EXECUTION COPY
Exhibit 2.1
ASSET PURCHASE AGREEMENT
By and Between
RELIANCE STEEL & ALUMINUM CO.
and
PITT-DES MOINES, INC.
__________________________________________
Relating to the Purchase of Assets of the
Steel Service Centers Division of Pitt-Des Moines, Inc.
__________________________________________
May 18, 2001
TABLE OF CONTENTS
ARTICLE I SALE AND PURCHASE OF ASSETS............................ 2
1.01 Sale of Assets........................................ 2
1.02 Retained Assets....................................... 4
1.03 Purchase Price........................................ 5
1.04 Payment of the Purchase Price......................... 5
1.05 Adjustments Based Upon Net Assets..................... 5
1.06 Allocation of Purchase Price.......................... 7
1.07 Liabilities Assumed by Purchaser...................... 7
1.08 Liabilities Not Assumed by Purchaser.................. 8
ARTICLE II CLOSING............................................... 9
2.01 Closing; Closing Date................................. 9
2.02 Effective Time........................................ 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER............. 10
3.01 Authority............................................. 10
3.02 Seller Organization................................... 10
3.03 General Steel Organization and Authority.............. 10
3.04 General Steel Capitalization and Ownership of Shares.. 11
3.05 Securityholder Agreements............................. 11
3.06 No Options............................................ 11
3.07 Non-Contravention..................................... 12
3.08 Subsidiaries.......................................... 12
3.09 Financial Statements.................................. 12
3.10 Governmental Consents................................. 12
3.11 Absence of Certain Changes............................ 13
3.12 Absence of Certain Other Changes...................... 13
3.13 Undisclosed Liabilities............................... 14
3.14 Tax Matters........................................... 14
3.15 Other Tax Liabilities................................. 14
3.16 Assets................................................ 15
3.17 Owned Real Property and Washington Property........... 15
3.18 Intellectual Property................................. 16
3.19 Real Property Leases.................................. 16
3.20 Contracts............................................. 16
3.21 Accounts Receivable................................... 17
3.22 Insurance............................................. 17
3.23 Litigation............................................ 17
3.24 Employees............................................. 18
3.25 Environmental Matters................................. 18
3.26 Employee Benefits..................................... 20
3.27 Legal Compliance...................................... 21
3.28 Broker's Fees......................................... 22
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3.29 Disclosures.......................................... 22
3.30 Disclaimer of Warranties............................. 22
3.31 Seller SEC Documents................................. 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.......... 23
4.01 Purchaser Organization............................... 23
4.02 Authority............................................ 23
4.03 Non-Contravention.................................... 23
4.04 No Brokers........................................... 24
4.05 Financing............................................ 24
4.06 Purchaser Accredited Investor........................ 24
4.07 SEC Documents........................................ 24
4.08 Absence of Certain Changes........................... 24
ARTICLE V AGREEMENTS RELATED TO EMPLOYMENT AND BENEFIT PLANS.... 25
5.01 Offer of Employment.................................. 25
5.02 Salaried Employee Benefits........................... 25
5.03 Hourly Employee Benefits............................. 26
5.04 General Steel Corporation Employees.................. 28
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING...................... 28
6.01 Conditions Precedent to the Obligation of Purchaser
to Close............................................. 28
6.02 Conditions Precedent to the Obligation of Seller to
Close................................................ 29
ARTICLE VII [RESERVED.]......................................... 29
ARTICLE VIII ACTIONS TO BE TAKEN AT THE CLOSING................. 30
8.01 Delivery of Cash and Instruments by Purchaser........ 30
8.02 Delivery of Instruments by Seller.................... 31
8.03 Other Documents...................................... 32
ARTICLE IX ACCESS............................................... 32
9.01 Seller's Access to Records........................... 32
9.02 Purchaser's Access to Assets......................... 32
ARTICLE X NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION............................................ 33
10.01 Non-Survival of Representations and Warranties....... 33
10.02 Seller Indemnification............................... 33
10.03 Purchaser Indemnification............................ 34
10.04 Notice of Claims..................................... 34
10.05 Method of Asserting Claims Relating to Third-Party
Actions.............................................. 35
ARTICLE XI POST-CLOSING COVENANTS............................... 35
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11.01 Tax Matters; Real Estate Costs....................... 35
11.02 Covenant Not to Compete.............................. 36
11.03 Further Assurances................................... 37
11.04 Xxxx-Xxxxx-Xxxxxx.................................... 37
11.05 No Further Action Letter............................. 37
ARTICLE XII MISCELLANEOUS....................................... 38
12.01 Press Releases and Announcements..................... 38
12.02 No Third-Party Beneficiaries......................... 38
12.03 Entire Agreement..................................... 39
12.04 Knowledge of Seller.................................. 39
12.05 Succession and Assignment............................ 39
12.06 Counterparts......................................... 39
12.07 Headings............................................. 39
12.08 Notices.............................................. 39
12.09 Governing Law........................................ 40
12.10 Amendments and Waivers............................... 40
12.11 Severability......................................... 40
12.12 Expenses............................................. 41
12.13 Construction......................................... 41
12.14 Incorporation of Exhibits and Schedules.............. 41
12.15 Termination.......................................... 41
12.16 Confidentiality...................................... 42
EXHIBITS
A. Note
B. Assumption Agreement
C. License Agreement
D. Fresno Submission
SCHEDULES
Schedule 1.01(b) Equipment
Schedule 1.01(d) Contract Rights
Schedule 1.01(n) Employee Benefit Plans
Schedule 1.02(b) Bank Accounts
Schedule 5.01 Severance Plans
Disclosure Schedule
Section 3.07(c) Non-Contravention
Section 3.09 Financial Statements
Section 3.10 Governmental Filings
Section 3.17 Owned Real Property and Washington Property
Section 3.18 Intellectual Property
Section 3.19 Real Property Leases
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Section 3.20 Contracts
Section 3.22 Insurance
Section 3.23 Litigation
Section 3.24(a) Employees
Section 3.24(b) Collective Bargaining Agreements
Section 3.26 Employee Benefit Plans
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is dated as of May 18,
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2001, by and between PITT-DES MOINES, INC., a Pennsylvania corporation
("Seller"), and RELIANCE STEEL & ALUMINUM CO., a California corporation
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("Purchaser").
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RECITALS:
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WHEREAS, Seller is a diversified engineering and construction company
and a distributor of a broad range of carbon steel products; and
WHEREAS, Seller's steel distribution segment currently operates seven
steel service centers located in the west and mid-west regions of the United
States. Seller's steel service centers process and distribute to end users a
general line of carbon steel products including plates, sheets, structural
shapes, bars, tubes, pipe and other miscellaneous metal products; and
WHEREAS, Seller operates one of its service centers as General Steel
Corporation, a Washington corporation ("General Steel"). General Steel owns and
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operates this service center in Woodland, Washington, and leases office space in
Des Moines, Washington. Seller owns 100% of the outstanding shares of stock of
General Steel (the "General Steel Shares"); and
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WHEREAS, Purchaser desires to purchase certain assets of Seller's
service centers at the following locations operated by Seller: Fresno,
California; Santa Clara, California; Stockton, California; Cedar Rapids, Iowa;
Sparks, Nevada; and Spanish Fork, Utah and the General Steel Shares. These
service center locations together with the service center owned and operated by
General Steel in Woodland, Washington, shall individually be referred to as a
"Service Center" and collectively referred to as the "Service Centers."
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Seller's steel processing and distribution business as conducted at and from the
Service Centers shall be referred to in this Agreement as the "Business"; and
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WHEREAS, Purchaser desires to specifically exclude from the purchase
(a) any and all assets of the former steel service center business located in
Des Moines, Iowa (the "Des Moines Service Center") except for inventory still
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located in Des Moines, Iowa and the equipment in Des Moines, Iowa listed on
Schedule 1.01(b), (b) any and all of the assets of the Seller's former culvert
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business which previously manufactured and marketed to end users corrugated
metal culvert pipe and accessories (the "Culvert Division"), and (c) any and all
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of the assets of any other line of business or division which Seller owns or
operates, whether in the past or present (the "Other Divisions"); and
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WHEREAS, Seller desires to sell and transfer, and Purchaser desires to
purchase and acquire, in exchange for the consideration herein specifically set
forth, the assets of the Service Centers used exclusively in the Business and
the General Steel Shares.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions herein contained, the parties hereto,
intending to be legally bound hereby, agree for themselves and their successors
and assigns as follows (capitalized terms have the meanings defined herein):
ARTICLE I
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SALE AND PURCHASE OF ASSETS
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1.01 Sale of Assets.
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Subject to the terms and conditions hereof, at the Closing Seller
shall sell, transfer, assign, convey and deliver to Purchaser or a designated
subsidiary of Purchaser, and Purchaser, directly or indirectly through a
subsidiary, hereby agrees to purchase, acquire and accept from Seller, all of
Seller's right, title and interest in and to the assets of Seller used
exclusively in connection with the Business (such assets being hereinafter more
fully described and in the aggregate sometimes referred to as the "Assets")
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except for such assets which are specifically excluded from this purchase by the
terms of Section 1.02. The Assets shall be transferred with good and marketable
title, free and clear of all liens, encumbrances, and security or other
interests except for the Assumed Liabilities identified in Section 1.07. The
Assets include all properties and assets of every kind, nature and description,
tangible and intangible, used exclusively in connection with the Business that
are owned by Seller or in which Seller has any right or interest (to the extent
of any such right or interest) including, without limiting the generality of the
foregoing, the following (but subject always to the provisions of Section 1.02):
(a) all Owned Real Property listed in Section 3.17 of the Disclosure
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Schedule together with all buildings, fixtures and improvements located thereon;
(b) all equipment and all other machinery, equipment, computer
hardware, tooling, motor vehicles, supplies, furniture, fixtures and
transportation, packing and delivery equipment listed on Schedule 1.01(b) that
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are owned by Seller and used exclusively in connection with the Business;
(c) all inventory including, but not limited to, raw materials, work-
in-progress, goods on consignment and finished goods of the Business;
(d) contract rights under those Contracts listed on Schedule 1.01(d);
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(e) all leasehold estates and other rights under the Leases listed in
Section 3.19 of the Disclosure Schedule;
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(f) Seller's ownership interest in General Steel, a 100% owned
subsidiary of Seller, consisting entirely of nine hundred (900) shares of common
stock (the "General Steel Shares");
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(g) certain intellectual property rights consisting of (collectively,
"Intellectual Property"):
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(i) all right, title and interest of the Seller in and to all
of the trade secrets, technical information, know-how, inventions and
discoveries, whether or not patentable and whether or not confidential,
pertaining exclusively to the Business;
(ii) tangible indicia including all United States and foreign
trademarks and trademark registrations and trademark applications, trade names,
copyrights, United States and foreign patents, patent applications, invention
disclosures and drawings set forth in Section 3.18 of the Disclosure Schedule;
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(iii) all right, title and interest of the Seller in and to the
slogan "Service When and Where You Need It";
(iv) certain rights to use the names "PDM" "PDM STEEL CENTERS"
"PDM STEEL CENTERS CORP." "PDM STEEL SERVICE CENTERS INC." "PDM SERVICE CENTER"
"PDM SERVICE CENTERS" and "PDM STEEL" as provided for in the License Agreement
attached hereto as Exhibit C; and
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(v) all right, title and interest of the Seller in and to the
Internet domain name "xxxxxxxx.xxx".
(h) accounts receivable and notes receivable attributable exclusively
to the Business (except for those accounts receivable and notes receivable which
are retained pursuant to the terms of Section 1.02(f) below);
(i) all prepaid items attributable exclusively to the Business
(except for prepaid items related to Retained Assets);
(j) to the extent transferable, memberships, agencies, licenses,
authorizations, consent agreements and all transferable permits attributable
exclusively to the Business (except as to certain licenses related to Retained
Assets);
(k) all royalties, deferred charges, advance payments, claims for
refunds or rebates (except with respect to Taxes other than sales or use Taxes
payable as a result of this transaction), rights of offset and credits of all
kinds (except with respect to Taxes other than sales or use Taxes payable as a
result of this transaction) attributable exclusively to the Business pertaining
to periods ending on or before the Closing Date;
(l) all books of account, files, papers, records and customer,
supplier, employee and production information, including data contained in
computer software files, wherever located (except as to certain records which
pertain to Retained Assets) related to the Business;
(m) all items of computer software related exclusively to the
Business; and
(n) the assets of the Plans which are listed on Schedule 1.01(n) to
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the extent attributable to employees of the Business who become employees of the
Purchaser at Closing.
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EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE ASSETS ARE BEING
SOLD "AS IS" WITHOUT IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR OTHER IMPLIED WARRANTIES.
