UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
-----------------------------------
)
In the Matter of )
)
Precision Castparts Corp., )
a corporation; )
) File No. 991-0240
and )
)
Xxxxx-Xxxxxx Company, )
a corporation. )
)
-----------------------------------
AGREEMENT CONTAINING CONSENT ORDERS
The Federal Trade Commission ("Commission"), having initiated an
investigation of acquisition of 100% of the voting stock of Xxxxx-Xxxxxx Company
("Xxxxx-Xxxxxx") by Precision Castparts Corp. ("PCC"), and it now appearing that
PCC and Xxxxx-Xxxxxx, hereinafter sometimes referred to as "Respondents," are
willing to enter into this Agreement Containing Consent Orders ("Consent
Agreement") to divest certain assets and providing for other relief:
IT IS XXXXXX AGREED by and between Respondents, by their duly authorized
officers and their attorneys, and counsel for the Commission that:
1. Respondent PCC is a corporation organized, existing and doing business
under and by virtue of the laws of the State of Oregon, with its office and
principal place of business located at 0000 X.X. Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxx 00000-4254.
2. Respondent Xxxxx-Xxxxxx is a corporation organized, existing and doing
business under and by virtue of the laws of the Commonwealth of
Massachusetts, with its office and principal place of business located at
000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000-0000.
3. Respondents admit all the jurisdictional facts set forth in the draft of
Complaint here attached.
4. Respondents waive:
a. any further procedural steps;
b. the requirement that the Commission's Order to Hold Separate and
Decision & Order, here attached and made a part hereof, contain a
statement of findings of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge or
contest the validity of the Order to Hold Separate or Decision & Order
entered pursuant to this Consent Agreement; and
d. any claims under the Equal Access to Justice Act.
5. Respondents shall submit within thirty (30) days of the date this Consent
Agreement is signed by Respondents an initial report, pursuant to
Commission Rule 2.33, 16 C.F.R. ss. 2.33, signed by Respondents, setting
forth in detail the manner in which Respondents have complied and will
comply with the Order to Hold Separate and with Paragraphs II. through V.
of the Decision & Order. Such report will not become part of the public
record unless and until the accompanying Consent Agreement and Decision &
Order are accepted by the Commission for public comment.
6. This Consent Agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
Consent Agreement is accepted by the Commission, it, together with the
Complaint contemplated thereby, will be placed on the public record for a
period of thirty (30) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance of
this Consent Agreement and so notify Respondents, in which event it will
take such action as it may consider appropriate, or amend its Complaint as
the circumstances may require and issue its Decision & Order in disposition
of the proceeding.
7. This Consent Agreement is for settlement purposes only and does not
constitute an admission by Respondents that the law has been violated as
alleged in the draft Complaint here attached, or that the facts as alleged
in the draft Complaint, other than jurisdictional facts, are true.
8. Because there may be interim competitive harm, and divestiture or other
relief resulting from a proceeding challenging the legality of the proposed
acquisition might not be possible, or might be less than an effective
remedy, the Commission may issue an Order to Hold Separate in this matter.
9. Respondents have read the Order to Hold Separate contemplated hereby.
Respondents agree to comply with the terms of the attached Order to Hold
Separate from the date the Order to Hold Separate is served on Respondents.
The Order to Hold Separate shall
2
become final upon service. Delivery of this Order to Hold Separate by any
means specified in Commission Rule 4.4(a), 16 C.F.R. ss. 4.4(a), shall
constitute service. The Respondents waive any right they might have to any
other manner of service. When final, the Order to Hold Separate shall have
the same force and effect and may be altered, modified or set aside in the
same manner and within the same time provided by statute for other orders.
Respondents may be liable for civil penalties in the amount provided by law
for each violation of the Order to Hold Separate after it becomes final.
10. This Consent Agreement contemplates that, if it is accepted by the
Commission, the Commission may (1) issue its Complaint corresponding in
form and substance with the draft Complaint here attached, and its Order to
Hold Separate, and (2) make information public with respect thereto. If
such acceptance is not subsequently withdrawn by the Commission pursuant to
the provisions of Commission Rule 2.34, 16 C.F.R. ss. 2.34, the Commission
may, without further notice to Respondents, issue the attached Decision &
Order containing an order to divest in disposition of the proceeding. When
so entered, the Decision & Order shall have the same force and effect, and
may be altered, modified, or set aside in the same manner and within the
same time provided by statute for other orders. The Decision & Order shall
become final upon service. Delivery of the Complaint and the Decision &
Order by any means specified in Commission Rule 4.4(a), 16 C.F.R. ss.
4.4(a), shall constitute service. Respondents waive any right they may have
to any other manner of service. The Complaint may be used in construing the
terms of the Decision & Order, and no agreement, understanding,
representation, or interpretation not contained in the Decision & Order or
the Consent Agreement may be used to vary or contradict the terms of the
Decision & Order.
11. By signing this Consent Agreement, Respondents represent that they can
accomplish the full relief contemplated by the attached Order to Hold
Separate and Decision & Order.
12. Respondents have read the Complaint and the Decision & Order contemplated
hereby. Respondents understand that once the Decision & Order has been
issued, they will be required to file one or more compliance reports
showing they have fully complied with the Decision & Order and with the
Order to Hold Separate. Respondents agree to comply with the terms of the
Decision & Order from the date they sign this Consent Agreement. Proposed
Respondents agree that if they consummate the divestitures pursuant to
Paragraphs II.A. or IV.A. of the Decision & Order prior to the time the
Decision & Order becomes final, they will include and enforce a provision
in the divestiture agreements with the Acquirer-Albany and the
Acquirer-Groton requiring the transaction(s) to be rescinded, and the
divested assets returned to Respondents, should the Commission not make the
Decision & Order final or should the Commission notify Respondents that the
Acquirer-Albany and/or the Acquirer-Groton are not acceptable acquirers, or
that the divestiture agreements are not acceptable manners of divestiture.
Respondents further understand that they may be liable for civil penalties
in the amount provided by law for each violation of the Decision & Order
after it becomes final.
3
Signed this 25th day of October, 1999.
PRECISION CASTPARTS CORP. FEDERAL TRADE COMMISSION,
BUREAU OF COMPETITION
Xxxxxxxx X. Xxxxxxxxxx
XXXX XXXXXXX Xxxxxxx X. Xxxxxx
------------------------------------ Xxxxxx X. Xxxx
Xxxx Xxxxxxx Attorneys
Executive Vice President
Precision Castparts Corp.
By:
------------------------------------
XXXXXXX X. XXXXXXX Xxxxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Xxxxxxx, Xxxx & Xxxxx, PLLC
Counsel for Precision Castparts Corp.
APPROVED:
XXXXX-XXXXXX COMPANY
----------------------------------------
Xxxxx X. Xxxxxx
Deputy Assistant Director
XXXXX X. XXXXXX
------------------------------------
Xxxxx X. Xxxxxx
Chairman & CEO
Xxxxx-Xxxxxx Company ----------------------------------------
Xxxxx X. Xxxxx
Senior Deputy Director
X. XXXXXXX XXXXX
------------------------------------
X. Xxxxxxx Xxxxx, Esq. XXXXXXX X. XXXXXX
Xxxxxxx, Procter & Xxxx, LLP ----------------------------------------
Counsel for Xxxxx-Xxxxxx Company Xxxxxxx X. Xxxxxx
Bureau Director
4
UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
COMMISSIONERS: Xxxxxx Xxxxxxxx, Chairman
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxx
-----------------------------------
)
In the Matter of )
)
Precision Castparts Corp., )
a corporation; )
) Docket No. C-3904
and ) ORDER TO HOLD SEPARATE
)
Xxxxx-Xxxxxx Company, )
a corporation. )
)
-----------------------------------
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed acquisition by Respondent Precision Castparts
Corp. ("PCC") of all of the outstanding shares of Respondent Xxxxx-Xxxxxx
Company ("Xxxxx-Xxxxxx"), and Respondents having been furnished thereafter with
a copy of a draft of Complaint which the Bureau of Competition presented to the
Commission for its consideration and which, if issued by the Commission, would
charge Respondents with violations of Section 7 of the Xxxxxxx Act, as amended,
15 U.S.C. ss. 18, and Section 5 of the Federal Trade Commission Act, as amended,
15 U.S.C. ss. 45; and
Respondents, their attorneys, and counsel for the Commission having
thereafter executed an Agreement Containing Consent Orders ("Consent
Agreement"), containing an admission by Respondents of all the jurisdictional
facts set forth in the aforesaid draft of Complaint, a statement that the
signing of said Consent Agreement is for settlement purposes only and does not
constitute an admission by Respondents that the law has been violated as alleged
in such Complaint, or that the facts as alleged in such Complaint, other than
jurisdictional facts, are true, and waivers and other provisions as required by
the Commission's Rules; and
The Commission having thereafter considered the matter and having
determined that it had reason to believe that Respondents have violated the said
Acts, and that a Complaint should issue stating its charges in that respect, and
having determined to accept the executed Consent Agreement and to place such
Consent Agreement on the public record for a period of thirty (30) days, the
Commission hereby issues its Complaint, makes the following jurisdictional
findings
and issues this Order to Hold Separate:
1. Respondent PCC is a corporation organized, existing, and doing
business under and by virtue of the laws of the State of Oregon, with
its office and principal place, of business located at 0000 X.X.
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000-4254.
2. Respondent Xxxxx-Xxxxxx is a corporation organized, existing, and
doing business under and by virtue of the laws of the Commonwealth of
Massachusetts, with its office and principal place of business located
at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000-0000.
3. The Federal Trade Commission has jurisdiction of the subject matter of
this proceeding and of Respondents, and the proceeding is in the
public interest.
ORDER
I.
IT IS ORDERED that, as used in this order, the following definitions shall
apply:
A. "PCC" means Precision Castparts Corp., its directors, officers,
employees, agents and representatives, predecessors, successors, and
assigns; its subsidiaries, including Xxxxx-Xxxxxx after the
Acquisition, divisions, groups and affiliates controlled by PCC, and
the respective directors, officers, employees, agents and
representatives, successors, and assigns of each.
B. "Xxxxx-Xxxxxx" means Xxxxx-Xxxxxx Company, its directors, officers,
employees, agents and representatives, predecessors, successors, and
assigns; its subsidiaries, divisions, groups and affiliates controlled
by Xxxxx-Xxxxxx, and the respective directors, officers, employees,
agents and representatives, successors, and assigns of each;
"Xxxxx-Xxxxxx" includes Xxxxx-Xxxxxx Titanium Castings, LLC, the joint
venture with Titanium Metals Corporation through which Xxxxx-Xxxxxx
conducts its Titanium Aerospace Investment Cast Components business.
C. "Respondents" means PCC and Xxxxx-Xxxxxx, individually and
collectively.
D. "Commission" means the Federal Trade Commission.
E. "Doncasters" means Doncasters plc, a corporation organized, existing,
and doing business under and by virtue of the laws of the United
Kingdom, with its office and principal place of business located at
00-00 Xxxxx Xxxx, Xxxxxxxxx,
2
Derbyshire, United Kingdom.
F. "Acquisition" means the proposed acquisition by PCC of all the voting
securities of Xxxxx-Xxxxxx.
G. "Investment Casting" means a method of manufacturing metal components,
whereby a wax model of the metal component is dipped into a ceramic
slurry which dries to form a ceramic shell. The wax is then removed
using a special furnace, leaving a cavity within the ceramic shell
into which molten metal is poured. Once the metal cools, the ceramic
shell is removed producing dimensionally precise metal components.
H. "Aerospace Investment Cast Components" means dimensionally precise
metal components manufactured using the Investment Casting process
that are used primarily in aerospace jet engine and aerospace airframe
applications.
I. "Titanium Aerospace Investment Cast Components" means Aerospace
Investment Cast Components manufactured using titanium alloy.
J. "Albany Facility" means Xxxxx-Xxxxxx'x Investment Casting
manufacturing plant located at 000 Xxxxx Xxxxxx XX, Xxxxxx, Xxxxxx
00000, and all assets used in the production of Titanium Aerospace
Investment Cast Components at the Albany Facility.
K. "Groton Large Parts Facility" means Xxxxx-Xxxxxx'x Investment Casting
manufacturing plant located at 000 Xxxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxx 00000, identified by Xxxxx-Xxxxxx for internal accounting
purposes as Plant 08, and all assets used in the production of
Aerospace Investment Cast Components at the Groton Large Parts
Facility included in the Groton Divestiture Agreement, as defined in
Paragraph I.U. in the Decision & Order.
L. "Groton Facility" means Xxxxx-Xxxxxx'x Investment Casting
manufacturing plants, referred to internally by Xxxxx-Xxxxxx as Plant
08 and Plant 02, located at 000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx
00000, and all assets used in the production of Aerospace Investment
Cast Components at the Groton Facility.
M. "Albany Facility Assets" means all assets, properties, businesses and
goodwill, tangible and intangible, of Xxxxx-Xxxxxx used in the
development, manufacture and sale of Titanium Aerospace Investment
Cast Components at the Albany Facility, including, without limitation,
the following:
1. all owned or leased real property and improvements, buildings,
plants, manufacturing operations, machinery, fixtures, equipment,
furniture, tools and other tangible personal property located in
Xxxxx-Xxxxxx'x Albany Facility;
3
2. all intellectual property, inventions, technology, trademarks,
trade names, trade secrets, copyrights, Manufacturing Know-How,
as defined in Paragraph I.L. of the Decision & Order, research
material, technical information, management information systems,
software specifications, designs, drawings, processes and quality
control data; provided, however, that this does not include any
rights in the name "Xxxxx-Xxxxxx";
3. all customer lists, vendor lists, catalogs, sales promotion
literature and advertising materials; inventory and storage
capacity; rights, titles and interests in and to owned or leased
real property, together with appurtenances, licenses and permits;
4. all rights, titles and interests in and to contracts relating to
the development, manufacture and sale of any Titanium Aerospace
Investment Cast Component; all rights, titles and interests in
and to the contracts entered into in the ordinary course of
business with customers (together with associated bid and
performance bonds), suppliers, sales representatives,
distributors, agents, personal property lessors, personal
property lessees, licensors, licensees, consignors, consignees;
5. all rights under warranties and guarantees, express or implied;
6. all books, records and files, and all items of prepaid expense;
and
7. all Sales and Service Operations.
