provides insurance
coverage to any of the Sellers with respect to the Business or to which any of the Sellers has
applied for insurance coverage with respect to the Business.
3.1.19 Agreements, Contracts and Commitments. SCHEDULE 3.1.19 contains a complete and
accurate list of the following Contracts (hereinafter referred to as the “Material Contracts”) to
which any of the Sellers is a party with respect to the Business or by which the Business or any of
the Purchased Assets may be bound or affected and, in each case, which has not expired by its
terms:
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(a) (i) any collective bargaining Contract; (ii) any written or material oral Contract with
any Seller Affiliate; (iii) any written or material oral Contract with any officer or director of
any of the Sellers; (iv) any written or material oral Contract with any consultant or advisor to
any of the Sellers with respect to the Business; and (v) any written or material oral Contract with
any employee of the Business;
(b) any written or material oral Contract for the purchase by any Seller of products or
services to be used in the Business which Contract: (i) was not entered into in the ordinary course
of business; or (ii) requires payments to be made by any Seller during any twelve (12) consecutive
month period in excess of $250,000.00;
(c) any Contract of any of the Sellers to sell or supply products of the Business or to
perform services using employees of the Business, which Contract: (i) was not entered into in the
ordinary course of business; or (ii) provides for payments expected to be in excess of $750,000.00
to be made to any Seller over any future twelve (12) consecutive month period with respect to
products of the Business or services provided by employees of the Business;
(d) any distribution, dealer, partnership, joint venture, representative, sales agency or
similar Contract;
(e) any lease of real property used in the Business or any lease of personal property used in
the Business providing for annual rental payments in excess of $25,000.00 under which any of the
Sellers is either lessor or lessee;
(f) any note, debenture, bond, equipment trust agreement, letter of credit agreement, loan
agreement or other Contract for the borrowing or lending of money or any guarantee, pledge or
undertaking relating to the indebtedness of any other Person;
(g) Any Contract with any of the Sellers providing for the creation or continuance of any
Encumbrance affecting the Business or any of the Purchased Assets other than Encumbrances which are
Permitted Liens;
(h) any Contract providing for any capital expenditure or leasehold improvements to be made in
connection with the Business or the Purchased Assets and which provides for payments to be made by
any of the Sellers in excess of $25,000;
(i) any Contract limiting or restraining any of the Sellers, the Business or the employees of
the Business whose knowledge is attributed to the Sellers pursuant to Section 10.13 hereof from
engaging or competing in any manner in the steel processing business, from disclosing any
confidential information of the Business, from misappropriating any trade secrets of the Business
or from employing any Person, from using products which are competitive with any products of any
customer, vendor, supplier, distributor, contractor or other Person or requiring any of the Sellers
or the Business to deal exclusively with or grant exclusive rights to any customer, vendor,
supplier, distributor, contractor or other Person;
(j) any material license, franchise, computer service, distributorship or other Contract which
relates in whole or in part to any Intellectual Property of any third Person used by any of the
Sellers in the conduct of the Business;
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(k) any Contract providing for the purchase by any of the Sellers of any products, services or
inventory to be used by the Business and any Contract providing for the sale by any of the Sellers
of any products produced by the Business or the performance of services by any employees of the
Business, in each case, if such Contract provides for payments in excess of $50,000.00 and provides
for the purchase by the Business of minimum quantities or percentages of products, services or
inventory or for the purchase of minimum quantities or percentages of products produced by the
Business or services performed by the Business or any sales Contracts with customers of the
Business which provide for rebates or other monetary concessions in favor of any customer of a
Seller;
(l) any Contract entered into by any Seller or any Seller Affiliate at any time during the
sixty (60) calendar month period ending on the date hereof concerning any acquisition or
divestiture of all or a substantial portion of the assets and related liabilities of, or any
acquisition or divestiture of all the outstanding equity interests of, any operating business which
is now or, prior to any such divestiture was, included within the assets of Business;
(m) the Partnership Agreement for the Partnership and any related documents;
(n) Contracts for the sale of products at a fixed price (“Fixed Price Contracts”) which
Contracts have no counterpart or related Contract entered into by GSSI with suppliers for the
specific purpose of fixing the price of raw materials required to perform such Fixed Price
Contracts (such Fixed Price Contracts being hereinafter “Unmatched Fixed Price Contracts”) and
pursuant to which the aggregate amount of tons of product to be delivered by GSSI is five hundred
(500) or more tons; and
(o) any other Contract material to the Business.
Each of the Material Contracts is in full force and effect and is valid and enforceable
against the parties thereto in accordance with its terms except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter affecting the enforcement of creditors’ rights and the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any Proceeding therefor may be brought. Each of the Sellers
is, and to the knowledge of Sellers, all other parties to the Material Contracts are, in compliance
with the provisions thereof, excluding such minor failures to comply which, in the aggregate, have
not had, and would not reasonably be expected to have, a Material Adverse Effect. None of the
Sellers is, and to the knowledge of Sellers, no other party to the Material Contracts is, in
default in the performance, observance or fulfillment of any obligation, covenant or condition
contained therein, excluding such minor defaults which, in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect; and no event has occurred which with
or without the giving of notice or lapse of time, or both, would constitute a default thereunder,
excluding such defaults which, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Except for the Excluded Contracts and except as set forth and described
on SCHEDULE 3.1.19 of the Disclosure SCHEDULE, none of the Material Contracts requires the consent
of any party to its assignment in connection with the transactions contemplated by this Agreement.
Prior to the date hereof, Sellers have provided Purchaser with copies of all Material
Contracts other than Excluded Contracts and other than Contracts which are to be provided in
accordance with Section 4.1.12.
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The aggregate amount of tons of products required to be delivered pursuant to all Unmatched
Fixed Price Contracts which, individually, provide for the delivery of less than five hundred (500)
tons of products, is less than one thousand five hundred (1,500) tons.
3.1.20 Labor Matters. Except for the failure to deliver, if and to the extent
required under the Worker Adjustment and Retraining Notification Act (the “WARN Act”), written
notice to employees employed at the Cleveland Facility with respect to the termination of their
employment with GSSI on the Closing Date, each of the Sellers has complied and is in compliance
with all Regulations and Authorizations relating to employment of employees of the Business,
including, without limitation, all Regulations and Authorizations relating to equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, workers’ compensation,
collective bargaining, the payment of social security and similar taxes, occupational safety and
health and plant closing (including, without limitation, the WARN Act), excluding such minor
failures to comply which, in the aggregate, have not had, and would not have, a Material Adverse
Effect. None of the Sellers has any liability for the payment of any compensation, wages, Taxes,
fines, penalties or other amounts, however designated, for failure to comply with any of the
foregoing Regulations and Authorizations with respect to employment of any employees or consultants
of the Business. There is no unfair labor practice charge or complaint pending against any of the
Sellers, or to knowledge of Sellers, threatened, before the National Labor Relations Board. During
the thirty-six (36) calendar months immediately preceding the date hereof, none of the Sellers has
suffered any strike, picketing or work stoppage or, to the knowledge of the Sellers, any slowdown,
by any union or other group of employees affecting the Business and, to the knowledge of Sellers,
no such strike, slowdown, picketing or work stoppage is threatened against the Business. Except as
set forth on SCHEDULE 3.1.20, the Business is not a party to any collective bargaining agreement;
no collective bargaining agreement determines the terms and conditions of employment of any
employee of the Business; no collective bargaining agent has been certified as a representative of
any of the employees of any Seller; and no representation campaign or election is now in progress
or, to the knowledge of Sellers, threatened with respect to any of the employees of the Business.
SCHEDULE 3.1.20 contains the names and titles of and, to the extent applicable, current annual base
salaries for all employees of the Business. To the knowledge of Sellers, no employee of the
Business is a party to, or is otherwise bound by, any Contract, including any confidentiality,
non-competition or proprietary rights Contract, between such employee and any other Person or
entity that in any way adversely affects the performance of such employee’s duties as an employee
of the Business.
(a) (i) All wages, salaries, commissions, bonuses, vacation pay, severance and termination
pay, sick pay, and other compensation for services performed for the Business by employees and
former employees of Sellers that were or are engaged in the Business, and (ii) the monetary
obligations of the Business under any employment or labor practices and policies, or any collective
bargaining agreement or individual agreement to which any of the Sellers is a party, or by which
any of the Sellers may be bound, have been paid or, to the extent earned or incurred but not yet
due, accrued in full on the books and records of the Business in accordance with the Accounting
Principles.
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(b) Neither GSSI nor GSCNY is subject to any settlement agreement, conciliation agreement,
letter of commitment, deficiency letter or consent decree with any present or former employee of
the Business or any applicant for employment, with any labor union or other employee representative
of the Business, or with any Governmental Authority or arbitrator relating to claims of unfair
labor practices, employment discrimination, or other claims with respect to employment and labor
practices and policies of GSSI and/or GSCNY in connection with the Business which remains
unresolved or outstanding. No Governmental Authority has issued an Order with respect to the
employment and labor practices or policies of GSSI or GSCNY in connection with the Business which
remains unresolved or outstanding.
(c) CPI does not have, and has never had, any employees.
3.1.21 Employee Benefits. Sellers have listed on SCHEDULE 3.1.21 and provided
Purchaser with a complete and correct copy of each: (a) “employee benefit plans,” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); (b)
specified fringe benefit plans, as defined in Section 6039D of the Code; and (c) other material
plans, funds, programs or arrangements, written or unwritten, which are maintained or contributed
to by any of the Sellers or which otherwise provide any employee benefit to employees of the
Business (collectively (a), (b) and (c), are hereinafter referred to as the “Employee Plans”).
Each Employee Plan has been administered in substantial compliance with applicable Regulations,
including, but not limited to, the provisions of ERISA and the Code, and in substantial compliance
with the terms of such Employee Plan. Each Seller has, at all times, complied, and currently
complies, in all material respects, with the applicable continuation coverage requirements for its
group health plans, as defined in Code Section 5000(b)(1), including Section 4980B of the Code,
Sections 601 through 608, inclusive, of ERISA, and any applicable state statutes mandating health
insurance continuation coverage for employees. There is no material pending or, to the knowledge
of Sellers, threatened litigation relating to any Employee Plan, nor, to the knowledge of Sellers,
is there any basis for any such litigation. None of the Sellers nor any fiduciary of any Employee
Plan has engaged in a transaction with respect to any Employee Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject any Seller or Purchaser,
Worthington Warehouse or WS Michigan to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(l) of ERISA or a violation of Section 406 of ERISA.
3.1.22 Intellectual Property.
(a) Except as set forth in SCHEDULE 3.1.22, Sellers own or are licensed to use all material
Intellectual Property used in connection with the Business. “Intellectual Property” means the
following, whether registered or unregistered and includes those arising under common law: (i)
patents, trademarks, service marks, trade dress, copyrights, domain names, trade names, corporate
names, fictitious business names and logos and applications therefor (collectively, “Patents and
Names”); and (ii) computer software and related object and source codes, technologies, methods,
manufacturing formulations, databases, designs, plans, processes, trade secrets, customer lists,
confidential business information, know-how, proprietary information, inventions and other
intellectual property rights (“Other Intellectual Property”).
(b) SCHEDULE 3.1.22(b) sets forth a true, accurate and complete list of (with, as applicable,
a reasonable description that reasonably identifies) all registered Patents and Names, owned by or
licensed to any of the Sellers and used in connection with the Business, and all federal, state,
local and foreign registrations, filings and applications with respect to or seeking to register
such Intellectual Property.
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(c) Except for shrink-wrap or click-wrap software or off-the-shelf software, SCHEDULE
3.1.22(c) sets forth a true, accurate and complete list of all licenses, sublicenses, assignments
and other Contracts or restrictions under which any of the Sellers is a licensor, licensee,
assignor or assignee of any material Intellectual Property which is used in the conduct of the
Business or to which a Purchased Asset is bound. Sellers have performed all obligations imposed by
the terms of any such license, sublicense, assignment and other Contract or restriction to the
extent such obligations are required to be performed on or prior to the date hereof, and neither
the Sellers nor, to the knowledge of Sellers, any other party thereto, is in breach of or default
thereunder in any respect, nor, to the knowledge of Sellers, is there any event which with notice
or lapse of time or both would constitute a default thereunder, excluding minor breaches and
defaults which, in the aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect. All of the Intellectual Property licenses, sublicenses, assignments and
other Contracts or restrictions listed on SCHEDULE 3.1.22(c) (and including also any shrink-wrap,
click-wrap, and off-the-shelf software licenses) are valid and enforceable against the parties
thereto in accordance with their respective terms except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter affecting
the enforcement of creditors’ rights and the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the discretion of the
court before which any Proceeding therefor may be brought.
(d) None of the Intellectual Property listed on SCHEDULE 3.1.22(b) or SCHEDULE 3.1.22(c) is
subject to any outstanding Order and no Proceeding, hearing, investigation, charge, complaint,
claim or demand is pending or, to the knowledge of Sellers, threatened, which challenges the
validity, enforceability, ownership, Use or licensing of such Intellectual Property.