1.02 Retained Assets.
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Anything in Section 1.01 to the contrary notwithstanding, there shall
be excluded from the Assets and retained by Seller all of Seller's right, title
and interest in (each item being referred to herein as a "Retained Asset" and
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collectively as the "Retained Assets"):
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(a) this Agreement;
(b) all cash (excluding xxxxx cash at the Business), cash equivalents
and all bank accounts of the Seller which relate to the Business, which bank
accounts are listed on Schedule 1.02(b);
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(c) all rights to refunds, rebates or rights of offset or credits
with respect to any Taxes with respect to the Business pertaining to periods
ending on or prior to the Closing Date other than sales or use Taxes payable as
a result of this transaction. For purposes of this Agreement, "Taxes" shall mean
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any and all taxes, sums or amounts assessed or assessable, levied or due, by or
to any federal, state or county or other local governmental authority or agency;
(d) all insurance policies; provided that Purchaser shall be entitled
to the proceeds in the event that any claims or liabilities arise with respect
to the Business or the Assets covered by the insurance policies;
(e) all central administration, purchasing, insurance, accounting,
treasury, tax, engineering, testing, marketing and other records that relate to
Seller's businesses in general, as opposed to those records that relate to the
Business exclusively;
(f) accounts receivable and notes receivable related to inter-
division transactions, if any;
(g) all assets of every kind and nature whatsoever, owned, held or
used by Seller for any of its businesses which are not the Business, including,
but not limited to assets of;
(i) the Des Moines Service Center, except for inventory still
located in Des Moines, Iowa and the equipment in Des Moines, Iowa listed on
Schedule 1.01(b);
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(ii) the Culvert Division; and
(iii) the Other Divisions
(h) all prepaid items, if any, related to Retained Assets;
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(i) except for assets of the Plans set forth on Schedule 1.01(n) to
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the extent attributable to employees of the Business who become employees of the
Purchaser, all assets of Seller's Plans; and
(j) except as otherwise specifically provided for in this Agreement
or in the License Agreement, all rights to the names "Pitt-Des Moines, Inc.,"
"PDM" and all similar, derivative or related names; provided that such names
shall not be used in connection with a metals service center or the processing
and distribution of metals.
1.03 Purchase Price.
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The aggregate purchase price for the Assets and the Assumed
Liabilities (as defined below) and obligations assumed expressly by Purchaser
hereunder shall be Ninety-Seven Million Five Hundred Thousand (U.S.) Dollars
(US$97,500,000) minus any amount to be paid by Seller pursuant to Section 1.05
and/or Section 9.02 (the "Purchase Price").
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1.04 Payment of the Purchase Price.
-----------------------------
Seller acknowledges that it has received Three Million Dollars
($3,000,000) (the "Deposit") as a deposit, and that the Deposit, plus interest
earned thereon from the date of receipt, shall be credited against the Purchase
Price. At Closing, Purchaser will pay Seller not less than Forty-Five Million,
Seven Hundred and Fifty Thousand Dollars ($45,750,000) by wire transfer of same
day funds. At Closing, Purchaser will deliver to Seller a promissory note in
the form attached as Exhibit A (the "Note") for the balance of the Purchase
--------- ----
Price, subject to Section 9.02(b). The Note shall bear interest at a rate equal
to the rate of interest that Seller would pay its primary lender, but not more
than 7% per annum. The Note shall be payable on or before September 30, 2001
(the "Maturity Date"). The Note may be prepaid, in whole or in part, at any
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time. The outstanding balance of the Note shall become immediately due and
payable on (i) the closing of an offering of debt or equity securities by
Purchaser or (ii) the closing of a refinancing of Purchaser's outstanding long-
term indebtedness, if either such closing occurs before the Maturity Date.
1.05 Adjustments Based Upon Net Assets.
---------------------------------
(a) Closing Statement Preparation. Within forty-five (45) days after
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the Closing, Seller shall, at Seller's expense, prepare and deliver to Purchaser
an audited balance sheet of the Business as of the close of business on the
Closing Date (the "Closing Balance Sheet") which audit shall be performed by
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Ernst and Young LLP or by an independent public accountant selected by Seller
and acceptable to the Purchaser, acting reasonably. The Closing Balance Sheet
shall be prepared in accordance with generally accepted accounting principles
applied on a basis consistent with Seller's past practice and applying the
accounting policies, including inventory valuation policies, applied by the
Seller in preparing the Most Recent Balance Sheet. Based on the Closing Balance
Sheet, Seller will also deliver to Purchaser, within ten (10) business days
after delivery of the Closing Balance Sheet, its proposed calculation of Net
Assets of the Business and the adjustment, if any, to be made to the Purchase
Price in accordance with Section 1.05(e) below. For purposes of this Agreement,
"Net Assets" shall
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mean the total assets (excluding cash) of the Business to be transferred to
Purchaser less the total liabilities of the Business to be assumed by Purchaser
as of the Closing Date.
(b) Closing Balance Sheet Review. Upon Seller's delivery of the
----------------------------
Closing Balance Sheet to Purchaser, Purchaser shall review the Closing Balance
Sheet (and Seller's calculation of Net Assets and proposed Purchase Price
adjustment) and, within thirty (30) days after the receipt thereof from the
Seller, Purchaser shall deliver to Seller in writing any objections or disputes
which it may have with respect thereto.
(c) Closing Balance Sheet Dispute. If Purchaser makes a timely
-----------------------------
objection to the Closing Balance Sheet (or to Seller's calculation of the Net
Assets or the resulting adjustment of the Purchase Price), and Purchaser and
Seller are unable to resolve their disputes within fifteen (15) days after
Purchaser's objection, the specific disputed items shall be resolved before the
independent public accounting firm of PricewaterhouseCoopers LLP (the
"Independent Accountants"). The Independent Accountants will be instructed to
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resolve the disputed items and perform their services as expeditiously as
possible, and to deliver a revised Closing Balance Sheet to Seller and Purchaser
as a result thereof. The revised Closing Balance Sheet, reflecting the
resolution of the disputed items, shall be prepared in compliance with the
provisions of this Agreement. The fees and expenses of the Independent
Accountants shall be shared equally by Purchaser and Seller.
(d) Final Closing Balance Sheet. The Closing Balance Sheet shall be
---------------------------
deemed final and binding upon the parties and shall become the "Final Closing
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Balance Sheet" upon earliest to occur of the following:
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(i) the mutual acceptance by Purchaser and Seller of the
Closing Balance Sheet;
(ii) Purchaser's failure to make a timely objection in writing
to the Closing Balance Sheet; or
(iii) the delivery by the Independent Accountants of a revised
Closing Balance Sheet to Purchaser and Seller in accordance with the provisions
of Section 1.05(c).
(e) Adjustment of Purchase Price.
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(i) If the Net Assets, as determined from the Final Closing
Balance Sheet, is equal to Eighty Million (U.S.) Dollars (US$80,000,000) (the
"Base Amount"), no adjustment to the Purchase Price will be made.
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(ii) If the Net Assets, as determined from the Final Closing
Balance Sheet, is less than the Base Amount, such deficiency (the "Asset
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Deficiency") shall be treated as an adjustment to the Purchase Price, in which
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event the Purchase Price shall be reduced by an amount equal to the Asset
Deficiency. Seller shall pay to Purchaser an amount equal to the Asset
Deficiency.
(iii) Any amounts to be paid pursuant to this Section 1.05 shall
be payable by Seller by wire transfer of same day funds within three (3)
business days after the date
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on which the Final Closing Balance Sheet shall have become final and binding
pursuant to Section 1.05(d).
(iv) There shall be no adjustment of the Purchase Price as a
result of inventory valuation due to market prices.
1.06 Allocation of Purchase Price.
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After the Final Closing Balance Sheet has been determined, Purchaser
shall provide the allocation of the Purchase Price allocated among the Assets
and the Assumed Liabilities to Seller. Seller and Purchaser shall agree on such
allocation. Seller and Purchaser each hereby covenant and agree that neither of
them will take a position on any income tax return, before any governmental
agency charged with the collection of any income tax, or in any judicial
proceeding that is in any way inconsistent with the agreed upon allocation.
1.07 Liabilities Assumed by Purchaser.
--------------------------------
At the Closing, Purchaser agrees to assume, and thereafter pay, fully
satisfy and perform when due in accordance with their respective terms, all
liabilities and obligations of the Business prior to or subsequent to the
Closing, except as expressly provided below and except for those expressly
retained by Seller pursuant to the terms of Section 1.08 hereof, including,
without limiting the generality of the foregoing, all of the following (such
liabilities and obligations being hereinafter referred to collectively as the
"Assumed Liabilities"):
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(a) all liabilities and obligations of Seller for the trade accounts
payable attributable exclusively to the Business except for those expressly not
assumed pursuant to the terms of Section 1.08 below;
(b) all obligations and liabilities of Seller under the Contracts
listed on Schedule 1.01(d), including those arising prior to the Closing Date to
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the extent reflected on the Final Closing Balance Sheet;
(c) all liabilities and obligations of Seller under the Leases listed
in Section 3.19 of the Disclosure Schedule, including those arising prior to the
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Closing Date to the extent reflected on the Final Closing Balance Sheet;
(d) all liabilities and obligations of Seller in the nature of a
liability claim or warranty claim and arising with respect to any products sold
by or services rendered by Seller exclusively in connection with the Business
prior to Closing, including but not limited to the liabilities and claims known
to the Seller; provided that Seller has disclosed all known liabilities and
claims to Purchaser before the Closing and provided further that Purchaser shall
be entitled to the proceeds of any insurance covering such liabilities and
claims;
(e) all liabilities and obligations accruing subsequent to the
Closing with respect to utilities and Taxes on the Owned Real Property and
personal property of the Business acquired by the Purchaser;
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(f) all liabilities and obligations of Seller pursuant to the
collective bargaining agreements listed on Section 3.24(b) of the Disclosure
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Schedule;
(g) except as provided in Section 1.08(f) all claims made by New
Employees and their beneficiaries attributable to the Business for costs
incurred after the Closing Date relating to illness or injuries that arise or
commence before or after the Closing Date, including but not limited to the
liabilities and claims known to the Seller;
(h) all claims, actions, proceedings, citations, notices of
violations, orders, administrative, civil or criminal fines or penalties (in
each case whether known or unknown) under the Occupational Safety and Health Act
and the regulations thereunder or similar legislation, rules and regulations in
respect of or as a result of events (whether known or unknown) that are related
exclusively to the Business, including but not limited to the liabilities and
claims known to the Seller provided that Seller has disclosed all known claims,
actions, proceedings, citations, notices of violations, orders, administrative,
civil or criminal fines or penalties to Purchaser before the Closing; and
provided further that Purchaser shall be entitled to the proceeds of any
insurance covering such liabilities and claims;
(i) any claims, actions, proceedings, citations, notices of
violations, orders, administrative, civil fines or penalties (in each case
whether known or unknown) by any governmental authority or agency or by non-
governmental third parties under, or any damages or liabilities resulting from,
the violation of any Environmental Laws with respect to the Business or with
respect to any site or facility to which Seller, in connection with the
Business, has sent, either directly or indirectly, Regulated Materials for
storage, treatment, disposal or other management; provided that Seller has
disclosed all known liabilities and claims to Purchaser before the Closing and
provided further that Purchaser shall be entitled to the proceeds of any
insurance covering such liabilities and claims;
(j) all liabilities and obligations with respect to sales or use
Taxes, if any, payable as a direct result of the consummation of the transaction
contemplated by this Agreement;
(k) all claims for severance pay under PDM's regular and special
severance policies described in Schedule 5.01 by any New Employee who is
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terminated by Purchaser without cause as of or within one year after the
Closing; and
(l) all liabilities and obligations of any nature whatsoever
attributable to the Business except those expressly excluded pursuant to the
terms of Section 1.08 hereof.
1.08 Liabilities Not Assumed by Purchaser.
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Anything in Section 1.07 to the contrary notwithstanding, there shall
be excluded from the Assumed Liabilities and Purchaser shall not assume any of
the following (the "Retained Liabilities"):
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(a) all liabilities or obligations of Seller for foreign, federal,
state or local income Taxes and, except as provided in Section 7.04, for all
real estate Taxes, both general and
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special, and assessments with respect to the Owned Real Property and the Leased
Real Property for, in all cases, all periods prior to and including the Closing
Date;
(b) all liabilities or obligations of Seller for expenses (including
fees and disbursements of counsel and independent public accountants for
Seller), except as may be otherwise provided in Section 1.07, incurred by Seller
for the transactions contemplated hereby;
(c) all liabilities or obligations of Seller for payment of wages and
bonuses (except for incentives, compensation or liabilities or obligations
specifically assumed by Purchaser hereunder, to the extent reflected on the
Final Closing Balance Sheet) and wage Taxes for services rendered by employees
of Seller prior to and including the Closing Date;
(d) all obligations and liabilities of Seller for sales and use
Taxes, franchise Taxes, gross receipts Taxes, business occupation Taxes, license
taxes, whether calculated on a separate company, combined, consolidated or
unitary basis, incurred in the ordinary course of business of the Business prior
to and including the Closing Date, other than sales and use Taxes, and transfer
Taxes or stamps, if any, incurred as a result of the transactions contemplated
by this Agreement which shall be the obligation of Purchaser;
(e) all obligations and liabilities of Seller under Seller's Plans
(except for obligations and liabilities of Seller under the Plans listed on
Schedule 1.01(n) hereto);
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(f) all liabilities and obligations of Seller relating to workers'
compensation claims made by employees of the Seller attributable to the Business
and relating to employees of Seller on long-term or short-term disability for
periods prior to and including the Closing Date;
(g) any and all inter-division debts and inter-division accounts
payable and notes payable;
(h) any indebtedness for borrowed funds; and
(i) all obligations and liabilities of Seller other than those
attributable to the Business.