N. "Groton Large Parts Facility Assets" means all assets, properties,
businesses and goodwill, tangible and intangible, of Xxxxx-Xxxxxx used
in the development, manufacture and sale of Aerospace Investment Cast
Components at the Groton Large Parts Facility, including, without
limitation, the following:
1. all owned or leased real property and improvements, buildings,
plants, manufacturing operations, machinery, fixtures, equipment,
furniture, tools and other tangible personal property located in
Xxxxx-Xxxxxx'x Groton Large Parts Facility;
2. all intellectual property, inventions, technology, trademarks,
trade names, trade secrets, copyrights, Manufacturing Know-How,
research material, technical information, management information
systems, software specifications, designs, drawings, processes
and quality control data; provided, however, that this does not
include any rights in the name Xxxxx-Xxxxxx";
3. all customer lists, vendor lists, catalogs, sales promotion
literature and
4
advertising materials; inventory and storage capacity; rights,
titles and interests in and to owned or leased real property,
together with appurtenances, licenses and permits;
4. all rights, titles and interests in and to contracts relating to
the development, manufacture and sale of any Aerospace Investment
Cast Component; all rights, titles and interests in and to the
contracts entered into in the ordinary course of business with
customers (together with associated bid and performance bonds),
suppliers, sales representatives, distributors, agents, personal
property lessors, personal property lessees, licensors,
licensees, consignors, consignees;
5. all rights under warranties and guarantees, express or implied;
6. all books, records and files, and all items of prepaid expense;
and
7. all Sales and Service Operations.
O. "Groton Facility Assets" means all assets, properties, businesses and
goodwill, tangible and intangible, used in the development,
manufacture and sale of Aerospace Investment Cast Components at the
Groton Facility, including, without limitation, the following:
1. all owned or leased real property and improvements, buildings,
plants, manufacturing operations, machinery, fixtures, equipment,
furniture, tools and other tangible personal property located in
Xxxxx-Xxxxxx'x Groton Facility;
2. all intellectual property, inventions, technology, trademarks,
trade names, trade secrets, copyrights, Manufacturing Know-How,
research material, technical information, management information
systems, software specifications, designs, drawings, processes
and quality control data; provided, however, that this does not
include any rights in the name Xxxxx-Xxxxxx";
3. all customer lists, vendor lists, catalogs, sales promotion
literature and advertising materials; inventory and storage
capacity; rights, titles and interests in and to owned or leased
real property, together with appurtenances, licenses and permits;
4. all rights, titles and interests in and to contracts relating to
the development, manufacture and sale of any Aerospace Investment
Cast Component; all rights, titles and interests in and to the
contracts entered into in the ordinary course of business with
customers (together with associated bid and performance bonds),
suppliers, sales representatives, distributors, agents, personal
property lessors, personal property lessees,
5
licensors, licensees, consignors, consignees;
5. all rights under warranties and guarantees, express or implied;
6. all books, records and files, and all items of prepaid expense;
and
7. all Sales and Service Operations.
P. "Sales and Service Operations" means all of Xxxxx-Xxxxxx'x assets,
properties, business and goodwill, tangible and intangible, used in
the sale or service of Xxxxx-Xxxxxx'x Aerospace Investment Cast
Components business at either the Albany Facility, the Groton Large
Parts Facility, or the Groton Facility, as applicable.
Q. "Material Confidential Information" means competitively sensitive or
proprietary information not independently known to an entity from
sources other than the entity to which the information pertains, and
includes, but is not limited to, all customer lists, price lists,
marketing methods, patents, technologies, processes, Manufacturing
Know-How, or other trade secrets.
R. "Key Employees" means the employees listed in Appendix A to the
Decision & Order.
6
II.
IT IS FURTHER ORDERED that:
A. Respondents shall hold the Albany Facility Assets as a separate and
independent business, except to the extent that Respondents must
exercise direction and control over the Albany Facility Assets to
assure compliance with this Order to Hold Separate, or with the
Consent Agreement, and except as otherwise provided in this Order to
Hold Separate, and shall vest the Albany Facility with all powers and
authorities necessary to conduct its business. The purpose of this
Order is to: (i) preserve the Albany Facility as a viable,
competitive, and ongoing Titanium Aerospace Investment Cast Components
business, independent of Respondents, until divestiture is achieved;
(ii) assure that no Material Confidential Information is exchanged
between Respondents and the Albany Facility; and (iii) prevent interim
harm to competition pending divestiture and other relief.
B. Respondents shall hold the Albany Facility Assets separate and
independent on the following terms and conditions:
1. The Commission at any time may appoint an Independent Auditor to
monitor Respondents' compliance with Paragraph II. of this Order
to Hold Separate, and Respondents shall give the Independent
Auditor, if one is appointed, all powers and authority necessary
to effectuate his/her responsibilities pursuant to this Order to
Hold Separate.
2. If an Independent Auditor is appointed by the Commission for the
Albany Facility Assets, Respondents shall consent to the
following procedures:
a. The Commission shall select the Independent Auditor, subject
to the consent of Respondents, which consent shall not be
unreasonably withheld. The Independent Auditor shall be a
person with experience necessary to perform his or her
duties. If Respondents have not opposed, in writing,
including the reasons for opposing, the selection of any
proposed Independent Auditor within ten (10) days after
notice by the staff of the Commission to Respondents of the
identity of any proposed Independent Auditor, Respondents
shall be deemed to have consented to the selection of the
proposed Independent Auditor.
b. Within ten (10) days after appointment of the Independent
Auditor, Respondents shall execute an Independent Auditor
agreement that, subject to the prior approval of the
Commission, transfers to the Independent Auditor all rights
and powers necessary to permit the Independent Auditor to
perform his or her duties.
7
c. The Independent Auditor shall have full and complete access
to all personnel, books, records, documents and facilities
of Respondents or to any other relevant information relating
to the Albany Facility Assets, as the Independent Auditor
may reasonably request, including but not limited to all
documents and records kept in the normal course of business
that relate to the Albany Facility Assets. Respondents shall
develop such financial or other information as the
Independent Auditor may reasonably request and shall
cooperate with the Independent Auditor. Respondents shall
take no action to interfere with or impede the Independent
Auditor's ability to perform his/her responsibilities
consistent with the terms of this Order to Hold Separate or
to monitor Respondents' compliance with this Order to Hold
Separate.
d. The Independent Auditor shall have the authority to employ,
at the cost and expense of Respondents, such consultants,
accountants, attorneys, and other representatives and
assistants as are reasonable and necessary to carry out the
Independent Auditor's duties and responsibilities. The
Independent Auditor shall account for all expenses incurred,
including fees for his/her services, subject to the approval
of the Commission.
e. Respondents may require the Independent Auditor to sign a
confidentiality agreement prohibiting the disclosure of any
Material Confidential Information gained as a result of his
or her role as Independent Auditor to anyone other than the
Commission.
3. Respondents shall appoint, subject to the approval of the
Independent Auditor, three (3) individuals from among the current
employees of Xxxxx-Xxxxxx working in the management, sales,
marketing, or financial operations of the Titanium Aerospace
Investment Cast Components business at the Albany Facility to
manage and maintain the Albany Facility Assets. The Management
Team, in its capacity as such, shall report directly and
exclusively to the Independent Auditor, and shall manage the
Albany Facility Assets independently of the management of
Respondents. The Management Team shall not be involved in any way
in the operations of the businesses of Respondents, other than
the Titanium Aerospace Investment Cast Components business at the
Albany Facility, during the hold separate period.
4. Respondents shall not change the composition of the management of
the Albany Facility, except that the Management Team shall be
permitted to remove management employees for cause subject to
approval of the Independent Auditor. The Independent Auditor
shall have the power to remove members of the Management Team for
cause and to require
8
Respondents to appoint replacement members to the Management Team in the same
manner as provided in subparagraph II.B.3. of this Order to Hold Separate.
5. The Independent Auditor shall have responsibility, through the
Management Team, for managing the Albany Facility Assets
consistent with the terms of this Order to Hold Separate; for
maintaining the independence of the Albany Facility Assets
consistent with the terms of this Order to Hold Separate and the
Consent Agreement; and for assuring Respondents' compliance with
their obligations pursuant to this Order to Hold Separate.
6. The Albany Facility shall be staffed with sufficient employees to
maintain the viability and competitiveness of that facility.
Employees of the Albany Facility shall include: (i) all personnel
employed by the Albany Facility as of the date the Commission
accepts the Consent Agreement for public comment; and (ii) those
persons hired from other sources. The Management Team, with the
approval of the Independent Auditor, shall have the authority to
replace employees who have otherwise left their positions with
the Albany Facility since January 1, 1999. To the extent that
employees of the Albany Facility leave the Albany Facility prior
to the divestiture of the Albany Facility Assets, the Management
Team, with the approval of the Independent Auditor, may replace
the departing employees of the Albany Facility with persons who
have similar experience and expertise.
7 Respondents shall cause the Independent Auditor, each member of
the Management Team, and each employee of the Albany Facility to
submit to the Commission a signed statement that the individual
will maintain the confidentiality required by the terms and
conditions of this Order to Hold Separate. These individuals must
retain and maintain all Material Confidential Information
relating to the held separate business on a confidential basis
and, except as is permitted by this Order to Hold Separate, such
persons shall be prohibited from providing, discussing,
exchanging, circulating, or otherwise furnishing any such
information to or with any other person whose employment involves
any of Respondents' businesses other than the Albany Facility
business. These persons shall not be involved in any way in the
management, sales, marketing, and financial operations of the
competing products of Respondents.
8. Respondents shall establish written procedures to be approved by
the Independent Auditor covering the management, maintenance, and
independence of the Albany Facility Assets consistent with the
provisions of this Order to Hold Separate.
9
9. Respondents shall circulate to employees of the Albany Facility
and to Respondents' employees who are responsible for the
operation or marketing of Titanium Aerospace Investment Cast
Components in the United States, a notice of this Order to Hold
Separate and Consent Agreement, in the form attached as
Attachment A.
10. The Independent Auditor, if one is appointed, and the Management
Team shall serve, without bond or other security, at the cost and
expense of Respondents, on reasonable and customary terms
commensurate with the person's experience and responsibilities.
Respondents shall indemnify the Independent Auditor and the
Management Team, and hold the Independent Auditor and the
Management Team harmless against any losses, claims, damages,
liabilities, or expenses arising out of, or in connection with,
the performance of the Independent Auditor's or the Management
Team's duties, including all reasonable fees of counsel and other
expenses incurred in connection with the preparation for or
defense of any claim, whether or not resulting in any liability,
except to the extent that such losses, claims, damages,
liabilities, or expenses result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by the
Independent Auditor or the Management Team.
11. Respondents shall provide the Albany Facility with sufficient
working capital to operate the Albany Facility at least at
current rates of operation, to meet all capital calls with
respect to the Albany Facility and to carry on, at least at their
scheduled pace, all capital projects for the Albany Facility that
are ongoing or approved as of January 1, 1999. In addition,
Respondents shall continue, at least at their scheduled pace, any
additional expenditures for the Albany Facility authorized prior
to the date this Order to Hold Separate is signed by Respondents.
During the period this Order to Hold Separate is effective,
Respondents shall make available for use by the Albany Facility
funds sufficient to perform all necessary routine maintenance to,
and replacements of, assets of the Albany Facility. Respondents
shall provide the Albany Facility with such funds as are
necessary to maintain the viability, competitiveness, and
marketability of the Albany Facility Assets until the date the
divestiture is completed, provided the Albany Facility may not
assume any new long-term debt except as necessary to meet a
competitive threat and as approved by the Independent Auditor.
12. Respondents shall continue to provide the same support services
to the Albany Facility Assets as are being provided to such
assets by Xxxxx-Xxxxxx as of the date this Order to Hold Separate
is signed by Respondents. Respondents may charge the Albany
Facility the same fees, if any, charged by Respondents for such
support services as of the date this Order to Hold Separate is
signed by Respondents. Respondents' personnel
10
providing such support services must retain and maintain all
Material Confidential Information of the Albany Facility Assets
on a confidential basis, and, except as is permitted by this
Order to Hold Separate, such persons shall be prohibited from
providing, discussing, exchanging, circulating, or otherwise
furnishing any such information to or with any person whose
employment involves any of Respondents' businesses, other than
the Titanium Aerospace Investment Cast Components business at the
Albany Facility. Such personnel shall also execute
confidentiality agreements prohibiting the disclosure of any
Material Confidential Information of the Albany Facility Assets.
13. Except as provided in this Order to Hold Separate, Respondents
shall not employ or make offers of employment to employees of the
Albany Facility during the hold separate period. The acquirer of
the Albany Facility Assets shall have the option of offering
employment to the Albany Facility employees. After the hold
separate period, Respondents may offer employment to Albany
Facility employees who have not been offered employment or have
been terminated by the acquirer of the Albany Facility Assets.
Respondents shall not interfere with the employment of employees
of the Albany Facility by the acquirer of the Albany Facility
Assets; shall not offer any incentive to said employees to
decline employment with the acquirer of the Albany Facility
Assets or accept other employment with Respondents; and shall
remove any impediments that may deter employees of the Albany
Facility from accepting employment with the acquirer of the
Albany Facility Assets including, but not limited to, any
non-compete or confidentiality provisions of employment or other
contracts with the Albany Facility that would affect the ability
of employees of the Albany Facility to be employed by the
acquirer of the Albany Facility Assets.
14. For a period of one (1) year commencing on the date the Albany
Facility Assets are divested, Respondents shall not employ or
make offers of employment to any Key Employee of the Albany
Facility who has been offered employment with the acquirer of the
Albany Facility Assets unless such individual has been terminated
by the acquirer of the Albany Facility Assets.
15. Notwithstanding subparagraph II.B.14., Respondents may offer a
bonus or severance to those Key Employees of the Albany Facility
that continue their employment with the Albany Facility until the
date that the Albany Facility Assets are divested.