(e) Except as set forth on SCHEDULE 3.1.22(e), to the knowledge of Sellers, the Business has
not and does not infringe upon or unlawfully or wrongfully use any Patents and Names or Other
Intellectual Property owned or claimed by another Person, and none of the Sellers has received any
written or other formal notice of any claim or threat of infringement or any other claim or
proceeding relating to any such, Patents and Names or Other Intellectual Property.
(f) If and to the extent that any registered Intellectual Property which is used in the
Business or any Intellectual Property for which an application for registration has been filed with
respect to the Business, has been developed or invented by any employee of the Business, the
Sellers have obtained an assignment of all rights of any such employee to any such Intellectual
Property. To the knowledge of Sellers, no Person is infringing upon or otherwise violating or
misappropriating the Intellectual Property rights of the Business and no claim is currently pending
or threatened against a third party alleging infringement or misappropriation or a violation of the
Intellectual Property of the Business. No Proceeding is pending and no claim has been made against
any Seller or, to the knowledge of Sellers, is threatened, which contests the right of Sellers to
sell or license, or the Business to use, the Intellectual Property of the Business.
(g) Except as set forth on SCHEDULE 3.1.22(g), none of the Sellers is a party to or bound by
any license or other Contract requiring the payment by such Seller or its assigns of any royalty
payment or license fee, excluding standard licenses relating to software licensed by the Business
for use solely on the computers of the Business for its internal business purposes.
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3.1.23 Environmental Matters.
(a) Except as set forth in SCHEDULE 3.1.23(a), each of GSSI and GSCNY is and at all times has
been in compliance in all material respects with all applicable Environmental Requirements relating
to the conduct of the Business and/or the property owned, leased or operated by GSSI or GSCNY at
any time prior to the date hereof in connection with the Business (“Seller Property”) and the Use
of Seller Property, and none of the Sellers has engaged in any Environmental Activity at, nor has
any Environmental Activity otherwise occurred on or in connection with, the conduct of the Business
or the Use of any of the Seller Property in violation of any applicable Environmental Requirements
except for violations which have been disclosed in SCHEDULE 3.1.23(a) or remediated by Sellers as
required by applicable Environmental Requirements and disclosed in SCHEDULE 3.1.23(a) and as to
which, to the knowledge of Sellers, the Business has no further Liability or Obligation.
(b) Except as set forth in SCHEDULE 3.1.23(b), no Proceedings are pending or, to the knowledge
of Sellers, are or have been threatened, in connection with any Environmental Activity, or alleged
Environmental Activity, (i) of any of Sellers, (ii) relating to the Business or (iii) relating to
the Seller Property.
(c) No claims have been made or, to the knowledge of Sellers, threatened against any of the
Sellers or any Seller Property with respect to conduct of the Business or against any Purchased
Assets relating to damage, contribution, cost recovery, compensation, penalty, loss or injury
relating to any Hazardous Substance or any Environmental Activity, except for claims or threatened
claims set forth on SCHEDULE 3.1.23(c).
(d) Sellers have no knowledge of any liability, absolute or contingent, existing in connection
with any Environmental Activity engaged in by any of the Sellers in connection with the conduct of
the Business or with respect to the Purchased Assets which would have a Material Adverse Effect.
(e) Except as set forth in SCHEDULE 3.1.23(e), to the knowledge of Sellers, no Hazardous
Substances have been released into or from the Seller Property or any component thereof, and no
notices, no steps regarding releases of Hazardous Substances and no institutional controls are
required pursuant to Environmental Requirements.
(f) Except as set forth in SCHEDULE 3.1.23(f), no written notice, order, directive, complaint
or other formal communication has been made or issued by a Governmental Authority or other Person
alleging the occurrence of Environmental Activity by the Business or on the Seller Property in
violation of any Environmental Requirements.
(g) Except as set forth in SCHEDULE 3.1.23(g), to the knowledge of Sellers, none of the
Purchased Assets or the Business Property has been used for Hazardous Substance disposal or has
been contaminated by Hazardous Substances.
(h) To the knowledge of Sellers, none of the operations of Sellers in respect of the Business
or its activities have contaminated lands, waters or other property of others with hazardous waste
or Hazardous Substances in violation of any Environmental Requirements.
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(i) Except as set forth on SCHEDULE 3.1.23(i): (i) no Person is required to take any response
action under Environmental Requirements related to the Business, the Purchased Assets or the
Business Property; (ii) to the knowledge of Sellers, there are no Hazardous Substances located on
or in the ground or in the ground water under the Seller Property, except for Hazardous Substances
in concentrations which would not (A) exceed applicable human health exposure levels, or clean-up
or response thresholds established by Environmental Law or (B) otherwise have a Material Adverse
Effect; and (iii) no underground storage tanks are or have been located on the Business Property.
(j) Sellers have provided to Purchaser correct and complete copies of all environmental
assessments, audits, reports or investigations prepared by or for Sellers or any Seller Affiliate,
or otherwise in the control of Sellers or any Seller Affiliate, and relating to the Business or the
Seller Property.
(k) Except as set forth in SCHEDULE 3.1.23(k), Sellers have obtained all Authorizations
necessary to satisfy all applicable Environmental Requirements involving the Business, the
Purchased Assets or the Seller Property, and has paid all fees (including, without limitation, late
fees) associated with such Authorizations.
(l) Sellers agree to cooperate with Purchaser and Worthington Warehouse to the extent
reasonably requested in connection with Purchaser’s or Worthington Warehouse’s application for the
transfer, renewal or issuance of appropriate Authorizations.
(m) CPI has never owned, operated or leased any facility or real property or engaged in any
Environmental Activity.
3.1.24 Real Property.
(a) The Cleveland Real Property comprises all of the Real Property owned or leased by any of
the Sellers that is used by Sellers and the Business in the Cleveland, Ohio area;
(b) The Detroit Real Property comprises all of the Real Property owned or leased by any of the
Sellers that is used by Sellers and the Business in the Detroit, Michigan area;
(c) Subject to the recording of any applicable mortgage discharge (which Sellers shall do
promptly upon receipt of the Adjusted Closing Payment), at Closing, GSSI will convey to Purchaser
by general warranty deed title to the Cleveland Real Property and GSCNY will convey to Worthington
Warehouse by general warranty deed title to the Detroit Real Property, in each case, free and clear
of any Encumbrances other than the Permitted Liens;
(d) Sellers have not received any written notice or formal communication that the whole or any
part of the Cleveland Real Property or the whole or any part of the Detroit Real Property is
subject to any Proceedings for condemnation, eminent domain or other taking by any Governmental
Authority and to the knowledge of Sellers, no such condemnation or other takings is threatened.
Sellers have not received any formal notice from any Governmental Authority concerning any actual
or contemplated public improvements made or to be made by any Governmental Authority, the costs of
which are or could become special assessments against or an Encumbrance upon the Cleveland Real
Property or the Detroit Real Property and, to the knowledge of Sellers, no such public improvement
is threatened;
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(e) Other than Permitted Liens (including those set forth on SCHEDULE 3.1.24(e)), there are no
contract rights, leases, subleases, licenses or other Contracts, written or oral, granting to any
party the right of purchase, use or occupancy related to any portion of the Cleveland Real Property
or the Detroit Real Property;
(f) Except set forth on SCHEDULE 3.1.24(f), the Cleveland Real Property and the operation or
maintenance thereof as operated and maintained by GSSI prior to the Closing Date do not: (i)
contravene any existing zoning law or other existing administrative Regulation (including, but not
limited to, those relating to land use, building, fire, health and safety); or (ii) violate any
existing restrictive covenant or any existing legal requirement;
(g) Except set forth on SCHEDULE 3.1.24(g), the Detroit Real Property and the operation or
maintenance thereof as operated and maintained by GSCNY prior to the Closing Date do not: (i)
contravene any existing zoning law or other existing administrative Regulation (including, but not
limited to, those relating to land use, building, fire, health and safety); or (ii) violate any
existing restrictive covenant or any existing legal requirement;
(h) The Amended and Restated Service Agreement (the “Service Agreement”) between GSSI and
American Steel & Wire Corporation, filed for record on September 29, 1998 and recorded in Volume
98-12604, Page 39 of the Cuyahoga County, Ohio records is null and void and of no further force and
effect; the Cleveland Real Property does not rely upon any of the services previously provided
under the Service Agreement to supply utility services; the Cleveland Real Property is supplied
with utilities adequate for the use and operation of the Business as conducted by GSSI as of the
date hereof; and such utilities, to the knowledge of Sellers, extend to the Cleveland Real Property
through legal rights of way or validly created easements.
(i) The Detroit Real Property is supplied with utilities adequate for the use and operation of
the Business as conducted by GSCNY as of the date hereof; and such utilities, to the knowledge of
Sellers, extend to the Detroit Real Property through legal rights of way or validly created
easements.
(j) There are no adverse or other parties in possession of the Cleveland Real Property, or any
part thereof, except Sellers. No party has been granted any license, lease or other right relating
to the use or possession of the Cleveland Real Property or any part thereof.
(k) There are no adverse or other parties in possession of the Detroit Real Property, or any
part thereof, except Sellers. No party has been granted any license, lease or other right relating
to the use or possession of the Detroit Real Property or any part thereof.
(l) There is no option to purchase, right of first offer, right of first refusal or other
provision granting any party any right to acquire: (i) the Cleveland Real Property or any portion
thereof; or (ii) the Detroit Real Property or any portion thereof;
(m) There are no Proceedings or outstanding Orders which are pending or, to the knowledge of
Sellers, threatened against or which affect the Cleveland Real Property or the Detroit Real
Property;
(n) To the knowledge of Sellers, the Cleveland Real Property and the Detroit Real Property are
not subject to any real property Tax increases or recapture of Taxes occasioned by retroactive
revaluation, special assessments, changes in the land usage, or loss of any exemption or benefit
status;
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(o) Except as set forth on SCHEDULE 3.1.24(o), Sellers have not entered into any Contracts
affecting or impacting the Cleveland Real Property, which will bind Purchaser or the Cleveland Real
Property on or after the Closing Date or any Contracts affecting or impacting the Detroit Real
Property which will bind Worthington Warehouse or the Detroit Real Property on or after the Closing
Date;
(p) Except as set forth on SCHEDULE 3.1.24(p), the buildings and other improvements on the
Cleveland Real Property conform to all applicable Regulations and Authorizations relating to their
use and operation, excluding such minor failures to conform which, in the aggregate, have not had,
and would not have, a Material Adverse Effect. Except as set forth on SCHEDULE 3.1.24(p), GSSI has
maintained the buildings and improvements located on the Cleveland Real Property consistent with
normal practice, has not delayed any appropriate maintenance, and to Sellers’ knowledge, no
material maintenance or replacement costs need to be expended as of the Closing Date in connection
therewith. There are no unpaid claims for labor, materials, or equipment on the Cleveland Real
Property as a result of any improvement, repairs or alterations for which a mechanic’s lien or
other claim could be filed by any Person;
(q) Except as set forth on SCHEDULE 3.1.24(q), the buildings and other improvements on the
Detroit Real Property conform to all applicable Regulations and Authorizations relating to their
use and operation, excluding such minor failures to conform which, in the aggregate, have not had,
and would not have, a Material Adverse Effect. Except as set forth in SCHEDULE 3.1.24(q), GSCNY
has maintained the buildings and improvements located on the Detroit Real Property consistent with
normal practice, has not delayed any appropriate maintenance, and to Sellers’ knowledge, no
material maintenance or replacement costs need to be expended as of the Closing Date in connection
therewith. There are no unpaid claims for labor, materials, or equipment on the Detroit Real
Property as a result of any improvement, repairs or alterations for which a mechanic’s lien or
other claim could be filed by any Person;
(r) Sellers have obtained and delivered to Purchaser a commitment for an ALTA Owner’s Title
Insurance Policy on the current form for the Cleveland Real Property and to Worthington Warehouse
an ALTA Owner’s Title Insurance Policy on the current form for the Detroit Real Property; in each
case issued by Chicago Title Insurance Company (the “Title Company”), together with copies of all
documents referenced therein (the “Title Commitments”);
(s) Sellers have delivered to Purchaser a correct and complete copy of the most recently
performed survey of the Cleveland Real Property and to Worthington Warehouse a complete and correct
copy of the most recently performed survey of the Detroit Real Property in Sellers’ possession or
control; and
(t) GSSI has received all required Authorizations required in connection with its use of the
Cleveland Real Property and all buildings, improvements and personal property thereon, except where
a failure to obtain such Authorizations would not individually or in the aggregate have a Material
Adverse Effect. GSCNY has received all required Authorizations required in connection with its use
of the Detroit Real Property and all buildings, improvements and personal property thereon, except
where a failure to obtain such Authorizations would not individually or in the aggregate have a
Material Adverse Effect
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3.1.25 Sufficiency of Purchased Assets. Except for the Buffalo Real Property: (a)
the Purchased Assets include all of the assets, properties and other rights necessary for
Purchaser, Worthington Warehouse and WS Michigan to conduct the Business after the Closing in
substantially the same manner as the Business is conducted by Sellers prior to the Closing; and (b)
no Person (other than Sellers) owns any asset, property or right necessary for Purchaser,
Worthington Warehouse and WS Michigan to conduct the Business in substantially the same manner as
it is conducted by Sellers prior to the Closing, except items disclosed in SCHEDULE 3.1.25.