ARTICLE II
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CLOSING
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2.01 Closing; Closing Date.
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The closing of the transactions contemplated by the Agreement (the
"Closing") shall take place at the offices of Purchaser located at 350 South
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Grand Avenue, Suite 5100, Xxx Xxxxxxx, XX 00000, 10:00 a.m. local time, on the
second business day following the satisfaction or, to the extent permitted, the
waiver of the conditions set forth in Article VI, but no earlier than July 2,
2001, or at such other place or such other time or date as the parties may
agree. The time and date upon which the Closing occurs is herein called the
"Closing Date."
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2.02 Effective Time.
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All transactions entered into on the Closing Date pursuant hereto
shall be deemed to have occurred simultaneously, and shall become effective as
of 11:59 p.m. local time in Los Angeles, California, on the Closing Date, and
thus, any and all gains and losses, howsoever incurred, from the Business from
and after that time and date shall be the sole and exclusive property or
responsibility, as the case may be, of Purchaser.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Purchaser as hereafter set forth in
this Article III, and acknowledges that Purchaser is relying upon such
representations and warranties contained in this Article III as being true and
correct as of the date of this Agreement except as set forth in the disclosure
schedule attached hereto (the "Disclosure Schedule"). The Disclosure Schedule
-------------------
shall be arranged in sections and subsections corresponding to the numbered and
lettered sections and subsections contained in this Article III.
3.01 Authority.
---------
Seller represents that (a) it has all requisite corporate power,
authority and capacity to execute and deliver this Agreement and all other
agreements and instruments executed by Seller in connection herewith and to
perform its obligations hereunder and thereunder, and (b) this Agreement and all
other agreements and instruments executed by Seller or in connection herewith,
have been duly and validly executed and delivered by Seller and constitute valid
and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms.
3.02 Seller Organization.
-------------------
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. Seller is duly
qualified to conduct business and is in corporate and tax good standing under
the laws of each jurisdiction in which the Service Centers are located and in
which the nature of its businesses or the ownership or leasing of its properties
requires such except where the lack of such qualification would not have a
material adverse effect on the assets, business, liabilities, operations,
financial condition or results of operations of the Business ( a "Material
--------
Adverse Effect"). Seller has all requisite corporate power and authority to
--------------
carry on the Business and to own, lease and use the properties owned and used by
it. Seller has furnished to Purchaser true and complete certified copies of its
articles of incorporation and bylaws as in effect on the date hereof.
3.03 General Steel Organization and Authority.
----------------------------------------
General Steel is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington. General Steel is duly
qualified to conduct business and is in corporate and tax good standing under
the laws of each jurisdiction in which
-10-
the nature of its businesses or the ownership or leasing of its properties
requires such, except where the lack of such qualification would not have a
material adverse effect on the assets, business, liabilities, operations,
financial condition or results of operations of its business as it is currently
being conducted. General Steel has all requisite corporate power and authority
to carry on its business and to own and use the properties owned and used by it.
Seller has furnished to Purchaser true and complete copies of General Steel's
articles of incorporation and bylaws as in effect on the date hereof.
3.04 General Steel Capitalization and Ownership of Shares.
----------------------------------------------------
The authorized capital stock of General Steel (immediately prior to
the Closing) consists of (a) nine hundred (900) shares of common stock, no par
value (the "Common Shares"), of which nine hundred (900) shares are issued and
-------------
outstanding. All of the issued and outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable and are
owned, beneficially and of record, by the Seller. No subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of General Steel is authorized
or outstanding. General Steel has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders any shares of its capital stock, any
evidences of indebtedness or assets of General Steel. General Steel has no
obligation (contingent or otherwise) to purchase, redeem, or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof. There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
General Steel. All of the issued and outstanding shares of capital stock of
General Steel have been offered, issued or sold by General Steel in compliance
with applicable federal and state securities laws. Seller has full right, power
and authority to transfer the General Steel Shares to Purchaser, free and clear
of any liens, claims, encumbrances, charges or restrictions, and such transfer
will not constitute a material breach or material violation of, or material
default under, any agreement or instrument by which General Steel or Seller is
bound.
3.05 Securityholder Agreements.
-------------------------
There are no outstanding options to purchase shares of capital stock
of General Steel. There are no agreements, written or oral, between General
Steel and any holder of its securities or others, or among any holders of its
securities, relating to the acquisition (including without limitation rights of
first refusal, anti-dilution or pre-emptive rights), disposition, registration
under the Securities Act of 1933, as amended (the "Securities Act"), or voting
--------------
of the capital stock of General Steel.
3.06 No Options.
----------
No person or entity has any agreement or option, any right of first
refusal, any security interest, or any right or privilege (whether bylaw, pre-
emptive or contractual) capable of becoming an agreement or option for the
purchase or other acquisition from the Seller of any of the Assets other than
the rights of customers of the Seller to purchase inventory of the Business in
the ordinary and usual course of the Business.
-11-
3.07 Non-Contravention.
-----------------
Except as would not have a Material Adverse Effect, neither the
execution and delivery or performance of this Agreement by Seller nor the
consummation by Seller of the transactions contemplated hereby will, (a)
conflict with or violate any provision of the articles of incorporation or
bylaws of Seller or General Steel or other governance documents of Seller or
General Steel, (b) except for any filings specifically described in this
Agreement, require on the part of Seller any filing with (including notices and
reports), or any permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, or (c) except as set forth in Section 3.07(c) of
---------------
the Disclosure Schedule, to the knowledge of Seller, result in the breach of, or
constitute a default under, any agreement or instrument to which Seller is a
party or by which it is bound.
3.08 Subsidiaries.
------------
Except for the General Steel Shares, Seller, in connection with the
operation of the Business, does not, directly or indirectly, own, legally or
beneficially, any interest, by stock ownership or otherwise, in any other
corporation, partnership, trust, limited liability company or other form of
business association. Seller is not a general partner or the holder of a
majority of the partnership interests in any partnership.
3.09 Financial Statements.
--------------------
Section 3.09 of the Disclosure Schedule contains complete and
------------
accurate copies of the balance sheets of the Business as of March 31, 2001 (the
"Most Recent Balance Sheet") and as of December 31, 2000, results of operations
-------------------------
and related statements of cash flow for the Business for the three months ended
March 31, 2001 and for the year ended December 31, 2000. The foregoing financial
statements (the "Financial Statements") have been prepared in accordance with
--------------------
generally accepted accounting principles applied by Seller on a consistent basis
throughout the periods and fairly and accurately present, in all material
respects, the financial condition, results of operations and cash flows of the
Business, as of the respective dates thereof and for the periods referred to
therein, and are consistent with the books and records of Seller.
3.10 Governmental Consents.
---------------------
To the knowledge of Seller, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of Seller in
connection with the execution and delivery of this Agreement or the consummation
of the transactions to be consummated at the Closing, as contemplated by this
Agreement, except for matters which, if not obtained or made, would not have a
Material Adverse Effect, and except for filings as shall have been made prior to
and shall be effective on and as of the Closing and such filings required to be
made after the Closing under applicable federal and state securities laws, all
of which filings are specified in Section 3.10 of the Disclosure Schedule.
------------
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3.11 Absence of Certain Changes.
--------------------------
To the knowledge of Seller, since the date of the Most Recent Balance
Sheet, there has not been a Material Adverse Effect. For purposes of this
Agreement, the financial results of the Business for the period from the date of
the Most Recent Balance Sheet shall not constitute a Material Adverse Effect,
shall not be a basis for a reduction in the Purchase Price and shall not be
basis for termination of this Agreement by Purchaser to the extent that Seller
has made no adjustments to those financial results other than normal and
recurring adjustments in amounts similar to those taken in the periods of the
financial statements for the Business provided to Purchaser.
3.12 Absence of Certain Other Changes.
--------------------------------
Since the date of the Most Recent Balance Sheet, Seller has not:
(a) with respect to the Business: (i) created, incurred or assumed
any debt (including obligations in respect of capital leases) other than in the
ordinary course of business; (ii) assumed, guaranteed, endorsed or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person or entity; or (iii) made any loans, advances
or capital contributions to, or investments in, any other person or business
entity;
(b) with respect to the Business, mortgaged, pledged or subjected to
any lien, security interest or other charge or encumbrance any of its properties
or assets, tangible or intangible (other than purchase money security interests
on the Assets existing by operation of law (rather than under a written
agreement or contract) in connection with the acquisition by Seller or General
Steel of such Assets);
(c) amended its articles of incorporation or bylaws or the articles
of incorporation or bylaws of General Steel;
(d) changed in any material respect its accounting methods,
principles or practices;
(e) with respect to the Business, sold, assigned, transferred or
licensed any intellectual property, other than in the ordinary course of
business;
(f) to the knowledge of Seller, with respect to the Business,
amended, terminated, taken or omitted to take any action that would constitute a
violation of or default under, or waived any rights under, any contract or
agreement or entered into any contract or agreement involving the potential
payment or receipt by Seller in excess of $50,000;
(g) with respect to the Business, made or committed to make any
capital expenditure in excess of Two Hundred Fifty Thousand Dollars ($250,000)
in the aggregate;
(h) with respect to the Business, forgiven or canceled any debts or
claims, or waived any material rights, having a value in excess of Two Hundred
Fifty Thousand Dollars ($250,000) in the aggregate;
-13-
(i) with respect to the Business, adopted or amended, in any
material respect, any bonus, profit-sharing, stock option, pension, retirement,
deferred compensation, severance, termination or other material plan, agreement,
trust, fund or arrangement for the benefit of employees;
(j) with respect to the Business, experienced any labor trouble that
materially and adversely affects its relations with its employees as a whole;
(k) with respect to General Steel, declared, set aside, made or paid
any dividend or other distribution in respect of its capital stock, or agreed to
do any of the foregoing, or purchased or redeemed or agreed to purchase or
redeem, directly or indirectly, any shares of its capital stock;
(l) with respect to General Steel, issued or sold any shares of its
capital stock of any class or any options, warrants, conversion or other rights
to purchase any such shares or any securities convertible into or exchangeable
for such shares;
(m) with respect to General Steel, made any payment of any nature to
any securityholder of General Steel other than salary payable in the ordinary
course of business consistent with past practices;
(n) agreed in writing or otherwise to take any of the foregoing
actions; or
(o) conducted the Business other than in the ordinary course.
3.13 Undisclosed Liabilities.
-----------------------
To the knowledge of Seller, other than such liabilities which
individually or in the aggregate would not have a Material Adverse Effect, the
Seller does not have any liability with respect to the Business (whether
absolute or contingent, whether liquidated or unliquidated and whether due or to
become due), except for (a) liabilities shown on the Most Recent Balance Sheet,
(b) liabilities which have arisen since the date of the Most Recent Balance
Sheet in the ordinary course of business which are similar in nature and amount
to the liabilities shown on the Most Recent Balance Sheet, and (c) the Retained
Liabilities.
3.14 Tax Matters.
-----------
Seller has filed all material tax returns and reports as required by
law, those reports are true and correct in all material respects and Seller has
paid all material Taxes and other material assessments due.
3.15 Other Tax Liabilities.
---------------------
To the knowledge of Seller, Seller and General Steel have withheld or
collected from each payment made to its employees, independent contractors,
creditors, shareholders and other third parties the amount of all taxes required
to be withheld or collected therefrom and have paid or will pay all such amounts
to the appropriate taxing authorities when due. Neither Seller nor General
Steel nor any of its shareholders has ever filed a consent pursuant to Section
341(f)
-14-
of the Code relating to collapsible corporations. With respect to the Business,
General Steel is not required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of any voluntary change in accounting
method (nor has any taxing authority proposed in writing any such adjustment or
change of accounting method). Seller is not a foreign person within the meaning
of Section 1445 of the Code. General Steel has not received any notice of
deficiency or assessment of additional taxes that has not been paid or satisfied
and is not party to any action or proceeding by any federal, state, local or
foreign governmental authority for assessment or collection of taxes,
assessments or other governmental charges. There are no liens or other
encumbrances on any of the assets of either Seller or General Steel that arose
in connection with any failure (or alleged failure) to pay any tax. Except for
the affiliated group of which Seller is the common parent, neither Seller nor
General Steel has been a party to any tax allocation or sharing agreement or a
member of an affiliated group filing a consolidated federal income tax return.