16. Respondents shall not exercise direction or control over, or
influence directly or indirectly, the Albany Facility Assets, the
Independent Auditor,
11
the Management Team, or any of its operations; provided, however,
that Respondents may exercise only such direction and control
over the Albany Facility Assets as are necessary to assure
compliance with this Order to Hold Separate or the Consent
Agreement, or with all applicable laws.
17. Except for the Management Team and except to the extent provided
in subparagraphs II.B.12. and II.B.16., Respondents shall not
permit any non-Albany Facility employees, officers, or directors
to be involved in the operations of the Albany Facility Assets.
18. Respondents shall maintain the viability, competitiveness, and
marketability of the Albany Facility Assets; shall not sell,
transfer, or encumber any of the Albany Facility Assets (other
than in the normal course of business); and shall not cause or
permit the destruction, removal, wasting, or deterioration, or
otherwise impair the viability, competitiveness, or marketability
of the Albany Facility Assets.
19. If the Independent Auditor ceases to act or fails to act
diligently and consistent with the purposes of this Order to Hold
Separate, the Commission may appoint a substitute Independent
Auditor in the same manner as provided in Paragraph H.B.1. of
this Order to Hold Separate.
20. Until the divestiture of the Albany Facility Assets is
accomplished, Respondents shall ensure that Albany Facility
employees continue to be paid their salaries, all accrued
bonuses, pensions and other accrued benefits to which such
employees would otherwise have been entitled had they remained in
the employment of Xxxxx-Xxxxxx during the hold separate period.
21. Except as required by law, and except to the extent that
necessary information is exchanged in the course of consummating
the Acquisition, defending investigations, defending or
prosecuting litigation, obtaining legal advice, negotiating
agreements to divest assets pursuant to the Consent Agreement, or
complying with this Order to Hold Separate or the Consent
Agreement, Respondents shall not receive or have access to, or
use or continue to use, any Material Confidential Information,
not in the public domain, about the Albany Facility Assets.
Respondents may receive, on a regular basis, aggregate financial
information relating to the Albany Facility necessary to allow
Respondents to prepare United States consolidated financial
reports and tax returns. Any such information that is obtained
pursuant to this subparagraph shall be used only for the purposes
set forth in this subparagraph.
22. Within thirty (30) days after the date Respondents sign the
Consent Agreement and every thirty (30) days thereafter until the
Order to Hold
12
Separate terminates, the Independent Auditor or the Management
Team shall report in writing to the Commission concerning the
efforts to accomplish the purposes of this Order to Hold
Separate. Included within that report shall be the Independent
Auditor's or the Management Team's assessment of the extent to
which the Albany Facility is meeting (or exceeding) its projected
goals as are reflected in operating plans, budgets, projections
or any other regularly prepared financial statements.
III.
IT IS FURTHER ORDERED that until the date the Commission issues the
Decision Order, Respondents shall take such actions as are necessary to maintain
the viability and marketability of the Groton Facility Assets, and to prevent
the destruction, removal, wasting, deterioration, or impairment of any of the
Groton Facility Assets except for ordinary wear and tear.
IV.
IT IS FURTHER ORDERED that:
A. If the Groton Large Parts Facility Assets are not divested to
Doncasters pursuant to Paragraph IV.A.1. of the Decision & Order, or
if the Commission orders rescission of the Groton Divestiture
Agreement with Doncasters pursuant to Paragraph 12 of the Consent
Agreement, Respondents shall hold the Groton Facility Assets as a
separate and independent business, except to the extent that
Respondents must exercise direction and control over the Groton
Facility Assets to assure compliance with this Order to Hold Separate,
or with the Consent Agreement, and except as otherwise provided in
this Order to Hold Separate, and shall vest the Groton Facility with
all powers and authorities necessary to conduct its business. The
purpose of this Order is to: (i) preserve the Groton Facility as a
viable, competitive, and ongoing Aerospace Investment Cast Components
business, independent of Respondents, until divestiture is achieved;
(ii) assure that no Material Confidential Information is exchanged
between Respondents and the Groton Facility; and (iii) prevent interim
harm to competition pending divestiture and other relief.
B. Respondents shall hold the Groton Facility Assets separate and
independent on the following terms and conditions:
1. The Commission at any time may appoint an Independent Auditor to
monitor Respondents' compliance with Paragraph IV. of this Order
to Hold Separate, and Respondents shall give the Independent
Auditor, if one is appointed, all powers and authority necessary
to effectuate his/her
13
responsibilities pursuant to this Order to Hold Separate. The
Independent Auditor for the Groton Facility may be the same
person as the Independent Auditor appointed by the Commission for
the Albany Facility Assets pursuant to Paragraph II.B.1. of this
Order to Hold Separate.
2. If an Independent Auditor is appointed by the Commission for the
Groton Facility Assets, Respondents shall consent to the
following procedures:
a. The Commission shall select the Independent Auditor, subject
to the consent of Respondents, which consent shall not be
unreasonably withheld. The Independent Auditor shall be a
person with experience necessary to perform his or her
duties. If Respondents have not opposed, in writing,
including the reasons for opposing, the selection of any
proposed Independent Auditor within ten (10) days after
notice by the staff of the Commission to Respondents of the
identity of any proposed Independent Auditor, Respondents
shall be deemed to have consented to the selection of the
proposed Independent Auditor.
b. Within ten (10) days after appointment of the Independent
Auditor, Respondents shall execute an Independent Auditor
agreement that, subject to the prior approval of the
Commission, transfers to the Independent Auditor all rights
and powers necessary to permit the Independent Auditor to
perform his or her duties.
c. The Independent Auditor shall have full and complete access
to all personnel, books, records, documents and facilities
of Respondents or to any other relevant information relating
to the Groton Facility Assets, as the Independent Auditor
may reasonably request, including but not limited to all
documents and records kept in the normal course of business
that relate to the Groton Facility Assets. Respondents shall
develop such financial or other information as the
Independent Auditor may reasonably request and shall
cooperate with the Independent Auditor. Respondents shall
take no action to interfere with or impede the Independent
Auditor's ability to perform his/her responsibilities
consistent with the terms of this Order to Hold Separate or
to monitor Respondents' compliance with this Order to Hold
Separate.
d. The Independent Auditor shall have the authority to employ,
at the cost and expense of Respondents, such consultants,
accountants, attorneys, and other representatives and
assistants as are reasonable and necessary to carry out the
Independent Auditor's duties and responsibilities. The
Independent Auditor shall account for all expenses incurred,
including fees for his/her services, subject to the
14
approval of the Commission.
e. Respondents may require the Independent Auditor to sign a
confidentiality agreement prohibiting the disclosure of any
Material Confidential Information gained as a result of his
or her role as Independent Auditor to anyone other than the
Commission.
3. Respondents shall appoint, subject to the approval of the
Independent Auditor, three (3) individuals from among the current
employees of Xxxxx-Xxxxxx working in the management, sales,
marketing, or financial operations of the Aerospace Investment
Cast Components business at the Groton Facility, to manage and
maintain the Groton Facility Assets. This additional Management
Team, in its capacity as such, shall report directly and
exclusively to the Independent Auditor, and shall manage the
Groton Facility Assets independently of the management of
Respondents. The Groton Management Team shall not be involved in
any way in the operations of the businesses of Respondents, other
than the Aerospace Investment Cast Components business at the
Groton Facility, during the hold separate period.
4. Respondents shall not change the composition of the management of
the Groton Facility, except that the Management Team shall be
permitted to remove management employees for cause subject to the
approval of the Independent Auditor. The Independent Auditor
shall have the power to remove members of the Management Team for
cause and to require Respondents to appoint replacement members
to the Management Team in the same manner as provided in
subparagraph IV.B.3. of this Order to Hold Separate.
5. The Independent Auditor shall have responsibility, through the
Management Team, for managing the Groton Facility Assets
consistent with the terms of this Order to Hold Separate; for
maintaining the independence of the Groton Facility Assets
consistent with the terms of this Order to Hold Separate and the
Consent Agreement; and for assuring Respondents' compliance with
their obligations pursuant to this Order to Hold Separate.
6. The Groton Facility shall be staffed with sufficient employees to
maintain the viability and competitiveness of that facility.
Employees of the Groton Facility shall include: (i) all personnel
employed by the Groton Facility as of the date the Commission
accepts the Consent Agreement for public comment; and (ii) those
persons hired from other sources. The Management Team, with the
approval of the Independent Auditor, shall have the authority to
replace employees who have otherwise left their
15
positions with the Groton Facility since January 1, 1999. To the
extent that employees of the Groton Facility leave the Groton
Facility prior to the divestiture of the Groton Facility Assets,
the Management Team, with the approval of the Independent
Auditor, may replace the departing employees of the Groton
Facility with persons who have similar experience and expertise.
7. Respondents shall cause the Independent Auditor, each member of
the Management Team, and each employee of the Groton Facility to
submit to the Commission a signed statement that the individual
will maintain the confidentiality required by the terms and
conditions of this Order to Hold Separate. These individuals must
retain and maintain all Material Confidential Information
relating to the held separate business on a confidential basis
and, except as is permitted by this Order to Hold Separate, such
persons shall be prohibited from providing, discussing,
exchanging, circulating, or otherwise furnishing any such
information to or with any other person whose employment involves
any of Respondents' businesses other than the Groton Facility
business. These persons shall not be involved in any way in the
management, sales, marketing, and financial operations of the
competing products of Respondents.
8. Respondents shall establish written procedures to be approved by
the Independent Auditor covering the management, maintenance, and
independence of the Groton Facility Assets consistent with the
provisions of this Order to Hold Separate.
9. Respondents shall circulate to employees of the Groton Facility
and to Respondents' employees who are responsible for the
operation or marketing of Aerospace Investment Cast Components in
the United States, a notice of this Order to Hold Separate and
Consent Agreement, in the form attached as Attachment B.
10. The Independent Auditor, if one is appointed, and the Management
Team shall serve, without bond or other security, at the cost and
expense of Respondents, on reasonable and customary terms
commensurate with the person's experience and responsibilities.
Respondents shall indemnify the Independent Auditor and the
Management Team, and hold the Independent Auditor and the
Management Team harmless against any losses, claims, damages,
liabilities, or expenses arising out of, or in connection with,
the performance of the Independent Auditor's or the Management
Team's duties, including all reasonable fees of counsel and other
expenses incurred in connection with the preparation for or
defense of any claim, whether or not resulting in any liability,
except to the extent that such losses, claims, damages,
liabilities or expenses result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by the
Independent
16
Auditor or the Management Team.
11. Respondents shall provide the Groton Facility with sufficient
working capital to operate the Groton Facility, at least at
current rates of operation, to meet all capital calls with
respect to the Groton Facility and to carry on, at least at their
scheduled pace, all capital projects for the Groton Facility that
are ongoing or approved as of January 1, 1999. In addition,
Respondents shall continue, at least at their scheduled pace, any
additional expenditures for the Groton Facility authorized prior
to the date this Order to Hold Separate is signed by Respondents.
During the period this Order to Hold Separate is effective,
Respondents shall make available for use by the Groton Facility
funds sufficient to perform all necessary routine maintenance to,
and replacements of, assets of the Groton Facility. Respondents
shall provide the Groton Facility with such funds as are
necessary to maintain the viability, competitiveness, and
marketability of the Groton Facility Assets until the date the
divestiture is completed, provided the Groton Facility may not
assume any new long-term debt except as necessary to meet a
competitive threat and as approved by the Independent Auditor.
12. Respondents shall continue to provide the same support services
to the Groton Facility Assets as are being provided to such
assets by Xxxxx-Xxxxxx as of the date this Order to Hold Separate
is signed by Respondents. Respondents may charge the Groton
Facility the same fees, if any, charged by Respondents for such
support services as of the date this Order to Hold Separate is
signed by Respondents. Respondents' personnel providing such
support services must retain and maintain all Material
Confidential Information of the Groton Facility Assets on a
confidential basis, and, except as is permitted by this Order to
Hold Separate, such persons shall be prohibited from providing,
discussing, exchanging, circulating, or otherwise furnishing any
such information to or with any person whose employment involves
any of Respondents' businesses. Such personnel shall also execute
confidentiality agreements prohibiting the disclosure of any
Material Confidential Information of the Groton Facility Assets.
13. Except as provided in this Order to Hold Separate, Respondents
shall not employ or make offers of employment to employees of the
Groton Facility during the hold separate period. The acquirer of
the Groton Facility Assets shall have the option of offering
employment to Groton Facility employees. After the hold separate
period, Respondents may offer employment to Groton Facility
employees who have not been offered employment or have been
terminated by the acquirer of the Groton Facility Assets.
Respondents shall not interfere with the employment of employees
of the Groton Facility by the acquirer of the Groton Facility
17
Assets; shall not offer any incentive to said employees to
decline employment with the acquirer of the Groton Facility
Assets or accept other employment with Respondents; and shall
remove any impediments that may deter employees of the Groton
Facility from accepting employment with the acquirer of the
Groton Facility Assets including, but not limited to, any
non-compete or confidentiality provisions of employment or other
contracts with the Groton Facility that would affect the ability
of employees of the Groton Facility to be employed by the
acquirer of the Groton Facility Assets.
14. For a period of one (1) year commencing on the date the Groton
Facility Assets are divested, Respondents shall not employ or
make offers of employment to any Key Employee of the Groton
Facility who has been offered employment with the acquirer of the
Groton Facility Assets unless such individual has been terminated
by the acquirer of the Groton Facility Assets.
15. Notwithstanding subparagraph IV.B.14., Respondents may offer a
bonus or severance to those Key Employees of the Groton Facility
that continue their employment with the Groton Facility until the
date that the Groton Facility Assets are divested.
16. Respondents shall not exercise direction or control over, or
influence directly or indirectly, the Groton Facility Assets, the
Independent Auditor, the Management Team, or any of its
operations; provided, however, that Respondents may exercise only
such direction and control over the Groton Facility Assets as are
necessary to assure compliance with this Order to Hold Separate
or the Consent Agreement, or with all applicable laws.
17. Except for the Management Team and except to the extent provided
in subparagraphs IV.B.12. and IV.B.16., Respondents shall not
permit any non-Groton Facility employees, officers, or directors
to be involved in the operations of the Groton Facility Assets.