3.1.26 Customers and Suppliers. Listed on SCHEDULE 3.1.26 are the Business’ (a)
twenty (20) largest customers; and (b)twenty (20) largest suppliers identified by name (in each
case in terms of dollars), with whom or which the Business has done business since January 1, 2009.
Except as set forth on SCHEDULE 3.1.26, Sellers do not know, or have reasonable grounds to know,
that any such customer or supplier or any other customer or supplier material to the Business has
terminated or expects to terminate a portion of such customer’s or supplier’s normal business with
the Business.
3.1.27 Availability of Documents. Sellers have made available to Purchaser copies of
all documents, including, without limitation, all Material Contracts, Employee Plans, and
Authorizations, listed in the Disclosure SCHEDULE or referred to herein. Such copies are true and
complete in all material respects and include all amendments, supplements and modifications thereto
or waivers currently in effect thereunder.
3.1.28 Certain Payments. Except as set forth on SCHEDULE 3.1.28, none of the Sellers
nor, to the knowledge of Sellers, any Seller Affiliate, director, officer, employee, agent or any
other Person acting for or on behalf of any of the Sellers, has directly or indirectly made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any
Person, private or public, regardless of form, whether in money, property or services: (a) to
obtain favorable treatment in securing business; (b) to pay for favorable treatment for business
secured; (c) to obtain special concessions or for special concessions already obtained, for or in
respect to the Business; or (d) in violation of any Regulation.
3.1.29 Completeness of Disclosure. To the knowledge of Sellers, no representation,
warranty or statement by Sellers in this Agreement or in any Disclosure SCHEDULE, certificate,
statement, document or instrument furnished or to be furnished to Purchaser, Purchaser Ohio
Affiliate, Worthington Warehouse or WS Michigan pursuant hereto, or in connection with the
negotiation, execution or performance of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact required to be stated
herein or therein or necessary to make any statement herein or therein not misleading.
3.2 Representations and Warranties of Purchaser and Purchaser Ohio Affiliate. Each of
Purchaser and Purchaser Ohio Affiliate hereby, jointly and severally, represent and warrant to
Sellers as follows:
3.2.1 Corporate and Limited Liability Company Existence. Purchaser Ohio Affiliate is
a corporation, duly organized, validly existing and in good standing under the laws of the State of
Ohio. Purchaser is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Ohio.
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3.2.2 Corporate and Limited Liability Company Power and Authorization. Purchaser Ohio
Affiliate has the corporate power, authority and legal right to execute, deliver and perform this
Agreement and each of the Purchaser Closing Documents to which it is party. The execution,
delivery and performance of this Agreement and the Purchaser Closing Documents to which it is a
party by Purchaser Ohio Affiliate have been duly authorized by all necessary corporate and
shareholder action on the part of Purchaser Ohio Affiliate. This Agreement has been duly executed
and delivered by Purchaser Ohio Affiliate and constitutes, and the Purchaser Closing Documents to
which Purchaser Ohio Affiliate is a party when executed and delivered will constitute, the legal,
valid and binding obligations of Purchaser Ohio Affiliate, enforceable against Purchaser Ohio
Affiliate in accordance with their respective terms except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter affecting
the enforcement of creditors’ rights and the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the discretion of the
court before which any Proceeding therefor may be brought. Purchaser has the power, authority and
legal right to execute, deliver and perform this Agreement and each of the Purchaser Closing
Documents to which it is a party. The execution, delivery and performance of this Agreement and
the Purchaser Closing Documents to which it is a party by Purchaser have been duly authorized by
all necessary limited liability company action. This Agreement has been duly executed and
delivered by Purchaser and constitutes, and the Purchaser Closing Documents to which it is a party
when executed and delivered will constitute, the legal, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their respective terms except that such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter affecting the enforcement of creditors’ rights and the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any Proceeding therefor may be brought.
3.2.3 Validity of Contemplated Transactions, Etc. Neither the execution, delivery and
performance of this Agreement or the Purchaser Closing Documents to which it is a party by
Purchaser and Purchaser Ohio Affiliate nor the consummation of the transactions contemplated hereby
or thereby violates, conflicts with or results in the breach of, or will violate, conflict with or
result in the breach of, any term, condition or provision of, or requires or will require the
consent of any other Person under: (a) any Regulation to which Purchaser or Purchaser Ohio
Affiliate is subject; (b) any Order to which Purchaser or Purchaser Ohio Affiliate is subject;
(c) the charter or organizational documents of, or any securities issued by, Purchaser or Purchaser
Ohio Affiliate; or (d) any mortgage, Contract, plan or other instrument, oral or written, to which
Purchaser or Purchaser Ohio Affiliate is a party or by which any of the assets of Purchaser or
Purchaser Ohio Affiliate are bound, which violation, conflict or breach, in the case of this clause
(d), individually or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the transactions contemplated by this Agreement.
Except as aforesaid, no Authorization, approval or consent of, and no registration or filing with,
any Governmental Authority is required in connection with the execution, delivery and performance
of this Agreement and the Purchaser Closing Documents to which each is a party by Purchaser and
Purchaser Ohio Affiliate or the consummation of the transactions contemplated hereby.
3.2.4 Completeness of Disclosure. To the knowledge of Purchaser and Purchaser Ohio
Affiliate, no representation, warranty or statement by Purchaser or Purchaser Ohio Affiliate in
this Agreement or in any certificate, statement, document or instrument furnished or to be
furnished to Sellers pursuant hereto, or in connection with the negotiation, execution or
performance of this Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated herein or therein or necessary to
make any statement herein or therein not misleading.
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3.3 Survival and Construction of Representations and Warranties. All representations
and warranties made by the parties in Section 3.1 and 3.2 of this Agreement, the Disclosure
SCHEDULE, or any certificate, statement, document or instrument furnished pursuant to this
Agreement shall survive the Closing for a period of eighteen (18) months, other than those
representations and warranties contained in Sections 3.1.2, 3.1.10, 3.1.13, 3.1.23 and 3.2.2 of
this Agreement, which shall survive until ninety (90) days after the expiration of the applicable
statutes of limitations (including all periods of extension). The disclosure of an item in one
section of the Disclosure SCHEDULE shall be deemed to modify both the representations and
warranties contained in the Section of this Agreement to which it corresponds in number and any
other representation and warranty of the parties disclosing such item to the extent that it is or
should be readily apparent from a reading of such disclosure item that it would also qualify or
apply to such other representation or warranty. Notwithstanding any investigation or audit
conducted before or after the Closing Date or the decision of any party to complete the Closing,
each party shall be entitled to rely upon the representations and warranties set forth herein and
therein.
ARTICLE IV — COVENANTS PRIOR TO CLOSING
4.1 Covenants of Sellers Prior to the Closing. Sellers jointly and severally covenant
and agree with Purchaser and Purchaser Ohio Affiliate that, prior to the Closing and except as
otherwise agreed to in writing by Purchaser and Purchaser Ohio Affiliate:
4.1.1 Business in the Ordinary Course. Sellers shall conduct the Business solely in
the ordinary course consistent with past practice, including, without limitation, paying,
discharging or performing, as appropriate, their respective Liabilities and Obligations in the
ordinary course consistent with past practice as they are incurred and not allowing levels of
inventory (whether raw materials, work in process or finished goods) to vary materially from the
levels customarily maintained.
4.1.2 Existing Condition. Sellers shall not cause or permit to occur any of the
events or occurrences described in Section 3.1.12 hereof. Sellers shall not, with respect to the
Business, enter into any new Contract, or any amendment, modification or termination of any
existing Contract or Authorization which would materially affect the Business or the Purchased
Assets, or would otherwise be binding on Purchaser, Worthington Warehouse or WS Michigan, except
those related to the purchase and sale of inventory in the ordinary course of business.
4.1.3 Maintenance of Purchased Assets and Business Relations. Sellers shall continue
to maintain and service the Purchased Assets in the same manner as has been their consistent past
practice. At all times from and after the date hereof through the Closing Date, Sellers shall
maintain those insurance policies described on SCHEDULE 3.1.18, and the risk of loss or damage to
the Purchased Assets shall be borne by Sellers through the Closing. Sellers shall use commercially
reasonable efforts to maintain good relations and goodwill with employees, suppliers, customers,
distributors and any others having business relations with the Business.
4.1.4 Compliance with Regulations. Sellers shall comply with all Regulations
applicable to the Business, including, without limitation, the WARN Act.
4.1.5 Updated Disclosure SCHEDULES. Sellers shall promptly disclose to Purchaser in
an update to the Disclosure SCHEDULE any information contained in the representations and
warranties or the Disclosure SCHEDULE which, because of an event occurring after the date hereof,
is incomplete or is no longer correct as of all times after the date hereof until the Closing Date;
provided, however, that such update to the Disclosure
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SCHEDULE shall not be deemed to amend or supplement the representations and warranties of
Sellers or the Disclosure SCHEDULE thereto for the purposes of Article V of this Agreement unless
Purchaser shall have consented in writing, such consent not to be unreasonably withheld.
4.1.6 Conduct of Business. Sellers shall use commercially reasonable efforts to cause
all of the conditions to the obligations of Sellers and Purchaser and Purchaser Ohio Affiliate
under this Agreement to be satisfied on or prior to the Closing Date. In the event that Sellers
determine that a condition is not reasonably likely to be so satisfied, Sellers shall promptly
notify Purchaser of such determination.
4.1.7 Exclusive Rights. From and after the date hereof until the Closing or earlier
termination of this Agreement pursuant to Section 8.1 hereof, none of the Sellers and none of their
respective representatives shall directly or indirectly solicit or engage in negotiations or
discussions with, disclose any of the terms of this Agreement to, accept any offer from, furnish
any information to, or otherwise cooperate, assist, or participate with, any Person (other than
Purchaser, Purchaser Ohio Affiliate and any Purchase Affiliates and representatives) regarding any
offer or proposal with respect to the acquisition by purchase, merger, lease or otherwise of any
capital stock of GSSI, GSCNY or CPI, any of the Purchased Assets, the Business or any material
assets, properties, or other operations of the Business, and Sellers shall promptly notify
Purchaser of any such discussion, offer or proposal.
4.1.8 Access. At all reasonable times prior to the Closing, Purchaser and its
representatives shall have the right, upon reasonable advance notice and during normal business
hours (unless otherwise agreed to by Sellers) to: (a) examine, inspect and review the Business and
the Purchased Assets and all books, Contracts, records and documents of every kind relating to the
Business and the Purchased Assets, and (b) interview those employees of the business whose
knowledge is attributed to the Sellers pursuant to Section 10.13 hereof suppliers and customers
(including prospective customers) of the Business. Sellers shall reasonably cooperate with
Purchaser and its representatives in conducting the reviews and other activities described in this
Section 4.1.8.
4.1.9 Specific Performance. The parties hereto recognize and agree that in the event
of a breach by Sellers of this Article IV, money damages may not be an adequate remedy to
Purchaser, Worthington Warehouse and WS Michigan and, even if money damages were adequate, it may
be impossible to ascertain or measure with any degree of accuracy the damages sustained by
Purchaser, Worthington Warehouse and WS Michigan therefrom. Accordingly, if there should be a
breach by Sellers of the provisions of this Article IV, Purchaser, Worthington Warehouse and WS
Michigan shall be entitled to an injunction restraining Sellers from any such breach without
showing or proving actual damage sustained by Purchaser, Worthington Warehouse and WS Michigan.
Nothing in the preceding sentence shall limit or otherwise affect any remedies that Purchaser,
Worthington Warehouse and WS Michigan may otherwise have under applicable Regulations.
4.1.10 Taxes.
(a) No Seller shall make or change any Tax election related to the Business or the Purchased
Assets or, except as required by applicable Regulations, reverse any accruals with respect to the
Taxes related to the Business, file any amended Tax Return related to the Business or the Purchased
Assets, settle or compromise any Tax liability related to the Business or the Purchased Assets,
waive any statutes of limitations with respect to Taxes related to the Business or the Purchased
Assets or agree to any extension of time with respect to any Tax assessment or deficiency related
to the Business or the Purchased Assets
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(b) CPI shall have (and Sellers shall have caused CPI to have), on or prior to the Closing
Date:
(i) prepared, in the ordinary course of business and consistent with CPI’s past practices, and
timely filed all Tax Returns required to be filed by it on or before the Closing Date (“Post
Signing Returns”);
(ii) consulted with Purchaser with respect to all Post Signing Returns and delivered drafts of
such Post Signing Returns to Purchaser no later than fifteen (15) days prior to the date (including
extensions) on which such Post Signing Returns were so filed;
(iii) fully and timely paid all Taxes due and payable in respect of such Post Signing Returns
that were so filed;
(iv) properly reserved (and reflected such reserve in its books and records and financial
statements), in accordance with CPI’s past practices and in the ordinary course of business, for
all Taxes payable by it for which no Post Signing Return was due prior to the Closing Date;
(v) promptly notified Purchaser of any federal, state, local or foreign suit, claim, action,
investigation, proceeding or audit (collectively “Actions”) pending against or with respect to CPI
in respect of any Tax matter, including (without limitation) Tax liabilities and refund claims, and
not settled or compromised any such Tax matter or action without Purchaser’s consent; and
(vi) not made or changed any Tax election or, except as required by applicable Regulations,
changed any Accounting Principles or practices used by CPI, not reversed any accruals with respect
to Taxes, not filed any amended Tax Return, settled or compromised any Tax liability, not waived
any statutes of limitations with respect to Taxes or agreed to any extension of time with respect
to any Tax assessment or deficiency.