Seller and General Steel have no liability for the taxes of any person other
than taxes of members of Seller's affiliated group under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
3.16 Assets.
------
The Assets and the Retained Assets include all rights and property
necessary to the conduct of the Business by Purchaser in the manner it is
presently conducted by Seller. Seller owns full legal title to the Assets free
and clear of any lien or encumbrance except (i) liens or other encumbrances
securing Taxes, assessments, governmental charges or levies, or claims of
mechanics, contractors, subcontractors, materialmen, carriers, landlords and the
like, all of which are not yet due and payable; (ii) liens or encumbrances shown
in the Preliminary Title Reports, as defined below, (iii) liens or encumbrances
incurred in the ordinary course of business in connection with deposit accounts
and other obligations of like nature, none of which, if not satisfied, would
have a Material Adverse Effect, and (iv) other imperfections of title, liens or
encumbrances, if any, which do not materially impair the continued use and
operation of the Assets as used in the Business.
3.17 Owned Real Property and Washington Property.
-------------------------------------------
To the knowledge of Seller, a complete and accurate list of all real
property owned by Seller in connection with the Business (the "Owned Real
----------
Property") and all real property owned by General Steel (the "Washington
-------- ----------
Property") is set forth in Section 3.17 of the Disclosure Schedule, and Seller
-------- ------------
has fee simple title in and to the Owned Real Property and General Steel has fee
simple title in and to the Washington Property subject, however, to such matters
of title of record, such matters as set forth in Section 3.17 of the Disclosure
------------
Schedule, or such matters as are apparent on the premises, and as will not
materially affect the continued use of the Owned Real Property or the Washington
Property as presently being used in connection with the Business and subject to
applicable laws. Seller has delivered to Purchaser true, correct and complete
copies of Preliminary Title Reports or Title Commitments in our possession with
respect to the Owned Real Property and the Washington Property (the "Preliminary
-----------
Title Reports").
-------------
-15-
3.18 Intellectual Property.
---------------------
To the knowledge of Seller, Seller owns, is licensed or otherwise
possesses, a legally enforceable right to use, all Intellectual Property used in
the operation of the Business or necessary for the operation of the Business as
presently proposed to be conducted and a listing of all material Intellectual
Property used in the operation of the Business or necessary for the operation of
the Business as presently proposed to be conducted is set forth on Section 3.18
------------
of the Disclosure Schedule.
3.19 Real Property Leases.
--------------------
To the knowledge of Seller, Section 3.19 of the Disclosure Schedule
------------
lists all real property leased or subleased to Seller or General Steel (the
"Leased Real Property"). Seller has delivered to Purchaser true, correct and
---------------------
complete copies of the leases and subleases (as amended to date) listed in
Section 3.19 of the Disclosure Schedule (the "Leases"). With respect to each
------------- ------
Lease, the Lease is legal, valid and binding, enforceable and in full force and
effect.
3.20 Contracts.
---------
(a) To the knowledge of Seller, Section 3.20 of the Disclosure
------------
Schedule sets forth the following written contracts to which Seller, with
respect to the Business, is a party (the "Contracts"):
---------
(i) any contract (or group of related contracts) for the
furnishing, performance or receipt of services or the delivery of products by
Seller involving or expected to involve the payment by Seller, or the receipt by
Seller or its assignees or transferees, of more than $50,000 in any twelve-month
period;
(ii) any contract concerning confidentiality, non-competition
or non-solicitation (other than confidentiality agreements with customers or
employees of Seller set forth in the standard terms and conditions of sale or
standard form of employment agreement of Seller, true and correct copies of
which have been delivered by Seller to Purchaser);
(iii) any contract under which the consequences of a default or
termination could have a Material Adverse Effect, or a material adverse effect
on the ability of the parties to consummate the transactions contemplated by
this Agreement;
(iv) any contract (or group of related written contracts) for
the lease of personal property from or to third parties providing (A) for lease
payments in excess of $50,000 per annum, or (B) for a term of more than one
year;
(v) any contract establishing a partnership or joint venture;
(vi) any contract (or group of related written contracts) under
which it has created, incurred, assumed, or guaranteed (or may create, incur,
assume, or guarantee) indebtedness (including capitalized lease obligations)
involving more than $50,000 or under which it has imposed (or may impose) a
security interest on any assets of Seller;
-16-
(vii) any service contracts; and
(viii) any other contract (or group of related written contracts)
involving more than $50,000 or a term of more than one year, whether or not
entered into in the ordinary course of business.
(b) Each Contract is legal, valid, binding and enforceable against
the other party thereto and Seller is not in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification or acceleration under such Contract.
(c) No Contract (i) limits the ability of Seller or General Steel to
compete in or conduct any line of business or compete with any person or in any
geographic area or during any period of time or (ii) immediately after the
Closing to the knowledge of Seller, would limit the ability of Purchaser or any
subsidiary of Purchaser to compete in or conduct any material line of business
or compete with any person or in any geographic area or during any period of
time.
3.21 Accounts Receivable.
-------------------
To the knowledge of Seller, all accounts receivable of the Business
are reflected properly on Seller's books and records, are valid receivables and
have been adequately reserved for on such books and records in accordance with
generally accepted accounting principles.
3.22 Insurance.
---------
To the knowledge of Seller, Section 3.22 of the Disclosure Schedule
------------
lists each insurance policy relating to the Assets or the Business (including
fire, theft, casualty, general liability, workers compensation, business
interruption, environmental, product liability and automobile insurance policies
and bond and surety arrangements) to which Seller or General Steel has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past two (2) years. To the knowledge of Seller, Seller and General
Steel are not in breach or default (including with respect to the payment of
premiums or the giving of notices) under any such policy, and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default or permit termination, modification or acceleration, under such
policy. Neither Seller nor General Steel has received any notice from the
insurer disclaiming coverage or reserving rights with respect to a particular
claim or such policy in general. Section 3.22 of the Disclosure Schedule
------------
identifies all claims asserted by Seller or General Steel with respect to the
Assets or the Business pursuant to any insurance policy since January 1, 2000 or
any claim made prior to that date which remains pending, and describes the
nature and status of each such claim. Neither Seller nor General Steel has
incurred any material loss, damage, expense or liability covered by any such
insurance policy for which it has not properly asserted a claim under such
policy.
3.23 Litigation.
----------
Section 3.23 of the Disclosure Schedule identifies, and contains a
------------
brief description of, (a) any unsatisfied judgment, order, decree, stipulation
or injunction and (b) any claim, complaint, action, suit, proceeding, or hearing
before any governmental entity or before
-17-
any arbitrator which relates to the Assets or the Business or to which Seller is
a party with respect to the Business; provided, however, that Seller makes no
representation or warranty in this Section 3.23 with respect to environmental
matters (which are addressed exclusively in Section 3.25). There are no judicial
or administrative actions, suits or proceedings pending relating to the Business
or the Assets or, to the knowledge of Seller, threatened against the Business or
affecting the Assets.
3.24 Employees.
---------
To the knowledge of Seller:
(a) Section 3.24(a) of the Disclosure Schedule lists all employees of
---------------
Seller employed exclusively in the Business as of May 1, 2001.
(b) Except as set forth in Section 3.24(b) of the Disclosure
---------------
Schedule, Seller is not a party to or bound by any collective bargaining
agreement relating to the employees of the Business, nor has Seller experienced
any strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes relating to the Business. There is no labor strike, dispute,
slowdown, work stoppage, and, to the knowledge of Seller, there is not
threatened nor has there been threatened, any organizing effort or activity by
any employee or labor union relating to the business activities of the Business.
3.25 Environmental Matters.
---------------------
Except for actual or alleged violations of Environmental Laws (as
defined herein) or any actual or potential business environmental risk,
recognized environmental condition or any other environmental condition, concern
or risk identified in the Action Items List (as defined herein), the Seller's
Environmental Reports (as defined herein) and the RWQCB Letter (as defined
herein):
(a) To the knowledge of Seller, Seller, with respect to the Business,
is in material compliance with all applicable Environmental Laws. For purposes
of this Agreement, "Environmental Laws" means all laws, regulations, decrees,
------------------
licenses, permits, authorizations or orders of any governmental entity relating
to (i) protection of human health (including employees in the workplace) from
exposure to hazardous, toxic or harmful substances, materials or wastes, (ii)
protection of plant and animal life and habitat, (iii) protection of the
environment, air, water, or land, and (iv) pollution or pollution control; such
laws including, but not limited to Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) (S) 9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. (S) (S) 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. (S) (S) 1801 et seq., the Toxic
Substances Control Act, 15 U.S.C. (S) (S) 2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. (S) (S) 1251 et seq., the Federal Safe Drinking
Water Act, 42 U.S.C. (S) (S) 300f-300j, the Federal Air Pollution Control Act,
42 U.S.C. 7401 et seq., the Oil Pollution Act, 33 U.S.C. (S) (S) 2701 et seq.,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S) (S) 136 to
136y, the Occupational Safety and Health Act, 29 U.S.C. (S) (S) 651 et seq.,
each as amended, or any equivalent state or local law and the regulations
promulgated thereunder.
-18-
(b) To the knowledge of Seller, there exists on or in the properties
owned or leased by Seller in connection with the Business no Regulated Materials
in amounts or concentrations that require reporting or remediation under
applicable Environmental Laws. For purposes of this Agreement, "Regulated
---------
Materials" means any substances, materials or wastes, regardless of their form
---------
or nature, the presence, generation, use, handling, labeling, processing,
recovery, treatment, collection, transportation, storage or disposal of which is
regulated by any Environmental Law.
(c) Seller has not received any written notice of any action, suit,
claim, order, decree or proceeding relating to (i) violations of Environmental
Laws in respect of properties owned or leased by Seller in connection with the
Business or (ii) contribution, response, removal or remedial obligations caused
by the use, handling, treatment, storage, disposal or release of Regulated
Materials in respect of properties owned or leased by Seller in connection with
the Business.
(d) To the knowledge of Seller, Seller has all permits necessary for
the operation of the Business except for such permits which the failure to
obtain would not have a Material Adverse Effect.
(e) For purposes of this Section 3.25, the following terms shall have
the meanings set forth herein: (i) "Action Items List" shall mean that list of
-----------------
items provided to Seller under the December 20, 2000, letter from Xxx Chorel;
(ii) "RWQCB Letter" shall mean the April 17, 2001 No Further Action letter from
------------
the San Francisco Bay Region of the California Regional Water Quality Control
Board to Seller regarding the Santa Clara, CA Service Center; and (iii)
"Seller's Environmental Reports" shall mean those Phase I Environmental Site
------------------------------
Assessments and Limited Compliance Audit reports prepared by URS Corporation
("URS") regarding the Service Centers, the report entitled Rev. Phase II
---
Investigation prepared by URS regarding the Fresno, CA Service Center, the
report entitled Limited Phase II Environmental Site Assessment prepared by URS
regarding the Santa Clara, CA Service Center, the report entitled Phase II
Investigation prepared by URS regarding the Stockton, CA Service Center, the
report entitled Phase II Investigation prepared by URS regarding the Spanish
Fork, UT Service Center, the report entitled Limited Phase II Soil Investigation
prepared by Cambria Environmental Technology, Inc. ("Cambria") regarding the
-------
Fresno, CA Service Center, the report entitled Limited Phase II Soil and
Groundwater Investigation prepared by Cambria regarding the Santa Clara, CA
Service Center, the report entitled Soil Removal and Confirmation Sampling
Completion prepared by Cambria regarding the Stockton, CA Service Center, the
report entitled Review and Site Inspection prepared by Cambria regarding the
Stockton, CA Service Center, the report entitled Waste Pile Sampling Results
prepared by Cambria regarding the Fresno, CA Service Center, and the draft Soil
Removal Workplan dated April 11, 2001, regarding the Fresno, CA Service Center.
Seller has provided true, correct and complete copies of the Action Items List,
the RWQCB Letter, and Seller's Environmental Reports to Purchaser and, to the
knowledge of Seller, Seller does not possess any other records, reports,
studies, analyses, tests or monitoring results pertaining to the existence of
any hazardous, toxic or harmful substance, material or waste in, on, under or
affecting the Business or the Service Centers that identifies any actual or
potential business environmental condition, concern or risk which could
reasonably be expected to have a Material Adverse Effect. Purchaser shall have
full and unrestricted access to all records, reports, studies, analyses, tests
or monitoring results pertaining to the existence of any hazardous, toxic
-19-
or harmful substance, material or waste in, on, under or affecting the Business
or the Service Centers that identifies any actual or potential business
environmental condition, concern or risk.