18. Respondents shall maintain the viability, competitiveness, and
marketability of the Groton Facility Assets; shall not sell,
transfer, or encumber any of the Groton Facility Assets (other
than in the normal course of business); and shall not cause or
permit the destruction, removal, wasting, or deterioration, or
otherwise impair the viability, competitiveness, or marketability
of the Groton Facility Assets.
19. If the Independent Auditor ceases to act or fails to act
diligently and consistent with the purposes of this Order to Hold
Separate, the Commission may appoint a substitute Independent
Auditor in the same manner as provided in Paragraph IV.B.1. of
this Order to Hold Separate.
18
20. Until the divestiture of the Groton Facility Assets is
accomplished, Respondents shall ensure that Groton Facility
employees continue to be paid their salaries, all accrued
bonuses, pensions and other accrued benefits to which such
employees would otherwise have been entitled had they remained in
the employment of Xxxxx-Xxxxxx during the hold separate period.
21. Except as required by law, and except to the extent that
necessary information is exchanged in the course of consummating
the Acquisition, defending investigations, defending or
prosecuting litigation, obtaining legal advice, negotiating
agreements to divest assets pursuant to the Consent Agreement, or
complying with this Order to Hold Separate or the Consent
Agreement, Respondents shall not receive or have access to, or
use or continue to use, any Material Confidential Information,
not in the public domain, about the Groton Facility Assets.
Respondents may receive, on a regular basis, aggregate financial
information relating to the Groton Facility necessary to allow
Respondents to prepare United States consolidated financial
reports and tax returns. Any such information that is obtained
pursuant to this subparagraph shall be used only for the purposes
set forth in this subparagraph.
22. Within thirty (30) days after the date Respondents sign the
Consent Agreement and every thirty (30) days thereafter until the
Order to Hold Separate terminates, the Independent Auditor or the
Management Team shall report in writing to the Commission
concerning the efforts to accomplish the purposes of this Order
to Hold Separate. Included within that report shall be the
Independent Auditor's or the Management Team's assessment of the
extent to which the Groton Facility, if applicable, is meeting
(or exceeding) its projected goals as are reflected in operating
plans, budgets, projections or any other regularly prepared
financial statements.
V.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at least
thirty (30) days prior to any proposed change in the corporate Respondents such
as dissolution, assignment, sale resulting in the emergence of a successor
corporation, or the creation or dissolution of subsidiaries or any other change
in the corporation that may affect compliance obligations arising out of this
Order to Hold Separate.
VI.
IT IS FURTHER ORDERED that for the purposes of determining or securing
19
compliance with this Order to Hold Separate, and subject to any legally
recognized privilege, and upon written request with reasonable notice to
Respondents made to their principal United States offices, Respondents shall
permit any duly authorized representatives of the Commission:
A. Access, during office hours of Respondents and in the presence of
counsel, to all facilities, and access to inspect and copy all books,
ledgers, accounts, correspondence, memoranda, and all other records
and documents in the possession or under the control of Respondents
relating to compliance with this Order to Hold Separate; and
B. Upon five (5) days' notice to Respondents and without restraint or
interference from Respondents, to interview officers, directors, or
employees of Respondents, who may have counsel present, regarding such
matters.
VII.
IT IS FURTHER ORDERED that this Order to Hold Separate shall terminate on
the earlier of:
A. Three (3) business days after the Commission withdraws its acceptance
of the Consent Agreement pursuant to the provisions of Commission Rule
2.34, 16 C.F.R. ss. 2.34; or
B. Three (3) business days after the divestiture of the Albany Facility
Assets, or three (3) business days after the divestiture of the Groton
Facility Assets (provided the Groton Large Parts Facility Assets have
not been divested to Doncasters pursuant to Paragraph IV.A.1 of the
Decision & Order), whichever is later.
By the Commission.
----------------------------------------
Xxxxxx X. Xxxxx
Secretary
SEAL
ISSUED:
20
ATTACHMENT A
NOTICE OF DIVESTITURE AND REQUIREMENT FOR CONFIDENTIALITY
Precision Castparts Corp. ("PCC") and Xxxxx-Xxxxxx Company
("Xxxxx-Xxxxxx"), hereinafter referred to as "Respondents," have entered into an
Agreement Containing Consent Orders ("Consent Agreement") with the Federal Trade
Commission relating to the divestiture of certain assets.
As used herein, the term "Albany Facility," as defined in Paragraph I.M. of
the Federal Trade Commission's Decision & Order, means Xxxxx-Xxxxxx'x Titanium
Aerospace Investment Cast Components manufacturing facility.
As used herein, the term "Albany Facility Assets," as defined in Paragraph
I.P. of the Decision & Order, means the Xxxxx-Xxxxxx assets located at the
Albany Facility that are used to develop, manufacture and sell Titanium
Aerospace Investment Cast Components. Under the terms of the Consent Agreement,
Respondents must divest the Albany Facility Assets within six (6) months from
the date they sign the Consent Agreement.
The term "Acquisition" means the acquisition of 100% of the voting
securities of Xxxxx-Xxxxxx by PCC.
The Albany Facility Assets must be managed and maintained as a separate,
ongoing business, independent of all other businesses of the Respondents until
such assets are divested. All competitive information relating to the Albany
Facility Assets must be retained and maintained by the persons involved in the
operation of those assets on a confidential basis, and such persons shall be
prohibited from providing, discussing, exchanging, circulating, or otherwise
furnishing any such information to or with any other person whose employment
involves any other business of the Respondents. Similarly, persons involved in
similar activities at Xxxxx-Xxxxxx or PCC shall be prohibited from providing,
discussing, exchanging, circulating, or otherwise furnishing any similar
information to or with any other person whose employment involves the Albany
Facility Assets.
Any violation of the Consent Agreement may subject Respondents to civil
penalties and other relief as provided by law.
ATTACHMENT B
NOTICE OF DIVESTITURE AND REQUIREMENT FOR CONFIDENTIALITY
Precision Castparts Corp. ("PCC") and Xxxxx-Xxxxxx Company ("Xxxxx-
Xxxxxx"), hereinafter referred to as "Respondents," have entered into an
Agreement Containing Consent Orders ("Consent Agreement") with the Federal Trade
Commission relating to the divestiture of certain assets.
As used herein, the term "Groton Facility," as defined in Paragraph 1.0. of
the Federal Trade Commission's Decision & Order, means Xxxxx-Xxxxxx'x Aerospace
Investment Cast Components manufacturing facility.
As used herein, the term "Groton Facility Assets," as defined in Paragraph
I.R. of the Decision & Order, means the Xxxxx-Xxxxxx assets located at the
Groton Facility that are used to develop, manufacture and sell Aerospace
Investment Cast Components. Under the terms of the Consent Agreement, if
Respondents fail to divest the Groton Large Parts Facility Assets, as defined in
Paragraph I.Q. of the Decision & Order, to Doncasters pursuant to Paragraph
IV.A.1. of the Decision & Order, Respondents must divest the Groton Facility
Assets within six (6) months from the date they sign the Consent Agreement.
The term "Acquisition" means the acquisition of 100% of the voting
securities of Xxxxx-Xxxxxx by PCC.
The Groton Facility Assets must be managed and maintained as a separate,
ongoing business, independent of all other businesses of the Respondents until
such assets are divested. All competitive information relating to the Groton
Facility Assets must be retained and maintained by the persons involved in the
operation of those assets on a confidential basis, and such persons shall be
prohibited from providing, discussing, exchanging, circulating, or otherwise
furnishing any such information to or with any other person whose employment
involves any other business of the Respondents. Similarly, persons involved in
similar activities at Xxxxx-Xxxxxx or PCC shall be prohibited from providing,
discussing, exchanging, circulating, or otherwise furnishing any similar
information to or with any other person whose employment involves the Groton
Facility Assets.
Any violation of the Consent Agreement may subject Respondents to civil
penalties and other relief as provided by law.
ANALYSIS OF PROPOSED CONSENT ORDER
TO AID PUBLIC COMMENT
The Federal Trade Commission ("Commission") has accepted, subject to final
approval, an Agreement Containing Consent Orders ("Consent Agreement") and
Decision & Order from Precision Castparts Corp. ("PCC") and Xxxxx-Xxxxxx Company
("Xxxxx-Xxxxxx") designed to remedy the anticompetitive effects resulting from
PCC's acquisition of all of the voting securities of Xxxxx-Xxxxxx. Under the
terms of the Consent Agreement, PCC and Xxxxx-Xxxxxx will be required to divest
the following assets that are involved in the development, manufacture and sale
of titanium, stainless steel and nickel-based superalloy aerospace investment
cast components: (1) Xxxxx-Xxxxxx'x titanium foundry located in Albany, Oregon;
and (2) Xxxxx-Xxxxxx'x Large Cast Parts foundry located in Groton, Connecticut.
The proposed Consent Agreement and Decision & Order have been placed on the
public record for thirty (30) days for reception of comments by interested
persons. Comments received during this period will become part of the public
record. After thirty (30) days, the Commission will again review the proposed
Consent Order and the comments received, and will decide whether it should
withdraw from the proposed Consent Agreement or make final the proposed Decision
& Order.
Pursuant to a May 17, 1999 cash tender offer, PCC agreed to acquire 100% of
the voting securities of Xxxxx-Xxxxxx for approximately $721 million. The
proposed Complaint alleges that this agreement violates Section 5 of the FTC
Act, as amended, 15 U.S.C. ss. 18, and the acquisition of Xxxxx-Xxxxxx by PCC,
if consummated, would violate Section 7 of the Xxxxxxx Act, as amended, 15
U.S.C. ss. 45, and Section 5 of the FTC Act, as amended, 15 U.S.C. ss. 18, in
the markets for titanium, large stainless steel, and large nickel-based
superalloy aerospace investment cast structural components.
Investment casting is a method of manufacturing metal components whereby a
wax model of the metal component is dipped into a ceramic slurry which dries to
form a ceramic
shell. The wax is then melted out using a special furnace, leaving a cavity
within the ceramic shell into which molten metal is poured. Once the metal
cools, the ceramic shell is removed, producing dimensionally precise metal
components. Aerospace investment cast structural components are components that
are used primarily in aerospace jet engine and aerospace airframe applications
and are manufactured using a variety of metal alloys, including titanium,
stainless steel, and nickel-based superalloy. PCC and Xxxxx-Xxxxxx are two of
the world's leading suppliers of titanium, stainless steel, and nickel-based
superalloy aerospace investment cast structural components. While each of these
metals, and others including aluminum, can be used in many aerospace
applications, for a particular application, one metal is typically far superior
to the alternatives based on cost, weight, and strength considerations.
Therefore, based on design specifications and performance characteristics, a
component produced from a particular metal is not a reasonable competitive
alternative for an investment cast aerospace structural component manufactured
using a different metal.
Metal aerospace structural components can also be produced utilizing other
methods of manufacturing, such as forging and fabrication. While these other
methods of manufacturing are alternatives to investment casting, the investment
casting process provides the most cost-effective method of producing the
required components for those aerospace applications where investment castings
are currently used. In view of this cost distinction, other methods of
manufacturing are not reasonable competitive alternatives for the production of
titanium, stainless steel, and nickel-based superalloy aerospace investment cast
structural components.
Titanium, large stainless steel, and large nickel-based superalloy
investment cast structural aerospace components are each relevant markets. The
worldwide market for titanium aerospace investment cast structural components is
highly concentrated, and the proposed acquisition would substantially increase
concentration in the market. PCC and Xxxxx-Xxxxxx are two of only four viable
suppliers of titanium aerospace investment cast structural components, and one
of the remaining two competitors is significantly smaller than the other three.
2
The worldwide market for large (greater than 24 inches in diameter)
stainless steel aerospace investment cast structural components is also highly
concentrated, and the acquisition would substantially increase concentration in
this market. PCC and Xxxxx-Xxxxxx are two of only six viable suppliers of large
stainless steel aerospace investment cast structural components.
The worldwide market for large (greater than 24 inches in diameter)
nickel-based superalloy aerospace investment cast structural components is also
highly concentrated, and the acquisition would substantially increase
concentration in this market. PCC and Xxxxx-Xxxxxx are two of only four viable
suppliers of large nickel-based superalloy aerospace investment cast structural
components.
By eliminating competition between PCC and Xxxxx-Xxxxxx in these highly
concentrated markets, the proposed acquisition would have allowed PCC to
unilaterally exercise market power, and would have enhanced the likelihood of
coordinated interaction among the remaining firms in these markets, thereby
increasing the likelihood that: (1) consumers of titanium, large stainless
steel, and large nickel-based superalloy aerospace investment cast components
would be forced to pay higher prices; and (2) innovation in these markets would
decrease.
It is unlikely that the competition eliminated by the proposed acquisition
would have been replaced by new entrants into the relevant markets within two
years due to the substantial barriers to entry into the markets at issue. A new
entrant into these markets would need to undertake the difficult, expensive, and
time-consuming process of developing a new product. Moreover, a new, entrant
would likely have to purchase a new facility, as well as specialized investment
casting equipment. A new entrant would also have to undertake the arduous task
of developing the required engineering and process expertise. In addition,
because of the critical nature of aerospace investment cast structural
components, a new entrant would have to obtain customer and other third-party
certifications and approvals before it could begin to manufacture and sell
aerospace investment cast components. Finally, customers of aerospace investment
cast structural components are generally reluctant to contract with suppliers
that have not developed a
3
proven reputation for quality and reliability. For these reasons, new entry into
the market would in all likelihood not occur in time to deter or counteract the
anticompetitive effects resulting from the acquisition.
The proposed Consent Agreement and Decision & Order effectively remedy the
acquisition's anticompetitive effects in the market for titanium aerospace
investment cast structural components by requiring PCC and Xxxxx-Xxxxxx to
divest Xxxxx-Xxxxxx'x titanium foundry in Albany, Oregon to a
Commission-approved acquirer. Pursuant to the Consent Agreement and Decision &
Order, PCC and Xxxxx-Xxxxxx are required to divest the Albany titanium foundry
no later than six (6) months from the date the Commission accepts the Consent
Agreement and Decision & Order for public comment. In the event that PCC and
Xxxxx-Xxxxxx fail to divest the assets within the required time, the Commission
may appoint a trustee to divest the assets. Xxxxx-Xxxxxx only recently acquired
control of the Albany titanium foundry and had not yet integrated the foundry
into its castings operation and business. As a result, the Commission did not
require that PCC and Xxxxx-Xxxxxx divest Xxxxx-Xxxxxx'x Albany titanium foundry
to a purchaser identified and approved by the Commission prior to the
consummation of the Xxxxx-Xxxxxx acquisition.