4.1.11 Accounting Principles. No Seller shall make any change in any of the
accounting principles or practices used in connection with the Business.
4.1.12 Access to Specified Contracts. Sellers shall provide the Purchaser, immediately after
execution of the Agreement, full access to:
(a) all information, including copies thereof, in respect of all Contracts of the Business
relating to:
(i) purchases of steel or steel processing services by customers of the Business; and
(ii) purchases of steel by the Business from its suppliers; and
(b) management of the Business to discuss existing customers and the potential loss of
business from existing customers.
4.2 Agreements of Purchaser and Purchaser Ohio Affiliate Prior to the Closing.
Purchaser and Purchaser Ohio Affiliate jointly and severally covenant and agree with Sellers that,
prior to the Closing and except as otherwise agreed to in writing by Sellers:
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4.2.1 Actions of Purchaser and Purchaser Ohio Affiliate. Purchaser and Purchaser
Ohio Affiliate shall cooperate, and cause Worthington Warehouse and WS Michigan to cooperate, with
Sellers and use commercially reasonable efforts to cause all of the conditions to the obligations
of Purchaser and Purchaser Ohio Affiliate and Sellers under this Agreement to be satisfied on or
prior to the Closing Date. In the event that Purchaser determines that a condition is not
reasonably likely to be so satisfied, Purchaser shall promptly notify Seller of such
determination.
4.3 Guarantee of Performance. Purchaser Ohio Affiliate hereby unconditionally
guarantees performance by Purchaser of all Liabilities and Obligations of Purchaser under this
Agreement and under the Transition Agreements.
ARTICLE V — CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to Obligations of Purchaser and Purchaser Ohio Affiliate.
The obligations of Purchaser and Purchaser Ohio Affiliate under this Agreement to effect the
Closing are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent (unless waived in writing by Purchaser and Purchaser Ohio
Affiliate):
5.1.1 Representations and Warranties True as of the Closing Date. The representations
and warranties of Sellers contained in this Agreement or in any Disclosure SCHEDULE, certificate,
statement, document or instrument furnished to Purchaser, Purchaser Ohio Affiliate, Worthington
Warehouse and WS Michigan pursuant to this Agreement that are not qualified as to materiality or
Material Adverse Effect shall have been true in all material respects on the date hereof without
regard to any updated Disclosure SCHEDULE furnished to Purchaser, Purchaser Ohio Affiliate,
Worthington Warehouse and WS Michigan after the date hereof and prior to the Closing, and shall be
true in all material respects on the Closing Date with the same force and effect as though such
representations and warranties were made as of such date. The representations and warranties of
Sellers contained in this Agreement or in any Disclosure SCHEDULE, certificate, statement, document
or instrument furnished to Purchaser, Purchaser Ohio Affiliate, Worthington Warehouse and WS
Michigan pursuant to this Agreement that are qualified as to materiality or Material Adverse Effect
shall have been true in all respects on the date hereof without regard to any updated Disclosure
SCHEDULE furnished to Purchaser, Purchaser Ohio Affiliate, Worthington Warehouse and WS Michigan
after the date hereof and prior to the Closing, and shall be true in all respects on the Closing
Date with the same force and effect as though such representations and warranties were made as of
such date.
5.1.2 Employee Information. Sellers shall have provided Purchaser with correct and
complete information with respect to: (a) the full amount and nature of any bonus and any other
remuneration, whether in cash or in kind, paid or payable to each employee employed at the
Cleveland Facility and the Detroit Facility for the year ended December 31, 2009 together with the
current wage rates of such employees and copies or summaries of any bonus plans, non-qualified
deferred compensation plans and other material compensatory plans applicable to employees employed
at the Cleveland Facility and the Detroit Facility; (b) the earned, unpaid and accrued vacation and
severance benefits to which each employee employed at the Cleveland Facility and the Detroit
Facility is entitled or may be entitled to as a result of the consummation of the transactions
contemplated by this Agreement; and (c) such other information as may be reasonably requested with
respect to the employee benefit practices and policies of Sellers with respect to the employees
employed at the Cleveland Facility and the Detroit Facility.
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5.1.3 Compliance with this Agreement. Sellers shall have performed and complied in
all material respects with all agreements and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing.
5.1.4 Closing Certificate. Purchaser and Purchaser Ohio Affiliate shall have received
a certificate from Sellers dated the Closing Date, certifying that the conditions specified in
Section 5.1.1 and Section 5.1.3 hereof have been fulfilled and certifying that Sellers have
obtained all approvals, consents and waivers required with respect to Sellers, the Purchased Assets
or the Business by Section 5.1.6 hereof.
5.1.5 No Threatened or Pending Litigation. There shall be no Proceeding, Order,
injunction or final judgment relating thereto, pending before any Governmental Authority in which
it is sought to restrain or prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby, and to the knowledge of
Sellers or Purchaser and Purchaser Ohio Affiliate, there shall be no threatened Proceeding or
Order, which Sellers or Purchaser and Purchaser Ohio Affiliate in good faith reasonably believe
could result in the consummation of the transactions contemplated hereby being restrained or
prohibited or the award of damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
5.1.6 Approvals, Consents and Waivers. Sellers shall have delivered to Purchaser, or
there shall otherwise have been obtained, all approvals, consents and waivers (including the
expiration of any applicable notice or waiting period under any applicable Regulations) from
Governmental Authorities which, in the reasonable judgment of Purchaser, are necessary or required
to consummate this Agreement and the transactions contemplated hereby or for Purchaser, Worthington
Warehouse and WS Michigan to continue the operation of the Business and all approvals, consents and
waivers of and from those customers, suppliers, lessors and other third parties identified in
SCHEDULE 3.1.19.
5.1.7 Material Adverse Effect. No Material Adverse Effect shall have occurred.
5.1.8 Good Standing Certificate. Each of the Sellers shall have delivered to
Purchaser a certificate dated as of a date not earlier than ten (10) business days prior to the
Closing as to the good standing of such Seller, executed by appropriate officials of the state of
its incorporation and each jurisdiction in which such Seller is qualified to do business as a
foreign corporation as set forth on SCHEDULE 3.1.1 and a certificate as to the payment of all
applicable state taxes by each of the Sellers executed by appropriate officials of the state of its
incorporation and each jurisdiction in which such Seller is qualified to do business as a foreign
corporation except those jurisdictions set forth on SCHEDULE 5.1.8.
5.1.9 Purchaser has been given full access to the people and the information, including
Contracts, set forth in Section 4.1.12 and:
(a) In the reasonable opinion of Purchaser, based on verbal inquiries of GSSI sales
management, it is unlikely that the Business will lose more than $17 million in aggregate annual
sales;
(b) In the reasonable opinion of Purchaser, the Business will generate an average Material
Margin of not less than 23% for the first calendar quarter of 2010; and
(c) In the reasonable opinion of Purchaser, all material fixed price sales Contracts with
matching sourcing Contracts are included in the Business’ aggregate average Material Margin of not
less than 23%.
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5.2 Conditions Precedent to the Obligations of Sellers. The obligations of Sellers
under this Agreement to effect the Closing are subject to the fulfillment or satisfaction, prior to
or at the Closing, of each of the following conditions precedent (unless waived in writing by
Sellers):
5.2.1 Representations and Warranties True as of the Closing Date. The representations
and warranties of Purchaser and Purchaser Ohio Affiliate contained in this Agreement or in any
certificate, statement, document or instrument furnished to Sellers pursuant to this Agreement
shall have been true in all material respects on the date hereof and shall be true in all material
respects on the Closing Date with the same force and effect as though such representations and
warranties were made as of such date.
5.2.2 Compliance with this Agreement. Purchaser and Purchaser Ohio Affiliate shall
have performed and complied in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with by Purchaser and Purchaser Ohio Affiliate prior to
or at the Closing.
5.2.3 Closing Certificate. Sellers shall have received a certificate from Purchaser
and Purchaser Ohio Affiliate dated the Closing Date, certifying that the conditions specified in
Section 5.2.1 and Section 5.2.2 hereof have been fulfilled.
5.2.4 No Threatened or Pending Litigation. There shall be no Proceeding, Order,
injunction or final judgment relating thereto, pending before any Governmental Authority in which
it is sought to restrain or prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby, and to the knowledge of
Sellers or Purchaser and Purchaser Ohio Affiliate, there shall be no threatened Proceeding or
Order, which Sellers or Purchaser and Purchaser Ohio Affiliate in good faith reasonably believe
could result in the consummation of the transactions contemplated hereby being restrained or
prohibited or the award of damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE VI — INDEMNIFICATION
6.1 Indemnification Obligations of Sellers. From and after the Closing, Sellers,
jointly and severally, shall reimburse, indemnify and hold harmless Purchaser and Purchaser Ohio
Affiliate and all of the Affiliates, members, managers, shareholders, directors, officers,
employees, agents, representatives, successors and assigns of Purchaser and Purchaser Ohio
Affiliate (each, an “Indemnified Purchaser Party”) against and in respect of any and all damages,
losses, liabilities, costs and expenses (including reasonable attorneys’ fees) incurred or suffered
(hereinafter, “Losses”) by any Indemnified Purchaser Party that result from, relate to or arise out
of:
(a) the Excluded Liabilities;
(b) any breach or non-fulfillment of any agreement or covenant of Sellers in this Agreement or
any Seller Closing Document;
(c) Sellers’ operation of the Business and/or ownership of the Purchased Assets prior to the
Closing, other than the Assumed Liabilities;
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(d) any breach of any representation or warranty on the part of Sellers under this Agreement,
or any misrepresentation in or omission from any Disclosure SCHEDULE, certificate, statement,
document or instrument furnished to Purchaser, Purchaser Ohio Affiliate, Worthington Warehouse
and/or WS Michigan pursuant to this Agreement; or
(e) any Taxes of CPI relating to any Tax period (or portion thereof) ending on or prior to the
Closing Date;
and any and all actions, suits, claims, proceedings, investigations, demands, assessments, audits,
fines, judgments, costs and other expenses (including, without limitation, reasonable attorneys’
fees and expenses) incident to any of the foregoing or to the enforcement of this Section 6.1;
provided, however, that: (i) notwithstanding anything to the contrary contained in the foregoing
provisions of this Section 6.1, the term “Losses” shall not be deemed or construed to include any
payments which may be made by Purchaser to Sellers with respect to Cleveland/Buffalo Receivables,
if any, which remain uncollected at the end of the one hundred twenty (120) day period following
the Closing Date as required by the Transition Agreements; and provided further that none of the
Sellers shall have any liability with respect to the matters described in Section 6.1(d) until the
total of all Losses incurred or suffered by the Indemnified Purchaser Parties with respect to such
matters exceeds $400,000 (the “Basket Amount”), at which point Sellers shall be obligated to
indemnify the Indemnified Purchaser Parties for all such Losses incurred or suffered by the
Indemnified Purchaser Parties to the extent that such Losses exceed the Basket Amount, and (ii) the
maximum liability of Sellers under this Section 6.1 shall not exceed $7,500,000 (the “Cap”);
further, provided, however, that if a representation or warranty of the Sellers which has been
qualified by materiality or a Material Adverse Effect has been breached after taking into effect
such qualifications, such qualifications shall be disregarded and not taken into account for
purposes of calculating the amount of Purchaser’s and Purchaser Ohio Affiliate’s Losses arising out
of the breach of such representation or warranty, and the foregoing provisions relating to the
Basket Amount and the Cap shall not apply to any claim relating to Section 3.1.2, Section 3.1.13 or
Section 3.1.23, any claim relating to Taxes or any claim involving fraud or intentional
misrepresentation.