3.26 Employee Benefits.
-----------------
To the knowledge of Seller:
(a) Disclosure. Section 3.26 of the Disclosure Schedule sets forth an
---------- ------------
accurate, current and complete list of all Plans covering employees of the
Business. For purposes of this Agreement, a "Plan" or "Plans" shall mean: (i) a
---- -----
welfare benefit plan within the meaning of Section 3(1) of the Federal Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) a pension
-----
benefit plan within the meaning of Section 3(2) of ERISA, (iii) a stock bonus,
stock purchase, stock option, restricted stock, stock appreciation right or
similar equity based plan, or any other deferred compensation, retirement,
welfare-benefit, severance, bonus, incentive or fringe benefit plan. With
respect to each of the Plans covering employees of the Business, other than any
"Multiemployer Plan" (which, for purposes of this Agreement, shall have the
------------------
meaning set forth in Section 3(37) of ERISA), Seller has provided to the Buyer
accurate, current and complete copies of each of the following: (i) where the
Plan has been reduced to writing, the plan document together with all
amendments; (ii) where the Plan has not been reduced to writing, a written
summary of all material plan terms; (iii) where applicable, copies of any trust
agreements, custodial agreements, insurance policies, administration agreements
and similar agreements, and investment management or investment advisory
agreements; (iv) copies of any summary plan descriptions, employee handbooks or
similar employee communications; (v) in the case of any Plan that is intended to
be qualified under Section 401(a) of the Code, a copy of the most recent
determination letter from the IRS and a copy of any request for such a
determination; (vi) in the case of any funding arrangement intended to qualify
as a VEBA under Section 501(c)(9) of the Code, a copy of the IRS letter
determining that it so qualifies; and (vii) in the case of any Plan for which
Forms 5500 are required to be filed, a copy of the three most recently filed
Forms 5500, with schedules attached. With respect to any Multiemployer Plan, the
Seller has provided such material documents corresponding to those described in
the preceding sentence, and such other material information, as Seller has in
its possession regarding such Multiemployer Plan.
(b) Plan Qualification; Plan Administration; Certain Taxes and
----------------------------------------------------------
Penalties. Each Plan covering employees of the Business that is intended to be
---------
qualified under Section 401(a) of the Code is so qualified. Each Plan covering
employees of the Business, including any associated trust or fund, has been
administered, in all material respects, in accordance with its terms and with
all applicable Legal Requirements, and nothing has occurred with respect to any
such Plan that has subjected or could subject the Seller on behalf of the
Business, to a liability under Section 409 or Section 502 of ERISA or Chapter 43
of Subtitle D or Section 6652 of the Code.
(c) All Contributions and Claims and Premiums Paid. All required
----------------------------------------------
contributions, assessments and premium payments on account of each Plan covering
employees of the Business have been made. There are no existing lawsuits, claims
or other controversies relating to any such Plan, other than routine claims for
information or benefits in the normal
-20-
course. No such Plan is the subject of examination by a government agency or a
participant in a government sponsored amnesty, voluntary compliance or similar
program.
(d) Retiree Benefits; Certain Welfare Plans. Other than as required
---------------------------------------
under Section 601 et seq. of ERISA, no Plan covering employees of the Business
that is a Welfare Plan provides benefits or coverage following retirement or
other termination of employment. Each welfare benefit trust or fund that
constitutes or is associated with any such Welfare Plan and that is intended to
be exempt from federal income tax under Section 501(c)(9) of the Code is so
exempt.
(e) Certain Matters Concerning Defined Benefit Pension Plans. Seller
--------------------------------------------------------
makes the following representation with respect to all defined benefit pension
plans maintained by Seller or any member of Seller's controlled group (within
the meaning of Code Section 414(b)) ("Defined Benefit Plans"), including Defined
---------------------
Benefit Plans that do not cover any employees of the Business: (1) all premiums
payable to the PBGC through the closing date have been paid, (2) there are no
minimum funding deficiencies, funding waivers or extensions of amortization
periods within the meaning of Code Section 412, and (3) neither the Seller nor
any member of Seller's controlled group has incurred any liability under Title
IV of ERISA.
(f) Certain Matters Concerning Multiemployer Pension Plans. Seller
------------------------------------------------------
makes the following representation with respect to all multiemployer pension
plans to which Seller or any member of Seller's controlled group (within the
meaning of Code Section 414(b)) has been required to make contributions during
the past five years ("Multiemployer Pension Plans") including Multiemployer
---------------------------
Pensions Plans that do not cover any employees of the Business:, neither Seller
nor any member of Seller's controlled group has incurred any liability under
Subtitle E of Title IV of ERISA that remains unpaid in whole or in part as of
the Closing Date. Seller has recently sold the assets of one of its principal
lines of business which is unrelated to the Business or the Assets. It is
anticipated that Seller will experience a withdrawal from the Operating
Engineers Local 825 Pension Fund. Seller's best estimate is that it will incur
less than $100,000 of withdrawal liability as a result of such a withdrawal from
that fund.
(g) Certain Matters Concerning Group Health Plans. Seller makes the
---------------------------------------------
following representation with respect to all group health plans (within the
meaning of Code Section 4980B or 4980D) maintained by Seller or any member of
Seller's controlled group (within the meaning of Code Section 414(b)) ("Group
-----
Health Plans") including Group Health Plans that do not cover any employees of
------------
the Business: neither Seller nor any member of Seller's controlled group has
incurred any tax under Code Section 4980B or 4980D.
3.27 Legal Compliance.
----------------
Seller is and has been in compliance in all material respects with
each law (including without limitation rules and regulations thereunder) of any
federal, state or local government of the United States or of any foreign
government, or any governmental entity, which (a) affects or relates to this
Agreement or the transactions contemplated hereby, or (b) is applicable to the
Business or to Seller in connection with the Business, except where the failure
to comply would not have a Material Adverse Effect; provided, however, that
Seller makes no representation or warranty in this Section 3.27 with respect to
environmental matters (which are
-21-
addressed exclusively in Section 3.25). To the knowledge of Seller, Seller has
obtained and now holds all governmental licenses and permits required to own and
operate the Business except where failure to obtain any such licenses or permits
would not have a Material Adverse Effect.
3.28 Broker's Fees.
-------------
Except for certain fees payable by Seller to Xxxxxx & Co., Inc.,
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement, and Seller has not entered into any contract, agreement or
understanding with any broker, finder or similar agent which would result in the
obligation of Purchaser to pay any finder's fee, brokerage fee, commission or
similar payment in connection with the transactions contemplated hereby.
3.29 Disclosures.
-----------
To the knowledge of Seller, neither this Agreement nor any Exhibit or
Schedule hereto, when such documents are read together, contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they are made, not
misleading.
3.30 Disclaimer of Warranties.
------------------------
Except as otherwise expressly provided herein, the Assets are being
sold "as is where is." Seller makes no warranty, express or implied, to anyone,
as to fitness, merchantability, design, condition, capacity, value, performance,
quality or any other aspect of such Assets or their material or workmanship and
Seller further disclaims any liability for loss, damage or injury to anyone as a
result of any defects, latent or otherwise, in such Assets however arising.
Purchaser hereby acknowledges that Seller makes no warranty, express or implied,
to anyone, as to the Business conducted or the Assets to be conveyed hereunder
except as expressly contained herein. Purchaser affirms that Purchaser has
independently, and in Purchaser's sole judgment, selected the Assets to be
purchased and has not relied upon any statement or representation of Seller
except as expressly contained in this Agreement in deciding to effect the
purchase of the Assets.
3.31 Seller SEC Documents.
--------------------
As of their respective dates, the Seller SEC Documents, as defined
below, complied in all material respects with the requirements of the Securities
Act of 1933 or the Securities Exchange Act of 1934, as the case may be, and the
rules and regulations of the Securities and Exchange Commission (the "SEC")
---
thereunder applicable to such Seller SEC Documents, and none of the Seller SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Seller contained in the Seller SEC
Documents complied as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto
-22-
or, in the case of the unaudited statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC) and fairly present in accordance with applicable
requirements of United States generally accepted accounting principles (subject,
in the case of the unaudited statements, to normal, recurring adjustments, none
of which will be material) the consolidated financial position of Seller and its
consolidated subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of Seller and its
consolidated subsidiaries for the periods presented therein, respectively.
"Seller SEC Documents" shall be defined as each report, schedule, registration
--------------------
statement and definitive proxy statement filed by Purchaser with the SEC since
January 1, 2000 and prior to the date of this Agreement which are all the
documents (other than preliminary material) that Purchaser has been required to
file with the SEC since such date.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller as follows:
4.01 Purchaser Organization.
----------------------
Purchaser is a corporation, duly organized, validly existing and in
good standing under the laws of the State of California, and has all requisite
corporate power and authority to own, lease and operate its assets, properties
and business and to carry on its business as now being and as heretofore
conducted.
4.02 Authority.
---------
Purchaser has all requisite corporate power and authority and has
received such approvals and taken such actions as are required to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
including the issuance of the Note. Each of this Agreement and the Note, when
duly executed and delivered, will be the valid and binding obligation of
Purchaser enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or other laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
4.03 Non-Contravention.
-----------------
Except as would not have a material adverse effect on the assets,
business, liabilities, operations, financial condition or results of operations
of the Purchaser's business, neither the execution and delivery or performance
of this Agreement by Purchaser nor the consummation by Purchaser of the
transactions contemplated hereby will (a) conflict with or violate any provision
of the articles of incorporation, bylaws or other governance agreements of
Purchaser, (b) except for any filings specifically described in this Agreement,
require on the part of Purchaser any filing with (including notices and
reports), or any permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, or (c) result in the breach of, or constitute a
default under, any agreement or instrument to which Purchaser is a party or by
which it is bound.
-23-
4.04 No Brokers.
----------
Purchaser has not entered into any contract, agreement or
understanding with any broker, finder or similar agent which will result in the
obligation of Seller to pay any finders fee, brokerage fee, commission or
similar payment in connection with the transactions contemplated hereby.
4.05 Financing.
---------
Purchaser has obtained, or before the Maturity Date will have
obtained, commitments from financing sources in sufficient amounts to consummate
the transactions contemplated.
4.06 Purchaser Accredited Investor.
-----------------------------
Purchaser is an "Accredited Investor" as that term is defined in
Regulation D promulgated under the Securities Act. Purchaser is acquiring the
General Steel Shares for investment purposes only and not with a view toward
distribution thereof.
4.07 SEC Documents.
-------------
As of their respective dates, the SEC Documents, as defined below,
complied in all material respects with the requirements of the Securities Act of
1933 or the Securities Exchange Act of 1934, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such SEC Documents, and none
of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Purchaser contained in the SEC
Documents complied as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Rule
10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of United States generally accepted accounting
principles (subject, in the case of the unaudited statements, to normal,
recurring adjustments, none of which will be material) the consolidated
financial position of Purchaser and its consolidated subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of Purchaser and its consolidated subsidiaries for the periods
presented therein, respectively. "SEC Documents" shall be defined as each
-------------
report, schedule, registration statement and definitive proxy statement filed by
Purchaser with the SEC since January 1, 2000 and prior to the date of this
Agreement which are all the documents (other than preliminary material) that
Purchaser has been required to file with the SEC since such date.
4.08 Absence of Certain Changes.
--------------------------
Since the date of the most recent SEC Document, to the knowledge of
Purchaser, there has not been any material adverse change in the assets,
business, liabilities, operations, financial condition or results of operations
of Purchaser's business, taken as a whole. For
-24-
purposes of this Agreement, the financial results of the Purchaser for the
period from the date of the most recent SEC Document shall not constitute a
material adverse change in the assets, business, liabilities, operations,
financial condition or results of operations of Purchaser's business, taken as a
whole.
ARTICLE V
---------
AGREEMENTS RELATED TO EMPLOYMENT AND BENEFIT PLANS
--------------------------------------------------
5.01 Offer of Employment.
-------------------
On the Closing Date, Purchaser agrees to offer employment to each
employee of Seller who is employed exclusively in the Business other than
employees who are then absent from work on the Closing Date due to sickness,
injury or disability ("New Employees"). Any such employee who is absent from
-------------
work on the Closing Date due to sickness, injury or disability shall be offered
employment by Purchaser if and only if the employee is willing and able to
return to work on a full-time basis within six months following the Closing
Date. All offers of employment will be at the same location that the employee
is employed immediately prior to the Closing Date and at the same base salary
(or hourly compensation) level as in effect immediately prior to the Closing
Date. Purchaser shall have no responsibility for coverage under any employee
benefit plan (within the meaning of Section 3 of ERISA) or payment of severance
or any other benefit to any employee who is not required to be offered
employment under this section or who is required to be offered employment under
this section but who does not accept such offer. Such employees shall remain
subject to the terms of Seller's employee benefit plans including, without
limitation, COBRA continuation coverage under Seller's group health plans. Each
employee who accepts Purchaser's offer of employment shall be immediately fully
subject to Purchaser's employment policies including but not limited to
Purchaser's policies regarding performance review, discipline, compensation
adjustment and discharge (including any collective bargaining agreements
covering such employees), provided, that Purchaser agrees to assume Seller's
regular and special severance obligations as set forth on Schedule 5.01.