The proposed Consent Agreement and Decision & Order effectively remedy the
acquisition's anticompetitive effects in the markets for large stainless steel
and large nickel-based superalloy aerospace investment cast structural
components by requiring PCC and Xxxxx-Xxxxxx to divest the Xxxxx-Xxxxxx'x Large
Cast Parts ("LCP") foundry in Groton, Connecticut to Doncasters plc, a leading
international manufacturer of aerospace investment cast components. Pursuant to
the Consent Agreement and Decision & Order, PCC and Xxxxx-Xxxxxx are required to
divest the Groton LCP foundry to Doncasters no later than 16 business days from
the date the Commission accepts the Consent Agreement and Decision & Order for
public comment. In the event PCC and Xxxxx-Xxxxxx fail to divest the Groton LCP
foundry to Doncasters within the required time, the Consent Agreement contains a
"crown jewel" provision that allows the Commission to appoint a trustee to
divest both Xxxxx-Xxxxxx'x LCP
4
and Small Cast Parts ("SCP") foundries located in Groton, Connecticut, to an
acquirer approved by the Commission.
The proposed Consent Agreement and Decision & Order require PCC and
Xxxxx-Xxxxxx to assist the acquirers of the divested assets so that they can
compete effectively in the markets for titanium, large stainless steel, and
large nickel-based superalloy aerospace investment cast components. PCC and
Xxxxx-Xxxxxx must provide sufficient technical assistance and advice to the
acquirers in order that they may begin manufacturing and selling titanium,
stainless steel, and nickel-based superalloy aerospace investment cast
components. Further, at the request of a customer of titanium, stainless steel,
or nickel-based superalloy aerospace investment cast components at any time
during the next year, PCC and Xxxxx-Xxxxxx must transfer to the Albany titanium
facility, the Groton LCP foundry, or both the Groton LCP and SCP foundries, as
applicable, all tooling and manufacturing know-how associated with producing a
particular component identified by the customer. PCC and Xxxxx-Xxxxxx must also
pay (a) all costs reasonably incurred in the delivery of such tooling and
manufacturing know-how; (b) fifty (50) percent of the costs reasonably incurred
in conforming such tooling to substantially the same quality employed or
achieved by Xxxxx-Xxxxxx; and (c) fifty (50) percent of the costs related to
receiving any certifications or approvals from the customer that may be required
as a result of the transfer of the assets.
To ensure that the acquirers of the divested assets have the opportunity to
retain all the key employees currently involved in Xxxxx-Xxxxxx'x titanium,
large stainless steel and large nickel-based superalloy aerospace casting
businesses, the Consent Agreement and Decision & Order require that PCC and
Xxxxx-Xxxxxx provide financial incentives to these individuals, including a
bonus for certain employees for accepting employment with the acquirer. Further,
the Consent Agreement and Decision & Order require PCC and Xxxxx-Xxxxxx to
provide to the Commission a report of compliance with the divestiture provisions
of the Decision & Order within thirty (30) days following the date the Decision
& Order becomes final, and every thirty (30) days until PCC and Xxxxx-Xxxxxx
have completed the divestitures. Finally, an Order to
5
Hold Separate issued by the Commission requires that the Albany titanium
foundry, and if necessary the Groton LCP and Groton SCP, be operated
independently of PCC and Xxxxx-Xxxxxx until the divestitures are completed.
The purpose of this analysis is to facilitate public comment on the Consent
Agreement and Decision & Order, and it is not intended to constitute an official
interpretation of the Consent Agreement and Decision & Order or to modify their
terms in any way.
6
UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
-----------------------------------
)
In the Matter of )
)
Precision Castparts Corp., )
a corporation; )
) Docket No. C-3904
and )
)
Xxxxx-Xxxxxx Company, )
a corporation. )
)
-----------------------------------
COMPLAINT
The Federal Trade Commission ("Commission"), having reason to believe that
Respondent Precision Castparts Corp. ("PCC"), a corporation subject to the
jurisdiction of the Commission, has agreed to acquire 100 percent of the voting
securities of Respondent Xxxxx-Xxxxxx Company ("Xxxxx-Xxxxxx"), a company
subject to the jurisdiction of the Commission, in violation of Section 7 of the
Xxxxxxx Act, as amended, 15 U.S.C. ss. 18, and Section 5 of the Federal Trade
Commission Act, as amended 15 U.S.C. ss. 45, and it appearing to the Commission
that a proceeding in respect thereof would be in the public interest, hereby
issues its Complaint, stating its charges as follows:
I. DEFINITIONS
1. "Aerospace Investment Cast Components" means dimensionally precise metal
components manufactured using the investment casting process that are used
primarily in aerospace jet engine and aerospace airframe applications.
2. "Titanium Aerospace Investment Cast Components" means Aerospace
Investment Cast Components manufactured using titanium alloy.
3. "Large Stainless Steel Aerospace Investment Cast Components" means
Aerospace Investment Cast Components with a diameter greater than 24 inches
manufactured using stainless steel.
4. "Large Nickel-based Superalloy Aerospace Investment Cast Components"
means Aerospace Investment Cast Components with a diameter greater than 24
inches manufactured using nickel-based superalloy.
5. "Merger Agreement" means the Agreement and Plan of Merger Among
Precision Castparts Corp., WGC Acquisition Corp., and Xxxxx-Xxxxxx Company,
dated May 17, 1999.
6. "Respondents" means PCC and Xxxxx-Xxxxxx.
II. RESPONDENTS
7. Respondent PCC is a corporation organized, existing, and doing business
under and by virtue of the laws of the State of Oregon, with its office and
principal place of business located at 0000 X.X. Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxx 00000-4254.
8. Respondent Xxxxx-Xxxxxx is a corporation organized, existing, and doing
business under and by virtue of the laws of the Commonwealth of Massachusetts,
with its office and principal place of business located at 000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000.
9. Respondent Xxxxx-Xxxxxx, through a joint venture with Titanium Metals
Corporation, and Respondent PCC are engaged in, among other things, the
development, manufacture, and sale of Titanium Aerospace Investment Cast
Components.
10. Respondent Xxxxx-Xxxxxx and Respondent PCC are engaged in, among other
things, the development, manufacture, and sale of Large Stainless Steel and
Large Nickel-based Superalloy Aerospace Investment Cast Components.
11. Respondents are, and at all times relevant herein have been, engaged in
commerce as "commerce" is defined in Section 1 of the Xxxxxxx Act, as amended,
15 U.S.C. ss. 12, and are corporations whose businesses are in or affect
commerce as "commerce" is defined in Section 4 of the Federal Trade Commission
Act, as amended, 15 U.S.C. ss. 44.
III. THE ACQUISITION
12. On May 17, 1999, PCC and Xxxxx-Xxxxxx entered into the Merger Agreement
under which PCC is to acquire through a cash tender offer 100 percent of the
voting securities of Xxxxx-Xxxxxx valued at approximately $721 million
("Acquisition").
IV. THE RELEVANT MARKETS
13. For purposes of this Complaint, the relevant lines of commerce in which
to analyze the effects of the Acquisition are:
a. the development, manufacture, and sale of Titanium Aerospace
Investment Cast Components;
2
b. the development, manufacture, and sale of Large Stainless Steel
Aerospace Investment Cast Components; and
c. the development, manufacture, and sale of Large Nickel-based
Superalloy Aerospace Investment Cast Components.
14. For purposes of this Complaint, the world is the relevant geographic
area in which to analyze the effects of the Acquisition in the relevant lines of
commerce.
V. STRUCTURE OF THE MARKETS
15. The market for the development, manufacture, and sale of Titanium
Aerospace Investment Cast Components is highly concentrated as measured by the
Xxxxxxxxxx-Xxxxxxxxx Index. PCC and Xxxxx-Xxxxxx are two of four significant
suppliers of Titanium Aerospace Investment Cast Components in the world.
16. The market for the development, manufacture, and sale of Large
Stainless Steel Aerospace Investment Cast Components is highly concentrated as
measured by the Xxxxxxxxxx-Xxxxxxxxx Index. PCC and Xxxxx-Xxxxxx are two of six
significant suppliers of Large Stainless Steel Aerospace Investment Cast
Components in the world.
17. The market for the development, manufacture, and sale of Large
Nickel-based Superalloy Aerospace Investment Cast Components is highly
concentrated as measured by the Xxxxxxxxxx-Xxxxxxxxx Index. PCC and Xxxxx-Xxxxxx
are two of four significant suppliers of Large Nickel-based Superalloy Aerospace
Investment Cast Components in the world.
VI. BARRIERS TO ENTRY
18. Entry into each relevant market is difficult and would not occur in a
timely manner to deter or counteract the adverse competitive effects described
in Paragraph 19 because of the time required to acquire a manufacturing facility
and the necessary specialized equipment, to develop the necessary engineering
and process technology, and to obtain the customer-required certifications and
approvals that are necessary to develop, manufacture, and sell Titanium, Large
Stainless Steel, and Large Nickel-based Superalloy Aerospace Investment Cast
Components.
3
VII. EFFECTS OF THE ACQUISITION
19. The effects of the Acquisition, if consummated, may be substantially to
lessen competition and to tend to create a monopoly in the relevant markets in
violation of Section 7 of the Xxxxxxx Act, as amended, 15 U.S.C. ss. 18, and
Section 5 of the FTC Act, as amended, 15 U.S.C. ss. 45, in the following ways,
among others:
(a) by eliminating the actual, direct, and substantial competition
between PCC and Xxxxx-Xxxxxx in the relevant markets for the development,
manufacture, and sale of Titanium, Large Stainless Steel, and Large
Nickel-based Superalloy Aerospace Investment Cast Components;
(b) by increasing the likelihood of unilateral anticompetitive effects
in the relevant markets for the development, manufacture, and sale of
Titanium, Large Stainless Steel, and Large Nickel-based Superalloy
Aerospace Investment Cast Components;
(c) by increasing the likelihood of coordinated interaction in the
relevant markets for the development, manufacture, and sale of Titanium,
Large Stainless Steel, and Large Nickel-based Superalloy Aerospace
Investment Cast Components;
(d) by increasing the likelihood that customers of Titanium, Large
Stainless Steel, and Large Nickel-based Superalloy Aerospace Investment
Cast Components would be forced to pay higher prices; and
(e) by reducing innovation in the relevant markets for the
development, manufacture, and sale of Titanium, Large Stainless Steel, and
Large Nickel-based Superalloy Aerospace Investment Cast Components.
VIII. VIOLATIONS CHARGED
20. The Merger Agreement described in Paragraph 12 constitutes a violation
of Section 5 of the FTC Act, as amended 15 U.S.C. ss. 45.
21. The Acquisition described in Paragraph 12, if consummated, would
constitute a violation of Section 7 of the Xxxxxxx Act, as amended, 15 U.S.C.
ss. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. ss. 45.
4
WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission day of
________, 1999, issues its Complaint against said Respondents.
By the Commission.
----------------------------------------
Xxxxxx X. Xxxxx
Secretary
SEAL:
5
UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
COMMISSIONERS: Xxxxxx Xxxxxxxx, Chairman
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxx
-----------------------------------
)
In the Matter of )
)
Precision Castparts Corp., )
a corporation; )
) Docket No.C-3904
and ) DECISION AND ORDER
)
Xxxxx-Xxxxxx Company, )
a corporation. )
)
-----------------------------------
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed acquisition by Respondent Precision Castparts
Corp. ("PCC") of all of the outstanding shares of Respondent Xxxxx-Xxxxxx
Company ("Xxxxx-Xxxxxx"), and Respondents having been furnished thereafter with
a copy of a draft of Complaint which the Bureau of Competition presented to the
Commission for its consideration and which, if issued by the Commission, would
charge Respondents with violations of Section 7 of the Xxxxxxx Act, as amended,
15 U.S.C. ss. 18, and Section 5 of the Federal Trade Commission Act, as amended,
15 U.S.C. ss. 45; and
Respondents, their attorneys, and counsel for the Commission having
thereafter executed an Agreement Containing Consent Orders ("Consent
Agreement"), containing an admission by Respondents of all the jurisdictional
facts set forth in the aforesaid draft of Complaint, a statement that the
signing of said Consent Agreement is for settlement purposes only and does not
constitute an admission by Respondents that the law has been violated as alleged
in such Complaint, or that the facts as alleged in such Complaint, other than
jurisdictional facts, are true, and waivers and other provisions as required by
the Commission's Rules; and
The Commission having thereafter considered the matter and having
determined that it had reason to believe that Respondents have violated the said
Acts, and that a Complaint should issue stating its charges in that respect, and
having thereupon issued its Complaint and an Order to Hold Separate, and having
accepted the executed Consent Agreement and placed such Consent Agreement on the
public record for a period of thirty (30) days for the receipt and consideration
of public comments, now in further conformity with the procedure described in
Commission Rule 2.34, 16 C.F.R. ss. 2.34, the Commission hereby makes the
following jurisdictional findings and issues the following Order:
1. Respondent PCC is a corporation organized, existing, and doing
business under and by virtue of the laws of the State of Oregon, with
its office and principal place of business located at 0000 X.X.
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000-4254.
2. Respondent Xxxxx-Xxxxxx is a corporation organized, existing, and
doing business under and by virtue of the laws of the Commonwealth of
Massachusetts, with its office and principal place of business located
at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000-0000.
3. The Federal Trade Commission has jurisdiction of the subject matter of
this proceeding and of Respondents, and the proceeding is in the
public interest.
ORDER
I.
IT IS ORDERED that, as used in this order, the following definitions shall
apply:
A. "PCC" means Precision Castparts Corp., its directors, officers,
employees, agents and representatives, predecessors, successors, and
assigns; its subsidiaries, including Xxxxx-Xxxxxx after the
Acquisition, divisions, groups and affiliates controlled by PCC, and
the respective directors, officers, employees, agents and
representatives, successors, and assigns of each.