6.2 Indemnification Obligation of Purchaser and Purchaser Ohio Affiliate. From and
after the Closing, Purchaser and Purchaser Ohio Affiliate shall, jointly and severally, reimburse,
indemnify and hold harmless each of the Sellers and each Seller Affiliate (each, an “Indemnified
Seller Party”) against and in respect of any and all Losses incurred or suffered by any Indemnified
Seller Party that result from, relate to or arise out of:
(a) the Assumed Liabilities;
(b) any breach or non-fulfillment of any agreement or covenant of Purchaser and Purchaser Ohio
Affiliate in this Agreement or any Purchaser Closing Document;
(c) the operation of the Business and/or ownership of the Purchased Assets by Purchaser,
Worthington Warehouse and WS Michigan, as appropriate, after the Closing, other than as related to
the Excluded Assets, the Excluded Liabilities or matters covered by Section 6.1 including any
severance or termination of employment benefits which may be payable with respect to employees
hired by Purchaser or Worthington Warehouse on or after the Closing Date;
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(d) Any Liability or Obligation of Purchaser and Purchaser Ohio Affiliate for payment of any
fees, expenses, commissions or other similar payments which may be due and payable to any agent,
broker or finder arising in connection with the consummation of the transactions contemplated by
this Agreement; or
(e) any breach of any representation or warranty on the part of Purchaser and Purchaser Ohio
Affiliate under this Agreement, or any misrepresentation in or omission from any certificate,
statement, document or instrument furnished by Purchaser and/or Purchaser Ohio Affiliate pursuant
to this Agreement;
and any and all actions, suits, claims, proceedings, investigations, demands, assessments, audits,
fines, judgments, costs and other expenses (including, without limitation, reasonable attorneys’
fees and expenses) incident to any of the foregoing or to the enforcement of this Section 6.2;
provided, however, that: (i) neither Purchaser nor Purchaser Ohio Affiliate shall have any
Liability with respect to the matters described in Section 6.2(e) until the total of all Losses
incurred or suffered by the Indemnified Seller Parties with respect to such matters exceeds the
Basket Amount, at which point Purchaser and Purchaser Ohio Affiliate shall be obligated to
indemnify the Indemnified Seller Parties for all such Losses incurred or suffered by the
Indemnified Seller Parties to the extent that such Losses exceed the Basket Amount, and (ii) the
maximum Liability of Purchaser and Purchaser Ohio Affiliate under this Section 6.2 shall not exceed
the Cap; further, provided, however, that if a representation and warranty of Purchaser and/or
Purchaser Ohio Affiliate which has been qualified by materiality or a Material Adverse Effect has
been breached after taking into effect such qualifications, such qualifications shall be
disregarded and not taken into account for purposes of calculating the amount of Sellers’ Losses
arising out of the breach of such representation or warranty, and the foregoing provisions relating
to the Basket Amount and the Cap shall not apply to any claim involving fraud or intentional
misrepresentation.
6.3 Claim Procedures. Except as otherwise provided by Section 9.7(d) hereof with
respect to the liability of CPI for Taxes with respect to periods occurring prior to the Closing
Date (including Straddle Periods):
(a) As to any Claim for which a party hereto asserts that it is entitled to indemnification
(an “Indemnitee”) under this Article VI which arises out of a claim or liability asserted against
or sought to be collected from the Indemnitee by a third party (a “Third-Party Claim”), the
Indemnitee shall provide to the party or parties from whom indemnification is sought (the
“Indemnitor”) under this Article VI a written notice setting forth the Claim, the provisions of
this Agreement and other instruments under which such Claim arises and, if known, the amount of the
Losses incurred or anticipated to be incurred as a result of such Claim (a “Claim Notice”). The
Indemnitor shall have thirty (30) days following its receipt of the Claim Notice respecting such
Claim to notify the Indemnitee whether or not the Indemnitor elects to defend the Indemnitee
concerning such Claim; and:
(i) if the Indemnitor so elects to defend the Indemnitee concerning such Claim, the Indemnitor
shall either settle or, by appropriate proceedings, defend such Claim, in its sole discretion; and
the Indemnitee shall cooperate as reasonably requested by the Indemnitor in connection with such
settlement or defense. The Indemnitor may control the defense or settlement of the Claim;
provided, however, that the Indemnitor shall effect no settlement of such Claim, if such settlement
would adversely affect the liability of the Indemnitee, unless the Indemnitee shall consent thereto
in writing, which consent shall not be unreasonably delayed or withheld. If the Indemnitee desires
to participate in, without
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controlling, any such defense or settlement by the Indemnitor, it may do
so at the Indemnitee’s sole cost and expense. Notwithstanding anything herein to the contrary,
from the date on which the Indemnitee gives a Claim Notice to the Indemnitor until the Indemnitor
elects to defend the Indemnitee (or until the time for such election shall have passed) in respect
of any Third-Party Claim, the Indemnitee may take any necessary actions to defend (but not settle)
such Claim; provided, however, that upon the election of the Indemnitor to defend such Claim, the
Indemnitor shall promptly reimburse the Indemnitee for its reasonable expenses actually incurred in
defending such Claim. In addition, notwithstanding anything herein to the contrary, the Indemnitee
may employ its own counsel at the expense of the Indemnitor to assert such defenses as counsel
reasonably acceptable to the Indemnitor advises in writing conflict with those maintained by the
Indemnitor on its own behalf in the same proceeding (in which case the Indemnitor may not direct
the assertion of such defense on behalf of the Indemnitee); or
(ii) if the Indemnitor shall not so elect to defend the Indemnitee concerning such Claim, the
Indemnitee shall, without prejudice to its right of indemnification from the Indemnitor, either
settle or, by appropriate proceedings, defend such Claim, in its sole discretion; and the
Indemnitor shall cooperate as reasonably requested by the Indemnitee in connection with such
settlement or defense. The Indemnitee may control the defense or settlement of the Claim involved;
provided, however, that the Indemnitee shall effect no settlement of such Claim, if such settlement
would adversely affect the liability of the Indemnitor, unless the Indemnitor shall consent thereto
in writing, which consent shall not be unreasonably delayed or withheld. If the Indemnitor desires
to participate in, without controlling, any such defense or settlement by the Indemnitee, it may do
so at its sole cost and expense.
(b) As to any Claim for which the Indemnitee would be entitled to indemnification under this
Article VI which arises other than out of a Claim asserted against or sought to be collected from
the Indemnitee by a third party (a “Direct Claim”), the Indemnitor will have thirty (30) days
following its receipt of the Claim Notice respecting such Claim within which to respond in writing
to such Claim Notice. If the Indemnitor does not respond within such period, the Indemnitor will
be deemed to have rejected such Claim, in which event the Indemnitee may pursue any remedies
available to the Indemnitee subject to the provisions of this Article VI. If the Indemnitor
disputes such Direct Claim within such response period, the Indemnitor and the Indemnitee will
proceed promptly and in good faith to negotiate a resolution of such dispute. If all such disputes
are not resolved through negotiations within thirty (30) days after the end of the initial response
period, either the Indemnitor or the Indemnitee may initiate litigation to resolve such disputes.
6.4 Compliance with Bulk Sales Laws. Purchaser and Purchaser Ohio Affiliate, on the
one hand, and Sellers, on the other hand, hereby waive compliance by Purchaser and Purchaser Ohio
Affiliate and Sellers with the bulk sales laws and any other similar laws in any applicable
jurisdiction in respect of the transactions contemplated by this Agreement. Sellers, jointly and
severally, shall indemnify Purchaser and Purchaser Ohio Affiliate from, and hold them harmless
against, any liabilities, damages, costs and expenses resulting from or arising out of (a) the
parties’ failure to comply with any of such laws in respect of the transactions contemplated by
this Agreement, or (b) any action brought or levy made as a result thereof.
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6.5 Additional Limits on Losses.
(a) All claims for indemnification relating solely to a breach of a representation or warranty
made by Sellers or by Purchaser and Purchaser Ohio Affiliate must be asserted in writing and
delivered to the applicable Indemnitor prior to the termination of the respective survival period
for such representation or warranty set forth in Section 3.3 hereof. Any claims for
indemnification relating solely to a breach of a representation or warranty made by Sellers or by
Purchaser and Purchaser Ohio Affiliate that are not asserted in writing and delivered to the
Indemnitor prior to the termination of the respective survival period for such representation or
warranty set forth in Section 3.3 hereof shall expire and be lost forever.
(b) Notwithstanding anything contained herein to the contrary, no Person entitled to
indemnification hereunder may make a claim for indemnification that includes or seeks punitive
damages, consequential damages or lost profits; provided, however, that
this limitation shall not apply to any such amounts paid to third parties in connection with
Third-Party Claims.
(c) An Indemnitee shall not be entitled to double recovery for any Losses in connection with
any indemnification claim. In connection with the foregoing, for purposes of calculating the
amount payable to an Indemnitee in connection with any indemnification claim, the amount of any
Loss shall not include an amount for which an indemnification claim has been paid under any other
representation, warranty, covenant or agreement but only to the extent of such payment. In this
regard, for the avoidance of doubt, an Indemnitee shall not be entitled to indemnification for
Losses (and the amount of such Losses shall not be includable in determining whether the aggregate
amount of any Losses exceeds the Basket Amount) to the extent, but only to the extent, that the
amount of any Losses from any matter has been taken into account in the determination of the Final
Working Capital.
(d) Notwithstanding anything to the contrary contained in Section 6.1, the amount of any
Losses incurred by any Indemnified Purchaser Party shall be based on the Losses actually incurred
or suffered by such Indemnified Purchaser Party without reference to the manner in which Purchaser
may have arrived at the Purchase Price. Nothing in this Section 6.5(d) shall be deemed or
constructed to limit the amount of Losses which may be recovered by any Indemnified Purchaser Party
except as expressly limited by the preceding sentence or elsewhere in this Article VI.
(e) The amount of any obligation for which indemnification may be claimed by any Indemnitee
will be reduced by any insurance proceeds (net of costs of collection therefor) received in cash by
the Indemnitee (or by any Affiliate of the Indemnitee) with respect to the matter that is the
subject of the indemnification claim; provided that the indemnification obligation
shall be reduced only by the insurance proceeds received in cash and not by any deductible. Each
Indemnitee agrees to make good faith, commercially reasonable efforts to obtain all such insurance
proceeds available to it, provided that nothing in this Article VI requires any Indemnified Party
to carry any insurance.
6.6 Indemnity Payment Characterization. All indemnification payments under this
Article VI shall be deemed adjustments to the Purchase Price.
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ARTICLE VII — POST CLOSING MATTERS
7.1 Employees and Employee Benefits.
(a) After the Closing Date, Sellers shall pay directly to each of their employees employed
at the Cleveland Facility and the Detroit Facility that portion of all compensation and benefits
which has been accrued on behalf of or is otherwise due and owing to that employee (or is
attributable to expenses properly incurred by that employee) as of the Closing Date. Subject to
the provisions of Section 7.1(b) hereof, Sellers shall be responsible for payment of severance
benefits to employees employed at the Buffalo Facility, subject to the right to reimbursement for
such severance benefits, if any, as may be provided for by the Transition Agreements. Subject to
the provisions of Section 7.1(b) hereof, Purchaser or Worthington Warehouse, as applicable,
shall be responsible for payment of severance benefits, if any, due to employees employed at the
Cleveland Facility (other than Xxxx Xxxxxxx) and the Detroit Facility, but only to the extent
such potential severance benefits are disclosed in SCHEDULE 7.1(a). Subject to the provisions of
Section 7.1(b) hereof, nothing contained in the preceding sentence shall be deemed or construed
to limit, impair or otherwise affect the Liabilities and Obligations of Purchaser or Worthington
Warehouse (assumed by Purchaser or Worthington Warehouse, as applicable, pursuant to Section
1.4.1(e) hereof) to pay to employees (other than Xxxx Xxxxxxx) employed at the Cleveland Facility
and the Detroit Facility, any amounts which may be required to be paid to any such employees
under the WARN Act in connection with the termination of their employment with GSSI (in the case
of employees employed at the Cleveland Facility) and the termination of their employment with
GSCNY (in the case of employees employed at the Detroit Facility) or any Liabilities and
Obligations which Purchaser or Worthington Warehouse, as appropriate, may have in connection with
any termination of the employment of any such employees by Purchaser or Worthington Warehouse, as
appropriate, after the Closing Date, which Liabilities and Obligations are hereby expressly
acknowledged and agreed by Purchaser to be Liabilities and Obligations of Purchaser or
Worthington Warehouse, as appropriate. No portion of the assets of any Employee Plan (and no
amount attributable to any such Employee Plan) shall be transferred to Purchaser or Worthington
Warehouse, and neither Purchaser nor Worthington Warehouse shall be required to continue any such
Employee Plan after the Closing Date. The amounts payable on account of all Employee Plans shall
be determined with reference to the date of the event by reason of which such amounts become
payable, without regard to conditions subsequent, and none of Purchaser or any Purchaser
Affiliate shall be liable for any claim for insurance, reimbursement or other benefits payable by
reason of any event which occurs prior to or after the Closing Date. Subject to the preceding
provisions of this Agreement relating to severance benefits, all amounts payable directly to
employees of Sellers, or to any fund, shall be paid by Sellers within the time period required in
the applicable Employee Plan.