-------------
5.02 Salaried Employee Benefits.
--------------------------
(a) Salaried employees who are hired by Purchaser in accordance with
Section 5.01 ("New Salaried Employees") shall be eligible to participate under
----------------------
the same terms and conditions as Purchaser's other salaried employees in
Purchaser's employee benefit plans and programs including, but not limited to,
Purchaser's 401(k) Plan, employee share ownership plan, group health insurance,
group life insurance, disability insurance and accidental death and
dismemberment insurance. Where Purchaser provides different employee benefit
plans to different groups of its existing U.S. salaried employees, Purchaser may
determine in its discretion which such plans it shall provide to any or all New
Salaried Employees.
(b) Purchaser may, but need not, maintain one or more employee
benefit plans providing benefits similar to those provided under one or more of
Seller's employee benefit plans, during such time as Purchaser deems
appropriate, in lieu of placing New Salaried Employees (or any group thereof) in
Purchaser's existing plan or plans. However, Purchaser
-25-
shall have no obligation to adopt or otherwise provide to New Salaried Employees
any employment policy or employee benefit plan or program similar to any such
policy or program maintained or provided by Seller prior to the closing,
provided, that Purchaser agrees to assume Seller's regular and special severance
obligations as set forth on Schedule 5.01.
-------------
(c) Seller agrees that New Salaried Employees shall be fully vested
in their benefits under Seller's defined benefit pension plan, 401(k) profit
sharing plan and employee stock ownership plan as of the closing. Seller shall
remain solely responsible for the maintenance of these plans and the payment of
benefits under them.
(d) Purchaser shall cause to be waived under Purchaser's welfare
plans (as defined in Section 3(1) of ERISA) all eligibility waiting periods and
pre-existing condition exclusions for New Salaried Employees and their eligible
dependents (to the extent that dependents are covered by Purchaser's welfare
plan) and shall cause New Salaried Employees and their eligible dependents (to
the extent dependents are covered by Purchaser's welfare plan) to be given
credit under Purchaser's welfare plans for deductible and out-of-pocket expenses
that they have satisfied under the Seller's similar plans, if any, during the
calendar year in which the closing occurs. In addition, New Salaried Employees
shall be credited under Purchaser's pension plans (as defined in Section 3(1) of
ERISA) with eligibility service and vesting service for all service with Seller
prior to closing.
(e) Purchaser shall have no responsibility for or obligation with
respect to any of Seller's welfare plans (as defined in Section 3(1) of ERISA)
or any of Seller's pension plans (as defined in Section 3(2) of ERISA) or
workers compensation programs covering New Salaried Employees prior to the
Closing. By way of emphasis and not to limit the generality of the foregoing,
Purchaser shall have no responsibility or obligation with respect to any expense
incurred prior to Closing that is covered by Seller's welfare plan even though a
claim for the expense or reimbursement is not made until after the Closing.
5.03 Hourly Employee Benefits.
------------------------
(a) Hourly employees who are hired by Purchaser in accordance with
Section 5.01 ("New Hourly Employees") shall, subject to any relevant bargaining
--------------------
agreement, be eligible to participate under the same terms and conditions as
Purchaser's other hourly employees in Purchaser's employee benefit plans and
programs including, but not limited to, Purchaser's 401(k) Plan, group health
insurance, group life insurance, disability insurance and accidental death and
dismemberment insurance. Where Purchaser provides different employee benefit
plans to different groups of its existing U.S. hourly employees, Purchaser may
determine in its discretion which such plans it shall provide to any or all New
Hourly Employees.
(b) Purchaser may, but need not, establish one or more employee
benefit plans providing benefits similar to those provided under one or more of
Seller's employee benefit plans, for such time as Purchaser deems appropriate,
in lieu of placing New Hourly Employees (or any group thereof) in Purchaser's
existing plan or plans. However, Purchaser, except as specifically provided in
this Section 5.03, shall have no obligation to adopt or otherwise provide to New
Hourly Employees any employment policy or employee benefit plan or program
similar to any such policy or program maintained or provided by Seller prior to
the Closing.
-26-
(c) Notwithstanding Section 5.03(b), Purchaser agrees to assume
(either directly or through one or more subsidiary corporations) sponsorship of
the following pension plans of Seller (the "Assumed Pension Plans"):
---------------------
(1) PDM Pension Plan for Merit Shop Employees of the Service
Center Division, a PDM sponsored defined benefit pension plan that covers only
employees and former employees of the Business;
(2) PDM 401(k) Plan for Merit Shop Employees of the Service
Center Division, a PDM sponsored 401(k) profit sharing plan that covers only
employees and former employees of the Business;
(3) PDM Pension Plan for Western Division Ironworkers, a PDM
sponsored defined benefit pension plan that covers only employees, certain
former employees of an idle facility, and former employees of the Business; and
(4) PDM Pension Plan for Western Division Steelworkers (the
"Western Division Steelworkers Plan"), a PDM sponsored defined benefit pension
----------------------------------
plan that covers both employees and former employees of the Business and
employees of PDM Strocal, Inc. a former PDM subsidiary that was sold to a third
party on November 3, 2000. Pursuant to the stock purchase agreement between
Seller and Strocal, and related agreements, the benefit liabilities of the
Western Division Steelworkers Plan attributable to PDM Strocal employees, and
the allocable share of Plan assets attributable to such liabilities, are to be
transferred to a qualified defined benefit pension plan to be established by PDM
Strocal, Inc. to assume such benefit liabilities and receive such allocable Plan
assets. Seller shall cooperate with Purchaser after the Closing Date to
effectuate the transfer of such allocable Plan assets and liabilities to the
Strocal, Inc. Plan, and Seller shall bear the actuarial and other external legal
and administrative costs associated with effectuating such transfer.
Seller shall provide all cooperation reasonably requested by Purchaser in
connection with Purchaser's assumption of the Assumed Pension Plans including,
but not limited to, access to all of Seller's records with respect to the plans,
copies of all currently in effect and formerly in effect plan documents, summary
plan descriptions and administrative forms, copies of all IRS determination
letter filings and employee data necessary to administer the plans, and access
to and cooperation from Seller's employees who have been responsible for the
administration of the plans. In addition, Seller shall be responsible for any
contributions required under such plans attributable to work performed or
compensation earned prior to the closing, shall be responsible for preparing and
filing Form 5500s for all Assumed Pension Plans for plan years ending on or
before the closing, and shall assist Purchaser in preparing Form 5500s for the
Assumed Pension Plans for the first plan year ending after the closing.
(d) Except as may be provided under relevant collective bargaining
agreements, Purchaser shall have no obligation to continue contributions or
benefit accruals under the Assumed Pension Plans, and may terminate or merge the
Assumed Pension Plans at such time and in such manner as Purchaser determines in
its discretion, subject to the rights of the participants under ERISA.
-27-
(e) Purchaser shall cause to be waived under Purchaser's welfare
plans (as defined in Section 3(1) of ERISA) all eligibility waiting periods and
pre-existing condition exclusions for New Hourly Employees and their eligible
dependents (to the extent that dependents are covered by Purchaser's welfare
plan) and shall cause New Hourly Employees and their eligible dependents (to the
extent dependents are covered by Purchaser's welfare plan) to be given credit
under Purchaser's welfare plans for deductible and out-of-pocket expenses that
they have satisfied under the Seller's similar plans, if any, during the
calendar year in which the closing occurs. In addition, New Hourly Employees
shall be credited under Purchaser's pension plans (as defined in Section 3(1) of
ERISA) with vesting service for all uninterrupted service with Seller prior to
Closing.
(f) Purchaser shall have no responsibility for or obligation with
respect to any of Seller's welfare plans (as defined in Section 3(1) of ERISA)
or any of Seller's pension plans (as defined in Section 3(2) of ERISA) or
workers compensation programs covering New Hourly Employees prior to the
closing. By way of emphasis and not to limit the generality of the foregoing,
Purchaser shall have no responsibility or obligation with respect to any expense
incurred prior to closing that is covered by Seller's welfare plan even though a
claim for the expense or reimbursement is not made until after the closing.
(g) Purchaser shall make contributions under the Multiemployer Plans
disclosed in Section 3.26 of the Disclosure Schedule to the extent required
------------
under the collective bargaining agreements assumed by Purchaser in accordance
with Section 1.07. Seller shall make all contributions required under said plans
and said collective bargaining agreements that are attributable to work
performed by covered employees on or before the closing.
5.04 General Steel Corporation Employees.
-----------------------------------
The preceding sections of this Article V shall also apply with respect
to employees of General Steel who become indirect employees of Purchaser as a
result of Purchaser's acquisition of all of the outstanding shares in that
corporation, provided, however, that General Steel shall remain responsible for
all of the employee benefit plans (within the meaning of Section 3(3) of ERISA)
of which it is the sponsor at the time of Closing.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
6.01 Conditions Precedent to the Obligation of Purchaser to Close.
------------------------------------------------------------
The obligation of Purchaser to enter into and complete the Closing is,
at its option, subject to the fulfillment at or prior to the Closing of the
following conditions, any of which may be waived by the Purchaser:
(a) Regulatory Approvals. The parties shall have filed with the
--------------------
Federal Trade Commission and the Antitrust Division of the Department of Justice
complete and accurate notification and report forms with respect to the
transactions contemplated hereby, pursuant to the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. Section 18a,
-28-
and the rules promulgated thereunder (the "HSR Act"), and the waiting period
-------
required to expire under the HSR Act, including any extension thereof, in
connection with the transactions contemplated hereby shall have expired prior to
the Closing Date.
(b) Litigation. No action, suit or proceeding shall have been
----------
instituted by any governmental or regulatory body, nor shall any order have been
issued by any court or governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated hereby.
(c) Deliverables. Each of the documents and other items to be
------------
delivered by Seller as set forth in Section 8.02 shall have been tendered for
delivery.
(d) Due Diligence. Purchaser shall have completed its due diligence
-------------
investigation of the Assets and the Business in accordance with Section 9.02.
6.02 Conditions Precedent to the Obligation of Seller to Close.
---------------------------------------------------------
The obligation of Seller to enter into and complete the Closing is, at
its option, subject to the fulfillment at or prior to the Closing of the
following conditions, any of which may be waived by Seller:
(a) Regulatory Approvals. The parties shall have filed with the
--------------------
Federal Trade Commission and the Antitrust Division of the Department of Justice
complete and accurate notification and report forms with respect to the
transactions contemplated hereby, pursuant to the HSR Act and the waiting period
required to expire under the HSR Act, including any extension thereof, shall
have expired prior to the Closing Date.
(b) Litigation. No action, suit or proceeding shall have been
----------
instituted by any governmental or regulatory body, nor shall any order have been
issued by any court or governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated hereby.
(c) Deliverables. Each of the documents and other items to be
------------
delivered by Purchaser as set forth in Section 8.01 shall have been tendered for
delivery.
ARTICLE VII
-----------
[Reserved]
----------
-29-
ARTICLE VIII
------------
ACTIONS TO BE TAKEN AT THE CLOSING
----------------------------------
The following actions shall be taken at the Closing. Unless otherwise
provided herein, each shall be conditional on completion of all the others and
all shall be deemed to have taken place simultaneously:
8.01 Delivery of Cash and Instruments by Purchaser.
---------------------------------------------
Purchaser shall:
(a) deliver or cause to be delivered an amount equal to not less than
Forty-Five Million Seven Hundred Fifty Thousand Dollars ($45,750,000) to Seller
by wire transfer of immediately available United States funds to the account or
accounts of Seller as previously communicated to Purchaser;
(b) deliver to Seller the duly executed Note;
(c) deliver to Seller, duly executed, an instrument of assumption
substantially in the form of Exhibit B attached hereto and such other
---------
instruments as Seller's counsel shall reasonably request to effect the
assumption by Purchaser of all of the Assumed Liabilities;
(d) deliver to Seller a certificate signed by Purchaser's President
as to the accuracy of Purchaser's representations and warranties, the
performance of the covenants for which Purchaser is responsible hereunder and
the satisfaction of all conditions to Seller's obligations hereunder;
(e) deliver to Seller a copy of Purchaser's corporate resolution in
form and substance reasonably satisfactory to Seller, duly adopted by
Purchaser's board of directors, certified by its secretary or assistant
secretary, duly authorizing the execution and delivery of this Agreement and the
performance of those transactions contemplated by this Agreement;
(f) deliver to Seller a license agreement substantially in the form
of Exhibit C whereby Seller grants Purchaser a perpetual, royalty free license
---------
to use the trade names "PDM" "PDM STEEL CENTERS" "PDM STEEL CENTERS CORP." "PDM
STEEL SERVICE CENTERS INC." "PDM SERVICE CENTER" "PDM SERVICE CENTERS" and "PDM
STEEL" in connection with the Business (the "License Agreement"); and
-----------------
(g) deliver to Seller certificates issued by the Secretary of State
of the State of California and the Franchise Tax Board for the State of
California confirming Purchaser's corporate and tax good standing.