B. "Xxxxx-Xxxxxx" means Xxxxx-Xxxxxx Company, its directors, officers,
employees, agents and representatives, predecessors, successors, and
assigns; its subsidiaries, divisions, groups and affiliates controlled
by Xxxxx-Xxxxxx, and the respective directors, officers, employees,
agents and representatives, successors, and assigns of each;
"Xxxxx-Xxxxxx" includes Xxxxx-Xxxxxx Titanium Castings, LLC, the joint
venture with Titanium Metals Corporation through which Xxxxx-Xxxxxx
conducts its Titanium Aerospace Investment Cast Components business.
C. "Respondents" means PCC and Xxxxx-Xxxxxx, individually and
collectively.
D. "Commission" means the Federal Trade Commission.
E. "Doncasters" means Doncasters plc, a corporation organized, existing,
and doing business under and by virtue of the laws of the United
Kingdom, with its office
2
and principal place of business located at 00-00 Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxxx.
F. "Acquisition" means the proposed acquisition by PCC of all the voting
securities of Xxxxx-Xxxxxx.
G. "Investment Casting" means a method of manufacturing metal components,
whereby a wax model of the metal component is dipped into a ceramic
slurry which dries to form a ceramic shell. The wax is then removed
using a special furnace, leaving a cavity within the ceramic shell
into which molten metal is poured. Once the metal cools, the ceramic
shell is removed producing dimensionally precise metal components.
H. "Aerospace Investment Cast Components" means dimensionally precise
metal components manufactured using the Investment Casting process
that are used primarily in aerospace jet engine and aerospace airframe
applications.
I. "Titanium Aerospace Investment Cast Components" means Aerospace
Investment Cast Components manufactured using titanium alloy.
J. "Stainless Steel and/or Nickel-based Superalloy Aerospace Investment
Cast Components" means Aerospace Investment Cast Components of a
diameter or length of twelve (12) inches or greater manufactured using
stainless steel and/or nickel-based superalloys.
K. "Tooling" means the metal die or tool necessary to produce the wax
model of the component in the Investment Casting process.
L. "Manufacturing Know-How" means gating schemes, temperature controls,
and other fixed process documentation, and all information, data and
notes relating thereto, used in the development, manufacture and sale
of Aerospace Investment Cast Components.
M. "Albany Facility" means Xxxxx-Xxxxxx'x Investment Casting
manufacturing plant located at 000 Xxxxx Xxxxxx XX, Xxxxxx, Xxxxxx
00000, and all assets used in the production of Titanium Aerospace
Investment Cast Components at the Albany Facility.
N. "Groton Large Parts Facility" means Xxxxx-Xxxxxx'x Investment Casting
manufacturing plant located at 000 Xxxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxx 00000, identified by Xxxxx-Xxxxxx for internal accounting
purposes as Plant 08, and all assets used in the production of
Titanium Aerospace Investment Cast Components and Stainless Steel
and/or Nickel-based Superalloy Aerospace
3
Investment Cast Components at the Groton Large Parts Facility included
in the Groton Divestiture Agreement.
0. "Groton Facility" means Xxxxx-Xxxxxx'x Investment Casting
manufacturing plants, referred to internally by Xxxxx-Xxxxxx as Plant
08 and Plant 02, located at 000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx
00000, and all assets used in the production of Titanium Aerospace
Investment Cast Components and Stainless Steel and/or Nickel-based
Superalloy Aerospace Investment Cast Components at the Groton
Facility.
P. "Albany Facility Assets" means all assets, properties, businesses and
goodwill, tangible and intangible, of Xxxxx-Xxxxxx used in the
development, manufacture and sale of Titanium Aerospace Investment
Cast Components at the Albany Facility, including, without limitation,
the following:
1. all owned or leased real property and improvements, buildings,
plants, manufacturing operations, machinery, fixtures, equipment,
furniture, tools and other tangible personal property located in
Xxxxx-Xxxxxx'x Albany Facility;
2. all intellectual property, inventions, technology, trademarks,
trade names, trade secrets, copyrights, Manufacturing Know-How,
research material, technical information, management information
systems, software specifications, designs, drawings, processes
and quality control data; provided, however, that this does not
include any rights in the name Xxxxx-Xxxxxx";
3. all customer lists, vendor lists, catalogs, sales promotion
literature and advertising materials; inventory and storage
capacity; rights, titles and interests in and to owned or leased
real property, together with appurtenances, licenses and permits;
4. all rights, titles and interests in and to contracts relating to
the development, manufacture and sale of any Titanium Aerospace
Investment Cast Component; all rights, titles and interests in
and to the contracts entered into in the ordinary course of
business with customers (together with associated bid and
performance bonds), suppliers, sales representatives,
distributors, agents
4
personal property lessors, personal property lessees, licensors,
licensees, consignors, consignees;
5. all rights under warranties and guarantees, express or implied;
6. all books, records and files, and all items of prepaid expense;
and
7. all Sales and Service Operations.
Q. "Groton Large Parts Facility Assets" means all assets, properties,
businesses and goodwill, tangible and intangible, of Xxxxx-Xxxxxx used
in the development, manufacture and sale of Titanium Aerospace
Investment Cast Components or Stainless Steel and/or Nickel-based
Superalloy Aerospace Investment Cast Components at the Groton Large
Parts Facility, including, without limitation, the following:
1. all owned or leased real property and improvements, buildings,
plants, manufacturing operations, machinery, fixtures, equipment,
furniture, tools and other tangible personal property located in
Xxxxx-Xxxxxx'x Groton Large Parts Facility;
2. all intellectual property, inventions, technology, trademarks,
trade names, trade secrets, copyrights, Manufacturing Know-How,
research material, technical information, management information
systems, software specifications, designs, drawings, processes
and quality control data; provided, however, that this does not
include any rights in the name "Xxxxx-Xxxxxx";
3. all customer lists, vendor lists, catalogs, sales promotion
literature and advertising materials; inventory and storage
capacity; rights, titles and interests in and to owned or leased
real property, together with appurtenances, licenses and permits;
4 all rights, titles and interests in and to contracts relating to
the development, manufacture and sale of any Aerospace Investment
Cast Component; all rights, titles and interests in and to the
contracts entered into in the ordinary course of business with
customers (together with associated bid and performance bonds),
suppliers, sales representatives, distributors, agents, personal
property lessors, personal property lessees, licensors,
licensees, consignors, consignees;
5. all rights under warranties and guarantees, express or implied;
6. all books, records and files, and all items of prepaid expense;
and
5
7. all Sales and Service Operations.
R. "Groton Facility Assets" means all assets, properties, businesses and
goodwill, tangible and intangible, used in the development,
manufacture and sale of Titanium Aerospace Investment Cast Components
or Stainless Steel and/or Nickel-based Superalloy Aerospace Investment
Cast Components at the Groton Facility, including, without limitation,
the following:
1. all owned or leased real property and improvements, buildings,
plants, manufacturing operations, machinery, fixtures, equipment,
furniture, tools and other tangible personal property located at
the Groton Facility;
2. all intellectual property, inventions, technology, trademarks,
trade names, trade secrets, copyrights, Manufacturing Know-How,
research material, technical information, management information
systems, software specifications, designs, drawings, processes
and quality control data; provided, however, that this does not
include any rights in the name Xxxxx-Xxxxxx";
3. all customer lists, vendor lists, catalogs, sales promotion
literature and advertising materials; inventory and storage
capacity; rights, titles and interests in and to owned or leased
real property, together with appurtenances, licenses and permits;
4. all rights, titles and interests in and to contracts relating to
the development, manufacture and sale of any Aerospace Investment
Cast Component; all rights, titles and interests in and to the
contracts entered into in the ordinary course of business with
customers (together with associated bid and performance bonds),
suppliers, sales representatives, distributors, agents, personal
property lessors, personal property lessees, licensors,
licensees, consignors, consignees;
5. all rights under warranties and guarantees, express or implied;
6. all books, records and files, and all items of prepaid expense;
and
7. all Sales and Service Operations.
S. "Acquirer-Albany" means the entity that acquires the Albany Facility
Assets pursuant to Paragraphs II.A. or III.A. of this Order, as
applicable.
T. "Acquirer-Groton" means Doncasters, or the entity that acquires the
Groton Facility Assets pursuant to Paragraphs IV.A.2. or V.A. of this
Order, as applicable.
6
U. "Groton Divestiture Agreement" means all agreements between
Respondents and any Acquirer-Groton, and all exhibits thereof
V. "Albany Divestiture Agreement" means all agreements between
Respondents and any Acquirer-Albany, and all exhibits thereof
W. "Non-Public Acquirer Information" means any information not in the
public domain obtained by Respondents directly or indirectly from the
Acquirer-Albany or the Acquirer-Groton, prior to the effective date,
or during the term, of the provision of assistance to the acquirer as
required by Paragraphs II.E. and IV.C. of this Order. Non-Public
Acquirer Information shall not include information that subsequently
falls within the public domain through no violation of this Order by
Respondents.
X. "Cost" means direct cash cost of raw materials and labor.
Y. "Sales and Services Operations" means all of Xxxxx-Xxxxxx'x assets,
properties, business and goodwill, tangible and intangible, used in
the sale or service of Xxxxx-Xxxxxx'x Aerospace Investment Cast
Components business at either the Albany Facility, the Groton Large
Parts Facility, or the Groton Facility, as applicable.
Z. "Material Confidential Information" means competitively sensitive or
proprietary information not independently known to an entity from
sources other than the entity to which the information pertains, and
includes, but is not limited to, all customer lists, price lists,
marketing methods, patents, technologies, processes, Manufacturing
Know-How, or other trade secrets.
AA. "Key Employees" means the employees listed in Appendix A to this
Order.
II.
IT IS FURTHER ORDERED that:
A. Respondents shall divest the Albany Facility Assets, at no minimum
price, absolutely and in good faith, within six (6) months from the
date the Consent Agreement is signed by Respondents.
7
Provided that, if the Acquirer-Albany expresses a preference not to
acquire any portion of the Albany Facility Assets, and if the
Commission approves the Acquirer-Albany and the Albany Divestiture
Agreement, then Respondents shall not be required to divest that
portion of such assets.
B. Respondents shall divest the Albany Facility Assets only to an
acquirer that receives the prior approval of the Commission and only
in a manner that receives the prior approval of the Commission. The
purpose of the divestiture of the Albany Facility Assets is to ensure
that the Albany Facility Assets continue to be used in the
development, manufacture and sale of Titanium Aerospace Investment
Cast Components in substantially the same manner and quality currently
employed or achieved by Xxxxx-Xxxxxx and to remedy the lessening of
competition resulting from the Acquisition as alleged in the
Commission's complaint.
C. Pending divestiture of the Albany Facility Assets, Respondents shall
take such actions as are necessary to maintain the viability and
marketability of the Albany Facility Assets and to prevent the
destruction, removal, wasting, deterioration, or impairment of any of
the Albany Facility Assets except for ordinary wear and tear. Prior to
divestiture, Respondents shall not transfer any of the individuals
identified pursuant to Paragraph ILL of this Order to any other
position outside the Albany Facility.
D. Respondents will ensure that at the time of the divestiture required
under Paragraph II.A., the Albany Facility Assets shall be
unencumbered and free of current and future claims of ownership or any
equity interest, including, but not limited to, any claims of right of
first refusal, by any third-party entity or entities, including, but
not limited to, Titanium Metals Corporation. Provided, however, that
if the Acquirer-Albany determines to allow Titanium Metals Corporation
to retain all or a part of its interest in the Albany Facility Assets
after the divestiture, and if the Commission approves such retention,
then the Respondents shall be deemed to have complied with this
Paragraph II.D.
E. With respect to Titanium Aerospace Investment Cast Components, the
applicable Tooling for which existed at the Albany Facility at the
time of the divestiture, Respondents shall provide, at cost, upon
reasonable notice and request by Acquirer-Albany, for a period not to
exceed twelve (12) months from the date the divestiture is completed:
(a) such assistance and training as are reasonably necessary to enable
the Acquirer-Albany to develop, manufacture and sell Titanium
Aerospace Investment Cast Components in substantially the same manner
and quality, and using the same Manufacturing Know-How, as employed or
achieved by Xxxxx-Xxxxxx; and (b) such assistance and training as are
reasonably necessary to enable the Acquirer-Albany to obtain any
customer-required approvals and/or certifications.
F. Respondents shall not provide, disclose or otherwise make available to
any of
8
their employees not involved in providing assistance to the
Acquirer-Albany, any Non-Public Acquirer Information, nor shall
Respondents use any Non-Public Acquirer Information obtained or
derived by Respondents in their capacity as a provider of assistance
pursuant to Paragraph II.E., except for the sole purpose of providing
assistance pursuant to Paragraph II.E.
G. Respondents shall comply with the terms of the Albany Divestiture
Agreement for the Albany Facility Assets, which will be incorporated
by reference into this Order, and made a part thereof. Any failure by
Respondents to comply with the terms of the Albany Divestiture
Agreement shall constitute a failure to comply with this Order.
H. For a period of twelve (12) months from the date the divestiture
occurs, Respondents shall, upon reasonable notice and request by a
customer of any Titanium Aerospace Investment Cast Component(s):
1. transfer to the Albany Facility all Tooling and Manufacturing
Know-How located in any other Xxxxx-Xxxxxx manufacturing facility
at any time prior to the date the Acquisition is completed, used
in the development, manufacture and sale of the Titanium
Aerospace Investment Cast Component(s) identified by the
customer;
2. pay all costs reasonably incurred in the delivery of such Tooling
and Manufacturing Know-How to the Albany Facility;
3. pay fifty (50) percent of the costs, if any, that are reasonably
and necessarily incurred by the Acquirer-Albany in conforming
such Tooling so as to enable the manufacture of Titanium
Aerospace Investment Cast Component(s) to substantially the same
quality employed or achieved by Xxxxx-Xxxxxx; and
4. with respect to such Tooling, pay fifty (50) percent of the
costs, if any, that are reasonably and necessarily incurred by
the Acquirer-Albany in obtaining customer-required certification
or approval for Titanium Aerospace Investment Cast Component(s)
produced from the same Manufacturing Know-How and having
substantially the same quality employed or achieved by
Xxxxx-Xxxxxx.