(b) Purchaser has expressed a potential interest in making offers of employment to up to
eight (8) individuals employed by GSSI at the Buffalo Facility (such employees being hereinafter
the “Buffalo Employees”). The Sellers acknowledge and agree that the Purchaser shall have the
right to make offers of employment to any or all of the Buffalo Employees prior to the Closing
Date or within sixty (60) days thereafter and, on or prior to the Closing Date, the Purchaser
shall identify which of the Buffalo Employees it intends to make offers of employment. If any of
the Buffalo Employees who receive offers of employment from the Purchaser accepts employment with
the Purchaser (those of the Buffalo Employees who receive offers of employment from the Purchaser
and agree to accept such offers of employment being hereinafter referred to as the “Buffalo New
Hires”), the Purchaser agrees to and hereby assumes any obligation of the Sellers for payment of
any severance or other termination of employment benefits to the Buffalo New Hires (the aggregate
amount of
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the severance or other termination of employment benefits which would have been paid by Sellers to the Buffalo New Hires being hereinafter the “Buffalo New Hire Severance”). In
connection with the foregoing, Sellers agree to reimburse the Purchaser or Worthington Warehouse,
as appropriate, for payment of severance benefits paid by Purchaser to employees employed at the
Cleveland Facility and/or the Detroit Facility who do not receive offers of employment from
Purchaser or Worthington Warehouse, as appropriate, if any, and severance benefits, if any, paid
by Purchaser or Worthington Warehouse, as appropriate, to employees employed by the Sellers as of
the Closing Date who receive offers of employment from Purchaser or Worthington Warehouse, as
appropriate, and whose employment is terminated by Purchaser or Worthington Warehouse, as
appropriate, on or before the first anniversary of the Closing Date in an amount equal to the
lesser of: (i) the total amount of any such severance benefits paid by Purchaser or Worthington
Warehouse, as appropriate, to any such employees within such one (1) year period; and (ii) the
aggregate amount of the Buffalo New Hire Severance. Payment to Purchaser or Worthington
Warehouse, as appropriate, of the amount Purchaser or Worthington Warehouse, as appropriate, is
entitled to be reimbursed for by the preceding sentence shall be made by Sellers within ten (10)
days following receipt by Sellers of reasonably satisfactory evidence of the payment by Purchaser
or Worthington Warehouse, as appropriate, of the amount of severance benefits which Purchaser is
entitled to be reimbursed for by the preceding sentence.
(c) Sellers shall be responsible for complying with the provisions of Section 4980B of the
Code and Sections 601 through 608, inclusive, of ERISA (such Code and ERISA provisions hereafter
referred to as “COBRA”) pertaining to notice to be provided to such employees of the Buffalo
Facility or other employees of Sellers who do not become employees of Purchaser or Worthington
Warehouse to the extent COBRA notices are required to be provided to such employees as a result
of the transactions contemplated by this Agreement. In addition, Sellers shall provide health
care continuation coverage required by COBRA for employees employed at the Buffalo Facility or
other employees of Sellers who do not become employees of Purchaser or Worthington Warehouse
through an Employee Plan or Employee Plans maintained after the Closing Date by Sellers or by an
entity related to Sellers, and Sellers shall make every effort to maintain such an Employee Plan
or Employee Plans for the duration of any COBRA continuation coverage period.
(d) Although it is anticipated that Purchaser will make offers of employment to most
employees presently employed at the Cleveland Facility, Purchaser is under no obligation to
employ any personnel presently employed by Sellers. Prior to the Closing Date, Purchaser may
offer employment to such employees presently employed by the Business as Purchaser in its sole
discretion shall determine. Subject to any obligation that Purchaser may have to recognize the
collective bargaining agent of the employees employed by the Business at the Cleveland Facility,
Purchaser shall have the absolute right to establish all terms and conditions of employment,
including wages, benefits and benefit plans, for any employees of the Business to whom Purchaser
chooses to make an offer of employment. All such offers shall be on terms established by
Purchaser and shall be contingent upon employment commencing with Purchaser only following the
Closing Date. Sellers agree not to discourage any Persons who are offered employment by
Purchaser from accepting employment with Purchaser. Any prior employment by Sellers of such
employees shall not affect entitlement to, or the amount of, salary or other compensation or
benefits, current or deferred, which Purchaser may make available to its employees.
7.2 Non-Solicitation, Noncompetition and Nondisparagement.
(a) Except as provided by Section 7.2(c) hereof, for a period of five (5) years after the
Closing Date, none of the Sellers nor any of their Affiliates shall directly or indirectly:
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(i) cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, consultant or other Person which had a business relationship with the Business on the
Closing Date or within the year preceding the Closing Date to cease doing business with Purchaser
or Worthington Warehouse, as appropriate, or in any way adversely interfere with its relationship
with Purchaser or Worthington Warehouse, as appropriate; or
(ii) solicit, attempt to solicit, hire or attempt to hire, directly or indirectly, whether as
an employee, agent, independent contractor or any other capacity, any employee who is offered
employment with the Business by Purchaser or Worthington Warehouse, as appropriate, or who
otherwise becomes employed by the Business after Closing or in any way interfere with the
relationship between Purchaser or Worthington Warehouse, as appropriate and any of its employees.
(b) Except as provided by Section 7.2(c) hereof, for a period of five (5) years after the
Closing Date, Sellers shall not (and each Seller shall cause its Affiliates not to), anywhere in
the United States of America, directly or indirectly, either for themselves or any other Person,
own, manage, operate, join, consult with, render services for, participate in, control, permit
their name to be used by, or otherwise assist in any manner, in any business which is competitive
with the Business except as provided in the Transition Agreements.
(c) The provisions of Section 7.2(a)(i) and Section 7.2(b) above shall not apply or be
binding upon (i) any Person who may become an Affiliate of any of the Sellers after the Closing
Date as a result the acquisition of Parent (both in form and substance) by such Person or (ii)
any Person that becomes an Affiliate of Sellers in connection with the acquisition by any of the
Sellers or any Affiliate of the Sellers of any such Person if at the time of the acquisition of
such Person, such Person and its Affiliates (on a consolidated basis) derive less than 10% of
their aggregate annual net sales from Steel Processing businesses; provided that in the event of
the acquisition by any of the Sellers or any Affiliate of Sellers of any such Person, the Sellers
shall promptly use commercially reasonable efforts to divest the Steel Processing business of
such Person as soon as practical following the acquisition; and provided further that in the case
of each of clause (i) and (ii) above, (A) any Steel Processing operations of the applicable
Person shall be held and conducted separately from the Sellers and their Affiliates and shall not
be merged, combined or operated in conjunction with Sellers and their Affiliates, (B) no
director, officer or key employee of the Sellers who participated in the conduct or oversight of
the Business shall have any involvement in the day-to-day operation or management of the
affiliated Steel Processing operations, and (C) neither the Gibraltar name nor the Buffalo
Facility shall be used in or associated with such Steel Processing operations. The provisions of
Section 7.2(a)(ii) shall not be deemed or construed to prohibit the hiring by any of the Sellers
or any of their Affiliates of Xxxx Xxxxxxx or any employee of the Business after such employee’s
employment with the Purchaser or any Purchaser Affiliate has been terminated (for reasons other
than to pursue employment with the Sellers or their Affiliates) or any employee of the Business
who applies for employment in response to any general solicitation of individuals for employment
pursuant to any newspaper, Internet or other similar help wanted advertisement which is not
directed or focused on personnel employed by the Purchaser or any Purchaser Affiliate in the
Business, provided such employee is not first contacted by or on behalf of the Sellers or their
Affiliates.
“Steel Processing” for the purpose of this Section 7.2(c) shall mean pickling, slitting, cold
reducing, galvanizing, annealing, cutting to length, tension leveling, edging and configured
blanking.
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(d) The parties hereto specifically acknowledge and agree that the remedy at law for any
breach of the foregoing provisions of this Section 7.2 will be inadequate and that Purchaser and
Worthington Warehouse, in addition to any other relief available to them, shall be entitled to
temporary and permanent injunctive relief, specific performance or other equitable relief without
the necessity of proving actual damage. In the event that the provisions of this Section 7.2
should ever be deemed to exceed the limitation provided by applicable Regulations, then the
parties hereto agree that such provisions shall be reformed to set forth the maximum limitations
permitted. Sellers acknowledge and agree that this Section 7.2 is a significant inducement to
Purchaser to enter into and perform its obligations under this Agreement and this Section 7.2 is
reasonable and necessary to protect and preserve Purchaser’s legitimate business interests and
the value of the Purchased Assets.
7.3 Discharge of Excluded Liabilities. From and after the Closing Date, Sellers shall
pay, discharge or perform, in accordance with past practice all of the Excluded Liabilities,
including, without limitation, any Liabilities or Obligations to employees of GSSI and/or GSCNY who
are not employed by Purchaser or Worthington Warehouse. If any Excluded Liabilities are not so
paid, discharged or performed and if Purchaser reasonably determines that such failure will impair
the use or enjoyment of the Purchased Assets by Purchaser, Worthington Warehouse and WS Michigan or
conduct of the Business, Purchaser may, at any time after the Closing Date, upon ten (10) days
prior advance written notice to Sellers, elect to pay, perform or discharge, as appropriate, any
such Excluded Liability (but shall have no obligation to do so) and Sellers shall promptly
reimburse Purchaser for all costs and expenses associated therewith.
7.4 Payments Received. Sellers and Purchaser agree that after the Closing they will
hold and will promptly transfer and deliver to the applicable party, from time to time as and when
received by them, any cash, checks with appropriate endorsements (using their best efforts not to
convert such checks into cash) or other property that they or their Affiliate may receive on or
after the Closing which properly belongs to the applicable other party, including, without
limitation, any insurance proceeds and payments on account of accounts receivable, and will account
to the other for all such receipts.
7.5 HSR Filings. If required by Regulation, each party shall promptly, but in no
event later than ten (10) days after the date hereof, make their respective filings under the Xxxx
Xxxxx Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and, thereafter, make
any other required submissions under the HSR Act and use commercially reasonable efforts and
diligence to satisfy any other conditions necessary to comply with the HSR Act and to obtain early
termination of any waiting period pursuant thereto. Notwithstanding the foregoing, nothing in this
Section 7.5 or otherwise in this Agreement shall require Purchaser or any Purchaser Affiliate to
propose, negotiate, effect or agree to, the sale, divestiture, license or other disposition of any
assets or businesses of Purchaser or any Purchaser Affiliate (including the Purchased Assets) or
otherwise take any action that limits the freedom of action with respect to, or its ability to
retain any of the businesses, product lines or assets of Purchaser or any Purchaser Affiliate
(including the Purchased Assets).
7.6 Access to Records. After the Closing Date, Purchaser and Worthington Warehouse
shall retain for a period of five (5) years those records of Sellers delivered to Purchaser and
Worthington Warehouse in connection with the consummation of the transactions contemplated in this
Agreement; provided that Purchaser and Worthington Warehouse may discard or destroy records not
intended for long-term retention consistent with Purchaser’s and Worthington Warehouse’s respective
record retention policies and practices; and provided, further, that Purchaser and Worthington
Warehouse may discard or destroy records after giving written notice to Sellers and giving Sellers
60 days following receipt of such notice to request in writing that all or a portion of the records
intended to be discarded or destroyed be delivered to the Sellers. Purchaser and Worthington
Warehouse also shall provide Sellers and their
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representatives reasonable access thereto, during
normal business hours and on reasonable prior notice, to enable them to prepare financial
statements or for other reasonable business purposes. After the Closing Date, Sellers shall
provide Purchaser and its representatives reasonable access to records that are Excluded Assets,
during normal business hours and on reasonable prior notice, for any reasonable business purpose
specified by Purchaser in such notice.
7.7 Further Assurances. From time to time at another party’s reasonable request and
without further consideration, each party hereto shall execute and deliver such further instruments
of conveyance, assignment and transfer, and take such other actions as the requesting party may
reasonably request, in order to more effectively convey and transfer any of the Purchased Assets or
otherwise accomplish the transactions contemplated by this Agreement.
7.8 Name Transition. After Closing, Purchaser shall cause the Business to cease using
the “Gibraltar” name in accordance with the Transition Agreements.
ARTICLE VIII — TERMINATION
8.1 Termination.
(a) Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be
terminated by written notice of termination at any time before the Closing Date only as follows:
(i) by mutual written agreement of Sellers and Purchaser and Purchaser Ohio Affiliate;
(ii) by Purchaser and Purchaser Ohio Affiliate, at any time if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of Sellers with respect to
their representations, warranties or covenants set forth in this Agreement;
(iii) by Sellers, at any time if there has been a material misrepresentation, breach of
warranty or breach of covenant on the part of Purchaser or Purchaser Ohio Affiliate with respect to
its representations, warranties or covenants set forth in this Agreement; or
(iv) by either Purchaser and Purchaser Ohio Affiliate or Sellers if the transactions
contemplated hereby have not been consummated by March 31, 2010.
(b) If this Agreement is terminated as permitted by Section 8.1(a) hereof, such termination
shall be without liability of any party (or any shareholder, director, officer, employee, agent or
representative of such party) to any other party to this Agreement; provided, however, that
(i) if such termination shall result from the willful failure of Sellers to fulfill a
condition to the performance of the obligations of Purchaser or Purchaser Ohio Affiliate or to
perform a covenant of this Agreement or from a willful breach by Sellers of this Agreement, Sellers
shall be jointly and severally liable for any and all losses, costs, claims, or expenses, incurred
or suffered by Purchaser or Purchaser Ohio Affiliate as a result of such failure or breach.