-30-
8.02 Delivery of Instruments by Seller.
---------------------------------
Seller shall:
(a) deliver to Purchaser, duly executed and registered where
required by Purchaser, all such assignments, bills of sale, deeds (including
mutually acceptable instructions with respect to recordation of such deeds),
stock powers, powers of attorney and other instruments of transfer of title
(including original certificates of title and copies of registrations of all
motor vehicles), as shall be necessary to evidence or effect the absolute and
unconditional conveyance, sale, assignment, transfer and delivery of all rights
and interests in the Assets to be sold hereunder to Purchaser free and clear of
any liens or encumbrances except as is expressly provided for in Section 3.16 of
this Agreement;
(b) deliver to Purchaser a certificate signed by Seller's
President or Vice President, Finance confirming the accuracy of Seller's
representations and warranties, the performance of the covenants for which
Seller is responsible hereunder and the satisfaction of all conditions to
Purchaser's obligations hereunder; provided that the information in Sections
--------
3.18,3.22, 3.23 and 3.26 of the Disclosure Schedule shall be accurate as of the
------------------------
date of this Agreement and the information provided in Section 3.22 of the
------------
Disclosure Schedule shall be accurate as of the date of this Agreement, with
such changes to which Purchaser in its reasonable discretion shall have
consented;
(c) deliver to Purchaser a copy of the Seller's corporate
resolutions in form and substance reasonably satisfactory to Purchaser, duly
adopted by Seller's board of directors, certified by its secretary or assistant
secretary, duly authorizing the execution and delivery of this Agreement and the
performance of those transactions contemplated by this Agreement;
(d) deliver to Purchaser a copy of the notice letter to PNC
Bank, National Association completing the release of General Steel's obligations
under Seller's Revolving Credit and Letter of Credit Issuance Agreement with PNC
Bank, National Association;
(e) deliver to Purchaser a certification of non-foreign status
as contemplated under Section 1.1445-2(b)(2) of the Treasury Regulations,
certifying that Seller is not a foreign person;
(f) deliver to Purchaser the License Agreement;
(g) deliver to Purchaser (i) certificates issued by the
Secretary of State of the Commonwealth of Pennsylvania and the Franchise Tax
Board or other taxing authority for the Commonwealth of Pennsylvania confirming
Seller's corporate and tax good standing in its state of incorporation, (ii)
similar certificates in each jurisdiction in which a Service Center is located
and (iii) similar certificates for General Steel; and
(h) deliver to Purchaser originals of all books and records
pertaining to the Business including but not limited to the corporate minute
book, stock ledger and any blank stock certificates of General Steel.
-31-
8.03 Other Documents.
---------------
Each of Purchaser and Seller shall deliver to the other such other
certificates, instruments and documents, in form and substance reasonably
satisfactory to the other, as may be reasonably requested by either party to
consummate the transactions contemplated by this Agreement.
ARTICLE IX
----------
ACCESS
------
9.01 Seller's Access to Records.
--------------------------
(a) Purchaser agrees to grant Seller and Seller's representatives
reasonable access to the Business, Assets and employees of the Business after
the Closing solely for purposes of permitting Seller to prepare the Closing
Balance Sheet and any tax returns and, upon not less than one (1) business day's
notice to Purchaser and at the expense of Seller, to defend any dispute to same
that may be raised.
(b) Purchaser agrees, for a period of six (6) years after the Closing
Date, to retain custody of all books and records of the Business in existence as
of the Closing Date including, without limitation, tax return work papers and
tax documentation and to make the same available during regular business hours
to officers, attorneys, accountants, and other authorized representatives of
Seller and their successors and assigns and to permit such persons to make
copies thereof. If at any time after such six (6) year period Purchaser wishes
to dispose of any such records, Purchaser shall notify Seller (or their
successors and assigns) and afford Seller a reasonable opportunity to take
possession thereof.
9.02 Purchaser's Access to Assets.
----------------------------
(a) For a period of twenty business days from the later of (i) the
date that Seller provides the Disclosure Schedule to Purchaser or (ii) the date
of this Agreement (the "Due Diligence Period"), Purchaser shall have full access
--------------------
to the Assets and the properties, books, records, employees and management of
the Business.
(b) If Purchaser determines in good faith that any fact
circumstance exists which is adversely inconsistent with any of the
representations and warranties of Seller in this Agreement, then Purchaser shall
notify Seller of such inconsistencies within the Due Diligence Period and shall
advise Seller of its reasonable view of the impact of such inconsistencies on
the Purchase Price, if any (the "Adjustment Amount"). For purposes of this
-----------------
provision, the financial results of the Business for the period from the date of
the Most Recent Balance Sheet shall not be a basis for a reduction in the
Purchase Price to the extent that Seller has made no adjustments to those
financial results other than normal and recurring adjustments in amounts similar
to those taken in the periods of the financial statements for the Business
provided to Purchaser. Furthermore, the Purchase Price shall not be reduced as
a result of inventory write-downs taken in the ordinary course of business
consistent with Seller's past practices. If Seller has not cured the
inconsistencies causing the Adjustment Amount by the Closing Date, Purchaser
shall, subject
-32-
to application of Seller's Basket (as defined below) and Seller's Cap (as
defined below), withhold the Adjustment Amount from the Purchase Price by
reducing the aggregate principal amount of the Note to be delivered at Closing.
Seller shall then have the option either (i) to cure such inconsistencies at its
own expense within thirty (30) days after receipt of such notice (the "Cure
----
Period"), or (ii) agree to the reduction in the Purchase Price by the Adjustment
------
Amount, provided that the Adjustment Amount shall not reduce the Purchase Price
until the Adjustment Amount exceeds the Seller's Basket, as defined below, but
then the Purchase Price shall be adjusted to the extent of the entire Adjustment
Amount from the first dollar. In any event the Adjustment Amount shall not
exceed Five Million Dollars ($5,000,000) ("Seller's Cap"), and in either case,
------------
Purchaser shall be required to proceed with the Closing. If Seller cures the
inconsistencies that have caused an Adjustment Amount after the Closing Date but
during the Cure Period, Purchaser shall promptly pay to Seller the Adjustment
Amount withheld from the Purchase Price in cash by wire transfer of immediately
available funds. If Seller does not cure the inconsistencies for any reason
within the Cure Period, the Purchase Price shall, subject to the provisions of
this Section 9.02(b), be automatically reduced by the Adjustment Amount.
ARTICLE X
---------
NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
---------------------------------------------------------------
10.01 Non-Survival of Representations and Warranties.
----------------------------------------------
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing and neither Seller nor Purchaser shall have any liability
therefor, except for covenants and agreements which, by their terms, are to be
performed after the Closing and except for the representations and warranties
identified below, which shall survive the Closing and continue in effect until
the second anniversary of the Closing Date.
10.02 Seller Indemnification.
----------------------
After the Closing, and subject to the provisions of this Article X,
Seller will indemnify, defend and hold Purchaser and its officers, directors and
employees (each a "Purchaser Indemnified Person" and collectively the "Purchaser
---------------------------- ---------
Indemnified Persons") harmless from and against any and all claims, liabilities,
-------------------
damages, losses, deficiencies and expenses (including, without limitation,
reasonable attorneys' fees and expenses and costs of suit) (individually a
"Loss" and collectively "Losses") arising out of (i) any breach or default by
---- ------
Seller of (A) any covenant or agreement contained in this Agreement which, by
its terms, is to be performed after the Closing, or (B) the representations and
warranties set out in Sections 3.14, 3.15, and 3.16 or (ii) the Retained
Liabilities; provided, however, that Purchaser shall not be entitled to
--------
indemnification from Seller under this Agreement for Losses arising out of any
single claim or aggregate of claims by Purchaser Indemnified Persons until the
amount of all of the Losses by Purchaser Indemnified Persons plus the Adjustment
Amount, if any, exceeds Five Hundred Thousand Dollars ($500,000) (the "Seller's
--------
Basket"), and then only to the extent of Losses in excess of the Seller's Basket
------
in the aggregate.
-33-
10.03 Purchaser Indemnification.
-------------------------
After the Closing, and subject to the provisions of this Article X,
Purchaser will jointly and severally indemnify, defend and hold Seller and its
officers, directors and employees (each an "Seller Indemnified Person" and
-------------------------
collectively the "Seller Indemnified Persons") harmless from and against any and
--------------------------
all claims, liabilities, damages, losses, deficiencies and expenses (including,
without limitation, reasonable attorneys' fees and expenses and costs of suit)
(individually a "Loss" and collectively "Losses") arising out of: (i) any
---- ------
breach or default by Purchaser of (A) any covenant or agreement contained in
this Agreement which, by its terms, is to be performed after the Closing, or (B)
the representations and warranties set out in Sections 4.05 and 4.06; (ii) the
Assumed Liabilities; or (iii) the operation by the Purchaser of the Business
after the Closing Date; provided, however, that Seller shall not be entitled to
--------
indemnification from Purchaser under this Agreement for Losses arising out of
any single claim or aggregate of claims by Seller Indemnified Persons until the
amount of all of the Losses by Seller Indemnified Persons exceeds Five Hundred
Thousand Dollars ($500,000) (the "Purchaser's Basket"), and then only to the
------------------
extent of Losses in excess of the Purchaser's Basket in the aggregate.
10.04 Notice of Claims.
----------------
(a) Any Seller Indemnified Person or Purchaser Indemnified Person
(the "Indemnified Person") seeking indemnification hereunder shall give to the
-------------------
party obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
----------- ------------
facts giving rise to any claims for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any agreement, certificate or instrument executed pursuant hereto or in
connection herewith upon which such claim is based; provided, that a Claim
--------
Notice in respect of any action at law or suit in equity by or against a third
person as to which indemnification will be sought shall be given promptly after
the action or suit is commenced as set forth in Section 10.05; and provided
--------
further, that failure to give such notice shall not relieve the Indemnitor of
-------
its obligations hereunder except to the extent it shall have been prejudiced by
such failure.
(b) Indemnitor shall have thirty (30) days after the giving of any
Claim Notice pursuant hereto to (i) agree to the amount or method of
determination set forth in the Claim Notice and to pay such amount to such
Indemnified Party in immediately available funds or (ii) to provide such
Indemnified Party with notice that it disagrees with the amount or method of
determination set forth in the Claim Notice (the "Dispute Notice"). Within
fifteen (15) days after the giving of the Dispute Notice, each party involved in
the dispute shall meet at a mutually agreed location in California for the
purpose of determining whether they can resolve the dispute themselves by
written agreement. If such parties fail to resolve the dispute by written
agreement, the parties' dispute or disputes shall be resolved by litigation;
provided, however, any such litigation shall be commenced and prosecuted solely
in a state or federal court located in California. If any party initiates any
legal proceedings arising under or relating to this Agreement, including but not
limited to proceeding in any state, federal or bankruptcy court, the prevailing
party shall be entitled to recover its costs and reasonable attorneys' fees,
including the fees of any consultant or expert witness retained in connection
with the proceeding.
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10.05 Method of Asserting Claims Relating to Third-Party Actions.
----------------------------------------------------------
(a) The Indemnified Person shall give prompt written notification to
the Indemnitor of the commencement of any action, suit or proceeding relating to
a third-party claim for which indemnification pursuant to Section 10.02 or 10.03
may be sought; provided, however, that no delay on the part of the Indemnified
--------
Person in notifying Indemnitor shall relieve Indemnitor of any liability or
obligation hereunder except to the extent of any damage or liability caused by
or arising out of such delay.
(b) Within fifteen (15) days after delivery of such notification,
Indemnitor may, upon written notice thereof to the Indemnified Person, assume
control of the defense of such action, suit or proceeding with counsel
reasonably satisfactory to the Indemnified Person.
(c) If Indemnitor does not so assume control of such defense, the
Indemnified Person shall control such defense. The party not controlling such
defense may participate therein at its own expense.
(d) The party conducting the defense of such action, suit or
proceeding shall keep the other party advised of the status of such action, suit
or proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto.
(e) The party conducting the defense shall not agree to any
settlement of or the entry of a judgment in any action, suit or proceeding with
respect to which they have assumed the defense thereof without the prior written
consent of the other party, which shall not be unreasonably withheld (it being
understood that it is reasonable to withhold such consent if, among other
things, the settlement or the entry of a judgment (A) lacks a complete release
of the party for all liability with respect thereto or (B) imposes any material
liability or obligation on the party).
(f) Notwithstanding anything contained herein to the contrary, an
Indemnified Person shall not be entitled to indemnification to the extent that
it is compensated for any Losses sustained by it by any insurance policy
proceeds paid to it or tax benefit realized by it as a result of such Losses.
(g) The indemnification provided for herein shall be the exclusive
remedy in any action seeking damages or any other form of monetary relief
brought by any party to this Agreement against any other party hereto.