I. No later than the time of the execution of the Albany Divestiture
Agreement, Respondents shall provide the Acquirer-Albany with a
complete list of all non-clerical, salaried employees of Xxxxx-Xxxxxx
who have been involved in the development, manufacture or sale of any
Titanium Aerospace Investment Cast Component at the Albany Facility at
any time during the period from January 1, 1999 until the date of the
Albany Divestiture Agreement. The list shall state each individual's
name, position or positions held from January 1, 1999 until the date
9
of the Albany Divestiture Agreement, address, telephone number, and a
description of the duties and work performed by the individual in
connection with any Titanium Aerospace Investment Cast Component
developed, manufactured or sold by Xxxxx-Xxxxxx'x Albany Facility.
Respondents shall provide the Acquirer-Albany the opportunity to enter
into employment contracts with such individuals, provided that such
contracts are contingent upon the Commission's approval of the Albany
Divestiture Agreement.
J. Respondents shall provide the Acquirer-Albany with an opportunity to
inspect the personnel files and other documentation relating to the
individuals identified pursuant to Paragraph II.I. of this Order to
the extent permissible under applicable laws, at the request of the
Acquirer-Albany any time after the execution of the Albany Divestiture
Agreement.
K. Respondents shall not enforce any confidentiality or non-compete
restrictions relating to the Albany Facility Assets that apply to any
employee identified pursuant to Paragraph II.I. who accepts employment
with the Acquirer-Albany. In addition, Respondents shall provide all
Key Employees of the Albany Facility with reasonable financial
incentives to continue in their employment positions during the period
covered by the Order to Hold Separate, hereto attached, in order that
such employees may be in a position to accept employment with the
Acquirer-Albany at the time of the divestiture. Such incentives shall
include:
1. continuation of all employee benefits offered by Xxxxx-Xxxxxx
until the date of the divestiture, including regularly scheduled
raises and bonuses; and
2. a bonus, based on the schedule identified in Appendix A, of an
employee's annual salary (including any other bonuses) as of the
date this Order becomes final for any individual who agrees to
accept an offer of employment from the Acquirer-Albany, payable
by Respondents as of the date the divestiture is accomplished.
L. For a period of one (1) year commencing on the date of the
individual's employment by the Commission-approved Acquirer-Albany,
Respondents shall not employ any of the Key Employees who have been
offered employment with the Commission-approved Acquirer-Albany,
unless the individual's employment has been terminated by the
Acquirer-Albany.
III.
IT IS FURTHER ORDERED that:
A. If Respondents have not divested, absolutely and in good faith and
with the
10
Commission's prior approval, the Albany Facility Assets within the
time required by Paragraph II.A. of this Order, the Commission may
appoint a trustee to divest the Albany Facility Assets. In the event
that the Commission or the Attorney General brings an action pursuant
to ss. 5(1) of the Federal Trade Commission Act, 15 U.S.C. ss. 45(1),
or any other statute enforced by the Commission, Respondents shall
consent to the appointment of a trustee in such action. Neither the
appointment of a trustee nor a decision not to appoint a trustee under
this Paragraph shall preclude the Commission or the Attorney General
from seeking civil penalties or any other relief available to it,
including a court-appointed trustee, pursuant to ss. 5(1) of the
Federal Trade Commission Act, or any other statute enforced by the
Commission, for any failure by the Respondents to comply with this
Order.
B. If a trustee is appointed by the Commission or a court pursuant to
Paragraph III.A. of this Order, Respondents shall consent to the
following terms and conditions regarding the trustee's powers, duties,
authority and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of the Respondents, which consent shall not be unreasonably
withheld. The trustee shall be a person with experience and
expertise in acquisitions and divestitures. If Respondents have
not opposed, in writing, including the reasons for opposing, the
selection of any proposed trustee within ten (10) days after
notice by the staff of the Commission to Respondents of the
identify of the proposed trustee, Respondents shall be deemed to
have consented to the selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest the Albany
Facility Assets.
3. Within ten (10) days after appointment of the trustee,
Respondents shall execute a trust agreement that, subject to the
prior approval of the Commission and, in the case of a
court-appointed trustee, of the court, transfers to the trustee
all rights and powers necessary to permit the trustee to effect
the divestiture required by this Order.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in Paragraph
III.B.3. to accomplish the divestiture, which shall be subject to
the prior approval of the Commission. If, however, at the end of
the twelve-month period, the trustee has submitted a plan of
divestiture or believes that divestiture can be achieved within a
reasonable time, the divestiture period may be extended by the
Commission or, in the case of a court-appointed trustee, by the
court; provided, however, the Commission may extend this period
only two (2) times.
11
5. The trustee shall have full and complete access to the personnel,
books, records and facilities related to the Albany Facility
Assets or to any other relevant information, as the trustee may
request. Respondents shall develop such financial or other
information as such trustee may request and shall cooperate with
the trustee. Respondents shall take no action to interfere with
or impede the trustee's accomplishment of the divestiture. Any
delays in divestiture caused by Respondents shall extend the time
for divestiture under this Paragraph in an amount equal to the
delay, as determined by the Commission or, for a court-appointed
trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to Respondents' absolute and
unconditional obligation to divest expeditiously at no ' minimum
price. The divestiture shall be made in the manner and to an
acquirer as set out in Paragraph II.A. of this Order; provided,
however, if the trustee receives bona fide offers from more than
one such acquiring entity, and if the Commission determines to
approve more than one such acquiring entity, the trustee shall
divest to the acquiring entity selected by Respondents from among
those approved by the Commission; provided further, however, that
Respondents shall select such entity within five (5) business
days of receiving notification of the Commission's approval.
7. The trustee shall serve, without bond or other security, at the
cost and expense of Respondents, on such reasonable and customary
terms and conditions as the Commission or a court may set. The
trustee shall have the authority to employ, at the cost and
expense of Respondents, such consultants, accountants, attorneys,
investment bankers, business brokers, appraisers, and other
representatives and assistants as are necessary to carry out the
trustee's duties and responsibilities. The trustee shall account
for all monies derived from the divestiture and all expenses
incurred. After approval by the Commission and, in the case of a
court-appointed trustee, by the court, of the account of the
trustee, including fees for his or her services, all remaining
monies shall be paid at the direction of Respondents, and the
trustee's power shall be terminated. The trustee's compensation
shall be based at least in significant part on a commission
arrangement contingent on the trustee's divesting the Albany
Facility Assets.
8. Respondents shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or
expenses arising out of, or in connection with, the performance
of the trustee's duties, including all, reasonable fees of
counsel and other expenses incurred in connection with the
preparation for or defense of any claim, whether or not resulting
in any
12
liability, except to the extent that such losses, claims,
damages, liabilities or expenses result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by the trustee.
9. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as
provided in Paragraph III.A. of this Order.
10. The Commission or, in the case of a court-appointed trustee, the
court, may on its own initiative or at the request of the trustee
issue such additional orders or directions as may be necessary or
appropriate to accomplish the divestiture required by this Order.
11. In the event the trustee reasonably determines that he or she is
unable to divest the Albany Facility Assets in a manner
consistent with the Commission's purpose as described in
Paragraph II.B., the trustee may also divest such additional
ancillary assets and business and effect such arrangements as are
necessary to maintain the marketability, viability and
competitiveness of the Albany Facility Assets.
12. The trustee shall have no obligation or authority to operate or
maintain the Albany Facility Assets.
13. The trustee shall report in writing to Respondents and the
Commission every sixty (60) days concerning the trustee's efforts
to accomplish the divestiture.
13
IV.
IT IS FURTHER ORDERED that:
A. Respondents shall divest, absolutely and in good faith:
1. the Groton Large Parts Facility Assets as a competitive, viable,
on-going business to Doncasters, in accordance with the Asset
Purchase Agreement between Xxxxx-Xxxxxx Investment Castings, Inc.
and Doncasters dated October 8, 1999 within sixteen (16) business
days of the date the Commission accepts the Consent Agreement for
public comment; or
2. the Groton Facility Assets, at no minimum price, to an
Acquirer-Groton within six (6) months after the date the
Respondents sign the Consent Agreement. Respondents shall divest
the Groton Facility Assets pursuant to Paragraph IV.A.2. of this
Order only to an Acquirer-Groton that receives the prior approval
of the Commission and only in a manner that receives the prior
approval of the Commission.
Provided that, if the Acquirer-Groton expresses a preference not to
acquire any portion of the Groton Large Parts Facility Assets or the
Groton Facility Assets, as applicable, and if the Commission approves
the Acquirer-Groton and the Groton Divestiture Agreement, then
Respondents shall not be required to divest that portion of such
assets.
B. The purpose of the divestiture of the Groton Large Parts Facility
Assets or the Groton Facility Assets is to ensure that these assets
continue to be used in the development, manufacture and sale of
Aerospace Investment Cast Components in substantially the same manner
and quality currently employed or achieved by Xxxxx-Xxxxxx and to
remedy the lessening of competition resulting from the acquisition as
alleged in the Commission's complaint.
C. With respect to Aerospace Investment Cast Components, the applicable
Tooling for which existed at the Groton Large Parts Facility or, if
applicable, the Groton Facility, at the time of the divestiture,
Respondents shall provide, at cost, upon reasonable notice and request
by the Acquirer-Groton, for a period not to exceed twelve (12) months
from the date the divestiture is completed: (a) such assistance and
training as are reasonably necessary to enable the Acquirer-Groton to
develop, manufacture and sell Aerospace Investment Cast Components in
substantially the same manner and quality, and using the same
Manufacturing Know-How, as employed or achieved by Xxxxx-Xxxxxx; and
(b) such assistance and training as are reasonably necessary to enable
the Acquirer-Groton to obtain any customer-required approvals and/or
certifications.
D. Respondents shall not provide, disclose or otherwise make available to
any of
14
their employees not involved in providing assistance to the
Acquirer-Groton, any Non-Public Acquirer Information, nor shall
Respondents use any Non-Public Acquirer Information obtained or
derived by Respondents in their capacity as a provider of assistance
pursuant to Paragraph IV.C., except for the sole purpose of providing
assistance pursuant to Paragraph IV.C.
E. Pending either the divestiture of the Groton Large Parts Facility
Assets to Doncasters pursuant to Paragraph IV.A.1. of this Order or
the divestiture of the Groton Facility Assets pursuant to Paragraphs
IV.A.2. or V.A. of this Order, if applicable, Respondents shall take
such actions as are necessary to maintain the viability and
marketability of the Groton Facility Assets and to prevent the
destruction, removal, wasting, deterioration, or impairment of any of
the Groton Facility Assets except for ordinary wear and tear. Prior to
divestiture, Respondents shall not transfer, without the consent of
the Acquirer-Groton, any of the individuals identified pursuant to
Paragraph IV.H. of this Order to any other position.
F. For a period of twelve (12) months from the date the divestiture
occurs, upon reasonable notice and request by a customer of any
Aerospace Investment Cast Component(s) of a diameter or length twelve
(12) inches or greater, Respondents shall:
1. transfer to the Groton Large Parts Facility or the Groton
Facility, as applicable, all Tooling and Manufacturing Know-How
located in any other Xxxxx-Xxxxxx manufacturing facility, other
than the Albany Facility, at any time prior to the date the
Acquisition is completed, used in the development, manufacture
and sale of the Aerospace Investment Cast Component(s) identified
by the customer;
2. pay all costs reasonably incurred in the delivery of such Tooling
and Manufacturing Know-How to the Groton Large Parts Facility or
the Groton Facility, as applicable;
3. pay fifty (50) percent of the costs, if any, that are reasonably
and necessarily incurred by the Acquirer-Groton in conforming
such Tooling so as to enable the manufacture of Aerospace
Investment Cast Component(s) to substantially the same quality
employed or achieved by Xxxxx-Xxxxxx; and
4. with respect to such Tooling, pay fifty (50) percent of the
costs, if any, that reasonably and necessarily are incurred by
the Acquirer-Groton in obtaining customer-required certification
or approval for Aerospace Investment Cast
15
Component(s) having substantially the same quality and using the
same Manufacturing Know-How, as employed or achieved by
Xxxxx-Xxxxxx.
G. Respondents shall comply with the terms of the Groton Divestiture
Agreement, which is incorporated by reference into this Order, and
made a part thereof. Any failure by Respondents to comply with the
terms of the Groton Divestiture Agreement shall constitute a failure
to comply with this Order.
H. No later than the time of the execution the Groton Divestiture
Agreement, Respondents shall provide the Acquirer-Groton with a
complete list of all non-clerical, salaried employees of
Xxxxx-Xxxxxx'x Groton Facility who have been involved in the
development, manufacture or sale of any Aerospace Investment Cast
Component at the Groton Facility, at any time during the period from
January 1, 1999 until the date of the Groton Divestiture Agreement.
The list shall state each individual's name, position or positions
held from January 1, 1999 until the date of the Groton Divestiture
Agreement, address, telephone number, and a description of the duties
and work performed by the individual in connection with any Aerospace
Investment Cast Component developed, manufactured or sold by
Xxxxx-Xxxxxx'x Groton Facility. Respondents shall provide the
Acquirer-Groton the opportunity to enter into employment contracts
with such individuals, provided that such contracts are contingent
upon the Commission's approval of the Groton Divestiture Agreement.
I. Respondents shall provide the Acquirer-Groton with an opportunity to
inspect the personnel files and other documentation relating to the
individuals identified pursuant to Paragraph IV.H. of this Order to
the extent permissible under applicable laws, at the request of the
Acquirer-Groton any time after the execution of the Groton Divestiture
Agreement.