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(ii) if such termination shall result from the willful failure of Purchaser and Purchaser Ohio
Affiliate to fulfill a condition to the performance of the obligations of Sellers or to perform a
covenant of this Agreement or from a willful breach by Purchaser or Purchaser Ohio Affiliate of
this Agreement, Purchaser and Purchaser Ohio Affiliate shall be jointly and severally liable for
any and all losses, costs, claims, or expenses, incurred or suffered by Seller as a result of such
failure or breach.
(c) The provisions of Section 8.1 and Section 10.6 of this Agreement shall survive any
termination of this Agreement pursuant to Section 8.1(a) hereof.
ARTICLE IX — TAX MATTERS
9.1 Pre-Closing Income Taxes. Sellers shall make, or have made, all federal, state,
local and foreign filings with respect to income Taxes of Sellers for the Business or the Purchased
Assets for any Tax period (or portion thereof) ending on or before the Closing Date. All
liabilities of Sellers with respect to income Taxes under federal, state, local and foreign income
Tax laws attributable to the operations of the Business or the Purchased Assets through the Closing
Date shall be borne by Sellers, and any refunds or credits or rights to refunds or credits with
respect thereto shall be the property of Sellers. All Tax Returns prepared and filed by Sellers
relating to Tax liabilities attributable to the Business or the Purchased Assets shall be prepared
and filed in a manner that is consistent with prior practice of the Sellers (including, without
limitation, with respect to the jurisdictions in which such Tax Returns are filed).
9.2 Other Pre-Closing Taxes. All Tax liabilities of Sellers (other than income Taxes)
attributable to the Business or the Purchased Assets for Tax periods (or portions thereof) ending
on or prior to the Closing Date shall be borne by Sellers other than Assumed Liabilities described
in Sections 1.4.1(g), 1.4.1(h) and 1.4.1(i) hereof.
9.3 Post-Closing Taxes. All Taxes attributable to the Business or the Purchased
Assets (excluding the Excluded Assets and the Excluded Operations) for Tax periods (or portions
thereof) beginning after the Closing Date shall be the responsibility of Purchaser, and any refunds
or credits or rights to refunds or credits with respect thereto shall be Purchaser’s.
9.4 Straddle Periods. All real property Taxes, personal property Taxes and similar ad
valorem obligations levied on a Seller with respect to the Business or the Purchased Assets for a
Tax period that includes (but does not end on) the Closing Date, whether such Taxes are payable to
a taxing authority, a landlord or other third party, shall be apportioned between Section 9.2 and
Section 9.3 as of the Closing Date based upon, respectively, the number of calendar days in the
portion of such Tax period ending on the Closing Date and the number of calendar days in the
portion of such Tax period commencing after the Closing Date. If the Closing occurs before the Tax
rate is fixed for the then current Tax period, the proration of the corresponding Taxes shall be on
the basis of the Tax rate for the last preceding Tax period applied to the latest assessed
valuation. Purchaser shall be responsible for filing all Tax Returns relating to such Taxes with
respect to the Business and the Purchased Assets required to be filed after the Closing Date. For
any such Tax Return relating to a Tax period that begins on or prior to, and ends after, the
Closing Date, Purchaser shall provide such Tax Return to the Sellers at least thirty (30) days
prior to the date on which such Tax Return is required to be filed (but in no event earlier than
thirty (30) days after the Closing Date), for Sellers’ review and comment. Sellers shall have ten
(10) days to review and comment on any such Tax Return, which comments Purchaser shall take into
consideration in its sole discretion. Purchaser shall also be responsible for filing all Tax
Returns relating to sales, withholding and GST for the Business for periods beginning on or prior
to but ending after the Closing Date. Purchaser shall provide such Tax Returns to the Sellers at
least ten (10) business days prior to the date on which any such Tax Return is required to be
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filed, for Sellers’ review and comment. Sellers shall have five (5) business days to review and
comment on any such Tax Return, which comments Purchaser shall take into consideration in its sole
discretion.
9.5 Reimbursements. If either Sellers (or an Affiliate of a Seller) or Purchaser (or
an Affiliate of Purchaser, including, after the Closing, CPI) pays any Taxes to be borne by the
other party under this Article IX, the other party shall promptly reimburse Sellers or Purchaser,
as applicable, for the Taxes paid. If, in preparing Tax Returns or payments after the Closing, it
appears to Purchaser that Sellers will be asked to pay additional Taxes, Purchaser shall so notify
Sellers, and provide Sellers a reasonable opportunity to review and comment upon any related Tax
Returns prior to filing them and paying the Tax. If either party receives any refunds or credits
which are the property of the other party under this Article IX, such party shall promptly pay the
amount of such refunds or credits to the other party. Notwithstanding anything in this Agreement
to the contrary, Purchaser shall not be obligated to reimburse Sellers under this Section 9.5 (or
to indemnify Sellers under any other provision of this Agreement) for any Tax liability that
relates to prepaid Taxes described in Section 1.1.1(j).
9.6 Transfer Taxes and Conveyance Fees. Sellers shall pay in a timely manner and
shall be responsible for any and all real estate transfer taxes and conveyance fees due (i) in Ohio
with respect to the transfer of the Cleveland Real Property to Purchaser and (ii) in Michigan with
respect to the transfer of the Detroit Real Property to Worthington Warehouse. Sellers shall pay
in a timely manner and shall be responsible for: (a) any and all sales or use Taxes attributable to
the transfer to Purchaser and Worthington Warehouse of the tangible personal property included in
the Purchased Assets; and (b) timely file or caused to be filed all necessary documents (including
all Tax Returns) with respect to such Taxes. Sellers shall indemnify, reimburse and hold Purchaser
and Worthington Warehouse harmless in respect of any liability for payment of or failure to pay any
such sales or use Taxes or real estate transfer taxes or conveyance fees or the filing of or
failure to file any reports required in connection therewith.
9.7 CPI Taxes.
(a) Sellers shall prepare, or cause to be prepared, at Sellers’ cost and expense, all
Pre-Closing Period Tax Returns required to be filed by or on behalf of CPI that are not filed by
the Closing Date. All such Pre-Closing Period Tax Returns shall be prepared and filed in a manner
that is consistent with the prior practice of CPI, except as otherwise required by applicable law.
The Sellers shall provide each such Pre-Closing Period Tax Return (or in the case of a consolidated
Tax Return, the portion of any such consolidated Tax Return that relates to CPI) to the Purchaser
for its review at least thirty (30) days prior to the due date (including extensions) of any such
Pre-Closing Period Tax Return; provided, however, that such drafts of any Pre-Closing Period Tax
Return shall be subject to the Purchaser’s review and approval, which approval shall not be
unreasonably withheld or delayed. If the Purchaser disputes any item on such Pre-Closing Period Tax
Return, it shall notify the Sellers (by written notice within ten (10) days of receipt of such
Pre-Closing Period Tax Return) of such disputed item (or items) and the basis for its objection.
If the Purchaser does not object by written notice within such period, such draft of such
Pre-Closing Period Tax Return shall be deemed to have been accepted and agreed upon, and final and
conclusive, for purposes of this Section 9.7(a). The Sellers and the Purchaser shall act in good
faith to resolve any such dispute prior to the due date (including extensions) of such Pre-Closing
Period Tax Return. If the Sellers and the Purchaser cannot resolve any disputed item, the item in
question shall be resolved by the Independent Auditor as promptly as practicable, whose
determination shall be final and conclusive for purposes of this Section 9.7(a). The fees and
expenses of the Independent Auditor shall be paid 50% by the Purchaser and 50% by the Sellers.
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(b) The Purchaser shall, at its expense, prepare and timely file, or cause to be prepared and
timely filed, all Straddle Period Tax Returns required to be filed by CPI, if any. All Straddle
Period Tax Returns shall be prepared and filed in a manner that is consistent with the prior
practice of CPI, except as required by applicable law. The Purchaser shall deliver or cause to be
delivered drafts of all Straddle Period Tax Returns to Sellers for Sellers’ review at least thirty
(30) days prior to the due date (including extensions) of any such Straddle Period Tax Return and
shall notify the Sellers of the Purchaser’s calculation of the Sellers’ share of the Taxes of CPI
for such Straddle Period (determined in accordance with Section 9.7(c)); provided, however, that
such drafts of any Straddle Period Tax Return shall be subject to the Sellers’ review and approval,
which approval shall not be unreasonably withheld or delayed. If the Sellers dispute any item on
such Straddle Period Tax Return, Sellers shall notify the Purchaser (by written notice within ten
(10) days of receipt of such Straddle Period Tax Return) of such disputed item (or items) and the
basis for their objection. If the Sellers do not object by written notice within such period, such
draft of such Straddle Period Tax Return shall be deemed to have been accepted and agreed upon, and
final and conclusive, for purposes of this Section 9.7(b). The Sellers and the Purchaser shall act
in good faith to resolve any such dispute prior to the due date (including extensions) of such
Straddle Period Tax Return. If the Sellers and the Purchaser cannot resolve any disputed item, the
item in question shall be resolved by the Independent Auditor as promptly as practicable, whose
determination shall be final and conclusive for purposes of this Section 9.7(b). The fees and
expenses of the Independent Auditor shall be paid 50% by the Purchaser and 50% by the Sellers. On
or before the date a Straddle Period Tax Return of CPI is filed, the Sellers shall pay to the
Purchaser in immediately available funds the amount of the Sellers’ share of the Tax liability for
the Straddle Period determined pursuant to this Section 9.7(b) and Section 9.7(c). For the
avoidance of doubt, a consolidated Tax Return that includes CPI for the Tax period (or portion
thereof) beginning after the Closing Date shall not be a considered a “Straddle Period Tax Return”
for purposes of this Agreement.
(c) (i) All Tax liabilities of CPI for Tax periods (or portions thereof) ending on or prior to
the Closing Date shall be borne by Sellers.
(ii) The Sellers and the Purchaser agree that, in the event of a 338(h)(10) Election, the
Sellers and the Purchaser will cooperate to cause the Partnership to (A) issue separate Schedule
K-1s for the year of the Closing for the portion of such calendar year ending on the Closing Date,
and the portion of such year beginning on the day after the Closing Date, and (B) allocate items of
Partnership income, gain, loss and deduction across the year of the Closing based upon a closing of
the Partnership books as of the end of the Closing Date.
(iii) In the event that no 338(h)(10) Election is filed (or a 338(h)(10) Election is filed,
but the Partnership does not issue separate Schedule K-ls as described in Section 9.7(c)(ii)
above), then the Sellers and the Purchaser agree to use commercially reasonable efforts to allocate
items of Partnership income, gain, loss and deduction to the portion of such calendar year ending
on the Closing Date, and the portion of such calendar year beginning on the day after the Closing
Date, as if the Partnership books had been closed at the end of the Closing Date, based upon
information contained in the Partnership’s monthly audited financials; provided that items of
income, gain, loss and deduction for the month of the Closing that are not attributable to an
extraordinary event shall be allocated across such month pro rata, based upon the number of days of
such month.
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(d) In the case of an audit or administrative or judicial proceeding involving any asserted
liability for Taxes of CPI, the imposition of which Taxes would result in a payment obligation by
Sellers under Section 6.1 (other than an audit or administrative or judicial proceeding relating to
a consolidated Tax Return that includes CPI for the Tax Period (or portion thereof) beginning after
the Closing Date), the Sellers will have the right to participate in, at their own expense, the
audit or administrative or judicial proceeding. The Sellers, on the one hand, and the Purchaser
and CPI, on the other hand, shall fully cooperate in good faith in connection with any such audit
or other proceeding. In the case of an audit or administrative or judicial proceeding involving
any asserted liability for Taxes of CPI relating to a Straddle Period, or a Tax period ending on or
before the Closing Date (other than an audit or administrative or judicial proceeding relating to a
consolidated Tax Return that includes CPI for the Tax Period (or portion thereof) beginning after
the Closing Date), the Sellers shall have the right, at their sole expense, to control the conduct
of such audit or proceeding; provided, however, that as a precondition to the Sellers’ right to
control such proceedings, (i) the Sellers shall deliver to Purchaser a written statement in which
the Sellers agree to indemnify Purchaser, CPI and their respective Affiliates from and against the
entirety of any Taxes or Losses related to Taxes that Purchaser, CPI or any such Affiliate may
incur resulting from, arising out of, relating to or caused by such proceedings, and (ii) the
Sellers shall conduct the defense actively and diligently; provided further, however, that the
Sellers shall not consent to the entry of any judgment or enter into any settlement without the
prior written consent of CPI or Purchaser if (A) such judgment or settlement is likely to establish
a precedential custom or practice materially adverse to the continuing business of CPI and/or
Purchaser for periods beginning after the Closing Date or (B) the Taxes at issue in the proceeding
relate to a Straddle Period. So long as the Sellers are conducting the defense in accordance with
this Section 9.7(d), and subject to Purchaser’s rights in this Section 9.7(d), Purchaser may retain
separate co-counsel at its sole cost and expense and may participate in, but not control, such
defense. In the event that any of the conditions of this Section 9.7(d) is or becomes unsatisfied,
(1) Purchaser and CPI may control the defense, and consent to the entry of any judgment or enter
into any settlement, in any manner that they reasonably may deem appropriate, with the consent of
the Sellers, which consent shall not be unreasonably withheld or delayed, and (2) the Sellers shall
remain responsible for any Taxes and other Losses that Purchaser and CPI may incur resulting from,
arising out of, relating to or caused by such proceedings.