ARTICLE XI
----------
POST-CLOSING COVENANTS
----------------------
11.01 Tax Matters; Real Estate Costs.
------------------------------
(a) Each of Purchaser and Seller shall cooperate in the preparation
of all tax returns for any tax periods for which the other party could
reasonably require its assistance in
-35-
obtaining any necessary information. All property taxes levied with respect to
the Owned Real Property and any personal property included in the Assets for a
taxable period that includes (but does not end on) the Closing Date shall be
apportioned between Seller and Purchaser as of the Closing Date based on the
number of days of such taxable period included in the pre-Closing tax period and
the number of days of such taxable period included in the post-Closing tax
period. Seller shall be liable for the proportionate amount of such taxes that
is attributable to the pre-Closing tax period, and Purchaser shall be liable for
the proportionate amount of such taxes that is attributable to the post-Closing
tax period. Within a reasonable period after the Closing, Seller and Purchaser
shall present a statement to the other setting forth the amount of reimbursement
to which each is entitled under this Section 11.01, together with such
supporting evidence as is reasonably necessary to calculate the proration
amount. Unless provided for on the Closing Balance Sheet, the proration amount
shall be paid by the party owing it to the other within thirty (30) days after
delivery of such statement.
(b) All fees and miscellaneous costs concerning the conveyance of
the Owned Real Property shall be borne by the parties according to custom in the
county in which the Owned Real Property is located, except that Purchaser and
Seller shall each pay one-half of all transfer taxes, costs of title preparation
and title insurance.
11.02 Covenant Not to Compete.
-----------------------
(a) For a period of five (5) years from and after the Closing,
Seller hereby covenants and agrees that it shall not engage or participate,
directly or indirectly, in the Business, which includes the processing and
distribution of metal products in competition with the Business conducted by
Seller immediately prior to the Closing within the States of California
(including, but not limited to, in Los Angeles, Orange, Riverside, Sacramento,
Santa Xxxxx, and San Bernardino Counties), Arizona, Iowa, Kansas, Nebraska,
Nevada, Oregon, Utah, and Washington; provided that this covenant shall not
apply to any purchaser of other assets or securities of Seller so long as such
purchaser is prohibited from using Seller's name or any derivation thereof or
any name similar thereto in the Business.
(b) Seller and Purchaser expressly agree that it is not their
intention to violate any public policy or statutory or common law. The parties
intend that the covenant set forth above shall be construed as a series of
separate covenants, one for each county or state within the specified geographic
area, each of which covenants shall be deemed to be identical. If, in any
judicial proceedings, a court shall refuse to enforce any of the separate
covenants deemed included in this Section 11.02, then such unenforceable
covenant shall be deemed to be eliminated therefrom or modified to the extent
necessary to permit it and the remaining separate covenants to be enforceable.
Without limiting the generality of the foregoing, if any court of competent
jurisdiction determines that the foregoing covenant not to compete is invalid
because of its length of time or geographic scope, then Seller and Purchaser
agree that such covenant shall be reduced either in length of time or geographic
scope or both to the extent necessary to make such covenant enforceable against
Seller.
(c) Seller and Purchaser acknowledge and agree that the remedy at
law for any breach of the foregoing covenant not to compete will be inadequate
and that Purchaser shall be entitled, in addition to any remedy at law, to
injunctive relief. The consideration for the
-36-
foregoing covenant not to compete, which is a material element of this
Agreement, is Purchaser's agreement to purchase the Assets and pay the Purchase
Price provided herein, and Seller acknowledges the adequacy of such
consideration.
11.03 Further Assurances.
------------------
The parties, at any time after the execution of this Agreement, will
execute, acknowledge and deliver any further assignments, conveyances and other
assurances, documents and instruments, and take such other actions, reasonably
requested by the other party for the purpose of performing the obligations
created hereunder.
11.04 Xxxx-Xxxxx-Xxxxxx.
-----------------
Each of Seller and Purchaser shall as promptly as practicable, but
in no event later than five (5) business days following the execution and
delivery of this Agreement, file or cause to be filed with the United States
Federal Trade Commission (the "FTC") and the United States Department of Justice
---
(the "DOJ") any notification and report form required for the transactions
----
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Each of Seller and Purchaser shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission that is
necessary under the HSR Act. Seller and Purchaser shall keep each other
apprised of the status of any communications with, and any inquiries or requests
for additional information from, the FTC and the DOJ and shall comply promptly
with any such inquiry or request and shall promptly provide any supplemental
information requested in connection with the filings made hereunder pursuant to
the HSR Act. Any such supplemental information shall be in substantial
compliance with the requirements of the HSR Act. Each party shall use all
commercially reasonable efforts to obtain any clearance required under the HSR
Act for the consummation of the transactions contemplated by this Agreement.
Purchaser shall pay all filing fees required by the FTC or the DOJ. For
purposes of this Section 11.04, "commercially reasonable efforts" of Purchaser
shall include promptly opposing any motion or action for a temporary,
preliminary or permanent injunction against the consummation of the transactions
contemplated by this Agreement.
11.05 No Further Action Letter.
------------------------
(a) Based upon the information and draft workplan submitted on
behalf of Seller by Cambria Environmental Technology, Inc. ("Cambria") to the
-------
State of California, Department of Toxic Substances Control, Voluntary Cleanup
Program ("DTSC") under cover letter dated April 12, 2001 (the "Fresno Submission
---- -----------------
a copy of which is attached hereto as Exhibit D, with respect to Seller's
---------
property in Fresno, California, Seller has requested that, upon completion of
the activities described in the workplan, DTSC issue a letter indicating that no
further action is required with respect to the matters covered in the Fresno
Submission. In the event the DTSC requires additional investigation and/or
remedial activities with respect to such matters, Seller will comply with any
such requirements about which DTSC and Seller agree are necessary to address the
matters covered in the Fresno Submission and obtain a determination in writing
from
-37-
DTSC, or such other regulatory agency having jurisdiction for such matters, that
no further investigation and/or remedial activities with respect to such matters
is required.
(b) Purchaser acknowledges that in order for Seller to obtain a
written determination that no further investigation and/or remedial activities
are required with respect to the matters covered in the Fresno Submission, the
DTSC may require that a covenant to restrict the use of the Fresno property be
recorded in the Official Records of Fresno County, California. In the event that
DTSC requires the recording of such a covenant, Purchaser shall execute and
record the covenant required by DTSC. Purchaser shall, upon reasonable request
of Seller, take any and all other actions required by DTSC in order to obtain a
written determination that no further investigation and/or remedial activities
are required with respect to the matters covered in the Fresno Submission,
provided that any third-party costs and expenses of such actions shall be borne
by Seller. In the event that Purchaser fails to comply with this Section
11.05(b), Seller shall be released of its obligations under Section 11.05(a) and
shall have no further liability to Purchaser with respect to the matters
described in the Fresno Submission.
(c) Purchaser and Seller agree that Seller shall have full control
over the remedial activities described in this Section 11.05 and shall conduct
all such activities in a commercially reasonable manner. As of the Closing Date,
Purchaser hereby grants Seller the right license and privilege to enter onto the
property described in this Section 11.05 through such agents and with such
personnel and equipment and at such reasonable times as Seller may deem
appropriate to perform remedial activities on such properties; provided that
Seller provides notice to Purchaser not less than one business day before
entering onto the property or performing any remedial activities thereon.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
12.01 Press Releases and Announcements.
--------------------------------
On or shortly after the Closing Date, the parties will issue a joint
press release relating to the subject matter of this Agreement. No party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement or public disclosure of this Agreement or the
transactions contemplated hereby without the prior written approval of Purchaser
and Seller; provided, however, that any party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing party will use its reasonable efforts to inform the other parties
prior to making the disclosure). Neither Seller nor Purchaser shall buy, sell or
otherwise trade in any securities of either party prior to the Closing Date and
public announcement of this transaction.
12.02 No Third-Party Beneficiaries.
----------------------------
Except as provided for in Sections 10.02 and 10.03, this
Agreement shall not confer any rights or remedies upon any person other than the
parties and their respective successors and permitted assigns nor is anything in
this Agreement intended to relieve or
-38-
discharge the obligation or liability of any third persons to any party to this
Agreement nor shall any provision give any third party any right of subrogation
or action over or against any party to this Agreement.
12.03 Entire Agreement.
----------------
This Agreement, including the Exhibits, Schedules and the Disclosure
Schedule attached hereto and the documents referred to herein constitute the
entire agreement among the parties and supersedes any prior understandings,
agreements, or representations by or among the parties, written or oral, with
respect to the subject matter hereof.
12.04 Knowledge of Seller.
-------------------
Any representations and warranties made by Seller in this Agreement
and limited to the knowledge of Seller shall be limited to the actual knowledge
of Xxxxxxx X. XxXxx, Xxxxxxx X. Xxxxx, Xxxxx Xxxxxxx and the managers of the
Service Centers regardless of whether such representation or warranty expressly
states that it is so limited.
12.05 Succession and Assignment.
-------------------------
This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other party;
provided, however, that Purchaser may assign its rights hereunder to an
affiliate so long as Purchaser remains liable under this Agreement and so long
as any such assignment does not delay the Closing.
12.06 Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
12.07 Headings.
--------
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
12.08 Notices.
-------
All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered (i) five (5) business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, (ii) when received if it is sent by facsimile communication
during normal business hours on a business day or one (1) business day after it
is sent by facsimile and received if sent other than during business hours on a
business day, (iii) one (1) business day after it is sent via a reputable
overnight courier service, or (iv) when received if it is delivered by hand, in
each case to the intended recipient as set forth below:
-39-
If to Seller: Copy to:
Pitt-Des Moines, Inc. Xxxxxx Xxxxx, Esq.
Town Center One Xxxxxxxx Ingersoll Professional
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000 Xxxxxxxxxxx
Xxx Xxxxxxxxx, XX 00000 One Oxford Centre
Attn: President 000 Xxxxx Xxxxxx, 00xx Xxxxx
Facsimile No: (000) 000-0000 Xxxxxxxxxx, XX 00000-0000
Facsimile No: (000) 000-0000
If to Purchaser: Copy to:
Reliance Steel & Aluminum Co. Reliance Steel & Aluminum Co.
000 Xxxxx Xxxxx Xxxxxx 000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000 Xxxxx 0000
Xxx Xxxxxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Attn: President Attn: General Counsel
Facsimile No. (000) 000-0000 Facsimile No. (000) 000-0000
Any party may change the address to which notices, requests,
demands, claims or other communications are to be delivered by giving the other
parties to this Agreement notice thereof in the manner set forth in this
Section.
12.09 Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
12.10 Amendments and Waivers.
----------------------
The parties may mutually amend any provision of this Agreement at
any time. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the parties. No waiver by any party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.11 Severability.
------------
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
-40-
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
12.12 Expenses.
--------
Seller shall bear all costs and expenses of its attorneys,
accountants, brokers and financial advisors representing Seller in connection
with the transactions contemplated hereby. Purchaser shall bear the cost and
expense of its own attorneys, accountants, brokers and financial advisors
representing it in connection with the transaction contemplated hereby.
12.13 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 shall be applied against any party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
12.14 Incorporation of Exhibits and Schedules.
---------------------------------------
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
12.15 Termination.
-----------
This Agreement may be terminated by: (i) mutual consent of Seller
and Purchaser; or (ii) Seller or Purchaser if the Closing has not taken place on
or before December 31, 2001; provided, however, that no party then in breach of
any obligations hereunder shall have the right to terminate. If this Agreement
is terminated for any reason pursuant to this Section 12.15, each party shall
return to the other party all documents and copies thereof which shall have been
furnished to it by such other party or, with the agreement of the other party,
shall destroy all such documents and copies thereof and certify in writing to
the other party any such destruction. If this Agreement is terminated by Seller
or Purchaser as permitted in this Section 12.15 and not as a result of the
failure of any party to perform its obligations hereunder, such termination
shall be without liability of any party. If a party terminates this Agreement as
a result of the failure of the other party to perform its obligations hereunder,
the non-breaching party shall, in addition to other remedies provided by this
Agreement, at law, or in equity, be entitled to reimbursement from the breaching
party for all expenses incurred by the non-breaching party in connection with
this Agreement and the transaction contemplated hereby.
-41-
12.16 Confidentiality.
---------------
The Confidentiality Agreement dated July 24, 2000, and executed by
Seller and Purchaser shall remain in full force and effect and shall survive the
termination of this Agreement.
[intentionally left blank]
-42-
IN WITNESS WHEREOF, the parties have executed this ASSET PURCHASE
AGREEMENT as of the date first above written.
PITT-DES MOINES, INC.
By: /s/ Xxxxxxx X. XxXxx
-----------------------------------------
Name: Xxxxxxx X. XxXxx
---------------------------------------
Title: President and CEO
--------------------------------------
RELIANCE STEEL & ALUMINUM CO.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
-43-