J. Respondents shall not enforce any confidentiality or non-compete
restrictions relating to the Groton Large Parts Facility or the Groton
Facility, as applicable, that apply to any employee identified
pursuant to Paragraph IV.H. who accepts employment with the
Acquirer-Groton. In addition, Respondents shall provide all Key
Employees of the Groton Facility with reasonable financial incentives
to continue in their employment positions, either (1) pending
divestiture of the Groton Large Parts Facility Assets, or (2) during
the period covered by the Order to Hold Separate, hereto attached, as
applicable, in order that such employees may be in a position to
accept employment with the Acquirer-Groton at the time of the
divestiture. Such incentives shall include:
1. continuation of all employee benefits offered by Xxxxx-Xxxxxx
until the date of the divestiture, including regularly scheduled
raises and bonuses; and
2. a bonus, based on the schedule identified in Appendix A, of an
employee's annual salary (including any other bonuses) as of the
date this Order
16
becomes final, payable by Respondents six (6) months from the
date the divestiture is accomplished, for any individual who is
employed at that time by the Acquirer-Groton.
K. For a period of one (1) year commencing on the date of the
individual's employment by the Commission-approved Acquirer-Groton,
Respondents shall not employ any of the Key Employees of the Groton
Facility who have been offered employment with the Commission-approved
Acquirer-Groton, unless the individual's employment has been
terminated by the Acquirer-Groton.
V.
IT IS FURTHER ORDERED that
A. If Respondents have not divested, absolutely and in good faith, and
with the Commission's prior approval, the Groton Large Parts Facility
Assets or Groton Facility Assets within the time required by Paragraph
IV.A. of this Order, then the Commission may appoint a trustee to
divest the Groton Facility Assets. The trustee may be the same person
as the trustee appointed in Paragraph III.A. of this Order. In the
event that the Commission or the Attorney General brings an action
pursuant to ss. 5(1) of the Federal Trade Commission Act, 15 U.S.C.
ss. 45(i), or any other statute enforced by the Commission,
Respondents shall consent to the appointment of a trustee in such
action. Neither the appointment of a trustee nor a decision not to
appoint a trustee under this Paragraph shall preclude the Commission
or the Attorney General from seeking civil penalties or any other
relief available to it, including a court-appointed trustee, pursuant
to ss. 5(1) of the Federal Trade Commission Act, or any other statute
enforced by the Commission, for any failure by the Respondents to
comply with this Order.
B. If a trustee is appointed by the Commission or a court pursuant to
Paragraph V.A. of this Order, Respondents shall consent to the
following terms and conditions regarding the trustee's powers, duties,
authority and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of the Respondents, which consent shall not be unreasonably
withheld. The trustee shall be a person with experience and
expertise in acquisitions and divestitures. If Respondents have
not opposed, in writing, including the reasons for opposing, the
selection of any proposed trustee within ten (10) days after
notice by the staff of the Commission to Respondents of the
identify of the proposed trustee, Respondents shall be deemed to
have consented to the selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest the Groton
Facility Assets.
17
3. Within ten (10) days after appointment of the trustee,
Respondents shall execute a trust agreement that, subject to the
prior approval of the Commission and, in the case of a
court-appointed trustee, of the court, transfers to the trustee
all rights and powers necessary to permit the trustee to effect
the divestiture required by this Order.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in Paragraph
V.B.3. to accomplish the divestiture, which shall be subject to
the prior approval of the Commission. If, however, at the end of
the twelve-month period, the trustee has submitted a plan of
divestiture or believes that divestiture can be achieved within a
reasonable time, the divestiture period may be extended by the
Commission or, in the case of a court-appointed trustee, by the
court; provided, however, the Commission may extend this period
only two (2) times.
5. The trustee shall have full and complete access to the personnel,
books, records and facilities related to the Groton Facility
Assets or to any other relevant information, as the trustee may
request. Respondents shall develop such financial or other
information as such trustee may request and shall cooperate with
the trustee. Respondents shall take no action to interfere with
or impede the trustee's accomplishment of the divestiture. Any
delays in divestiture caused by Respondents shall extend the time
for divestiture under this Paragraph in an amount equal to the
delay, as determined by the Commission or, for a court-appointed
trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to Respondents' absolute and
unconditional obligation to divest expeditiously at no minimum
price. The divestiture shall be made in the manner and to an
acquirer as set out in Paragraph IV.A.2. of this Order; provided,
however, if the trustee receives bona fide offers from more than
one such acquiring entity, and if the Commission determines to
approve more than one such acquiring entity, the trustee shall
divest to the acquiring entity selected by Respondents from among
those approved by the Commission; provided further, however, that
Respondents shall select such entity within five (5) business
days of receiving notification of the Commission's approval.
7. The trustee shall serve, without bond or other security, at the
cost and expense of Respondents, on such reasonable and customary
terms and conditions as the Commission or a court may set. The
trustee shall have the authority to employ, at the cost and
expense of Respondents, such
18
consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as
are necessary to carry out the trustee's duties and
responsibilities. The trustee shall account for all monies
derived from the divestiture and all expenses incurred. After
approval by the Commission and, in the case of a court-appointed
trustee, by the court, of the account of the trustee, including
fees for his or her services, all remaining monies shall be paid
at the direction of Respondents, and the trustee's power shall be
terminated. The trustee's compensation shall be based at least in
significant part on a commission arrangement contingent on the
trustee's divesting the Groton Facility Assets.
8. Respondents shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or
expenses arising out of, or in connection with, the performance
of the trustee's duties, including all reasonable fees of counsel
and other expenses incurred in connection with the preparation
for or defense of any claim, whether or not resulting in any
liability, except to the extent that such losses, claims,
damages, liabilities, or expenses result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by the trustee.
9. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as
provided in Paragraph V.A. of this Order.
10. The Commission or, in the case of a court-appointed trustee, the
court, may on its own initiative or at the request of the trustee
issue such additional orders or directions as may be necessary or
appropriate to accomplish the divestiture required by this Order.
11. In the event the trustee reasonably determines that he or she is
unable to divest the Groton Facility Assets in a manner
consistent with the Commission's purpose-as described in
Paragraph IV.B., the trustee may also divest such additional
ancillary assets and business and effect such arrangements as are
necessary to
19
maintain the marketability, viability and competitiveness of the
Groton Facility Assets.
12. The trustee shall have no obligation or authority to operate or
maintain the Groton Facility Assets.
13. The trustee shall report in writing to Respondents and the
Commission every sixty (60) days concerning the trustee's efforts
to accomplish the divestiture.
VI.
IT IS FURTHER ORDERED that:
A. Within thirty (30) days after the date this order becomes final and
every thirty (30) days thereafter until Respondents have fully
complied with the provisions of Paragraphs II. through V. of this
Order, Respondents shall submit to the Commission a verified written
report setting forth in detail the manner and form in which they
intend to comply, are complying, and have complied with Paragraphs II.
through V. of this Order and with the Order to Hold Separate.
Respondents shall include in their compliance reports, among other
things that are required from time to time, a full description of the
efforts being made to comply with Paragraphs II. through V. of the
Order, including a description of all substantive contacts or
negotiations for the divestitures and the identities of all parties
contacted. Respondents shall include in their compliance reports
copies, other than of privileged materials, of all written
communications to and from such parties, all internal memoranda, and
all reports and recommendations concerning divestiture. The final
compliance report required by this Paragraph VI.A. shall include a
statement that the divestitures have been accomplished in the manner
approved by the Commission and shall include the dates the
divestitures were accomplished.
B. One year from the date of divestiture of the Albany Facility Assets
and annually thereafter until the Order terminates, Respondents shall
file a verified written report to the Commission setting forth in
detail the manner in which they have complied and are complying with
this Order.
C. One year from the date of divestiture of the Groton Large Parts
Facility Assets or the Groton Facility Assets, as applicable, and
annually thereafter until the Order terminates, Respondents shall file
a verified written report to the Commission setting forth in detail
the manner in which they have complied and are complying with this
Order.
20
VII.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at least
thirty (30) days prior to any proposed change in the corporate Respondents such
as dissolution, assignment, sale resulting in the emergence of a successor
corporation, or the creation or dissolution of subsidiaries or any other change
in the corporation that may affect compliance obligations arising out the Order.
VIII.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, and subject to any legally recognized privilege, and
upon written request with reasonable notice to Respondents, Respondents shall
permit any duly authorized representative of the Commission:
A. Access, during office hours and in the presence of counsel, to all
facilities and access to inspect and copy all non-privileged books,
ledgers, accounts, correspondence, memoranda and other records and
documents in the possession or under the control of Respondents
relating to any matter contained in this Order; and
B. Upon five (5) days' notice to Respondents and without restraint or
interference from them, to interview officers, directors, or employees
of Respondents, who may have counsel present, regarding any such
matters.
IX.
IT IS FURTHER ORDERED that this Order shall terminate one (1) year after
the divestitures required in Paragraphs II.A. and IV.A. of this Order are
accomplished.
By the Commission.
Xxxxxx X. Xxxxx
Secretary
SEAL
ISSUED:
21
APPENDIX A
KEY EMPLOYEES
List of Key Employees of the Albany Facility and Bonus Schedule.
Key Employees to receive a 20% bonus:
Xxxxx Xxxxxx, President/CEO
Xxxx Xxxxxx, Vice Pres. Mkting & Sales
Xxxxx Xxxxxxxx, Plant Mgr.
Xxxxx Xxxxx, Vice Pres. Eng./XX
Xxxxx Xxxxxx, Controller
Xxxx Xxxxxxxx, Vice Pres. HR
Key Employees to receive a 10% bonus:
Xxxxxx Xxxxxx, Admin. Assist.
Xxxx Xxxxxxx, Acct. Mgr.
Xxxxx Xxxx, Sales Admin.
Xx Xxxxxxxx, Quality Engr.
Xxxxx Xxxxxxx, Six Sigma/Proc. Engr.
Xxxx Xxxxxxxxxx, Facilities Maint.
Xxxxx Xxxxx, Inv. Cast. Heat Treat
Xxxx Xxxxxx, Shift Super.
Xxxxx Xxxxxx, All Prod. Centers, NDT
Xxx Xxxxxx, Shift Super.
Xxxx Xxxxxxx, KO Superv.
Xxx Xxxxxxxxxx, Purchasing
Dot Xxxxxxx, Wax Shift Super.
Xxxxxx Xxxxxx, Wax Shift Super.
Xxxx Xxxx, Xx. Xxxx. Eng.
Xxxx Xxxxxxxxx, Proj. Eng.
Xxxxx Xxxxxxxx, Eng. Tech.
Xx Xxxxxxxx, P&IC Manager
Xxxxx Xxxx, Shipping/Receiving Super.
Xxxx Xxx, H.R. Generalist
Xxxxxxx Xxxxxxx, Accounting Mgr.
Xxx Xxxxxxxxx, A/P Clerk
Xxxxx Xxxxx, Data Base Mgr.
Xxxxxx Xxxx, Cost Estimator
Xxx Xxxxxxx, Salvage Analyst
Xxxxx Check, Layout Inspector
Xxxxx Xxxxx-Xxxx, QA Eng.
Key Employees to receive a 5% bonus:
Xxxxxx Xxxx, P/R Specialist
Xxx Xxxxxx, Cost Accounting Clerk
Xxxxx Xxxxxxxxx, P/R & A/R Clerk
Xxx Xxxxx, Metallurgist
Xxx Xxxxxxx, Process Eng.
Xxxxxxx Xxxxxxxx, Contract Compliance
Xxxxx Xxxxxxx, Safety/Security Coord.
Xxxxx Xxxxxx, Proj. Eng.
Xxxx Xxxxxx, Proj. Eng.
Xxxxxx Xxxxxx, Eng. Tech.
Xxxx Xxxxxxxxxx, Shipping Coord.
Xxxxx Xxxxxxx, Eng. Tech.
Xxxxxxx Xxxxxxx, Xx. Met Lab Tech.
Xxxxxxx Xxxxx, Layout Inspector
Xxxx Xxxxxxxx, Layout Inspector
Xxxxx Xxxxxx, PT Recep./ Sect.
List of Key Employees of the Groton Facility and Bonus Schedule.
Key Employees to receive a 20% bonus:
Xxxxx Xxxxxxx, Mgr. Xxxxx.
Xxxxx Xxxxx, Xx. Process Eng.
Xxxxxxxxx Xxxxxx, Mgr. Bus. Unit
Xxxxxx X. Xxxxxxx, Quality Tech. A
Xxxxxxx X. Xxxxx, Prod. Ctrl A
Xxxxxx X. Xxxxxx, Sup. Manuf.
Xxxxxxx Xxxxxx, HR Admin.
Xxxxxxx Xxxxxx, Eng. Process
Xxxxxxx Xxxxxx, Eng. Product Asst.
Xxxxxxx X. Xxxxx, Eng. Product
Xxxxxx Xxx, Engineer Product Sr
Xxxx X. Xxxxxxxx, Accountant General
Xxxx X. Xxxxx, MIS Programmer Analy.
Xxxx X. Xxxxxxx, Contract Admin.
Xxxxxxxxx Xxxxxxx, XXX Xxxxx.
Xxxxxx Xxxxxx, Xx. Product Eng.
Xxxxx Xxxx, Contract Admin.
Xxxx Xxxx, Senior Tech.
Xxxx X. Xxxxxxx, Maint. Lead Sr
Xxxxx Xxxxxxxxx, Dsqr/qa Tech.
2
List of additional Key Employees of the Groton Facility to receive a 20%
bonus if the Groton Large Parts Facility Assets are not divested to
Doncasters pursuant to Paragraph IV.A.1. of the Decision & Order, or if
the Commission orders the rescission of the Groton Divestiture Agreement
with Doncasters pursuant to Paragraph 12 of the Consent Agreement:
Xxxxx Xxxxxx, Mgr. Op.
Xxx Xxxxxxxxx, Mgr. HR
Xxxxx Xxxxx, Mgr. Mat.
Xxxx Xxxxxxxx, Mgr. Bus. Unit UTC Intl.
Xxxxx Xxxxx, Controller
Xxxxx Xxxxxxx, Mgr. Eng. & Quality
Xxxxx Xxxx, Continuous Improvement Mgr.
Xxxxxxx Xxxxxx, Continuous Imp. Mgr
Xxxxxx Xxxxxxx, Quality Assur. Mgr.
Xxxxxx Xxxxxx, Facility & Maint. Engr
Xxxxx Xxxxx, Eng. Mgr.
Xxxxxxx Xxxxxx, Envtl., Health & Safety Mgr.
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