9.8 Cooperation. The parties agree to cooperate with each other and to provide each
other with all information and documentation reasonably necessary to permit the preparation and
filing of all federal, state, local and foreign Tax Returns and Tax elections with respect to CPI
and the Business. Purchaser shall make available to Sellers and their representatives, on at least
three (3) days’ prior written notice, all records and materials reasonably required by them to
pursue or contest any Tax matters and shall provide reasonable cooperation to Sellers in such case,
including having personnel of the Business provide reasonable assistance to Sellers. Sellers shall
make available to Purchaser and its representatives, on at least three (3) days’ prior written
notice, those records and materials reasonably required by them to prepare, pursue or contest any
Tax matters arising after the Closing which have factual reference to the pre-Closing periods.
9.9 Section 338(h)(10) Election.
(a) At Purchaser’s option, after considering the costs and benefits thereof, and upon notice
delivered by Purchaser to Sellers (the “338(h)(10) Notice”), Sellers and WS Michigan shall join in
making a timely election or elections under Section 338(h)(10) of the Code and any corresponding
elections under state, local or foreign Tax law (collectively, the “338(h)(10) Election”), with
respect to the purchase and sale of CPI Shares. Purchaser shall issue the 338(h)(10) Notice in
writing no later than 90 days after the Closing Date.
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(b) In the event that Purchaser delivers a 338(h)(10) Notice:
(i) WS Michigan, Sellers and CPI shall execute any and all documents, statements, and other
forms that are required to be submitted to any Tax authority in connection with a 338(h)(10)
Election (the “338 Forms”) no later than 15 days prior to the date such 338 Forms are required to
be filed;
(ii) CPI and WS Michigan shall cause the 338 Forms to be duly executed by an authorized Person
for WS Michigan and CPI, as applicable;
(iii) Sellers, WS Michigan and CPI shall duly and timely file the 338 Forms in accordance with
applicable Tax laws and regulations and the terms of this Agreement;
(iv) Sellers and WS Michigan shall report the purchase of the CPI Shares consistent with any
338(h)(10) Election made with respect to CPI and shall take no position contrary thereto, or the
CPI Allocation (defined below), unless and to the extent required to do so pursuant to applicable
law;
(v) As soon as practicable after the 338(h)(10) Notice, Purchaser shall cause WS Michigan to
deliver to Sellers a statement allocating the “adjusted grossed-up basis” and “aggregate deemed
sale price” (as such terms are defined in Treasury Regulations issued under Section 338 of the
Code) among the assets of CPI in accordance with such Treasury Regulations (the “CPI Allocation”),
and consistent with the allocation of Purchase Price under Section 1.3.3;
(vi) Any liability for federal, state and local Taxes resulting from the 338(h)(10) Election
shall be borne by Sellers; and
(vii) If Sellers breach any covenant set forth in Section 9.9 which breach prevents a valid
338(h)(10) Election from being made, Sellers shall indemnify and hold WS Michigan, CPI and each of
their Affiliates harmless against any and all Taxes due which result from such breach, together
with all expenses and other Losses related thereto.
ARTICLE X — MISCELLANEOUS
10.1 Expenses. Each party shall bear its respective costs, fees and expenses incurred
in connection with the preparation, negotiation, execution and performance of the transactions
contemplated by this Agreement (including, without limitation, the costs, fees and expenses of any
accountants, attorneys, brokers, financial advisors, etc.). The parties acknowledge and agree that
such costs, fees and expenses (including the costs, fees and expenses of any accountants,
attorneys, brokers, financial advisors, etc. retained by or representing Sellers) of Sellers shall
not be transferred as Liabilities of the Business.
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10.2 Entire Agreement. This Agreement (along with the Disclosure SCHEDULE, the
documents delivered pursuant hereto, and the Seller Closing Documents and Purchaser Closing
Documents) set forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. This Agreement shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Except as provided in Article VI,
the Agreement is not intended to confer upon any other Person not a party hereto any rights or
remedies hereunder. Any and all previous agreements and understandings between or among the
parties hereto regarding the subject matter hereof, whether written or oral, are superseded by this
Agreement, including, without limitation the Confidentiality Agreement dated October 14, 2008 (the
“Confidentiality Agreement”) to the extent provided in Section 10.6 of this Agreement.
10.3 Assignment and Binding Effect. No party may assign any of its rights or delegate
any of its obligations under this Agreement without the prior written consent of the other parties,
except Purchaser may assign any of its rights and delegate any of its obligations under this
Agreement to any Affiliate of Purchaser. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and permitted assigns of each
party hereto.
10.4 Waiver. The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither any failure nor any delay by any party in exercising any right, power
or privilege under this Agreement or any of the documents referred to in this Agreement will
operate as a waiver of such right, power or privilege, and no single or partial exercise of any
such right, power or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum extent permitted
by applicable Regulations, (a) no claim or right arising out of this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party entitled to the benefit of such claim or right; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation of that party or
of the right of the party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this Agreement.
10.5 Notices. All notices, consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized overnight courier service
(costs prepaid); (b) sent by facsimile with confirmation of transmission by the transmitting
equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt
requested, postage prepaid, in each case to the following addresses or facsimile numbers and marked
to the attention of the Person designated below (or to such other address, facsimile number or
Person as a party may designate by notice to the other parties):
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| If to any of the Sellers, to: | With a required copy to: | |||
| Gibraltar Industries, Inc. | Lippes Xxxxxxx Xxxxxx Xxxxxxxx LLP | |||
| 0000 Xxxx Xxxxx Xxxx | 000 Xxxx Xxxxxx | |||
| X.X. Xxx 0000 | Xxxxx 000 | |||
| Xxxxxxx, Xxx Xxxx 00000-0000 | Xxxxxxx, Xxx Xxxx 00000-0000 | |||
| Attention: Xxxxxxx X. Xxxxx | Attention: Xxxx X. Xxxxxx, Esq. | |||
| Fax: (000) 000-0000 | Fax: (000) 000-0000 | |||
| If to Purchaser or Purchaser | With a required copy to: | |||
| Ohio Affiliate, to: | ||||
| Xxxx X. Xxxxxxxx, Esq. | Xxxxxxxxx X. Xxxxxx, Esq. | |||
| 000 Xxx Xxxxxx Xxxxxx Xxxx | Xxxxx, Xxxxx, Xxxxxxx and Xxxxx LLP | |||
| Xxxxxxxx, Xxxx 00000 | 00 Xxxx Xxx Xxxxxx | |||
| Fax: (000) 000-0000 | X.X. Xxx 0000 | |||
| Xxxxxxxx, Xxxx 00000-0000 | ||||
| Fax: (000) 000-0000 |
In connection with any notice to be provided by any one or more Sellers to Purchaser or
Purchaser Ohio Affiliate, written notice delivered by Parent in the manner described above and
within any applicable time period, shall be deemed to be an effective notice. In connection with
any notice to be provided to any one or more Sellers, written notice delivered to Parent in the
manner described above and within any applicable time period, shall be deemed to be an effective
notice.
In connection with any notice to be provided by Purchaser or Purchaser Ohio Affiliate to
Sellers, written notice delivered by Purchaser Ohio Affiliate in the manner described above and
within any applicable time period, shall be deemed to be an effective notice. In connection with
any notice to be provided to Purchaser or Purchaser Ohio Affiliate, written notice delivered to
Purchaser Ohio Affiliate in the manner described above and within any applicable time period, shall
be deemed an effective notice.
10.6 Confidential Information.
(a) From and after the date hereof, none of the Sellers shall disclose to any Person (other
than such party’s business, financial and legal advisers and other than Purchaser or any Purchaser
Affiliate) in any manner, directly or indirectly, any confidential or proprietary information or
data of any Purchaser Affiliate whether of a technical or commercial nature (“Confidential
Information”), or use or assist any Person (other than such Seller’s business financial and legal
advisers and other than any Purchaser Affiliate) to use, in any manner, directly or indirectly, any
Confidential Information of Purchaser, Purchaser Ohio Affiliate or their respective Affiliates.
Confidential Information excludes information which is or becomes generally known to the public and
which did not become generally known through the breach of any provisions of this Agreement. As
used in this Agreement, Confidential Information includes, but is not limited to, any and all (i)
computer software (and related object and source codes) proprietary to any Purchaser Affiliate,
together with all documentation for any such software; (ii) confidential, proprietary or trade
secret information submitted to any Purchaser Affiliate in confidence by its suppliers, employees,
consultants, customers or others; (iii)
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information of any Purchaser Affiliate concerning operations, customers or prospects, terms
and conditions of sale and prices, technical knowledge relating to customer requirements, and
knowledge of markets for its products and services; and (iv) subject to the successful consummation
of the Closing, all confidential, proprietary, and similar information of the Business, other than
information relating solely to the Excluded Assets. Sellers acknowledge that all information,
whether falling within the above definition or otherwise, shall be presumed to be Confidential
Information if any Purchaser Affiliate takes measures designed to prevent it, in the ordinary
course of business, from being available to Persons other than those selected to have access
thereto for limited purposes. All information disclosed to Sellers or to which any Seller obtains
access, which such Person has a reasonable basis to believe to be Confidential Information, or
which such Person has a reasonable basis to believe any Purchaser Affiliate treats as being
Confidential Information, shall be presumed to be Confidential Information.
(b) Subject to the last sentence of this Section 10.6(b), the Confidentiality Agreement shall
continue to apply to Sellers’ Confidential Information. Effective upon the Closing: (i) all of
Sellers’ Confidential Information relating to the Business shall become Confidential Information of
Purchaser, the provisions of Section 10.6(a) shall apply thereto and the provisions of the
Confidentiality Agreement shall cease to apply to Sellers’ Confidential Information relating to the
Business; and (ii) the restrictions on disclosure of Sellers’ Confidential Information as contained
in the Confidentiality Agreement shall, with respect to any of Sellers’ Confidential Information
which is not related to the Business, continue to apply for all periods of time after the Closing
Date.
(c) Notwithstanding anything to the contrary herein, in the event this Agreement is terminated
in accordance with its terms, the Confidentiality Agreement shall remain in full force and effect
in accordance with the terms thereof.
10.7 Counterparts. This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of which, when taken
together shall constitute a single agreement.
10.8 Pronouns. All pronouns used in this Agreement shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Person(s) may require.
10.9 Governing Law. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the internal laws of the State of Ohio without regard to
the principles of conflict of laws thereof.
10.10 No Strict Construction. The language used in this Agreement shall be deemed to
be the language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party. The headings of Articles and Sections of this
Agreement are for convenience only and will not affect its construction or interpretation.
10.11 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable Regulations, but if any
provision of this Agreement is held to be prohibited by or invalid under applicable Regulations,
such provision will be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement.
10.12 Public Announcements. Except as required by applicable Regulations, no party to
this Agreement shall make any public statement or release concerning this Agreement or the
transactions contemplated hereby except for such information as shall have been approved by the
other party.
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10.13 Knowledge. For purposes of this Agreement, any representation or warranty of
any Seller or Sellers which is qualified by knowledge shall mean the actual knowledge of Xxxxx
Xxxxxxx, Xxxxxx Cover, Xxx Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxx, Xxx X’Xxxx, Xxxxx Xxxx, Xxx
Xxxxx, Xxxx Xxxxxxx and Xxxx Xxxxxxx and any representation or warranty of Purchaser or Purchaser
Ohio Affiliate which is qualified by knowledge shall mean the actual knowledge of Xxxxxx Xxxx, Xxxx
Xxxxxxxx, Xxx Xxxxx Xxxxxx Xxxx and Xxxx Xxxxxxx.
[Remainder of page intentionally left blank. Signature page follows.]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their
respective duly authorized officers, as of the date first written above.
| GIBRALTAR INDUSTRIES, INC: | ||||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||||
| Name: | Xxxxxxx X. Xxxxx | |||||
| Title: | Vice President | |||||
| GIBRALTAR STEEL CORPORATION OF NEW YORK: | ||||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||||
| Name: | Xxxxxxx X. Xxxxx | |||||
| Title: | Vice President | |||||
| GIBRALTAR STRIP STEEL, INC: | ||||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||||
| Name: | Xxxxxxx X. Xxxxx | |||||
| Title: | Vice President | |||||
| THE WORTHINGTON STEEL COMPANY, LLC: COMPANY: |
THE WORTHINGTON STEEL | |||||||||||||
By:
|
/s/ Xxxx X. Xxxxxxxx | By: | /s/ Xxxx X. Xxxxxxxx | |||||||||||
| Name: | Xxxx X. Xxxxxxxx | Name: | Xxxx X. Xxxxxxxx | |||||||||||
| Title: | Vice President | Title: | Vice President | |||||||||||
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